EXHIBIT 1 - Bloomberg Professional Services · 2016-06-20 · EXHIBIT 1 Exhibit 1 -Page 15 Case 8:14-cv-01214-DOC-AN Document 197-1 Filed 10/21/14 Page 1 of 81 Page ID #:7340

EXHIBIT 1

Exhibit 1 - Page 15

Case 8:14-cv-01214-DOC-AN Document 197-1 Filed 10/21/14 Page 1 of 81 Page ID #:7340

HIGHLY CONFIDENTIAL ~~-~~~- ---------- ·~---·---------

1

2 UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

3 Civil Action No. 8:14-cv-01214

4

- - - -x

ALLERGAN, INC., a Delaware corporation

5 and Karah H. Parschauer, an individual,

6 Plaintiff,

7 -against-

8 VALEANT PHARMACEUTICALS INTERNATIONAL,

INC., VALEANT PHARMACEUTICALS

9 INTERNATIONAL, AGMS, INC., PERSHING

SQUARE CAPITAL MANAGEMENT, L.P., PS

10 MANAGEMENT, GP, LLC, PS FUND 1, LLC

and WILLIAM A. ACKMAN, an individual,

11 and Does 1-10,

12 Defendants.

13 - - - - - - - - - - - - - - - - - - -x

14

15

16

17

October 2, 2014

9:29 a.m.

HIGHLY CONFIDENTIAL

18 Deposition of WILLIAM ACKMAN,

19 taken by Plaintiffs, held at the

20 offices of Pershing Square Capital

21 Management, 888 Seventh Avenue,

22 New York, New York, before Kathleen

23 Piazza Luongo, a Notary Public of the

24 State of New York.

V eritext Legal Solutions Midwest www.veritext.com

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888-391-3376


HIGHLY CONFIDENTIAL ---- ---------------------------------------,

A P P E A R A N C E S: 2 3 LATHAM & WATKINS LLP

650 Town Center Drive 4 20th Floor

Costa Mesa, Califomia 92626-1925 Attorneys for Plaintiffs

BY: MICHELE D JOHNSON, ESQ michele johnnsonaYiw com

~and~

KRISTIN MURPHY, ESQ kristin mml)hy([J)lw com

-and-9 SARA SOLOW, ESQ

10 II SULLIVAN & CROMWELL LLP

125 Broad Street 12 New Y ark, New Y ark I 0004-2498

Attorneys for Valeant Defendants 13

BY: MAX S HEUER, ESQ 14 heuenn({J)sullcrom com 15 16 KIRKLAND & ELLIS LLP

333 South Hope Street 17 Los Angeles, California 90071

Attorneys for Pershing Square 18

BY: MARK HOLSCHER, ESQ 19 mark holscher@kirkland com

-and-20 JOHN DELMONACO, ESQ

jdelmonaco@kirland cmn 21 22

23 ALSO PRESENT:

David Klafter, Esq 24 Dimitri Zvonkov, Videographer

2 3 4

5 6 7 8 9

----

THE VIDEOGRAPHER: Good moming. My name is Dimitri Zvonkov with Veritext.

Today's date is October 2, 2014. The time on the video screen is 9:29a.m.

This deposition is being held at the offices of Pershing Square

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10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Capital Management, located at 888 Seventh Avenue in New York, New York.

The caption of the case is Allergan, Inc., et a!., versus Valeant Phmmaceuticals International, Inc., eta!., in the U.S. District Court, Central District of Califomia, South em Division.

The name of the witness is William Ackman.

Will counsel please identify themselves for the record.

MR. HOLSCHER: Good moming. Mark Holscher, H-0-L-S-C-H-E-R, of Kirkland & Ellis for Pershing Square

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and Mr. Ackman. 2 MR. DELMONACO: John Delmonaco 3 from Kirkland & Ellis for Pershing 4 Square and Mr. Ackman. 5 MR. KLAFTER: David Klafter for 6 Pershing Square. 7 MR. HEUER: Max Heuer, Sullivan 8 & Cromwell for Valeant. 9 MS. JOHNSON: Michele Johnson,

1 0 Latham & Watkins for Allergan and 11 Plaintiffs. 12 MS. MURPHY: Kristin Murphy of 13 Latham & Watkins for the Plaintiffs. 14 MS. SOLOW: Sara Solow, Latham 15 & Watkins for the Plaintiffs. 16 THE VIDEOGRAPHER: Will the 17 reporter please swear in the witness. 18 WILL I AM ACKMAN, called as a 19 witness, having first been duly swom, 20 was examined and testified as follows: 21 EXAMINATION BY MS. JOHNSON: 22 23 24

2

Q. A. Q.

Good moming, Mr. Ackman. Good moming. We met briefly off the record

but I'm Michele Johnson at Latham. Have you had your deposition

3 taken before? 4

5 A. Yes.

6 7 8 9

10 11

Q. A.

Q.

A.

Q.

I imagine a number of times? A number.

I love depositions. They are very fun.

How many times, approximately? In my life? Yes.

12 A. Ten, twelve, eight. 13 Q. When was the last one? 14 A. During the General Growth 15 bankruptcy, I believe, that was in, uh, 16 2009. 17 Q. Okay. 18 Let me go over a few ground 19 mles that will govem our proceedings 20 today. 21 You've just been given an oath 22 and you understand your testimony is the 23 same as if you were giving it in court -

A. Yes. 24

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Q. -- under penalty of perjury? Q. Who was present at that 2 A. Yes. 2 meeting? 3 Q. The court reporter is recording 3 A. Uh, counsel and David Klafter. 4 everything that we say so it's important 4 Q. Counsel that are here today? 5 that we not talk over each other, so I 5 A. Yes, and one other, Jay 6 will ask you to allow me to finish my 6 Lefkowitz from Kirkland. 7 questions and I will pay you the same 7 Q. How long did that meeting last? 8 courtesy on your answers. 8 A. Little under an hour. 9 A. Sure. 9 Q. What was in the folder of

10 Q. Because she is taking down what 10 documents that you reviewed, generally? 11 we say it's important to provide verbal 11 A. Um, the letter, um, letters 12 responses rather than head shakes and 12 that we had sent to Valeant, proxy 13 nonverbal cues; is that fair? 13 statement and a bunch of e-mails. 14 A. Yes. 14 Q. Letters that you sent to 15 Q. Well done. 15 Valeant or to Allergan? 16 If you don't understand my 16 A. I'm sorry, to Allergan. 17 question I'll ask you to ask me to 17 Q. Any letters that you sent to 18 clarify; if you answer the question I'll 18 Valeant? 19 assume you understood what I was saying. 19 A. Uh, yes, uh, like 20 A. Yes. 20 confidentiality agreement, agreements. 21 Q. Okay. 21 Q. Anything else that you can 22 If your counsel objects to a 22 recall? 23 question you are still required to answer 23 A. Couple of news articles, um, 24 unless he instructs you not to answer; do 24 that's it.

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1 you understand that? Q. Anything else that you did to 2 A. Yes. 2 prepare for your deposition other than 3 Q. Okay. 3 the meeting that you are describing that 4 If you need a break just let me 4 you had yesterday? 5 know, we'll probably take breaks 5 A. I went through the documents 6 throughout, but I would just ask that if 6 this morning at home. I was supposed to 7 a question spending that you answer the 7 read them in advance for preparation but 8 pending question before we take a break. 8 I didn't have time to do that so I read 9 A. Yes. 9 them this morning.

10 Q. And after the deposition the 10 Q. Anything else? 11 court reporter will prepare a transcript 11 A. That's it. Got a good night 12 and you will have an opportunity to 12 sleep sort of. 13 review the transcript but if you make any 13 Q. Ish? 14 changes then we will have the opportunity 14 A. I woke up and read the 15 to comment on those changes. 15 documents. I did get a good night sleep. 16 Do you understand that? 16 Had a nice company party last night. 17 A. I do. 17 Q. Here? 18 Q. Any reason you can't give your 18 A. Yes, New York. 19 best testimony here today? 19 Q. All right. 20 A. No. 20 Would you give me a brief 21 Q. What did you do to prepare for 21 description of you are educational 22 this deposition? 22 background after high school? 23 A. Uh, yesterday I went through a 23 A. I went to Harvard College, got 24 folder of documents with my counsel. 24 an AB degree, which is like a bachelor of '----------------------------------~-- ··--------

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HIGHLY CONFIDENTIAL

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arts degree in social studies, then I 2 went to Harvard Business School and I got 3 anMBA. 4 Q. Following your MBA from Harvard 5 what's your employment background? 6 A. I've been in the investment 7 management business since that time. 8 Q. Do you consider yourself an 9 activist investor?

10 A. Yes. 11 Q. What does that mean to you? 12 A. It means we are not a passive 13 investor. It means we take generally 14 large stakes in undervalued, often under-15 managed companies and we work with 16 management, boards and shareholders to 17 help make the companies more successful. 18 Q. As an activist investor do you 19 regularly participate in hostile takeover 20 attempts for companies? 21 MR. HOLSCHER: Objection. 22 F onn. Vague. 23 A. Um, I don't think I've ever 24 done anything that's hostile to the f~--~-----~-~----~----

shareholders of the companies we invest 2 in. There are times where management 3 teams are threatened by us because they 4 may be the problem, they may lose their 5 jobs as a result of our involvement and, 6 uh, they might describe it as hostile, 7 but we are often the largest shareholders 8 of the companies we invest in, we look to 9 making changes to businesses that create

10 long-term, sustainable value for 11 shareholders; as a result we have an

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12 enonnous support from shareholders and we 13 built that credibility and I want to call 14 it reputational equity in the last eleven 15

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23 Q. Did you know that Mr. Doyle was

www.veritext.com

24 going to meet up with Mr. Pearson at the

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JPMorgan Healthcare conference, that that 2 was going to happen? 3 A. No. 4 Q. It was news to you that they 5 met? 6 A. Yes. 7 MS. JOHNSON: I'll ask the 8 court reporter to mark as Ackman 9 Exhibit 1 a multi-page document that

10 I'll hand to you. 11 (Whereupon, the above-mentioned 12 Allel·gan, Inc. Schedule 14A was 13 marked Ackman Exhibit 1 for 14 identification.) • • • • • • • • • • I I I I I

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I •

• • • ••• • •

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Q. Exhibit 1 is a Schedule 14A submitted by Pershing Square in September

7 of 2014, it's a multi-page document. 8 Have you seen this document 9 before?

10 A. Yes. 11 Q. What is it? 12 A. Exactly what you just said. 13 Q. Great. 14 Did you review this document 15 before it was submitted to the SEC? 16 A. Yes . 17 Q. Starting on page 4, Background 18 and Past Contacts, the document states 19 that in September 2012 Mr. Pearson spoke 20 with Mr. Pyott. 21 Did you have any knowledge or 22 involvement with that communication? 23 A. No . 24 September 2012? -~~ ----~---~--~----··

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Q. Conect. 2 A. No. 3 Q. And in January of2014 4 Mr. Doyle met with Mr. Pearson, that's 5 the meeting that you just described? 6 A. Yes. 7 Q. Following their meeting on 8 January 14th of2014 did you and Mr. 9 Doyle discuss his meeting with Mr.

10 Pearson? 11 A. Um, eventually I did, I guess 12 following, yes. 13 Q. Following? 14 A. Yeah. 15 Q. And do you recall what you 16 discussed with Mr. Doyle the first time 17 that he reported to you that he met with 18 Mr. Pearson? 19 A. Um, just that he had, uh, 20 bumped into Mike Pearson and that he 21 thought I should meet him and that there 22 was the potential for us to work with 23 Valeant. 24 Q. Did you discuss a way in which

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HIGHLY CONFIDENTIAL

you would work with Valeant? 2 A. No. 3 Q. At the time? 4 A. No. 5 Q. The next thing that's listed in 6 this proxy is that on February 4 Mr. 7 Pearson and Mr. Morfit met with you and 8 Mr. Doyle. 9 Is that the next thing that

10 happened in this sequence? 11 A. Yes. 12 MR. HOLSCHER: Objection. 13 Vague, ambiguous, fonn. As to "next 14 thing," foundation, but you can 15 answer. 16 A. I mean to clarify, so the next 17 material thing, I would say, was that we 18 had a meeting. 19 Q. Did you have any discussions 20 with anyone between January 14th and 21 February 4th about how you might work 22 together with Valeant? 23 A. No. 24 Q. Not with Mr. Doyle or anyone

else at Pershing Square? 2 A. No. 3 Q. What do you recall about that 4 meeting on February 4th? 5 A. Uh, meeting was here, uh, it

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6 was Mike and Mason, um, myself and Bill 7 Doyle, I'm not sure if Jordan Rubin 8 attended, he may or may not have been 9 there; and really there was a meeting

10 where Mike introduced himself and Valeant 11 and their strategy and their history and 12 having thought about the industry, how 13 they thought about building their 14 company, um, and I did the same, 15 described who we were, you know, it was 16 just kind of an introductory meeting so 17 we could both get to know each other 18 better.

9 Q. Did you know Mr. Morfit before I 0 this February 4th meeting? 11 A. I had I think been on one or 12 two panels with him, but I didn't know 13 him other than that, yeah. 14 Not much-- I've been on panels 15 with his partner certainly, I may have 16 also been on a panel with him but I 17 didn't really know him. I knew who he 18 was. 19 Q. Is the reason that you agreed 20 to meet with Mr. Pearson on February 4th 21 that Mr. Doyle suggested it? 22 A. Yes. 23 MS. JOHNSON: I'll ask the 24 court repotier to mark Exhibit 2 to

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Exhibit 1 - Page 21 888-391-3376


HIGHLY CONFIDENTIAL

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your deposition. 2 (Whereupon, the above-mentioned 3 e-mail dated Februmy 8, 2014 bearing 4 Bates numbersPERCAL-00 14170 through 5 175 was marked Ackman Exhibit 2 for 6 identification.) 7 MS. JOHNSON: We will probably 8 refer back to Exhibit 1 so you might 9 want to keep it handy.

