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Delaware Court of ChanceryCase No. 12711-VCSIn Re Tesla Motors, Inc. Stockholder Litigation

Document 328, Attachment 2

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EXHIBIT 8

EFiled: Oct 24 2019 09:41PM EDT Transaction ID 64340641

Case No. 12711-VCS

CONFIDENTIAL

1 THE COURT OF CHANCERY OF THE STATE OF DELAWARE2 ----------------------------------------------x3 IN RE TESLA MOTORS, INC. Consolidated4 STOCKHOLDER LITIGATION C.A. No. 12711-VCS56 ----------------------------------------------x7 ** C O N F I D E N T I A L **89 VIDEOTAPED DEPOSITION OF EVERCORE 30(B)(6) WITNESS10 COURTNEY MCBEAN1112 DATE: Wednesday, June 5, 201913 TIME: 9:32 a.m. - 7:20 p.m.14 LOCATION: Weil, Gotshal & Manges LLP15 201 Redwood Shores Parkway16 Redwood City, California1718192021 Reported by:22 ASHALA TYLOR, CSR #2436, CLR, CRR, RPR23 JOB NO. 34042892425 PAGES 1 - 310

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Veritext Legal Solutions212-267-6868 www.veritext.com 516-608-2400

CONFIDENTIAL

Page 2

1 THE COURT OF CHANCERY OF THE STATE OF DELAWARE

2 ----------------------------------------------x

3 IN RE TESLA MOTORS, INC. Consolidated

4 STOCKHOLDER LITIGATION C.A. No. 12711-VCS

5

6 ----------------------------------------------x

7

8

9

10

11

12

13

14

15

16 Videotaped deposition of EVERCORE 30(B)(6) WITNESS

17 COURTNEY MCBEAN, taken at Weil, Gotshal & Manges LLP,

18 201 Redwood Shores Parkway, Redwood City, California,

19 commencing at 9:32 a.m. and ending at 7:20 p.m., on

20 Wednesday, June 5, 2019, before Ashala Tylor,

21 CSR No. 2436, RPR, CRR, CLR.

22

23

24

25

Page 3

1 APPEARANCES OF COUNSEL:

2

3 For the Class Plaintiffs:

4 KESSLER TOPAZ MELTZER & CHECK, LLP

5 BY: JUSTIN O. RELIFORD, ESQ.

6 280 King of Prussia Road

7 Radnor, Pennsylvania 19087

8 [email protected]

9 610.667.7056

10

11 For the Director Defendants:

12 CRAVATH, SWAINE & MOORE LLP

13 BY: VANESSA A. LAVELY, ESQ.

14 825 Eighth Avenue

15 New York, New York 10019-7475

16 212.474.1718

17 [email protected]

18

19

20

21

22

23

24

25

1 A P P E A R A N C E S (continued)2 For Evercore and the Witness:3 WEIL, GOTSHAL & MANGES LLP4 BY: STEFANIA D. VENEZIA, ESQ.5 767 Fifth Avenue6 New York, New York 10153-01197 212.310.83038 [email protected]

10 ALSO PRESENT:11 Brogiin Keeton, Evercore In-House Counsel12 Monica Coscia13 Sean Grant, Videographer141516171819202122232425

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1 I N D E X

2 WITNESS EXAMINATION BY PAGE

3 COURTNEY MCBEAN

4 Mr. Reliford 15, 156

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14

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2 (Pages 2 - 5)


CONFIDENTIAL

Page 6

1 E X H I B I T S

2 NO. DESCRIPTION PAGE

3 Exhibit 1 Email and attachments from Stuart 30

4 Francis, 6-10-16,

5 EVR_TESLA_00223592 - 661

6

7 Exhibit 2 Email and attachments from Courtney 50

8 McBean to Roger Altman, 6-16-16,

9 EVR-TESLA_00162339 - 434

10

11 Exhibit 3 Email chain, top one from Courtney 58

12 McBean to Stuart Francis, 6-16-20,

13 EVR-TESLA_00194944 - 946

14

15 Exhibit 4 Evercore Deck, TESLADIR0000087 - 186 61

16

17 Exhibit 5 Tesla, Inc. Form 424B3 74

18

19 Exhibit 6 Tesla Motors Meeting Minutes, 82

20 6-20-16, TESLA00001459 - 468

21

22 Exhibit 7 (Removed per agreement of counsel) 92

23

24

25

Page 7

1 E X H I B I T S (continued)


3 Exhibit 8 Printout of the metadata that 92

4 was produced in connection with

5 Exhibit 7

6

7 Exhibit 9 Email and attachments from Todd 112

8 Maron to [email protected] and others,

9 6-20-16, TESLADIR0084651 - 773

10

11 Exhibit 10 Email and attachments from 123

12 Courtney McBean to Stuart Francis,

13 6-22-16, EVR-TESLA-00195333 - 336

14

15 Exhibit 11 Email from Courtney McBean to Roger 126

16 Altman and others, 7-2-16,

17 EVR-TESLA-00195608 - 613

18

19 Exhibit 12 Email chain, top one from Stuart 130

20 Francis to Roger Altman, 7-3-16,

21 EVR-TESLA-00224440 - 443

22

23 Exhibit 13 Email and attachment from Brad 133

24 Buss to Todd Maron, 7-5-16,

25 EVR-TESLA-00228876 - 882

Page 8



3 Exhibit 14 Email from Patricia Shaw to 139

4 Project D, 7-13-16,

5 EVR-TESLA-00180255 - 259

6

7 Exhibit 15 Email from Roger Altman to Chuck 143

8 McMullan, 7-13-16,

9 EVR-TESLA-00224569 - 570

10



13 EVR-TESLA-00163026 - 027

14


16 Francis to Courtney McBean,

17 7-15-16, EVR-TESLA-00163084 - 085

18

19 Exhibit 18 Email from Stuart Francis to 160

20 Courtney McBean, 7-15-16,

21 EVR-TESLA-00163371

22



25 EVR-TESLA-00195864

Page 9



3 Exhibit 20 Email from Jonathan Chang to Todd 165

4 Maron, 7-16-16,

5 EVR-TESLA-00224682 - 684

6

7 Exhibit 21 Email chain, top one from Preston G. 168

8 Comey to Patricia Shaw, 7-16-16,

9 EVR-TESLA-00082472 - 474

10

11 Exhibit 22 Email from Courtney McBean to 172

12 Stuart Francis, 7-16-16,

13 EVR-TESLA-00163387

14

15 Exhibit 23 Email from John D. McPhee to 178

16 Jason Wheeler, 7-30-16,

17 TESLA00739014 - 015

18


20 Project D, 7-17-16,

21 EVR-TESLA-00082568 - 587

22

23

24

25

3 (Pages 6 - 9)


CONFIDENTIAL

Page 10



3 Exhibit 25 Email chain, top one from 188

4 Preston G. Comey, 7-18-16,

5 EVR-TESLA-00082788 - 793 and

6 attached Covenant/Trigger Review

7 without Bates numbers

8

9 Exhibit 26 Email chain, top one from Patricia 194

10 Shaw to Courtney McBean, 7-18-16,

11 EVR-TESLA-00180956, with attached

12 Board Discussion Materials without

13 Bates numbers

14

15 Exhibit 27 Email from Courtney McBean to Roger 203

16 Altman and others, 7-18-16,

17 EVR-TESLA-00163432 - 433

18

19 Exhibit 28 Email and attachment from Courtney 206

20 McBean, 7-18-16,

21 EVR-TESLA-00196119 - 163

22

23 Exhibit 29 Email from Preston G. Comey to 216

24 Jason Wheeler, 7-18-16,

25 EVR-TESLA-00083013 - 015

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4 Francis, 7-18-16,

5 EVR-TESLA-00196388 - 390

6

7 Exhibit 31 Evercore Board Discussion 224

8 materials, 7-19-16,

9 TESLA00000712 - 759

10


12 Stuart Francis, 7-18-16,

13 EVR-TESLA-00163447

14

15 Exhibit 33 Document titled "Draft, Materials 242

16 Prepared for the Special Committee

17 Project Daedalus,"

18 LAZ_TES00039341 - 354

19

20 Exhibit 34 Email chain, top one from Patricia 259

21 Shaw to Courtney McBean, 7-20-16,

22 EVR-TESLA-00211076 - 077

23

24

25

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4 McBean to Preston G. Comey, 7-20-16,

5 EVR-TESLA-00211087 - 088

6


8 McBean to Stuart Francis, 7-21-16,

9 EVR-TESLA-00196598 - 599

10



13 EVR-TESLA-00197125

14

15 Exhibit 38 Tesla Motors, Inc. Minutes, 274

16 7-22-16, TESLA00001732 - 734

17



20 EVR-TESLA-00225547 - 549

21

22 Exhibit 40 Tesla Motors, Inc. Minutes, 7-24-16, 279

23 TESLA00001735 - 738

24

25

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4 McBean to Eric Senay, 7-26-16,

5 EVR-TESLA-00084703 - 705

6

7 Exhibit 42 Document titled "Evercore Project 293

8 Daedalus, Fairness Opinion

9 Discussion Materials, 7-30-16,"

10 TESLA00001115 - 176

11


13 David Karp, 8-24-16,

14 EVR-TESLA-00226699 - 701

15

16

17

18

19

20

21

22

23

24

25

4 (Pages 10 - 13)


CONFIDENTIAL

Page 14

1 Redwood City, California; Wednesday, June 5, 2019

2 9:32 a.m.

3 --o0o--

4 THE VIDEOGRAPHER: Good morning. We are

5 on the record. The time is 9:32 a.m. and the date

6 is June 5, 2019.

7 This is the videotaped deposition of

8 Evercore pursuant to Rule 30(b)(6) of

9 Courtney McBean. This deposition is being taken on

10 behalf of counsel for plaintiffs In Re Tesla Motors,

11 Inc., Stockholder Litigation filed in the Court of

12 the Chancery of the State of Delaware, Consolidated

13 Case 12711-VCS.

14 This deposition is being held -- being

15 held at Weil, Gotshal & Manges, LLP, in

16 Redwood City, California.

17 My name is Sean Grant. I'm from the firm

18 Veritext. I'm the videographer, and the court

19 reporter is Ashala Tylor also from Veritext.

20 Please note that audio and video recording

21 will take place unless all parties have agreed to go

22 off the record. Microphones are sensitive and may

23 pick up whispers, private conversations, or cell

24 interference.

25 At this time, will counsel please identify

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1 themselves and state whom they represent.2 MR. RELIFORD: Justin Reliford with3 Kessler Topaz Meltzer & Check for class plaintiffs.4 MS. VENEZIA: Stefania Venezia from Weil,5 Gotshal & Manges for the witness and Evercore.6 MS. KEETON: Brogiin Keeton on behalf of7 Evercore.8 MS. LAVELY: Vanessa Lavely, Cravath,9 Swaine & Moore, on behalf of the director

10 defendants.11 MS. COSCIA: Monica Coscia of Cravath,12 Swaine & Moore on behalf of director defendants.13 COURTNEY McBEAN,14 being first duly sworn or affirmed to testify to the15 truth, the whole truth, and nothing but the truth, was16 examined and testified as follows:17 EXAMINATION18 BY MR. RELIFORD:19 Q. Ms. McBean, thank you again for coming in20 today. You understand that you're here to provide21 testimony on behalf of Evercore as its corporate22 representative?23 A. Yes.24 Q. We're going to be talking about the 201625 acquisition of SolarCity and Tesla. Are you

Page 16

1 familiar with that transaction?2 A. Yes.3 Q. Is it okay, for purposes of the4 deposition, if I just refer to it generally as "the5 transaction"?6 A. Yes.7 Q. Have you ever had your deposition taken8 before?9 A. No.

10 Q. Let's go over some ground rules, then.11 One of the most important things is that we have a12 clean record of our conversation today, which means13 that we can't speak over one another. So I'll ask14 questions. I ask that you wait for me to finish15 asking a question before you begin your answer, and16 I'll let you finish your answer before I move on to17 the next question. Okay?18 Head nods, shakes, don't translate into19 the written record; so we're going to need verbal20 answers to everything I say -- oral answers to21 everything I say.22 Objections are going to happen from time23 to time by any person sitting across the table.24 When those happen, I'd ask that you just answer the25 question as presented unless I choose to rephrase my

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1 question or unless your counsel instructs you not to2 answer the question.3 Okay? Do you understand?4 A. Yes.5 Q. If you don't understand a question, please6 ask me to rephrase it, ask me to repeat it. I want7 to make sure that you understand every question8 that's asked. Okay?9 A. Okay.

10 Q. Because if you answer a question, I'm11 going to assume that you understood it. Okay?12 A. Uh-huh.13 Q. This isn't an endurance competition. It14 will be a long deposition, but it's not an endurance15 competition. While I like to take breaks probably16 every hour or so, if you need a break more frequent,17 you know, just want a break, you know, just ask for18 it. And I'm sure we'll agree to take a break then.19 A. Okay.20 Q. The one thing is that if there's a21 question pending, I'll ask that you answer the22 question before the break. Okay?23 A. Okay.24 Q. And under the Delaware rules, you are not25 really allowed to talk to your counsel during the

5 (Pages 14 - 17)


CONFIDENTIAL

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1 break about the substance of your deposition. Okay?2 All right. How long have you been with3 Evercore?4 A. Three years and five months.5 Q. Where did you work before that?6 A. Greenhill.7 Q. Were you also doing investment banking at8 Greenhill?9 A. Yes.

10 Q. Do you have any particular expertise in11 investment banking?12 A. I focus on the technology sector.13 Q. Do you have any particular expertise in14 solar companies?15 A. I've spent time in and around the solar16 industry, yes.17 Q. Tell me about the time you spent in and18 around the solar industry.19 A. I've covered solar companies over the20 course of my career.21 Q. And how long has that career been?22 A. I started investment banking in 2005 and23 prior to that was a lawyer in technology.24 Q. Where were you a lawyer?25 A. Wilson Sonsini.

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1 Q. Sort of walk me through your career a2 little bit. Where did you go to law school?3 A. University of Chicago.4 Q. Did you start with Wilson Sonsini right5 after University of Chicago?6 A. Yes.7 Q. And how long were you at Wilson Sonsini8 before moving on?9 A. Three years and 9 months.

10 Q. That's a very specific answer.11 A. I get asked that question a lot.12 Q. All right. And you left Wilson Sonsini in13 2005, you said; is that right?14 A. Yes.15 Q. And where did you go after you left?16 A. I went to Citigroup's global investment17 banking advisory group in Palo Alto, their18 technology group.19 Q. How long were you at Citi?20 A. Five -- about five years.21 Q. So in about 2010, you left Citi, and where22 did you go then?23 A. That's when I joined Greenhill.24 Q. And how long were you at Greenhill before25 you came over to Evercore?

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1 A. I left Greenhill in 2015, late 2015.2 Q. So is this transaction that we're talking3 about one of the first major transactions you worked4 on while at Evercore?5 A. Yes.6 Q. Have you ever worked on a transaction in7 the solar industry space?8 A. No.9 Q. Since this transaction have you worked on

10 any other transactions in the solar industry space?11 A. No.12 Q. Who are the other members of the Evercore13 team working on the transaction?14 A. Roger Altman, Stuart Francis,15 Preston Comey, Trisha Shaw, Anand Sankaralingam.16 Q. For the court reporter, I'll ask you to17 spell that for me.18 A. A-N-A-N-D is the first name. Second name19 is S-A-N-K-A-R-A-L-I-N-G-A-M.20 Marshall Watkins and Conner Landry.21 Q. Roger Altman is the founder of Evercore;22 is that correct?23 A. Yes.24 Q. What's his title?25 A. Chairman.

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1 Q. He answers directly to the board of2 directors?3 A. Yes.4 Q. How many transactions has Mr. Altman5 worked on during the course of a year?6 A. I'm not sure of the exact number.7 Q. Does he often get involved in specific8 transactions?9 A. Yes.

10 Q. Have you worked with him on other11 transactions before?12 A. Before the Tesla deal?13 Q. Yes.14 A. No.15 Q. Have you worked with him on other16 transactions since the Tesla deal?17 A. Yes.18 Q. How many?19 A. One.20 Q. What deal was that?21 A. Dell.22 Q. Could you be more specific?23 MS. VENEZIA: Only if you don't divulge24 anything that's confidential.25 THE WITNESS: Dell -- Dell's Class B

6 (Pages 18 - 21)


CONFIDENTIAL

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1 stock, which was its tracking stock, merged into its2 Class C stock, which was the private stock, by which3 Dell went public. That transaction closed in4 December. We advised the Class B stockholders of5 Dell.6 BY MR. RELIFORD:7 Q. Do you know why Mr. Altman was personally8 involved in the Tesla transaction?9 A. Do I know why? He often gets involved

10 in -- so our more complex transactions --11 Q. So you would describe --12 A. -- because of his expertise.13 Q. What do you mean by that -- "because of14 his expertise"?15 A. In -- in advisory roles. Obviously given16 his experience, he has a tremendous amount of17 transaction experience.18 Q. Is there any sort of value floor that19 matters whether or not Mr. Altman gets involved in20 the transaction?21 MS. VENEZIA: Objection to form.22 THE WITNESS: What do you mean by "value23 floor"?24 BY MR. RELIFORD:25 Q. Do transactions have to be of a certain

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1 size before Mr. Altman gets involved?

2 A. No.

3 Q. How about the clients of transactions? Is

4 it some measure of the client's importance to the

5 firm that determines whether or not Mr. Altman is

6 going to get involved?

7 A. I'm not involved in whether he's -- you

8 know, decisions of what deals he works on or not; so

9 I wouldn't be able to answer that.

10 Q. Was this transaction the first time you

11 got to work with Mr. Francis?

12 A. No.

13 Q. What other transactions have you worked on

14 with Mr. Francis?

15 A. We had worked -- I joined Evercore in

16 February of 2016, and this deal commenced in early

17 June. So we had worked on things that hadn't

18 announced at that point and --

19 Q. The other people that you named --

20 Preston Comey, Patricia Shaw, Anand Sankaralingam,

21 Marshall Watkins, and Conner Landry -- those are all

22 people that are junior to you, correct?

23 A. Yes. Yes.

24 Q. Does Mr. Altman have any particular

25 expertise in the solar industry?

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1 A. I -- I don't know.2 Q. Does Mr. Francis have any particular3 expertise in the solar industry?4 A. Yes.5 Q. What's his -- what's the basis of his6 expertise?7 A. He was the lead book runner on the8 SunPower IPO, and I believe also covered different9 solar companies over the course of his career.

10 Q. Does Preston Comey have any particular11 expertise in the solar industry?12 A. I'm not sure.13 Q. Same question for Ms. Shaw.14 A. I'm not sure.15 Q. Same question for Anand.16 A. I'm not sure.17 Q. Same for Marshall Watkins.18 A. I'm not sure.19 Q. And Connor Landry?20 A. I'm not sure.21 Q. Who is Chuck McMullan?22 A. Oh, sorry, I should have mentioned him.23 He also was part of the deal team. He heads our24 debt advisory group at Evercore.25 Q. What does the debt advisory group do at

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1 Evercore?2 A. Advise companies on debt, capital3 structure, what types of debt they should raise, how4 to restructure debt.5 Q. Do any of the team members have any6 particular expertise in bankruptcy?7 A. No.8 Q. Other than Mr. McMullan, do any of them9 have -- do any of the team members have any

10 expertise in restructurings?11 A. No. We have a separate restructuring team12 at Evercore.13 Q. Did you consult any members of the14 restructuring team during the course of the15 engagement on the transaction?16 A. No. There wasn't a need.17 Q. When did you personally learn of the18 engagement by Tesla?19 A. I believe it was early June, 2016.20 Q. Can you pinpoint a date somewhere early21 June?22 A. I don't remember the exact date, but it23 would have been the first week of June, 2016.24 Q. What was your reaction when you learned25 about the engagement?

7 (Pages 22 - 25)


CONFIDENTIAL

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1 A. I don't know what you mean by that2 question.3 Q. How did you react when you learned about4 the engagement?5 A. How -- I still don't understand the6 question.7 Q. Were you excited?8 A. Yes.9 Q. Did it seem like a complex transaction?

10 MS. VENEZIA: Objection to form.11 THE WITNESS: When I -- when I first12 learned of the assignment, we didn't know the13 target; so --14 BY MR. RELIFORD:15 Q. When did you learn what the target was16 going to be?17 A. Probably a week later.18 Q. And how did you come to learn what the19 target was going to be?20 A. Tesla provided the name.21 Q. And the target was SolarCity, correct?22 A. SolarCity or a solar company. SolarCity23 was a company they thought was well positioned in24 the market, but the objective was to acquire a solar25 company.

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1 Q. Other than SolarCity, did Tesla direct you2 to any other solar companies by name?3 A. No.4 Q. So SolarCity was the only solar company5 that Tesla mentioned by name when it talked about6 acquiring or potentially acquiring a solar company,7 correct?8 A. Yes. But then they asked us to look at9 the solar market and evaluate what would be the most

10 attractive target for them.11 Q. Did you ever ask why Tesla wanted to12 acquire a solar company?13 A. Well, they provided the strategic14 rationale -- their view of the strategic rationale15 when we first spoke about the potential assignment.16 Q. Did you have any personal thoughts on the17 strategic rationale of Tesla acquiring a solar18 company?19 A. In my view, it's a very compelling20 combination.21 Q. Did you ask why they were interested in22 acquiring a solar company in June of 201623 specifically at that time?24 A. They also provided us with the timing25 considerations. They had just really launched the

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1 battery storage business, and the battery storage2 business is the link between the electric vehicles3 and solar. That's really what makes the whole4 strategic rationale.5 So with the launch of that business and6 SolarCity was also coming out with a solar roof,7 which obviously is a big difference than solar8 panels, that really drove the timing.9 Q. What was the status of the solar roof

10 projects in 2016 at SolarCity?11 A. It was in development, but they had a12 prototype which we were able to see over the course13 of the deal.14 Q. So was the idea to do the transaction15 before the solar roof was announced publicly?16 MS. VENEZIA: Objection to the form.17 THE WITNESS: I don't think the timing18 was -- I don't think we thought of it that way. But19 I think there's a benefit to having it launched as a20 Tesla roof, solar roof, because part of the21 synergies are with the Tesla brand and the Tesla22 consumers, right?23 BY MR. RELIFORD:24 Q. Leading up to June of 2016, SolarCity's25 stock price was on the decline, right?

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1 A. Yes.2 Q. Did the price decline of -- this3 transaction --4 (Reporter clarification.)5 Q. Did the price decline of SolarCity shares6 play a role in this -- the timing of this7 transaction?8 A. Not to my knowledge.9 Q. Did Evercore ever advise Tesla that now

10 might not be a good time to acquire a solar company11 given Tesla's business condition?12 A. I'm not sure what you mean by "Tesla's13 business condition."14 Q. Was Tesla profitable in June of 2016?15 A. No.16 Q. When was Tesla going to be profitable?17 MS. VENEZIA: Objection to the form.18 THE WITNESS: In several years.19 BY MR. RELIFORD:20 Q. It had significant issues with --21 operational issues with producing its Model X at22 scale, correct?23 A. Some issues.24 Q. It had announced that it was going to make25 a Model 3 which was a lower-priced car, correct?

8 (Pages 26 - 29)


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1 A. Yes.2 Q. What was the status of the Model 3 project3 in June of 2016?4 A. They were just launching it at the time.5 Q. So with those considerations in mind, did6 Evercore say maybe now is not the best time to buy a7 solar company?8 A. We took those factors into consideration9 in our recommendation, but there were a lot of other

10 considerations including, as I said, the fact that11 their battery storage business had really just12 launched in -- at scale and they -- the Tesla roof13 coming out and the fact that, in 2006 [sic], Elon14 said that he wanted to combine solar with EVs. So15 this was always part of their plan.16 We took into account all the factors with17 respect to timing and whether it made sense to18 acquire a solar company.19 Q. And Evercore's advice was that it made20 sense?21 A. Yes.22 (Exhibit 1 was marked for23 identification and attached24 hereto.)25 BY MR. RELIFORD:

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1 Q. Ms. McBean, the court reporter has handed

2 you what's been marked as McBean Exhibit 1.

3 A. Okay.

4 Q. For the record, it's a document email and

5 attachment marked as EVR-TESLA_223592 and continuing

6 through 223661. This email attaches one of the

7 initial draft presentations that Evercore was

8 preparing for Tesla; is that right?

9 A. Yes.

10 Q. It says "Board Discussion Materials,

11 June 17, 2006," on the cover page.

12 Do you see that?

13 A. Yes.

14 Q. At that time were you planning on --

15 MS. VENEZIA: 2016.

16 BY MR. RELIFORD:

17 Q. I'm sorry. 2016. Yeah.

18 Was there a board meeting planned for

19 June 17, 2016?

20 A. I believe it was actually held on the

21 20th, if I recall correctly.

22 Q. You ultimately met with some members of

23 management on June 17, 2016, though, correct?

24 A. Yes.

25 Q. There was one board member that was

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1 present at that meeting, right?2 A. I believe there may have been.3 Q. And who was the board member?4 A. If there were a board member present, it5 may have been Robyn Denholm, but I can't be certain.6 Q. If you go to the executive summary --7 A. Yes.8 Q. -- which is Bates-stamped 223594, it says,9 "Scorpius is indisputably the most attractive asset

10 in the solar market."11 Do you see that?12 A. Yes.13 Q. Scorpius is a code name for SolarCity?14 A. Yes.15 Q. Did you have any discussions with any16 other potential targets in the solar industry by17 this time on June 17? I'm sorry. This would be18 June 10th from this document.19 A. No. I don't -- that wouldn't have been20 appropriate.21 Q. Did you receive any nonpublic diligence on22 any other target, potential target, in the solar23 industry by June 10, 2016?24 A. On none of them including SolarCity.25 Q. At any point in Evercore's engagement in

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1 the transaction, did you have any discussions with2 any other companies in the solar industry?3 A. No.4 Q. At any point in Evercore's work on the5 transaction, did you have any -- did you engage in6 any nonpublic diligence --7 A. No.8 Q. -- with any other potential target in the9 solar industry?

10 A. No.11 Q. Why not?12 A. Because based on our analysis, SolarCity13 was the most attractive asset.14 Q. And SolarCity was the name that Tesla15 specifically provided Evercore, correct?16 A. SolarCity -- or, sorry, Tesla's view was17 that SolarCity was the most attractive asset for18 Tesla. And then -- then they asked us to -- then19 they hired an adviser to look at the market from an20 outside perspective, assess which target made the21 most sense.22 If you look at our analysis, it's pretty23 clear that SolarCity is the most attractive asset24 for Tesla because it is the clear market leader in25 residential and commercial solar. No one has near

9 (Pages 30 - 33)


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1 their market share.2 The residential piece is highly important3 for Tesla given its consumer focus. A lot of the4 other players are utility focused. They also had5 had consistent access to the capital markets. Many6 of the other companies had not. Some were7 restructuring. Some had gone into Chapter 11. And8 it was vertically integrated, which Tesla is.9 That's very important to them, that they control the

10 whole supply chain.11 Q. At this point in time in June 2016, were12 there any profitable companies in the solar13 industry?14 A. I -- I don't recall exactly. Perhaps some15 of their utility focus. I just can't remember.16 Q. Could you turn to page 4 of the17 presentation. It's Bates-stamped 223600.18 There's a bullet point down at the bottom19 that I'd like you to explain to me. I'll read it20 into the record and then just ask you sort of to21 explain it in more layman's terms, okay?22 "As the solar installation market becomes23 increasingly competitive, solar installers must24 figure out ways to avoid margin stacking and control25 soft costs at every level if they are to continue to

Page 35

1 expand cost parity in the face of expiring2 incentives."3 Do you see that?4 A. Uh-huh.5 Q. What did you mean by "continue to expand6 cost parity in the face of expiring incentives"?7 A. So this point is that vertically8 integrated companies have a more efficient cost9 structure. And in the face of potentially declining

10 incentives, regulatory incentives, solar companies11 would benefit from having a more efficient cost12 structure. Vertical integration results in more13 cost efficiencies.14 Q. So as regulatory incentives go away, it's15 more important for companies in the solar industry16 to become more cost-efficient?17 A. If they do --18 MS. VENEZIA: Object to the form.19 THE WITNESS: I mean, regulatory20 provisions are uncertain. They had been extended21 three times at that time. But in that -- in the22 face of a regulatory environment, anything you can23 do to make the business more efficient would be24 prudent.25 BY MR. RELIFORD:

Page 36

1 Q. If you go to the next page, page 5 of the2 deck, there's a graphic here that says, "92 percent3 of solar build has benefited from both state and4 federal incentives."5 Do you see that?6 A. Yes.7 Q. And the federal incentive is called ITC?8 A. Yes.9 Q. What's ITC stand for?

10 A. Investment tax credit.11 Q. There's a bullet point that says, "Growth12 has been underpinned by stacking federal incentives13 on top of some form of state level incentives."14 Do you see that?15 A. Yes.16 Q. How important was the federal ITC to17 SolarCity's business model?18 A. It was important. It is important.19 Q. The ITC is set to phase out in the coming20 years, correct?21 MS. VENEZIA: Objection to the form.22 THE WITNESS: Right now, yes.23 BY MR. RELIFORD:24 Q. Can you explain the phaseout.25 A. It declines to 26 percent in 2020; 22

Page 37

1 percent in 2021; and then in 2022, it goes to

2 10 percent for commercial utility and residential

3 leasing.

4 Q. Did Evercore do anything during the course

5 of its engagement to explore how SolarCity was going

6 to deal with the phaseout of the ITC beginning in

7 2021?

8 A. We did extensive due diligence. They

9 obviously have a huge lobbying group that is focused

10 on this 24 hours a day. As you're likely aware, in

11 December 2015, the ITC had been extended. That was,

12 I believe, the third time it had been extended.

13 They were lobbying to have it extended again. No

14 surprise. And so they -- they were obviously doing

15 what they could to get supportive government

16 incentives for solar.

17 Q. Anything else?

18 A. Any -- can you rephrase the question?

19 Q. What else was SolarCity going to do to

20 deal with the phaseout of the ITC that began in

21 2021?

22 A. It obviously affects the cost structure.

23 So to the point in the prior page, they had

24 vertically integrated making the business more

25 efficient to position themselves in case that

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1 happened.2 Q. Anything else?3 A. Not that I recall.4 Q. So they vertically integrated and then5 they planned to change the law?6 MS. VENEZIA: Object to form.7 THE WITNESS: They did not plan to change8 the law.9 BY MR. RELIFORD:

10 Q. They were going to try to change it?11 A. They were not going to try to change the12 law. They have lobbying groups as most companies13 do.14 Q. So they were going to lobby to change the15 law?16 A. They were -- they were lobbying for17 policies that support solar.18 Q. Turn to page 32 of the presentation. It's19 got the Bates stamp 223631 on it.20 (Reporter clarification.)21 Q. 31. Can you tell me what this page is,22 what it's trying to convey?23 A. This is a discounted cash flow analysis of24 SolarCity using the perpetuity growth method based25 on Wall Street research.

Page 39

1 Q. And this graph or this chart shows2 projections of SolarCity's revenue, EBITDA and3 operating income from 2016 to 2025; is that right?4 A. Yes, provided by a Wall Street analyst.5 Q. During the course of that time period,6 2016 to 2025, the ITC phaseout would take effect,7 correct?8 A. Under the current regulation, yes.9 Q. Why did you include a 10-year projection

10 period in this preliminary deck as opposed to, say,11 a 5-year projection period?12 A. For discounted cash flow analysis, the13 longer projections you have, the better. This14 analyst provided the most robust model. This is15 what -- the information that they provided. So16 that's -- that's why we ran it at 10 years.17 Q. You asked SolarCity during the course of18 diligence for 10-year projections, correct?19 A. I believe so.20 Q. Did you ever receive 10-year projections21 from SolarCity?22 A. No.23 Q. How long were the projections that you24 received from SolarCity?25 A. Through 2020.

Page 40

1 Q. So then those projections wouldn't fully2 take into account the phaseout of the ITC that we've3 been discussing, which starts in --4 A. No, but it's highly unusual to get even,5 to be honest, a 5-year model from a company. It's6 very hard for them to predict what their business is7 going to look like after several years.8 And -- can I --9 MS. VENEZIA: Go ahead.

10 THE WITNESS: I'm not sure that we asked11 for a 10-year model now that I think about it. We12 probably asked for a 5-year model, which is typical,13 but I don't -- I don't recall.14 BY MR. RELIFORD:15 Q. What analyst work was -- was used to16 create this DCF analysis?17 A. The research analyst, the Wall Street18 research? I believe it was Morgan Stanley.19 Q. Do you see these big sort of negative20 numbers and total levered free cash flows in 202121 and 2022?22 A. Uh-huh.23 Q. Is that, in effect, the phaseout of the24 ITC?25 A. Obviously I think it's also an impact of

Page 41

1 operating expenses during that time period, but I'm2 sure that ITC had some impact.3 Q. So if you based the DCF analysis on4 projections that included 2021 and 2022, that DCF5 would then reflect some impact of the phaseout of6 the ITC, correct?7 MS. VENEZIA: Objection to the form.8 THE WITNESS: The way that we ultimately9 did the DCF, the answer is not necessarily. So once

10 we went into diligence with SolarCity, they provided11 us with a cash model. So they don't look at their12 business this way. This is a research analyst's13 model.14 The way we ultimately did our analysis was15 based on the cash model that they provided us, which16 is how they see their business. It's sources and17 uses analysis. So you have sources of cash, one of18 which is tax equity financing, which is dependent on19 the ITC.20 We looked at the cash flow of a number of21 different components, which you can see in our22 presentations. And we assumed that the combination23 of those sources of cash would grow 3 to 5 percent24 in perpetuity. So we didn't make an assumption25 about the ITC -- about the ITC -- ITC at all. It

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1 didn't impact the way the DCF was conducted in the2 way that it made sense for SolarCity's business3 model.4 BY MR. RELIFORD:5 Q. There's a lot there, so I'm going to try6 and unpack it and see if I understand.7 A. Uh-huh.8 Q. You used a sources and uses model to build9 the DCF valuation, correct?

10 A. Yes.11 Q. The sources in the terminal year of the12 model included revenues from tax credit financing,13 ITC financing?14 A. Cash. Not revenue. Cash.15 Q. It can be cash from ITC financing?16 A. Some portion of the tax equity.17 Q. Which would still be there in 2020, right?18 A. Yes.19 Q. But begins to phase away in 2021, right?20 A. It doesn't phase away. It declines,21 right.22 Q. For residential it phases away completely,23 right?24 MS. VENEZIA: Objection to form.25 THE WITNESS: Not -- not for leasing. For

Page 43

1 leasing it's still 10 percent. So SolarCity, if2 they sell a system to a consumer under lease, it's3 still 10 percent. For the consumer, the consumer4 themselves, if they purchase a solar system, it's5 zero in 2022.6 So -- and they also have commercial7 systems. So for them the -- the tax equity will not8 go to zero. And it's a source of cash in the model9 among a number of different sources of cash. We

10 took, as I said, the sum of all the sources of cash11 and grew it at 3 to 5 percent in perpetuity, which,12 for, you know, that type of cash flow is a very13 conservative growth rate.14 BY MR. RELIFORD:15 Q. Let's put a pin on the ITC and pivot to16 the perpetuity growth rate. Turn to page 31 of the17 presentation.18 I believe you said earlier that 3 to19 5 percent is very conservative, correct?20 A. For the cash flow, yes.21 Q. This initial analysis was done at 1 to22 3 percent, correct?23 A. Yes.24 Q. And it resulted in a DCF valuation based25 off the Morgan Stanley model of $19 to $35; is that

Page 44

1 correct?

2 A. Yes, yes.

3 Q. You personally had them change this to 3

4 to 5 percent, correct?

5 MS. VENEZIA: Objection to the form.

6 THE WITNESS: I'm not sure what you mean

7 by the question.

8 BY MR. RELIFORD:

9 Q. You got a copy of this deck, right?

10 A. Pardon?

11 Q. You got a copy of this deck --

12 A. Yes.

13 Q. -- right? You told your team to change

14 the perpetuity growth rate from 3 to 5 percent?

15 A. Yes.

16 Q. Why?

17 A. Because this is a very high growth

18 company. At the time it was, you know, growing in

19 the mid-30s. It was expected to continue to grow.

20 And we, from our perspective, centering the

21 perpetuity growth rate around nominal GDP, which was

22 between 3 to 4 percent, made sense.

23 Q. So based off of the company's historic

24 ability to grow, you felt 3 to 5 percent was more

25 appropriate than 1 to 3 percent?

Page 45

1 A. Projected growth.2 Q. Yes, that's my question.3 A. You said historical.4 Q. Right.5 A. We based it on the projected growth of the6 business and looked at nominal GDP.7 Q. I think your answer before was because8 this is a very high growth company, at the time you9 know it was growing in the mid-30s.

10 A. And was expected to continue to grow, I11 believe I said.12 Q. So that's looking at the past results of13 growth and then saying we're expecting it to14 continue to grow?15 MS. VENEZIA: Objection to the form.16 THE WITNESS: Well, you know, the past is17 obviously an actual number, right? We looked at18 both. But obviously the projections are -- the19 projected growth is also important. That's the20 determining factor really in looking at a growth21 rate.22 BY MR. RELIFORD:23 Q. And you based that move from 1 to24 3 percent to 3 to 5 percent in this early June time25 period without any diligence or -- strike that.

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1 All you had at the time when you made that2 suggestion to move from 1 to 3 percent to 3 to3 5 percent was publicly available information about4 SolarCity, correct?5 A. And the solar -- SolarCity and the solar6 industry.7 Q. You found out during diligence that there8 are various issues that were going to affect9 SolarCity's ability to grow, correct?

10 A. Yes.11 Q. One of them being its liquidity issues,12 correct?13 A. Yes.14 Q. Why didn't you ever revisit the 3 to15 5 percent PGR after diligence?16 A. We did. We look at all of our assumptions17 throughout the course of any deal.18 The liquidity concern went into our view19 of valuation. And it was, you know, our impression20 or our understanding that the liquidity concerns21 were also caused by the timing of Tesla's offer.22 SolarCity had always had access to the23 capital markets, had very successfully financed24 itself for many years, and were the -- under the25 impression that they would continue to do so, but

Page 47

1 there obviously were liquidity concerns, which we2 diligenced. We notified the board. We had many3 board discussions regarding those issues. We4 ultimately took that into our valuation analysis and5 recommendation.6 Q. Did anyone on the Evercore team ever7 suggest decreasing the PGR in light of what you8 discovered during diligence?9 A. As I said, we discuss all of our

10 assumptions thoroughly, not only as the deal team,11 but with a fairness committee that does hundreds of12 fairness processes each year. And we went through13 each of the assumptions and agreed that a 3 to14 5 percent perpetuity growth rate still made sense.15 Q. So the deal team working with the fairness16 committee came to the conclusion that 3 to 5 percent17 still made sense even after everything you18 discovered during diligence?19 A. Yes.20 Q. Lazard represented SolarCity; is that21 correct?22 A. Yes.23 Q. Lazard used the 1 to 3 percent perpetuity24 growth rate; isn't that correct?25 A. I believe so.

Page 48

1 Q. They came up with DCFs that were generally2 lower than the valuation, the DCF valuations that3 Evercore came to; is that correct?4 A. Yes, but they also used an unlevered5 discount cash flow. And as I described earlier, we6 used a levered discounted cash flow analysis.7 Q. Did you think --8 A. It's apples to oranges.9 Q. Did you think it was appropriate to use a

10 levered free cash flow analysis as opposed to an11 unlevered free cash flow analysis?12 A. Yes.13 Q. Why was it appropriate here to use a14 levered free cash flow analysis as --15 A. Because it --16 MS. VENEZIA: Let him finish.17 BY MR. RELIFORD:18 Q. -- as opposed to an unlevered free cash19 flow analysis?20 A. Because a significant amount of the value21 in the SolarCity business is the cash financing,22 including tax equity, cash equity. And if you look23 at the business on an unlevered basis, you don't24 take into account any of that financing.25 They monetize every aspect of their

Page 49

1 business. And that's a huge component of value. So2 the way that we did it captured that value. If you3 look at it in an unlevered way, you don't capture4 that value.5 Q. Why did Lazard use an unlevered free cash6 flow?7 A. I -- I can't say why they took a certain8 valuation approach. We didn't have any discussions9 about valuation with them.

10 Q. I just want to make sure I understand that11 last answer.12 During the course of Evercore's engagement13 by Tesla, you had no conversations about valuation14 with Lazard, the financial adviser to SolarCity?15 A. About --16 MS. VENEZIA: Objection to form.17 THE WITNESS: -- our valuational analysis18 and our valuation analysis in the assumptions, no.19 BY MR. RELIFORD:20 Q. Is that normal?21 A. Yes.22 Q. And so it's in light of the heavy23 importance of financing transactions to SolarCity's24 business model that makes a levered free cash flow25 analysis a more appropriate analysis, in your

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1 opinion?

2 A. Yes.

3 (Exhibit 2 was marked for

4 identification and attached

5 hereto.)

6 BY MR. RELIFORD:


8 you what's been marked as Exhibit 2 in this

9 deposition. For the record, it's a document -- or

10 an email and attachment beginning at

11 EVR-TESLA_162339 and continuing through 162434.

12 So this is an analysis that you circulated

13 to your team on June 6, 2016, correct? Or rather a

14 presentation deck that you circulated to your team?

15 A. Correct.

16 MS. VENEZIA: June 16th you said, right?

17 Yes, confirmed, June 16th?

18 MR. RELIFORD: Can we go off the record

19 for a second?

20 MS. VENEZIA: Sure.

21 MR. RELIFORD: It will be quick.

22 THE VIDEOGRAPHER: Going off the record.

23 The time is 10:25 a.m.

24 (Off the record discussion.)

25 THE VIDEOGRAPHER: Back on the record.

Page 51

1 The time is 10:26 a.m.

2 MR. RELIFORD: For the purpose of the

3 record, the timestamp on this email is 7:36:44

4 seconds p.m., which would be Greenwich Mean Time and

5 would be 12:36:44 p.m. West Coast time, which is

6 something that counsel for Evercore and I have

7 agreed on, correct?

8 MS. VENEZIA: Confirm that the documents

9 were produced using Greenwich Mean Time.

10 MR. RELIFORD: But solely for top emails?

11 MS. VENEZIA: Yes.

12 MR. RELIFORD: Okay.

13 Q. You note that there's a meeting tomorrow,

14 which would be June 17th, correct?

15 A. Correct.

16 Q. And that was the meeting with Tesla

17 management and one board member, correct?

18 A. Yes.

19 Q. So you had another six days to work on

20 this presentation deck, correct?

21 A. From this version?

22 Q. From McBean Exhibit 1.

23 A. Yes.

24 Q. Could you turn to page 31 of the deck.

25 What is this page trying to convey?

Page 52

1 A. This is SolarCity's historical and2 projected financials from the Wall -- the Morgan3 Stanley research analyst model.4 Q. The top line in -- or the top row in this5 chart is "Deployed Projects MW."6 "MW" is megawatts?7 A. Megawatts of solar energy.8 Q. Why would you look at deployed projects in9 terms of megawatts when talking about the projected

10 financials of a solar company?11 A. Because the business is generated off of12 megawatts deployed. So that's -- that's the basis13 for the financial model is how many megawatts a14 company deploys.15 Q. And if you look across the row of deployed16 projects in megawatts, growth begins to taper in17 about 2017; is that right?18 A. It looks like 2018. Are you looking based19 on megawatts?20 Q. Megawatts between 2017 and 2018.21 A. Looks like 2018.22 Q. 22 and a half percent growth in 2018,23 right?24 A. Yes.25 Q. And then 17 and a half percent in 2019?

Page 53

1 A. Yes.2 Q. And then 15 percent in 2020?3 A. Yes.4 Q. And then 12 and a half percent in 2021?5 A. Yes.6 Q. And then zero in 2022; is that right?7 A. Yes.8 Q. And then it picks up to 10 percent in 20239 but drops below 10 percent for the rest of the

10 projection period, right?11 A. Yes.12 Q. All right. Why is that happening?13 A. This is --14 MS. VENEZIA: Objection to the form.15 THE WITNESS: -- one research analyst's16 model.17 BY MR. RELIFORD:18 Q. A research analyst you chose to put in19 this deck, right?20 A. Yes.21 Q. Okay. Why does growth sort of fall off in22 2021?23 A. The reduction in the ITC is part of it.24 But as to what exactly went into the assumptions25 behind the model, we don't have access to.

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1 Q. Can you turn to page 40. I'm sorry.2 Let's start at 39. This is an overview of valuation3 methodologies that Evercore was using at this period4 in time to value SolarCity, correct?5 A. Correct.6 Q. And that's based off of publicly-available7 information, correct?8 A. Correct.9 Q. There is a discounted equity value

10 analysis that you guys did here, right?11 A. Yes.12 Q. And the other was a consideration of the13 lack of direct comparables.14 Do you see that?15 A. Yes.16 Q. And then another consideration requires17 assumptions around when the business will achieve18 steady state.19 Do you see that?20 A. Yes.21 Q. What did you mean by "lack of direct22 comparables"?23 A. There were no publicly-traded companies24 that were precisely comparable to SolarCity.25 Q. That includes other solar companies,

Page 55

1 right?2 A. Yes.3 Q. So even in the solar industry, SolarCity4 was a snowflake special unto itself?5 A. As I said earlier, they were the market6 leader. They were more focused on residential. The7 other public companies were more utility focused. A8 very different business model.9 Q. You didn't include a discounted equity

10 value in the final fairness opinion that you gave,11 correct?12 A. No.13 Q. And that -- part of that was because of14 the lack of direct comparables, correct?15 A. That was part of it, yes.16 Q. Any other reason?17 A. Once we went into diligence, we determined18 that the discounted cash flow model was the best way19 to look at the business. It's a cash-generating20 business, right? You look at cash in, cash out,21 sources and uses of cash.22 The discounted equity value is a23 profitability analysis; so you're looking at a time24 period in the future when the company is profitable25 and then discounting that value back.

Page 56

1 We didn't think that was appropriate for2 SolarCity after we diligenced how they financed3 themselves and how they run the business.4 Q. So based off of your diligence, Evercore5 came to the conclusion that a DCF analysis was the6 best way to value SolarCity, correct?7 A. It was one of the best ways -- one of the8 primary ways to value SolarCity.9 Q. Page 40 is what we refer to as a football

10 field, correct?11 A. Yes.12 Q. It has a 10-year DCF analysis there.13 Do you see that?14 A. Yes.15 Q. And that has a 11 to 13 percent cost of16 equity, correct?17 A. Yes.18 Q. And that was based off of19 publicly-available information at the time that you20 derived this cost of equity, correct?21 A. Yes.22 Q. The perpetuity growth rate here is only23 2 to 4 percent.24 Do you see that?25 A. Yes.

Page 57

1 Q. And it results in a DCF range of $22 a

2 share to $37 a share, right?

3 A. Yes.

4 Q. And so now the DCF range with this 2 to

5 4 percent PGR has moved the DCF valuation above the

6 current share price, right?

7 A. Yes.

8 Q. Why was it 2 to 4 percent in this deck?

9 A. At the time we thought it was more

10 appropriate based on the public information that we

11 had.

12 As we did more work around the public

13 information of SolarCity and the industry, we became

14 more comfortable with 3 to 5 percent.

15 Q. So on June 10, your team prepares a deck

16 with a 1 to 3 percent PGR, right?

17 A. Yes.

18 Q. You say, no, 3 to 5 percent, right?

19 A. Uh-huh.

20 Q. Or six days later, the deck is at 2 to

21 4 percent, right?

22 What happened in those intervening days

23 where 3 to 5 wasn't followed but 2 to 4 was?

24 A. I can't recall.

25 MS. VENEZIA: Justin, we have been going

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1 about an hour. Good time for a break, or do you2 want a couple more questions on this document?3 MR. RELIFORD: We can take a break.4 MS. VENEZIA: Okay.5 THE VIDEOGRAPHER: Going off the record.6 The time is 10:36 a.m.7 (Recess.)8 (Time off record: 10:36 a.m.)9 (Time back on record: 10:49 a.m.)

10 THE VIDEOGRAPHER: Back on the record.11 The time is 10:49 a.m.12 BY MR. RELIFORD:13 Q. Sorry. The top one is for you.14 A. Take one.15 Q. Take one and pass it.16 A. Thank you. Are we done with this or --17 Q. You can put that one away.18 A. Okay.19 (Exhibit 3 was marked for20 identification and attached21 hereto.)22 BY MR. RELIFORD:23 Q. Ms. McBean, the court reporter has handed24 you what's been marked Exhibit 3 in this deposition.25 It's a continuation of the email that you sent on

Page 59

1 June 16 around 12:37 p.m.

2 A. Okay.

3 Q. Do you see that?

4 On the second page of the document, you

5 write to Timothy LaLonde?

6 A. Yes.

7 Q. "I just tried calling you. The plan has

8 changed a little bit. Tomorrow morning we are

9 meeting with the CFO, GC, their teams, and one board

10 member. On Monday morning, we are meeting with the

11 full board. Give me a call if you have a chance to

12 discuss."

