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

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EXHIBIT 14

CONFIDENTIAL

1 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE2 ----------------------------------------------3 IN RE: TESLA MOTORS, INC. Consolidated4 STOCKHOLDER LITIGATION C.A. No. 12711-VCS56 ----------------------------------------------7891011 CONFIDENTIAL121314 VIDEO-RECORDED DEPOSITION OF JASON WHEELER15 TUESDAY, JUNE 4, 201916171819202122 Reported by:23 Anrae Wimberley24 CSR No. 777825 Job No. NY 3255267

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

CONFIDENTIAL

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1 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

2 ----------------------------------------------

3 IN RE: TESLA MOTORS, INC. Consolidated

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

5

6 ----------------------------------------------

7

8

9

10

11 CONFIDENTIAL

12

13

14 Transcript of video-recorded deposition

15 of JASON WHEELER, taken at Robbins, Geller, Rudman &

16 Dowd LLP, One Montgomery Street, Suite 1800,

17 San Francisco, California 94104, beginning at 1:04

18 p.m. and ending at 4:00 p.m. on Tuesday, June 4,

19 2019, before Anrae Wimberley, Certified Shorthand

20 Reporter No. 7778.

21

22

23

24

25

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1 APPEARANCES:

2 For Plaintiffs:

3 ROBBINS GELLER RUDMAN & DOWD LLP

4 BY: RANDALL BARON, ESQ.

5 MAXWELL R. HUFFMAN, ESQ.

6 655 West Broadway, Suite 1900

7 San Diego, California 92101

8 (619) 231-1058

9 [email protected]

10 [email protected]

11

12 For Tesla Motors Director Defendants:

13 CRAVATH, SWAINE & MOORE LLP

14 BY: CLAIRE BOTNICK, ESQ.

15 825 Eighth Avenue

16 New York, New York 10019-7475

17 (212) 474-1906

18 [email protected]

19

20

21

22

23

24

25

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1 For the deponent Jason Wheeler:2 RAMSEY & EHRLICH LLP3 BY: MILES EHRLICH, ESQ.4 CHHAYA BHALOTRA, ESQ.5 803 Hearst Avenue6 Berkeley, California 947107 (510) 548-36008 [email protected] [email protected]

1011 Also Present:12 VERITEXT LEGAL SOLUTIONS13 SEAN GRANT, VIDEOGRAPHER14 (415) 274-997715 [email protected] --oOo--171819202122232425

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1 I N D E X2 EXAMINATION BY: PAGE3 MR. BARON 10, 1114 MS. BOTNICK 11056 --oOo--7 E X H I B I T S89 EXHIBIT DESCRIPTION PAGE

10 Exhibit 1 E-mail chain of June 2016; 2211 Bates TESLA00094317 thru 3181213 Exhibit 2 E-mail dated 2/29/16 from 2914 Wheeler to Musk and Maron15 w/attachment; Bates16 TESLADIR0080593 thru 6021718 Exhibit 3 Minutes of a Special Meeting of 3119 the Board of Directors of Tesla20 Motors held 2/29/16; Bates21 TESLA00001346 thru 34722232425

2 (Pages 2 - 5)


CONFIDENTIAL

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1 E X H I B I T S (Cont'd)2 EXHIBIT DESCRIPTION PAGE3 Exhibit 4 Minutes of a Regular Meeting of 404 the Board of Directors of Tesla5 Motors held 5/31/16; Bates6 TESLA00001455 thru 45878 Exhibit 5 Board of Directors Meeting 459 Agenda of 6/20/16; Bates

10 TESLA00000001 thru 1221112 Exhibit 6 E-mail chain of July 2016; 5613 Bates TESLA00740939 thru 9401415 Exhibit 7 E-mail chain of July 2016 5816 w/attachment; 2 pages1718 Exhibit 8 E-mail chain of July 2016; 6219 Bates TESLA00522135 thru 1372021 Exhibit 9 E-mail dated 7/18/16 from 7122 Jenny to various individuals23 w/attachment; Bates24 TESLA00247581 thru 60025

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1 E X H I B I T S (Cont'd)2 EXHIBIT DESCRIPTION PAGE3 Exhibit 10 Minutes of a Special Meeting of 744 the Board of Directors of Tesla5 Motors held 7/19/16; Bates6 TESLA00001473 thru 47778 Exhibit 11 E-mail chain of July 2016; 789 Bates EVR-TESLA_00229251

1011 Exhibit 12 E-mail dated 7/21/16 from Senay 8312 to Repo and Wheeler13 w/attachment; Bates14 TESLA00248052 thru 0571516 Exhibit 13 E-mail dated 7/30/16 from McPhee 8917 to Wheeler; Bates TESLA0073001418 thru 0151920 Exhibit 14 E-mail chain of August 2016; 9521 Bates TESLA00065990 thru 99122232425

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1 E X H I B I T S (Cont'd)

2 EXHIBIT DESCRIPTION PAGE

3 Exhibit 15 Minute of a Special Meeting of 97

4 the Board of Directors of Tesla

5 Motors held 8/13/16; Bates

6 TESLA00001757 thru 758

7

8 Exhibit 16 E-mail chain of August 2016; 103

9 Bates TESLA00065977

10 --oOo--

11

12 QUESTIONS WITNESS INSTRUCTED NOT TO ANSWER:

13 (None)

14

15 --oOo--

16

17

18

19

20

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22

23

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25

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1 TUESDAY, JUNE 4, 2019; SAN FRANCISCO, CALIFORNIA;

2 1:04 P.M.

3 - - -

4 THE VIDEOGRAPHER: Good afternoon.

5 We're on the record.

6 The time is 1:04 p.m. and the date is

7 June 4th, 2019.

8 This begins the videotaped deposition of

9 Jason Wheeler.

10 This deposition is being taken on behalf

11 of counsel for plaintiffs In Re Tesla Motors Inc.

12 Stockholder Litigation filed in the Court of the

13 Chancery of the State of Delaware. Consolidated

14 Case 12711-VCS.

15 This deposition is being held at Robbins

16 Geller Rudman & Dowd LLP in San Francisco,

17 California.

18 My name is Sean Grant from the firm

19 Veritext. I'm the videographer. And the court

20 reporter is Anrae Wimberley, also from Veritext.

21 Please note that audio and video recording

22 will take place unless all parties have agreed to go

23 off the record. Microphones are sensitive and may

24 pick up whispers, private conversations or cell

25 interference.

3 (Pages 6 - 9)


CONFIDENTIAL

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1 At this time, will counsel please identify

2 themselves and state whom they represent.

3 MR. BARON: Randall Baron, Robbins Geller

4 Rudman & Dowd, for plaintiffs.

5 MR. HUFFMAN: Maxwell Huffman, Robbins Geller

6 Rudman & Dowd, for plaintiffs.

7 MS. BOTNICK: Claire Botnick, Cravath Swaine &

8 Moore, for director defendants.

9 MR. EHRLICH: Miles Ehrlich from Ramsey &

10 Ehrlich on behalf of the witness, Jason Wheeler.

11 MS. BHALOTRA: Chhaya Bhalotra from Ramsey &

12 Ehrlich on behalf of the witness, Jason Wheeler.

13 THE VIDEOGRAPHER: And please move that off the

14 chain.

15 MS. BHALOTRA: Sure.

16 THE VIDEOGRAPHER: Will the certified court

17 reporter please swear in the witness.

18 JASON WHEELER,

19 sworn as a witness by the Certified

20 Shorthand Reporter, testified as follows:

21 EXAMINATION

22 BY MR. BARON:

23 Q. Mr. Wheeler, did you have an opportunity

24 to review any documents in preparation for your

25 deposition here today?

Page 11

1 A. I did look at some documents.2 Q. Did they help refresh your recollection3 over things that happened in the past?4 A. A little bit. It was a flood. It's a big5 binder.6 Q. Do you know the source of those documents?7 A. A lot of it's just, I think, Tesla e-mails8 and records.9 Q. Did you have that yourself or was that

10 sent to you by somebody?11 A. It wasn't sent. I reviewed it in person.12 Q. Okay. Where did you review those?13 A. My lawyer -- counsels' office.14 Q. Okay. Did you have any conversations with15 any lawyers other than your counsel?16 A. I did not.17 Q. Did you have any indirect conversations?18 Like did you answer any questions that were posed to19 you from your lawyers from other lawyers that you're20 aware of?21 A. Not that I'm aware of, no.22 Q. Just to go through your background just23 briefly, you spent a number of years at Google;24 correct?25 A. That's correct.

Page 12

1 Q. And how many years did you spend there?

2 A. Thirteen and a half.

3 Q. And it appears that you were -- you came

4 onto Tesla in 2015; is that correct?

5 A. That's correct.

6 Q. How did you get your job at Tesla?

7 A. Regular interview process.

8 Q. Were they just interviewing for CFOs and

9 you went through the interview?

10 A. I got contacted by a recruiter. And he

11 said, this guy, Elon, wants to talk to you.

12 I said, okay, I'll go talk to him.

13 Q. And did you interview with anybody other

14 than Elon or just --

15 A. I did. I interviewed with most of the

16 management team, a few of the board members and then

17 a final interview with Elon before he offered me the

18 job.

19 Q. And you were the chief financial officer

20 of Tesla for about a year and a half; is that

21 correct?

22 A. That's correct.

23 Q. And then it appears that you were a senior

24 advisor for six months thereafter.

25 Is that an accurate statement? I think

Page 13

1 it's on your LinkedIn page.2 A. Yeah, that's correct.3 Q. And what did the senior advisor do as4 opposed to the CFO?5 A. I didn't do much as a senior advisor,6 frankly. I was available if necessary, but I didn't7 really get involved in the day-to-day. Deepak, the8 old CFO, came back so he knew what he was doing.9 Q. So it was just sort of a transition time?

10 A. Mostly, yes.11 Q. And now you are -- I think you said you12 were on your sabbatical?13 A. Sabbatical, yes.14 Q. And you're doing speaking.15 Are you doing anything else?16 A. Yeah, I've done some speaking engagements17 and engaging in hobbies. And I've got some plans18 actually for the future. I've got to figure out19 what I want to be when I grow up eventually.20 Q. Don't we all.21 A. Or not.22 Q. Sort of -- just want to get a sense of23 what it was like working at Tesla, and I kind of got24 my own sense on Saturday.25 In my deposition of Mr. Musk, he, on the

4 (Pages 10 - 13)


CONFIDENTIAL

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1 record, said things like you seem like a very, very2 bad person, just a bad human being, you're a3 shameful person, people like you make me sad about4 the future for America. He just -- you have no5 conscience. But it went on for about eight or nine6 hours on Saturday.7 And I was kind of curious as to whether or8 not that was unique to my experience with Mr. Musk,9 or was that sort of a common experience at Tesla?

10 A. So, Randy, you seem like a good guy.11 I think -- I don't think it was unique to12 you, but Elon never treated me that way and people13 close to him I didn't see him treat that way. But14 he certainly could be a bit tempestuous. This is in15 the public record.16 Q. No, no, there's the Wired article that17 talked about his firings and some other things. And18 I was curious about that as sort of a management19 style. Because I asked him that. I said, is this20 sort of a style that you utilize? Do you -- I don't21 want to use the word "bullying," but is this a style22 you use in which -- if you get challenged, do you23 kind of attack the challenger?24 Was that common for Mr. Musk?25 A. Yeah, I witnessed him behave that way on

Page 15

1 some occasions, for sure. He liked people that2 could stand up for themselves. I think that's why3 he and I got along reasonably well. It was like, if4 I think it's bullshit, it's bullshit. But, yeah,5 that's definitely part of his management style.6 Q. So that sort of moves us into this sort of7 issue that Elon raised in his deposition. And when8 asking him about the solar acquisition -- or9 SolarCity acquisition and pointing out to him that,

10 at least on the issue of megawatts deployed --11 And you're familiar with megawatts12 deployed?13 A. Yes.14 Q. -- on the issue of megawatts deployed15 falling down substantially since the time of16 acquisition, he said it was all because of the17 Model 3.18 A. All because of Model 3? Yeah.19 Q. All because of Model 3.20 And I think that makes sense. And it's an21 accurate statement, if I have it right, that at the22 time -- or even before the SolarCity acquisition,23 there was some anticipation that the Model 3 project24 was going to be difficult and costly; is that a fair25 statement?

Page 16

1 A. Yeah, that's a fair statement.2 Q. And so even as of the time of first3 quarter 2016 -- and I think there was the May 4th4 earnings call which talked about the fact that the5 reality -- I think Mr. Musk said the reality is that6 volume production will be some number of months7 later as we resolve supply chain and internal8 production issues.9 So even in, I guess, February -- early

10 February and beyond, you already knew that the11 Model 3 was going to be a big challenge; is that a12 fair statement?13 A. My experience -- I dropped into the14 company when Model X was just rolling off the lines.15 And that was -- that didn't go smoothly.16 The Model S launch didn't go smoothly, but17 I experienced the Model X launch in my first18 earnings calls. It was a horrible quarter because19 the Model X was just not coming off the line.20 So I think it was a known factor that21 these product launches are very difficult. So the22 anticipation of Model 3 being difficult was like,23 yeah, of course it's going to be difficult.24 Q. And it was really going to be sort of -- I25 think even Elon said it was really sort of the

Page 17

1 crowned jewel idea of Tesla which was the affordable2 electric car; right? That was the idea behind it?3 A. Yeah, certainly one part of the master4 plan was certainly to get to Model 3. I mean, the5 whole -- I know you're deeply versed in this, but6 the whole plan was to do high-end luxury cars at the7 beginning and have those then fund the mass market8 Model 3. So, yes, that was definitely a huge part9 of the master plan and the strategy.

10 Q. And, again, I think in August of 2016,11 once again you made it very clear in the calls that12 things are challenging, we are unlikely to meet the13 first deadline. All of those were sort of known14 expectations, at least what it looked like from the15 earnings call, that we're going to be challenged. A16 lot of our time, money and effort is going to be17 spent trying to get this product line up.18 A. Yeah, I think there was an internal19 recognition that the Model 3 was -- Elon talked20 about it as a company product. So I think there was21 lots of anticipation and thinking that this is going22 to be difficult.23 On the flip side of that -- and this is24 important -- the Model 3 was designed differently25 than the S and the X. The S and the X were

5 (Pages 14 - 17)


CONFIDENTIAL

Page 18

1 almost -- and this is maybe stating it a little too

2 strongly, but they're almost like hand-built custom

3 cars. It's probably the extreme.

4 The Model 3 was designed specifically with

5 manufacturing in mind. And every part and every

6 process was thought about, okay, what's the easiest

7 way to actually source these components to

8 manufacture them and do them at scale, because

9 moving to scale was different.