10 THE WITNESS: I will. Thank 11 you. 12 Q. Referring back to Exhibit 1 for 13 a moment, it states that on Februmy 6th 14 Mr. Ackman and Mr. Pearson had a 15 telephone call to discuss conceptually a 16 potential transaction structure in which 17 Valeant would identify a target and 18 disclose it confidentially to Pershing 19 Square. 20 Do you see that? 21 A. Yes. 22 Q. Whose idea was that, that 23 structure? 24 A. Oh, the transaction structure?

I mean, it's some combination of myself 2 and Mr. Pearson that came out of that 3 conversation. 4 Q. What do you recall about what 5 you discussed? 6 A. Maybe we can work together to 7 buy -- to help you acquire a company. 8 Q. I'm just reading, a potential 9 transaction structure in which Valeant

10 would identify a target, disclose it to 11 you confidentially? 12 A. Right. 13 Q. And then you could decide 14 whether you were interested in working 15 with--16 A. I'm not sure I would call it a 17 transaction structure but. 18 Q. A discussion structure maybe? 19 A. A discussion structure is

probably a better word to describe it.

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11 Q. On either the February 4th 12 meeting or the February 6th telephone 13 call did anyone mention Allergan? 14 A. Um, not until later. 15 Q. Not until after you signed a 16 confidential agreement? 17 A. Actually, at our first meeting 18 on February 4th Va1eant, when I asked 19 them what kind of business they were 20 interested in acquiring, they mentioned 21 like 10 or 12 different companies as the 22 kind of business they were interested in 23 and, uh, I believe that Allergan was one 24 of those companies.

So I've heard the name Allergan 2 before, I did not know that this was 3 their intended target until they -- we 4 signed a confidentiality agreement with 5 them. 6 Q. Did you talk about any 7 specifics with regard to the 10 or 12 8 companies, including Allergan, that were 9 mentioned on Februmy 4th?

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10 MR. HOLSCHER: You can answer. 11 Go ahead. 12 A. No. 13 Q. All right. 14 MS. JOHNSON: Exhibit 2 is an 15 e-mail that's dated at the top 16 Februmy 8, 2014, Bates number 17 PERCAL-0014170 through 175. 18 Q. Have you seen this document 19 before or parts of it? 20 A. I've seen the parts where I'm 21 copied on the e-mail, I don't think I've 22 seen the parts where I'm not. 23 Q. On the page that's marked 14173 24 at the bottom --

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A. Right. 2 Q. --in an e-mail from report 3 Chai-Onn ofValeant on which you were 4 copied Mr. Chai-Onn says "I'm here with 5 Mike and we feel timing might be 6 critical." 7 Do you see that? 8 A. Yes. 9 Q. Do you have an understanding

10 why timing may be critical at this point 11 on February 7, 2014? 12 A. No. 13 Q. Was the timing critical to you? 14 A. Well, I mean any time you are 15 planning to build a stake in a company, 16 um, I think I have a pretty good idea why 17 they were concemed about timing.

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7 Q. And this idea of building a 8 stake in a company prior to making a 9 proposal attempt, whose idea was that?

10 A. I think it's an idea that comes 11 out of takeovers generally, right? You 12 know, the idea is you buy a total stake 13 in a business and then you make a 14 proposal and the benefit of doing so is, 15 one, if you're, you know, someone else 16 comes along and pays a higher price at 17 least you are compensated for your time

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18 and energy and expenses subsequent to the 19 takeover; and, two, it gives you voting 20 power at an upcoming annual meeting or 21 gives you potential ability to call a 22 special meeting, so I would say it wasn't 23 patiicularly innovative but. 24 Q. The idea of having a hedge fund

1 like Pershing Square take a toe-hold in a Page 29

2 company and having a public company like 3 V aleant make the offer was somewhat less 4 usual; would you agree? 5 MR. HOLSCHER: Objection. 6 Mistakes the facts. Vague as to 7 "offer," form, but you can answer the 8 question. 9 A Sure. What we did here is we

10 formed a joint venture with Valeant to 11 buy the company and, um, and I don't know 12 how innovative that is, um, you know, 13 people call us a hedge fund but we're 14 actually as of today we're effectively a 15 public company or our funds, a big chunk 16 of our capital is public and I think we 17 think of ourselves as an investment 18 holding company in tenns of the way we 19 operate; but we're not -- most hedge 20 funds are, you know, when people think 21 hedge fund they think highly levered 22 short-tenn trading-oriented, you know, 23 arbitragers, where we are very different 24 from that.

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HIGHLY CONFIDENTIAL

The structure of Pershing 2 Square historically is one that is used 3 by many hedge funds but it's really much 4 more similar to Berkshire Hathaway in 5 tenns of approach. 6 Q. The idea of having your 7 investment holding company partner as a 8 joint venture with Valeant in this way, 9 whose idea was that?

10 A It was my idea. I mean, it 11 came out of the-- I mean I guess "idea" 12 is really the wrong word. I mean, Mike 13 came to us and said, look, perhaps we can 14 work together, you bring something, we 15 bring something, um, so I don't want to 16 take too much credit for it; but, you

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17 know, we both were interested in working 18 together. 19 Q. And after you began discussing 20 about ways to work together the approach 21 of having your investment holding company 22 take a toe-hold in Allergan --23 A That's not what happened. 24 Q. Okay, tell me what happened.

1 A Okay. 2 We fanned the partnership and 3 we actually fanned an entity, you know, 4 in substance we formed a pminership, in 5 technical te1ms I don't know whether an 6 LLC or whatever the entity itself was,

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7 and we entered into an arrangement where 8 we both put up capital and we bought a 9 toe-hold stake in the business and then

10 made a proposal to, uh, you know, to 11 merge with the company. 12 Q. And that structure that you 13 just described, when was the first time 14 you discussed proceeding in that way with 15 Mr. Pearson? 16 A I think it would be good to go 17 to the dates. If you want a date, um, I 18 think it's in the proxy. 19 So we fanned the partnership on 20 February 11th, which was a limited 21 liability company, uh, and then we talked 22 about it in more detail over the next, 23 um, couple weeks. 24 Q. So the partnership structure

approach had to have been discussed 2 sometime between February 6th and 3 February 11th? 4 A. Well, fmming a pminership,

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5 yes. What exactly we were going to do we 6 hadn't decided yet. 7 Q. The proxy states that around 8 the same that Mr. Pearson and Mr. Pyott 9 of Allel·gan agreed to meet, did you know

10 about that meeting being set up? 11 A. Yes. 12 Q. What did you discuss with 13 Mr. Pearson about that meeting? 14 A Whether it was advisable to 15 have the meeting or not. 16 Q. And what was discussed on that 17 topic? 18 A. I thought there was a real 19 risk-- the biggest risk when you are 20 going to be building a stake in a company 21 is that leaks, and that the stock price 22 goes up and your opportunity to acquire 23 shares becomes much more difficult, um, I 24 didn't believe, you know, All erg an had

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made, you know, kind of made it known in 2 the public domain that they weren't 3 interested in Valeant and I felt that the 4 incremental benefit of a meeting was 5 very, very small because they had made 6 it -- Allergan needs to be running around 7 to the analysts community saying that we 8 don't want V aleant, we're not interested 9 m a merger.

1 0 I think it had been pretty 11 widely known in the investment community 12 that this was a pretty good fit and that 13 Valeant was a company, they had smi of 14 stayed at the size of the company they 15 were interested in so there was 16 speculation around this transaction or 1 7 potential transaction and I think, you 18 know, David Pyott very assertively made 19 clear that he had no interest in a 20 transaction publicly, and so my view was 21 there was very little upside to having 22 that meeting and there was a potential 23 downside. 24 Q. But Mr. Pearson scheduled the

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meeting anyway? 1 Q. Do you recognize this e-mail, 2 A. No, the meeting had been 2 at least the parts on which you were 3 scheduled prior to my knowing the meeting 3 copied? 4 had been scheduled. 4 A. Yes. 5 Q. Following the execution of the 5 MR. HOLSCHER: Just take your 6 confidentiality agreement you leamed 6 time. It's a two-page document. 7 about Allergan and leamed about the 7 Just take your time and read through 8 meeting? 8 the--9 A. Yes. I 9 THE WITNESS: Yes.

10 Q. That had already been scheduled 10 Q. The e-mail begins with an 11 prior to your involvement? 11 e-mail from a Mr. Seshandri to you on 12 A. Yes. 12 October 11, 2013; do you see that? 13 Q. And you suggested that Mr. 13 A. Yes. 14 Pearson what you just testified to about 14 Q. What was the circumstance that 15 the advisability of having that meeting? 15 led to this initial e-mail? 16 A. We discussed it generally among 16 A. I don't know. 17 the group. 17 Q. Did you receive it out of the 18 Q. And subsequently that meeting 18 blue? 19 was cancelled -- 19 A. Yes. 20 A. Yes. 20 Q. Did you have any discussions 21 Q. --by Mr. Pearson? 21 with the person who sent it to you? 22 A. Yes. 22 A. Uh, I may have, or I'm not 23 Q. Was one of the reasons he 23 sure. I may have had him speak with 24 cancelled the meeting, as far as you 24 someone else in my company.

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know, because of the public reports about Q. You don't specifically recall 2 Allergan and Mr. Pyatt that you have just 2 speaking to him? 3 described? 3 A. If I spoke to him I spoke to 4 MR. HOLSCHER: I object as to 4 him for a minute and -- and had someone 5 foundation. Calls for speculation. 5 else talk to him in the company, but 6 But you can answer. 6 maybe I sent him an e-mail back saying 7 A. Uh, I think that was certainly 7 I'll have someone else call you, I don't 8 one of the factors, but we discussed it, 8 even know. 9 um, you know, the upside/downside of 9 Q. Do you recall having any

10 having a meeting and ultimately we 10 discussions with anyone about Valeant 11 collectively made a decision it wasn't a 11 following the receipt of this e-mail in 12 good idea. 12 October 2013? 13 MS. JOHNSON: I will ask the 13 A. Uh, yes. 14 court reporter to mark Exhibit 3 to 14 Q. What are those? 15 your deposition. 15 A. Just Jordan, I just-- you 16 (Whereupon, the above-mentioned 16 know, people pitch us ideas all the time, 17 e-mail dated February 8, 2014 bearing 17 uh, and depending on what else I'm 18 Bates stamps PERCAL 0038059 through 18 working on I may look at it myself, I may 19 061 was marked Ackman Exhibit 3 for 19 hand it off to another member of the team 20 identification.) 20 and I probably asked one of the younger 21 MS. JOHNSON: Exhibit 3 is an 21 guys in the office to look at this. 22 e-mail dated February 8th at the top, 22 Q. Is it fair to describe this 23 PERCAL-0038059 through 061. 23 short idea as a bear thesis on Valeant? 24 CONTINUED EXAMINATION BY MS. JOHNSON :24 A. Yes.

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Q. What discussion did you have, 2 if any, about the bear thesis on Valeant 3 in this time period?

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4 MR. HOLSCHER: Vague as to time 5 period. Objection. 6 Q. In the time period of this 7 e-mail? 8 MR. HOLSCHER: Are you 9 rcfening to October 2013 or February

10 2014? 11 MS. JOHNSON: October of2013. 12 MR. HOLSCHER: Okay. 13 You can answer. 14 A I don't remember having 15 conversations about it. 16 Q. The next e-mail in the string 17 isinFebruaryof2014. 18 A Right. 19 Q. From Jordan Rubin to you. 20 Who is Mr. Rubin? 21 A He's an analyst on the 22 investment team. 23 Q. It looks like you forwarded it 24 in February to Mr. Rubin, Mr. Doyle and

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1 Mr. Hakim; why did you do that? 2 A I had remembered that someone 3 had sent me a bear thesis on V aleant and 4 I searched my file to find it and then I 5 sent it to Bill and Jordan because we 6 were looking at Valeant. 7 Q. Did you have discussion in that 8 time period, meaning February of2014, 9 about the bear thesis on Vale ant?

10 A In February of2014, sure. 11 Q. What were those discussions? 12 A Uh, that we should, you know, 13 in our business, and we always find it 14 ve1y helpful, uh, to understand, when you 15 are analyzing an investment, you know, 16 thinking of buying a company you always 17 want to know what the negative case is; 18 and so it's very helpful to understand 19 the bear thesis. 20 So in effect this is --21 obviously a lot of people are bullish on 22 Valeant, stock price had gone up a lot, 23 some people are bearish, and we wanted to 24 understand both points of view.

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Q. And you conducted due diligence 2 on Valeant for that reason? 3 A No, we conducted due diligence 4 on Valeant for the purposes of 5 potentially partnering with them to buy 6 Allergan. 7 Q. By "for that reason" I mean in 8 order to leam more information about the 9 bear thesis on V aleant?

