exhibit 16 - reutersblogs.reuters.com/alison-frankel/files/2014/10/all... · exhibit 16 page 402....

EXHIBIT 16 Manually Filed Pursuant to Local Rule 79-5.1 and Defendants’ Application to

File Under Seal

Exhibit 16 Page 401

HIGHLY CONFIDENTIALMichael Gallagher - 10/7/2014

1 UNITED STATES DISTRICT COURT

2 CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION

3

4 ALLERGAN, INC., a Delaware

corporation and Karah H.

5 Parschauer, an individual,

6 Plaintiffs,

7 vs. No. 8:14-CV-01214

8 VALEANT PHARMACEUTICALS

INTERNATIONAL, INC., VALEANT

9 PHARMACEUTICALS INTERNATIONAL,

10 AGMS, INC., PERSHING SQUARE

CAPITAL MANAGEMENT, L.P., PS

11 MANAGEMENT, GP, LLC, PS FUND 1,

12 LLC and WILLIAM A. ACKMAN, an

13 individual, and Does 1-10,

14 Defendants.

________________________________________________

15 HIGHLY CONFIDENTIAL TRANSCRIPT

16

17 VIDEOTAPED DEPOSITION of MICHAEL GALLAGHER

18 San Diego, California

19 Tuesday, October 7, 2014

20 Volume I

21 Reported by:

22 Kae F. Gernandt

23 RPR, CSR No. 5342

24 Job No. 1940348

25 PAGES 1 - 255

Page 1

Veritext National Deposition & Litigation Services866 299-5127

Exhibit 16 Page 402


Page 2

1 UNITED STATES DISTRICT COURT

2 CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION

3

4 ALLERGAN, INC , a Delaware

corporation and Karah H

5 Parschauer, an individual,

6 Plaintiffs,

7 vs No 8:14-CV-01214

8 VALEANT PHARMACEUTICALS

INTERNATIONAL, INC , VALEANT

9 PHARMACEUTICALS INTERNATIONAL,

10 AGMS, INC , PERSHING SQUARE

CAPITAL MANAGEMENT, L P , PS

11 MANAGEMENT, GP, LLC, PS FUND 1,

12 LLC and WILLIAM A ACKMAN, an

13 individual, and Does 1-10,

14 Defendants

________________________________________________

15

16

17 Videotaped Deposition of MICHAEL GALLAGHER,

18 Volume I, taken on behalf of defendant, at 12670 High

19 Bluff Drive, San Diego, California, beginning at

20 10:02 a m and ending at 4:35 p m , on Tuesday,

21 October 7, 2014, before Kae F Gernandt, RPR, Certified

22 Shorthand Reporter No 5342

23

24

25

1 APPEARANCES:23 For Plaintiff:4 LATHAM & WATKINS, LLP

BY: COLLEEN CARLTON SMITH5 12670 High Bluff Drive

San Diego, California 92130-20716 (858) 523-5400

colleen smith@lw com7

LATHAM & WATKINS, LLP8 BY: SARAH E DIAMOND

650 Town Center Drive, 20th Floor9 Costa Mesa, California 92626-1925

(714) 540-123510 sarah diamond@lw com1112 For Defendant Pershing Square:13 KIRKLAND & ELLIS LLP

BY: MARK HOLSCHER14 JASON KELLY

ROBERT BOLDT15 333 South Hope Street

Los Angeles, California 9007116 (213) 680-8190

mark holscher@kirkland com17 jason kelly@kirkland com

robert boldt@kirkland com1819 For Valeant defendants:20 SULLIVAN & CROMWELL LLP

BY: KATHERINE A TAYLOR21 1888 Century Park East

Los Angeles, California 90067-172522 (310) 712-6694

taylork@sullcrom com2324 Also Present:25 Scott Tanaka, Videographer

Page 4

1 I N D E X2 VOLUME I34 TUESDAY, OCTOBER 7, 201456 WITNESS78 MICHAEL GALLAGHER9

1011 EXAMINATION BY PAGE12 Mr. Holscher . . . . . . . . . . . . . . . . . . .813141516171819202122232425

Page 5

1 DEPOSITION EXHIBITS2 MICHAEL GALLAGHER3 NUMBER DESCRIPTION IDENTIFIED45 Exhibit 1 Schedule 14A Proxy Statement 126 Exhibit 2 E-mail dated 6/7/14 to David 30

Pyott from Michael Gallagher,7 subject: Deck8 Exhibit 3 ISS Proxy Advisory Services 35

document regarding Allergan,9 Inc.

10 Exhibit 4 Letter dated 8/4/14 from Glass 7111 Lewis & Co.12 Exhibit 5 Letter dated 6/3/14 from T.Rowe 7713 Price Associates, Inc.

Exhibit 6 Letter from Jennison Associates 10214 to Michael R. Gallagher15 Exhibit 7 M&A Edge Note: North America, 12016 from ISS dated 10/1/14

Exhibit 8 Release from Jackson Square 12717 Partners dated 9/28/14 to18 Michael Gallagher

Exhibit 9 Letter dated 9/25/14 from 13819 Pentwater Capital Management

titled "Pentwater Capital20 Management Issues Letter to

Board of Directors of Allergan,21 Inc."

Exhibit 10 Client alert titled "A New 14822 Takeover Threat: Symbiotic

Activism" dated 4/25/14 from23 Wachtell, Lipton, Rosen & Katz24 Exhibit 11 E-mail dated 2/7/14, subject 159

Merrill Lynch, with attachment25

2 (Pages 2 - 5)


Exhibit 16 Page 403


Page 6

1 DEPOSITION EXHIBITS (CONTINUED)2 MICHAEL GALLAGHER3 NUMBER DESCRIPTION IDENTIFIED45 Exhibit 12 Goldman Sachs Equity Research 1696 paper dated 3/7/147 Exhibit 13 E-mail dated 6/12/14, subject: 177

Allergan Media Coverage8 Overview/Valeant Analyst9 Reports - Attached

Exhibit 14 News Release dated 6/10/14, 18610 titled "Allergan Board

Unanimously Rejects Revised11 Unsolicited Proposal from12 Valeant"

Exhibit 15 E-mail string, top e-mail dated 20313 6/2/04, subject: Ubben call14 Exhibit 16 E-mail string, top e-mail dated 20515 8/26/14, subject: Ubben call

Exhibit 17 E-mail string, top e-mail dated 21716 6/6/14, subject: Message to17 you on behalf to the team

Exhibit 18 Agenda for board of directors 21818 meeting dated 7/14/1419 Exhibit 19 U.S. SEC Form 8-K dated 6/10/14 23420 for Allergan, Inc.2122232425

Page 7

1 SAN DIEGO, CALIFORNIA, TUESDAY, OCTOBER 7, 2014

2 10:02 A M

3

4 THE VIDEOGRAPHER: Good morning We are on 10:02:13

5 the record at 10:02 a m on October 7th, 2014 10:02:16

6 This is the video-recorded deposition of Michael 10:02:21

7 Gallagher 10:02:24

8 My name is Scott Tanaka, here with our 10:02:25

9 court reporter, Kae Gernandt We're here from 10:02:28

10 Veritext Legal Solutions at the request of counsel 10 02:31

11 for the defendant This deposition is being held at 10:02:32

12 12670 High Bluff Drive, San Diego, California 92130 10:02:36

13 The caption of this case is Allergan 10 02:45

14 Incorporated, et al, vs Valeant Pharmaceuticals 10:02:47

15 International Incorporated, et al The case number 10:02:51

16 is 8:14-cv-01214 10:02:54

17 Please note that audio and video 10:03:01

18 recording will take place unless all parties agree 10:03 03

19 to go off the record Microphones are sensitive and 10:03:03

20 may pick up whispers, private conversations and 10:03:07

21 cellular interference 10:03:07

22 I am not related to any party in this 10:03:11

23 action nor am I financially interested in the 10:03:15

24 outcome in any way 10:03:17

25 If there are any objections to 10:03:19

Page 8

1 proceeding, please state them at the time of your 10 03:21

2 appearance, beginning with the noticing attorney 10:03:23

3 MR HOLSCHER: Good morning Mark Holscher 10:03:27

4 of Kirkland & Ellis for Pershing Square 10:03:29

5 MR KELLY: Jason Kelly, Kirkland & Ellis, 10:03:35

6 for Pershing Square 10:03:36

7 MR BOLDT: Bob Boldt for Pershing Square, 10:03:38

8 Kirkland & Ellis 10:03:39

9 MS TAYLOR: Katherine Taylor, Sullivan & 10:03:42

10 Cromwell, for the Valeant defendants 10:03:43

11 MS DIAMOND: Sarah Diamond, Latham & 10:03:47

12 Watkins, for the plaintiffs 10:03:48

13 MS SMITH: Colleen Smith, Latham & Watkins, 10:03:50

14 for Allergan and Karah Parschauer 10:03:51

15 THE VIDEOGRAPHER: Court reporter, please 10:03:56

16 swear in the witness 10:03:56

17 10:04:06

18 MICHAEL GALLAGHER, 10:04:06

19 having been administered an oath, was examined and 10:04:06

20 testified as follows: 10:04:06

21 10:04:06

22 EXAMINATION 10:04:06

23 BY MR HOLSCHER: 09:37:43

24 Q Good morning, Mr Gallagher 10:04:08

25 A Good morning 10:04:09

Page 9

1 Q. How would Allergan be harmed if Pershing 10:04:10

2 Square is allowed to vote at the December 18th 10:04:14

3 meeting? 10:04:17

4 MS. SMITH: Objection to the extent it calls 10:04:19

5 for a legal conclusion. 10:04:21

6 Otherwise, you may answer. 10:04:25

7 THE WITNESS: If Pershing Square acquired 10:04:37

8 their shares illegally or against the law, it 10:04:39

9 would -- it would break our -- our bylaws, and we'd 10:04:43

10 follow our bylaws. 10:04:46

11 BY MR. HOLSCHER: 10:04:48

12 Q. I understand that's your position and 10:04:49

13 Allergan's position. I'm asking you a little bit 10:04:56

14 different question. 10:04:59

15 Specifically, how would Allergan be 10:05:02

16 harmed if Pershing Square is allowed to vote at the 10:05:04

17 December 18th meeting? 10:05:08

18 A. Well, as I indicated, we'd have to 10:05:09

19 follow our bylaws. 10:05:11

20 Q. Okay. Setting aside for the moment -- 10:05:14

21 A. I can't set aside the bylaws. 10:05:19

22 Q. Is there any other harm that you can 10:05:22

23 identify other than your view that it would violate 10:05:24

24 the bylaws? 10:05:28

25 MS. SMITH: And again, same objection to the 10:05:30

3 (Pages 6 - 9)


Exhibit 16 04


Page 10

1 extent it calls for a legal conclusion regarding how 10:05:33

2 Allergan would be harmed by Pershing Square's voting 10:05:36

3 in the special meeting. 10:05:39

4 THE WITNESS: Now answer it? 10:05:41

5 MS. SMITH: Uh-huh. 10:05:42

6 THE WITNESS: If they acquired their shares 10:05:43

7 illegally, then you have to wonder if there aren't 10:05:46

8 other arrangements that are illegal as well. But 10:05:49

9 our bylaws are very clear, and we would follow them. 10:05:52


11 Q. Okay. What other arrangements that are 10:05:55

12 illegal are you referring to? 10:05:57

13 A. There probably are a myriad of them, but 10:06:02

14 I -- I can't list all of them for you. It's not 10:06:04

15 my -- my area of expertise. We would wait to see 10:06:06

16 what the situation was and make our decision at that 10:06:09

17 time. 10:06:11

18 Q. But you indicated that because you 10:06:12

19 believe that Pershing Square acquired its shares 10:06:14

20 illegally that there might be a myriad of other 10:06:18

21 illegal arrangements. To what are you referring? 10:06:20

22 A. I don't know. I mean, if someone breaks 10:06:23

23 the law, there's likely that they break other laws 10:06:26

24 as well. 10:06:28

25 Q. Okay. So, in your view it's likely that 10:06:29

Page 11

1 Pershing Square may have broken other laws? 10:06:31

2 A. I have no -- no view on that. I'm 10:06:33

3 simply saying it's possible. 10:06:35

4 Q. Okay. With respect to the specific 10:06:37

5 proposals that are being considered on 10:06:40

6 December 18th, how would Allergan be harmed if 10:06:43

7 Pershing Square votes on those proposals? 10:06:48

8 MS. SMITH: And again, I object to the extent 10:06:51

9 it calls for a legal conclusion. 10:06:52

10 You may answer if you know. 10:06:54

11 THE WITNESS: If I want to or if -- 10:06:56

12 MS. SMITH: No, no, no. Please answer 10:06:57

13 subject to that objection. 10:06:59

14 THE WITNESS: Pershing Square basically wants 10:07:01

15 to put on the board people who are essentially 10:07:03

16 beholding to them so that they can drive the lowest 10:07:08

17 possible deal for Allergan. And that would harm our 10:07:10

18 shareholders, and we have a very strong fiduciary 10:07:15

19 duty to look after the long-term interests of our 10:07:18

20 shareholders. 10:07:20

21 MR. HOLSCHER: I'd like to show you and have 10:07:24

22 this marked as our first exhibit, Schedule 14A that 10:07:26

23 was filed, I believe, either last night or this 10:07:32

24 morning. I'm not sure of the timing. If I can have 10:07:34

25 this marked as Exhibit 1, please. 10:07:37

Page 12

1 (Deposition Exhibit 1 marked for 10:07:50

2 identification.) 10:07:50


4 Q. Do you recognize this document, 10:08:06

5 Mr. Gallagher? 10:08:08

6 A. Yeah. I actually don't think I've seen 10:08:20

7 this final document. 10:08:22

8 Q. I'll represent to you I believe it was 10:08:26

9 filed by Allergan in the last 12 hours or so. 10:08:27

10 A. Yeah. Well, fine. 10:08:32

11 Q. Okay. If I have you turn to the third 10:08:34

12 page that's marked small bullet one. 10:08:37

13 A. Yep. 10:08:43

14 Q. You have that in front of you? 10:08:43

15 A. I do. 10:08:44

16 Q. Okay. I'll represent to you this is 10:08:45

17 Allergan's summary of the items that are up for vote 10:08:47

18 on December 18th. 10:08:54

19 With respect to No. 1, do you see where 10:09:04

20 it summarizes the Proposal 1 to remove certain 10:09:08

21 directors from the Allergan board? Do you see that? 10:09:13

22 A. I do. 10:09:19

23 Q. Okay. How would Allergan be harmed if 10:09:20

24 Pershing Square were to vote on December 18th, 10:09:24

25 2014, on this proposal? 10:09:28

Page 13



3 THE WITNESS: I think I've answered that 10:09:33

4 question. I think my -- my past answer is 10:09:34

5 appropriate to -- to that point. 10:09:41


7 Q. Anything else that comes to mind as to 10:09:44

8 how Allergan would be harmed -- 10:09:48

9 A. This is all a scheme to replace 10:09:50

10 Allergan's directors with people who are essentially 10:09:52

11 beholding to Pershing Square and Valeant to drive a 10:09:57

12 very low deal for the shareholders of this company. 10:10:00

13 That's how they would be harmed. 10:10:03

14 Q. Okay. Now, the second proposal is to 10:10:05

15 request the Allergan board elect or appoint six of 10:10:12

16 Pershing Square and Valeant's nominees to serve as 10:10:17

17 directors. Do you see that? 10:10:20

18 A. I do. 10:10:21

19 Q. And how would Allergan be harmed if 10:10:21

20 Pershing Square voted on that proposal? 10:10:24

21 A. It's the same answer. 10:10:27

22 Q. Okay. Do you have an understanding as 10:10:29

23 to whether or not Allergan is required under this 10:10:33

24 proposal to elect or appoint the directors proposed 10:10:36

25 by Pershing Square and Valeant? 10:10:43

4 (Pages 10 - 13)


Exhibit 16 Page 405


Page 14

1 A. Allergan is not required to do that. 10:10:49

2 Q. Okay. So, if Allergan is not required 10:10:52

3 to elect or appoint the slate recommended by 10:10:56

4 Pershing Square and Valeant, how is Allergan harmed 10:11:01

5 if Pershing Square votes on this second proposal on 10:11:08

6 December 18th? 10:11:11

7 A. It gives -- it gives the -- 10:11:12

8 MS. SMITH: Just a second. Let him answer -- 10:11:14

9 let him ask the full question -- 10:11:15

10 THE WITNESS: Sorry. 10:11:17

11 MS. SMITH: -- before you answer. 10:11:17

12 THE WITNESS: I thought you had. My 10:11:19

13 apologies. 10:11:19

14 MR. HOLSCHER: No problem. 10:11:20

15 THE WITNESS: Go ahead. 10:11:21


17 Q. So, if -- if Allergan does not need to 10:11:22

18 follow the recommendation with respect to the six 10:11:28

19 directors on the Pershing Square/Valeant slate, how 10:11:35

20 is Allergan harmed if Pershing Square votes on this 10:11:39

21 second proposal on December 18th, 2014? 10:11:44

22 A. It gives more -- more weight to the 10:11:51

23 number of votes voting for a group of directors who 10:11:56

24 are beholding to Pershing Square and who would drive 10:11:59

25 a deal that is significantly below the value of 10:12:03

Page 15

1 Allergan. Without their votes, a more 10:12:07

2 representative picture would be presented. 10:12:11

3 Q. But you agree that this second proposal 10:12:14

4 does not require Allergan -- 10:12:19

5 A. That's right. 10:12:21

6 Q. -- to appoint those directors? 10:12:21


8 Q. Okay. With respect to the directors on 10:12:24

9 the Pershing Square/Valeant slate, have you reviewed 10:12:27

10 those names? 10:12:31

11 A. I've -- I've looked over that slate, 10:12:32

12 yes. 10:12:34

13 Q. Okay. Do you have any information that 10:12:34

14 causes you to believe that those directors would 10:12:38

15 violate their fiduciary duties to Allergan if they 10:12:43

16 were appointed to the board? 10:12:45

17 A. Do I have any specific? No. 10:12:48

18 Q. Do you have any general information? 10:12:50

19 A. I have an impression that people who are 10:12:55

20 appointed by -- by Pershing Square for this 10:12:57

21 particular purpose basically understand what they're 10:12:59

22 there for. 10:13:02

23 Q. And what is it that you believe that 10:13:02

24 they're there for? 10:13:04

25 A. To -- well, to drive a deal that would 10:13:05

Page 16

1 not be in the best interests of Allergan 10:13:07

2 shareholders and deliver Allergan to Valeant at a 10:13:10

3 sub par and unacceptable price. 10:13:15

4 Q. Okay. So, do you believe -- I'm sorry, 10:13:18

5 go ahead. I didn't mean to stop you. 10:13:20

6 A. Well, I believe that Mr. Ackman at 10:13:22

7 Pershing Square thinks the price is reasonable. We 10:13:25

8 do not. Therefore, I have to assume that his slate 10:13:28

9 of directors would agree with him because he's a 10:13:32

10 very influential guy, and I'm sure that they would 10:13:36

11 be influenced by his position. 10:13:42

12 Q. Okay. Is it your belief that the 10:13:44

13 Pershing Square/Valeant slate of directors is likely 10:13:46

14 to violate their fiduciary duties to Allergan if 10:13:50

15 they're appointed to the board? 10:13:53

16 A. I think if they accepted the deal that's 10:13:55

17 on the table, they would be violating their 10:13:59

18 fiduciary duties, yes. 10:14:01

19 Q. Okay. Do you know whether or not 10:14:03

20 Pershing Square has any prior relationship with any 10:14:06

21 of these six directors? 10:14:09

22 A. I do not know. 10:14:10

23 Q. Do you know if Allergan has done 10:14:11

24 anything to try to investigate that? 10:14:13

25 A. I know nothing. 10:14:15

Page 17


2 Valeant has any relationship to these -- 10:14:20

3 A. I do not. 10:14:23

4 Q. -- six directors? Okay. 10:14:24

5 MS. SMITH: Again, let me just remind you to 10:14:28

6 wait for him to finish the question. 10:14:30

7 THE WITNESS: Thank you. 10:14:32


9 Q. Respect to the third proposal to be 10:14:33

10 voted on on December 18th, Allergan summarizes 10:14:36

11 that -- No. 3 is to amend Allergan's administrative 10:14:40

12 bylaws to modify the mechanics for calling a special 10:14:46

13 meeting of the stockholders. Do you see that? 10:14:49

14 A. Yes. 10:14:51


16 Pershing Square were to vote on that proposal at the 10:14:55

17 December 18th meeting? 10:14:59

18 A. If Pershing Square's votes tip the 10:15:01

19 balance on that, then these -- these bylaws that 10:15:05

20 they're proposing would be too loose for, in my 10:15:09

21 opinion, the board to have any control over the 10:15:16

22 process and would lead to potential disaster from 10:15:20

23 the standpoint of minority shareholders calling 10:15:24

24 frequent special meetings in far-flung places at 10:15:28

25 inconvenient times. 10:15:37

5 (Pages 14 - 17)


Exhibit 16 Page 406


Page 18

1 Q. How many special meetings has Allergan 10:15:39

2 had in the last ten years? 10:15:41

3 A. This is the only one I'm aware of. 10:15:42

4 Q. You agree as the third proposal that if 10:15:47

5 Pershing Square's 9.7 percent shares -- let me 10:15:50

6 rephrase it. 10:15:57

7 So, for the third proposal, you agree 10:15:58

8 that if 50 percent of the shareholders other than 10:16:01

9 Pershing Square voted in favor of this third 10:16:04

10 proposal that Pershing Square's voting on the 10:16:08

11 Proposal 3 on December 18th would not harm 10:16:11

12 Allergan? 10:16:15

13 MS. SMITH: Objection. Objection to the 10:16:16

14 extent it calls for a legal conclusion. 10:16:17

15 Again, you may answer. 10:16:21

16 THE WITNESS: Could you rephrase that in a 10:16:23

17 different way? 10:16:24


19 Q. Yeah. Let me -- yeah, let me try and be 10:16:25

20 clear. 10:16:26

21 For No. 3, if there's already 30 percent 10:16:27

22 of the 50 percent -- let me start again. 10:16:29

23 So, there's already 50 percent of the 10:16:31

24 shareholders who favored and vote to change the 10:16:33

25 mechanics for calling a special meeting of the 10:16:37

Page 19

1 stockholders, you'd agree that whether or not 10:16:39

2 Pershing Square voted its 9.7 percent wouldn't make 10:16:42

3 any difference? 10:16:46

4 A. It's a hypothetical question that I'm 10:16:47

5 not going to answer. 10:16:48

6 Q. Okay. I understand you may not want to 10:16:49

7 answer those, but I'm permitted within reason -- 10:16:51

8 A. Yeah. 10:16:55

9 Q. -- to ask you hypothetical questions. 10:16:55

10 A. My answer to that is I don't believe 10:16:57

11 there would be 50 percent of the vote passed. I 10:16:59

12 don't think that's a likely situation. 10:17:01

13 Q. Okay. But if, in fact, 50 percent of 10:17:03

14 the shareholders other than Pershing Square voted in 10:17:06

15 favor of the third proposal -- 10:17:08

16 A. Yeah. 10:17:12

17 Q. -- you agree that Pershing Square's 10:17:12

18 voting wouldn't harm Allergan? 10:17:14

19 A. Yes, I don't agree with that. 10:17:16

20 Q. And why don't you agree? 10:17:18

21 A. Because 60/40 is different than 50/50. 10:17:20

22 Q. And why is that? 10:17:23

23 A. Because it's 10 percent more. 10:17:24

24 Q. Right. But once you're past the 10:17:26

25 threshold that the -- the shareholder vote passes, 10:17:28

Page 20

1 what's the difference in the percentage vote if 10:17:32

2 you're over 50 percent? 10:17:34

3 A. Well, you have to be over 50 percent. 10:17:36

4 You said 50 percent. 10:17:38

5 Q. Okay. So, let me reframe the 10:17:39

6 hypothetical. So, if 50.1 percent of Allergan's 10:17:41

7 shareholders voted in favor of -- and I'll do 10:17:46

8 this -- for purpose of time, I'll loop -- put all of 10:17:49

9 them together. 10:17:54

10 So, 50.1 percent of the shareholders 10:17:55

11 voted in favor of Provisions 1, 2, 3, 4, 5, 6, 7 and 10:17:57

12 8, you agree that Allergan would not be harmed if 10:18:01

13 Pershing Square also voted its 9.7 percent shares in 10:18:05

14 favor? 10:18:10

15 MS. SMITH: Object to the extent that's an 10:18:11

16 incomplete hypothetical and does not -- is not clear 10:18:13

17 whether you're including proxies that have been 10:18:16

18 solicited by Pershing Square in the 50.1 percent. 10:18:18

19 You can answer. 10:18:22

20 THE WITNESS: And the answer is no, I 10:18:23

21 wouldn't agree with that. 10:18:24


23 Q. And why don't you agree? 10:18:26

24 A. Because, again, 50 percent is -- is a 10:18:27

25 very close vote, and throwing 10 percent in is a big 10:18:29

Page 21

1 decider in that vote. 10:18:33

2 Q. But to be clear, my hypothetical is: If 10:18:35

3 there are enough shareholders who vote in favor of 10:18:37

4 passage, how is Allergan harmed if Pershing Square 10:18:40

5 also votes its 9.7 percent? 10:18:43

6 A. Well, your number is actually, in my 10:18:48

7 opinion, not likely because you're talking about 10:18:50

8 50 percent with 90 percent of the people voting, 10:18:53

9 which means there would be a significant number of 10:18:57

10 people voting in favor of this. I don't think 10:19:00

11 that's likely, I think, that your hypothetical is 10:19:02

12 even grounded in reality. 10:19:05

13 Q. You think it's more likely that these 10:19:07

14 proposals all fail? 10:19:09

15 A. I think it's very likely. 10:19:11

16 Q. Okay. So, it's very likely the 10:19:13

17 proposals will fail. How is Allergan harmed if 10:19:15

18 Pershing Square votes its 9.7 percent in favor of 10:19:19

19 these proposals that are going to fail? 10:19:24

20 A. I still think that Pershing Square with 10:19:25

21 a block of 10 percent can color the results. And if 10:19:27

22 they have improperly gained their shares, then that 10:19:33

23 shouldn't be allowed. 10:19:38

24 Q. Okay. What specifically does Allergan 10:19:39

25 want the court to stop or enjoin on October 28th? 10:19:41

6 (Pages 18 - 21)


Exhibit 16 Page 407


Page 22

1 MS. SMITH: Object to the extent it calls for 10:19:48

2 a legal conclusion. And again, I think I need to 10:19:49

3 make clear for the record that obviously 10:19:52

4 Mr. Gallagher is appearing here in his personal 10:19:54

5 capacity as a director of Allergan. He is not here 10:19:56

6 as a 30(b)(6) witness for the company. Certainly he 10:19:59

7 can answer the questions to the best of his 10:20:02

8 knowledge but, obviously, not -- not speaking as a 10:20:04

9 30(b)(6). 10:20:07

10 THE WITNESS: We think there was insider 10:20:08

11 trading conducted by Mr. -- Mr. Ackman at Pershing 10:20:10

12 Square, and we think that it is appropriate for that 10:20:14

13 to be found in this -- in this case. 10:20:16


15 Q. But what -- what's -- let me back up. 10:20:20

16 You're the lead director for Allergan? 10:20:22

17 A. I am. 10:20:24

18 Q. And presumably you voted in favor of the 10:20:25

19 lawsuit being filed against Pershing Square and 10:20:30

20 Valeant? 10:20:32

21 A. I did. 10:20:33

22 Q. And was -- 10:20:33

23 A. It was a unanimous vote. 10:20:33

24 Q. Right. And before that you reviewed the 10:20:36

25 legal pleadings? 10:20:38

Page 23

1 A. We did. 10:20:39

2 Q. Okay. And you also -- 10:20:40

3 A. When you say -- excuse me. 10:20:42

4 When you say "reviewed the legal 10:20:43

5 pleadings," we talked about what was going to be 10:20:45

6 done. 10:20:46

7 Q. Okay. 10:20:47

8 A. We didn't look at documents. 10:20:47

9 Q. Okay. And as the lead director, you 10:20:48

10 voted in favor of Allergan seeking to get some sort 10:20:51

11 of injunction against Pershing Square and Valeant? 10:20:56

12 A. I did. 10:20:57

13 Q. Right. I'm asking you as the lead 10:20:58

14 director of Allergan, what is it that Allergan wants 10:21:02

15 Judge Carter to stop or enjoin on October 28th? 10:21:05

16 What -- what relief are you seeking? 10:21:09

17 MS. SMITH: You -- I mean, you can answer if 10:21:14

18 you know. 10:21:15

19 THE WITNESS: You can give me the document, 10:21:16

20 and I can read it to you if you'd like. 10:21:17


22 Q. We can do that at a break, and I'll give 10:21:21

23 you the pleadings from injunction filings. 10:21:23

24 But without -- I'm not -- not trying to 10:21:26

25 stump you. I just want to get an understanding. 10:21:27

Page 24

1 What is your understanding as a lead 10:21:29

2 director of what you want Judge Carter to stop or 10:21:31

3 enjoin on October 28th? 10:21:33

4 A. Pershing Square from voting their 10:21:36

5 shares. 10:21:38

6 Q. Okay. Are you seeking to stop anyone 10:21:38

7 else from voting their shares other than Pershing 10:21:41

8 Square? 10:21:43

9 A. I'm not sure. 10:21:44

10 Q. Now, have any shareholders advised you 10:21:46

11 that they believe they would be harmed if Pershing 10:21:58

12 Square voted at the December 18th meeting? 10:22:01

13 A. I've had no conversations with 10:22:05

14 shareholders about -- about that. 10:22:07

15 Q. I want to make sure I've captured 10:22:13

16 everything. Setting aside conversations, have you 10:22:15

17 had any written communication or any indication of 10:22:17

18 any kind from any Allergan shareholder that they 10:22:20

19 believe they would be harmed if Pershing Square 10:22:23

20 voted at the December 18th meeting? 10:22:26

21 A. I don't recall any. 10:22:28

22 Q. Okay. You're aware that approximately 10:22:29

23 40 percent of Allergan's shareholders have filed 10:22:37

24 consents to the December 18th meeting to go 10:22:41

25 forward? 10:22:43

Page 25

1 A. I am. 10:22:43

2 Q. And you were actually tracking those 10:22:44

3 consents as they came through the last couple 10:22:46

4 months? 10:22:49

5 A. Our advisors were. 10:22:49

6 Q. And they were giving you regular updates 10:22:50

7 on that? 10:22:52

8 A. Yes. 10:22:52

9 Q. Okay. Do you have any information that 10:22:53

10 any of those 40 percent do not want Pershing Square 10:22:55

11 to vote at the December 18th meeting? 10:23:00

12 A. That they do not want Pershing Square to 10:23:04

13 vote? 10:23:06

14 Q. Right. 10:23:07

15 A. I do not have any information on how 10:23:08

16 they feel about that. 10:23:09

17 Q. Do you think it's fair to assume that 10:23:10

18 the 40 percent who have filed consents do want 10:23:12

19 Pershing Square to vote at the December 18th 10:23:20

20 meeting? 10:23:22

21 A. You're asking -- 10:23:23

22 MS. SMITH: Objection. Calls for 10:23:24

23 speculation. 10:23:25

24 THE WITNESS: You're asking me to assume 10:23:25

25 something? You're asking me to give my speculation. 10:23:27

7 (Pages 22 - 25)


Exhibit 16 Page 408


Page 26

1 MR. HOLSCHER: Right. 10:23:30

2 THE WITNESS: Yeah. I would speculate if the 10:23:31

3 balance of those who filed saw that there was 10:23:33

4 insider trading by Mr. Ackman and Pershing Square, 10:23:35

5 they'd be thinking twice about their position. 10:23:39


7 Q. Okay. With respect to the insider 10:23:42

8 trading, can you tell me in your own words what 10:23:47

9 insider trading you believe Pershing Square and 10:23:50

10 Valeant engaged in? 10:23:53

11 MS. SMITH: Again, object to the extent it 10:23:55

12 calls for a legal conclusion. 10:23:57

13 THE WITNESS: Yeah, I'm not a lawyer. I 10:23:58

14 don't understand a lot of the complexities of the 10:24:00

15 law but readily admit that I see things as a basic 10:24:03

16 man on the street. I've seen insider trading cases 10:24:07

17 brought to -- actions brought. I've seen people 10:24:11

18 like Martha Stewart go to jail for insider trading 10:24:16

19 on various -- on what I would consider to be a 10:24:19

20 relatively small action on her part. 10:24:22

21 So, I know that there are serious 10:24:25

22 ramifications for insider trading. To me when -- 10:24:28

23 when someone takes information that no one else has 10:24:30

24 and uses it in the marketplace to make a gain and -- 10:24:35

25 and basically take money from other investors who 10:24:38

Page 27

1 may not have sold their shares if they didn't have 10:24:41

2 that knowledge, that's insider trading. 10:24:45

3 The fact that somehow it's linked with a 10:24:47

4 tender offer to make it a defined insider trading, I 10:24:49

5 very much believe that Mr. Ackman and Mr. Pearson at 10:24:54

6 Valeant had to consider the concept of a tender 10:25:00

7 offer as they cooked up their scheme to do what 10:25:03

8 they've done here. 10:25:06

9 It would be almost impossible to think 10:25:08

10 that someone with the financial acumen and 10:25:10

11 determination of Mr. Ackman, I would not think that 10:25:13

12 that would be a possibility and plan that -- to go 10:25:17

13 forward. Do I know that that happened? No. But 10:25:22

14 you asked me to speculate, and that's what I 10:25:25

15 speculate. 10:25:26


17 Q. Do you have any information that 10:25:27

18 Mr. Pearson or Mr. Ackman had any inside information 10:25:28

19 regarding Allergan when they -- when Pershing 10:25:31

20 Square 1 accumulated these ownership interests in 10:25:35

21 Allergan? 10:25:39

22 A. I'm not sure. 10:25:39

23 Q. Okay. There -- 10:25:40

24 A. There was a director who was a 10:25:42

25 codirector, director on our board and a director on 10:25:44

Page 28

1 their board, who was privy to strategic plans of -- 10:25:46

2 of Allergan. And it is possible that through him 10:25:50

3 they got information about Allergan strategy, its 10:25:53

4 forward numbers and projections, et cetera. So, 10:25:58

5 it's -- it's -- it's probably more than a 10:26:00

6 possibility. 10:26:02

7 Q. Okay. Are you aware whether or not 10:26:04

8 Mr. Ackman and Mr. Pearson have been asked questions 10:26:05

9 about any contact with that director? 10:26:08

10 A. I have no knowledge of that. 10:26:11

11 Q. Do you know what their answers were? 10:26:12

12 A. I have no knowledge of that. 10:26:13

13 Q. Okay. You mentioned earlier that Martha 10:26:14

14 Stewart was convicted of insider trading. Do you 10:26:16

15 know, in fact, she was convicted of making a false 10:26:19

16 statement and not insider trading? 10:26:22

17 A. No, I don't know that. 10:26:23

18 Q. Okay. With respect to the 10:26:25

19 December 18th, 2014 meeting, have you received any 10:26:25

20 communication from any shareholder indicating they 10:26:41

21 do not want that meeting to go forward? 10:26:45

22 A. No. 10:26:48

23 Q. I'd like you to look at this -- the 10:27:04

24 Allergan proxy I've put in front of you and have you 10:27:05

25 look at page 19. It's 19 on this, kind of 10:27:07

Page 29

1 three-quarters of the way down. 10:27:16

2 A. I think I'm getting there. Got it. 10:27:18

3 This one? 10:27:20

4 Q. Okay. There's a reference there to 10:27:21

5 "certain agreements." I'd ask you to read that to 10:27:22

6 yourself. I want to ask you a few questions about 10:27:25

7 it. 10:27:28

8 A. Want me to read Appendix D as well? 10:28:12

9 Q. No, it's okay. I'm not getting into the 10:28:14

10 details of the underlying agreements. 10:28:17

11 A. Okay. 10:28:20

12 Q. I'm read -- I'm going to ask you some 10:28:20

13 questions that -- that are from the proxy that was 10:28:22

14 filed and is dated yesterday or today by Allergan. 10:28:25

15 I'm at page 19 under "certain agreements." 10:28:29

16 There's a reference there to the 10:28:32

17 December 18th Proposal No. 2 and how it might 10:28:36

18 impact certain credit agreements. See that? 10:28:41

19 A. Uh-huh, I do. 10:28:46

20 Q. When did you first learn there was a 10:28:47

21 potential issue with the Allergan credit agreements 10:28:49

22 relating to the removal of board members? 10:28:54

23 A. Just now. 10:28:58

24 Q. This is the first you've -- 10:28:59

25 A. Yeah. 10:29:00

8 (Pages 26 - 29)


Exhibit 16 Page 409


Page 30

1 Q. -- heard of it? 10:29:00

2 So, as the lead director of Allergan, 10:29:02

3 you were not aware before this morning that there 10:29:04

4 could be an impact on the credit agreements? 10:29:07

5 A. Had no -- no knowledge of that. 10:29:10

6 Q. Okay. And with respect to the credit 10:29:11

7 agreement that's defined there, does Allergan have 10:29:19

8 any money drawn down on that credit agreement now? 10:29:23

9 A. I -- I don't know. 10:29:26

10 Q. Okay. You surprised to read this 10:29:27

11 provision in -- in the proxy? 10:29:31

12 A. Surprised? It just seems like a 10:29:34

13 relatively interesting point. But surprised? Not 10:29:36

14 really. It makes sense. 10:29:41

15 MR. HOLSCHER: Mark that as Exhibit 2. 10:29:59




19 Q. Mr. Gallagher, I've put before you a 10:30:11

20 document that is Exhibit 2. 10:30:14

21 By the way, these are going to be 10:30:15

22 identified as Gallagher Exhibit 2. You can put MG, 10:30:16

23 whatever you want, for the designation. 10:30:21

24 This appears to be an e-mail from you to 10:30:23

25 Mr. Pyott, dated June 7th, 2014. Do you see that? 10:30:26

Page 31

1 A. Uh-huh, I do. 10:30:31

2 Q. And the e-mail address there, the 10:30:32

3 [email protected], is that the e-mail address 10:30:37

4 that you use on a regular basis? 10:30:41

5 A. It is. 10:30:43

6 Q. Okay. Do you have an Allergan e-mail? 10:30:44

7 A. I do not. 10:30:46

8 Q. Okay. And do you regularly communicate 10:30:48

9 with Mr. Pyott or people at Allergan from this 10:30:54

10 e-mail address? 10:30:57

11 A. Yes. 10:30:59

12 Q. Okay. As part of the litigation in 10:30:59

13 Delaware and California, were you asked to do 10:31:07

14 anything to preserve -- 10:31:12

15 A. Yeah. 10:31:14

16 Q. -- your e-mails? 10:31:14

17 A. Yes. 10:31:15

18 Q. When were you asked to preserve your 10:31:16

19 e-mails? 10:31:18

20 A. Gee, I don't know. I don't remember the 10:31:19

21 exact date. It was some time ago. 10:31:25

22 Q. Potentially months ago? 10:31:27

23 A. Yes. 10:31:29

24 Q. Okay. And to your knowledge, did you 10:31:29

25 inadvertently destroy or delete any of your 10:31:36

Page 32

1 e-mails -- 10:31:39

2 A. Never. 10:31:40

3 Q. -- at that time period? 10:31:40

4 A. Did not. 10:31:44

5 Q. And fair to say that in communicating 10:31:45

6 with Allergan that you would regularly -- 10:31:46

7 A. I was asked to preserve all e-mails 10:31:48

8 related to Allergan. I mean, I get a lot of 10:31:51

9 personal e-mails from -- I -- I delete those 10:31:54

10 regularly. 10:31:57

11 Q. Right. I'm not asking about those. 10:31:57

12 A. Okay. 10:31:59

13 Q. So, with respect to your -- your e-mails 10:31:59

14 to people at Allergan or shareholders, anyone 10:32:02

15 relating to this overall dispute, be fair to say you 10:32:04

16 used your MRGallagher@hotmail e-mail account fairly 10:32:08

17 regularly? 10:32:12

18 A. I don't do a lot of e-mailing to 10:32:13

19 investors. I, frankly, don't think I've ever really 10:32:17

20 e-mailed an investor. 10:32:21

21 Q. How about to Mr. Pyott or others at 10:32:23

22 Allergan? 10:32:27

23 A. I would use this -- this e-mail. This 10:32:27

24 is the only one I use. 10:32:29

25 Q. Okay. And would you communicate with 10:32:31

Page 33

1 Mr. Pyott or others at Allergan on a fairly regular 10:32:34

2 basis? 10:32:37

3 A. Not -- I mean, I don't know what "fairly 10:32:38

4 regularly" means. What would you -- what would you 10:32:40

5 call "fairly regularly"? 10:32:42

6 Q. Daily? 10:32:44

7 A. No. 10:32:45

8 Q. Okay. So, it's been a pretty intense 10:32:45

9 process here with all the back-and-forth proposals 10:32:48

10 and meeting with advisors and all this. There's 10:32:50

11 been a lot going on the last few months. 10:32:52

12 A. Uh-huh. 10:32:55

13 Q. Do you know why this is the only e-mail 10:32:56

14 we have from your outbox in the entire production? 10:32:59

15 A. Because we have had possibly 30 board 10:33:03

16 meetings since April 22nd, and I have a frequent 10:33:06

17 forum to talk to David and the rest of the directors 10:33:13

18 and the management team in those board meetings. 10:33:15

19 And I don't usually get involved with 10:33:19

20 day-to-day activities of Allergan. That's not my 10:33:22

21 role as lead director. And so, I don't send a lot 10:33:26

22 of e-mails to -- to them. So, if this is the only 10:33:30

23 one you have, then this is the only one I wrote. 10:33:33

24 Q. So, do you think it's credible that from 10:33:36

25 this dispute and all that's going on with Allergan, 10:33:41

9 (Pages 30 - 33)


Exhibit 16 Page 410


Page 34

1 say this date of June 7th through October, you 10:33:46

2 only sent one e-mail from your e-mail address? 10:33:49

3 A. No. 10:33:53

4 MS. SMITH: Objection. Argumentative. 10:33:55

5 THE WITNESS: No. Now, you guys did your 10:33:58

6 search. My files were copied. You did your search. 10:34:02

7 You had your key words. I'm not saying this is the 10:34:06

8 only one I wrote -- I wrote. There may be some that 10:34:10

9 I wrote to Scott Sherman, who's head of HR. But I 10:34:14

10 usually don't do that. I usually call and talk to 10:34:23

11 them. 10:34:26

12 So, it's not unusual that you would only 10:34:30

13 find a little bit. I've learned over time that 10:34:32

14 putting things down in e-mails can lead to 10:34:35

15 misinterpretations and misunderstandings. 10:34:37


17 Q. So, again, with respect to your 10:34:43

18 e-mailing Mr. Pyott or others at Allergan, do you 10:34:46

19 believe this is the only e-mail you sent to them in 10:34:52

20 the last several months on this issue -- these 10:34:57

21 issues? 10:34:59

22 A. I would -- I really don't know. I would 10:34:59

23 say that there are very few e-mails that I sent. 10:35:01

24 Q. Okay. You can set that aside. I'll 10:35:06

25 come back to this later. 10:35:09

Page 35

1 A. All right. Are we done with this? 10:35:11

2 Q. Yes, we are. Thanks. 10:35:13

3 A. You want them back? 10:35:15

4 Q. No. You get to keep them by your side. 10:35:16

5 The court reporter will collect them after we're 10:35:19

6 done. 10:35:22

7 A. Okay. Thanks. It's been a long time 10:35:22

8 since I've done a deposition. 10:35:23

9 MR. HOLSCHER: We could mark this as 10:35:25

10 Exhibit 3, please. 10:35:26




14 Q. Do you recognize Exhibit 3? 10:35:50

15 A. I do. 10:35:51

16 Q. And what is it? 10:35:52

17 A. It's an ISS write-up of the 10:35:53

18 Valeant/Allergan situation. 10:36:02

19 Q. And you've seen this before today? 10:36:08

20 A. I have. 10:36:09

21 Q. And you met with ISS before they issued 10:36:11

22 this report? 10:36:13

23 A. I did. 10:36:14

24 Q. And did you also follow up and send them 10:36:16

25 a memo from counsel for Allergan before this report? 10:36:19

Page 36

1 A. I did. 10:36:23

2 Q. And did you talk with any particular 10:36:24

3 people at ISS, including Mr. Cernich? 10:36:26

4 A. He had, I believe, two other people 10:36:31

5 there. I don't remember their names. 10:36:33

6 Q. Apart from the meeting you had with 10:36:34

7 Cernich before they issued this August 6th report, 10:36:37

8 did you have any phone calls with him? 10:36:40

9 A. No. 10:36:42

10 Q. Do you know if anyone else from Allergan 10:36:42

11 had phone calls with them before the report? 10:36:44

12 A. I don't know. 10:36:46

13 Q. Okay. With respect to the -- to ISS, 10:36:46

14 who is ISS? 10:36:52

15 A. Institutional Shareholder Services. 10:36:55

16 Q. And do you know what ISS's purpose is? 10:37:00

17 A. They advise certain companies on how 10:37:08

18 they should vote on proxy issues, evaluate 10:37:12

19 governance of companies, issue opinions on various 10:37:17

20 situations. They have a very active, I understand, 10:37:22

21 fee structure business where they basically most -- 10:37:26

22 make most of their money. 10:37:28

23 Q. Is it fair to say they're a leading 10:37:31

24 shareholder advisory firm? 10:37:34

25 A. It's fair to say that they're the 10:37:35

Page 37

1 largest. 10:37:36

2 Q. And is Glass Lewis the other one -- 10:37:37

3 A. Yes. 10:37:39

4 Q. -- that's the largest? 10:37:39

5 Does Allergan value the opinions and 10:37:43

6 recommendations of ISS? 10:37:46

7 A. Allergan pays attention to the opinions 10:37:55

8 and recommendations of ISS and considers them a 10:37:58

9 reality of life. 10:38:02

10 Q. Do you believe ISS is qualified to make 10:38:06

11 the opinions they make? 10:38:08

12 A. I think ISS has serious conflicts of 10:38:09

13 interest. 10:38:12

14 Q. Do you think -- what do you believe 10:38:13

15 their conflicts of interest are? 10:38:14

16 A. I believe because they make their -- 10:38:15

17 their money on their fee side, on advisories, that 10:38:17

18 they're highly influenced by the people who pay the 10:38:22

19 fees, and they slant their -- their opinions based 10:38:26

20 on that and that they're not open-minded and 10:38:27

21 objective. And I'm not the only one in business who 10:38:31

22 feels that way. 10:38:33

23 Q. And what's their fee side? 10:38:34

24 A. They -- they provide consultive 10:38:37

25 services, as I understand it, to investor groups. 10:38:41

10 (Pages 34 - 37)


Exhibit 16 Page 411


Page 38

1 Q. Do you know if ISS has provided 10:38:46

2 consultive services to Pershing Square? 10:38:48

3 A. I know that Pershing Square -- I've been 10:38:50

4 told that Pershing Square is a large fee payer to 10:38:53

5 ISS. 10:38:57

6 Q. Okay. And do you know if Valeant is, in 10:38:57

7 your view, a large fee payer? 10:38:59

8 A. I don't know. 10:39:02

9 Q. Okay. But you view the -- that the 10:39:02

10 receipt of the money on the advisory -- I guess on 10:39:03

11 the fee-based side is interfering with their -- 10:39:08

12 their judgment? 10:39:10

13 A. I think that it creates a major conflict 10:39:11

14 of interest. 10:39:14

15 Q. Okay. Have you ever spoke with anyone 10:39:15

16 from ISS regarding your concerns about their bias? 10:39:19

17 A. I have not. 10:39:21

18 Q. Okay. Now, you're paying Goldman Sachs 10:39:23

19 $6 million a year -- or $6 million a quarter for 10:39:32

20 their opinions to you? 10:39:36

21 MS. SMITH: Objection. Vague, ambiguous. 10:39:38

22 THE WITNESS: I'm not sure what the fee is. 10:39:39

23 I don't recall it. 10:39:41


25 Q. Do you know if you're also paying Bank 10:39:42

Page 39

1 of America $6 million a quarter in fees? 10:39:44

2 A. Again, I don't recall the exact number 10:39:46

3 that we're paying them, but we are paying them fees. 10:39:48

4 Q. You agree they're being paid millions of 10:39:51

5 dollars? 10:39:52

6 A. I -- I do. 10:39:53

7 Q. Do you think that that in any way 10:39:53

8 affects the opinions they're giving you? 10:39:55

9 A. I do not. 10:39:57


11 A. Because I've had a lot of experience 10:40:00

12 with these types of companies over the years, and 10:40:01

13 they seem to be very objective and very scrupulous 10:40:03

14 about what they do because they -- they know their 10:40:07

15 reputation is extremely important for ongoing 10:40:09

16 business. 10:40:12

17 Q. So, as it relates to Goldman Sachs and 10:40:13

18 BofA, their receipt of fees from you doesn't affect 10:40:15

19 their giving you independent advice? 10:40:21

20 A. Or maybe JPMorgan or Credit Suisse on -- 10:40:23

21 on Valeant's side. I mean, do you believe that 10:40:27

22 those are affecting their advice to Mr. Pearson? 10:40:29

23 I -- you know, I think we all have to 10:40:32

24 assume that if we -- if we hire a banker and we pay 10:40:34

25 them that kind of money, we're hiring them on their 10:40:38

Page 40

1 reputation and their ability and knowledge and their 10:40:40

2 objectivity. That's the reason that we have them, 10:40:43

3 plus their expertise. So, from that standpoint, no. 10:40:45

4 Q. So, with respect to ISS, do you have any 10:40:49

5 concrete information that they've received fees from 10:40:54

6 Pershing Square? 10:40:57

7 A. I do not have concrete information. I 10:40:59

8 have been told that they do. 10:41:02

9 Q. And who told you that? 10:41:03

10 A. Our shareholder service advisor. 10:41:05

11 Q. And who's that? 10:41:08

12 A. Innisfree. 10:41:09

13 Q. Okay. And who at -- what was the name 10:41:11

14 of the company? 10:41:13

15 A. Innisfree. 10:41:14

16 Q. And who at Innisfree told you that they 10:41:15

17 believe Pershing Square was making payments to ISS? 10:41:18

18 A. Art. I don't remember Art's last name. 10:41:22

19 Q. So, just in general, you believe that 10:41:26

20 ISS is not fair? 10:41:28

21 A. I do. 10:41:29

22 Q. Okay. And so, with respect to this ISS 10:41:30

23 report, you don't -- you don't view ISS having a lot 10:41:36

24 of integrity? 10:41:41


Page 41

1 THE WITNESS: I do not. 10:41:54


3 Q. With respect to the ISS report, looking 10:42:02

4 at the first page of Exhibit 3 in front of you, the 10:42:05

5 second-to-the-last bullet point on the first page, 10:42:12

6 you see where ISS states, "There appear to be 10:42:16

7 significant governance issues which could be 10:42:23

8 addressed at a proposed special meeting. 10:42:26

9 Shareholders should provide consent for the request 10:42:29

10 to call special meeting." You see that? 10:42:33

11 A. I do. 10:42:36

12 Q. And you disagree with that conclusion? 10:42:36

13 A. I do. 10:42:38

14 Q. And before they issued that conclusion, 10:42:39

15 you provided them information as to why you believed 10:42:40

16 they should not make their recommendation? 10:42:42

17 A. Allergan did. 10:42:44

18 Q. But you were present on behalf of 10:42:45

19 Allergan to make the presentation to ISS? 10:42:47

20 A. I was. But it wasn't to lobby for or 10:42:50

21 against a special meeting. 10:42:53

22 Q. What was it to -- trying to accomplish? 10:42:55

23 A. To talk to -- to ISS to understand their 10:42:57

24 issue on -- on corporate governance to explain our 10:42:59

25 position on corporate governance to start a dialogue 10:43:03

11 (Pages 38 - 41)


Exhibit 16 Page 412


Page 42

1 with them. 10:43:07

2 Q. Okay. With respect to the ISS report, 10:43:07

3 I'd like to move to page 2 of that report. There's 10:43:10

4 a section that says, "What is required to provide 10:43:13

5 consent?" Do you see that? 10:43:16

6 A. I do. 10:43:18

7 Q. Okay. Have you -- you've reviewed this 10:43:19

8 before? 10:43:21

9 A. I have. 10:43:21

10 Q. Okay. Do you believe this is a fair 10:43:22

11 summary of the requirements Allergan's bylaws impose 10:43:25

12 on shareholders who want to support the call for 10:43:30

13 special meeting? 10:43:34

14 A. I do. 10:43:38

15 Q. And in your view, those requirements are 10:43:40

16 reasonable and appropriate? 10:43:46

17 A. At the time we put these special meeting 10:43:58

18 provisions in, I did. 10:44:03

19 Q. What Allergan purpose is served by 10:44:11

20 requiring shareholders to move the shares in a 10:44:14

21 record name? 10:44:18

22 A. So Allergan knows which shareholders 10:44:18

23 are -- that they are legitimate shareholders of the 10:44:22

24 company. And it's not all shares. It's a minimum 10:44:25

25 of one share. 10:44:31

Page 43

1 Q. Who would be an illegitimate 10:44:33

2 shareholder? 10:44:36

3 A. I don't know. I'm not an expert on 10:44:37

4 illegitimacy of shareholders. 10:44:39

5 Q. Well, you referenced that the -- that 10:44:43

6 the requirement to move shares into record name is 10:44:44

7 so that Allergan can determine if someone is a 10:44:47

8 legitimate shareholder. 10:44:49

9 A. Right. What I meant is the name is 10:44:51

10 legitimate. The owner's name is legitimate. 10:44:52

11 Q. Okay. Looking down to the fourth bullet 10:45:02

12 point, ISS summarizes the bylaws as requiring that 10:45:09

13 the shareholder "answer an extensive written 10:45:14

14 information request on matters ranging from whether 10:45:16

15 the shareholder has dividend rights which may be 10:45:19

16 separate from the common shares to whether any 10:45:21

17 shares are owned on margin as well as the total 10:45:24

18 margin indebtedness to 'any material relationship 10:45:27

19 with the company, any affiliate of the company, any 10:45:31

20 officer, director or employee of the company, or any 10:45:36

21 affiliate thereof or any of the more than 30 named 10:45:40

22 principal competitors.'" 10:45:44

23 Do you see that? 10:45:45

24 A. I do. 10:45:46

25 Q. How are the Allergan shareholders' 10:45:47

Page 44

1 interests served by this requirement? 10:45:50

2 A. This whole set of requirements was to 10:45:56

3 determine the -- the nature of the relationships 10:45:59

4 that exist between investors who were signing up for 10:46:03

5 a special meeting to uncover if there were special 10:46:06

6 arrangements between them, if they had a -- a 10:46:11

7 mission that was not aligned with the balance of -- 10:46:15

8 of the shareholders who were not signing for the 10:46:19

9 special meeting and basically gather as much 10:46:23

10 information as possible in order to determine that. 10:46:25

11 Q. The next bullet point indicates that the 10:46:29

12 Allergan bylaws require shareholders to "provide 10:46:32

13 similar information disclosure for 'associates' of 10:46:35

14 any shareholders, a broad term which explicitly 10:46:38

15 includes spouses, children, trusts, corporations of 10:46:42

16 the business entities." 10:46:45


18 A. I do. 10:46:46

19 Q. Do you believe that's a -- a reasonable 10:46:47

20 provision to impose upon shareholders before voting? 10:46:48

21 A. At the time we did this, I did. 10:46:52

22 Q. Going to the next page, page 3, you see 10:47:05

23 the ISS quick score, the governance quick score 10:47:11

24 pillars? 10:47:15

25 A. Yes. 10:47:16

Page 45

1 Q. Do you know what they are? 10:47:16

2 A. They're ratings for various aspects 10:47:18

3 of -- of governance. 10:47:22

4 Q. And are you aware that -- that the 10:47:26

5 scale's from 1 to 10, with 10 being the worst 10:47:27

6 possible rating? 10:47:30

7 A. I do. 10:47:31

8 Q. And you are aware that if there's a red 10:47:32

9 flag, that is something that ISS has identified as a 10:47:35

10 problematic practice? 10:47:38

11 A. Uh-huh, I do. 10:47:39

12 Q. Do you know why ISS has given Allergan 10:47:41

13 the worst rating of 10 for board practices? 10:47:44

14 A. I think they've written it up in their 10:47:49

15 document. You can -- you can read it. 10:47:51

16 Q. But what's your understanding as to why? 10:47:53

17 A. Well, I think that ISS believes that we 10:47:55

18 did not properly follow through on a number of 10:47:59

19 shareholder resolutions. We disagree with them on 10:48:04

20 that. We've explained that to them. But they've 10:48:08

21 continued to see things their way. 10:48:13

22 Q. And on -- for shareholder rights, they 10:48:17

23 give Allergan the second worst score of 9 out of 10. 10:48:21


25 A. I do. 10:48:25

12 (Pages 42 - 45)