10 So the thinking was, yes, this is going to

11 be difficult to get through, but once we get through

12 this, we're going to be able to produce way more

13 cars than we've ever been able to produce.

14 So there's near-term pain and a lot of

15 long-term optimism on what the Model 3 was going to

16 do in terms of manufacturing capacity, capability at

17 the company.

18 Q. And because our -- my issue is not with

19 the Model 3. My issue is the decision to do the

20 Model 3 and SolarCity at the same time.

21 A. Sure.

22 Q. And it seems to me that, early on,

23 everybody knew it was a bet-the-company project, the

24 Model 3 was, even before the SolarCity acquisition

25 got announced.

Page 19

1 Is that an accurate statement?2 A. Yeah, I think everybody knew it was a3 bet-the-company.4 Q. And everybody knew that because of the5 scaling issue, that you would have to build the6 machines to build the machines, so it was really7 sort of a double challenge just to get that product8 line up to scale.9 A. Yeah.

10 Q. Is that a fair statement?11 A. Everyone knew it was going to be12 difficult.13 But I would caveat that -- and this is14 important. It's kind of like the way that Elon has15 lived his entire life. You know, SpaceX at the same16 time as Tesla. Almost going through bankruptcy with17 both companies in the same day.18 So I think as someone that bought on to19 the mission of the company, it wasn't shocking for20 him to want to seem to do too much at the same time21 because he had a track record of pulling it off.22 Q. Well, in talking -- in talking numbers --23 because in some ways that's what we're doing -- you24 in -- I believe it was the Q1 2016 earnings call,25 you even said to the public that this is a capex

Page 20

1 challenge. Right. We anticipated it would be about2 1 1/2 billion last quarter, and it's going to be at3 least 50 percent above that moving forward, so we4 can't even meet our guidance, it's going to cost a5 lot of money, it's going to be a real challenge.6 Do you recall saying that?7 A. I don't recall saying it specifically, but8 if you tell me it's in the transcript, then I9 believe you.

10 Q. And it seems to me that even when Elon11 proposed that you buy SolarCity, that you noticed12 that there was a challenge just on a financial basis13 about trying to do both of those two things at the14 same time.15 Do you recall that?16 A. So my thinking when the deal first came up17 was the biggest issue was actually -- Randy,18 something you've already brought up, was this19 execution. I thought the company needed to be20 focused on building cars. And having experienced21 the Model X launch, I knew that that was not easy.22 And doing it again with Model 3, figured that that23 wasn't going to be easier either.24 And then my other specific concern when it25 came up was just the combined balance sheets.

Page 21

1 SolarCity had a lot of debt on the balance sheet.

2 We had a balance sheet that -- it was nothing like

3 when I was at Google where I was like, okay, we need

4 cash, all right, more cash is falling from the sky.

5 So it was a risky balance sheet at Tesla

6 and a risky balance sheet at SolarCity, and I

7 thought the combination of those two was probably

8 not going to create synergy.

9 MR. BARON: Can I have --

10 THE WITNESS: Those were my two concerns when

11 it came up.

12 MR. BARON: Can I have the June 20th e-mail

13 from Mr. Wheeler, please.

14 BY MR. BARON:

15 Q. Did you express those concerns to

16 Mr. Musk?

17 A. I did.

18 Q. And what did he say?

19 A. So those concerns came up when the deal

20 came around the first time, and Elon and the board

21 ultimately decided not to pursue it.

22 Q. In February?

23 A. Yes, I believe it was in February.

24 Q. We'll get to that in a moment.

25 So they first came up, the board --

6 (Pages 18 - 21)


CONFIDENTIAL

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1 A. I expressed those concerns. I made those2 points in the board meeting. And I had expressed3 those to Elon ahead of the board meeting as well.4 And everybody knows what happened, ultimately5 decided not to go through with the deal at that6 point in time.7 Q. We'll talk about -- and I'll show you the8 minutes, but do you recall that what the board said9 was, well, you go ahead and give us more information

10 and come back and we'll talk again later?11 A. I don't remember the specifics of the12 conversation at the board meeting. I do remember13 those points about execution on vehicle14 manufacturing and the combined balance sheets being15 certainly part of the discussion and part of the16 factors that went into let's take a pause on this17 and let's not do it right now.18 MR. BARON: Can you mark this as Wheeler19 Exhibit 1, please.20 (Wheeler Exhibit 1 was marked.)21 BY MR. BARON:22 Q. Showing you -- I'm showing you what's been23 marked as Wheeler Exhibit 1.24 Is this a document that you reviewed25 recently?

Page 23

1 A. Yes, I think I looked through this.2 Q. And this is a document in which you sent3 to Todd Maron and Elon Musk just before the idea of4 buying SolarCity was brought back to the board of5 directors; correct?6 A. That's correct.7 Q. And in it, it appears that you identified8 immediate issues, near-term issues and sort of9 medium-term issues.

10 Is it fair to characterize this as you're11 trying to make sure everybody understands that this12 may not be the best time to do SolarCity because we13 have some other things happening with the Model 3?14 A. I wouldn't say it exactly that way. It's15 funny, when I reread this memo, I said, this -- this16 is me doing my job. It's the job as the chief17 financial officer to be a steward of the company's18 resources and to identify and be transparent about19 financial risk.20 So the intent, I believe, of this note was21 to say, hey, we just need to be eyes wide open about22 these issues. And sitting from my chair as the CFO,23 here's what I think is important for us to be aware24 of as we contemplate this potential transaction.25 Q. So in your view, it was not unusual that

Page 24

1 the Model 3 would be a challenge and that you would2 have to somehow manage the challenge of an3 acquisition of SolarCity at the same time you4 managed that challenge; is that a fair way of5 putting it?6 A. I think we all knew it was going to be7 hard, it was going to be challenging.8 Q. Which one is it, doing both at the same9 time?

10 A. Doing both.11 Q. And was the board -- was this information12 shared with the board?13 This did not go to the board of directors,14 but when you went to the board of directors in June,15 did you say to them, hey, this is going to be really16 hard to do both this and Model 3 at the same time?17 A. Those weren't the words that I would have18 used. I would have stuck to just the facts on what19 was in the SolarCity balance sheet that I had seen.20 And I don't recall, honestly, the detail of the21 discussion, but I would have stuck to -- I would22 have stuck to these points because I was pretty23 versed in them, and I wanted to make sure that they24 were part of the decision-making process.25 Q. And the points that we're talking about --

Page 25

1 these points are the ones that are primarily in the

2 near-term and medium-term issues; correct?

3 A. Yeah, let's see. These -- change and

4 control -- yeah, the immediate issues are more just

5 stuff that we needed to sort out.

6 Q. Let's go through these for a moment.

7 So do you have some -- did you ever have a

8 conversation about the fact that the market, or at

9 least Moody's, did not think this was a good

10 acquisition or a smart acquisition?

11 A. So is this talking about -- so the nature

12 of the discussions with Moody's and S&P was not

13 about whether or not they thought this was a good

14 acquisition or not. The nature of the discussion

15 with the rating agencies was to go to New York and

16 talk to them and eventually set the company up to be

17 able to do non-resource debt. That was the nature

18 of those discussions. We weren't asking for them to

19 opine on whether or not SolarCity was a good idea or

20 not.

21 Q. But as I understood -- are you aware that

22 S&P actually came out, upon the announcement of the

23 transaction, of -- of the negative credit rating?

24 A. They had a B minus rating on the company

25 before the acquisition, so it's not shocking.

7 (Pages 22 - 25)


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1 Q. Okay.2 A. As a personal aside, the S&P guys, when we3 went to visit them, I was like, ah, it was painful.4 Q. And then the issue specifically with the5 amount of debt, which was the second bullet point6 under near-term issues, do you recall having a7 specific conversation with the board of directors8 about that?9 A. We ended up talking a lot about this, and

10 particularly around the timing of debts coming due.11 I seem to recall, in some of the Evercore analysis,12 there being some charts showing year by year what13 was coming due.14 Q. And also was there some specific15 discussion, again in talking about medium-term16 issues, about the fact that SolarCity doesn't17 generate any cash from operations and has massive18 capex needs? Again, was that something that was19 discussed with the board?20 A. Yes, those points were known to the board.21 Q. And how about the elimination of the solar22 investment tax credits, was that discussed with the23 board?24 A. That was discussed with the board.25 Q. Was there ever a plan that you saw -- some

Page 27

1 written plan as to how to deal with the tax credits2 going away?3 A. I don't recall a specific written plan,4 but there were certainly discussions about how to5 deal with that. Part of it was just classic6 strategy, which is the more solar panels that are7 going to be produced, the unit cost is going to go8 down. It's just a maxim of manufacturing and costs.9 So if you get to that point, then things are going

10 to be okay.11 There's also financial alternatives that12 we discussed. We ended up actually making good13 progress on this, was pushing more loans and cash14 purchases of the solar installations than leases.15 So there were lots of discussions on how to mitigate16 the risk of that solar tax credit going away.17 And there's also -- I vaguely recall18 discussions of different policy remedies that could19 be put in place or whether or not a current20 administration would re-up that or take it away. So21 it was a -- yes, it was discussed.22 Q. Were these discussed before the -- before23 it was decided or before the merger agreement was24 signed or after?25 A. I don't remember the exact timing of the

Page 28

1 merger agreement, but I know these issues were on2 people's minds as we went through the whole process.3 Q. Did you ever see any actual written-down4 plan as to saying, these are the tax credits that go5 away, this is how we're going to make up for the6 loss in tax credits?7 A. I don't recall seeing a specific plan.8 Q. Was there anybody who was assigned with9 that job of saying, how are we to make up with the

10 loss -- the known loss of tax credits?11 A. Sure. I think the SolarCity finance team12 and the leadership team there had to deal with it.13 The entire history of the company was they built a14 pretty compelling financial engine which helped you15 deal with the fact that you were putting long-term16 assets in place with cash flows that came over a17 long period of time, but there was a big upfront18 capital expense.19 So I think SolarCity had done a nice job20 of dealing with the ups and downs of sources of21 financing up to that point in its life.22 Q. Okay. So that we are clear, let me --23 before the merger agreement was signed, was there24 anybody at Tesla who was doing -- who was charged25 with doing an analysis specifically of, how are we

Page 29

1 going to make up for the loss of ITCs?2 A. I think it's certainly something we looked3 at as a part of our overall analysis of the deal,4 but who exactly did it and which spreadsheet it was5 in, I can't tell you.6 Q. Are you saying that you believe that there7 is some plan that almost looks like a balance sheet,8 these are the ITCs that are going to go away during9 time, this is how we're going to make up for that

10 loss?11 A. I don't know if there was or there wasn't.12 Q. It wasn't something that you worked on?13 A. My team may have worked on it.14 Q. But you don't recall ever seeing one?15 A. I don't recall.16 Q. So let's talk -- let's move back to17 February 2016.18 MR. BARON: Can I have the February 29th19 e-mail, please.20 Mark this as Wheeler 2, please.21 (Wheeler Exhibit 2 was marked.)22 BY MR. BARON:23 Q. Showing you what's been marked as24 Wheeler 2, is this a document you have seen25 recently?

8 (Pages 26 - 29)


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Page 30

1 A. Thumb through it real quickly.

2 (Witness reviews document.)

3 A. Long time ago.

4 Q. Litigation is not a fast thing.

5 A. All right.

6 Q. Is this a document you've seen recently?

7 A. Yes, I thumbed through it last week.

8 Q. And it appears that this is on Monday,

9 February 29th. You sent Elon a draft of a model

10 regarding the possibility of acquiring SolarCity;

11 correct?

12 A. Correct.

13 Q. It says, "last 24 hours."

14 When was it that you were working on

15 this -- when was it that Elon had asked you to put

16 this together and --

17 MS. BHALOTRA: I'm sorry.

18 BY MR. BARON:

19 Q. -- did he tell you to start?

20 MS. BHALOTRA: Excuse me. Just for the record,

21 it says, "the last 48 hours."

22 MR. BARON: I'm sorry.

23 BY MR. BARON:

24 Q. "48 hours."

25 A. Yeah.

Page 31

1 Q. So you started 48 hours before, so you2 started Saturday morning or Friday night?3 A. I got a call from Elon on Saturday. And4 then I had a couple of my folks from my team meet5 first thing on Sunday morning, and we tore into this6 for like a 16-hour jam session or something like7 that. It was an awesome Sunday.8 Q. Did you ask Elon why we need to do it9 right away?

10 A. Well, there was going to be a board call,11 so we needed to do some preliminary analysis on it.12 Q. Well, there was going to be a special13 meeting. He was calling a board meeting; correct?14 A. I don't know.15 Q. Well, let me -- just so we have documents16 in front of us so we know what we're talking about.17 MR. BARON: Can I have the board meeting,18 please.19 Let me mark this as Wheeler Exhibit 3.20 (Wheeler Exhibit 3 was marked.)21 BY MR. BARON:22 Q. So have you seen Wheeler Exhibit 3 before?23 This is the minutes of a special meeting of the24 board of directors of Tesla Motors dated25 February 29th.

Page 32

1 Do you see this?2 A. Yeah.3 Q. Have you seen it before?4 A. Yep.5 Q. And you can see it's a special meeting,6 which means that it wasn't regularly scheduled, Elon7 Musk had to have called that special for that to8 happen; correct?9 A. I don't know what the legal procedure is

10 for calling a special board meeting.11 Q. Okay.12 A. I wouldn't have dealt with that.13 Q. So other than Elon saying, "I need this14 for the meeting for Monday," did you ask him why we15 need to do this so fast?16 A. I didn't ask him. I talked to him very17 briefly on Saturday. He said he was thinking about18 doing this deal, and my job as the CFO was to19 evaluate that financially.20 Q. Do you know where he was when he told you21 he wanted the deal done -- he wanted you to put this22 together for the board meeting?23 A. He called me from his plane, so he was in24 air space somewhere. I don't know exactly where he25 was.

Page 33

1 Q. Do you know --2 A. I don't mean to be cheeky.3 Q. No, no. Look, I have -- I think that he4 was actually with his cousin Lyndon in Tahoe at the5 time, but I wondered whether he may have told you6 that.7 A. He did not tell me that.8 Q. And you went -- and you went to the board9 meeting.

10 And did you give this presentation to the11 board or did Elon?12 A. Elon did not give this presentation.13 Wouldn't be a presentation that he would give. I14 walked -- I believe I walked through it briefly.15 Q. And as part of this presentation, you're16 saying that you also discussed the cap- -- some of17 the capital needs that were going to be coming up18 with Tesla as well?19 A. I don't recall us discussing Tesla capital20 needs in that meeting. It's not to say it wasn't; I21 just don't remember if we talked about that or not.22 Q. Did you talk about the Model 3 and that23 this was going to be happening at the same time as24 the Model 3 in that meeting?25 A. To go back to what I said earlier, I do

9 (Pages 30 - 33)


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Page 34

1 remember my two big points being around just

2 automotive production generally. The company needed

3 to be focused on execution. That was my mantra the

4 entire time that I was there. And then the concerns

5 that I've talked about already about the two

6 combined balance sheets.