13 Do you see that?

14 A. Yes.

15 Q. Who is Timothy LaLonde?

16 A. He chairs our fairness committee.

17 Q. Why were you calling Mr. LaLonde?

18 A. Before we present any financial analysis

19 to a client, and in particular a board, we go over

20 the assumptions of the analysis with our fairness

21 committee. And the board meeting had changed from

22 Friday to Monday; so I wanted to talk to him about

23 the timing and when we needed to go to committee and

24 present our -- go over our analysis.

25 Q. So on the 17th, did you, in fact, meet

Page 60

1 with the CFO of Tesla?2 A. Yes.3 Q. And who was that?4 A. Jason Wheeler.5 Q. Did you meet with the GC of Tesla?6 A. Yes.7 Q. Who was that?8 A. Todd Maron.9 Q. You mentioned "their teams." What other

10 people were there on the 17th from their teams?11 A. I believe Justin McAnear may have been12 there from Jason's team. He's in the finance team.13 Phil Rothenberg could have been there. He's on the14 legal team. Susan Repo may have been there. She's15 the treasurer. I can't remember exactly who was at16 that meeting.17 Q. And again you reference one board member;18 is that right?19 A. Yes.20 Q. Do you have any recollection of who that21 was?22 A. I believe it was Robyn Denholm.23 Q. Do you know why Ms. Denholm joined the24 meeting?25 A. I think in her capacity as board member.

Page 61

1 Q. Why her and no other board members?2 A. I don't recall.3 Q. On the first page of the document, you4 write to Stuart Francis, "Do we want to send the5 book to Eduardo or Will?"6 Do you see that?7 A. Yes.8 Q. Who are Eduardo and Will?9 A. They are two other people on our fairness

10 committee, the standing fairness committee at11 Evercore. And as you can see in Tim's email, he's12 basically saying he's not available and can you13 review the analysis with Eduardo or Will.14 Q. You go on, "I can explain the15 circumstances to you when you have a few minutes."16 What were the circumstances that you need17 to explain to Mr. Francis?18 A. The change in the timing.19 Q. Why did the timing change?20 A. I don't recall.21 (Exhibit 4 was marked for22 identification and attached23 hereto.)24 BY MR. RELIFORD:25 Q. Ms. McBean, the court reporter has handed

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1 you what's been marked as Exhibit 4 in the

2 deposition. It's an Evercore's presentation

3 beginning at Bates stamp TESLA DIR_87 and continuing

4 through TESLA DIR_186.

5 This is the deck that you sent to Tesla in

6 advance of the June 17th meeting, correct?

7 A. I'm not sure based on what you've provided

8 to me.

9 Q. I'll represent that this was produced by

10 Tesla. All right?

11 A. Okay.

12 Q. All right. And if Tesla had an Evercore

13 presentation that it produced, presumably you guys

14 gave it to them, right?

15 A. Yes.

16 Q. Can you turn to page 32 of the deck?

17 A. Okay.

18 Q. It's a projected cash flow statement here.

19 Do you see that?

20 A. Yes. Yes.

21 Q. The row that says "Financing Cash Flow."

22 A. Yes.

23 Q. Do you see that?

24 A. Yes.

25 Q. Do you agree that financing -- or cash

Page 63

1 flow from financing begins to taper around 2020?

2 A. According to this model, yes.

3 Q. This is the same Morgan Stanley model?

4 A. Yes.

5 Q. And that tapering is, in part, due to the

6 phaseout of the ITC, correct?

7 MS. VENEZIA: You can't mark up that.

8 It's the original.

9 THE WITNESS: Oh, I can't? Sorry. Sorry.

10 MS. VENEZIA: It's okay.

11 MR. RELIFORD: I once deposed Phil

12 Rothenberg who had a nervous tick. He would mark up

13 every exhibit. I go "Stop."

14 THE WITNESS: According to the model, it

15 looks like a number of items are declining over this

16 time period.

17 Again, this is the Morgan Stanley model.

18 I'm not sure what drove all of their assumptions,

19 but if you look at the line items, it looks like

20 it's attributed to a number of different items.

21 BY MR. RELIFORD:

22 Q. Look on page 38 of the deck. This is a

23 slide titled "Project -- Projected Financing Needs."

24 Do you see that?

25 A. Yes.

Page 64

1 Q. What are you trying to convey in this2 slide?3 A. The cash needs of the business.4 Q. The top line in the graph shows cash flow5 from financing.6 Do you see that?7 A. Yes.8 Q. And 2019 and 2020, it's at 2.4. That's a9 billion dollars, right?

10 A. Correct.11 Q. And then the bottom line is -- or the12 lighter color line is cash flow from operations in13 investing.14 Do you see that?15 A. Yes.16 Q. And 2019 and 2020, that's also at 2.4.17 Do you see that?18 A. Yes. Yes.19 Q. And over the same period of time, it looks20 like megawatt deployment is going up; is that right?21 A. Yes.22 Q. So can you explain to me why, if megawatt23 deployment is going up, cash flow from financing is24 sort of remaining steady as is cash flow from25 operations and investing?

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1 A. Again, this is the Morgan Stanley2 financing assumptions. Over that time period,3 the -- I'm assuming there are many different4 components of what they are considering for cash5 flow from financing.6 Q. Why do you include a slide like this in7 the deck?8 A. It illustrated SolarCity's financing needs9 over the next several years.

10 Q. These cash flow from operation and11 investing, they're all in parentheses. Those are12 negative numbers, right?13 A. Correct, those are outflows.14 Q. So in 2019 - 2020, as megawatt deployment15 goes up, cash flows remain around the same, right?16 A. According to the Morgan Stanley model.17 Q. What do you read into that about the18 ability to generate free cash flows by improving19 megawatt deployment?20 A. I can't speak to what the research analyst21 was basing his assumptions on, but both the cash22 flow from operations and investing and the cash flow23 from financing are constant. Sometimes you see24 research analysts take a conservative view and just25 assume that if it -- a line item like that won't

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1 grow.2 I don't know if that's -- that's the3 approach he took -- or he or she. He.4 Q. So is it fair to say that, based on the5 Morgan Stanley model that you were looking at, even6 if SolarCity was deploying more megawatts, it wasn't7 necessarily generating more free cash?8 A. I believe that's correct.9 Q. If you can turn to page 40 of the deck,

10 this is another football field; is that right?11 A. Yes.12 Q. You have a 10-year discounted cash flow13 analysis there at the top.14 Do you see that?15 A. Yes.16 Q. The growth rate -- excuse me. The17 perpetuity growth rate is now at 3 to 5 percent.18 Do you see that?19 A. Yes.20 Q. What changed or what additional analyses21 did Evercore do between June 16 when we looked at22 Exhibit 2 and June 17 that would cause it to change23 the PGR from 2 to 4 percent to 3 to 5 percent?24 A. As I said before, we looked at the growth25 rate projected and historical of SolarCity. We

Page 67

1 looked at the growth rate of the industry. We

2 discussed it with our fairness committee. And based

3 on nominal GDP, which was between 3 and 4 percent at

4 that time, we thought a growth rate around nominal

5 GDP was appropriate.

6 Q. That is a very similar answer to what you

7 told me about the 2 to 4 percent, right?


9 THE WITNESS: I don't believe so.

10 BY MR. RELIFORD:

11 Q. I'm trying -- so I'm just trying to

12 understand this change that happened in the deck

13 overnight -- 2 to 4 to 3 to 5.

14 A. Uh-huh.

15 Q. All right? Was there any specific

16 information that you uncovered that caused that

17 change from 2 to 4 percent to 3 to 5 percent?


19 Asked and answered.

20 THE WITNESS: As we prepare all of our

21 decks, we go through our assumptions in detail as a

22 deal team and then with our fairness committee. We

23 often change assumptions through that process to

24 make sure that we get to assumptions that we all

25 feel comfortable with. That happened here just as

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1 it does in every deal.2 BY MR. RELIFORD:3 Q. Did your fairness committee tell you to4 change it from 2 to 4 to 3 to 5?5 A. I don't believe so.6 Q. Did anyone in particular, to the best of7 your recollection, suggest the change from 2 to 4 to8 3 to 5?9 A. Any -- what do you mean by "anyone"?

10 Q. We went through a list of deal team11 members --12 A. Yes.13 Q. -- right?14 Was there one person that said, "Hey, move15 2 to 4 to 3 to 5. Let's get together and discuss16 it"?17 A. I don't recall, but any -- any assumption18 that we ultimately make is discussed as a team and19 agreed to as a team. So even if one person were to20 suggest that that made the most sense, it would be21 discussed not only with the deal team but also with22 the fairness committee.23 Q. Okay. To the best of your recollection,24 what discussions do you remember for moving this25 from 2 to 4 to 3 to 5 before it went to the -- to

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1 Tesla?2 A. I don't recall.3 Q. You have here a -- some of the parts4 valuation.5 Do you see that?6 MS. VENEZIA: What page are you on,7 Justin?8 THE WITNESS: On 40?9 BY MR. RELIFORD:

10 Q. On page 40.11 A. Yes.12 Q. It results in a valuation of $53 per share13 to $61 per share.14 Do you see that?15 A. Yes. Yes.16 Q. The stock was trading at $21 a share.17 Do you see that?18 A. Yep.19 Q. Why is the sum of the parts analysis so20 much higher than the share price?21 A. Oftentimes when you look at a business,22 the sum of the parts can be higher than the value of23 the whole company. Here, that was the case. If you24 looked at the DevCo piece versus a PowerCo piece25 separately, it came out to a higher value.

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1 Q. Go to page 47 of the deck. This graph2 depicts the performance of SolarCity share price; is3 that right?4 A. Yes.5 Q. Is it fair to say that every time6 SolarCity lowered guidance, the stock price dropped?7 A. Yes. As is typical for most companies.8 Q. So when a company lowers guidance, it's9 typical to see the profits decline?

10 A. Yes.11 Q. On May 3rd, 2016, there's an entry12 "Announces first cash equity offering."13 Do you see that?14 A. Yes.15 Q. What did you mean by that?16 A. It's another form of financing that they17 had issued with John Hancock.18 Q. And six days later they announced lower19 fiscal year 2016 installation guidance, right?20 A. Yes.21 Q. And the cash equity financing --22 announcement of the cash equity financing didn't23 result in an increase in share price, right?24 A. No.25 Q. Is there anything you read into that as an

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1 investment banker?2 A. Obviously there are other factors in3 market prices, and I don't recall exactly what was4 happening around that time. I know Brexit happened5 sometime in this time frame. I'm not sure. I can't6 remember the exact date, but I would have to look at7 exactly what was happening in the market at that8 time.9 Q. How would Brexit affect SolarCity's share

10 price?11 A. Brexit would affect a lot of companies'12 shareholder prices because it provides -- it adds13 uncertainty into the market.14 Q. Does SolarCity do a lot of business in15 England?16 A. No. That's -- but it -- even companies17 that aren't exposed to the UK would be affected by18 an event like Brexit, just like 9/11 affected a lot19 of different markets around the world.20 Q. Turn to page 54 of the deck, please.21 Page 54 is an accretion and dilution22 analysis that includes synergies, correct?23 A. Correct.24 Q. It's based off of earnings per share; is25 that correct?

Page 72

1 A. Yes.2 Q. You estimate -- or Evercore's belief was3 that the transaction would be dilutive in 2019 and4 2020 based off of earnings per share, correct?5 A. Based on this Wall Street research6 analyst, correct.7 Q. Did Evercore ever conduct an analysis that8 it provided to Tesla that said the transaction would9 be accreted on an earnings per share basis?

10 A. During the course of the deal? I don't11 recall.12 Q. Why is earnings per share relevant when13 looking at a deal? Or earnings per share accretion14 and dilution, why is that relevant when looking at a15 transaction?16 A. It's one of the factors that companies17 consider when they're looking to acquire a company.18 Q. Does Evercore usually include an accretion19 and dilution analysis in its materials to a board20 when advising an owner transaction?21 A. Yes.22 Q. Evercore didn't include an accretion and23 dilution analysis in its final fairness presentation24 to the Tesla board, correct?25 A. It's not typical to include an accretion

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1 and dilution in every fairness opinion. The primary2 analysis obviously is whether the transaction is3 fair, and that includes, you know, more -- the4 valuation analysis of the companies. Sometimes we5 include accretion and dilution and sometimes we6 don't. It depends on the transaction.7 Q. Well, what -- is there any rubric that you8 use for when you include one and when you don't?9 A. We include it -- typically when we do

10 include it, it's -- again, it's not part of the11 fairness analysis. It's included kind of in the12 front part of our deck as a data point, but it13 doesn't go into whether the transaction is fair.14 And that's why you don't see it.15 Q. Did the board -- or during the course of16 the transaction, did you discuss EPS dilution with17 the Tesla board?18 A. Yes.19 Q. What was their reaction when you had those20 discussions?21 A. I don't recall.22 Q. Did you ever tell them that this23 transaction was going to be accreted on an earnings24 per share basis?25 A. I don't recall.

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1 (Exhibit 5 was marked for2 identification and attached3 hereto.)4 BY MR. RELIFORD:5 Q. The court reporter has handed you what's6 been marked as Exhibit 5 in this deposition.7 Do you recognize this as the proxy for the8 transaction?9 A. Yes.

10 Q. There was a joint proxy statement issued11 to Tesla and SolarCity shareholders, correct?12 A. Yes.13 Q. Did you have a chance to review the proxy14 before it went public?15 A. Yes.16 Q. Did you review the entire proxy or were17 there just certain portions of the proxy that you18 reviewed?19 A. We were provided with drafts of the proxy,20 and I reviewed all of it.21 Q. Did you ever say, hey, that's wrong, to22 anything in the proxy, the drafts that you saw?23 A. We always review the background of the24 merger and, in particular, the description of our25 fairness opinion, and there are often mistakes. I'm

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1 sure there were things we corrected here that the2 lawyers didn't understand based on our analysis.3 Q. Okay. Turn to page 47 of the proxy.4 Page 47 at the bottom has a paragraph5 under the heading, "The Merger may not be accretive6 and may cause dilution to Tesla's earnings per7 share."8 Do you see that?9 A. Yes.

10 Q. It says, "Tesla currently anticipates that11 the merger will be accretive to earnings per share12 in 2016."13 Do you see that?14 A. Yes.15 Q. That's not information you provided to16 Tesla, correct?17 MS. VENEZIA: Objection to the form.18 THE WITNESS: I don't -- I don't believe19 so.20 BY MR. RELIFORD:21 Q. Do you know where Tesla got the idea that22 this share -- transaction would be accretive to23 earnings per share in 2016?24 A. Companies do their own analyses of what25 they will do with a company they acquire once they

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1 own it and make assumptions of accretion and

2 dilution based on how they are going to operate the

3 company, how they are going to run the company under

4 their ownership.

5 Q. But every analysis that you gave Tesla was

6 that the transaction would be dilutive, correct?

7 A. That analysis was based on the public

8 company Morgan Stanley model. This analysis was

9 after diligence. I imagine it's in the proxy. It

10 was after a significant amount of due diligence

11 where they were able to learn and understand the

12 synergies that they would be able to realize.

13 Q. So when you reviewed the proxy, you didn't

14 say anything, hey, our EPS accretion and dilution

15 analysis showed dilution?

16 A. No.

17 Q. You can set the proxy aside. You might

18 want to keep it handy, though.

19 What did you do at the June 17, 2016

20 meeting with Jason Wheeler and Todd Maron and their

21 teams?

22 A. We discussed the board meeting on Monday

23 and the topics that we wanted to cover.

24 Q. What were the topics that you wanted to

25 cover?

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1 A. Our assessment of the solar industry, a2 review -- which included a review of potential3 targets in the solar industry. Our review on what4 the most attractive asset would be for Tesla and5 analysis around what a potential transaction would6 look like between Tesla and that asset.7 Q. Prior to the June 20th meeting,8 Evercore -- strike that.9 Prior to the June 20th meeting, Elon Musk

10 received an advance copy of Evercore's presentation11 materials, correct?12 A. Yes.13 Q. Why did Elon Musk receive an advance copy?14 A. We often provide copies to management15 teams before board meetings. It's very common.16 Q. Was it your understanding that he would be17 receiving advance copies of all the materials going18 to the board throughout this process?19 A. I don't know if it was -- there was a set20 process like that, but from time to time he did21 receive copies of our presentations in advance of22 the board meetings.23 Q. Tell me more about "from time to time."24 Was it -- do you remember any presentation decks25 that you said, hey, don't show this to Elon. It's

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1 only for the board?2 A. No.3 Q. Do you know of any specific decks that4 Mr. Elon -- or Mr. Musk -- strike that.5 Do you know of any specific presentations6 that were not shared with Elon Musk prior to being7 given to the board?8 A. I don't recall.9 Q. There was a time before the June 20th

10 meeting that you were expecting comments from11 Mr. Musk on the deck before it went to the board,12 correct?13 A. I don't believe so.14 Q. You'd agree with me that Mr. Musk had a15 conflict of interest when it came to the16 transaction, correct?17 MS. VENEZIA: Objection to the form.18 MS. LAVELY: Join.19 THE WITNESS: I'm not going to comment on20 that. That's a legal matter.21 BY MR. RELIFORD:22 Q. You don't want to do that. You're23 familiar with what a conflict of interest is,24 correct?25 A. Yes.

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1 Q. How would you define a conflict of2 interest?3 MS. VENEZIA: Objection to the form.4 She's not here as an expert witness nor here in a5 legal capacity. She's here as a 30(b)(6) witness on6 behalf of Evercore.7 If you have any lay understanding you can8 provide that, but that's --9 THE WITNESS: He was a significant

10 shareholder of SolarCity.11 BY MR. RELIFORD:12 Q. In your opinion, did Mr. Musk have a13 conflict of interest when it came to this14 transaction?15 MS. VENEZIA: Same objection.16 MS. LAVELY: Join.17 THE WITNESS: I don't have an opinion18 on -- on his conflicts or lack of conflicts.19 BY MR. RELIFORD:20 Q. He recused himself from a vote on the21 transaction?22 A. Yes.23 Q. Would he need to recuse himself if he24 didn't have a conflict of interest?25 A. No.

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1 MS. VENEZIA: Objection to the form.2 MS. LAVELY: Join.3 MR. RELIFORD: We can agree that an4 objection for one is an objection for all. How does5 that sound?6 MS. VENEZIA: I'm fine with that.7 MS. LAVELY: Sure.8 BY MR. RELIFORD:9 Q. Why did Elon Musk recuse himself from the

10 vote --11 MS. VENEZIA: Objection.12 BY MR. RELIFORD:13 Q. -- on this transaction?14 MS. VENEZIA: Objection to the form.15 THE WITNESS: Because he was a significant16 shareholder of SolarCity and on the board.17 BY MR. RELIFORD:18 Q. Chairman of the board of SolarCity,19 correct?20 A. Yes.21 Q. Founder of SolarCity, correct?22 MS. VENEZIA: Objection to the form.23 THE WITNESS: I don't know if he's24 technically a founder of SolarCity.25

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1 BY MR. RELIFORD:2 Q. He didn't found the company with his3 cousins --4 A. Lyndon and Peter definitely are founders.5 Elon was an investor. I'm not sure -- I -- I just6 don't know if he was actually a founder or not. As7 you know, he's not a founder -- founder of Tesla.8 Q. So in your lay understanding of --9 A. Yes.

10 Q. -- what a conflict of interest is?11 A. Yes.12 Q. He had a significant ownership stake in13 SolarCity. The fact that he's a chairman of the14 board, the fact that his cousins founded the15 company, you don't think he had a conflict?16 MS. VENEZIA: Objection to the form.17 THE WITNESS: Yes, he did have a conflict18 of interest.19 BY MR. RELIFORD:20 Q. Were there any special precautions that21 Evercore took in light of Mr. Musk's conflict of22 interest?23 A. We all put in place the systems by which,24 you know, Elon recused himself from board meetings25 where we were discussing terms of the transaction

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1 and making decisions on the transaction. He was2 recused from those discussions.3 Q. Given his apparent conflict of interest,4 would it be appropriate for Elon Musk to make5 comments on Evercore's materials before they went to6 the board?7 A. I don't believe he did. I don't recall8 him ever providing comments to us.9 (Exhibit 6 was marked for

10 identification and attached11 hereto.)12 BY MR. RELIFORD:13 Q. The court reporter has handed you what's14 been marked as Exhibit 6 in this deposition,15 Ms. McBean. These are June 20, 2016 minutes of a16 special meeting of the board of directors of Tesla17 Motors, Inc.18 Do you see that?19 A. Yes.20 Q. And you -- have you ever seen these21 minutes before?22 A. No.23 Q. It has here as being present at the24 meeting Mr. Altman, Mr. Francis and yourself. Do25 you see that?

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1 A. Yes.2 Q. And this is a telephonic board meeting,3 correct?4 A. I believe so.5 Q. Were you physically there at Tesla or did6 you join by phone?7 A. I can't recall.8 Q. Some of the more junior members of your9 team participated by phone, correct?

10 A. I believe so.11 Q. That would include Marshall Watkins,12 correct?13 A. I don't recall.14 Q. How about Anand?15 A. I don't recall.16 Q. Do you take notes at board meetings?17 A. Not typically.18 Q. Why not?19 A. I don't need to.20 Q. Memory like a steel trap?21 A. Not a steel trap, but --22 Q. That's a real question. Why don't you23 need to take notes at board meetings?24 MS. VENEZIA: Objection. Asked and25 answered.

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1 THE WITNESS: I just typically don't. I2 don't need to.3 BY MR. RELIFORD:4 Q. This was the first time that the Evercore5 team was meeting with the board of directors of6 Tesla, correct?7 A. Correct.8 Q. Mr. Musk participated in the conversation9 to a certain point in time before he left, correct?

10 A. Correct.11 Q. On page 3 there's a note, "The directors12 also discussed extensively with Evercore the13 financial, credit and indebtedness profile of14 SolarCity and of a potential brand -- of a potential15 combined company, SolarCity's ability to meet its16 current and future debt obligations and financing17 needs, as well as the company's market valuation18 relative to its net asset base."19 Do you see that?20 A. Yes.21 Q. Is that an accurate description of some of22 the stuff you discussed?23 A. Yes.24 Q. What did Evercore say about SolarCity's25 ability to meet its current and future debt

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1 obligations and financing needs at this initial June2 20th meeting?3 A. Well, we discussed this in the pages that4 we went through in the deck. The company obviously5 needed to continue to finance itself through various6 forms of financing, including tax equity, cash7 equity. And that -- those analyses are all laid out8 very clearly in our materials.9 Q. So as of June 20th, was Evercore of the

10 opinion that SolarCity had the ability to meet its11 current and future debt obligations and financing12 needs?13 A. Yes.14 Q. And that was based off of the publicly15 available information --16 A. Publicly.17 Q. -- correct?18 A. Yes.19 Q. This note about the company's market20 valuation relative to its net asset base, what's21 that referencing?22 A. Where are you seeing that?23 Q. That same paragraph we just read.24 "The director has also discussed25 extensively with Evercore"...

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1 (Reporter clarification.)2 Q. "The director has also discussed3 extensively with Evercore...the company's market4 valuation relative to its net asset base."5 Do you see that?6 A. Yeah, that's just another determination of7 value. So we looked at the value of the assets8 minus the obligations and the market value.9 Q. Why were you looking at the value of the

10 assets?11 A. Because it's a -- again, it's a highly12 financed business. It's how you look at leased13 businesses. And we looked at the debt obligations14 of the company in relation to its ability to finance15 itself.16 Q. Next paragraph down it goes on,17 "Representatives of Evercore then presented to the18 board their valuation analysis of SolarCity,19 including the third party forecast for SolarCity and20 growth, cost energies and other assumptions21 underlying their valuation analysis. The directors22 discussed the reasonableness of these forecasts and23 assumptions based on public information and market24 perception of SolarCity."25 Do you see that?

Page 87

1 A. Yes.2 Q. What do you recall the discussion of the3 reasonableness of the forecast and assumptions that4 were based off of public information?5 A. I believe we discussed -- as I said, the6 analysis at this time was based off the Morgan7 Stanley model. And whenever you're using a research8 analyst model you discuss -- you discuss whether it,9 you know, reflects the true projections of the

10 business, and you don't really know that until you11 start diligence and start talking to the company.12 So there's always a caveat when you're using a13 public research analyst model that it could be14 aggressive, it could be conservative, and you won't15 really know that until you talk to the company.16 Q. The second-to-last sentence says -- of17 that paragraph says, "Finally, Evercore reviewed the18 potential accretion/dilution impact on various per19 share earning metrics for the company as a result of20 a potential acquisition."21 Do you see that?22 A. Yes.23 Q. Why did Evercore review the24 accretion/dilution impact on the various per share25 earning metrics for the company as a result of the

Page 88

1 potential acquisition?2 A. As I said earlier, we included it in our3 analysis based on public information at that stage,4 and it was included in our analysis, and we went5 through it with the board.6 Q. And you told them it would be dilutive to7 earnings per share, correct?8 A. Yes.9 Q. Did any director care?

10 A. We discussed all of the analyses in --11 thoroughly with the -- the directors. I don't12 recall specific statements made by directors, but13 all of the assumptions and analyses were reviewed14 thoroughly with the board.15 Q. It goes on, "Based on Evercore's analysis,16 the directors then discussed, with input from17 management and representatives of Evercore, the18 value and structure of a potential acquisition19 proposal for SolarCity."20 Do you see that?21 A. Yes.22 Q. And Mr. Musk was still present in the room23 for that conversation, correct?24 A. I believe so, but I'm not entirely sure.25 I believe so.

Page 89

1 Q. Did Mr. Musk provide any commentary on the2 value or structure of a potential acquisition3 proposal for SolarCity?4 A. I don't recall.5 Q. It goes on, "The directors discussed the6 need to conduct further diligence on SolarCity,7 including of nonpublic information, in order to8 determine the maximum walk-away acquisition price9 the company should offer."

10 Do you see that?11 A. Yes.12 Q. What was discussed about the maximum13 walk-away acquisition price at that time during the14 meeting?15 A. What would be the highest price that Tesla16 could pay for this asset given the financial model17 of SolarCity.18 Q. And Mr. Musk --19 A. It's a very common thing for a company.20 You look at -- I mean, obviously you're always21 trying to pay the lowest price possible, but what is22 your limit. At what point would you decide not to23 do the transaction, the walk-away price.24 Q. Were any specific numbers discussed at the25 meeting about a maximum walk-away price?

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1 A. No, this comment is made because the

2 discussion was that we need more information to

3 really know what that number would be.

4 Q. It goes on, "The board discussed various

5 possible exchange ratios based on the analysis

6 presented by Evercore and considered a range of

7 .122X to .131X shares of the company's common stock

8 for each share of SolarCity common stock,

9 representing a value of 26.50 to 28.50 for each

10 share of SolarCity common stock."

11 Do you see that?

12 A. Yes.

13 Q. Mr. Musk was present for that discussion,

14 correct?

15 A. Yes.

16 Q. Did you feel it was appropriate for

17 Mr. Musk to be present for that discussion

18 considering his conflict of interest?


20 THE WITNESS: We weren't making any

21 decisions at that time.

22 BY MR. RELIFORD:

23 Q. I'm going to ask my question again. Did

24 you believe it was appropriate for Mr. Musk to be

25 present for that discussion considering his conflict

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1 of interest?2 MS. VENEZIA: Objection to the form.3 Asked and answered.4 THE WITNESS: Yes, we were just discussing5 potential exchange ratios. We weren't making any6 decisions at the time.7 BY MR. RELIFORD:8 Q. Well, a decision was made at this board9 meeting to make a public offer at .122X to .131X

10 exchange ratio, correct?11 A. Yes.12 Q. And Mr. Musk participated in at least a13 portion of that conversation setting that value14 range, correct?15 MS. VENEZIA: Objection to the form.16 THE WITNESS: Participated in the17 discussion.18 BY MR. RELIFORD:19 Q. What did he say about the price that20 should be offered for SolarCity shares?21 A. I -- I don't recall.22 Q. Luckily for us, some of your team members23 do keep notes. So why don't we go to those notes.24 A. Okay.25

Page 92



3 hereto.)



6 hereto.)

7 BY MR. RELIFORD:

8 Q. The court reporter has handed you what's

9 been marked as -- or what have been marked as

10 Exhibits 7 and 8 to the deposition. All right.

11 Exhibit 7 is a document that was produced

12 by Evercore with the Bates stamp EVR-TESLA_186363

13 continuing through 186365.

14 And Exhibit 8 is a printout of the

15 metadata that was produced in connection with

16 Exhibit 7.

17 A. Okay.

18 Q. The author was identified as Marshall

19 Watkins; is that right?

20 A. Yes.

21 Q. And that was one of the team members from

22 the Evercore team?

23 A. He's an analyst.

24 Q. And the file name of the document was

25 "2016.06.20 Board Notes." Do you see that under the

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1 file name?2 A. Yes.3 Q. All right. Just looking through these, do4 these appear to be notes from that June 20th5 meeting?6 A. I don't recall --7 MS. VENEZIA: Objection to form.8 THE WITNESS: -- ever seeing these.9 BY MR. RELIFORD:

10 Q. Why don't you look through the document11 and tell me if the notes match up with your12 recollection of what happened at the meeting.13 (Pause while witness peruses document.)14 A. Okay.15 Q. These notes roughly match up with your16 recollection of what was discussed at the June 20th17 board meeting?18 MS. VENEZIA: Is that a question?19 MR. RELIFORD: Yes.20 THE WITNESS: It's someone else's21 recollection of a meeting. Some of it sounds22 familiar to me. I don't remember everything in23 detail from that meeting.24 BY MR. RELIFORD:25 Q. Let's go through a few of Mr. Watkins'

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1 notes then.

2 "We looked at the minutes and then talked

3 about a discussion of needing to do more diligence

4 to come up with a walk-away price."

5 Do you remember that?

6 A. Yes.

7 Q. There's a note here at the bottom.

8 "What's our walk-away price? Elon, dash, doubt

9 there will be another bidder. Plan to bid and tell

10 them to put it to the shareholders and they can make

11 that determination."

12 Do you see that?

13 A. Yes.

14 Q. Okay. At some point during the June 20th

15 meeting, did Mr. Musk, Elon Musk, say that he doubts

16 there would be any other bidders for SolarCity?

17 A. I don't recall.

18 Q. Did he say anything about just bid and

19 then let the shareholders decide?


21 Q. At the top of the page, there's a note

22 about "Are we paying pretty close to asset value?"

23 And you said "Essentially," or the notes

24 say "Essentially."

25 Do you see that?

Page 95

1 A. Where am I?

2 Q. The top of the same page.

3 A. I say that.

4 Q. And that's consistent with what we talked

5 about before in the minutes, right?

6 A. Yes.

7 Q. And there's a note about current Tesla

8 cost to capital.

9 Do you see that?

10 A. Yes.

11 Q. And then a bullet point that says "Mixed

12 reception upon -- on recent New York trip from

13 Moody's and S&P."

14 Do you see that?

15 A. Yes.

16 Q. Was there a discussion about Tesla's

17 meetings with Moody's and S&P at this board meeting?

18 A. I believe so.

19 Q. And there's a note "Don't think access to

20 public debt markets will be super compelling."

21 Do you see that?

22 A. Yes.

23 Q. Somebody at this meeting raised a concern

24 that a combined company would have a rougher time

25 accessing public debt markets, correct?

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1 A. I don't recall if that's SolarCity itself2 or the combined company. I just don't -- I don't3 remember what the discussion was focused on4 specifically with respect to that point.5 Q. So it could have been Tesla. It could6 have been SolarCity, but somebody was going to have7 trouble accessing public debt markets, right?8 MS. VENEZIA: Objection to the form.9 THE WITNESS: It says it won't be super

10 compelling.11 BY MR. RELIFORD:12 Q. What do you take that to mean?13 A. Well, the terms could be not as14 attractive.15 Q. The next bullet point down says, "Jason16 thinks combined company will have a higher cost of17 capital."18 Do you see that?19 A. Yes.20 Q. Mr. Wheeler is the CFO of Tesla, correct?21 A. Yes.22 Q. He was present at this meeting?23 A. Yes.24 Q. He expressed that a combined company would25 result in a highest cost of capital in his opinion,

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1 correct?2 A. Yes.3 Q. Turning to the next page, there is an4 entry, quote, "Elon - Matters that it's publicly5 defensible in the middle, for example, of a6 precedent premia paid."7 A. Where are you?8 Q. The fourth bullet point down on 186364.9 A. Okay.

10 Q. Mr. Musk conveyed to the board that the11 offer had to be publicly defensible, correct?12 A. Yes.13 Q. And he suggested that offer should be in14 the middle of, for example, the precedent premium15 paid, correct?16 A. Yes.17 Q. That would be roughly $30 a share; is that18 right?19 A. I don't have the actual data in front me.20 Q. There's a note under risk of someone21 seeking an appraisal remedy, another comment --22 (Reporter clarification.)23 Q. -- remedy, another comment by Mr. Musk,24 quote, "I don't negotiate."25 Do you see that?

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1 A. I see it.2 Q. Do you remember Mr. Musk saying he doesn't3 negotiate?4 A. I don't recall that. I don't know what5 he's referring to.6 Q. The next bullet point down, "What range7 are we actually suggesting?"8 Another bullet point, "25 to $27 under9 EVR's suggested exchange ratio."

10 Do you see that?11 A. Yes.12 Q. So were you, as Evercore, recommending a13 bid at 25 to $27 for SolarCity?14 A. It was based on the exchange ratio. So15 I'd have to go back and look at what the dollar was,16 but we were suggesting an -- a suggested exchange17 ratio.18 Q. Did you have discussions before this board19 meeting about what exchange ratio you would be20 recommending to the Tesla board?21 A. Yes. That's customary.22 Q. Where did you wind up in that discussion?23 A. Within the range that we suggested to the24 board.25 Q. Did you suggest 25 to $27 a share?

Page 99

1 MS. VENEZIA: Objection to the form.2 Asked and answered.3 THE WITNESS: As I said, I -- we were4 talking about an exchange ratio. I don't remember5 the actual dollar value.6 BY MR. RELIFORD:7 Q. Well, the minutes, if you remember, had an8 exchange ratio of .122X to a .131X.9 Do you see that?

10 A. Yes.11 Q. And that corresponds to a dollar value of12 26.50 to 28.50, correct?13 A. I believe so.14 Q. Okay.15 A. Oh, yes.16 Q. Evercore suggested a lower exchange ratio17 to the board, though, right?18 MS. VENEZIA: Objection to the form.19 THE WITNESS: I don't recall.20 BY MR. RELIFORD:21 Q. So it could have happened; it could not22 have happened. You just don't recall?23 A. I believe the exchange ratio was a24 discussion between us and the board, and ultimately25 it's the board's decision.

Page 100

1 Q. Well, the board hired you guys as the2 financial adviser, right?3 A. Yes.4 Q. And one of your jobs was to go dig into5 SolarCity, figure out how much we're going to bid,6 right?7 A. Yes.8 Q. And they were making a decision because9 they were going to put out a public offer the next

10 day, if they decided to go forward, with an exchange11 ratio in it, right?12 A. Yes.13 Q. And they looked to you as Evercore and14 said, "What should we pay?" Right?15 A. Uh-huh.16 Q. And when they did that, what did Evercore17 say?18 A. I can't recall.19 Q. So it could have been 25 to 27, right?20 A. Possible.21 Q. There's a note here, "Elon, is that the22 final value?"23 Sub-bullet point, "Yep."24 We're back on Exhibit 7, which are the25 notes from the meeting.

Page 101

1 (Reporter clarification.)2 Q. Which are the notes from the meeting.3 A. Where are you?4 Q. The middle of the page, second page. It's5 Bates-stamped 186364. And the entry says "Elon - Is6 that the final value?"7 Sub-bullet point, "Yep."8 Do you see that?9 A. Yes.

10 Q. Did Mr. Musk ask whether or not whatever11 range you offered was where you were saying the12 transaction should end up?13 A. Should end up? Can you clarify that14 question?15 Q. By the time negotiations were done.16 A. Can you repeat the question?17 Q. Sure. You provided advice on what you18 thought would be an appropriate price to pay, right?19 MS. VENEZIA: Objection. Objection to the20 form.21 THE WITNESS: No.22 BY MR. RELIFORD:23 Q. No.24 A. Not at this time -- point.25 Q. So you don't recall providing any advice

26 (Pages 98 - 101)


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Page 102

1 at all about what Tesla should pay to acquire2 SolarCity at this June 20th, 2016, meeting?3 (Reporter clarification.)4 Q. -- to acquire SolarCity at this June 20th,5 2016, meeting?6 MS. VENEZIA: Objection to the form.7 THE WITNESS: We provided a view on what8 they should offer based on public information. It's9 very different.

10 We didn't -- we hadn't conducted11 diligence. Obviously it was subject to diligence.12 We did extensive diligence following that offer13 based on publicly-available information.14 BY MR. RELIFORD:15 Q. Next entry down, "Elon - Tricky thing is16 S's historical trading performance, i.e., at much17 higher levels. Premia to current prices don't mean18 that much. Might come in a bit low."19 Do you see that?20 A. Where is this?21 Q. Right underneath "Yep."22 (Reporter clarification.)23 Q. -- underneath "Yep."24 A. Yep.25 Q. What did Mr. Musk say about the offer

Page 103

1 relative to the historic trading prices of SolarCity2 stock?3 MS. VENEZIA: Objection to the form.4 THE WITNESS: It's a dynamic we often see,5 particularly in technology companies. When a6 company has been more highly valued in the market7 and the stock price comes down, it's often difficult8 to convince those companies whose stock price has9 decreased that a reasonable premium on that lower

10 price is appropriate given that, in the recent past,11 their stock price and market value was much higher.12 BY MR. RELIFORD:13 Q. The next bullet point, "Elon's impression14 of appropriate price? Would rely on what the15 appropriate premium is."16 Do you see that?17 A. Yes.18 Q. And Mr. Musk expressed the view that the19 offer price should reflect a premium to the share20 price of SolarCity's common stock, correct?21 MS. LAVELY: Objection to form.22 THE WITNESS: Yes. As is --23 (Reporter clarification.)24 MS. LAVELY: Objection to form.25 THE WITNESS: That's right. It's typical

Page 104

1 that you would pay a premium for an acquisition.2 BY MR. RELIFORD:3 Q. And if you look a little further down,4 there's a bullet point, "Elon - 30 percent over5 4-week trailing ($28.50.)"6 Do you see that?7 A. Yes.8 Q. So Mr. Musk suggested the price would9 be -- or the offer price would go as high as $28.50,

10 correct?11 MS. VENEZIA: Objection to the form.12 THE WITNESS: I don't recall.13 BY MR. RELIFORD:14 Q. Do you recall Mr. Musk saying anything15 about a specific dollar amount of price?16 A. I don't recall the specific discussions17 around price at this board meeting. I do remember18 all the board members were active in the discussion.19 Q. This is why people take notes.20 It says here, "Elon is not a fan of using21 ranges."22 Do you remember Mr. Musk participating in23 a conversation about offering a specific exchange24 ratio versus a range of exchange ratios?25 A. No.

Page 105

1 Q. You don't remember Mr. Musk making any2 comments in that regard?3 A. I don't recall.4 Q. It says here "Settled on $26.50 per share5 to $28.50 per share."6 Do you see that?7 A. Yes.8 Q. And that's consistent with what we saw in9 the board minutes, correct?

10 A. Yes.11 Q. And that was what was discussed at the12 board with Mr. Musk in the room, correct?13 A. Yes.14 Q. There's a note here, "Any impact on Brexit15 vote?"16 Bullet point, "Shouldn't be material."17 Do you see that?18 A. I see that.19 Q. Circling back to the conversation, Brexit20 really didn't have anything to do with SolarCity,21 right?22 MS. VENEZIA: Objection to the form.23 THE WITNESS: I disagree. I think it had24 a tremendous impact on the market as a whole.25 BY MR. RELIFORD:

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1 Q. Okay. And it had a material impact on2 SolarCity's trading price?3 A. On the market.4 Q. My question is about SolarCity.5 A. Not a material impact on SolarCity but on6 the whole market.7 MS. VENEZIA: We've been going another8 hour. Just take another short break?9 MR. RELIFORD: Sure.

10 BY MR. RELIFORD:11 Q. Is Mr. Watkins still employed at Evercore?12 A. No.13 Q. Do you know where he works?14 A. Silver Lake Partners.15 (Reporter clarification.)16 A. Silver Lake Partners. It's a private17 equity firm.18 Q. Did he work on the Dell transaction with19 you?20 A. No.21 MR. RELIFORD: If you don't mind, could we22 just finish the discussions about the June 20th23 meeting and then take a break?24 MS. VENEZIA: Yes.25 BY MR. RELIFORD:

Page 107

1 Q. Did Mr. Musk discuss negotiating tactics2 at the meeting on June 20th?3 A. Pardon?4 Q. Did Mr. Musk provide any commentary on5 negotiating tactics that the company should consider6 when negotiating with SolarCity?7 A. I don't recall.8 Q. So he could have. You just don't recall,9 right?

10 A. I don't recall.11 Q. So if another one of your analysts left a12 note, "Elon is talking about negotiating tactics,"13 that could be true, could not be true. You just14 don't recall?15 MS. LAVELY: Object to the form.16 BY MR. RELIFORD:17 Q. Mr. Musk suggests putting a meaningful18 value on the table to avoid individuals coming in to19 block the deal?20 MS. VENEZIA: Is that a question?21 MR. RELIFORD: Yes.22 THE WITNESS: What's the question?23 BY MR. RELIFORD:24 Q. Do you remember Mr. Musk making any25 comments about having to have a meaningful value

Page 108

1 proposition for SolarCity shareholders so that2 nobody would block the transaction?3 A. No.4 Q. No. You don't recall?5 A. No. I don't recall.6 Q. Could have happened; might not have7 happened. You just don't recall?8 A. I don't recall.9 Q. Was there any discussion of due diligence

10 needing to be conducted within two weeks at this11 June 20th meeting?12 A. There was discussion about due diligence13 being conducted expeditiously because, given this14 was a public offer, it caused a lot of disruption to15 both companies.16 So our recommendation was to conduct17 diligence as thoroughly but expeditiously as18 possible given the impact on both companies.19 Obviously we didn't get the information we needed in20 that -- in that time frame.21 MR. RELIFORD: That's as good a place as22 any for a break. Stop there.23 THE VIDEOGRAPHER: Going off the record.24 The time is 12:03 p.m.25 (Recess.)

Page 109

1 (Time off record: 12:03 p.m.)2 (Time back on record: 12:19 p.m.)3 THE VIDEOGRAPHER: Back on the record.4 The time is 12:19 p.m.5 BY MR. RELIFORD:6 Q. Welcome back, Ms. McBean.7 A. Thank you.8 Q. I remind you, you are still under oath.9 A. Yes.

10 Q. Did you have any discussions with your11 counsel regarding the deposition while on break?12 A. No.13 Q. Turn to page 73 of Exhibit 4, which was14 the June 17 Evercore deck that was given to Tesla15 management.16 A. Yes.17 Q. 73 is a slide called "Next Steps."18 A. Hold on.19 Q. And for the record, it's TESLA VIR 178.20 A. Yes.21 Q. The last bullet point says, "Following the22 approach, Taurus and its advisors will need to23 conduct due diligence of Scorpius, which will be a24 significant undertaking given Scorpius's complicated25 balancing and financing structure."

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1 Do you see that?2 A. Yes.3 Q. And Taurus here is Tesla, correct?4 A. Yes.5 Q. Scorpius is SolarCity?6 A. Yes.7 Q. Why did you believe that it would be a8 significant undertaking to do due diligence into9 SolarCity?

10 A. Because it's an incredibly complicated11 capital structural, as I'm sure you've seen in a lot12 of the documents in the financial model.13 Q. As you went through diligence, did you14 realize that it was even more complicated than you15 thought back in early June of 2016?16 A. I don't think so. I think it was about as17 complicated as we expected.18 Q. What makes SolarCity's balance sheet so19 complicated to understand?20 A. They monetize every aspect of the business21 in a variety of different ways. So they use22 asset-backed financing. They use tax equity23 financing. They use an ag facility. It's -- they24 use a number of different financing methods to -- to25 finance the business.

Page 111

1 Q. What is it about their -- or strike that.2 Anything else about the balance sheet?3 A. No.4 Q. Same question on the financing structure.5 What is it about SolarCity's financing structure6 that is so complicated?7 A. It's the -- the question is the same8 really because the balance sheet and the -- the9 financing structure plays into the balance sheet,

10 right?11 Q. Uh-huh.12 A. So it's the same answer, which is that13 there are a number of different ways they monetize14 different assets and raise capital to finance the15 business.16 Q. And for that reason, it's really important17 to dig into the nonpublic information?18 A. Exactly.19 Q. Did you advise the board on June 20th that20 due diligence would be a significant undertaking21 because of the complications of SolarCity's balance22 sheet and financing structure?23 A. Because of the complicated balance sheet24 and financing structure, yes.25

Page 112



3 hereto.)

4 BY MR. RELIFORD:


6 you what's been marked as Exhibit 9 in the

7 deposition. It's a June 20, 2016, email with

8 attachments. The Bates stamp is TESLA DIR_84651 to

9 84773.

10 This is an email that Todd Maron sent to

11 the Tesla directors and you and Mr. Francis with

12 materials for the June 20th board meeting, right?

13 A. Yes.

14 Q. And Evercore's presentation for that

15 meeting begins on TESLA DIR_84654, right?

16 A. Yes.

17 Q. All right. To be clear, this is your book

18 that -- Evercore's book that they gave to the

19 company for the June 20th meeting, right?

20 A. To the board, yes.

21 Q. In the executive summary, page -- slide 1,

22 TESLA DIR_84658.

23 A. Yes.

24 Q. It says, "There are, however, potential

25 risks that need to be further diligenced."

Page 113

1 Do you see that?2 A. Yes.3 Q. "SolarCity's financial forecast including4 its projected growth, profitability, and impact of a5 new loan product."6 Do you see that?7 A. Yes.8 Q. And this was the subject diligence that9 Evercore conducted?

10 A. Yes.11 Q. By this point in time, had you received12 any financial forecast for SolarCity from SolarCity?13 A. No.14 Q. When did you receive financial forecasts15 for SolarCity from SolarCity?16 A. I don't recall the exact date, but I17 believe it was in mid-July, early to mid-July.18 Q. Do you know if SolarCity had prepared19 financial forecasts on a regular course of its20 business that it could just hand over to you?21 A. I don't.22 Q. Did you ask?23 A. We asked for a financial model --24 Q. You never --25 A. -- multiple times.

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1 Q. Did you ever ask if the financial forecast2 was prepared specifically for the purpose of3 negotiating the transaction versus normal sort of4 business at SolarCity?5 A. We just asked for a financial forecast.6 Q. Did it matter to you whether or not it was7 prepared for the purposes of negotiations or if it8 was prepared in the normal course?9 A. We cared about whether it was a reasonable

10 reflection of the performance of the business, and11 obviously we did a lot of diligence once we did12 receive the financial model.13 Q. There's a note here, "SolarCity standalone14 financing strategy and the pro forma company's15 financing strategy."16 Do you see that?17 A. Yes.18 Q. And that was identified as a potential19 risk by Evercore?20 A. Yes.21 Q. What was the -- why was it that the22 standalone financing strategy for SolarCity would be23 a potential risk that Evercore needed to do due24 diligence into?25 A. Because it was a business that required

Page 115

1 significant capital and was dependent on financing

2 streams.

3 Q. Note at the bottom, "In the downside

4 scenario, if SolarCity were to cease DevCo

5 operations, would PowerCo be able to remain

6 solvent?"

7 Do you see that?

8 A. Yes.

9 Q. What is DevCo?

10 A. DevCo is the new solar installations.

11 Q. What is PowerCo?

12 A. PowerCo is the existing solar

13 installations.

14 Q. Why was Evercore thinking about a downside

15 scenario where you ceased DevCo operations?

16 A. Because we wanted to look at even in a

17 worst-case scenario where you shut down development

18 of the new business, would the existing business be

19 cash flow sustainable.

20 Q. Did Evercore ever come to a conclusion

21 about whether or not if SolarCity were to cease

22 DevCo operations PowerCo could remain solvent?

23 A. Yes, in our view, PowerCo on its own would

24 be solvent -- or, yes, PowerCo on its own would be

25 solvent.

Page 116

1 Q. You discussed that with the board, right?

2 A. Yes.

3 Q. What did the board -- what do you recall

4 about those conversations with the board about this

5 option of ceasing DevCo operations?


7 THE WITNESS: It wasn't a strategy that

8 anyone was considering. As I said, it was a

9 worst-case scenario: If you had to shut down DevCo,

10 would PowerCo be self-sustaining. Our analysis

11 showed that it would, which provides some level of

12 comfort.

13 BY MR. RELIFORD:

14 Q. What are some of the things that a Tesla

15 shareholder would know from Tesla's public filings

16 about whether or not Tesla was winding down DevCo's

17 operations?


19 THE WITNESS: Can you repeat the question?

20 BY MR. RELIFORD:

21 Q. Sure. If Tesla were to shut down DevCo's

22 operations, wind down DevCo's operations, would you

23 expect megawatt guidance to decrease or megawatts

24 installed to decrease?