Exhibit 16 Page 413


Page 46

1 Q. And do you know why ISS has given 10:48:26

2 Allergan the second worst score of 9 for shareholder 10:48:29

3 rights? 10:48:33

4 A. Their -- their red flag is on takeover 10:48:33

5 defenses. They apparently think we have overly 10:48:35

6 stringent takeover defenses. 10:48:39

7 Q. And you disagree with them? 10:48:41

8 A. I do. 10:48:42

9 Q. Okay. And under "vote results," does 10:48:43

10 this indicate that ISS had recommended against you 10:48:47

11 being re-elected at the May 6th, 2014 meeting? 10:48:52

12 A. Yes. 10:48:56

13 Q. Had you and others at Allergan had 10:48:57

14 discussions with ISS as to the reason for that 10:49:00

15 recommendation? 10:49:01

16 A. I did not. 10:49:02

17 Q. Do you know if others at Allergan did? 10:49:02

18 A. I do not know for sure. 10:49:05

19 Q. Did anyone at Allergan ever tell you 10:49:06

20 what ISS's concerns were specifically regarding your 10:49:08

21 conduct as lead director? 10:49:10

22 A. It had to do with the -- not following 10:49:12

23 through and putting exactly what the shareholder 10:49:16

24 resolution that had been voted on the previous year 10:49:18

25 onto our proxy and to endorse it at a special 10:49:24

Page 47

1 meeting, provision we felt that was extremely loose 10:49:29

2 and would be greatly disruptive. 10:49:34

3 We had significant feedback from a 10:49:37

4 number of -- of our investors who said that that was 10:49:39

5 way too loose, and while a special meeting made 10:49:42

6 sense, they didn't think that was necessary. It was 10:49:46

7 a 10 percent hurdle rate without any other real 10:49:48

8 conditions related to it. 10:49:51

9 So, we spent a year studying what to do 10:49:52

10 and put together what we thought was a much more 10:49:54

11 appropriate special meeting package, which started 10:49:57

12 at 25 percent for -- and frankly, that got 98, 10:50:02

13 99 percent of the vote when we put it out. 10:50:07

14 ISS was in favor of it and supported it, 10:50:11

15 and -- but because it wasn't exactly the 10 percent 10:50:13

16 without the other kinds of -- of controls that the 10:50:17

17 board needs in order to have an orderly process, 10:50:19

18 they thought that I should be singled out because I 10:50:23

19 was head of the governance committee at that time. 10:50:27

20 Q. But other than the 25 percent, we just 10:50:30

21 went through on page 2 the several different hurdles 10:50:32

22 that Allergan also put in for those 25 percent, 10:50:36

23 right? 10:50:38

24 A. Yeah, I didn't say that was the only 10:50:39

25 one. 10:50:42

Page 48

1 Q. Okay. And didn't you also refuse to 10:50:42

2 implement a shareholder vote to split the CEO and 10:50:44

3 chairman position? 10:50:47

4 A. We -- we recommended against it. We're 10:50:49

5 still considering what we're going to do, and we'll 10:50:53

6 be addressing that in our next -- in our next annual 10:50:55

7 meeting. We're already talking to shareholders 10:51:00

8 about their -- their versions of that. 10:51:01

9 Now, when you say there was a vote, 10:51:03

10 these are nonbinding votes, and they did not garner 10:51:06

11 50 percent of outstanding shares. They did get more 10:51:12

12 than 50 percent of the shares voted. So, that means 10:51:14

13 that at least 50 percent of our -- of the votes of 10:51:19

14 our shareholders weren't in favor of these. 10:51:24

15 So, that basically means that if we're 10:51:26

16 going to satisfy all or as a vast array of 10:51:28

17 shareholders, then we need to find something that is 10:51:33

18 more middle of the road than the proposal that was 10:51:35

19 made by the shareholder. 10:51:38

20 Q. So, you assume that if a shareholder 10:51:39

21 didn't vote on splitting the CEO chairman, that 10:51:40

22 means they opposed it? 10:51:45

23 A. I think so, yes. 10:51:46

24 Q. Okay. 10:51:48

25 A. They didn't care enough to think that it 10:51:48

Page 49

1 was worth a vote. 10:51:50

2 Q. Okay. And you've indicated that there 10:51:51

3 were investors -- several investors who thought the 10:51:53

4 10 percent threshold for meetings was too loose. 10:51:55

5 Who are those investors? 10:51:59

6 A. You'd have to talk to Allergan. This is 10:52:00

7 feedback we got from -- from them who talked to the 10:52:02

8 proxy desks at the institutions. 10:52:05

9 Q. Fair to say you listen to those 10:52:09

10 institutions -- these long-term shareholders, you 10:52:11

11 listen to their feedback? 10:52:14

12 A. As I said, I -- we get their feedback 10:52:17

13 via our legal department who contact -- and 10:52:20

14 institutional investor group who contact these 10:52:23

15 people and fill us in. 10:52:27

16 Q. Okay. Now, turning to page 5 of the 10:52:28

17 report, just above where it says "Purpose of the 10:52:37

18 consent solicitation," do you see that there's a 10:52:40

19 reference to, "At Valeant's closing price the prior 10:52:46

20 day, the market value offer was approximately $181. 10:52:49

21 A premium of 27.4 percent to Allergan's closing 10:52:53

22 price for any offer was announced and the 10:52:57

23 55.1 percent to Allergan's closing price the day 10:53:00

24 before Pershing Square crossed the 5 percent 10:53:06

25 threshold." 10:53:09

13 (Pages 46 - 49)


Exhibit 16 Page 414


Page 50


2 A. I do. 10:53:10

3 Q. Okay. Do you agree that that offer was 10:53:10

4 a 55.1 percent premium to Allergan's closing price 10:53:12

5 the day before Pershing Square crossed the 5 percent 10:53:19

6 threshold? 10:53:23

7 A. I'm not challenging the math in this 10:53:23

8 paragraph. 10:53:27

9 Q. Okay. I'd like you to turn to page 6 of 10:53:27

10 the report. The very bottom paragraph on page 6, 10:53:31

11 the last paragraph references the rationale Allergan 10:53:39

12 gave and the information that you and others gave to 10:53:46

13 ISS in the meeting, and I'm going to read from it, 10:53:49

14 where the company contends, quote, "the interest of 10:53:52

15 Pershing Square are not aligned with the interest of 10:53:54

16 Allergan stockholders." 10:53:58


18 A. I do. 10:54:00

19 Q. Do you believe that? 10:54:01

20 A. I do. 10:54:02


22 A. Pershing Square seems bent on making a 10:54:03

23 deal at any price. They like the low price. They 10:54:09

24 like the medium price. And they like the high 10:54:13

25 price. And in my opinion, they're more incentivized 10:54:16

Page 51

1 to getting the lowest possible deal than -- than -- 10:54:19

2 than getting the highest possible value for their 10:54:22

3 shares. Most of our shareholders certainly wouldn't 10:54:26

4 be aligned with that. 10:54:29

5 Q. And going to ISS analysis on page 7, 10:54:33

6 about two-thirds of the way from the bottom, you see 10:54:37

7 on the analysis -- it's the bottom half of that 10:54:39

8 page, at page 7, they have some analysis. 10:54:41

9 And then the beginning of the fourth 10:54:43

10 paragraph, they say, "It is untrue that Pershing 10:54:45

11 Square's incentive run counter to the other 10:54:48

12 shareholders." 10:54:51

13 You see that? 10:54:52

14 A. I see that. 10:54:53

15 Q. And you disagree with ISS's conclusion? 10:54:54

16 A. Vehemently. 10:54:57

17 Q. And why are they wrong? 10:54:57

18 MS. SMITH: Can I pause you for a second, 10:54:59

19 please? I'm not -- I'm not where you are. 10:55:00

20 MR. HOLSCHER: I'm sorry. Page 7, the 10:55:03

21 analysis section, the fourth paragraph. It starts 10:55:04

22 with, "It is untrue." 10:55:07

23 MS. SMITH: Okay. 10:55:09

24 MR. HOLSCHER: I'll say it again. 10:55:10

25 ///

Page 52


2 Q. Mr. Gallagher, you see on page 7 that 10:55:11

3 ISS has concluded that, "It is untrue that Pershing 10:55:15

4 Square's incentives run counter to other 10:55:22

5 shareholders"? 10:55:27

6 See that? 10:55:27

7 A. I do. 10:55:28

8 Q. And you disagree with ISS? 10:55:28

9 A. Totally. 10:55:31

10 Q. And you believe they're wrong? 10:55:31

11 A. Totally. 10:55:32


13 A. Because I believe that Pershing Square's 10:55:34

14 run counter to other shareholders. 10:55:37

15 Q. Okay. At the -- at the May -- at 10:55:39

16 page 8, the first paragraph of page 8, ISS refers to 10:55:46

17 "the high withhold votes, the 2014 annual meeting 10:55:50

18 against the lead independent director" -- 10:55:56

19 A. Where are you? 10:55:58

20 Q. I'm sorry. It's the first paragraph. 10:55:59

21 A. Okay. 10:56:00

22 Q. The fourth line. 10:56:01

23 A. Okay. 10:56:01

24 Q. It references, "the high withhold votes, 10:56:02

25 the 2014 annual meeting against the lead independent 10:56:04

Page 53

1 director of 33.4 percent." 10:56:08


3 A. I do. 10:56:12

4 Q. And that was the May 2014 meeting? 10:56:14

5 A. It was. 10:56:17

6 Q. And fair to say you disagree with the 10:56:19

7 withhold vote of 33.4 percent? 10:56:23

8 A. I don't understand your question. 10:56:27

9 Q. Do you -- you believe that you're doing 10:56:30

10 a good job as a lead independent director? 10:56:34

11 A. I do. Thank you. 10:56:36

12 Q. So, you disagreed with the 33.4 percent 10:56:36

13 withhold vote? 10:56:40

14 A. I do. 10:56:41

15 Q. Notwithstanding you disagree with it, 10:56:42

16 did you have any discussions with Allergan in May of 10:56:43

17 2014 if -- if given -- whether incorrect or not, in 10:56:46

18 your view, the shareholders' concerns, whether you 10:56:50

19 should continue as a lead director? 10:56:53

20 A. Because of the 33.4? 10:56:55

21 Q. Right. 10:56:57

22 A. No. And -- and I'm sure that if the 10:56:59

23 other directors or if David Pyott felt that that was 10:57:02

24 the case, they would have certainly offered it. 10:57:06

25 But I think I've explained my position 10:57:08

14 (Pages 50 - 53)


Exhibit 16 Page 415


Page 54

1 regarding ISS and ISS's rationale and statements. I 10:57:10

2 believe that the governance committee did the right 10:57:18

3 thing, and if we had to be penalized by ISS to do 10:57:21

4 it, that's -- that's part of the job, and we -- we 10:57:27

5 suffer the responsibility. 10:57:30

6 Interesting to note that two-thirds of 10:57:32

7 the votes were for me, even though ISS was pretty 10:57:37

8 strongly against me, including Glass Lewis as well. 10:57:43

9 So, I -- I look more at the two-thirds as being 10:57:47

10 pretty bright people and the one-third as being kind 10:57:51

11 of followers of ISS because that's what they do. 10:57:53

12 Q. In the middle of page 8 of the ISS 10:57:56

13 report -- and again, we're talking about the 10:58:02

14 August 21st, 2014 report, it -- I'm going with the 10:58:04

15 paragraph that starts with "Asked once again." And 10:58:10

16 about the third line down, it says, "the lead 10:58:14

17 independent director offered the board had been 10:58:18

18 informed by its advisors that such bylaws -- that 10:58:20

19 such bylaw constraints were common in other 10:58:26

20 companies." 10:58:29


22 A. I do. 10:58:30

23 Q. And that's what you told ISS at your 10:58:31

24 meeting before it issued the August 21st, 2014 -- 10:58:32

25 A. I did. 10:58:37

Page 55

1 Q. -- report? 10:58:37

2 And, in fact, that's not true, right? 10:58:38

3 A. What's not true? 10:58:40

4 Q. Your representation that Allergan's 10:58:42

5 bylaw constraints were common at other companies; 10:58:46

6 that's not true? 10:58:48

7 A. Well, it is true. There are -- there's 10:58:50

8 nothing in our bylaws that you couldn't find in some 10:58:53

9 other company's bylaws. So, from that standpoint, 10:58:56

10 they're common. 10:58:59

11 Q. Looking to page 2 of the -- of the 10:59:03

12 report, let's go back to page 2. 10:59:05

13 A. Right. 10:59:07

14 Q. So, this is the -- remember the bullet 10:59:09

15 points we went over, the one, two, three, four, 10:59:12

16 five, six bullet points with the -- the restrictions 10:59:14

17 in your bylaws? 10:59:16

18 A. Yes. 10:59:17

19 Q. Okay. Can you name any Fortune 500 10:59:18

20 company other than Allergan that had those six 10:59:22

21 restrictions, or similar restrictions, all of them 10:59:26

22 in place at the time that Allergan put those bylaws 10:59:29

23 in place? 10:59:32

24 A. No. 10:59:33

25 Q. Isn't it true that there isn't a single 10:59:34

Page 56

1 other Fortune 500 company in the United States that 10:59:36

2 had that same collection of bylaws? 10:59:39

3 A. I would say that the bylaws for 10:59:41

4 companies on special meetings are all very unique 10:59:44

5 and almost like fingerprints in that you could 10:59:48

6 pretty much say that for a -- for most companies. 10:59:51

7 I would also point out that half the 10:59:53

8 companies in the S&P 500 have no provision for 10:59:56

9 special meetings. So, while these may be difficult, 11:00:01

10 and I grant that they are, they do allow for a 11:00:04

11 special meeting. And clearly the process works 11:00:07

12 because we -- we were within a six-week period given 11:00:11

13 a request for a special meeting that met our 11:00:17

14 threshold. So, while they're -- they're difficult 11:00:20

15 and possibly unique, they're certainly doable, 11:00:24

16 although possibly difficult. 11:00:28

17 Q. Are you aware that Pershing Square and 11:00:33

18 Valeant filed a suit in Delaware Chancery Court to 11:00:35

19 invalidate these restrictive laws? 11:00:39

20 A. I am. 11:00:42

21 Q. Did you read a copy of the complaint 11:00:42

22 that was filed by Valeant/Pershing Square? 11:00:43

23 A. I don't remember if I did or not. 11:00:45

24 Q. Okay. The complaint included some 11:00:47

25 allegations that you had actually breached your 11:00:49

Page 57

1 fiduciary duties. Did you review those? 11:00:51

2 A. I don't recall. 11:00:53

3 Q. Okay. Did you ever get independent 11:00:54

4 counsel to review the allegations relating to your 11:00:57

5 alleged breach of fiduciary duty brought in Delaware 11:01:02

6 or California? 11:01:05

7 MS. SMITH: So, you may answer that question 11:01:06

8 to the extent it doesn't call for attorney-client 11:01:07

9 privileged information. 11:01:09


11 Q. Yeah. To be clear, I don't want the 11:01:11

12 substance of any advice. On just -- on just the 11:01:12

13 fact of whether you've -- you've got any independent 11:01:14

14 legal advice. 11:01:16

15 A. The board has independent legal advice, 11:01:16

16 and I do not feel the need to get personal 11:01:21

17 independent legal advice. 11:01:25

18 Q. Okay. So, the board has independent 11:01:27

19 legal advice apart from Latham & Watkins and 11:01:29

20 Wachtell? 11:01:33

21 A. Wachtell is our independent board 11:01:34

22 advisor. 11:01:36

23 Q. Okay. And are you aware that your 11:01:36

24 independent board advisor, Wachtell, appeared as 11:01:38

25 litigation counsel for the company in the California 11:01:40

15 (Pages 54 - 57)


Exhibit 16 Page 416


Page 58

1 litigation? 11:01:43

2 A. I -- I guess I'm aware of that, yes. 11:01:45

3 Q. And that they also appeared in Delaware 11:01:48

4 as litigation counsel? 11:01:50

5 A. Yes. 11:01:51

6 Q. But you believe Wachtell is providing 11:01:52

7 you independent advice? 11:01:54

8 A. I do. 11:01:56

9 Q. Okay. 11:01:57

10 A. The board. 11:01:57

11 Q. Do you know who Chancellor Bouchard is? 11:02:00

12 A. He's the, I guess, judge in Delaware. 11:02:03

13 Q. Okay. Did anyone at Allergan advise you 11:02:07

14 of what Chancellor Bouchard's reaction was to these 11:02:22

15 bylaws? 11:02:26

16 MS. SMITH: Objection. Relevance. 11:02:30

17 THE WITNESS: I -- I don't recall. 11:02:31


19 Q. Are you aware that -- well, do you 11:02:38

20 understand the Delaware courts have expertise in 11:02:41

21 dealing with corporate governance issues? 11:02:44

22 A. I understand that. 11:02:46

23 Q. Do you believe in general the Delaware 11:02:47

24 courts are biased towards shareholders? 11:02:49

25 A. I don't have an opinion. 11:02:52

Page 59

1 Q. With respect to Chancellor Bouchard, do 11:02:54

2 you have a view of whether or not he's biased? 11:02:57

3 A. I don't -- I don't have an opinion. 11:02:59

4 MS. SMITH: Let me remind you to let him 11:03:01

5 answer the quest- -- ask the question before you 11:03:02

6 answer. 11:03:04


8 Q. So far as you know, is -- is Chancellor 11:03:05

9 Bouchard, I guess, neutral? 11:03:06


11 THE WITNESS: I have no knowledge whether 11:03:12

12 he's neutral or not. I -- I would assume. I would 11:03:14

13 hope for the sake of good legal system that he is. 11:03:19


15 Q. Do you understand -- were you ever told 11:03:26

16 before today that Chancellor Bouchard had described 11:03:28

17 these bylaws as a horse choker of a bylaw? 11:03:34


19 And don't reveal the content of any 11:03:45

20 attorney-client privileged communications you may 11:03:47

21 have had. But please answer. 11:03:49

22 THE WITNESS: I'm sorry. I didn't understand 11:03:52

23 your advice there. 11:03:53

24 MS. SMITH: Of course. If -- 11:03:54

25 THE WITNESS: Don't -- don't -- 11:03:54

Page 60

1 MS. SMITH: If you -- 11:03:56

2 THE WITNESS: Don't invoke the -- 11:03:56

3 MS. SMITH: Don't reveal the content of 11:03:57

4 any -- 11:03:58

5 THE WITNESS: Then I can't -- I can't answer. 11:03:59

6 MS. SMITH: -- discussions you've had with 11:04:00

7 your attorneys. 11:04:01


9 Q. Again, I'm not asking you what advice 11:04:03

10 you got from counsel. I'm saying, before you 11:04:04

11 started this deposition today -- 11:04:07

12 A. Right. 11:04:08

13 Q. -- were you aware that the bylaws you've 11:04:09

14 been defending in this deposition Chancellor 11:04:13

15 Bouchard referred to as horse choker of a bylaw? 11:04:15

16 MS. SMITH: Again, objection, relevance. 11:04:20

17 And you may answer yes or no. 11:04:21

18 THE WITNESS: Yes, I had heard that. 11:04:22


20 Q. Okay. Do you think Chancellor 11:04:24

21 Bouchard's characterization of the bylaws as a horse 11:04:28

22 choker is correct? 11:04:33


24 THE WITNESS: I don't know what Chancellor 11:04:37

25 Bouchard means by horse choker. If that's a -- if 11:04:39

Page 61

1 that's a standard legal term, I'd like to hear it. 11:04:43

2 I understand that he thinks that these 11:04:46

3 bylaws are very, very difficult. I think he 11:04:49

4 probably is aware also that they are doable and that 11:04:52

5 a special meeting was called for and that the board 11:04:55

6 responded and set a date. So, if you're asking me 11:04:59

7 would I agree that these are difficult 11:05:04

8 administratively, I would agree. 11:05:09


10 Q. After Chancellor Bouchard described 11:05:18

11 these bylaws as horse choker, did you consider 11:05:21

12 removing or amending these restrictive bylaws 11:05:27

13 regarding a shareholder vote? 11:05:30

14 MS. SMITH: So, that's a compound question. 11:05:34

15 Object. Compound. 11:05:36

16 Please go ahead and answer it. 11:05:37

17 THE WITNESS: Let's break it in two then. 11:05:38


19 Q. I think I just asked you one question, 11:05:42

20 but I'll do it again. 11:05:43

21 After -- placing a time: After 11:05:46

22 Chancellor Bouchard referred to these bylaws as 11:05:48

23 horse choker of a bylaw, did you consider having 11:05:50

24 Allergan remove or amend those bylaws? 11:05:56

25 MS. SMITH: And so, I still object as 11:05:59

16 (Pages 58 - 61)


Exhibit 16 Page 417


Page 62

1 compound. 11:06:00

2 But please answer. 11:06:01

3 THE WITNESS: Yeah. I actually -- I had 11:06:03

4 considered making amendments to our requirements 11:06:05

5 prior to that. 11:06:09


7 Q. When was that? 11:06:11

8 A. After my meeting with ISS. 11:06:13

9 Q. Okay. And do you have any amendments 11:06:15

10 that you were going to be proposing at a later 11:06:19

11 shareholder meeting? 11:06:22

12 A. We are examining a number of different 11:06:24

13 approaches that would streamline the process. 11:06:28

14 Q. So, how would Allergan be harmed if 11:06:33

15 Pershing Square votes on December 18th, 2014, to 11:06:37

16 remove these bylaws that the company is considering 11:06:42

17 changing in any event? 11:06:49

18 A. You're -- you're -- the assumption in 11:06:51

19 your question is that we're thinking of changing 11:06:54

20 them to the very loosey-goosey -- that's another 11:06:55

21 legal term -- set of requirements that Pershing 11:06:59

22 Square is proposing. We -- we think that is 11:07:04

23 actually nonsense, that -- that proposal. 11:07:07

24 We -- we have had feedback from 11:07:12

25 investors that we have sought out that they are 11:07:15

Page 63

1 unhappy with the administrative requirements of 11:07:20

2 our -- of our special meeting bylaws. And we have 11:07:23

3 been examining and are considering making some 11:07:27

4 streamlining changes to it. 11:07:30

5 Q. In ISS's report, they indicated they had 11:07:34

6 heard repeatedly that the additional procedural 11:07:38

7 information requirements laid out by Allergan bylaws 11:07:43

8 impose a significant burden on investors. You see 11:07:45

9 that? 11:07:48

10 A. I'm aware of that. 11:07:51

11 Q. Is that consistent with the feedback you 11:07:52

12 got from shareholders? 11:07:53

13 A. It is. 11:07:54

14 Q. Are you aware of any shareholder who 11:07:55

15 supports the restrictive bylaws, the six bullet 11:07:57

16 points we went over, in the ISS report? 11:08:01

17 A. I am not. 11:08:03

18 Q. Okay. Now, one of the proposals -- and 11:08:05

19 let's go back to that proxy statement that I believe 11:08:23

20 we marked that as an early -- 11:08:25

21 A. One. 11:08:27

22 Q. -- exhibit. I think it's No. 1. 11:08:27

23 And again, I want to use your -- your 11:08:32

24 Allergan summary of these proposals just to make 11:08:35

25 sure we start on the same page. So, I'm going back 11:08:38

Page 64

1 to Exhibit 1 on the proposals. Proposal 8 is, as 11:08:42

2 Allergan has described it, "to request that the 11:08:50

3 Allergan board engage with Valeant with whom 11:08:53

4 Pershing Square is a self-proclaimed co-bidder 11:08:57

5 regarding its proposal to acquire Allergan." 11:09:01


7 A. I do. 11:09:05

8 Q. Do you know whether or not that 11:09:06

9 Proposal 8 also makes clear that Allergan, under 11:09:07

10 this proposal, was under no obligation to accept any 11:09:12

11 bid from Valeant? 11:09:17

12 MS. SMITH: Objection. Ambiguous. 11:09:21

13 THE WITNESS: I'm really not sure I 11:09:23

14 understand your question. 11:09:24


16 Q. This proposal only requires that -- let 11:09:25

17 me back it up. 11:09:29

18 Proposal 8 is -- is only a request that 11:09:31

19 Allergan engage with Valeant/Pershing Square; is 11:09:37

20 that right? 11:09:40

21 A. That's what it appears to be, yes. 11:09:41

22 Q. Have you read these proposals? 11:09:42

23 A. This? 11:09:45

24 Q. No. Just -- just the proposals for the 11:09:45

25 December 18th, 2014 meeting. 11:09:47

Page 65

1 A. Not in detail, no. 11:09:50

2 Q. Okay. Do you have a general 11:09:51

3 understanding that one of the requests is that 11:09:53

4 Allergan essentially engage and have discussions 11:09:57

5 with Valeant and Pershing Square? 11:10:01

6 A. One of the requests, yes. 11:10:02

7 Q. Are you aware that request does not, in 11:10:04

8 any way, require Valeant to accept any offer from -- 11:10:07

9 A. You mean Allergan? 11:10:11

10 Q. I'm sorry. 11:10:13

11 Are you aware that that Proposal 8 does 11:10:14

12 not require Allergan to accept any offer from 11:10:16

13 Valeant or Pershing Square? 11:10:18

14 A. I would assume that would be the case. 11:10:19

15 Q. And, in fact, it explicitly states that 11:10:21

16 if Allergan gets a better offer from someone else, 11:10:24

17 it should take it? 11:10:26

18 A. That would make sense too. 11:10:28


20 Pershing Square's allowed to vote on Proposal 8 at 11:10:34

21 the December 18th, 2014 meeting? 11:10:38

22 A. I think I've continued to answer that 11:10:40

23 question consistently, and I would invoke the same 11:10:42

24 answer. You know, if Pershing Square obtains their 11:10:46

25 shares illegally, we're bound by our bylaws, and we 11:10:49

17 (Pages 62 - 65)


Exhibit 16 Page 418


Page 66

1 will -- we will follow them. And they shouldn't be 11:10:53

2 allowed to vote them. Therefore, for us to accept 11:10:56

3 basically -- break our bylaws, it would be wrong, 11:11:02

4 couldn't do it. 11:11:06

5 Q. Okay. Are you aware that your bylaws 11:11:07

6 with respect to calling a shareholder meeting 11:11:10

7 include a clause that you won't accept votes to call 11:11:15

8 a special meeting if the person who's voting has 11:11:21

9 violated the securities laws? Do you know that's 11:11:25

10 part of your bylaws? 11:11:27

11 A. Could you say that again? 11:11:32

12 Q. Yeah. I'm going to ask you a few 11:11:34

13 questions to distinguish between your bylaws on 11:11:35

14 calling a special meeting -- 11:11:37

15 A. Yeah. 11:11:39

16 Q. -- and voting at a special meeting. 11:11:39

17 A. Okay. 11:11:41

18 Q. Okay. You've indicated you believe that 11:11:41

19 if Pershing Square were to vote on December 18th, 11:11:43

20 2014, it would violate Allergan's bylaws; is that 11:11:47

21 right? 11:11:51

22 A. Well, our bylaws require -- yes, I 11:11:51

23 believe that's true. 11:11:53

24 Q. And why do you believe that's true? 11:11:54

25 A. Our bylaws require that the 11:11:56

Page 67

1 shareholders -- that we follow all laws, federal 11:12:01

2 and -- and -- and state, regarding the ownership of 11:12:05

3 shares. I believe that's what it says. 11:12:10

4 Q. Okay. Are you aware whether or not that 11:12:12

5 provision about shares obtained in violation of law, 11:12:15

6 that Allergan believes are obtained by violation of 11:12:22

7 law, relate only to whether you can call a vote 11:12:25

8 rather than actually voting? 11:12:28

9 A. No, I think it's both. 11:12:30

10 Q. Okay. Do you know what particular 11:12:31

11 bylaws you're referring to? 11:12:37

12 A. I don't. I'm not a bylaw expert. 11:12:38

13 Q. Okay. Apart from Pershing Square's 11:12:41

14 voting being a violation of the bylaws, in your 11:12:44

15 view, how would Allergan be harmed if Pershing 11:12:49

16 Square on December 18, 2014 voted on Proposal No. 8? 11:12:50

17 MS. SMITH: Objection. Calls for a legal 11:12:57

18 conclusion. And again, of course you're asking 11:12:58

19 about his knowledge as opposed to a company 11:13:00

20 30(b)(6). 11:13:03

21 But go ahead and answer. 11:13:05

22 THE WITNESS: If Pershing Square's shares 11:13:22

23 were acquired through insider trading, they're 11:13:25

24 tainted, shows a special interest and, according to 11:13:28

25 our bylaws, should not be allowed to be voted. 11:13:35

Page 68


2 Q. I want to ask you a few more questions 11:13:44

3 on No. 2 specifically, which is the -- 11:13:46

4 A. No. 2. 11:13:50

5 Q. -- "to request that Allergan board elect 11:13:51

6 or appoint six of Pershing Square and Valeant's 11:13:54

7 nominees to serve as directors." 11:13:56

8 A. Uh-huh. 11:13:58

9 Q. You agree that if this Proposal 2 11:14:02

10 passes, that doesn't mean that the Valeant/Pershing 11:14:06

11 Square slate automatically become directors of 11:14:09

12 Allergan, right? 11:14:13

13 A. I think I answered that question 11:14:20

14 already. 11:14:21

15 Q. I'm sorry for repeating myself, but I 11:14:26

16 just ask that you answer the questions back or I 11:14:28

17 move on quickly. 11:14:33

18 So, do you agree, this Proposal 2 11:14:34

19 passes, that doesn't mean the Valeant/Pershing 11:14:36

20 Square slate automatically becomes directors of 11:14:37

21 Allergan? 11:14:40

22 A. I -- I agree with that. It does not 11:14:40

23 mean that, that they do not become directors of 11:14:42

24 Allergan. 11:14:45

25 Q. Have you had discussions with the other 11:14:47

Page 69

1 directors with respect to what they would do if, in 11:14:49

2 fact, Proposal 2 passes? 11:14:53

3 A. What other directors are you talking 11:14:59

4 to -- of? 11:15:01

5 Q. Well, so if Proposal 2 passes, you and 11:15:02

6 five other directors would be removed, right? 11:15:05

7 A. Right. 11:15:08

8 Q. So, there would be remaining directors 11:15:08

9 of Allergan? 11:15:10

10 A. Right. Is that who you mean? 11:15:10

11 Q. Correct. 11:15:12

12 So, the remaining -- have you talked to 11:15:12

13 the directors who would be remaining at Allergan -- 11:15:14

14 A. Which would be three. 11:15:16

15 Q. -- three of them, with respect to what 11:15:17

16 they would do if Proposal 2 passes? 11:15:18

17 MS. SMITH: Let me just remind you, if you've 11:15:21

18 had discussions with other directors in the context 11:15:22

19 of advice provided by attorneys, obviously don't 11:15:26

20 reveal the content of the attorney's advice. But 11:15:29

21 with that admonition, please answer. 11:15:33

22 THE WITNESS: No. 11:15:34


24 Q. And do you agree that the remaining 11:15:37

25 directors could try to select people other than the 11:15:39

18 (Pages 66 - 69)


Exhibit 16 Page 419


Page 70

1 Pershing Square/Valeant slate? 11:15:42

2 A. I do. 11:15:45

3 Q. How would Allergan be harmed if, in 11:15:46

4 fact, Pershing Square voted in favor of Proposal 2, 11:15:49

5 it passed, and the remaining directors appointed new 11:15:53

6 directors other than the Valeant slate? 11:15:58

7 A. How would Allergan be harmed? 11:16:05

8 Q. Correct. 11:16:06

9 A. If they appointed new directors other 11:16:07

10 than the Valeant slate? 11:16:10

11 Q. Correct. 11:16:11

12 A. I don't know how they'd be harmed. 11:16:12

13 Q. And you agree it's -- it's possible the 11:16:14

14 remaining directors could seek to nominate directors 11:16:16

15 other than the Pershing Square/Valeant slate? 11:16:22

16 A. They would need to. 11:16:27

17 Q. And why do you say they would need to? 11:16:29

18 A. There's no financial expert left on the 11:16:31

19 board. Can't run an audit committee without a 11:16:33

20 financial expert. 11:16:36

21 Q. Do you know if any of the Pershing 11:16:37

22 Square/Valeant slate are financial experts? 11:16:38

23 A. I looked over their backgrounds, and it 11:16:42

24 wasn't clear to me that there was a financial expert 11:16:43

25 there. But the backgrounds were not complete. 11:16:46

Page 71

1 Q So, you have a concern that potentially 11:16:49

2 the -- apart from your concern about bias, which 11:16:51

3 we've talked about, you also have a concern that 11:16:54

4 Pershing Square and Valeant's directors might not be 11:16:57

5 qualified? 11:16:59

6 A You know, I'm not going to say that 11:17:00

7 because I don't know I think the -- my chief 11:17:01

8 concern is the one I've -- I've explained 11:17:04

9 Q Okay 11:17:06

10 MS SMITH: Could we -- would this be a good 11:17:10

11 moment for a break? We've been going a little over 11:17:12

12 an hour 11:17:15

13 MR HOLSCHER: That's fine 11:17:16

14 THE VIDEOGRAPHER: Going off the record The 11:17:17

15 time is 11:17 a m 11:17:18

16 (A brief recess was taken ) 11:17:21

17 THE VIDEOGRAPHER: Back on the record The 11:38:51

18 time is 11:38 a m 11:38:52

19 (Deposition Exhibit 4 marked for

20 identification )


22 Q Mr Gallagher, I've placed in front of 11:38:55

23 you Exhibit 4, which is an August 4th, 2014 report 11:38:56

24 from Glass Lewis Have you seen that before? 11:39:01

25 A I believe I have 11:39:07

Page 72

1 MS. SMITH: Do you have an extra copy? 11:39:09

2 MR. HOLSCHER: Oh, I'm sorry. Yes. 11:39:11

3 MS. SMITH: Thank you. 11:39:12

4 MR. HOLSCHER: Sorry. 11:39:13


6 Q. Did you also meet with Glass Lewis 11:39:22

7 before they issued their report? 11:39:23

8 A. Did not. 11:39:25

9 Q. Have you ever spoken over the phone with 11:39:26

10 anyone from Glass Lewis? 11:39:28

11 A. I have not. 11:39:29

12 Q. And what's your understanding of what 11:39:32

13 Glass Lewis does? 11:39:35

14 A. They're very similar to ISS. 11:39:37

15 Q. Does -- is Glass Lewis a reputable proxy 11:39:40

16 advisory firm? 11:39:46

17 A. I assume that they are. 11:39:47

18 Q. Do you have any concerns with respect to 11:39:50

19 Glass Lewis accepting fees that might compromise its 11:39:52

20 judgment? 11:39:56

21 A. I know very little about Glass Lewis. 11:39:57

22 Q. Okay. Does any of the little you know 11:40:00

23 cause you to have concerns about their independence? 11:40:04

24 A. No. 11:40:07

25 Q. Do you think they're skewed in favor of 11:40:09

Page 73

1 shareholders? 11:40:11

2 A. I don't know. I would guess that that 11:40:12

3 would be the case, yes. That's their -- that's 11:40:14

4 their job. 11:40:16

5 Q. Okay. In terms of your guess they're 11:40:17

6 skewed in favor of shareholders, it's just your 11:40:21

7 general sense, but you don't have any specific facts 11:40:24

8 to support it? 11:40:26

9 A. Not a lot. 11:40:27

10 Q. Okay. Do you have any? 11:40:28

11 A. No. 11:40:29

12 Q. With respect to the Glass Lewis report, 11:40:31

13 did you review this report on around August 4th, 11:40:34

14 2014? 11:40:41

15 A. I -- I really don't recall. I think 11:40:43

16 I've seen it, but I don't -- I don't have a lot of 11:40:46

17 recollection of it. 11:40:49

18 Q. Okay. Do you know if this report was 11:40:50

19 provided to the Allergan board? 11:40:51

20 A. I don't know. 11:40:56

21 Q. Okay. 11:40:57


23 Q. Okay. Just as a general practice, would 11:41:00

24 the Allergan board review the shareholder services 11:41:02

25 reports regarding its various practices and 11:41:07

19 (Pages 70 - 73)


Exhibit 16 Page 420


Page 74

1 policies? 11:41:10

2 A. It would more -- more than likely review 11:41:10

3 the ISS and, to some degree, Glass Lewis because ISS 11:41:14

4 is a significantly more dominant factor in this -- 11:41:19

5 in this industry. 11:41:23

6 Q. Okay. 11:41:24

7 A. I mean, we pay attention to what Glass 11:41:25

8 Lewis does and what their recommendations are. The 11:41:28

9 board is aware of those. 11:41:32

10 Q. Okay. And with respect to the Glass 11:41:36

11 Lewis conclusion, do you know what they concluded 11:41:39

12 with respect to whether or not they supported 11:41:41

13 shareholders filing consents in support of the 11:41:45

14 meeting? 11:41:47

15 A. Yeah, you know, I don't recall. I'd 11:41:48

16 have to read this. I would assume that they 11:41:50

17 supported the calling of the meeting. 11:41:53

18 Q. Okay. If you could look at the Glass 11:41:55

19 Lewis report at page -- I think it's page 6. I 11:42:07

20 don't see page numbers on it, actually. 11:42:17

21 A. What's the heading say? 11:42:19

22 Q. The very top bullet point would say, 11:42:21

23 "Any existing ability for shareholder to call" -- 11:42:23

24 A. Got it. 11:42:27

25 Q. -- "a special meeting." 11:42:28

Page 75

1 About three-quarters of the way down, 11:42:30

2 Glass Lewis states, "This obstructive process echos 11:42:31

3 a trend of recalcitrant adherence to progressive 11:42:39

4 corporate governance standards at Allergan, 11:42:44

5 including a period marked by active opposition to 11:42:46

6 shareholder proposals covering the right to act by 11:42:53

7 written consent and the separation of the roles of 11:42:56

8 chairman and CEO, proposals that receive the 11:42:59

9 affirmative support of 50.1 percent and 50.5 percent 11:43:05

10 of votes cast at Allergan's 2013 and 2014 special 11:43:11

11 meetings, respectively." 11:43:16


13 A. I do. 11:43:20

14 Q. And we've talked about those two issues 11:43:20

15 with respect to ISS in terms of your views as to -- 11:43:22

16 A. We have. 11:43:24

17 Q. -- those votes? Okay. 11:43:24

18 Do you know with -- do you know whether 11:43:42

19 or not you or anyone else at Allergan submitted any 11:43:46

20 written materials to Glass Lewis? 11:43:49

21 A. I did not. 11:43:51

22 Q. Okay. 11:43:53

23 A. I do not know if the company did. 11:43:53

24 Q. And the fact that Glass Lewis supported 11:44:06

25 the consents for the calling of the shareholder 11:44:08

Page 76

1 meeting, did that in any way affect your thinking 11:44:12

2 with respect to Allergan's opposition to it? 11:44:15

3 A. No. 11:44:17

4 Q. And why not? 11:44:21

5 A. I made my mind up independently in 11:44:24

6 conjunction with the other members of the board. 11:44:27

7 Q. Who is T.Rowe Price? 11:44:34

8 A. It's an institutional invest- -- 11:44:37

9 investor. 11:44:38

10 Q. Do you know if they've been a long-term 11:44:41

11 investor of Allergan? 11:44:44

12 A. I believe they have. 11:44:45

13 Q. Okay. You view them as a savvy investor 11:44:47

14 group? 11:44:50

15 A. I do. 11:44:51

16 Q. Over the years, have you spoken to 11:44:52

17 anybody at T.Rowe Price regarding Allergan? 11:44:55

18 A. I have. 11:44:58

19 Q. With whom at T.Rowe Price have you 11:44:58

20 spoken? 11:45:00

21 A. I don't recall their names. 11:45:01

22 Q. Have you ever spoken with a Joseph Fath, 11:45:03

23 F-a-t-h? 11:45:07


25 Q. A David Giroux? 11:45:09

Page 77

1 A. I just don't recall their names. I'm 11:45:10

2 sorry. 11:45:12

3 Q. Okay. I'll just give the names, see if 11:45:12

4 they refresh your memory. 11:45:15

5 A. Yeah. 11:45:16

6 Q. I'm not trying to harass you. 11:45:16

7 A. No, no, that's okay. 11:45:18

8 Q. Does the names -- do the names Larry 11:45:19

9 Puglia, Robert Sharps, Taymour Tamaddon, David 11:45:21

10 Giroux or Joseph Fath -- 11:45:27

11 A. Taymour does ring a bell. 11:45:30

12 Q. -- ring a bell? 11:45:32

13 A. Yeah. 11:45:33

14 Q. Okay. 11:45:33

15 A. I'm sure he was in the call that I was 11:45:33

16 on. 11:45:36

17 MR. HOLSCHER: Okay. I'd like to have this 11:45:36

18 marked as our next exhibit. I think that's 11:45:37

19 Exhibit 5. 11:45:39




23 Q. I'm sorry the copy's not great. It's 11:45:59

24 the -- the best one that we have from the 11:46:00

25 production. 11:46:02

20 (Pages 74 - 77)


Exhibit 16 Page 421


Page 78

1 Oh, by the way, if you set that aside 11:46:04

2 for one second, I have one or two cleanup questions 11:46:05

3 to ask. 11:46:11

4 With respect to your e-mail -- I asked 11:46:12

5 you some questions about your e-mail. 11:46:14

6 A. This one here? 11:46:15

7 Q. Right. But generally about your -- your 11:46:16

8 e-mail -- e-mail collection, your e-mail, do you 11:46:18

9 know if anyone ever conducted a search or took the 11:46:22

10 e-mails out of your sent box from your e-mail? 11:46:30

11 A. The person who came to my house and 11:46:35

12 downloaded -- 11:46:38

13 Q. Right. 11:46:39

14 A. -- all -- yeah. Yes, they did. 11:46:39

15 Q. And how do you know they did? 11:46:41

16 A. Well, he's there telling me what he was 11:46:43

17 going to do. 11:46:45

18 Q. Okay. And was that someone from the 11:46:46

19 Latham & Watkins law firm? 11:46:49

20 A. You know, at the time I -- he told me 11:46:53

21 who he was with, but I don't recall -- 11:46:56

22 Q. Okay. 11:47:00

23 A. -- who it was. 11:47:00

24 Q. So, essentially you just turned over 11:47:01

25 your system to whoever came in and said "Have at 11:47:02

Page 79

1 it"? 11:47:05

2 A. Yeah. 11:47:06

3 Q. Okay. And someone did a download of 11:47:06

4 your system? 11:47:08

5 A. He did. He did. He asked me if I had 11:47:08

6 an Allergan file. I gave him an Allergan -- I 11:47:10

7 showed him where the Allergan file was. 11:47:12

8 Q. Okay. 11:47:16

9 A. But he downloaded everything. 11:47:16

10 Q. Okay. And as you sit here today, I just 11:47:17

11 want to make sure that I've, you know, covered this. 11:47:20

12 So, you know that our search terms here were, you 11:47:24

13 know, the words Valeant, Pershing Square -- 11:47:29

14 A. Uh-huh. 11:47:32

15 Q. -- Ackman, Allergan. It was fairly 11:47:32

16 broad. 11:47:35

17 A. Right. 11:47:36

18 Q. So, it wasn't a narrow search term. 11:47:36

19 A. Right. 11:47:39

20 Q. Any -- any explanation as to how we 11:47:40

21 would just get one e-mail from your outbox? 11:47:42

22 A. Yeah. 11:47:44

23 MS. SMITH: Objection. Asked and answered. 11:47:45

24 Go ahead. 11:47:47

25 THE WITNESS: Yeah, there's only one 11:47:47

Page 80

1 apparently. 11:47:48


3 Q. Okay. Okay. With respect to the 11:47:49

4 Exhibit 4, this is a T.Rowe Price letter dated

5 January 3rd, 2014, addressed to the board of

6 directors of Allergan. Do you see that?

7 A. I do, but this is very hard to read. 11:48:03

8 Q. I'm sorry. We've done our best to 11:48:05

9 enhance it. This is the copy received from 11:48:07

10 Allergan. So, we actually did everything we could 11:48:11

11 to bring the text out, and -- let me see. Is 11:48:13

12 your -- is your copy better than his? 11:48:17

13 MS. SMITH: No, it's the same. 11:48:20


15 Q. Okay. Well, let's do our best to go 11:48:22

16 through. We did everything we could to enhance it. 11:48:24

17 Did you -- did you receive this letter 11:48:27

18 from T.Rowe Price sometime in early June 2014? 11:48:28

19 A. I'm sure I did. If it was directed to 11:48:31

20 the board as this is indicated that, then we would 11:48:33

21 have seen it. 11:48:37

22 Q. Okay. Do you know whether or not this 11:48:38

23 letter was sent after you had discussions with 11:48:40

24 T.Rowe Price? 11:48:44


Page 81

1 Q. Okay. Says in the first paragraph they 11:48:47

2 own about 4.8 percent of Allergan's outstanding 11:48:50

3 common stock. Do you see that? 11:48:53

4 A. I do. 11:48:54

5 Q. Okay. 11:48:55

6 A. It's helpful if you read it, though. 11:48:56

7 Q. In the first paragraph, you see it says, 11:49:00

8 "We are writing to encourage the board to begin good 11:49:01

9 faith negotiations with Valeant Pharmaceuticals." 11:49:04


11 A. I do. 11:49:07

12 Q. Okay. And do you believe that T.Rowe 11:49:08

13 Price has the long-term interest of Allergan in 11:49:14

14 mind? 11:49:19



17 THE WITNESS: I think T.Rowe Price is -- has 11:49:22

18 the long-term interest of T.Rowe Price in mind. 11:49:24


20 Q. Okay. You don't view them as active as 11:49:29

21 shareholders, right? 11:49:34

22 A. I do not. 11:49:35

23 Q. And with respect to T.Rowe Price, before 11:49:37

24 you received this June 3rd, 2014 letter, had you 11:49:39

25 viewed them as kind of a constructive shareholder in 11:49:43

21 (Pages 78 - 81)


Exhibit 16 Page 422


Page 82

1 terms of dealing with Allergan? 11:49:47

2 MS. SMITH: Objection. Lack of foundation as 11:49:49

3 to whether or not T.Rowe Price is the actual 11:49:52

4 shareholder. 11:49:55

5 Go ahead. 11:49:56

6 THE WITNESS: I -- 11:50:01


8 Q. Well, let me reframe it. 11:50:02

9 T.Rowe Price's clients have about 4.8 11:50:04

10 percent of Allergan, do you understand that? 11:50:07

11 A. I do. 11:50:10

12 Q. Okay. And that these are 11:50:11

13 actively-managed accounts so that T.Rowe Price 11:50:12

14 actually -- this is a stock that T.Rowe Price has, 11:50:14

15 you know, essentially recommended or selected for 11:50:17

16 their clients? 11:50:20

17 A. Uh-huh. 11:50:20

18 Q. And your understanding that before 11:50:21

19 June 3rd, 2014, that T.Rowe Price was generally 11:50:23

20 supportive of Allergan's management? 11:50:27

21 A. Yes. 11:50:29

22 Q. Okay. And you view them as essentially 11:50:30

23 active managers who do deep research before 11:50:35

24 investing? 11:50:38

25 A. That's my impression. 11:50:39

Page 83

1 Q. Okay. And in the second paragraph they 11:50:41

2 say, "It is relatively uncommon for us to reach out 11:50:56

3 to a board to support -- in support of a merger 11:50:59

4 proposal." 11:51:03


6 A. Yes. 11:51:05

7 Q. Okay. And then the next sentence says, 11:51:06

8 "The potential merger of Allergan with Valeant is an 11:51:09

9 exception because we believe the benefits of the 11:51:12

10 combination are compelling." 11:51:15


12 A. I do. 11:51:18

13 Q. Did you or to any -- or anyone else at 11:51:19

14 Allergan ever follow up with T.Rowe Price to get 11:51:21

15 more information as to why they believed the 11:51:25

16 benefits of the combination are compelling? 11:51:26

17 A. I believe that our management team 11:51:31

18 frequently talked to T.Rowe Price. I know David 11:51:38

19 Pyott has talked with them many times in Maryland, 11:51:41

20 many times this year. And I know that Jim Hindman 11:51:50

21 has frequent conversations with them. I know that I 11:51:54

22 talked with them telephonically. I don't remember 11:51:57

23 exactly what the date was. 11:52:00

24 Q. Based on all those conversations, is it 11:52:01

25 your understanding that T.Rowe Price is still today 11:52:03

Page 84

1 of the view that they support the potential merger 11:52:06

2 of Allergan with Valeant? 11:52:10

3 A. Allergan. 11:52:13

4 Q. Allergan with Valeant. 11:52:14

5 A. Yeah. I believe that's the case, yes. 11:52:15

6 Q. In the -- in the fourth paragraph, 11:52:18

7 T.Rowe Price also states, "It seems 11:52:21

8 counter-productive for Allergan to direct resources 11:52:28

9 towards discrediting Valeant." 11:52:32


11 A. I do. 11:52:34

12 Q. And then T.Rowe Price writes, "Valeant's 11:52:35

13 sustained pattern of significant operating 11:52:39

14 outperformance against virtually any benchmark 11:52:43

15 constitutes strong evidence of the validity of 11:52:48

16 Valeant's strategy and their management team's 11:52:52

17 ability to successfully execute large transactions." 11:52:54


19 A. Well, I see -- I see that, yes. 11:53:00

20 Q. Yes. 11:53:03

21 A. But your reading it helps me see it. 11:53:03

22 Q. Okay. Are -- are you aware that T.Rowe 11:53:05

23 Price also had done in-depth research and analysis 11:53:12

24 of Valeant? 11:53:17

25 A. I would assume that they did. 11:53:19

Page 85

1 Q. In their conversations with you and 11:53:20

2 Allergan management they indicated they had actually 11:53:22

3 done their own deep analysis of -- of how Valeant 11:53:24

4 was operating, right? 11:53:27

5 A. That's -- that's my impression. 11:53:28

6 Q. Okay. And T.Rowe Price had concluded 11:53:30

7 that "Valeant had a sustained pattern of significant 11:53:34

8 operating outperformance against virtually any 11:53:39

9 benchmark." 11:53:43


11 A. I do. 11:53:45

12 Q. Do you agree with that conclusion of 11:53:46

13 T.Rowe Price? 11:53:48

14 A. The conclusion that -- 11:53:50

15 Q. "Valeant had a sustained pattern of 11:53:51

16 significant operating outperformance against 11:53:55

17 virtually any benchmark." 11:53:58

18 A. I -- I don't think I can agree with 11:54:01

19 that, no. 11:54:03

20 Q. And -- 11:54:03

21 A. It's very vague. 11:54:03

22 Q. Okay. Is there any reason you disagree 11:54:05

23 with that other than the fact that it's vague? 11:54:08

24 A. Well, I'm not -- I'm not impressed by 11:54:10

25 Valeant's performance, no, if that's what you're 11:54:13

22 (Pages 82 - 85)


Exhibit 16 Page 423


Page 86

1 asking. 11:54:17

2 Q. And why aren't you impressed by 11:54:17

3 Valeant's performance? 11:54:19

4 A. I believe that Valeant's business model 11:54:21

5 is flawed, significantly flawed, and that it is -- 11:54:23

6 as one of Valeant's advisors called it, a house of 11:54:29

7 cards, where they basically acquire, strip, slash 11:54:32

8 and burn, push product out, and then move on to the 11:54:40

9 next larger acquisition. I think their model is not 11:54:43

10 sustainable and will lead to disaster down the road. 11:54:46

11 Therefore, I have a difference of opinion with 11:54:51

12 T.Rowe Price. 11:54:54

13 Q. Fair to say that T.Rowe Price strongly 11:54:55

14 disagrees with your conclusion? 11:54:56

15 A. And I -- and what I'm -- 11:54:58



18 THE WITNESS: What I'm saying is I strongly 11:55:01

19 disagree with their position. 11:55:02


21 Q. Right. And T.Rowe Price also indicates 11:55:04

22 that "Valeant has the ability to successfully 11:55:08

23 execute large transactions." 11:55:11


25 A. I don't see it, but where is that? 11:55:12

Page 87

1 Q. The third-to-the-last sentence of that 11:55:16

2 second-to-last paragraph, I'm sorry it's so hard to 11:55:19

3 read, but it says "Their management team's ability 11:55:21

4 to successfully execute large transactions." 11:55:25

5 A. Yes, I see that. 11:55:29

6 Q. Okay. Do you agree with that conclusion 11:55:30

7 of T.Rowe Price? 11:55:31

8 A. Absolutely not. 11:55:32

9 Q. And why do you disagree with that 11:55:33

10 conclusion? 11:55:36

11 A. Because of their inability to 11:55:37

12 successfully execute large transactions. 11:55:38

13 Q. And what large transactions do you 11:55:43

14 believe Valeant has failed to successfully execute? 11:55:46

15 A. Okay. By "execute," I mean integrate, 11:55:50

16 operate successfully. And I think MedAssist is a 11:55:53

17 good example of a disaster that they -- that they 11:55:57

18 had, which is a recent acquisition that they made 11:56:00

19 where they bought a company, didn't understand the 11:56:03

20 business and lost significant share in the 11:56:07

21 marketplace to a well-run company with a better 11:56:09

22 model in those same markets. That company being 11:56:12

23 Allergan. So, I -- I -- I would -- I would say that 11:56:15

24 they're factually incorrect. 11:56:19

25 Q. So, you -- and you -- going to the last 11:56:22

Page 88

1 two pages, you understand that this was -- this 11:56:24

2 letter was signed by five different vice presidents 11:56:28

3 at T.Rowe Price? 11:56:33

4 A. I see that, yes. 11:56:34

5 Q. And that each of them manages funds that 11:56:36

6 have Allergan stock? 11:56:41

7 A. I'm not sure that they all have Allergan 11:56:44

8 stock, but if that's what this says, then that's 11:56:46

9 fine. 11:56:50

10 Q. And you -- you know this letter 11:56:50

11 indicated that it was a unanimous view that now is 11:56:52

12 the time for Allergan to engage with Valeant? 11:56:58

13 A. I think that's what this says, yes. 11:57:02

14 Q. Okay. And looking at the second page -- 11:57:05

15 so, four of the managers actually have positions in 11:57:08

16 both companies, right? 11:57:11

17 A. You know, my impression is that there's 11:57:12

18 a mixture of -- I'm actually an investor with T.Rowe 11:57:15

19 Price and have a number of their -- their funds that 11:57:18

20 have done very well and I'm very pleased with it. 11:57:21

21 However, I don't agree with everything 11:57:24

22 that they say or think. And if -- this is not 11:57:25

23 representative of all shareholders. This is -- this 11:57:28

24 is their point of view. They have a vested interest 11:57:30

25 in Valeant because they significantly invest a 11:57:32

Page 89

1 number of their funds in Valeant, and the last thing 11:57:35

2 they want is for this house of cards to come 11:57:37

3 tumbling down because that would mean their jobs. 11:57:40

4 And so, they're putting a lot of pressure on -- on 11:57:42

5 Allergan to take a deal because they think that's 11:57:45

6 the best way of preserving their position. 11:57:48

7 Q. So, you -- it's your belief that these 11:57:50

8 T.Rowe Price executives actually believe that 11:57:54

9 Valeant's a house of cards? 11:57:58

10 A. I don't know what -- what they believe 11:57:59

11 personally. I -- I do believe that there are a lot 11:58:02

12 of people in the marketplace who invested in Valeant 11:58:05

13 who don't really want to know the real story because 11:58:08

14 they are vested in their careers in picking Valeant 11:58:11

15 and hoping that it continues to go. 11:58:16

16 But I guess if, down deep, if you -- if 11:58:18

17 you asked them and really put it to them in a very 11:58:20

18 inquisitive kind of way that you're quite good at, 11:58:23

19 they would probably say it's going to happen 11:58:27

20 someday. 11:58:29

21 Q. So, you believe that T.Rowe Price is 11:58:29

22 pushing Allergan to merge with Valeant to prop up 11:58:33

23 Valeant? 11:58:38

24 A. I think that they think that's probably 11:58:38

25 the best possible solution for them. This is a 11:58:41

23 (Pages 86 - 89)


Exhibit 16 Page 424


Page 90

1 T.Rowe Price incentive, not -- not an Allergan 11:58:44

2 incentive or a Valeant incentive. These people are 11:58:47

3 vested in performance of T.Rowe Price and their 11:58:50

4 funds. 11:58:52

5 Q. And you -- so, you think they want the 11:58:53

6 merger because they're concerned about Valeant if it 11:58:54

7 doesn't get Allergan? 11:58:57

8 A. I do believe that. 11:58:58

9 Q. Okay. The second page, the second full 11:58:59

10 paragraph, they write, "It's no longer rational in

11 our view for the Allergan board to refuse to meet

12 with the bidders on the grounds that the offer

13 'substantially undervalues' the company. In fact,

14 given how compelling the face value of the current

15 offer is, we fail to see how the board can satisfy

16 its duty to optimize shareholder value without

17 having actually explored this option."


19 A. I see that. 11:59:37

20 Q. And -- and I take it you disagree with 11:59:38

21 that conclusion as well? 11:59:39

22 A. I -- I do. Clearly, I do. 11:59:40

23 Q. And do you believe that these five 11:59:44

24 authors of this T.Rowe Price letter are biased? 11:59:46

25 A. I think they are influenced by their own 11:59:52

Page 91

1 positions and drive to make their funds as 11:59:55

2 successful as possible. 11:59:58

3 Q. And that's -- and they're writing this 12:00:00

4 letter because they believe the Allergan stock -- 12:00:03

5 the Allergan merger agreement would help prop up 12:00:05

6 their investments in Valeant? 12:00:09

7 MS. SMITH: Objection. Calls for speculation 12:00:11

8 about what T.Rowe Price believes. 12:00:12

9 Go ahead. 12:00:14


11 Q. What do you believe their motivation is 12:00:15

12 for making this recommendation? 12:00:17

13 A. I -- I think you said it very well. 12:00:18

14 Q. Okay. Do you know whether anyone at 12:00:20

15 Allergan has spoken with T.Rowe Price about their

16 research and analysis of Valeant's performance?

17 A. I -- you know, I don't know 12:00:45

18 specifically. I would -- I would expect that there 12:00:46

19 had been discussions. Probably Jim -- Jim Hindman 12:00:48

20 has talked to them about that. 12:00:52

21 Q. Do you have any understanding whether or 12:00:53

22 not T.Rowe Price as an institution has spent far 12:00:55

23 more time analyzing Valeant over the years than 12:01:00

24 Allergan has? 12:01:03

25 A. I would assume over the years, yes. 12:01:05

Page 92

1 More -- more time. I would hope so. 12:01:08

2 Q. In terms of your shareholders, the size 12:01:30

3 of your shareholders, I understand that PS Fund 1 is 12:01:32

4 your largest shareholder, 9.7 percent. 12:01:35

5 A. Yes, it is. 12:01:38

6 Q. And I've asked you about your views of 12:01:39

7 PS 1, so we know those. 12:01:41

8 At 4.8 percent ownership, the advisory 12:01:44

9 clients to T.Rowe Price, are they the top couple 12:01:47

10 shareholders in terms of percentage of the company? 12:01:51

11 A. It changes a lot, but certainly 12:01:53

12 they're -- you know, certainly Pershing Square is -- 12:01:55

13 PS 1 is -- is the largest. T.Rowe Price is -- is in 12:01:58

14 there for second place. 12:02:03

15 Q. And as the lead director of Allergan, 12:02:06

16 does it -- did it in any way affect your views with 12:02:07

17 respect to whether to engage with Valeant that one 12:02:13

18 of your largest shareholders is telling you it would 12:02:19

19 be a violation of your fiduciary obligations if you 12:02:23

20 didn't do it? 12:02:26

21 A. Did it in any way affect my views? Is 12:02:28

22 that what you said? 12:02:32

23 Q. Uh-huh. 12:02:33

24 A. No. 12:02:36

25 Q. Okay. And why not? 12:02:37

Page 93

1 A. Because my charge is as a -- as a board 12:02:38

2 member is to weigh all of the data, all of the facts 12:02:43

3 and to be looking out for all of Allergan's 12:02:48

4 shareholders, not the No. 1 position or the No. 2 12:02:51

5 position, but every one of them. 12:02:55

6 And we have facts and data that the 12:02:57

7 marketplace may not have, and we have to consider 12:03:00

8 all of those things. From a fiduciary 12:03:05

9 responsibility, we can't just open negotiations with

10 anyone who just comes down the street and said "I'd

11 like to buy your company."