7 Q. At the time, did you have any

8 understanding about SolarCity's liquidity issues or

9 whether they had any liquidity issues?

10 A. Solely what was available in public

11 information. That's all we had for that fateful

12 Sunday 18-hour jam session.

13 Q. You will agree with me there's nothing in

14 the presentation about SolarCity's liquidity needs

15 or debt covenants or problems they were having

16 meeting any of those; correct?

17 A. Yeah, I don't believe there was anything

18 in the presentation. I suspect it would have taken

19 a lot more diligence to get to that level of

20 specificity.

21 Q. And at that board meeting -- and you can

22 take a look at the minutes -- there was also --

23 Larry Sonsini from Wilson Sonsini was at that

24 meeting.

25 Do you know how he got there or was that

Page 35

1 done by Elon or somebody else? Did you have any2 involvement in getting him there?3 A. No. I wouldn't have.4 Was Larry there physically or on the5 phone?6 Q. I have no idea.7 A. I think he was on the phone, if I8 remember. I don't believe he was there physically.9 But Todd would have dealt with that.

10 Q. And at that meeting, did any of the board11 members say, Elon, why do we need to do this now?12 A. I don't have specific recollection of who13 was saying that. I think it's safe to say that that14 was discussed in the meeting and it was brought up.15 Q. Well, what was the answer? What was the16 answer to, why now?17 A. You can see from what happened, we decided18 not to do it.19 Q. That's not the same answer, though.20 Elon wanted to do this -- as of February,21 he wanted to do that then; correct? He would not22 have asked you to put this together if it was not23 something that he thought he wanted to do then;24 correct?25 A. He wanted to do it.

Page 36

1 Q. Did anybody ask him why?

2 A. I'm sure that was most of what the

3 discussion was in the board meeting.

4 Q. And what was his answer?

5 A. I don't remember exactly what he said on

6 all of this. I do -- the vague recollections I have

7 is repeatedly throughout the process of him

8 referencing all the way back to the master plan and

9 creating a fully integrated sustainable energy

10 company.

11 Q. And I get that there's some concept of

12 adding solar to the Master Plan Part 1.

13 But the question that I was asking was,

14 why now? We have Model 3 happening. We have a lot

15 of things going on. We ourselves have a large debt

16 load. Why do we need to do this now, Elon?

17 Was that question asked?

18 A. I'm guessing it was, but I don't remember

19 what he said.

20 Q. At any time during this process, either in

21 February or June, do you recall Elon ever telling

22 anybody why he needed to do this now?

23 A. I don't recall specifically.

24 Q. And you don't recall whether you ever

25 asked him that question?

Page 37

1 A. Again, my -- I was consistent and clear on2 my concerns with the deal throughout, and it was3 about the balance sheets and it was about execution4 and vehicle manufacturing.5 Q. Now, you considered the work that you did6 in this jam session to be very high level and7 preliminary; correct?8 A. Yeah, that's fair. One day of work, yeah.9 That's fair.

10 Q. I'm not saying it's not a good piece of11 work for one day. I'm just saying it was high level12 and preliminary.13 And the board knew that; correct?14 A. Yeah.15 Q. And if you take a look at the board16 minutes and you'll look on the second page -- the17 back page of the board minutes, you'll see what they18 indicate is that "The board decided not to proceed19 with an offer to SolarCity at this time because of20 the potential effect on management's team time and21 resources in the near term. In the meantime, the22 board authorized management to gather additional23 details and to further explore and analyze the24 potential transaction with SolarCity."25 Do you see that?

10 (Pages 34 - 37)


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1 A. I see that.2 Q. So is it -- was that a fair -- is that a3 fair statement of what happened to the board? Did4 they say, not today, but get us more information and5 we'll talk about it again later?6 A. As I recall, I think that's a fair7 characterization of the discussion.8 Q. The next -- well, let me go back to your9 presentation for one moment.

10 One of the things that was in your cover11 letter and in the presentation itself was the fact12 that it was going to be -- and it's in Exhibit 2 --13 highly dilutive to EPS.14 Do you see that?15 A. Yes.16 Q. And you do a chart on that as well.17 At any time, did you learn that it would18 not be dilutive to acquire SolarCity?19 A. I would have to look at the documents we20 did right before the acquisition. I'm not shocked21 that it was dilutive, at least on an EPS basis.22 Q. Both of the companies had a substantial23 amount of debt and, therefore, it would not be24 surprising to you that adding a lot of debt to a lot25 of debt would be a dilutive acquisition?

Page 39

1 Is that a "yes"? You have to say yes when2 you're on the record. She has to take you down3 and --4 A. Yes.5 MS. BHALOTRA: Objection to form on that6 question.7 BY MR. BARON:8 Q. And at no -- you don't recall ever saying,9 oh, I guess this isn't a dilutive acquisition;

10 correct?11 A. I don't recall ever saying it wasn't12 dilutive. I was focused more on cash flow and --13 more on cash flow.14 Q. And, again, I'm talking as of the15 presentation on February 29th, 2016, you were of the16 belief that there was a $190 million drain on their17 cash flow over the last year.18 That was the information you had; correct?19 A. That was -- I think there was an analyst20 report that had said that, and it was the only data21 point that we had. So, yeah, based on the available22 data, sure.23 MR. BARON: Let me have the May 31st board24 meeting, please.25 Mark this Exhibit 5 -- Exhibit 4.

Page 40

1 (Wheeler Exhibit 4 was marked.)2 BY MR. BARON:3 Q. Showing you what's been marked Exhibit 4.4 This is the minutes of a regular meeting of the5 board of directors dated May 21st [sic], 2016. And6 it appears that you were also present at this7 meeting.8 Do you recall being at this meeting?9 A. I don't recall this specific meeting, but

10 if it was a board meeting, I was there. I wasn't at11 all the board meetings.12 Q. Do you recall that at the next13 regular-scheduled meeting after the special meeting14 in February, the idea of SolarCity was again brought15 back on the agenda?16 A. I vaguely, vaguely recall Elon coming in17 and there being some discussion of it, but the18 substance of the discussion, I don't.19 Q. Do you recall whether there was anything20 else discussed at the meeting other than just the21 acquisition of SolarCity?22 A. If it was a regularly scheduled board23 meeting, I would have given an update on the24 financials. There would have been an update on25 operations. It would have been the typical

Page 41

1 discussion that you have at a board meeting.2 Q. But I don't see any of those. And do you3 see any indication that those took place at this4 meeting?5 MS. BOTNICK: Object to form.6 (Witness reviews document.)7 THE WITNESS: I don't see anything, but there's8 also a bunch of stuff redacted.9 BY MR. BARON:

10 Q. But that would have been lawyers. That11 would not have been your update on financials;12 correct?13 A. I don't know. I didn't redact it.14 Q. Good point.15 Did you do -- and we looked at those last16 February 29th minutes.17 Did you do any additional analysis between18 February 29th and that all-night jam session and19 this meeting on May 31st to do any further analysis?20 A. My recollection on this is that I did not.21 And, again, it kind of goes back to where I was22 focused at the time. It was execution in getting23 cars out the door. And there was a lot going on24 with the company just in regards to that.25 And I think I would have prioritized my

11 (Pages 38 - 41)


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Page 42

1 time towards that and a little bit less towards any2 potential future acquisition.3 Q. One of the comments on the 29th board4 meeting, and you read it just a moment ago, was that5 the decision to push it off was the potential impact6 on management team's time and resources in the near7 term.8 Was there anything that occurred that9 expanded the capacity of management's time and

10 resources between February and May?11 Did things get easier?12 A. There were ebbs and flows, certainly. In13 this specific time frame that you're talking about,14 I don't know. It was a long time ago. There were15 ebbs and flows. It was never an easy place to work,16 but there were times where manufacturing would be17 rolling along and -- things would be hit, and I18 think the stress level and the tenor of things would19 calm down a bit. So there were ebbs and flows. If20 one of those ebbs or flows occurred during this time21 frame, between these two board meetings, I don't22 know.23 Q. There's nothing you specifically recall24 like, oh, we solved all of our Model 3 problems,25 we're ready to go.

Page 43

1 That didn't happen; right?

2 A. I don't recall anything like that.

3 Q. And, in fact, the Model 3 problems between

4 February and May probably just got more complicated

5 during that time period?

6 A. So again --

7 MS. BHALOTRA: Object to form.

8 THE WITNESS: It's hard to layer the timelines

9 on each other because a lot of things were happening

10 in the future. But I got myself pretty into the

11 details on Model 3. And as the Model 3 progressed,

12 things got clearer and clearer, as you would expect

13 from any product launch. The ebbs and flows of

14 that, don't know; I don't know how they aligned.

15 BY MR. BARON:

16 Q. Now, moving to June 20th -- on June -- at

17 the meeting on May 31st, do you recall that the

18 board of directors gave authority to hire a

19 financial advisor and to move forward with the

20 possibility of an acquisition of SolarCity?

21 Do you recall that?

22 And you can look at this -- it's page 2,

23 very top.

24 A. Yes, I believe that this happened at the

25 meeting. I don't recall this specific conversation,

Page 44

1 but --2 Q. Did you have any role in hiring or3 bringing about the financial advisors between4 May 31st and I guess about three weeks later,5 June 20th?6 A. Had they been hired on June 20th?7 Q. I will show you the next document.8 So June 20th, first off, was the e-mail,9 Exhibit 1, that's in front of you where you raise

10 the capital structure consideration; correct?11 A. Yep.12 Q. Does that refresh your recollection as to13 whether or not Evercore had been hired by then? It14 does not have to. I'm just asking.15 A. Yeah -- no, I'm just trying -- I'm trying16 to understand your question. It sounds like was I17 involved in the process to choose the financial18 advisors? Yes, I was.19 Q. In what way were you involved?20 A. So I think Todd and I, we kind of21 cochaired the selection committee. And we did the22 interviews with the potential advisors. And then I23 think we ultimately made the recommendation to hire24 Evercore.25 Q. Who did you make the recommendation to?

Page 45

1 A. Good question. I'm guessing it would have

2 been Robyn, but I'm not --

3 Q. Why do you guess it would have been Robyn?

4 But Denholm you're talking about.

5 A. Yeah.

6 I seem to recall that she had a lead role

7 in some of this, but you know what, I don't recall.

8 And Todd would have made -- he would have delivered

9 the final recommendation to whoever we had assigned

10 to decide on or to bless our recommendation.

11 MR. BARON: So can I have the June 30th

12 presentation.

13 MR. HUFFMAN: June 20?

14 MR. BARON: June 20, yes.

15 Mark this Exhibit 5.

16 (Wheeler Exhibit 5 was marked.)

17 BY MR. BARON:

18 Q. Showing you what's been marked Exhibit 5.

19 It appears to be discussion materials and a

20 presentation from Evercore regarding the acquisition

21 of SolarCity.

22 Do you recall this document?

23 A. On June 20th? So we had hired them by

24 June 20th.

25 Q. Yes.

12 (Pages 42 - 45)


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Page 46

1 MS. BHALOTRA: Take your time to look at it.2 (Witness reviews document.)3 BY MR. BARON:4 Q. The question was really -- do you recall5 what the question is I'm asking? I was asking if6 you recall the document.7 A. Yes.8 Q. I'm not trying to slow you down. And your9 counsel did say feel free to take your time to

10 review it. I don't have that many questions on it.11 First are on its preparation.12 Did you do any analysis between May 31st13 and June 20th yourself other than to just discuss14 and hire the bankers?15 A. My recollection is they -- the bankers did16 a lot of the analysis, and we provided input where17 necessary and helpful. But I don't recall doing18 loads and loads of incremental analysis on top of19 what the bankers were doing.20 Q. Did you get a copy of the presentation21 before it was presented to the board of directors?22 A. I'm guessing that I did.23 Q. Did Elon?24 A. Don't know.25 Q. Did you meet with Elon and discuss any of

Page 47

1 the issues within the presentation at any time prior2 to the board meeting?3 A. I don't recall us getting together to talk4 about it.5 Q. I'm going to ask you a couple of things if6 you can -- again, understand it was a while ago.7 Can you turn to page 8, please, of the8 document itself.9 A. This page 8?

10 Q. No. Page 8 of the actual presentation.11 It's TESLA 14.12 A. Yes.13 Q. Do you recall this analysis being14 presented to the board of directors?15 A. I don't recall the analysis being16 presented.17 Q. Again, this isn't a surprising analysis18 because you had previously identified that it was19 going to be -- it would likely be a dilutive20 acquisition; correct?21 A. This analysis is not surprising to me.22 Q. Do you recall whether -- because you're23 the finance guy, not me.24 But have you ever used an adjusted EBITDA25 per-share metric before? Have you ever seen that

Page 48

1 used?2 A. I think this is banker stuff. And without3 understanding what adjustments they were making to4 the EBITDA, it's hard for me to answer the question.5 Q. As a metric -- until this, I actually have6 never seen a metric of an EBITDA per-share analysis.7 I've seen EPS, that's fairly common. But EBITDA per8 share I've never seen as a metric that was used very9 much.

10 Have you seen it before?11 A. I think there are lots of different ways12 to do valuations of companies.13 Q. Now, an EBITDA analysis or EBITDA per14 share, that doesn't account for debt servicing;15 correct?16 A. I don't know how they did this analysis.17 Q. Typically, since EBITDA would be before18 depreciation, et cetera, you would not expect an19 EBITDA to take into account debt servicing; is that20 a fair statement?21 A. So -- yes, that's a fair statement.22 Q. And for SolarCity -- debt servicing was a23 real issue at SolarCity. They had a lot of debt and24 they had a lot of debt that needed to be serviced;25 correct?

Page 49

1 A. It was a real business consideration.2 Q. Did the board -- was there any discussion3 at the board level as to whether EBITDA per share or4 EPS was a more viable methodology for determining5 whether this transaction made sense?6 A. I don't recall if there was any discussion7 like that at the board.8 Q. If you would turn to, again, internal9 document page 47. That's TESLA 56.

