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

Document 328, Attachment 1

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EXHIBIT 2

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1 IN THE COURT OF CHANCERY OF THE STATE OF2 DELAWARE3 ----------------------------)4 IN RE TESLA MOTORS, INC., )Consolidated5 STOCKHOLDER LITIGATION )C.A. No. 12711-VCS6 ----------------------------)78910 CONFIDENTIAL1112 The confidential videotaped13 deposition of GREGORY BILICIC, taken in the14 above-entitled cause, before ANDREA L. KIM, a15 Certified Shorthand Reporter of said state, at16 300 North LaSalle Street, Chicago, Illinois, on17 the 30th day of May, A.D. 2019, at 8:14 a.m.1819202122232425

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

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1 PRESENT:23 PRICKETT, JONES & ELLIOTT,4 (1310 King Street,5 Wilmington, Delaware 198016 302-888-6542), by:7 MR. SAMUEL CLOSIC,8 [email protected],9 MR. KEVIN H. DAVENPORT,

10 [email protected],11 appeared on behalf of the Plaintiffs;1213 CRAVATH, SWAINE & MOORE LLP,14 (825 Eighth Avenue,15 New York, New York 10019-747516 212-474-1906), by:17 MS. CLAIRE BOTNICK,18 [email protected],19 appeared on behalf of the Director20 Defendants;2122232425

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1 PRESENT: (Continued)23 KIRKLAND & ELLIS LLP,4 (601 Lexington Avenue,5 New York, New York 100226 212-446-4802), by:7 MR. YOSEF J. RIEMER, P.C.,8 [email protected],9 MS. VERA C. ESSES,

10 [email protected],11 appeared on behalf of Lazard Freres &12 Co., LLC, and the witness.1314 VIDEOTAPED BY:15 MS. BARBARA PATEL.1617 REPORTED BY: ANDREA L. KIM, C.S.R.18 CERTIFICATE NO. 84-3722.19202122232425

1 I N D E X23 WITNESS: PAGE:4 GREGORY BILICIC5 EXAM by MR. CLOSIC................. 96 EXAM by MR. RIEMER................. 7978 *****9 I N D E X

10 EXHIBIT NUMBER MARKED11 Exhibit No. 1 Document bearing Bates Number 1212 LAZ_TES00000060 through LAZ_TES00000071......13 Exhibit No. 2 Document bearing Bates Number 1514 LAZ_TES00057666..............................15 Exhibit No. 3 Document bearing Bates Number 1716 LAZ_TES00047962 through LAZ_TES00047963 .....17 Exhibit No. 4 Document bearing Bates Number 1918 LAZ_TES00045396 through LAZ_TES00045397 .....19 Exhibit No. 5 Document bearing Bates Number 2020 LAZ_TES00087048 through LAZ_TES00087053 .....21 Exhibit No. 6 Document bearing Bates Number 2322 TESLA00001855 through TESLA00001857 .........23 Exhibit No. 7 Document bearing Bates Number 2624 TESLA00001858 through TESLA00001861 .........25

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1 I N D E X

2 EXHIBIT NUMBER MARKED

3 Exhibit No. 8 Document bearing Bates Number 31

4 LAZ_TES00087106 through LAZ_TES00087120 .....

5 Exhibit No. 9 Document bearing Bates Number 33

6 LAZ_TES00086512 .............................

7 Exhibit No. 10 Document bearing Bates 36

8 Number LAZ_TES00085033 through

9 LAZ_TES00085040 .............................


11 Number TESLA00001878 through TESLA00001879 ..










21 Number LAZ_TES00086460 ......................


23 Number LAZ_TES00067124 through

24 LAZ_TES00067240..............................

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1 I N D E X2 EXHIBIT NUMBER MARKED3 Exhibit No. 18 Document bearing Bates 674 Number LAZ_TES00087062 through5 LAZ_TES00087068 .............................6 Exhibit No. 19 Document bearing no Bates 757 Number.......................................89