25 MS. VENEZIA: Same objection.

Page 117

1 THE WITNESS: Yes, yes.2 BY MR. RELIFORD:3 Q. Significantly decrease, correct?4 A. If you are looking at total megawatts5 installed it wouldn't decrease. But new megawatts6 it would -- it would -- it would go to zero.7 Q. Was this downside scenario something that8 Evercore relied upon when advising SolarCity that --9 or when advising Tesla that it should go through

10 with this transaction?11 A. It was one of many factors that we12 considered.13 Q. Was it a factor that was ever disclosed to14 shareholders?15 A. I don't believe so, but I don't recall.16 Q. The amount of new installations for solar17 at Tesla has tapered off since the acquisition,18 correct?19 A. Yes.20 Q. What do you recall of the board's reaction21 when discussing this sort of downside option --22 MS. VENEZIA: Objection to the form.23 BY MR. RELIFORD:24 Q. -- of winding down DevCo's operations and25 relying only on PowerCo?

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1 A. Again, it wasn't a realistic scenario. It

2 wasn't -- meaning it wasn't a scenario that they

3 would ever plan to do. It was a downside case. And

4 it was something that they can -- you know, took

5 into consideration when discussing the transaction.

6 Q. Can you turn to page 8 of the deck. It's

7 TESLA DIR_84665.

8 Before we go there, what do you mean by

9 "it wasn't a realistic scenario"?

10 A. Meaning it wasn't their strategic plan for

11 the business.

12 Oftentimes if you're thinking of acquiring

13 a company you might look at, well, worst-case

14 scenario, if, you know, we -- for example, if we

15 experience a force majeure and the whole market goes

16 down, what would -- what could we do to make this

17 entity profitable or more attractive from a

18 financial standpoint. We look at downside scenarios

19 often in deals, and this was one that we looked at,

20 but it would never be Tesla's strategic objective at

21 the time to shut down DevCo.

22 Q. How do you know?

23 A. That was not how it was communicated to

24 us.

25 Q. So there could have been conversations

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1 that you weren't a part of where Tesla directors2 discussed this as an optional plan for the company?3 MS. VENEZIA: Objection to the form.4 THE WITNESS: It's possible, but it5 wouldn't make sense given the strategic rationale.6 BY MR. RELIFORD:7 Q. Why wouldn't it make sense?8 A. Because the whole strategic rationale is9 to combine solar with the battery storage units and

10 you then would have to deploy more solar with11 battery storage units.12 Q. So it wouldn't make sense if you accept13 that that was the strategic rationale for the14 transaction, right?15 A. Yes.16 Q. So if there were some other rationale for17 the transaction it could make sense, right?18 MS. VENEZIA: Objection to the form.19 THE WITNESS: I'm not aware of another20 strategic rationale.21 BY MR. RELIFORD:22 Q. Look at page 8 of the deck. This is23 another accretion/dilution analysis, correct?24 A. Yes.25 Q. And it shows that on an EPS basis, that

Page 120

1 the transaction would be dilutive in both 2019 and2 2020, correct?3 A. Yes.4 Q. If I were to represent to you that this is5 the very last EPS accretion/dilution analysis that6 was produced to us in this litigation, would you7 have any reason to doubt that representation?8 A. No.9 Q. Was there any discussion about pulling the

10 EPS accretion/dilution analysis out of the decks11 that you presented to the board moving forward at12 this point in time?13 A. I don't recall. But as I said earlier,14 after we did diligence and were provided with a cash15 model, this is just not how you look at the16 transaction given their financial model. It's a17 sources and uses cash model, and they didn't provide18 us with a model that would -- would make sense from19 a EPS accretion/dilution analysis because it's not20 how the business is run.21 Q. I don't think I understood that answer.22 Not that you didn't say it well. I'm just limited.23 Can you explain to me why it wouldn't make24 sense to care about EPS accretion/dilution based off25 of how SolarCity did their financial models?

Page 121

1 A. Because a business model is a financing2 model, so you look at it from cash source and uses.3 They don't look at it on a P&L basis. So it's -- it4 would -- it's difficult to take a cash model and5 then determine what the EPS impact would ultimately6 be.7 Q. Transaction or -- strike that.8 Tesla's offer of -- public offer to9 SolarCity was released on June 21st; is that right?

10 A. Yes.11 Q. Tesla's stock price took a huge hit,12 right?13 A. Yes.14 Q. Evercore predicted that Tesla's stock15 price was going to take a huge hit, correct?16 (Reporter clarification.)17 Q. Evercore predicted that Tesla's stock18 price was going to take a huge hit, correct?19 A. Yes.20 Q. Why?21 A. Typically when an acquirer announces a22 transaction the stock price declines.23 Q. Tesla stock price declined over 10 percent24 in one day of trading, correct?25 A. Yes.

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Page 122

1 Q. Is that a larger impact than you expected2 at Evercore?3 A. It's probably on the high end of what we4 expected.5 Q. Why, in your opinion, was it a larger6 magnitude than you expected?7 A. When the transaction was announced, the8 investor community and media I don't think fully9 captured the strategic rationale, primarily because

10 most of that community wasn't aware of the existence11 or the importance of the battery storage business.12 And if you don't know about that business and you13 just think of Tesla as an electric vehicle company,14 the strategic rationale isn't as clear.15 Once investors understood the strategic16 rationale, I think they understood the transaction17 more. But at the outset when the offer was made, I18 don't think the public fully grasped the strategic19 rationale of the transaction.20 Q. Did Evercore advise the board that the21 public offer was going to result in a huge hit or in22 a hit to Tesla share price?23 A. I believe we advised the board that the24 stock price could decline.25 Q. Some believe that -- or some investors saw

Page 123

1 this as a bailout of SolarCity by Tesla, right?

2 MS. LAVELY: Objection to form.

3 THE WITNESS: Investors? I believe some

4 may have.

5 BY MR. RELIFORD:

6 Q. Did you have any conversations with

7 anybody about the perception that this would be a

8 bailout of SolarCity by Tesla?

9 A. Prior to the offer?

10 Q. Yes.

11 A. No.



14 hereto.)

15 BY MR. RELIFORD:


17 you what's been marked as Exhibit 10 to the

18 deposition.

19 A. Okay.

20 Q. It's an email you sent is to Stu Francis,

21 Roger Altman, and Chuck McMullan, copying the rest

22 of your team, with a presentation about Tesla and

23 SolarCity shareholder base, right?

24 A. Yes.

25 Q. It says, "Phil asked us to put together --

Page 124

1 put the shareholder pages on the WebEx for the call2 in a few minutes."3 Do you see that?4 A. Yes.5 Q. Who is Phil?6 A. Rothenberg. He's in the -- he was in the7 legal department at the time. Worked for8 Todd Maron.9 Q. Why were you looking at the overlap of the

10 Tesla and SolarCity shareholder base at this time?11 A. Well, we were going to -- if we proceeded12 with the transaction, it was going to be subject to13 a Tesla shareholder vote, so we wanted to make sure14 we understood the shareholder base.15 Q. So why would you look for the overlap16 between Tesla and SolarCity shareholders?17 A. It's something we always look at. We look18 at both companies and then we look at the overlap.19 Q. How much overlap did you ultimately20 conclude existed between the Tesla and SolarCity21 shareholder base?22 A. You can see the numbers on the page.23 If -- for Tesla, the top 25 institutional is24 53 percent. For SolarCity, among the top 25, it's25 45.6 percent.

Page 125

1 Q. So then 53 percent of Tesla shareholders2 also held shares of SolarCity is what you found3 based off -- just looking at the top 254 institutional investors?5 A. Yes, but it's oftentimes they're -- I6 mean, we didn't do this at a fund level. There7 could be different fund level ownership, for8 example, at Fidelity or T. Rowe, some of these9 larger funds. But the overall shareholder, yes.

10 Q. What did you discuss on this call with --11 on June 22nd about the overlap and its relevance to12 the transaction?13 A. I don't recall discussing the overlap. I14 do remember we talked about institutional versus15 retail because in both of these companies there's a16 significant amount of retail investors, and retail17 investors are notoriously difficult to reach in18 terms of they just often don't vote. So we did look19 at the breakdown between institutional and retail.20 I don't recall talking about the shareholder21 overlap.22 Q. And Tesla management just asked you to23 prepare these slides, but then you didn't discuss it24 at all on the call?25 A. I'm sure we pointed out the numbers. I

32 (Pages 122 - 125)


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Page 126

1 just don't remember anything beyond that. I do

2 remember there was a big discussion around the

3 retail component.



6 hereto.)

7 BY MR. RELIFORD:


9 been marked as Exhibit 11 in the deposition. It's

10 an email from you, again to Mr. Altman, Mr. Francis

11 and Chuck McMullan, copying your team. Do you see

12 that?

13 A. Yes.

14 Q. And it's attaching some draft board update

15 materials, right?

16 A. Yes.

17 Q. You note, "Todd would like to send the

18 pages to Elon tonight in advance of sending them to

19 the board tomorrow. Could you please let us know if

20 you have any comments?"

21 Do you see that?

22 A. Yes.

23 Q. And that was, again, typical for what you

24 expected when you have board pages that you --

25 A. Yes.

Page 127

1 MS. VENEZIA: Just let him finish his2 question.3 THE WITNESS: Sorry.4 BY MR. RELIFORD:5 Q. Turn to the last page of the document. So6 we're now at July 2, 2016, right? Twelve days after7 the board announced -- or the board decided to make8 a public offer, right?9 A. Yes.

10 Q. And by that point in time you still had11 very limited diligence that was being provided by12 SolarCity; is that right?13 A. Yes.14 Q. Is it fair to say that SolarCity wasn't15 acting with the same alacrity that Evercore was?16 MS. VENEZIA: Objection to the form.17 THE WITNESS: They weren't providing as18 much diligence as we were requesting on a timely19 base.20 BY MR. RELIFORD:21 Q. It notes here, "The primary diligence22 model -- or the primary diligence item needed is23 SolarCity's 5-year financial model, which they have24 indicated will be provided the week of July 5th."25 Do you see that?

Page 128

1 A. Yes.2 Q. Why was it taking them so long to get you3 a financial model?4 MS. LAVELY: Objection. Form.5 THE WITNESS: I can't be sure, but6 oftentimes companies don't have a financial --7 5-year financial model off the shelf. I would say8 most of my clients don't. And even if they do, it9 might not be built out to a level of detail that you

10 would need in a process like this. So it wasn't11 atypical.12 BY MR. RELIFORD:13 Q. So the idea of diligencing this14 transaction in two weeks, that was gone by July 2nd,15 right?16 A. Yeah.17 Q. And even after you received the 5-year18 model you were going to need additional management19 sessions to understand the 5-year model, correct?20 A. Yes.21 Q. At some point in time SolarCity requested22 that Tesla provide bridge financing to SolarCity23 between or before the closing of the transaction; is24 that right?25 A. Yes.

Page 129

1 Q. Why did SolarCity need bridge financing?2 A. Because their access to capital, as they3 communicated to us, had been impacted by the offer,4 and they needed financing in the time period during5 which we were having discussions, and they6 approached us to provide that financing.7 Q. Your Evercore team was pretty skeptical,8 though, about their explanation that the public9 offer was constraining their ability to find bridge

10 financing, correct?11 A. When we first heard about it, yes. But12 that was in advance of significant due diligence.13 Q. At some point in diligence did you verify14 SolarCity's representation that the public offer was15 making it difficult for them to find financing?16 A. Yes. We had several sessions with Rad17 Small who headed their capital markets group. And18 he communicated to us that they had been in19 discussions in other tax equity financing around the20 time we came forward with our offer. And those21 discussions were negatively impacted because of the22 uncertainty that our offer created.23 Q. Did you follow up with the tax equity sort24 of partners in the transactions to verify that that25 was the case?

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1 A. The tax equity providers?2 Q. Uh-huh.3 A. No.4 Q. That was just Mr. Small's statements to5 you, correct?6 A. Yes.7 Q. And diligence showed you that SolarCity8 was having significant liquidity concerns even9 before the public offer, correct?

10 MS. LAVELY: Objection to form.11 THE WITNESS: There were liquidity12 concerns before the public offer, yes.13 (Exhibit 12 was marked for14 identification and attached15 hereto.)16 BY MR. RELIFORD:17 Q. This is an email chain dated July 2nd to18 July 3rd, 2016. It's an extension of the email19 chain that we were looking at before in Exhibit 11.20 On July 3rd at 10:40 a.m., Roger Altman21 wrote, "But I don't understand why the proposed22 merger compromises STCY's ability to finance itself23 today."24 Do you see that?25 A. Yes.

Page 131

1 Q. And you question, "Why would this be the2 case," right?3 A. Yes.4 Q. And Chuck McMullan, who was sort of the5 finance guy on your team, right?6 A. The debt. Debt advisory.7 Excuse me. My throat is dry.8 Debt adviser.9 Q. He says, "That's a good question for which

10 they did not give us a concise answer."11 Do you see that?12 A. Yes.13 Q. All right. And Mr. Altman responded,14 "Mark me down as a skeptic on the argument that this15 proposed merger makes it harder for them to finance16 themselves. I continue to wonder whether their17 liquidity and access to financing is under more18 pressure than it appears."19 Do you see that?20 A. Yes.21 Q. Mr. Altman was right that their liquidity22 and access for financing was under more pressure23 than it appeared from the public information,24 correct?25 A. Yes.

Page 132

1 Q. Mr. McMullan responded, "I share your2 skepticism. A related question is whether the3 liquidity stress is temporary or will be sustained.4 The target and Lazard had a lot to consider pulling5 this financial model together." Correct?6 A. Yes.7 Q. So then Mr. Altman responds, "We need to8 convey this skepticism to Tesla. Don't want them9 just accepting this."

10 A. Yes.11 Q. Do you see that?12 A. Yes.13 Q. And Mr. Francis agreed with that?14 A. Yes.15 Q. So you communicated to the Tesla board16 that you didn't quite buy what SolarCity was saying17 about the offer constraining their ability to find18 financing, correct?19 A. Yes.20 Q. Who is Brad Buss?21 A. He's a Tesla board member.22 Q. He's also the chief financial officer of23 SolarCity; is that right?24 A. He was.25

Page 133



3 hereto.)

4 BY MR. RELIFORD:

5 Q. This is an email that Mr. Buss sent to

6 you, Mr. Maron, and Mr. Wheeler with his comments on

7 the due diligence you requested from Lazard and

8 SolarCity, correct?

9 A. Yes.

10 Q. And you had a conversation with Mr. Buss

11 following the receipt of this markup, correct?

12 A. Yes.

13 Q. Had this markup gone to -- or had this

14 list gone out to SolarCity by July 5th?

15 A. I can't recall. I don't believe so, but I

16 can't recall.

17 Q. Did you give him a list of diligence items

18 at all?

19 A. Yes. I just can't remember if we sent --

20 we sent multiple drafts and we had a very detailed

21 diligence tracker. We shared back and forth

22 probably every day.

23 What I'm saying is, I don't know if we had

24 already sent a first list before this one. But we

25 would have followed up with another one with

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1 additional items.2 Q. On page 2 --3 A. Yes.4 Q. -- of the list there's a bullet point for5 manufacturing. Do you see that?6 A. Yes.7 Q. And Mr. Buss has some notes here. Do you8 see those notes on the left-hand side?9 A. Yes.

10 Q. His first note is, "A lot of concerns."11 A. Yes.12 Q. Did you discuss Mr. Buss's concerns about13 SolarCity's manufacturing with Mr. Buss?14 A. Yes. And the board.15 Q. One of his concerns was that there was no16 expertise; is that right?17 A. Yes.18 Q. So Mr. Buss was explaining to you that19 SolarCity didn't have any expertise to actually20 handle the manufacturing that it needed to do,21 correct?22 MS. LAVELY: Objection. Form. Misstates23 the document.24 THE WITNESS: Tesla acquired Silevo, which25 is the --

Page 135

1 (Reporter clarification.)2 A. -- Silevo, which is the modular3 manufacturing business. That entity had4 manufacturing expertise. It was an acquisition.5 His concern was that SolarCity, as a management6 team, didn't have that expertise in and of itself7 outside of the business that it had acquired.8 Q. There's a note here, "Missed deadlines on9 technology and production."

10 Do you see that?11 A. Yes.12 Q. Did you discuss those concerns with13 Mr. Buss?14 A. Yes. And the board.15 Q. What did he say?16 A. Silevo has a commitment to a facility in17 Buffalo under which they have to meet certain18 targets for spend and employees. And there are19 target deadlines for the progress of that plant, and20 they had missed a number of them.21 Q. Page 4, this is a section of items under22 the heading "Financial."23 Do you see that?24 A. Yes.25 Q. It notes, "Please provide quarterly

Page 136

1 financial projections from 2016 to 2025."2 Do you see that?3 A. Yes.4 Q. So you did ask for a --5 A. 10-year --6 (Reporter clarification.)7 Q. Start over again.8 So you did ask for 10-year projections9 from SolarCity, right?

10 A. Yes.11 Q. And those 10-year projections would have12 captured the period of phaseout of the federal SITC,13 correct?14 A. The decrease.15 Q. The decrease?16 A. Yes.17 Q. He notes, "They are horrible and very18 optimistic."19 Do you see that?20 A. Yes.21 Q. Did you discuss that with Mr. Buss?22 A. Yes.23 Q. Tell me about that discussion.24 A. He -- his view is that the financial25 projections, when he was at SolarCity, were very

Page 137

1 optimistic, which is one of their -- after our2 diligence, one of the reasons why we put together a3 sensitivity case in running our valuation analysis4 in both their base case and our sensitivity case.5 Q. Do you know what he meant by "horrible"?6 A. Pardon?7 Q. Do you know what he meant by "horrible"?8 A. No. I only recall him saying they were9 very optimistic.

10 Q. Which do you think was more reliable:11 Projections they came up with or the revised12 projections that you prepared?13 A. We relied on both. I think we felt14 comfortable the sensitivity case was a realistic15 view of the business.16 Q. Mr. Buss notes, "Generally will miss17 install guidance in current year frequently."18 Do you see that?19 A. Yes.20 Q. What did you discuss with Mr. Buss21 regarding that note?22 A. I don't recall.23 Q. That was consistent with what you found in24 diligence, though, right?25 A. Yes.

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1 Q. SolarCity often missed its --2 A. Yes.3 Q. SolarCity often missed its guidance that4 provided for installations, right?5 A. Yes.6 Q. And we saw that in the chart too, right?7 A. Yes.8 Q. And the stock price generally drops when9 that happens -- when they announce revised guidance

10 downward, right?11 A. Yes.12 Q. The final page, there's a note, "Need very13 detailed cash flow model by" -- does it say the M&H?14 A. Month. Month, M-T-H.15 Q. Oh, M-T-H, month.16 "Need very detailed cash flow model by17 month. They have." Right?18 A. Yes.19 Q. So Mr. Buss was telling you that this is20 something that they actually have is a cash flow21 model by month, right?22 A. Yes.23 Q. And he says, "Probe every assumption and24 input," right?25 A. Yes.

Page 139

1 Q. And concludes, "The slowing sales in2 Selivo cash burden is really hurting the cash3 timing," right?4 A. Yes. Yes.5 Q. And that would have been the same6 regardless of whether Tesla made a public offer to7 acquire SolarCity, correct?8 A. Yes.9 (Exhibit 14 was marked for

10 identification and attached11 hereto.)12 BY MR. RELIFORD:13 Q. Ms. McBean, the court reporter has handed14 you what's been marked as Exhibit 14 in this15 deposition. It's a document Bates-labeled16 EVR-TESLA_180255.17 Can you describe this document for the18 record?19 A. These are SolarCity board slides that were20 posted to the data room. They are board slides from21 February 2016 that show cash forecasts, cash flow by22 quarter, and monthly liquidity for 2016.23 Q. Do you see on slide -- well, it's the --24 it's got the Bates stamp 180258.25 A. Yes.

Page 140

1 Q. 2016 liquidity by month?2 A. Yes.3 Q. There's a note, "May, August, September4 currently show significant liquidity concerns."5 Do you see that?6 A. Yes.7 Q. So that was advice that the SolarCity8 board was receiving from its management team in9 February of 2016, correct?

10 A. Yes.11 Q. And that was, again, four months before12 Tesla's public offer, correct?13 A. Yes.14 Q. And this is information that you just15 discovered in mid-July 2016, correct?16 A. Correct.17 Q. Fair to say it was nonpublic information,18 correct?19 A. Yes.20 Q. This is information Mr. Musk had, though,21 correct?22 A. I would imagine so as a SolarCity board23 member, but I don't have direct knowledge of that.24 Q. You would expect Mr. Gracias to have the25 same information, correct?

Page 141

1 A. Yes.2 Q. You would expect Mr. Buss to have that3 same information, correct?4 MS. LAVELY: Objection to form.5 THE WITNESS: No.6 BY MR. RELIFORD:7 Q. Not at all?8 A. I don't recall if he was CFO of9 Tesla SolarCity at the time.

10 Q. Was he still operating under a contract11 with SolarCity?12 A. I don't --13 MS. LAVELY: Objection to form.14 THE WITNESS: I don't recall.15 BY MR. RELIFORD:16 Q. You never asked?17 A. I'm sure we asked. I don't remember the18 exact dates of when he was working with SolarCity.19 Q. There's a note here, "Revolver20 liquidity" --21 (Reporter clarification.)22 Q. There's a note that says, "Revolver23 liquidity covenant as of 12-31-2015 was $116.324 million."25 Do you see that?

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1 A. Yes.2 Q. And then the slide circles the three3 months where they are going to fall beneath that4 liquidity covenant, correct?5 A. Yes.6 Q. Other than that, were there other7 significant liquidity concerns at SolarCity that you8 uncovered in diligence?9 A. This was the primary concern was the

10 default on the revolver.11 Q. What do you mean by "default"?12 A. If they go below the 116.3 liquidity13 covenant, then they could default on the revolver.14 Q. By this point in time, you still hadn't15 received the financial forecasts for SolarCity,16 correct?17 MS. VENEZIA: Objection to form.18 MR. RELIFORD: I can make that more19 specific. You're right.20 Q. By July 13th -- or strike that.21 By July 12th, you still hadn't received22 the forecast for SolarCity, correct?23 MS. VENEZIA: Same objection.24 THE WITNESS: I believe that's correct.25

Page 143

1 (Exhibit 15 was marked for2 identification and attached3 hereto.)4 BY MR. RELIFORD:5 Q. This is an email chain between yourself,6 Roger Altman, Chuck McMullan, Stuart Francis, and7 Preston Comey; is that right?8 A. Yes.9 Q. This take place on July 12th, 2016, right?

10 A. Yes.11 Q. It says here, "I followed up with Susan as12 well" -- or, I'm sorry, let me start with13 Chuck McMullan in this email from 8:59 p.m. on14 July 12th.15 "Follow up with Susan as well to highlight16 the need to focus on the downsized model and that we17 would be asking Lazard to have one prepared. I18 pushed the idea, a call, to start discussing what19 their assumptions might be for that case."20 Do you see that?21 A. Yes.22 Q. He says "downsized." Could that have been23 a typo?24 A. That's a typo.25 Q. He meant downside?

Page 144

1 A. Downside.2 Q. Right. So you did discuss -- or you did3 request a downside model from SolarCity as well?4 A. Multiple times.5 Q. Did you ever get a downside model?6 A. Prior to the announcement of the7 transaction?8 Q. It's almost like you know where I'm going9 with this one. Yeah. Let's start over.

10 You requested a downside model from11 SolarCity; is that right?12 A. Multiple times.13 Q. And you never received one before the14 board ultimately voted to approve the transaction,15 right?16 A. Yes. We did not receive it.17 Q. Why did you request a downside model from18 SolarCity?19 A. Because the base case seemed optimistic to20 us, and we thought it would be prudent to look at a21 lower growth in megawatt and installations case, and22 we asked them for it.23 Q. And this email is on July 12th, 2016,24 right?25 A. Yes.

Page 145

1 Q. All right. And you hadn't received the2 base case yet by then, right?3 A. Yes.4 MS. VENEZIA: Objection to the form.5 Are you representing that?6 MR. RELIFORD: I'm asking.7 Q. Did you not -- you hadn't received the8 base side case -- or base case yet by July 12th,9 right?

10 A. I don't believe so.11 Q. So you asked for the downside model before12 you saw their base model?13 A. Yes.14 Q. Mr. McMullan goes through to talk about15 some of the negotiations with potential lenders on a16 bridge loan, correct?17 A. Yes.18 Q. He writes, "With this many banks in the19 know and looking to place the bridge risk (few will20 want to hold it), preselling, leaks could start.21 There was a recent Debtwire article alluding to22 SolarCity distress if no deal already."23 Do you see that?24 A. Yes.25 Q. What was Evercore concerned would be

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1 leaked with all of the involvement of all of these2 banks?3 A. I'm not sure what he means when he says4 "Alluding to SolarCity distress if no deal already."5 I imagine it's about the financing, right? The6 SolarCity financing. I'm not sure what the next7 sentence means, and that is important to understand8 what he means in the prior sentence.9 Q. The transaction was public at this point,

10 right?11 A. Yes.12 Q. Everybody knew Tesla was going to acquire13 SolarCity, right?14 MS. VENEZIA: Objection to the form.15 MR. RELIFORD: Or strike that.16 Q. Everybody knew Tesla made an offer to17 acquire SolarCity, right?18 A. Yes.19 Q. And you go in the banks to find potential20 bridge financing for SolarCity, right?21 A. Yes.22 Q. And Mr. McMullan is expressing a concern23 that we involve too many banks and people are going24 to start to know that SolarCity is having financing25 problems, right?

Page 147

1 MS. LAVELY: Objection to form.2 THE WITNESS: He's concerned that banks3 will disclose that SolarCity is looking for bridge4 financing.5 BY MR. RELIFORD:6 Q. Why would that be a concern for7 Mr. McMullan?8 A. Because they are looking for financing and9 there could be a perception that they're having

10 difficulty finding financing.11 Q. And, in fact, they were having difficulty12 finding financing, correct?13 A. Yes.14 Q. And that was information that Evercore15 didn't want leaked, correct?16 A. I think it was a concern that it would be17 leaked before we had completed diligence and18 finished our review and process in the deal. This19 is in the middle of the deal. You don't want20 anything leaked during the middle of a deal.21 Q. But wouldn't that concern just lower22 SolarCity's stock price?23 A. Pardon?24 Q. Wouldn't the leak of the information that25 SolarCity was having financial troubles just reduce

Page 148

1 SolarCity's stock price?


3 THE WITNESS: That would be the natural

4 reaction.

5 BY MR. RELIFORD:

6 Q. And you're acquiring -- Tesla is acquiring

7 or trying to acquire SolarCity, right?

8 A. Yes.

9 Q. A lower stock price -- would be good to

10 get a lower price, right?

11 A. I don't want to speculate on -- on what

12 the market would do, what would happen in the market

13 to the stock price.

14 Q. You didn't want the information getting

15 out, though, right?


17 THE WITNESS: Again, when we're working on

18 a deal, you don't want any of the information that's

19 private disclosed into the public domain while

20 you're in negotiations and conducting due diligence.



23 hereto.)

24 BY MR. RELIFORD:


Page 149

1 you what's been marked Exhibit 16 in this2 deposition. It's an email chain between you and3 Mr. Francis and Mr. Altman on July 3rd -- or4 July 13th, 2016.5 Do you see that?6 A. Yes.7 Q. I'm looking at your email at 9:37 a.m.8 A. Yes.9 Q. And this email -- you're sending this in

10 advance of a call you're about to have with Lazard,11 right?12 A. Yes.13 Q. You say, "Roger, I caught up with Stu on14 my call with Lazard last night. They did not seem15 to think it would be a problem for SolarCity to16 provide the low growth, lower cost case, so let's17 see."18 Do you see that?19 A. Yes.20 Q. That's the downside case you requested,21 right?22 A. Yes.23 Q. Lazard said, "Not a problem. We can get24 it to you," right?25 A. Yes.

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1 Q. Never gave it to you?2 A. Yes.3 Q. "Also, interestingly Tanguy" -- that's4 T-A-N-G-U-Y -- "CFO, and Seth, GC, both left on5 two-week vacations out of the country yesterday,6 which is a little strange."7 Did that help -- did that contribute to8 the delays in getting diligence out of SolarCity9 that their chief financial officer and general

10 counsel were gone for two weeks during this process?11 A. Yes. I'm sure that had an impact.12 Q. And then the paragraph concludes, "Also,13 the plan is for SolarCity to seek third-party14 financing for the bridge. All other options are off15 the table."16 What did you mean by that?17 A. They asked Tesla to provide the bridge18 financing. We advised the board that we didn't19 think it was in Tesla's best interest to provide it.20 Tesla -- the board agreed. And we told them to --21 that they would need to find third-party financing22 for that bridge.23 Q. So the third party here isn't distinct24 from banks versus sort of private lenders?25 A. Third party meaning not Tesla.

Page 151

1 Q. So it could have been a bank? It could2 have been anything else? It could have been an3 individual?4 A. Yes. Just not Tesla.5 Q. It could have been solar bonds purchased6 by Elon and Lyndon, right?7 A. Yes.8 Q. You say, "All other options are off the9 table," right?

10 A. Yes.11 Q. "All" implies more than one, right?12 A. Yes.13 Q. All right. Tesla providing bridge14 financing would be one option, right?15 A. Yes.16 Q. You say, "All other options are off the17 table," right?18 A. Yes.19 Q. I mean, what other options were off the20 table as of July 13th, 2016, for SolarCity to find21 bridge financing?22 A. I believe at that time they were also23 requesting Elon to provide the bridge financing. I24 think those were the two options.25 Q. And Elon said no?

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1 A. Ultimately, yes.2 Q. Did you discuss that with Elon?3 A. Me personally? No. We discussed it with4 the board.5 Q. When did you discuss it with the board?6 A. I don't recall.7 Q. As of July 13th, 2016, you had only had8 two meetings with the board, right?9 A. I think that's correct.

10 Q. And one was June 20th. The other was11 July 5th, right?12 A. Yes.13 Q. So you didn't discuss it with the board on14 June 20th or July 5th, this option of Elon providing15 financing, right?16 MS. VENEZIA: Objection to the form.17 THE WITNESS: I don't believe so.18 BY MR. RELIFORD:19 Q. Okay. So when did you discuss this option20 that was at some point on the table before July 13th21 of Elon personally providing bridge financing with22 the board?23 A. I don't recall.24 Q. Other than Tesla providing financing and25 SolarCity -- and Elon personally providing

Page 153

1 financing, are there any other options included in2 this "all other options are off the table" note that3 you have?4 A. I don't believe so.5 Q. Roger Altman responds, "Under the6 circumstances, we should only do this on a timetable7 which works for our diligence needs."8 Do you see that?9 A. Yes.

10 Q. And you respond "Yes. Agreed." Right?11 A. Yes.12 Q. What did you take Mr. Altman's email to13 mean?14 A. That was in relation to the last paragraph15 of my email where it says the internal group is16 still pushing toward a late signing --17 (Reporter clarification.)18 A. -- a signing late next week. And Roger's19 view and my view and Evercore's view is we need to20 conduct thorough due diligence before we can get to21 signing.22 Q. And that would -- that would include23 getting all of the items that you requested from24 SolarCity, right?25 A. Yes.

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1 Q. Including the downside case, right?2 A. It included anything that we were able to3 get.4 Q. You asked for a downside case, right?5 A. Yes.6 Q. Right. Roger and you and Evercore7 agreed --8 A. Yes.9 Q. -- we should only do this on a timetable

10 that meets our diligence needs, right?11 MS. VENEZIA: You have to verbally12 respond.13 THE WITNESS: Yes.14 BY MR. RELIFORD:15 Q. But you didn't wait for the downside case16 that Evercore said wouldn't be a problem to give17 you?18 MS. VENEZIA: Objection to the form.19 BY MR. RELIFORD:20 Q. Lazard, I apologize.21 You didn't wait for the downside case you22 requested and that Lazard told you shouldn't be a23 problem to give you, right?24 A. They ultimately told us that they weren't25 going to provide one to us, which is why Tesla ended

Page 155

1 up putting together its own sensitivity case.

2 Q. When did Lazard tell that you they would

3 not provide you with the downside case?

4 A. I can't remember the exact date, but it

5 would have been around the time when Tesla started

6 putting together its own sensitivity case.

7 Q. That didn't raise any red flags for you?

8 A. I've been on a number of deals where this

9 happened. It's not a -- you know, we thought, based

10 on Lazard's guidance, that we wouldn't be able to

11 get a good downside case from SolarCity directly.

12 But oftentimes the acquirer management team will put

13 together a downside case for the target.

14 MS. VENEZIA: Justin, we have been going

15 about an hour or so. Whenever is a good breaking

16 point we can take a lunch break.

17 MR. RELIFORD: This is as good a place as

18 any to stop.

19 MS. VENEZIA: Okay.

20 MR. RELIFORD: Thank you.

21 THE VIDEOGRAPHER: Off the record. The

22 time is 1:29 p.m.

23 (Whereupon, a luncheon recess was had.)

24

25

Page 156

1 Redwood City, California2 Wednesday, June 5, 20193 2:15 p.m.4 THE VIDEOGRAPHER: Back on the record.5 The time is 2:15 p.m.6 MS. LAVELY: Before we get going, we're7 going to clawback Exhibit 7 -- it was marked earlier8 in the deposition -- on the basis that portions of9 the document reflect Tesla attorney-client privilege

10 based on discussions at this June 20th board11 meeting, and we will coordinate with counsel for12 Evercore to produce a redacted version of this13 document.14 MR. RELIFORD: For the record, plaintiffs15 object to that clawback.16 EXAMINATION (resumed)17 BY MR. RELIFORD:18 Q. Welcome back, Ms. McBean.19 A. Thank you.20 Q. You are still under oath.21 A. Yes.22 Q. Did you discuss your deposition testimony23 at all with counsel during the break?24 A. No.25 Q. The court reporter has handed you what's

Page 157

1 been marked Exhibit 17 in this deposition.2 (Exhibit 17 was marked for3 identification and attached4 hereto.)5 BY MR. RELIFORD:6 Q. Can you identify the document for the7 record?8 A. It looks like an email between -- I need9 to look at it -- Jonathan Mir to me, copying George

10 Bilicic and Stu Francis.11 Q. And George Bilicic is one of the Lazard12 advisors, right?13 A. Yes.14 Q. And who is Jonathan Mir?15 A. Jonathan Mir is also the managing director16 at Lazard.17 Q. Mr. Mir writes you on Friday morning,18 "Courtney, we need cooperation or reverse due19 diligence. The special committee notes the absence20 of any cooperation thus far."21 Were you not cooperating with SolarCity22 diligence requests?23 A. We communicated to them that we would24 provide diligence once they provided us with25 diligence.

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1 Q. And you didn't feel by July 15th that

2 SolarCity was providing you with the diligence that

3 you needed, correct?

4 A. No -- correct.

5 Q. Mr. Mir continues, "Evercore needs to

6 manage the diligence requests coming from Tesla,

7 which are is becoming inappropriate, meaning demands

8 and tone. It is a serious problem that you need to

9 fix."

10 Do you see that?

11 A. Yes.

12 Q. You thought he was being ridiculous,

13 didn't you?


15 THE WITNESS: I thought it was

16 unreasonable.

17 BY MR. RELIFORD:

18 Q. Why did you think it was unreasonable?

19 A. Because we were going through our normal

20 course due diligence. We weren't doing anything

21 unusual. We always do very thorough due diligence

22 on companies. That was the normal process we were

23 proceeding with, and he obviously was pushing back

24 on us.

25 Q. Did you have any thoughts about why Lazard

Page 159

1 was pushing back on the diligence that was being2 requested?3 A. It is fairly customary for investment4 bankers to push back on diligence requests for their5 client. But I think some of this was -- we were6 getting frustrated obviously because of the pace of7 diligence wasn't as fast as we had hoped for.8 Q. You forwarded Mr. Mir's email to Stu9 Francis, right?

10 A. Yes.11 Q. The first sentence, "This is ridiculous,"12 right?13 MS. VENEZIA: I think you are actually14 looking at a different version of this email chain15 than the one you marked.16 MR. RELIFORD: That would be horrible if17 that's the case.18 Q. You shared your view that it was19 ridiculous with Stu Francis, right?20 A. I believe so.21 Q. You responded to Mr. Mir's email,22 "Jonathan, there are significant near-term issues23 that we need to discuss."24 Do you see that?25 A. Yes.

Page 160

1 Q. What were the significant near-term issues

2 that you needed to discuss with Lazard?

3 A. I believe it was diligence, the need for

4 the bridge financing, and the near-term liquidity

5 concerns.

6 Q. You had a call with the Lazard team later

7 in the day on July 15th; is that right?

8 It's not on the document. You can put

9 that aside.

10 A. I can't recall the exact date, but I

11 know -- I know we spoke to Lazard after this email

12 chain.

13 Q. You described it as a very concerning call

14 with Lazard, right?


16 THE WITNESS: I don't recall, but that's

17 possible.



20 hereto.)

21 BY MR. RELIFORD:


23 been marked Exhibit 18. It's an email chain between

24 you, Stu Francis, Roger Altman, Chuck McMullan and

25 Preston Comey. Do you see that?

Page 161

1 A. Yes.2 Q. You write to the group, "I just had a very3 concerning call with Lazard. Are you available to4 speak?"5 A. Yes.6 Q. What was so concerning about the call that7 you had with Lazard on July 15th?8 A. Among the topics we discussed, one was the9 belief that they -- or the view that they would

10 potentially go below the $116 million required11 threshold of cash for the revolver and could12 potentially default on the revolver. On the call,13 it didn't seem like Lazard was aware of that issue.14 Q. Was Lazard aware of the short-term15 liquidity issues that SolarCity was facing16 generally?17 MS. LAVELY: Object to the form.18 THE WITNESS: I don't know what they were19 aware of, but on this call, as I said, they didn't20 seem to be aware that they could potentially default21 on the revolver.22 BY MR. RELIFORD:23 Q. Tell me about that conversation that you24 had with the rest of the team following that call25 with Lazard. What did you guys discuss regarding

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1 your conversation with the Lazard team and how did2 you respond?3 A. We all thought it was unusual. And I4 believe we agreed to then -- that we needed to5 update the board on the discussion.6 Q. You next saw the board on July 19th; is7 that right?8 A. I don't recall the exact date.9 Q. What did you tell the board at your next

10 conversation about your discussion with Lazard?11 A. I recounted the conversation just as I did12 a moment ago.13 Q. What did they say about -- strike that.14 What did Lazard say about getting you the15 diligence you were requesting during this July 15th16 call?17 A. They said they were working on it and18 would provide it as soon as they could.19 Q. Did that make you even more resolved in20 your belief that the Evercore team really needed to21 take its time in due diligence into SolarCity?22 A. Yes.23 (Exhibit 19 was marked for24 identification and attached25 hereto.)

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1 BY MR. RELIFORD:2 Q. You called Elon Musk after that3 conversation; is that right?4 The court reporter has handed you what's5 been marked as Exhibit 19. It's a one-page email6 chain produced at EVR-TESLA_195864.7 You write to Stuart Francis, "Roger just8 called me. I brought him up to speed and told him9 that we were waiting to jump on a call with Elon."

10 Do you see that?11 A. Yes.12 Q. Was that a previously planned call with13 Mr. Musk?14 A. I don't recall.15 Q. Did you convene the call in light of the16 conversation you had just had with Lazard?17 A. It's possible.18 Q. What was your call with Mr. Musk -- or19 strike that.20 What do you recall of your conversation21 with Mr. Musk?22 A. I recounted the conversation with Lazard,23 including an update on diligence.24 Q. And what did Mr. Musk say?25 A. He was very concerned about the pace of

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1 diligence, and obviously was as surprised as we were2 about Lazard's reaction to the revolver issue.3 Q. What do you mean by he was as surprised as4 you were about Lazard's reaction to the revolver5 issue?6 A. That they didn't seem to know that this7 document existed that showed that they would go8 below the 116 million in July.9 Q. But Mr. Musk wasn't surprised, right,

10 about the potential of SolarCity tripping their debt11 covenants?12 A. I don't believe so.13 Q. What did Mr. Musk say he was going to do?14 A. He was going to see what he would do about15 accelerating the diligence requests, responses to16 the diligence requests.17 Q. How would he be able to make Lazard move18 faster?19 A. He could make the company move faster.20 Q. Which company?21 A. SolarCity.22 Q. Why did you call Mr. Musk rather than23 anybody else at Tesla about this issue?24 A. Well, I believe we called Todd first, who25 is the general counsel. Then we updated Elon, who

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1 was in a position to be able to make those requests2 directly to SolarCity.3 Q. So then Mr. Musk was now going to get4 involved in the diligence process?5 MS. LAVELY: Objection to form.6 THE WITNESS: I wouldn't say -- he wasn't7 conducting the diligence. He was requesting that8 they respond to our requests for diligence.9 BY MR. RELIFORD:

10 Q. By the following morning, Mr. Maron was11 setting up daily check-in calls that Elon would be12 on to discuss the progress of diligence, right?13 A. Yes.14 (Exhibit 20 was marked for15 identification and attached16 hereto.)17 BY MR. RELIFORD:18 Q. The court reporter has handed you what's19 been marked as Exhibit 20. It's an email chain from20 July 15, 2016. So it would be the same day that you21 had a conversation with Mr. Musk, right?22 A. Yes.23 Q. And the first email in the chain is from24 Todd Maron who is the GC, right?25 A. Yes.

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1 Q. He writes "All: As discussed, we're going2 to have daily check-in call with Elon to discuss3 dating items and progress."4 Do you see that?5 A. Yes.6 Q. And the first email is an agenda for the7 call sent out by Jonathan Chang; is that right?8 A. Yes.9 Q. And the call was anticipated to be at 10

10 a.m. on July 16th, correct?11 A. Yes.12 Q. Who is Jonathan Chang?13 A. He's the current general counsel of Tesla.14 At the time he was in the legal department at Tesla.15 Q. This is a pretty lengthy list of items16 that Mr. Chang sets out in his email; would you17 agree?18 A. Yes.19 Q. You discussed these all in the call?20 A. This was basically a checklist of21 everything that we needed to complete.22 Q. And you discussed these items on the call?23 A. Yes.24 Q. The expectation would be that you'd have a25 call every day with Mr. Musk?

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1 A. Yes.2 Q. And that happened, correct?3 A. Yes.4 Q. Mr. Musk can be a quiet, shy guy, correct?5 MS. VENEZIA: Objection to the form.6 THE WITNESS: Not typically.7 BY MR. RELIFORD:8 Q. What is he like, typically?9 A. On calls with us during the process?

10 Q. Let's start there. Sure, yeah.11 A. He's obviously incredibly an impressive12 person. A lot of people call --13 MR. RELIFORD: Hold on. Let's take a14 break.15 THE VIDEOGRAPHER: Going off the record.16 The time is 2:35 p.m.17 (Recess.)18 (Time off record: 2:35 p.m.)19 (Time back on record: 3:11 p.m.)20 THE VIDEOGRAPHER: Back on the record.21 The time is 3:11 p.m.22 MR. RELIFORD: For the purposes of the23 record, we had to take a break because of a leak24 that happened in the conference room.25 I'll ask the court reporter, Madam Court

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1 Reporter, do you mind reading back the last two2 questions and answers.3 (The record was read by the4 court reporter, as requested)5 BY MR. RELIFORD:6 Q. So why don't we pick up there. Why don't7 you finish your answer to that question. What was8 Elon like on these calls?9 A. On the calls -- as I said, he's incredibly

10 impressive. He's a visionary.11 On the calls he is a leader. He has a12 very defined vision for Tesla. On the board calls13 he -- he was a participant. But there were many14 voices obviously in the sessions when he was15 involved.16 Q. So he didn't just sit idly by while these17 daily update calls happened; he was an active18 participant on those calls?19 A. On the daily update calls, yes, he was an20 active participant.21 Q. Did he ever express disagreement with22 anything anybody was saying during calls?23 A. I don't believe so.24 (Exhibit 21 was marked for25 identification and attached.)

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1 BY MR. RELIFORD:2 Q. Ms. McBean, the court reporter has handed3 you what's been marked as Exhibit 21. After you4 have had a chance to review it, could you just5 identify it for the record.6 A. It is an email chain among various members7 of the deal team at Evercore.8 Q. And the email chain is from Saturday,9 July 16th; is that right?

10 A. Yes.11 Q. Starts with an email from you at 10:2012 a.m., right?13 A. Yes.14 Q. And you sent this during your call with15 Elon and the rest of the team, correct?16 A. I imagine so.17 Q. You write to your team, "Who is working on18 the qualitative pages for the fairness book and can19 I see a draft?"20 Do you see that?21 A. Yes.22 Q. When did you expect the next board meeting23 to happen?24 A. I don't recall.25 Q. Mr. Comey responds to you --

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1 (Reporter clarification.)2 Q. Comey -- C-O-M-E-Y.3 -- responds to you with a list of the4 people responsible for the various pages in the5 deck, right?6 A. Yes.7 Q. And can you read your 10:29 a.m. email8 into the record.9 A. "We should catch up after this. We are

10 running out of time. Plan is to sign this week in11 fairness" --12 (Reporter clarification.)13 A. -- "is to sign this week in fairness on14 Monday. We need to call Lazard today."15 Q. Why did you tell your team you were16 running out of time?17 A. Running out of time to prepare our18 materials.19 Q. Your materials for what?20 A. The -- a potential board book. We often21 put those together in advance, far in advance of a22 board meeting, because, as I said earlier, we review23 all of our analyses and assumptions with the24 fairness committee internally and oftentimes there's25 back and forth between the committee.

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1 They -- they dig deep into our

2 assumptions, make sure they agree with the

3 assumptions that we've made, and so we don't have,

4 you know, a committee meeting right before our board

5 meeting, typically one in advance. We often have

6 multiple meetings with them to make sure that

7 everyone agrees with the assumptions that we make.

8 Q. So the plan was to talk to your fairness

9 committee on Monday, which would be July 18, right?

10 A. I'm not sure which Monday it's referring

11 to.

12 Q. Well, it says, "Plan is to sign this week

13 and fairness is on Monday."

14 A. Yeah, so it would have been -- this was on

15 Saturday, so it would have been Monday.

16 Q. So the plan was to go to the fairness

17 committee on Monday, the 18th?

18 A. Yes.

19 Q. And have a deal signed up by the end of

20 the week, which would be the 23rd?

21 A. Yes.

22 Q. And that was the plan discussed with

23 Mr. Musk during this 10:00 call?

24 A. I believe so.

25 Q. It was his plan, right?

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1 MS. VENEZIA: Objection to the form.2 THE WITNESS: I don't think it was -- I3 don't know whose plan it was. I think it was the4 collective team's plan.5 BY MR. RELIFORD:6 Q. Mr. Musk being a member of that collective7 team, right?8 A. He was on the call.9 Q. Did you tell Mr. Musk that you didn't even

10 have the diligence necessary to prepare a downside11 case for SolarCity yet?12 MS. VENEZIA: Objection to the form.13 THE WITNESS: I'm sure we communicated to14 him that we needed to complete our diligence15 obviously before we could get to -- we could issue a16 fairness presentation.17 BY MR. RELIFORD:18 Q. But the plan was still to have it signed19 that week?20 MS. KEETON: Objection. Form.21 THE WITNESS: If we were able to complete22 our diligence by that time.23 (Exhibit 22 was marked for24 identification and attached25 hereto.)

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1 BY MR. RELIFORD:2 Q. The court reporter has handed you what's3 been marked as Exhibit 22. This is an email4 exchange you had with Stuart Francis in advance of5 that 10:00 call on Saturday, July 16th, right?6 A. Yes.7 Q. Stuart Francis writes, "Are we the parties8 preparing the scaled back growth" --9 (Reporter clarification.)

10 Q. Mr. Francis writes, "Are we the parties11 preparing the scaled back growth plan, and assuming12 we are, what, if anything, should we say about it on13 the precall and in the call with Elon?"14 Do you see that?15 A. Yes.16 Q. So by July 16, 2016, the decision had been17 made that Evercore would be preparing the downside18 case?19 THE VIDEOGRAPHER: Sorry. I need to go20 off the record.21 MR. RELIFORD: Off the record.22 THE VIDEOGRAPHER: Going off the record.23 The time is 3:19 p.m.24 (Recess.)25 (Time off record: 3:19 p.m.)

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1 (Time back on record: 3:21 p.m.)

2 THE VIDEOGRAPHER: Back on the record.

3 The time is 3:21 p.m.

4 BY MR. RELIFORD:

5 Q. By July 16, 2016, had a decision been made

6 that Evercore would prepare a downside case rather

7 than waiting for downside projections from Lazard?

8 A. We were told they didn't exist and

9 wouldn't be provided by Lazard. Lazard told us

10 that. So we decided that it was prudent to put

11 together a downside case.

12 Evercore is not in the business of putting

13 together projections. We will put together, you

14 know, the constructs of a model based on input from

15 our client on the assumptions. So it was Tesla's

16 sensitivity case of the SolarCity model.

17 Q. Before we had discussed the -- the -- that

18 you weren't able to recollect the timing of when

19 Lazard told you that they wouldn't give you a

20 downside case.