10 Do you see the "Overview of the Financing11 Process"? Were you aware of this -- the financing12 process at SolarCity prior to this presentation?13 Did you understand how they were -- how they were14 dealing with their cash and how they were financing15 their installations?16 MS. BOTNICK: Object to form.17 THE WITNESS: The balance sheet and the18 financing process at SolarCity was very complex.19 And I think I relied a little bit on my team and20 folks with expertise in financial markets to21 understand this. And then, of course, we relied on22 the bankers, and I think they laid it out pretty23 clearly.24 BY MR. BARON:25 Q. Did you have an understanding of that

13 (Pages 46 - 49)


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Page 50

1 before the bankers laid this out?2 A. I imagine I was starting to come up to3 speed on how all this worked as we were going4 through the process. Exactly at what point in time5 I had a decent understanding, I can't say.6 Q. Did you have an understanding as to how7 dependent their financing process was on the ITC8 program?9 A. I knew that their financing process was

10 complicated and they had built a pretty robust,11 impressive financing machine to finance these,12 again, long-term cash flows that required heavy13 upfront capital investment. I don't recall how I14 felt about the ITC specifically within that15 construct.16 Q. And do you recall whether there was a17 discussion with the board about how important the18 ITCs were to that construct?19 A. I don't recall a specific discussion.20 It's not to say that it wasn't discussed, but I21 don't recall a specific discussion.22 Q. Do you recall a discussion about the fact23 that -- any discussion about the fact that the ITCs24 were winding down and how that would affect their25 ability to continue to finance?

Page 51

1 A. Again, I think -- my feeling on it was2 they had figured out how to build this impressive3 kind of financial machine to finance this business.4 And lots of things can change. Tax credits can go5 away, interest rates can go up, capital markets can6 freeze for any number of reasons.7 And I don't remember being fixated on any8 one issue. Just looking at the totality of it and9 then seeing what they had done historically, I was

10 like, well, they seem to have been able to navigate11 troubled waters in the past.12 Q. Can you turn to page 30 for me, please.13 A. 30?14 Q. I'm sorry. 50 internal. Sorry. I15 misspoke or I can't see well.16 MS. BHALOTRA: TESLA 59?17 MR. BARON: TESLA 59, yes.18 BY MR. BARON:19 Q. In this do you see -- do you recall the20 discussion about the recurring cash generation of21 PowerCo?22 A. Yuck. This stuff was super complicated.23 Q. Which is actually my question.24 In this, they said further diligence would25 be required to fully analyze the historic and

Page 52

1 projected cash flows.2 Was that a fair understanding that, as of3 this point, it was complicated and it was unclear4 from the public record how the cash flows were5 actually working through PowerCo?6 A. I think there was probably a recognition7 that some more diligence needed to be done on these8 issues.9 Q. Did you have an understanding of

10 historical and projected cash flow characteristics11 of PowerCo from the public record?12 A. My recollection is that I wanted to do13 more diligence to understand it better.14 Q. By "diligence" you mean look into --15 internal at company documents as opposed to just the16 public record?17 A. Correct.18 MR. BARON: Can I have the June 20th minutes19 for a moment, please.20 BY MR. BARON:21 Q. Actually, I don't think I need the22 minutes, that's fine, unless you want to see them to23 refresh your recollection.24 Do you recall, at the meeting in which25 this presentation was undertaken, whether or not

Page 53

1 there was a discussion of some greater capacity of2 management to undertake the SolarCity acquisition in3 June than there was in February?4 Let me see if I can actually turn that5 into English.6 Do you recall whether at the board7 meeting on June --8 A. Can you do it in Latin?9 Q. No. I don't think I can do it in English.

10 A. Either can I. It would be fun to try.11 Q. I have been watching Rome, so maybe that's12 going to help me out.13 Are you aware of whether -- at the meeting14 on June 20th whether there was a discussion of15 whether there was some greater capacity to undertake16 the SolarCity acquisition simultaneously with the17 Model 3 program that did not exist in February when18 it was first brought to the board?19 MS. BHALOTRA: Object to form.20 THE WITNESS: I don't recall if there was a21 discussion of that or not. It's not to say it22 didn't happen; I just don't recall.23 BY MR. BARON:24 Q. You did not give that presentation that25 there was some greater capacity; correct?

14 (Pages 50 - 53)


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Page 54

1 A. I did not give a presentation as to the

2 capacity of the management team at any given point

3 in time.

4 Q. Nor do you recall anybody else doing so?

5 A. I don't think anybody would give an

6 analysis of that strictly because it's almost an

7 impossible thing to analyze.

8 Q. Do you recall anybody on the board at this

9 meeting on June 20th asking Elon the question, why

10 now? Why should we buy SolarCity now when we are in

11 the middle of the Model 3 project?

12 A. Yeah. I don't recall anyone asking that

13 specific question.

14 Q. And do you recall, at this meeting on

15 June 20th, whether there was any discussion about

16 the liquidity issues that were ongoing at SolarCity

17 at this meeting?

18 A. Yeah. Fair question.

19 My understanding of the nature of this

20 document was it was still based on public

21 information. So I think some of the more detailed

22 questions about liquidity probably didn't come up as

23 a part of this. This was probably more broad brush

24 strokes. That's my vague recollection.

25 Q. But you knew that Elon Musk was chairman

Page 55

1 of the board of SolarCity; correct?2 A. I did know that.3 Q. And there were other people on the board4 of directors that had relationships or sat on the5 board of SolarCity as well; correct?6 A. Um-hum.7 Q. "Yes"?8 A. Yes.9 It was no secret.

10 Q. Again, it was no secret.11 And so in this meeting in which the12 question was -- or could have been, why now, did13 anybody that you recall stand up and say, we should14 note that there are some liquidity issues ongoing at15 SolarCity that may be an explanation for the timing16 of this acquisition?17 MS. BOTNICK: Objection as to form.18 THE WITNESS: Again, this meeting was a long19 time ago, and the exact texture of the conversation20 I don't remember. But I don't recall anyone making21 this specific point you're asking about.22 BY MR. BARON:23 Q. Nor do you recall -- do you recall Elon or24 anyone else saying, if we do not do this now, they25 are going to have to find some source of cash,

Page 56

1 including maybe going back to the public equity

2 markets, "they" being SolarCity?

3 MS. BOTNICK: Object to form.

4 THE WITNESS: I don't recall that coming up in

5 the meeting.

6 MS. BHALOTRA: Is this a good time for a break,

7 Counselor?

8 MR. BARON: Sure.

9 THE VIDEOGRAPHER: Going off the record. The

10 time is 2:09 p.m.

11 (Recess taken.)

12 THE VIDEOGRAPHER: Back on the record. The


14 (Whereupon, Mr. Ehrlich has not rejoined

15 the proceedings.)

16 MR. BARON: Mark this as Exhibit 6, please.


18 BY MR. BARON:

19 Q. Showing you what's been marked as

20 Exhibit 6. It's an e-mail from Justin McAnear to

21 Susan Repo, and you are cc'd on this as well.

22 Have you seen this document recently?

23 A. I'm not sure.

24 Q. If you take a look at the July 4th Susan

25 Repo e-mail, "Happy 4th," you note that it says that

Page 57

1 "SolarCity mentioned they needed a bridge loan of2 around $300 million to get through the quarter."3 Do you see that?4 A. Yep.5 Q. Prior to July 4th, were you aware of any6 immediate cash needs of SolarCity?7 A. Let me make sure I understand this.8 Q. Prior to this e-mail on July 4th, were you9 aware of any immediate cash needs that SolarCity

10 had?11 A. I don't know. It was a long time ago.12 Clearly identified it here.13 Q. And you have no recollection of whether,14 at any of the prior board meetings or any15 discussions with bankers prior to this date, you16 were aware of the cash -- immediate cash needs of17 SolarCity?18 A. The exact time frame for when we knew that19 they needed cash I don't recall.20 Q. Above, there's a discussion that talked21 about Goldman -- "heard from Goldman that they22 needed $500 million and had preapproval."23 Do you recall any of the details as to24 whether or not Goldman had guaranteed that they25 could make that $500 million available or whether

15 (Pages 54 - 57)


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Page 58

1 that was just some preliminary agreement or some

2 preliminary indication by Goldman?

3 A. So that would have been worked on the

4 SolarCity finance team, so I don't know what the

5 exact discussions with Goldman were.

6 Q. So as of this point, you have no idea how

7 solid the Goldman potential bridge loan was or was

8 not?

9 A. I would not have known at this time.

10 Q. You can put that aside.

11 MR. BARON: Can I have the Sunday, July 10th,

12 Jason Wheeler e-mail.

13 Can you mark this as Exhibit 7.


15 MS. BHALOTRA: Counsel, is there a Bates stamp

16 on this document?

17 MR. BARON: No. I don't know. We'll find one.

18 BY MR. BARON:

19 Q. I'm showing you a Jason Wheeler e-mail

20 from Sunday, July 10th, 2016 to Todd Maron. It is

21 the last in an e-mail chain, the first one being

22 July 10th, 2016 from Elon Musk -- or from Elon Musk

23 to Todd Maron. And that's forwarding an e-mail on

24 July 10th from Lyndon Rive to Elon Musk.

25 Do you recall seeing this document?

Page 59

1 A. I don't recall seeing this.2 Q. Now, in this document you note attached to3 it is an updated liquidity by month, and it4 indicates that inter month -- intra-month lows5 showed that the cash balance of SolarCity was below6 their debt covenant on 8 months out of 12 in 2016.7 Do you see that?8 A. I count seven, but --9 Q. Look at 73 on the first -- 73, 93, 105,

10 173. That one is 114. That's all still below 93,11 86 and 107.12 A. What was the covenant?13 Q. 116.14 A. The covenant was 116?15 Q. Yes.16 A. Oh, okay. That's in the notes. Okay.17 Sure. Yes.18 Q. Up until you received this e-mail, were19 you aware of the liquidity position of SolarCity and20 the risk of tripping the liquidity covenants during21 2016?22 A. I don't recall exactly when we discovered23 this in the diligence process. So I can't say, in24 relation to this date, when I knew.25 Q. Were you aware of the cross-default on the

Page 60

1 revolver that existed?2 A. Sounds familiar. I remember discussing3 that.4 Q. Do you know when you became aware of the5 cross-default?6 A. I don't.7 Q. Do you understand that to mean that even8 on the non-recourse debt, if they defaulted on more9 than $10 million on that, that was a cross-default

10 to the revolver?11 A. That specific language around it I don't12 recall. I don't recall the details of it.13 Q. Does that sound wrong to you?14 A. That's a judgment question. I don't know.15 I would have to actually go back and review the16 documents and the details of everything to make --17 to opine on it.18 Q. As of July 10th, you said, "The liquidity19 covenant on the revolver is new news."20 Do you see that on the very first line of21 this document?22 A. Um-hum.23 Q. What did you mean by, "The liquidity24 covenant on the revolver is new news"?25 A. Let me read the e-mail.

Page 61

1 (Witness reviews document.)2 A. Okay. So can you repeat the question.3 Q. The question is, what did you understand4 it to mean when you said that the liquidity covenant5 was new news to you?6 A. I'm guessing I was not aware of the7 details of the liquidity covenant at the time --8 Q. Does that mean --9 A. -- and that was new information to me.

10 Q. Does that mean you didn't know there was a11 liquidity covenant or that you didn't know that they12 were at risk of tripping the liquidity covenant?13 A. It's hard to say, unfortunately.14 July 10th, 2016, Jason was ambiguous. I'm not being15 cheeky. I don't know exactly what I meant when I16 said that.17 Q. Well, it's not uncommon that revolvers18 have liquidity covenants.19 A. Sure.20 Q. The Tesla revolver had a liquidity21 covenant; correct?22 A. Yes, it did.23 Q. So the fact that they had a liquidity24 covenant on their revolver is not new news.25 You probably assumed that; fair?

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1 MS. BOTNICK: Object to the form.

2 THE WITNESS: Maybe, maybe not. Maybe, maybe

3 not. Because all different types of debt

4 instruments have all different types of covenants.

5 So I wouldn't say, oh, this is a revolver, it's got

6 a liquidity covenant. Maybe, maybe not. I don't

7 know.

8 MR. BARON: Can I have the July 14th e-mail

9 with -- to Radford Small, please, from Tanguy.

10 MR. HUFFMAN: This one; right?

11 MR. BARON: Yes.

12 Mark this as Exhibit 7, please.

13 THE REPORTER: 8.

14 MR. BARON: Then don't mark it as Exhibit 7.


16 BY MR. BARON:

17 Q. I'm showing you a series of e-mails as

18 Exhibit 8. The last e-mail is July 14th, 2016 to

19 Radford Small from Tanguy Serra -- take that back --

20 yeah, to Radford Small from Tanguy Serra. The very

21 first e-mail in the chain appears to be from Radford

22 Small to Lyndon Rive on July 14th. I do not believe

23 that you were on this e-mail chain.

24 Does this look familiar to you in any way?

25 A. No.

Page 63

1 Q. Let's go through it. Because I want to

2 know if there's information in this that you knew

3 real-time. So go to the very last e-mail because

4 it's an e-mail chain, and it goes from back to

5 front. You see on July 14th, there's a discussion

6 that just says, "Just finished a call with Tesla.

7 They're putting the bridge loan completely on us."

8 Do you see that line?

9 A. I see it.

10 Q. Were you on the call with Radford saying

11 the company is not going to provide a bridge loan?

12 A. I don't recall if I was on the call or

13 not. I was aware of the issue, but I don't recall

14 if I was on that specific call.

15 (Whereupon, Mr. Ehrlich rejoined the

16 proceedings.)

17 BY MR. BARON:

18 Q. How did you learn that the company was not

19 going to provide a bridge loan?


21 THE WITNESS: So could you be more specific on

22 your question.

23 BY MR. BARON:

24 Q. Well, did you make the decision to not

25 provide a bridge loan from Tesla?

Page 64

1 A. I was not in favor of doing a bridge loan.2 Q. Why?3 A. Because I thought it was important for4 SolarCity to stand on their own.5 Q. What does that mean?6 A. I didn't want to use Tesla's balance sheet7 to get them through to the end of the transaction.8 Q. Why not?9 A. Because they're a standalone company.

10 Q. Okay. Now, who made the decision -- you11 recommended against a bridge loan.12 Did anybody else recommend against a13 bridge loan from Tesla?14 A. I think my team, we were pretty against15 it.16 Q. Who else was on your team?17 A. So Susan Repo, Eric Senay were probably18 the two principal folks in those conversations.19 They were my treasury folks.20 Q. Was anyone else against it?21 A. I'm sure there were; exactly who, I don't22 know.23 Q. Did Elon take a view on it?24 A. I don't recall if he did or not.25 Q. Did the board vote on it, on whether to

Page 65

1 give a bridge loan?2 A. I don't know that there would have been a3 board vote on something like that. There may have4 been counsel from the board on it. I specifically5 remember my point of view. I had a responsibility6 for Tesla's balance sheet.7 Q. So if you go up the chain -- that was at8 5:06. Up the chain, it says -- there's a question,9 "What is happening here? Is this Elon not speaking

10 with his team again?"11 Again, was the decision not to give a12 bridge loan discussed with Elon?13 A. I'm sure that it was discussed with Elon.14 And, again, my opinion on this was strong. I didn't15 think it was the right thing to do, and we didn't do16 it.17 Q. Now, if you look next to -- "I thought we18 got clear direction they want to buy Silevo and then19 the rest of the company."20 Do you see the rest of that line?21 A. Yes.22 Q. Do you recall there being bandied about a23 plan for Tesla to buy Silevo first as an asset to24 provide the cash and then buy the rest of the25 company?