1 0 A I'm confused. What's your 11 question? 12 Q. Did you conduct due diligence 13 on Valeant for -- in order to evaluate 14 the bear thesis on Valeant before 15 partnering with them? 16 A No. 17 Q. Did you conduct-- what was the 18 reason you conducted due diligence on 19 Valeant throughout this period? 20 A We conducted due diligence on 21 Valeant for the purposes of deciding 22 whether we wanted to -- we -- one, we 23 wanted to, you know, we were 24 contemplating doing a transaction in

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2 3 4 5 6 7 8 9

10

which we were going to become a major shareholder in Valeant and we were going to own a big position in the company, um, you know, it was not a cash deal, it was going to be largely a stock transaction and so we wanted to make sure that we were comfortable becoming a big shareholder ofValeant on a long-tenn basis and that's why we did our due diligence.

11 12 13 14 15 16 17 18 19 20 21 22 23 24

Q. On the bottom of page 1 of this exhibit you say "We need to make sure that Valeant is pressure tested for a likely attack by the target"; do you see that?

A Yes. Q. Why did you write that? A. Urn, because one of the, you

know, clearly Allergan didn't want to sell itself to Valeant, they made that clear publicly, and in fact they said I think David Pyott is quoted as saying something like we don't think our shareholders want Valeant's paper, right? Which is sort of an intimation that the

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defense to a hostile takeover involving 2 currency other than cash is to question 3 the credibility of the cunency. 4 Q. And that's what you expected 5 from Allergan? 6 A. Yes, based on Mr. Pyatt's 7 statements, sure. 8 Q. And you wanted to know if 9 Valeant was pressure tested to respond to

10 that likely attack by Allergan? 11 A. Sure. 12 Q. What did you mean by "pressure 13 tested"? 14 A. That, you know, they, all of 15 the potential bear arguments that could

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16 be made about V aleant they had very good 17 responses to.


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9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

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Q. And in coming to that conclusion, in coming to a conclusion about Valeant you conducted due diligence on Valeant?

MR. HOLSCHER: I just object to fon11, it's vague as to "conclusion"; but you can answer her question.

THE WITNESS: Maybe you can ask it again.

MS. JOHNSON: Let me rephrase. Q. You conducted due diligence on

Valeant? A. Conect. Q. And in doing so you reviewed

non-public information of Valeant? A. That's conect.

Page 47

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3 A. That's conect. 4 Q. On the fifth page of--5 A. Ofwhich document? 6 Q. OfExhibit 1. 7 A. Okay, yes. 8 Q. At the top of page 5 it says 9 that, On February 7 Sullivan Cromwell,

10 Valeant's counsel, sent Pershing Square 11 and Kirkland & Ellis, Pershing Square's 12 counsel, a draft confidentiality 13 agreement. 14 Do you see that? 15 A. Yes. 16 Q. Is Kirkland & Ellis Pershing 17 Square's regular counsel? 18 A. We use them a lot. 19 Q. When did you --20 A. It's a great fin11. I want to 21 make sure that's on the record. 22 Q. Noted. 23 A. Good. 24 MR. HOLSCHER: Agreed?

Page 49

MS. JOHNSON: Noted and agreed. 2 MR. HOLSCHER: Thank you. 3 Q. When did you contact Kirkland & 4 Ellis about this particular transaction? 5 A. Right around this time, you 6 know, shortly before we started working 7 on it. 8 Q. Sometime between Febtuary 4th 9 and February 7th?

1 0 A. Around that time, sure. 11 Q. And did you hire any other 12 counsel at that time regarding this 13 transaction? 14 A. No. 15 MS. JOHNSON: I'll ask the 16 court reporter to mark as Exhibit 4 to 17 your deposition the next document. 18 (Whereupon, the above-mentioned 19 e-mail dated Febmary 8, 2014, 20 bearing Bates numbers PERCAL-0038071 21 through 073 was marked Ackman Exhibit 22 4 for identification.) 23 MS. JOHNSON: Exhibit 4 is an 24 e-mail dated February 8th marked

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Page 50

PERCAL-0038071 through 073.

2 CONTINUED EXAMINATION BY MS. JOHNS

3 Q. Have you seen this document

4 before?

5 MR. HOLSCHER: Just for the

6 record I want to make sure the comi

7 reporter knows, we can deal with this

8 later, but a number of these

9 documents are marked highly

10 confidential; so we're not saying

11 that as they are listed, but there

12 will be special procedures as to the

13 treatment of these exhibits to these

14 depositions in terms of not being

15 disclosed publically.

16 I know we had a different comi

17 reporter in New York last week, so I

18 just want to make sure we put that on

19 the record and note that these

20 documents are non-public documents

21 and will need to be treated as such

22 when we circulate the transcripts.

23 MS. JOHNSON: Agreed.

24 CONTINUED EXAMINATION BY MS. JOHNS

Q. Have you seen this e-mail 2 before? 3 A Yes. 4 Q. Is it a continuation of the 5 e-mail we saw previously? 6 'A Yes. 7 Q. At the top Mr. Rubin writes to 8 you, "Valeant has gone hostile before but 9 defending their stock as acquisition

10 cunency takes it to a new level." 11 Did you have any discussions 12 with Mr. Rubin about that topic? 13 A Probably. 14 Q. What do you recall about those 15 discussions? 16 A Same as before, the previous 17 deals that were hostile, so-called 18 hostile, unsolicited transactions were 19 all cash. 20 This is a stock deal, you know, 21 the company had already hinted that they 22 were going to attack the cun·ency by 23 saying that their shareholders wouldn't 24 like it, so same -- same thing.

Q. And by "the previous deals" that 2 were hostile you mean Valeant's previous 3 deals? 4 A That's conect. 5 Q. Of the approximately hundred 6 acquisitions that Valeant had unde1iaken 7 those that were hostile involved all 8 cash? 9 A To be really clear, but we can

10 use this as a shorthand, I don't view 11 hostile transactions. I call them happy 12 deals, not hostile deals. 13 What I mean by that is that 14 there are very few unhappy shareholders

Page 52

15 when a company makes a public proposal to 16 acquire a business, but if you prefer the 17 term hostile. Anyway, unsolicited I 18 think is a little more gentlemanly. I 19 think it's also more accurate.

4 Q. Agreed. 5 The e-mail uses "unsolicited," 6 it also uses "hostile" so that's the 7 reason why I'm asking about it. 8 A I think "unsolicited" is 9 actually more accurate. So I don't --

10 so, to be clear, I think the only 11 hostility is that of the management who 12 doesn't want to lose their job. 13 Q. And the unsolicited proposals 14 that you are refening to were previous 15 ones made by Valeant for other companies? 16 A That's correct. I wasn't 17 refening to it, that's Jordan was 18 refening to it. 19 Q. And this was the first 20 unsolicited offer that Valeant planned to 21 make for a company that involved their 22 stock as acquisition cunency? 23 A That's right. 24 Q. Why was that decision made, if

------·-··-----·-·- ---·-·-----'--~·--------------------------·----~


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you know? 2 A. Well, actually I don't know if 3 it was the first. I'm only aware of this 4 one. 5 Q. To your knowledge? 6 A. That's right. 7 Q. And to your knowledge why was 8 the decision made to use their stock as 9 acquisition cunency in this particular

10 proposal? 11 A. Too big to finance all cash.

7 Q. Was one reason to involve 8 Pershing Square as a partner, as you say, 9 to reduce those contingencies?

10 MR. HOLSCHER: Objection. 11 Foundation. Calls for speculation as 12 to Valeant's state of mind, but you 13 can answer if you can. 14 A. I can -- if you'd like I can

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15 explain what I think they were interested 16 where we could add value, maybe you can 17 be more specific what you want. 18 Q. Sure. 19 In your discussions with 20 Valeant about this transaction what did 21 you discuss about the reasons for having 22 Pershing Square be involved? 23 A. Sure. 24 Um, one, we had the benefit of ----·-·---

2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

-- because Valeant's cmTency was going to be pati of the consideration for the transaction, uh, it was important to give credibility to the value of that

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cunency, uh, you know, Valeant over the previous six years where Mike Pearson had been CEO of the company had not been a promotional company, you know, most public companies, you know, the CEO goes to many analyst conferences and they are constantly speaking to analysts to cover the stock.

Mike's approach was more they didn't historically use their stock to acquire things so they didn't really care what the stock price was and they figured over time that investors would figure it out and if anything they had been the net buyer of their shares, which of course they would rather buy stock at a lower price as opposed to a higher price, so they really had no real incentive to get their stock price to fully reflect their value.

--- ········---------1

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1 In this transaction, um, 2 because was -- a decent chunk of the 3 consideration was going to be stock, all 4 of a sudden the stock became a relevant 5 consideration, but they hadn't spent the 6 last six years promoting the company and 7 so they thought we could be helpful in a 8 number of ways.

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2 So we had the benefit really 3 for the first time of doing due diligence 4 on a company with full access to 5 management and access to inside 6 infonnation, so we could vet Valeant as

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7 company, we could assess its value and we 8 could have helped, you know, vet the 9 credibility of the cunency. So that was

10 one very material way that r though t 11 would be helpful and they thought would 12 be helpful.

12 Experience is helpful and 13 Valeant had no experience in proxy 14 contests, so I think that was another big 15 way that we could-- be helpful to us. 16 So it was giving credibility to 17 the currency, tactics in the takeover, 18 um, our proxy contest expertise, the 19 following we have in the investment 20 community, the shareholders, you know, 21 general judgment on, uh, how to proceed. 22 And then they were also picking 23 up, you know, on a long-tenn basis a 24 major new shareholder who would give an

--------------------

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imprimatur to the company going forward 2 and hopefully help, you know, cause the 3 market to revalue the company. 4 Valeant is almost a boutique, 5 it's a very nichie [ si] kind of company, 6 it does not have a conventional 7 shareholder base and so, particularly in 8 phanna, you know, a lot of their 9 shareholders -- some of the shareholders

10 are not particularly big phanna investors 11 because the company follows a very

' 12 different approach from many other phanna 13 companies. So those are some of the 14 reasons. 15 Q. And you discussed all of these 16 reasons with Mr. Pearson? 17 A Yes. 18 Q. In the relevant time frame? 19 A Yes. 20 Q. And by "it" would get you as a 21 major shareholder you mean Valeant would 22 get Pershing Square as a new major 23 shareholder? ' 24 A If the transaction was

------·---- ·---

successful. 2 Q. So one of the things you talked 3 about in the February time frame is if 4 this transaction was successful Pershing 5 Square would become a Valeant 6 shareholder? 7 A Yes. 8 Q. And a major one? 9 A Major one, and we told Pearson

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10 that we expected we would own it for many 11 years. 12 Q. In your discussions of the ways 13 in which Pershing Square could be helpful 14 that you've just described, did you also 15 discuss how the partnership, as you tenn 16 it, with Valeant would be structured? 17 A When? Eventually, yes, because 18 we came to an agreement. But I don't 19 know particular days but, you know, in 20 this period we certainly talked about how 21 to work together, sure. 22 Q. And how did the discussion of 23 the actual structure of the partnership 24 come up?

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A. We were planning on working 2 together for the purpose of acquiring

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3 Allergan and we sat down and talked about 4 how we would go about doing so. 5 Q. And this was all after the 6 confidentiality agreement was signed of 7 course? 8 A. Yes. 9 Q. And between the confidentiality

10 agreement and the ultimate agreement on 11 February 25th, can you describe the 12 discussions that led up to the structure 13 of the relationship as it was documented 14 in the February 26th agreement? 15 MR. HOLSCHER: Objection. 16 Vague. Foundation. 17 You can answer to the best of 18 your knowledge. 19 A. Actually I happen to agree with 20 you this time. So --21 MR. HOLSCHER: This time. 22 A. Tell me what you would like to 23 know and I'll do my best to answer it. 24 I'm not saying anything about

other times. This is one where the 2 vagueness overwhelmed me, due respect, 3 due respect. 4 Q. Do you refer to the February 5 25th agreement as a relationship 6 agreement or by some other name? 7 A. I haven't refeiTed to it since 8 we did the agreement. 9 Partnership agreement, I don't

10 know what its called. Relationship 11 agreement, that sounds fine. 12 Q. Okay. 13 So before the relationship 14 agreement was signed--15 A. I like partnership, that's how 16 I think about it. 17 Q. Before the pmtnership 18 agreement was signed --19 A. Yes. 20 Q. --what discussions do you 21 recall about the structure of that 22 agreement? 23 A. The structure of the agreement? 24 Not much.

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Q. Okay. 2 A. The agreement was very simple. 3 We agreed to work together for the 4 purpose of acquiring Allergan. If you 5 want to pull out a copy of it I'm happy 6 to go through it with you. 7 Q. I will. 8 Before we do that can we talk 9 about the confidentiality agreement

10 briefly. That was signed on February 9, 11 2014? 12 A. I'll accept your word. 13 Q. What discussions do you recall 14 about the negotiation of that patticular 15 agreement? 16 A. None. 17 Q. Do you recall that it contained 18 a stand-still requiring Pershing Square 19 not to trade in the securities of either 20 Valeant or the target, which was at that 21 point yet unnamed? 22 A. Yes. 23 Q. Do you recall that it contained 24 an acknowledgment of the federal

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~-----~--~~

securities Jaws barring trading on inside

2 information?

3 A. I think so. I'm accept your

4 word as well.

5 MS. JOHNSON: Why don't we look

6 at it.

7 (Whereupon, the above-mentioned

8 February 9, 2014 execution version of

9 a confidentiality agreement between

10 Pershing Square and Valeant was marked

11 Ackman Exhibit 5 for identification.)

12 MS. JOHNSON: Exhibit 5 to your

13 deposition is a February 9, 2014

14 execution version of a

15 confidentiality agreement between

16 Pershing Square and Valeant.

Page 65

17 CONTINUED EXAMINATION BY MS. JOHNSON:

18 Q. Would you agree with that?

19 A. Yes. It's not signed. I guess

20 it's -- this is from the, uh, EDGAR

21 filing, yes. It is I guess signed. Not

22 signed exactly but it says it was signed,

23 yes.