21 A. Yes.

22 Q. All right. Does this refresh your

23 recollection that it happened before July 16th?

24 A. Based on this email it would have had to

25 have been before July 16th because we proceeded down

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1 this path because we were told it didn't exist and2 it wouldn't be provided.3 Q. Who told you that the downside model4 didn't exist?5 A. I believe it was Jonathan Mir.6 Q. So Jonathan Mir lied to you?7 MS. VENEZIA: Object to the form.8 MS. LAVELY: Objection.9 THE WITNESS: I don't know.

10 BY MR. RELIFORD:11 Q. Well, you eventually got the restricted12 liquidity case, right?13 A. Yes.14 Q. That was their downside case, right?15 A. Yes.16 Q. It was in existence by mid-July, right?17 A. Okay. I --18 MS. VENEZIA: Objection to the form.19 Are you telling her that?20 (Reporter clarification.)21 MS. VENEZIA: Objection to the form.22 Are you representing that to the witness?23 BY MR. RELIFORD:24 Q. Oh, I'm sorry. When you got the25 restricted liquidity case from Lazard you didn't ask

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1 how long they had it?2 MS. VENEZIA: Objection to the form. That3 wasn't your prior question.4 THE WITNESS: No.5 BY MR. RELIFORD:6 Q. You didn't ask at all? They sent you this7 case that you had been waiting for and you didn't8 say, hey, you told me it didn't exist?9 A. They didn't -- we saw it in the proxy

10 disclosure.11 Q. So then he lied to you?12 MS. VENEZIA: Objection.13 THE WITNESS: I don't know when the14 downside case, their SolarCity downside case, was15 created.16 BY MR. RELIFORD:17 Q. You respond to Mr. Francis around 10:0818 p.m., "Sorry for the delay. Yes, I agree. We do19 not have enough information yet to do the downside20 case."21 Do you see that?22 A. Yes.23 Q. That was a true statement as of July 16th,24 right?25 A. Yes. We waited --

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1 MS. LAVELY: Counsel, I think you2 misrepresented the time on the email.3 MR. RELIFORD: I have not. The top email4 is in Greenwich Mountain Time, which is seven hours5 later.6 MS. LAVELY: I understand. You said 10:087 p.m. It's actually --8 MR. RELIFORD: Oh, I'm sorry, 10:08 a.m.9 I apologize.

10 MS. VENEZIA: And it's actually --11 THE WITNESS: It's 5:08.12 MS. VENEZIA: -- Greenwich Mean Time --13 MR. RELIFORD: Greenwich Mean Time. So14 that would be --15 MS. VENEZIA: -- just so we're clear.16 BY MR. RELIFORD:17 Q. Just to be clear, this top email was sent18 at 10:08 a.m. on July 16th, right?19 A. Yes.20 Q. What information did you feel was21 necessary to prepare a proper downside case?22 A. We needed more detail on the cost side,23 because we adjusted the costs in addition to24 adjusting the megawatt growth. So you don't adjust25 the -- the top line without taking into account

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1 adjustments of the costs. And we didn't have the2 detail of the costs that we needed in order to do3 that at this time.4 Q. Other than the costs, was there anything5 else that you needed to do a downside case for6 SolarCity?7 A. I don't believe so.8 Q. When did you get the information on the9 costs that you needed to do the downside case?

10 A. I don't recall the exact date, but I11 believe it was shortly thereafter.12 Q. What was KPMG's role in connection with13 the transaction?14 A. They performed the accounting due15 diligence.16 Q. And what do you mean by "accounting due17 diligence"?18 A. KPMG typically comes in to, you know, look19 at the -- the historical financials in the20 accounting. I believe that was their role.21 (Exhibit 23 was marked for22 identification and attached23 hereto.)24 BY MR. RELIFORD:25 Q. The court reporter has handed you what's

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1 been marked as Exhibit 23 in this deposition. Have2 you ever seen a copy of this email before?3 A. No.4 Q. Do you know who John McPhee is?5 A. I don't believe so.6 Q. Did you have any dealings with KPMG in7 connection with the transaction?8 A. I don't believe so.9 Q. Mr. McPhee writes to Mr. Wheeler, "Please

10 take this note in the spirit of being constructive.11 There are impediments and risks to the process that12 need to be addressed and, in our view, it is not13 realistic to meet an August 15th filing deadline14 with the appropriate quality required and an15 adequate review process.16 "In a typical merger process, financial17 and tax -- and tax due diligence is performed prior18 to signing the merger agreement -- or signing an19 agreement. The due diligence reports and20 information gathered or used to support the S-421 filing process including initial price allocation22 considerations.23 "The SC financial statements are highly24 complex and make pro forma adjustments and PPA25 challenging to complete quickly, as we have seen

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1 from the time required from the bankers to develop2 an appropriate financial model."3 Do you see that?4 A. Yes.5 Q. Do you agree with Mr. McPhee's statement6 that, in a typical merger process, financial and tax7 due diligence is performed before -- or performed8 prior to signing the agreement?9 A. Yes. And from our perspective, it was in

10 this case.11 Q. Further down Mr. McPhee writes, "We have12 taken the information provided by SolarCity as far13 as possible. We have monitored the data room in14 realtime and confirmed the critical information15 requested for the S-4 and due diligence has not yet16 been provided."17 Do you see that?18 A. Yes.19 Q. "We were told yesterday that key pieces of20 information had been provided during this week to21 Lazard for review. However, it is expected that22 this information will not be provided until sometime23 next week after signing."24 Do you see that?25 A. Yes.

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1 Q. So KPMG's view was that there was critical2 information that still hadn't been provided by3 July 30th, 2016. Do you disagree with that4 statement?5 MS. VENEZIA: Objection to the form.6 MS. LAVELY: Objection.7 THE WITNESS: The information that we8 needed, I disagree with that statement, yes.9 BY MR. RELIFORD:

10 Q. So you had all the information necessary11 to do tax due diligence?12 A. We don't do tax due diligence.13 Q. Does the DCF analysis that you did14 contemplate that SolarCity would pay income taxes?15 A. Yes. But we're not tax experts.16 Q. And that -- and information about taxes17 doesn't really impact your valuation of --18 A. We had information on taxes, but we19 weren't performing tax due diligence.20 Q. So you wouldn't need the information that21 KPMG would need to do their job?22 A. KPMG needs very different information than23 we do, yes.24 Q. Has SolarCity ever paid any meaningful25 amount of income taxes?

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1 A. I don't believe so.2 (Exhibit 24 was marked for3 identification and attached4 hereto.)5 BY MR. RELIFORD:6 Q. Going back to that July 16 - 17 time7 period, you had asked for the draft deck from your8 team; is that right?9 A. Yes.

10 Q. And you sent comments on that draft deck11 around 11:20 a.m. on the 16th?12 A. On the 17th.13 Q. On the 17th, rather.14 A. Yes.15 Q. Are these your comments?16 A. Yes.17 Q. Can you go to the executive summary on18 page 1 of the attachment?19 A. Yes.20 Q. EVR-TESLA_82573.21 Under the main bullet point, do you see22 "Since the announcement, we have engaged in due23 diligence in SolarCity"?24 A. Yes.25 Q. The second bullet point down, it says,

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1 "Given our view that this model is somewhat2 optimistic given SolarCity's liquidity challenges,3 we put together a revised case with lower growth4 costs and capital needs [identify all other5 adjustments]."6 Do you see that?7 A. Yes.8 Q. So the sensitivity case that you put9 together was done in part to account for the

10 liquidity challenges that SolarCity was facing,11 correct?12 A. Yes.13 Q. At the bottom it has a note, "Finally, as14 a downside case, we considered whether, if we shut15 down DevCo, PowerCo cash flows could service16 SolarCity's existing debt," right?17 A. Yes.18 Q. And we saw that in a prior report as well?19 A. Yes.20 Q. Had you done further diligence into21 whether or not you could shut down DevCo and have22 PowerCo cash flow service SolarCity's existing debt23 by that point in time?24 A. Yes.25 Q. And you planned to discuss that at the

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1 July 19th meeting, right?2 A. Yes.3 Q. Turn to page 3, the slide that's EVR --4 (Reporter clarification.)5 Q. It's EVR-TESLA_82576. This is a slide on6 the due diligence findings, right?7 A. Okay.8 MS. VENEZIA: He's asking can you tell one9 way or the other?

10 THE WITNESS: It looks like -- it's hard11 to know without the title, but it looks like due12 diligence concerns.13 BY MR. RELIFORD:14 Q. In your -- in your comments, "In your15 point on the shift in their business from resi to16 commercial."17 Do you see that?18 A. Yes.19 Q. What did you mean by that?20 A. At the time, the business was primarily21 residential and they were increasing their sales of22 commercial solar.23 Without seeing the title, I'm not sure if24 this is concerns or if this is just a list of all of25 the due diligence topics.

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1 Q. Did you evaluate the commercial2 installation forecasts that SolarCity provided with3 an eye towards its existing capacity to actually4 handle that amount of commercial installations?5 MS. LAVELY: Objection. Form.6 THE WITNESS: Can you repeat that7 question? I'm not sure I understand.8 BY MR. RELIFORD:9 Q. Sure. What did you do to diligence

10 whether SolarCity was actually in a position to11 shift its focus to commercial as opposed to12 residential?13 A. They weren't shifting their focus. They14 already were in the commercial solar business. It15 was becoming a bigger part of their business over16 the forecast period.17 We didn't appreciate that based on the18 public information, but we had extensive due19 diligence sessions on both the residential sales20 force, the commercial sales force, how they were21 positioned in both markets.22 To my earlier point, they are the market23 leader in both residential and commercial; so they24 were very well positioned to go after the commercial25 market in a more aggressive manner than they had

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1 been. Prior to that time, they were just more

2 focused on residential.

3 Q. And what did you do to come to that

4 conclusion?

5 MS. LAVELY: Objection. Asked and

6 answered.

7 THE WITNESS: We had numerous due

8 diligence sessions with SolarCity management

9 teams -- management team. Sorry.

10 BY MR. RELIFORD:

11 Q. So it was conversations with SolarCity's

12 management teams that gave you comfort they could

13 actually meet their projections of growth in the

14 commercial solar space?


16 THE WITNESS: Yes. In their historical

17 performance in the commercial segment of the market.

18 BY MR. RELIFORD:

19 Q. Why were you highlighting that as a

20 diligence concern?

21 MS. LAVELY: Objection. Form.


23 THE WITNESS: As I said, I don't know if

24 this is just a list of diligence topics or if this

25 is a concern.

Page 187

1 I do know that we wanted to make sure that2 any shift in the end markets of their business was3 adequately captured in the model. So that was4 something we wanted to do for their due diligence5 much like the loan product, which you'll see in a6 lot of these documents, was that factored into the7 model. Things that we wanted to dig in deeper.8 BY MR. RELIFORD:9 Q. What do you mean by "the loan product"?

10 A. They had just released a loan product, and11 that was one of the things that we diligenced to see12 what their assumptions were for the loan product in13 the model.14 Q. Also here, "On the clear need, please be15 much more granular about the situation."16 Do you see that?17 A. Yes.18 Q. And you can see the liquidity blurb right19 here?20 A. Yes.21 Q. What did you mean by "much more granular"?22 A. I believe I meant timing.23 Q. What do you mean by "timing"?24 A. At what point -- it says that they are25 dangerously low to crossing below the 116 minimum.

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1 I believe I wanted to note -- I think I -- I'm not

2 sure about the timing, but I think we knew at that

3 time when they would have gone below that threshold.



6 hereto.)

7 BY MR. RELIFORD:

8 Q. You have been handed what's been marked as

9 Exhibit 25 in the deposition.

10 This is an internal email chain between

11 you and your team on July 17th; is that right?

12 A. Yes.

13 Q. Under the first email in time?

14 A. In time.

15 Q. Meaning Ms. Shaw's 8:10 p.m. email.

16 It says, "Team, July 13 weekly cash flow

17 forecast was just posted to the dataroom. Cash

18 balances in all periods are greater than 100. It

19 looks like the primary difference from the previous

20 forecast we looked at has to do with timing of tax

21 equity received. Overall magnitude of tax equity

22 has not changed significantly, with the exception of

23 September where it is projected to be $34 million

24 less."

25 Do you see that?

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1 A. Yes.2 Q. You see that. You see before this another3 weekly cash forecast, right?4 A. Yes.5 Q. Ms. Shaw goes on, "Additionally, there is6 a decrease in material, operations, S&M and overhead7 costs in July with an increase in these costs in8 August versus the July 6th forecast."9 Do you see that?

10 A. Yes.11 Q. So at this time you were aware that12 SolarCity was pretty much just pushing account13 payables forward to maintain their cash balances14 above their debt covenant, right?15 A. Yes.16 MS. LAVELY: Objection to form.17 BY MR. RELIFORD:18 Q. Did that give you any concerns about19 SolarCity's solvency?20 A. It gave us concerns about the liquidity21 situation, which we took into account in our22 analysis.23 Q. Have you ever had another transaction24 where the target company was shifting accounts25 payable to avoid default?

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1 MS. LAVELY: Objection to form.2 THE WITNESS: Not that I can recall.3 BY MR. RELIFORD:4 Q. Did you tell the board that SolarCity was5 shifting accounts payable just to avoid default?6 MS. LAVELY: Objection to form.7 THE WITNESS: I believe so.8 BY MR. RELIFORD:9 Q. When?

10 A. I can't recall.11 Q. What was the board's reaction when they12 found that out?13 A. I can't recall.14 Q. Would it have been a board meeting after15 July 16th?16 A. I believe so.17 Q. Would it have been at the next board18 meeting -- July 19th?19 A. I just can't recall.20 Q. If you did tell them that on July 19th,21 would you expect it to be reflected in the deck that22 SolarCity is literally not paying its bills just to23 remain -- or just to avoid an event of default?24 MS. VENEZIA: Objection to the form.25 THE WITNESS: Could you repeat the

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1 question?2 BY MR. RELIFORD:3 Q. Sure. You knew they were shifting4 accounts payable so that they didn't default on5 their revolver, correct?6 MS. LAVELY: Objection to form.7 THE WITNESS: Yes.8 BY MR. RELIFORD:9 Q. And did you tell the board that at the

10 July 19th meeting, which was the next meeting that11 you had with the board?12 MS. VENEZIA: Objection to the form.13 Asked and answered.14 THE WITNESS: I don't recall the date.15 BY MR. RELIFORD:16 Q. You responded to Ms. Shaw on July 17,17 "Greater than 100, but less than 116."18 Do you see that?19 A. Yes.20 Q. And 116 was the cash balance they had to21 keep for -- to avoid a default on the revolver,22 right?23 A. Yes.24 Q. And she responds saying, "Yes. It's below25 116" -- $116 -- "116 in the following weeks," and

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1 then lists seven different weeks in the forecast

2 period that they would fall below the debt covenant;

3 is that right?

4 A. Yes.

5 Q. Mr. McMullan responded, "Also, in later

6 dated report, $90 million projected cash in 7/8

7 becomes $11 in one short week. Looks like fewer tax

8 equity and SREC proceeds overall in addition to

9 one-week pushback. Possible they are having to

10 increase yields and thus raise less financing.

11 Argues for more downside and realized cash inflows."

12 Do you see that?

13 A. Yes.

14 Q. What did you understand Mr. McMullan to

15 mean when he said, "Possible they are having to

16 increase yields and thus raise less financing"?

17 A. That the rate at which they could raise

18 capital was higher -- that was possibly higher is

19 what he's saying.

20 Q. What did Lazard -- or strike that.

21 How did Evercore take that into account

22 when preparing this downside model?

23 A. In the downside case, we decreased

24 megawatts deployed which requires less capital.

25 Q. Anything else?

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1 A. We decreased costs and financing because2 financing is the engine that runs the -- that3 finances the megawatts.4 Q. Anything else?5 A. Those are the primary adjustments that6 were made.7 Q. Did you look at the discount rate that8 SolarCity was using in connection with its various9 financing instruments?

10 A. Yes.11 Q. And you made no adjustments there?12 A. To current debt?13 Q. For future findings -- when finding the14 present value of those future financings, the15 discount rate used.16 A. In what analysis?17 MS. VENEZIA: Objection to form.18 BY MR. RELIFORD:19 Q. We'll circle back there.20 There's an attachment to this email,21 Mr. Comey's email. What is this document?22 A. This is analysis of the covenants for23 SolarCity's debt.24 Q. And this is the document that was posted25 to the data room by SolarCity, right?

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1 A. Yes. Yes.2 Q. And this explains that a default on their3 revolver would result in cost defaults on other of4 their debts, right?5 A. Yes. Yes.6 Q. It's fair to say that, as of July 17,7 2016, Evercore was still trying to understand the8 totality of the liquidity concerns facing it --9 SolarCity, right?

10 A. Yes.11 (Exhibit 26 was marked for12 identification and attached13 hereto.)14 BY MR. RELIFORD:15 Q. The court reporter has handed you what's16 been marked as Exhibit 26 in the deposition. Can17 you identify it for the record?18 A. It's --19 MS. VENEZIA: Justin, just one second.20 The PowerPoint doesn't have a Bates stamp on it.21 MR. RELIFORD: It was produced natively.22 MS. VENEZIA: Thank you.23 THE WITNESS: It's a draft of board24 materials dated July 19th, 2016.25 BY MR. RELIFORD:

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1 Q. Was this the next iteration of the draft2 that you got to see since making your comments for3 the team?4 A. I'm not sure. I believe so.5 Q. Can you go to the executive summary? The6 executive summary explains that the model you7 received from SolarCity was more aggressive than the8 Morgan Stanley model that you had used in the June9 20th presentation, right?

10 A. Yes.11 Q. And at that time, it was Evercore's belief12 that the model was somewhat optimistic in light of13 SolarCity's liquidity challenges?14 A. Yes.15 Q. And so you put together this revised case16 that's described, in summary form, right here in17 these bullet points, right?18 A. Yes.19 Q. In the initial revised case had20 residential megawatt growth reduced by 30 percent;21 is that right?22 A. Yes.23 Q. Commercial and other megawatt growth24 reduced by 50 percent, right?25 A. Yes.

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1 Q. What was other megawatt growth? What's

2 captured by other megawatt growth?

3 A. They have some very small part but utility

4 scale. So, for example, in Hawaii.

5 Q. Anything else besides utility

6 installments -- installations?

7 A. I don't believe so.

8 Q. Your downside model reduced sales and

9 marketing costs proportionately to the decrease in

10 megawatts that you took out, right?

11 A. Yes.

12 Q. There was a reduction in overhead and

13 research and development, right?

14 A. Yes.

15 Q. Can you explain to me this adjustment for

16 loan product ramp from 7 percent in Q2 '16 to

17 30 percent in Q4 2019, management case assumes ramp

18 up to 20 percent?

19 A. Yes. At the time the majority of the

20 business was -- the majority of the sales were

21 leases, and so a customer would lease the sale --

22 the system from SolarCity.

23 More and more the market was transitioning

24 to an ownership model, and some customers would buy

25 the system outright and pay cash and other customers

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1 would do so through a loan. And SolarCity2 introduced a loan product in -- I believe in 2016.3 So we made an assumption that that product4 would grow through the forecast period as a percent5 of sales.6 Q. Would that have the effect of increasing7 or decreasing the value of SolarCity?8 MS. VENEZIA: Objection to form.9 THE WITNESS: It shouldn't have an impact

10 on the megawatts deployed, but it does result in11 lower costs -- lower upfront costs.12 BY MR. RELIFORD:13 Q. Meaning more cash flow?14 A. Yes.15 Q. This next bullet point, "50 percent of16 excess Silevo module inventory sold to the market at17 the internal transfer price."18 What's that adjustment?19 A. I believe this -- that the adjustment is20 on the price at which Silevo was able to sell its21 excess inventory. And I believe that we reduced it,22 and that's what that bullet is referring to.23 Q. So that would have the effect of24 decreasing the value of SolarCity, right?25 A. Yes.

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1 Q. By that time had you discussed these2 assumptions with Tesla management?3 A. Yes.4 Q. And they thought it was appropriate to5 reduce megawatts in -- residential megawatt growth6 by 30 percent?7 A. I don't think they gave us the 30 percent.8 I think they gave us -- I think we discussed about a9 potential range and -- because ultimately I think we

10 agreed to, I want to say, 25 percent for residential11 and 30 percent for commercial, and that's what we12 were guided to do, if I recall correctly.13 Q. How did 30 percent end up in this deck?14 A. This was a draft put together by the -- by15 the team. So it wasn't the final draft that was --16 that, you know, had Tesla's final input on the17 assumptions.18 Q. So this reflects your internal thinking,19 right, this 30 percent?20 MS. VENEZIA: Objection to the form.21 THE WITNESS: No, it was based on an22 initial discussion, but that initial discussion23 was -- was a -- it was not as refined as it was over24 time.25 BY MR. RELIFORD:

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1 Q. When was that initial discussion?2 A. It was prior to putting this deck3 together.4 Q. Was it the July 15th call that we talked5 about -- or July 16th call that we talked about?6 MS. VENEZIA: Objection to form.7 THE WITNESS: I don't recall when it was.8 BY MR. RELIFORD:9 Q. And whose idea was it to reduce

10 residential megawatt growth?11 A. This would have been based on discussions12 with the Tesla energy team and also Jason Wheeler.13 Q. So they didn't direct you to any one14 specific percentage in that first conversation,15 right?16 A. Not in the first conversation.17 Q. That would be the same for the 50 percent18 reduction in commercial and other megawatt growth,19 right?20 A. Yes.21 Q. You have here, "Our valuation analysis is22 based on the following methodologies," and then23 lists five methodologies. Do you see that?24 A. Yes.25 Q. And one is discounted cash -- or it says,

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1 "Primary" -- strike that.

2 Primary -- the primary methodologies you

3 were using were discounted cash flow and the sum of

4 the parts analysis, right?

5 A. Yes.

6 Q. And secondary were analyst price targets,

7 trading ranges and precedent premiums paid, right?

8 A. Yes.

9 Q. Why was a discounted cash flow model one

10 of the primary ways to value SolarCity that Evercore

11 used?

12 (Reporter clarification.)

13 Q. -- that Evercore used?

14 A. Discounted cash flow analysis is often the

15 primary valuation methodology used in acquisitions.

16 It is a reflection of the intrinsic value of the

17 company because it looks at the cash flows over time

18 and discounts them to present value.

19 Q. SolarCity was not good at preparing

20 forecasts, right?


22 THE WITNESS: We thought their management

23 case was optimistic, which is why we prepared the

24 sensitivity case.

25

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1 BY MR. RELIFORD:2 Q. Brad Buss said they were horrible, right?3 A. Yes.4 MS. LAVELY: Objection to form.5 BY MR. RELIFORD:6 Q. Isn't the DCF only as reliable as the7 inputs you use?8 A. Yes. Which is why we performed it on the9 sensitivity case as well.

10 Q. Can you turn to page 5 of the deck. This11 is another football field; is that right?12 A. Yes.13 Q. And it has a 5-year discounted cash flow14 analysis based off the management case and the15 revised case, right?16 A. Yes.17 Q. Based off of the assumptions that we've18 been discussing, it resulted in a DCF range of 15 to19 $25 a share -- the revised case resulted in a DCF20 analysis of 15 to $25 a share, right?21 A. Yes.22 Q. So the low end would be significantly23 below the offer price or the offer date price of24 SolarCity shares, right?25 MS. VENEZIA: Objection to form.

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1 THE WITNESS: Can you repeat the last one?2 BY MR. RELIFORD:3 Q. Sure. Offer date price, 21.88. That4 refers to the price of SolarCity stock on June 21,5 2016, right?6 A. Yes.7 Q. And this range would be below that price8 for the most part, right?9 MS. LAVELY: Objection to form.

10 THE WITNESS: The bar is -- part of the11 bar is below the range, yes.12 BY MR. RELIFORD:13 Q. And that's with a 3 to 5 percent14 perpetuity growth rate, right?15 A. Yes.16 Q. And 12 to 14 percent cost of equity,17 right?18 A. Yes.19 Q. Turn to page 22 of the deck. This is the20 DCF analysis on the revised case; is that right?21 A. Yes.22 Q. And you end up with terminal year23 projections of $3.61 billion for sources of cash; is24 that right?25 A. Yes.

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1 Q. And $3.362 billion in uses of cash; is2 that right?3 A. Yes.4 Q. And which gives you total levered adjusted5 free cash flows of --6 (Reporter clarification.)7 Q. Which gives you total levered adjusted8 free cash flows of 249 million, right?9 A. Yes.

10 Q. Why don't you set that aside but don't put11 it too far away.12 (Exhibit 27 was marked for13 identification and attached14 hereto.)15 BY MR. RELIFORD:16 Q. Can you identify Exhibit 27 for the17 record, please?18 A. It's an email from me to the internal19 Evercore team.20 Q. And this is dated --21 A. July 18th.22 Q. -- July 18th?23 A. July 18, 2016.24 Q. And that would have been around 10:22 a.m.25 on the 18th, right?

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1 A. Seven hours, yes.2 Q. And you're forwarding a -- looks like a3 news release about SolarCity's 345 million financing4 transaction; is that right?5 A. Yes.6 (Reporter clarification.)7 Q. -- $345 million financing transaction.8 And, "SolarCity released the following9 this morning. These amounts are already accounted

10 for in their plan."11 Do you see that?12 A. Yes.13 Q. You go on, "These are not additional funds14 and their liquidity situation remains the same."15 Is that right?16 A. Yes.17 Q. Could you read that last sentence into the18 record.19 A. "In fact, they provided weekly projected20 cash flow statements over the weekend that show the21 company likely going below the $116 million22 threshold covenant in their revolver, such that they23 would default on July 30th."24 Q. It was your belief as of July 18th that25 SolarCity was going in default by July 30th based

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1 off the information you saw in diligence, right?2 MS. VENEZIA: Objection to the form.3 MS. LAVELY: Objection.4 THE WITNESS: Based on this cash flow5 statement, that is -- it suggested that they would6 default on July 30th without additional cash.7 BY MR. RELIFORD:8 Q. How did they avoid default on July 30th?9 A. I don't recall the exact manner.

10 Q. Did you know at one point; you just don't11 recall right now?12 A. I don't recall.13 Q. You were conducting diligence for14 SolarCity, right?15 A. Yes.16 Q. You thought they were about to default by17 July 30th, right?18 MS. VENEZIA: Objection to the form.19 THE WITNESS: Based on the cash flow20 statement that they provided, it looked as if they21 would default on July 30th if those statements were22 an accurate reflection of the cash balance at the23 time.24 BY MR. RELIFORD:25 Q. And in light of that belief, did you say

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1 to anybody, "Hey, maybe we shouldn't try to close2 this transaction by the 23rd"?3 A. As I've said, we took the liquidity4 situation into account in our analysis and in our5 recommendation.6 Q. But if you were able to close by the 23rd,7 then SolarCity probably wasn't going to have --8 (Reporter clarification.)9 Q. If you had an agreement by the 23rd, then

10 SolarCity probably wouldn't have to go through an11 event of default, right?12 MS. VENEZIA: Objection to form.13 THE WITNESS: Can you repeat the question?14 MR. RELIFORD: I'll strike the question.15 (Exhibit 28 was marked for16 identification and attached17 hereto.)18 BY MR. RELIFORD:19 Q. Can you identify Exhibit 28 for the record20 when you get a chance?21 A. This is an email attaching a draft of22 board materials that was sent to Evercore's internal23 fairness committee.24 Q. And it would have been sent around 11:1025 a.m. on the 18th, right?

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1 A. Yes.2 Q. You had a meeting with your fairness3 committee coming up at 11:30, right?4 A. Yes.5 Q. You and your team made some adjustments to6 the sensitivity case that we were looking at in7 Exhibit 26, correct?8 MS. VENEZIA: Objection to the form.9 THE WITNESS: I'm sure that's possible.

10 This was just a draft on July 26th -- or July --11 sorry -- July 17th.12 BY MR. RELIFORD:13 Q. Other than the news flash about the tax14 equity or about the $345 million in new financing,15 what new information, if any, did you receive from16 SolarCity that would cause you to adjust your17 sensitivity forecasts?18 MS. VENEZIA: Objection to form.19 THE WITNESS: I can't recall.20 BY MR. RELIFORD:21 Q. You didn't receive any information, right?22 MS. VENEZIA: Objection to form.23 THE WITNESS: I can't recall.24 BY MR. RELIFORD:25 Q. Did you have any discussions with Tesla

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1 management between the preparation of that draft2 that we looked at on the 17th, which was Exhibit 26,3 and this draft that you sent to your fairness4 committee?5 A. I would suspect so.6 Q. Do you recall?7 A. I don't recall a specific call, but we8 were talking to them a lot; so...9 Q. You got that draft back that we looked at

10 in Exhibit 26 at 9:14 p.m. on the 17th, right?11 A. Yes.12 Q. It's now 11:10 the following day?13 A. Yes.14 Q. Did you have discussions with Tesla15 management between that time period?16 A. I'm sure --17 MS. VENEZIA: Asked and answered.18 THE WITNESS: I'm sure we did. We were19 having daily calls with them at that point.20 BY MR. RELIFORD:21 Q. And did you discuss the assumptions that22 you had put into the July 17th deck?23 A. I don't recall.24 Q. Can you turn to page 6 -- I'm sorry --25 page 5 of the deck that you sent to the management

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1 committee -- I'm sorry -- strike that.2 Can you turn to page 6 of the deck that3 you sent to the fairness committee for your 11:304 call on July 18th. Do you see here that the revised5 case assumption has changed since the last deck?6 A. Yes.7 Q. There's now only a 25 percent reduction in8 residential megawatts inspected. Do you see that?9 A. It's --

10 MS. VENEZIA: You're on the wrong --11 THE WITNESS: You said page 6.12 BY MR. RELIFORD:13 Q. I'm sorry, page 5.14 A. Yes.15 Q. And it was 30 in the case before, right?16 A. Yes.17 Q. And there's only a 30 percent haircut to18 commercial megawatt inspected. Do you see that?19 A. Yes.20 Q. Okay. There was no reduction to other21 megawatts inspected, right?22 A. Commercial and other is a line item, so it23 gets kind of folded in together. So I believe24 it's -- it's that line item itself, but --25 Q. And you still keep the S&M -- excuse me --

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1 the sales and marketing cost reductions were done

2 proportionately and reductions to the megawatts,

3 right?

4 A. Yes.

5 Q. So a 10 percent reduction in research and

6 development, right?

7 A. Yes.

8 Q. And 50 percent of excess Silevo module

9 inventory being sold to the market at the internal

10 transfer price?

11 A. Yes.

12 Q. Tell me everything you can recall about

13 why the revised case was changed to these

14 assumptions between 9 p.m. on the 17th and 11 a.m.

15 on the 18th.


17 THE WITNESS: These assumptions come from

18 Tesla. So at the end of the day they sign off on

19 the assumptions for the sensitivity case.

20 BY MR. RELIFORD:

21 Q. But you couldn't recall if you had a

22 conversation with Tesla about those assumptions,

23 right?


25 THE WITNESS: You asked me on that day.

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1 BY MR. RELIFORD:2 Q. Uh-huh.3 A. As I said, these -- these numbers come4 from them. So I would imagine it happened before5 this time.6 Q. So you had a call with Tesla and you said,7 hey, we did your original assumptions and the8 discount -- or our DCF resulted in a 15 to $259 range?

10 A. No.11 Q. And they came back and said, "Let's change12 the assumptions"?13 A. No.14 MS. VENEZIA: Objection to the form.15 Misstates the testimony. Mischaracterizes the16 witness's testimony.17 BY MR. RELIFORD:18 Q. Were they aware of the assumptions that19 were in the July 17th deck?20 A. I don't believe so.21 Q. The DCF range with these less dramatic22 revisions resulted in a range now of $18 to $28; is23 that right?24 MS. VENEZIA: Objection to the form.25 MS. LAVELY: Object.

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1 THE WITNESS: Yes.2 BY MR. RELIFORD:3 Q. And that's still using a 12 to 14 percent4 cost of equity?5 A. Yes.6 Q. And a 3 to 5 percent perpetuity growth7 rate?8 A. Yes.9 Q. What did your fairness committee tell you

10 when they saw this draft deck?11 A. Whenever we meet with our fairness12 committee we go through all the assumptions. They13 ask us questions. We make sure that we agree with14 all the assumptions that Evercore has made. The15 sensitivity case is Tesla's case.16 Q. Go to page 12. That shows the DCF17 analysis revised case, right?18 A. Yes.19 Q. And the end result of those adjustments20 was to increase total levered adjusted free cash21 flow --22 (Reporter clarification.)23 Q. -- levered adjusted free cash flow to $28724 million in the terminal year, right?25 A. Yes.

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1 Q. Your fairness committee asked you to make2 a whole lot of changes to this deck before it went3 to the board, right?4 MS. VENEZIA: Objection to the form.5 THE WITNESS: They often make -- ask us to6 make changes to decks before they go to boards.7 BY MR. RELIFORD:8 Q. Did they ask you to change the projections9 that you were using?

10 MS. VENEZIA: Objection to form.11 THE WITNESS: Can you explain the12 question?13 BY MR. RELIFORD:14 Q. These revised projections that you just15 spoke of, right, did your fairness committee ask you16 to change those?17 MS. VENEZIA: Objection to the form.18 THE WITNESS: I can't imagine they would19 have done so.20 BY MR. RELIFORD:21 Q. Go back to page 4 of the deck. There's a22 comment on --23 MS. VENEZIA: Which deck are you looking24 at, Justin?25 MR. RELIFORD: I'm looking at the deck

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1 that was sent to the fairness committee. It's2 EVR-TESLA_196127.3 THE WITNESS: Yes.4 BY MR. RELIFORD:5 Q. Okay. Next to these three different types6 of analyses -- premiums paid, analyst price targets,7 and 52-week high and low -- there is a consideration8 that you list. Do you see that?9 A. Yes.

10 Q. Can you read that into the record?11 A. "Reference statistics based off market12 data which does not reflect knowledge of nonpublic13 liquidity concerns."14 Q. Why would that be a consideration when15 using any of these sort of analyses?16 A. These, as the page says, were reference17 statistics. They weren't our primary valuation18 methodologies. They're public market statistics.19 So they didn't have the benefit of all the liquidity20 information that we had.21 Q. So the market price of SolarCity stock22 didn't reflect an understanding of the liquidity23 considerations or the liquidity issues that24 SolarCity was facing, right?25 MS. LAVELY: Objection to form.

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1 THE WITNESS: Did not fully reflect.2 BY MR. RELIFORD:3 Q. So an analysis that's based off of just4 the premium to market price wouldn't really reflect5 the true value of SolarCity because that information6 isn't in the public market, correct?7 MS. VENEZIA: Objection to the form.8 THE WITNESS: Could you repeat it?9 BY MR. RELIFORD:

10 Q. An analysis based off of the market price11 of SolarCity's stock wouldn't reflect the true value12 of SolarCity because of the information that hadn't13 been disclosed about SolarCity's liquidity concerns,14 correct?15 MS. VENEZIA: Same objection.16 THE WITNESS: The information would affect17 the market value. But, again, it was a reference18 statistic. It wasn't a valuation methodology.19 BY MR. RELIFORD:20 Q. What do you think would have happened to21 the market price of SolarCity stock if the market22 knew, like you knew, that by July 30th they were23 going to be in default on their revolver?24 MS. VENEZIA: Objection to the form.25 THE WITNESS: That would typically result

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1 in a decrease in stock price.2 BY MR. RELIFORD:3 Q. Would you say a significant decrease?4 MS. VENEZIA: Objection to the form.5 THE WITNESS: Potentially.6 BY MR. RELIFORD:7 Q. Did that fact reinforce Evercore's belief8 that a discounted cash flow analysis is a better way9 to value SolarCity?

10 MS. LAVELY: Objection to form.11 THE WITNESS: Did what? You said, "Did12 that."13 BY MR. RELIFORD:14 Q. Did the nonpublic nature of SolarCity's15 liquidity concerns reinforce Evercore's belief that16 a discounted cash flow methodology was the best way17 to value SolarCity?18 A. Yes.19 (Exhibit 29 was marked for20 identification and attached21 hereto.)22 BY MR. RELIFORD:23 Q. The court reporter has handed you what's24 marked as Exhibit 29. It's a document being Bates25 stamp EVR-TESLA_83013 and continuing to 83015.

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1 Do you see that?2 A. Yes.3 Q. And here Mr. Preston -- Mr. Preston Comey4 of your team is sending to Jason Wheeler a5 side-by-side comparison of the management case that6 you received from SolarCity and a revised case that7 Evercore had been working on, right?8 A. Yes.9 Q. And Mr. Comey sent some other analysis, I

10 believe, a little earlier in the day at 2:48 p.m.,11 so four minutes before?12 A. I don't know what you're referring to.13 Q. Okay. So you see Mr. Comey's email at14 2:48 p.m. "Jason, please find the two cases,15 management and the revised case. Let us know when16 you have time to discuss."17 A. Oh, yes.18 Q. "We will send a dial-in."19 (Reporter clarification.)20 Q. -- "send a dial-in," right?21 This was the first time you showed22 Mr. Wheeler the revised case that Evercore had been23 working on, correct?24 MS. VENEZIA: Objection to the form.25 THE WITNESS: The actual case. But the

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1 assumptions, again, this is -- as investment2 bankers, companies give us assumptions. We often3 build models based on those assumptions, and that's4 what we did here.5 So the assumptions were provided by Tesla.6 We put together the mechanics of the model in Excel.7 BY MR. RELIFORD:8 Q. So here's what I'm trying to understand.9 I don't mean to be difficult. I'm just trying to

10 understand. All right?11 On July 17th, Evercore prepared this12 internal model that had -- that resulted in a 15 to13 $25 DCF range, right?14 Would it surprise you to learn that I15 never saw anything in my review of these documents16 and my team has never saw anything where you send17 any analysis of those assumptions to Mr. Wheeler?18 MS. VENEZIA: Objection to the form.19 MS. LAVELY: Compound. Argumentative.20 THE WITNESS: No. It was a draft.21 BY MR. RELIFORD:22 Q. A draft. So Mr. Wheeler didn't see those23 assumptions, right?24 MS. VENEZIA: Objection to the form.25 Misstates and mischaracterizes prior testimony.

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1 THE WITNESS: He didn't see the analysis.2 BY MR. RELIFORD:3 Q. This is the first analysis that he's seen,4 correct?5 MS. VENEZIA: Objection. Asked and6 answered.7 MS. LAVELY: Asked and answered.8 THE WITNESS: These are financial models.9 These are the first models of the sensitivity case

10 that he saw.11 BY MR. RELIFORD:12 Q. These -- this model -- I want you to go --13 turn to the attachment.14 A. Yes.15 Q. It's page 6. And if you could get side by16 side with Exhibit 28.17 A. What page?18 Q. It's going to be page 12.19 And the numbers on page 12 of the deck you20 sent to your fairness committee match up with what21 you sent to Mr. Wheeler, right?22 A. Yes.23 Q. And you had a conversation with24 Mr. Wheeler following sending him these sort of25 side-by-side analysis, right?

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1 A. Yes.

2 Q. And it was at that point in time that he

3 signed off on the revised case, right?

4 A. I believe so.

5 Q. Did you tell Mr. Wheeler during that

6 conversation, "Hey, this is our second crack at a

7 revised case. We did one before, and it resulted in

8 a 15 to $25 DCF"?


10 THE WITNESS: No.

11 BY MR. RELIFORD:

12 Q. Why didn't you share that with Mr.

13 Wheeler? Strike that.

14 You had a call later in the day with

15 Mr. Musk and other management members of Tesla; is

16 that right?




20 hereto.)

21 BY MR. RELIFORD:

22 Q. Mr. Maron writes to you, Mr. Francis,

23 Mr. Altman, other members of Tesla management, and

24 then an attorney from Wachtell, "For the 5:00 p.m.

25 call today, Tesla finance team, the Wachtell team,

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1 and the Evercore team should each be prepared to2 give Elon a brief update on the major items that you3 have been working on in your respective area since4 our last call with him on Saturday."5 Do you see that?6 A. Yes.7 Q. Mr. Francis responds, "Thanks. We will be8 prepared to update him as you suggest."9 Do you see that?

10 A. Yes.11 Q. Did you suggest the revised sensitivity12 case on this call with Mr. Musk?13 A. I believe this was more of a status update14 call; so we would have updated him that it had been15 put together.16 Q. Did you provide any insight into what the17 model said?18 A. I don't believe so.19 Q. Did you provide any input about your20 conversations with your fairness committee?21 A. No.22 Q. What did you give as an update to23 Mr. Musk?24 A. I don't recall, but we had these calls25 fairly regularly to update -- discuss diligence, the

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1 process, timing.2 Q. Was there anything you learned on that3 diligence call that would have caused you to revise4 your sensitivity case further?5 A. On what diligence call?6 Q. I'm sorry. Is there anything you would7 have learned during that call at 5:00 p.m. on8 July 18th that would have caused you to change your9 sensitivity case further?

10 A. I don't recall.11 Q. Is there anything that was posted to the12 data room on July 18th that would have caused you to13 change your sensitivity case versus what you just14 got Mr. Maron to approve?15 A. I don't recall.16 MS. VENEZIA: Objection to the form.17 BY MR. RELIFORD:18 Q. The board meeting was going to be the19 following day on July 19th; is that right?20 A. Yes.21 Q. Ms. Denholm had asked for an advanced copy22 of the debt by 1:00 p.m. Do you remember that?23 A. It sounds familiar.24 Q. And because of the changes that your25 fairness committee requested, you weren't able to

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1 meet that 1:00 p.m. deadline; is that right?2 MS. VENEZIA: Object to the form.3 THE WITNESS: I don't recall, but that's4 possible.5 BY MR. RELIFORD:6 Q. Your fairness committee told you that they7 couldn't approve a transaction or a fairness opinion8 on a transaction within the range of the initial9 offer based off of what they had seen on July 18th,

10 correct?11 MS. LAVELY: Objection to form.12 THE WITNESS: Could you repeat the13 question?14 BY MR. RELIFORD:15 Q. When you met with your fairness committee16 on July 18th, they told you that they couldn't sign17 off on a fairness opinion within the range of the18 initial offer based off of what they were seeing,19 correct?20 MS. LAVELY: Same objection.21 THE WITNESS: I believe that's true.22 MS. VENEZIA: Can we take a break for a23 tape switch?24 MR. RELIFORD: Sounds good.25 THE VIDEOGRAPHER: Going off the record.

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1 The time is 4:40 p.m.2 (Recess.)3 (Time off record: 4:40 p.m.)4 (Time back on record: 4:51 p.m.)5 THE VIDEOGRAPHER: Back on the record.6 The time is 4:51 p.m.7 (Exhibit 31 was marked for8 identification and attached9 hereto.)

10 MR. RELIFORD: And can you just keep out11 that email with the side-by-side comparison of the12 revised case that was sent to Mr. Maron.13 Q. The court reporter has handed you what's14 been marked as Exhibit 31 to this deposition.15 Can you identify the document for the16 record?17 A. For discussion materials dated July 19,18 2016.19 Q. And these are the discussion materials20 that were actually provided to the board on the21 19th, right?22 A. I believe so.23 Q. Between the time that Mr. Maron approved24 the revised sensitivity case that you sent him on25 the afternoon of July 18th and the time you sent

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1 this deck, Evercore had further revised the2 sensitivity case, correct?3 MS. VENEZIA: Objection to the form.4 THE WITNESS: First we sent the deck to5 Jason Wheeler, I believe, not Todd Maron.6 BY MR. RELIFORD:7 Q. I'm sorry. Jason Wheeler.8 A. Could you repeat the question?9 Q. Sure. Between the time that Mr. Wheeler

10 signed off on the revised sensitivity case that you11 gave him on the 18th and this board meeting on the12 19th, Evercore further revised the sensitivity case,13 correct?14 MS. LAVELY: Objection to the form.15 THE WITNESS: I don't recall.16 BY MR. RELIFORD:17 Q. Let's go to page 1. There is a bullet18 point -- or a set of bullet points that explain the19 adjustments to the management case that Evercore20 made to create the revise sensitivity case, correct?21 A. Yes.22 Q. Residential megawatt growth was --23 (Reporter clarification.)24 Q. Residential megawatt growth was reduced by25 25 percent, right?

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1 A. Yes.2 Q. And that was consistent with what you told3 Mr. Wheeler, right?4 A. It was consistent with the financial model5 that we shared with him.6 Q. Commercial and other megawatt growth was7 reduced by 30 percent. That was also consistent,8 right?9 A. Yes.

10 Q. S&M calls produced proportionally to11 decrease in megawatts, right?12 A. Yes.13 Q. 10 percent cost reduction in overhead and14 R&D expenses.15 A. Yes.16 Q. That was the same?17 A. Yes.18 Q. There's no longer an adjustment for19 selling 50 percent of the excess capacity at Silevo20 to the market. Why did that change?21 A. I don't recall.22 Q. Would you go to page 6 of Exhibit 31?23 What exhibit number was the Wheeler email?24 A. 29.25 Q. Do you see how, on page 6 of the deck that

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1 was sent to the Tesla board, net generation of cash2 goes to 462 million in 2020?3 A. Yes.4 Q. And if you compare that to what you sent5 to Mr. Wheeler the day before, it was at6 287 million, right?7 A. Yes.8 Q. And the changes really appear to be in the9 cash equity line item, the other DevCo funding line

10 item, for sources of cash, and the other DevCo corp11 use of cash.12 Do you see those line items?13 A. Are you looking at 2020?14 Q. Well, I'm looking at the entire projection15 period. Do you see how cash equity goes from16 36 million in 2016 to 141 million?17 A. 149.18 Q. In 2016. Cash equity.19 A. Yes.20 Q. All right. It goes from 105 million to21 285 million in 2017?22 A. Yes.23 Q. And cash equity increases from 120 million24 in 2018 to 300 million, right?25 A. Yeah.

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1 Q. Why were those adjustments made?2 A. I don't recall the exact reason, but3 obviously it's still a decrease in cash equity4 financing in relation to the management case.5 Q. But it's increasing relative to the6 projections that Mr. Wheeler signed off on, on the7 18th, correct?8 MS. LAVELY: Objection to form.9 MS. VENEZIA: Objection to the form.

10 THE WITNESS: I don't see in this email11 that he signed off on them.12 BY MR. RELIFORD:13 Q. I happen to have that email. Give me one14 second.15 (Exhibit 32 was marked for16 identification and attached17 hereto.)18 BY MR. RELIFORD:19 Q. And that's an email that you sent to your20 team -- right? -- on July 18th?21 A. Yes.22 Q. And it was around 4:17 p.m., right?23 A. Yes.24 Q. And you had a call with Mr. Wheeler that25 started around 4:00 that day?

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1 A. I don't recall the exact time.2 Q. Was it a long conversation, a short3 conversation; do you recall?4 A. I don't recall. I imagine if you are5 walking through a case, it's a detailed6 conversation.7 Q. You write to your team, "I just walked8 through the revised sensitivity case with Jason and9 he approved it."

10 Do you see that?11 A. Yes.12 Q. Okay. Does that refresh your recollection13 as to whether or not Mr. Wheeler approved the case14 that was sent to him on the 18th?15 MS. VENEZIA: Object to the form.16 THE WITNESS: I'm not sure what exactly17 he's signing off on, on this one. I do know that we18 always get sign-off on -- from, you know, the19 management team on a case like this.20 The inputs come from them. We put it into21 a model, and it is our internal process that we22 receive approval from the management team.23 BY MR. RELIFORD:24 Q. And Mr. Wheeler approved what you sent him25 on the 18th, correct?

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1 A. Yes.2 Q. Let's get back to the comparison of what3 the board saw on the 19th and what Mr. Wheeler saw4 on the 18th. Okay?5 A. Okay.6 Q. Do you see the line item for "Other DevCo7 Funding"?8 A. Yes.9 Q. In 2016, other DevCo funding goes from 291

10 to 258. It's a decrease, right?11 A. Yes.12 Q. It goes from 545 in 2017 to 299; is that13 right?14 A. Yes.15 Q. What's encaptured by this "Other DevCo16 Funding"?17 A. I believe the revolver and convertible18 debt show up in the DevCo funding.19 Q. Anything else?20 A. Not that I recall.21 Q. It's decreased from 141 million to22 14 million in 2018. Do you see that?23 MS. VENEZIA: 191 million.24 MR. RELIFORD: I'm sorry, 190.25 (Reporter clarification.)

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1 Q. There was a decrease from 191 million in2 2018 to 14 million. Do you see that?3 A. Yes.4 Q. An increase from negative 94 million to5 184 million in 2019. Do you see that?6 A. Yes.7 Q. And an increase from 68 million to8 247 million in 2020?9 A. Yes.

10 Q. What were the reasons for these changes --11 A. I don't know.12 Q. -- between July 18th and July 19th?13 A. I don't recall.14 Q. You'd agree that the net impact of the15 changes between July 18th and the revised case that16 you sent to Mr. Wheeler and the case that we're17 looking at here that you showed to the board on18 July 19th, there's an increase from $287 million to19 $462 million in 2020 net generation of cash?20 MS. LAVELY: Objection to form.21 THE WITNESS: Yes.22 BY MR. RELIFORD:23 Q. And 2020 was the terminal year of your24 discounted cash flow analysis, correct?25 A. Yes.