12 We've done serious evaluations of the 12:03:17

13 offers that we've received from Valeant. Several 12:03:20

14 times, obviously, as those offers have changed. And 12:03:25

15 in each time the conclusion was that it was an 12:03:28

16 insufficient price for us to consider to start 12:03:31

17 negotiation. And you give up significant things 12:03:36

18 when you start a negotiation with a company when 12:03:38

19 their offer is significantly below any threshold of 12:03:40

20 acceptability. 12:03:43

21 Q. What do you give up when you start 12:03:45

22 negotiations? 12:03:47

23 A. Well, first of all, you give up the 12:03:47

24 ability to get the best possible price even from 12:03:49

25 that -- from that -- that company because they have 12:03:51

24 (Pages 90 - 93)


Exhibit 16 Page 425


Page 94

1 the impression that you think that their price is 12:03:58

2 somewhat reasonable. You also give up the 12:04:00

3 opportunity -- you also signal to the market you 12:04:03

4 think that price is reasonable. 12:04:06

5 You also may cut off other avenues of -- 12:04:08

6 of accretive, shareholder-enhancing options that are 12:04:11

7 available to you because people think you've got a 12:04:17

8 deal going with -- with this other company. 12:04:20

9 So, it's -- it's something that is a 12:04:24

10 very important decision that has to be weighed in 12:04:26

11 the context of what are our fiduciary duties, what 12:04:30

12 are -- what is our knowledge of all of the facts, 12:04:34

13 what are our conclusions, what are our advisors 12:04:37

14 recommending to us? 12:04:40

15 And frankly, in this situation, we have 12:04:42

16 to not only evaluate the amount of the offer, but we 12:04:45

17 have to evaluate the kind of the offer. And in this 12:04:49

18 case, there's a large component of Valeant stock, 12:04:52

19 and we have to evaluate Valeant, and that's why 12:04:55

20 we've looked at their business model and examined it 12:04:58

21 as thoroughly as we can, with the conclusion that 12:05:02

22 there are weaknesses in that business model and, 12:05:05

23 therefore, that currency is not as good as cold cash 12:05:08

24 is. 12:05:11

25 Q. Do you believe that Allergan is better 12:05:11

Page 95

1 at evaluating Valeant's business model than T.Rowe 12:05:13

2 Price? 12:05:18

3 A. I think that JPMorgan, Bank of America, 12:05:19

4 Merrill Lynch certainly are just as capable and 12:05:24

5 qualified as T.Rowe Price. And frankly, they don't 12:05:27

6 have the vested interest that T.Rowe Price has in 12:05:31

7 protecting their positions in Valeant. 12:05:34

8 Q. How about Goldman Sachs, what do you 12:05:36

9 think in terms of their ability to evaluate Valeant? 12:05:40

10 A. I think that their ability to evaluate 12:05:43

11 Valeant is good. 12:05:45

12 Q. Do you know what Goldman's analyst had 12:05:46

13 analyzed with respect to Valeant? So, the first 12:05:52

14 offer became public in, what, April 2014. So, as of 12:05:55

15 March 2014, have you reviewed Goldman Sachs' 12:05:58

16 research at that time regarding Valeant? 12:06:03

17 A. I don't believe I have. 12:06:04

18 Q. Okay. So, as you sit here today, do you 12:06:05

19 know what Goldman's view was -- before you hired 12:06:07

20 them, what their view was regarding Valeant's 12:06:12

21 business model? 12:06:14

22 MS. SMITH: Objection. Objection. Ambiguous 12:06:15

23 as to Goldman, but go ahead. 12:06:16

24 THE WITNESS: Yeah. When you say Goldman 12:06:19

25 Sachs, there is no one Goldman Sachs, as you're 12:06:20

Page 96

1 probably well aware. There's their analyst group. 12:06:24

2 There's -- there's the banking group. There's an 12:06:27

3 M&A group. 12:06:29

4 We're -- we're dealing with people who 12:06:30

5 are expert in valuing -- in valuating companies, and 12:06:31

6 that team has got extreme experience as well as the 12:06:36

7 Bank of America group. 12:06:41

8 So, there's many times when a banking 12:06:44

9 firm will have an analyst who says buy or sell, and 12:06:47

10 yet another arm of the organization that's more 12:06:51

11 specialized in -- in another area where they're 12:06:55

12 evaluating companies from a different perspective 12:06:58

13 may come out with a different opinion. It's not 12:07:01

14 uncommon. I think you know that. 12:07:03

15 BY MR. HOLSCHER 12:07:06

16 Q. But you made the reference that you 12:07:06

17 believe that Valeant's a, quote, "house of cards," 12:07:08

18 right? 12:07:09

19 A. I do. 12:07:09

20 Q. Have you asked Goldman, the investment 12:07:10

21 banks you're dealing with, whether they agree that 12:07:12

22 Valeant is a house of cards? 12:07:13

23 A. They -- they -- they agree that there is 12:07:15

24 a -- there are significant flaws in the business 12:07:17

25 model of -- of Valeant. 12:07:21

Page 97

1 Q. Who at Goldman has told you they agree 12:07:22

2 there's significant flaws -- 12:07:26

3 A. Our team. 12:07:27

4 Q. -- in the business model of Valeant? 12:07:28

5 MS. SMITH: Again, let me remind you: Let 12:07:30

6 him finish the question. 12:07:31


8 Q. Who at Goldman Sachs has told you they 12:07:33

9 agree that there's significant flaws in the Valeant 12:07:34


11 A. Our team. 12:07:38

12 Q. And who's on the team? 12:07:39

13 A. Is -- is that public knowledge? 12:07:40

14 Chuck McAdams heads the team at Goldman 12:07:43

15 Sachs. 12:07:46

16 Q. Who else with Goldman Sachs have you 12:07:47

17 talked about -- talked with who have indicated they 12:07:48

18 believe there's serious problems? 12:07:51

19 A. Jim Katzman. 12:07:53

20 Q. Anyone else? 12:07:54

21 A. No. 12:07:55

22 Q. Okay. Have you -- has anyone at Goldman 12:07:56

23 indicated that they agree with your statement that 12:08:01

24 Valeant's a, quote, "house of cards"? 12:08:03

25 A. I don't think I've had that discussion 12:08:06

25 (Pages 94 - 97)


Exhibit 16 Page 426


Page 98

1 with them. 12:08:08

2 Q. Okay. And -- 12:08:09

3 A. I know that JPMorgan banker who's 12:08:12

4 working for Valeant thinks that they're a house of 12:08:15

5 cards. 12:08:18

6 Q. And with respect to Goldman, with whom 12:08:19

7 at Goldman have you discussed the Valeant business 12:08:23

8 model? 12:08:27

9 A. The team that has presented their views 12:08:28

10 of the -- of this transaction. 12:08:32

11 Q. You've identified two people by name. 12:08:36

12 A. Yeah. 12:08:38

13 Q. Is there anyone else that you can recall 12:08:38

14 that you spoke with? 12:08:40

15 A. I can't. 12:08:43

16 Q. Okay. And the Goldman investment 12:08:44

17 banking side, do you know whether or not they 12:08:51

18 actually underwrote a stock offer for Valeant in 12:08:54

19 2013? 12:08:57

20 A. I think they did. Yeah, they've 12:08:57

21 disclosed that. 12:08:59

22 Q. Have you talked to them about that? 12:09:00

23 A. Only from the standpoint that they've 12:09:02

24 disclosed that they had done that. 12:09:05

25 Q. Okay. What's your understanding of, 12:09:06

Page 99

1 when Goldman Sachs actually leads an underwriting 12:09:07

2 for stock -- for a stock offer of Valeant, what 12:09:12

3 representations they make regarding their confidence 12:09:14

4 in the accounting of Valeant? Do you have any 12:09:17

5 understanding of that? 12:09:20


7 for -- lack of foundation, calls for speculation. 12:09:25

8 But go ahead. 12:09:29

9 THE WITNESS: Yeah, I don't know the details 12:09:30

10 of what it is that they -- they do in that area of 12:09:32

11 the business. 12:09:33


13 Q. Okay. But you're aware that Goldman 12:09:34

14 Sachs underwrote a multi-billion dollar stock offer? 12:09:36

15 A. About 2.3 billion or something. 12:09:39

16 Q. And it's for that 2.3 billion stock 12:09:42

17 offering your understanding is being involved in 12:09:44

18 the -- let me back up. 12:09:48

19 You're a former senior executive at 12:09:49

20 Playtex? 12:09:52

21 A. CEO. 12:09:52

22 Q. CEO. 12:09:53

23 And you've been on the Valeant board for 12:09:54

24 over 15 years? 12:09:56

25 A. I've never been on the Valeant board. 12:09:57

Page 100

1 Q. I'm sorry. On the Allergan board for 12:09:59

2 more than 15 years. 12:10:01

3 A. 15 years. 12:10:02

4 Q. Okay. And you have other senior 12:10:02

5 executive positions in consumer products area? 12:10:04


7 Q. Okay. And over the years, you've dealt 12:10:07

8 extensively with investment banks? 12:10:09

9 A. I have. 12:10:11

10 Q. Okay. And based on your dealings with 12:10:12

11 investment banks, you're aware that when they do a 12:10:13

12 stock offering, those investment banks need to make 12:10:15

13 certain representations and warranties? 12:10:18

14 A. I do. 12:10:21

15 Q. Okay. And so, based on your extensive 12:10:22

16 knowledge, you're aware that Goldman must have, at 12:10:24

17 the time of the stock offering of Valeant, reviewed 12:10:28

18 Valeant's financial statements and indicated they 12:10:32

19 believed they fairly represented Valeant's financial 12:10:35

20 condition? 12:10:38

21 MS. SMITH: Objection. Lack of foundation. 12:10:39

22 THE WITNESS: Yeah. I would assume that's 12:10:41

23 the case. 12:10:42


25 Q. Okay. Now, with respect to Goldman, the 12:10:42

Page 101

1 analyst side, have you reviewed any of Goldman's 12:10:45

2 analyst reports regarding the strength of Valeant's 12:10:49

3 business? 12:10:54

4 A. I don't recall specifically. We see a 12:10:54

5 ton of analyst's reports for both Allergan, and now 12:10:57

6 we're looking at Valeant's. And I don't recall 12:11:00

7 exactly which ones we've seen, but if they -- 12:11:02

8 they've been written in the past number of months, 12:11:04

9 since, you know, late April, then we probably have 12:11:10

10 seen it. 12:11:13

11 Q. Okay. By the way, with respect to the 12:11:17

12 T.Rowe Price letter, do you have any reason to 12:11:18

13 believe that that was written at the request of Bill 12:11:23

14 Ackman? 12:11:27

15 A. I wouldn't know. 12:11:34

16 Q. Same question as to whether Bill Ackman, 12:11:36

17 Pershing Square or Valeant, do you believe that 12:11:39

18 they, you know, somehow influenced T.Rowe Price to 12:11:41

19 write that letter? 12:11:45

20 A. How would I know that? 12:11:47

21 Q. I'm just asking if you know. 12:11:49

22 A. Yeah, I -- I -- I couldn't know that. 12:11:52

23 Q. Based on the letter you received and 12:11:56

24 your discussions with T.Rowe Price, do you believe 12:11:58

25 that was -- whether mistake or not, this letter 12:11:59

26 (Pages 98 - 101)


Exhibit 16 Page 427


Page 102

1 generally reflects their views? 12:12:03


3 speculation, lack of foundation. 12:12:05

4 THE WITNESS: This reflects the views of 12:12:06

5 these five individuals. 12:12:09

6 MR. HOLSCHER: Okay. Mark this as Exhibit 5, 12:12:23

7 please. 12:12:38

8 THE REPORTER: 6. 12:12:38

9 MR. HOLSCHER: 6, please. Thank you. 12:12:39




13 Q. I've placed in front of you what's been 12:12:57

14 marked as Exhibit 6. Do you recognize this 12:12:59

15 document? 12:13:01

16 A. I vaguely remember seeing it. 12:13:01

17 Q. And is this a letter to you from Spiros 12:13:04

18 Segalas, the present chief investment officer at 12:13:09

19 Jennison Associates? 12:13:15

20 A. Yes, it is. 12:13:17

21 Q. And do you know who -- who Jennison 12:13:18

22 Associates is? 12:13:20

23 A. I really don't know anything about them. 12:13:22

24 Q. Okay. Do you know if they're a 12:13:24

25 long-term -- that they had been a long-term holder 12:13:30

Page 103

1 of Allergan stock? 12:13:34

2 A. I really don't know anything about them. 12:13:35

3 Q. Okay. Do you know if they're one of the 12:13:37

4 top ten holders of Allergan stock?


6 Q. Okay. The top of the letter there says 12:13:53

7 that -- in that first paragraph, they indicate that 12:13:56

8 they hold about 3.6 percent of Allergan shares 12:14:00

9 outstanding as of March 31st, 2014. Do you see 12:14:06

10 that? 12:14:10

11 A. I do. 12:14:10

12 Q. Okay. And Mr. Segalas is writing you to 12:14:11

13 tell you he believes it's in the best interest of 12:14:19

14 Allergan shareholders the Allergan board engage in 12:14:22

15 discussions with the management of Valeant? 12:14:25

16 A. That's what that says. 12:14:27

17 Q. Did you ever have a follow-up discussion 12:14:30

18 with Mr. Segalas? 12:14:34

19 A. I did not. 12:14:35

20 Q. Do you know if anyone at Allergan did? 12:14:36

21 A. I do not know. 12:14:37

22 Q. And you disagree with Jennison's point 12:14:55

23 of view? 12:14:59

24 A. I do. 12:14:59

25 Q. Okay. In this letter, Jennison says it 12:15:00

Page 104

1 believes a more in-depth due diligence by the board 12:15:04

2 is necessary, and it would be difficult or 12:15:07

3 impossible to do effectively without meeting with 12:15:11

4 Valeant management. 12:15:14


6 A. I do see that. 12:15:15

7 Q. Do you agree with that statement? 12:15:17

8 A. No. 12:15:18


10 A. I've already indicated that by opening 12:15:26

11 up discussions with Valeant we were making an 12:15:28

12 improper signal to the marketplace that would 12:15:31

13 diminish the value of Allergan in any transaction 12:15:34

14 and close the options available to us for the -- for 12:15:36

15 creating the most shareholder value for -- for our 12:15:40

16 stockholders. 12:15:44

17 I also think that the -- he's -- he's 12:15:45

18 making an assumption that we don't have significant 12:15:50

19 information about Valeant at this point in time. 12:15:53

20 And he's making the assumption that if we did due 12:15:55

21 diligence with Valeant that we'd actually learn 12:15:58

22 something from them. Those are -- those are 12:16:01

23 assumptions. Those are not facts. 12:16:05

24 Q. So, you don't think that Allergan would 12:16:07

25 learn anything if it did more due diligence with 12:16:09

Page 105

1 Valeant? 12:16:12

2 A. I -- I -- I tend to believe, based on 12:16:12

3 the reportings of Valeant, that they are very good 12:16:14

4 at obfuscating facts and hiding the peanut. 12:16:19

5 Q. Okay. Are you familiar with an entity 12:16:24

6 known as Capital Research & Management, or CapRe? 12:16:27

7 A. Yes. 12:16:32

8 Q. And who are they? 12:16:32

9 A. They're a large investment firm. 12:16:34

10 Q. And at one point did they have a 12:16:35

11 significant amount of shares in Allergan? 12:16:39

12 A. They were our largest shareholder at one 12:16:40

13 time. 12:16:42

14 Q. They were, right? 12:16:43

15 A. Yes. 12:16:43

16 Q. And -- and, in fact, this summer they 12:16:45

17 requested to meet with Mr. Pyott, right? 12:16:53

18 A. I believe that's true, yes. 12:16:59

19 Q. Were you involved at all in discussions 12:17:02

20 with Mr. Pyott about the fact that he was going to 12:17:03

21 be meeting with Cap- -- CapRe? 12:17:06


23 Q. Okay. Do you know whether or not CapRe 12:17:10

24 indicated it had some concerns with Allergan's 12:17:12

25 refusal to engage with Valeant? 12:17:17

27 (Pages 102 - 105)


Exhibit 16 Page 428


Page 106

1 A. I have no -- no knowledge of that. 12:17:20

2 Q. Okay. Do you know whether or not they, 12:17:22

3 in fact, did meet with Mr. Pyott? 12:17:26

4 A. I do not know if they met or had a phone 12:17:30

5 conversation. I believe there was contact. 12:17:33

6 Q. Are you aware that after that contact 12:17:34

7 with Mr. Pyott, do you know whether or not 12:17:36

8 Capital Re sold all of its shares in Allergan? 12:17:40

9 A. They did sell their shares. 12:17:44

10 Q. And did Mr. Pyott indicate to you why -- 12:17:46

11 what they told him as to why they were going to sell 12:17:48

12 their shares? 12:17:51

13 A. Yes, he did. 12:17:54

14 Q. And what did he tell you? 12:17:55

15 A. I don't remember. 12:17:56

16 Q. Okay. Do you know whether or not it 12:17:59

17 might have been a -- some concern with Allergan's 12:18:01

18 scorched-earth rebuffing of Valeant? 12:18:04

19 A. No -- 12:18:11

20 Q. You -- 12:18:12

21 A. -- I don't believe it was that at all. 12:18:12

22 Q. You think it was something else? 12:18:13

23 A. I think it was their concern that -- 12:18:15

24 that this deal was upsetting to them and that they 12:18:17

25 didn't want to be involved with it. 12:18:20

Page 107

1 Q. Okay. So, you believe they got out 12:18:22

2 because they didn't like the proposed value of the 12:18:25

3 transaction? 12:18:27

4 A. I believe that's part of the reason, 12:18:28

5 yes. 12:18:29

6 Q. Do you know if there's any other part, 12:18:30

7 any other reason? 12:18:31

8 A. I don't -- I don't know. 12:18:31

9 Q. Okay. Are you guessing or do you 12:18:32

10 remember?

11 A. No, I -- I believe that's what I 12:18:36

12 remember. 12:18:37

13 Q. Okay. Do you have an understanding what 12:18:38

14 a poison pill is?

15 A. I do. 12:18:54

16 Q. Just generally speaking, what is it? 12:18:55

17 A. It's a device used by a board to prevent 12:18:58

18 a single shareholder from acquiring a significantly 12:19:01

19 greater than a number of shares in order to slow the 12:19:04

20 process down. 12:19:08

21 Q. Doesn't it more than slow the process 12:19:11

22 down? It -- doesn't it prevent the shareholder from 12:19:14

23 acquiring more shares? 12:19:16

24 A. I think that's what I said or meant to 12:19:18

25 say. 12:19:20

Page 108

1 Q. Okay. And with respect to Valeant and 12:19:20

2 Pershing Square, in -- in April of this year, did 12:19:25

3 Allergan put in place a poison pill? 12:19:31

4 A. Yes, we did. 12:19:33

5 Q. Okay. And the poison pill is in place 12:19:34

6 today? 12:19:42

7 A. It is. 12:19:43

8 Q. Okay. So, if every one of those 12:19:43

9 proposals I showed you, Proposals 1 through 8 -- 12:19:48

10 A. Uh-huh. 12:19:50

11 Q. -- at the December 18th, 2014 meeting, 12:19:52

12 if every one of those proposals passed, is it fair 12:19:54

13 to say there still cannot be any tender offer of 12:19:57

14 Allergan shares? 12:20:00

15 MS. SMITH: Objection. Calls for a legal 12:20:01

16 conclusion, lack of foundation. 12:20:03

17 Go ahead. 12:20:05

18 THE WITNESS: I'd like you to rephrase that 12:20:09

19 in a way that I -- 12:20:11

20 MR. HOLSCHER: Okay. 12:20:12

21 THE WITNESS: -- better understand what 12:20:12

22 you're saying. 12:20:12


24 Q. Okay. You -- you started some of your 12:20:13

25 testimony this morning talking about the fact that 12:20:16

Page 109

1 you believe that Pershing Square unlawfully gained 12:20:18

2 its shares, right? 12:20:22

3 A. I do. 12:20:23

4 Q. And that -- that they, among other 12:20:24

5 things, shouldn't be allowed to be voted for a 12:20:27

6 tender offer because they gained them improperly? 12:20:29

7 A. Right. 12:20:33

8 Q. Okay. I'm just asking you some 12:20:33

9 questions: As we stand today, you agree there can 12:20:34

10 be no successful tender offer to take over Allergan 12:20:38

11 because the poison pill is in place? 12:20:42

12 MS. SMITH: Again, calls for a legal 12:20:45

13 conclusion. 12:20:46

14 THE WITNESS: I believe I know that. 12:20:48


16 Q. And -- and so, even if Proposals 1 12:20:53

17 through 8 pass, there could never be a tender offer 12:20:55

18 absent the agreement of Allergan's board? 12:20:59

19 MS. SMITH: Same objection. 12:21:02

20 THE WITNESS: Yeah, I -- I'm not sure. 12:21:03

21 MR. HOLSCHER: Okay. I think he's running 12:21:05

22 out of tape, so why don't we stop now. 12:21:07

23 MS. SMITH: Okay. 12:21:10

24 THE VIDEOGRAPHER: This marks the end of 12:21:12

25 Media No. 1 in the deposition of Michael Gallagher. 12:21:13

28 (Pages 106 - 109)


Exhibit 16 Page 429


Page 110

1 Going off the record. The time is 12:21 p.m. 12:21:16

2 (Lunch recess taken at 12:21 p m.) 12:21:23

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

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25

Page 111

1 SAN DIEGO, CALIFORNIA, TUESDAY, OCTOBER 7, 2014

2 1:04 P M

3

4 THE VIDEOGRAPHER: This marks the beginning 01:04:07

5 of Media No 2 in the deposition of Michael 01:04 09

6 Gallagher This deposition is being held at 01:04:11

7 12670 High Bluff Drive, San Diego, California 92130 01:04:13

8 Videographer is Scott Tanaka, here on behalf of 01:04:21

9 Veritext Legal Solutions Today's date is 01:04:23

10 October 7th, 2014 01:04:26

11 Back on the record The time is 01:04:29

12 1:04 p m 01:04:30


14 Q Good afternoon, Mr Gallagher 01:04:33

15 A Hello 01:04:35

16 Q I want to ask you some questions about 01:04:36

17 your contacts with shareholders and your knowledge 01:04:38

18 of Allergan's contacts with its shareholders 01:04:40

19 Since April 22nd, 2014, has Allergan 01:04:46

20 attempted to reach out to all of its major 01:04:52

21 shareholders to explain to them why it opposes the 01:04:57

22 potential merger with Valeant and Pershing Square? 01:05:04

23 A Allergan has an ongoing dialogue with 01:05:11

24 their shareholders prior to April 22nd and after 01:05:15

25 April 22nd, and they have continued that, 01:05:18

Page 112

1 obviously. Possibly with a little more frequency 01:05:22

2 because there's a lot more interest today than there 01:05:25

3 was before April 22nd. And one of the discussion 01:05:28

4 points, clearly, is the -- the issue of the Valeant 01:05:33

5 offer. 01:05:39

6 Q. Okay. And have you personally 01:05:40

7 communicated with any of Allergan's shareholders 01:05:44

8 since April of 2014? 01:05:47

9 A. I have. 01:05:49

10 Q. And which shareholders have you 01:05:50

11 communicated with? 01:05:53

12 A. I've talked with -- I may not remember 01:05:55

13 all of them. Obviously Pershing Square, I had a 01:05:57

14 conversation with Mr. Ackman. I talked with T.Rowe 01:06:01

15 Price, Vanguard. 01:06:04

16 Q. Have you spoken with State Street? 01:06:08

17 A. I talked with Fidelity. 01:06:11

18 Q. Okay. 01:06:14

19 A. I talked with Jackson Square, BlackRock. 01:06:15

20 Q. BlackRock. 01:06:21

21 A. Maybe one or two others that I've -- 01:06:22

22 that I've -- I've had conversations with. 01:06:24

23 Q. AllianceBerstein? 01:06:26

24 A. I don't recall that, no. 01:06:27


Page 113

1 Allergan as a company has systematically gone 01:06:32

2 through its list of major shareholders with a plan 01:06:36

3 to essentially contact them to explain to them 01:06:39

4 Allergan's views regarding Pershing Square and 01:06:41

5 Valeant? 01:06:43

6 A. Well, again, Allergan has an ongoing 01:06:44

7 dialogue with its shareholders, and David Pyott is 01:06:47

8 well known for visiting with and talking with 01:06:52

9 shareholders. He has over his career. So, this is 01:06:54

10 an ongoing dialogue. 01:06:57

11 And now, obviously, they have had 01:06:59

12 communications with all these shareholders, and I 01:07:00

13 don't know how many of them, but many, many, many 01:07:04

14 shareholders, and certainly the subject of Valeant 01:07:06

15 and the offer comes up. 01:07:10

16 Q. Okay. And in your conversations with 01:07:12

17 the shareholders -- I don't get the sense you're a 01:07:15

18 shy man. So, in your conversation with 01:07:18

19 shareholders, I'm assuming you've express -- 01:07:20

20 expressed to them your opinions regarding Valeant 01:07:22

21 and Pershing Square? 01:07:25

22 A. I have. 01:07:26

23 Q. And fair to say that you've indicated to 01:07:28

24 shareholders that you believe that they engaged in 01:07:32

25 insider trading? 01:07:33

29 (Pages 110 - 113)


Exhibit 16 Page 430


Page 114

1 A. I don't recall having had much 01:07:35

2 discussion at all about the insider trading with the 01:07:37

3 investors. I may have mentioned it's my belief, but 01:07:40

4 I don't think it was something I covered on -- on 01:07:43

5 all of them or most of them. It was not -- only if 01:07:45

6 it came up in some -- some way that the shareholder 01:07:50

7 led me to that -- that issue. It was not a purpose 01:07:55

8 of mine to talk to them on -- on that subject. 01:07:58

9 Q. And there was a complaint that was filed 01:08:02

10 in federal court in -- in Santa Ana around August, 01:08:04

11 beginning of August of this year. Do you recall 01:08:07

12 that? 01:08:09

13 A. I do. 01:08:09

14 Q. And that's the complaint where Allergan 01:08:10

15 raised, you know, in something that was a couple 01:08:12

16 inches thick, allegations that it believed that 01:08:16

17 Pershing Square had engaged in insider trading? 01:08:19

18 A. Yes. 01:08:22

19 Q. And some pretty detailed allegations of 01:08:22

20 why Allergan believed that Valeant was not -- didn't 01:08:26

21 operate appropriately, I guess would be fair to say. 01:08:29

22 A. Uh-huh. 01:08:32

23 Q. Is that fair to say? 01:08:32

24 A. Yes. 01:08:33

25 Q. And you're aware that at the time that 01:08:34

Page 115

1 complaint went out that Allergan also issued, kind 01:08:36

2 of, press releases and made statements to the press 01:08:38

3 spreading that out throughout the United States? 01:08:42

4 A. Yeah. Vaguely, I remember a press 01:08:44

5 release, but I'm not -- I can't -- I can't picture 01:08:46

6 it in my mind. 01:08:49

7 Q. And that it was covered, you know, front 01:08:50

8 page of the Wall Street Journal on the online 01:08:51

9 edition? 01:08:54

10 MS. SMITH: Yeah. 01:08:55

11 THE WITNESS: Valeant, Allergan and Pershing 01:08:56

12 Square have consumed a lot of ink since 01:08:57

13 April 22nd. 01:08:59


15 Q. And if I could direct you to your most 01:09:01

16 recent proxy, page 12, there's a section that says 01:09:05

17 "Legal proceedings in connection with the exchange 01:09:18

18 offer." 01:09:22


20 A. I do. 01:09:22

21 Q. And there's a reference to "Action 01:09:23

22 against Valeant, Pershing Square and William A. 01:09:24

23 Ackman for violation of federal securities law." 01:09:28


25 A. I do. 01:09:31

Page 116

1 Q. And, in fact, in your proxies, you're 01:09:31

2 disclosing to all the shareholders your belief that 01:09:36

3 Allergan and -- I'm sorry. 01:09:40

4 In your proxies you're disclosing to all 01:09:42

5 the shareholders your belief that Pershing Square 01:09:45

6 and Valeant improperly acquired their shares? 01:09:47

7 A. I haven't read this paragraph. You want 01:09:52

8 me to read it? 01:09:55

9 Q. Sure. Sure. 01:09:56

10 A. Okay. 01:10:26

11 Q. So, you notice that in that paragraph it 01:10:27

12 says, actually, the contents of the complaint which 01:10:29

13 is attached as Schedule 19 -- 14D9 as Exhibit A27. 01:10:32


15 A. A28. 01:10:38

16 Q. I think you're getting ahead of 01:10:40

17 yourself. I think the complaint is A27 and the 01:10:41

18 press release is A28. 01:10:44

19 A. Oh, yes, I'm sorry. You're right. 01:10:46

20 Q. So -- so, in fact, you actually had sent 01:10:48

21 out to all shareholders an actual copy of the 01:10:50

22 complaint, right? 01:10:53

23 A. It looks that way. 01:10:53

24 Q. In addition, there's a reference to the 01:10:55

25 press release -- remember, I had asked you a 01:10:57

Page 117

1 question about that before -- a press release issued 01:10:58

2 by Allergan announcing filing of a lawsuit attached 01:11:02

3 the schedule 14D9 as Exhibit A28. 01:11:04


5 A. I do. 01:11:08

6 Q. Does that refresh your memory that, in 01:11:09

7 fact, Allergan did have a press release announcing 01:11:10

8 the lawsuit? 01:11:13

9 A. Vaguely. 01:11:14

10 Q. Would it be fair to say that so far as 01:11:14

11 you know most, if not all, of Allergan's 01:11:17

12 shareholders know today that you believe that 01:11:20

13 Pershing Square and Valeant engaged in improper 01:11:23

14 insider trading? 01:11:26


16 for speculation. 01:11:30

17 THE WITNESS: I would speculate that pretty 01:11:30

18 much all of our institutional shareholders would 01:11:36

19 know about this. I can't say what the retail 01:11:38

20 shareholders would know. 01:11:41


22 Q. In fact, it's -- it's been a -- 01:11:45

23 something that Allergan has systematically followed 01:11:47

24 up on with its shareholders to make sure they're 01:11:55

25 aware of Allergan's views regarding Pershing Square 01:12:00

30 (Pages 114 - 117)


Exhibit 16 Page 431


Page 118

1 and Valeant? 01:12:02

2 MS. SMITH: Objection. Vague, ambiguous, 01:12:03

3 lack of foundation. 01:12:10


5 THE WITNESS: I -- I -- the word "systematic" 01:12:12

6 suggests that in every call they did this, and I 01:12:16

7 don't think that's the case. But -- and I'd be very 01:12:21

8 surprised if it was. So, I guess I'd have to 01:12:23

9 disagree with your assertion. 01:12:26


11 Q. Okay. Do you agree -- were you 01:12:28

12 involved -- well, I don't want to get any 01:12:35

13 attorney-client communication. 01:12:38

14 Let me ask you this: You agree that 01:12:38

15 Allergan prepared a press release to announce that 01:12:40

16 it was suing Mr. Ackman, Pershing Square and others 01:12:44

17 for insider trading? 01:12:48

18 A. Yes. 01:12:52

19 Q. Okay. And you saw that that was 01:12:52

20 covered, like in the Wall Street Journal? 01:12:56

21 A. Yes. 01:12:58

22 Q. Okay. And Allergan wanted the Wall 01:12:58

23 Street Journal to cover those allegations? 01:13:02

24 MS. SMITH: Objection. 01:13:04

25 ///

Page 119


2 Q. That was one of the reasons you -- well, 01:13:05

3 let me ask you this: Are you aware that Allergan 01:13:06

4 also reached out to the Wall Street Journal to make 01:13:09

5 sure they covered the allegations in the insider 01:13:11

6 trading complaint? 01:13:14

7 A. Specifically, no. But I wouldn't be 01:13:15

8 surprised. 01:13:17

9 Q. Okay. And it'd be fair to say that it's 01:13:18

10 highly likely all of Allergan's institutional 01:13:27

11 investors are aware today of the insider trading 01:13:29

12 allegations raised by Allergan? 01:13:34


14 speculation, lacks foundation. 01:13:36

15 THE WITNESS: I would -- I would think that 01:13:39

16 the vast majority of the institutional holders of 01:13:41

17 Allergan stock would be aware of it. 01:13:47


19 Q. As you sit here today, you think they're 01:13:50

20 true? 01:13:51

21 A. I do. 01:13:51

22 Q. Right. 01:13:52

23 And if someone asks you, that's what you 01:13:58

24 would tell them? 01:14:02

25 A. I'd have to. 01:14:04

Page 120

1 Q. We stopped when we were going back and 01:14:22

2 forth on the poison pill. I just want to see if I 01:14:24

3 can ask you a few short questions and -- and see if 01:14:28

4 I can close out the record. And I apologize if I 01:14:30

5 repeat a couple questions --

6 A. That's all right. 01:14:38

7 Q. -- to get started. 01:14:38

8 Are you aware that Allergan has put in 01:14:39

9 place a poison pill? 01:14:41

10 A. Yes. 01:14:43

11 Q. Is it your understanding that so long as 01:14:43

12 a poison pill is in place, a tender offer for 01:14:45

13 Allergan shares cannot be consummated? 01:14:48

14 MS. SMITH: Object to the extent it calls for 01:14:51

15 a legal conclusion. 01:14:53

16 THE WITNESS: Yeah, I'm not an expert on -- 01:14:53

17 on tender offers and poison pills. So, I -- I -- 01:14:54

18 I'm really not sure. 01:14:57

19 MR. HOLSCHER: Okay. Can you mark this next 01:15:24

20 exhibit, Exhibit 7? 01:15:28



23 THE WITNESS: Thank you. 01:15:39


25 Q. I put in front of you, Mr. Gallagher, 01:15:48

Page 121

1 Exhibit 7. Do you recognize that document? 01:15:51

2 A. I don't. 01:15:56

3 Q. All right. I'll represent to you it's 01:15:58

4 an ISS report dated October 1st, 2014. Have you 01:15:59

5 seen this report before today? 01:16:05

6 A. May I take a look at it? 01:16:08

7 Q. Sure. 01:16:10

8 A. Yeah, I believe I did see this. 01:16:37

9 Q. Okay. Do you know if this was 01:16:38

10 distributed to the board of Allergan? 01:16:40

11 A. I don't know. I would guess it was 01:16:42

12 posted. 01:16:46

13 Q. When you say "posted," where would it be 01:16:46

14 posted? Do you have an internal, like, website? 01:16:48

15 A. E-mail from Matt Maletta, who's the 01:16:51

16 secretary of the board. 01:16:55

17 Q. Okay. Did you discuss this ISS report 01:16:56

18 with any board members outside the presence of 01:16:58

19 counsel? 01:17:01

20 A. No. 01:17:01

21 Q. Okay. Do you recall that in this report 01:17:02

22 ISS concluded that the board should give 01:17:14

23 shareholders a deciding vote on any large buyout 01:17:22

24 blocking acquisition? Are you aware of that 01:17:25

25 conclusion? 01:17:30

31 (Pages 118 - 121)


Exhibit 16 Page 432


Page 122

1 A. I believe that is their conclusion. 01:17:31

2 Q. And do you agree with that conclusion? 01:17:32

3 A. No. 01:17:34

4 Q. And why not? 01:17:35

5 A. The board is solely charged with making 01:17:36

6 decisions of that nature. And, you know, if ISS is 01:17:38

7 now in the position of telling boards that they 01:17:42

8 should put a vote out for every -- everything that a 01:17:45

9 board has to decide, then we really don't need 01:17:48

10 boards anymore. 01:17:52

11 Boards are the fiduciary -- have the 01:17:52

12 fiduciary responsibility to make decisions. They 01:17:54

13 stand in place of the shareholders. And until 01:17:57

14 they're -- they're no longer serving, that's what 01:18:00

15 they should do, and they should be independent and 01:18:03

16 make their decisions, clearly listen to all -- all 01:18:06

17 shareholders. 01:18:10

18 But at the end of the day, they have to 01:18:10

19 make the decision based on the facts available to 01:18:12

20 them, the advice of their experts and their own 01:18:14

21 business judgment. 01:18:17

22 Q. On the second page, ISS in the second 01:18:18

23 full paragraph, there's a reference to, "Absent the 01:18:22

24 announcement of a large irrevocable acquisition 01:18:29

25 though, absent, that is, an irrevocable breach of 01:18:34

Page 123

1 faith, shareholder can -- shareholders cannot know 01:18:37

2 whether the board's public professions of alignment 01:18:41

3 are principles or platitudes." 01:18:45


5 A. I do. 01:18:48

6 Q. Do you know that ISS is of the view that 01:18:49

7 it would be an irrevocable breach of faith for the 01:18:52

8 Allergan board to enter an acquisition such as Silax 01:18:56

9 before the December 18th vote? 01:18:59

10 A. I forget the verb that you said. What 01:19:01

11 was the verb? 01:19:03

12 Q. Did you know that ISS is of the view 01:19:05

13 that it would be an irrevocable breach of faith for 01:19:08

14 Allergan to enter into a transaction to buy Salix 01:19:16

15 before the December 18th, 2014 vote? 01:19:21

16 MS. SMITH: Before you answer the question, 01:19:26

17 for the record, we're going to be taking the 01:19:27

18 position during this deposition that any questions 01:19:30

19 regarding any strategic matters that are under 01:19:31

20 consideration currently by the board -- and I'm not 01:19:36

21 specifically speaking to this. But I just, you 01:19:38

22 know, wanted you to understand that the position 01:19:42

23 we've taken with respect to the documents will be 01:19:44

24 the same position we're taking with regard to the 01:19:46

25 depositions. 01:19:48

Page 124

1 Now I think he can answer this question 01:19:49

2 yes or no. 01:19:51

3 MR. HOLSCHER: I'm not going to ask him about 01:19:51

4 what they're considering and -- 01:19:52

5 MS. SMITH: Okay. Then -- 01:19:54


7 Q. I'm asking just your -- are you aware 01:19:55

8 that ISS has taken the position that it would be an 01:19:58

9 irrevocable breach of faith of the shareholders for 01:20:02

10 Allergan to enter into an acquisition such as the 01:20:04

11 Salix transaction before December 18th, 2014? 01:20:07

12 MS. SMITH: And you can answer that question 01:20:13

13 yes or no, but -- 01:20:16

14 THE WITNESS: Yes. 01:20:18


16 Q. And you disagree with ISS? 01:20:19

17 A. Of course. 01:20:22

18 Q. Okay. The page 3, the next page, at the 01:20:23

19 top paragraph, ISS takes issue with Valeant's 01:20:40

20 referring -- let me restate that. 01:20:46

21 At the top of page 3, ISS takes issue in 01:20:49

22 the first paragraph with Allergan's referring to the 01:20:51

23 Valeant offer as "grossly inadequate." And in doing 01:20:55

24 so, they note that "one can't help but wonder about 01:20:58

25 the credibility of a board which took no action 01:21:05

Page 125

1 about -- no action a year ago with shares trading at 01:21:08

2 roughly half the Valeant offer, despite pleas from 01:21:12

3 shareholders for a buyback." 01:21:17


5 A. I do. 01:21:19

6 Q. And, in fact, didn't shareholders 01:21:20

7 approach Allergan last year, asking Allergan to buy 01:21:23

8 back its shares? 01:21:31

9 A. Which shareholder? You mean all -- 01:21:32

10 Q. I'm just asking generally. 01:21:35

11 A. -- you mean all -- all shareholders? 01:21:36

12 Q. Do you know if any major institutional 01:21:37

13 shareholders asked that? 01:21:39

14 A. That's a different question. 01:21:40

15 I believe that -- my recollection is 01:21:41

16 that Jackson Square was in favor of Allergan buying 01:21:48

17 shares back. That's been their position pretty 01:21:56

18 historically. I'm not aware of any other major 01:22:00

19 investor who suggested we should do it. Not to say 01:22:03

20 that it didn't happen, but I'm not aware of it. 01:22:06

21 Q. Okay. And in the last half of 2013, 01:22:09

22 from, say, June through the end of December, 01:22:11

23 Allergan's stock price was somewhere between the -- 01:22:17

24 that 85 and maybe low hundreds; is that about right? 01:22:20

25 A. That's right. 01:22:25

32 (Pages 122 - 125)


Exhibit 16 Page 433


Page 126

1 Q. Okay. And during that time period 01:22:25

2 Allergan didn't buy back any of its shares? 01:22:27

3 A. I believe that's true. 01:22:31

4 Q. Okay. And why is that? 01:22:32

5 MS. SMITH: Let me just caution you that 01:22:39

6 you're to answer the question, but to the extent 01:22:41

7 that it would reveal any business strategies that 01:22:44

8 are currently being considered by the company, 01:22:47

9 you'll have to keep that confidential. 01:22:50

10 THE WITNESS: Yeah. I know you guys are 01:22:52

11 deposing Jim Hindman today or tomorrow, and I think 01:22:56

12 he'd be the guy who can answer that better. He's 01:22:59

13 the one that's had the conversation with Jackson 01:23:02

14 Square. 01:23:03

15 But my -- my impression is that we -- we 01:23:04

16 really couldn't buy back shares during that period 01:23:08

17 of time because there was an overhang related to 01:23:10

18 Restasis and our knowledge of what was going on. 01:23:13

19 So, we -- we were -- were not able to buy shares in 01:23:16

20 the marketplace at that time. 01:23:18


22 Q. The entire six months the end of 2013? 01:23:20

23 A. Well, for the last -- the last part 01:23:23

24 of -- last half -- well, not the last half, but the 01:23:25

25 last quarter of the year for sure. 01:23:28

Page 127

1 Q. Between June and August, the shares were 01:23:33

2 in the 80 to 90 range, right? 01:23:37


4 Q. Okay. But roughly last year, kind of, 01:23:45

5 roughly half of what the share price is today? 01:23:48

6 A. Yeah, roughly. 01:23:53

7 Q. Let's -- let's -- just go over -- turn 01:24:03

8 briefly to the Jackson Square letter. 01:24:06

9 Can I have that, Jason? Tab 60, please. 01:24:08

10 We'll mark this is Exhibit 8, please. 01:24:18




14 Q. Do you recognize Exhibit 8, 01:24:41

15 Mr. Gallagher? 01:24:43

16 A. I do. 01:24:44

17 Q. Is that a September 27, 2014 letter to 01:24:44

18 you from the chairman and chief investment officer 01:24:50

19 of Jackson Square Partners? 01:24:57

20 A. It is. 01:24:59

21 Q. And his name is Mr. Jeff Van Harte? 01:24:59

22 A. It is. 01:25:02

23 Q. Had you met with him before 01:25:03

24 September 27th, 2014? 01:25:05

25 A. I believe not. 01:25:07

Page 128

1 Q. Did you ever talk to him on the phone 01:25:11

2 before? 01:25:12

3 A. I -- I did. 01:25:13

4 Q. Okay. Do you know if other executives 01:25:13

5 of Allergan had spoken with Mr. Van Harte or other 01:25:16

6 employees of Jackson Square Partners before 01:25:22

7 September 2014? 01:25:25

8 A. Yes. 01:25:27

9 Q. Fair to say they were a -- been a 01:25:30

10 long-term, major shareholder of Allergan? 01:25:32

11 A. Yes. 01:25:36

12 Q. You view them as pretty sophisticated 01:25:36

13 investors? 01:25:39

14 A. I do. 01:25:39

15 Q. Generally cooperative with the company? 01:25:40

16 A. Very supportive. Long-term investors. 01:25:42

17 Q. Okay. Did you -- did you speak with 01:25:45

18 Mr. Van Harte after you received this letter? 01:25:57

19 A. I did. 01:25:59

20 Q. And did you speak to him by yourself or 01:26:00

21 was someone else on the phone with you from 01:26:04

22 Allergan? 01:26:06

23 A. Jim Hindman was with me. 01:26:07

24 Q. And you -- just on the phone? 01:26:08

25 A. On the phone. 01:26:10

Page 129

1 Q. Okay. And did you talk about this 01:26:10

2 letter? 01:26:13

3 A. We did. 01:26:14

4 Q. Okay. And first -- let's go to the 01:26:15

5 letter first. I want to ask you about your 01:26:19

6 conversation. 01:26:22

7 The letter, in the third paragraph -- or 01:26:23

8 the second paragraph says you refused to engage with 01:26:27

9 Valeant, describing their takeover offer as grossly 01:26:33

10 inadequate. "We note -- we note, however, the board 01:26:36

11 was not compelled by the value available via the 01:26:38

12 repurchase of Allergan stock and was trading at 01:26:42

13 roughly half the current level through much the 01:26:45

14 second half of 2013." 01:26:47


16 A. I do. 01:26:49

17 Q. And he notes in -- in a parenthetical 01:26:49

18 they had been pushing Allergan to buy back shares at 01:26:51

19 that time? 01:26:56

20 A. Yes. 01:26:56

21 Q. Okay. Down in the third paragraph, in 01:26:58

22 the second sentence, he writes, "Most 01:27:03

23 disturbingly -- more disturbingly, this approach 01:27:07

24 appears to be intended not only to preempt 01:27:10

25 shareholder approval but also limit interests from 01:27:13

33 (Pages 126 - 129)


Exhibit 16 Page 434


Page 130

1 various bidders of the company." 01:27:16


3 A. I do. 01:27:18

4 Q. Okay. Do you agree with that statement 01:27:19

5 from Mr. Van Harte?

6 A. No. 01:27:23

7 Q. Why not? 01:27:24

8 MS. SMITH: Again, same objection. 01:27:28

9 Answer the question if you can do so 01:27:30

10 without revealing any business strategies 01:27:32

11 information. 01:27:43

12 THE WITNESS: Which exact statement are you 01:27:50

13 referring to? 01:27:51


15 Q. I don't want to speak for you, 01:27:57

16 Mr. Gallagher, but it appears to be in the letter 01:27:58

17 he's complaining the board seems focused on hastily 01:28:01

18 closing a large transaction. And in the second 01:28:04

19 sentence, he states, "Given the circumstances, this 01:28:06

20 can only mean the price paid must be dramatically 01:28:10

21 higher than would otherwise be the case, depressing 01:28:12

22 potential returns on capital." 01:28:15

23 Then he states, "Most disturbingly, this 01:28:17

24 approach." Again, it's your review of the letter, 01:28:20

25 not mine. I think he's referring to the first 01:28:23

Page 131

1 sentence of the paragraph: "This approach appears 01:28:26

2 to be intended to not only preempt shareholder 01:28:26

3 approval but also limiting interest from the various 01:28:29

4 bidders of the company." 01:28:31

5 And my question to you is: Do you 01:28:33

6 disagree with Mr. Van Harte's statement? 01:28:35

7 A. I do. 01:28:39


9 A. The board and the company would never 01:28:41

10 hastily close a large transaction. The board would 01:28:46

11 never do a deal dramatically higher than would 01:28:51

12 otherwise be normal. The board would, therefore, 01:28:55

13 not depress potential returns on invest -- 01:28:59

14 investment capital -- invested capital. And the 01:29:01

15 concept that that would be done to preempt 01:29:06

16 shareholder approval is nonsense. That would not be 01:29:09

17 the intention of the board. 01:29:11

18 And clearly, we're -- we have done 01:29:15

19 nothing, in my opinion, to eliminate interest from 01:29:18

20 various bidders for the company because we think 01:29:21

21 that the position we've taken with Valeant of 01:29:24

22 refusing to talk to them at the prices that we think 01:29:26

23 are significantly below any acceptable threshold 01:29:29

24 would tell potential bidders that the price of 01:29:33

25 Allergan, if they're so interested, is significantly 01:29:37

Page 132

1 higher. So, I think his -- his -- his thoughts are 01:29:40

2 well-intended but totally incorrect. 01:29:45

3 Q. I think you referred to what he said as 01:29:49

4 nonsense? 01:29:51

5 A. Did I say that to him? 01:29:55

6 Q. No, I think you said -- just said it to 01:29:57

7 me. 01:30:00

8 A. Oh, maybe. I don't always listen to 01:30:01

9 myself. 01:30:08

10 MS. SMITH: The record is what the record is. 01:30:09


12 Q. So, the -- with respect to this letter, 01:30:11

13 he also states in that third paragraph, "Management 01:30:16

14 has defended this stance by claiming that 01:30:20

15 shareholder feedback has been strongly in favor of 01:30:23

16 an acquisition." 01:30:27


18 A. I do. 01:30:28

19 Q. Okay. Can you identify any 01:30:29

20 institutional shareholders of Allergan who have been 01:30:33

21 strongly in favor of Allergan making a large 01:30:37

22 acquisition? 01:30:42

23 A. There are dozens of them. I think 01:30:44

24 you're talking about a specific timeframe, though, 01:30:48

25 aren't you? 01:30:50

Page 133

1 Q. Well, in this timeframe now, between the 01:30:51

2 August, September -- the time period between now and 01:30:54

3 before the board meeting. I think that the 01:30:57

4 reference is September 27, 2014, so it's a fair 01:30:59

5 point, Mr. Gallagher. 01:31:03

6 I'm going to focus on the -- let's just 01:31:04

7 say the summer of 2014 through today -- 01:31:07

8 A. Right. 01:31:12

9 Q. -- have any institutional shareholders 01:31:12

10 of Allergan indicated to you or, to your knowledge, 01:31:16

11 others at Allergan that they strongly support 01:31:19

12 Allergan making an acquisition? 01:31:24

13 A. To me, no. But if -- if you want to -- 01:31:30

14 a more detailed answer, you should talk to the 01:31:36

15 people who talk to more shareholders, which would be 01:31:39

16 David Pyott and Jim Hindman. I know you'll be 01:31:42

17 talking to them, and I'm sure they can give the 01:31:45

18 details of other shareholders who suggest that 01:31:47

19 acquisition is a -- is a good thing. 01:31:49

20 Now, as I -- as I kind of corrected you 01:31:52

21 on your question, and I have to say that over a long 01:31:54

22 period of time, many of our shareholders have 01:31:58

23 encouraged the company to make good strategic 01:31:59

24 accretive acquisitions. And -- and I believe that 01:32:04

25 there are probably still quite a few out there who 01:32:07

34 (Pages 130 - 133)


Exhibit 16 Page 435


Page 134

1 would like to see that. 01:32:10

2 Now, you have pointed out a number of -- 01:32:11

3 of letters from Jackson Square and from T.Rowe 01:32:12

4 Price. We certainly know what -- what Pershing 01:32:15

5 Square's position is. 01:32:19

6 If you add up the number of letters that 01:32:21

7 we do not have from investors weighing in on this 01:32:22

8 subject, there are significantly greater shares held 01:32:27

9 by this pile than there are by the short pile that 01:32:30

10 you've given me. And there are, of course -- when 01:32:32

11 you deal with investors, it goes from A to Z. 01:32:34

12 Everyone has an opinion on every issue, and those 01:32:38

13 opinions vary as the night and day sometimes. 01:32:41

14 And there are many who are -- have told 01:32:44

15 us this is a deal we should do and we should do it 01:32:46

16 quickly, and there are many who have said "Do not -- 01:32:49

17 do not make this deal. This is -- this is 01:32:51

18 absolutely absurd. We do not want that company's 01:32:52

19 stock. We will never own it." Some have said we 01:32:56

20 cannot own it. And others who are in the middle who 01:33:00

21 say "Let's see what happens." 01:33:02

22 So, this is what I know. You want to 01:33:05

23 find out the specifics of who they are, I think you 01:33:08

24 should talk to David and Jim. 01:33:10

25 Q. Have David or Jim identified to you any 01:33:13

Page 135

1 institutional shareholder communicating to them 01:33:18

2 since this special meeting was set -- 01:33:23

3 A. Yeah. 01:33:26

4 Q. -- that they favored an acquisition by 01:33:26

5 Allergan before the special meeting? 01:33:30

6 A. They have not indicated that that was -- 01:33:32

7 that there were investors who had communicated that. 01:33:35

8 They have communi- -- they have not said that there 01:33:40

9 were -- other than these, those who had said not to. 01:33:41

10 Q. Okay. When you say "other than these," 01:33:45

11 you're referring to -- the first would be Pershing 01:34:00

12 Square? 01:34:02

13 A. I'm assuming that's what their position 01:34:04

14 is. I think we know that. 01:34:06

15 Q. T.Rowe Price? 01:34:08

16 A. T.Rowe Price, Jackson Square, probably 01:34:09

17 the Jennison Associates. 01:34:14

18 Q. Is there another one, Pentwater? 01:34:18

19 A. Pentwater, that's another one, yeah. 01:34:21

20 Q. Okay. 01:34:23

21 A. Again, you know, if you add up the 01:34:25

22 overall shares that those very vocal minority 01:34:26

23 positions have, it's less than a third of the -- of 01:34:30

24 the investor. 01:34:33

25 Q. But you agree that T.Rowe Price isn't 01:34:35

Page 136

1 historically a vocal shareholder? 01:34:36

2 A. They are very strong in their position, 01:34:42

3 and -- and good days and bad days they're very 01:34:43

4 strong and they're not shy about saying what they 01:34:47

5 think. And they -- they flip-flop at times on their 01:34:50

6 position, and they've certainly advocated making 01:34:52

7 acquisitions in the past. So . . . 01:34:55

8 Q. And you indicated you spoke with 01:34:57

9 Mr. Van Harte after you received this letter. What 01:35:00

10 did you tell him in the conversation? 01:35:03

11 A. I -- we talked about his comment about 01:35:08

12 buying shares back at the end of last year, and I 01:35:18

13 indicated that he and Jim had already had a 01:35:21

14 discussion about that, explaining why that wasn't 01:35:24

15 done, talked about making an acquisition. And I 01:35:27

16 told him that the -- the company has to employ its 01:35:31

17 resources over time in a number of different ways: 01:35:36

18 Some buying back stock, some making acquisitions, 01:35:43

19 some investing in -- in the plant and equipment. 01:35:47

20 And that we have to keep all options open, and we 01:35:52

21 have to have a mix of those if we're going to have a 01:35:56

22 healthy company that grows long term and pretty much 01:35:58

23 explained the philosophy of the company and -- and 01:36:01

24 our business model. 01:36:03

25 Q. Did he indicate in any way he would 01:36:05

Page 137

1 change the positions that he set out in his 01:36:06

2 September 27th, 2014 letter? 01:36:08

3 A. Well, there -- there was more on the 01:36:10

4 phone call than -- than -- than him. There were, I 01:36:12

5 think, three or four people, and they actually had 01:36:16

6 kind of different opinions. I don't remember who I 01:36:22

7 was talking to at any particular time on a 01:36:24

8 teleconference. 01:36:27

9 They were strong in their -- in their 01:36:29

10 position, and I was equally strong in explaining the 01:36:31

11 company's position. 01:36:34

12 Q. And again, have you received any letter 01:36:42

13 from any institutional shareholder saying that they 01:36:44

14 support Allergan, first, not engaging with Valeant? 01:36:51

15 Has any institutional investor sent you a letter or 01:36:56

16 said it? 01:37:01

17 A. I have not. 01:37:01

18 Q. Okay. Has any letter been sent to you 01:37:01

19 or the board of directors from an institutional 01:37:03

20 shareholder saying they support the -- Allergan 01:37:04

21 making a large acquisition before the shareholder 01:37:08

22 meeting? 01:37:11

23 A. I -- I don't think so, but I'm not 01:37:12

24 positive. 01:37:17

25 Q. Okay. And with respect to Pentwater, 01:37:19

35 (Pages 134 - 137)


Exhibit 16 Page 436


Page 138

1 I'll just show you briefly that letter. 01:37:27

2 By the way, do you have any reason to 01:37:33

3 believe that Jackson Square wrote this, you know, at 01:37:34

4 the direction of Mr. Ackman or Pershing Square? 01:37:38

5 A. I know that Mr. Ackman met with Jackson 01:37:41

6 Square before they wrote this letter. 01:37:45

7 Q. And people from Allergan met with 01:37:48

8 Jackson Square too, right? 01:37:50

9 A. I don't know if they met with them. I'm 01:37:53

10 sure they had phone conversations with them. 01:37:55

11 Q. Based on your discussion with 01:37:58

12 Mr. Van Harte, do you believe this letter reflects 01:38:00

13 the sincere views of -- of Jackson Square, or are 01:38:03

14 they just writing it as -- as a proxy for 01:38:07

15 Mr. Ackman? 01:38:10

16 A. I -- 01:38:12



19 THE WITNESS: Yeah. You know, if you're 01:38:13

20 asking me to speculate, I wouldn't know. 01:38:14

21 MR. HOLSCHER: I'd like to show you, we'll 01:38:19

22 mark this as Exhibit 8 -- 9. This is the 01:38:20

23 September 25th, 2014 letter from Pentwater Capital. 01:38:27

24 MS. SMITH: Thank you. 01:38:34


Page 139



3 Q. By the way, Mr. Gallagher, with respect 01:38:40

4 to the T.Rowe Price, Pentwater, Jackson Square 01:38:42

5 letters, I want to ask you about conversations with 01:38:47

6 your advisors, not your lawyers, just your 01:38:50

7 investment bankers. Okay? 01:38:54

8 Have you had discussions with your 01:38:55

9 investment bankers as to whether it's highly unusual 01:38:56

10 for these shareholders to send such direct letters 01:38:58

11 to the board that considering an acquisition or 01:39:02

12 transaction could be a breach of the fiduciary 01:39:06

13 duties? 01:39:09

14 A. No. 01:39:09

15 Q. You never talked about that with your 01:39:10

16 advisors? 01:39:12

17 A. No. Not with the financial advisors, 01:39:13

18 no. 01:39:16

19 Q. Okay. Again, I don't want any -- 01:39:17

20 anything in terms of your discussions with counsel, 01:39:17

21 but as you sit here today, do you have any 01:39:19

22 understanding whether or not it's unusual for 01:39:21

23 shareholders to send such public letters to a board 01:39:24

24 essentially saying "If you engage in this 01:39:29

25 transaction, we believe you may be violating your 01:39:30

Page 140

1 fiduciary duties"? 01:39:33

2 A. Listen, I'm not aware of a lot of these 01:39:34

3 situations and what kind of letters. I would -- I 01:39:38

4 would not be in a position to -- to -- to say that. 01:39:40

5 And having never had this experience myself in the 01:39:43

6 past, then I would have no basis for that. 01:39:45

7 Q. Okay. 01:39:47

8 A. I would point out that -- 01:39:48

9 Q. Go ahead. I'm sorry. 01:39:51

10 A. -- again, that if you stack up the 01:39:52

11 people who did not send us letters, who did not 01:39:56

12 apparently feel this way, strongly, to send us a 01:39:58

13 letter, that's significantly more shareholders than 01:40:01

14 this -- this handful that we're talking about. 01:40:04

15 Not that these aren't important 01:40:06

16 investors to us, don't get me wrong. And not that a 01:40:08

17 company and its investors from time to time can have 01:40:11

18 a difference of opinion. But as a board, we have 01:40:14

19 a -- an obligation that is very single -- 01:40:18

20 single-minded. And we are very much reminded and 01:40:20

21 aware of our fiduciary duties consistently in our 01:40:23

22 meetings, which we -- which we have had many of 01:40:28

23 since April 22nd. And our -- our legal counsel 01:40:33

24 has, at almost every turn that we've taken, reminded 01:40:35

25 us consistently that -- 01:40:40

Page 141

1 Q. I'd ask you -- 01:40:41

2 MS. SMITH: Yeah, yeah. 01:40:42

3 MR. HOLSCHER: I don't want to chance 'cause 01:40:43

4 I don't want you to inadvertently waive the 01:40:43

5 privilege because then I would -- 01:40:45

6 THE WITNESS: Yeah. Thank you. 01:40:47

7 MR. HOLSCHER: -- so I have to stop you 01:40:48

8 there. 01:40:49

9 MS. SMITH: Other than that, are you finished 01:40:51

10 with your answer? 01:40:52

11 THE WITNESS: I am, sure. 01:40:53


13 Q. Let me stop you. I interrupted you 01:40:54

14 solely because I didn't want you to inadvertently 01:40:56

15 waive the attorney-client privilege. 01:40:59

16 A. Thank you. 01:41:00

17 Q. But you can answer fully if you want. I 01:41:00

18 was not in any way trying to interrupt you. 01:41:02

19 A. I was -- I was done. 01:41:04

20 Q. Okay. On the Pentwater letter, which is 01:41:04

21 Exhibit 9, did you also receive this letter from 01:41:07

22 Pentwater sometime around September 25th, 2014? 01:41:10

23 A. Yes. 01:41:14

24 Q. And it's written by a Matthew Halbower. 01:41:14


36 (Pages 138 - 141)