24 Q. It indicates that there are -'------ - ~---- -~~ ------------


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HIGHLY CONFIDENTIAL

electronic signatures? 2 A. Yes, or that it was otherwise 3 signed. 4 Q. And at paragraph 4 of the 5 agreement --6 A. Yes. 7 Q. --Pershing Square confinned 8 that it and its representatives had been 9 advised that the securities laws prohibit

10 trading on material non-public 11 infonnation that you would receive 12 following the signing of this agreement. 13 Would you-- would you agree? 14 A. What is your question? Would 15 you repeat the question, sorry. 16 Q. Sure. 17 Would you agree that paragraph 18 4 of this agreement provides that 19 Pershing Square and its representatives 20 had been advised that the U.S. securities 21 laws prohibit trading on material 22 non-public infonnation that you might 23 receive following the signing of this 24 agreement?

MR. HOLSCHER: Objection. 2 Misstates. Objection, fonn. 3 Document speaks for itself. 4 Misstates the language of provision 5 4(a). 6 You can ask him these questions 7 but the document is self-explanatory. 8 A. I mean, I'd rather just-- I'm 9 not a lawyer, so I'd rather read what it

10 says ifyou want or you can just take--11 put it in the record. 12 Q. Sure. 13 I'm just asking for your 14 understanding about whether you 15 understood that this agreement 16 prohibited you from trading on material 17 non-public infonnation that you might 18 receive following the signing of this 19 agreement. 20 A. Yes, until they pe1mitted us 21 to. 22 Q. 23 A. 24

Until Valeant pennitted you to? That's correct.

MS. JOHNSON: The tape is about

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to run out so let's take a short 2 break. 3 THE WITNESS: I don't want to 4 stop. 5 MS. JOHNSON: We'll come right 6 back. 7 THE WITNESS: Oh, okay, then 8 fine. 9 THE VIDEOGRAPHER: This ends

10 tape number one. We're off the 11 recordat10:25. 12 (Whereupon, a brief recess was 13 taken.) 14 THE VIDEOGRAPHER: This begins 15 tape number two in the deposition of 16 William Ackman. 17 We're on the record at 10:34. 18 MS. JOHNSON: Mr. Ackman, I'll 19 ask the court reporter to mark as the 20 next exhibit an order of the LLC 21 Agreement. 22 THE WITNESS: Call me Bill. 23 MS. JOHNSON: I will. 24 (Whereupon, the above-mentioned

Page 69

Limited Liability Agreement of PS

2 Fund 1 was marked Ackman Exhibit 6

3 for identification.)

4 THE WITNESS: Save time.

5 MS. JOHNSON: Shorter, I

6 appreciate that.

7 THE WITNESS: Thank you.


9 Q. Have you seen Exhibit 6 before?

10 A. Yes.

11 Q. What is it?

12 A. The Limited Liability Agreement

13 ofPSFundl.

14 Q. Was it dated as of February 11,

15 2014?

16 A. It is.

17 Q. Does your signature appear on

18 the final page?

19 A. Yes.

20 Q. Several times?

21 A. Yes.

22 Q. On behalf of each Pershing

23 Square entity that entered into this

24 agreement on February 11th? ------ ~--------~·~·

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HIGHLY CONFIDENTIAL

~m ~n

A. Yes. 2 Q. Valeant was not a member of PS 3 Fund 1, the original LLC agreement; 4 conect? 5 A. When we fon11ed it? 6 Q. Conect. 7 A. Uh, let's see. Doesn't look 8 like it. 9 Q. So the February 11,2014 LLC

10 agreement fon11ing PS Fund 1 had as its 11 members only Pershing Square entities? 12 A. Um--13 Q. Correct? 14 A. Give me a moment to read it. 15 Q. Of course. 16 A. Yes, it looks conect. 17 Q. Did you direct the fon11ation of 18 this entity? 19 A. Effectively, yes. 20 Q. Why? 21 A. For the purpose of making this 22 investment. 23 Q. And by "this investment" you 24 mean the toe-hold in Allergan stock?

5 6 this agreement at the time it was fon11ed? 7 8

A. Correct. Q. And it was fon11ed for the

9 purpose of acquiring Allergan stock? 10 A. Yes. 11 Q. What was -- whose idea was it 12 to fon11 a separate entity in order to 13 acquire Allergan stock? 14 A. I mean that's what we do in 15 this kind of a circumstance. I mean, if 16 we're going to fon11 a partnership we need 17 an entity. We can't invest just on 18 behalf of Pershing Square. 19 Q. Would you briefly explain to me

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20 the differences among the Pershing Square 21 entities that are signatories to this LLC 22 agreement? 23 A. Sure. 24 Um, Pershing Square Capital

Management is the management company of 2 Pershing Square, employs the people and 3 receives in some cases profit shares from 4 some of the profits. 5 Pershing Square L.P. is a U.S. 6 so-called 3C7 partnership that has 7 capital from investors. 8 Pershing Square II is a small 9 3Cl partnership for investors who owned

1 0 qualify in the net worth threshold for 11 Pershing Square L.P. 12 Pershing Intemational is an 13 offshore fund for offshore investors. 14 And Pershing Square Holdings is 15 another offshore fund that we had planned 16 to take public and is now a public 17 company.

2 Q. All right. 3 And the five Pershing Square 4 entities that you've just described were 5 the only signatories to the LLC -- LLC 6 agreement at the time it was entered 7 into? 8 A. Right. 9 Do you want to know why?

10 Q. Yes,ldo. 11 A. Okay. 12 So one of the biggest concems 13 we had at the beginning of this 14 relationship was confidentiality, um, and, 15 uh, we wanted to keep, in particular, 16 Valeant's name out of any of our 1 7 agreements that we would have to share 18 with the counterpatiies to our swap 19 contracts and so, uh, we did not include 20 Valeant initially in the -- in this 21 entity because we did not want to let 22 our -- the investment bank who would be 23 on the other side of the transaction know 24 that V aleant was a patiy to the

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to that entity that you were patinering 2 with a strategic, Valeant did not sign 3 the PS Fund 1 agreement? 4 MR. HOLSCHER: Objection. 5 Partially misstates his prior 6 testimony as to the reasons why; but 7 you can answer the question. 8 A. Sure. 9 I don't know, um, it may be the

10 moment we fanned the entity we don't need

17 Unfortunately, banks are leaky 18 and so, uh, we kept Valeant out of the 19 agreement until the last possible moment. 20 Q. At the time of the fonnation of 21 PS Fund 1 on February 11th you intended 22 to purchase Allergan securities by way of 23 forward and option contracts? 24 A. And some stock outright.

Q. As ofF ebruary 11th you 2 intended to purchase Allergan securities 3 by way of forward contracts, option 4 contracts and stock outright? 5 A. That's correct. 6 Q. And the counterparty --7 A. In that opposite -- sort of 8 opposite order, but yes, stock first and 9 then the options and forward contracts.

10 Q. "First" meaning 11 chronologically? 12 A. That's conect. 13 Q. So you purchased stock first 14 and then the options and forward 15 contracts? 16 A. That's conect. 17 Q. Had you already selected the 18 counterpmty to the transaction 7 19 A. I don't believe so. 20 Q. But you anticipated that you 21 would have to select a bank as the 22 counterparty? 23 A. Yes. 24 Q. And to avoid having to disclose

11 12 13 14 15 16 17 18 19 20 21 22 23 24

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2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

someone else to sign it and that's why it was just us, but we did not add them until later, um, because of what you just described, which is that we did not want to let the bank know that Valeant was a partner.

Q. How did you choose which bank to use?

A. Urn, we chose a bank that we busted, uh, and that we had done business with before that had the capacity to do a transaction of this SIZe.

Q. And that bank was Nomura?

A. That's conect. Q. And did you discuss with any

other banks this transaction before selecting Nomura?

A. I don't believe so. Q. Nomura was the only bank that

you contacted at all about this potential transaction?

MR. HOLSCHER: Objection. Vague as to "you." Foundation. A. I didn't do any of the

contacting of the banks. Our trader would be the person that ultimately contacted the banks.

I believe we only contacted one bank, for the same concern about confidentiality.

Q. And who was your trader that you refened to.

A. Ramy, R-A-M-Y, Saad, S-A-A-D, is our head trader.

Q. And at your direction he contacted Nomura; is that cotTect?

A. That's cotTect. I mean we ,, ___ , ______ ,_,_ --------------------

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discussed different possibilities, 2 ultimately selected Nomura, and then he 3 contacted them. 4 Q. And it was important to you, 5 meaning Pershing Square, that Valeant's 6 identity not be disclosed to Nomura? 7 A Con·ect.

22 Q. I am with you. I'm looking at 23 your testimony right there. 24 A Okay.

The, um, I lost my train of 2 thought. 3 Anyway, so we have to be very

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4 careful about who we transact with, how we 5 apply, because people are trying to 6 figure out what we're doing next and if 7 they figure it out then stock prices are 8 going to move; so that's always true. 9 We felt this was particularly

10 sensitive because of the involvement 11 with, you know, Nomura is not used to 12 seeing us show up with someone else, that 13 might raise an even higher level of 14 speculation about what our plans were and 15 that could, you know, if there is a 16 dishonest person or someone with loose 17 lips on the other side that could 18 interfere with the transaction and 19 confidentiality was critically important 20 for obvious reasons. 21 Q. I was looking at your testimony 22 and I think you said for the second time 23 on the day of the announcement your 24 investment ideas go up an average of 25

percent--2 A Versus our average cost of 3 accumulation. 4 So the price we pay to buy the 5 stake versus the closing price on the 6 first day -- I happen to know this fact 7 because we just did a public offering 8 and the underwriters did an analysis --9 but the average increase in price on the

10 first day versus our average cost is what 11 is 25 percent. 12 Q. Versus the average cost at 13 which you acquired the stake? 14 A Not the average move on the 15 first day, right? Because actually the 16 last day is usually the highest price you 17 paid, right? I'm just saying the average 18 cost versus the closing price on the 19 first day. 20 Q. I understand. 21 All right. Who at Nomura did 22 Mr. Saad work with, if you know? 23 A I don't know. 24 Q. Do you know-- do you have a

1 relationship with any people at Nomura? 2 A Uh, I've met them. I couldn't 3 name them. 4 Q. Is the closer relationship

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5 between Mr. Saad and Nomura or between 6 you and Nomura? 7 A He works with them much more 8 closely than I do. 9 Q. Was it your decision to choose

10 Nomura or in connection with him? 11 A It was his recommendation and I 12 agreed with his recommendation. 13 Q. Using February 11th, the date 14 of this agreement as a sort of reference 15 point, when did Pershing Square reach out 16 to Nomura about this transaction? 17 MR. HOLSCHER: Objection. 18 Foundation. Calls for speculation. 19 A I would rather look at when we 20 statied buying, so what date was that? 21 Q. February 25th. 22 A Then we had to buy -- it would 23 probably be very close to February 25th. 24 Q. And the reason for that was to

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Page 82 Page 84

minimize disclosure risks? 1 us a consent to cross the threshold 2 A. Yes, and also, I don't know 2 requirement, the five percent threshold. 3 that we had decided to go ahead until 3 Q. Thank you for that 4 very close to that date, so you don't 4 clarification. 5 want to alert the world until you decide 5 So was that decision only 6 to do something. 6 Valeant's or was it your decision as well 7 Q. Were continuing to diligence 7 whether to cross that threshold? 8 Valeant up until February 25th? 8 A. It was both of our decisions. 9 A. Yes. 9 Q. You both had to come to the

10 Q. And did you continue to 10 conclusion that you wanted to move 11 diligence them after February 25th? 11 forward? 12 A. Yes. 12 A. That's correct. 13 Q. Had you made the decision to go 13 Q. Did you make that decision 14 public with this plan on February 25th or 14 prior to the time when Valeant made its 15 were you still deciding based on your 15 decision on that topic? 16 continued review of Valeant and its 16 MR. HOLSCHER: Objection. 17 business plan? 17 Vague. Form. 18 MR. HOLSCHER: Objection to 18 A. But even I can understand so 19 form. Vague. 19 I'll do my best. 20 A. I should be a lawyer. 20 The, urn, we had, um, we thought 21 Q. Were you going to object to 21 the time was right to go forward so we 22 fonn? 22 had decided, but we needed -- we were --23 A. I was. If you can repeat the 23 we needed their pe1mission at that point. 24 question? 24 We made a decision at a

···~--,----· ···--·

Page 83 Page 85

Q. I'm asking about when your certain, there was a debate about timing, 2 decision point was. 2 um, you know, we got to five percent, our 3 A. You said to go public, that's 3 view is we step out of the market for 4 what I didn't understand. 4 some period of time and then based on 5 Q. Okay. 5 facts and circumstances we decide to go 6 Go public meaning not your IPO 6 forward or not, um, and, you know, we can 7 but to go -- to disclose to the market 7 decide to go forward and if they said no 8 this investment in Allergan. 8 we couldn't go forward; they could decide 9 A. No. 9 to go fmward and if we said no it