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1 Q. And that is the year to which you apply2 the 3 to 5 percent perpetuity growth rate, right?3 A. Correct.4 Q. And these changes had the net effect of5 increasing the value range that Evercore derived6 from its discounted cash flow analysis, correct?7 MS. VENEZIA: Objection to the form.8 THE WITNESS: And this was a draft. This9 wasn't an analysis that we presented. It happens in

10 every deal where -- I mean, there also could be11 analyst mistakes in analyses that we fix before12 going to board meetings. There could be a number of13 different reasons to increase the value but from14 something we never presented.15 BY MR. RELIFORD:16 Q. Well, you presented your revised case to17 Mr. Wheeler on the 18th, right?18 A. But we didn't do a valuation analysis.19 Q. You walked him through that case, though,20 right?21 A. Yes.22 Q. And he signed off on that case, right?23 A. Yes.24 Q. And then you go to the board with a25 different case?

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1 A. He would have had to sign off on this case2 too.3 Q. When did he do that?4 A. I don't recall, but it would have been5 before the board meeting.6 Q. What can I look to for a record of when7 Mr. Wheeler signed off on this case?8 MS. VENEZIA: Objection to the form.9 MS. LAVELY: Objection.

10 THE WITNESS: I'm not sure.11 BY MR. RELIFORD:12 Q. Did he send an email?13 A. I don't recall.14 Q. Did he call you on the phone and say, "I15 saw the new numbers. Thumbs up. Okay. Send it to16 the board"?17 A. I don't recall.18 Q. Can you go to page 20 on the board19 presentation. And this sets out the key diligence20 findings that Evercore had made, right?21 A. Yes.22 Q. The first one is liquidity situation. Do23 you see that?24 A. Yes.25 Q. In the initial draft, liquidity situation

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1 was all the way down on the list and you had them2 bring it up to number 1, right?3 A. Yes.4 Q. Why?5 A. Because we thought it was a primary6 concern.7 Q. It says, "The company's corporate revolver8 carries a minimum cash balance covenant of9 $116 million measured last day of each month which

10 is exclusive of the cash held in fund accounts, the11 triggering of which will carry a default without a12 cure period and could result in cross defaults and13 other debt instruments in the company's capital14 structure."15 Do you see that?16 A. Yes.17 Q. What did you mean by "a default without a18 cure period"?19 A. Some debt instruments, even if you20 default, allow for a time period during which you21 can meet the covenant. The revolver -- this22 revolver did not have a cure period.23 Q. The next bullet point says, "Additionally,24 a disclosure default could impair SolarCity's25 ability to monetize future assets of tax equity,

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1 back levering, and cash equity in the time frame2 required to maintain solvency."3 Do you see that?4 A. Yes.5 Q. What did you mean by a disclosure of6 default?7 A. If they were to default on their revolver8 and disclose that.9 Q. To the market?

10 A. Yes.11 Q. And that would create a threat to their12 ability to maintain solvency, right?13 A. Yes.14 Q. What's back levering?15 A. Back levering is a financing approach that16 they use.17 Q. How does that work? How is that different18 than cash equity or tax equity?19 A. The back levering, I believe, is the20 abrogation facility. So each of these is financing21 a component of the revenue streams that they receive22 from the megawatts deployed.23 Q. So these three sources -- tax equity, back24 levering, and cash equity -- those were the three25 primary sources of SolarCity's cash, right?

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1 A. Yes.2 Q. And why is it that the disclosure of3 default would impair SolarCity's ability to engage4 in these types of financing transactions?5 MS. VENEZIA: Objection to the form.6 THE WITNESS: Because an event of default7 would impact a company's ability to finance itself.8 BY MR. RELIFORD:9 Q. I guess I'm asking, how specifically? Is

10 it that people don't want to buy these funds if they11 know that SolarCity defaulted? Is it that the12 instruments themselves? Like, mechanically how is13 it that a disclosure of event of default would14 impair their abilities?15 MS. VENEZIA: Objection to the form.16 THE WITNESS: I'm not sure what you mean17 by "mechanically."18 BY MR. RELIFORD:19 Q. They disclosed default, right?20 MS. VENEZIA: Are you assuming that?21 BY MR. RELIFORD:22 Q. Let's assume they disclose a default.23 You're advising the board, hey, if they do that,24 they're not going to be able to do tax equity, back25 levering, and cash equity in the time frame required

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1 to meet insolvency, correct?2 MS. VENEZIA: Object to form.3 MS. LAVELY: Is there a question?4 THE WITNESS: I'm not sure what the5 question is.6 BY MR. RELIFORD:7 Q. I'm trying to understand the link between8 a disclosure of an event of default and their9 ability to engage in these types of financing

10 transactions; sort of why is it that a disclosure of11 an event of default would impair their ability --12 MS. VENEZIA: Objection to the form.13 BY MR. RELIFORD:14 Q. -- to engage in these types of financing15 transactions?16 A. Well, any event of default would impact a17 company's ability to raise financing.18 Q. So it's that simple? It's not --19 A. It's very simple, yeah.20 Q. So we talked before about how Mr. Musk was21 aware that SolarCity was on the verge of tripping22 debt covenants, right?23 MS. VENEZIA: Objection to the form.24 MS. LAVELY: Misstates testimony.25 THE WITNESS: I'm not sure what you're

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1 referring to.2 BY MR. RELIFORD:3 Q. Well, remember we -- we talked about your4 conversation with Lazard and then your conversation5 with Mr. Musk, and he was surprised that Lazard6 didn't know that they could potentially trip debt7 covenants. Do you remember that testimony?8 MS. VENEZIA: Objection to the form.9 THE WITNESS: I think he was surprised

10 that it -- that an investment banker didn't know11 that its client could potentially default on its12 revolver.13 BY MR. RELIFORD:14 Q. Right. But Mr. Musk knew that that was a15 threat to SolarCity at that time, right?16 MS. VENEZIA: Objection.17 THE WITNESS: I believe so.18 MS. VENEZIA: Objection to form.19 BY MR. RELIFORD:20 Q. What did the other directors say on21 July 19th when you disclosed this to the board?22 A. When we disclosed?23 Q. This item number 1 in key discoveries,24 liquidity. You talked to the board about it, right?25 A. Yes.

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1 Q. What was the board's reaction?

2 A. That we should take into account the

3 liquidity situation in the value of SolarCity.

4 Q. Did they tell you how to take it into

5 account?

6 A. It would have a -- a negative impact on

7 value.

8 Q. Did they appear surprised to learn about

9 this?

10 A. Surprised about what specifically?

11 Q. That SolarCity was on the verge of

12 tripping debt covenants and really was risking

13 insolvency at this point.

14 MS. VENEZIA: Object to form.

15 MS. LAVELY: Object to the form.

16 THE WITNESS: We had numerous discussions

17 about the liquidity situation up to this point.

18 This obviously was new information. And, again, it

19 was something that the board took into account when

20 considering value.

21 BY MR. RELIFORD:

22 Q. This was new information you said,

23 correct?

24 A. I believe this was the board meeting at

25 which we informed them about the covenant, I

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1 believe, but --

2 Q. I'm asking about the board's reaction.

3 All right? I think that's -- I'm just trying to

4 understand. Was their only reaction, oh, well, you

5 should offer them a lower price?

6 MS. VENEZIA: Objection.

7 THE WITNESS: Again, it was a concern.

8 BY MR. RELIFORD:

9 Q. Did the board members seem particularly

10 concerned about this new information?

11 A. Yes.

12 Q. Which ones in particular?

13 A. I can't speak -- remember what each board

14 member's reaction was.

15 Q. Was Elon present at the July 19th meeting?

16 A. I believe so.

17 Q. Was Mr. Gracias present at the July 19th

18 meeting?

19 A. I believe so.

20 Q. Did any of the board members say to Elon

21 or Antonio, hey, why didn't you tell us about this

22 before?


24 Q. Going down to item 3, to the business mix.

25 "Beginning in Q1, 2015, business mix has experienced

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1 a shift from residential to commercial."2 Do you see that?3 A. Yes.4 Q. And then there's another bullet point.5 "From a business perspective, the commercial market6 is characterized by a longer sales process, greater7 working capital needs and greater difficulty when8 monetizing versus the residential market."9 Do you see that?

10 A. Yes.11 Q. And why is it that the commercial market12 is characterized by greater working capital needs?13 A. Because they are much bigger deployments.14 Q. In light of the liquidity situation of15 SolarCity, did that cause concern with SolarCity's16 ability to meet its projections for installments in17 the commercial market?18 A. Could you repeat the question?19 Q. In light of the liquidity situation of20 SolarCity, did that cause concern with SolarCity's21 ability to meet its projections for installments in22 the commercial market?23 A. It was definitely a concern.24 Q. Your adjustment to the projections was25 going to be a 30 percent reduction in megawatts

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1 installed for commercial and other deployments,

2 right?

3 A. Yes.

4 Q. The Lazard restricted liquidity case that

5 you received after they signed the deal anticipated

6 they would discontinue the business unit, the

7 commercial business unit, altogether, correct?

8 MS. VENEZIA: Objection to form.

9 MS. LAVELY: Objection. Form.

10 THE WITNESS: I don't recall what the --

11 the exact assumption was. Obviously we ran our own

12 analysis, our valuation analysis, based on that

13 case.



16 hereto.)

17 BY MR. RELIFORD:

18 Q. I'm handing you what's been marked as

19 Exhibit 33 in this deposition. For the record, this

20 document was produced by Lazard. It's Bates-stamped

21 LAZ_TES_39341 and continuing through to 39354.

22 Can you turn to page 6 of the presentation

23 deck. Did you ever see this document before?

24 A. No.

25 Q. When SolarCity -- or when Lazard gave you

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1 a copy of it, restricted liquidity case --2 A. Yes.3 Q. -- did they explain the qualitative sort4 of adjustments or assumptions that led them to5 create that case?6 A. I don't recall.7 Q. Did you ask?8 A. I believe we did.9 Q. And were you aware that the restricted

10 liquidity case that Lazard pulled together assumed11 that the commercial business unit would be12 discontinued as reflected on this page 6?13 A. I was -- I don't recall that, but, as you14 can see, that their case generates a significant15 more amount of additional cash than our sensitivity16 case.17 Q. Now, you asked Lazard for downside18 assumptions, right?19 A. Yes.20 Q. And you were trying to figure out how do21 we adjust management's projections to reflect the22 more accurate view of SolarCity in light of its23 liquidity situation, correct?24 A. Yes.25 MS. VENEZIA: Objection to form.

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1 BY MR. RELIFORD:2 Q. And they were saying we should shut down3 that commercial unit altogether, right?4 MS. VENEZIA: Objection to the form.5 THE WITNESS: I don't understand the6 question.7 BY MR. RELIFORD:8 Q. I'll try it a different way. Your initial9 deck had a 50 percent reduction in commercial

10 megawatts installed, right?11 A. Yes.12 Q. And then a 30 percent reduction in13 megawatts installed in commercial, right?14 A. Yes, but the first was a draft, as we15 discussed.16 Q. And Lazard was saying liquidity situation17 is so bad we should shut down commercial entirely?18 MS. LAVELY: Objection to form.19 MS. VENEZIA: Objection to the form.20 THE WITNESS: As this document says, they21 have assumed in their downside case that the22 commercial business would be discontinued.23 BY MR. RELIFORD:24 Q. If you had known that Lazard had prepared25 a downside case that assumed that SolarCity would

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1 shut down its entire commercial business unit, would2 that have changed the 30 percent reduction that you3 guys applied to megawatts installed for commercial?4 MS. VENEZIA: Objection to the form.5 THE WITNESS: If we had known that Lazard6 did that?7 BY MR. RELIFORD:8 Q. Uh-huh.9 A. If we had received a case from Lazard or

10 SolarCity we would have run our analysis off that11 case. But as you can see from this case, we would12 have -- it would have resulted in much higher values13 for SolarCity. So the case that we ultimately put14 together was much more conservative, even as a15 whole, even if certain assumptions are different.16 Q. So between 30 percent reduction,17 50 percent reduction and 100 percent reduction, what18 do you think is the right number to pick to come up19 with an accurate -- or accurate depiction of20 SolarCity's future commercial business?21 MS. VENEZIA: Objection to the form.22 THE WITNESS: I don't understand the23 question.24 BY MR. RELIFORD:25 Q. You agree that their case has 100 percent

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1 reduction in commercial megawatts installed, right?2 A. Yes.3 Q. All right. You only reduced it by4 30 percent in your analysis, your sensitivity case,5 right?6 A. Yes.7 Q. All right. And if you had that8 information, do you think you'd have gone up from9 30 percent?

10 MS. VENEZIA: Objection to the form.11 Asked and answered.12 THE WITNESS: Again, if we had their case13 we would have run our analysis off of their case and14 it would have shown a higher value for SolarCity.15 BY MR. RELIFORD:16 Q. How much diligence did you conduct into17 the restricted liquidity case other than the18 analysis?19 MS. VENEZIA: Objection to the form.20 THE WITNESS: I don't recall.21 BY MR. RELIFORD:22 Q. So you didn't diligence their restricted23 liquidity case --24 (Reporter clarification.)25 Q. So you didn't diligence their restricted

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1 liquidity case, right?2 A. I said I did not recall.3 Q. You got the restricted liquidity case4 after July 30th, right?5 A. Yes.6 Q. And that's when the board approved the7 transaction, right?8 A. Yes.9 Q. You got it a couple weeks later while they

10 were preparing the S-4?11 MS. VENEZIA: Objection to the question.12 THE WITNESS: Yes.13 BY MR. RELIFORD:14 Q. So you didn't engage in due diligence on15 the restricted liquidity case the same way you did16 with the management case, right?17 MS. LAVELY: Asked and answered.18 THE WITNESS: Certainly not to the extent19 of the management case.20 BY MR. RELIFORD:21 Q. What diligence did you perform when you22 got the restricted liquidity case?23 A. As I said, I don't recall.24 Q. But you wouldn't have just accepted that25 case without doing diligence into it, right, if you

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1 were going to use it in your analysis?

2 MS. VENEZIA: Object to the form.

3 THE WITNESS: We determined that we were

4 not going to use it in our analysis.

5 BY MR. RELIFORD:

6 Q. What do you mean by that, "We determined

7 that we were not going to use it in our analysis"?

8 A. We determined that it did not change our

9 analysis. As I said, it generates a lot more cash

10 than our revised sensitivity case. We thought that

11 was a much more conservative approach for SolarCity.

12 And had we used their case, it would have resulted

13 in a much higher value range for SolarCity.

14 Q. Well, you received their base case, right?

15 A. The management case.

16 Q. Management case?

17 A. Unrestricted liquidity case, yes.

18 Q. And then you sensitized that based off of

19 what you thought were more realistic assumptions,

20 right?

21 A. Yes.

22 Q. Is it fair to assume that if you received

23 this downsize case, you would have also sensitized

24 that based off of what you considered to be

25 realistic assumptions for SolarCity?

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1 MS. VENEZIA: Object to the form.

2 THE WITNESS: Can you repeat the question?

3 BY MR. RELIFORD:

4 Q. Is it fair to assume that if you received

5 their downside case during the course of the

6 diligence, you would have conducted diligence into

7 that downside case and made adjustments to the

8 assumptions that you felt were reasonable?

9 A. Not necessarily. If we receive a case

10 from them, we, of course, would diligence it. It

11 would depend on the diligence whether or not we made

12 adjustments. But it would be -- again, it would be

13 Tesla's judgment.

14 Q. Let's go back to the July 19th

15 presentation. Can you go to item 4 on the key

16 discovery summary, please.

17 A. Is there a page number?

18 Q. It's Tesla 73.

19 MS. VENEZIA: Page 21.

20 THE WITNESS: Okay. Thanks. Okay.

21 BY MR. RELIFORD:

22 Q. You talk about the phaseout of the federal

23 solar investment tax credit here; is that right?

24 A. The decrease.

25 Q. Was the board familiar with that concept

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1 already?2 A. Largely.3 Q. You talk about state level net metering4 policies. Do you see that?5 A. Yes.6 Q. What were you conveying to the board about7 state level net metering policy?8 A. Net metering allows consumers with solar9 energy panels to sell back the energy that they

10 generate during the day when they don't need it back11 to the grid, often at retail which is a high rate,12 that's credited toward their other utility costs.13 So it's a net benefit to the solar consumer.14 Those policies are under attack by15 nonsolar customers who think they are subsidizing16 or, you know, arguing that they are subsidizing17 solar consumers. So there were a lot of proposals18 against net metering at the time.19 But from Tesla's standpoint, without net20 metering the battery becomes more compelling,21 because if there's no net metering your solar panels22 are generating energy during the day and it's just23 being lost. But if you have the battery, you store24 the solar energy in the battery during the day, you25 get home at night and you need energy and there's no

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1 sunlight, you draw from the battery, which also you2 can power your home and charge your car.3 Q. Did Evercore do anything when creating its4 revised or sensitivity case to account for the5 impact of the regulatory uncertainty around net6 metering?7 A. It would have been captured in the8 decrease in megawatts because it results in lower --9 fewer systems, right? Without net metering and

10 without a battery the solar system isn't as11 compelling financially to a consumer.12 Q. How much of the reductions to megawatts13 installed in the revised sensitivity case is related14 to net metering versus liquidity concerns?15 A. I don't think I can attribute a certain16 amount toward each. Both were taken into account.17 In the net metering policies it's not --18 it's very different than ITC. But, again, it's just19 another uncertainty. It wasn't as if there was a20 deadline at which the net metering rules would21 change.22 Q. Item 5 on key discoveries.23 A. Yes.24 Q. Explain what you're conveying on25 PowerCo -- strike that.

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1 Item 5 is PowerCo standalone viability.2 Do you see that?3 A. Yes.4 Q. What did you convey to the board about5 PowerCo's standalone viability at this July 19th6 meeting?7 A. That if -- if we were to shut down DevCo,8 that PowerCo was viable as a standalone entity.9 Q. How much was that discussed at the meeting

10 on July 19th?11 A. It was discussed throughout the process12 multiple times. I don't remember the amount of13 time, but we discussed it in multiple meetings with14 the board.15 Q. What's this "Other Obligations" item on16 page 21 of the July 19th deck?17 A. I don't recall exactly, but I believe it18 was a legal obligation.19 Q. How was this taken into account in the20 revised sensitivity case?21 A. I believe we increased legal costs.22 Q. Page 22 is further detail on the liquidity23 and cash flow situation at SolarCity, right?24 A. Yes.25 Q. And you gave them the slide that you had

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1 received from the February SolarCity board2 presentation, right?3 A. Yes.4 Q. And you have a summary of weekly cash flow5 forecast as of July 13, 2016. Do you see that?6 A. Yes.7 Q. All right. And your summary only8 covers -- one, two, three, four -- five weeks,9 right?

10 A. Yes.11 Q. And you received cash flow forecasts all12 the way through November -- or September by that13 point in time, right?14 A. I don't recall.15 Q. We looked at in Exhibit 25 this list of16 weeks in which the July 13th cash forecast fell17 below the debt covenant. Do you remember that?18 That was in Ms. Shaw's 8:15 p.m. email in19 EVR-TESLA_82792, I believe.20 A. Yes.21 Q. And there are three weeks in September22 where they fall below the $116 million debt23 covenant, right?24 A. Yes.25 Q. Why didn't you put September -- or the

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1 September forecast in the July 19 board book?2 A. I believe we just focused on the near-term3 liquidity.4 Q. Two months was a near-term?5 MS. LAVELY: Objection to form.6 THE WITNESS: Given the discussions around7 financing, we were significantly concerned about the8 near-term as opposed to further periods further out.9 BY MR. RELIFORD:

10 Q. Did you tell the board that, "It doesn't11 get any better after the week of August 12th"?12 A. I believe we walked through the diligence13 findings with the board.14 Q. So you did tell them that September --15 there are three weeks in September where they fall16 below the cash covenants based off of these July17 13th forecasts?18 A. I believe so.19 Q. What was the board's reaction to this20 discussion of the weekly cash flow forecast that you21 received from SolarCity?22 A. I believe you already asked me that23 question. Same answer. We took it into account in24 value of SolarCity.25 Q. Did you advise the board that SolarCity

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1 was pushing out accounts payable so that they could2 stay above the debt covenant trigger?3 MS. VENEZIA: Objection. Asked and4 answered.5 THE WITNESS: I already answered this6 question, too.7 BY MR. RELIFORD:8 Q. I -- just to be specific. At this July9 19th meeting.

10 A. I don't remember at what meeting we had11 that discussion.12 Q. Did you tell the board that it was your13 opinion that by July 30th, SolarCity would14 experience an event of default based off their15 current cash forecasts at this July 19th meeting?16 MS. VENEZIA: Objection to the form.17 THE WITNESS: Could. They could18 experience an event of default on July 30th based on19 the cash flow statement they provided.20 BY MR. RELIFORD:21 Q. Did you tell the board that at this July22 19th meeting?23 A. I believe so.24 Q. Did Mr. Musk say anything about these25 liquidity issues at the July 19th meeting?

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1 A. Again, I think it was a concern among all2 the board members.3 Q. The answer could be "I don't recall." I4 don't mind. But did Mr. --5 MS. VENEZIA: Objection to the form. She6 gave you her answer. It's totally inappropriate.7 BY MR. RELIFORD:8 Q. Did Mr. Musk say anything about these9 liquidity concerns to the board at the July 19th

10 board meeting?11 A. I don't recall.12 Q. Did Mr. Gracias say anything to the board13 about these concerns at the July 19th board meeting?14 A. I don't recall.15 Q. Did anybody say, "It's okay, we'll just16 call the banks and work something out"?17 MS. VENEZIA: Objection to form.18 THE WITNESS: I don't recall.19 BY MR. RELIFORD:20 Q. Did that ever come up at any board meeting21 where you discussed the liquidity concerns, that22 these weren't real concerns because they could just23 call their banks and work it out?24 MS. VENEZIA: Objection to the form.25 THE WITNESS: I don't understand the

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1 question when you say, "They calling their banks."2 BY MR. RELIFORD:3 Q. Did any Tesla board member express the4 opinion that these liquidity concerns weren't real5 issues because SolarCity could just call the banks6 on the revolver and work it out?7 A. I don't recall.8 Q. In real time, July, everyone at the Tesla9 board recognized these liquidity concerns as a real

10 significant issue for SolarCity, correct?11 MS. LAVELY: Objection to form.12 THE WITNESS: It was a concern for13 SolarCity, yes.14 BY MR. RELIFORD:15 Q. Can you go back to page 2, the executive16 summary of the July 19th deck.17 There's a bullet point under "Reference18 Points," the third bullet point down. It says,19 "Also considered publicly-traded companies and the20 broadly-defined sector. However, these were not21 deemed to be comparable and, therefore, not22 relevant. See page 40 of the appendix."23 Do you see that?24 A. Yes.25 Q. All right. What were you -- can you

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1 explain that statement to me?2 A. We discussed this earlier. There weren't3 any publicly-traded companies that were directly4 comparable to SolarCity. Is this -- yeah.5 SolarCity.6 Q. If you go to page 40, it looks like it's a7 public company trading analysis.8 Do you see that?9 A. Yes.

10 Q. So you're saying trading analyses are a11 bad valuation technique because SolarCity is so not12 comparable to other solar companies.13 MS. VENEZIA: Objection to the form.14 MS. LAVELY: Misstates testimony.15 THE WITNESS: Public trading -- there were16 no publicly-traded comps directly comparable to17 SolarCity, which is often the case.18 BY MR. RELIFORD:19 Q. So that makes it difficult to do any20 reliable multiples-based analysis, right?21 A. Yes.22 Q. Did you advise the board on July 19th that23 your fairness committee couldn't support a24 transaction or wouldn't support a transaction at the25 initial offer range?

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1 MS. VENEZIA: Objection to the form.2 THE WITNESS: I don't recall.3 BY MR. RELIFORD:4 Q. Later that day on the 19th, you learned5 that SolarCity was going to need to reduce its6 guidance to the market on megawatts installed,7 right?8 A. I don't recall.9 (Exhibit 34 was marked for

10 identification and attached11 hereto.)12 BY MR. RELIFORD:13 Q. The court reporter has handed you what's14 been marked Exhibit 34 in the deposition. Could you15 identify it for the record?16 A. It's an email from Jonathan Chang of Tesla17 to a number of people at Tesla, Evercore, and18 Wachtell.19 Q. And Mr. Chang informs the group that20 SolarCity is doing a reduction in force.21 A. Yes.22 Q. Is that correct?23 He noted that SolarCity is now looking at24 the low end of the range -- guidance range it had25 previously announced to the market, right?

Page 260

1 A. Yes.2 Q. And that would have been 1 gigawatt?3 A. Yes.4 Q. He asked whether or not Evercore was aware5 of that?6 A. Yes.7 Q. And you mentioned a reduction that8 happened in May, right?9 A. Yes.

10 Q. But you didn't know that they were going11 to reduce guidance to the low end of the range they12 announced in May, right?13 A. No.14 Q. This was news to you?15 A. Yes.16 Q. And you asked your team to find out17 whether or not that reduction was baked into the18 model that you received from Lazard, correct?19 A. Yes.20 Q. Was it?21 A. I don't recall.22 Q. Did you make any adjustments to the23 revised sensitivity case to account for the lower24 guidance that SolarCity was going to announce?25 A. I don't recall, but we had already -- we

Page 261

1 had reduced megawatts deployed.2 Q. And because you had already reduced it,3 you didn't need to reduce it any further. Is that4 your testimony?5 MS. VENEZIA: Objection to the form.6 THE WITNESS: I said I don't recall, but7 we had reduced -- just stating a fact, we had8 reduced the megawatts installed.9 BY MR. RELIFORD:

10 Q. So I was just protecting my record.11 My question is whether or not there were12 any further reductions done --13 A. I don't recall.14 Q. -- in light of this new information?15 A. I don't recall.16 MS. VENEZIA: Objection. Asked and17 answered.18 BY MR. RELIFORD:19 Q. Should there have been?20 MS. VENEZIA: Objection to form.21 THE WITNESS: We take everything into22 account in our financial models. Tesla gave us the23 assumptions for the sensitivity case, and we relied24 on their judgment of what the right assumptions were25 to make.

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3 hereto.)

4 BY MR. RELIFORD:


6 been marked Exhibit 35. It's a two-page email

7 chain, Bates number EVR-TESLA --


9 Q. EVR-TESLA_211087 to 211088.

10 You write to inform Mr. Wheeler,

11 Mr. McAnear, Ms. Repo, and Eric Senay that after you

12 asked for an update from SolarCity on its second

13 quarter 2016 results that they wanted information

14 about Tesla's second quarter 2016 results; is that

15 right?

16 A. Yes.

17 Q. And you sent this email on July 20 of 2016

18 at about 11:49 a.m., right?

19 A. Yes.

20 Q. When did you have that conversation with

21 Lazard?

22 A. I believe it was that day.

23 Q. And was it the information that you had

24 learned from Mr. Chang in the last exhibit we looked

25 at that prompted a call about the 2Q '16 financial

Page 263

1 results of SolarCity?2 A. I believe so.3 Q. How close did you get to know Mr. McAnear4 during this process?5 MS. VENEZIA: Objection to the form.6 THE WITNESS: He's a -- he was a member of7 the deal team of one of my clients.8 BY MR. RELIFORD:9 Q. Mr. McAnear writes, "As we go further

10 along and time becomes more critical, requests like11 this from them make less sense."12 Do you see that?13 A. Yes.14 Q. Did you understand what Mr. McAnear meant15 by "as time becomes more critical"?16 A. Again, we wanted to complete diligence17 expeditiously given the impact that it was having on18 both companies.19 Q. It had nothing to do with the fact that20 they could default by July 30th?21 MS. VENEZIA: Objection to the form.22 THE WITNESS: I don't believe that's what23 he's referring to actually.24 BY MR. RELIFORD:25 Q. He goes on, "I'm happy to do what's best

Page 264

1 to keep this moving along, but I see no value in2 this. It's like a car accident victim checking the3 paramedics' credentials before letting them treat4 them."5 Do you see that?6 A. Yes.7 Q. What was Mr. McAnear -- or what did you8 take that to mean from Mr. McAnear?9 MS. VENEZIA: Objection to the form.

10 MS. LAVELY: Form.11 THE WITNESS: It seems like he's12 suggesting that because Tesla is a publicly-traded13 company with lots of information in the public14 domain that they would -- shouldn't have to need --15 they shouldn't need to diligence the stock as much16 as you would if you were acquiring a company.17 BY MR. RELIFORD:18 Q. So you didn't understand his statement to19 relate at all to the financial situation of20 SolarCity?21 MS. VENEZIA: Objection. Asked and22 answered.23 THE WITNESS: No.24 (Exhibit 36 was marked for25 identification and attached.)

Page 265

1 BY MR. RELIFORD:2 Q. The court reporter has handed you what's3 marked as Exhibit 36. Can you identify it for the4 record, please?5 A. It is an email between Roger Altman,6 Stu Francis, and me on July 21st, 2016.7 Q. And on July 21st, 2016, you had a call8 scheduled with Elon; is that right?9 A. The 22nd?

10 Q. Go to Mr. Altman's first email in time.11 A. 21st, yes.12 Q. Do you see July 21, 2016, at 3:20,13 Mr. Altman writes, "On tonight's call with Elon"?14 A. Yes.15 Q. So you had a call with Elon scheduled for16 the 21st?17 A. Yes.18 Q. Who else was going to be on that call?19 A. I don't recall.20 Q. Mr. Altman writes, "We need to make a21 recommendation also the revised exchange ratio."22 Do you see that?23 A. Yes.24 Q. Do you think "also" is a typo there? It25 should be "as to"?

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2 THE WITNESS: I don't know.

3 BY MR. RELIFORD:

4 Q. So his full sentence, "On tonight's call

5 with Elon, we making need to make a recommendation,

6 also the revised exchange ratio which we will be --

7 which we will recommend to the full board tomorrow.

8 At the moment, I'm not quite sure what that should

9 be."

10 Do you see that?

11 A. Yes.

12 Q. And then there's a discussion that follows

13 about what the recommendation would be --

14 A. Yes.

15 Q. -- right?

16 And you recommended or you told

17 Mr. Elon Musk that either the 21st that you were

18 going to recommend to the board a lower exchange

19 ratio than the initial offer range, right?

20 A. Yes.

21 Q. How did he react to that?

22 A. I don't recall any reaction. I think we

23 were just giving -- providing our recommendation.

24 Q. Were there any other directors on that

25 phone call with Mr. Musk the evening of July 21st?

Page 267

1 A. I don't believe so.2 Q. Why would you need to tell Elon before you3 told the other directors that you were going to come4 in below the initial offer range?5 MS. LAVELY: Objection. Form.6 THE WITNESS: I believe we were having an7 update call with him prior to the board meeting,8 which wasn't unusual. And on that call, as outlined9 in this email, we thought it made sense to also tell

10 him what we planned to tell the board.11 MS. LAVELY: We can go ahead and mark the12 transcript as confidential.13 (Exhibit 37 was marked for14 identification and attached15 hereto.)16 BY MR. RELIFORD:17 Q. The court reporter has handed you what's18 marked Exhibit 37. It's a one-page email chain19 between you, Mr. Altman, and Mr. Francis dated20 July 22nd, 2016; is that right?21 A. Yes.22 Q. And you're updating Mr. Altman on23 information that you had just learned from Lazard;24 is that right?25 A. It looks like SolarCity, Skadden, and

Page 268

1 Lazard.2 Q. And that call was specifically supposed to3 cover second quarter 2016 financial results for4 SolarCity, right?5 A. I believe so.6 Q. And they informed you that they were going7 to lower their annual guidance even further to8 900 megawatts to 1 gigawatt, right?9 A. Yes.

10 Q. They said they also need to address --11 strike that.12 You write, "They also need to address the13 cash balance which they plan to do by identifying14 the expected funding and providing expected cash15 flow."16 Do you see that?17 A. Yes.18 Q. What -- what did you mean by that?19 A. That's the revolver covenant for20 116 million, the minimum cash balance that they are21 required to have.22 Q. So they were going to disclose to the23 market their cash balance and their expected funding24 and expected cash flows?25 A. Yeah. That's typical --

Page 269

1 (Reporter clarification.)2 MS. LAVELY: Object to the form.3 THE WITNESS: That's typical disclosure in4 a quarterly report.5 BY MR. RELIFORD:6 Q. You found out on that day or in that call7 that SolarCity was only able to secure $100 million8 from Goldman Sachs in bridge financing, right?9 A. Yes.

10 Q. Would that $100 million go into effect11 only if a merger agreement were signed?12 A. I don't know.13 Q. It says, "Tanguy" -- T-A-N-G-U-Y -- "said14 that they feel good about running the business with15 this amount during signing and closing, will manage16 it very carefully and can, for example, move CapEx17 expenses for Silevo in the Q1!"18 Do you see that?19 A. Yes.20 Q. Why did you put an exclamation point at21 the end of that sentence?22 A. Because Silevo was already off track on23 timing and this would have pushed it back further.24 Q. If they pushed the Silevo expenses into25 Q1, that would have been likely after the

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1 acquisition closed, right?


3 THE WITNESS: Unclear of when the

4 shareholder vote would have been, but potentially.

5 BY MR. RELIFORD:

6 Q. You have done a lot of deals, right?

7 A. Yeah.

8 Q. And this is July of 2016, right?

9 A. Uh-huh.

10 Q. Based off of all of your experience of

11 pushing those expenses into Q1 would have made them

12 Tesla's responsibility, right?

13 A. Most likely.



16 BY MR. RELIFORD:

17 Q. You go on, "Then they -- or they then said

18 that they have no ability to refinance the revolver

19 unless they do an equity deal. So they want us to

20 take the refinance risk."

21 Do you see that?

22 A. Yes.

23 Q. What do they mean that they had no ability

24 to refinance the revolver unless they do an equity

25 deal?

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1 A. The bank who -- that issued the revolver2 informed them that they would need to do an equity3 deal in order to -- or sorry. Sorry. Let me just4 read it one more time.5 (Pause while witness peruses document.)6 A. So in order to refinance the revolver,7 they would have had to raise cash through an equity8 deal, straight equity in the market. And they asked9 us to take the refinance risk, meaning that they

10 could have refinanced it before the deal closed or11 after the deal closed.12 This is always a negotiation in deals, and13 they asked us on this call to take their refinance14 risk so that it -- the instrument would be15 refinanced after close.16 Q. Were they, in fact, unable to refinance17 the revolver before the closing of the transaction?18 MS. LAVELY: Objection to form.19 THE WITNESS: They could have issued20 equity, but it would have been an awkward time to do21 an equity offering when you are in discussions with22 a potential acquirer in the public domain.23 BY MR. RELIFORD:24 Q. Given your experience as an attorney and25 your years of experience as an investment banker,

Page 272

1 are you familiar with corporate disclosure2 requirements --3 MS. VENEZIA: Objection.4 BY MR. RELIFORD:5 Q. -- generally speaking?6 MS. VENEZIA: Objection to the form.7 THE WITNESS: Generally speaking.8 BY MR. RELIFORD:9 Q. If they tried to raise equity, do you

10 think -- or strike that.11 If SolarCity tried to raise equity at this12 time, would they need to disclose to the market the13 liquidity issues that they were facing?14 MS. VENEZIA: Objection to form. Calls15 for a legal conclusion which she's not here to16 provide.17 THE WITNESS: They would have to disclose18 their current liquidity situation.19 BY MR. RELIFORD:20 Q. Would that, in your opinion, affect the21 price at which they could sell you equity?22 MS. VENEZIA: Objection to the form.23 MS. LAVELY: Calls for speculation.24 THE WITNESS: Most likely.25 BY MR. RELIFORD:

Page 273

1 Q. And they'd likely have to sell stock at a2 discount to their trading price when that3 information wasn't disclosed, right?4 MS. VENEZIA: Same objections.5 THE WITNESS: I'm not sure I understand6 the question -- the end of the question, "When that7 information was not disclosed."8 BY MR. RELIFORD:9 Q. Say SolarCity shares are trading at $20,

10 right? They want to do -- they want to sell new11 equity, right? They have to disclose their12 liquidity situation when they do that, right?13 Do you think the result was to sell equity14 at $20 or less than $20?15 MS. LAVELY: Objection. Calls for16 speculation.17 THE WITNESS: I'm not sure.18 BY MR. RELIFORD:19 Q. At the bottom, it notes that SolarCity20 moved their earnings back to August 9th from21 August 4th.22 Do you see that?23 A. Yes.24 Q. Did Lazard explain why they had moved the25 earnings date back?

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1 (Reporter clarification.)2 Q. Did Lazard explain why SolarCity had moved3 its earnings date back?4 A. I don't recall.5 (Exhibit 38 was marked for6 identification and attached7 hereto.)8 BY MR. RELIFORD:9 Q. These are the minutes of the July 22nd,

10 2016, board of directors meeting. Have you ever11 seen these documents -- or this document before?12 A. No.13 Q. Was this an in-person meeting or a14 telephonic meeting?15 A. I believe this was in-person for us at16 least. I'm not 100 percent sure.17 Q. On page 2, it says, "In response to18 questions from directors, representatives of19 Evercore discussed whether SolarCity's current20 proposals for interim financing would be sufficient21 to finance SolarCity's operations through the22 consummation of a potential transaction, other23 possible methods for SolarCity to generate near-term24 cash liquidity, and the impact of those matters on25 Evercore's valuation analysis of SolarCity."

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1 Do you see that?2 A. Yes.3 Q. What did you advise the board with respect4 to SolarCity's current proposals for interim5 financing? Did you tell them it would be6 sufficient?7 MS. VENEZIA: Objection to the form.8 THE WITNESS: I don't recall what the9 current proposals were at the time.

10 BY MR. RELIFORD:11 Q. Well, they were only going to be able to12 get $100 million in bridge financing from13 Goldman Sachs at this time, right?14 A. Yes.15 Q. Okay. Did you advise the board of that16 fact?17 A. Yes. I believe so.18 Q. And did you tell the board that would be19 sufficient, insufficient, or you didn't know whether20 or not it would be insufficient or sufficient?21 MS. LAVELY: Asked and answered.22 THE WITNESS: At least SolarCity23 communicated to us that that would be sufficient.24 BY MR. RELIFORD:25 Q. Did Evercore come to an opinion on whether

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1 or not $100 million would be sufficient?2 MS. VENEZIA: Objection to the form.3 THE WITNESS: I don't recall.4 BY MR. RELIFORD:5 Q. You provided advice on other possible6 methods for SolarCity to generate near-term cash7 liquidity, right?8 A. Yes.9 Q. What were the other possible methods that

10 you discussed with the Tesla board?11 A. I don't recall.12 Q. It talks about the impact of those matters13 on Evercore's valuation analysis of SolarCity.14 Do you see that?15 A. Yes.16 Q. And that would be the fact that they only17 got $100 million bridge financing and there were18 other possible methods or a discussion of other19 possible methods, right?20 MS. VENEZIA: Objection.21 THE WITNESS: The liquidity situation in22 general, yes. Yes.23 BY MR. RELIFORD:24 Q. What was the impact of those matters on25 Evercore's valuation analysis of SolarCity?

Page 277

1 A. It was our view that we should lower the2 offer price because of those concerns.3 Q. And that's what you conveyed at this board4 meeting?5 A. I believe so.6 Q. Did you provide any specific guidance at7 this board meeting as to how far you should lower8 the offer?9 A. A document? I believe it was .115. But

10 below -- Sorry, below .115.11 Q. So you provided a specific range to the12 board at this July 22nd meeting?13 A. It was our recommendation to the board,14 yes.15 THE VIDEOGRAPHER: Going off the record.16 The time is 6:20 p.m.17 (Recess.)18 (Time off record: 6:20 p.m.)19 (Time back on record: 6:31 p.m.)20 THE VIDEOGRAPHER: Back on the record.21 The time is 6:31 p.m.22 (Exhibit 39 was marked for23 identification and attached24 hereto.)25 BY MR. RELIFORD:

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2 you what's been marked Exhibit 39. It's an email

3 chain from July 23rd, 2016, between you, Mr. Altman,

4 and Mr. Francis.

5 Do you see that?

6 A. Yes.

7 Q. You updated Mr. Francis that Lazard was

8 now aware that you were going -- that the Tesla

9 board was going to come in below the range in the

10 initial offer, right?

11 Oh, sorry. You -- Mr. Francis notifies

12 Mr. Altman -- strike that all.

13 Mr. Francis notified Mr. Altman that

14 Lazard now knew that Tesla was going to come in

15 below the initial offer range, right?

16 A. Yes.

17 Q. And Mr. Altman responds, "Or this whole

18 thing just needs more time. I would slow it down."

19 Do you see that?

20 A. Yes.

21 Q. And you note that you had the same

22 thought?

23 A. Yes.

24 Q. Why did you think that the transaction

25 needed more time as of July 23, 2016?

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1 MS. VENEZIA: Objection to the form.2 THE WITNESS: Because we were -- we were3 very far apart in value.4 BY MR. RELIFORD:5 Q. Lazard threatened to put out a press6 release saying that they were terminating deal7 discussions, right?8 A. Yes.9 Q. And you didn't think that they could find

10 financing in time if they were to make that11 announcement, right?12 A. It was a concern, yes.13 (Exhibit 40 was marked for14 identification and attached15 hereto.)16 BY MR. RELIFORD:17 Q. And there was a board meeting on July 24,18 2016; is that right?19 A. Yes.20 Q. And did you attend in person?21 A. I believe so. I believe so.22 Q. You notified the board at this meeting23 about SolarCity's anticipated second quarter 201624 financial results, right?25 If you go to page 2 of the document.

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1 A. Yeah.2 Q. First full paragraph.3 A. Yes.4 Q. The board briefly revisited the strategic5 rationale for the transaction; is that right?6 A. Yes.7 Q. In particular in light of all the due8 diligence findings that you guys had made, right?9 A. Yes.

10 Q. Including the liquidity risks, right?11 A. Yes.12 Q. Did anyone say, "We shouldn't go forward"?13 A. I don't believe so.14 Q. Do you see this paragraph here,15 "Representatives of Evercore"?16 A. Yes.17 Q. It's a pretty complicated sentence here.18 I'm going to try to unpack this with you. Okay?19 The sentence reads: "The directors asked20 questions of Evercore" --21 A. I don't know where you're reading now.22 Q. I'm sorry.23 A. I was looking at -- which page?24 Q. Page 3, the paragraph that begins --25 A. "Representatives."

Page 281

1 Q. -- "Representatives of Evercore."2 A. There are two.3 Q. The big one.4 A. Okay.5 Q. All right?6 A. Yep.7 Q. "The directors asked questions of Evercore8 regarding the expected impact of SolarCity's9 announcement of its second quarter results on the

10 trading price of SolarCity's common stock, including11 in the hypothetical scenario that the company had12 not publicly disclosed its acquisition proposal."13 Do you see that?14 A. Yes.15 Q. All right. Let's stop there.16 When the board asked questions of you17 regarding the expected impact of the release of the18 2Q '16 financial results for SolarCity, what did you19 tell them was the likely impact on the trading price20 of SolarCity's common stock?21 A. Well, given that they were going to reduce22 guidance, the stock price would likely go down.23 Q. They asked you about a hypothetical24 situation which was if we didn't make this offer and25 they were releasing this guidance, what would have

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1 happened, right?2 A. Yes.3 Q. And what was the advice Evercore provided4 in that hypothetical scenario? What was Evercore's5 best guess as to what would have happened to6 SolarCity absent your -- Tesla's public offer?7 MS. VENEZIA: Objection to the form.8 THE WITNESS: That the stock price would9 go down.

10 BY MR. RELIFORD:11 Q. The sentence goes on, "And the possibility12 of a successful combination with SolarCity if the13 company were to delay its making of a revised14 proposal or announce its intent not to proceed with15 an acquisition of SolarCity at this time."16 Do you see that?17 A. Yes.18 Q. So the directors asked you what's the19 chance of us ever buying this company if we20 terminate negotiations now, right?21 MS. VENEZIA: Object to the form.22 THE WITNESS: That's not how I interpret23 the language.24 BY MR. RELIFORD:25 Q. Okay. What questions were asked about the

Page 283

1 possibility of a successful conversation --2 combination with SolarCity if the company were to3 delay its making of a revised proposal?4 A. What questions were asked?5 Q. Uh-huh.6 A. Oh, I see. I'm sorry. I hadn't read the7 whole sentence.8 Yes. So they asked if the transaction9 would be successful if they were to delay the

10 revised proposal or announce the intent not to11 proceed with an acquisition.12 Q. And what did Evercore advise the board13 about the chances of a successful combination if it14 delayed making a revised proposal so that SolarCity15 could announce its second quarter 2016 financial16 results?17 A. I don't recall.18 Q. There's -- the sentence goes on, "Or19 announce its intent not to proceed with an20 acquisition of SolarCity at this time."21 Do you see that?22 A. Yes.23 Q. Okay. So the board asked Evercore for24 advice about the chances of a successful combination25 if the company were to announce its intent not to

Page 284

1 proceed with an acquisition of SolarCity at that2 time, right?3 A. Yes.4 Q. And what was the advice Evercore provided?5 A. Typically when you make an announcement6 like that, the stock price can be impacted7 negatively pretty significantly, which happened to8 one my other clients last year.9 It's in -- it's a negative signal to the

10 market.11 Q. Separate and apart from the impact on the12 stock price, what advice did Evercore provide about13 the possibility of a successful combination with14 SolarCity if you announced your intent not to15 proceed at that time?16 MS. VENEZIA: Objection to the form.17 THE WITNESS: I don't recall.18 BY MR. RELIFORD:19 Q. What do you think would have happened to20 SolarCity if you guys terminated discussions on or21 around July 24th?22 MS. VENEZIA: Objection to the form.23 Calls for speculation.24 THE WITNESS: What do you mean by what25 would have happened?

Page 285

1 BY MR. RELIFORD:2 Q. I'm -- I'm -- what -- sitting here today,3 I get that you can't recall what they might say, so4 I'm going to try to work around that, all right?5 Sitting here today, what do you think6 would have happened to SolarCity if Tesla terminated7 discussions in this late July time period and8 SolarCity had to announce its second quarter 20169 earnings?

10 MS. VENEZIA: Objection to the form.11 Calls for speculation.12 MS. LAVELY: Objection. Ambiguous.13 THE WITNESS: It would have a negative14 stock -- impact on the stock price, which would15 impact its ability to finance itself.16 BY MR. RELIFORD:17 Q. Would it end up in default?18 MS. VENEZIA: Objection to the form.19 THE WITNESS: Unclear. But the risk of20 default increases.21 BY MR. RELIFORD:22 Q. And the board asked you these similar23 questions back on July 24th, right?24 A. I believe so.25 Q. But you don't recall the advice you gave?

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1 MS. VENEZIA: Objection to the form.2 Asked and answered.3 THE WITNESS: I don't recall.4 BY MR. RELIFORD:5 Q. Evercore advised the board if they pulled6 out now SolarCity was going to go into bankruptcy,7 didn't it?8 MS. VENEZIA: Objection to the form.9 THE WITNESS: I don't recall.

10 BY MR. RELIFORD:11 Q. Evercore advised the board that if you12 pulled out now SolarCity's stock price would drop13 very, very low, right?14 MS. LAVELY: Asked and answered.15 THE WITNESS: I already answered that16 question. I believe we told them that it would17 be -- it would decline.18 BY MR. RELIFORD:19 Q. So by announcing the transaction prior to20 the disclosure of SolarCity's second quarter 201621 financial results and lowered megawatt guidance, you22 were able to keep SolarCity stock price from23 declining, right?24 MS. VENEZIA: Objection to the form.25 MS. LAVELY: Objection to the form.

Page 287

1 THE WITNESS: Not necessarily, because

2 they still announced those earnings, right?

3 BY MR. RELIFORD:

4 Q. But by the time they announced it, there

5 was a signed deal, right?

6 A. That was subject to shareholder votes.

7 Q. Did you share with the board on July 24th

8 your and Mr. Altman's --


10 Q. Did you share with the board on July 24th

11 you and Mr. Altman's view that there needed to be

12 more time for negotiations to play out?

13 A. I don't recall on that specific day, but

14 there were numerous discussions at -- at board

15 meetings recommending that we take the adequate time

16 to go through the process.

17 Q. Mr. Musk was present for a portion of the

18 conversation -- excuse me -- regarding the timing of

19 making a potential revised acquisition proposal

20 relative to SolarCity's upcoming announcement,

21 right? It's going back to the paragraph we looked

22 at on page 2.

23 A. Could you direct me to where?

24 Q. Page 2, this first full paragraph --

25 A. Yep.

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1 Q. -- you discuss --2 A. Yes, yes.3 Q. -- with the board at -- right.4 And then discussion ensued among the5 directors regarding timing of making a potential6 revised acquisition proposal relative to SolarCity's7 upcoming announcement, correct?8 A. Yes.9 Q. And the upcoming announcement is the

10 announcement of the second quarter 2016 financial11 results?12 A. Yes.13 Q. And Mr. Musk was present for that portion14 of the conversation?15 A. Yes.16 Q. What did he say?17 A. I don't recall him saying anything. I18 don't -- I don't recall.19 Q. So he could have said something; you just20 don't recall?21 A. I don't recall.22 Q. Was Mr. Musk in favor of proceeding with a23 revised acquisition proposal prior to the release of24 the second quarter 2016 financial results for25 SolarCity?