Exhibit 16 Page 437


Page 142

1 A. Yes. 01:41:19

2 Q. Have you ever spoken to him before? 01:41:19

3 A. I'm not sure if I have or not. I had a 01:41:20

4 conversation with an investor very early in the 01:41:22

5 process, and it may have been Pentwater, but I -- 01:41:26

6 I'm not -- I'm not positive. 01:41:30

7 Q. Okay. And Pentwater indicates they're 01:41:31

8 the beneficial holder of 3.9 million shares of 01:41:34

9 Allergan? 01:41:38

10 A. Yes. 01:41:38

11 Q. All right. And in the second paragraph 01:41:39

12 Mr. Halbower writes, "During this time, the actions 01:41:47

13 of Allergan's board have grown increasingly hostile 01:41:50

14 toward its own shareholders." 01:41:54


16 A. I do. 01:41:56

17 Q. And you disagree with that? 01:42:02

18 A. I do. 01:42:04

19 Q. Okay. He goes on to say in that 01:42:04

20 paragraph -- I'm skipping two sentences -- 01:42:12

21 "Pentwater does not understand how Allergan's 01:42:13

22 directors could possibly conclude it is an 01:42:17

23 appropriate exercise of the fiduciary duty to embark 01:42:20

24 on such a large-scale acquisition that in [sic] 01:42:23

25 first engaging Valeant and Actavis. This is 01:42:25

Page 143

1 especially the case, given that in less than three 01:42:28

2 months Allergan shareholders will vote on whether to 01:42:31

3 remove six of Allergan's directors." 01:42:34


5 A. I do. 01:42:37

6 Q. And do you believe it could be an 01:42:38

7 appropriate exercise of your fiduciary duty to make 01:42:43

8 a large-scale acquisition before the December board 01:42:46

9 meeting? 01:42:52

10 MS. SMITH: And just at a general level, you 01:42:55

11 can answer that question. In other words, without 01:42:57

12 revealing any particular business strategy. 01:43:00

13 THE WITNESS: Can you read your question 01:43:03

14 back, please. 01:43:04


16 Q. I'll back up. 01:43:05

17 His -- his -- his statement in the 01:43:06

18 letter is, "Pentwater does not understand how 01:43:08

19 Allergan's directors could possibly conclude it is 01:43:12

20 an appropriate exercise of their fiduciary duty to 01:43:15

21 embark on such a large-scale acquisition that in 01:43:18

22 [sic] first engaging with Valeant and Actavis." 01:43:21

23 And my question to you is: Do you agree 01:43:25

24 with Mr. Halbower that it would not be an 01:43:28

25 appropriate exercise of the Allergan directors' 01:43:31

Page 144

1 fiduciary duties to embark on a large-scale 01:43:36

2 acquisition without first engaging with Valeant and 01:43:40

3 Actavis? 01:43:43

4 A. No. 01:43:45


6 A. Why do I disagree with him? 01:43:51

7 Q. Right. 01:43:54

8 MS. SMITH: Again, I just -- you know, we're 01:43:55

9 dancing a little close to getting into specifics of 01:43:56

10 what the board may or may not be considering. I 01:44:00

11 understand you're not asking that. 01:44:02

12 MR. HOLSCHER: I'm not asking that. 01:44:04

13 MS. SMITH: Understood. But I just want to 01:44:06

14 be clear on the record that the answer should be at 01:44:07

15 a general level and, you know, that we're not 01:44:09

16 opening that door. So -- 01:44:11

17 THE WITNESS: Okay. Generally, it would be a 01:44:13

18 breach of the board's fiduciary duty if they did not 01:44:21

19 follow through on an acquisition that was strategic 01:44:26

20 and financially accretive and important to the 01:44:31

21 long-term growth of shareholder value for that 01:44:35

22 company. So, I guess Mr. Halbower and I have a very 01:44:39

23 different understanding of fiduciary duty of the 01:44:45

24 board. 01:44:48

25 ///

Page 145


2 Q. And we've gone over a June letter from 01:44:50

3 T.Rowe Price to Allergan. Are you aware of T.Rowe 01:44:56

4 Price making statements more recently, in the last 01:45:02

5 couple weeks, that they too believed that the -- 01:45:04

6 that Allergan should not engage in any large 01:45:08

7 acquisition before the December shareholder meeting? 01:45:11

8 A. Statements rather than -- 01:45:17

9 Q. Public statements rather than letter. 01:45:18

10 A. Yeah. You know, I'm not sure I'm aware 01:45:21

11 of that. 01:45:22

12 Q. Okay. 01:45:23

13 A. I wouldn't be surprised to hear it. 01:45:23

14 Q. Okay. 01:45:25

15 A. Who did they make those statements to? 01:45:30

16 Q. I can show you the -- if you'd like, I 01:45:33

17 can show you the -- it was a Wall Street Journal 01:45:35

18 article. I can show it to you briefly if you'd like 01:45:38

19 to see it. 01:45:40

20 A. That's fine. Yeah, I wouldn't be 01:45:41

21 surprised that they shared their views with the Wall 01:45:42

22 Street Journal. 01:45:44

23 Q. Okay. I understand that it's your view 01:45:45

24 that Allergan is seeking to have Pershing Square not 01:46:10

25 vote its 9.7 percent ownership interest in Allergan 01:46:14

37 (Pages 142 - 145)


Exhibit 16 Page 438


Page 146

1 at the December shareholder meeting. 01:46:18

2 My question to you is: Is it your 01:46:22

3 understanding that Allergan still wants that 01:46:27

4 9.7 percent to count as the available shareholders 01:46:29

5 that vote at that meeting or not include at all in 01:46:35

6 the numerator or denominator of the vote? 01:46:39

7 A. It is my understanding and desire that 01:46:43

8 we have 100 percent, which would include the 9.7 01:46:46

9 that cannot be voted. 01:46:51

10 Q. So, you would like to have those 01:46:57

11 9.7 percent included in the denominator but that 01:46:58

12 Pershing Square not be permitted to vote for any of 01:47:04

13 the eight proposals? 01:47:07

14 MS. SMITH: Just to be clear, you're asking 01:47:08

15 him for his personal opinion or view, or are you 01:47:09

16 asking if he knows what the company's position is on 01:47:12

17 that issue? 01:47:14

18 MR. HOLSCHER: The company's position. 01:47:15

19 THE WITNESS: I'm not sure what the company's 01:47:16

20 position is. 01:47:17


22 Q. Okay. So, do you know -- do you know 01:47:18

23 whether or not the company's position is that 01:47:29

24 Pershing Square's vote should just be concluded as a 01:47:31

25 no vote in December? Do you know whether or not 01:47:34

Page 147

1 that's the company's position? 01:47:37

2 MS. SMITH: You can -- if you know, you can 01:47:38

3 answer. 01:47:40



6 Q. Is that just your hope? 01:47:41

7 A. I think it should be a nonvote. My hope 01:47:44

8 and my wish. 01:47:52

9 Q. I want to take you back to April of 01:48:12

10 2014. 01:48:14

11 A. I'd like to go back there. 01:48:15

12 Q. So, do you know when Allergan received 01:48:25

13 the unsolicited offer from Valeant and Pershing 01:48:27

14 Square? 01:48:32

15 A. What date? 01:48:33

16 Q. Right, approximate date. 01:48:34

17 A. I think it was the 22nd. 01:48:36

18 Q. Okay. So, we'll use that as a starting. 01:48:37

19 So, as of April 22nd, 2014, what was 01:48:41

20 your understanding as to how Pershing Square PS 01:48:51

21 Fund 1 had acquired those shares before 01:48:57

22 April 22nd, 2014? 01:49:00

23 A. It was -- it was a technical process 01:49:12

24 that I frankly don't terribly understand having to 01:49:17

25 do with call options, et cetera, and derivatives, 01:49:20

Page 148

1 and I -- I don't understand that very well. 01:49:24

2 Q. But as of April 22nd, 2014, what you 01:49:29

3 referred to as the insider trading, that conduct had 01:49:34

4 been completed, it was done, so far as you knew? 01:49:37

5 A. I would -- I would guess, yes. 01:49:43

6 MR. HOLSCHER: Okay. I want to show you 01:49:44

7 the -- a Wachtell, Lipton client alert. This is not 01:49:46

8 attorney-client communication, something they just 01:49:51

9 sent to the world. 01:49:52

10 Have this marked as Exhibit 10. 01:49:54




14 Q. Do you have that document in front of 01:50:24

15 you, Mr. Gallagher? 01:50:25

16 A. I do. 01:50:26

17 Q. Have you seen that before today? 01:50:26

18 A. Yeah, I may have seen this back early in 01:50:28

19 this process about, but I -- I don't recall when I 01:50:31

20 first saw it. 01:50:33

21 Q. All right. I'll represent to you this 01:50:34

22 is a client alert, we call these, or client memos 01:50:38

23 from Wachtell, Lipton dated April 25th, 2014 with 01:50:44

24 respect to the Pershing Square/Valeant hostile bid. 01:50:50


Page 149

1 A. Yes. 01:50:54

2 Q. As of this time, had Allergan hired 01:50:54

3 Wachtell, Lipton to represent it in this dispute? 01:50:58

4 A. I don't think so. 01:51:03

5 Q. Okay. Did you read this before Allergan 01:51:04

6 hired Wachtell? 01:51:08

7 A. I don't know. 01:51:10

8 Q. Okay. If you go down to the fourth 01:51:12

9 paragraph, the first three paragraphs essentially 01:51:15

10 summarize how Pershing Square and Valeant acquired 01:51:21

11 the shares, if you look at the first couple 01:51:23

12 paragraphs. 01:51:26

13 A. Uh-huh. 01:51:27

14 Q. Then at the beginning of the fourth, 01:51:28

15 Wachtell's memo states, "This new stratagem 01:51:30

16 emphasizes the crying need for the SEC to bring its 01:51:34

17 early warning rules in the 21st Century, as we 01:51:39

18 have been urging for several years." 01:51:43

19 It goes on to say, "The SEC should 01:51:46

20 forthwith move to close the ten-day filing window 01:51:48

21 and the wide loophole opened by even more complex 01:51:54

22 derivative trading schemes." 01:51:57


24 A. I do. 01:52:00

25 Q. Okay. So, are you aware that before 01:52:00

38 (Pages 146 - 149)


Exhibit 16 Page 439


Page 150

1 Allergan hired Wachtell, Wachtell was telling the 01:52:03

2 world they thought the SEC should change its rules 01:52:09

3 to close the loophole that Pershing Square and 01:52:13

4 Valeant had used, according to Wachtell? 01:52:20

5 MS. SMITH: Objection. Document speaks for 01:52:22

6 itself, lack of foundation. And I would say that 01:52:22

7 mischaracterizes the document. 01:52:29

8 But you can answer. 01:52:30

9 THE WITNESS: Yeah, I'd have to spend much 01:52:36

10 more time reading this to see if I could under- -- 01:52:38

11 agree with your statement or not. 01:52:40


13 Q. But it's fair to say that as of 01:52:43

14 April 25th, Allergan and its soon-to-be counsel 01:52:46

15 knew exactly how Pershing Square and Valeant had 01:52:53

16 acquired these shares. You understood that -- well, 01:52:58

17 let me -- let me back up. 01:53:01

18 This -- this memo sets out the process 01:53:02

19 and make the reference to exercising options and 01:53:06

20 what they refer as styling them as co-bidders. You 01:53:14

21 see all that language? 01:53:17

22 A. Yes. 01:53:19

23 Q. Okay. So, my question is: So, when did 01:53:19

24 you first consider Allergan suing Mr. Ackman and 01:53:26

25 Pershing Square for insider trading? 01:53:34

Page 151

1 A. I don't remember the exact date. 01:53:37

2 Q. But you agree that the actual 01:53:41

3 information about the trading was known to you and 01:53:44

4 to your -- the counsel you later hired as of 01:53:48

5 April 25th, 2014? 01:53:52

6 A. I don't -- 01:53:54


8 THE WITNESS: I don't know that. I don't 01:53:56

9 know that other -- other facts weren't -- weren't 01:53:57

10 discovered after this April 25th, so I don't know 01:54:00

11 that. And not being a technical expert on -- on 01:54:03

12 insider trading and buying into the market to avoid 01:54:08

13 tripwires, I really can't say that this is accurate 01:54:13

14 for the situation as it really occurred or if this 01:54:18

15 was an impression of what was going on or anything 01:54:22

16 else because it's not -- not my domain to know this. 01:54:25


18 Q. Okay. When did you as a lead director 01:54:29

19 of Allergan first consider suing Pershing Square and 01:54:34

20 Valeant for insider trading? 01:54:40

21 A. I don't know the exact date. But the 01:54:42

22 minutes that I think you have would pretty well 01:54:45

23 pinpoint that. 01:54:49

24 Q. Do you believe it was close in time to 01:54:50

25 this August time period? 01:54:52

Page 152

1 A. I thought it was before that, but I'm 01:54:56

2 not sure. 01:54:58

3 Q. Okay. Do you know why Allergan waited 01:54:59

4 until August 1st, 2014 to file its complaint 01:55:10

5 against Pershing Square and Valeant? 01:55:14


7 for attorney-client privileged information. 01:55:21

8 Otherwise, to the extent you can answer without 01:55:22

9 revealing any of that, you may do so. 01:55:24

10 THE WITNESS: I cannot. 01:55:26


12 Q. So, are you saying it was a legal 01:55:27

13 strategy to wait until -- I'm not asking you what 01:55:30

14 the legal strategy is, but you're saying it's a 01:55:33

15 privileged legal strategy as to why Allergan waited 01:55:36

16 until August? 01:55:38

17 A. I can't discuss it. I'm sorry. 01:55:39

18 Q. Okay. I'm not asking for the 01:55:41

19 communications, but I want to get the -- the 01:55:42

20 frameworks of this. 01:55:44

21 Do you agree that Allergan could have 01:55:46

22 sued Pershing Square and Mr. Ackman for insider 01:55:50

23 trading on April 25th, 2014? 01:55:56



Page 153

1 You may answer if you can. 01:56:08

2 THE WITNESS: I guess that would have been 01:56:12

3 possible. 01:56:15

4 MR. HOLSCHER: And to the -- and I guess what 01:56:16

5 you're saying is to the -- the reason for waiting 01:56:17

6 until August 1st is -- relates to privileged legal 01:56:21

7 strategy which you're -- it's not an area where I 01:56:27

8 can ask questions; is that right? 01:56:30

9 MS. SMITH: All I'm saying is if -- if -- if 01:56:33

10 you -- if you can answer that question in a way that 01:56:35

11 doesn't reveal the content of any attorney-client 01:56:38

12 communication, you may do so. If you have a 01:56:41

13 recollection that would be independent of that, you 01:56:44

14 may. 01:56:46

15 I'm not saying that's totally off 01:56:47

16 limits. I'm just admonishing you, you know, not to 01:56:49

17 reveal the content of any discussions you may have 01:56:54

18 had with your attorneys. 01:56:58

19 THE WITNESS: Generally -- generally it is a 01:57:00

20 very big step for a company to sue a shareholder. 01:57:02

21 It's something that needs to be considered in depth, 01:57:08

22 and there are a lot of factors that need to be 01:57:12

23 observed prior to making that kind of decision. And 01:57:19

24 at the end of the day, we filed this as timely as we 01:57:31

25 could, given our understanding of all the other 01:57:40

39 (Pages 150 - 153)


Exhibit 16 Page 440


Page 154

1 factors we were weighing. 01:57:42


3 Q. What were the other factors you were 01:57:46

4 weighing? 01:57:49

5 A. I can't say. 01:57:51

6 Q. Are you saying the other factors you're 01:57:57

7 weighing are -- relate to privileged advice you got 01:57:59

8 from counsel? 01:58:01

9 A. I am. 01:58:02

10 Q. What information did Allergan receive 01:58:03

11 after April 25th, 2014 that related to the insider 01:58:06

12 trading allegations? 01:58:11

13 A. I can't say. 01:58:13

14 Q. Can you identify any? 01:58:14

15 A. I can't -- I can't say. I'm sorry. I'd 01:58:15

16 love to answer your question, but I can't. 01:58:17

17 Q. Are you saying that -- that there -- 01:58:19

18 there was information after April 25th related to 01:58:22

19 the trading, but that information is privileged? Is 01:58:25

20 that what you're saying? 01:58:27

21 A. That's what I'm saying. I'm saying that 01:58:28

22 the information was privileged. This information 01:58:30

23 you're asking for is privileged. 01:58:32

24 MS. SMITH: The information you receive -- 01:58:34

25 you received information from your attorneys is what 01:58:35

Page 155

1 you're saying -- 01:58:37

2 THE WITNESS: Yeah, exactly. 01:58:37

3 MS. SMITH: -- so you can't discuss it. 01:58:39


5 Q. In June and July and August of 2014, 01:58:45

6 were you monitoring the number of shareholders, 01:58:49

7 percentage of shareholders, who were filling out all 01:58:56

8 the paperwork for the -- call the shareholder 01:59:00

9 meeting? 01:59:02

10 A. I've already answered that I had, the 01:59:03

11 board was. 01:59:05

12 Q. And was the timing of this lawsuit done 01:59:06

13 at a time when you and others at Allergan, not 01:59:07

14 talking about lawyers -- 01:59:12

15 A. Right. 01:59:13

16 Q. -- but you and other executives -- you 01:59:13

17 and the execs at Allergan determining that, in fact, 01:59:15

18 Pershing Square was having success in getting the 01:59:19

19 25 percent? 01:59:22

20 A. There was no consideration and no 01:59:24

21 linkage at all between our decision to file this 01:59:27

22 lawsuit and the special meeting. 01:59:31

23 Q. Why did you wait? Is there any 01:59:34

24 nonprivileged information you can give me as to why 01:59:39

25 you waited from April 22nd, 2014 to August 1st, 01:59:41

Page 156

1 2014 to bring these claims? 01:59:46

2 MS. SMITH: So, objection. I think he's 01:59:48

3 already -- you've asked him that and he's already 01:59:50

4 answered it to the best of his ability without 01:59:53

5 revealing discussions he had with his attorneys. 01:59:55

6 But if you can answer that in a more 01:59:58

7 fulsome way than you have. 02:00:00

8 THE WITNESS: The -- the -- the most 02:00:01

9 significant answer is one I've already said. Taking 02:00:02

10 a step such as this is much -- is not something a 02:00:05

11 board relishes doing. And at a time when we felt we 02:00:11

12 were obligated to do it, we did it as soon as we 02:00:23

13 could. 02:00:26


15 Q. Did you feel obligated to issue a press 02:00:27

16 release? 02:00:29

17 A. I think, frankly, almost everything that 02:00:32

18 we do from this time of April 22nd to today 02:00:35

19 until -- until December 18th requires a press 02:00:39

20 release to be released because it is such a -- a 02:00:42

21 notorious situation in the business press. 02:00:50

22 Q. Not asking about communication with 02:00:54

23 counsel, but I want to know what facts did you learn 02:00:57

24 after April 22nd, 2014 that in any way related to 02:01:01

25 the insider trading allegations? What facts did you 02:01:09

Page 157

1 learn? It's not privileged. What facts did you 02:01:13

2 learn? 02:01:17

3 A. I'm afraid I can't answer that for, you 02:01:18

4 know, confidentiality, attorney-client privilege. 02:01:23

5 Q. Just to be clear, I'm -- I'm not asking 02:01:28

6 about communications with counsel. What I'm driving 02:01:32

7 is -- and I've been careful, and if I knew you were 02:01:36

8 going to slip, I stopped you. So, I do not want 02:01:37

9 attorney-client communications. 02:01:41

10 What I am entitled to get is there's 02:01:43

11 facts that were known to Allergan as of 02:01:45

12 April 22nd, 2014. You didn't file until 02:01:46

13 April [sic] 1st, and I'm asking you if you can 02:01:50

14 identify any facts that relate to the insider 02:01:54

15 trading allegations that Allergan learned between 02:01:57

16 April 22nd, 2014 and August 1st. 02:02:00

17 MS. SMITH: And I think what the -- you know, 02:02:08

18 answer the question. 02:02:10

19 But I think what he's told you is he's 02:02:10

20 having a hard time answering that question without 02:02:12

21 breaching the attorney-client privilege. 02:02:18

22 THE WITNESS: That's the -- that's the 02:02:21

23 answer. 02:02:22

24 MS. SMITH: I'm happy to have a discussion 02:02:24

25 with you off the record to see if there's a way we 02:02:26

40 (Pages 154 - 157)


Exhibit 16 Page 441


Page 158

1 can answer that question. 02:02:28


3 Q. Bank of America is one of your financial 02:02:39

4 advisors? 02:02:41

5 A. It is. 02:02:42

6 Q. And you're paying them -- 02:02:43

7 A. You know better than I do. 02:02:47

8 Q. You're paying them, but you pay them for 02:02:48

9 each opinion too. Do you know you pay, like, 02:02:50

10 2 million per opinion and, I think, 6 million a 02:02:53

11 quarter? 02:02:55

12 A. How much is Valeant paying for their 02:02:56

13 opinions? 02:02:58

14 Q. The -- so, the -- fair to say you're 02:03:00

15 relying on Bank of America as your advise -- one of 02:03:07

16 your advisors? 02:03:10

17 A. Yes. 02:03:12

18 Q. Okay. And -- and you've repeatedly made 02:03:12

19 the statements to the press in every one of your 02:03:21

20 proxies that the, quote -- Valeant proposal, quote, 02:03:26

21 "substantially undervalues Allergan." Fair to say 02:03:28

22 that's -- 02:03:32

23 A. Yeah -- 02:03:32

24 Q. -- likely -- 02:03:32

25 A. -- that's accurate. 02:03:33

Page 159

1 Q. Okay. And do you know if at any time 02:03:34

2 before you retained Bank of America as your advisor 02:03:36

3 they did any analysis of a fair value for an 02:03:39

4 acquisition of Allergan? Do you know if they ever 02:03:42

5 did any analysis of that? 02:03:45


7 MR. HOLSCHER: Okay. Can you mark this as 02:03:47

8 Exhibit 11. 02:03:52




12 Q. I have put before you Exhibit 11, which 02:04:21

13 is an e-mail from David Pyott to you, subject 02:04:25

14 Merrill Lynch, dated February 7th, 2014. And it 02:04:29

15 attaches a Bank of America/Merrill Lynch report 02:04:33

16 entitled "Valeant Plus Allergan?" 02:04:43


18 A. I do. 02:04:46

19 Q. Did you receive this -- did you review 02:04:47

20 this before today? 02:04:49

21 A. I don't recall seeing this. I'm not 02:04:50

22 saying I didn't. I just don't remember it. 02:04:52

23 Q. So, when you hired -- were you part of 02:04:54

24 the group that decided to hire Bank of America? 02:04:57

25 A. I, along with the board, approved the 02:05:00

Page 160

1 hiring of Bank of America. 02:05:02

2 Q. And when you hired them, did you know 02:05:03

3 that they had actually done an analysis in -- did 02:05:05

4 you recall in February 2014 they did an analysis of 02:05:08

5 what a, kind of, fair valuation of Allergan would 02:05:11

6 be? 02:05:13

7 A. I -- I -- I don't recall what I recalled 02:05:14

8 in -- when we hired them. 02:05:20

9 Q. And February of 2014 was before you 02:05:22

10 started paying Merrill Lynch, right? 02:05:27

11 A. Yes. 02:05:31

12 Q. And the first page says, "Theoretical 02:05:31

13 assessment of Allergan in M&A situation." You see 02:05:35

14 that? 02:05:40

15 A. I do. 02:05:41

16 Q. And you look at that first full 02:05:42

17 paragraph about halfway down, it says, "We thought 02:05:49

18 it would be interesting to assess Allergan in the 02:05:52

19 context of a potential M&A situation." 02:05:54


21 A. I do. 02:05:58

22 Q. It says, "Our simple pro forma analysis 02:05:59

23 suggests that the theoretical acquisition of 02:05:59

24 Allergan for 150 a share (28 percent premium) funded 02:06:03

25 with 75 percent stock and with 2 billion of cost 02:06:08

Page 161

1 synergies and full tax synergies would be roughly 02:06:13

2 17 percent accretive to our earnings per share 02:06:17

3 for -- for VRX and will remain accretive up to a 02:06:20

4 purchase price of 195." 02:06:25


6 A. I do. 02:06:28

7 Q. Okay. This -- this report, you don't 02:06:36

8 recall reading any of this report before today? 02:06:37

9 A. I don't remember it. 02:06:40

10 Q. Okay. Did anyone -- has anyone at Bank 02:06:41

11 of America/Merrill Lynch since they've been hired 02:06:47

12 ever talked to you about the prior analysis they'd 02:06:49

13 done of Valeant and Allergan as recently as February 02:06:51

14 of 2014? 02:06:56

15 A. Yeah, I don't recall that. 02:06:57

16 Q. Okay. Did anyone from Bank of 02:06:59

17 America/Merrill Lynch ever tell you that they might

18 have done some prior analysis that was too low --

19 too low a valuation for Allergan?

20 A. I -- I just -- I don't remember. 02:07:11

21 Q. Okay. If you look at page 3 of this, 02:07:13

22 there's something entitled "Simple Pro Forma 02:07:18

23 Analysis." 02:07:22


25 A. Yes, I do. 02:07:23

41 (Pages 158 - 161)


Exhibit 16 Page 442


Page 162

1 Q. It says, "We assessed several pro forma 02:07:24

2 scenarios by combining our published models for 02:07:27

3 Allergan and Valeant and varying key inputs, 02:07:31

4 including premium paid, consideration, pro forma tax 02:07:33

5 rate and cost synergies." 02:07:38


7 A. I do. 02:07:40

8 Q. Okay. And as a starting point, do you 02:07:41

9 see that they actually start a theoretical 02:07:44

10 acquisition at $150 a share? Do you see that? 02:07:48

11 A. Yes. 02:07:53

12 Q. And that implies a 28 percent premium 02:07:54

13 over the last stock price. You see that? 02:07:58

14 A. I do. 02:08:01

15 Q. And Bank of America/Merrill Lynch says 02:08:03

16 "This is similar to the median premium of 30 percent 02:08:05

17 for $1 billion pharma acquisitions announced in the 02:08:08

18 last three years." 02:08:12


20 A. I do. 02:08:14

21 Q. Are you generally aware of the, kind of, 02:08:15

22 rule of thumb last few years in the larger pharma 02:08:16

23 acquisitions has been about a 30 percent premium of 02:08:21

24 the stock price before, you know, the market became 02:08:24

25 aware of the offer? 02:08:26

Page 163

1 A. It depends. 02:08:27


3 THE WITNESS: Yeah, it depends on the 02:08:30

4 situation and the growth and the -- the 02:08:31

5 profitability and the strategic fit. I mean, 02:08:36

6 there -- there are many factors then. So, it's hard 02:08:40

7 to say that there is a very narrow range. It can be 02:08:44

8 a significant range. 02:08:49


10 Q. So, this analysis of your current 02:08:50

11 advisors is a little too simplistic for you? 02:08:52

12 MS. SMITH: Objection. Argumentative, vague, 02:08:56

13 ambiguous. 02:08:59

14 THE WITNESS: I didn't say that. 02:09:00


16 Q. Going down a little farther, they note 02:09:02

17 that -- they're talking about a Valeant/Allergan 02:09:05

18 combination. They say, "We would expect such a 02:09:11

19 transaction to include significant cost and tax 02:09:15

20 synergies based on what Valeant has done with past 02:09:17

21 acquisitions." 02:09:21


23 A. Where is that? 02:09:23

24 Q. Just below that chart. 02:09:23

25 A. Yes, okay. 02:09:25

Page 164

1 Q. Says -- do you see where it says, "We 02:09:26

2 would expect such a transaction to include 02:09:27

3 significant costs and tax synergies based on what 02:09:29

4 Valeant has done with past acquisitions"? 02:09:31

5 A. I do. 02:09:35

6 Q. Okay. Since you've retained Merrill 02:09:35

7 Lynch, have they provided you any of their prior 02:09:38

8 significant analysis of the costs and tax synergies 02:09:43

9 that Valeant had obtained in past acquisitions? 02:09:48

10 A. I believe they have. 02:09:54

11 Q. Okay. And do you agree with your 02:09:55

12 advisors from Bank of America/Merrill Lynch that you 02:09:59

13 would expect Allergan/Valeant transaction to include 02:10:05

14 significant cost and tax synergies? 02:10:09

15 MS. SMITH: Objection. Vague as to Bank of 02:10:14

16 America. 02:10:17


18 Merrill Lynch. Apologies. 02:10:19

19 Go ahead. You can answer whether you 02:10:23

20 agree or not. 02:10:24

21 THE WITNESS: State the question again. 02:10:25


23 Q. And do you agree with your advisors from 02:10:26

24 Bank of America/Merrill Lynch that a 02:10:29

25 Allergan/Valeant transaction would include 02:10:34

Page 165

1 significant cost and tax synergies? 02:10:37

2 A Do I agree with that? I agree that 02:10:49

3 Valeant stated that they would strip out significant 02:10:53

4 amount of costs, so I guess I would have to agree 02:10:56

5 with that As far as tax synergies go, that's a 02:10:59

6 questionable area 02:11:05

7 Q And why do you believe it's 02:11:06

8 questionable? 02:11:07

9 A I'm not sure that Valeant's tax rate 02:11:07

10 will be upheld over time 02:11:12

11 Q Okay Fair to say you believe the 02:11:18

12 analysis in Bank of America/Merrill Lynch's February 02:11:24

13 memo is too conservative evaluation of Allergan? 02:11:28

14 A I do 02:11:32

15 Q Okay You wouldn't have paid for this 02:11:32

16 opinion? 02:11:35

17 A No And it's certainly different than 02:11:36

18 the -- when they have the real numbers of our plan, 02:11:45

19 very, very different than the conclusions that they 02:11:50

20 reach regarding the value of Allergan 02:11:53

21 MS SMITH: If you're done with this 02:12:01

22 particular document, could we take a break here? 02:12:03

23 MR HOLSCHER: Sure 02:12:06


25 time is 2:12 p m 02:12:09

42 (Pages 162 - 165)


Exhibit 16 Page 443


Page 166



3 time is 2:27 p m 02:27:34


5 Q Mr Gallagher, a couple more questions 02:27:38

6 on that last e-mail exchange with you and Mr Pyott 02:27:39

7 The front page, you see where Mr Pyott 02:27:46

8 writes to you, "Per the last e-mail, the numbers are 02:27:51

9 broadly correct"? 02:27:53

10 Do you know whether or not he's 02:27:56

11 referring to the -- the numbers in the Merrill 02:27:57

12 Lynch -- Bank of America/Merrill Lynch analysis? 02:27:58

13 A This is the last mail I don't know if 02:28:01

14 it's an e-mail or not But, you know, as I say, I 02:28:05

15 don't recall this And is there more to this e-mail 02:28:08

16 than -- than just this? 02:28:14

17 Q This was it 02:28:16

18 A And there's no "David" or anything? It 02:28:17

19 seems odd that it just stops right there 02:28:18

20 Q That's what we received There's no 02:28:21

21 sign of a redaction on it, usually where your 02:28:24

22 counsel would actually put it 02:28:26

23 And then he says, "On the other hand, we 02:28:28

24 could do $10 earnings per share this year as well if 02:28:30

25 we really wanted to," with an exclamation point 02:28:33

Page 167

1 Do you know what your most recent public 02:28:35

2 guidance is with respect to your earnings per share? 02:28:37

3 A. It's in -- it's in the vicinity of 5.45, 02:28:41

4 60, somewhere in there. 02:28:42

5 Q. Okay. And do you know what your most 02:28:45

6 recent public guidance is for 2015? Again, just 02:28:46

7 public guidance. 02:28:49

8 A. It's in the vicinity of $8 and, I'm 02:28:50

9 going to say, 40 cents. 02:28:55

10 Q. So, his -- so, it would be fair 02:28:58

11 Mr. Pyott might have been a bit optimistic for 2014? 02:29:00

12 A. I don't know -- I don't know if he was 02:29:05

13 being tongue in cheek or anything else. It's -- it 02:29:05

14 seems almost out of context in a way, so I really 02:29:08

15 don't know. 02:29:12

16 As I say, I don't remember -- I don't 02:29:13

17 remember the e-mail, and I don't remember reading 02:29:15

18 this. It just seems odd that that's all that was in 02:29:17

19 this thing. So, I don't -- I really don't know what 02:29:22

20 his frame of mind was when he said it and whether he 02:29:26

21 was being serious or joking or whatever. 02:29:28

22 Q. Okay. And so, again, your public 02:29:32

23 guidance for this year is, you said, 5 -- 02:29:33

24 A. Yeah, you know, I don't -- I'm sorry, I 02:29:37

25 just don't carry those numbers around in my head, 02:29:38

Page 168

1 but my -- my recollection is somewhere in the mid 02:29:40

2 5-dollar range. 02:29:44

3 Q. And next year? 02:29:45

4 A. In the mid 8-dollar range. Maybe a 02:29:46

5 little lower than that. And I can tell you '16, 02:29:48

6 $10. 02:29:52

7 So, when you write those down, please 02:29:58

8 make sure you say that I'm not -- I'm not telling 02:30:00

9 you exactly what I -- I know those numbers are, just 02:30:02

10 rough. 02:30:05

11 Q. I want to ask a few more questions about 02:30:12

12 your work with Goldman Sachs. 02:30:14

13 A. Yes. 02:30:17

14 Q. At any time before today, had you looked 02:30:20

15 at Goldman Sachs' analyst's reports regarding 02:30:22

16 Valeant? 02:30:28

17 A. Well, I think maybe we covered this 02:30:29

18 already. But all of the reports that are written on 02:30:32

19 Valeant or Allergan, analyst reports, have been 02:30:36

20 posted on a daily basis at the end of the day by 02:30:40

21 Matt Maletta. So, if there was run, I would have 02:30:46

22 seen it. 02:30:48

23 MR. HOLSCHER: We'll mark this as Exhibit 13. 02:30:49

24 THE REPORTER: 12. 02:31:02


Page 169

1 THE REPORTER: Really. 02:31:05

2 THE WITNESS: Yeah. 02:31:06

3 MR. HOLSCHER: I trust you. 02:31:07




7 Q. I've put before you a Goldman Sachs' 02:31:15

8 equity research for Valeant Pharmaceuticals, dated 02:31:19

9 March 7th, 2014. Have you seen this before today? 02:31:22

10 A. Again, I -- you know, I don't recall 02:31:26

11 specifically, but probably have if it was -- let me 02:31:27

12 see. March 7th. I may not have seen this. 02:31:32

13 Q. Have you taken any steps to review the 02:31:36

14 equity research of Valeant done by Goldman Sachs? 02:31:40

15 A. Not specifically, no. 02:31:45

16 Q. Okay. Have you done any review of Bank 02:31:47

17 of America/Merrill Lynch's equity research of 02:31:49

18 Valeant? 02:31:51

19 A. Not specifically. 02:31:52

20 Q. Are you aware that their equity research 02:31:52

21 directly contradicts your assertions that Valeant 02:31:57

22 has flimsy accounting? 02:32:03

23 MS. SMITH: Lack of foundation, vague and 02:32:08

24 ambiguous. 02:32:09

25 THE WITNESS: I think that's something that 02:32:09

43 (Pages 166 - 169)


Exhibit 16 4


Page 170

1 their equity research and their -- and their bankers 02:32:10

2 have to deal with. 02:32:16


4 Q. So, I'm going to make sure I understand 02:32:20

5 your answer and I'll ask you a follow-up question. 02:32:23

6 So, as you sit here today, you don't 02:32:25

7 recall having reviewed any of Goldman Sachs' equity 02:32:27

8 research on Valeant? 02:32:31

9 A. Prior to April 22nd, no. 02:32:32

10 Q. How about since April 22nd? 02:32:35

11 A. If -- as I've said before, if they've 02:32:36

12 written it, then it's been posted, and I -- I 02:32:39

13 probably scanned through it. 02:32:41

14 Q. Okay. Did Goldman Sachs need to stop 02:32:42

15 its equity research of Valeant once you hired it? 02:32:46

16 A. I don't know. 02:32:49

17 Q. Okay. How about Bank of America/Merrill 02:32:50

18 Lynch, do you know if they were able to continue 02:32:52

19 their equity research? 02:32:56

20 A. I don't know. 02:32:58

21 Q. Okay. So, the -- the Goldman Sachs 02:32:59

22 equity research makes a reference to Valeant as a 02:33:04

23 conviction buy. Do you have an understanding of 02:33:22

24 what that means? 02:33:24

25 A. Not really. 02:33:25

Page 171

1 Q. And do you see under the implications 02:33:34

2 that the Goldman Sachs as of March 7th, 2014, had 02:33:36

3 a 12-month price target for Valeant at 164. Do you 02:33:42

4 see that? 02:33:46

5 A. Let me see if I see that. Where is 02:33:48

6 that? 02:33:52

7 Q. Under "Valuation" on the first page. 02:33:53

8 A. Oh, here. 02:33:55

9 Q. I'm sorry. "Implications" on the first 02:33:57

10 page. 02:34:01

11 A. Oh. 02:34:04

12 Q. See under "Implications" -- 02:34:04

13 A. 164, yes, I see it. 02:34:06

14 Q. Okay. And then at the bottom, it says, 02:34:07

15 "Investment list membership" on the left. Do you 02:34:09

16 see where it says "America's buy list" and 02:34:13

17 "American's conviction buy list"? 02:34:15

18 A. Yes. 02:34:18

19 Q. Okay. So -- but you're not aware what 02:34:19

20 that means -- 02:34:21

21 A. No. 02:34:21

22 Q. -- at Goldman Sachs? 02:34:22

23 A. No. There's probably a thing in the 02:34:22

24 back that tells you, though. 02:34:25

25 Q. Okay. Has anyone from the Goldman Sachs 02:34:27

Page 172

1 investment banking, advising you today, told you 02:34:37

2 that they believe that Valeant's accounting is 02:34:41

3 improper? 02:34:43

4 A. I wouldn't put it that way. 02:35:02

5 Q. What way would you put it? 02:35:06

6 A. That there are significant questions 02:35:08

7 about their accounting. 02:35:09

8 Q. Okay. And Allergan has made allegations 02:35:13

9 that it believes that Valeant is providing incorrect 02:35:19

10 and false growth rates. Do you recall that you've 02:35:22

11 made those assertions? 02:35:25

12 A. We have. 02:35:26

13 Q. Okay. Has anyone at Goldman Sachs told 02:35:27

14 you they agree with you that Valeant has been giving 02:35:29

15 incorrect growth rates? 02:35:33

16 A. I -- I don't recall. 02:35:35

17 Q. You don't recall one way or the other? 02:35:36

18 A. I don't recall one way or the other. 02:35:37

19 Q. How about has anyone at Bank of 02:35:38

20 America/Merrill Lynch -- has anyone at Bank of 02:35:41

21 America/Merrill Lynch told you they agree with 02:35:43

22 Valeant's assertion -- let me say it again. 02:35:45

23 Has anyone at Bank of America/Merrill 02:35:48

24 Lynch told you they agree with Allergan's assertion 02:35:49

25 that Valeant has falsified its growth rates? 02:35:52

Page 173

1 A I can't say specifically What I can 02:36:04

2 say is they have been in attendance at meetings when 02:36:07

3 discussions were had about Valeant, its accounting 02:36:11

4 There -- 02:36:18

5 Q Before you go on, if there's lawyers at 02:36:18

6 that meeting you want to talk about, I'm going to 02:36:20

7 ask you everything that happened at the meeting 02:36:22

8 So, if you're -- if you're going to go into 02:36:24

9 privileged meetings, I'll ask all about that I 02:36:26

10 don't want you to inadvertently do that You may 02:36:28

11 want to check with your counsel, but -- 02:36:29

12 A May I have -- 02:36:31

13 Q Yeah, that's fine 02:36:32

14 A I don't know if you want to do this 02:36:33

15 How do I do this without -- 02:36:34

16 Q You can step outside 02:36:35

17 MS SMITH: Yeah, we can go off the record 02:36:37


19 time is 2:36 p m 02:36:39

20 (At this time, Counsel and the deponent 02:36:45

21 left the deposition room, returning shortly 02:36:45

22 thereafter ) 02:36:45


24 time is 2:40 p m 02:40:53

25 MR HOLSCHER: Okay I'll reask the 02:40:55

44 (Pages 170 - 173)


Exhibit 16 Page 445


Page 174

1 question. Just to be clear, my view is that if the 02:40:57

2 witness recalls statements made by Bank of 02:41:00

3 America/Merrill Lynch or Goldman Sachs as issues, 02:41:02

4 we're entitled to it unless it's in the context of 02:41:04

5 communication with counsel where advice is being 02:41:09

6 received. But to the extent that he wants to give 02:41:11

7 us part of a conversation where advice is being 02:41:13

8 received and waives that, then we'd be entitled to 02:41:15

9 ask about the entire conversation. 02:41:18

10 So, I don't -- I'm not asking for that, 02:41:19

11 but I -- you're also not allowed to use the 02:41:20

12 privilege as, what we call, a sword rather than a 02:41:22

13 shield. So, that's -- but we don't need to spend 02:41:26

14 time on that. 02:41:28


16 Q. So, my question is: With respect to, 02:41:29

17 first, Bank of America/Merrill Lynch, did anyone 02:41:32

18 from Bank of America/Merrill Lynch ever indicate to 02:41:40

19 you that they agreed with Allergan's assertion that 02:41:44

20 Valeant had falsified its growth rates? 02:41:47

21 A. What I recall -- first of all, let me 02:41:55

22 say that we've had 30-some board meetings since 02:41:57

23 April 22nd. And who said what, when, in what 02:42:03

24 specific meeting is very difficult to recollect. 02:42:08

25 But what I can recall, not that they 02:42:11

Page 175

1 specifically said anything about falsified 02:42:14

2 accounting, but that in -- in our meetings reviewing 02:42:20

3 Valeant and discussing its business model, there are 02:42:25

4 plenty of conversations related to their lack of 02:42:31

5 transparency in their accounting, their moving their 02:42:33

6 accounting around and changing their terms to make 02:42:37

7 it very difficult for people to understand just 02:42:40

8 exactly what was going on in their business. 02:42:42

9 I don't recall the lawyers saying the 02:42:47

10 words false -- or excuse me, the -- the bankers 02:42:51

11 saying the word false -- falsify, but I don't recall 02:42:53

12 them ever speaking out and saying they disagreed 02:42:58

13 with any of the observations that were being made 02:43:02

14 about Valeant and its accounting. 02:43:05

15 Q. So, so far as you are concerned, you 02:43:07

16 believe that Goldman Sachs agrees with all the 02:43:10

17 public pronouncements that have been made by 02:43:14

18 Allergan attacking Allergan's -- let me say it 02:43:18

19 again. 02:43:21

20 So, so far as you know, Goldman Sachs 02:43:22

21 agrees with all the statements Allergan has made 02:43:24

22 attacking Valeant's accounting and business model? 02:43:28

23 MS. SMITH: Objection. Ambiguous and may 02:43:32

24 call for speculation. 02:43:36

25 But if you know the answer, you may -- 02:43:37

Page 176

1 THE WITNESS: I think it -- it's a 02:43:39

2 speculation that -- that I would speculate that they 02:43:41

3 agree with that conclusion. 02:43:45


5 Q. Both Goldman Sachs and Bank of 02:43:48

6 America/Merrill Lynch? 02:43:50

7 A. I would make that speculation. 02:43:53

8 Q. Okay. And with respect to Goldman 02:43:55

9 Sachs, you are aware that they did an underwriting 02:43:57

10 for Valeant in 2013? 02:44:05

11 A. We talked about that. 02:44:09

12 Q. I'm going to ask you a few more 02:44:11

13 questions about it. So -- 02:44:12

14 A. Okay. 02:44:13

15 Q. -- you're aware of that? 02:44:13

16 A. I am. 02:44:14

17 Q. Okay. And do you know whether or not 02:44:15

18 Goldman Sachs actually purchased options in 02:44:29

19 Valeant's stock as part of the underwriting? 02:44:31

20 A. I don't know. 02:44:35

21 Q. Do you think that Goldman would 02:45:10

22 underwrite a company stock if it thought its 02:45:13

23 accounting numbers were questionable? 02:45:15



Page 177

1 THE WITNESS: I have no idea. 02:45:20


3 Q. Do you think Goldman Sachs would 02:45:24

4 exercise $300 million in Valeant options if they 02:45:26

5 thought that its accounting was questionable? 02:45:30

6 MS. SMITH: Same objection. 02:45:33

7 THE WITNESS: I have no idea. 02:45:34

8 MR. HOLSCHER: Draw your attention to 02:45:47

9 Exhibit 13. 02:45:48




13 Q. Exhibit 13 is a June 12th, 2014 e-mail 02:45:59

14 from Mr. Maletta. Would he give you essentially a 02:46:03

15 daily press coverage report relating to Allergan and 02:46:08

16 Valeant? 02:46:12

17 A. Yes, he would. 02:46:13

18 Q. By the way, did Allergan ever pay 02:46:14

19 anybody to write, kind of, advisory articles 02:46:18

20 analyzing the Allergan/Valeant transaction? 02:46:20

21 A. I don't -- I don't know. 02:46:24

22 Q. Do you know if Allergan ever paid 02:46:26

23 anybody to write, kind of, blogs or any opinions? 02:46:28

24 A. I have no idea. 02:46:30

25 Q. Okay. On the June 12th, 2014 update, 02:46:31

45 (Pages 174 - 177)


Exhibit 16 Page 446


Page 178

1 page 4, there's the New York Times article summary 02:46:38

2 that says "Goldman's Unusually Quiet Role in Battle 02:46:41

3 for Botox Maker." Do you see that? 02:46:47

4 A. I see that. 02:46:49

5 Q. Did you read this? 02:46:50

6 A. Probably. 02:46:51

7 Q. Okay. So, about the fifth paragraph 02:46:54

8 down, it says value -- "Valeant issued new stock 02:47:06

9 last June, selling $23.5 million shares at $85 02:47:09

10 apiece as part of its effort to fund the purchase of 02:47:13

11 Bausch & Lomb, as underwriter Goldman placed those 02:47:15

12 shares in institutional investors, essentially 02:47:20

13 giving the stock its blessing." 02:47:22

14 Do you agree with that statement, that 02:47:24

15 underwriting Valeant shares Goldman actually 02:47:25

16 essentially gave its blessing on Valeant shares? 02:47:29

17 A. I would guess there's an implied -- the 02:47:39

18 word "blessing" is an odd -- odd word. 02:47:42

19 Q. Endorsement may be fair? 02:47:45

20 A. Possibly. 02:47:47

21 Q. Okay. And in that paragraph, this is 02:47:48

22 from a New York Times article, the writer continues, 02:47:51

23 "What is more, Goldman itself exercised its option 02:47:55

24 to purchase Valeant shares, buying 300 million worth 02:47:58

25 for itself." 02:48:03

Page 179


2 A. Where is that? Oh, yes, I see it. 02:48:05

3 Q. You see that? 02:48:07

4 A. Yeah. 02:48:08

5 Q. Before today, were you aware that your 02:48:08

6 advisor had actually exercised options to purchase 02:48:10

7 Valeant shares? 02:48:14

8 A. I'm sure that they disclosed that to us 02:48:14

9 at one point in time. 02:48:17

10 Q. And the article goes on to say, "Now, 02:48:18

11 despite its recent endorsement of Valeant stock, 02:48:20

12 Goldman's new client, Allergan, has proceeded to 02:48:22

13 question the worth of those shares." 02:48:26


15 A. I do. 02:48:29

16 Q. Okay. And the article then quotes 02:48:29

17 Allergan as -- in an SEC filing saying, "Valeant 02:48:35

18 needs to complete the Allergan transaction or 02:48:39

19 another significant transaction for its current 02:48:42

20 stock price." 02:48:45


22 A. I do. 02:48:46

23 Q. Did anyone at Goldman Sachs ever 02:48:49

24 indicate to you they agreed with Allergan's 02:48:52

25 assertion that Valeant needs to complete the 02:48:54

Page 180

1 Allergan transaction or another significant 02:48:56

2 transaction to support its current stock price? 02:48:58

3 A. Not in these words. 02:49:03

4 Q. What words did they use? 02:49:05

5 A. That they're a serial acquirer and need 02:49:07

6 to continue their acquisition trail. 02:49:10

7 Q. And who at Goldman Sachs told you that? 02:49:12

8 A. Our team. 02:49:15

9 Q. And who on the team? 02:49:15

10 A. Jim Katzman. 02:49:18

11 Q. With respect to the, quote, "Valeant 02:49:20

12 needs to complete the Allergan transaction or a 02:49:21

13 significant transaction to support its current stock 02:49:24

14 price," did anyone from Bank of America/Merrill 02:49:26

15 Lynch tell you they agreed with that? 02:49:28

16 A. Yeah, I don't -- I don't recall. 02:49:30

17 Q. Okay. The bottom of that page, it says, 02:49:32

18 "Nonetheless, Goldman's enthusiastic support of 02:49:39

19 Valeant stock less than a year ago stands in 02:49:44

20 contrast to its alliance with the team that is now 02:49:46

21 talking down the value of those shares." 02:49:49


23 A. I do. 02:49:51

24 Q. Do you agree there's a contact -- 02:49:52

25 contrast? 02:49:53

Page 181

1 A. On the surface. 02:49:58

2 Q. What about beneath the surface? 02:49:59

3 A. I don't know. 02:50:01

4 Q. Okay. Do you know what a fairness 02:50:02

5 opinion is? 02:50:08

6 A. Yes, roughly. 02:50:11

7 Q. And what is it? 02:50:12

8 A. It's when a financial institution, the 02:50:16

9 banking group, opines on whether or not a -- a deal 02:50:19

10 is -- offer price is fair. 02:50:27

11 Q. Do you know whether or not it's common 02:50:30

12 practice in M&A transactions in the United States 02:50:31

13 for a company that's receiving an offer to obtain a 02:50:35

14 fairness opinion? 02:50:39

15 A. I don't think it is. Not in a situation 02:50:41

16 like ours. 02:50:44

17 Q. Okay. 02:50:45

18 A. And in a consummated deal, I think it's 02:50:46

19 absolutely essential, but not -- not at the level 02:50:49

20 that we're at. 02:50:52

21 Q. Okay. And have you been involved in 02:50:53

22 obtaining fairness opinions in the past? 02:50:58

23 A. Many, many years ago. 02:51:01

24 Q. Any -- anytime in the last ten years? 02:51:02

25 A. Probably when we bought Inamet. 02:51:07

46 (Pages 178 - 181)


Exhibit 16 Page 447


Page 182

1 Q. Okay. Have you asked Goldman Sachs to 02:51:13

2 prepare a fairness opinion with respect to the 02:51:16

3 proposed Valeant/Allergan transaction? 02:51:18

4 A. No. 02:51:21

5 Q. You know why not? 02:51:23

6 A. Not -- not required at this point in 02:51:24

7 time. 02:51:26

8 Q. Okay. Have you requested that Bank of 02:51:27

9 America/Merrill Lynch provide a fairness opinion? 02:51:29

10 A. No. 02:51:31

11 Q. And also 'cause you think it's not 02:51:32

12 required? 02:51:34

13 A. Not required. Not just me, the board. 02:51:35

14 Q. Has the board actually formed -- 02:51:38

15 A. And our -- and our, you know -- our 02:51:40

16 legal advisors as well. 02:51:40

17 Q. Has the board actually had discussions 02:51:41

18 about whether it needs a fairness opinion? 02:51:43

19 A. No. 02:51:46

20 Q. So, what's the basis for your conclusion 02:51:49

21 that a -- you know, now is not the right time for a 02:51:52

22 fairness opinion? 02:51:56

23 A. Because, as I said, fairness opinions 02:51:57

24 are generally written at a time when there is a deal 02:51:59

25 that is in the offing. There's no deal in the 02:52:01

Page 183

1 offing here. 02:52:04

2 Q. Okay. 02:52:05

3 A. And our board's fairly sophisticated. 02:52:07

4 We've got some pretty smart financial guys on there. 02:52:09

5 And they understand the difference between fairness 02:52:12

6 opinions and other appraisals. And if they felt 02:52:15

7 that one was needed, they would have spoken up and 02:52:18

8 said don't we -- "Shouldn't we get one?" It's not 02:52:21

9 been -- it's not been necessary because there is -- 02:52:23

10 there is no deal. 02:52:26

11 Q. Do you know what the difference is 02:52:28

12 between a fairness opinion and an inadequacy 02:52:29

13 opinion? 02:52:32

14 A. An inad- -- inadequacy opinion basically 02:52:33

15 looks at the parameters of a deal and determines 02:52:37

16 whether or not it -- what the value of it is, 02:52:42

17 whether or not it meets muster. 02:52:44

18 Q. More specifically, does an inadequacy 02:52:47

19 opinion mean nothing more than there might be some 02:52:50

20 other buyer who could pay more? 02:52:52

21 A. No, not necessarily. It means that the 02:52:55

22 value that -- it could mean, I guess, several 02:52:59

23 things, but it -- in this case it means the offer 02:53:02

24 that's being provided is inadequate to the value of 02:53:06

25 the company. 02:53:09

Page 184

1 Q. So, your understanding is that 02:53:11

2 inadequacy opinion determines whether or not the 02:53:15

3 offer that's being provided is inadequate to the 02:53:18

4 value of the company? 02:53:22

5 A. Yeah. 02:53:23

6 Q. How did Allergan determine from the 02:53:26

7 inadequacy opinions that Valeant's offer 02:53:27

8 substantially undervalued Allergan? 02:53:32

9 A. By evaluating the offer and looking 02:53:35

10 at -- at the long-range plan that Allergan has, 02:53:38

11 doing lots of statistical analysis of the value of 02:53:47

12 the earnings at various levels of -- at various 02:53:51

13 earnings per share levels, at various multiples, and 02:53:58

14 determining what those ranges were and then seeing 02:54:03

15 what the resultant price per share would be and then 02:54:06

16 doing a present value of those -- those share prices 02:54:10

17 to get broad ranges as to the value of the company 02:54:15

18 for shareholders, along with other objective 02:54:19

19 analysis of the quality and risk related to the 02:54:26

20 Valeant stock which is, as you know, you know, 02:54:31

21 not -- it's not an all-cash deal, it's a significant 02:54:36

22 stock deal, and the -- evaluating the issues related 02:54:40

23 to that -- that stock. 02:54:44

24 Q. I don't want to ask you about any 02:54:49

25 pending or potential transaction. I want to go back 02:54:50

Page 185

1 historically. 2013 and 2014 before you received the 02:54:53

2 unsolicited offer, I only want to ask you questions 02:54:59

3 about -- 02:55:04

4 A. Okay. 02:55:04

5 Q. -- not potential transactions that are 02:55:05

6 live. 02:55:06

7 A. Okay. 02:55:07

8 Q. Before you received the unsolicited 02:55:12

9 offer from Pershing Square and Valeant, had Allergan 02:55:14

10 received any offer to purchase the company in 2013? 02:55:16

11 MS. SMITH: Let me just pause in this line of 02:55:21

12 questioning. So, if there are strategic options and 02:55:23

13 potential transactions that are being -- that are 02:55:27

14 currently live that, you know, started before the 02:55:30

15 offer, obviously, that would fall within the scope 02:55:36

16 of the business strategy, so please don't discuss 02:55:39

17 any of those potential transactions. With that 02:55:42

18 admonition -- 02:55:45

19 THE WITNESS: What was the -- the timeframe 02:55:46

20 you were talking about? 02:55:47


22 Q. 2013. 02:55:49

23 A. The year 2013? Not to my knowledge. 02:55:50

24 Q. Okay. Would it be fair to say that 02:55:54

25 before you received the unsolicited offer from 02:55:57

47 (Pages 182 - 185)