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Page 66

1 A. Yeah.

2 Q. You're laughing. Why?

3 A. Because it was a dumb idea.

4 Q. Whose idea was it?

5 A. I'm not sure whose it was. I think that

6 may have come from SolarCity, but I can't

7 specifically remember.

8 Q. Do you remember whether or not Elon Musk

9 ever indicated that that would be something that

10 Tesla would do?

11 A. I don't know if he ever did or not.

12 Q. Did you ever have a conversation with Elon

13 Musk about it?

14 A. I don't remember if I did, but if I did, I

15 would have told him what I just told you, it was a

16 dumb idea.

17 Q. Why was it a dumb idea?

18 A. To buy an asset from -- it's the same

19 thing as giving them a bridge loan.

20 Q. At the time that that was discussed, did

21 you have some understanding as to what was happening

22 with their other sources of potential bridge loans

23 from Goldman and Morgan Stanley or anybody else?

24 A. Yeah, the things that I recall from this

25 period are that it was a -- there was a bunch of

Page 67

1 activity to try and get bridge financing lined up.

2 And, also, the overlying atmospherics here were once

3 the deal was announced, the capital markets

4 tightened for SolarCity, which is logical. It's

5 what you would expect because it becomes uncertainty

6 as to whether they're going to be acquired by Tesla.

7 So I was somewhat sympathetic to the issue

8 that simply by announcing the deal, that the capital

9 markets had tightened for SolarCity. So I was

10 interested in helping come up with a reasonable

11 solution or opining on that, but, again, a bridge

12 loan, buying Silevo, no.

13 Anything that had to do with leveraging

14 Tesla's balance sheet to do that I was against, but

15 I was not against advising and helping them find a

16 solution.

17 Q. Well, at that time, did you look at their

18 balance sheet and analyze whether or not -- other

19 than -- other than the announcement whether or not

20 their balance sheet showed that they were a good

21 credit risk?


23 THE WITNESS: I think I've been consistent with

24 my view on this. They had a risky balance sheet

25 that was enabled by the financing machine that they

Page 68

1 had built. And my job as a CFO is to think about2 interest rate risk, to think about liquidity risk,3 to think about all these things. And I analyzed it4 through green-shaded glasses, if you will.5 BY MR. BARON:6 Q. But they had significant liquidity risk,7 interest risk. All of those risks were significant8 given that they were financing through these9 complicated mechanisms; correct?

10 MS. BOTNICK: Object to form.11 THE WITNESS: So in general, any balance sheet12 that has a dollar of debt on it has those risks.13 BY MR. BARON:14 Q. So you didn't think there was anything15 unique about SolarCity's risks.16 A. I thought that the innovation they had17 done on building that financing engine was18 interesting, and it needed a lot of diligence to19 really understand how it worked.20 So is what they were doing unique in the21 history of capitalism? Probably not, but it was22 something, again, as a CFO, we needed to understand23 and needed to get our arms around.24 Q. Are you aware -- do you know who held the25 revolver for SolarCity?

Page 69

1 A. Not off the top of my head.

2 Q. Were you aware that it was BAML? Does

3 that sound familiar to you?

4 A. Sounds familiar.

5 Q. Were you aware that BAML sent in a risk

6 team in order to evaluate SolarCity? During this

7 time.

8 A. I don't recall. I don't recall.

9 Q. Would that have been something that you

10 thought was at least interesting in the course of an

11 acquisition, whether or not the bank holding the

12 revolver would send in a risk team?

13 A. Banks are -- they deal with risk. And if

14 you have a situation, like we described, where we

15 announce a deal and suddenly the capital markets get

16 dry for a company, it wouldn't surprise me that they

17 would send in a team to understand what was going on

18 with their investment.

19 Q. In July of 2016 -- just so we have timing,

20 June was the meeting where it was decided that they

21 would start negotiating with SolarCity.

22 A. Yes.

23 Q. By middle of July, KPMG was brought in on

24 the SolarCity side; correct?

25 A. KPMG? Why was KPMG -- were they the

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Page 70

1 auditors?2 Q. I'm asking you. They were brought in by3 Tesla.4 A. I don't recall.5 Q. You don't recall being the person who6 brought in KPMG?7 A. Can you remind me what KPMG's role was?8 Were they doing --9 Q. Purchase price accounting or giving

10 consulting on the --11 A. Oh, sure. Yeah.12 Q. -- acquisition allocation.13 A. Okay. Yeah.14 Q. Were you the person that hired --15 A. Yeah, I would have -- yep.16 Q. And they were helping you do due17 diligence; correct?18 A. I don't recall if we were using them19 specifically for purchase price accounting or if20 they were doing more diligence on the debt21 issuances. I don't recall exactly what their scope22 of work was.23 MR. BARON: Can you give me the July 19th24 investment.25 Do you need a date?

Page 71

1 MR. HUFFMAN: What's the date?2 MR. BARON: It's the 7/18 Chris Jenny to Jason3 Wheeler.4 Can you mark this next in order.5 (Wheeler Exhibit 9 was marked.)6 BY MR. BARON:7 Q. Showing you what I've marked as Exhibit 9.8 It's a cover e-mail from Chris Jenny to you dated9 July 18th talking about the Model 3 investment

10 update. Just have a couple of questions that I'm11 hoping you can explain for me.12 Can you turn to page 4 of the document,13 which would be TESLA 247585.14 Can you explain what this chart means?15 (Witness reviews document.)16 A. It looks like it's a waterfall showing17 what we believe to be the capex requirements for18 Model 3 and how they evolved over time.19 Q. And what does it say? Does it say that20 the capex needs are becoming smaller?21 A. Smaller. Um-hum.22 Q. And so does it mean that you're getting a23 better handle on the Model 3 or a less good handle,24 or you had the inaccurate assessment of the costs?25 A. I would characterize this as saying --

Page 72

1 just by looking at some of this specificity --2 second time I've had trouble with that word -- of3 the numbers, that we were getting a good handle on4 it and we were looking for ways to lower the overall5 capex.6 Q. Let me --7 A. This is a good chart.8 Q. So now go -- if you go to page 5 and 6.9 What are these charts? What do these

10 charts indicate?11 A. So, yeah, so these are -- these are cash12 balance forecasts. And they are trying to depict --13 what's going to happen is we poured capital into the14 Model 3 production and, as the cars started to come15 off the line and we started to generate cash flow16 from them, what the cash needs -- what was going to17 happen to the cash balance of the company.18 Q. And so, good or bad, this is bad because19 you were $1.7 billion below the minimum cash20 balance; right?21 MS. BOTNICK: Object to form.22 THE WITNESS: No, I wouldn't describe it as23 bad. This is just the forecast and the facts. And24 you could look at what's on the right half of that25 chart and say this is great.

Page 73

1 BY MR. BARON:2 Q. Now, turn to page 9 of this document.3 Explain to me what the capex phasing4 12-month deferral was.5 MS. BHALOTRA: We're on 7590?6 MR. BARON: Yes, 7590.7 THE WITNESS: 7590. Let me see.8 I believe this was looking probably at a9 scenario where possibly we slowed down the ramp of

10 the Model 3.11 BY MR. BARON:12 Q. And what that would have done would have13 been reduced the amount below the minimum cash14 balance that you ultimately would have had to get15 to; correct?16 A. That's correct.17 Q. So that was -- if you decided that it was18 too risky to be $1.7 billion below the minimum cash19 balance, you could push out the ramp and just stay20 to $1.2 billion below the minimum cash balance?21 A. That's right.22 Q. Explain to me what the minimum cash23 balance was.24 A. I believe the minimum cash balance was a25 comfort level that we had where, looking at

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Page 74

1 intra-quarter lows in cash and unexpected2 circumstances arise, et cetera, like the minimum3 amount of cash that we wanted on the balance sheet4 at any given time.5 Q. Well, you had a liquidity covenant for6 your revolver as well at Tesla; right?7 A. I don't recall us having a revolver. We8 had an asset-backed line and a couple of other debt9 instruments. And if they had liquidity covenants, I

10 don't recall. They may have. I don't think the ABL11 would have had a liquidity covenant.12 Q. If you would turn to page 18, which is13 247599.14 Can you explain this chart to me?15 A. It looks like it's looking at various16 launch dates or start of production through time and17 the positive impact that would have on that cash low18 point that we were just talking about.19 MR. BARON: Can I have the July 19th board20 minutes, please.21 Mark this Exhibit 10.22 (Wheeler Exhibit 10 was marked.)23 BY MR. BARON:24 Q. Now I'm showing you what is a special25 meeting of the board of directors of Tesla. Again,

Page 75

1 it was -- do you recall being at this meeting on2 July 19th?3 A. I must have been there.4 Q. It identifies you as being there. In5 fact, on page 2 of this document, TESLA 1474, it6 indicates that you then reported to the board the7 results of the financial due diligence at SolarCity.8 Do you see that?9 A. I see that.

10 Q. And in this discussion, you specifically11 informed the board that the company had rejected the12 request for the -- or rejected a request for bridge13 financing.14 Do you see that?15 A. Which paragraph?16 Q. Same paragraph, "Mr. Wheeler then17 reported."18 A. Yes, I see it.19 Q. All right. Was the board aware that -- of20 the liquidity needs and rejection of the bridge loan21 prior to this meeting?22 A. I can't recall.23 Q. And as of this meeting, did you know the24 status of any discussions that SolarCity was having25 with any other potential bridge financiers?

Page 76

1 A. I don't know at this specific point in2 time what the status was of any of those3 discussions.4 Q. Was there a discussion specifically about5 the chart that you were provided on July 10th in6 which SolarCity was -- had indicated that it would7 be tripping its debt covenants a number of times8 during 2016 -- or was at risk of tripping its debt9 covenants throughout 2016?

10 MS. BHALOTRA: Object to form.11 THE WITNESS: Could you repeat the question.12 BY MR. BARON:13 Q. Yes.14 Did you share with the board the e-mail15 that you received that showed that SolarCity16 believed that it was at risk of tripping its debt17 covenants a number of times during 2016?18 A. I don't think that I would have shared an19 e-mail with the board. It may have been discussed,20 but I don't recall the form of this discussion.21 Q. Do you have any recollection of sharing22 with the board the information that the company was23 at risk of tripping its debt covenants a number of24 times in 2016?25 A. I don't recall a specific instance of

Page 77

1 informing the board.2 Q. Are you aware whether anyone informed the3 board of that?4 A. I would speculate that someone had5 informed the board and folks on the board knew of6 the issues because the board was pretty deeply7 involved in what was going on on a day-to-day basis,8 but the specific conduit and who had those9 discussions, I can't recall.

10 Q. Again, do you recall anyone at the board11 discussing with Mr. Musk again why does he think12 Tesla should buy SolarCity now?13 MS. BHALOTRA: Object to form.14 THE WITNESS: At this meeting, I don't recall15 if that discussion took place or not.16 BY MR. BARON:17 Q. Again, do you recall whether anyone18 discussed whether or not the company was in better19 shape with staffing to handle the SolarCity20 acquisition in July than it was in February?21 A. I don't recall a discussion of that.22 MR. BARON: Can I have the July 20th e-mail23 from Justin McAnear.24 THE WITNESS: J. Mac. Justin McAnear. He's a25 good guy.

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Page 78

1 MS. BHALOTRA: Do you want some water?2 THE WITNESS: Anything with caffeine in it3 would be fabulous.4 MR. BARON: Mark that Exhibit 11, please.5 (Wheeler Exhibit 11 was marked.)6 (Discussion off the record.)7 BY MR. BARON:8 Q. So I'm showing you what's been marked as9 Exhibit 11. It's an e-mail from Justin McAnear to a

10 number of people, including you, dated July 20th,11 2016.12 Who is Justin McAnear?13 A. He was our VP of finance. He was14 responsible for planning and analysis. He was one15 of my direct reports.16 Q. In this, there -- in connection with the17 acquisition, there was some level of due diligence18 that was called for in which SolarCity did some due19 diligence of Tesla; correct?20 A. I remember them wanting to do due21 diligence of us, reverse due diligence.22 Q. And you considered that sort of a23 check-the-box sort of a thing. You didn't put a lot24 of weight or effort into that process; correct?25 A. We were buying them.

Page 79

1 Q. Which means --

2 A. Which means it's our job to do the

3 diligence of them, not their job to do the diligence

4 of us.

5 Q. And I think Justin put it another way

6 which was, "It's like a car accident victim checking

7 the paramedics' credentials before letting them

8 treat him."

9 Do you see that?

10 A. Let me see -- yeah.

11 Q. Did you understand that sentiment when he

12 sent that to you?

13 A. I don't know how I understood it when I

14 got this. But I do remember feeling like, screw you

15 guys. We're buying you. And I'm not going to waste

16 my team's time and my time providing a bunch of data

17 and analysis to SolarCity on what was going on in

18 our internal operations. It was irrelevant to the

19 transaction in my point of view.

20 Q. And they needed you for the acquisition;

21 correct?


23 BY MR. BARON:

24 Q. That was Justin's view.


Page 80

1 THE WITNESS: He's using a colorful analogy2 there. What he was thinking and what was on his3 mind, I can't . . .4 BY MR. BARON:5 Q. By this time, you understood that they had6 liquidity issues; correct?7 A. We knew at this time that, as I described8 earlier, the capital markets had tightened for them9 as a result of the acquisition, and that was a

10 catalyst for them having some near-term liquidity11 issues.12 Q. But let's be clear.13 You saw the chart that was prepared before14 the acquisition in which they anticipate potentially15 tripping their debt covenants a number of times16 regardless of the acquisition; correct?17 MS. BOTNICK: Object to form.18 MS. BHALOTRA: Object to form.19 THE WITNESS: I also -- when you handed it to20 me, I read Lyndon's description of what was going on21 in the capital markets with them and how there are22 lots of just timing issues when different things23 would come through.24 BY MR. BARON:25 Q. We're talking -- in that e-mail, you

Page 81

1 saw -- that was -- the chart was provided to the2 board of directors of SolarCity in April.3 Were you aware of that? Or do you want to4 go --5 A. I don't go to SolarCity's board meetings.6 Q. That's not my question.7 A. That's what you asked me.8 Q. You got that chart; right?9 A. Um-hum.