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1 MS. LAVELY: Object to the form.2 THE WITNESS: Was he in favor? We weren't3 voting. He wasn't involved in the voting of the --4 of the, you know -- of the board, so -- "in favor,"5 I don't know what you mean by that.6 BY MR. RELIFORD:7 Q. You had conversations with him almost8 daily, right?9 A. Yes.

10 Q. And he was there at the board meeting,11 right?12 A. Yes.13 Q. And he's not a wallflower, right?14 A. No.15 Q. Okay. He's a leader, to use your words,16 right?17 A. Yes.18 Q. What did he say, if anything, about19 whether or not you should proceed with a revised20 proposal prior to the release of the second quarter21 2016 financial results?22 MS. LAVELY: Asked and answered.23 MS. VENEZIA: Asked and answered.24 THE WITNESS: I don't -- I don't believe25 he said anything.

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1 BY MR. RELIFORD:2 Q. Did you have any opinion whether or not he3 favored doing it, or favored waiting, favored4 pulling away from the deal altogether?5 MS. LAVELY: Same objection.6 THE WITNESS: I believe his view was that7 the strategic rationale was still intact and we8 should take all of the information that we learned9 during diligence into our perspective on value.

10 But, again, when it came down to the board11 deliberations on whether and when to go back to12 SolarCity, he recused himself.13 BY MR. RELIFORD:14 Q. I get that he recused himself for the15 vote. But he was there for the discussion. You16 just don't recall what he said, right?17 MS. LAVELY: Objection to the form.18 MS. VENEZIA: Asked and answered.19 THE WITNESS: I think I answered that20 question.21 BY MR. RELIFORD:22 Q. All right. The minutes reflect that the23 meeting began at 9 a.m. and ended at 1:45 p.m. And24 Evercore left before the meeting terminated, right?25 A. Yes.

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1 Q. Do you recall how long before 1:45 p.m.2 Evercore left?3 A. It was pretty close to the end of the4 meeting, I believe.5 (Exhibit 41 was marked for6 identification and attached7 hereto.)8 BY MR. RELIFORD:9 Q. Exhibit 41 is an email chain from --

10 ending on July 25th with an email from you to Eric11 Senay, copying Chuck McMullan, Susan Repo, Jason12 Wheeler, and Preston Comey.13 Do you see that?14 A. Yes.15 Q. You have a note here or you say, "Thanks,16 Eric. Let's discuss. If they are manipulating17 payables and receivables, we should be conservative18 and back out a larger amount for valuation19 purposes."20 Do you see that?21 A. Yes.22 Q. What does that refer to?23 A. I need to read the email chain.24 (Pause while witness peruses document.)25 A. Okay. Would you repeat the question?

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1 Q. The question was, what does that refer to?2 Like what did you mean by your statement, "If they3 are manipulating payables and receivables, we should4 be conservative and back out a larger amount for5 valuation purposes"?6 A. I don't recall what this in particular is7 based on; but, obviously, if there's any sort of8 adjustments they're making to payables and9 receivables, that should go into the value of

10 SolarCity.11 Q. So "manipulating" here doesn't mean12 falsify the numbers, right? It's just adjusting the13 numbers?14 MS. LAVELY: Objection to form.15 THE WITNESS: You can push out receivables16 in a manner that is an adjustment but it's -- you17 know, some companies do it. But, again, if they're18 pushing that out for liquidity reasons, this is,19 like, another liquidity concern that we need to take20 into account in our valuation.21 BY MR. RELIFORD:22 Q. And they were, in fact, manipulating23 receivables and payables, correct?24 MS. LAVELY: Objection to form.25 THE WITNESS: They were adjusting them.

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1 BY MR. RELIFORD:2 Q. How did you take that into account in your3 valuation between the time of your statement and the4 final fairness opinion on July 30th?5 A. The valuation here refers to the6 counterproposal. So we lowered our offer price7 below the original range.8 MR. RELIFORD: Let's move on to the next9 exhibit.

10 (Exhibit 42 was marked for11 identification and attached12 hereto.)13 MR. RELIFORD: For the record, this is a14 document produced at TESLA_1115 and continuing15 through 1176.16 Q. Do you recognize this as the final17 fairness opinion that Evercore delivered to the18 Tesla board?19 A. Yes.20 Q. Can you go to page 6 of the deck. There's21 a side-by-side comparison of the SolarCity22 management case and revised sensitivity case; is23 that right?24 A. Yes.25 Q. For these entries on tax equity, did

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1 Evercore do anything to analyze or assess the2 monetization rates of tax equities assumed in these3 two models?4 A. The rates? We based it off of the most5 recent tax equity financing that SolarCity had6 issued in May of 2016.7 Q. So the monetization rates used in these --8 in the SolarCity model was the same as the9 monetization rate that was actually achieved in the

10 tax equity financing that occurred in May of 2016?11 A. I believe that's correct.12 Can you -- can you clarify what you mean13 by "rate" because I'm wondering if we're talking14 past each other.15 Q. We might be.16 SolarCity sits on a bunch of tax equity17 sort of credits, right?18 MS. VENEZIA: Objection to the form.19 THE WITNESS: Yes. Tax credits.20 BY MR. RELIFORD:21 Q. Tax credits. And let's say they have a22 value, hypothetically, of 100. All right? When23 they go out to the financing markets to convert24 those credits into cash --25 A. Uh-huh.

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1 Q. -- they don't get 100, right?2 A. Usually an interest rate.3 Q. Well, I'm talking about the amount they4 actually get in cash versus what they have in5 credits.6 A. You mean the amount they're able to7 monetize?8 Q. Exactly. That's what I mean.9 A. Okay.

10 Q. Okay?11 A. Yes.12 Q. So now we're talking about the same thing,13 right?14 A. Yes.15 Q. What did Evercore do to assess the16 monetization rates assumed within these models?17 A. We declined the monetization on a18 dollar-per-megawatt basis over the forecast period.19 Q. Can you explain that a little bit more for20 me?21 A. So tax equity as an absolute number22 increases, but the right way to look at it is on a23 dollar-per-megawatt basis. Megawatts are24 increasing; so the tax equity on a25 dollar-per-megawatt basis is declining over the

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1 forecast period.2 Q. Is that the same in both the management3 case and the sensitivity case or just in the4 sensitivity case?5 A. It looks relatively stable. I believe6 it's relatively stable in the management case and7 declining in the sensitivity case, if I recall8 correctly.9 Q. That's not reflected on this page, though,

10 right?11 A. No.12 Q. In this revised sensitivity case, it has13 residential, other, international. Just for clarity14 purposes, other would include commercial; is that15 right?16 A. Yes.17 Q. Can you turn to 1136 -- rather, 1137.18 It's the page on just the revised sensitivity case.19 Do you see that?20 A. Yes.21 Q. Tax equity here is 1.835 billion in the22 term -- in 2020, right?23 A. Yes.24 Q. And that total amount of source of cash25 carries over to become the terminal year

Page 297

1 calculation, right?2 A. It's part --3 Q. Or the terminal year value -- I'm sorry --4 source of cash?5 A. Yeah. It's part of the sum of the sources6 of cash --7 Q. All right.8 A. -- which goes into what we use for the9 terminal value.

10 Q. So then the terminal value doesn't reflect11 the phaseout or decrease in federal SITC that would12 occur 2021 moving forward, right?13 MS. VENEZIA: Objection to the form.14 THE WITNESS: That's not the right way to15 think about this, as we discussed at the beginning16 of the day.17 The way this DCF is done is looking at a18 total source of cash number which, over the19 projection period, is comprised of a number of20 different components outlined here.21 We then assume that the source of cash --22 the total source of cash grows in perpetuity at23 3.5 percent.24 BY MR. RELIFORD:25 Q. From $4.167 billion, right?

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1 A. Yes.2 Q. Which includes $1.8 billion of tax equity,3 right?4 A. Yes.5 Q. And if you carried this projection out to6 2021 or 2022, would you expect that tax equity7 number to actually decrease because of the impact of8 the ITCs?9 MS. VENEZIA: Objection to the form.

10 THE WITNESS: We didn't have projections11 for those years.12 BY MR. RELIFORD:13 Q. If you had added a year in your revised14 sensitivity case, would you have factored in the15 phaseout or the decrease in the SITC?16 MS. VENEZIA: Objection to the form.17 THE WITNESS: It's a reduction, first of18 all, again.19 It would have been taken into account in20 the tax equity number, but it's -- it's not21 necessarily -- it doesn't necessarily mean the tax22 equity goes down because it's based on how many23 megawatts and the rate on which you can monetize it.24 So it's both components.25 So even though the rate is going down, the

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1 megawatts are going up to a certain amount. The

2 dollar number could actually increase. We didn't

3 have projections for that year; so I can't speculate

4 on what the tax equity number would have been for

5 that year. What I'm telling you is we didn't make

6 an assumption at all on tax equity itself given this

7 analysis.

8 The way the analysis works is you look at

9 a number of different cash streams as a whole and

10 you grow them in a perpetuity at a growth rate,

11 which is what we did.

12 BY MR. RELIFORD:

13 Q. Okay. So your DCF analysis contains no

14 assumption about what would happen in tax equity in

15 2021, 2022, 2023, et cetera, right?


17 THE WITNESS: That's not the right way to

18 look at it.

19 BY MR. RELIFORD:

20 Q. Separate and apart of whether or not it's

21 the right way to look at it, that's just a true

22 statement: Your DCF analysis contains no assumption

23 about what happens in tax equity financing in 2021

24 or 2022 or 2023?

25 MS. VENEZIA: Objection to the form. You

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1 have a fundamental misunderstanding of how it works.

2 That doesn't mean the witness's testimony is

3 inaccurate.

4 THE WITNESS: We didn't take it into

5 account or not because the way that the analysis is

6 structured, we didn't grow the tax equity stream in

7 perpetuity.

8 Does that make sense?

9 BY MR. RELIFORD:

10 Q. Because you grew all the sources of cash

11 in perpetuity?

12 A. Yes.

13 Q. There's no specific line item for taxes in

14 the uses of cash, right?


16 THE WITNESS: This is a -- as we discussed

17 at the beginning, this is a cash model.

18 BY MR. RELIFORD:

19 Q. So they have to pay taxes, though, at some

20 point if they become profitable, correct?

21 A. But they -- well, they don't, but that's

22 not in the cash model.

23 Q. What do you mean "they don't"? I'm sorry.

24 A. I don't think they were paying cash at the

25 time -- or taxes at the time.

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1 Q. And did you ever do anything to figure out2 at some point in time if SolarCity would have to pay3 taxes?4 A. I believe we looked at it at one point.5 Q. And did you do anything to take into6 account what their future tax burdens would be and7 conduct in the DCF analysis?8 A. What is -- there are taxes included in the9 other line; so that's where it shows up.

10 Q. Okay.11 A. Sorry.12 Q. Can you go to 1139. And this is on the13 sum of the parts analysis.14 A. Yes.15 Q. This line item for annual retained value.16 A. Yes.17 Q. How was that derived?18 A. The -- that was calculated by the19 megawatts retained in the -- multiplied by the20 dollar per megawatt.21 Q. And how did you determine the -- strike22 that.23 For the sum of the parts analysis, you24 did -- Evercore did make adjustments to account for25 the phaseout of the SITC, correct?

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1 MS. LAVELY: Objection to form.2 THE WITNESS: Decrease, yes.3 BY MR. RELIFORD:4 Q. Why was it appropriate to do it in the sum5 of the parts analysis?6 A. These analysis -- analyses are apples to7 oranges. The way that we did the sum of the parts8 analysis looks at the PowerCo business, which is the9 existing installations, versus the DevCo business.

10 Now, DevCo is reliant on new11 installations. We looked at the retained value of12 those systems which is inherently reliant on the tax13 equity financing.14 So in order to do the valuation in this15 methodology, you have to make assumptions on the16 value of those installations which inevitably will17 decline if the tax incentive is declining.18 MS. VENEZIA: Justin, we're about19 30 minutes out.20 BY MR. RELIFORD:21 Q. Can you go to 1142?22 A. Yes.23 Q. This is the backup for the WACC that24 Evercore used, right?25 (Reporter clarification.)

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1 Q. WACC, W-A-C-C.2 A. And the cost of equity for the DCF.3 Q. In calculating or determining a WACC that4 you would use for your DCF analysis, did Evercore5 take into consideration the potential for debt6 covenant breaches?7 A. We used the cost of equity, to be clear.8 Q. Cost of equity, right?9 A. Because of the cash-based DCF.

10 Q. So the cost of capital was irrelevant to11 the analysis?12 A. For the discount rate in the discounted13 cash flow we used a cost of equity.14 Q. Why did you use a cost of equity as15 opposed to the cost of capital?16 MS. VENEZIA: Objection to the form.17 THE WITNESS: Because it was a cash-based18 model.19 BY MR. RELIFORD:20 Q. Does the cost of equity that you used21 factor in any risk of default by SolarCity?22 MS. VENEZIA: Objection to form.23 THE WITNESS: It's based on datas of other24 solar companies. So it did reflect the capital25 financing, the market conditions of the solar

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1 industry itself. And many of these companies were2 under -- a few of them were under financing pressure3 at the time.4 BY MR. RELIFORD:5 Q. Any as significant as SolarCity?6 MS. VENEZIA: Objection to form.7 THE WITNESS: It's unclear.8 BY MR. RELIFORD:9 Q. Is there any way to determine the cost of

10 equity with information specific to one company as11 opposed to the market more broadly?12 MS. VENEZIA: Objection to the form.13 THE WITNESS: You can look at recent14 financings.15 BY MR. RELIFORD:16 Q. How much of SolarCity's projections17 reflected the solar roof project that we discussed18 earlier today?19 MS. VENEZIA: Objection to the form.20 THE WITNESS: I can't recall the exact21 amount, but I believe they were included in the22 projections.23 BY MR. RELIFORD:24 Q. Did the status of that project factor in25 at all to the adjustments made to create the

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1 sensitivity case?2 A. What do you mean by "the status"?3 Q. They had a concept of a solar roof tile,4 right?5 A. They had an actual prototype.6 Q. They didn't have a way to manufacture it7 at scale, though, as of this time, right?8 A. Not at this time.9 Q. Still don't really have a way to

10 manufacture it to scale, right?11 MS. KEETON: Objection to form.12 THE WITNESS: Can you repeat the question?13 BY MR. RELIFORD:14 Q. Tesla/SolarCity still doesn't have a way15 to manufacture the solar roof tile at scale, right?16 MS. LAVELY: Objection to form.17 THE WITNESS: They are not manufacturing18 it at scale today.19 BY MR. RELIFORD:20 Q. So in light of those two facts, did21 Evercore take into account the status of the solar22 roof tile project when creating the revised23 sensitivity case?24 MS. VENEZIA: Objection to the form.25 THE WITNESS: We went through the

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1 assumptions on the revised sensitivity case and the2 adjustments that we made.3 BY MR. RELIFORD:4 Q. So you didn't? The answer is no?5 MS. VENEZIA: Objection to the form.6 THE WITNESS: I don't understand the7 question.8 BY MR. RELIFORD:9 Q. I'm trying to --

10 A. You're asking the status which is a very11 vague question. You're asking about adjustments to12 a model that I already went through. I don't13 understand the question.14 Q. All right. Do any of the adjustments that15 were made to create the revised sensitivity case16 reflect any concern about the inclusion of17 projections based off of the solar roof tile?18 A. There weren't any concerns about the solar19 roof at the time.20 (Exhibit 43 was marked for21 identification and attached22 hereto.)23 BY MR. RELIFORD:24 Q. This is my last exhibit. 43 is an email25 that you sent to David Karp, Ron Chen at Wachtell,

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1 copying all the members of your team, with a2 comparison of the restricted liquidity case and the3 revised sensitivity case; is that right?4 A. Yes.5 Q. Other than this side-by-side comparison,6 did Evercore do any analysis on the restricted7 liquidity cases?8 A. This is the analysis that we did.9 Q. You received the restricted liquidity case

10 the day before on August 23rd, right?11 A. I don't recall the exact date, but that12 sounds about right.13 MR. RELIFORD: I think that does it for my14 questions subject to any redirect that I might add.15 MS. VENEZIA: No.16 MS. LAVELY: I have no questions.17 MS. VENEZIA: The deposition is closed.18 THE VIDEOGRAPHER: This concludes the19 videotaped deposition of Evercore pursuant to Rule20 30(b)(6). We are off the record at 7:20 p.m. Thank21 you.22 (At the time of 7:20 p.m. the deposition23 was concluded.)2425

Page 308

1 DECLARATION

2

3 I hereby declare I am the deponent in the within

4 matter; that I have read the foregoing transcript and

5 know the contents thereof; and I declare that the same

6 is true of my knowledge except as to the matters which

7 are therein stated upon my information or belief, and

8 as to those matters, I believe them to be true.

9 I declare under the penalties of perjury

10 under the laws of the United States that the

11 foregoing is true and correct.

12

13 This declaration is executed this _______ day

14 of _______________________, 20___, at

15 ________________________________, __________________

16 (City) (State)

17

18 _________________________________

19 Courtney McBean

20

21

22

23

24

25

Page 309

1 C E R T I F I C A T E23 I, the undersigned, a Certified Shorthand4 Reporter for the State of California, do hereby5 certify:6 That the foregoing proceedings were taken before7 me at the time and place herein set forth; that a8 verbatim record of the proceedings was made by me using9 machine shorthand, which was thereafter transcribed

10 under my direction; further, that the foregoing is an11 accurate transcription thereof.12 I further certify that I am neither financially13 interested in the action nor a relative or employee of14 any attorney of any of the parties.15 IN WITNESS THEREOF, I have this date16 subscribed my name this 6th day of June, 2019.17

<%11625,Signature%>18 ________________________________________19 ASHALA TYLOR, CLR, RPR, CRR, CSR #2436202122232425

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1 ACKNOWLEDGMENT OF DEPONENT2 I, Courtney McBean, do hereby certify3 that I have read the foregoing transcript of my4 testimony, and further certify that it is a true5 and accurate record of my testimony (with the6 exception of the corrections listed below):7 Page Line Correction8 ____|_____|_________________|_________________9 ____|_____|_________________|_________________

10 ____|_____|_________________|_________________11 ____|_____|_________________|_________________12 ____|_____|_________________|_________________13 ____|_____|_________________|_________________14 ____|_____|_________________|_________________15 ____|_____|_________________|_________________16 ____|_____|_________________|_________________17 ____|_____|_________________|_________________18 ____|_____|_________________|_________________19 ____|_____|_________________|_________________20 ____|_____|_________________|_________________2122 Signed under the pains and penalties of perjury23 this _____ day of ________________, 20___.24

___________________________25

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310 1:2532 11:11 38:18

62:16 228:1533 11:15 242:14,19336 7:1334 11:20 188:23

259:9,143404289 1:23345 204:3,7 207:1435 12:3 43:25

262:1,6354 11:1836 12:7 227:16

264:24 265:3

37 12:11 57:2267:13,18

38 12:15 63:22274:5

39 12:18 54:2277:22 278:2

390 11:539341 242:2139354 242:213:11 167:19,213:19 173:23,253:20 265:123:21 174:1,33rd 70:11 130:18

130:20 149:3

4

4 6:15 34:16 44:2256:23 57:5,8,21,2361:21 62:1 66:2367:3,7,13,17 68:468:7,15,25 104:5109:13 135:21179:20 180:15213:21 247:10249:15

4.167 297:2540 12:22 54:1 56:9

66:9 69:8,10257:22 258:6279:13

41 13:3 291:5,942 13:7 293:10424b3 6:1743 13:12 306:20,24433 10:17434 6:9443 7:2145.6 124:25462 227:2 231:19468 6:20

[22 - 468] Page 3


CONFIDENTIAL

47 70:1 75:3,4474 9:94:00 228:254:17 228:224:40 224:1,34:51 224:4,64th 273:21

5

5 1:12 2:20 6:1714:1,6 36:1 39:1140:5,12 41:2343:11,19 44:4,1444:24 45:24 46:346:15 47:14,1657:14,18,23 66:1766:23 67:13,1768:4,8,15,25 74:174:6 127:23 128:7128:17,19 156:2201:10,13 202:13208:25 209:13212:6 232:2251:22 252:1

50 6:7 195:24197:15 199:17210:8 226:19244:9 245:17

52 214:753 69:12 124:24

125:154 71:20,21545 230:12549 12:20570 8:958 6:11587 9:21599 12:95:00 220:24 222:75:08 177:115th 127:24 133:14

152:11,14

6

6 1:9 2:16 6:1914:8 50:13 79:582:9,14 208:24209:2,11 219:15226:22,25 242:22243:12 293:20307:20

6-10-16 6:46-16-16 6:86-16-20 6:126-20-16 6:20 7:96-22-16 7:1361 6:15 69:13610.667.7056 3:9613 7:17661 6:568 231:7684 9:56:20 277:16,186:31 277:19,216th 189:8 309:16

7

7 6:22 7:5 92:1,1092:11,16 100:24156:7 196:16

7-13-16 8:4,8,127-15-16 8:17,207-16-16 8:24 9:4,8

9:127-17-16 9:207-18-16 10:4,10,16

10:20,24 11:4,127-19-16 11:87-2-16 7:167-20-16 11:21 12:47-21-16 12:87-22-16 12:12,167-24-16 12:19,22

7-26-16 13:47-3-16 7:207-30-16 9:16 13:97-5-16 7:247/8 192:6701 13:14705 13:573 109:13,17

249:18734 12:16738 12:2374 6:17759 11:9767 4:5773 7:9793 10:57:20 1:13 2:19

307:20,22

8

8 7:3 92:4,10,14118:6 119:22

8-24-16 13:1382 6:19825 3:1482573 182:2082576 184:582792 253:1983013 216:2583015 216:2584651 112:884654 112:1584658 112:2284665 118:784773 112:987 62:3882 7:258:10 188:158:15 253:188:59 143:13

9

9 7:7 19:9 112:1,6210:14 290:23

9/11 71:1890 192:6900 268:892 6:22 7:3 36:294 231:4946 6:139:14 208:109:32 1:13 2:19

14:2,59:37 149:79th 273:20

a

a.m. 1:13 2:1914:2,5 50:23 51:158:6,8,9,11 130:20149:7 166:10169:12 170:7177:8,18 182:11203:24 206:25210:14 262:18290:23

abilities 236:14ability 44:24 46:9

65:18 84:15,2585:10 86:14 129:9130:22 132:17234:25 235:12236:3,7 237:9,11237:17 241:16,21270:18,23 285:15

able 23:9 28:1276:11,12 115:5154:2 155:10164:17 165:1172:21 174:18197:20 206:6222:25 236:24

[47 - able] Page 4


CONFIDENTIAL

269:7 275:11286:22 295:6

abrogation 235:20absence 157:19absent 282:6absolute 295:21accelerating

164:15accept 119:12accepted 247:24accepting 132:9access 34:5 46:22

53:25 95:19 129:2131:17,22

accessing 95:2596:7

accident 264:2account 30:16

40:2 48:24 177:25183:9 189:12,21192:21 206:4239:2,5,19 251:4251:16 252:19254:23 260:23261:22 292:20293:2 298:19300:5 301:6,24305:21

accounted 204:9accounting 178:14

178:16,20accounts 189:24

190:5 191:4234:10 255:1

accreted 72:973:23

accretion 71:2172:13,18,22,2573:5 76:1,1487:18,24 119:23120:5,10,19,24

accretive 75:5,1175:22

accurate 84:21205:22 243:22245:19,19 309:11310:5

achieve 54:17achieved 294:9acknowledgment

310:1acquire 26:24

27:12 29:10 30:1872:17 75:25 102:1102:4 139:7146:12,17 148:7

acquired 134:24135:7

acquirer 121:21155:12 271:22

acquiring 27:6,627:17,22 118:12148:6,6 264:16

acquisition 15:2587:20 88:1,1889:2,8,13 104:1117:17 135:4270:1 281:12282:15 283:11,20284:1 287:19288:6,23

acquisitions200:15

acting 127:15action 309:13active 104:18

168:17,20actual 45:17 97:19

99:5 217:25 305:5add 307:14added 298:13

addition 177:23192:8

additional 66:20128:18 134:1204:13 205:6243:15

additionally 189:5234:23

address 268:10,12addressed 179:12adds 71:12adequate 179:15

287:15adequately 187:3adjust 177:24

207:16 243:21adjusted 177:23

203:4,7 212:20,23adjusting 177:24

292:12,25adjustment

196:15 197:18,19226:18 241:24292:16

adjustments 178:1179:24 183:5193:5,11 207:5212:19 225:19228:1 243:4 249:7249:12 260:22292:8 301:24304:25 306:2,11306:14

advance 62:677:10,13,17,21126:18 129:12149:10 170:21,21171:5 173:4

advanced 222:21advice 30:19

101:17,25 140:7

276:5 282:3283:24 284:4,12285:25

advise 25:2 29:9111:19 122:20254:25 258:22275:3,15 283:12

advised 22:4122:23 150:18286:5,11

adviser 33:1949:14 100:2 131:8

advising 72:20117:8,9 236:23

advisors 109:22157:12

advisory 19:1722:15 24:24,25131:6

affect 46:8 71:9,11215:16 272:20

affirmed 15:14afternoon 224:25ag 110:23agenda 166:6aggressive 87:14

185:25 195:7ago 162:12agree 17:18 62:25

78:14 80:3 166:17171:2 176:18180:5 212:13231:14 245:25

agreed 14:2147:13 51:7 68:19132:13 150:20153:10 154:7162:4 198:10

agreement 6:22179:18,19 180:8206:9 269:11

[able - agreement] Page 5


CONFIDENTIAL

agrees 171:7ahead 40:9 267:11alacrity 127:15allocation 179:21allow 234:20allowed 17:25allows 250:8alluding 145:21

146:4altman 6:8 7:16,20

8:7,12 10:1612:19 20:14,2121:4 22:7,19 23:123:5,24 82:24123:21 126:10130:20 131:13,21132:7 143:6 149:3153:5 160:24220:23 265:5,13265:20 267:19,22278:3,12,13,17

altman's 153:12265:10 287:8,11

alto 19:17altogether 242:7

244:3 290:4ambiguous 285:12amount 22:16

48:20 76:10104:15 117:16125:16 181:25185:4 243:15251:16 252:12269:15 291:18292:4 295:3,6296:24 299:1304:21

amounts 204:9analyses 66:20

75:24 85:7 88:1088:13 170:23

214:6,15 232:11258:10 302:6

analysis 33:12,2238:23 39:12 40:1641:3,14,17 43:2147:4 48:6,10,11,1448:19 49:17,18,2549:25 50:12 54:1055:23 56:5,1259:18,20,24 61:1366:13 69:19 71:2272:7,19,23 73:2,473:11 75:2 76:5,776:8,15 77:586:18,21 87:688:3,4,15 90:5116:10 119:23120:5,10,19 137:3181:13 189:22193:16,22 199:21200:4,14 201:14201:20 202:20206:4 212:17215:3,10 216:8217:9 218:17219:1,3,25 231:24232:6,9,18 242:12242:12 245:10246:4,13,18 248:1248:4,7,9 258:7,20274:25 276:13,25299:7,8,13,22300:5 301:7,13,23302:5,6,8 303:4,11307:6,8

analyst 39:4,1440:15,17 52:353:18 65:20 72:687:8,13 92:23200:6 214:6232:11

analyst's 41:1253:15

analysts 65:24107:11

analyze 294:1anand 20:15 23:20

24:15 83:14announce 138:9

260:24 282:14283:10,15,19,25285:8

announced 23:1828:15 29:24 70:18122:7 127:7259:25 260:12284:14 287:2,4

announcement70:22 144:6182:22 279:11281:9 284:5287:20 288:7,9,10

announces 70:12121:21

announcing286:19

annual 268:7301:15

answer 16:15,1616:24 17:2,10,2119:10 23:9 41:945:7 49:11 67:6111:12 120:21131:10 168:7254:23 256:3,6306:4

answered 67:1983:25 91:3 99:2186:6 191:13208:17 219:6,7246:11 247:17255:4,5 261:17

264:22 275:21286:2,14,15289:22,23 290:18290:19

answers 16:20,2021:1 168:2

anticipated 166:9242:5 279:23

anticipates 75:10antonio 240:21anybody 123:7

164:23 168:22206:1 256:15

apart 279:3284:11 299:20

apologize 154:20177:9

apparent 82:3appear 93:4 227:8

239:8appearances 3:1appeared 131:23appears 131:18appendix 257:22apples 48:8 302:6applied 245:3apply 232:1appraisal 97:21appreciate 185:17approach 49:8

66:3 109:22235:15 248:11

approached 129:6appropriate 32:20

44:25 48:9,1349:25 56:1 57:1067:5 82:4 90:1690:24 101:18103:10,14,15179:14 180:2198:4 302:4

[agrees - appropriate] Page 6


CONFIDENTIAL

approval 229:22approve 144:14

222:14 223:7approved 224:23

229:9,13,24 247:6area 221:3argues 192:11arguing 250:16argument 131:14argumentative

218:19article 145:21ashala 1:22 2:20

14:19 309:19aside 76:17 160:9

203:10asked 17:8 19:11

27:8 33:18 39:1740:10,12 67:1983:24 91:3 99:2113:23 114:5123:25 125:22141:16,17 144:22145:11 150:17154:4 182:7 186:5191:13 208:17210:25 213:1219:5,7 222:21243:17 246:11247:17 254:22255:3 260:4,16261:16 262:12264:21 271:8,13275:21 280:19281:7,16,23282:18,25 283:4,8283:23 285:22286:2,14 289:22289:23 290:18

asking 16:15143:17 145:6

184:8 236:9 240:2306:10,11

aspect 48:25110:20

assess 33:20 294:1295:15

assessment 77:1asset 32:9 33:13

33:17,23 77:4,684:18 85:20 86:489:16 94:22110:22

assets 86:7,10111:14 234:25

assignment 26:1227:15

assume 17:1165:25 236:22248:22 249:4297:21

assumed 41:22243:10 244:21,25294:2 295:16

assumes 196:17assuming 65:3

173:11 236:20assumption 41:24

68:17 138:23197:3 209:5242:11 299:6,14299:22

assumptions 46:1647:10,13 49:1853:24 54:17 59:2063:18 65:2,2167:21,23,24 76:186:20,23 87:388:13 143:19170:23 171:2,3,7174:15 187:12198:2,17 201:17

208:21 210:14,17210:19,22 211:7211:12,18 212:12212:14 218:1,2,3,5218:17,23 243:4243:18 245:15248:19,25 249:8261:23,24 302:15306:1

attached 10:6,1130:23 50:4 58:2061:22 74:2 82:1092:2,5 112:2123:13 126:5130:14 133:2139:10 143:2148:22 157:3160:19 162:24165:15 168:25172:24 178:22182:3 188:5194:12 203:13206:16 216:20220:19 224:8228:16 242:15259:10 262:2264:25 267:14274:6 277:23279:14 291:6293:11 306:21

attaches 31:6attaching 126:14

206:21attachment 7:23

10:19 31:5 50:10182:18 193:20219:13

attachments 6:3,77:7,11 112:8

attack 250:14

attend 279:20attorney 156:9

220:24 271:24309:14

attractive 27:1032:9 33:13,17,2377:4 96:14 118:17

attribute 251:15attributed 63:20atypical 128:11audio 14:20august 140:3

179:13 189:8254:11 273:20,21307:10

author 92:18available 46:3

54:6 56:19 61:1285:15 102:13161:3

avenue 3:14 4:5avoid 34:24

107:18 189:25190:5,23 191:21205:8

aware 37:10119:19 122:10161:13,14,19,20189:11 211:18237:21 243:9260:4 278:8

awkward 271:20

b

b 1:9 2:16 6:1 7:18:1 9:1 10:1 11:112:1 13:1 14:821:25 22:4 79:5307:20

back 50:25 55:2558:9,10 98:15100:24 105:19

[approval - back] Page 7


CONFIDENTIAL

109:2,3,6 110:15133:21 156:4,18158:23 159:1,4167:19,20 168:1170:25 173:8,11174:1,2 182:6193:19 208:9211:11 213:21224:4,5 230:2235:1,14,15,19,23236:24 249:14250:9,10 257:15269:23 273:20,25274:3 277:19,20285:23 287:21290:11 291:18292:4

backed 110:22background 74:23backup 302:23bad 244:17 258:11bailout 123:1,8baked 260:17balance 110:18

111:2,8,9,21,23191:20 205:22234:8 268:13,20268:23

balances 188:18189:13

balancing 109:25bank 151:1 271:1banker 71:1

238:10 271:25bankers 159:4

180:1 218:2banking 18:7,11

18:22 19:17bankruptcy 25:6

286:6

banks 145:18146:2,19,23 147:2150:24 256:16,23257:1,5

bar 202:10,11base 84:18 85:20

86:4 123:23124:10,14,21127:19 137:4144:19 145:2,8,8145:12 248:14

based 33:12 38:2441:3,15 43:2444:23 45:5,2352:18 54:6 56:456:18 57:10 62:766:4 67:2 71:2472:4,5 75:2 76:2,785:14 86:23 87:487:6 88:3,15 90:598:14 102:8,13120:24 125:3155:9 156:10174:14,24 185:17198:21 199:11,22201:14,17 204:25205:4,19 214:11215:3,10 218:3223:9,18 242:12248:18,24 254:16255:14,18 258:20270:10 292:7294:4 298:22303:9,17,23306:17

basically 61:12166:20

basing 65:21basis 24:5 48:23

52:12 72:9 73:24119:25 121:3

156:8 295:18,23295:25

bates 10:7,13 32:834:17 38:19 62:392:12 101:5 112:8139:15,24 194:20216:24 242:20262:7

battery 28:1,130:11 119:9,11122:11 250:20,23250:24 251:1,10

becoming 158:7185:15

began 37:20290:23

beginning 37:650:10 62:3 240:25297:15 300:17

begins 42:19 52:1663:1 112:15280:24

behalf 14:10 15:615:9,12,21 79:6

belief 72:2 161:9162:20 195:11204:24 205:25216:7,15 308:7

believe 24:8 25:1931:20 32:2 37:1239:19 40:18 43:1845:11 47:25 60:1160:22 66:8 67:968:5 75:18 78:1382:7 83:4,10 87:588:24,25 90:2495:18 99:13,23110:7 113:17117:15 122:23,25123:3 133:15142:24 145:10

151:22 152:17153:4 159:20160:3 162:4164:12,24 168:23171:24 175:5178:7,11,20 179:5179:8 182:1187:22 188:1190:7,16 195:4196:7 197:2,19,21209:23 211:20217:10 220:4221:13,18 223:21224:22 225:5230:17 235:19238:17 239:24240:1,16,19 243:8252:17,21 253:19254:2,12,18,22255:23 262:22263:2,22 267:1,6268:5 274:15275:17 277:5,9279:21,21 280:13285:24 286:16289:24 290:6291:4 294:11296:5 301:4304:21 308:8

beneath 142:3benefit 28:19

35:11 214:19250:13

benefited 36:3best 30:6 55:18

56:6,7 68:6,23150:19 216:16263:25 282:5

better 39:13 216:8254:11

[back - better] Page 8


CONFIDENTIAL

beyond 126:1bid 94:9,18 98:13

100:5bidder 94:9bidders 94:16big 28:7 40:19

126:2 281:3bigger 185:15

241:13bilicic 157:10,11billion 64:9 202:23

203:1 296:21297:25 298:2

bills 190:22bit 19:2 59:8

102:18 295:19block 107:19

108:2blurb 187:18board 10:12 11:7

21:1 31:10,18,2532:3,4 47:2,351:17 59:9,11,1959:21 60:17,2561:1 72:19,2473:15,17 76:2277:15,18,22 78:1,778:11 80:16,1881:14,24 82:6,1683:2,16,23 84:586:18 88:5,1490:4 91:8 92:2593:17 95:17 97:1098:18,20,24 99:1799:24 100:1104:17,18 105:9105:12 111:19112:12,20 116:1,3116:4 120:11122:20,23 126:14126:19,24 127:7,7

132:15,21 134:14135:14 139:19,20140:8,22 144:14150:18,20 152:4,5152:8,13,22156:10 162:5,6,9168:12 169:22170:20,22 171:4190:4,14,17 191:9191:11 194:23206:22 213:3222:18 224:20225:11 227:1230:3 231:17232:12,24 233:5233:16,18 236:23238:21,24 239:19239:24 240:9,13240:20 247:6249:25 250:6252:4,14 253:1254:1,10,13,25255:12,21 256:2,9256:10,12,13,20257:3,9 258:22266:7,18 267:7,10274:10 275:3,15275:18 276:10277:3,7,12,13278:9 279:17,22280:4 281:16283:12,23 285:22286:5,11 287:7,10287:14 288:3289:4,10 290:10293:18

board's 99:25117:20 190:11239:1 240:2254:19

boards 213:6bonds 151:5book 24:7 61:5

112:17,18 169:18170:20 254:1

bottom 34:1864:11 75:4 94:7115:3 183:13273:19

brad 7:23 132:20201:2

brand 28:21 84:14breaches 303:6break 17:16,17,18

17:22 18:1 58:1,3106:8,23 108:22109:11 155:16156:23 167:14,23223:22

breakdown125:19

breaking 155:15breaks 17:15brexit 71:4,9,11

71:18 105:14,19bridge 128:22

129:1,9 145:16,19146:20 147:3150:14,17,22151:13,21,23152:21 160:4269:8 275:12276:17

brief 221:2briefly 280:4bring 234:2broadly 257:20

304:11brogiin 4:11 15:6brought 163:8

buffalo 135:17build 36:3 42:8

218:3built 128:9bullet 34:18 36:11

95:11 96:15 97:898:6,8 100:23101:7 103:13104:4 105:16109:21 134:4182:21,25 195:17197:15,22 225:17225:18 234:23241:4 257:17,18

bunch 294:16burden 139:2burdens 301:6business 28:1,2,5

29:11,13 30:1135:23 36:17 37:2440:6 41:12,1642:2 45:6 48:2148:23 49:1,2452:11 54:17 55:855:19,20 56:364:3 69:21 71:1486:12 87:10110:20,25 111:15113:20 114:4,10114:25 115:18,18118:11 120:20121:1 122:11,12135:3,7 137:15174:12 184:15,20185:14,15 187:2196:20 240:24,25241:5 242:6,7243:11 244:22245:1,20 269:14302:8,9

[beyond - business] Page 9


CONFIDENTIAL

businesses 86:13buss 7:24 132:20

133:5,10 134:7,13134:18 135:13136:21 137:16,20138:19 141:2201:2

buss's 134:12buy 30:6 132:16

196:24 236:10buying 282:19

c

c 1:7 4:1 22:2170:2 303:1,1309:1,1

c.a. 1:4 2:4calculated 301:18calculating 303:3calculation 297:1california 1:16

2:18 14:1,16156:1 309:4

call 59:11 124:1125:10,24 143:18149:10,14 160:6160:13 161:3,6,12161:19,24 162:16163:9,12,15,18164:22 166:2,7,9166:19,22,25167:12 169:14170:14 171:23172:8 173:5,13199:4,5 208:7209:4 211:6220:14,25 221:4221:12,14 222:3,5222:7 228:24233:14 256:16,23257:5 262:25265:7,13,15,18

266:4,25 267:7,8268:2 269:6271:13

called 36:7 109:17163:2,8 164:24

calling 59:7,17257:1

calls 165:11 167:9168:8,9,11,12,17168:18,19,22208:19 221:24226:10 272:14,23273:15 284:23285:11

capacity 60:2579:5 185:3 226:19

capex 269:16capital 25:2 34:5

46:23 95:8 96:1796:25 110:11111:14 115:1129:2,17 183:4192:18,24 234:13241:7,12 303:10303:15,24

capture 49:3captured 49:2

122:9 136:12187:3 196:2 251:7

car 29:25 251:2264:2

care 88:9 120:24cared 114:9career 18:20,21

19:1 24:9carefully 269:16carried 298:5carries 234:8

296:25carry 234:11

case 14:13 37:2569:23 115:17116:9 118:3,13129:25 131:2137:3,4,4,14143:19 144:19,21145:2,8,8 149:16149:20 154:1,4,15154:21 155:1,3,6155:11,13 159:17172:11 173:18174:6,11,16,20175:12,14,25176:7,14,14,20177:21 178:5,9180:10 183:3,8,14192:23 195:15,19196:17 200:23,24201:9,14,15,19202:20 207:6209:5,15 210:13210:19 212:15,15212:17 217:5,6,15217:22,25 219:9220:3,7 221:12222:4,9,13 224:12224:24 225:2,10225:12,19,20228:4 229:5,8,13229:19 231:15,16232:16,19,22,25233:1,7 242:4,13243:1,5,10,14,16244:21,25 245:9245:11,11,13,25246:4,12,13,17,23247:1,3,15,16,19247:22,25 248:10248:12,14,15,16248:17,23 249:5,7249:9 251:4,13

252:20 258:17260:23 261:23293:22,22 296:3,3296:4,6,7,12,18298:14 305:1,23306:1,15 307:2,3,9

cases 217:14 307:7cash 38:23 39:12

40:20 41:11,15,1741:20,23 42:14,1442:15 43:8,9,10,1243:20 48:5,6,10,1148:14,18,21,2249:5,24 55:18,1955:20,20,21 62:1862:21,25 64:3,4,1264:23,24 65:4,1065:15,18,21,2266:7,12 70:12,2170:22 85:6 115:19120:14,17 121:2,4138:13,16,20139:2,2,21,21161:11 183:15,22188:16,17 189:3189:13 191:20192:6,11 196:25197:13 199:25200:3,9,14,17201:13 202:23203:1,5,8 204:20205:4,6,19,22212:20,23 216:8216:16 227:1,9,10227:11,15,18,23228:3 231:19,24232:6 234:8,10235:1,18,24,25236:25 243:15248:9 252:23253:4,11,16

[businesses - cash] Page 10


CONFIDENTIAL

254:16,20 255:15255:19 268:13,14268:20,23,24271:7 274:24276:6 294:24295:4 296:24297:4,6,18,21,22299:9 300:10,14300:17,22,24303:9,13,17

catch 170:9caught 149:13cause 66:22 75:6

207:16 241:15,20caused 46:21

67:16 108:14222:3,8,12

caveat 87:12cease 115:4,21ceased 115:15ceasing 116:5cell 14:23centering 44:20certain 22:25 32:5

49:7 74:17 84:9135:17 245:15251:15 299:1

certainly 247:18certified 309:3certify 309:5,12

310:2,4cetera 299:15cfo 59:9 60:1

96:20 141:8 150:4chain 6:11 7:19

8:11,15 9:7 10:3,911:3,20 12:3,7,1813:3 34:10 130:17130:19 143:5149:2 159:14160:12,23 163:6

165:19,23 169:6,8188:10 262:7267:18 278:3291:9,23

chairman 20:2580:18 81:13

chairs 59:16challenges 183:2

183:10 195:13challenging

179:25chance 59:11

74:13 169:4206:20 282:19

chancery 1:1 2:114:12

chances 283:13,24chang 9:3 166:7

166:12,16 259:16259:19 262:24

change 38:5,7,1038:11,14 44:3,1361:18,19 66:2267:12,17,23 68:4,7211:11 213:8,16222:8,13 226:20248:8 251:21

changed 59:8,2166:20 188:22209:5 210:13245:2

changes 213:2,6222:24 227:8231:10,15 232:4

chapter 34:7characterized

241:6,12charge 251:2chart 39:1 52:5

138:6

check 3:4 15:3165:11 166:2

checking 264:2checklist 166:20chen 306:25chicago 19:3,5chief 132:22 150:9choose 16:25chose 53:18chuck 8:7 24:21

123:21 126:11131:4 143:6,13160:24 291:11

circle 193:19circles 142:2circling 105:19circulated 50:12

50:14circumstances

61:15,16 153:6citi 19:19,21citigroup's 19:16city 1:16 2:18 14:1

14:16 156:1308:16

clarification 29:438:20 86:1 97:22101:1 102:3,22103:23 106:15121:16 135:1136:6 141:21153:17 170:1,12173:9 175:20184:4 200:12203:6 204:6 206:8212:22 217:19225:23 230:25246:24 262:8269:1 270:14274:1 287:9302:25

clarify 101:13294:12

clarity 296:13class 3:3 15:3

21:25 22:2,4clawback 156:7,15clean 16:12clear 33:23,24

112:17 122:14177:15,17 187:14303:7

clearly 85:8client 59:19 156:9

159:5 174:15238:11

client's 23:4clients 23:3 128:8

263:7 284:8close 94:22 206:1

206:6 263:3271:15 291:3

closed 22:3 270:1271:10,11 307:17

closing 128:23269:15 271:17

clr 1:22 2:21309:19

coast 51:5code 32:13collective 172:4,6color 64:12combination

27:20 41:22282:12 283:2,13283:24 284:13

combine 30:14119:9

combined 84:1595:24 96:2,16,24

come 26:18 94:4102:18 115:20

[cash - come] Page 11


CONFIDENTIAL

186:3 210:17211:3 229:20245:18 256:20267:3 275:25278:9,14

comes 103:7178:18

comey 9:8 10:4,2312:4 20:15 23:2024:10 143:7160:25 169:25170:2 217:3,9291:12

comey's 193:21217:13

comfort 116:12186:12

comfortable 57:1467:25 137:14

coming 15:19 28:630:13 36:19107:18 158:6207:3

commenced 23:16commencing 2:19comment 78:19

90:1 97:21,23213:22

commentary 89:1107:4

comments 78:1082:5,8 105:2107:25 126:20133:6 182:10,15184:14 195:2

commercial 33:2537:2 43:6 184:16184:22 185:1,4,11185:14,20,23,24186:14,17 195:23198:11 199:18

209:18,22 226:6241:1,5,11,17,22242:1,7 243:11244:3,9,13,17,22245:1,3,20 246:1296:14

commitment135:16

committee 11:1647:11,16 59:16,2159:23 61:10,1067:2,22 68:3,22157:19 170:24,25171:4,9,17 206:23207:3 208:4 209:1209:3 212:9,12213:1,15 214:1219:20 221:20222:25 223:6,15258:23

common 77:1589:19 90:7,8,10103:20 281:10,20

communicated118:23 129:3,18132:15 157:23172:13 275:23

community 122:8122:10

companies 18:1418:19 24:9 25:227:2 33:2 34:6,1235:8,10,15 38:1254:23,25 55:770:7 71:11,1672:16 73:4 75:24103:5,8 108:15,18124:18 125:15128:6 158:22218:2 257:19258:3,12 263:18

292:17 303:24304:1

company 26:22,2326:25 27:4,6,12,1827:22 29:10 30:730:18 40:5 44:1845:8 52:10,1455:24 69:23 70:872:17 75:25 76:376:3,8 81:2,1584:15 85:4 86:1487:11,15,19,2589:9,19 95:2496:2,16,24 103:6107:5 112:19118:13 119:2122:13 164:19,20189:24 200:17204:21 258:7264:13,16 281:11282:13,19 283:2283:25 304:10

company's 44:2384:17 85:19 86:390:7 114:14 234:7234:13 236:7237:17

comparable 54:24257:21 258:4,12258:16

comparables54:13,22 55:14

compare 227:4comparison 217:5

224:11 230:2293:21 307:2,5

compelling 27:1995:20 96:10250:20 251:11

competition 17:1317:15

competitive 34:23complete 166:21

172:14,21 179:25263:16

completed 147:17completely 42:22complex 22:10

26:9 179:24complicated

109:24 110:10,14110:17,19 111:6111:23 280:17

complications111:21

component 49:1126:3 235:21

components 41:2165:4 297:20298:24

compound 218:19comprised 297:19compromises

130:22comps 258:16concept 249:25

305:3concern 46:18

95:23 135:5 142:9146:22 147:6,16147:21 186:20,25234:6 240:7241:15,20,23256:1 257:12279:12 292:19306:16

concerned 145:25147:2 163:25240:10 254:7

concerning 160:13161:3,6

[come - concerning] Page 12


CONFIDENTIAL

concerns 46:2047:1 130:8,12134:10,12,15135:12 140:4142:7 160:5184:12,24 189:18189:20 194:8214:13 215:13216:15 251:14256:9,13,21,22257:4,9 277:2306:18

concise 131:10conclude 124:20concluded 307:23concludes 139:1

150:12 307:18conclusion 47:16

56:5 115:20 186:4272:15

condition 29:11,13conditions 303:25conduct 72:7 89:6

108:16 109:23153:20 246:16301:7

conducted 42:1102:10 108:10,13113:9 249:6

conducting 148:20165:7 205:13

conference 167:24confidential 21:24

267:12confirm 51:8confirmed 50:17

180:14conflict 78:15,23

79:1,13,24 81:1081:15,17,21 82:390:18,25

conflicts 79:18,18connection 7:4

92:15 178:12179:7 193:8

conner 20:2023:21

connor 24:19conservative

43:13,19 65:2487:14 245:14248:11 291:17292:4

consider 72:17107:5 132:4

consideration 30:854:12,16 118:5214:7,14 303:5

considerations27:25 30:5,10179:22 214:23

considered 90:6117:12 183:14248:24 257:19

considering 65:490:18,25 116:8239:20

consistent 34:595:4 105:8 137:23226:2,4,7

consolidated 1:32:3 14:12

constant 65:23constraining

129:9 132:17constructive

179:10constructs 174:14consult 25:13consumer 34:3

43:2,3,3 250:13251:11

consumers 28:22250:8,17

consummation274:22

contains 299:13299:22

contemplate181:14

contents 308:5continuation

58:25continue 34:25

35:5 44:19 45:1045:14 46:25 85:5131:16

continued 4:1 7:18:1 9:1 10:1 11:112:1 13:1

continues 158:5continuing 31:5

50:11 62:3 92:13216:25 242:21293:14

contract 141:10contribute 150:7control 34:9,24convene 163:15conversation

16:12 84:8 88:2391:13 104:23105:19 133:10161:23 162:1,10162:11 163:3,16163:20,22 165:21199:14,16 210:22219:23 220:6229:2,3,6 238:4,4262:20 283:1287:18 288:14

conversations14:23 49:13 116:4

118:25 123:6186:11 221:20289:7

convert 294:23convertible 230:17convey 38:22

51:25 64:1 132:8252:4

conveyed 97:10277:3

conveying 250:6251:24

convince 103:8cooperating

157:21cooperation

157:18,20coordinate 156:11copies 77:14,17,21copy 44:9,11

77:10,13 179:2222:21 243:1

copying 123:21126:11 157:9291:11 307:1

corp 227:10corporate 15:21

234:7 272:1correct 20:22

23:22 26:21 27:729:22,25 31:2333:15 36:20 39:739:18 41:6 42:943:19,22 44:1,446:4,9,12 47:21,2448:3 50:13,1551:7,14,15,17,2054:4,5,7,8 55:1155:14 56:6,10,1656:20 62:6 63:664:10 65:13 66:8