Exhibit 16 Page 448


Page 186

1 Pershing Square and Valeant, Allergan had not before 02:56:00

2 received an offer at a higher price or value? 02:56:03

3 A. To the best of my knowledge, that's 02:56:10

4 true. 02:56:12

5 MR. HOLSCHER: Have you look at Exhibit 14. 02:56:54




9 Q. Mr. Gallagher, I've put before you a 02:57:16

10 news release issued by Allergan dated June 10, 2014 02:57:18

11 entitled "Allergan Board Unanimously Rejects Revised 02:57:23

12 Unsolicited Proposal from Valeant." 02:57:30


14 A. Yes. 02:57:33

15 Q. And the subheading is "Proposal 02:57:33

16 substantially undervalues Allergan and creates 02:57:35

17 significant risk and uncertainty for Allergan's 02:57:38

18 stockholders." 02:57:41


20 A. I do. 02:57:42

21 Q. And you agree with that statement? 02:57:43

22 A. I do. 02:57:45

23 Q. Strongly? 02:57:45

24 A. Very much so. 02:57:46

25 Q. And looking to the letter that's 02:57:49

Page 187

1 attached at -- so it's page 2 of the release, but 02:57:55

2 it's page 1 and 2 of the letter. Starting at the 02:58:02

3 bottom of the first page of the letter, page 2 of 02:58:07

4 the release, "So, the board also considered how the 02:58:09

5 second revised proposal creates significant risks 02:58:14

6 and uncertainties for Allergan stockholders due to, 02:58:17

7 among other things," and there's four bullet points 02:58:19

8 there. Do you see that? 02:58:23

9 A. Yes. 02:58:24

10 Q. One relates to an alleged unsustained 02:58:25

11 business model. Another is an alleged lack of 02:58:28

12 clarity around a growth potential. The other is 02:58:31

13 alleged anemic growth. The final is unrealistic 02:58:34

14 SG&A and R&D synergies. Do you see that? 02:58:37

15 A. I do. 02:58:43

16 Q. Okay. Let's start with the unrealistic 02:58:44

17 SG&A. What analysis did Allergan do of Valeant's 02:58:50

18 alleged unrealistic SG&A targets? 02:58:56

19 A. We looked at the level of reduction that 02:59:08

20 Valeant had said that they would achieve by slashing 02:59:12

21 SG&A and R&D to an amount that, in our opinion, is 02:59:17

22 absolutely unsupportable of the business in the long 02:59:22

23 term. 02:59:25

24 Q. And what's the current SG&A of Allergan 02:59:26

25 right now? 02:59:31

Page 188

1 A. I don't recall the exact number. 02:59:34

2 Q. 33, 34 percent, something like that? 02:59:36

3 A. That's about right. 02:59:38

4 Q. And what's the industry average? 02:59:39

5 A. For which industry? Specialty pharma, 02:59:43

6 pharma? 02:59:44

7 Q. Specialty pharma. Pick either. 02:59:46

8 A. It's -- it's -- it's lower than that. 02:59:48

9 Q. Mid to high 20s? 02:59:51

10 A. Yeah, about high 20s. 02:59:52

11 Q. Fair to say that for several years 02:59:54

12 Allergan's shareholders have been asking Allergan to 02:59:56

13 get the SG&A in line with the industry? 02:59:59

14 A. No, that's not fair to say. It's a 03:00:01

15 great way to lead into a question. But when you say 03:00:04

16 "Allergan shareholder," again I have to remind you 03:00:06

17 that there's a broad array of Allergan shareholders. 03:00:08

18 And -- and did some? Of course. Did many others? 03:00:11

19 No. 03:00:16

20 Q. Okay. And what was the SG&A target that 03:00:17

21 you believe was unrealistic? 03:00:22

22 A. The SG&A number that Valeant uses in its 03:00:25

23 model, and I forget what it is, but this is 03:00:28

24 referring to the $2.7 billion in synergies that they 03:00:31

25 would cut out of -- of Allergan's R&D and SG&A. 03:00:36

Page 189

1 Q. And I showed you before the February 03:00:41

2 2014 report from Merrill Lynch -- Bank of 03:00:43

3 America/Merrill Lynch. Were they -- 03:00:46

4 A. Yeah. 03:00:48

5 Q. -- they themselves -- on the analyst 03:00:48

6 side -- 03:00:51

7 A. Yeah. 03:00:52

8 Q. -- believed there'd be very significant 03:00:52

9 synergies. You recall that? 03:00:54

10 A. I do. 03:00:55

11 Q. Has Bank of America/Merrill Lynch told 03:00:56

12 you today how much they think the synergies would 03:00:57

13 be? 03:01:00

14 A. Have they told me today? 03:01:02

15 Q. Yeah. As of today what they think the 03:01:03

16 synergies would be. 03:01:05

17 A. Oh, as of today. 03:01:06

18 They -- if you're -- they agree that the 03:01:09

19 size of the cuts are unobtainable and still maintain 03:01:13

20 the ability to run that business. 03:01:19

21 Q. And who -- who at Bank of 03:01:20

22 America/Merrill Lynch has told you that? 03:01:21

23 A. Albert -- I forget Albert's last name. 03:01:23

24 MS. SMITH: At BofA? 03:01:31

25 THE WITNESS: At BofA. Yeah, BofA. Wong, I 03:01:33

48 (Pages 186 - 189)


Exhibit 16 Page 449


Page 190

1 think it is. 03:01:35


3 Q. Okay. You also indicate -- 03:01:35

4 A. And there's a difference between 03:01:39

5 banking, by the way, and the analysts. 03:01:41

6 Q. With respect to -- 03:01:45

7 A. They're not all the same people. 03:01:45

8 Q. With respect to the -- Allergan's claim 03:01:48

9 that Valeant's R&D synergies targets are 03:01:51

10 unrealistic, what was the R&D synergy target that 03:01:54

11 Valeant had set? 03:01:59

12 A. Percentage-wise? 03:02:03

13 Q. Yes. 03:02:04

14 A. I think -- I think they run about a 03:02:05

15 3 percent. 03:02:06

16 Q. And what -- 03:02:09

17 A. R&D. 03:02:10

18 Q. And what percent is -- 03:02:11

19 A. We run at about 16. 03:02:12

20 Q. Okay. And what was the synergy that 03:02:14

21 Valeant had targeted, the total? 03:02:18

22 A. I forget how much of R&D they were going 03:02:21

23 to cut, but it was a significant amount. 03:02:24

24 Q. Do you know how much? 03:02:27

25 A. I think it was a billion dollars, 03:02:29

Page 191

1 somewhere in that vicinity. 03:02:35

2 Q. And you -- you view that as unrealistic? 03:02:38

3 A. Yeah. 03:02:41

4 Q. Okay. And with respect to the 03:02:41

5 unsustainable business model that's described here 03:02:48

6 as the risks, did Allergan's advisors at Bank of 03:02:52

7 America/Merrill Lynch or Goldman Sachs tell you they 03:02:59

8 believed that Valeant had an unsustainable business 03:03:02

9 model? 03:03:05

10 A. They agreed that they did, yes. 03:03:05

11 Q. Both of them agree? 03:03:07

12 A. Yeah. 03:03:08

13 Q. No doubt in your mind they both agreed 03:03:09

14 that -- that Valeant had an unsustainable business 03:03:11

15 model? 03:03:13

16 A. I don't remember them ever disagreeing 03:03:14

17 with that. 03:03:17

18 Q. Okay. And Allergan has declined to 03:03:18

19 enter into any nondisclosure agreements with 03:03:28

20 Valeant? 03:03:30

21 A. That's right. 03:03:31

22 Q. And they've declined to meet with anyone 03:03:31

23 from Valeant? 03:03:34

24 A. That's right. 03:03:36

25 Q. With respect to the business model, 03:03:38

Page 192

1 would it have been helpful for Allergan to meet with 03:03:45

2 the CFO of -- of Valeant? 03:03:49

3 A. I don't think so. 03:03:51

4 Q. Why not? 03:03:53

5 A. Because I've indicated if we do that, it 03:03:53

6 signals to the marketplace that we're interested in 03:03:56

7 this price, and we're not interested in this price. 03:03:58

8 And it forecloses off potential other avenues and 03:04:01

9 options of creating shareholder value over -- over 03:04:05

10 the long term. 03:04:09

11 Plus, we know a lot about their business 03:04:12

12 model. We compete against them. We read whatever 03:04:14

13 financial information is available on them. We -- 03:04:18

14 we've read the statements of their -- their CEO and 03:04:20

15 their CFO about their business model. So, they 03:04:25

16 haven't been shy about telling people what their 03:04:30

17 business model is. I think everybody understands 03:04:32

18 what that is. 03:04:34

19 I don't think there's anyone that 03:04:35

20 doesn't think that they're a serial acquirer. There 03:04:37

21 may be differences of opinion as to how much they 03:04:39

22 are slashing and burning businesses. And time will 03:04:41

23 tell whether or not that that's the case because the 03:04:43

24 businesses will all kind of collapse to the ground 03:04:47

25 as a result of lack of support over time if -- if -- 03:04:50

Page 193

1 if that's the case. 03:04:52

2 Q. And that's your view? 03:04:53

3 A. That's my view. 03:04:55

4 Q. And what's -- what's been the stock 03:04:56

5 appreciation of Valeant stock since Mr. Pearson 03:04:59

6 became CEO? 03:05:01

7 A. It's been a lot. They've growth 03:05:03

8 significantly. 03:05:05

9 Q. And what's -- what's their market cap? 03:05:05

10 Do you know what the market cap has increased to the 03:05:06

11 last five years? 03:05:09

12 A. A lot, a great deal. 03:05:10

13 Q. Tens of billions. 03:05:12

14 A. Oh, sure. 03:05:13

15 Q. And you think that's all going to -- 03:05:13

16 gimmicks? 03:05:16

17 A. Yeah, I do. 03:05:16

18 Q. Okay. Now I'm setting aside your 03:05:18

19 strategy where you say you do not want to engage 03:05:22

20 with Valeant because you think it could signal that 03:05:26

21 you think that the deal could even be possibly close 03:05:29

22 to the amount you want to pay. 03:05:33

23 A. Okay. Thank you. 03:05:35

24 Q. Put that aside. 03:05:36

25 I'm focusing on these four points where 03:05:38

49 (Pages 190 - 193)


Exhibit 16 Page 450


Page 194

1 you essentially attack Valeant's business. Okay? 03:05:40

2 A. All right. 03:05:44

3 Q. Okay. And with respect to -- let's just 03:05:44

4 go to the second bullet point -- "a lack of clarity 03:05:47

5 surrounding Valeant's growth potential because of 03:05:49

6 Valeant's opaque pro forma driven financial 03:05:52

7 reporting." 03:05:56


9 A. I do. 03:05:57

10 Q. Don't you agree, Mr. Gallagher, that you 03:05:58

11 would get clarity about that one way or the other if 03:05:59

12 you sat down with Valeant's -- 03:06:03

13 A. No. 03:06:05

14 Q. -- CFO? 03:06:06

15 A. No. They've hidden these and they've 03:06:07

16 been this nontransparent to the world. They're 03:06:09

17 skilled at hiding the peanut. And there are plenty 03:06:16

18 of analysts who agree that there's a lack of 03:06:19

19 transparency in the numbers, and they've pleaded 03:06:22

20 with Valeant to start providing that. And Valeant 03:06:25

21 keeps saying they're going to and they keep not 03:06:28

22 doing it. 03:06:31

23 And so, I'm not so sure that if you went 03:06:31

24 in and lifted the covers you would find the kinds of 03:06:33

25 things that you would need to kind of -- besides, 03:06:36

Page 195

1 some of the things that are wrong with their model 03:06:37

2 are things that are going to happen and not yet 03:06:40

3 happened. 03:06:42

4 They've already happened to some of 03:06:43

5 their businesses. There's no question that 03:06:44

6 they've -- they have basically failed miserably 03:06:46

7 on -- on their botulinum toxin business and in their 03:06:49

8 filler business. And they shuffled that off under 03:06:54

9 the pretense that they were going to buy the 03:06:59

10 Allergan business. 03:07:01

11 But basically they were losing ground 03:07:02

12 significantly in those markets because they didn't 03:07:04

13 know how to operate them properly and they were 03:07:06

14 milking them. And the rest of their business as 03:07:08

15 we've -- as we've seen, because of our forensic 03:07:11

16 accounting, has indicated that they are taking rapid 03:07:13

17 price increases and that their volume advances are 03:07:16

18 relatively small and that they're losing share in a 03:07:19

19 number of their important businesses. 03:07:22

20 Q. And what forensic accounting have you 03:07:23

21 done of Valeant's business? 03:07:26

22 A. We hired a couple of forensic firms. I 03:07:27

23 don't remember their names, but it's -- it's 03:07:29

24 available. That it's basically broken down the 03:07:31

25 available information to look at their numbers from 03:07:34

Page 196

1 the standpoint of intrinsic growth versus price 03:07:36

2 increases and compared that to the growth in the 03:07:41

3 categories they compete it. 03:07:44

4 Q. So, in your mind, there's no information 03:07:45

5 that can be useful to Allergan from sitting down 03:07:48

6 with Valeant's controller, CFO? 03:07:53

7 A. I believe that any information that 03:07:56

8 could be gained from that would be small compared to 03:07:57

9 what we already know about them and would then 03:08:02

10 trigger the other issue that you've put aside which 03:08:04

11 I think is extremely important. 03:08:08

12 Q. Has Allergan had any scientific team 03:08:11

13 perform R&D-related due diligence on this 03:08:14

14 transaction? 03:08:17

15 A. From what standpoint? 03:08:19

16 Q. Of the potential synergy of the 03:08:21

17 transaction. Have you -- have you put together a 03:08:25

18 scientific team to look at the R&D side for due 03:08:27

19 diligence here? 03:08:30

20 A. The R&D side of -- of -- 03:08:31

21 Q. Of a combined entity. Yeah. 03:08:33

22 A. They have virtually no R&D. We get -- 03:08:35

23 we get applications from their R&D organization all 03:08:37

24 the time because they -- they want to get out of 03:08:38

25 Valeant which they say does no R&D and they want to 03:08:40

Page 197

1 join a firm that does 03:08:43

2 I mean, it's -- it's pretty well known, 03:08:44

3 and I think Michael Pearson broadcasts this from 03:08:46

4 every mountaintop he can, that they think R&D is -- 03:08:50

5 is a waste of money for a pharmaceutical company 03:08:54

6 Q Do they -- do they say that actually, or 03:08:57

7 do they make a distinction in the early R&D 03:08:59

8 spending -- 03:09:01

9 A No They -- 03:09:02

10 Q -- versus R&D -- let me finish the 03:09:02

11 question, sir 03:09:03

12 A Sure 03 09:05

13 Q Does Mr Pearson make any distinction 03:09:05

14 between early R&D spending versus spending on R&D to 03:09:07

15 enhance product lines? 03:09:12

16 A He believes, as I understand it, that 03:09:13

17 pharmaceutical companies don't do well in R&D and 03:09:16

18 it's a waste of their money and that they're better 03:09:18

19 off buying development from -- from the marketplace 03:09:21

20 Q How much has Allergan spent total in R&D 03:09:26

21 in the last five years? 03:09:30

22 A Oh, I don't know the exact number, but I 03:09:34

23 would guess it would be $3 1/2 billion Maybe 03:09:36

24 somewhere in that vicinity It's a guess 03:09:48

25 Q A year? 03:09:50

50 (Pages 194 - 197)


Exhibit 16 Page 451


Page 198

1 A. No, no, no, no, no. 03:09:50

2 Q. Total? 03:09:52

3 A. Over the five-year period, yeah. 03:09:52

4 Q. Total? 03:09:54

5 A. Yeah. 03:09:59

6 Q. Okay. Has Allergan done any analysis 03:10:00

7 of -- 03:10:03

8 A. Those numbers are readily available, you 03:10:04

9 know. Frankly, for me to try and think of those off 03:10:06

10 the top of my head, I can't do that. But, you know, 03:10:09

11 those numbers are clearly available. 03:10:12

12 Q. Has Allergan done any analysis of what 03:10:14

13 its rate of return has been on the capital its 03:10:16

14 invested in R&D? 03:10:18

15 A. It's done a lot of analysis of the 03:10:19

16 investments it's made versus the sales that those 03:10:23

17 investments have returned. And the number of -- the 03:10:28

18 amount of business that that $3 1/2 billion 03:10:33

19 generates is vastly greater, vastly greater by a 03:10:36

20 multiple of five or six or more. 03:10:43

21 Q. So, you believe that Allergan's got a 03:10:45

22 five- or six-time return on its R&D spend? 03:10:47

23 A. I do. 03:10:51

24 Q. You sure of that? 03:10:52

25 A. I'm pretty close. Yeah, I -- I believe 03:10:53

Page 199

1 that's the number. But I'm guessing again. 03:10:55

2 Q. Okay. 03:10:57

3 A. I know that businesses like -- like 03:10:57

4 Botox have had sizeable R&D expenditures, and Botox 03:11:02

5 over the past ten years has returned significant 03:11:12

6 amount of volume and profit to the company. 03:11:15

7 Q. Do you know a Mr. Ubben? 03:11:17

8 A. Jeff Ubben. 03:11:19

9 Q. Yeah. Who's he? 03:11:20

10 A. He's the president or chairman of 03:11:21

11 ValueAct. 03:11:24

12 Q. And he used to -- he used to be a board 03:11:28

13 member for -- 03:11:29

14 A. Playtex. 03:11:30

15 Q. -- Playtex, right? 03:11:31

16 Fair to say you think he's a smart guy? 03:11:32

17 A. He is. 03:11:35

18 Q. High integrity? 03:11:36

19 A. I do. 03:11:37

20 Q. Understands accounting? 03:11:37

21 A. I do. 03:11:39

22 Q. And given all you've been saying about 03:11:44

23 Valeant, I think it's important to flesh this out. 03:11:47

24 I mean, you don't have any question about 03:11:49

25 Mr. Ubben's integrity? 03:11:51

Page 200

1 A. Ubben. 03:11:52

2 Q. Ubben. You don't have any question 03:11:52

3 about his integrity, do you? 03:11:54

4 A. No. 03:11:55

5 Q. And do you know where he works now? 03:11:57

6 A. ValueAct Capital. 03:12:01

7 Q. And do you know what ValueAct Capital 03:12:03

8 is? 03:12:05

9 A. It's a activist investor firm. 03:12:05

10 Q. You agree Mr. Ubben's a sophisticated 03:12:14

11 investor? 03:12:17

12 A. I do. 03:12:17

13 Q. You agree he may know more about 03:12:17

14 accounting than you do? 03:12:20

15 A. Possibly. 03:12:21

16 Q. You agree he knows more about finance 03:12:22

17 than you do? 03:12:24

18 A. Probably. 03:12:25

19 Q. And you worked well with him when he was 03:12:28

20 on the board of Playtex? 03:12:30

21 A. I did. 03:12:34

22 Q. And you've had conversations with 03:12:35

23 Mr. Ubben about the Valeant/Allergan situation, 03:12:37

24 right? 03:12:41

25 A. I have. 03:12:41

Page 201

1 Q. Starting in about June of this year, do 03:12:43

2 you recall? 03:12:46

3 A. I don't remember the dates, but that -- 03:12:46

4 that's probably right. 03:12:49

5 Q. And starting in June, he offered to make 03:12:50

6 Valeant managers available to you to talk to, right? 03:12:53

7 A. He did. 03:12:57

8 Q. In fact, he also offered to make former 03:12:57

9 Valeant managers who quit Valeant available to you, 03:13:00

10 right? 03:13:03

11 A. He did. 03:13:04

12 Q. And that would actually help potentially 03:13:04

13 support your thesis that Valeant's not a good 03:13:07

14 company, right? 03:13:10

15 A. In what way? 03:13:12

16 Q. Well, you said you've hired forensic 03:13:14

17 investigators to look at -- 03:13:15

18 A. Right. 03:13:18

19 Q. -- Valeant, right? 03:13:18

20 A. Right. 03:13:19

21 Q. So, someone of high integrity you trust 03:13:20

22 has said to you, you can -- he'll get you access to 03:13:24

23 people who've left Valeant, right? 03:13:26

24 A. He did. 03:13:29

25 Q. And you didn't take him up on that 03:13:29

51 (Pages 198 - 201)


Exhibit 16 Page 452


Page 202

1 offer, did you? 03:13:31

2 A. I didn't take him up on that, but I know 03:13:32

3 that -- that Allergan has talked to past employees 03:13:34

4 of -- and, you know, current employees that continue 03:13:36

5 to seek employment with us. 03:13:40

6 Q. Right. 03:13:42

7 And during your conversations with 03:13:43

8 Mr. Ubben, you thought he might just be kicking the 03:13:46

9 tires to get a sense of what you were thinking, 03:13:49

10 right? 03:13:51

11 MS. SMITH: Objection. Vague. 03:13:54


13 Q. Well, in the June-July time period, he 03:13:56

14 was not on the board of Valeant, right? 03:13:58

15 A. No. 03:14:01

16 Q. And, in fact, in the last summer -- let 03:14:02

17 me do this. I'll show you an exhibit. 03:14:06

18 Can we go to Tab 47? Let's show him 46 03:14:08

19 real fast. 03:14:16

20 Are we on 14 now? 03:14:18

21 THE REPORTER: 15. 03:14:19

22 MR. HOLSCHER: 15? 03:14:28

23 MS. SMITH: I don't think you've gotten it 03:14:29

24 right once. 03:14:30

25 MR. HOLSCHER: I should write them down. 03:14:31

Page 203




4 Q. I've put in front of you an e-mail. And 03:14:34

5 at the bottom it's from Mike Gallagher Hotmail to 03:14:40

6 David Pyott, June. 03:14:46

7 It says, "I just received a call from 03:14:49

8 Jeff Ubben from ValueAct. Jeff's on the Valeant 03:14:51

9 board for some time and recently left it. I know 03:14:54

10 Jeff from the Playtex days when he was on our board. 03:14:58

11 I have high regard for Jeff's intellect/integrity." 03:15:01


13 A. Yep, I do see that. 03:15:06

14 Q. Is that a fair summary of your views of 03:15:07

15 him? 03:15:09

16 A. It is. 03:15:10

17 Q. Okay. 03:15:12

18 MS. SMITH: So, let me pause you for a second 03:15:12

19 and say that this does appear -- I mean, let me 03:15:14

20 review it, but it appears to be an attorney-client 03:15:16

21 privileged -- oh, no, it's to David Pyott. Never 03:15:20

22 min. I thought it was to Katz. I apologize. 03:15:23

23 MR. HOLSCHER: Okay. Yeah, it -- it's 03:15:27

24 something you sent us.

25 MS. SMITH: No, understood. I mean, I just 03:15:31

Page 204

1 don't know. Apologies. I thought it was going to 03:15:32

2 Katz. 03:15:35

3 MR. HOLSCHER: No problem. 03:15:35


5 Q. So, in this e-mail he offered to provide 03:15:36

6 information on any issue you might have. Do you see 03:15:43

7 that? 03:15:46

8 A. I do. 03:15:46

9 Q. Why didn't you take Ubben up on his 03:15:47

10 offer? Why didn't you take him up on his offer? 03:15:49

11 A. We didn't need the follow-through on his 03:15:51

12 offer. As I indicated, we had plenty of 03:15:53

13 intelligence from Valeant managers who are -- had 03:15:57

14 left the company already. 03:16:00

15 Q. And so, as a fiduciary of Allergan, why 03:16:06

16 do you believe it's not in Allergan's interest to 03:16:22

17 get information from someone you think is high 03:16:29

18 integrity, who you trust, who's offering you more 03:16:31

19 information about a company that you're trashing in 03:16:35

20 press releases? 03:16:37

21 A. Well, I think I've just answered your 03:16:39

22 question. The information he was providing was 03:16:40

23 information we already had available to us. 03:16:43

24 Q. How did you know it's the same if you 03:16:45

25 haven't heard it yet? 03:16:46

Page 205

1 A. Well, he made the offer of making past 03:16:47

2 Valeant employees available to us. We had talked to 03:16:51

3 past Valeant employees. 03:16:55

4 Q. Okay. Now -- 03:16:56

5 A. You know, let's -- let's be fair about 03:17:00

6 this. I mean, I -- I have a high regard for -- for 03:17:01

7 Jeff and everything else, but he's on the Valeant 03:17:03

8 team, as you well know that. 03:17:07

9 Q. Well, if you look at -- 03:17:10

10 A. And any -- any hand-picked group of past 03:17:11

11 Valeant employees would not be as good as others 03:17:15

12 that we would reach out to to get a more objective 03:17:17

13 point of view. 03:17:20

14 MR. HOLSCHER: Okay. If I could have you 03:17:21

15 look now at Tab 47. 03:17:22




19 Q. So, the first is a e-mail from you to 03:17:54

20 David Pyott copying Mr. Katz, August 26th, 2014. 03:17:57


22 A. I do. 03:18:02

23 Q. And the one above it's from Pyott to you 03:18:02

24 commenting, "It feels like it was a temperature 03:18:08

25 check. You state our position excellent." 03:18:10

52 (Pages 202 - 205)


Exhibit 16 Page 453


Page 206


2 A. I do. 03:18:13

3 Q. Okay. Towards the bottom, you say, "I 03:18:13

4 think they might -- they may be trying to determine 03:18:28

5 if they move on or not." You say, "If they did, we 03:18:30

6 would be stuck with Ackman." 03:18:34

7 Is that trying to determine -- Valeant 03:18:36

8 trying to determine whether to move on? 03:18:38

9 A. Yes. 03:18:40

10 Q. Okay. "And I replied that we were more 03:18:41

11 than ready for that. Ackman picked on the wrong 03:18:43

12 board to try its bullying -- his bullying tactic." 03:18:46


14 A. I do. 03:18:50

15 Q. "I know Jeff is not a fan of Ackman." 03:18:50

16 See that? 03:18:54

17 A. I do. 03:18:54

18 Q. And why is it you know that Jeff Ubben 03:18:55

19 is not a fan of Ackman? 03:18:57

20 A. He told me. 03:18:59

21 Q. And what did he tell you? 03:18:59

22 A. He told me that they were not prepared 03:19:00

23 for the negativism that Ackman would bring. 03:19:02

24 Q. Okay. And what's the negativism that 03:19:06

25 Ackman would bring? 03:19:08

Page 207

1 A. Are you serious? 03:19:10

2 Ackman has a method which is to 03:19:20

3 storm-troop, intimidate, bully, threaten, ridicule 03:19:25

4 his opponents until he gets his way, and 03:19:35

5 occasionally cry if that will get him his way. And 03:19:41

6 I think Jeff is at the other end of the spectrum 03:19:45

7 from -- from Ackman, and I think Jeff knows he's at 03:19:49

8 the other end of the spectrum from -- from Ackman. 03:19:52

9 And Jeff has written articles that have 03:19:55

10 been published about how the activist community had 03:19:58

11 better start policing itself or they're going to 03:20:03

12 poison their own well. 03:20:06

13 Q. Hasn't Jeff also publicly stated in the 03:20:08

14 last ten days that, "We are strongly in support of 03:20:11

15 the Allergan/Valeant combination in light of their 03:20:17

16 perfect strategic fit and the potential to create 03:20:21

17 enormous shareholder value for both companies"? 03:20:24

18 A. Yeah. I don't think that has anything 03:20:28

19 to do with Ackman, if that is your question. 03:20:30

20 Q. You indicated that Jeff Ubben and Ackman 03:20:32

21 were at different ends of the spectrum? 03:20:35

22 A. When it comes to how they operate their 03:20:38

23 businesses. 03:20:40

24 Q. Right. I'm deposing about this 03:20:40

25 transaction. I'll follow up and let you ask -- say 03:20:40

Page 208

1 whatever you want -- 03:20:41

2 A. Right. 03:20:43

3 Q. -- as long as you want. 03:20:43

4 A. Thank you. 03:20:44

5 Q. But you agree that with respect to this 03:20:44

6 transaction -- 03:20:46

7 A. Yes. 03:20:47

8 Q. -- someone you think of -- of high 03:20:47

9 integrity -- 03:20:48

10 A. Right. 03:20:50

11 Q. -- and smarter than you in finance has 03:20:49

12 said that "We are strongly in support of the 03:20:52

13 Allergan/Valeant combination in light of their 03:20:55

14 perfect strategy fit and the potential to create 03:20:57

15 enormous shareholder value for both companies," 03:21:00

16 right? 03:21:03

17 That's -- you recognize that's what 03:21:04

18 Ubben -- he said? 03:21:05

19 A. That's what he said, yes. 03:21:06

20 Q. Okay. And -- and you agree he's sincere 03:21:07

21 in saying that? 03:21:12

22 A. I believe he believes that. 03:21:14

23 Q. Okay. And is it possible he's right? 03:21:15

24 A. I think he's wrong. 03:21:17

25 Q. Okay. Is it possible he's right? 03:21:18

Page 209

1 A. It's more possible that I am. 03:21:20

2 Q. Okay. Now, with respect to his 03:21:22

3 knowledge of Valeant, do you believe that he knows 03:21:26

4 more about Valeant's accounting and business model 03:21:29

5 or you know more about Valeant's accounting and 03:21:32


7 A. I'm not sure what Jeff knows about -- 03:21:35

8 and -- and I told him I thought that that was a 03:21:37

9 weakness and he had missed it. But I think I know a 03:21:39

10 lot more about Allergan and what makes it tick than 03:21:42

11 Jeff does. 03:21:47

12 Q. So, you -- 03:21:48

13 A. And I think he admitted that. 03:21:49

14 Q. So, your view is that at the moment that 03:21:51

15 the Valeant offer, I think you say, substantially 03:21:52

16 undervalues Allergan, right? 03:21:57

17 A. I do. 03:21:59

18 Q. Okay. So, let's take you back, I don't 03:22:00

19 know, six months, seven months so Allergan stock is 03:22:05

20 about 110, right? 03:22:08

21 A. Right. 03:22:10

22 Q. Would you say that six, seven months 03:22:11

23 ago, before you ever heard the name Bill Ackman, 03:22:14

24 that Allergan stock was horribly undervalued? 03:22:16

25 A. I would say it was very much 03:22:20

53 (Pages 206 - 209)


Exhibit 16 Page 454


Page 210

1 undervalued, yes. 03:22:22

2 Q. Kind of an awful, you know, divergent 03:22:23

3 between the price and its really value, in your 03:22:26

4 view? 03:22:30

5 A. In my view. 03:22:30

6 Q. So, is there anything in the Allergan 03:22:31

7 board minutes in 2013 through April 2014 talking 03:22:33

8 about the board's concern that the stock was 03:22:36

9 horribly undervalued? 03:22:38

10 A. I don't think there is anything in the 03:22:40

11 minutes at any time about our conversation about the 03:22:41

12 stock price. 03:22:45

13 Q. All right. 03:22:45

14 A. It's not something that the board talks 03:22:46

15 about. 03:22:48

16 Q. Doesn't talk about? 03:22:49

17 A. And doesn't minute, no. 03:22:50

18 Q. Okay. So, to be clear, before April of 03:22:51

19 2014, Allergan stock price was under 115, right? 03:23:00

20 A. It was. 03:23:07

21 Q. So, while you might think that the 03:23:08

22 current offer horribly undervalues and materially 03:23:10

23 undervalues it, it's a 50 percent premium as to what 03:23:14

24 the board and Allergan were hearing from the market 03:23:18

25 six months ago, right? 03:23:21

Page 211

1 A Were hearing from Allergan? 03:23:23

2 Q Hearing from the market The market 03:23:25

3 The market 03:23:27

4 A The market 03:23:28

5 Q Do you agree with that? 03:23:30

6 A The market undervalued Allergan stock, 03:23:31

7 in my opinion, yes 03:23:32

8 Q Okay And in your opinion, the market 03:23:33

9 must have massively undervalued the stock, right? 03:23:35

10 MS SMITH: Objection Vague 03:23:39

11 THE WITNESS: Well, how big is massive? 03:23:41


13 Q Well, a year ago your stock is trading 03:23:44

14 about 85, right? 03:23:46

15 A That was a low We had -- we had been 03:23:48

16 hit as a result of some issues related to Restasis, 03:23:51

17 and our stock was -- was at a low 03:23:54

18 MR HOLSCHER: I'm sorry He needs to change 03:23:58

19 the tape, so go off the record 03:24:00

20 THE VIDEOGRAPHER: This marks the end of 03:24:02

21 Media No 2 in the deposition of Michael Gallagher 03:24:03

22 Going off the record The time is 3:24 p m 03:24:06


24 THE VIDEOGRAPHER: This marks the beginning 03:36:38

25 of Media 3 in the deposition of Michael Gallagher 03:36:39

Page 212

1 This deposition is taking place at 12670 High Bluff 03:36:42

2 Drive, San Diego, California 92130. The 03:36:47

3 videographer is Scott Tanaka, here on behalf of 03:36:51

4 Veritext Legal Solutions. Today's date is 03:36:54

5 October 7th, 2014. Back on the record. The time 03:36:56

6 is 3:36 p.m. 03:37:00


8 Q. Mr. Gallagher, I want to follow up on 03:37:05

9 your comments regarding Mr. Ackman, just to have you 03:37:06

10 fill in the details. 03:37:08

11 I think you indicated that you thought 03:37:10

12 that Mr. Ackman would bully, threaten people, was 03:37:12

13 vindictive and could even cry. What do you believe 03:37:16

14 Mr. Ackman and Pershing Square have done to bully 03:37:20

15 Allergan? 03:37:28

16 A. I think many of the inflammatory words 03:37:29

17 that he's used and concepts he's used in his letters 03:37:32

18 to the board were unnecessary and uncalled for. He 03:37:36

19 has a reputation of calling up analysts who don't 03:37:40

20 agree with him and -- and being abrasive. This 03:37:45

21 is -- this is what I've heard. 03:37:51

22 Q. What do you know firsthand in terms 03:37:53

23 of -- I understand the bullying from the letters you 03:37:55

24 received. 03:37:57

25 A. Yeah. 03:37:58

Page 213

1 Q. Have you spoken to any analysts who he's 03:37:59

2 yelled at? 03:38:01

3 A. I haven't personally, no. 03:38:02

4 Q. Okay. Anyone at Allergan, to your 03:38:03

5 knowledge? 03:38:04

6 A. I think so, yes. But I don't know the 03:38:05

7 details of it. 03:38:07

8 Q. Okay. You talked about him -- him 03:38:08

9 threatening. Do you believe he's threatened 03:38:09

10 Allergan here? 03:38:16

11 A. I think that some of the -- some of the 03:38:17

12 words in his letters can be interpreted as threats. 03:38:20

13 Q. He hasn't accused you of criminal 03:38:24

14 conduct, has he? 03:38:26

15 A. You know, getting to breaking a 03:38:29

16 fiduciary responsibility and things of that nature, 03:38:30

17 having our friends be -- or our associates being 03:38:32

18 ashamed of us and that kind of thing, I'd say that's 03:38:37

19 over the pale. 03:38:40

20 Q. But he hasn't accused you of committing 03:38:41

21 a crime? 03:38:43

22 A. No, not that I know of. 03:38:44

23 Q. He hasn't gone to the SEC and asked them 03:38:46

24 to investigate you personally, has he? 03:38:48

25 A. No, he hasn't. 03:38:50

54 (Pages 210 - 213)


Exhibit 16 Page 455


Page 214

1 Q. You -- you have accused Mr. Ackman of 03:38:50

2 committing crime. 03:38:53

3 A. I haven't committed a crime. 03:38:53

4 Q. I understand your views. At some point 03:38:55

5 you do have to answer my questions. 03:38:57

6 Allergan has accused Mr. Ackman of 03:38:58

7 engaging in insider trading, right? 03:39:00

8 THE WITNESS: Is that a slow response, or you 03:39:06

9 want me to answer? 03:39:08

10 MS. SMITH: It's a different question than 03:39:09

11 the one he asked before, so you can answer that one. 03:39:10

12 THE WITNESS: Yes, we have. 03:39:13


14 Q. And Allergan has tried to get the SEC to 03:39:15

15 investigation him, right, personally? 03:39:17

16 MS. SMITH: Are you hesitating because you're 03:39:28

17 not sure if you can that question? 03:39:32

18 THE WITNESS: That's right. 03:39:35

19 MS. SMITH: You know, answer the question to 03:39:39

20 the extent it doesn't call for anything that's 03:39:42

21 attorney-client privileged communications, if you 03:39:45

22 can. 03:39:54

23 Do you -- do you need to speak to me 03:40:09

24 outside? 03:40:10


Page 215

1 I don't think the company has approached 03:40:11

2 the SEC. 03:40:13


4 Q. My question was: And Allergan has tried 03:40:19

5 to get the SEC to investigate Mr. Ackman personally, 03:40:21

6 correct? 03:40:25

7 A. I don't think Allergan has done that. 03:40:25

8 Q. Are you trying to distinct between 03:40:30

9 Allergan and Allergan's counsel? 03:40:32

10 A. I am. 03:40:34

11 Q. Doesn't Allergan act through its 03:40:34

12 counsel? 03:40:37

13 A. Well, you said Allergan. I was being 03:40:38

14 literal. 03:40:39

15 Q. But you, as a lead director, had to 03:40:41

16 approve that, right? I mean, they went to the board 03:40:43

17 as to whether Allergan was going to attempt to have 03:40:45

18 Mr. Ackman personally investigated by the SEC, 03:40:48

19 right? 03:40:51

20 A. Well, Mr. Ackman and Pershing Square, 03:40:51

21 yes. 03:40:54

22 Q. And you approved that? 03:40:55

23 A. Yes. 03:40:56

24 Q. Did you view that as a bullying tactic? 03:40:56

25 A. No. 03:40:59

Page 216

1 Q. Did you view that as vindictive? 03:40:59

2 A. No. 03:41:01

3 Q. Threatening? 03:41:01

4 A. No. 03:41:02

5 Q. How about when you approved the 03:41:02

6 complaint that accused him of insider trading, did 03:41:03

7 you think that was bullying? 03:41:06

8 A. No. 03:41:08

9 Q. Did you think it was threatening? 03:41:08

10 A. No. 03:41:09

11 Q. Think it was vindictive? 03:41:10

12 A. No. 03:41:12

13 Q. Because you thought you were right? 03:41:12

14 A. Because it was an obligation that we 03:41:14

15 had. 03:41:15

16 Q. Fair to say that you've been equally 03:41:20

17 aggressive with Pershing Square as you think they've 03:41:22

18 been with you? 03:41:27

19 A. Well, of course my opinion is probably 03:41:29

20 biased, but I'd say no. 03:41:33

21 Q. Now I want to ask you some questions 03:41:36

22 about Project Avalanche. Do you know what that is? 03:41:38

23 A. I don't recall it. 03:41:41

24 Q. You have no recollection what product -- 03:41:52

25 Project Avalanche is? 03:41:54

Page 217

1 A. I can't -- no, I do not. You have 03:41:57

2 something I could look at? 03:42:02

3 Q. Sure, sure. 03:42:04

4 Let me turn to Tab 67, see if that -- 03:42:05

5 A. Can I ask you a question? How long does 03:42:22

6 it take you to prepare for one of these? 03:42:24

7 Q. This took a while. 03:42:27

8 A. It seems like it -- it's an 03:42:30

9 extraordinary amount of time to -- 03:42:32

10 Q. This took awhile. 03:42:34

11 A. -- be this prepared. 03:42:35

12 Q. Yeah. 03:42:41

13 16? 03:42:49

14 THE REPORTER: 17. 03:42:49

15 MR. HOLSCHER: I keep thinking -- I got four 03:42:50

16 kids too. 03:42:53




20 Q. I put in front of you Exhibit 17. This 03:42:55

21 is -- to see if it refreshes your memory. This is 03:42:58

22 not a e-mail to or from you. It involves Mr. Pyott. 03:42:59

23 A. Yeah. 03:43:05

24 Q. There's a reference to -- do you know 03:43:05

25 who Lynn Salo is? 03:43:12

55 (Pages 214 - 217)


Exhibit 16 Page 456


Page 218

1 A. I've met Lynn, yes. 03:43:13

2 Q. Okay. And it's Lynn to David Pyott in 03:43:14

3 June, making reference to Project Avalanche. 03:43:16


5 A. I do. 03:43:20

6 Q. Does that refresh your memory at all? 03:43:22

7 A. No. 03:43:23





12 Q. I'd like you to go to page 38 of this 03:44:08

13 document. And just -- just for -- before we go 03:44:11

14 there, this is the agenda for Monday, July 14th, 03:44:23

15 2014 Allergan board of directors meetings, and 03:44:27

16 there's a number of pages attached. A good number 03:44:32

17 of them are just -- are redacted, and then there's 03:44:34

18 some Goldman Sachs, Bank of America presentation. 03:44:38

19 I'm drawing your attention to page 38. 03:44:41

20 And it's entitled "Process, Timing and 03:44:47

21 Tactics Consideration." Do you see that? 03:44:50

22 A. I do. 03:44:53

23 Q. Okay. At the top it says, "Process 03:44:54

24 likely to be extended as long as Venus offer's 03:44:57

25 outstanding and board determines it undervalues 03:45:00

Page 219

1 Apollo." 03:45:04


3 A. I do. 03:45:06

4 Q. And Venus is a -- is the code name that 03:45:07

5 you were using internally for Valeant; is that 03:45:08

6 right? 03:45:11

7 A. Yes. 03:45:12

8 Q. And Apollo is the code name you were 03:45:12

9 using for Allergan, correct? 03:45:16

10 A. You cracked the code. 03:45:17

11 Q. It's not the hardest one to crack. 03:45:19

12 But the -- and it talks about process, 03:45:21

13 timing and tactic considerations, right? 03:45:23

14 A. It does. 03:45:26

15 Q. And one of the tactics that you and your 03:45:26

16 advisors were employing was tactics to try to reduce 03:45:30

17 the value of Valeant's stock price, right? 03:45:34

18 A. Where does it say that? 03:45:39

19 Q. About two-thirds of the way down, it 03:45:48

20 says "Apollo's tactics thus far have resulted in," 03:45:50

21 and the third bullet point, "Venus' stock price 03:45:53

22 falling below levels before public announcements of 03:45:58

23 its proposal to acquire Apollo." 03:46:00

24 See that? 03:46:02

25 A. Yeah, but your question was different 03:46:03

Page 220

1 than what that says. 03:46:04

2 Q. Right. 03:46:05

3 But I'm asking you a basic question. In 03:46:05

4 fact, part of your strategy -- let me back up. 03:46:07

5 The bid that Valeant was making for 03:46:10

6 Allergan along with Pershing Square was -- was cash 03:46:13

7 and stock component, right? Is that fair? 03:46:16

8 MS. SMITH: Objection. Lacks foundation. 03:46:19


10 Q. The offer had a cash and stock 03:46:27

11 component, right? 03:46:28

12 A. Yes. 03:46:30

13 Q. Okay. And depending on the value of 03:46:30

14 Valeant's stock, the -- the total consideration to 03:46:36

15 Allergan would change, right? 03:46:41

16 A. That's right. 03:46:42

17 Q. Okay. And you and the rest of the board 03:46:43

18 were, throughout the summer, vehemently opposed to 03:46:47

19 this unsolicited offer, right? 03:46:51

20 A. Yes. We were opposed to the offer after 03:46:54

21 reviewing extensively the offer itself. 03:46:56

22 Q. And you spent significant amount of time 03:47:01

23 with your advisors from Goldman Sachs and Bank of 03:47:04

24 America on process, timing and tactic considerations 03:47:06

25 to fend off this unsolicited offer, right? 03:47:11

Page 221

1 A. Yes. 03:47:15

2 Q. Okay. And one of the ways that the 03:47:16

3 offer could be less appealing is if Valeant's stock 03:47:18

4 price went down? 03:47:22

5 A. As an offshoot of us indicating to the 03:47:23

6 marketplace what our objections were about their 03:47:27

7 model. 03:47:30

8 Q. Right. 03:47:31

9 So, when you -- so, when you send out 03:47:31

10 all the press releases attacking the accounting, the 03:47:33

11 business model, attacking that they, you know, strip 03:47:38

12 R&D and, in your words, it's going to collapse in 03:47:42

13 the future, you understood that that might result in 03:47:45

14 Valeant's stock price dropping, right? 03:47:49

15 MS. SMITH: Objection. Lacks foundation. 03:47:51

16 THE WITNESS: Well, the -- the intention was 03:47:53

17 to let the investment community know that there were 03:47:55

18 serious concerns about their business model. That 03:47:58

19 was the intention. 03:48:01

20 Because if people have to take a 03:48:03

21 significant portion of the offer in stock and the 03:48:05

22 stock has got, in our opinion, intrinsic weaknesses 03:48:08

23 to it, then it's our obligation to point out those 03:48:12

24 weakness to the investor community. And if the 03:48:15

25 offshoot of that is the investment community 03:48:18

56 (Pages 218 - 221)


Exhibit 16 Page 457


Page 222

1 believes that and says, "Gee, their stock is not 03:48:20

2 as -- as -- worth as much as we thought," then 03:48:24

3 that's the offshoot of it. 03:48:25

4 But the purpose is more to talk about 03:48:27

5 the weakness in their -- in their model and why it 03:48:29

6 is not an adequate currency for Allergan stock. 03:48:33


8 Q. But you'd agree that Allergan has taken 03:48:38

9 a very proactive approach to attack Valeant's 03:48:40

10 accounting and business model? 03:48:45

11 A. Yes, we have. 03:48:46

12 Q. Okay. And -- and you and your advisors 03:48:47

13 discuss the time -- you were aware that in doing 03:48:50

14 that one of the possible offshoots was that the 03:48:52

15 Valeant stock price could be affected? 03:48:56

16 A. That -- that is a possibility, of 03:48:59

17 course, yes. 03:49:01

18 You know, on the other hand, if people 03:49:03

19 didn't believe what we were saying, they could have 03:49:04

20 totally rejected the concept and possibly Valeant 03:49:07

21 stock would have gone up. Our purpose was to say 03:49:10

22 what we thought about their -- about their model. 03:49:15

23 Q. And in this process, timing and tactics 03:49:17

24 consideration memo, there's a reference to "Apollo's 03:49:20

25 tactics thus far resulted in Venus' stock price 03:49:24

Page 223

1 falling below levels before public announcement of 03:49:30

2 its proposal to acquire Apollo." 03:49:33


4 A. I do. 03:49:36

5 Q. And you thought that was a good thing? 03:49:37

6 A. I thought that was an appropriate thing. 03:49:38

7 Q. Right. And why did you think it was 03:49:41

8 appropriate? 03:49:44

9 A. Because I don't think Venus' stock is as 03:49:45

10 valuable as the marketplace did. 03:49:48

11 Q. Okay. And to this day, you think it 03:49:50

12 would be appropriate for Allergan to get as much 03:49:53

13 information out there; and if the offshoot is that 03:49:55

14 Valeant's stock price goes down, you think that 03:50:01

15 would be appropriate? 03:50:03

16 A. If the market judges our -- our position 03:50:05

17 to be valid, then the market will basically bring 03:50:09

18 their stock down. But our -- our goal is to get our 03:50:12

19 point of view about their model out there. 03:50:15

20 Q. And do you know as of yesterday how 03:50:18

21 Valeant's stock is doing? 03:50:20

22 A. It was in the 127, -28 range. 03:50:22

23 Q. Do you know what it was when it made its 03:50:26

24 offer? 03:50:29


Page 224

1 Q. Okay. Now, are you aware that there was 03:50:33

2 a -- this -- whatever the name of -- the Project 03:50:36

3 Avalanche or some other name, that actually Allergan 03:50:40

4 had a specific project to try to take away business 03:50:43

5 from Valeant while this unsolicited offer is 03:50:49

6 pending? 03:50:53

7 A. I'm not aware of Project Avalanche. I'm 03:50:55

8 not surprised that Allergan would try to take away 03:50:59

9 share from Valeant during this time, before this 03:51:04

10 time and after this time. That's what business 03:51:07

11 people do, try to take the business away from their 03:51:10

12 competitors. 03:51:13

13 Q. Setting aside normal competition, are 03:51:15

14 you aware of any project since the unsolicited offer 03:51:17

15 was announced, whether named Project Avalanche, 03:51:21

16 Project Endurance, where it was focused on trying to 03:51:24

17 bring down the performance of Valeant? 03:51:30

18 A. No. 03:51:33

19 Q. Okay. So, to the extent that was going 03:51:34

20 on at the company, you're not aware of it? 03:51:36

21 A. Not aware of it. 03:51:38

22 Q. Okay. So, before I showed you that 03:51:39

23 Project Avalanche e-mail, you had not heard of 03:51:40

24 Project Avalanche? 03:51:43

25 A. Not to my knowledge. 03:51:46

Page 225

1 Q. Okay. Have you received any independent 03:51:46

2 legal advice regarding the board's -- Allergan 03:52:00

3 board's fiduciary obligations with respect to any 03:52:03

4 conduct to impact the stock price of Valeant? 03:52:06

5 Not asking for the advice. I'm saying: 03:52:13

6 Have you received any independent legal advice 03:52:14

7 regarding the Allergan board's fiduciary obligations 03:52:18

8 with respect to any conduct to impact the stock 03:52:21

9 price of Valeant? 03:52:25

10 MS. SMITH: You can answer yes or no whether 03:52:28

11 you've received independent legal advice regarding 03:52:29

12 the board's fiduciary duties. 03:52:33

13 MR. HOLSCHER: That's all I'm asking. 03:52:34

14 MS. SMITH: Just yes or no. 03:52:37

15 THE WITNESS: I don't really understand the 03:52:38

16 question. Our fiduciary responsibilities to the 03:52:39

17 stock price of Valeant? 03:52:42

18 MR. HOLSCHER: Correct. 03:52:44

19 THE WITNESS: Yeah, I can only answer that in 03:52:45

20 a general way. 03:52:48

21 MS. SMITH: Wait. Let me pause you. I think 03:52:49

22 your question is about -- 03:52:51

23 MR. HOLSCHER: Just whether he got advice or 03:52:53

24 not. 03:52:53

25 MS. SMITH: -- a specific piece of legal 03:52:54

57 (Pages 222 - 225)


Exhibit 16 Page 458


Page 226

1 advice. 03:52:55

2 MR. HOLSCHER: Yeah. 03:52:56

3 MS. SMITH: It -- I think answering the 03:52:56

4 question as to whether he received a specific piece 03:52:58

5 of legal advice would be privileged. He can answer 03:53:00

6 yes or no whether he received independent legal 03:53:03

7 advice regarding his -- the board's fiduciary 03:53:06

8 duties. 03:53:09

9 MR. HOLSCHER: Right. I'm not asking for the 03:53:10

10 context. 03:53:11

11 MS. SMITH: Okay. 03:53:13


13 Q. Just yes or no. 03:53:13

14 A. Yes. 03:53:14

15 Q. Okay. Have you ever heard of Project 03:53:15

16 Endurance? 03:53:17

17 A. Yes. 03:53:18

18 Q. And what's that? 03:53:19

19 A. That's a project to streamline the 03:53:19

20 processes and organizational structure and 03:53:22

21 decision-making processes that Allergan uses in 03:53:25

22 order to make the company a better run company, 03:53:31

23 focus it, create -- push decision-making farther out 03:53:33

24 into the organization, lower the number of levels of 03:53:39

25 chain of command, broaden the responsibility of 03:53:42

Page 227

1 managers over more people, resulting in significant 03:53:45

2 cost reductions and better efficiencies in operating 03:53:48

3 capabilities of the company. 03:53:52

4 Q. And when did Project Endurance start? 03:53:53

5 A. The genesis of Project Endurance was in 03:53:56

6 September a year ago when I, representing the board, 03:54:00

7 had a discussion with David Pyott that we wanted to 03:54:03

8 see a different kind of strategic plan for the 03:54:08

9 following year that would look at the company from a 03:54:11

10 more strategic standpoint and less from a financial 03:54:16

11 standpoint and that including that would be a review 03:54:19

12 of all of our structures and processes and 03:54:23

13 procedures. 03:54:26

14 I also instructed him to -- if he 03:54:26

15 agreed, to encourage Doug Ingram, the president of 03:54:29

16 the company, to take that responsibility on since 03:54:35

17 Doug was new to his position. Doug eagerly took it 03:54:37

18 on. David very much endorsed it. And Doug began 03:54:41

19 the process that September in determining the depth 03:54:45

20 and scope and direction of that aspect of the -- of 03:54:52

21 the project that I asked them to undertake. 03:54:55

22 Q. And when -- when was Project Endurance 03:55:01

23 first introduced to the employees of Allergan? 03:55:05

24 A. That would have been the first part of 03:55:13

25 2014, this year. 03:55:22

Page 228

1 Q And with respect to cutting of 03:55:24

2 headcount, when was that first introduced as part of 03:55:26

3 Project Endurance? 03:55:29

4 A That was -- that was part of the whole 03:55:30

5 process from the beginning 03:55:31

6 Q So, it's your position that the decision 03:55:33

7 to cut headcount at Allergan was something that was 03:55:34

8 decided in 2013? 03:55:38

9 A The -- the decision to evaluate the 03:55:42

10 entire structure of Allergan and its capabilities, 03:55:44

11 decision-making processes, operations was decided at 03:55:49

12 that point in time That led to the reduction in 03:55:56

13 headcount Very similar to a project that David 03:55:59

14 Pyott took on when he became CEO of the company back 03:56:03

15 in 1998 03:56:09

16 Q I want to ask you just more general 03:56:10

17 questions about your -- your work at the board 03:56:12

18 You're the lead independent director? 03:56:17

19 A I am 03:56:20

20 Q And you're the chairman of the corporate 03:56:20

21 governance and compliance committee? 03:56:23

22 A No 03:56:25

23 Q You were? 03:56:25

24 A I was 03:56:26

25 Q When did you get off that? 03:56:26

Page 229

1 A. Recently, in the last month. 03:56:27

2 Q. And who's the chairman of that corporate 03:56:33

3 governance committee? 03:56:36

4 A. Henri Termeer. 03:56:37

5 Q. Okay. Are you still chairman of the 03:56:38

6 organization and compensation committee? 03:56:41

7 A. I am. 03:56:42

8 Q. And as -- in that committee, you set 03:56:42

9 Mr. Pyott's compensation? 03:56:44

10 A. We do. 03:56:46

11 Q. And Mr. Pyott gets a bonus based on the 03:56:48

12 amount of R&D that's spent? 03:56:50

13 A. The entire management team, 10 percent 03:56:53

14 of their bonus is based on the percentage of sales 03:56:56

15 spent in R&D. 03:57:02

16 Q. Are you aware of any other pharma 03:57:03

17 company that gives bonuses based solely on the 03:57:05

18 amount of R&D spent by the company? 03:57:08

19 A. These bonuses are not based solely on 03:57:10

20 the R&D spent by the company. But 10 percent of the 03:57:13

21 bonuses. 03:57:16

22 Q. Right, that 10 percent percentage. 03:57:17

23 So, part of his bonus is based on just 03:57:18

24 total R&D spent, right? 03:57:20

25 A. 80 percent is based on earnings per 03:57:22

58 (Pages 226 - 229)


Exhibit 16 Page 459


Page 230

1 share. 10 percent is on sales growth. And 03:57:25

2 10 percent is on percent of dollars spent in R&D. 03:57:28

3 Q. Are you aware of any other Fortune 500 03:57:32

4 company that gives any portion of a bonus based 03:57:35

5 solely on R&D spent? 03:57:37

6 A. No. 03:57:39



9 Q. Did Mr. Pyott agree in 2013 with the 03:57:53

10 shareholder proposal to split the CEO/chairman 03:58:01

11 position? 03:58:05

12 A. Mr. Pyott didn't have a say in it. 03:58:13

13 Q. Did you ever talk to him about it? 03:58:15

14 A. Yes, I did. 03:58:16

15 Q. And he wanted to keep the chairman/CEO 03:58:18

16 position together as his, right? 03:58:21

17 A. I believe he did, yes. 03:58:23

18 Q. And you did too? 03:58:24

19 A. I -- I did, yes. 03:58:26

20 Q. And you feel the same way today? 03:58:27

21 A. I do, yes. 03:58:28

22 Q. Okay. How long have you known 03:58:29

23 Mr. Pyott? 03:58:34

24 A. Since 1998, November. 03:58:35

25 Q. Okay. And if there's an acquisition of 03:58:38

Page 231

1 Allergan by Valeant, is it your understanding that 03:58:44

2 Mr. Pyott may no longer have a job? 03:58:46

3 A. I would imagine that'd be the case, yes. 03:58:50

4 Q. Have you discussed that with him? 03:58:52

5 A. No. 03:58:53

6 Q. Were there any golden parachutes put in 03:58:57

7 place at the time the unsolicited offer was 03:58:59

8 announced? 03:59:01

9 A. For senior executives? 03:59:02

10 Q. Yes. 03:59:07

11 A. No. We -- we did increase the amount of 03:59:07

12 severance that people would get if they were 03:59:14

13 eliminated as a -- as a result of a -- a change in 03:59:17

14 control. 03:59:22

15 Q. Including the senior executives? 03:59:23

16 A. I'm not sure whether -- I don't remember 03:59:24

17 whether it covered the senior executives. It was 03:59:26

18 intended to cover the management team, the broad 03:59:29

19 management team, and this was done to retain. The 03:59:31

20 senior executives are very well compensated by basic 03:59:38

21 contract when it comes to change in control. 03:59:43

22 Q. During the time you've been lead 03:59:48

23 director of the board, have you led any 03:59:51

24 investigations in allegations of misconduct by 03:59:53

25 Mr. Pyott? 03:59:57

Page 232

1 A. No. 03:59:58

2 Q. Okay. In the last five years, have you 03:59:58

3 and Mr. Pyott ever disagreed on any resolution 04:00:09

4 before the board? 04:00:12


6 Q. How about in the last ten years, have 04:00:21

7 you and Mr. Pyott ever disagreed on any resolution 04:00:22

8 or issue before the board? 04:00:27


10 Q. Okay. Apart from your service on the 04:00:30

11 Allergan board, do you have any other employment or 04:00:37

12 job? 04:00:43

13 A. No. 04:00:43

14 Q. For how long has the Allergan board been 04:00:46

15 your -- I guess your only job? 04:00:49

16 A. I retired from Playtex at the end of 04:00:52

17 2004, so ten years. 04:00:55

18

19

20

21

22

23

24

25

Page 233

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18 MR HOLSCHER: Okay Let me take a break for 04:02:13

19 five minutes I just want to go through this and 04:02:18

20 see if I can streamline and finish up 04:02:20

21 MS SMITH: Uh-huh 04:02:24

22 THE WITNESS: Fine 04:02:24


24 time is 4:02 p m 04:02:25


59 (Pages 230 - 233)