10 Q. And when you got that chart in July, you11 noted that that was a chart that was presented to12 the SolarCity board of directors in April.13 Were you aware of that?14 MS. BOTNICK: Object to form.15 MS. BHALOTRA: Could we take a look at the16 chart?17 MR. BARON: It's in front of you.18 THE WITNESS: Yeah.19 BY MR. BARON:20 Q. It's a July 10th e-mail.21 THE WITNESS: Which exhibit number?22 MR. HUFFMAN: 7.23 BY MR. BARON:24 Q. And if you look at the e-mail from Lyndon25 to Elon dated July 10th, "Here's an updated cash

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Page 82

1 forecast we gave the board in April."2 Do you see that?3 A. I see that.4 Q. As of April, the capital market was not5 drying up as a result of an acquisition -- an6 announced acquisition by Tesla; correct?7 MS. BHALOTRA: Object to form.8 THE WITNESS: Had we -- did the announcement9 happen after that?

10 BY MR. BARON:11 Q. Do you remember you didn't even go back to12 the board until June? We saw -- the June 20th13 presentation.14 A. When was the announcement made for the15 acquisition?16 Q. Not until July.17 A. Then correct, your question is correct.18 Q. So the liquidity issues at SolarCity19 preceded the announcement of an acquisition; is that20 a fair point?21 Will you agree with that?22 MS. BOTNICK: Object to form.23 THE WITNESS: I think there's more nuance to24 it. This chart is talking about intra-quarter lows,25 or intra-month lows. It's not talking about

Page 83

1 end-of-quarter lows in the measurement period. So I

2 don't think it's black and white.

3 MR. BARON: Can I have the Eric Senay e-mail

4 from July 21st.


6 MR. BARON: Marking Exhibit 12, which is an

7 e-mail from Eric Senay to Susan Repo and you dated

8 July 21st, 2016.

9 BY MR. BARON:

10 Q. Do you recall receiving this document?

11 A. Yes, this looks familiar.

12 Q. And, again, this is taking a series of

13 steps to mitigate the liquidity risk.

14 Again, is it your testimony that the

15 liquidity risk that is being discussed in this

16 document is -- was caused by the announcement of the

17 acquisition of SolarCity by Tesla?


19 THE WITNESS: I'm giving you the overall

20 atmospherics that were taking place at the time.

21 And the financial engine that they had built

22 always -- it always required for them to get more

23 and more financing over time. There's always going

24 to be risk attached to that.

25 At the same time, the announcement of the

Page 84

1 merger did cause the markets to freeze up a little2 bit for them. So I guess, no, I'm not testifying3 specifically about anything. I'm giving the overall4 broad brush strokes of the situation that we were5 in.6 BY MR. BARON:7 Q. Was it your view that the liquidity risk8 that was -- that existed at SolarCity was caused by9 the announcement of the acquisition?

10 A. I think the liquidity risk at SolarCity11 was a combination of their balance sheet and their12 financial processes, and there was also some13 additional pressure put on by the announcement of14 the acquisition.15 Q. Now, on this -- on the second page, which16 was TESLA 248054, this is a summary of the efforts17 by SolarCity to get a bridge loan or take care of18 their immediate liquidity problems; correct?19 A. I have to read that to answer that20 question.21 (Witness reviews document.)22 A. Sorry. Could you just restate the23 question.24 Q. Sure.25 This is a discussion about the steps and

Page 85

1 efforts being taken to mitigate the liquidity risks2 that were taking place at SolarCity between the3 signing of the merger agreement and the closing of4 the transaction; correct?5 A. That's correct.6 Q. So these were the immediate liquidity7 issues; correct?8 A. Yeah, I think this was a summary of what9 was going on.

10 Q. And in connection with it, you identified11 that fundamentally they failed in achieving a bridge12 loan as of that point; correct?13 MS. BOTNICK: Object to form.14 BY MR. BARON:15 Q. They had not managed to actually get any16 bank to provide them a bridge loan; correct?17 MS. BOTNICK: Object to form.18 THE WITNESS: We had rejected doing a bridge19 loan from Tesla's balance sheet, as we discussed,20 and the other things that they had done. I know21 that there was a bunch of activity around them22 trying to find some kind of bridge financing.23 Exactly what we talked about in this discussion and24 where it was at, I don't recall specifically.25 BY MR. BARON:

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Page 86

1 Q. Okay. None of the discussion about the2 challenges that were happening with getting a bridge3 loan from some other financial institution4 specifically referenced that it was harder because5 of the Tesla acquisition, was it?6 MS. BOTNICK: Object to form.7 BY MR. BARON:8 Q. Did you receive any documentation,9 anything that says -- this is a letter from a bank

10 that says, because of the acquisition they're not11 going to give us a bridge loan?12 A. No, I never received documentation that13 said that.14 Q. I mean, BAML did -- on this document15 didn't understand the Tesla/SolarCity merger story;16 correct? That's what this document says?17 A. Sure.18 Q. Did anyone ever discuss with you whether19 banks did not understand the merger at all or the20 story behind the merger?21 A. I don't recall if anything -- if anybody22 had that discussion.23 Q. It's fair to say, as of the time that the24 board of directors approved the merger and signed25 the merger agreement, the immediate liquidity needs

Page 87

1 of SolarCity had not yet been taken care of;2 correct?3 MS. BHALOTRA: Object to form.4 THE WITNESS: Could you just -- could you5 restate the question.6 BY MR. BARON:7 Q. As of the time the merger agreement was8 signed, there was no agreement in place -- there was9 no source by which to take care of the immediate

10 liquidity needs of SolarCity; correct?11 A. I believe it was an ongoing process.12 MS. BHALOTRA: Object to form.13 BY MR. BARON:14 Q. As of the time of the merger agreement15 being signed, they had not yet resolved those16 problems; correct?17 A. I believe that's true.18 Q. Now, were you involved in the discussions19 of the exchange rate? Did you give any advice as to20 the exchange rate?21 A. I was definitely involved in the22 discussions on exchange rate.23 Q. Were you aware that Elon Musk was having,24 quote-unquote, daily calls with the investment25 bankers and the lawyers, updates about the progress

Page 88

1 of the merger?

2 A. I think there was at some point a notion

3 of having daily calls, but things didn't always work

4 like that at Tesla. Elon would get distracted by

5 any number of things, and if there were or weren't

6 daily calls with Elon and the bankers, I don't know.

7 Q. You were not on those calls.

8 A. I was not on those calls.

9 Q. And were you on a call with -- between the

10 bankers and Elon Musk discussing exchange rates

11 prior to the board meeting in which there was a

12 discussion about what the appropriate exchange rate

13 should be?


15 THE WITNESS: I don't think so.

16 BY MR. BARON:

17 Q. So you don't know whether or not Elon pre

18 discussed with the bankers what recommendation they

19 should have with -- to the board as to the exchange

20 rate?

21 A. Yeah, I don't -- no, I don't think he did.

22 Q. Well, we know he did. There was an e-mail

23 on that.

24 But the question is, you weren't part of

25 that?

Page 89

1 MS. BOTNICK: Object to form.2 THE WITNESS: I was not part of that.3 BY MR. BARON:4 Q. You don't know that he didn't; correct?5 A. I don't know that he didn't.6 MR. BARON: Can I have the John McPhee7 July 30th e-mail to Jason Wheeler.8 Mark that Exhibit 13.9 (Wheeler Exhibit 13 was marked.)

10 BY MR. BARON:11 Q. Showing you an e-mail from John McPhee to12 you dated July 30th, 2016.13 Have you seen this e-mail recently?14 A. I don't think so.15 Q. And for frame of reference, are you aware16 that July 30th was the date that the board of17 directors approved the signing of the merger18 agreement?19 A. Sure.20 Q. So this would be -- this e-mail is21 July 30th.22 Do you understand that to be the same day23 the board of directors signed the merger agreement?24 A. If you tell me it was the same day, I25 believe you.

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1 Q. And did you understand that KPMG was2 tasked with helping prepare the S-4 filing in3 connection with the merger -- the merger or the4 acquisition of SolarCity?5 A. Yes, I do recall that now.6 Q. And do you recall that KPMG expressed7 concern that financial and tax due diligence was not8 performed prior to the signing of the merger9 agreement?

10 A. Can you point to where -- where it says11 that.12 Q. Sure.13 The second full paragraph.14 A. Second full paragraph.15 MS. BHALOTRA: You can also read the e-mail if16 you want.17 THE WITNESS: Why don't I just read it.18 BY MR. BARON:19 Q. We can do that, but I'll point you to what20 I want you to see, so --21 A. It's good to have the full context, so if22 you don't mind, I'd like to read the whole thing.23 Q. Sure.24 (Witness reviews document.)25 A. Okay.

Page 91

1 Q. Do you recall this e-mail and the2 situation that gave rise to this e-mail?3 A. What I recall is that -- principle, work4 expands to fill the time it can occupy. And5 whenever you're working with a professional services6 firm, you want to push them to work quicker.7 Q. You understood that John McPhee at KPMG8 believed that this was a unique merger and process9 from their perspective?

10 A. Sure. Yes.11 Q. And they believed that it wasn't -- the12 process was not undertaken like a normal13 transaction.14 That's what they said; correct?15 A. That's what he said, but it's hard to know16 what was actually in his mind when he said that. He17 may have been talking about the overlap on the board18 and the related governance issues, but I don't know19 exactly what he was thinking.20 My job was to push these guys to make sure21 they didn't take three months to do something that22 didn't need to take three months.23 Q. And he also said, in a typical merger24 process -- so in his view, this was not a typical25 merger process; correct?

Page 92

1 MS. BOTNICK: Object to form.2 BY MR. BARON:3 Q. You understood that they did not believe4 this was a typical merger process; correct?5 MS. BOTNICK: Object to form.6 THE WITNESS: I think there were things that7 were not typical about this, for sure, but . . .8 BY MR. BARON:9 Q. One of the things is that -- at least

10 according to John McPhee, that financial and tax due11 diligence is performed prior to the signing of the12 merger agreement.13 That was his view; correct?14 THE WITNESS: Yes, that's the way he put it.15 BY MR. BARON:16 Q. Did anybody suggest to you that perhaps17 the merger agreement in this case should not have18 been signed before there was tax due diligence and19 financial due diligence?20 A. I don't recall anyone suggesting that.21 Q. When he said it was normal that an S-422 process would be at least three months from the23 commencement to the filing of the initial draft, did24 you think that he was making that up?25 MS. BOTNICK: Object to form.

Page 93

1 THE WITNESS: I think that professional service2 firms want to maximize revenue and billable hours.3 BY MR. BARON:4 Q. In this he said -- he asked that -- they5 have "monitored the data room in real-time and6 confirmed that critical information requested for7 the S-4 and due diligence had not been provided."8 Do you see that on the fourth paragraph?9 A. Yep.

10 Q. So did you agree with that statement?11 A. He had his point of view on what was12 important and what should have been provided when.13 I don't have any details on what was or wasn't14 provided and on what time frame it was provided. So15 I can't tell you whether or not I agree with his16 assessment or not.17 Q. So you don't know what they're drawing.18 You just don't have any information to believe one19 way or another whether or not there was sufficient20 information in the data room?21 A. That's fair.22 MS. BOTNICK: Object to form.23 BY MR. BARON:24 Q. Do you see where he indicates "Our tax25 teams have identified some potentially significant

24 (Pages 90 - 93)


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1 tax exposures that impact SolarCity's financial

2 statements and that also need to be resolved"?

3 Do you see that?

4 A. I see that.

5 Q. Do you believe that he was being earnest

6 in that assessment?

7 A. Yeah, John's an earnest guy. Also, from

8 having done some work on this type of stuff before,

9 a purchase accounting and the diligence here, a lot

10 of it is done -- it's very technical and on how you

11 record stuff in the financial statements. A lot of

12 this stuff typically has less to do with operations

13 and real-world cash flow.

14 Q. Did you ever share with the board of

15 directors the concerns that KPMG expressed about the

16 fact that certain due diligence was not accomplished

17 prior to the signing of the merger agreement?

18 A. I don't recall.

19 Q. In fact, the board -- you definitely did

20 not tell them at the board meeting on July 30th

21 prior to the signing of the merger agreement;

22 correct?


24 THE WITNESS: I don't recall.

25 MR. BARON: One more document and we'll take a

Page 95

1 break.

2 Can I have the August 5th e-mail from Eric

3 Senay to Jason Wheeler, please.

4 Actually, why don't we take a break now

5 because I have a couple of documents.


7 time is 3:19 p.m.

8 (Recess taken.)



11 MR. BARON: Can we mark this next in order,

12 please.


14 BY MR. BARON:

15 Q. Showing you what's been marked as

16 Exhibit 14. Top of it is Eric Senay to you dated

17 August 8th, 2016.

18 It is fair to say that --

19 MR. HUFFMAN: August 5th.

20 MR. BARON: August 5th, 2016. What did I say?

21 MR. HUFFMAN: 8th.

22 BY MR. BARON:

23 Q. August 5th, 2016.

24 It's fair to say that as of August 5th,

25 2016, SolarCity had still not yet found a way to

Page 96

1 resolve their short-term liquidity problems;

2 correct?

3 A. That's fair to say.

4 Q. What was that?

5 A. That's fair to say.

6 Q. And as of this date is when you learned

7 that Goldman Sachs had pulled their indication that

8 they may be willing to provide a bridge loan;

9 correct?

10 A. Looks like it, yep, that's correct.

11 Q. And they came to the same conclusion,

12 according to Eric, that Morgan Stanley had come to;

13 correct?

14 A. Is that what Eric says?

15 Q. If you look at the bottom, the

16 2:30 e-mail.

17 "I'm aware of the issues of GS."

18 A. Yes. Yep, it's fair to say.

19 Q. And Eric does not say in this e-mail that

20 the concerns of Morgan Stanley or Goldman Sachs had

21 to do with the, as you put it, uncertainty with the

22 Tesla transaction; correct?

23 A. Eric does not say that in the e-mail.

24 Q. And, again, the issue that he says was the

25 issue was "a substandard profile of SolarCity as a

Page 97

1 borrower and the constraints that creates for a

2 regulated money center bank."

3 Do you see that?

4 It's that same -- on the first page,

5 565990, the bottom of the same one that talks about

6 them being the same issues.

7 A. Correct.

8 Q. All right. By the way, the Silver Lake

9 idea, that never came to fruition either; correct?