[concerns - correct] Page 13


CONFIDENTIAL

71:22,23,25 72:4,672:24 74:11 75:1676:6 77:11 78:1278:16,24 80:19,2183:3,9,12 84:6,7,984:10 85:17 88:788:23 90:14 91:1091:14 95:25 96:2097:1,11,15 99:12103:20 104:10105:9,12 110:3117:3,18 119:23120:2 121:15,18121:24 128:19129:10 130:5,9131:24 132:5,18133:8,11 134:21136:13 139:7140:9,12,15,16,18140:21,25 141:3142:4,16,22,24145:16 147:12,15152:9 158:3,4166:10 167:2,4169:15 183:11191:5 207:7 215:6215:14 217:23219:4 223:10,19225:2,13,20 228:7229:25 231:24232:3,6 237:1239:23 242:7243:23 257:10259:22 260:18288:7 292:23294:11 300:20301:25 308:11

corrected 75:1correction 310:7corrections 310:6

correctly 31:21198:12 296:8

corresponds 99:11coscia 4:12 15:11

15:11cost 35:1,6,8,11,13

35:16 37:22 56:1556:20 86:20 95:896:16,25 149:16177:22 194:3202:16 210:1212:4 226:13303:2,7,8,10,13,14303:15,20 304:9

costs 34:25 177:23178:1,2,4,9 183:4189:7,7 193:1196:9 197:11,11250:12 252:21

counsel 3:1 4:116:22 14:10,2517:1,25 51:6109:11 150:10156:11,23 164:25166:13 177:1

counterproposal293:6

country 150:5couple 58:2 247:9course 18:20 21:5

24:9 25:14 28:1237:4 39:5,1746:17 49:12 72:1073:15 113:19114:8 158:20249:5,10

court 1:1 2:114:11,18 20:1631:1 50:7 58:2361:25 74:5 82:1392:8 112:5 123:16

126:8 139:13148:25 156:25160:22 163:4165:18 167:25,25168:4 169:2 173:2178:25 194:15216:23 224:13259:13 262:5265:2 267:17278:1

courtney 1:102:17 5:3 6:7,117:12,15 8:11,16,208:24 9:11,1910:10,15,19 11:1111:21 12:3,7,12,1813:3,12 14:915:13 157:18308:19 310:2

cousins 81:3,14covenant 10:6

141:23 142:4,13189:14 192:2204:22 234:8,21239:25 253:17,23255:2 268:19303:6

covenants 164:11193:22 237:22238:7 239:12254:16

cover 31:11 76:2376:25 268:3

covered 18:1924:8

covers 253:8crack 220:6cravath 3:12 15:8

15:11cravath.com 3:17

create 40:16225:20 235:11243:5 304:25306:15

created 129:22176:15

creating 251:3305:22

credentials 264:3credit 36:10 42:12

84:13 249:23credited 250:12credits 294:17,19

294:21,24 295:5critical 180:14

181:1 263:10,15cross 234:12crossing 187:25crr 1:22 2:21

309:19csr 1:22 2:21

309:19cure 234:12,18,22current 39:8 57:6

84:16,25 85:1195:7 102:17137:17 166:13193:12 255:15272:18 274:19275:4,9

currently 75:10140:4

customary 98:21159:3

customer 196:21customers 196:24

196:25 250:15

d

d 1:7 4:4 5:1 8:49:15,20 20:18

[correct - d] Page 14


CONFIDENTIAL

daedalus 11:1713:8

daily 165:11 166:2168:17,19 208:19289:8

dangerously187:25

dash 94:8data 73:12 97:19

139:20 180:13193:25 214:12222:12

dataroom 188:17datas 303:23date 1:12 14:5

25:20,22 71:6113:16 155:4160:10 162:8178:10 191:14201:23 202:3273:25 274:3307:11 309:15

dated 130:17192:6 194:24203:20 224:17267:19

dates 141:18dating 166:3david 13:13

306:25day 37:10 100:10

121:24 133:22160:7 165:20166:25 208:12210:18,25 217:10220:14 222:19227:5 228:25234:9 250:10,22250:24 259:4262:22 269:6287:13 297:16

307:10 308:13309:16 310:23

days 51:19 57:2057:22 70:18 127:6

dcf 40:16 41:3,4,942:1,9 43:24 48:256:5,12 57:1,4,5181:13 201:6,18201:19 202:20211:8,21 212:16218:13 220:8297:17 299:13,22301:7 303:2,4,9

dcfs 48:1deadline 179:13

223:1 251:20deadlines 135:8,19deal 21:12,16,20

23:16 24:23 28:1337:6,20 46:1747:10,15 67:2268:1,10,21 72:1072:13 107:19145:22 146:4147:18,19,20148:18 169:7171:19 232:10242:5 263:7270:19,25 271:3,8271:10,11 279:6287:5 290:4

dealings 179:6deals 23:8 118:19

155:8 270:6271:12

debt 24:24,25 25:225:3,4 84:16,2585:11 86:13 95:2095:25 96:7 131:6131:6,8 164:10183:16,22 189:14

192:2 193:12,23222:22 230:18234:13,19 237:22238:6 239:12253:17,22 255:2303:5

debts 194:4debtwire 145:21december 22:4

37:11decide 89:22 94:19decided 100:10

127:7 174:10decision 91:8

99:25 100:8173:16 174:5

decisions 23:882:1 90:21 91:6

deck 6:15 36:239:10 44:9,1150:14 51:20,2453:19 57:8,15,2062:5,16 63:2265:7 66:9 67:1270:1 71:20 73:1278:11 85:4 109:14118:6 119:22170:5 182:7,10190:21 198:13199:2 201:10202:19 208:22,25209:2,5 211:19212:10 213:2,21213:23,25 219:19225:1,4 226:25242:23 244:9252:16 257:16293:20

decks 67:21 77:2478:3 120:10 213:6

declaration 308:1308:13

declare 308:3,5,9decline 28:25 29:2

29:5 70:9 122:24286:17 302:17

declined 121:23295:17

declines 36:2542:20 121:22

declining 35:963:15 286:23295:25 296:7302:17

decrease 116:23116:24 117:3,5136:14,15 189:6196:9 216:1,3226:11 228:3230:10 231:1249:24 251:8297:11 298:7,15302:2

decreased 103:9192:23 193:1230:21

decreasing 47:7197:7,24

deemed 257:21deep 171:1deeper 187:7default 142:10,11

142:13 161:12,20189:25 190:5,23191:4,21 194:2204:23,25 205:6,8205:16,21 206:11215:23 234:11,17234:20,24 235:6,7236:3,6,13,19,22237:8,11,16

[daedalus - default] Page 15


CONFIDENTIAL

238:11 255:14,18263:20 285:17,20303:21

defaulted 236:11defaults 194:3

234:12defendants 3:11

15:10,12defensible 97:5,11define 79:1defined 168:12

257:20definitely 81:4

241:23delaware 1:1 2:1

14:12 17:24delay 176:18

282:13 283:3,9delayed 283:14delays 150:8deliberations

290:11delivered 293:17dell 21:21,25 22:3

22:5 106:18dell's 21:25demands 158:7denholm 32:5

60:22,23 222:21department 124:7

166:14depend 249:11dependent 41:18

115:1depends 73:6depiction 245:19depicts 70:2deploy 119:10deployed 52:5,8

52:12,15 192:24197:10 235:22

261:1deploying 66:6deployment 64:20

64:23 65:14,19deployments

241:13 242:1deploys 52:14deponent 308:3

310:1deposed 63:11deposition 1:9

2:16 14:7,9,1416:4,7 17:14 18:150:9 58:24 62:274:6 82:14 92:10109:11 112:7123:18 126:9139:15 149:2156:8,22 157:1179:1 188:9194:16 224:14242:19 259:14307:17,19,22

derived 56:20232:5 301:17

describe 22:11139:17

described 48:5160:13 195:16

description 6:27:2 8:2 9:2 10:211:2 12:2 13:274:24 84:21

detail 67:21 93:23128:9 177:22178:2 252:22

detailed 133:20138:13,16 229:5

determination86:6 94:11

determine 89:8121:5 301:21304:9

determined 55:17248:3,6,8

determines 23:5determining 45:20

303:3devco 69:24 115:4

115:9,10,15,22116:5,9 118:21183:15,21 227:9227:10 230:6,9,15230:18 252:7302:9,10

devco's 116:16,21116:22 117:24

develop 180:1development

28:11 115:17196:13 210:6

dial 217:18,20difference 28:7

188:19different 24:8

41:21 43:9 55:863:20 65:3 71:19102:9 110:21,24111:13,14 125:7159:14 181:22192:1 214:5232:13,25 235:17244:8 245:15251:18 297:20299:9

difficult 103:7121:4 125:17129:15 218:9258:19

difficulty 147:10147:11 241:7

dig 100:4 111:17171:1 187:7

diligence 32:2133:6 37:8 39:1841:10 45:25 46:746:15 47:8,1855:17 56:4 76:976:10 87:11 89:694:3 102:11,11,12108:9,12,17109:23 110:8,13111:20 113:8114:11,24 120:14127:11,18,21,22129:12,13 130:7133:7,17,21 137:2137:24 142:8147:17 148:20150:8 153:7,20154:10 157:19,22157:24,25 158:2,6158:20,21 159:1,4159:7 160:3162:15,21 163:23164:1,15,16 165:4165:7,8,12 172:10172:14,22 178:15178:17 179:17,19180:7,15 181:11181:12,19 182:23183:20 184:6,12184:25 185:9,19186:8,20,24 187:4205:1,13 221:25222:3,5 233:19246:16,22,25247:14,21,25249:6,6,10,11254:12 263:16264:15 280:8290:9

[default - diligence] Page 16


CONFIDENTIAL

diligenced 47:256:2 112:25187:11

diligencing 128:13dilution 71:21

72:14,19,23 73:1,573:16 75:6 76:276:14,15 87:18,24119:23 120:5,10120:19,24

dilutive 72:3 76:688:6 120:1

dir 62:3,4 112:8112:15,22 118:7

direct 27:1 54:1354:21 55:14140:23 199:13287:23

direction 309:10directly 21:1

155:11 165:2258:3,16

director 3:11 15:915:12 85:24 86:288:9 157:15

directors 21:282:16 84:5,1186:21 88:11,12,1689:5 112:11 119:1238:20 266:24267:3 274:10,18280:19 281:7282:18 288:5

disagree 105:23181:3,8

disagreement168:21

disclose 147:3235:8 236:22268:22 272:12,17273:11

disclosed 117:13148:19 215:13236:19 238:21,22273:3,7 281:12

disclosure 176:10234:24 235:5236:2,13 237:8,10269:3 272:1286:20

discontinue 242:6discontinued

243:12 244:22discount 48:5

193:7,15 211:8273:2 303:12

discounted 38:2339:12 48:6 54:955:9,18,22 66:12199:25 200:3,9,14201:13 216:8,16231:24 232:6303:12

discounting 55:25discounts 200:18discovered 47:8

47:18 140:15discoveries 238:23

251:22discovery 249:16discuss 47:9 59:12

68:15 73:16 87:887:8 107:1 125:10125:23 134:12135:12 136:21137:20 144:2152:2,5,13,19156:22 159:23160:2 161:25165:12 166:2183:25 208:21217:16 221:25

288:1 291:16discussed 67:2

68:18,21 76:2284:12,22 85:3,2486:2,22 87:588:10,16 89:5,1289:24 90:4 93:16105:11 116:1119:2 152:3 161:8166:1,19,22171:22 174:17198:1,8 244:15252:9,11,13256:21 258:2274:19 276:10297:15 300:16304:17

discussing 40:381:25 91:4 117:21118:5 125:13143:18 201:18

discussion 10:1211:7 13:9 31:1050:24 87:2 90:290:13,17,25 91:1794:3 95:16 96:398:22 99:24104:18 108:9,12120:9 126:2136:23 162:5,10198:22,22 199:1224:17,19 254:20255:11 266:12276:18 288:4290:15

discussions 32:1533:1 47:3 49:868:24 73:20 82:298:18 104:16106:22 109:10129:5,19,21

156:10 199:11207:25 208:14239:16 254:6271:21 279:7284:20 285:7287:14

disruption 108:14distinct 150:23distress 145:22

146:4divulge 21:23document 11:15

13:7 31:4 32:1850:9 58:2 59:461:3 92:11,2493:10,13 127:5134:23 139:15,17156:9,13 157:6160:8 164:7193:21,24 216:24224:15 242:20,23244:20 271:5274:11 277:9279:25 291:24293:14

documents 51:8110:12 187:6218:15 274:11

doing 18:7 37:14158:20 247:25259:20 290:3

dollar 98:15 99:599:11 104:15295:18,23,25299:2 301:20

dollars 64:9domain 148:19

264:14 271:22doubt 94:8 120:7doubts 94:15

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downsize 248:23downsized 143:16

143:22downward 138:10draft 11:15 31:7

126:14 169:19182:7,10 194:23195:1 198:14,15206:21 207:10208:1,3,9 212:10218:20,22 232:8233:25 244:14

drafts 74:19,22133:20

dramatic 211:21draw 251:1drop 286:12dropped 70:6drops 53:9 138:8drove 28:8 63:18dry 131:7due 37:8 63:5

76:10 108:9,12109:23 110:8111:20 114:23129:12 133:7

148:20 153:20157:18 158:20,21162:21 178:14,16179:17,19 180:7180:15 181:11,12181:19 182:22184:6,11,25185:18 186:7187:4 247:14280:7

duly 15:14dynamic 103:4

e

e 1:7 4:1,1 5:1 6:17:1 8:1 9:1 10:111:1 12:1 13:1170:2 309:1,1

earlier 43:18 48:555:5 88:2 120:13156:7 170:22185:22 217:10258:2 304:18

early 23:16 25:1925:20 45:24110:15 113:17

earning 87:19,25earnings 71:24

72:4,9,12,13 73:2375:6,11,23 88:7273:20,25 274:3285:9 287:2

ebitda 39:2eduardo 61:5,8,13effect 39:6 40:23

197:6,23 232:4269:10

efficiencies 35:13efficient 35:8,11

35:16,23 37:25eighth 3:14

either 266:17electric 28:2

122:13elon 30:13 77:9,13

77:25 78:4,6 80:981:5,24 82:4 94:894:15 97:4 100:21101:5 102:15104:4,20 107:12126:18 151:6,23151:25 152:2,14152:21,25 163:2,9164:25 165:11166:2 168:8169:15 173:13221:2 240:15,20265:8,13,15 266:5266:17 267:2

elon's 103:13else's 93:20email 6:3,7,11 7:7

7:11,15,19,23 8:38:7,11,15,19,239:3,7,11,15,1910:3,9,15,19,2311:3,11,20 12:3,712:11,18 13:3,1231:4,6 50:10 51:358:25 61:11 112:7112:10 123:20126:10 130:17,18133:5 143:5,13144:23 149:2,7,9153:12,15 157:8159:8,14,21160:11,23 163:5165:19,23 166:6166:16 169:6,8,11170:7 173:3174:24 177:2,3,17179:2 188:10,13

188:15 193:20,21203:18 206:21217:13 224:11226:23 228:10,13228:19 233:12253:18 259:16262:6,17 265:5,10267:9,18 278:2291:9,10,23306:24

emails 51:10employed 106:11employee 309:13employees 135:18encaptured

230:15ended 154:25

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17:14energies 86:20energy 52:7

199:12 250:9,9,22250:24,25

engage 33:5 236:3237:9,14 247:14

engaged 182:22engagement 25:15

25:18,25 26:432:25 37:5 49:12

engine 193:2england 71:15ensued 288:4entire 74:16

227:14 245:1entirely 88:24

244:17entity 118:17

135:3 252:8entries 293:25

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entry 70:11 97:4101:5 102:15

environment35:22

eps 73:16 76:14119:25 120:5,10120:19,24 121:5

equities 294:2equity 41:18 42:16

43:7 48:22,2254:9 55:9,2256:16,20 70:12,2170:22 85:6,7106:17 110:22129:19,23 130:1188:21,21 192:8202:16 207:14212:4 227:9,15,18227:23 228:3234:25 235:1,18235:18,23,24236:24,25 270:19270:24 271:2,7,8271:20,21 272:9272:11,21 273:11273:13 293:25294:5,10,16295:21,24 296:21298:2,6,20,22299:4,6,14,23300:6 302:13303:2,7,8,13,14,20304:10

eric 13:4 262:11291:10,16

erm 7:8esq 3:5,13 4:4essentially 94:23

94:24estimate 72:2

et 299:15evaluate 27:9

185:1evening 266:25event 71:18

190:23 206:11236:6,13 237:8,11237:16 255:14,18

eventually 175:11evercore 1:9 2:16

4:2,11 6:15 11:713:7 14:8 15:5,715:21 18:3 19:2520:4,12,21 23:1524:24 25:1,1229:9 30:6 31:733:15 37:4 47:648:3 51:6 54:356:4 61:11 62:1266:21 72:7,18,2277:8 79:6 81:2184:4,12,24 85:9,2586:3,17 87:17,2388:17 90:6 92:1292:22 98:12 99:16100:13,16 106:11109:14 113:9114:19,23 115:14115:20 117:8121:14,17 122:2122:20 127:15129:7 145:25147:14 154:6,16156:12 158:5162:20 169:7173:17 174:6,12192:21 194:7200:10,13 203:19212:14 217:7,22218:11 221:1225:1,12,19 232:5

233:20 251:3259:17 260:4274:19 275:25280:15,20 281:1,7282:3 283:12,23284:4,12 286:5,11290:24 291:2293:17 294:1295:15 301:24302:24 303:4305:21 307:6,19

evercore's 30:1932:25 33:4 49:1262:2 72:2 77:1082:5 88:15 112:14112:18 153:19195:11 206:22216:7,15 274:25276:13,25 282:4

everybody 146:12146:16

evr 6:5,9,13 7:137:17,21,25 8:5,98:13,17,21,25 9:59:9,13,21 10:5,1110:17,21,25 11:511:13,22 12:5,9,1312:20 13:5,1431:5 50:11 92:12139:16 163:6182:20 184:3,5214:2 216:25253:19 262:7,9

evr's 98:9evs 30:14exact 21:6 25:22

71:6 113:16141:18 155:4160:10 162:8178:10 205:9228:2 229:1

242:11 304:20307:11

exactly 34:1453:24 60:15 71:371:7 111:18229:16 252:17295:8

examination 5:215:17 156:16

examined 15:16example 97:5,14

118:14 125:8196:4 269:16

excel 218:6exception 188:22

310:6excess 197:16,21

210:8 226:19exchange 90:5

91:5,10 98:9,14,1698:19 99:4,8,16,23100:10 104:23,24173:4 265:21266:6,18

excited 26:7exclamation

269:20exclusive 234:10excuse 66:16

131:7 209:25287:18

executed 308:13executive 32:6

112:21 182:17195:5,6 257:15

exhibit 6:3,7,11,156:17,19,22 7:3,5,77:11,15,19,23 8:38:7,11,15,19,239:3,7,11,15,1910:3,9,15,19,23

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exhibits 92:10exist 174:8 175:1,4

176:8existed 124:20

164:7

existence 122:10175:16

existing 115:12,18183:16,22 185:3302:9

expand 35:1,5expect 116:23

140:24 141:2169:22 190:21298:6

expectation166:24

expected 44:1945:10 110:17122:1,4,6 126:24180:21 268:14,14268:23,24 281:8281:17

expecting 45:1378:10

expeditiously108:13,17 263:17

expenses 41:1226:14 269:17,24270:11

experience 22:1622:17 118:15255:14,18 270:10271:24,25

experienced240:25

expert 79:4expertise 18:10,13

22:12,14 23:2524:3,6,11 25:6,10134:16,19 135:4,6

experts 181:15expiring 35:1,6explain 34:19,21

36:24 61:14,1764:22 120:23

196:15 213:11225:18 243:3251:24 258:1273:24 274:2295:19

explaining 134:18explains 194:2

195:6explanation 129:8explore 37:5exposed 71:17express 168:21

257:3expressed 96:24

103:18expressing 146:22extended 35:20

37:11,12,13extension 130:18extensive 37:8

102:12 185:18extensively 84:12

85:25 86:3extent 247:18eye 185:3

f

f 1:7 309:1face 35:1,6,9,22facility 110:23

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183:10 194:8214:24 272:13

fact 30:10,1359:25 81:13,14147:11 204:19216:7 261:7263:19 271:16275:16 276:16292:22

factor 45:20117:13 303:21304:24

factored 187:6298:14

factors 30:8,1671:2 72:16 117:11

facts 305:20fair 66:4 70:5 73:3

73:13 127:14140:17 194:6248:22 249:4

fairly 159:3221:25

fairness 13:847:11,12,15 55:1059:16,20 61:9,1067:2,22 68:3,2272:23 73:1,1174:25 169:18170:11,13,24171:8,13,16172:16 206:23207:2 208:3 209:3212:9,11 213:1,15214:1 219:20221:20 222:25223:6,7,15,17258:23 293:4,17

fall 53:21 142:3192:2 253:22254:15

falsify 292:12familiar 16:1

78:23 93:22222:23 249:25272:1

fan 104:20far 157:20 170:21

180:12 203:11277:7 279:3

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139:21 140:9253:1

federal 36:4,7,1236:16 136:12249:22 297:11

feel 67:25 90:16158:1 177:20269:14

fell 253:16felt 44:24 137:13

249:8fewer 192:7 251:9fidelity 125:8field 56:10 66:10

201:11fifth 4:5figure 34:24 100:5

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finally 87:17183:13

finance 60:12 85:586:14 110:25111:14 130:22131:5,15 220:25236:7 274:21285:15

financed 46:2356:2 86:12

finances 193:3financial 49:14

52:13 59:18 84:1389:16 100:2110:12 113:3,12113:14,19,23114:1,5,12 118:18120:16,25 127:23128:3,6,7 132:5,22135:22 136:1,24142:15 147:25150:9 179:16,23180:2,6 219:8226:4 261:22262:25 264:19268:3 279:24281:18 283:15286:21 288:10,24289:21

financially 251:11309:12

financials 52:2,10178:19

financing 41:1842:12,13,15 48:2148:24 49:23 62:2162:25 63:1,2364:5,23 65:2,5,865:23 70:16,21,2284:16 85:1,6,11109:25 110:22,23110:24 111:4,5,9111:22,24 114:14114:15,22 115:1121:1 128:22129:1,4,6,10,15,19131:17,22 132:18146:5,6,20,24147:4,8,10,12

150:14,18,21151:14,21,23152:15,21,24153:1 160:4192:10,16 193:1,2193:9 204:3,7207:14 228:4235:15,20 236:4237:9,14,17 254:7269:8 274:20275:5,12 276:17279:10 294:5,10294:23 299:23302:13 303:25304:2

financings 193:14304:14

find 129:9,15132:17 146:19150:21 151:20217:14 260:16279:9

finding 147:10,12193:13

findings 184:6193:13 233:20254:13 280:8

fine 80:6finish 16:14,16

48:16 106:22127:1 168:7

finished 147:18firm 14:17 23:5

106:17first 15:14 20:3,18

23:10 25:23 26:1127:15 61:3 70:1284:4 129:11133:24 134:10159:11 164:24165:23 166:6

188:13 199:14,16217:21 219:3,9225:4 233:22244:14 265:10280:2 287:24298:17

fiscal 70:19five 18:4 19:20,20

199:23 253:8fix 158:9 232:11flags 155:7flash 207:13floor 22:18,23flow 38:23 39:12

41:20 43:12,2048:5,6,10,11,14,1949:6,24 55:1862:18,21 63:164:4,12,23,24 65:565:10,22,22 66:12115:19 138:13,16138:20 139:21183:22 188:16197:13 200:3,9,14201:13 204:20205:4,19 212:21212:23 216:8,16231:24 232:6252:23 253:4,11254:20 255:19268:15 303:13

flows 40:20 65:1565:18 183:15200:17 203:5,8268:24

focus 18:12 34:334:15 143:16185:11,13

focused 34:4 37:955:6,7 96:3 186:2254:2

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follows 15:16266:12

football 56:966:10 201:11

force 118:15185:20,20 259:20

forecast 86:1987:3 113:3,12114:1,5 142:22185:16 188:17,20189:3,8 192:1197:4 253:5,16254:1,20 295:18296:1

forecasts 86:22113:14,19 139:21142:15 185:2200:20 207:17253:11 254:17255:15

foregoing 308:4308:11 309:6,10310:3

form 6:17 22:2126:10 28:16 29:1735:18 36:13,2138:6 41:7 42:2444:5 45:15 49:1653:14 67:8,1870:16 75:17 78:17

79:3 80:1,14,2281:16 90:19 91:291:15 93:7 96:899:1,18 101:20102:6 103:3,21,24104:11 105:22107:15 116:6,18117:22 119:3,18123:2 127:16128:4 130:10134:22 141:4,13142:17 145:4146:14 147:1148:2,16 152:16154:18 158:14160:15 161:17165:5 167:5 172:1172:12,20 175:7175:18,21 176:2181:5 185:5186:15,21,22189:16 190:1,6,24191:6,12 193:17195:16 197:8198:20 199:6200:21 201:4,25202:9 205:2,18206:12 207:8,18207:22 210:16,24211:14,24 213:4213:10,17 214:25215:7,24 216:4,10217:24 218:18,24220:9 222:16223:2,11 225:3,14228:8,9 229:15231:20 232:7233:8 236:5,15237:2,12,23 238:8238:18 239:14,15242:8,9 243:25

244:4,18,19 245:4245:21 246:10,19248:2 249:1 254:5255:16 256:5,17256:24 257:11258:13 259:1261:5,20 263:5,21264:9,10 266:1267:5 269:2 270:2270:15 271:18272:6,14,22 275:7276:2 279:1 282:7282:21 284:16,22285:10,18 286:1,8286:24,25 289:1290:17 292:14,24294:18 297:13298:9,16 299:16299:25 300:15302:1 303:16,22304:6,12,19305:11,16,24306:5

forma 114:14179:24

forms 85:6forth 133:21

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forwarded 159:8forwarding 204:2found 46:7 81:2

125:2 137:23190:12 269:6

founded 81:14founder 20:21

80:21,24 81:6,7,7

founders 81:4four 140:11

217:11 253:8fourth 97:8frame 71:5 108:20

235:1 236:25francis 6:4,12 7:12

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free 40:20 48:1048:11,14,18 49:549:24 65:18 66:7203:5,8 212:20,23

frequent 17:16frequently 137:17friday 59:22

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g

g 9:7 10:4,23 12:420:19 150:4269:13

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generate 65:18250:10 274:23276:6

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george 157:9,11getting 148:14

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gigawatt 260:2268:8

give 59:11 131:10133:17 154:16,23174:19 189:18218:2 221:2,22228:13

given 22:15 29:1134:3 78:7 82:389:16 103:10108:13,18 109:14109:24 119:5120:16 183:1,2254:6 263:17271:24 281:21299:6

gives 203:4,7giving 266:23global 19:16go 14:21 16:10

19:2,15,22 32:635:14 36:1 40:943:8 50:18 59:1959:23,24 61:1463:13 67:21 70:173:13 91:23 93:2598:15 100:4,10104:9 117:6,9118:8 142:12146:19 161:10164:7 171:16173:19 182:17185:24 195:5204:13 206:10212:12,16 213:6213:21 219:12225:17 226:22

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goes 37:1 65:1586:16 88:15 89:590:4 118:15145:14 189:5227:2,15,20 230:9230:12 263:25282:11 283:18297:8 298:22

going 15:24 16:1916:22 17:11 23:626:16,19 29:16,2437:5,19 38:10,1138:14 40:7 42:546:8 50:22 57:2558:5 64:20,2373:23 76:2,377:17 78:19 90:2396:6 100:5,9106:7 108:23121:15,18 122:21124:11,12 128:18142:3 144:8146:12,23 154:25155:14 156:6,7158:19 164:13,14165:3 166:1167:15 173:22182:6 204:21,25206:7 215:23219:18 222:18

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goldman 269:8275:13

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gotshal 1:14 2:174:3 14:15 15:5

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grows 297:22growth 36:11

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handing 242:18handle 134:20

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happening 53:1271:4,7

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hey 68:14 74:2176:14 77:25 176:8206:1 211:7 220:6236:23 240:21

high 44:17 45:8104:9 122:3 214:7

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highest 89:1596:25

highlight 143:15highlighting

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hired 33:19 100:1historic 44:23

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hour 17:16 58:1106:8 155:15

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house 4:11huge 37:9 49:1

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identified 92:18114:18

identify 14:25157:6 169:5 183:4194:17 203:16

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identifying 268:13idly 168:16illustrated 65:8imagine 76:9

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impact 40:25 41:241:5 42:1 87:1887:24 105:14,24106:1,5 108:18113:4 121:5 122:1150:11 181:17197:9 231:14236:7 237:16239:6 251:5263:17 274:24276:12,24 281:8281:17,19 284:11285:14,15 298:7

impacted 129:3,21284:6

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34:2,9 35:1536:16,18,18 45:19111:16 146:7

impression 46:1946:25 103:13

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inaccurate 300:3inappropriate

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35:10,10,14 36:436:12,13 37:16

include 39:9 55:965:6 72:18,22,2573:5,8,9,10 83:11153:22 296:14

included 41:442:12 73:11 77:288:2,4 153:1154:2 301:8304:21

includes 54:2571:22 73:3 298:2

including 30:1032:24 48:22 85:686:19 89:7 113:3154:1 163:23179:21 280:10281:10

inclusion 306:16income 39:3

181:14,25increase 70:23

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increased 252:21increases 227:23

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increasingly 34:23incredibly 110:10

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input 88:16138:24 174:14198:16 221:19

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installed 116:24117:5 242:1244:10,13 245:3246:1 251:13259:6 261:8

installers 34:23installments 196:6

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interested 27:21309:13

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internally 170:24international

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197:21 210:9investing 64:13,25

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investor 81:5122:8

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involve 146:23involved 21:7 22:8

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involvement 146:1ipo 24:8irrelevant 303:10issue 161:13 164:2

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issued 70:17 74:10271:1,19 294:6

issues 29:20,21,2346:8,11 47:3159:22 160:1161:15 214:23255:25 257:5272:13

itc 36:7,9,16,1937:6,11,20 39:640:2,24 41:2,6,1941:25,25,25 42:1342:15 43:15 53:2363:6 251:18

itcs 298:8item 65:25 127:22

209:22,24 227:9227:10 230:6238:23 240:24249:15 251:22

252:1,15 300:13301:15

items 63:15,19,20133:17 134:1135:21 153:23166:3,15,22 221:2227:12

iteration 195:1

j

jason 9:16 10:2460:4 76:20 96:15199:12 217:4,14225:5,7 229:8291:11

jason's 60:12job 1:23 181:21jobs 100:4john 9:15 70:17

179:4join 78:18 79:16

80:2 83:6joined 19:23 23:15

60:23joint 74:10jonathan 9:3

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jreliford 3:8judgment 249:13

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jump 163:9june 1:12 2:20

14:1,6 23:1725:19,21,23 27:2228:24 29:14 30:3

31:11,19,23 32:1732:18,23 34:1145:24 50:13,16,1751:14 57:15 59:162:6 66:21,2276:19 77:7,9 78:982:15 85:1,9 93:493:16 94:14 102:2102:4 106:22107:2 108:11109:14 110:15111:19 112:7,12112:19 121:9125:11 152:10,14156:2,10 195:8202:4 309:16

junior 23:22 83:8justin 3:5 15:2

57:25 60:11 69:7155:14 194:19213:24 302:18

k

k 20:19karp 13:13 306:25keep 76:18 91:23

191:21 209:25224:10 264:1286:22

keeton 4:11 15:6,6172:20 305:11

kessler 3:4 15:3key 180:19 233:19

238:23 249:15251:22

kind 73:11 209:23king 3:6knew 146:12,16

188:2 191:3215:22,22 238:14278:14

know 17:17,1722:7,9 23:8 24:126:1,12 43:1244:18 45:9,1646:19 60:23 66:271:4 73:3 75:2177:19 78:3,580:23 81:6,7,2487:9,10,15 90:398:4 106:13113:18 116:15118:4,14,22122:12 126:19133:23 137:5,7144:8 145:19146:24 155:9160:11,11 161:18164:6 171:4 172:3174:14 175:9176:13 178:18179:4 184:11186:23 187:1198:16 205:10217:12,15 229:17229:18 231:11236:11 238:6,10250:16 260:10263:3 266:2269:12 275:19280:21 289:4,5292:17 308:5

knowledge 29:8140:23 214:12308:6

known 244:24245:5

kpmg 178:18179:6 181:21,22

kpmg's 178:12181:1

ktmc.com 3:8

l

l 1:7 20:19labeled 139:15lack 54:13,21

55:14 79:18laid 85:7lake 106:14,16lalonde 59:5,15,17landry 20:20

23:21 24:19language 282:23largely 250:2larger 122:1,5

125:9 291:18292:4

late 20:1 153:16153:18 285:7

launch 28:5launched 27:25

28:19 30:12launching 30:4lavely 3:13 15:8,8

78:18 79:16 80:280:7 103:21,24107:15 123:2128:4 130:10134:22 141:4,13147:1 148:2 156:6161:17 165:5175:8 177:1,6181:6 185:5 186:5186:21 189:16190:1,6 191:6201:4 202:9 205:3211:25 214:25216:10 218:19219:7 223:11,20225:14 228:8231:20 233:9237:3,24 239:15

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law 19:2 38:5,8,1238:15

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lazard's 155:10164:2,4

lead 24:7leader 33:24 55:6

168:11 185:23289:15

leading 28:24leak 147:24

167:23leaked 146:1

147:15,17,20leaks 145:20learn 25:17 26:15

26:18 76:11218:14 239:8

learned 25:24 26:326:12 222:2,7259:4 262:24267:23 290:8

lease 43:2 196:21leased 86:12leases 196:21leasing 37:3 42:25

43:1led 243:4left 19:12,15,21

20:1 84:9 107:11134:8 150:4290:24 291:2

legal 60:14 78:2079:5 124:7 166:14252:18,21 272:15

lenders 145:15150:24

lengthy 166:15letting 264:3level 34:25 36:13

116:11 125:6,7128:9 250:3,7

levels 102:17

levered 40:20 48:648:10,14 49:24203:4,7 212:20,23

levering 235:1,14235:15,19,24236:25

lied 175:6 176:11light 47:7 49:22

81:21 163:15195:12 205:25241:14,19 243:22261:14 280:7305:20

lighter 64:12limit 89:22limited 120:22

127:11line 52:4 63:19

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link 28:2 237:7liquidity 46:11,18

46:20 47:1 130:8130:11 131:17,21132:3 139:22140:1,4 141:20,23142:4,7,12 160:4161:15 175:12,25183:2,10 187:18189:20 194:8195:13 204:14206:3 214:13,19214:22,23 215:13216:15 233:22,25238:24 239:3,17241:14,19 242:4243:1,10,23244:16 246:17,23

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list 68:10 133:14133:17,24 134:4166:15 170:3184:24 186:24214:8 234:1253:15

listed 310:6lists 192:1 199:23literally 190:22litigation 1:4 2:4

14:11 120:6little 19:2 59:8

104:3 150:6217:10 295:19

llp 1:14 2:17 3:43:12 4:3 14:15

loan 113:5 145:16187:5,9,10,12196:16 197:1,2

lobby 38:14lobbying 37:9,13

38:12,16location 1:14long 17:14 18:2,21

19:7,19,24 39:23128:2 176:1 229:2291:1

longer 39:13226:18 241:6

look 27:8 33:19,2240:7 41:11 46:1648:22 49:3 52:8

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looked 41:20 45:645:17 66:21,2467:1 69:24 86:786:13 94:2 100:13118:19 188:20205:20 208:2,9253:15 262:24287:21 301:4302:11

looking 45:12,2052:18 55:23 66:572:13,14,17 86:993:3 117:4 124:9125:3 130:19145:19 147:3,8149:7 159:14207:6 213:23,25227:13,14 231:17259:23 280:23297:17

looks 52:18,2163:15,19 64:19157:8 184:10,11188:19 192:7200:17 204:2258:6 267:25296:5 302:8

lost 250:23lot 19:11 30:9 34:3

42:5 71:11,14,18108:14 110:11114:11 132:4134:10 167:12187:6 208:8 213:2248:9 250:17270:6

lots 264:13low 102:18 149:16

187:25 201:22214:7 259:24260:11 286:13

lower 29:25 48:270:18 99:16 103:9144:21 147:21148:9,10 149:16183:3 197:11,11240:5 251:8260:23 266:18268:7 277:1,7

lowered 70:6286:21 293:6

lowers 70:8lowest 89:21luckily 91:22lunch 155:16luncheon 155:23lyndon 81:4 151:6

m

m 20:19 138:14,15170:2

m&h 138:13machine 309:9madam 167:25magnitude 122:6

188:21main 182:21maintain 189:13

235:2,12

majeure 118:15major 20:3 221:2majority 196:19

196:20making 37:24 82:1

90:20 91:5 100:8105:1 107:24129:15 195:2266:5 282:13283:3,14 287:19288:5 292:8

manage 158:6269:15

management31:23 51:17 77:1488:17 109:15125:22 128:18135:5 140:8155:12 186:8,9,12196:17 198:2200:22 201:14208:1,15,25 217:5217:15 220:15,23225:19 228:4229:19,22 247:16247:19 248:15,16293:22 296:2,6

management's243:21

managing 157:15manges 1:14 2:17

4:3 14:15 15:5manipulating

291:16 292:3,11292:22

manner 185:25205:9 292:16

manufacture305:6,10,15

manufacturing134:5,13,20 135:3

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131:14 267:11marked 30:22

31:2,5 50:3,858:19,24 61:2162:1 74:1,6 82:982:14 92:1,4,9,9112:1,6 123:12,17126:4,9 130:13133:1 139:9,14143:1 148:21149:1 156:7 157:1157:2 159:15160:18,23 162:23163:5 165:14,19168:24 169:3172:23 173:3178:21 179:1182:2 188:4,8194:11,16 203:12206:15 216:19,24220:18 224:7,14228:15 242:14,18259:9,14 262:1,6264:24 265:3267:13,18 274:5277:22 278:2279:13 291:5293:10 306:20

market 26:24 27:932:10 33:19,2434:1,22 55:5 71:371:7,13 84:1785:19 86:3,8,23103:6,11 105:24106:3,6 118:15148:12,12 185:22185:25 186:17196:23 197:16

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markup 133:11,13maron 7:8,24 9:4

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marshall 20:2023:21 24:17 83:1192:18

match 93:11,15219:20

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materials 10:1211:8,15 13:931:10 72:19 77:1177:17 82:5 85:8112:12 126:15170:18,19 194:24206:22 224:17,19

matter 78:20114:6 308:4

matters 22:1997:4 274:24

276:12,24 308:6,8maximum 89:8,12

89:25mcanear 60:11

262:11 263:3,9,14264:7,8

mcbean 1:10 2:175:3 6:8,12 7:12,158:12,16,20,24 9:119:19 10:10,15,2011:11,21 12:4,8,1212:19 13:4,1214:9 15:13,1931:1,2 50:7 51:2258:23 61:25 82:15109:6 112:5123:16 139:13148:25 156:18169:2 278:1308:19 310:2

mcmullan 8:824:21 25:8 123:21126:11 131:4132:1 143:6,13145:14 146:22147:7 160:24192:5,14 291:11

mcphee 9:15179:4,9 180:11

mcphee's 180:5mean 22:13,22

26:1 29:12 35:535:19 44:6 51:4,954:21 68:9 70:1589:20 96:12102:17 118:8125:6 142:11150:16 151:19153:13 164:3177:12,13 178:16184:19 187:9,21

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meaning 118:2,10150:25 158:7188:15 197:13271:9

meaningful107:17,25 181:24

means 16:12 146:3146:7,8

meant 137:5,7143:25 187:22263:14

measure 23:4measured 234:9mechanically

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84:15,25 85:10135:17 179:13186:13 212:11223:1 234:21237:1 241:16,21

meeting 6:1931:18 32:1 51:1351:16 59:9,10,2160:16,24 62:676:20,22 77:7,978:10 82:16,2483:2 84:5 85:289:14,25 91:9

93:5,12,17,21,2394:15 95:17,2396:22 98:19100:25 101:2102:2,5 104:17106:23 107:2108:11 112:12,15112:19 156:11169:22 170:22171:4,5 184:1190:14,18 191:10191:10 207:2222:18 225:11233:5 239:24240:15,18 252:6,9255:9,10,15,22,25256:10,13,20267:7 274:10,13274:14 277:4,7,12279:17,22 289:10290:23,24 291:4

meetings 77:15,2281:24 83:16,2395:17 152:8 171:6232:12 252:13287:15

meets 154:10megawatt 64:20

64:22 65:14,19116:23 144:21177:24 195:20,23196:1,2 198:5199:10,18 209:18225:22,24 226:6286:21 295:18,23295:25 301:20

megawatts 52:6,752:9,12,13,16,1952:20 66:6 116:23117:4,5 192:24193:3 196:10

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memory 83:20mentioned 24:22

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met 31:22 223:15metadata 7:3

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250:8,18,20,21251:6,9,14,17,20

method 38:24methodologies

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methods 110:24274:23 276:6,9,18276:19

metrics 87:19,25microphones

14:22mid 44:19 45:9

113:17,17 140:15175:16

middle 97:5,14101:4 147:19,20

million 141:24161:10 164:8188:23 192:6203:8 204:3,7,21207:14 212:24227:2,6,16,16,20227:21,23,24230:21,22,23231:1,2,4,5,7,8,18231:19 234:9253:22 268:20269:7,10 275:12276:1,17

mind 30:5 106:21168:1 256:4

minimum 187:25234:8 268:20

minus 86:8minutes 6:19

12:15,22 61:1582:15,21 94:295:5 99:7 105:9124:2 217:11274:9 290:22302:19

mir 157:9,14,15157:17 158:5175:5,6

mir's 159:8,21mischaracterizes

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138:1,3misstates 134:22

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mistakes 74:25232:11

misunderstanding300:1

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models 120:25218:3 219:8,9261:22 294:3295:16

modular 135:2module 197:16

210:8moment 162:12

266:8monday 59:10,22

76:22 170:14171:9,10,13,15,17

monetization294:2,7,9 295:16295:17

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66:5 76:8 87:6195:8

morning 14:4 59:859:10 157:17165:10 204:9

motors 1:3 2:36:19 12:15,2214:10 82:17

mountain 177:4move 16:16 45:23

46:2 68:14 164:17164:19 269:16293:8

moved 57:5273:20,24 274:2

moving 19:8 68:24120:11 264:1297:12

multiple 113:25133:20 144:4,12171:6 252:12,13

multiples 258:20multiplied 301:19musk 77:9,13 78:4

78:6,11,14 79:1280:9 82:4 84:888:22 89:1,1890:13,17,24 91:1294:15,15 97:10,2398:2 101:10102:25 103:18104:8,14,22 105:1105:12 107:1,4,17107:24 140:20163:2,13,18,21,24164:9,13,22 165:3165:21 166:25167:4 171:23172:6,9 220:15221:12,23 237:20238:5,14 255:24

256:8 266:17,25287:17 288:13,22

musk's 81:21mw 52:5,6

n

n 1:7,7 4:1 5:120:18,18,19,19150:4 269:13

name 14:17 20:1820:18 26:20 27:227:5 32:13 33:1492:24 93:1 309:16

named 23:19natively 194:21natural 148:3nature 216:14near 33:25 159:22

160:1,4 254:2,4,8274:23 276:6

necessarily 41:966:7 249:9 287:1298:21,21

necessary 172:10177:21 181:10

need 16:19 17:1625:16 61:16 79:2383:19,23 84:289:6 90:2 109:22112:25 128:10,18129:1 132:7138:12,16 143:16150:21 153:19157:8,18 158:8159:23 160:3170:14 173:19179:12 181:20,21187:14 250:10,25259:5 261:3264:14,15 265:20266:5 267:2268:10,12 271:2

272:12 291:23292:19

needed 59:23 85:5108:19 114:23127:22 129:4134:20 158:3160:2 162:4,20166:21 172:14177:22 178:2,5,9181:8 278:25287:11

needing 94:3108:10

needs 63:23 64:365:8 84:17 85:185:12 153:7154:10 158:5181:22 183:4241:7,12 278:18

negative 40:1965:12 231:4 239:6284:9 285:13

negatively 129:21284:7

negotiate 97:2498:3

negotiating 107:1107:5,6,12 114:3

negotiation 271:12negotiations

101:15 114:7145:15 148:20282:20 287:12

neither 309:12nervous 63:12net 84:18 85:20

86:4 227:1 231:14231:19 232:4250:3,7,8,13,18,19250:21 251:5,9,14251:17,20

never 113:24118:20 141:16144:13 150:1218:15,16 232:14

new 3:15,15 4:6,695:12 113:5115:10,18 117:5117:16 207:14,15233:15 239:18,22240:10 261:14273:10 302:10

news 204:3 207:13260:14

night 149:14250:25

nods 16:18nominal 44:21

45:6 67:3,4nonpublic 32:21

33:6 89:7 111:17140:17 214:12216:14

nonsolar 250:15normal 49:20

114:3,8 158:19,22note 14:20 51:13

84:11 85:19 94:794:21 95:7,1997:20 100:21105:14 107:12114:13 115:3126:17 134:10135:8 137:21138:12 140:3141:19,22 153:2179:10 183:13188:1 278:21291:15

noted 259:23notes 83:16,23

91:23,23 92:25

[morgan - notes] Page 32


CONFIDENTIAL

93:4,11,15 94:1,23100:25 101:2104:19 127:21134:7,8 135:25136:17 137:16157:19 273:19

notified 47:2278:13 279:22

notifies 278:11notoriously

125:17november 253:12number 21:6

41:20 43:9 45:1763:15,20 90:3110:24 111:13135:20 155:8226:23 232:12234:2 238:23245:18 249:17259:17 262:7295:21 297:18,19298:7,20 299:2,4,9

numbers 10:7,1340:20 65:12 89:24124:22 125:25211:3 219:19233:15 292:12,13

numerous 186:7239:16 287:14

o

o 1:7 3:5 170:2o0o 14:3oath 109:8 156:20object 35:18 38:6

107:15 156:15161:17 175:7211:25 223:2229:15 237:2239:14,15 248:2249:1 269:2

282:21 289:1objection 22:21

26:10 28:16 29:1736:21 41:7 42:2444:5 45:15 49:1653:14 67:8,1875:17 78:17 79:379:15 80:1,4,4,1180:14,22 81:1683:24 90:19 91:291:15 93:7 96:899:1,18 101:19,19102:6 103:3,21,24104:11 105:22116:6,18,25117:22 119:3,18123:2 127:16128:4 130:10134:22 141:4,13142:17,23 145:4146:14 147:1148:2,16 152:16154:18 158:14160:15 165:5167:5 172:1,12,20175:8,18,21 176:2176:12 181:5,6185:5 186:5,15,21186:22 189:16190:1,6,24 191:6191:12 193:17197:8 198:20199:6 200:21201:4,25 202:9205:2,3,18 206:12207:8,18,22210:16,24 211:14211:24 213:4,10213:17 214:25215:7,15,24 216:4216:10 217:24