10 Q. You had-- 10 wouldn't happen. You need both ofus. 11 A. We didn't make a decision to 11 It's like a nuclear launch 12 disclose to the market our investment in 12 device, both guys have a gun, both guys 13 Allergan, we were required to do that by 13 have a button. 14 law, right? 14 Q. You said there was a debate on 15 Q. You made a decision to cross 15 timing, does that mean that --16 the threshold and therefore have to 16 A. No. 17 disclose to the market; conect? 17 Q. What was the nature of that 18 A. We were not pennitted to close 18 debate? 19 the 13D threshold without Valeant's 19 A. You know, tactics, right? It's 20 consent, so it was we started, uh, buying 20 a partnership, okay? You can't agree to 21 stock on whatever the date was, uh, and 21 everything in advance, right? 22 once we started our plan was to acquire 22 So we had a very simple 23 4.9 percent of the company and at which 23 agreement that we had to work together. 24 point we have to wait until Valeant gave 24 We were all trying to accomplish the same

----~---~-------~~---- -·----···-----

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1 objectives. It's a judgment call, wanted 2 to consider the facts and circumstances 3 at the time, you know, and we worked as 4 partners to decide what was the best 5 thing to do. 6 Q. I'm trying to understand the 7 nature of the debate. Did one party want 8 to go faster or slower? 9 A. That's the only thing you can

10 possibly debate, about timing. 11 Q. I would think. 12 Who wanted to move faster? Who 13 wanted to move slower? 14 MR. HOLSCHER: Objection. 15 Vague as to time. Form. 16 A. I don't know whether it was 17 faster or slower. 18 Q. But that's one of the most key 19 things. 20 A. I don't know that there was a 21 debate. I'm not sure there was a 22 meaningful disagreement, right? I think 23 a day here or there, you know. 24 Q. So I'm just trying to

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understand what you mean about there was 2 a debate on timing. There was a mild 3 disagreement about -- I'm just trying to 4 understand what you mean by there was a 5 debate on timing. 6 A. We decided, you know, there's 7 some technical details about when you 8 start buying and when -- well if you 9 start buying on a Friday there are two

10 weekends, there is a ten calendar day 11 window where you can buy stock. 12 Q. Under !3D? 13 A. Under !3D. 14 If you start buying on a Friday 15 you're going to hit two weekends and 16 you're going to limit the number of 17 trading days. 18 There was also a, uh, holiday, 19 Good Friday in the middle, which was a 20 loss of a trading day. So we were 21 debating whether to wait to Monday and 22 then we would have the benefit of 23 incrementally more trading days, uh, we 24 could have waited later, there wouldn't

1 be a holiday in the middle and then we 2 would have, you know, so the debate was 3 do we wait for more time so we get nine 4 trading days, which is possible if you 5 start on a Monday and you finish on a 6 Wednesday or Thursday, whatever it is, 7 eight or nine trading days, or do you 8 start on a Friday and because you had 9 Good Friday in the middle we'd have to

10 wait like two weeks to start; and we 11 discussed the benefit of the incremental 12 trading day versus the risk of waiting. 13 Q. And what was your view on that 14 issue? 15 A. Ultimately it was a tough call

Page 88

16 but we decided to go forward, uh, when we 17 did. 18 Q. On February 14th Mr. Morfit 19 fi-om ValueAct called you and I can put it 20 in front of you if you would like but he 21 called you. 22 A. I believe you so I'm going to 23 take your word on that. 24 Q. Thank you.

2 3 4 5 6 7 8 9

10 11

Do you recall whether you took that call?

A. I don't think so. Q. Whynot? A. I'm not sure I spoke to him.

I think we ended up having an e-mail communication.

Q. Do you recall what you conesponded about?

A. Yes. Q. What was it about?

Page 89

12 13

A. You know, why don't you show me the exhibit and I'll have a better sense

14 15 16 17 18 19 20 21 22 23 24

of the timing, because I've spoken to him a number of times.

Q. Fair enough. A. Okay.

(Whereupon, the above-mentioned Febtuary 14, 2014 e-mail Bates stamped PERCAL-0001464 was marked Ackman Exhibit 7 for identification.)

MS. JOHNSON: Exhibit 7 to your deposition is a February 14, 2014

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Page 90 Page 92

e-mail Bates stamped PERCAL-0001464.

2 CONTINUED EXAMINATION BY MS. JOHNSON: ~~~~~~~~~~~~~~~~~~~~~~~~ 3 Q. Have you seen this document 4 before? 5 A. Yes. 6 Q. Is it the e-mail as I described 7 it? 8 A. Yes. Perfect track record. 9 Q. Do you recall Mr. Morfit from

' 10 ValueAct calling you around this time 11 period? 12 A. I do. 13 Q. Do you recall what you 14 discussed, if anything? 15 A. Yes.

• • • • 22 Q. Do you recall any other 23 discussions with Mr. Morfit about his 24 proposal, as you describe it?

1 A. Um, it wasn't a pmiicularly 2 long conversation. 3 Q. Other than that conversation? 4 A. It's possible we spoke a second 5 time but -- but I don't think so. 6 Q. Okay. 7 (Whereupon, the above-mentioned

Page 93

8 document entitled A MOE Feb 16th 2014, 9 Bates stamped VAL-ALL_00037942 to

10 37967 was marked Ackman Exhibit 8 for 11 identification.) 12 MS. JOHNSON: We will look at 13 the next exhibit. 14 MR. HOLSCHER: Thank you. 15 MS. JOHNSON: Exhibit 8 to your 16 deposition is entitled A MOE, Bates 17 stamped VAL-ALL_00037942 to 37967. 18 MR. HEUER: I just want to note 19 on the record that this is a highly 20 confidential document and I think 21 when this came up in the last 22 deposition we had the witness sign 23 the protective order, so we will 24 consent to showing him.

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Page 94 Page 961

MS.JOHNSON: Thankyou. ~-=~==========····, 2 CONTINUED EXAMINATION BY MS. JOHNSON:

3 Q. As counsel mentioned, this was I • 4 produced by Valeant, so my question-- I • -5 and I don't know the answer to this-- is ~~~·~~~~~~~~~=-6 whether you have seen it before?

I • • 7 A. It's so confidential that I

8 have not seen it before. I • 9 Q. Okay. I I • 10 A. That's how confidential it is. • • 11 You mean to say you only ask me • • 12 questions you know the answers to? • • 13 Q. Not always.

14 A . Okay. • • • • • • • • •

•


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22 Q. Do you recall discussions with 23 Valeant about Valeant's conhibution to 24 the PS Fund 1 entity?

1 A Yes. 2 Q. And what discussions were 3 those? 4 A Just related to what they were 5 able to, you know, just in tenns of HSR 6 and other restrictions, uh, they were

Page 99

7 going to make the HSR contribution to the 8 entity. 9 Q. What do you mean by "the HSR

10 contribution"? 11 A I think there is a minimum 12 amount of stock a strategic acquirer can 13 provide another company before having to 14 make an HSR contribution, which was 75.9 15 million. 16 Q. And you had discussions with 17 Mr. Pearson about that topic? 18 A I think it came up in 19 conversations with lawyers about what 20 they could invest. 21 Q. Prior to February 25th, which 22 was the patinership agreement, what 23 discussions do you recall with the 24 lawyers about the HSR limit?

Page 100

1 MR. HOLSCHER: I'm going to 2 object as potential attomey-client 3 communications; but to the extent you 4 are having a business discussion 5 where lawyers are present you can try 6 to answer a question, but they are 7 not entitled to ask you about your 8 conversations with, for example, 9 lawyers at Kirkland & Ellis.

10 A What I would say, first of all, 11 I understand the HSR restrictions myself, 12 I believe that Valeant could only make a 13 $75.9 million investment and that's what 14 they made. 15 Q. And your personal understanding 16 of the HSR requirement is that they could 17 only make an investment of that size 18 without having to file an HSR, you know, 19 statement with the FTC? 20 A Uh, the issue is they could 21 have acquired, done a forward contract to 22 acquire stock in Allergan, as we did, or 23 options. 24 The problem is that because we

1 were the counter -- they didn't have 2 agreements with Nomura as we do it, 3 they're called ISDA, it's a contract in 4 order to enter into these options/forward 5 contracts, so we try to get them to 6 become patiies to those contracts, which 7 was just not feasible, and so therefore 8 they were really limited to just buying 9 the HSR limit, and so we bought -- they

Page 101

10 wanted to make the maximum investment 11 they were pennitted to make, which means 12 buy $75.9 million in stock, so we bought 13 $7 5. 9 million in stock and the entity 14 effectively assigned that stock to them 15 and then our investment was through the 16 forward contracts and the, uh, and the 17 options. 18 MR. HEUER: Can I just object 19 to foundation and to the extent your 20 question requested a legal 21 conclusion, the prior question. 22 THE WITNESS: And I may be 23 wrong in all of that, but that's my 24 understanding.

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Page 102 Page 104

make a -- a filing. 2 CONTINUED EXAMINATION BY MS. JOHNSON: 2

3 Q. What was the reason for 3 Once we built our economic

stake, uh, then we made a filing with the 4 Pershing Square using forward contracts 5 and options? 6 A. Sure.

7 I think the FTC generally looks 8 at investors like us as they likely look 9 at other strategic buyers, which is they

10 consider us control type investors where 11 the control of the entity is, you know, 12 could be changed, uh, and as a result we 13 are subject to the same limitations as a 14 typical strategic acquirer is in buying a 15 stake in a business. 16 The FTC specifically examines 17 the acquisition of economic interest in a 18 business that don't come with voting 19 rights from the HSR requirements. 20 So if you buy options or you 21 enter into a forward contract to acquire 22 shares you can get economic exposure 23 before making -- before being required to 24 make the requisite filing to the

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govemment. 2 Q. In order to avoid making that 3 filing with the govemment Pershing 4 Square used forward contracts and options 5 contracts to purchase Allergan shares? 6 A. To be clear, so the FTC 7 specifically examined -- we could buy as 8 much of a company as we want once we get 9 permission from the Federal Trade

10 Commission because we're buying voting 11 interests, but you have to make a filing 12 with the FTC and there is a 30-day period 13 where they will review it. 14 You are also required to send a 15 copy ofthe filing with the FTC to the 16 company, in this case the target. The 1 7 last thing you want to do is alert the 18 target that you are going to buy a big 19 stake in a company. 20 So the FTC specifically 21 examines the purchase of non-voting 22 interests, options, forward contracts, 23 that's a permitted way to get economic 24 exposure to a company without having to

4 Federal Trade Commission to get approval 5 to acquire the underlying shares. 6 Q. So only the $75.9 million wmih 7 of stock was allocated to Valeant; 8 correct? 9 A. Uh, that's correct.

10 Q. And for that reason Valeant did 11 not have to make an FTC HSR filing? 12 MR. HOLSCHER: I'm going to 13 make an objection. You are asking 14 for a legal conclusion with respect 15 to another entity. 16 You can answer if you'd like 17 but you are asking for a legal 18 conclusion. 19 A. I'm no lawyer, but my 20 understanding is they could buy 75.9 21 million without having to make a filing. 22 Q. After the $75.9 million of 23 Allergan stock that PS Fund 1 acquired 24 the rest of the shares via shares or

forward contracts or options contracts 2 were allocated to Pershing Square? 3 A. Well, so it was actually we had 4 an overall anangement and our deal was 5 that, uh, they would get the first $75.9 6 million in stock, we would acquire 7 options and forward contracts, and

Page 105

8 depending on the circumstances they would 9 participate in a share of our profits

10 from our investment. 11 Q. How is--12 A. So, you know, technically 13 allocations are, you know, there were 14 sort of several different ways things get 15 allocated depending on what happens. 16 Q. Can you describe the 17 negotiations leading up to the agreement 18 for the allocation of profits? 19 MR. HOLSCHER: Objection. 20 Vague. Foundation. Calls for a 21 nanative. 22 A. Want to hear a story? It's not 23 that complicated. 24 So we agreed to fonn a

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partnership and we agreed to put up 2 capital, they agreed to put up capital, 3 and they wanted to share in the profits 4 in the event that the venture was 5 unsuccessful in acquiring Allergan, i.e.,

Page 106

6 someone came in and paid a higher-- paid 7 a higher price; and so I guess we wanted 8 to pay them a lower share of the profits, 9 they wanted a higher share of the

10 profits, we negotiated an agreement to 11 share 15 percent of the profits from the 12 investment-- our investment with them in 13 the circumstance in which someone else 14 paid a higher price and V aleant wasn't

prepared to top that bid .

•

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22 23 24

2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23

Q. You said you believe in-- you preferred "aligned incentives," what was not an aligned incentive about the one

percent profit-sharing thing? Page 109

A. So our mutual goal was to combine the two companies and for us to become a long-tenn shareholder of the combined enterprise; to the extent that we got less of the profits from an alternative bid, our incentives are more aligned, we're more interested, therefore we make more money in the deal in which Valeant/Allergan happens and, you know, we get less of the profits if it's sold to a third party; so we're more incentivized to work together to accomplish the goal.

(Whereupon, the above-mentioned e-mail dated February 18,2014 at the top, V AL-ALL_00004174- 4177 was marked Ackman Exhibit 9 for identification.)

MS. JOHNSON: Exhibit 9 to your deposition is an e-mail with a date February 18, 2014 at the top, VAL-ALL 00004174 to 4177. You were I

24 believe not copied on this e-mail.

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Q. So my first question was 2 whether you have seen this document or 3 the attachment before? 4 A. Uh, no.

Page 110

1 2 3 4

Olasker are counsel for Valeant, to your knowledge?