10 A. That did not come to fruition, correct.

11 Q. Did that make any more sense than the --

12 Silver Lake idea, did that make any sense to you?


14 THE WITNESS: It made more sense than Silevo or

15 a bridge loan from Tesla's balance sheet. It's

16 third-party financing, whatever.

17 MR. BARON: Can I have the August 13th board

18 minutes, please.

19 Can you mark this Exhibit 15.


21 BY MR. BARON:

22 Q. Showing you what's been marked Exhibit 15.

23 It is another special meeting of the board of

24 directors from Tesla Motors.

25 And do you have a recollection of making a

25 (Pages 94 - 97)


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Page 98

1 presentation to the board of directors regarding the2 finance -- or the short-term financing that3 SolarCity needed on August 13th?4 A. I don't remember giving the presentation.5 Let me see here. Let me read the notes.6 (Witness reviews document.)7 A. Yeah, I vaguely remember this meeting and8 the discussion.9 Q. By August 13th, it's fair to say that sort

10 of the traditional sources of third-party financing11 had all fallen away; correct?12 A. The ones that had been explored had fallen13 away.14 Q. And so the idea now was to issue another15 round of SpaceX bonds; correct -- another round of16 solar bonds; correct?17 A. Correct.18 Q. And were you aware as of this date that19 solar bonds had already been purchased by SpaceX?20 A. I believe I was aware of that.21 Q. Were you aware that the solar bonds being22 purchased by SpaceX -- or that SpaceX had more than23 70-something percent of the outstanding solar bonds24 of SolarCity?25 A. I don't recall if I was aware of that

Page 99

1 specific fact.

2 Q. Were you aware of whether or not the

3 investment in solar bonds by SpaceX was consistent

4 with the SpaceX investment policy?

5 A. I was not familiar with the SpaceX

6 investment policy. SpaceX is completely separate

7 from Tesla from a management perspective.

8 Q. Now, in connection -- in connection with

9 the proposition that -- well, in your words, what

10 was the solar bond proposition that you were

11 discussing with the board of directors on

12 August 13th?

13 A. If I recall correctly, SolarCity wanted to

14 issue a series of solar bonds to come up with the

15 money they needed to address the short-term

16 liquidity concerns through the culmination of the

17 transaction.

18 Q. And were you aware -- and in preparing

19 this for the board of directors, you seemed to

20 believe that there was a concern about entities

21 affiliated with Tesla or its directors and officers

22 becoming debt investors of the company following the

23 closing of the merger.

24 Do you see that?

25 Words in the minutes.

Page 100

1 (Witness reviews document.)

2 A. Just restate the question.

3 Q. There was some concern by somebody that

4 this solar bond proposal would make an entity

5 affiliated with Tesla or its directors and officers

6 debt investors of the company following the closing

7 of the merger; correct?


9 THE WITNESS: So this someone you're

10 describing, which I don't know who that is, you're

11 asking my point of view on this?

12 BY MR. BARON:

13 Q. Yes -- well, no.

14 First I'm asking, do you recall somebody

15 expressing a concern that SpaceX, as an affiliated

16 entity, and Elon Musk and Lyndon Rive would become

17 debt investors of Tesla after the acquisition and

18 that being some concern for some reason?

19 A. Sure. I don't recall the specifics of it,

20 but I do -- I do remember that this was certainly

21 discussed as part of the prospect of doing a solar

22 bond offering to meet their liquidity needs.

23 Q. "This" meaning what? That it may be a

24 concern to some that they become debt investors?

25 A. Meaning by -- so I had my objection to

Page 101

1 using Tesla's balance sheet specifically. That was2 my role. I did not want to use Tesla's balance3 sheet to meet these short-term liquidity needs.4 Now, if that liquidity came from SpaceX --5 I wasn't the CFO of SpaceX. If that came from Elon6 and whoever, okay, that's their own personal7 decisions. That said, I think there was definitely8 discussions about the optics of this given the9 overlapping directorates between SolarCity and

10 Tesla, et cetera.11 Q. And it was you who proposed the12 possibility that the company could pursue a13 recapitalization following the closing, meaning that14 you could just buy these people out right away after15 the closing; correct?16 A. One of the --17 Q. That's what you were suggesting, is, well,18 we can always just buy out those bonds immediately19 after closing; correct?20 A. Those are your words, not mine.21 What was taking place is we were looking22 at various different ways to finance the combined23 company at some point in the future. And one24 thought on that was a recapitalization, including,25 at some point in the future, the use of true

26 (Pages 98 - 101)


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Page 102

1 non-course [sic] debt financing, which -- a couple2 of years later, the company was actually able to do3 that.4 Q. But specifically in response to the fact5 that SpaceX and Elon and Lyndon would be,6 quote-unquote, debt investors, you responded that7 the company could recapitalize following the8 closing; correct?9 MS. BOTNICK: Object to form.

10 THE WITNESS: I don't know that the11 conversation went that way. What I'm telling you is12 that Tesla, very complicated balance sheet;13 SolarCity, very complicated balance sheet. Any CFO14 in their right mind is going to think about the15 long-term capital structure of that combined entity,16 and that's what I was focused on.17 BY MR. BARON:18 Q. All my question is is, when the minutes19 here say, in response to the discussion about20 insiders becoming debt investors or affiliated21 entities becoming debt investors, you discussed22 recapitalization.23 Is that an inaccurate recitation of these24 minutes? You did not discuss recapitalization as a25 response to a concern about them becoming debt

Page 103

1 investors?2 A. I believe that there's probably a lot of3 context to this conversation. And whether this is4 inaccurate or accurate, I don't know.5 Q. Ultimately, did you learn that Elon Musk,6 Lyndon Rive and Peter Rive invested $100 million in7 solar bonds at 6.5 percent?8 A. I did.9 Q. Did you have any say in determining

10 whether you thought that 6.5 percent was an11 appropriate return or not?12 A. I don't recall if I was in those13 discussions or not.14 Q. You understood that that return was going15 to be a return that Tesla was going to be obligated16 to pay; correct?17 A. Correct.18 MS. BHALOTRA: May I ask a question?19 MR. BARON: No.20 MS. BHALOTRA: No.21 MR. BARON: Can I have the August 30th Brian22 Scelfo e-mail, please.23 (Wheeler Exhibit 16 was marked.)24 BY MR. BARON:25 Q. Showing you a document which is an e-mail

Page 104

1 chain from Brian Scelfo, S-c-e-l-f-o, to you dated2 August 30th, 2016.3 Do you recall there being an e-mail4 regarding the integration plan for integrating5 SolarCity into Tesla on July -- August 30th, 2016?6 A. I think at this time we definitely would7 have started to really think about what they wanted8 to do on integration.9 Q. Looking on the top e-mail, on the

10 2:18 p.m. e-mail, the second number, "Ongoing11 business plan/financial model," do you see where it12 says, "The goal is to identify the levers in terms13 of product, sales channels, state, et cetera, that14 we can pull/change in order to cut off unprofitable15 areas and invest in the profitable areas"?16 Do you see that?17 A. I see that.18 Q. And, again, the development of that is,19 according to Brian Scelfo, in early stages, is that20 correct, as of August 30th?21 A. Yep, that's what the e-mail says.22 Q. Prior to the merger being agreed to, had23 anybody made any attempt to identify levers in term24 of product, sales channels, state, et cetera, that25 can pull/change in order to cut off unprofitable

Page 105

1 areas and invest in profitable areas at Tesla?2 A. At Tesla. I think when we started to do3 the due diligence with -- and we had access to their4 data, I think we probably started to look at, okay,5 what states are profitable. It's complicated.6 Different states had different regulations on7 various credits, et cetera. So we were trying to8 get an understanding of the operations of the9 company.

10 Q. Did anyone actually prepare a report and11 analysis to identify specifically where areas of12 potential future profitability were in SolarCity,13 apart from what SolarCity management had told you14 was profitable?15 A. I think we probably did some of that16 analysis preliminarily, but I don't recall17 specifically. I don't recall specifically.18 Q. You don't recall any specific reports or19 documents that would support that you did that20 analysis; correct?21 A. I do not.22 Q. Were you involved in the decision to move23 up the presentation on the Solar Roof in any way?24 A. Move up the presentation of --25 Q. Are you aware -- I'm sorry.

27 (Pages 102 - 105)


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Page 106

1 Are you aware that the presentation of the2 Solar Roof was moved up in order to garner investor3 support for the acquisition of SolarCity?4 MS. BOTNICK: Object to form.5 THE WITNESS: I don't remember the gymnastics6 around the timing of the announcement.7 BY MR. BARON:8 Q. Are you aware that S&P put SolarCity on a9 negative credit watch upon the signing of the merger

10 agreement?11 A. That sounds familiar.12 Q. Prior to -- well, on the issue of the13 Solar Roof, did you undertake any analysis to14 determine whether or not there was a value15 attributable to the Solar Roof project contained in16 the forecasts provided to the company from17 SolarCity?18 A. What I remember on this is the Solar Roof19 was a nascent product and there hadn't been a ton of20 financial modeling done on that, at least not from21 the finance team. And I recall my sentiment on it22 at the time being, okay, this is a future product.23 We need to evaluate the current operations of the24 company. And I didn't know what to think of it at25 the time.

Page 107

1 Q. You understood that in projections or2 historically they had actually put money into the3 development of the Solar Roof, SolarCity had?4 A. I don't recall that. I believe it if you5 said they did, but I don't recall that.6 Q. Did you determine whether or not the cost7 associated with developing the Solar Roof were8 contained in the forecasts provided by SolarCity?9 A. I don't recall ever seeing stuff on the

10 Solar Roof specifically in SolarCity's forecast and11 opining on whether or not it was important to the12 financial success of the company.13 Q. So you don't know one way or the other14 whether the SolarCity [sic] project was included15 from a cost perspective or potential16 revenue-down-the road perspective one way or17 another?18 MS. BOTNICK: Object to form.19 THE WITNESS: Solar Roof?20 MR. BARON: Solar Roof. What did I say?21 MR. EHRLICH: SolarCity.22 BY MR. BARON:23 Q. Whether or not the Solar Roof project was24 incorporated in the financial projections, either25 from a cost standpoint or a revenue standpoint.

Page 108

1 A. I don't recall one way or another.2 Q. I think you just mentioned this.3 Upon the effort of incorporating SolarCity4 into Tesla, you did learn that the SolarCity Finance5 had zero visibility on how much it was going to cost6 to make the Solar Roof, install it, R&D, where it7 will be manufactured, buildup costs of getting raw8 materials, et cetera.9 Were you aware of that?

10 A. I think at the time, yeah, I was aware11 that there wasn't a lot of financial modeling that12 had been done on it. My recollection of it was it13 was a future nascent product. And my frame of mind14 at the time was I was looking at the solar business15 that was already there as we went through diligence.16 Q. So I get a sense of timing -- I know you17 understood that it was a future nascent product by18 the time it was incorporated.19 Were you of that view even before the20 merger agreement was signed, that there was --21 MS. BHALOTRA: Object to form.22 BY MR. BARON:23 Q. -- no real product yet to model?24 A. Yes, I think before it was signed, that's25 what I was thinking.

Page 109

1 Q. And just so that we sort of close the

2 loop, when you say "future nascent product," can you

3 give me a sense -- does that mean that it is

4 conceptualized, but a long way from actually being

5 able to be deployed on a house?


7 THE WITNESS: So my frame of mind in doing the

8 financial analysis of SolarCity was on the current

9 products and the current financing alternatives and

10 everything that the company was doing.

11 I never really thought much about what the

12 Solar Roof was going to do one way or another for

13 that set of financials.

14 And to get directly to your question

15 about -- I thought it was an interesting product. I

16 think when everybody saw it, it was interesting. It

17 was like, okay, this may be a different way of doing

18 solar. So it was exciting in the sense that the

19 Model 3 was exciting before they actually started

20 rolling off the line.

21 But my huge chunk of my time at Tesla was

22 actually digging down into the details of Model 3

23 and helping, at least from a financial perspective,

24 bring that to fruition. I didn't spend any time

25 like that on the Solar Roof.

28 (Pages 106 - 109)


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Page 110

1 BY MR. BARON:

2 Q. Okay. When was the last time you were

3 actively involved at Tesla? I think we looked at

4 it. You left the CFO position in -- what month?

5 A. I think it was April, if I recall

6 correctly. April 20th or something like that, 14

7 months ago.

8 MR. BARON: Let's take a break. I may be done.

9 Give me a few minutes and then we'll . . .



12 (Recess taken.)



15 MR. HUFFMAN: For the record, for Exhibit 7,

16 the Bates stamp was cut off in the printing process.

17 The document is Bates stamped TESLA 584461 and was

18 designated confidential.