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1 again this is speculation, but it might have2 been Wachtell also because Wachtell was3 representing Tesla, and my recollection is that4 is one of the ways that they came to contact us5 was as a result of Wachtell.6 MR. CLOSIC: This will be 4.7 (WHEREUPON, a certain document8 was marked Bilicic Deposition9 Exhibit No. 4, for

10 identification, as of 5/30/19.)11 BY MR. CLOSIC:12 Q. Mr. Bilicic, we have placed in13 front of you Exhibit 4 which is Bates stamped14 LAZ_TES 45396.15 A. Okay.16 Q. So on June 25th, 2016 you17 reported to the Lazard team that SolarCity had18 hired Lazard as a financial advisor in19 connection with Tesla's proposal to acquire20 SolarCity, correct?21 A. Correct.22 Q. And in discussing this with23 your team, you said -- and this is in the --24 almost at the top of the email: "This is a25 much better place for us to be. We do not want

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1 to be on the other side here."2 And that's a reference to3 advising SolarCity instead of Tesla, correct?4 A. That's correct.5 Q. And you continue to tell your6 team: "The advice that Evercore gave to the7 other side was embarrassing."8 That refers to advice that9 Evercore gave to Tesla, correct?

10 A. Correct.11 Q. What was that advice?12 A. It's the advice to pursue the13 acquisition of SolarCity.14 Q. Why was -- what was15 embarrassing about that advice?16 A. I thought it was not great17 advice because of my judgment that the18 industrial logic of combining a car company19 with a solar manufacturing company and solar20 company didn't make sense.21 (WHEREUPON, a certain document22 was marked Bilicic Deposition23 Exhibit No. 5, for24 identification, as of 5/30/19.)25

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1 points that was made by the management was that2 the introduction of the Tesla proposal3 precluded their access to the capital markets4 because of the presence of material on public5 information, but I would read this to mean, you6 know, a negative consequence -- the way it's7 written that it would have a negative8 consequence on liquidity, but I can make the9 argument that it would also have freed the

10 company to figure out a rationale to -- or11 figure out a way to go access the capital12 markets in a way they couldn't because of the13 pendency of the transaction, and that was14 flowing through the considerations.15 I would say I de-emphasized16 that as a real factor related to the liquidity17 of the company though. I think the company had18 a liquidity problem that had almost nothing to19 do with the presence of the Tesla proposal. Do20 you follow what --21 Q. I do. I do. We may get into22 the specifics of that and have you explain it23 more.24 A. When I asked did you follow,25 did you understand it was more was I making any

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1 meetings -- meeting minutes from the July 20,2 2016 special committee meeting, correct?3 A. Yes.4 Q. And at that meeting Lazard5 advised the committee that it would be6 challenging to complete a PIPE transaction on7 terms that would be acceptable to the company,8 right?9 A. That's correct, and the way

10 the minutes are written I would say at this11 point not only that acceptable, but maybe not12 even actionable.13 Q. What do you mean by14 non-actionable?15 A. Right, the money wasn't there.16 You know, the feedback from the market when we17 talked to people is that they didn't think this18 business was financeable.19 Q. Back to those conversations20 you were just discussing, were you given any21 reasons as to why the SolarCity business was22 not financeable?23 A. People were worried about --24 the language used by some of the people25 approached concerns about solvency, viability,

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1 and liquidity of the company and financing into2 a business that was not going to be viable for3 the long term.4 Q. When you say solvency, are you5 referring to a bankruptcy risk?6 A. I am referring to it in more7 of a layman's sense, not a technical legal8 sense, but embedded in that would be a concern9 about viability.

10 (WHEREUPON, a certain document11 was marked Bilicic Deposition12 Exhibit No. 12, for13 identification, as of 5/30/19.)14 BY MR. CLOSIC:15 Q. Mr. Bilicic, this is Exhibit16 12 for us today. It's TESLA 1882. The17 paragraph I am going to ask you about -- of18 course, take your time to read the document --19 is in this Lazard Update that starts on page 1.20 A. Okay.21 Q. Okay. I want to ask you about22 a sentence that's on page 2. It's about23 halfway through that first big paragraph. It24 starts on the left-hand side "Mr. Bilicic noted25 his view."