A. Conect. Q. What, in general tenns -- and I

Page 112

5 Q. Who is Alex Moore? 5 ask you because I know you have Kirkland 6 A. Alex Moore? 6 7 MR. HOLSCHER: I'm going to 7 8 object on -- 8 9 THE WITNESS: Isn't this is 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

attorney-client privilege? Why would this be something that -

MR. HOLSCHER: It may be something that Valeant disclosed.

I'm going to object on foundation grounds. This appears to be an e-mail between Valeant's counsel and Valeant. My client's never seen it before.

If you want to ask him

10 11 12 13 14 15

questions if he knows of individuals, • you know, apart from reading it on • the e-mail you can ask that, but • again, I object on foundation and I'd • ask you to, you know, answer •

& Ellis as your counsel -- what in general terms is Davies Ward retained to do?

A. Canadian securities law. Q. So Davies Ward is Pershing

Square's Canadian counsel? A. That's correct. Q. And Olasker, to your knowledge,

is Valeant's Canadian counsel? A. Yes.

----------------\ --------------

2

3

4

5

questions based on your personal knowledge.

So you go ahead and ask the question but I think it's a foundation issue.

Page Ill

I I I I I

6 CONTINUED EXAMINATION BY MS. JOHNSON: I 7 Q. My question is who is Alex I 8 Moore? 9 A. I don't know.

10 Q. Are any of the names on this 11 e-mail counsel for Pershing Square, to 12 your knowledge? 13 A. Clay Horner. 14 Oh, no, no, no, Clay Horner is 15 Valeant's counsel. Um, I don't know, 16 yeah, I don't know. 17 Our counsel was Davies Ward, so. 18 Oh, Patricia Olasker. Patricia Olasker 19 is our lawyer, and Alex I think works 20 with Patricia at Davies Ward. 21 Q. Davies Ward is counsel for 22 Pershing Square? 23 24

A. That's correct. Q. And Clay Horner and Patricia

I I • • • • • • • • • • • • • • •

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10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

2 3 4 5 6 7 8 9

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HIGHLY CONFIDENTIAL

Q. Do you recall discussions in that time period with those people present about the transaction proceeding by way of a merger?

A. Yes. Q. Do you recall discussions about

the transaction proceeding by way of a merger and having Pershing Square be identified as a soliciting person?

A. No. Q. Do you recall discussions,

without respect to a tender offer, of Pershing Square being identified as a co-bidder?

A. Urn, when? Q. Prior to February 25, 2014 with

counsel for both pa1iies present. A. Yes.

Page 131

Q. What do you recall? A. With both counsel present? No.

We definitely talked to our lawyers about it, sure.

Q. All right. I won't ask you about your

discussions with your own lawyers. Do you recall discussions where

lawyers for both parties were present where you discussed the terminology "co-bidder"?

A. No. Q. Do you recall discussions with

both counsel present after February 25th about the terminology "co-bidder"?

MR. HOLSCHER: I'm going to object.

I've given you leeway here in tenns of the questions. That's a yes or no question because it would be privileged. But I'm going to object to fonn of tenninology of "co-bidder."

I don't want to be

Page 132

argumentative here, but objection,

2 form, foundation.

3 He can answer the yes or no 4 question but to the extent there is a

5 common interest privilege after

6 February 25th the substance of those 7 conversations we're asserting a 8 privilege; but he can answer your yes

9 or no question.

10 THE WITNESS: You are going to 11 have to ask me again. Thank you.

12 MS. JOHNSON: Of course. Any 13 time. 14 CONTINUED EXAMINATION BY MS. JOHNSON:

15 Q. After February 25, 2014, do you

16 recall any discussions with both counsel 17 for Pershing Square and Valeant being 18 present where the concept of calling

19 Pershing Square a co-bidder was

20 discussed? And that is a yes or no 21 question.

22 A. The concept of calling us a

23 co-bidder?

24 Q. Yes.

2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23

A. No. Q. Okay.

The partnership agreement dated February 25th refers toPS Fund 1 as a co-bidder; do you recall that?

A. No, but I believe you if it's true.

Q. Okay. We will look at it, but if that

is in fact the case do you recall discussions prior to its signing about why that tenn was used?

A. Yes. Q. What do you recall? A. These were conversations with

counsel. Q. Only your own counsel? A. Sure. Q. A. Q.

Any other conversations? No. Okay.

MS. JOHNSON: We will take a break to switch the tape.

Page 133

24 THE VIDEOGRAPHER: This ends

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1 tape number two. We're off the 2 record at 11:29. 3 (Whereupon, a brief recess was 4 taken.) 5 THE VIDEOGRAPHER: This begins 6 tape number three in the deposition 7 of William Ackman. 8 We're on the record at 11:40. 9 (Whereupon, the above-mentioned

10 e-mail dated February 20, 2014, 11 bearing Bates numbers VAL-ALL_ 12 00028337 to 28344 was marked Ackman 13 Exhibit 10 for identification.) 14 MS. JOHNSON: Mr. Ackman, I'll 15 ask the court repmier --16 THE WITNESS: Bill. 17 MS. JOHNSON: I forgot already. 18 I 'II ask the court repmier to 19 hand you what's been marked Exhibit 20 1 0 to your deposition. 21 Exhibit 10 is an e-mail dated 22 February 20, 2014, marked 23 VAL-ALL 00028337 to 28344.

Page 134

zero sum situation; so I certainly read 2 it, I didn't draft any of it and if there 3 are ideas I might have put them in. 4 Some things came from lawyers, 5 some things came from me. 6 Q. All right. 7 Let's turn to the agreement 8 which starts on page 28338 and the first

Page 136

9 heading marked No. 1 says "Formation of a 10 co-bidder entity"; do you see that? 11 A. Yes. 12 Q. Is that a word that you drafted 13 or not? 14 A. I didn't draft it but in 15 substance I mean I just thought of this 16 as joint venturers, but in fact we were 17 co-bidders of the company. Same thing. 18 Q. In your mind joint venturer and 19 co-bidder are sort of--20 21 22 23

A. The same. Q. -- the same? A. Q.

Partners. And partners.

24 CONTINUED EXAMINATION BY MS. JOHNSON:24 On page 2, subparagraph (e)

Q. Have you seen this document 2 before? 3 A. Yes. 4 Q. Have I described it accurately? 5 A. I think so. 6 Q. Is this an e-mail that you sent 7 to Mr. Pearson on February 20, 2014 8 attaching a draft of a -- of an 9 agreement?

10 A. Yes. 11 Q. Okay. 12 You state at the top, "I did my 13 best to put something together that 14 attempted to contemplate issues that

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15 would be important to you. Please let me 16 know how I did. " 17 Were you involved in creating 18 the document that is attached to this 19 e-mail? 20 A. I think it's an overstatement. 21 I told the lawyers to design an 22 agreement that was we wouldn't waste a 23 lot of time negotiating as a partnership, 24 we're not trying to, you know, it's not a

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says, "If a company transaction is being 2 pursued by the company through a tender 3 offer or a merger prior to the 4 tennination time, each of the company, 5 Poseidon and the Co-Bidder Entity will be 6 identified as co-bidders or soliciting 7 persons, respectively." 8 Is that a subparagraph that you 9 had any involvement in drafting?

10 A. I did not draft that paragraph. 11 Q. Did you have any discussions 12 other than with your own lawyers with no 13 one else present about whether the 14 transaction might proceed as a merger? 15 A. Yes. 16 Q. What discussions did you have 17 in that regard? 18 A. Uh, that was our plan. I mean, 19 so basically, um, Valeant had approached 20 the company a year and a half earlier and 21 about I think potential mergers of equals 22 or some other kind of transaction and, uh, 23 I think Mr. Pyatt got back to Mike 24 Pearson saying that the Board -- discussed

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it the Board, had no interest, um, you know, our theory was that, uh, by buying a large stake in the company, by announcing the bid for the business, uh, that that would put -- that would, one, lead to, um, you know, some turnover in the shareholder base but also, uh, existing shareholders, you know, putting pressure on the company, on the Board to, uh, hopefully consider a transaction; and so, um, you !mow, that was our plan and the goal was to effectively use the-- our, you know, initial large toe-hold in the company plus the, uh, support from other shareholders and a turnover in the share base ultimately to put pressure on the Board to be open up to a potential deal.

Q. And the question is if that didn't work did you think through to the end what niight happen thereafter?

A. Yes, yes. Q. And what did you think? What

was in your mind about that? A. We were going to call a special

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meeting. The plan was to call a special meeting and replace the Board.

Q. Did you ever discuss proceeding by way of a tender offer with anyone other than your own lawyers?

A. No. Q. Or an exchange offer? A. No.

Do you want to know why? It would save us a lot of time and legal fees and all this complete waste of time.

Q. Why? A. Because there has not been --

you can't do a hostile tender offer. There is not an example of a successful hostile tender offer for thi1iy years and the reason for that is the poison pill --and you guys should know that really well because the other law firm working on this invented the poison pill; right?

Once you realize that a company can put in place a poison pill, a Board can, a tender offer is worthless.

A tender offer hasn't worked in --------·-···-·-----

2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

thi1iy years. The only reason why people use

tender offers today as a mechanism is to compete a consensually negotiated transaction in the most efficient way possible.

A tender offer is not a technique that is used in hostile deals any more, and that's why we weren't planning to do a tender offer, because a tender offer doesn't do anything.

All a tender offer does -- and

Page 140

maybe I'll save you even more time -- why do we launch one at the very end? Because we -- we get to force the Board to disclose their reasons for rejecting the deal in a 14D-9; and on the margin, you know, it shows little more conviction to the arbitragers, but it doesn't do anything, and this litigation is a complete waste of time and it really bothers me that Allergan is spending our money, okay, suing us and accusing us of crimes, you know, it's absurd.

------·----------

Q. My question is didn't you know that a tender offer might be used for that very purpose when you stmied this?

A. We didn't talk about it, we didn't think about it, in fact I didn't expect the Board to behave as badly as they behaved.

These guys have behaved extremely poorly. They've wasted shareholders' money. The shareholders are ready to throw them out, okay?

Okay, when Jackson Square, okay, and T. Rowe Price release public letters saying that the Board is behaving badly, that's when you know that the Board has overstepped its bounds.

T. Rowe Price is not a shareholder advocate.

Jackson Square, I don't know if they've ever disclosed a public letter -written a public letter to a company ever, okay? They've been a shareholder in the company for ten years, okay?

This litigation is a complete

Page 141

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waste of time, okay? I'm happy to stay 2 here for five hours, okay, I'm going to 3 do it, I know it's your job; um, but if I

Page 142

4 can deliver a message to the Board, okay, 5 it's a complete waste of time. We did 6 not stake one step, not one step for 7 doing a tender offer, nor did Valeant, 8 okay? Not one. 9 Q. It's right in the document.

10 A We did not take one step. 11 Okay? Full stop. Okay? 12 MR. HOLSCHER: Just with 13 respect to your comment that it's in 14 the document, that's not a question. 15 You are entitled to ask him 16 questions, not to make statements. 17 So if you want to ask him a 18 question you can ask him a question. 19 You are asking him questions 20 about a draft agreement that he did 21 not draft, of a provision that he has 22 indicated he didn't draft. 23 If you want to ask him 24 questions you can do that, but in

1 terms of the back -and-forth in the 2 statement, um, that's not a question. 3 So feel free to ask him 4 questions and I'd ask my client 5 witness just to answer your 6 questions. 7 THE WITNESS: I'd be delighted 8 to. 9 MR. HOLSCHER: And then we'll

10 go forward. 11 THE WITNESS: And I'm not 12 holding you responsible, it's not

Page 143

that's conect. 2 Q. And you planned for that 3 eventuality? 4 A I -- we expected that the 5 company would, as I -- we believed that 6 Pyatt was opposed to the transaction, 7 okay, but we believed the Board was a 8 legitimate Board of Directors. May I 9 finish?

10 Q. Of course. 11 A Okay. The Board understood 12 their fiduciary duty and that presented 13 with a transaction that offered almost 14 three billion dollars worth of synergies, 15 that could create enonnous shareholder

Page 144

16 value, that offered tremendous synergies 17 between the two companies on the revenue 18 side, on the cost side, on just the 19 overall strategic side, uh, that the 20 combination of our large stake in the 21 company, uh, a very material premium bid 22 that was raised twice, that eventually 23 the Board, you know, the company would be 24 put in play, the Board would look at all

2 3 4 5 6

7 8 9

10 11 12

of their alternatives, uh, and we believed that we could be very competitive because Valeant's infrastructure offered the most synergies.

There was a risk that someone else paid more, that's okay, um, but, uh, we thought they would resist; but ultimately we thought they would capitulate.

Q. Did you have a plan in mind for if you were wrong and the Board did not capitulate?

Page 145

13 personal. 13 A Yes. 14 MS. JOHNSON: It's not. 14 15 CONTINUED EXAMINATION BY MS. JOHNSON: 15

16 Q. My question is when you started 16 17 you expected Mr. Pyott to resist; right? 17 18 A. Yes. 18 19 Q. And you expected this to be -- 19

20

Q. What was that plan? A We would call a special meeting

and we would replace the Board, and we were going to negotiate with a group of directors who understood their fiduciary duty.