Exhibit 16 Page 460


Page 234


2 time is 4:15 p m 04:15:22

3 MR HOLSCHER: New exhibit You can tell us 04:15:25

4 the number 04:15:27

5 THE REPORTER: 19 04:15:28

6 MR HOLSCHER: Exhibit 19 04:15:34


8 identification ) 04:15:36


10 Q Do you recognize Exhibit 19, 04:15:50

11 Mr Gallagher? 04:15:51

12 A Yes 04:15:52

13 Q And is this a Form 8-K containing a 04:15:52

14 presentation from Allergan? 04:15:57

15 A Yes, it is 04:15:58

16 Q If I could have you go back in time to 04:15:58

17 Exhibit 2 See -- is Exhibit 2 an e-mail from 04:16:01

18 you -- Mr Pyott regarding a deck, and it's dated 04:16:11

19 Saturday, June 7th, 2014? 04:16:14

20 A Yes 04:16:19

21 Q And it's reference to your reading 04:16:20

22 through the presentation deck last night? 04:16:21

23 A Yes 04:16:27

24 Q Okay And then this looks like a -- if 04:16:27

25 you look at Exhibit 19, this looks like a 04:16:30

Page 235

1 June 10th, 2014, for lack of a better word, a 04:16:33

2 presentation that includes a deck. Do you see that? 04:16:38

3 A. I do. 04:16:40

4 Q. Does that refresh your memory that you 04:16:42

5 might have reviewed this before it was filed with 04:16:44

6 the SEC? 04:16:46

7 A. Yes. 04:16:47

8 Q. Okay. I'd like you to turn to page 6 of 04:16:48

9 24. 04:16:54

10 A. Okay. 04:16:58

11 Q. And in -- in the June 2014 time period, 04:17:04

12 do you recall that Allergan was making public 04:17:06

13 statements and reaching out to the press to be wary 04:17:10

14 of what Valeant would report for its third-quarter 04:17:19

15 '14 results? Do you recall that? 04:17:22

16 A. Vaguely. 04:17:25

17 Q. And do you recall that this sheet, page 04:17:26

18 6 of 24 of this deck, and statements that Allergan 04:17:29

19 made to the press was that essentially -- in line 04:17:33

20 with what you've testified to, essentially Valeant's 04:17:36

21 business model has got problems, and one of the 04:17:39

22 results of that is going to be the further weakness 04:17:44

23 of true organic growth in the third quarter of 2014. 04:17:51

24 Do you recall that? 04:17:55

25 A. That's what this says, yeah. 04:17:56

Page 236

1 Q. And is this part of the deck that you 04:17:58

2 reviewed that Mr. Pyott sent you on Saturday, 04:18:00

3 June 7th, 2014? 04:18:04

4 A. I believe -- I believe that this was in 04:18:05

5 that deck. 04:18:07

6 Q. Yeah. 04:18:09

7 A. Don't know for sure, but assume it was. 04:18:09

8 Q. Okay. And at the top of this chart, it 04:18:11

9 says in a box there -- there's two boxes. It says, 04:18:14

10 "Valeant's lack of sales growth begs questions on 04:18:18

11 sustainability even with its frenzied acquisition 04:18:22

12 activity." 04:18:26


14 A. Yes. 04:18:28

15 Q. Okay. And down below Allergan writes, 04:18:29

16 "We believe Valeant's third quarter '14 results 04:18:32

17 (post anniversary of B&L acquisition) will reveal 04:18:37

18 further weakness of true organic growth." 04:18:42


20 A. I do. 04:18:45

21 Q. And you're aware that Valeant has kind 04:18:48

22 of given some prerelease guidance -- 04:18:53

23 A. I am. 04:18:55

24 Q. -- to third quarter 2014? 04:18:55

25 A. I am. 04:18:57

Page 237

1 Q. And as you sit here today, do you think 04:18:58

2 it's entirely possible that this slide that you 04:19:01

3 presented to the SEC in June 2014 might, in fact, be 04:19:04

4 wrong? 04:19:14

5 MS. SMITH: Objection. Vague as to time. 04:19:15

6 THE WITNESS: Yeah, I have not seen the 04:19:18

7 details of -- I've seen what they've said. I have 04:19:20

8 not seen the details of the report and won't be -- 04:19:24

9 which won't be available probably for another, I 04:19:27

10 would guess, couple of weeks. 04:19:30

11 And so, I really can't answer that at 04:19:32

12 this point in time because I -- I would need to see 04:19:35

13 the detail of what they report in order to -- to say 04:19:37

14 whether or not this is accurate or not accurate. 04:19:40


16 Q. If Valeant reports strong third-quarter 04:19:44

17 2014 results that actually show true organic growth, 04:19:48

18 will that change any -- any of your views about 04:19:53

19 Valeant? 04:19:56

20 A. Again, I'd have to see what the numbers 04:19:57

21 are and I have to look at the base point and I'd 04:19:59

22 have to have more information than just that 04:20:01

23 question. 04:20:03

24 Q. Do you think you have an open mind about 04:20:04

25 Valeant? 04:20:06

60 (Pages 234 - 237)


Exhibit 16 Page 461


Page 238

1 A. I try to. And the board tries to. We 04:20:07

2 certainly had a very, very open mind when we 04:20:10

3 reviewed their first offer and when we reviewed 04:20:12

4 their second offer. And -- and -- and we -- we 04:20:16

5 understand our fiduciary responsibility. We've been 04:20:18

6 well -- well counseled on that. And we understand 04:20:22

7 our obligation to shareholders to create the 04:20:26

8 greatest value for them. 04:20:32

9 But we still have -- and even if they 04:20:33

10 have one good quarter, that's not going to change 04:20:35

11 dramatically our opinion of Valeant and its model, 04:20:38

12 its inability to -- to run a healthy R&D program 04:20:40

13 that can develop new indications for its business 04:20:44

14 and particularly the businesses that we have which 04:20:46

15 rely heavily on those new indications for growth and 04:20:49

16 development, and the patients who would not receive 04:20:52

17 the benefit of those -- those new indications, the 04:20:57

18 physicians who would not be able to treat their 04:20:59

19 patients carefully, the -- the -- the reduction in 04:21:02

20 support and outreach to -- to patient -- to doctors 04:21:04

21 to train them, the -- the lack of education to 04:21:09

22 consumers about the products. 04:21:12

23 All of our businesses -- pretty much all 04:21:14

24 of our businesses rely on those things. And Valeant 04:21:16

25 does not believe in those things. And we do not 04:21:19

Page 239

1 think that they, one, would do those things or, two, 04:21:21

2 are capable in many ways of doing those things 04:21:25

3 because of their lack -- lack of experience at it. 04:21:29

4 Q. Be fair to say on a personal level you 04:21:31

5 strongly dislike Mr. Ackman? 04:21:33

6 A. I don't know Mr. Ackman. I've never met 04:21:35

7 him. I've talked to him once. I don't like some of 04:21:37

8 his tactics. 04:21:41

9 Q. You guys have -- within Allergan, you 04:21:43

10 refer to him like, what, a pack of wolves, right? I 04:21:45

11 mean, you've used a number of derogatory terms about 04:21:48

12 Mr. Ackman within Allergan, right? 04:21:51

13 A. I don't think -- I think we use the term 04:21:53

14 "pack of wolves" when it comes to our -- the purpose 04:21:55

15 of our special meeting bylaws, which was to prevent 04:21:59

16 a pack of wolves, or a wolf pack, attacking the 04:22:03

17 business and running a program that would not be in 04:22:09

18 the best interests of our -- our shareholders. 04:22:11

19 But Mr. Ackman is not derided by the 04:22:16

20 board in -- in -- in the kinds of terms that I've 04:22:22

21 heard others refer to him in general. Mr. Ackman 04:22:28

22 does not have the greatest -- I would not want to 04:22:31

23 have his reputation personally, no. 04:22:36

24 Q. So, you say you wouldn't want his 04:22:40

25 reputation. You've referred to him as bullying, 04:22:41

Page 240

1 intimidating and threatening, right? 04:22:44

2 A. I did. 04:22:46

3 Q. Are you comfortable that you can 04:22:46

4 separate out your fiduciary duty to the shareholders 04:22:47

5 with your personnel animus of Mr. Ackman? 04:22:50

6 A. I absolutely am. 04:22:52

7 Q. And you also -- just fair to say you 04:22:53

8 disagree with Mr. Liddon's analysis of Valeant -- 04:22:56

9 A. Ubben. 04:23:01

10 Q. -- Ubben's analysis of Valeant? 04:23:01

11 You disagree with his view, right? 04:23:03

12 A. I do. 04:23:04

13 Q. And you disagree with T.Rowe Price's 04:23:05

14 view? 04:23:07

15 A. I do. 04:23:07

16 Q. And you disagree with Jackson Square 04:23:08

17 Partners' view? 04:23:12

18 A. I do. 04:23:12

19 Q. You agree with -- I don't want to leave 04:23:15

20 a few out here -- Pentwater's view? 04:23:17

21 A. No. 04:23:19

22 Q. You don't? 04:23:19

23 A. No. 04:23:20

24 Q. Why not? 04:23:21

25 A. Are you asking about Pentwater, or are 04:23:24

Page 241

1 you asking about all of them? 04:23:26

2 Q. Pentwater's view. You disagree with 04:23:28

3 Pentwater's view -- 04:23:30

4 A. Yeah. 04:23:31

5 Q. -- regarding Valeant? 04:23:32

6 A. Yeah. 04:23:33

7 Q. Okay. And you disagree with the Goldman 04:23:33

8 Sachs analyst who had rated them a strong conviction 04:23:37

9 buy, right? 04:23:42

10 A. I do. 04:23:42

11 Q. And you disagree with the Bank of 04:23:43

12 America analyst that said that, at 150 a share back 04:23:45

13 in February, would be accretive to Allergan, right? 04:23:49

14 You disagree? 04:23:51

15 A. I do, I do. 04:23:52

16 Q. So, all of them are wrong. 04:23:53

17 A. Well, I'm not the only one who disagrees 04:23:54

18 with them. 04:23:56

19 Q. I asked you a different question. 04:23:57

20 So, you think that all of them are 04:23:58

21 wrong? 04:23:59

22 A. I think they're mistaken. 04:23:59

23 Q. And with respect to Valeant's 04:24:04

24 accounting, you're aware that Goldman Sachs endorsed 04:24:05

25 their accounting in 2013? In the view of the 04:24:08

61 (Pages 238 - 241)


Exhibit 16 Page 462


Page 242

1 New York Times, Goldman Sachs endorsed their 04:24:12

2 accounting. 04:24:15

3 A. That's what the New York Times article 04:24:16

4 said. 04:24:16

5 Q. And you know that Goldman Sachs did 04:24:17

6 their underwriting? 04:24:20

7 A. I do. 04:24:21

8 Q. And you know from your experience 04:24:21

9 whether it's from the Haas Business School as an 04:24:22

10 advisor or on the board or for Playtex that the 04:24:23

11 underwriter of a stock offering needs to do due 04:24:26

12 diligence to make sure that the financial reporting 04:24:29

13 of that company is accurate, right? 04:24:32

14 A. I do. 04:24:34

15 Q. And are you comfortable as a fiduciary 04:24:37

16 that -- that -- you just seem rock solid certain 04:24:40

17 that all these people are wrong? No doubt in your 04:24:43

18 mind? 04:24:48

19 A. Yes, there's no doubt in my mind. 04:24:48

20 Q. But you have an open mind? 04:24:50

21 A. I do. 04:24:52

22 Q. It's an open mind, but no doubt you're 04:24:55

23 right? 04:24:58

24 A. Let me put it this way: My mind is much 04:24:58

25 more open than Mr. Ackman's is. 04:25:00

Page 243

1 Q. Let me ask it this way: Do you think 04:25:03

2 that Mr. Ackman's and Pershing Square's conduct in 04:25:06

3 terms of making this offer has been to date 04:25:10

4 beneficial to the shareholders of Allergan? 04:25:12

5 A. No, I do not. 04:25:19

6 Q. Why were you and the Allergan executives 04:25:20

7 unable to get the Allergan shares at a market price 04:25:23

8 anything close to what you think the intrinsic value 04:25:27

9 was for the last three years? 04:25:30

10 MS. SMITH: Objection. Calls -- 04:25:36

11 THE WITNESS: I didn't say that we didn't 04:25:38

12 have it anywhere near close to the intrinsic value 04:25:39

13 for the last three years. 04:25:42


15 Q. That's my question. 04:25:44

16 A. Yeah, I don't know that we weren't able 04:25:46

17 to do that. 04:25:49

18 Q. I'll narrow it. So, 2013 -- 04:25:49

19 A. Right. 04:25:51

20 Q. -- you agree Mr. Ackman is not on the 04:25:51

21 scene, right? He hasn't -- 04:25:53

22 A. Right. 04:25:54

23 Q. He's not bullying you in 2013? 04:25:54

24 A. Exactly. 04:25:57

25 Q. He's done nothing to hurt you, right? 04:25:58

Page 244

1 A. Nothing. 04:25:59

2 Q. All right. In 2013, your stock is, fair 04:25:59

3 to say, in your view, floundering between 85 and 04:26:02

4 100? 04:26:05

5 A. Well, it's depressed from what it should 04:26:07

6 be. Floundering? No. Floundering implies 04:26:10

7 something totally different. 04:26:13

8 Q. So, it's depressed -- 04:26:14

9 A. It was bouncing back in -- in 2014 as 04:26:15

10 people realized that the Restasis issue was not a 04:26:18

11 significant issue. And we were starting to climb. 04:26:21

12 And the -- the -- the -- if you look at 04:26:26

13 what has happened this year and the increase we've 04:26:28

14 had in our business, which has been fantastic, and 04:26:30

15 the projections we have for continued real growth in 04:26:37

16 this business that is beyond what we've done 04:26:41

17 historically, which historically has been fantastic, 04:26:43

18 and you look at the increase in the earnings per 04:26:46

19 share and -- and our overall profitability over that 04:26:49

20 period of time and the -- the impact of Project 04:26:52

21 Endurance, our -- our trajectory on earnings per 04:26:56

22 share is very steep through 2019. 04:27:01

23 We've pinpointed and done something 04:27:07

24 because of this process to let people know what we 04:27:09

25 see for 2016 at $10. And when you start doing 04:27:11

Page 245

1 normal -- normal multiples around companies in our 04:27:16

2 industry that are performing at that rate of growth, 04:27:20

3 et cetera, it's pretty easy to see that this stock 04:27:22

4 is approaching on its own about a 200-dollar per 04:27:25

5 share stock. 04:27:30

6 Let me -- you sound like you're tired of 04:27:31

7 hearing me talk, but I'm -- I'm going to -- I'm 04:27:34

8 going to finish. 04:27:35

9 Our -- our stock as of yesterday was 04:27:40

10 trading several dollars above the implied value of 04:27:43

11 Valeant's offer, which strongly suggests that we're 04:27:49

12 starting to see the up- -- uptick that we -- we 04:27:52

13 anticipated against the performance that we've -- 04:27:56

14 we've done. We have analysts saying that stock is 04:27:58

15 targeted, meaning relatively short-term, for $200. 04:28:04

16 We see it easily being in the 250 range in 2016. 04:28:08

17 So, from that standpoint, yes, we think 04:28:11

18 that the number in the end of 2013 was well below 04:28:14

19 what it should have been at that point in time, and 04:28:19

20 we're starting to see the stock price today be 04:28:22

21 fairly close to what we think it ought to be. And 04:28:25

22 as we go forward, it ought to climb from there. 04:28:27

23 That's without a Valeant offer on the table in any 04:28:30

24 way, shape or form. And that's in Allergan 04:28:32

25 currency, by the way, which everyone understands is 04:28:35

62 (Pages 242 - 245)


Exhibit 16 Page 463


Page 246

1 pretty solid currency given the long-term historical 04:28:39

2 path that this company has taken. 04:28:42

3 We've got a very short burst of time 04:28:43

4 when the Valeant model has exploded into the 04:28:46

5 marketplace with their acquisition strategy and 04:28:49

6 slash and burn, cut costs, take on another 04:28:54

7 acquisition. And eventually all of that's going to 04:28:56

8 come -- especially if they can't make an 04:28:58

9 acquisition, it's going to come crashing down. And 04:29:02

10 I think a lot of people recognize that. 04:29:03

11 You've named a number you think this 04:29:05

12 acquisition should be done. There are a lot of 04:29:07

13 people out there who are sitting on the fence and 04:29:08

14 watching. There are a lot of people who think this 04:29:10

15 acquisition shouldn't be done. 04:29:13

16 So, when you say I -- I object and I 04:29:14

17 have a difference of opinion with seven or eight 04:29:15

18 people, yeah, that's true, I do. And -- and by the 04:29:19

19 way, so do the other eight members of our -- of our 04:29:21

20 board, have a difference of opinion with those seven 04:29:24

21 or eight people too. And they've independently 04:29:27

22 gotten to that -- to that position. So, hopefully, 04:29:31

23 you see where -- where I'm coming from. 04:29:34

24 Q. And even though you're -- you've said 04:29:36

25 you're sure that Valeant is going to crash and burn, 04:29:38

Page 247

1 you have an open mind with respect to the Valeant 04:29:41

2 offer? 04:29:43


4 THE WITNESS: If -- if Valeant turned into an 04:29:45

5 all-cash offer, our issue wouldn't have to be about 04:29:47

6 Valeant's model. And if that all-cash offer were 04:29:52

7 matching the kind of range that we see for -- for 04:29:56

8 Allergan, we would have a fiduciary responsibility 04:29:59

9 to consider that and not consider the issue related 04:30:02

10 to -- to Valeant's model. 04:30:05


12 Q. As a fiduciary to Allergan, let's assume 04:30:07

13 for the moment that you rebuff Valeant. 04:30:10

14 A. Okay. 04:30:16

15 Q. And you rebuff any other potential 04:30:16

16 offer, and we're sitting here a year from now and 04:30:22

17 the Allergan stock is back around the price it was 04:30:26

18 before Valeant appeared on the scene, say 120. Do 04:30:33

19 you believe you will have exercised at that point 04:30:36

20 your fiduciary obligations to the company? 04:30:39

21 MS. SMITH: Objection. Incomplete 04:30:40

22 hypothetical. 04:30:41

23 THE WITNESS: That's -- that's a totally 04:30:41

24 theoretical question. Is it -- is it possible that 04:30:43

25 that could be the case? Now, if the market is 04:30:47

Page 248

1 normative, in other words, it's a continuation of 04:30:50

2 what it -- what it is today without any major 04:30:54

3 catastrophe, as happened in 2007 and '8, then I 04:30:57

4 would say it would be virtually impossible for our 04:31:01

5 stock to be at $120 and that it is more likely it 04:31:04

6 would be knocking through the door of $200 a share. 04:31:06

7 And I believe that with -- and I -- you 04:31:10

8 know, and the truth is, having been on this board 04:31:12

9 for this long and understanding the ability of -- 04:31:15

10 capabilities of the company and seeing its true 04:31:18

11 growth pattern and the implementation of its 04:31:22

12 strategy, I very much believe that's the case. 04:31:24


14 Q. And until Pershing Square made its offer 04:31:27

15 with Valeant, had -- as of April 2014, had Allergan 04:31:36

16 in the three years prior had any reduction in its 04:31:42

17 SG&A expense? 04:31:49

18 A. I believe the SG&A expense was 04:31:50

19 relatively flat during that period of time. It was 04:31:52

20 something that was very concerning to a number of us 04:31:55

21 because we thought that the company had reached a 04:31:57

22 critical mass and it was time to move that down. 04:31:59

23 And we've had discussions, and they were -- they 04:32:03

24 were -- they were starting to do that. 04:32:05

25 And we recognize that it's kind of an 04:32:08

Page 249

1 outlier in our comparison to other companies. And 04:32:11

2 that's one of the reasons why Project Endurance was 04:32:14

3 kicked off last September. 04:32:17

4 Q. You agree that Mr. Pyott was -- had told 04:32:19

5 shareholders at shareholder meetings since 2010 he 04:32:22

6 was going to start to cut SG&A, right? It's been 04:32:25

7 going on for four or five years? 04:32:28

8 A. It was -- it was -- it was a -- it was a 04:32:30

9 goal of -- of the company, yeah. 04:32:31

10 Q. And a goal is, as of April 2014, it 04:32:33

11 hadn't been able to -- 04:32:35

12 A. Right. No, it had actually stemmed the 04:32:36

13 growth of SG&A and plateaued it. 04:32:38

14 MR. HOLSCHER: We appreciate your keeping an 04:32:57

15 open mind, Mr. Gallagher. Thank you for talking to 04:32:58

16 us today. 04:33:01

17 THE WITNESS: Thank you. I'm not going to 04:33:02

18 look forward to a rematch of this, but I feel like 04:33:03

19 I'm not going to go to the dentist for another month 04:33:07

20 or so, just to stay away from this kind of pain. 04:33:09

21 But thank you. 04:33:11

22 MS. SMITH: Before we go off the record, we 04:33:13

23 should just put on the record -- 04:33:14

24 MR. HOLSCHER: Yeah, why don't you work it 04:33:16

25 out with Bob because he knows the details, what 04:33:17

63 (Pages 246 - 249)


Exhibit 16 Page 464


Page 250

1 we're doing. 04:33:19

2 MS. SMITH: Of the stipulation? Whatever the 04:33:19

3 agreement is that you had in place with the other 04:33:22

4 depositions is fine. 04:33:23

5 MR. BOLDT: Actually, I don't know exactly 04:33:26

6 what that is. I think you should just put on the 04:33:28

7 record what you think needs to be -- 04:33:30

8 MR. HOLSCHER: I think you do it 04:33:31

9 provisionally. 04:33:31

10 MR. BOLDT: You have -- you can provisionally 04:33:32

11 designate it as highly confidential -- 04:33:33

12 MS. SMITH: Okay. 04:33:36

13 MR. BOLDT: -- to obviate the need for you to 04:33:35

14 sort through that over the next couple days. But 04:33:36

15 within, like, three days or so, you know, you'll 04:33:39

16 tell us what you think is highly confidential. I 04:33:41

17 think when you look at it, there's actually pretty 04:33:44

18 little that's highly confidential, in the 04:33:47

19 transcript, not the exhibits. 04:33:49

20 MS. SMITH: No, I understood in the 04:33:50

21 discussion of those exhibits -- 04:33:51

22 MR. BOLDT: Correct. 04:33:54

23 MS. SMITH: -- as well as something like, for 04:33:54

24 example, you know, Mr. Gallagher's assets and that 04:33:56

25 sort of thing -- 04:33:58

Page 251

1 MR. BOLDT: Yeah. 04:34:00

2 MS. SMITH: -- potentially. So -- 04:34:00

3 THE WITNESS: Please. 04:34:05

4 MS. SMITH: Of course. 04:34:05

5 So, we will do that. It will be 04:34:05

6 designated as highly confidential provisionally, and 04:34:07

7 we will, at the soonest available opportunity -- 04:34:10

8 MR. HOLSCHER: Exchange designations and see 04:34:13

9 if we can reach agreements. 04:34:14

10 MS. SMITH: Yeah. And we -- 04:34:16

11 MR. BOLDT: Let's put a fuse on it. Let's 04:34:16

12 put it within, like, three or four days or something 04:34:18

13 so we know and so we might -- otherwise, it's un- -- 04:34:19

14 it's unclear. I don't care if it's two days or five 04:34:22

15 days, just have a date so that we know. 04:34:26

16 MR. HOLSCHER: Yes, I just understand the 04:34:29

17 next several days are quite busy for everyone. 04:34:30

18 MR. BOLDT: Busier for us than you. 04:34:35

19 MS. SMITH: Your turn. Let's say five days. 04:34:36

20 MR. BOLDT: All right. 04:34:39

21 MS. SMITH: And -- and we -- I don't -- 04:34:39

22 MS. DIAMOND: Let's do Monday or -- 04:34:39

23 MS. SMITH: When's your brief due, Thursday? 04:34:42

24 MR. HOLSCHER: You know, the issue is that 04:34:44

25 there's a possibility as we're regarding our 04:34:46

Page 252

1 opposition brief, I have no idea if we want to use 04:34:49

2 some of this testimony. And if it's marked as 04:34:53

3 confident- -- highly confidential, then it has to be 04:34:54

4 redacted, sealed and all kinds of craziness. 04:34:56

5 MS. SMITH: Which is the issue we just had 04:34:58

6 last night. 04:35:00

7 MR. HOLSCHER: Right, right. 04:35:00

8 MS. SMITH: Right. So, we went ahead and 04:35:00

9 just treated it all as highly confidential. 04:35:01


11 MS. SMITH: We will -- we will do it as 04:35:03

12 quickly as possible. 04:35:04

13 MR. HOLSCHER: Yeah, we'll do that. 04:35:05

14 MS. SMITH: Five days at the outside. 04:35:06


16 MS. SMITH: But we will try to do it sooner. 04:35:07

17 MR. HOLSCHER: That's fine. 04:35:09

18 MS. SMITH: And we will ask that you all 04:35:09

19 please do that on your end as well because we don't 04:35:10

20 have those designations, you know, either. 04:35:13

21 Okay. Off the record, yes. 04:35:17

22 THE VIDEOGRAPHER: This concludes today's 04:35:19

23 video deposition of Michael Gallagher. Total number 04:35:20

24 of media used was three and will be retained by 04:35:23

25 Veritext Legal Solutions. Going off the record. 04:35:26

Page 253

1 The time is 4:35 p m. 04:35:28

2 (TIME NOTED: 4:35 p m.) 04:35:33

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

64 (Pages 250 - 253)


Exhibit 16 Page 465


Page 254

1 I, MICHAEL GALLAGHER, do hereby declare under

2 penalty of perjury that I have read the foregoing

3 transcript; that I have made any corrections as appear

4 noted, in ink, initialed by me, or attached hereto; that

5 my testimony as contained herein, as corrected, is true

6 and accurate.

7

8 EXECUTED this ______ day of _________ 2014, at

9 _____________________, __________________________.

10 (City) (State)

11

12

13

14

15 ______________________________

16 MICHAEL GALLAGHER

17 VOLUME I

18

19

20

21

22

23

24

25

Page 255

1 I, the undersigned, a Certified Shorthand

2 Reporter of the State of California, do hereby certify:

3 That the foregoing proceedings were taken before

4 me at the time and place herein set forth; that any

5 witnesses in the foregoing proceedings, prior to

6 testifying, were placed under oath; that a verbatim

7 record of the proceedings was made by me using machine

8 shorthand which was thereafter transcribed under my

9 direction; further, that the foregoing is an accurate

10 transcription thereof.

11 I further certify that I am neither financially

12 interested in the action nor a relative or employee of

13 any attorney of any of the parties.

14 IN WITNESS WHEREOF, I have this date subscribed

15 my name.

16

17 Dated: October 8, 2014

18

19

20

21

22 _______________________

23 Kae F. Gernandt

24 CSR No. 5342

25

65 (Pages 254 - 255)


Exhibit 16 Page 466


&

& 3:4,7,13,20 5:115:23 8:4,5,8,9,11,1357:19 78:19 105:6178:11

0

01214 1:7 2:7 7:16

1

1 1:11,25 2:11 5:511:25 12:1,19,2020:11 27:20 45:563:22 64:1 92:3,792:13 93:4 108:9109:16,25 147:21162:17 187:2

1-10 1:13 2:131/2 197:23 198:1810 5:21 19:23 20:25

21:21 45:5,5,13,2347:7,15 49:4 148:10148:11 166:24168:6 186:10229:13,20,22 230:1230:2 244:25

10/1/14 5:16100 146:8 244:4100,000 232:22102 5:1310:02 2:20 7:2,510th 235:111 5:24 159:8,9,12110 209:20115 210:1911:17 71:1511:38 71:1812 5:5 6:5 12:9

115:16 168:24169:4 171:3

120 5:15 247:18248:5

12670 2:18 3:5 7:12111:7 212:1

127 5:16 223:2212:21 110:1,212th 177:13,2513 6:7 168:23 177:9

177:10,13138 5:1814 6:9 186:5,6

202:20 235:15236:16

148 5:2114a 5:5 11:2214d9 116:13 117:314th 218:1415 6:12 99:24 100:2

100:3 202:21,22203:1

150 160:24 162:10241:12

159 5:2416 6:14 168:5

190:19 205:16217:13

164 171:3,13169 6:517 6:15 161:2

217:14,17,20232:23 233:2

177 6:718 6:17 67:16 218:9

232:23181 49:20186 6:91888 3:2118th 9:2,17 11:6

12:18,24 14:6,2117:10,17 18:1124:12,20,24 25:1125:19 28:19 29:1762:15 64:25 65:2166:19 108:11 123:9123:15 124:11156:19

19 6:19 28:25,2529:15 116:13 234:5234:6,7,10,25

1940348 1:24195 161:41998 228:15 230:241:04 111:2,121st 121:4 152:4

153:6 155:25157:13,16

2

2 5:6 20:11 29:1730:15,16,20,22 42:347:21 55:11,12 68:368:4,9,18 69:2,5,1670:4 93:4 111:5158:10 160:25187:1,2,3 211:21234:17,17

2.3 99:15,162.7 188:242/7/14 5:24200 245:4,15 248:62004 232:172007 248:32010 249:52013 75:10 98:19

125:21 126:22129:14 176:10185:1,10,22,23210:7 228:8 230:9241:25 243:18,23244:2 245:18

2014 1:19 2:21 4:47:1,5 12:25 14:2128:19 30:25 46:1152:17,25 53:4,1754:14,24 62:1564:25 65:21 66:2067:16 71:23 73:1475:10 80:5,18 81:2482:19 95:14,15103:9 108:11 111:1111:10,19 112:8121:4 123:15124:11 127:17,24128:7 133:4,7 137:2

138:23 141:22147:10,19,22 148:2148:23 151:5 152:4152:23 154:11155:5,25 156:1,24157:12,16 159:14160:4,9 161:14167:11 169:9 171:2177:13,25 185:1186:10 189:2205:20 210:7,19212:5 218:15227:25 234:19235:1,11,23 236:3236:24 237:3,17244:9 248:15249:10 254:8255:17

2015 167:62016 244:25 245:162019 244:22203 6:12205 6:1420s 188:9,1020th 3:8213 3:16217 6:15218 6:1721st 54:14,24 149:1722nd 33:16 111:19

111:24,25 112:3115:13 140:23147:17,19,22 148:2155:25 156:18,24157:12,16 170:9,10174:23

23.5 178:9234 6:1924 235:9,1825 47:12,20,22

155:19250 245:16255 1:2525th 138:23 141:22

148:23 150:14

[& - 25th]

Page 1


Exhibit 16 Page 467


151:5,10 152:23154:11,18

26th 205:2027 127:17 133:427.4 49:2127th 127:24 137:228 160:24 162:12

223:2228th 21:25 23:15

24:32:12 165:252:27 166:32:36 173:192:40 173:24

3

3 5:8 17:11 18:11,2120:11 35:10,11,1441:4 44:22 124:18124:21 161:21190:15 197:23198:18 211:25

3.6 103:83.9 142:83/7/14 6:630 5:6 18:21 22:6,9

33:15 43:21 67:20162:16,23 174:22

300 177:4 178:24310 3:2231st 103:933 188:233.4 53:1,7,12,20333 3:1534 188:235 5:838 218:12,193:24 211:223:36 212:63rd 80:5 81:24

82:19

4

4 5:10 20:11 71:1971:23 80:4 178:1

4.8 81:2 82:9 92:84/25/14 5:2240 24:23 25:10,18

167:946 202:1847 202:18 205:154:02 233:244:15 234:24:35 2:20 253:1,24th 71:23 73:13

5

5 5:12 20:11 49:1649:24 50:5 77:19,20102:6 167:23 168:2

5.45 167:350 18:8,22,23 19:11

19:13 20:2,3,4,2421:8 48:11,12,13210:23

50.1 20:6,10,18 75:950.5 75:950/50 19:21500 55:19 56:1,8

230:3523-5400 3:65342 1:23 2:22

255:24540-1235 3:955.1 49:23 50:4

6

6 5:13 20:11 22:6,938:19,19 39:1 50:950:10 67:20 74:19102:8,9,10,14158:10 235:8,18

6/10/14 6:9,196/12/14 6:76/2/04 6:136/3/14 5:126/6/14 6:166/7/14 5:660 127:9 167:460/40 19:21

650 3:867 217:4680-8190 3:166th 36:7 46:11

7

7 1:19 2:21 4:4 5:157:1 20:11 51:5,8,2052:2 111:1 120:20120:21 121:1

7/14/14 6:1871 5:10712-6694 3:22714 3:975 160:2577 5:127th 7:5 30:25 34:1

111:10 159:14169:9,12 171:2212:5 234:19 236:3

8

8 4:12 5:16 6:1920:12 52:16,1654:12 64:1,9,1865:11,20 67:16108:9 109:17127:10,11,14138:22 167:8 168:4234:13 248:3255:17

8/26/14 6:158/4/14 5:1080 127:2 229:2585 125:24 178:9

211:14 244:3858 3:68:14 1:7 2:7 7:16

9

9 5:18 45:23 46:2138:22,25 141:21

9.7 18:5 19:2 20:1321:5,18 92:4 145:25146:4,8,11

9/25/14 5:189/28/14 5:1790 21:8 127:290067-1725 3:2190071 3:1592130 7:12 111:7

212:292130-2071 3:592626-1925 3:998 47:1299 47:13

a

a.m. 2:20 7:2,571:15,18

a27 116:13,17a28 116:15,18 117:3ability 40:1 74:23

84:17 86:22 87:393:24 95:9,10 156:4189:20 248:9

able 126:19 170:18238:18 243:16249:11

abrasive 212:20absent 109:18

122:23,25absolutely 87:8

134:18 181:19187:22 240:6

absurd 134:18accept 64:10 65:8,12

66:2,7acceptability 93:20acceptable 131:23accepted 16:16

232:25accepting 72:19access 201:22accomplish 41:22account 32:16accounting 99:4

169:22 172:2,7173:3 175:2,5,6,14175:22 176:23

[25th - accounting]

Page 2


Exhibit 16 Page 468


177:5 195:16,20199:20 200:14209:4,5 221:10222:10 241:24,25242:2

accounts 82:13accretive 94:6

133:24 144:20161:2,3 241:13

accumulated 27:20accurate 151:13

158:25 237:14,14242:13 254:6 255:9

accused 213:13,20214:1,6 216:6

achieve 187:20ackman 1:12 2:12

16:6 22:11 26:427:5,11,18 28:879:15 101:14,16112:14 115:23118:16 138:4,5,15150:24 152:22206:6,11,15,19,23206:25 207:2,7,8,19207:20 209:23212:9,12,14 214:1,6215:5,18,20 239:5,6239:12,19,21 240:5243:20

ackman's 242:25243:2

acquire 64:5 86:7219:23 223:2

acquired 9:7 10:610:19 67:23 116:6147:21 149:10150:16

acquirer 180:5192:20

acquiring 107:18,23acquisition 86:9

87:18 121:24122:24 123:8124:10 132:16,22

133:12,19 135:4136:15 137:21139:11 142:24143:8,21 144:2,19145:7 159:4 160:23162:10 180:6230:25 236:11,17246:5,7,9,12,15

acquisitions 133:24136:7,18 162:17,23163:21 164:4,9

act 75:6 215:11actavis 142:25

143:22 144:3action 7:23 26:20

115:21 124:25125:1 255:12

actions 26:17142:12

active 36:20 75:581:20 82:23

actively 82:13activism 5:22activist 200:9

207:10activities 33:20activity 236:12actual 82:3 116:21

151:2acumen 27:10add 134:6 135:21addition 116:24additional 63:6address 31:2,3,10

34:2addressed 41:8 80:5addressing 48:6adequate 222:6adherence 75:3administered 8:19administrative

17:11 63:1administratively

61:8

admit 26:15admitted 209:13admonishing

153:16admonition 69:21

185:18advances 195:17advice 39:19,22

57:12,14,15,17,1958:7 59:23 60:969:19,20 122:20154:7 174:5,7 225:2225:5,6,11,23 226:1226:5,7

advise 36:17 58:13158:15

advised 24:10advising 172:1advisor 40:10 57:22

57:24 159:2 179:6242:10

advisories 37:17advisors 25:5 33:10

54:18 86:6 94:13139:6,16,17 158:4158:16 163:11164:12,23 182:16191:6 219:16220:23 222:12

advisory 5:8 36:2438:10 72:16 92:8177:19

advocated 136:6affect 39:18 76:1

92:16,21affiliate 43:19,21affirmative 75:9afraid 157:3afternoon 111:14agenda 6:17 218:14aggressive 216:17agms 1:10 2:10ago 31:21,22 125:1

180:19 181:23209:23 210:25

211:13 227:6agree 7:18 15:3 16:9

18:4,7 19:1,17,1919:20 20:12,21,2339:4 50:3 61:7,868:9,18,22 69:2470:13 85:12,18 87:688:21 96:21,23 97:197:9,23 104:7 109:9118:11,14 122:2130:4 135:25143:23 150:11151:2 152:21164:11,20,23 165:2165:2,4 172:14,21172:24 176:3178:14 180:24186:21 189:18191:11 194:10,18200:10,13,16 208:5208:20 211:5212:20 222:8 230:9240:19 243:20249:4

agreed 174:19179:24 180:15191:10,13 227:15

agreement 30:7,891:5 109:18 250:3

agreements 29:5,1029:15,18,21 30:4191:19 251:9

agrees 175:16,21ahead 14:15 16:5

61:16 67:21 79:2482:5 91:9 95:2399:8 108:17 116:16118:4 140:9 164:17164:19 252:8

al 7:14,15albert 189:23albert's 189:23alert 5:21 148:7,22aligned 44:7 50:15

51:4

[accounting - aligned]

Page 3


Exhibit 16 Page 469


alignment 123:2allegations 56:25

57:4 114:16,19118:23 119:5,12154:12 156:25157:15 172:8231:24

alleged 57:5 187:10187:11,13,18

allergan 1:4 2:4 5:85:20 6:7,10,20 7:138:14 9:1,15 10:211:6,17 12:9,21,2313:8,15,19,23 14:114:2,4,17,20 15:1,415:15 16:1,2,14,2317:10,15 18:1,1219:18 20:12 21:4,1721:24 22:5,16 23:1023:14,14 24:1827:19,21 28:2,3,2429:14,21 30:2,731:6,9 32:6,8,14,2233:1,20,25 34:1835:18,25 36:10 37:537:7 41:17,19 42:1942:22 43:7,25 44:1245:12,23 46:2,13,1746:19 47:22 49:650:11,16 53:1655:20,22 58:1361:24 62:14 63:7,2464:2,3,5,9,19 65:4,965:12,16,19 67:6,1568:5,12,21,24 69:969:13 70:3,7 73:1973:24 75:4,19 76:1176:17 79:6,6,7,1580:6,10 81:13 82:182:10 83:8,14 84:284:3,4,8 85:2 87:2388:6,7,12 89:5,2290:1,7,11 91:4,5,1591:24 92:15 94:25100:1 101:5 103:1,4

103:8,14,14,20104:13,24 105:11106:8 108:3,14109:10 111:19,23113:1,6 114:14,20115:1,11 116:3117:2,7,23 118:15118:22 119:3,12,17120:8,13 121:10123:8,14 124:10125:7,7,16 126:2128:5,10,22 129:12129:18 131:25132:20,21 133:10133:11,12 135:5137:14,20 138:7142:9 143:2,25145:3,6,24,25 146:3147:12 149:2,5150:1,14,24 151:19152:3,15,21 154:10155:13,17 157:11157:15 158:21159:4,16 160:5,13160:18,24 161:13161:19 162:3163:17 164:13,25165:13,20 168:19172:8 175:18,21177:15,18,20,22179:12,17,18 180:1180:12 182:3 184:6184:8,10 185:9186:1,10,11,16187:6,17,24 188:12188:16,17 191:18192:1 195:10 196:5196:12 197:20198:6,12 200:23202:3 204:15207:15 208:13209:10,16,19,24210:6,19,24 211:1,6212:15 213:4,10214:6,14 215:4,7,9

215:11,13,17218:15 219:9 220:6220:15 222:6,8223:12 224:3,8225:2,7 226:21227:23 228:7,10231:1 232:11,14,18233:9,17 234:14235:12,18 236:15239:9,12 241:13243:4,6,7 245:24247:8,12,17 248:15

allergan's 9:1312:17 13:10 17:1120:6 24:23 42:1149:21,23 50:4 55:466:20 75:10 76:281:2 82:20 93:3105:24 106:17109:18 111:18112:7 113:4 117:11117:25 119:10124:22 125:23142:13,21 143:3,19172:24 174:19175:18 179:24186:17 188:12,25190:8 191:6 198:21204:16 215:9

alliance 180:20allianceberstein

112:23allow 56:10allowed 9:2,16

21:23 65:20 66:267:25 109:5 174:11

ambiguous 38:2164:12 95:22 118:2163:13 169:24175:23

amend 17:11 61:24amending 61:12amendments 62:4,9america 5:15 39:1

95:3 96:7 158:3,15

159:2,15,24 160:1161:11,17 162:15164:12,16,24165:12 166:12169:17 170:17172:20,21,23 174:3174:17,18 176:6180:14 182:9 189:3189:11,22 191:7218:18 220:24241:12

america's 171:16american's 171:17amount 94:16

105:11 165:4187:21 190:23193:22 198:18199:6 217:9 220:22229:12,18 231:11

ana 114:10analysis 51:5,7,8,21

84:23 85:3 91:16159:3,5 160:3,4,22161:12,18,23163:10 164:8165:12 166:12184:11,19 187:17198:6,12,15 240:8240:10

analyst 6:8 95:1296:1,9 101:1,2168:19 189:5 241:8241:12

analyst's 101:5168:15

analysts 190:5194:18 212:19213:1 245:14

analyzed 95:13analyzing 91:23

177:20anemic 187:13angeles 3:15,21animus 240:5

[alignment - animus]

Page 4


Exhibit 16 Page 470


anniversary 236:17announce 118:15announced 49:22

162:17 224:15231:8

announcement122:24 223:1

announcements219:22

announcing 117:2,7annual 48:6 52:17

52:25answer 9:6 10:4

11:10,12 13:4,2114:8,11 18:15 19:519:7,10 20:19,2022:7 23:17 43:1357:7 59:5,6,21 60:560:17 61:16 62:265:22,24 67:2168:16 69:21 123:16124:1,12 126:6,12130:9 133:14141:10,17 143:11144:14 147:3 150:8152:8 153:1,10154:16 156:6,9157:3,18,23 158:1164:19 170:5175:25 214:5,9,11214:19 225:10,19226:5 237:11

answered 13:368:13 79:23 155:10156:4 204:21

answering 157:20226:3

answers 28:11anticipated 245:13anybody 76:17

177:19,23anymore 122:10anytime 181:24apart 36:6 57:19

67:13 71:2 232:10

apiece 178:10apollo 219:1,8,23

223:2apollo's 219:20

222:24apologies 14:13

164:18 204:1apologize 120:4

203:22apparently 46:5

80:1 140:12appealing 221:3appear 41:6 203:19

254:3appearance 8:2appearances 3:1appeared 57:24

58:3 247:18appearing 22:4appears 30:24 64:21

129:24 130:16131:1 203:20

appendix 29:8applications 196:23appoint 13:15,24

14:3 15:6 68:6appointed 15:16,20

16:15 70:5,9appraisals 183:6appreciate 249:14appreciation 193:5approach 125:7

129:23 130:24131:1 222:9

approached 215:1approaches 62:13approaching 245:4appropriate 13:5

22:12 42:16 47:11142:23 143:7,20,25223:6,8,12,15

appropriately114:21

approval 129:25131:3,16

approve 215:16approved 159:25

215:22 216:5approximate 147:16approximately

24:22 49:20april 33:16 95:14

101:9 108:2 111:19111:24,25 112:3,8115:13 140:23147:9,19,22 148:2148:23 150:14151:5,10 152:23154:11,18 155:25156:18,24 157:12157:13,16 170:9,10174:23 210:7,18248:15 249:10

area 10:15 96:1199:10 100:5 153:7165:6

argumentative 34:440:25 163:12 247:3

arm 96:10arrangements 10:8

10:11,21 44:6array 48:16 188:17art 40:18art's 40:18article 145:18 178:1

178:22 179:10,16242:3

articles 177:19207:9

ashamed 213:18aside 9:20,21 24:16

34:24 78:1 193:18193:24 196:10224:13

asked 27:14 28:831:13,18 32:7 54:1561:19 78:4 79:5,2389:17 92:6 96:20116:25 125:13156:3 182:1 213:23

214:11 227:21241:19

asking 9:13 23:1325:21,24,25 32:1160:9 61:6 67:1886:1 101:21 109:8124:7 125:7,10138:20 144:11,12146:14,16 152:13152:18 154:23156:22 157:5,13174:10 188:12220:3 225:5,13226:9 240:25 241:1

asks 119:23aspect 227:20aspects 45:2assertion 118:9

172:22,24 174:19179:25

assertions 169:21172:11

assess 160:18assessed 162:1assessment 160:13assets 250:24associates 5:13,13

44:13 102:19,22135:17 213:17

assume 16:8 25:1725:24 39:24 48:2059:12 65:14 72:1774:16 84:25 91:25100:22 236:7247:12

assuming 113:19135:13

assumption 62:18104:18,20

assumptions 104:23attached 6:9 116:13

117:2 187:1 218:16254:4

attaches 159:15

[anniversary - attaches]

Page 5


Exhibit 16 Page 471


attachment 5:24attack 194:1 222:9attacking 175:18,22

221:10,11 239:16attempt 215:17attempted 111:20attendance 173:2attention 37:7 74:7

177:8 218:19attorney 8:2 57:8

59:20 118:13141:15 148:8 152:7153:11 157:4,9,21203:20 214:21255:13

attorney's 69:20attorneys 60:7

69:19 153:18154:25 156:5

audio 7:17audit 70:19august 36:7 54:14

54:24 71:23 73:13114:10,11 127:1133:2 151:25 152:4152:16 153:6 155:5155:25 157:16205:20

authors 90:24automatically 68:11

68:20available 94:7

104:14 122:19129:11 146:4192:13 195:24,25198:8,11 201:6,9204:23 205:2 237:9251:7

avalanche 216:22216:25 218:3 224:3224:7,15,23,24

avenues 94:5 192:8average 188:4avoid 151:12

aware 18:3 24:2228:7 30:3 45:4,856:17 57:23 58:2,1960:13 61:4 63:10,1465:7,11 66:5 67:474:9 84:22 96:199:13 100:11,16106:6 114:25117:25 119:3,11,17120:8 121:24 124:7125:18,20 140:2,21145:3,10 149:25162:21,25 169:20171:19 176:9,15179:5 222:13 224:1224:7,14,20,21229:16 230:3236:21 241:24

awful 210:2awhile 217:10

b

b 22:6,9 67:20b&l 236:17back 22:15 33:9

34:25 35:3 55:1263:19,25 64:1768:16 71:17 99:18111:11 120:1 125:8125:17 126:2,16129:18 136:12,18143:14,16 147:9,11148:18 150:17166:2 171:24173:23 184:25209:18 212:5 220:4228:14 234:1,16241:12 244:9247:17

backgrounds 70:2370:25

bad 136:3balance 17:19 26:3

44:7

bank 38:25 95:396:7 158:3,15 159:2159:15,24 160:1161:10,16 162:15164:12,15,24165:12 166:12169:16 170:17172:19,20,23 174:2174:17,18 176:5180:14 182:8 189:2189:11,21 191:6218:18 220:23241:11

banker 39:24 98:3bankers 139:7,9

170:1 175:10banking 96:2,8

98:17 172:1 181:9190:5

banks 96:21 100:8100:11,12

base 237:21based 37:19 38:11

83:24 100:10,15101:23 105:2122:19 138:11163:20 164:3229:11,14,17,19,23229:25 230:4

basic 26:15 220:3231:20

basically 11:1415:21 26:25 36:2144:9 48:15 66:386:7 183:14 195:6195:11,24 223:17

basis 31:4 33:2140:6 168:20182:20 233:5,6

battle 178:2bausch 178:11began 227:18beginning 2:19 8:2

51:9 111:4 114:11149:14 211:24

228:5begs 236:10behalf 2:18 6:17

41:18 111:8 212:3beholding 11:16

13:11 14:24belief 16:12 89:7

114:3 116:2,5believe 10:19 11:23

12:8 15:14,23 16:416:6 19:10 24:11,1926:9 27:5 34:1936:4 37:10,14,1639:21 40:17,1942:10 44:19 50:1952:10,13 53:9 54:258:6,23 63:19 66:1866:23,24 67:3 71:2576:12 81:12 83:9,1784:5 86:4 87:1489:8,10,11,21 90:890:23 91:4,11 94:2595:17 96:17 97:18101:13,17,24 105:2105:18 106:5,21107:1,4,11 109:1,14113:24 117:12121:8 122:1 125:15126:3 127:25133:24 138:3,12139:25 143:6151:24 164:10165:7,11 172:2175:16 188:21196:7 198:21,25204:16 208:22209:3 212:13 213:9222:19 230:17236:4,4,16 238:25247:19 248:7,12,18

believed 41:1583:15 100:19114:16,20 145:5189:8 191:8

[attachment - believed]

Page 6


Exhibit 16 Page 472


believes 45:17 67:691:8 103:13 104:1172:9 197:16208:22 222:1

bell 77:11,12benchmark 84:14

85:9,17beneath 181:2beneficial 142:8

243:4benefit 238:17benefits 83:9,16bent 50:22best 16:1 22:7 77:24

80:8,15 89:6,2593:24 103:13 156:4186:3 239:18

better 65:16 80:1287:21 94:25 108:21126:12 158:7197:18 207:11226:22 227:2 235:1

beyond 244:16bias 38:16 71:2biased 58:24 59:2

90:24 216:20bid 64:11 148:24

220:5bidder 64:4bidders 90:12 130:1

131:4,20,24 150:20big 20:25 153:20

211:11bill 101:13,16

209:23billion 99:14,15,16

160:25 162:17188:24 190:25197:23 198:18

billions 193:13bit 9:13 34:13

167:11blackrock 112:19

112:20

blessing 178:13,16178:18

block 21:21blocking 121:24blogs 177:23bluff 2:19 3:5 7:12

111:7 212:1board 5:20 6:10,17

11:15 12:21 13:1515:16 16:15 17:2127:25 28:1 29:2233:15,18 45:1347:17 54:17 57:1557:18,21,24 58:1061:5 64:3 68:570:19 73:19,24 74:976:6 80:5,20 81:883:3 90:11,15 93:199:23,25 100:1103:14 104:1107:17 109:18121:10,16,18,22122:5,9 123:8,20124:25 129:10130:17 131:9,10,12131:17 133:3137:19 139:11,23140:18 142:13143:8 144:10,24155:11 156:11159:25 174:22182:13,14,17186:11 187:4199:12 200:20202:14 203:9,10206:12 210:7,14,24212:18 215:16218:15,25 220:17227:6 228:17231:23 232:4,8,11232:14 238:1239:20 242:10246:20 248:8

board's 123:2144:18 183:3 210:8

225:2,3,7,12 226:7boards 122:7,10,11bob 8:7 249:25bofa 39:18 189:24

189:25,25boldt 3:14 8:7,7

250:5,10,13,22251:1,11,18,20

bonus 229:11,14,23230:4

bonuses 229:17,19229:21

botox 178:3 199:4,4bottom 50:10 51:6,7

171:14 180:17187:3 203:5 206:3

botulinum 195:7bouchard 58:11

59:1,9,16 60:15,2561:10,22

bouchard's 58:1460:21

bought 87:19181:25

bouncing 244:9bound 65:25box 78:10 236:9boxes 236:9breach 57:5 122:25

123:7,13 124:9139:12 144:18

breached 56:25breaching 157:21break 9:9 10:23

23:22 61:17 66:371:11 165:22233:18

breaking 213:15breaks 10:22brief 71:16 166:1

211:23 233:25251:23 252:1

briefly 127:8 138:1145:18

bright 54:10bring 80:11 149:16

156:1 206:23,25223:17 224:17

broad 44:14 79:16184:17 188:17231:18

broadcasts 197:3broaden 226:25broadly 166:9broken 11:1 195:24brought 26:17,17

57:5bullet 12:12 41:5

43:11 44:11 55:1455:16 63:15 74:22187:7 194:4 219:21

bully 207:3 212:12212:14

bullying 206:12,12212:23 215:24216:7 239:25243:23

burden 63:8burn 86:8 246:6,25burning 192:22burst 246:3busier 251:18business 36:21

37:21 39:16 44:1686:4 87:20 94:20,2295:1,21 96:24 97:497:10 98:7 99:11101:3 122:21 126:7130:10 136:24143:12 156:21175:3,8,22 185:16187:11,22 189:20191:5,8,14,25192:11,15,17 194:1195:7,8,10,14,21198:18 209:4,6221:11,18 222:10224:4,10,11 235:21238:13 239:17

[believes - business]

Page 7


Exhibit 16 Page 473


242:9 244:14,16businesses 192:22

192:24 195:5,19199:3 207:23238:14,23,24

busy 251:17buy 93:11 96:9

123:14 125:7 126:2126:16,19 129:18170:23 171:16,17195:9 241:9

buyback 125:3buyer 183:20buying 125:16

136:12,18 151:12178:24 197:19

buyout 121:23bylaw 54:19 55:5

59:17 60:15 61:2367:12

bylaws 9:9,10,19,219:24 10:9 17:12,1942:11 43:12 44:1254:18 55:8,9,17,2256:2,3 58:15 59:1760:13,21 61:3,11,1261:22,24 62:16 63:263:7,15 65:25 66:366:5,10,13,20,22,2567:11,14,25 239:15

c

california 1:2,18 2:22:19 3:5,9,15,21 7:17:12 31:13 57:6,25111:1,7 212:2 255:2

call 6:13,15 33:534:10 41:10 42:1257:8 66:7 67:774:23 77:15 118:6137:4 147:25148:22 155:8174:12 175:24203:7 214:20

called 61:5 86:6calling 17:12,23

18:25 66:6,14 74:1775:25 212:19

calls 9:4 10:1 11:913:1 18:14 22:125:22 26:12 36:8,1167:17 81:15 86:1691:7 99:6,7 102:2108:15 109:12117:15 119:13120:14 138:17152:6,24 176:24243:10

cap 105:21 193:9,10capabilities 227:3

228:10 248:10capable 95:4 239:2capacity 22:5capital 1:10 2:10

5:19,19 105:6 106:8130:22 131:14,14138:23 198:13200:6,7

capre 105:6,21,23caption 7:13captured 24:15cards 86:7 89:2,9

96:17,22 97:24 98:5care 48:25 251:14career 113:9careers 89:14careful 157:7carefully 238:19carlton 3:4carry 167:25carter 23:15 24:2case 7:13,15 22:13

53:24 65:14 73:384:5 94:18 100:23118:7 130:21 143:1183:23 192:23193:1 231:3 247:25248:12

cases 26:16cash 94:23 184:21

220:6,10 247:5,6cast 75:10catastrophe 248:3categories 196:3cause 72:23 141:3

182:11causes 15:14caution 126:5cellular 7:21center 3:8central 1:2 2:2cents 167:9century 3:21 149:17ceo 48:2,21 75:8

99:21,22 192:14193:6 228:14230:10,15

cernich 36:3,7certain 12:20 29:5

29:15,18 36:17100:13 242:16

certainly 22:6 51:353:24 56:15 92:1192:12 95:4 113:14134:4 136:6 165:17238:2

certified 2:21 255:1certify 255:2,11cetera 28:4 147:25

245:3cfo 192:2,15 194:14

196:6chain 226:25chairman 48:3,21

75:8 127:18 199:10228:20 229:2,5230:10,15

challenging 50:7chance 141:3chancellor 58:11,14

59:1,8,16 60:14,2060:24 61:10,22

chancery 56:18change 18:24 137:1

150:2 211:18220:15 231:13,21237:18 238:10

changed 93:14changes 63:4 92:11changing 62:17,19

175:6characterization

60:21charge 93:1charged 122:5chart 163:24 236:8check 173:11 205:25cheek 167:13chief 71:7 102:18

127:18children 44:15

233:15choker 59:17 60:15

60:22,25 61:11,23chuck 97:14circumstances

130:19city 254:10claim 190:8claiming 132:14claims 156:1clarity 187:12 194:4

194:11clause 66:7cleanup 78:2clear 10:9 18:20

20:16 21:2 22:357:11 64:9 70:24144:14 146:14157:5 174:1 210:18

clearly 56:11 90:22112:4 122:16131:18 198:11

client 5:21 57:859:20 118:13141:15 148:7,8,22148:22 152:7

[business - client]

Page 8


Exhibit 16 Page 474


153:11 157:4,9,21179:12 203:20214:21

clients 82:9,16 92:9climb 244:11 245:22close 20:25 104:14

120:4 131:10 144:9149:20 150:3151:24 193:21198:25 243:8,12245:21

closing 49:19,21,2350:4 130:18

code 219:4,8,10codirector 27:25cold 94:23collapse 192:24

221:12collect 35:5collection 56:2 78:8colleen 3:4 8:13colleen.smith 3:6color 21:21combination 83:10

83:16 163:18207:15 208:13

combined 196:21combining 162:2come 34:25 89:2

96:13 246:8,9comes 13:7 93:10

113:15 207:22231:21 239:14

comfortable 240:3242:15

coming 246:23command 226:25comment 136:11commenting 205:24comments 212:9committed 214:3committee 47:19

54:2 70:19 228:21229:3,6,8

committing 213:20214:2

common 43:1654:19 55:5,10 81:3181:11

communi 135:8communicate 31:8

32:25communicated

112:7,11 135:7communicating

32:5 135:1communication

24:17 28:20 118:13148:8 153:12156:22 174:5

communications59:20 113:12152:19 157:6,9214:21

community 207:10221:17,24,25

companies 36:17,1939:12 54:20 55:556:4,6,8 88:16 96:596:12 197:17207:17 208:15245:1 249:1

company 13:12 22:640:14 42:24 43:1943:19,20 50:1455:20 56:1 57:2562:16 67:19 75:2387:19,21,22 90:1392:10 93:11,18,2594:8 113:1 126:8128:15 130:1 131:4131:9,20 133:23136:16,22,23140:17 144:22153:20 176:22181:13 183:25184:4,17 185:10197:5 199:6 201:14204:14,19 215:1

224:20 226:22,22227:3,9,16 228:14229:17,18,20 230:4242:13 246:2247:20 248:10,21249:9

company's 55:9134:18 137:11146:16,18,19,23147:1

compared 196:2,8comparison 249:1compelled 129:11compelling 83:10,16

90:14compensated

231:20compensation 229:6

229:9compete 192:12

196:3competition 224:13competitors 43:22

224:12complaining 130:17complaint 56:21,24

114:9,14 115:1116:12,17,22 119:6152:4 216:6

complete 70:25179:18,25 180:12

completed 148:4complex 149:21complexities 26:14compliance 228:21component 94:18

220:7,11compound 61:14,15

62:1compromise 72:19concept 27:6 131:15

222:20concepts 212:17concern 71:1,2,3,8

106:17,23 210:8

concerned 90:6175:15

concerning 248:20concerns 38:16

46:20 53:18 72:1872:23 105:24221:18

conclude 142:22143:19

concluded 52:374:11 85:6 121:22146:24

concludes 252:22conclusion 9:5 10:1

11:9 13:2 18:1422:2 26:12 41:12,1451:15 67:18 74:1185:12,14 86:14 87:687:10 90:21 93:1594:21 108:16109:13 120:15121:25 122:1,2152:25 176:3182:20

conclusions 94:13165:19

concrete 40:5,7condition 100:20conditions 47:8conduct 46:21 148:3

213:14 225:4,8243:2

conducted 22:1178:9

confidence 99:3confident 252:3confidential 1:15

126:9 250:11,16,18251:6 252:3,9

confidentiality157:4

conflict 38:13conflicts 37:12,15conjunction 76:6

[client - conjunction]