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1 A. Yep.2 Q. "Mr. Bilicic noted his view3 that in his judgment the Company's current4 liquidity situation was such that it warranted5 prompt action in the Company's current6 circumstances."7 What was the situation at the8 company that --9 A. So the company had a liquidity

10 problem based on our analysis which had a risk11 of producing a covenant problem, but more12 generally had the risk of damaging the overall13 business, and the other concern we had here was14 that the overall atmosphere of the company was15 such that -- and, you know, the quality of the16 data, the quality of the thinking was such that17 we were concerned about the company on a18 stand-alone basis going forward.19 Q. What do you mean by quality of20 the data?21 A. Just the -- when we started22 working on this assignment, one of the first23 things we asked for was what's the cash24 position of the company, what's the liquidity25 position of the company, give us a liquidity

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1 June 20 was a little bit under $22. So I am2 assuming that's correct.3 Q. If SolarCity announced that4 Tesla would not buy the company, the megawatt5 guidance was going to be reduced, and SolarCity6 had to sell stock to avoid breaching its7 liquidity covenant in the revolver, was Lazard8 expected the stock would trade below $22 which9 is why these lower base case figures were used,

10 correct?11 MR. RIEMER: Objection, form.12 BY THE WITNESS:13 A. We thought that -- we didn't14 know where it was going to trade. I don't know15 where the stock was trading when we did this16 presentation. It is somewhere in these17 materials or some other materials. We would18 have expected that a mix of the withdrawal of19 the Tesla offer, having to disclose the20 liquidity challenges of the company, the market21 being aware that we were having challenges22 accessing the capital markets, the discussion23 about degradation of megawatt guidance, all of24 that would contribute to a negative bias in the25 stock, so downward pressure, and that be

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1 exacerbated by having to go out and sell equity2 in the middle of that. So we were concerned3 about all of that.4 BY MR. CLOSIC:5 Q. And that's why this analysis6 uses prices between $15 and $22 per share,7 right?8 MR. RIEMER: Objection to form.9 BY THE WITNESS:

10 A. It was we were trying to do a11 realistic presentation of where the stock would12 trade. We just didn't know where it was going13 to trade, and so that's the answer.14 BY MR. CLOSIC:15 Q. So page 2 of the presentation16 there's a box that says Revised Investment17 Thesis, and then it's connected to eight other18 boxes, and those are the steps that Lazard was19 recommending SolarCity take if it was going to20 do a stand-alone equity offering, correct?21 A. Not quite. I mean, what we22 were doing here was focusing on an illustrative23 stand-alone investment thesis for the company24 that would give the marketplace confidence25 about viability and long-term economic

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DELAWARE RULES OF CIVIL PROCEDURE

Part V. Depositions and Discovery

Title V, Rule 30

(e) Submission to witness; changes; signing. When

the testimony is fully transcribed, the deposition

shall be submitted to the witness for examination

and shall be read to the witness, unless such

examination and reading are waived by the witness

and by the parties. Any changes in form or

substance which the witness desires to make shall

be entered upon the deposition by the officer with

a statement of the reasons given by the witness for

making them. The deposition shall then be signed by

the witness, unless the parties by stipulation

waive the signing or the witness is ill or cannot

be found or refuses to sign. If the deposition is

not signed by the witness within 30 days after the

date when the reporter notifies the witness and

counsel by mail of the availability for examination

by the witness, the officer shall sign it and state

on the record the fact of the waiver or of the

illness or absence of the witness or the fact of

the refusal to sign together with the reason, if

any, given therefor; and the deposition may then be

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used as fully as though signed, unless on a motion

to suppress under Rule 32(d) the Court holds that

the reasons given for the refusal to sign require

rejection of the deposition in whole or in part.

DISCLAIMER: THE FOREGOING CIVIL PROCEDURE RULES

ARE PROVIDED FOR INFORMATIONAL PURPOSES ONLY.

THE ABOVE RULES ARE CURRENT AS OF APRIL 1,

2019. PLEASE REFER TO THE APPLICABLE STATE RULES

OF CIVIL PROCEDURE FOR UP-TO-DATE INFORMATION.

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