218:18,24 219:5220:9 222:16223:11,20 225:3225:14 228:8,9231:20 232:7233:8,9 236:5,15237:12,23 238:8238:16,18 240:6242:8,9 243:25244:4,18,19 245:4245:21 246:10,19247:11 254:5255:3,16 256:5,17256:24 257:11258:13 259:1261:5,16,20 263:5263:21 264:9,21266:1 267:5 270:2270:15 271:18272:3,6,14,22273:15 275:7276:2,20 279:1282:7 284:16,22285:10,12,18286:1,8,24,25290:5,17 292:14292:24 294:18297:13 298:9,16299:16,25 300:15302:1 303:16,22304:6,12,19305:11,16,24306:5

objections 16:22273:4

objective 26:24118:20

obligation 252:18obligations 84:16

85:1,11 86:8,13252:15

obviously 22:1528:7 37:9,14,2240:25 45:17,1847:1 71:2 73:285:4 89:20 102:11108:19 114:11158:23 159:6164:1 167:11168:14 172:15228:3 239:18242:11 292:7

occur 297:12occurred 294:10offer 46:21 89:9

91:9 97:11,13100:9 102:8,12,25103:19 104:9108:14 121:8,8122:17,21 123:9127:8 129:3,9,14129:20,22 130:9130:12 132:17139:6 140:12146:16 201:23,23202:3 223:9,18240:5 258:25266:19 267:4277:2,8 278:10,15281:24 282:6293:6

offered 91:20101:11

offering 70:12104:23 271:21

officer 132:22150:9

oftentimes 69:21118:12 125:5128:6 155:12170:24

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CONFIDENTIAL

oh 24:22 63:999:15 138:15175:24 177:8217:17 240:4278:11 283:6

okay 16:3,17 17:317:8,9,11,19,22,2318:1 31:3 34:2151:12 53:21 58:458:18 59:2 62:1162:17 63:10 68:2375:3 91:24 92:1793:14 94:14 97:999:14 106:1123:19 152:19155:19 175:17184:7 209:20214:5 217:13229:12 230:4,5233:15 249:20,20256:15 275:15280:18 281:4282:25 283:23289:15 291:25295:9,10 299:13301:10

once 41:9 55:1763:11 75:25114:11 122:15157:24

ones 240:12operate 76:2operating 39:3

41:1 141:10operation 65:10operational 29:21operations 64:12

64:25 65:22 115:5115:15,22 116:5116:17,22,22117:24 189:6

274:21opinion 13:8 50:1

55:10 73:1 74:2579:12,17 85:1096:25 122:5 223:7223:17 255:13257:4 272:20275:25 290:2293:4,17

opposed 39:1048:10,18 185:11254:8 303:15304:11

optimistic 136:18137:1,9 144:19183:2 195:12200:23

option 116:5117:21 151:14152:14,19

optional 119:2options 150:14

151:8,16,19,24153:1,2

oral 16:20oranges 48:8

302:7order 89:7 178:2

271:3,6 302:14original 63:8

211:7 293:7outflows 65:13outlined 267:8

297:20outright 196:25outset 122:17outside 33:20

135:7overall 125:9

188:21 192:8

overhead 189:6196:12 226:13

overlap 124:9,15124:18,19 125:11125:13,21

overnight 67:13overview 54:2owner 72:20ownership 76:4

81:12 125:7196:24

p

p 4:1,1p&l 121:3p.m. 1:13 2:19

51:4,5 59:1108:24 109:1,2,4143:13 155:22156:3,5 167:16,18167:19,21 173:23173:25 174:1,3176:18 177:7188:15 208:10210:14 217:10,14220:24 222:7,22223:1 224:1,3,4,6228:22 253:18277:16,18,19,21290:23 291:1307:20,22

pace 159:6 163:25page 5:2 6:2 7:2

8:2 9:2 10:2 11:212:2 13:2 31:1134:16 36:1,137:23 38:18,2143:16 51:24,2554:1 56:9 59:461:3 62:16 63:2266:9 69:6,10 70:171:20,21 75:3,4

84:11 94:21 95:297:3 101:4,4109:13 112:21118:6 119:22124:22 127:5134:2 135:21138:12 163:5182:18 184:3201:10 202:19208:24,25 209:2209:11,13 212:16213:21 214:16219:15,17,18,19225:17 226:22,25233:18 242:22243:12 249:17,19252:16,22 257:15257:22 258:6262:6 267:18274:17 279:25280:23,24 287:22287:24 293:20296:9,18 310:7

pages 1:25 85:3124:1 126:18,24169:18 170:4

paid 97:6,15181:24 200:7214:6

pains 310:22palo 19:17panels 28:8 250:9

250:21paragraph 75:4

85:23 86:16 87:17150:12 153:14280:2,14,24287:21,24

paramedics 264:3pardon 44:10

107:3 137:6

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147:23parentheses 65:11parity 35:1,6parkway 1:15

2:18part 24:23 28:20

30:15 53:23 55:1355:15 63:5 73:1073:12 119:1 183:9185:15 196:3202:8,10 297:2,5

participant 168:13168:18,20

participated 83:984:8 91:12,16

participating104:22

particular 18:1018:13 23:24 24:224:10 25:6 59:1968:6 74:24 240:12280:7 292:6

particularly 103:5240:9

parties 14:21173:7,10 309:14

partners 106:14106:16 129:24

parts 69:3,19,22200:4 301:13,23302:5,7

party 86:19150:13,21,23,25

pass 58:15path 175:1patricia 8:3 9:8

10:9 11:20 23:20pause 93:13 271:5

291:24pay 89:16,21

100:14 101:18

102:1 104:1181:14 196:25300:19 301:2

payable 189:25190:5 191:4 255:1

payables 189:13291:17 292:3,8,23

paying 94:22190:22 300:24

penalties 308:9310:22

pending 17:21pennsylvania 3:7people 23:19,22

60:10 61:9 104:19146:23 167:12170:4 236:10259:17

percent 36:2,2537:1,2 41:23 43:143:3,11,19,22 44:444:14,22,24,2545:24,24 46:2,3,1547:14,16,23 52:2252:25 53:2,4,8,956:15,23 57:5,8,1457:16,18,21 66:1766:23,23 67:3,7,1767:17 104:4121:23 124:24,25125:1 195:20,24196:16,17,18197:4,15 198:6,7198:10,11,13,19199:17 202:13,16209:7,17 210:5,8212:3,6 225:25226:7,13,19 232:2241:25 244:9,12245:2,16,17,17,25246:4,9 274:16

297:23percentage 199:14perception 86:24

123:7 147:9perform 247:21performance 70:2

102:16 114:10186:17

performed 178:14179:17 180:7,7201:8

performing181:19

period 39:5,10,1141:1 45:25 53:1054:3 55:24 63:1664:19 65:2 129:4136:12 182:7185:16 192:2197:4 208:15227:15 234:12,18234:20,22 285:7295:18 296:1297:19

periods 188:18254:8

perjury 308:9310:22

perpetuity 38:2441:24 43:11,1644:14,21 47:14,2356:22 66:17202:14 212:6232:2 297:22299:10 300:7,11

person 16:2368:14,19 167:12274:13,15 279:20

personal 27:16personally 22:7

25:17 44:3 152:3

152:21,25perspective 33:20

44:20 180:9 241:5290:9

peruses 93:13271:5 291:24

peter 81:4pgr 46:15 47:7

57:5,16 66:23phase 36:19 42:19

42:20phaseout 36:24

37:6,20 39:6 40:240:23 41:5 63:6136:12 249:22297:11 298:15301:25

phases 42:22phil 60:13 63:11

123:25 124:5phone 83:6,9

233:14 266:25physically 83:5pick 14:23 168:6

245:18picks 53:8piece 34:2 69:24

69:24pieces 180:19pin 43:15pinpoint 25:20pivot 43:15place 14:21 81:23

108:21 143:9145:19 155:17309:7

plaintiffs 3:314:10 15:3 156:14

plan 30:15 38:759:7 94:9 118:3118:10 119:2

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150:13 170:10171:8,12,16,22,25172:3,4,18 173:11204:10 268:13

planned 31:1838:5 163:12183:25 267:10

planning 31:14plant 135:19play 29:6 287:12players 34:4plays 111:9please 14:20,25

17:5 71:20 126:19135:25 179:9187:14 203:17217:14 249:16265:4

point 23:18 32:2533:4 34:11,1835:7 36:11 37:2373:12 84:9 89:2294:14 95:11 96:496:15 97:8 98:6,8100:23 101:7,24103:13 104:4105:16 109:21113:11 120:12127:10 128:21129:13 134:4142:14 146:9152:20 155:16182:21,25 183:23184:15 185:22187:24 197:15205:10 208:19220:2 225:18234:23 239:13,17241:4 253:13257:17,18 269:20300:20 301:2,4

pointed 125:25points 195:17

225:18 257:18policies 38:17

250:4,14 251:17policy 250:7portion 42:16

91:13 287:17288:13

portions 74:17156:8

position 37:25165:1 185:10

positioned 26:23185:21,24

possibility 282:11283:1 284:13

possible 89:2190:5 100:20108:18 119:4160:17 163:17180:13 192:9,15207:9 223:4274:23 276:5,9,18276:19

possibly 192:18posted 139:20

188:17 193:24222:11

potential 27:1532:16,22 33:877:2,5 84:14,1487:18,20 88:1,1889:2 91:5 112:24114:18,23 145:15146:19 164:10170:20 198:9271:22 274:22287:19 288:5303:5

potentially 27:635:9 161:10,12,20216:5 238:6,11270:4

power 251:2powerco 69:24

115:5,11,12,22,23115:24 116:10117:25 183:15,22251:25 252:1,8302:8

powerco's 252:5powerpoint

194:20ppa 179:24precall 173:13precautions 81:20precedent 97:6,14

200:7precisely 54:24predict 40:6predicted 121:14

121:17preliminary 39:10premia 97:6

102:17premium 97:14

103:9,15,19 104:1215:4

premiums 200:7214:6

preparation 208:1prepare 67:20

125:23 170:17172:10 174:6177:21

prepared 11:16113:18 114:2,7,8137:12 143:17200:23 218:11221:1,8 244:24

prepares 57:15preparing 31:8

173:8,11,17192:22 200:19247:10

preselling 145:20present 4:10 32:1

32:4 59:18,2482:23 88:22 90:1390:17,25 96:22193:14 200:18240:15,17 287:17288:13

presentation34:17 38:18 43:1750:14 51:20 62:262:13 72:23 77:1077:24 112:14123:22 172:16195:9 233:19242:22 249:15253:2

presentations 31:741:22 77:21 78:5

presented 16:2586:17 90:6 120:11232:9,14,16

press 279:5pressure 131:18

131:22 304:2preston 9:7 10:4

10:23 12:4 20:1523:20 24:10 143:7160:25 217:3,3291:12

presumably 62:13pretty 33:22 94:22

129:7 166:15189:12 280:17284:7 291:3

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previous 188:19previously 163:12

259:25price 28:25 29:2,5

57:6 69:20 70:2,670:23 71:10 89:889:13,15,21,23,2591:19 94:4,8101:18 103:7,8,10103:11,14,19,20104:8,9,15,17106:2 121:11,15121:18,22,23122:22,24 138:8147:22 148:1,9,10148:13 179:21197:17,20 200:6201:23,23 202:3,4202:7 210:10214:6,21 215:4,10215:21 216:1240:5 272:21273:2 277:2281:10,19,22282:8 284:6,12285:14 286:12,22293:6

priced 29:25prices 71:3,12

102:17 103:1primarily 122:9

184:20primary 56:8 73:1

127:21,22 142:9188:19 193:5200:1,2,2,10,15214:17 234:5235:25

printout 7:3 92:14prior 18:23 37:23

77:7,9 78:6 123:9

144:6 146:8 176:3179:17 180:8183:18 186:1199:2 218:25267:7 286:19288:23 289:20

private 14:23 22:2106:16 148:19150:24

privilege 156:9pro 114:14 179:24probably 17:15

26:17 40:12 122:3133:22 206:7,10

probe 138:23problem 149:15

149:23 154:16,23158:8

problems 146:25proceed 282:14

283:11,19 284:1284:15 289:19

proceeded 124:11174:25

proceeding 158:23288:22

proceedings 309:6309:8

proceeds 192:8process 67:23

77:18,20 128:10147:18 150:10158:22 165:4167:9 179:11,15179:16,21 180:6222:1 229:21241:6 252:11263:4 287:16

processes 47:12produce 156:12

produced 7:4 51:962:9,13 92:11,15120:6 163:6194:21 226:10242:20 293:14

producing 29:21product 113:5

187:5,9,10,12196:16 197:2,3

production 135:9profile 84:13profitability 55:23

113:4profitable 29:14

29:16 34:12 55:24118:17 300:20

profits 70:9progress 135:19

165:12 166:3project 8:4 9:20

11:17 13:7 30:263:23 304:17,24305:22

projected 45:1,545:19 52:2,962:18 63:23 66:25113:4 188:23192:6 204:19

projection 39:9,1153:10 227:14297:19 298:5

projections 39:239:13,18,20,2340:1 41:4 45:1887:9 136:1,8,11,25137:11,12 174:7174:13 186:13202:23 213:8,14228:6 241:16,21241:24 243:21298:10 299:3

304:16,22 306:17projects 28:10

52:5,8,16prompted 262:25proper 177:21proportionally

226:10proportionately

196:9 210:2proposal 88:19

89:3 281:12282:14 283:3,10283:14 287:19288:6,23 289:20

proposals 250:17274:20 275:4,9

proposed 130:21131:15

proposition 108:1protecting 261:10prototype 28:12

305:5provide 15:20

77:14 79:8 89:1107:4 120:17128:22 129:6135:25 149:16150:17,19 151:23154:25 155:3157:24 162:18221:16,19 272:16277:6 284:12

provided 26:2027:13,24 33:1539:4,14,15 41:1041:15 62:7 72:874:19 75:15101:17 102:7120:14 127:11,24138:4 157:24174:9 175:2

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CONFIDENTIAL

180:12,16,20,22181:2 185:2204:19 205:20218:5 224:20255:19 276:5277:11 282:3284:4

providers 130:1provides 71:12

116:11providing 82:8

101:25 127:17151:13 152:14,21152:24,25 158:2266:23 268:14

provisions 35:20proxy 74:7,10,13

74:16,17,19,2275:3 76:9,13,17176:9

prudent 35:24144:20 174:10

prussia 3:6public 22:3 55:7

57:10,12 74:1476:7 86:23 87:487:13 88:3 91:995:20,25 96:7100:9 102:8108:14 116:15121:8 122:18,21127:8 129:8,14130:9,12 131:23139:6 140:12146:9 148:19185:18 214:18215:6 258:7,15264:13 271:22282:6

publicly 28:1546:3 54:6,23

56:19 85:14,1697:4,11 102:13257:19 258:3,16264:12 281:12

pulled 243:10286:5,12

pulling 120:9132:4 290:4

purchase 43:4purchased 151:5purpose 51:2

114:2purposes 16:3

114:7 167:22291:19 292:5296:14

pursuant 14:8307:19

push 159:4 292:15pushback 192:9pushed 143:18

269:23,24pushing 153:16

158:23 159:1189:12 255:1270:11 292:18

put 43:15 53:1858:17 81:23 94:10100:9 123:25124:1 137:2155:12 160:8170:21 174:10,13183:3,8 195:15198:14 203:10208:22 218:6221:15 229:20245:13 253:25269:20 279:5

putting 107:17155:1,6 174:12199:2

q

q1 240:25 269:17269:25 270:11

q2 196:16q4 196:17qualitative 169:18

243:3quality 179:14quarter 139:22

262:13,14 268:3279:23 281:9283:15 285:8286:20 288:10,24289:20

quarterly 135:25269:4

question 16:15,1716:25 17:1,2,5,717:10,21,22 19:1124:13,15 26:2,637:18 44:7 45:283:22 90:23 93:18101:14,16 106:4107:20,22 111:4,7116:19 127:2131:1,9 132:2168:7 176:3 185:7191:1 206:13,14213:12 223:13225:8 237:3,5241:18 244:6245:23 247:11249:2 254:23255:6 257:1261:11 273:6,6286:16 290:20291:25 292:1305:12 306:7,11306:13

questions 16:1458:2 168:2 212:13

274:18 280:20281:7,16 282:25283:4 285:23307:14,16

quick 50:21quickly 179:25quiet 167:4quite 132:16 266:8quote 97:4,24

r

r 4:1 20:19 309:1r&d 226:14rad 129:16radnor 3:7raise 25:3 111:14

155:7 192:10,16192:17 237:17271:7 272:9,11

raised 95:23ramp 196:16,17ran 39:16 242:11range 57:1,4 90:6

91:14 98:6,23101:11 104:24198:9 201:18202:7,11 211:9,21211:22 218:13223:8,17 232:5248:13 258:25259:24,24 260:11266:19 267:4277:11 278:9,15293:7

ranges 104:21200:7

rate 43:13,1644:14,21 45:2147:14,24 56:2266:16,17,25 67:1,4192:17 193:7,15202:14 212:7

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232:2 250:11294:9,13 295:2298:23,25 299:10303:12

rates 294:2,4,7295:16

ratio 91:10 98:998:14,17,19 99:4,899:16,23 100:11104:24 265:21266:6,19

rationale 27:14,1427:17 28:4 119:5119:8,13,16,20122:9,14,16,19280:5 290:7

ratios 90:5 91:5104:24

reach 125:17react 26:3 266:21reaction 25:24

73:19 117:20148:4 164:2,4190:11 239:1240:2,4,14 254:19266:22

read 34:19 65:1770:25 85:23 168:3170:7 204:17214:10 271:4283:6 291:23308:4 310:3

reading 168:1280:21

reads 280:19real 83:22 256:22

257:4,8,9realistic 118:1,9

137:14 179:13248:19,25

realize 76:12110:14

realized 192:11really 17:25 27:25

28:3,8 30:1145:20 87:10,1590:3 105:20 111:8111:16 139:2162:20 181:17215:4 227:8239:12 305:9

realtime 180:14reason 55:16

111:16 120:7228:2

reasonable 103:9114:9 249:8

reasonableness86:22 87:3

reasons 137:2231:10 232:13292:18

recall 31:21 34:1438:3 40:13 57:2461:2,20 68:1769:2 71:3 72:1173:21,25 78:882:7 83:7,13,1587:2 88:12 89:491:21 93:6 94:1794:20 96:1 98:499:19,22 100:18101:25 104:12,14104:16 105:3107:7,8,10,14108:4,5,7,8 113:16116:3 117:15,20120:13 125:13,20133:15,16 137:8137:22 141:8,14152:6,23 160:10

160:16 162:8163:14,20 169:24178:10 190:2,10190:13,19 191:14198:12 199:7205:9,11,12207:19,23 208:6,7208:23 210:12,21220:17 221:24222:10,15 223:3225:15 226:21228:2 229:1,3,4230:20 231:13233:4,13,17240:23 242:10243:6,13 246:20247:2,23 252:17253:14 256:3,11256:14,18 257:7259:2,8 260:21,25261:6,13,15265:19 266:22274:4 275:8 276:3276:11 283:17284:17 285:3,25286:3,9 287:13288:17,18,20,21290:16 291:1292:6 296:7304:20 307:11

receipt 133:11receivables 291:17

292:3,9,15,23receive 32:21

39:20 77:13,21113:14 114:12144:16 207:15,21229:22 235:21249:9

received 39:2477:10 113:11

128:17 142:15,21144:13 145:1,7188:21 195:7217:6 242:5 245:9248:14,22 249:4253:1,11 254:21260:18 307:9

receiving 77:17140:8

reception 95:12recess 58:7 108:25

155:23 167:17173:24 224:2277:17

recognize 74:7293:16

recognized 257:9recollect 174:18recollection 60:20

68:7,23 93:12,1693:21 174:23229:12

recommend 266:7266:18

recommendation30:9 47:5 108:16206:5 265:21266:5,13,23277:13

recommended266:16

recommending98:12,20 287:15

record 14:5,2216:12,19 31:434:20 50:9,18,2250:24,25 51:358:5,8,9,10 108:23109:1,2,3,19139:18 155:21156:4,14 157:7

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167:15,18,19,20167:23 168:3169:5 170:8173:20,21,22,25174:1,2 194:17203:17 204:18206:19 214:10223:25 224:3,4,5224:16 233:6242:19 259:15261:10 265:4277:15,18,19,20293:13 307:20309:8 310:5

recording 14:20recounted 162:11

163:22recuse 79:23 80:9recused 79:20

81:24 82:2 290:12290:14

red 155:7redacted 156:12redirect 307:14reduce 147:25

198:5 199:9 259:5260:11 261:3281:21

reduced 195:20,24196:8 197:21225:24 226:7246:3 261:1,2,7,8

reduction 53:23196:12 199:18209:7,20 210:5226:13 241:25244:9,12 245:2,16245:17,17 246:1259:20 260:7,17298:17

reductions 210:1,2251:12 261:12

redwood 1:15,162:18,18 14:1,16156:1

refer 16:4 56:9291:22 292:1

reference 60:17214:11,16 215:17257:17

referencing 85:21referring 98:5

171:10 197:22217:12 238:1263:23

refers 202:4 293:5refinance 270:18

270:20,24 271:6,9271:13,16

refinanced 271:10271:15

refined 198:23reflect 41:5 103:19

156:9 214:12,22215:1,4,11 243:21290:22 297:10303:24 306:16

reflected 190:21243:12 296:9304:17

reflection 114:10200:16 205:22

reflects 87:9198:18

refresh 174:22229:12

regard 105:2regarding 47:3

109:11 137:21161:25 281:8,17287:18 288:5

regardless 139:6regular 113:19regularly 221:25regulation 39:8regulatory 35:10

35:14,19,22 251:5reinforce 216:7,15relate 264:19related 132:2

251:13relation 86:14

153:14 228:4relative 84:18

85:20 86:4 103:1228:5 287:20288:6 309:13

relatively 296:5,6release 204:3

279:6 281:17288:23 289:20

released 121:9187:10 204:8

releasing 281:25relevance 125:11relevant 72:12,14

257:22reliable 137:10

201:6 258:20reliant 302:10,12relied 117:8

137:13 261:23reliford 3:5 5:4

15:2,2,18 22:6,2426:14 28:23 29:1930:25 31:16 35:2536:23 38:9 40:1442:4 43:14 44:845:22 48:17 49:1950:6,18,21 51:2,1051:12 53:17 58:358:12,22 61:24

63:11,21 67:1068:2 69:9 74:475:20 78:21 79:1179:19 80:3,8,12,1781:1,19 82:1284:3 90:22 91:791:18 92:7 93:993:19,24 96:1199:6,20 101:22102:14 103:12104:2,13 105:25106:9,10,21,25107:16,21,23108:21 109:5112:4 116:13,20117:2,23 119:6,21123:5,15 126:7127:4,20 128:12130:16 133:4139:12 141:6,15142:18 143:4145:6 146:15147:5 148:5,24152:18 154:14,19155:17,20 156:14156:17 157:5158:17 159:16160:21 161:22163:1 165:9,17167:7,13,22 168:5169:1 172:5,17173:1,21 174:4175:10,23 176:5176:16 177:3,8,13177:16 178:24181:9 182:5184:13 185:8186:10,18 187:8188:7 189:17190:3,8 191:2,8,15193:18 194:14,21

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194:25 197:12198:25 199:8201:1,5 202:2,12203:15 205:7,24206:14,18 207:12207:20,24 208:20209:12 210:20211:1,17 212:2213:7,13,20,25214:4 215:2,9,19216:2,6,13,22218:7,21 219:2,11220:11,21 222:17223:5,14,24224:10 225:6,16228:12,18 229:23230:24 231:22232:15 233:11236:8,18,21 237:6237:13 238:2,13238:19 239:21240:8 242:17244:1,7,23 245:7245:24 246:15,21247:13,20 248:5249:3,21 254:9255:7,20 256:7,19257:2,14 258:18259:3,12 261:9,18262:4 263:8,24264:17 265:1266:3 267:16269:5 270:5,16271:23 272:4,8,19272:25 273:8,18274:8 275:10,24276:4,23 277:25279:4,16 282:10282:24 284:18285:1,16,21 286:4286:10,18 287:3

289:6 290:1,13,21291:8 292:21293:1,8,13 294:20297:24 298:12299:12,19 300:9300:18 302:3,20303:19 304:4,8,15304:23 305:13,19306:3,8,23 307:13

rely 103:14relying 117:25remain 65:15

115:5,22 190:23remaining 64:24remains 204:14remedy 97:21,23remember 25:22

34:15 60:15 68:2471:6 77:24 93:2294:5 96:3 98:299:4,7 104:17,22105:1 107:24125:14 126:1,2133:19 141:17155:4 222:22238:3,7 240:13252:12 253:17255:10

remind 109:8removed 6:22repeat 17:6 101:16

116:19 185:6190:25 202:1206:13 215:8223:12 225:8241:18 249:2291:25 305:12

rephrase 16:2517:6 37:18

repo 60:14 262:11291:11

report 183:18192:6 269:4

reported 1:21reporter 14:19

20:16 29:4 31:138:20 50:7 58:2361:25 74:5 82:1386:1 92:8 97:22101:1 102:3,22103:23 106:15112:5 121:16123:16 126:8135:1 136:6139:13 141:21148:25 153:17156:25 160:22163:4 165:18167:25 168:1,4169:2 170:1,12173:2,9 175:20178:25 184:4194:15 200:12203:6 204:6 206:8212:22 216:23217:19 224:13225:23 230:25246:24 259:13262:5,8 265:2267:17 269:1270:14 274:1278:1 287:9302:25 309:4

reports 179:19represent 15:1

62:9 120:4representation

120:7 129:14representative

15:22representatives

86:17 88:17

274:18 280:15,25281:1

represented 47:20representing 90:9

145:5 175:22request 144:3,17requested 128:21

133:7 144:10149:20 153:23154:22 159:2168:4 180:15222:25

requesting 127:18151:23 162:15165:7

requests 157:22158:6 159:4164:15,16 165:1,8263:10

required 114:25161:10 179:14180:1 235:2236:25 268:21

requirements272:2

requires 54:16192:24

research 38:2540:17,18 41:1252:3 53:15,1865:20,24 72:587:7,13 196:13210:5

resi 184:15residential 33:25

34:2 37:2 42:2255:6 184:21185:12,19,23186:2 195:20198:5,10 199:10209:8 225:22,24

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241:1,8 296:13resolved 162:19respect 30:17 96:4

275:3respective 221:3respond 153:10

154:12 162:2165:8 176:17

responded 131:13132:1 159:21191:16 192:5

responds 132:7153:5 169:25170:3 191:24221:7 278:17

response 274:17responses 164:15responsibility

270:12responsible 170:4rest 53:9 123:21

161:24 169:15restricted 175:11

175:25 242:4243:1,9 246:17,22246:25 247:3,15247:22 307:2,6,9

restructure 25:4restructuring

25:11,14 34:7restructurings

25:10result 70:23 87:19

87:25 96:25122:21 194:3197:10 212:19215:25 234:12273:13

resulted 43:24201:18,19 211:8211:22 218:12

220:7 245:12248:12

results 35:1245:12 57:1 69:12251:8 262:13,14263:1 268:3279:24 281:9,18283:16 286:21288:11,24 289:21

resumed 156:16retail 125:15,16,16

125:19 126:3250:11

retained 301:15301:19 302:11

revenue 39:242:14 235:21

revenues 42:12reverse 157:18review 10:6 61:13

74:13,16,23 77:2,277:3 87:23 147:18169:4 170:22179:15 180:21218:15

reviewed 74:18,2076:13 87:17 88:13

revise 222:3225:20

revised 137:11138:9 183:3195:15,19 201:15201:19 202:20209:4 210:13212:17 213:14217:6,15,22 220:3220:7 221:11224:12,24 225:1225:10,12 229:8231:15 232:16248:10 251:4,13

252:20 260:23265:21 266:6282:13 283:3,10283:14 287:19288:6,23 289:19293:22 296:12,18298:13 305:22306:1,15 307:3

revisions 211:22revisit 46:14revisited 280:4revolver 141:19

141:22 142:10,13161:11,12,21164:2,4 191:5,21194:3 204:22215:23 230:17234:7,21,22 235:7238:12 257:6268:19 270:18,24271:1,6,17

ridiculous 158:12159:11,19

right 18:2 19:4,1219:13 28:22,2531:8 32:1 36:2239:3 42:17,19,2142:23 44:9,1345:4,17 50:1652:17,23 53:6,1053:12,19 54:1055:1,20 57:2,6,1657:18,21 60:1862:10,12,14 64:964:20 65:12,1566:10 67:7,1568:13 70:3,19,2392:10,19 93:395:5 96:7 97:1899:17 100:2,6,11100:14,19 101:18

102:21 103:25105:21 107:9111:10 112:12,15112:17,19 116:1119:14,17 121:9121:12 123:1,23126:15 127:6,8,12128:15,24 131:2,5131:13,21 132:23134:16 136:9137:24 138:4,6,10138:17,21,24139:3 142:19143:7,9 144:2,11144:15,24 145:1,2145:9 146:5,10,13146:17,20,25148:7,10,15149:11,21,24151:6,9,11,13,14151:17 152:8,11152:15 153:10,24154:1,4,6,10,23157:12 159:9,12159:19 160:7,14162:7 163:3 164:9165:12,21,24166:7 169:9,12170:5 171:4,9,25172:7 173:5174:22 175:12,14175:16 176:24177:18 182:8183:16 184:1,6187:18 188:11189:3,14 191:22192:3 193:25194:4,9 195:9,16195:17,21,24196:10,13 197:24198:19 199:15,19

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200:4,7,20 201:2201:11,15,20,24202:5,8,14,17,20202:24 203:2,8,25204:4,15 205:1,11205:14,17 206:11206:25 207:3,21208:10 209:15,21210:3,6,23 211:23212:17,24 213:3213:15 214:24217:7,20 218:10218:13,23 219:21219:25 220:3,16222:19 223:1224:21 225:25226:3,8,11 227:6227:20,24 228:20228:22 230:10,13232:2,17,20,22233:20 234:2235:12,25 236:19237:22 238:14,15238:24 240:3242:2 243:18244:3,10,13245:18 246:1,3,5,7247:1,4,7,16,25248:14,20 249:23251:9 252:23253:2,7,9,13,23257:25 258:20259:7,25 260:8,12261:24 262:15,18265:8 266:15,19267:20,24 268:4,8269:8 270:1,6,8,12273:3,10,11,12275:13 276:7,19278:10,15 279:7279:11,18,24

280:5,8,10 281:5281:15 282:1,20284:2 285:4,23286:13,23 287:2,5287:21 288:3289:8,11,13,16290:16,22,24292:12 293:23294:17,22 295:1295:13,22 296:10296:15,22 297:1,7297:12,14,25298:3 299:15,17299:21 300:14302:24 303:8305:4,7,10,15306:14 307:3,10307:12

risk 97:20 114:19114:23 145:19270:20 271:9,14285:19 303:21

risking 239:12risks 112:25

179:11 280:10road 3:6robust 39:14robyn 32:5 60:22roger 6:8 7:15,20

8:7,12 10:1512:19 20:14,21123:21 130:20143:6 149:13153:5 154:6160:24 163:7265:5

roger's 153:18role 29:6 178:12

178:20roles 22:15

ron 306:25roof 28:6,9,15,20

28:20 30:12304:17 305:3,15305:22 306:17,19

room 88:22105:12 139:20167:24 180:13193:25 222:12

rothenberg 60:1363:12 124:6

rougher 95:24roughly 93:15

97:17row 52:4,15 62:21rowe 125:8rpr 1:22 2:21

309:19rubric 73:7rule 14:8 307:19rules 16:10 17:24

251:20run 56:3 76:3

120:20 245:10246:13

runner 24:7running 137:3

170:10,16,17269:14

runs 193:2

s

s 4:1 6:1 7:1 8:19:1 10:1 11:1 12:113:1 20:19 179:20180:15 247:10

s&m 189:6 209:25226:10

s&p 95:13,17s's 102:16sachs 269:8

275:13

sale 196:21sales 139:1 184:21

185:19,20 196:8196:20 197:5210:1 241:6

sankaralingam20:15 23:20

saturday 169:8171:15 173:5221:4

saw 74:22 105:8122:25 138:6145:12 162:6176:9 183:18205:1 212:10218:15,16 219:10230:3,3 233:15

saying 45:13 61:1298:2 101:11104:14 132:16133:23 137:8168:22 191:24192:19 244:2,16258:10 279:6288:17

says 31:10 32:836:2,11 62:2175:10 87:16,1795:11 96:9,15101:5 104:20105:4 109:21112:24 123:25131:9 138:23141:22 143:11,22146:3 153:15171:12 182:25187:24 188:16199:25 214:16234:7,23 244:20257:18 269:13274:17

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sc 179:23scale 29:22 30:12

196:4 305:7,10,15305:18

scaled 173:8,11scenario 115:4,15

115:17 116:9117:7 118:1,2,9,14281:11 282:4

scenarios 118:18scheduled 265:8

265:15school 19:2scorpius 32:9,13

109:23 110:5scorpius's 109:24sean 4:13 14:17second 20:18

50:19 59:4 87:16101:4 182:25194:19 220:6228:14 262:12,14268:3 279:23281:9 283:15285:8 286:20288:10,24 289:20

secondary 200:6seconds 51:4section 135:21sector 18:12

257:20secure 269:7see 28:12 31:12

32:11 35:3 36:536:14 40:19 41:1641:21 42:6 54:1454:19 56:13,2459:3,13 61:6,1162:19,23 63:2464:6,14,17 65:2366:14,18 69:5,14

69:17 70:9,1373:14 75:8,1382:18,25 84:1986:5,25 87:2188:20 89:10 90:1192:25 94:12,2595:9,14,21 96:1897:25 98:1,1099:9 101:8 102:19103:4,16 104:6105:6,17,18 110:1113:1,6 114:16115:7 124:3,22126:11,21 127:25130:24 131:11,19132:11 134:5,8135:10,23 136:2136:19 137:18139:23 140:5141:25 143:20145:23 149:5,17149:18 153:8158:10 159:24160:25 163:10164:14 166:4169:19,20 173:14176:21 180:3,17180:24 182:21183:6 184:17187:5,11,16,18188:25 189:2,2,9191:18 192:12195:2 199:23204:11 209:4,8,18214:8 217:1,13218:22 219:1221:5,9 226:25227:12,15 228:10229:10 230:6,22231:2,5 233:23234:15 235:3

241:2,9 242:23243:14 245:11250:4 252:2 253:5257:22,23 258:8263:12 264:1,5265:12,22 266:10268:16 269:18270:21 273:22275:1 276:14278:5,19 280:14281:13 282:16283:6,21 291:13291:20 296:19

seeing 85:22 93:8184:23 223:18

seek 150:13seeking 97:21seen 82:20 110:11

179:2,25 219:3223:9 274:11

segment 186:17self 116:10selivo 139:2sell 43:2 197:20

250:9 272:21273:1,10,13

selling 226:19senay 13:4 262:11

291:11send 61:4 126:17

217:18,20 218:16233:12,15

sending 126:18149:9 217:4219:24

sense 30:17,2033:21 42:2 44:2247:14,17 68:20119:5,7,12,17120:18,24 263:11267:9 300:8

sensitive 14:22sensitivity 137:3,4

137:14 155:1,6174:16 183:8200:24 201:9207:6,17 210:19212:15 219:9221:11 222:4,9,13224:24 225:2,10225:12,20 229:8243:15 246:4248:10 251:4,13252:20 260:23261:23 293:22296:3,4,7,12,18298:14 305:1,23306:1,15 307:3

sensitized 248:18248:23

sent 58:25 62:5112:10 123:20133:5,19,20,24166:7 169:14176:6 177:17182:10 206:22,24208:3,25 209:3214:1 217:9219:20,21 224:12224:24,25 225:4227:1,4 228:19229:14,24 231:16262:17 306:25

sentence 87:16146:7,8 159:11204:17 266:4269:21 280:17,19282:11 283:7,18

separate 25:11284:11 299:20

separately 69:25

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september 140:3188:23 253:12,21253:25 254:1,14254:15

serious 158:8service 183:15,22sessions 128:19

129:16 168:14185:19 186:8

set 36:19 76:1777:19 203:10225:18 309:7

seth 150:4sets 166:16 233:19setting 91:13

165:11settled 105:4seven 177:4 192:1

204:1shakes 16:18share 34:1 57:2,2

57:6 69:12,13,1669:20 70:2,2371:9,24 72:4,9,1272:13 73:24 75:775:11,22,23 87:1987:24 88:7 90:890:10 97:17 98:25103:19 105:4,5122:22 132:1201:19,20 220:12287:7,10

shared 78:6133:21 159:18226:5

shareholder 71:1279:10 80:16116:15 123:23124:1,10,13,14,21125:9,20 270:4287:6

shareholders74:11 94:10,19108:1 117:14124:16 125:1

shares 29:5 90:791:20 125:2201:24 273:9

shaw 8:3 9:8 10:1011:21 20:15 23:2024:13 189:5191:16

shaw's 188:15253:18

sheet 110:18 111:2111:8,9,22,23

shelf 128:7shift 184:15

185:11 187:2241:1

shifting 185:13189:24 190:5191:3

shores 1:15 2:18short 106:8 161:14

192:7 229:2shorthand 309:3,9shortly 178:11show 77:25 139:21

140:4 204:20230:18

showed 76:15116:11 130:7164:7 217:21231:17

shown 246:14shows 39:1 64:4

119:25 212:16301:9

shut 115:17 116:9116:21 118:21183:14,21 244:2

244:17 245:1252:7

shy 167:4sic 30:13side 134:8 145:8

177:22 217:5,5219:15,16,25,25224:11,11 293:21293:21 307:5,5

sign 170:10,13171:12 210:18223:16 229:18233:1

signal 284:9signature 309:17signed 171:19

172:18 220:3225:10 228:6,11232:22 233:7242:5 269:11287:5 310:22

significant 29:2048:20 76:10 79:980:15 81:12109:24 110:8111:20 115:1125:16 129:12130:8 140:4 142:7159:22 160:1216:3 243:14257:10 304:5

significantly 117:3188:22 201:22254:7 284:7

signing 153:16,18153:21 179:18,18180:8,23 229:17269:15

silevo 134:24135:2,16 197:16197:20 210:8

226:19 269:17,22269:24

silver 106:14,16similar 67:6

285:22simple 237:18,19sit 168:16sitc 136:12 297:11

298:15 301:25sits 294:16sitting 16:23 285:2

285:5situation 187:15

189:21 204:14206:4 233:22,25239:3,17 241:14241:19 243:23244:16 252:23264:19 272:18273:12 276:21281:24

six 51:19 57:2070:18

size 23:1skadden 267:25skeptic 131:14skeptical 129:7skepticism 132:2,8slide 63:23 64:2

65:6 109:17112:21 139:23142:2 184:3,5252:25

slides 125:23139:19,20

slow 278:18slowing 139:1small 129:17

196:3small's 130:4

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snowflake 55:4soft 34:25solar 18:14,15,18

18:19 20:7,1023:25 24:3,9,1126:22,24 27:2,4,627:9,12,17,22 28:328:6,7,9,15,2029:10 30:7,14,1832:10,16,22 33:2,933:25 34:12,22,2335:10,15 36:337:16 38:17 43:446:5,5 52:7,1054:25 55:3 77:1,3115:10,12 117:16119:9,10 151:5184:22 185:14186:14 249:23250:8,13,17,21,24251:10 258:12303:24,25 304:17305:3,15,21306:17,18

solarcity 15:2526:21,22,22 27:1,428:6,10 29:532:13,24 33:12,1433:16,17,23 37:537:19 38:24 39:1739:21,24 41:1043:1 46:4,5,2247:20 48:21 49:1454:4,24 55:3 56:256:6,8 57:13 66:666:25 70:2,671:14 74:11 79:1080:16,18,21,2481:13 84:14 85:1086:18,19,24 88:1989:3,6,17 90:8,10

91:20 94:16 96:196:6 98:13 100:5102:2,4 103:1105:20 106:4,5107:6 108:1 110:5110:9 113:12,12113:15,15,18114:4,13,22 115:4115:21 117:8120:25 121:9123:1,8,23 124:10124:16,20,24125:2 127:12,14128:21,22 129:1130:7 132:16,23133:8,14 134:19135:5 136:9,25138:1,3 139:7,19140:7,22 141:9,11141:18 142:7,15142:22 144:3,11144:18 145:22146:4,6,13,17,20146:24 147:3,25148:7 149:15150:8,13 151:20152:25 153:24155:11 157:21158:2 161:15162:21 164:10,21165:2 172:11174:16 176:14178:6 180:12181:14,24 182:23183:10 185:2,10186:8 189:12190:4,22 193:8,25194:9 195:7196:22 197:1,7,24200:10,19 201:24202:4 204:8,25

205:14 206:7,10207:16 214:21,24215:5,12,21 216:9216:17 217:6236:11 237:21238:15 239:3,11241:15,20 242:25243:22 244:25245:10,13 246:14248:11,13,25252:23 253:1254:21,24,25255:13 257:5,10257:13 258:4,5,11258:17 259:5,20259:23 260:24262:12 263:1264:20 267:25268:4 269:7272:11 273:9,19274:2,23,25275:22 276:6,13276:25 281:18282:6,12,15 283:2283:14,20 284:1284:14,20 285:6,8286:6,22 288:25290:12 292:10293:21 294:5,8,16301:2 303:21304:5 305:14

solarcity's 28:2436:17 39:2 42:246:9 49:23 52:165:8 71:9 84:1584:24 103:20106:2 110:18111:5,21 113:3127:23 129:14134:13 147:22148:1 183:2,16,22

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verbal 16:19verbally 154:11verbatim 309:8verge 237:21

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vertical 35:12vertically 34:8

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videotaped 1:92:16 14:7 307:19

view 27:14,1933:16 46:18 65:24

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vir 109:19vision 168:12visionary 168:10vlavely 3:17voices 168:14vote 79:20 80:10

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voted 144:14votes 287:6voting 289:3,3

w

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303:3wachtell 220:24

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wait 16:14 154:15154:21

waited 176:25waiting 163:9

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89:23,25 94:4,8walked 229:7

232:19 254:12walking 229:5wall 38:25 39:4

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want 17:6,1749:10 58:2 61:476:18 78:22 132:8145:20 147:15,19148:11,14,18198:10 219:12236:10 270:19273:10,10

wanted 27:1130:14 59:22 76:2376:24 115:16124:13 187:1,4,7188:1 262:13263:16

watkins 20:2023:21 24:17 83:1192:19 93:25106:11

way 28:18 41:8,1241:14 42:1,2 49:249:3 55:18 56:6184:9 216:8,16234:1 244:8247:15 253:12295:22 297:14,17299:8,17,21 300:5302:7 304:9 305:6305:9,14

ways 34:24 56:7,8110:21 111:13200:10

we've 40:2 106:7171:3 201:17

webex 124:1wednesday 1:12

2:20 14:1 156:2week 25:23 26:17

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weekend 204:20weekly 188:16

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weeks 108:10128:14 150:10191:25 192:1247:9 253:8,16,21254:15

weil 1:14 2:17 4:314:15 15:4

weil.com 4:8welcome 109:6

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west 51:5wheeler 9:16

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whispers 14:23wilson 18:25 19:4

19:7,12wind 98:22 116:22

winding 116:16117:24

witness 1:9 2:164:2 5:2 15:5 21:2522:22 26:11 28:1729:18 35:19 36:2238:7 40:10 41:842:25 44:6 45:1649:17 53:15 63:963:14 67:9,2069:8 75:18 78:1979:4,5,9,17 80:1580:23 81:17 84:190:20 91:4,1693:8,13,20 96:999:3,19 101:21102:7 103:4,22,25104:12 105:23107:22 116:7,19117:1 119:4,19123:3 127:3,17128:5 130:11134:24 141:5,14142:24 147:2148:3,17 152:17154:13 158:15160:16 161:18165:6 167:6 172:2172:13,21 175:9175:22 176:4,13177:11 181:7184:10 185:6186:7,16,23 190:2190:7,25 191:7,14194:23 197:9198:21 199:7200:22 202:1,10205:4,19 206:13207:9,19,23208:18 209:11210:17,25 212:1

213:5,11,18 214:3215:1,8,16,25216:5,11 217:25218:20 219:1,8220:10 223:3,12223:21 225:4,15228:10 229:16231:21 232:8233:10 236:6,16237:4,25 238:9,17239:16 240:7242:10 244:5,20245:5,22 246:12246:20 247:12,18248:3 249:2,20254:6 255:5,17256:18,25 257:12258:15 259:2261:6,21 263:6,22264:11,23 266:2267:6 269:3 270:3271:5,19 272:7,17272:24 273:5,17275:8,22 276:3,21279:2 282:8,22284:17,24 285:13285:19 286:3,9,15287:1 289:2,24290:6,19 291:24292:15,25 294:19297:14 298:10,17299:17 300:4,16302:2 303:17,23304:7,13,20305:12,17,25306:6 309:15

witness's 211:16300:2

wonder 131:16wondering 294:13

words 289:15work 18:5 23:11

33:4 40:15 51:1957:12 106:18235:17 256:16,23257:6 285:4

worked 20:3,6,921:5,10,15 23:1323:15,17 124:7

working 20:1347:15 141:18148:17 162:17169:17 217:7,23221:3 241:7,12

works 23:8 106:13153:7 299:8 300:1

world 71:19worst 115:17

116:9 118:13write 59:5 61:4

161:2 163:7169:17 229:7262:10 268:12

writes 145:18157:17 166:1173:7,10 179:9180:11 220:22263:9 265:13,20

written 16:19wrong 74:21

209:10wrote 130:21

x

x 1:2,6 2:2,6 5:16:1 7:1 8:1 9:110:1 11:1 12:113:1 29:21

y

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year 21:5 39:9,1139:18,20 40:5,1140:12 42:11 47:1256:12 66:12 70:19127:23 128:7,17128:19 136:5,8,11137:17 201:13202:22 212:24231:23 232:1284:8 296:25297:3 298:13299:3,5

years 18:4 19:9,2029:18 36:20 39:1640:7 46:24 65:9271:25 298:11

yep 69:18 100:23101:7 102:21,23102:24 281:6287:25

yesterday 150:5180:19

yields 192:10,16york 3:15,15 4:6,6

95:12

z

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[yeah - zero] Page 55


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DELAWARE RULES OF CIVIL PROCEDURE

Part V. Depositions and Discovery

Title V, Rule 30

(e) Submission to witness; changes; signing. When

the testimony is fully transcribed, the deposition

shall be submitted to the witness for examination

and shall be read to the witness, unless such

examination and reading are waived by the witness

and by the parties. Any changes in form or

substance which the witness desires to make shall

be entered upon the deposition by the officer with

a statement of the reasons given by the witness for

making them. The deposition shall then be signed by

the witness, unless the parties by stipulation

waive the signing or the witness is ill or cannot

be found or refuses to sign. If the deposition is

not signed by the witness within 30 days after the

date when the reporter notifies the witness and

counsel by mail of the availability for examination

by the witness, the officer shall sign it and state

on the record the fact of the waiver or of the

illness or absence of the witness or the fact of

the refusal to sign together with the reason, if

any, given therefor; and the deposition may then be

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used as fully as though signed, unless on a motion

to suppress under Rule 32(d) the Court holds that

the reasons given for the refusal to sign require

rejection of the deposition in whole or in part.

DISCLAIMER: THE FOREGOING CIVIL PROCEDURE RULES

ARE PROVIDED FOR INFORMATIONAL PURPOSES ONLY.

THE ABOVE RULES ARE CURRENT AS OF APRIL 1,

2019. PLEASE REFER TO THE APPLICABLE STATE RULES

OF CIVIL PROCEDURE FOR UP-TO-DATE INFORMATION.

VERITEXT LEGAL SOLUTIONS

COMPANY CERTIFICATE AND DISCLOSURE STATEMENT

Veritext Legal Solutions represents that the

foregoing transcript is a true, correct and complete

transcript of the colloquies, questions and answers

as submitted by the court reporter. Veritext Legal

Solutions further represents that the attached

exhibits, if any, are true, correct and complete

documents as submitted by the court reporter and/or

attorneys in relation to this deposition and that

the documents were processed in accordance with

our litigation support and production standards.

Veritext Legal Solutions is committed to maintaining

the confidentiality of client and witness information,

in accordance with the regulations promulgated under

the Health Insurance Portability and Accountability

Act (HIPAA), as amended with respect to protected

health information and the Gramm-Leach-Bliley Act, as

amended, with respect to Personally Identifiable

Information (PII). Physical transcripts and exhibits

are managed under strict facility and personnel access

controls. Electronic files of documents are stored

in encrypted form and are transmitted in an encrypted

fashion to authenticated parties who are permitted to

access the material. Our data is hosted in a Tier 4

SSAE 16 certified facility.

Veritext Legal Solutions complies with all federal and

State regulations with respect to the provision of

court reporting services, and maintains its neutrality

and independence regardless of relationship or the

financial outcome of any litigation. Veritext requires

adherence to the foregoing professional and ethical

standards from all of its subcontractors in their

independent contractor agreements.

Inquiries about Veritext Legal Solutions'

confidentiality and security policies and practices

should be directed to Veritext's Client Services

Associates indicated on the cover of this document or

at www.veritext.com.

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