Page 9


Exhibit 16 Page 475


connection 115:17consent 41:9 42:5

49:18 75:7consents 24:24 25:3

25:18 74:13 75:25conservative 165:13consider 26:19 27:6

61:11,23 93:7,16150:24 151:19247:9,9

consideration123:20 155:20162:4 218:21220:14 222:24

considerations219:13 220:24

considered 11:562:4 126:8 153:21187:4

considering 48:562:16 63:3 124:4139:11 144:10

considers 37:8consistent 63:11consistently 65:23

140:21,25constitutes 84:15constraints 54:19

55:5constructive 81:25consultive 37:24

38:2consumed 115:12consumer 100:5consumers 238:22consummated

120:13 181:18contact 28:9 49:13

49:14 106:5,6 113:3180:24

contacts 111:17,18contained 254:5containing 234:13contends 50:14

content 59:19 60:369:20 153:11,17

contents 116:12context 69:18 94:11

160:19 167:14174:4 226:10

continuation 248:1continue 53:19

170:18 180:6 202:4continued 6:1 45:21

65:22 111:25244:15

continues 89:15178:22

contract 231:21contradicts 169:21contrast 180:20,25control 17:21

231:14,21controller 196:6controls 47:16conversation 106:5

112:14 113:18126:13 129:6136:10 142:4 174:7174:9 210:11

conversations 7:2024:13,16 83:21,2485:1 112:22 113:16138:10 139:5 175:4200:22 202:7

convicted 28:14,15conviction 170:23

171:17 241:8cooked 27:7cooperative 128:15copied 34:6copy 56:21 72:1

80:9,12 116:21copy's 77:23copying 205:20corporate 41:24,25

58:21 75:4 228:20229:2

corporation 1:4 2:4corporations 44:15correct 60:22 69:11

70:8,11 166:9 215:6219:9 225:18250:22

corrected 133:20254:5

corrections 254:3cost 160:25 162:5

163:19 164:14165:1 227:2

costa 3:9costs 164:3,8 165:4

246:6counsel 7:10 35:25

57:4,25 58:4 60:10121:19 139:20140:23 150:14151:4 154:8 156:23157:6 166:22173:11,20 174:5215:9,12

counseled 238:6count 146:4counter 51:11 52:4

52:14 84:8couple 25:3 92:9

114:15 120:5 145:5149:11 166:5195:22 237:10250:14

course 59:24 67:18124:17 134:10188:18 216:19222:17 233:2,5251:4

court 1:1 2:1 7:98:15 21:25 35:556:18 114:10

courts 58:20,24cover 118:23 231:18coverage 6:7 177:15covered 79:11 114:4

115:7 118:20 119:5

168:17 231:17covering 75:6covers 194:24crack 219:11cracked 219:10crash 246:25crashing 246:9craziness 252:4create 207:16

208:14 226:23238:7

creates 38:13186:16 187:5

creating 104:15192:9

credibility 124:25credible 33:24credit 29:18,21 30:4

30:6,8 39:20crime 213:21 214:2

214:3criminal 213:13critical 248:22cromwell 3:20 8:10crossed 49:24 50:5cry 207:5 212:13crying 149:16csr 1:23 255:24currency 94:23

222:6 245:25 246:1current 90:14

129:13 163:10179:19 180:2,13187:24 202:4210:22

currently 123:20126:8 185:14

cut 94:5 188:25190:23 228:7 246:6249:6

cuts 189:19cutting 228:1cv 1:7 2:7 7:16

[connection - cv]

Page 10


Exhibit 16 Page 476


d

d 4:1 29:8daily 33:6 168:20

177:15dancing 144:9data 93:2,6date 31:21 34:1 61:6

83:23 111:9 147:15147:16 151:1,21212:4 233:12,14243:3 251:15255:14

dated 5:6,10,12,165:17,18,22,24 6:6,76:9,12,14,15,18,1929:14 30:25 80:4121:4 148:23159:14 169:8186:10 234:18255:17

dates 201:3david 5:6 33:17

53:23 76:25 77:983:18 113:7 133:16134:24,25 159:13166:18 203:6,21205:20 218:2 227:7227:18 228:13

day 33:20,20 49:2049:23 50:5 122:18134:13 149:20153:24 168:20223:11 254:8

days 136:3,3 203:10207:14 250:14,15251:12,14,15,17,19252:14

deal 11:17 13:1214:25 15:25 16:1650:23 51:1 89:594:8 106:24 131:11134:11,15,17 170:2181:9,18 182:24,25183:10,15 184:21

184:22 193:12,21dealing 58:21 82:1

96:4,21dealings 100:10dealt 100:7december 9:2,17

11:6 12:18,24 14:614:21 17:10,1718:11 24:12,20,2425:11,19 28:1929:17 62:15 64:2565:21 66:19 67:16108:11 123:9,15124:11 125:22143:8 145:7 146:1146:25 156:19

decide 122:9decided 159:24

228:8,11decider 21:1deciding 121:23decision 10:16 94:10

122:19 153:23155:21 226:21,23228:6,9,11

decisions 122:6,12122:16

deck 5:7 234:18,22235:2,18 236:1,5

declare 254:1declined 191:18,22deep 82:23 85:3

89:16defendant 2:18 3:12

7:11defendants 1:14

2:14 3:19 8:10defended 132:14defending 60:14defenses 46:5,6defined 27:4 30:7degree 74:3delaware 1:4 2:4

31:13 56:18 57:558:3,12,20,23

delete 31:25 32:9deliver 16:2denominator 146:6

146:11dentist 249:19department 49:13depending 220:13depends 163:1,3deponent 173:20deposing 126:11

207:24deposition 1:17 2:17

5:1 6:1 7:6,11 12:130:16 35:8,11 60:1160:14 71:19 77:20102:10 109:25111:5,6 120:21123:18 127:11138:25 148:11159:9 169:4 173:21177:10 186:6 203:1205:16 211:21,25212:1 217:17 218:9234:7 252:23

depositions 123:25250:4

depress 131:13depressed 244:5,8depressing 130:21depth 84:23 104:1

153:21 227:19derided 239:19derivative 149:22derivatives 147:25derogatory 239:11described 59:16

61:10 64:2 191:5describing 129:9description 5:3 6:3designate 250:11designated 251:6designation 30:23designations 251:8

252:20

desire 146:7desks 49:8despite 125:2

179:11destroy 31:25detail 65:1 237:13detailed 114:19

133:14details 29:10 99:9

133:18 212:10213:7 237:7,8249:25

determination27:11

determine 43:7 44:344:10 184:6 206:4,7206:8

determines 183:15184:2 218:25

determining 155:17184:14 227:19

develop 238:13development 197:19

238:16device 107:17dialogue 41:25

111:23 113:7,10diamond 3:8 8:11

8:11 251:22diego 1:18 2:19 3:5

7:1,12 111:1,7212:2

difference 19:3 20:186:11 140:18 183:5183:11 190:4 233:6246:17,20

differences 192:21different 9:14 18:17

19:21 47:21 62:1288:2 96:12,13125:14 136:17137:6 144:23165:17,19 207:21214:10 219:25227:8 241:19 244:7

[d - different]

Page 11


Exhibit 16 Page 477


difficult 56:9,14,1661:3,7 104:2 174:24175:7

diligence 104:1,21104:25 196:13,19242:12

diminish 104:13direct 84:8 115:15

139:10directed 80:19direction 138:4

227:20 255:9directly 169:21director 22:5,16

23:9,14 24:2 27:2427:25,25 28:9 30:233:21 43:20 46:2152:18 53:1,10,1954:17 92:15 151:18215:15 228:18231:23

directors 5:20 6:1712:21 13:10,17,2414:19,23 15:6,8,1416:9,13,21 17:433:17 53:23 68:7,1168:20,23 69:1,3,6,869:13,18,25 70:5,670:9,14,14 71:480:6 137:19 142:22143:3,19,25 218:15

disagree 41:1245:19 46:7 51:1552:8 53:6,15 85:2286:19 87:9 90:20103:22 118:9124:16 131:6142:17 144:6 240:8240:11,13,16 241:2241:7,11,14

disagreed 53:12175:12 232:3,7

disagreeing 191:16disagrees 86:14

241:17

disaster 17:22 86:1087:17

disclosed 98:21,24179:8

disclosing 116:2,4disclosure 44:13discovered 151:10discrediting 84:9discuss 121:17

152:17 155:3185:16 222:13

discussed 98:7231:4

discussing 175:3discussion 97:25

103:17 112:3 114:2136:14 138:11157:24 227:7250:21

discussions 46:1453:16 60:6 65:468:25 69:18 80:2391:19 101:24103:15 104:11105:19 139:8,20153:17 156:5 173:3182:17 248:23

dislike 239:5dispute 32:15 33:25

149:3disruptive 47:2distinct 215:8distinction 197:7,13distinguish 66:13distributed 121:10district 1:1,2 2:1,2disturbingly 129:23

129:23 130:23divergent 210:2dividend 43:15division 1:2 2:2doable 56:15 61:4doctors 238:20document 5:8 12:4,7

23:19 30:20 45:15

102:15 121:1148:14 150:5,7165:22 218:13

documents 23:8123:23

doing 53:9 124:23156:11 184:11,16194:22 222:13223:21 239:2244:25 250:1

dollar 99:14 168:2,4245:4

dollars 39:5 190:25230:2 245:10

domain 151:16dominant 74:4door 144:16 248:6doubt 191:13

242:17,19,22doug 227:15,17,17

227:18download 79:3downloaded 78:12

79:9dozens 132:23dramatically 130:20

131:11 238:11draw 177:8drawing 218:19drawn 30:8drive 2:19 3:5,8

7:12 11:16 13:1114:24 15:25 91:1111:7 212:2

driven 194:6driving 157:6dropping 221:14due 104:1,20,25

187:6 196:13,18242:11 251:23

duties 15:15 16:1416:18 57:1 94:11139:13 140:1,21144:1 225:12 226:8

duty 11:19 57:590:16 142:23 143:7143:20 144:18,23240:4

e

e 3:8 4:1 5:6,24 6:76:12,12,14,14,15,1530:24 31:2,3,6,1031:16,19 32:1,7,932:13,16,18,20,2333:13,22 34:2,2,1434:18,19,23 78:4,578:8,8,8,10,1079:21 121:15159:13 166:6,8,14166:15 167:17177:13 203:4 204:5205:19 217:22224:23 234:17

eagerly 227:17earlier 28:13early 63:20 80:18

142:4 148:18149:17 197:7,14

earnings 161:2166:24 167:2184:12,13 229:25244:18,21

earth 106:18easily 245:16east 3:21easy 245:3echos 75:2edge 5:15edition 115:9education 238:21effectively 104:3efficiencies 227:2effort 178:10eight 146:13 246:17

246:19,21either 11:23 188:7

252:20

[difficult - either]

Page 12


Exhibit 16 Page 478


elect 13:15,24 14:368:5

elected 46:11eliminate 131:19eliminated 231:13ellis 3:13 8:4,5,8embark 142:23

143:21 144:1emphasizes 149:16employ 136:16employee 43:20

255:12employees 128:6

202:3,4 205:2,3,11227:23

employing 219:16employment 202:5

232:11encourage 81:8

227:15encouraged 133:23endorse 46:25endorsed 227:18

241:24 242:1endorsement 178:19

179:11ends 207:21endurance 224:16

226:16 227:4,5,22228:3 244:21 249:2

engage 64:3,19 65:488:12 92:17 103:14105:25 129:8139:24 145:6193:19

engaged 26:10113:24 114:17117:13

engaging 137:14142:25 143:22144:2 214:7

enhance 80:9,16197:15

enhancing 94:6

enjoin 21:25 23:1524:3

enormous 207:17208:15

enter 123:8,14124:10 191:19

enthusiastic 180:18entire 33:14 126:22

174:9 228:10229:13

entirely 237:2entities 44:16entitled 157:10

159:16 161:22174:4,8 186:11218:20

entity 105:5 196:21equally 137:10

216:16equipment 136:19equity 6:5 169:8,14

169:17,20 170:1,7170:15,19,22

especially 143:1246:8

essential 181:19essentially 11:15

13:10 65:4 78:2482:15,22 113:3139:24 149:9177:14 178:12,16194:1 235:19,20

et 7:14,15 28:4147:25 245:3

evaluate 36:1894:16,17,19 95:9,10228:9

evaluating 95:196:12 184:9,22

evaluation 165:13evaluations 93:12event 62:17eventually 246:7everybody 192:17

evidence 84:15exact 31:21 39:2

130:12 151:1,21188:1 197:22233:14

exactly 46:23 47:1583:23 101:7 150:15155:2 168:9 175:8233:8 243:24 250:5

examination 4:118:22

examined 8:1994:20

examining 62:1263:3

example 87:17250:24

excellent 205:25exception 83:9exchange 115:17

166:6 251:8exclamation 166:25excuse 23:3 175:10execs 155:17execute 84:17 86:23

87:4,12,14,15executed 254:8executive 99:19

100:5executives 89:8

128:4 155:16 231:9231:15,17,20 243:6

exercise 142:23143:7,20,25 177:4

exercised 178:23179:6 247:19

exercising 150:19exhibit 5:5,6,8,10,12

5:13,15,16,18,21,246:5,7,9,12,14,15,176:19 11:22,25 12:130:15,16,20,2235:10,11,14 41:463:22 64:1 71:19,2377:18,19,20 80:4

102:6,10,14 116:13117:3 120:20,20,21121:1 127:10,11,14138:22,25 141:21148:10,11 159:8,9159:12 168:23169:4 177:9,10,13186:5,6 202:17203:1 205:16217:17,20 218:9234:3,6,7,10,17,17234:25

exhibits 5:1 6:1250:19,21

exist 44:4existing 74:23expect 91:18 163:18

164:2,13expenditures 199:4expense 248:17,18experience 39:11

96:6 140:5 239:3242:8

expert 43:3 67:1270:18,20,24 96:5120:16 151:11

expertise 10:15 40:358:20

experts 70:22122:20

explain 41:24111:21 113:3

explained 45:2053:25 71:8 136:23

explaining 136:14137:10

explanation 79:20explicitly 44:14

65:15exploded 246:4explored 90:17express 113:19expressed 113:20extended 218:24

[elect - extended]

Page 13


Exhibit 16 Page 479


extensive 43:13100:15

extensively 100:8220:21

extent 9:4 10:1 11:813:1 18:14 20:1522:1 26:11 57:899:6 117:15 120:14126:6 152:6,8,24174:6 214:20224:19

extra 72:1extraordinary 217:9extreme 96:6extremely 39:15

47:1 196:11

f

f 1:22 2:21 76:23255:23

face 90:14fact 19:13 27:3

28:15 55:2 57:1365:15 69:2 70:475:24 85:23 90:13105:16,20 106:3108:25 116:1,20117:7,22 125:6155:17 201:8202:16 220:4 237:3

factor 74:4factors 153:22 154:1

154:3,6 163:6facts 73:7 93:2,6

94:12 104:23 105:4122:19 151:9156:23,25 157:1,11157:14

factually 87:24fail 21:14,17,19

90:15failed 87:14 195:6fair 25:17 32:5,15

36:23,25 40:2042:10 49:9 53:6

86:13 108:12113:23 114:21,23117:10 119:9 128:9133:4 150:13158:14,21 159:3160:5 165:11167:10 178:19181:10 185:24188:11,14 199:16203:14 205:5216:16 220:7 239:4240:7 244:2

fairly 32:16 33:1,3,579:15 100:19 183:3245:21

fairness 181:4,14,22182:2,9,18,22,23183:5,12

faith 81:9 123:1,7123:13 124:9

fall 185:15falling 219:22 223:1false 28:15 172:10

175:10,11falsified 172:25

174:20 175:1falsify 175:11familiar 105:5family 233:11fan 206:15,19fantastic 244:14,17far 17:24 59:8 91:22

117:10 148:4 165:5175:15,20 219:20222:25

farther 163:16226:23

fast 202:19fath 76:22 77:10favor 18:9 19:15

20:7,11,14 21:3,1021:18 22:18 23:1047:14 48:14 70:472:25 73:6 125:16132:15,21

favored 18:24 135:4february 159:14

160:4,9 161:13165:12 189:1241:13

federal 67:1 114:10115:23

fee 36:21 37:17,2338:4,7,11,22

feedback 47:3 49:749:11,12 62:2463:11 132:15

feel 25:16 57:16140:12 156:15230:20 249:18

feels 37:22 205:24fees 37:19 39:1,3,18

40:5 72:19felt 47:1 53:23

156:11 183:6fence 246:13fend 220:25fidelity 112:17fiduciary 11:18

15:15 16:14,18 57:157:5 92:19 93:894:11 122:11,12139:12 140:1,21142:23 143:7,20144:1,18,23 204:15213:16 225:3,7,12225:16 226:7 238:5240:4 242:15 247:8247:12,20

fifth 178:7file 79:6,7 152:4

155:21 157:12filed 11:23 12:9

22:19 24:23 25:1826:3 29:14 56:18,22114:9 153:24 235:5

files 34:6filing 74:13 117:2

149:20 179:17

filings 23:23fill 49:15 212:10filler 195:8filling 155:7final 12:7 187:13finance 200:16

208:11financial 27:10

70:18,20,22,24100:18,19 139:17158:3 181:8 183:4192:13 194:6227:10 242:12

financially 7:23144:20 255:11

find 34:13 48:1755:8 134:23 194:24

fine 12:10 71:1388:9 145:20 173:13233:22 250:4252:17

fingerprints 56:5finish 17:6 97:6

197:10 233:20245:8

finished 141:9firm 36:24 72:16

78:19 96:9 105:9197:1 200:9

firms 195:22first 11:22 29:20,24

41:4,5 52:16,2081:1,7 93:23 95:13103:7 124:22 129:4129:5 130:25135:11 137:14142:25 143:22144:2 148:20 149:9149:11 150:24151:19 160:12,16171:7,9 174:17,21187:3 205:19227:23,24 228:2238:3

[extensive - first]

Page 14


Exhibit 16 Page 480


firsthand 212:22fit 163:5 207:16

208:14five 55:16 69:6 88:2

90:23 102:5 193:11197:21 198:3,20,22232:2 233:19 249:7251:14,19 252:14

flag 45:9 46:4flat 248:19flawed 86:5,5flaws 96:24 97:2,9flesh 199:23flimsy 169:22flip 136:5floor 3:8flop 136:5floundering 244:3,6

244:6flung 17:24focus 133:6 226:23focused 130:17

224:16focusing 193:25follow 9:10,19 10:9

14:18 35:24 45:1866:1 67:1 83:14103:17 144:19170:5 204:11207:25 212:8

followed 117:23followers 54:11following 46:22

227:9follows 8:20forecloses 192:8foregoing 254:2

255:3,5,9forensic 195:15,20

195:22 201:16forget 123:10

188:23 189:23190:22

form 6:19 234:13245:24

forma 160:22161:22 162:1,4194:6

formed 182:14former 99:19 201:8forth 33:9 120:2

255:4forthwith 149:20fortune 55:19 56:1

230:3forum 33:17forward 24:25

27:13 28:4,21245:22 249:18

found 22:13foundation 82:2

99:7 100:21 102:3108:16 118:3119:14 150:6 151:7163:2 169:23 220:8221:15

four 55:15 88:15137:5 187:7 193:25217:15 249:7251:12

fourth 43:11 51:951:21 52:22 84:6149:8,14

frame 167:20frameworks 152:20frankly 32:19 47:12

94:15 95:5 147:24156:17 198:9

frenzied 236:11frequency 112:1frequent 17:24

33:16 83:21frequently 83:18friends 213:17front 12:14 28:24

41:4 71:22 102:13115:7 120:25148:14 166:7 203:4217:20

full 14:9 90:9122:23 160:16161:1

fully 141:17fulsome 156:7fund 1:11 2:11 92:3

147:21 178:10233:15

funded 160:24funds 88:5,19 89:1

90:4 91:1further 235:22

236:18 255:9,11fuse 251:11future 221:13

g

gain 26:24gained 21:22 109:1

109:6 196:8gallagher 1:17 2:17

4:8 5:2,6,14,18 6:27:7 8:18,24 12:522:4 30:19,22 52:271:22 109:25 111:6111:14 120:25127:15 130:16133:5 139:3 148:15166:5 186:9 194:10203:5 211:21,25212:8 234:11249:15 252:23254:1,16

gallagher's 250:24garner 48:10gather 44:9gee 31:20 222:1general 15:18 40:19

58:23 65:2 73:7,23143:10 144:15225:20 228:16239:21

generally 78:7 82:19102:1 107:16125:10 128:15

144:17 153:19,19162:21 182:24

generates 198:19genesis 227:5gernandt 1:22 2:21

7:9 255:23getting 29:2,9 51:1,2

116:16 144:9155:18 213:15233:2

gimmicks 193:16giroux 76:25 77:10give 23:19,22 25:25

45:23 77:3 93:17,2193:23 94:2 121:22133:17 155:24174:6 177:14

given 45:12 46:153:17 56:12 90:14130:19 134:10143:1 153:25199:22 236:22246:1

gives 14:7,7,22229:17 230:4

giving 25:6 39:8,19172:14 178:13

glass 5:10 37:2 54:871:24 72:6,10,13,1572:19,21 73:12 74:374:7,10,18 75:2,2075:24

go 7:19 14:15 16:524:24 26:18 27:1228:21 55:12 61:1663:19 67:21 79:2480:15 82:5 89:1591:9 95:23 99:8108:17 118:4 127:7129:4 140:9 147:11149:8 164:17,19165:5 173:5,8,17184:25 194:4202:18 211:19218:12,13 233:19

[firsthand - go]

Page 15


Exhibit 16 Page 481


234:16 245:22249:19,22

goal 223:18 249:9249:10

goes 134:11 142:19149:19 179:10223:14

going 19:5 21:1923:5 29:12 30:2133:11,25 44:22 48:548:16 50:13 51:554:14 62:10 63:2566:12 71:6,11,1478:17 87:25 89:1994:8 105:20 106:11110:1 120:1 123:17124:3 126:18 133:6136:21 151:15157:8 163:16165:24 167:9 170:4173:6,8,18 175:8176:12 190:22193:15 194:21195:2,9 204:1207:11 211:22215:17 221:12224:19 233:23235:22 238:10245:7,8 246:7,9,25249:6,7,17,19252:25

golden 231:6goldman 6:5 38:18

39:17 95:8,15,23,2495:25 96:20 97:1,897:14,16,22 98:6,798:16 99:1,13100:16,25 168:12168:15 169:7,14170:7,14,21 171:2171:22,25 172:13174:3 175:16,20176:5,8,18,21 177:3178:11,15,23179:23 180:7 182:1

191:7 218:18220:23 241:7,24242:1,5

goldman's 95:12,19101:1 178:2 179:12180:18

good 7:4 8:3,24,2553:10 59:13 71:1081:8 87:17 89:1894:23 95:11 105:3111:14 133:19,23136:3 201:13205:11 218:16223:5 238:10

goosey 62:20gotten 202:23

246:22governance 36:19

41:7,24,25 44:2345:3 47:19 54:258:21 75:4 228:21229:3

gp 1:11 2:11grant 56:10great 77:23 188:15

193:12greater 107:19

134:8 198:19,19greatest 238:8

239:22greatly 47:2grossly 124:23

129:9ground 192:24

195:11grounded 21:12grounds 90:12group 14:23 49:14

76:14 96:1,2,3,7159:24 181:9205:10

groups 37:25grown 142:13grows 136:22

growth 144:21163:4 172:10,15,25174:20 187:12,13193:7 194:5 196:1,2230:1 235:23236:10,18 237:17238:15 244:15245:2 248:11249:13

guess 38:10 58:2,1259:9 73:2,5 89:16114:21 118:8121:11 144:22148:5 153:2,4 165:4178:17 183:22197:23,24 232:15237:10

guessing 107:9199:1

guidance 167:2,6,7167:23 236:22

guy 16:10 126:12199:16

guys 34:5 126:10183:4 239:9

h

h 1:4 2:4 76:23haas 242:9halbower 141:24

142:12 143:24144:22

half 51:7 56:7 125:2125:21 126:24,24127:5 129:13,14

halfway 160:17hand 166:23 205:10

222:18handful 140:14happen 89:19

125:20 195:2happened 27:13

173:7 195:3,4244:13 248:3

happens 134:21happy 157:24harass 77:6hard 80:7 87:2

157:20 163:6hardest 219:11harm 9:22 11:17

18:11 19:18harmed 9:1,16 10:2

11:6 12:23 13:8,1313:19 14:4,20 17:1520:12 21:4,17 24:1124:19 62:14 65:1967:15 70:3,7,12

harte 127:21 128:5128:18 130:5 136:9138:12

harte's 131:6hastily 130:17

131:10he'll 201:22head 34:9 47:19

167:25 198:10headcount 228:2,7

228:13heading 74:21heads 97:14healthy 136:22

238:12hear 61:1 145:13heard 30:1 60:18

63:6 204:25 209:23212:21 224:23226:15 239:21

hearing 210:24211:1,2 245:7

heavily 238:15held 7:11 111:6

134:8 232:21 233:5233:16

hello 111:15help 91:5 124:24

201:12helpful 81:6 192:1

[go - helpful]

Page 16


Exhibit 16 Page 482


helps 84:21henri 229:4hereto 254:4hesitating 214:16hidden 194:15hiding 105:4 194:17high 2:18 3:5 7:12

50:24 52:17,24111:7 188:9,10199:18 201:21203:11 204:17205:6 208:8 212:1

higher 130:21131:11 132:1 186:2

highest 51:2highly 1:15 37:18

119:10 139:9250:11,16,18 251:6252:3,9

hindman 83:2091:19 126:11128:23 133:16

hire 39:24 159:24hired 95:19 149:2,6

150:1 151:4 159:23160:2,8 161:11170:15 195:22201:16

hiring 39:25 160:1historical 246:1historically 125:18

136:1 185:1 244:17244:17

hit 211:16hold 103:8holder 102:25 142:8holders 103:4

119:16holscher 3:13 4:12

8:3,3,23 9:11 10:1011:21 12:3 13:614:14,16 17:8 18:1820:22 22:14 23:2126:1,6 27:16 30:1530:18 34:16 35:9,13

38:24 41:2 51:20,2452:1 57:10 58:1859:7,14 60:8,1961:9,18 62:6 64:1568:1 69:23 71:13,2172:2,4,5 77:17,2280:2,14 81:19 82:786:20 91:10 96:1597:7 99:12 100:24102:6,9,12 108:20108:23 109:15,21111:13 115:14117:21 118:10119:1,18 120:19,24124:3,6,15 126:21127:13 130:14132:11 138:21139:2 141:3,7,12143:15 144:12145:1 146:18,21147:5 148:6,13150:12 151:17152:11 153:4 154:2155:4 156:14 158:2159:7,11 163:9,15164:22 165:23166:4 168:23,25169:3,6 170:3173:25 174:15176:4 177:2,8,12185:21 186:5,8190:2 202:12,22,25203:3,23 204:3,4205:14,18 211:12211:18 212:7214:13 215:3217:15,19 218:8,11220:9 222:7 225:13225:18,23 226:2,9226:12 230:8233:18 234:3,6,9237:15 243:14247:11 248:13249:14,24 250:8251:8,16,24 252:7

252:10,13,15,17hope 3:15 59:13

92:1 147:6,7hopefully 246:22hoping 89:15horribly 209:24

210:9,22horse 59:17 60:15

60:21,25 61:11,23hostile 142:13

148:24hotmail 32:16 203:5hotmail.com 31:3hour 71:12hours 12:9house 78:11 86:6

89:2,9 96:17,2297:24 98:4

hr 34:9huh 10:5 29:19 31:1

33:12 45:11 68:879:14 82:17 92:23108:10 114:22149:13 233:21

hundreds 125:24hurdle 47:7hurdles 47:21hurt 243:25hypothetical 19:4,9

20:6,16 21:2,11247:22

i

idea 177:1,7,24252:1

identification 12:230:17 35:12 71:2077:21 102:11120:22 127:12139:1 148:12159:10 169:5177:11 186:7 203:2205:17 217:18218:10 234:8

identified 5:3 6:330:22 45:9 98:11134:25

identify 9:23 132:19154:14 157:14

illegal 10:8,12,21illegally 9:8 10:7,20

65:25illegitimacy 43:4illegitimate 43:1imagine 231:3impact 29:18 30:4

225:4,8 244:20implement 48:2implementation

248:11implications 171:1,9

171:12implied 178:17

245:10implies 162:12

244:6important 39:15

94:10 140:15144:20 195:19196:11 199:23

impose 42:11 44:2063:8

impossible 27:9104:3 248:4

impressed 85:2486:2

impression 15:1982:25 85:5 88:1794:1 126:15 151:15

improper 104:12117:13 172:3

improperly 21:22109:6 116:6

inability 87:11238:12

inad 183:14inadequacy 183:12

183:14,18 184:2,7

[helps - inadequacy]

Page 17


Exhibit 16 Page 483


inadequate 124:23129:10 183:24184:3

inadvertently 31:25141:4,14 173:10

inamet 181:25incentive 51:11 90:1

90:2,2incentives 52:4incentivized 50:25inches 114:16include 66:7 146:5,8

163:19 164:2,13,25232:21

included 56:24146:11

includes 44:15235:2

including 20:1736:3 54:8 75:5162:4 227:11231:15

incomplete 20:16247:21

inconvenient 17:25incorporated 7:14

7:15incorrect 53:17

87:24 132:2 172:9172:15

increase 231:11244:13,18

increased 193:10increases 195:17

196:2increasingly 142:13indebtedness 43:18independence 72:23independent 39:19

52:18,25 53:1054:17 57:3,13,15,1757:18,21,24 58:7122:15 153:13225:1,6,11 226:6228:18

independently 76:5246:21

indicate 46:10 103:7106:10 136:25174:18 179:24190:3

indicated 9:18 10:1849:2 63:5 66:1880:20 85:2 88:1197:17,23 100:18104:10 105:24113:23 133:10135:6 136:8,13192:5 195:16204:12 207:20212:11

indicates 44:1186:21 142:7

indicating 28:20221:5

indication 24:17indications 238:13

238:15,17individual 1:5,13

2:5,13individuals 102:5industry 74:5 188:4

188:5,13 245:2inflammatory

212:16influenced 16:11

37:18 90:25 101:18influential 16:10information 15:13

15:18 25:9,15 26:2327:17,18 28:3 40:540:7 41:15 43:1444:10,13 50:12 57:963:7 83:15 104:19130:11 151:3 152:7154:10,18,19,22,22154:24,25 155:24192:13 195:25196:4,7 204:6,17,19204:22,23 223:13

237:22informed 54:18ingram 227:15initialed 254:4injunction 23:11,23ink 115:12 254:4innisfree 40:12,15

40:16inputs 162:3inquisitive 89:18inside 27:18insider 22:10 26:4,7

26:9,16,18,22 27:227:4 28:14,16 67:23113:25 114:2,17117:14 118:17119:5,11 148:3150:25 151:12,20152:22 154:11156:25 157:14214:7 216:6

institution 91:22181:8

institutional 36:1549:14 76:8 117:18119:10,16 125:12132:20 133:9 135:1137:13,15,19178:12

institutions 49:8,10instructed 227:14insufficient 93:16integrate 87:15integrity 40:24

199:18,25 200:3201:21 203:11204:18 208:9

intellect 203:11intelligence 204:13intended 129:24

131:2 132:2 231:18intense 33:8intention 131:17

221:16,19

interest 37:13,1538:14 50:14,1567:24 81:13,1888:24 95:6 103:13112:2 131:3,19145:25 204:16

interested 7:23131:25 192:6,7255:12

interesting 30:1354:6 160:18

interests 11:19 16:127:20 44:1 129:25239:18

interference 7:21interfering 38:11internal 121:14internally 219:5international 1:8,9

2:8,9 7:15interpreted 213:12interrupt 141:18interrupted 141:13intimidate 207:3intimidating 240:1intrinsic 196:1

221:22 243:8,12introduced 227:23

228:2invalidate 56:19invest 76:8 88:25

131:13invested 89:12

131:14 198:14investigate 16:24

213:24 215:5investigated 215:18investigation 214:15investigations

231:24investigators 201:17investing 82:24

136:19investment 96:20

98:16 100:8,11,12

[inadequate - investment]

Page 18


Exhibit 16 Page 484


102:18 105:9127:18 131:14139:7,9 171:15172:1 221:17,25

investments 91:6198:16,17

investor 32:20 37:2549:14 76:9,11,1388:18 125:19135:24 137:15142:4 200:9,11221:24

investors 26:2532:19 44:4 47:449:3,3,5 62:25 63:8114:3 119:11128:13,16 134:7,11135:7 140:16,17178:12

invoke 60:2 65:23involved 33:19

99:17 105:19106:25 118:12181:21

involves 217:22irrevocable 122:24

122:25 123:7,13124:9

iss 5:8,16 35:17,2136:3,13,14 37:6,837:10,12 38:1,5,1640:4,17,20,22,2341:3,6,19,23 42:243:12 44:23 45:9,1245:17 46:1,10,1447:14 50:13 51:552:3,8,16 54:1,3,754:11,12,23 62:863:16 72:14 74:3,375:15 121:4,17,22122:6,22 123:6,12124:8,16,19,21

iss's 36:16 46:2051:15 54:1 63:5

issue 29:21 34:2036:19 41:24 112:4114:7 124:19,21134:12 146:17156:15 196:10204:6 232:8 244:10244:11 247:5,9251:24 252:5

issued 35:21 36:741:14 54:24 72:7115:1 117:1 178:8186:10

issues 5:20 34:2136:18 41:7 58:2175:14 174:3 184:22211:16

it'd 119:9 233:6items 12:17

j

jackson 5:16 112:19125:16 126:13127:8,19 128:6134:3 135:16 138:3138:5,8,13 139:4240:16

jail 26:18january 80:5jason 3:14 8:5 127:9jason.kelly 3:17jeff 127:21 199:8

203:8,10 205:7206:15,18 207:6,7,9207:13,20 209:7,11

jeff's 203:8,11jennison 5:13

102:19,21 103:25135:17

jennison's 103:22jim 83:20 91:19,19

97:19 126:11128:23 133:16134:24,25 136:13180:10

job 1:24 53:10 54:473:4 231:2 232:12232:15

jobs 89:3join 197:1joking 167:21joseph 76:22 77:10journal 115:8

118:20,23 119:4145:17,22

jpmorgan 39:2095:3 98:3

judge 23:15 24:258:12

judges 223:16judgment 38:12

72:20 122:21july 155:5 202:13

218:14june 30:25 34:1

80:18 81:24 82:19125:22 127:1 145:2155:5 177:13,25178:9 186:10 201:1201:5 202:13 203:6218:3 234:19 235:1235:11 236:3 237:3

k

k 6:19 234:13kae 1:22 2:21 7:9

255:23karah 1:4 2:4 8:14katherine 3:20 8:9katz 5:23 203:22

204:2 205:20katzman 97:19

180:10keep 35:4 126:9

136:20 194:21217:15 230:15

keeping 249:14keeps 194:21kelly 3:14 8:5,5

key 34:7 162:3kicked 249:3kicking 202:8kids 217:16kind 24:18 28:25

39:25 54:10 81:2589:18 94:17 115:1127:4 133:20 137:6140:3 153:23 160:5162:21 177:19,23192:24 194:25210:2 213:18 227:8236:21 247:7248:25 249:20

kinds 47:16 194:24239:20 252:4

kirkland 3:13 8:4,58:8

kirkland.com 3:163:17,17

knew 148:4 150:15157:7

knocking 248:6know 10:22 11:10

16:19,22,23,25 17:123:18 26:21 27:1328:11,15,17 30:931:20 33:3,13 34:2236:10,12,16 38:1,338:6,8,25 39:14,2343:3 45:1,12 46:146:17,18 58:11 59:860:24 64:8 65:2466:9 67:10 70:12,2171:6,7 72:21,2273:2,18,20 74:11,1575:18,18,23 76:1078:9,15,20 79:11,1279:13 80:22 82:1583:18,20,21 88:1088:17 89:10,1391:14,17,17 92:7,1295:12,19 96:14 98:398:17 99:9 101:9,15101:18,20,21,22

[investment - know]

Page 19


Exhibit 16 Page 485


102:21,23,24 103:2103:3,20,21 105:23106:2,4,7,16 107:6107:8 109:14112:25 113:13114:15 115:7117:11,12,19,20121:9,11 122:6123:1,6,12,22125:12 126:10128:4 133:16 134:4134:22 135:14,21138:3,5,9,19,20144:8,15 145:10146:22,22,25 147:2147:12 149:7 151:8151:9,10,16,21152:3 153:16156:23 157:4,17158:7,9 159:1,4160:2 162:24166:10,13,14 167:1167:5,12,12,15,19167:24 168:9169:10 170:16,18170:20 173:14175:20,25 176:17176:20 177:21,22181:3,4,11 182:5,15182:21 183:11184:20,20 185:14190:24 192:11193:10 195:13196:9 197:22 198:9198:10 199:3,7200:5,7,13 202:2,4203:9 204:1,24205:5,8 206:15,18209:5,9,19 210:2212:22 213:6,15,22214:19 216:22217:24 221:11,17222:18 223:20,23232:20 233:1 236:7239:6 242:5,8

243:16 244:24248:8 250:5,15,24251:13,15,24252:20

knowledge 22:827:2 28:10,12 30:531:24 40:1 59:1167:19 94:12 97:13100:16 106:1111:17 126:18133:10 185:23186:3 209:3 213:5224:25 232:5,9

known 105:6 113:8151:3 157:11 197:2230:22

knows 42:22 146:16200:16 207:7 209:3209:7 249:25

l

l.p. 1:10 2:10lack 82:2 99:7

100:21 102:3108:16 118:3 150:6151:7 163:2 169:23175:4 187:11192:25 194:4,18235:1 236:10238:21 239:3,3

lacks 119:14 220:8221:15

laid 63:7language 150:21large 38:4,7 84:17

86:23 87:4,12,1394:18 105:9 121:23122:24 130:18131:10 132:21137:21 142:24143:8,21 144:1145:6

larger 86:9 162:22largest 37:1,4 92:4

92:13,18 105:12

larry 77:8late 101:9latham 3:4,7 8:11

8:13 57:19 78:19law 9:8 10:23 26:15

67:5,7 78:19 115:23laws 10:23 11:1

56:19 66:9 67:1lawsuit 22:19 117:2

117:8 155:12,22lawyer 26:13lawyers 139:6

155:14 173:5 175:9lead 17:22 22:16

23:9,13 24:1 30:233:21 34:14 46:2152:18,25 53:10,1954:16 86:10 92:15151:18 188:15215:15 228:18231:22

leading 36:23leads 99:1learn 29:20 104:21

104:25 156:23157:1,2

learned 34:13157:15

leave 240:19led 114:7 228:12

231:23left 70:18 171:15

173:21 201:23203:9 204:14

legal 7:10 9:5 10:111:9 13:2 18:1422:2,25 23:4 26:1249:13 57:14,15,1757:19 59:13 61:162:21 67:17 108:15109:12 111:9115:17 120:15140:23 152:12,14152:15,25 153:6182:16 212:4 225:2

225:6,11,25 226:5,6252:25

legitimate 42:2343:8,10,10

letter 5:10,12,13,185:20 80:4,17,2381:24 88:2,10 90:2491:4 101:12,19,23101:25 102:17103:6,25 127:8,17128:18 129:2,5,7130:16,24 132:12136:9 137:2,12,15137:18 138:1,6,12138:23 140:13141:20,21 143:18145:2,9 186:25187:2,3

letters 134:3,6 139:5139:10,23 140:3,11212:17,23 213:12

level 129:13 143:10144:15 181:19187:19 239:4

levels 184:12,13219:22 223:1226:24

lewis 5:11 37:2 54:871:24 72:6,10,13,1572:19,21 73:12 74:374:8,11,19 75:2,2075:24

liddon's 240:8life 37:9lifted 194:24light 207:15 208:13limit 129:25limiting 131:3limits 153:16line 52:22 54:16

185:11 188:13235:19

lines 197:15linkage 155:21

[know - linkage]

Page 20


Exhibit 16 Page 486


linked 27:3lipton 5:23 148:7,23

149:3list 10:14 113:2

171:15,16,17listen 49:9,11

122:16 132:8 140:2literal 215:14litigation 31:12

57:25 58:1,4little 9:13 34:13

71:11 72:21,22112:1 144:9 163:11163:16 168:5250:18

live 185:6,14llc 1:11,12 2:11,12llp 3:4,7,13,20lobby 41:20lomb 178:11long 11:19 35:7

49:10 76:10 81:1381:18 102:25,25120:11 128:10,16133:21 136:22144:21 184:10187:22 192:10208:3 217:5 218:24230:22 232:14246:1 248:9

longer 90:10 122:14231:2

look 11:19 23:828:23,25 54:9 74:18121:6 149:11160:16 161:21186:5 195:25196:18 201:17205:9,15 217:2227:9 234:25237:21 244:12,18249:18 250:17

looked 15:11 70:2394:20 168:14187:19

looking 41:3 43:1155:11 88:14 93:3101:6 184:9 186:25

looks 116:23 183:15234:24,25

loop 20:8loophole 149:21

150:3loose 17:20 47:1,5

49:4loosey 62:20los 3:15,21losing 195:11,18lost 87:20lot 26:14 32:8,18

33:11,21 39:1140:23 73:9,16 89:489:11 92:11 112:2115:12 140:2153:22 192:11193:7,12 198:15209:10 246:10,12246:14

lots 184:11love 154:16low 13:12 50:23

125:24 161:18,19211:15,17

lower 168:5 188:8226:24

lowest 11:16 51:1lunch 110:2lw.com 3:6,10lynch 5:24 95:4

159:14,15 160:10161:11,17 162:15164:7,12,18,24166:12,12 170:18172:20,21,24 174:3174:17,18 176:6180:15 182:9 189:2189:3,11,22 191:7

lynch's 165:12169:17

lynn 217:25 218:1,2

m

m&a 5:15 96:3160:13,19 181:12

machine 255:7mail 5:6,24 6:7,12

6:12,14,14,15,1530:24 31:2,3,6,1032:16,23 33:13 34:234:2,19 78:4,5,8,8,878:10 79:21 121:15159:13 166:6,8,13166:14,15 167:17177:13 203:4 204:5205:19 217:22224:23 234:17

mailed 32:20mailing 32:18 34:18mails 31:16,19 32:1

32:7,9,13 33:2234:14,23 78:10

maintain 189:19major 38:13 111:20

113:2 125:12,18128:10 248:2

majority 119:16maker 178:3making 28:15 40:17

50:22 62:4 63:391:12 104:11,18,20122:5 132:21133:12 136:6,15,18137:21 145:4153:23 205:1 218:3220:5 226:21,23228:11 235:12243:3

maletta 121:15168:21 177:14

man 26:16 113:18managed 82:13management 1:10

1:11 2:10,11 5:195:20 33:18 82:20

83:17 84:16 85:287:3 103:15 104:4105:6 132:13229:13 231:18,19

managers 82:2388:15 201:6,9204:13 227:1

manages 88:5march 95:15 103:9

169:9,12 171:2margin 43:17,18mark 3:13 8:3 30:15

35:9 102:6 120:19127:10 138:22159:7 168:23

mark.holscher 3:16marked 11:22,25

12:1,12 30:16 35:1163:20 71:19 75:577:18,20 102:10,14120:21 127:11138:25 148:10,11159:9 169:4 177:10186:6 203:1 205:16217:17 218:9 234:7252:2

market 49:20 94:3151:12 162:24193:9,10 210:24211:2,2,3,4,6,8223:16,17 243:7247:25

marketplace 26:2487:21 89:12 93:7104:12 126:20192:6 197:19 221:6223:10 246:5

markets 87:22195:12

marks 109:24 111:4211:20,24

martha 26:18 28:13maryland 83:19mass 248:22

[linked - mass]

Page 21


Exhibit 16 Page 487


massive 211:11massively 211:9matching 247:7material 43:18materially 210:22materials 75:20math 50:7matt 121:15 168:21matters 43:14

123:19matthew 141:24mcadams 97:14mean 10:22 16:5

23:17 32:8 33:339:21 65:9 68:10,1968:23 69:10 74:787:15 89:3 125:9,11130:20 163:5183:19,22 197:2199:24 203:19,25205:6 215:16239:11

meaning 245:15means 21:9 33:4

48:12,15,22 60:25170:24 171:20183:21,23

meant 43:9 107:24mechanics 17:12

18:25medassist 87:16media 6:7 109:25

111:5 211:21,25252:24

median 162:16medium 50:24meet 72:6 90:11

105:17 106:3191:22 192:1

meeting 6:18 9:3,1710:3 17:13,17 18:2524:12,20,24 25:1125:20 28:19,2133:10 36:6 41:8,1041:21 42:13,17 44:5

44:9 46:11 47:1,547:11 48:7 50:1352:17,25 53:4 54:2456:11,13 61:5 62:862:11 63:2 64:2565:21 66:6,8,14,1674:14,17,25 76:1104:3 105:21108:11 133:3 135:2135:5 137:22 143:9145:7 146:1,5 155:9155:22 173:6,7174:24 239:15

meetings 17:24 18:133:16,18 49:4 56:456:9 75:11 140:22173:2,9 174:22175:2 218:15 249:5

meets 183:17member 93:2

199:13members 29:22 76:6

121:18 246:19membership 171:15memo 35:25 149:15

150:18 165:13222:24

memory 77:4 117:6217:21 218:6 235:4

memos 148:22mentioned 28:13

114:3merge 89:22merger 83:3,8 84:1

90:6 91:5 111:22merrill 5:24 95:4

159:14,15 160:10161:11,17 162:15164:6,12,18,24165:12 166:11,12169:17 170:17172:20,21,23 174:3174:17,18 176:6180:14 182:9 189:2189:3,11,22 191:7

mesa 3:9message 6:16met 35:21 56:13

106:4 127:23 138:5138:7,9 218:1 239:6

method 207:2mg 30:22michael 1:17 2:17

4:8 5:2,6,14,18 6:27:6 8:18 109:25111:5 197:3 211:21211:25 252:23254:1,16

microphones 7:19mid 168:1,4 188:9middle 48:18 54:12

134:20mike 203:5milking 195:14million 38:19,19

39:1 142:8 158:10158:10 177:4 178:9178:24 232:23233:2

millions 39:4min 203:22mind 13:7 76:5

81:14,18 115:6167:20 191:13196:4 237:24 238:2242:18,19,20,22,24247:1 249:15

minded 37:20140:20

mine 114:8 130:25minimum 42:24minority 17:23

135:22minute 210:17minutes 151:22

210:7,11 233:19mischaracterizes

150:7misconduct 231:24

miserably 195:6misinterpretations

34:15missed 209:9mission 44:7mistake 101:25mistaken 241:22misunderstandings

34:15mix 136:21mixture 88:18model 86:4,9 87:22

94:20,22 95:1,2196:25 97:4,10 98:8136:24 175:3,22187:11 188:23191:5,9,15,25192:12,15,17 195:1209:4,6 221:7,11,18222:5,10,22 223:19235:21 238:11246:4 247:6,10

models 162:2modify 17:12moment 9:20 71:11

209:14 247:13monday 218:14

251:22money 26:25 30:8

36:22 37:17 38:1039:25 197:5,18

monitoring 155:6month 171:3 229:1

249:19months 25:4 31:22

33:11 34:20 101:8126:22 143:2209:19,19,22210:25

morning 7:4 8:3,248:25 11:24 30:3108:25

motivation 91:11mountaintop 197:4

[massive - mountaintop]

Page 22


Exhibit 16 Page 488


move 42:3,20 43:668:17 86:8 149:20206:5,8 248:22

moving 175:5mrgallagher 31:3

32:16multi 99:14multiple 198:20multiples 184:13

245:1muster 183:17myriad 10:13,20

n

n 4:1name 7:8 40:13,18

42:21 43:6,9,1055:19 98:11 127:21189:23 209:23219:4,8 224:2,3255:15

named 43:21 224:15246:11

names 15:10 36:576:21 77:1,3,8,8195:23

narrow 79:18 163:7243:18

nature 44:3 122:6213:16

near 243:12necessarily 183:21necessary 47:6

104:2 183:9need 14:17 22:2

48:17 57:16 70:1670:17 100:12 122:9149:16 153:22170:14 174:13180:5 194:25204:11 214:23237:12 250:13

needed 183:7needs 47:17 153:21

179:18,25 180:12

182:18 211:18242:11 250:7

negativism 206:23206:24

negotiation 93:1793:18

negotiations 81:993:9,22

neither 255:11neutral 59:9,12never 32:2 99:25

109:17 131:9,11134:19 139:15140:5 203:21 239:6

new 5:21 70:5,9149:15 178:1,8,22179:12 227:17234:3 238:13,15,17242:1,3

news 6:9 186:10night 11:23 134:13

234:22 252:6nominate 70:14nominees 13:16

68:7nonbinding 48:10nondisclosure

191:19nonprivileged

155:24nonsense 62:23

131:16 132:4nontransparent

194:16nonvote 147:7normal 131:12

224:13 245:1,1normative 248:1north 5:15note 5:15 7:17 54:6

124:24 129:10,10163:16

noted 253:2 254:4notes 129:17

notice 116:11noticing 8:2notorious 156:21notwithstanding

53:15november 230:24number 5:3 6:3 7:15

14:23 21:6,9 39:245:18 47:4 62:1288:19 89:1 101:8107:19 134:2,6136:17 155:6 188:1188:22 195:19197:22 198:17199:1 218:16,16226:24 232:20234:4 239:11245:18 246:11248:20 252:23

numbers 28:4 74:20165:18 166:8,11167:25 168:9176:23 194:19195:25 198:8,11237:20

numerator 146:6

o

oath 8:19 255:6obfuscating 105:4object 11:8 20:15

22:1 26:11 61:15,25120:14 246:16

objection 9:4,2511:13 13:1 18:13,1325:22 34:4 38:2140:25 58:16 59:1059:18 60:16,2364:12 67:17 79:2381:15 82:2 86:1691:7 95:22,22 99:6100:21 102:2108:15 109:19117:15 118:2,24119:13 130:8

138:17 150:5 151:7152:6,24 156:2163:2,12 164:15175:23 176:24177:6 202:11211:10 220:8221:15 230:7 237:5243:10 247:3,21

objections 7:25221:6

objective 37:2139:13 184:18205:12

objectivity 40:2obligated 156:12,15obligation 64:10

140:19 216:14221:23 238:7

obligations 92:19225:3,7 247:20

observations 175:13observed 153:23obstructive 75:2obtain 181:13obtained 67:5,6

164:9obtaining 181:22obtains 65:24obviate 250:13obviously 22:3,8

69:19 93:14 112:1112:13 113:11185:15

occasionally 207:5occurred 151:14october 1:19 2:21

4:4 7:1,5 21:2523:15 24:3 34:1111:1,10 121:4212:5 255:17

odd 166:19 167:18178:18,18

offer 27:4,7 49:2049:22 50:3 65:8,1265:16 90:12,15

[move - offer]

Page 23


Exhibit 16 Page 489


93:19 94:16,1795:14 98:18 99:2,14108:13 109:6,10,17112:5 113:15115:18 120:12124:23 125:2 129:9147:13 162:25181:10,13 183:23184:3,7,9 185:2,9185:10,15,25 186:2202:1 204:10,10,12205:1 209:15210:22 220:10,19220:20,21,25 221:3221:21 223:24224:5,14 231:7232:25 238:3,4243:3 245:11,23247:2,5,6,16 248:14

offer's 218:24offered 53:24 54:17

201:5,8 204:5offering 99:17

100:12,17 204:18242:11

offers 93:13,14120:17

officer 43:20 102:18127:18

offing 182:25 183:1offshoot 221:5,25

222:3 223:13offshoots 222:14oh 72:2 78:1 116:19

132:8 171:8,11179:2 189:17193:14 197:22203:21

okay 9:20 10:11,2511:4 12:11,16,2313:14,22 14:2 15:815:13 16:4,12,1917:1,4,15 19:6,1320:5 21:16,24 23:223:7,9 24:6,22 25:9

26:7 27:23 28:7,1328:18 29:4,9,1130:6,10 31:6,8,1231:24 32:12,25 33:834:24 35:7 36:1338:6,9,15,18 40:1340:22 42:2,7,1043:11 46:9 48:1,2449:2,16 50:3,951:23 52:15,21,2355:19 56:24 57:3,1857:23 58:9,13 60:2062:9 63:18 65:2,1966:5,17,18 67:4,1067:13 71:9 72:2273:5,10,18,21,2374:6,10,18 75:17,2276:13 77:3,7,14,1778:18,22 79:3,8,1080:3,3,15,22 81:1,581:12,20 82:12,2283:1,7 84:22 85:685:22 87:6,15 88:1490:9 91:14 92:2595:18 97:22 98:2,1698:25 99:13 100:4,7100:10,15,25101:11 102:6,24103:3,6,12,25 105:5105:23 106:2,16107:1,9,13 108:1,5108:8,20,24 109:8109:21,23 112:6,18112:25 113:16116:10 118:11,19118:22 119:9120:19 121:9,17,21124:5,18 125:21126:1,4 127:4 128:4128:17 129:1,4,21130:4 131:8 132:19135:10,20 137:18137:25 139:7,19140:7 141:20 142:7142:19 144:5,17

145:12,14,23146:22 147:18148:6 149:5,8,25150:23 151:18152:3,18 158:18159:1,7 161:7,10,16161:21 162:8163:25 164:6,11165:11,15 167:5,22168:25 169:16170:14,17,21171:14,19,25 172:8172:13 173:25176:8,14,17 177:25178:7,21 179:16180:17 181:4,17,21182:1,8 183:2 185:4185:7,24 187:16188:20 190:3,20191:4,18 193:18,23194:1,3 198:6 199:2203:17,23 205:4,14206:3,10,24 208:20208:23,25 209:2,18210:18 211:8 213:4213:8 218:2,8,23220:13,17 221:2222:12 223:11224:1,19,22 225:1226:11,15 229:5230:22,25 232:2,10232:18,23 233:9,18234:24 235:8,10236:8,15 241:7247:14 250:12252:10,15,21

once 19:24 54:15170:15 202:24239:7

ones 101:7ongoing 39:15

111:23 113:6,10online 115:8opaque 194:6

open 37:20 93:9136:20 237:24238:2 242:20,22,25247:1 249:15

opened 149:21opening 104:10

144:16operate 87:16

114:21 195:13207:22

operating 84:1385:4,8,16 227:2

operations 228:11opines 181:9opinion 17:21 21:7

50:25 58:25 59:386:11 96:13 131:19134:12 140:18146:15 158:9,10165:16 181:5,14182:2,9,18,22183:12,13,14,19184:2 187:21192:21 211:7,8216:19 221:22238:11 246:17,20

opinions 36:19 37:537:7,11,19 38:2039:8 113:20 134:13137:6 158:13177:23 181:22182:23 183:6 184:7

opponents 207:4opportunity 94:3

251:7opposed 48:22

67:19 220:18,20opposes 111:21opposition 75:5 76:2

252:1optimistic 167:11optimize 90:16option 90:17 178:23options 94:6 104:14

136:20 147:25

[offer - options]

Page 24


Exhibit 16 Page 490


150:19 176:18177:4 179:6 185:12192:9 232:21 233:2

order 44:10 47:17107:19 226:22237:13

orderly 47:17organic 235:23

236:18 237:17organization 96:10

196:23 226:24229:6

organizational226:20

ought 245:21,22outbox 33:14 79:21outcome 7:24outlier 249:1outperformance

84:14 85:8,16outreach 238:20outside 121:18

173:16 214:24252:14

outstanding 48:1181:2 103:9 218:25

overall 32:15 135:22244:19

overhang 126:17overly 46:5overview 6:8owned 43:17 232:21owner's 43:10ownership 27:20

67:2 92:8 145:25

p

p.m. 2:20 110:1,2111:2,12 165:25166:3 173:19,24211:22 212:6233:24 234:2 253:1253:2

pack 239:10,14,16239:16

package 47:11page 4:11 12:12

28:25 29:15 41:4,542:3 44:22,22 47:2149:16 50:9,10 51:551:8,8,20 52:2,1652:16 54:12 55:1155:12 63:25 74:1974:19,20 88:14 90:9115:8,16 122:22124:18,18,21160:12 161:21166:7 171:7,10178:1 180:17 187:1187:2,3,3 218:12,19235:8,17

pages 1:25 88:1218:16

paid 39:4 130:20162:4 165:15177:22

pain 249:20pale 213:19paper 6:6paperwork 155:8par 16:3parachutes 231:6paragraph 50:8,10

50:11 51:10,2152:16,20 54:15 81:181:7 83:1 84:6 87:290:10 103:7 116:7116:11 122:23124:19,22 129:7,8129:21 131:1132:13 142:11,20149:9 160:17 178:7178:21

paragraphs 149:9149:12

parameters 183:15parenthetical

129:17park 3:21

parschauer 1:5 2:58:14

part 26:20 31:1254:4 66:10 107:4,6126:23 159:23174:7 176:19178:10 220:4227:24 228:2,4229:23 236:1

particular 15:2136:2 67:10 137:7143:12 165:22

particularly 238:14parties 7:18 255:13partners 5:17

127:19 128:6240:17

party 7:22pass 109:17passage 21:4passed 19:11 70:5

108:12passes 19:25 68:10

68:19 69:2,5,16path 246:2patient 238:20patients 238:16,19pattern 84:13 85:7

85:15 248:11pause 51:18 185:11

203:18 225:21pay 37:18 39:24

74:7 158:8,9 177:18183:20 193:22

payer 38:4,7paying 38:18,25

39:3,3 158:6,8,12160:10

payments 40:17pays 37:7peanut 105:4 194:17pearson 27:5,18

28:8 39:22 193:5197:3,13

penalized 54:3penalty 254:2pending 184:25

224:6pentwater 5:19,19

135:18,19 137:25138:23 139:4141:20,22 142:5,7142:21 143:18240:25

pentwater's 240:20241:2,3

people 11:15 13:1015:19 21:8,10 26:1731:9 32:14 36:3,437:18 49:15 54:1069:25 89:12 90:294:7 96:4 98:11133:15 137:5 138:7140:11 175:7 190:7192:16 201:23212:12 221:20222:18 224:11227:1 231:12242:17 244:10,24246:10,13,14,18,21

percent 18:5,8,21,2218:23 19:2,11,13,2320:2,3,4,6,10,13,1820:24,25 21:5,8,821:18,21 24:2325:10,18 47:7,12,1347:15,20,22 48:1148:12,13 49:4,21,2349:24 50:4,5 53:1,753:12 75:9,9 81:282:10 92:4,8 103:8145:25 146:4,8,11155:19 160:24,25161:2 162:12,16,23188:2 190:15,18210:23 229:13,20229:22,25 230:1,2,2

percentage 20:192:10 155:7 190:12

[options - percentage]