Q. Do you agree with me that the 20 my word not yours -- but you expected 21 this to be hostile? 21 word tender does appear in this document? 22 A. Mr. Pyott did not want this 23 deal and still doesn't want this deal 24 regardless of what his shareholders want,

22 A It's a fact. 23 Q. Would you agree with me that it 24 was in the mind of somebody on their

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side? 2 A. I don't know what that means, 3 okay? I didn't draft the agreement. 4 MR. HOLSCHER: I'm going to 5 object to fonn. I've given you 6 leeway. 7 We all know, sitting in this 8 room, that the actual agreement has 9 specific provisions that prohibit

10 what you are describing as the plan; 11 and I'm giving you leeway to ask him 12 questions about a document that he 13 didn't draft, that's a draft that is 14 not the actual agreement, but I have 15 to raise an objection that it is 16 misleading to try and put in the 17 record that something's in someone's 18 mind when the actual operative 19 agreement prohibits what you are 20 trying to say they were planning for. 21 So I'm objecting. I'm giving 22 you leeway to ask him questions about 23 a draft that is not the operative 24 agreement, but I want the record to

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be crystal clear that this is a 2 misleading line of questions. 3 If you want to ask him 4 questions as to when they -- at the 5 time and the reasons as to why they 6 did the tender, those are appropriate 7 questions and I'm sure at some point 8 you will get there and, if not, we 9 will get there; but I'm objecting on

10 the grounds of misleading, fonn and 11 foundation; but you can ask him 12 whatever questions you'd like. 13 For the record, these 14 questions -- I know what you're 15 doing, you're trying to get snippets 16 for your brief-- you are asking him 1 7 questions about a draft letter that 18 is not the relationship letter for 19 which the actual relationship letter 20 has directly contradictory terms. 21 You can go ahead and ask the 22 questions. 23 MS. JOHNSON: That whole thing 24 was a waste because I didn't have a

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microphone on.

2 MR. HOLSCHER: Mine's on.

3 MS. JOHNSON: To the extent it 4 matters I object to your objection

5 characterizing the final agreement, 6 which we will look at.

7 CONTINUED EXAMINATION BY MS. JOHNSON: 8 Q. And my question is whether in

9 your mind you believed that if you were

10 wrong about the Board's reaction to your 11 proposal whether you contemplated that a

12 tender offer and exchange offer would be 13 a possibility? 14 A. We did not contemplate an

15 exchange offer or tender offer for the 16 reason 1 described at the very beginning.

17 You cannot have -- you cannot 18 do a hostile exchange offer and have it

19 succeed unless the Board of Directors 20 consent or you throw out the Board and

21 put in a new Board who redeems the pill.

22 They just don't work any more. 23 This is a complete waste of

24 time, and by the way, Marty Lipton knows

that, he invented the pill, it works 2 really effectively. You guys have a pill 3 in place. You cannot close a tender 4 offer, you can't do it. It's a waste of 5 time and, no, we did not think about it, 6 we did not take steps toward it, okay? 7 Our plan was to call a special meeting. 8 The reason why we wanted to buy

Page 149

9 as much stock as we bought in the company 10 was to give us a head start towards your 11 incredibly onerous requirement to call a 12 special meeting -- which you guys deserve 13 a lot of credit for designing, but are 14 extremely shareholder unfriendly -- and 15 hopefully you realize that now. 16 But, yes, our plan was to call 1 7 a special meeting and replace the Board. 18 There is no other way. A tender offer is 19 wotihless, and you know that, and you're 20 asking me these questions which is why 21 really I find it fmstrating and 22 disturbing. 23 Q. Did you have an understanding 24 at the time that you sent this draft

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agreement why the term "if this 2 transaction proceeds as a tender offer" 3 appeared in the draft? 4 A. No. 5 Q. Did you have an understanding 6 as to why the agreement says "if this 7 transaction proceeds as a tender offer" 8 we'll call each other "co-bidders"? 9 MR. HOLSCHER: Objection. He

10 just indicated --11 Lack of foundation. Misstates 12 the prior testimony. 13 He's indicated he was not aware 14 of this provision at the time, so you 15 are now asking a follow-up question 16 based on the assumption that he was 17 18 19 20 21

22

aware of the provision. So you misstate his prior testimony, form.

MS. JOHNSON: I don't believe you've testified that he was not aware of it, he said he did not draft it.

Page 150

A. Is this the one we are looking 2 at now? 3 Q. Yes. 4 A. This draft agreement? 5 Q. Yes, it's on page 5. 6 (Witness peruses exhibit.) 7 A. Okay. I've read Section 5. 8 Q. Did you have an understanding 9 about the circumstances under which the

10 agreement would tenninate? 11 MR. HOLSCHER: Objection. 12 Vague as to time. 13 Q. At the time you sent this 14 agreement to Mr. Pearson? 15 MR. HOLSCHER: Objection. 16 F 01111. Draft. Misstates the 17 18 19 20

document. A. So with respect to this draft? Q. Right. A. These three provisions I

21 understood and were things I focused on. 22 Q. And the I guess fourth

Page 152

23 CONTINUED EXAMINATION BY MS. JOHNSON:23 24 Q. My question was did you have in 24

provision that's under (b), can you tell me what you recall about the tennination

mind a reason for saying in the draft 2 that you sent to Mr. Pearson if this 3 transaction proceeds by a tender offer 4 we'll refer to each other as co-bidders? 5 A. I didn't say anything in the 6 document that was sent. You just said I 7 said something. I didn't say anything. 8 Objection to fotm.

Page 151

9 Q. Sustained. 10 Did you have an understanding 11 of why the draft agreement said if this 12 transaction proceeds by a tender offer we 13 will call the parties co-bidders? 14 MR. HOLSCHER: Objection. 15 Foundation. He has not testified he 16 has an understanding that was in the 17 draft. Fon11. 18 A. No. 19 Q. Did you have an understanding 20 of the tennination provisions in the 21 draft agreement? 22 A. I'd like to look at them before 23 I tell you whether I do or not. 24 Q. Of course.

rights -- as to your understanding about 2 whether there would be a third party, 3 what would happen if there were a third 4 party transaction proposal? 5 MR. HOLSCHER: Same -- same 6 objection to fonn, it's in a draft, 7 but you can answer. 8 A. Yeah, I'd have to check all 9 these references to the clauses, but the

10 basic deal was if someone else bid more, 11 uh, then, you know, we would work to 12 compete with that transaction; but 13 ultimately ifValeant wasn't prepared to 14 pay more, we couldn't compete, we were 15 free to take that other deal. 16 Q. And by "we" do you mean 17 Pershing Square? 18 A. Yes, PS Fund 1. 19 Q. Was Pershing Square, the 20 Pershing Square entities, were the 21 Pershing Square entities the only 22 entities that would control that decision 23 for PS Fund 1? 24 MR. HOLSCHER: Objection.

Page 153

----·-·-------

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Page 154

Fonn, foundation; and I want to make 2 sure the record is clear, this is not 3 the operative agreement. 4 You can try and answer the 5 question about the draft that was 6 sent. 7 THE WITNESS: Sure. 8 MR. HOLSCHER: On this February 9 20th.

10 But, I mean so the record is 11 clear, we are not answering questions 12 about the operative agreement. 13 A A way to think about it is in 14 stage one we put up the majority of the 15 capital-- the vast majority of the 16 capital -- and so we controlled with 17 respect to that-- that entity, right? 18 We could make decisions about buying 19 stock up until4.9 percent, but in the 20 ordinary course we were buying and 21 selling, it was really up to us, and that 22 if the deal didn't happen and some other 23 transaction happened we could choose to 24 take it.

--------------

Page 156

and stage two -- the agreement was that 2 Pershing Square would control PS Fund 1's 3 decision to acquire Allergan stock? 4 MR. HOLSCHER: Objection. Same 5 objection to this entire line of 6 questioning. It is creating -- and I 7 normally do not make speaking 8 objections -- it's creating a very 9 confused record because you have a

10 draft in front of him, you are asking 11 him hypothetical questions and there 12 is a written relationship agreement 13 and I'm just saying this again, if 14 you want to show him the relationship 15 agreement and ask about the tenns of 16 the agreement that's fine; if you 17 want to ask him questions about the 18 drafting, that's fine. 19 You have now mixed the two as 20 hypotheticals to create necessarily a 21 misleading question in the record. 22 So if you want to ask him about 23 the agreement with stage one or stage 24 two or the draft, that's fine, a

--------· ----------- --+--- ··----------Page 155

In stage two, uh, where they 2 were putting up more of the consideration 3 than us, they had more control over the 4 outcome. That's basically how it worked. 5 Q. Can you explain what you mean 6 by "stage two"? 7 A Uh, the first period up to 8 buying the stock, once the position was 9 owned and they made an offer, you know,

10 an offer which is largely Valeant's 11 consideration -- Valeant's stock and 12 Valeant's cash-- they had, you know, it 13 was up to them to decide what price to 14 pay. We did not control. 15 You know, we discussed it with 16 them, we had some, you know, they had 1 7 input into the trading, you know, we had 18 input into the bid, but we did not 19 control the ultimate tenns and they 20 didn't control the ultimate purchase, 21 that's how it worked. 22 Q. Right. 23 So the agreement --just so I 24 understand your tenninology of stage one

Page 157

hypothetical, but you are muddling

2 all three.

3 So I object to these questions

4 as inherently misleading and

5 confusing ..

6 I apologize for the speaking

7 objection and I ask you to read the

8 question back, but this is going to

9 be an inherently misleading record.

10 Ask about the agreement, ask 11 about the draft, but don't mix the

12 two in questions back-to-back. 13 Objection to form.

14 CONTINUED EXAMINATION BY MS. JOHNSON: 15 Q. We're talking about the draft 16 that you send on February 20th.

17 A. Okay. 18 Q. Do you have the question in

19 mind or shall I repeat it? 20 A. No idea. Go 'head.

21 Q. As of the draft on February 20,

22 2014 was your understanding that Pershing

23 Square would control the decisions of PS 24 Fund 1 in making decisions to acquire

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1 Allergan shares? 2 MR. HOLSCHER: Same objections. 3 A. You know, I'm not-- I haven't 4 compared the draft to the final so it's 5 hard for me to give you a precise answer. 6 Q. Okay, fair enough. 7 Let's look at the final 8 agreement. 9 (Whereupon, the above-mentioned

10 document marked "Execution Version 11 Confidential" of an agreement between 12 Pershing Square and Valeant 13 Pharmaceuticals was marked Ackman 14 Exhibit 11 for identification.) 15 MS. JOHNSON: We will look at it 16 in a second. 17 MR. HOLSCHER: Thank you. 18 MS. JOHNSON: Exhibit 11 to 19 your deposition is marked "Execution 20 Version Confidential" of an agreement 21 between Pershing Square and Valeant

Page 158

question. 2 A. So I didn't negotiate the 3 draft, right? I focused -- I negotiated 4 the deal, and then I probably read the 5 agreement several times to make sure it 6 reflected the deal. 7 So I wouldn't give me the 8 credit for actually writing the words in 9 the agreement.

10 Q. What do you recall about the

Page 160

11 negotiations of the deal between February 12 20th and February 25th, if anything? 13 A. No idea. 14 Q. Are there points of, you know, 15 particular contention that stick out in 16 your mind as being negotiated during that 17 time period? 18 A. I mean, the substance of things 19 we were focused on were we could buy up 20 to 4.9 percent, again, we had control 21 over that; but the decision to cross the

22 Pharmaceuticals. 22 23 CONTINUED EXAMINATION BY MS. JOHNSO :23

five percent threshold was something that required mutual consent.

24 Q. Have you seen this document

Page 159

before? 2 A. Yes. 3 Q. Does it indicate electronically 4 that this document has been signed by 5 you? 6 A. Yes. 7 Q. Is this the final version of 8 the relationship agreement or partnership 9 agreement between Pershing Square and

10 Valeant? 11 A. I believe so, yes. 12 Q. Okay. 13 No. 1 says "Formation of 14 Co-Bidder Entity: Acquisition of Allergan 15 Equity." 16 How involved were you in the 17 negotiations between the first draft that 18 we looked at which was February 20th and 19 this final agreement on February 25th? 20 MR. HOLSCHER: Objection. 21 Misstates the -- misstating question, 22 fonn, and incmrect reference to 23 negotiations prior to February 20th 24 document. But you can answer the

·-~~~----

24

2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Um, the tenns, you know, when,

Page 161

if someone put in a competing bid how quickly did Valeant have to respond with a higher offer before we were free to take the alternative bid, how long in effect we were locked up in partnership with them, things like that.

Q. On page 2 of the agreement in paragraph, subparagraph (d), the language is, if you will recall, it is different than the February 20th draft we looked at, if you want to read it.

My question is did you have any involvement in any of the changes between the February 20th draft we looked at and this final agreement?

A. I'm not a lawyer. I didn't modify the agreements. I focused on some basic business principles that I negotiated with Mike and that ultimately the lawyers reflected in the agreement.

I read the agreement to make sure it reflected my agreement; so it's not like I took an old draft, you know, I think that's what the lawyers did.

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Q. So it's fair to say you don't 2 recall any participation in the language 3 change of this particular paragraph from 4 the draft to the final? 5 A. Let me read it, but I don't 6 think so. 7 (Witness peruses Exhibit 11.) 8 A. I'm very familiar with one of 9 the provisions here.