19 MS. BOTNICK: Right.

20 EXAMINATION

21 BY MS. BOTNICK:

22 Q. So the solar bonds were offered by

23 SolarCity; is that correct?

24 A. That is correct.

25 Q. Okay. And so Tesla only assumed an

Page 111

1 obligation for the solar bonds if the acquisition2 went through; is that correct?3 A. That is correct.4 MS. BOTNICK: Okay. Thank you. Nothing5 further.6 FURTHER EXAMINATION7 BY MR. BARON:8 Q. I have a question.9 As of the time of the solar bonds being

10 offered, were there any other conditions to the11 merger other than getting the short-term liquidity12 issue resolved that you were aware that were13 outstanding?14 MS. BOTNICK: Object to form.15 THE WITNESS: Not that I recall.16 MR. BARON: Thank you.17 I have nothing further.18 THE VIDEOGRAPHER: This concludes today's19 videotaped deposition of Jason Wheeler. We're off20 the record at 4:00 p.m. Thank you.21 (Whereupon, the proceedings were concluded

at 4:00 p.m.)22 ---oOo---23

______________________________24 JASON WHEELER25

Page 112

1 I, the undersigned, a Certified Shorthand2 Reporter of the State of California, do hereby3 certify:4 That the foregoing proceedings were taken5 before me at the time and place herein set forth;6 that any witnesses in the foregoing proceedings,7 prior to testifying, were administered an oath; that8 a record of the proceedings was made by me using9 machine shorthand which was thereafter transcribed

10 under my direction; that the foregoing transcript is11 a true record of the testimony given.12 Further, that if the foregoing pertains to13 the original transcript of a deposition in a Federal14 Case, before completion of the proceedings, review15 of the transcript ( ) was (X) was not requested.16 I further certify that I am neither17 financially interested in the action nor a relative18 or employee of any attorney of any party to this19 action.20 IN WITNESS WHEREOF, I have this date21 subscribed my name.22 Dated: June 5, 20192324 <%16617,Signature%>

_____________________________25 ANRAE WIMBERLEY, CSR No. 7778

29 (Pages 110 - 112)


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28:25 29:3 31:1141:17,19 46:12,1646:18 47:13,15,1747:21 48:6,13,1654:6 78:14 79:17105:11,16,20106:13 109:8

analyst 39:19analyze 37:23

51:25 54:7 67:18analyzed 68:3announce 69:15announced 18:25

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25:22 67:19 82:882:14,19 83:16,2584:9,13 106:6

announcing 67:8anrae 1:23 2:19

9:20 112:25answer 8:12 11:18

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anticipate 80:14anticipated 20:1anticipation 15:23

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anybody 12:1328:8,24 36:1,2254:4,5,8 55:1364:12 66:23 86:2192:16 104:23

apart 105:13appearances 3:1appears 12:3,23

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appropriate 88:12103:11

approved 86:2489:17

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areas 104:15,15105:1,1,11

arms 68:23article 14:16aside 26:2 58:10asked 14:19 30:15

35:22 36:17,2581:7 93:4

asking 15:8 25:1836:13 44:14 46:546:5 54:9,1255:21 70:2 100:11100:14

assessment 71:2493:16 94:6

asset 65:23 66:1874:8

assets 28:16assigned 28:8 45:9associated 107:7assumed 61:25

110:25atmospherics 67:2

83:20

attached 59:283:24

attachment 5:156:16,23 7:13

attack 14:23attempt 104:23attorney 112:18attributable

106:15audio 9:21auditors 70:1august 7:20 8:8

17:10 95:2,17,1995:20,23,24 97:1798:3,9 99:12103:21 104:2,5,20

authority 43:18authorized 37:22automotive 34:2available 13:6

34:10 39:21 57:25avenue 3:15 4:5aware 11:20,21

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awesome 31:7

b

b 5:7 6:1 7:1 8:125:24

back 13:8 22:1023:4 29:16 33:2536:8 37:17 38:8

40:15 41:21 56:156:12 60:15 62:1963:4 82:11 95:9110:13

backed 74:8background 11:22bad 14:2,2 72:18

72:18,23balance 20:25

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baml 69:2,5 86:14bandied 65:22bank 69:11 85:16

86:9 97:2banker 48:2bankers 46:14,15

46:19 49:22 50:157:15 87:25 88:688:10,18

bankruptcy 19:16banks 69:13 86:19baron 3:4 5:3 10:3

10:3,22 21:9,12,1422:18,21 29:18,2230:18,22,23 31:1731:21 39:7,2340:2 41:9 43:1545:11,14,17 46:349:24 51:17,1852:18,20 53:2355:22 56:8,16,1858:11,17,18 62:8

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based 39:21 54:20basis 20:12 38:21

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becoming 71:2099:22 102:20,21102:25

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believed 76:1691:8,11

berkeley 4:6best 23:12bet 18:23 19:3better 52:13 71:23

77:18beyond 16:10bhalotra 4:4 10:11

10:11,15 30:17,2039:5 43:7 46:151:16 53:19 56:658:15 63:20 67:2273:5 76:10 77:1378:1 80:18 81:1582:7 87:3,1290:15 100:8103:18,20 108:21

big 11:4 16:1128:17 34:1

biggest 20:17billable 93:2billion 20:2 72:19

73:18,20binder 11:5bit 11:4 14:14 42:1

42:19 49:19 84:2black 83:2bless 45:10board 5:19 6:4,8

7:4 8:4 12:1621:20,25 22:2,3,822:12 23:4 24:1124:12,13,14 26:726:19,20,23,2431:10,13,17,2432:10,22 33:8,1134:21 35:10 36:3

37:13,15,17,18,2238:3 39:23 40:540:10,11,22 41:142:3,21 43:1846:21 47:2,1449:2,3,7 50:1753:6,18 54:8 55:155:3,5 57:1464:25 65:3,474:19,25 75:6,1175:19 76:14,19,2277:1,3,5,5,6,1081:2,5,12 82:1,1286:24 88:11,1989:16,23 91:1794:14,19,20 97:1797:23 98:1 99:1199:19

bond 99:10 100:4100:22

bonds 98:15,16,1998:21,23 99:3,14101:18 103:7110:22 111:1,9

borrower 97:1botnick 3:14 5:4

10:7,7 41:5 49:1655:17 56:3 62:168:10 72:21 79:2279:25 80:17 81:1482:22 83:18 85:1385:17 86:6 88:1489:1 92:1,5,2593:22 94:23 97:13102:9 106:4107:18 109:6110:19,21 111:4111:14

bottom 96:15 97:5bought 19:18

box 78:23break 56:6 95:1,4

110:8brian 103:21

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63:7,11,19,25 64:164:11,13 65:1,1266:19,22 67:1,1175:12,20,25 84:1785:11,16,18,2286:2,11 96:897:15

briefly 11:2332:17 33:14

bring 109:24bringing 44:3broad 54:23 84:4broadway 3:6brought 20:18

23:4 35:14 40:1453:18 69:23 70:270:6

brush 54:23 84:4build 19:5,6 51:2building 20:20

68:17buildup 108:7built 18:2 28:13

50:10 68:1 83:21bullet 26:5bullshit 15:4,4bullying 14:21bunch 41:8 66:25

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104:11 108:14buy 20:11 54:10

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buying 23:4 67:1278:25 79:15

c

c 104:1c.a. 1:4 2:4caffeine 78:2california 2:17 3:7

4:6 9:1,17 112:2call 16:4 17:15

19:24 31:3,1063:6,10,12,14 88:9

called 32:7,2378:18

calling 31:1332:10

calls 16:18 17:1187:24 88:3,6,7,8

calm 42:19cap 33:16capability 18:16capacity 18:16

42:9 53:1,15,2554:2

capex 19:25 26:1871:17,20 72:573:3

capital 28:1833:17,19 44:1050:13 51:5 67:3,869:15 72:13 80:880:21 82:4 102:15

capitalism 68:21car 17:2 79:6care 84:17 87:1,9cars 17:6 18:3,13

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catalyst 80:10cause 84:1caused 83:16 84:8caveat 19:13cbotnick 3:18cc'd 56:21cell 9:24center 97:2certain 94:16certainly 14:14

17:3,4 22:15 27:429:2 42:12 100:20

certified 2:1910:16,19 112:1

certify 112:3,16cetera 48:18 74:2

101:10 104:13,24105:7 108:8

cfo 13:4,8 23:2232:18 68:1,22101:5 102:13110:4

cfos 12:8chain 5:10 6:12,15

6:18 7:8,20 8:810:14 16:7 58:2162:21,23 63:465:7,8 104:1

chair 23:22chairman 54:25challenge 16:11

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challenged 14:2217:15

challenger 14:23challenges 86:2challenging 17:12

24:7chancery 1:1 2:1

9:13change 25:3 51:4

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charts 26:12 72:972:10

check 78:23checking 79:6cheeky 33:2 61:15chhaya 4:4,9

10:11chief 12:19 23:16choose 44:17chris 71:2,8chunk 109:21circumstances

74:2claire 3:14 10:7classic 27:5clear 17:11 28:22

37:1 65:18 80:12

clearer 43:12,12clearly 49:23

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cochaired 44:21colorful 80:1combination 21:7

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come 22:10 50:254:22 66:6 67:1072:14 80:23 96:1297:10 99:14

comfort 73:25coming 16:19

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commencement92:23

comments 42:3committee 44:21common 14:9,24

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company's 23:17compelling 28:14completely 63:7

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components 18:7concept 36:11conceptualized

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concluded 111:21concludes 111:18conclusion 96:11conditions 111:10conduit 77:8confidential 1:11

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constraints 97:1construct 50:15,18consulting 70:10cont'd 6:1 7:1 8:1contacted 12:10contained 106:15

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103:3continue 50:25control 25:4conversation

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conversations9:24 11:14,1764:18

copy 46:20correct 11:24,25

12:4,5,21,22 13:223:5,6 25:2 30:1130:12 31:13 32:834:16 35:21,2437:7,13 39:10,1841:12 44:10 47:2048:15,25 52:1753:25 55:1,561:21 68:9 69:2470:17 73:15,1678:19,24 79:2180:6,16 82:6,17,1784:18 85:4,5,7,1285:16 86:16 87:287:10,16 89:491:14,25 92:4,1394:22 96:2,9,10,1396:22 97:7,9,10

98:11,15,16,17100:7 101:15,19102:8 103:16,17104:20 105:20110:23,24 111:2,3

correctly 99:13110:6

cost 20:4 27:7107:6,15,25 108:5

costly 15:24costs 27:8 71:24

108:7counsel 9:11 10:1

11:15 46:9 58:1565:4

counselor 56:7counsels 11:13count 59:8couple 31:4 47:5

71:10 74:8 95:5102:1

course 16:2349:21 69:10 102:1

court 1:1 2:1 9:129:19 10:16

cousin 33:4covenant 59:6,12

59:14 60:19,2461:4,7,11,12,21,2462:6 74:5,11

covenants 34:1559:20 61:18 62:474:9 76:7,9,17,2380:15

cover 38:10 71:8cravath 3:13 10:7cravath.com 3:18create 21:8creates 97:1creating 36:9

credentials 79:7credit 25:23 27:16

67:21 106:9credits 26:22 27:1

28:4,6,10 51:4105:7

critical 93:6cross 59:25 60:5,9crowned 17:1csr 1:24 112:25culmination 99:16curious 14:7,18current 27:19

106:23 109:8,9custom 18:2cut 104:14,25

110:16

d

d 5:1daily 87:24 88:3,6data 39:20,22

79:16 93:5,20105:4

date 9:6 57:1559:24 70:25 71:189:16 96:6 98:18112:20

dated 5:13 6:217:11,16 31:2440:5 71:8 78:1081:25 83:7 89:1295:16 104:1112:22

dates 74:16day 13:7,7 19:17

37:8,11 77:7,789:22,24

deadline 17:13deal 20:16 21:19

22:5 27:1,5 28:1228:15 29:3 32:18

32:21 37:2 67:3,869:13,15

dealing 28:2049:14

dealt 32:12 35:9debt 21:1 25:17

26:5 34:15 36:1538:23,24,25 48:1448:19,22,23,2459:6 60:8 62:368:12 70:20 74:876:7,8,16,23 80:1599:22 100:6,17,24102:1,6,20,21,25

debts 26:10decent 50:5decide 45:10decided 21:21

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decision 18:1924:24 42:5 63:2464:10 65:11105:22

decisions 101:7deepak 13:7deeply 17:5 77:6default 59:25 60:5

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2:14 9:8,10,1510:25 13:25 15:7111:19 112:13

depreciation48:18

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determine 106:14107:6

determining 49:4103:9

developing 107:7development

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27:18 48:11 62:362:4 80:22 101:22105:6,6 109:17

differently 17:24difficult 15:24

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18:11 19:12digging 109:22diligence 34:19

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dilutive 38:13,1838:21,25 39:9,1247:19

direct 78:15direction 65:18

112:10directly 109:14director 3:12 10:8directorates 101:9directors 5:19 6:4

6:8 7:4 8:4 23:524:13,14 26:731:24 40:5 43:1846:21 47:14 55:474:25 81:2,1286:24 89:17,2394:15 97:24 98:199:11,19,21 100:5

discovered 59:22discuss 46:13,25

86:18 102:24discussed 26:19,22

26:24 27:12,21,2233:16 35:14 40:2050:20 65:12,1366:20 76:19 77:1883:15 85:19 88:18100:21 102:21

discussing 33:1960:2 77:11 88:1099:11

discussion 22:1524:21 25:14 26:1536:3 38:7 40:1740:18 41:1 45:1949:2,6 50:17,19,2150:22,23 51:2053:1,14,21 54:1557:20 63:5 75:1076:4,20 77:15,2178:6 84:25 85:2386:1,22 88:1298:8 102:19

discussions 25:1225:18 27:4,15,1857:15 58:5 75:2476:3 77:9 87:1887:22 101:8103:13

distracted 88:4document 22:24

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documentation86:8,12

documents 10:2411:1,6 31:1538:19 52:15 60:1695:5 105:19

doing 13:8,14,1519:23 20:22 23:1624:8,10 28:24,2532:18 46:17,19

54:4 64:1 68:2070:8,20 85:18100:21 109:7,10109:17

dollar 68:12door 41:23double 19:7dowd 2:16 3:3

9:16 10:4,6downs 28:20draft 30:9 92:23drain 39:16drawing 93:17dropped 16:13dry 69:16drying 82:5due 26:10,13

70:16 75:7 78:1778:18,20,21 90:792:10,18,19 93:794:16 105:3

dumb 66:3,16,17

e

e 5:1,7,10,13 6:16:12,15,18,21 7:17:8,11,16,20 8:1,811:7 21:12 29:1944:8 56:20,2557:8 58:12,19,2158:23 59:18 60:2562:8,17,18,21,2363:3,4 71:8 76:1476:19 77:22 78:980:25 81:20,2483:3,7 88:22 89:789:11,13,20 90:1591:1,2 95:2 96:1696:19,23 103:22103:25 104:1,3,9104:10,21

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ehrlich.com 4:8,9eight 14:5eighth 3:15either 20:23 36:20

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employee 112:18enabled 67:25ended 26:9 27:12energy 36:9engagements

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68:17 83:21english 53:5,9entire 19:15 28:13

34:4entities 99:20

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95:2,16 96:12,1496:19,23

esq 3:4,5,14 4:3,4et 48:18 74:2

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evaluate 32:1969:6 106:23

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everybody 18:2319:2,4 22:4 23:11109:16

evolved 71:18evr 7:9exact 27:25 55:19

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exactly 23:14 29:432:24 36:5 50:459:22 61:15 64:2170:21 85:23 91:19

examination 5:210:21 110:20111:6

exchange 87:19,2087:22 88:10,12,19

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22:13 34:3 37:341:22

exhibit 5:9,10,135:18 6:2,3,8,12,156:18,21 7:2,3,8,117:16,20 8:2,3,822:19,20,23 29:2131:19,20,22 38:1239:25,25 40:1,344:9 45:15,16,1856:16,17,20 58:1358:14 62:12,14,1562:18 71:5,774:21,22 78:4,5,981:21 83:5,6 89:889:9 95:13,1697:19,20,22103:23 110:15

exist 53:17existed 60:1 84:8expanded 42:9expands 91:4expect 43:12 48:18

67:5expectations

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16:13

experienced 16:1720:20

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f

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factor 16:20factors 22:16facts 24:18 72:23failed 85:11fair 15:24 16:1,12

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find 55:25 58:1767:15 85:22

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fixated 51:7flip 17:23flood 11:4flow 39:12,13,17

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focused 20:20 34:339:12 41:22102:16

folks 31:4 49:2064:18,19 77:5

following 99:22100:6 101:13102:7

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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.

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