Page 25


Exhibit 16 Page 491


229:14,22perfect 207:16

208:14perform 196:13performance 85:25

86:3 90:3 91:16224:17 245:13

performing 245:2period 32:3 56:12

75:5 126:1,16 133:2133:22 151:25198:3 202:13235:11 244:20248:19

perjury 254:2permitted 19:7

146:12pershing 1:10 2:10

3:12 8:4,6,7 9:1,79:16 10:2,19 11:1,711:14 12:24 13:1113:16,20,25 14:4,514:19,20,24 15:9,2016:7,13,20 17:16,1818:5,9,10 19:2,1419:17 20:13,18 21:421:18,20 22:11,1923:11 24:4,7,11,1925:10,12,19 26:4,927:19 38:2,3,4 40:640:17 49:24 50:5,1550:22 51:10 52:3,1356:17,22 62:15,2164:4,19 65:5,13,2065:24 66:19 67:1367:15,22 68:6,10,1970:1,4,15,21 71:479:13 92:12 101:17108:2 109:1 111:22112:13 113:4,21114:17 115:11,22116:5 117:13,25118:16 134:4135:11 138:4145:24 146:12,24

147:13,20 148:24149:10 150:3,15,25151:19 152:5,22155:18 185:9 186:1212:14 215:20216:17 220:6 243:2248:14

person 66:8 78:11personal 22:4 32:9

57:16 146:15 239:4personally 89:11

112:6 213:3,24214:15 215:5,18239:23

personnel 240:5perspective 96:12pharma 162:17,22

188:5,6,7 229:16pharmaceutical

197:5,17pharmaceuticals

1:8,9 2:8,9 7:1481:9 169:8

philosophy 136:23phone 36:8,11 72:9

106:4 128:1,21,24128:25 137:4138:10

physicians 238:18pick 7:20 188:7picked 205:10

206:11picking 89:14picture 15:2 115:5piece 225:25 226:4pile 134:9,9pill 107:14 108:3,5

109:11 120:2,9,12pillars 44:24pills 120:17pinpoint 151:23pinpointed 244:23place 7:18 55:22,23

92:14 108:3,5109:11 120:9,12

122:13 212:1 231:7250:3 255:4

placed 71:22 102:13178:11 255:6

places 17:24placing 61:21plaintiff 3:3plaintiffs 1:6 2:6

8:12plan 27:12 113:2

165:18 184:10227:8

plans 28:1plant 136:19plateaued 249:13platitudes 123:3playtex 99:20

199:14,15 200:20203:10 232:16242:10

pleaded 194:19pleadings 22:25

23:5,23pleas 125:2please 7:17 8:1,15

11:12,25 35:1051:19 59:21 61:1662:2 69:21 102:7,9127:9,10 143:14168:7 185:16 251:3252:19

pleased 88:20plenty 175:4 194:17

204:12plus 40:3 159:16

192:11point 13:5 30:13

41:5 43:12 44:1156:7 74:22 88:24103:22 104:19105:10 133:5 140:8162:8 166:25 179:9182:6 194:4 205:13214:4 219:21221:23 223:19

228:12 237:12,21245:19 247:19

pointed 134:2points 55:15,16

63:16 112:4 187:7193:25

poison 107:14 108:3108:5 109:11 120:2120:9,12,17 207:12

policies 74:1policing 207:11portion 221:21

230:4position 9:12,13

16:11 26:5 41:2548:3 53:25 86:1989:6 93:4,5 122:7123:18,22,24 124:8125:17 131:21134:5 135:13 136:2136:6 137:10,11140:4 146:16,18,20146:23 147:1205:25 223:16227:17 228:6230:11,16 246:22

positions 88:15 91:195:7 100:5 135:23137:1

positive 137:24142:6

possibility 27:1228:6 222:16 251:25

possible 11:3,1728:2 44:10 45:651:1,2 70:13 89:2591:2 93:24 153:3208:23,25 209:1222:14 237:2247:24 252:12

possibly 33:15 56:1556:16 112:1 142:22143:19 178:20193:21 200:15222:20

[percentage - possibly]

Page 26


Exhibit 16 Page 492


post 236:17posted 121:12,13,14

168:20 170:12potential 17:22

29:21 83:8 84:1111:22 130:22131:13,24 160:19184:25 185:5,13,17187:12 192:8 194:5196:16 207:16208:14 247:15

potentially 31:2271:1 201:12 251:2

practice 45:10 73:23181:12

practices 45:1373:25

preempt 129:24131:2,15

premium 49:21 50:4160:24 162:4,12,16162:23 210:23

prepare 182:2 217:6prepared 118:15

206:22 217:11prerelease 236:22presence 121:18present 3:24 41:18

102:18 184:16presentation 41:19

218:18 234:14,22235:2

presented 15:2 98:9237:3

preserve 31:14,1832:7

preserving 89:6president 199:10

227:15presidents 88:2press 115:2,2,4

116:18,25 117:1,7118:15 156:15,19156:21 158:19177:15 204:20

221:10 235:13,19pressure 89:4presumably 22:18pretense 195:9pretty 33:8 54:7,10

56:6 114:19 117:17125:17 128:12136:22 151:22183:4 197:2 198:25238:23 245:3 246:1250:17

prevent 107:17,22239:15

previous 46:24price 5:13 16:3,7

49:19,22,23 50:4,2350:23,24,25 76:7,1776:19 80:4,18,2481:13,17,18,23 82:382:13,14,19 83:1483:18,25 84:7,12,2385:6,13 86:12,13,2187:7 88:3,19 89:889:21 90:1,3,2491:8,15,22 92:9,1393:16,24 94:1,495:2,5,6 101:12,18101:24 112:15125:23 127:5130:20 131:24134:4 135:15,16,25139:4 145:3,4 161:4162:13,24 171:3179:20 180:2,14181:10 184:15186:2 192:7,7195:17 196:1 210:3210:12,19 219:17219:21 221:4,14222:15,25 223:14225:4,9,17 243:7245:20 247:17

price's 82:9 240:13prices 131:22

184:16

principal 43:22principles 123:3prior 16:20 49:19

62:5 111:24 153:23161:12,18 164:7170:9 248:16 255:5

private 7:20privilege 141:5,15

157:4,21 174:12privileged 57:9

59:20 152:7,15153:6 154:7,19,22154:23 157:1 173:9203:21 214:21226:5

privy 28:1pro 160:22 161:22

162:1,4 194:6proactive 222:9probably 10:13 28:5

61:4 89:19,24 91:1996:1 101:9 133:25135:16 169:11170:13 171:23178:6 181:25200:18 201:4216:19 237:9

problem 14:14204:3

problematic 45:10problems 97:18

235:21procedural 63:6procedures 227:13proceeded 179:12proceeding 8:1proceedings 115:17

255:3,5,7process 17:22 33:9

47:17 56:11 62:1375:2 107:20,21142:5 147:23148:19 150:18218:20,23 219:12220:24 222:23

227:19 228:5244:24

processes 226:20,21227:12 228:11

proclaimed 64:4product 86:8 197:15

216:24production 33:14

77:25productive 84:8products 100:5

238:22professions 123:2profit 199:6profitability 163:5

244:19program 238:12

239:17progressive 75:3project 216:22,25

218:3 224:2,4,7,14224:15,16,23,24226:15,19 227:4,5227:21,22 228:3,13244:20 249:2

projections 28:4244:15

pronouncements175:17

prop 89:22 91:5properly 45:18

195:13proposal 6:11 12:20

12:25 13:14,20,2414:5,21 15:3 17:917:16 18:4,7,10,1119:15 29:17 48:1862:23 64:1,5,9,1064:16,18 65:11,2067:16 68:9,18 69:269:5,16 70:4 83:4158:20 186:12,15187:5 219:23 223:2230:10

[post - proposal]

Page 27


Exhibit 16 Page 493


proposals 11:5,721:14,17,19 33:963:18,24 64:1,22,2475:6,8 108:9,9,12109:16 146:13

proposed 13:24 41:8107:2 182:3

proposing 17:2062:10,22

protecting 95:7provide 37:24 41:9

42:4 44:12 182:9204:5

provided 38:1 41:1569:19 73:19 164:7183:24 184:3

providing 58:6172:9 194:20204:22

provision 30:1144:20 47:1 56:867:5

provisionally 250:9250:10 251:6

provisions 20:1142:18

proxies 20:17 116:1116:4 158:20

proxy 5:5,8 28:2429:13 30:11 36:1846:25 49:8 63:1972:15 115:16138:14

ps 1:10,11 2:10,1192:3,7,13 147:20

public 95:14 97:13123:2 139:23 145:9167:1,6,7,22 175:17219:22 223:1235:12

publicly 207:13published 162:2

207:10puglia 77:9

purchase 161:4178:10,24 179:6185:10

purchased 176:18purpose 15:21 20:8

36:16 42:19 49:17114:7 222:4,21239:14

push 86:8 226:23pushing 89:22

129:18put 11:15 20:8

28:24 30:19,2242:17 47:10,13,2255:22 89:17 108:3120:8,25 122:8159:12 166:22169:7 172:4,5 186:9193:24 196:10,17203:4 217:20 231:6233:16 242:24249:23 250:6251:11,12

putting 34:14 46:2389:4

pyott 5:6 30:25 31:932:21 33:1 34:1853:23 83:19 105:17105:20 106:3,7,10113:7 133:16159:13 166:6,7167:11 203:6,21205:20,23 217:22218:2 227:7 228:14229:11 230:9,12,23231:2,25 232:3,7234:18 236:2 249:4

pyott's 229:9

q

qualified 37:10 71:595:5

quality 184:19quarter 38:19 39:1

126:25 158:11

235:14,23 236:16236:24 237:16238:10

quarters 29:1 75:1quest 59:5question 9:14 13:4

14:9 17:6 19:4 53:857:7 59:5 61:14,1962:19 64:14 65:2368:13 97:6 101:16117:1 123:16 124:1124:12 125:14126:6 130:9 131:5133:21 143:11,13143:23 146:2150:23 153:10154:16 157:18,20158:1 164:21 170:5174:1,16 179:13188:15 195:5197:11 199:24200:2 204:22207:19 214:10,17214:19 215:4 217:5219:25 220:3225:16,22 226:4237:23 241:19243:15 247:24

questionable 165:6165:8 176:23 177:5

questioning 185:12questions 19:9 22:7

28:8 29:6,13 66:1368:2,16 78:2,5109:9 111:16 120:3120:5 123:18 153:8166:5 168:11 172:6176:13 185:2 214:5216:21 228:17236:10

quick 44:23,23quickly 68:17

134:16 252:12quiet 178:2

quit 201:9quite 89:18 133:25

251:17quote 50:14 96:17

97:24 158:20,20180:11

quotes 179:16

r

r 5:14r&d 187:14,21

188:25 190:9,10,17190:22 196:13,18196:20,22,23,25197:4,7,10,14,14,17197:20 198:14,22199:4 221:12229:12,15,18,20,24230:2,5 238:12

raised 114:15119:12

ramifications 26:22range 127:2 163:7,8

168:2,4 184:10223:22 245:16247:7

ranges 184:14,17ranging 43:14rapid 195:16rate 47:7 162:5

165:9 198:13 245:2rated 241:8rates 172:10,15,25

174:20rating 45:6,13ratings 45:2rational 90:10rationale 50:11 54:1reach 83:2 111:20

165:20 205:12251:9

reached 119:4248:21

reaching 235:13

[proposals - reaching]

Page 28


Exhibit 16 Page 494


reaction 58:14read 23:20 29:5,8,12

30:10 45:15 50:1356:21 64:22 74:1680:7 81:6 87:3116:7,8 143:13149:5 178:5 192:12192:14 254:2

readily 26:15 198:8reading 84:21

150:10 161:8167:17 234:21

ready 206:11real 47:7 89:13

165:18 202:19244:15

reality 21:12 37:9realized 244:10really 30:14 32:19

34:22 64:13 73:1589:13,17 102:23103:2 120:18 122:9126:16 151:13,14166:25 167:14,19169:1 170:25 210:3225:15 237:11

reask 173:25reason 19:7 40:2

46:14 85:22 101:12107:4,7 138:2 153:5

reasonable 16:742:16 44:19 94:2,4

reasons 119:2 249:2rebuff 247:13,15rebuffing 106:18recalcitrant 75:3recall 24:21 38:23

39:2 57:2 58:1773:15,22 74:1576:21,24 77:1 78:2180:25 98:13 101:4,6103:5 105:22112:24 114:1,11121:21 127:3148:19 159:6,21

160:4,7 161:8,15166:15 169:10170:7 172:10,16,17172:18 174:21,25175:9,11 180:16188:1 189:9 201:2216:23 223:25235:12,15,17,24

recalled 160:7recalls 174:2receipt 38:10 39:18receive 75:8 80:17

141:21 154:10,24159:19 238:16

received 28:19 40:580:9 81:24 93:13101:23 128:18136:9 137:12147:12 154:25166:20 174:6,8185:1,8,10,25 186:2203:7 212:24 225:1225:6,11 226:4,6

receiving 181:13recess 71:16 110:2

166:1 211:23233:25

recognize 12:435:14 102:14 121:1127:14 208:17234:10 246:10248:25

recollect 174:24recollection 73:17

125:15 153:13168:1 216:24

recommendation14:18 41:16 46:1591:12

recommendations37:6,8 74:8

recommended 14:346:10 48:4 82:15

recommending94:14

record 7:5,19 22:342:21 43:6 71:14,17110:1 111:11 120:4123:17 132:10,10144:14 157:25165:24 166:2173:17,18,23211:19,22 212:5233:23 234:1249:22,23 250:7252:21,25 255:7

recorded 7:6recording 7:18red 45:8 46:4redacted 218:17

252:4redaction 166:21reduce 219:16reduction 187:19

228:12 238:19248:16

reductions 227:2refer 150:20 239:10

239:21reference 29:4,16

49:19 96:16 115:21116:24 122:23133:4 150:19170:22 217:24218:3 222:24234:21

referenced 43:5references 50:11

52:24referred 60:15

61:22 132:3 148:3239:25

referring 10:12,2167:11 124:20,22130:13,25 135:11166:11 188:24

refers 52:16reflects 102:1,4

138:12

reframe 20:5 82:8refresh 77:4 117:6

218:6 235:4refreshes 217:21refusal 105:25refuse 48:1 90:11refused 129:8refusing 131:22regard 123:24

203:11 205:6regarding 5:8 10:1

27:19 38:16 46:2054:1 61:13 64:567:2 73:25 76:1795:16,20 99:3 101:2113:4,20 117:25123:19 165:20168:15 212:9 225:2225:7,11 226:7234:18 241:5251:25

regular 25:6 31:433:1

regularly 31:8 32:632:10,17 33:4,5

rejected 222:20rejects 6:10 186:11relate 67:7 154:7

157:14related 7:22 32:8

47:8 126:17 154:11154:18 156:24175:4 184:19,22196:13 211:16247:9

relates 39:17 153:6187:10

relating 29:22 32:1557:4 177:15

relationship 16:2017:2 43:18

relationships 44:3relative 255:12relatively 26:20

30:13 83:2 195:18

[reaction - relatively]

Page 29


Exhibit 16 Page 495


245:15 248:19release 5:16 6:9

115:5 116:18,25117:1,7 118:15156:16,20 186:10187:1,4

released 156:20releases 115:2

204:20 221:10relevance 58:16

59:10,18 60:16,23230:7

relief 23:16relishes 156:11rely 238:15,24relying 158:15remain 161:3remaining 69:8,12

69:13,24 70:5,14rematch 249:18remember 31:20

36:5 40:18 55:1456:23 83:22 102:16106:15 107:10,12112:12 115:4116:25 137:6 151:1159:22 161:9,20167:16,17,17191:16 195:23201:3 231:16233:12,14

remind 17:5 59:469:17 97:5 188:16

reminded 140:20,24removal 29:22remove 12:20 61:24

62:16 143:3removed 69:6removing 61:12repeat 120:5repeatedly 63:6

158:18repeating 68:15rephrase 18:6,16

108:18

replace 13:9replied 206:10report 35:22,25 36:7

36:11 40:23 41:342:2,3 49:17 50:1054:13,14 55:1,1263:5,16 71:23 72:773:12,13,18 74:19121:4,5,17,21159:15 161:7,8177:15 189:2235:14 237:8,13

reported 1:21reporter 2:22 7:9

8:15 35:5 102:8168:24 169:1202:21 217:14234:5 255:2

reporting 194:7242:12

reportings 105:3reports 6:9 73:25

101:2,5 168:15,18168:19 237:16

represent 12:8,16121:3 148:21 149:3

representation 55:4representations

99:3 100:13representative 15:2

88:23represented 100:19representing 227:6repurchase 129:12reputable 72:15reputation 39:15

40:1 212:19 239:23239:25

request 7:10 13:1541:9 43:14 56:1364:2,18 65:7 68:5101:13

requested 105:17182:8

requests 65:3,6require 15:4 44:12

65:8,12 66:22,25required 13:23 14:1

14:2 42:4 182:6,12182:13

requirement 43:644:1

requirements 42:1142:15 44:2 62:4,2163:1,7

requires 64:16156:19

requiring 42:2043:12

research 6:5 82:2384:23 91:16 95:16105:6 169:8,14,17169:20 170:1,8,15170:19,22

resolution 46:24232:3,7

resolutions 45:19resources 84:8

136:17respect 11:4 12:19

14:18 15:8 17:926:7 28:18 30:632:13 34:17 36:1340:4,22 41:3 42:259:1 66:6 69:1,1572:18 73:12 74:1074:12 75:15 76:278:4 80:3 81:2392:17 95:13 98:6100:25 101:11108:1 123:23132:12 137:25139:3 148:24 167:2174:16 176:8180:11 182:2 190:6190:8 191:4,25194:3 208:5 209:2225:3,8 228:1241:23 247:1

respectively 75:11responded 61:6response 214:8responsibilities

225:16responsibility 54:5

93:9 122:12 213:16226:25 227:16238:5 247:8

rest 33:17 195:14220:17

restasis 126:18211:16 244:10

restate 124:20restrictions 55:16

55:21,21restrictive 56:19

61:12 63:15result 192:25 211:16

221:13 231:13resultant 184:15resulted 219:20

222:25resulting 227:1results 21:21 46:9

235:15,22 236:16237:17

retail 117:19retain 231:19retained 159:2

164:6 252:24retired 232:16return 198:13,22returned 198:17

199:5returning 173:21returns 130:22

131:13reveal 59:19 60:3

69:20 126:7 153:11153:17 236:17

revealing 130:10143:12 152:9 156:5

review 57:1,4 73:1373:24 74:2 130:24

[relatively - review]

Page 30


Exhibit 16 Page 496


159:19 169:13,16203:20 227:11

reviewed 15:9 22:2423:4 42:7 95:15100:17 101:1 170:7235:5 236:2 238:3,3

reviewing 175:2220:21

revised 6:10 186:11187:5

ridicule 207:3right 15:5,7 19:24

22:24 23:13 25:1426:1 32:11 35:143:9 47:23 53:2154:2 55:2,13 60:1264:20 66:21 68:1269:6,7,10 75:6 78:778:13 79:17,1981:21 85:4 86:2188:16 96:18 100:6105:14,17 109:2,7116:19,22 119:22120:6 121:3 125:24125:25 127:2 133:8138:8 142:11 144:7147:16 148:21153:8 155:15160:10 166:19182:21 187:25188:3 191:21,24194:2 199:15200:24 201:4,6,10201:14,18,19,20,23202:6,10,14,24207:24 208:2,10,16208:23,25 209:16209:20,21 210:13210:19,25 211:9,14214:7,15,18 215:16215:19 216:13219:6,13,17 220:2,7220:11,15,16,19,25221:8,14 223:7226:9 229:22,24

230:16 233:8239:10,12 240:1,11241:9,13 242:13,23243:19,21,22,25244:2 249:6,12251:20 252:7,7,8

rights 43:15 45:2246:3

ring 77:11,12risk 184:19 186:17risks 187:5 191:6road 48:18 86:10robert 3:14 77:9robert.boldt 3:17rock 242:16role 33:21 178:2roles 75:7room 173:21rosen 5:23rough 168:10roughly 125:2 127:4

127:5,6 129:13161:1 181:6 232:23

rpr 1:23 2:21rule 162:22rules 149:17 150:2run 51:11 52:4,14

70:19 87:21 168:21189:20 190:14,19226:22 238:12

running 109:21239:17

s

s&p 56:8sachs 6:5 38:18

39:17 95:8,15,25,2597:8,15,16 99:1,14168:12,15 169:7,14170:7,14,21 171:2171:22,25 172:13174:3 175:16,20176:5,9,18 177:3179:23 180:7 182:1191:7 218:18

220:23 241:8,24242:1,5

sake 59:13sales 198:16 229:14

230:1 236:10salix 123:14 124:11salo 217:25san 1:18 2:19 3:5

7:1,12 111:1,7212:2

santa 114:10sarah 3:8 8:11sarah.diamond 3:10sat 194:12satisfy 48:16 90:15saturday 234:19

236:2savvy 76:13saw 26:3 118:19

148:20saying 11:3 34:7

60:10 86:18 108:22136:4 137:13,20139:24 152:12,14153:5,9,15 154:6,17154:20,21,21 155:1159:22 175:9,11,12179:17 194:21199:22 208:21222:19 225:5245:14

says 42:4 49:1754:16 67:3 81:1,783:7 87:3 88:8,1396:9 103:6,16,25115:16 116:12129:8 160:12,17,22162:1,15 164:1,1166:23 171:14,16178:2,8 180:17203:7 218:23219:20 220:1 222:1235:25 236:9,9

scale 142:24 143:8143:21 144:1

scale's 45:5scanned 170:13scenarios 162:2scene 243:21 247:18schedule 5:5 11:22

116:13 117:3scheme 13:9 27:7schemes 149:22school 242:9scientific 196:12,18scope 185:15 227:20scorched 106:18score 44:23,23 45:23

46:2scott 3:25 7:8 34:9

111:8 212:3scrupulous 39:13sealed 252:4search 34:6,6 78:9

79:12,18sec 6:19 149:16,19

150:2 179:17213:23 214:14215:2,5,18 235:6237:3

second 13:14 14:5,814:21 15:3 41:545:23 46:2 51:1878:2 83:1 87:288:14 90:9,9 92:14122:22,22 129:8,14129:22 130:18142:11 187:5 194:4203:18 238:4

secretary 121:16section 42:4 51:21

115:16securities 66:9

115:23see 10:15 12:19,21

13:17 17:13 26:1529:18 30:25 41:6,1042:5 43:23 44:17,2245:21,24 49:18 50:150:17 51:6,13,14

[review - see]

Page 31


Exhibit 16 Page 497


52:2,6 53:2 54:2163:8 64:6 74:2075:12 77:3 80:6,1181:3,7,10 83:5,1184:10,18,19,19,2185:10 86:24,25 87:588:4 90:15,18,19101:4 103:9 104:5,6115:19,24 116:14117:4 120:2,3 121:8123:4 125:4 129:15130:2 132:17 134:1134:21 141:25142:15 143:4145:19 148:25149:23 150:10,21157:25 159:17160:13,20 161:5,24162:6,9,10,13,19163:22 164:1 166:7169:12 171:1,4,5,5171:12,13,16 178:3178:4 179:1,2,3,14179:21 180:22186:13,19 187:8,14194:8 203:12,13204:6 205:21 206:1206:13,16 217:4,21218:4,21 219:2,24223:3 227:8 233:20234:17 235:2236:13,19 237:12237:20 244:25245:3,12,16,20246:23 247:7 251:8

seeing 102:16159:21 184:14248:10

seek 70:14 202:5seeking 23:10,16

24:6 145:24seen 12:6 26:16,17

35:19 71:24 73:1680:21 101:7,10121:5 148:17,18

168:22 169:9,12195:15 237:6,7,8

segalas 102:18103:12,18

select 69:25selected 82:15self 64:4sell 96:9 106:9,11selling 178:9send 33:21 35:24

139:10,23 140:11140:12 221:9

senior 99:19 100:4231:9,15,17,20

sense 30:14 47:665:18 73:7 113:17202:9

sensitive 7:19sent 34:2,19,23

78:10 80:23 116:20137:15,18 148:9203:24 236:2

sentence 83:7 87:1129:22 130:19131:1

sentences 142:20separate 43:16

240:4separation 75:7september 127:17

127:24 128:7 133:2133:4 137:2 138:23141:22 227:6,19249:3

serial 180:5 192:20serious 26:21 37:12

93:12 97:18 167:21207:1 221:18

serve 13:16 68:7served 42:19 44:1service 40:10 232:10services 5:8 36:15

37:25 38:2 73:24serving 122:14

set 9:21 34:24 44:261:6 62:21 78:1135:2 137:1 190:11229:8 233:11 255:4

sets 150:18setting 9:20 24:16

193:18 224:13seven 209:19,22

246:17,20severance 231:12sg&a 187:14,17,18

187:21,24 188:13188:20,22,25248:17,18 249:6,13

shape 245:24share 42:25 87:20

127:5 160:24 161:2162:10 166:24167:2 184:13,15,16195:18 224:9 230:1241:12 244:19,22245:5 248:6

shared 145:21shareholder 19:25

24:18 28:20 36:1536:24 40:10 43:2,843:13,15 45:19,2246:2,23 48:2,19,2061:13 62:11 63:1466:6 73:24 74:2375:6,25 81:25 82:490:16 92:4 94:6104:15 105:12107:18,22 114:6123:1 125:9 128:10129:25 131:2,16132:15 135:1 136:1137:13,20,21144:21 145:7 146:1153:20 155:8188:16 192:9207:17 208:15230:10 249:5

shareholders 11:1811:20 13:12 16:2

17:23 18:8,24 19:1420:7,10 21:3 24:1024:14,23 32:14 41:942:12,20,22,23 43:443:25 44:8,12,14,2048:7,14,17 49:1051:3,12 52:5,1453:18 58:24 63:1267:1 73:1,6 74:1381:21 88:23 92:2,392:10,18 93:4103:14 111:17,18111:21,24 112:7,10113:2,7,9,12,14,17113:19,24 116:2,5116:21 117:12,18117:20,24 121:23122:13,17 123:1124:9 125:3,6,11,13132:20 133:9,15,18133:22 139:10,23140:13 142:14143:2 146:4 155:6,7184:18 188:12,17238:7 239:18 240:4243:4 249:5

shares 9:8 10:6,1918:5 20:13 21:2224:5,7 27:1 42:2042:24 43:6,16,1748:11,12 51:3 65:2567:3,5,22 103:8105:11 106:8,9,12107:19,23 108:14109:2 116:6 120:13125:1,8,17 126:2,16126:19 127:1129:18 134:8135:22 136:12142:8 147:21149:11 150:16178:9,12,15,16,24179:7,13 180:21232:21,21,22 233:5233:9 243:7

[see - shares]

Page 32


Exhibit 16 Page 498


sharps 77:9sheet 235:17sherman 34:9shield 174:13short 120:3 134:9

245:15 246:3shorthand 2:22

255:1,8shortly 173:21show 11:21 138:1,21

145:16,17,18 148:6202:17,18 237:17

showed 79:7 108:9189:1 224:22

shows 67:24shuffled 195:8shy 113:18 136:4

192:16sic 142:24 143:22

157:13side 35:4 37:17,23

38:11 39:21 98:17101:1 189:6 196:18196:20

sign 166:21signal 94:3 104:12

193:20signals 192:6signed 88:2significant 21:9 41:7

47:3 63:8 84:1385:7,16 87:20 93:1796:24 97:2,9 104:18105:11 156:9 163:8163:19 164:3,8,14165:1,3 172:6179:19 180:1,13184:21 186:17187:5 189:8 190:23199:5 220:22221:21 227:1244:11

significantly 14:2574:4 86:5 88:2593:19 107:18

131:23,25 134:8140:13 193:8195:12 233:3

signing 44:4,8silax 123:8similar 44:13 55:21

72:14 162:16228:13

simple 160:22161:22

simplistic 163:11simply 11:3sincere 138:13

208:20single 55:25 107:18

140:19,20singled 47:18sir 197:11sit 79:10 95:18

119:19 139:21170:6 237:1

sitting 196:5 246:13247:16

situation 10:1619:12 35:18 94:15151:14 156:21160:13,19 163:4181:15 200:23

situations 36:20140:3

six 13:15 14:1816:21 17:4 55:16,2056:12 63:15 68:6126:22 143:3198:20,22 209:19209:22 210:25

size 92:2 189:19sizeable 199:4skewed 72:25 73:6skilled 194:17skipping 142:20slant 37:19slash 86:7 246:6slashing 187:20

192:22

slate 14:3,19 15:9,1116:8,13 68:11,2070:1,6,10,15,22

slide 237:2slip 157:8slow 107:19,21

214:8small 12:12 26:20

195:18 196:8smart 183:4 199:16smarter 208:11smith 3:4 8:13,13

9:4,25 10:5 11:8,1213:1 14:8,11 17:518:13 20:15 22:123:17 25:22 26:1134:4 38:21 40:2551:18,23 57:7 58:1659:4,10,18,24 60:160:3,6,16,23 61:1461:25 64:12 67:1769:17 71:10 72:1,379:23 80:13 81:1582:2 86:16 91:795:22 97:5 99:6100:21 102:2108:15 109:12,19109:23 115:10117:15 118:2,24119:13 120:14123:16 124:5,12126:5 130:8 132:10138:17,24 141:2,9143:10 144:8,13146:14 147:2 150:5151:7 152:6,24153:9 154:24 155:3156:2 157:17,24163:2,12 164:15165:21 169:23173:17 175:23176:24 177:6185:11 189:24202:11,23 203:18203:25 211:10

214:10,16,19 220:8221:15 225:10,14225:21,25 226:3,11230:7 233:21 237:5243:10 247:3,21249:22 250:2,12,20250:23 251:2,4,10251:19,21,23 252:5252:8,11,14,16,18

sold 27:1 106:8233:9,15

solely 122:5 141:14229:17,19 230:5

solicitation 49:18solicited 20:18solid 242:16 246:1solution 89:25solutions 7:10 111:9

212:4 252:25someday 89:20somewhat 94:2soon 150:14 156:12sooner 252:16soonest 251:7sophisticated

128:12 183:3200:10

sorry 14:10 16:451:20 52:20 59:2265:10 68:15 72:2,477:2,23 80:8 87:2100:1 116:3,19140:9 152:17154:15 167:24171:9 211:18

sort 23:10 250:14,25sought 62:25sound 245:6south 3:15southern 1:2 2:2speak 128:17,20

130:15 214:23speaking 22:8

107:16 123:21175:12

[sharps - speaking]

Page 33


Exhibit 16 Page 499


speaks 150:5special 10:3 17:12

17:24 18:1,25 41:841:10,21 42:13,1744:5,5,9 46:25 47:547:11 56:4,9,11,1361:5 63:2 66:8,1466:16 67:24 74:2575:10 135:2,5155:22 239:15

specialized 96:11specialty 188:5,7specific 11:4 15:17

73:7 132:24 174:24224:4 225:25 226:4

specifically 9:1521:24 46:20 68:391:18 101:4 119:7123:21 169:11,15169:19 173:1 175:1183:18

specifics 134:23144:9

spectrum 207:6,8,21speculate 26:2 27:14

27:15 117:17138:20 176:2

speculation 25:2325:25 81:16 86:1791:7 99:7 102:3117:16 119:14138:18 175:24176:2,7,25

spend 150:9 174:13198:22

spending 197:8,14197:14

spent 47:9 91:22197:20 220:22229:12,15,18,20,24230:2,5

spiros 102:17split 48:2 230:10splitting 48:21

spoke 38:15 98:14136:8

spoken 72:9 76:1676:20,22 91:15112:16 128:5 142:2183:7 213:1

spouses 44:15spreading 115:3square 1:10 2:10

3:12 5:16 8:4,6,79:2,7,16 10:19 11:111:7,14 12:24 13:1113:16,20,25 14:4,514:19,20,24 15:9,2016:7,13,20 17:1618:9 19:2,14 20:1320:18 21:4,18,2022:12,19 23:11 24:424:8,12,19 25:10,1225:19 26:4,9 27:2038:2,3,4 40:6,1749:24 50:5,15,2256:17,22 62:15,2264:4,19 65:5,13,2466:19 67:16 68:6,1168:20 70:1,4,15,2271:4 79:13 92:12101:17 108:2 109:1111:22 112:13,19113:4,21 114:17115:12,22 116:5117:13,25 118:16125:16 126:14127:8,19 128:6134:3 135:12,16138:3,4,6,8,13139:4 145:24146:12 147:14,20148:24 149:10150:3,15,25 151:19152:5,22 155:18185:9 186:1 212:14215:20 216:17220:6 240:16248:14

square's 10:2 17:1818:5,10 19:17 51:1152:4,13 65:20 67:1367:22 134:5 146:24243:2

stack 140:10stance 132:14stand 109:9 122:13standard 61:1standards 75:4standpoint 17:23

40:3 55:9 98:23196:1,15 227:10,11245:17

stands 180:19start 18:22 41:25

63:25 93:16,18,21162:9 187:16194:20 207:11227:4 244:25 249:6

started 47:11 60:11108:24 120:7160:10 185:14

starting 147:18162:8 187:2 201:1,5244:11 245:12,20248:24

starts 51:21 54:15state 8:1 67:2

112:16 164:21205:25 254:10255:2

stated 165:3 207:13statement 5:5 28:16

63:19 97:23 104:7130:4,12 131:6143:17 150:11178:14 186:21

statements 54:1100:18 115:2 145:4145:8,9,15 158:19174:2 175:21192:14 235:13,18

states 1:1 2:1 41:656:1 65:15 75:2

84:7 115:3 130:19130:23 132:13149:15 181:12

statistical 184:11stay 249:20steep 244:22stemmed 249:12step 153:20 156:10

173:16steps 169:13stewart 26:18 28:14stipulation 250:2stock 81:3 82:14

88:6,8 91:4 94:1898:18 99:2,2,14,16100:12,17 103:1,4119:17 125:23129:12 134:19136:18 160:25162:13,24 176:19176:22 178:8,13179:11,20 180:2,13180:19 184:20,22184:23 193:4,5209:19,24 210:8,12210:19 211:6,9,13211:17 219:17,21220:7,10,14 221:3221:14,21,22 222:1222:6,15,21,25223:9,14,18,21225:4,8,17 232:18232:19 233:15,16233:17 242:11244:2 245:3,5,9,14245:20 247:17248:5

stockholders 17:1319:1 50:16 104:16186:18 187:6

stop 16:5 21:2523:15 24:2,6 109:22141:7,13 170:14

stopped 120:1 157:8

[speaks - stopped]

Page 34


Exhibit 16 Page 500


stops 166:19storm 207:3story 89:13stratagem 149:15strategic 28:1

123:19 133:23144:19 163:5185:12 207:16227:8,10

strategies 126:7130:10

strategy 28:3 84:16143:12 152:13,14152:15 153:7185:16 193:19208:14 220:4 246:5248:12

streamline 62:13226:19 233:20

streamlining 63:4street 3:15 26:16

93:10 112:16 115:8118:20,23 119:4145:17,22

strength 101:2string 6:12,14,15stringent 46:6strip 86:7 165:3

221:11strong 11:18 84:15

136:2,4 137:9,10237:16 241:8

strongly 54:8 86:1386:18 132:15,21133:11 140:12186:23 207:14208:12 239:5245:11

structure 36:21226:20 228:10

structures 227:12stuck 206:6studying 47:9stump 23:25

styling 150:20sub 16:3subheading 186:15subject 5:7,24 6:7

6:13,15,16 11:13113:14 114:8 134:8159:13

submitted 75:19subscribed 255:14substance 57:12substantially 90:13

158:21 184:8186:16 209:15

success 155:18successful 91:2

109:10successfully 84:17

86:22 87:4,12,14,16sue 153:20sued 152:22suffer 54:5suggest 133:18suggested 125:19suggests 118:6

160:23 245:11suing 118:16 150:24

151:19suisse 39:20suit 56:18sullcrom.com 3:22sullivan 3:20 8:9summarize 149:10summarizes 12:20

17:10 43:12summary 12:17

42:11 63:24 178:1203:14

summer 105:16133:7 202:16220:18

support 42:12 73:874:13 75:9 83:3,384:1 133:11 137:14137:20 180:2,13,18192:25 201:13

207:14 208:12238:20

supported 47:1474:12,17 75:24

supportive 82:20128:16

supports 63:15sure 11:24 16:10

24:9,15 27:22 38:2246:18 53:22 63:2564:13 77:15 79:1180:19 88:7 109:20116:9,9 117:24119:5 120:18 121:7126:25 133:17138:10 141:11142:3 145:10146:19 152:2 165:9165:23 168:8 170:4179:8 193:14194:23 197:12198:24 209:7214:17 217:3,3231:16 236:7242:12 246:25

surface 181:1,2surprised 30:10,12

30:13 118:8 119:8145:13,21 224:8

surrounding 194:5sustainability

236:11sustainable 86:10sustained 84:13

85:7,15swear 8:16sword 174:12symbiotic 5:22synergies 161:1,1

162:5 163:20 164:3164:8,14 165:1,5187:14 188:24189:9,12,16 190:9

synergy 190:10,20196:16

system 59:13 78:2579:4

systematic 118:5systematically 113:1

117:23

t

t 76:23t.rowe 5:12 76:7,17

76:19 80:4,18,2481:12,17,18,23 82:382:9,13,14,19 83:1483:18,25 84:7,12,2285:6,13 86:12,13,2187:7 88:3,18 89:889:21 90:1,3,2491:8,15,22 92:9,1395:1,5,6 101:12,18101:24 112:14134:3 135:15,16,25139:4 145:3,3240:13

tab 127:9 202:18205:15 217:4

table 16:17 245:23tactic 206:12 215:24

219:13 220:24tactics 218:21

219:15,16,20222:23,25 239:8

tainted 67:24take 7:18 26:25

65:17 89:5 90:20109:10 121:6 147:9165:22 201:25202:2 204:9,10209:18 217:6221:20 224:4,8,11227:16 233:18246:6

taken 2:18 71:16110:2 123:23 124:8131:21 140:24166:1 169:13211:23 222:8

[stops - taken]

Page 35


Exhibit 16 Page 501


233:25 246:2 255:3takeover 5:22 46:4,6

129:9takes 26:23 124:19

124:21talk 33:17 34:10

36:2 41:23 49:6114:8 128:1 129:1131:22 133:14,15134:24 173:6 201:6210:16 222:4230:13 245:7

talked 23:5 49:769:12 71:3 75:1483:18,19,22 91:2097:17,17 98:22112:12,14,17,19136:11,15 139:15161:12 176:11202:3 205:2 213:8239:7

talking 21:7 48:754:13 69:3 108:25113:8 132:24133:17 137:7140:14 155:14163:17 180:21185:20 210:7249:15

talks 210:14 219:12tamaddon 77:9tanaka 3:25 7:8

111:8 212:3tape 109:22 211:19target 171:3 188:20

190:10targeted 190:21

245:15targets 187:18 190:9tax 161:1 162:4

163:19 164:3,8,14165:1,5,9 233:7

taylor 3:20 8:9,9taylork 3:22

taymour 77:9,11team 6:17 33:18

83:17 96:6 97:3,1197:12,14 98:9 180:8180:9,20 196:12,18205:8 229:13231:18,19

team's 84:16 87:3technical 147:23

151:11teleconference

137:8telephonically 83:22tell 26:8 46:19

103:13 106:14119:24 131:24136:10 161:17168:5 180:15 191:7192:23 206:21234:3 250:16

telling 78:16 92:18122:7 150:1 168:8192:16

tells 171:24temperature 205:24ten 18:2 103:4

149:20 181:24199:5 207:14 232:6232:17

tend 105:2tender 27:4,6

108:13 109:6,10,17120:12,17

tens 193:13term 11:19 44:14

49:10 61:1 62:2176:10 79:18 81:1381:18 102:25,25128:10,16 136:22144:21 187:23192:10 239:13245:15 246:1

termeer 229:4terms 73:5 75:15

79:12 82:1 92:2,10

95:9 139:20 175:6212:22 239:11,20243:3

terribly 147:24testified 8:20 235:20testifying 255:6testimony 108:25

252:2 254:5text 80:11thank 17:7 53:11

72:3 102:9 120:23138:24 141:6,16193:23 208:4249:15,17,21

thanks 35:2,7that'd 231:3theoretical 160:12

160:23 162:9247:24

thereof 43:21255:10

thesis 201:13thick 114:16thing 54:3 89:1

133:19 167:19171:23 213:18223:5,6 250:25

things 26:15 34:1445:21 93:8,17 109:5183:23 187:7194:25 195:1,2213:16 238:24,25239:1,2

think 12:6 13:3,416:16 19:12 21:1021:11,13,15,20 22:222:10,12 25:17 27:927:11 29:2 32:1933:24 37:12,1438:13 39:7,23 45:1445:17 46:5 47:648:23,25 53:2560:20 61:3,19 62:2263:22 65:22 67:968:13 71:7 72:25

73:15 74:19 77:1881:17 85:18 86:987:16 88:13,22 89:589:24,24 90:5,2591:13 94:1,4,7 95:395:9,10 96:14 97:2598:20 104:17,24106:22,23 107:24109:21 114:4116:16,17 118:7119:15,19 124:1126:11 130:25131:20,22 132:1,3,6132:23 133:3134:23 135:14136:5 137:5,23147:7,17 149:4151:22 156:2,17157:17,19 158:10168:17 169:25176:1,21 177:3181:15,18 182:11189:12,15 190:1,14190:14,25 192:3,17192:19,20 193:15193:20,21 196:11197:3,4 198:9199:16,23 202:23204:17,21 206:4207:6,7,18 208:8,24209:9,13,15 210:10210:21 212:11,16213:6,11 215:1,7216:7,9,11,17 223:7223:9,11,14 225:21226:3 232:20 237:1237:24 239:1,13,13241:20,22 243:1,8245:17,21 246:10246:11,14 250:6,7,8250:16,17

thinking 26:5 62:1976:1 202:9 217:15

thinks 16:7 61:298:4

[taken - thinks]

Page 36


Exhibit 16 Page 502


third 12:11 17:918:4,7,9 19:1554:10,16 87:1 129:7129:21 132:13135:23 219:21235:14,23 236:16236:24 237:16

thirds 51:6 54:6,9219:19

thoroughly 94:21thought 14:12 47:10

47:18 49:3 150:2152:1 160:17176:22 177:5 202:8203:22 204:1 209:8212:11 216:13222:2,22 223:5,6248:21

thoughts 132:1threat 5:22threaten 207:3

212:12threatened 213:9threatening 213:9

216:3,9 240:1threats 213:12three 29:1 55:15

69:14,15 75:1 137:5143:1 149:9 162:18243:9,13 248:16250:15 251:12252:24

threshold 19:2549:4,25 50:6 56:1493:19 131:23

throwing 20:25thumb 162:22thursday 251:23tick 209:10time 8:1 10:17 20:8

31:21 32:3 34:1335:7 42:17 44:2147:19 55:22 61:2171:15,18 78:2088:12 91:23 92:1

93:15 95:16 100:17104:19 105:13110:1 111:11114:25 126:1,17,20129:19 133:2,22136:17 137:7140:17,17 142:12149:2 150:10151:24,25 155:13156:11,18 157:20159:1 165:10,25166:3 168:14173:19,20,24174:14 179:9 182:7182:21,24 192:22192:25 196:24198:22 202:13203:9 210:11211:22 212:5 217:9220:22 222:13224:9,10,10 228:12231:7,22 233:12,24234:2,16 235:11237:5,12 244:20245:19 246:3248:19,22 253:1,2255:4

timeframe 132:24133:1 185:19

timely 153:24times 17:25 83:19

83:20 93:14 96:8136:5 178:1,22242:1,3

timing 11:24 155:12218:20 219:13220:24 222:23

tip 17:18tired 245:6tires 202:9titled 5:19,21 6:10today 29:14 35:19

59:16 60:11 79:1083:25 95:18 108:6109:9 112:2 117:12

119:11,19 121:5126:11 127:5 133:7139:21 148:17156:18 159:20161:8 168:14 169:9170:6 172:1 179:5189:12,14,15,17230:20 237:1245:20 248:2249:16

today's 111:9 212:4252:22

told 38:4 40:8,9,1654:23 59:15 78:2097:1,8 106:11134:14 136:16157:19 172:1,13,21172:24 180:7189:11,14,22206:20,22 209:8249:4

tomorrow 126:11ton 101:5tongue 167:13top 6:12,14,15 74:22

92:9 103:4,6 124:19124:21 198:10218:23 236:8

total 43:17 190:21197:20 198:2,4220:14 229:24252:23

totally 52:9,11 132:2153:15 222:20244:7 247:23

town 3:8toxin 195:7tracking 25:2trading 22:11 26:4,8

26:9,16,18,22 27:227:4 28:14,16 67:23113:25 114:2,17117:14 118:17119:6,11 125:1129:12 148:3

149:22 150:25151:3,12,20 152:23154:12,19 156:25157:15 211:13214:7 216:6 245:10

trail 180:6train 238:21trajectory 244:21transaction 98:10

104:13 107:3123:14 124:11130:18 131:10139:12,25 163:19164:2,13,25 177:20179:18,19 180:1,2180:12,13 182:3184:25 196:14,17207:25 208:6

transactions 84:1786:23 87:4,12,13181:12 185:5,13,17

transcribed 255:8transcript 1:15

250:19 254:3transcription

255:10transparency 175:5

194:19trashing 204:19treat 238:18treated 252:9trend 75:3tried 214:14 215:4tries 238:1trigger 196:10tripwires 151:13troop 207:3true 55:2,3,6,7,25

66:23,24 105:18119:20 126:3 186:4235:23 236:18237:17 246:18248:10 254:5

trust 169:3 201:21204:18 232:21

[third - trust]

Page 37


Exhibit 16 Page 503


233:11,14trusts 44:15truth 248:8try 16:24 18:19

69:25 198:9 206:12219:16 224:4,8,11238:1 252:16

trying 23:24 41:2277:6 141:18 206:4,7206:8 215:8 224:16

tuesday 1:19 2:204:4 7:1 111:1

tumbling 89:3turn 12:11 50:9

127:7 140:24 217:4235:8 251:19

turned 78:24 247:4turning 49:16twice 26:5two 36:4 51:6 54:6,9

55:15 61:17 75:1478:2 88:1 98:11112:21 142:20219:19 233:10236:9 239:1 251:14

types 39:12

u

u.s. 6:19ubben 6:13,15 199:7

199:8 200:1,2,23202:8 203:8 204:9206:18 207:20208:18 240:9

ubben's 199:25200:10 240:10

uh 10:5 29:19 31:133:12 45:11 68:879:14 82:17 92:23108:10 114:22149:13 233:21

un 251:13unable 243:7unacceptable 16:3

unanimous 22:2388:11

unanimously 6:10186:11

uncalled 212:18uncertainties 187:6uncertainty 186:17unclear 251:14uncommon 83:2

96:14uncover 44:5underlying 29:10undersigned 255:1understand 9:12

15:21 19:6 26:1436:20 37:25 41:2353:8 58:20,22 59:1559:22 61:2 64:1482:10 87:19 88:192:3 108:21 123:22142:21 143:18144:11 145:23147:24 148:1 170:4175:7 183:5 197:16212:23 214:4225:15 238:5,6251:16

understanding13:22 23:25 24:145:16 65:3 72:1282:18 83:25 91:2198:25 99:5,17107:13 120:11139:22 144:23146:3,7 147:20153:25 170:23184:1 231:1 248:9

understands 192:17199:20 245:25

understood 144:13150:16 203:25221:13 250:20

undertake 227:21undervalued 184:8

209:24 210:1,9

211:6,9undervalues 90:13

158:21 186:16209:16 210:22,23218:25

underwrite 176:22underwriter 178:11

242:11underwriting 99:1

176:9,19 178:15242:6

underwrote 98:1899:14

unhappy 63:1unique 56:4,15united 1:1 2:1 56:1

115:3 181:12unlawfully 109:1unnecessary 212:18unobtainable

189:19unrealistic 187:13

187:16,18 188:21190:10 191:2

unsolicited 6:11147:13 185:2,8,25186:12 220:19,25224:5,14 231:7

unsupportable187:22

unsustainable 191:5191:8,14

unsustained 187:10untrue 51:10,22

52:3unusual 34:12 139:9

139:22unusually 178:2update 177:25updates 25:6upheld 165:10upsetting 106:24uptick 245:12urging 149:18

use 31:4 32:23,2463:23 147:18174:11 180:4239:13 252:1

useful 196:5uses 26:24 188:22

226:21usually 33:19 34:10

34:10 166:21

v

vague 38:21 85:2185:23 118:2 163:12164:15 169:23202:11 211:10237:5

vaguely 102:16115:4 117:9 235:16

valeant 1:8,8 2:8,83:19 6:8,12 7:148:10 13:11,25 14:414:19 15:9 16:2,1317:2 22:20 23:1126:10 27:6 35:1838:6 56:18,22 64:364:11,19 65:5,8,1368:10,19 70:1,6,1070:15,22 79:13 81:983:8 84:2,4,9,2485:3,7,15 86:2287:14 88:12,25 89:189:12,14,22,23 90:290:6 91:6,23 92:1793:13 94:18,19 95:795:9,11,13,16 96:2296:25 97:4,9 98:4,798:18 99:2,4,23,25100:17 101:17103:15 104:4,11,19104:21 105:1,3,25106:18 108:1111:22 112:4 113:5113:14,20 114:20115:11,22 116:6117:13 118:1

[trust - valeant]

Page 38


Exhibit 16 Page 504


124:23 125:2 129:9131:21 137:14142:25 143:22144:2 147:13148:24 149:10150:4,15 151:20152:5 158:12,20159:16 161:13162:3 163:17,20164:4,9,13,25 165:3168:16,19 169:8,14169:18,21 170:8,15170:22 171:3 172:9172:14,25 173:3174:20 175:3,14176:10 177:4,16,20178:8,15,16,24179:7,11,17,25180:11,19 182:3184:20 185:9 186:1186:12 187:20188:22 190:11,21191:8,14,20,23192:2 193:5,20194:20,20 196:25199:23 200:23201:6,9,9,19,23202:14 203:8204:13 205:2,3,7,11206:7 207:15208:13 209:3,15219:5 220:5 222:15222:20 224:5,9,17225:4,9,17 231:1235:14 236:21237:16,19,25238:11,24 240:8,10241:5 245:23 246:4246:25 247:1,4,13247:18 248:15

valeant's 13:1639:21 49:19 68:671:4 84:12,16 85:2586:3,4,6 89:9 91:1695:1,20 96:17 97:24

100:18,19 101:2,6124:19 165:9 172:2172:22 175:22176:19 184:7187:17 190:9 194:1194:5,6,12 195:21196:6 201:13 209:4209:5 219:17220:14 221:3,14222:9 223:14,21235:20 236:10,16241:23 245:11247:6,10

valid 223:17validity 84:15valuable 223:10valuating 96:5valuation 160:5

161:19 171:7value 14:25 37:5

49:20 51:2 90:14,16104:13,15 107:2129:11 144:21159:3 165:20 178:8180:21 183:16,22183:24 184:4,11,16184:17 186:2 192:9207:17 208:15210:3 219:17220:13 238:8 243:8243:12 245:10

valueact 199:11200:6,7 203:8

valuing 96:5van 127:21 128:5,18

130:5 131:6 136:9138:12

vanguard 112:15various 26:19 36:19

45:2 73:25 130:1131:3,20 184:12,12184:13

vary 134:13varying 162:3

vast 48:16 119:16vastly 198:19,19vehemently 51:16

220:18venus 218:24 219:4

219:21 222:25223:9

verb 123:10,11verbatim 255:6veritext 7:10 111:9

212:4 252:25versions 48:8versus 196:1 197:10

197:14 198:16vested 88:24 89:14

90:3 95:6vice 88:2vicinity 167:3,8

191:1 197:24video 7:6,17 252:23videographer 3:25

7:4 8:15 71:14,17109:24 111:4,8165:24 166:2173:18,23 211:20211:24 212:3233:23 234:1252:22

videotaped 1:172:17

view 9:23 10:2511:2 38:7,9 40:2342:15 53:18 59:267:15 76:13 81:2082:22 84:1 88:11,2490:11 95:19,20103:23 123:6,12128:12 145:23146:15 174:1 191:2193:2,3 205:13209:14 210:4,5215:24 216:1223:19 240:11,14240:17,20 241:2,3241:25 244:3

viewed 81:25views 75:15 92:6,16

92:21 98:9 102:1,4113:4 117:25138:13 145:21203:14 214:4237:18

vindictive 212:13216:1,11

violate 9:23 15:1516:14 66:20

violated 66:9violating 16:17

139:25violation 67:5,6,14

92:19 115:23virtually 84:14 85:8

85:17 196:22 248:4visiting 113:8vocal 135:22 136:1volume 1:20 2:18

4:2 195:17 199:6254:17

vote 9:2,16 12:17,2417:16 18:24 19:1119:25 20:1,25 21:121:3 22:23 25:11,1325:19 36:18 46:947:13 48:2,9,2149:1 53:7,13 61:1365:20 66:2,19 67:7121:23 122:8 123:9123:15 143:2145:25 146:5,6,12146:24,25

voted 13:20 17:1018:9 19:2,14 20:720:11,13 22:1823:10 24:12,2046:24 48:12 67:1667:25 70:4 109:5146:9

votes 11:7 14:5,2014:23 15:1 17:1821:5,18 48:10,13

[valeant - votes]

Page 39


Exhibit 16 Page 505


52:17,24 54:7 62:1566:7 75:10,17

voting 10:2 14:2318:10 19:18 21:8,1024:4,7 44:20 66:866:16 67:8,14

vrx 161:3vs 1:7 2:7 7:14

w

wachtell 5:23 57:2057:21,24 58:6 148:7148:23 149:3,6150:1,1,4

wachtell's 149:15wait 10:15 17:6

152:13 155:23225:21

waited 152:3,15155:25

waiting 153:5waive 141:4,15waives 174:8wall 115:8 118:20

118:22 119:4145:17,21

want 11:11 19:621:25 23:25 24:2,1525:10,12,18 28:2129:6,8 30:23 35:342:12 57:11 63:2368:2 79:11 89:2,1390:5 106:25 111:16116:7 118:12 120:2129:5 130:15133:13 134:18,22139:5,19 141:3,4,14141:17 144:13147:9 148:6 152:19156:23 157:8168:11 173:6,10,11173:14 184:24,25185:2 193:19,22196:24,25 208:1,3212:8 214:9 216:21

228:16 233:19239:22,24 240:19252:1

wanted 118:22123:22 166:25227:7 230:15

wants 11:14 23:14146:3 174:6

warning 149:17warranties 100:13wary 235:13waste 197:5,18watching 246:14watkins 3:4,7 8:12

8:13 57:19 78:19way 7:24 18:17 29:1

30:21 37:22 39:745:21 47:5 51:665:8 75:1 76:1 78:189:6,18 92:16,21101:11 108:19114:6 116:23136:25 138:2 139:3140:12 141:18153:10 156:7,24157:25 167:14172:4,5,17,18177:18 188:15190:5 194:11201:15 207:4,5219:19 225:20230:20 242:24243:1 245:24,25246:19

ways 136:17 221:2239:2

we've 45:20 71:3,1175:14 80:8 93:12,1394:20 101:7 123:23131:21 140:24145:2 174:22 183:4192:14 195:15,15238:5 244:13,16,23245:13,14 246:3248:23

weakness 209:9221:24 222:5235:22 236:18

weaknesses 94:22221:22

website 121:14week 56:12weeks 145:5 237:10weigh 93:2weighed 94:10weighing 134:7

154:1,4,7weight 14:22went 47:21 55:15

63:16 115:1 194:23215:16 221:4 252:8

when's 251:23whereof 255:14whispers 7:20who've 201:23wide 149:21william 1:12 2:12

115:22window 149:20wise 190:12wish 147:8withhold 52:17,24

53:7,13witness 4:6 8:16 9:7

10:4,6 11:11,1413:3 14:10,12,1517:7 18:16 20:2022:6,10 23:19 25:2426:2,13 34:5 38:2241:1 58:17 59:11,2259:25 60:2,5,18,2461:17 62:3 64:1367:22 69:22 79:2581:17 82:6 86:1895:24 99:9 100:22102:4 108:18,21109:14,20 115:11117:17 118:5119:15 120:16,23124:14 126:10

130:12 138:19141:6,11 143:13144:17 146:19147:4 150:9 151:8152:10 153:2,19155:2 156:8 157:22163:3,14 164:21169:2,25 174:2176:1 177:1,7185:19 189:25211:11 214:8,12,18214:25 221:16225:15,19 233:22237:6 243:11 247:4247:23 249:17251:3 255:14

witnesses 255:5wolf 239:16wolves 239:10,14,16wonder 10:7 124:24wong 189:25word 118:5 175:11

178:18,18 235:1words 26:8 34:7

79:13 143:11175:10 180:3,4212:16 213:12221:12 248:1

work 168:12 228:17249:24

worked 200:19working 98:4works 56:11 200:5world 148:9 150:2

194:16worst 45:5,13,23

46:2worth 49:1 178:24

179:13 222:2write 35:17 90:10

101:19 168:7177:19,23 202:25

writer 178:22writes 84:12 129:22

142:12 166:8

[votes - writes]

Page 40


Exhibit 16 Page 506


236:15writing 81:8 91:3

103:12 138:14written 24:17 43:13

45:14 75:7,20 101:8101:13 141:24168:18 170:12182:24 207:9

wrong 51:17 52:1066:3 140:16 195:1206:11 208:24237:4 241:16,21242:17

wrote 33:23 34:8,8,9138:3,6

x

x 4:1

y

yeah 12:6,10 18:1918:19 19:8,16 26:226:13 29:25 31:1547:24 57:11 62:366:12,15 74:15 77:577:13 78:14 79:2,2279:25 84:5 95:2498:12,20 99:9100:22 101:22109:20 115:4,10120:16 121:8126:10 127:6 135:3135:19 138:19141:2,2,6 145:10,20148:18 150:9 155:2158:23 161:15163:3 167:24 169:2173:13,17 179:4180:16 184:5188:10 189:4,7,15189:25 191:3,12193:17 196:21198:3,5,25 199:9203:23 207:18212:25 217:12,23219:25 225:19

226:2 233:4 235:25236:6 237:6 241:4,6243:16 246:18249:9,24 251:1,10252:13

year 38:19 46:2447:9 83:20 108:2114:11 125:1,7126:25 127:4136:12 166:24167:23 168:3180:19 185:23197:25 198:3 201:1211:13 227:6,9,25244:13 247:16

years 18:2 39:1276:16 91:23,2599:24 100:2,3,7149:18 162:18,22181:23,24 188:11193:11 197:21199:5 232:2,6,17233:10 243:9,13248:16 249:7

yelled 213:2yep 12:13 203:13yesterday 29:14

223:20 245:9york 178:1,22 242:1

242:3

z

z 134:11

[writes - z]

Page 41


Exhibit 16 Page 507

exhibit 16 - reutersblogs.reuters.com/alison-frankel/files/2014/10/all... · exhibit 16 page 402....

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