10 Q. Which one is that? 11 A. Urn, the, uh, the provision that 12 acknowledging that no steps had been 13 taken and that in order to do a tender 14 offer they needed both of our consents. 15 Q. And what are you recalling 16 about that pmiicular provision? 17 A. Just that our lawyers, uh, you 18 know, advised us about the tender offer 19 rules and, you know, we didn't want our 20 --you know, since this was a pminership 21 and we didn't control V aleant and we 22 hadn't purchased securities yet, you 23 know, the risk was, uh, if, uh, Valeant

Page 162

24 went ahead and made a tender offer while ------------··------

we were buying stock it could create 2 potentially a risk for us and we had no 3 interest in -- this was the I'll call it

Page 163

4 the belt-and-suspenders provision to make 5 sure they couldn't launch -- we had no 6 plans to launch a tender offer, we didn't 7 want to launch a tender offer, nor did 8 they, and they didn't want us to either, 9 and so therefore we built in a provision

10 that required mutual consent in order to 11 do it. 12 Q. Was that a negotiated provision 13 with Valeant? 14 A. It wasn't negotiated. I think 15 we both wanted it. 16 Q. Do you recall anything else 1 7 about the discussions leading to, you 18 know, these two sentences that we're 19 talking about right now, these two 20 clauses? 21 A. No, just what I described. 22 Q. Just to skip to the end, you 23 have now -- Valeant has now launched a 24 tender offer?

A.

2 Q. 3 A.

4 Q. 5 offer? 6 A.

7 Q. 8 A.

We have. And you-We're part of it. You're part of the tender

That's conect. Why was that decision made? Uh, we made that decision

9 because, uh, after attempting to, you 10 know, motivate the Board to, uh, 11 negotiate, um, we thought it would be 12 tactic, you know, it would be helpful to 13 have a public record as to why the Board 14 rejected the transaction and, you know,

Page 164

15 the event community we took some advice 16 from, uh, suggested that we launch a 17 tender offer, uh, for that reason. 18 Q. The event community? 19 A. Event investors. We -- we 20 attended a meeting at the Sanford 21 Bemstein conference and we met with most 22 of the large shareholders of the company 23 and, you know, we were given input as to 24 strategy and what to do here and they --

one of the, uh, arbs recommended that, 2 you know, Valeant launch a tender offer 3 just to show more, you know, launch a 4 tender offer to show more definitiveness. 5 Q. And why did that suggestion 6 change your mind? 7 A. Well, uh, one, we already

Page 165

8 purchased our stake in the company, uh, 9 we had not been successful in convincing

10 the Board to come to the table and, uh, 11 you know, it was important to show as 12 much conviction as possible and certainty 13 because that increased the amount of 14 stock that would ultimately be held by 15 people who would be suppmtive of the 16 transaction; and the biggest risk to 17 shareholders buying the stock at the 18 current price was that Valeant decided 19 not to go forward. Without Valeant 20 there's no deal. 21 And so what a tender offer did 22 is it just showed incremental-- it's 23 more optics than substance -- it showed 24 more conviction on the pmt of Valeant

--- ·--------- ----


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HIGHLY CONFIDENTIAL

and without the benefit of the Board 2 being required to respond as to the 3 reasons for rejecting the deal. 4 Q. Did Valeant and Pershing Square 5 make that decision together? 6 A Yes. 7 Q. Were there-- yes or no, were 8 there discussions --9 MR. HOLSCHER: Objection.

I 0 Vague as to time. Farm. 11 Q. -- to the prior question?

Page 166

12 A We made the decision subsequent 13 to raising the offer to the highest -- to 14 the highest price, and then, um, I'm 15 sorry, we made the decision right after 16 that Sanford Bemstein conference. 17 Q. Which was when; do you recall? 18 A End of May. 19 Q. And as a yes or no question, 20 were there discussions between Pershing 21 Square and Valeant with counsel for both 22 people present around the time period of 23 the end of May about the concept of a 24 tender offer?

A Yes. 2 Q. As to the termination 3 provisions in this final agreement, which 4 are on page 5, can you describe any 5 negotiations that occUlTed leading to the 6 signing of this final agreement about 7 when this agreement would tenninate? 8 A Um, the ones that we were 9 focused on, uh, were (a), (b), (c) and

10 (d). I mean, basically what our concern 11 was -- this becomes a big illiquid

Page 167

12 position, how long do we have to hang out 13 there. 14 We also didn't want to be in a 15 position where Valeant -- we wanted 16 Valeant to be very responsive to whatever 17 the alternative deal was otherwise we 18 should be free to accept another 19 transaction. We didn't want to be 20 hanging out here, so that's really what 21 we focused on. 22 Q. And by "hanging out here" you 23 meant in the presence of a third party 24 offer you wanted to be at some point free

to take it? 2 A That's conect. 3 Q. IfValeant detennined not to 4 match or exceed it? 5 A That's right. 6 Q. And the decision of whether 7 Valeant would match or exceed it was 8 entirely Valeant's decision? 9 A Uh, yes. We had input into

10 it, they would listen to us, but they 11 were putting up the bulk of the money to 12 buy the company so it was their decision 13 ultimately. 14 Q. And, conversely, your decision 15 of how to vote your shares, subject to 16 the restrictions in the agreement, was it 17 entirely belonged to Pershing Square? 18 A Um, I think we -- I think the 19 way it worked was if Valeant's deal was 20 the best deal we would contractually 21 agree to support it, if someone else 22 offered a better transaction they didn't

Page 168

23 want to compete with then we could vote 24 in favor of that transaction.

Q. In order to vote in favor of a 2 third-party transaction would the entire 3 agreement tenninate as you were 4 negotiating this agreement leading up to 5 the final signing? 6 A I don't know. 7 Q. What was important to you was 8 that you could vote your shares in favor 9 of a better deal if Valeant didn't choose

10 to match it? 11 A That's correct. 12 Q. Okay. 13 There is a provision in this 14 agreement about a right ofValeant to

Page 169

15 require Pershing Square to purchase $400 16 million of Valeant securities? 17 A Yes. 18 Q. What do you recall about 19 negotiations -- negotiations leading to 20 that provision? 21 A Uh, they, in the event they 22 needed more capital they wanted a 23 commitment from us. They asked 24 originally for a billion dollars, um, and

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Page 170 Page 172

the problem was while we were prepared to Q. Yes. 2 commit more capital our view is it's hard 2 A. Where in 2(d)? You said on 3 to commit to buy stock in advance without 3 page 3? 4 knowing what the price is going to be in 4 Q. On page 3, do you see 2(d), 5 the future; and so this was already a 5 "The company agrees that..."? 6 very large investment for us and so we 6 A. Yup. 7 originally wanted to have a fixed price 7 Q. I won't reread it, but the 8 so we could buy it on the basis of 8 company agrees that it shall not acquire 9 today's price and we were prepared to 9 beneficial ownership of Allergan equity

10 make a bigger commitment, um, but under I 10 except as a result of the consummation of 11 think the Toronto Stock Exchange mles 11 the company transaction; do you see that? 12 they couldn't commit to sell a stock at 12 A. Yes, "company" being Valeant. 13 today's price at some point in the 13 Q. Conect. 14 future. 14 Do you recall any negotiations 15 Q. Umhum. 15 leading up to this particular paragraph? 16 A. So we ended -- I think the TSE 16 A. It wasn't a negotiation. I can 17 allows for sales as much as a 15 percent 17 explain to you why it's here if you want. 18 discount without shareholder approval and 18 Q. Okay. 19 so we ended up agreeing to commit $400 19 A. Um, we just wanted to make sure 20 million at a 15 percent discount from 20 that we didn't -- first of all, as a 21 market price at the time. 21 group for 13D purposes we didn't 22 Q. And that commitment is at 22 inadvertently cross the five percent 23 Valeant's selection? 23 threshold and we didn't inadvertently 24 A. That's conect. 24 cross the HSR threshold, so that all of

"·~---~-·-·

Page 171 Page 173

Q. Is it decided immediately the purchases had to be through this 2 before any transaction closed whether or 2 entity. 3 not to call that obligation? 3 Q. Are you aware that Valeant 4 A That's correct. 4 later in May bought 100 Allergan shares? 5 Q. And if Valeant decides Pershing 5 A Yes. 6 Square will make that purchase? 6 Q. Do you have an understanding as 7 A That's correct. 7 to whether that purchase violated this 8 Q. And if Valeant either doesn't 8 agreement? 9 meet the character -- 9 A. No, we said it was okay.

10 MS. JOHNSON: Well, strike 10 Q. Is that something, did they 11 that. 11 come to you ahead of time and ask for 12 Q. IfValeant for any reason 12 pennission? 13 chooses not to call that obligation, 13 A. I think it was discussed. 14 Pershing Square does not have to make 14 Q. What was discussed? 15 that contribution? 15 A. I think they needed to own the 16 A We're on the hook, uh, but it's 16 shares for the record, they wanted to 17 at their option as to whether to take it 17 have record ownership of the stock and we 18 or not. 18 said, fine, and the hundred shares didn't 19 Q. Section 2( d) of this agreement 19 affect any threshold so it was fine. 20 provides that the company, meaning 20 Q. Do you recall when they made 21 V aleant, agrees that except as provided 21 that request to you? 22 by this letter agreement at any time 22 A. No. 23 during which the company -- 23 Q. Shortly before they made the 24 A I'm sony, 2( d)? 24 purchase?

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A. Yes. 2 Q. Is it that--3 A. Again, it wasn't a particular 4 material fact, but I think we had a 5 discussion -- we had regular almost a 6 daily call, uh, I think at some point 7 there was a reason, I don't remember 8 exactly the one, where they had to or it 9 would be useful, helpful to them to own

10 some number of record shares, so, you 11 know, it wasn't an issue. 12 Q. Is that because the Allergan 13 shares that are allocated to V aleant

Page 174

14 based on its $75.9 million investment are 15 not beneficially owned by Valeant? 16 A. That sounds like a legal 17 question. I would ask a lawyer. 18 MR. HOLSCHER: Objection. 19 Objection to fonn, foundation, and 20 asks for a legal conclusion. 21 MS. JOHNSON: That's fine. 22 Q. Was there a written agreement 23 that gave them pennission or it was just 24 oral?

A. Oral. 2 Q. Did they tell you why they 3 wanted to have a separate ownership of 4 100 shares? 5 A. I don't remember. 6 Q. This agreement was executed on

Page 175

7 February 25th, 2014; would you agree with 8 that? 9 A. Yes.

10 Q. And you began trading in -- PS 11 Fund 1 began trading in Allergan shares 12 the same day; is that true? 13 A. I'll take your word. 14 Q. Okay. I'll show you--15 A. This is what I'll say to save 16 you time: If we filed something on a 13D 17 it's accurate, so if it shows us buying 18 on that date you can rely on that. 19 Q. All right. 20 A. I just am not going to remember 21 particular dates. 22 Q. That's perfectly fine, I 23 understand. 24 (Whereupon, the above-mentioned

Page 176

one-page e-mail dated February 27,

2 2014, bearing Bates numbers

3 PERCAL-0000363, was marked Ackman

4 Exhibit 12 for identification.)

5 MS. JOHNSON: Exhibit 12 to 6 your deposition is a one-page e-mail

7 dated February 27, 2014, marked

8 PERCAL --

9 THE WITNESS: I spilled water.

10 MS. JOHNSON: It's only water.

11 MR. HOLSCHER: Just water.

12 THE WITNESS: It's another

13 reason for you to drink water rather 14 than Coke.

15 MR. HOLSCHER: I switched. 16 THE WITNESS: Sorry, go 'head.

17 MS. JOHNSON: 0000363. 18 THE WITNESS: Yes. 19 CONTINUED EXAMINATION BY MS. JOHNSON:

20 Q. And do you recognize this 21 document?

22 A. Yes.

23 Q. Is it an e-mail exchange 24 between you and Mr. Pearson?

Page 177

A. Yes. 2 Q. Do you note on February 27th 3 that "Mike, we bought your shares well"? 4 A. Umhum. 5 Q. What did you mean by that? 6 A. As I explained, the money that 7 they put up, uh, was in effect the 8 purchase of the shares that would be 9 allocated to them, so that's what I

10 meant. 11 Those shares, that $75.9 12 million that we allocated to them, that 13 we did a good job buying them I felt. 14 Q. Why did you feel you did a good 15 job buying them? 16 A. Relative to the weighted 17 average price on the respective days we 18 executed well, it wasn't a grand 19 accomplishment but. 20 Q. But an accomplishment? 21 A. Right. 22 Q. Other than the shares purchased 23 and allocated to Valeant under the 24 agreement, was the rest of the Allergan

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equity purchased through forward and 2 option contracts? 3 A. Yes. 4 Q. You say, "I had some fmiher 5 thoughts on timing." Do you recall what 6 you meant? 7 A. I'm not sure. 8 Q. Do you recall having a follow-

Page 178

9 up discussion with Mr. Pearson about your 1 0 further thoughts on timing? 11 A. I mean, it's possible it was 12 timing with respect to when we cross the 13 threshold, but I don't know. 14 Q. Do you recall any discussions 15 about any other kind of timing with 16 Mr. Pearson? 17 MR. HOLSCHER: Objection. 18 Vague as to time, fonn. 19 A. I have no idea. 20 Q. Okay. 21 A. Is there a document that you 22 want to show me to refresh my 23 recollection? 24 Q. Yes, there is.


2 e-mail dated March 6, 2014 marked

3 PERCAL-0065474 was marked Ackman 4 Exhibit 13 for identification.) 5 MS. JOHNSON: Exhibit 13 to

6 your deposition is an e-mail that you 7 were not copied on dated March 6,

8 2014 marked PERCAL 0065474, it's an

9 e-mail from Mr. Doyle to Mike Pearson 10 that references you. 11 CONTINUED EXAMINATION BY MS. JOHN

12 Q. I assume you have not seen this 13 document before?

14 A. I don't think so.

• •

•


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10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

HIGHLY CONFIDENTIAL

Page 182

Page 183

Q. Start what? A. Buying. Q. I understand. A. I mean, we were -- we had done

a sufficient level of due diligence on Valeant that we were comfortable doing this deal with them, but, you know, we didn't want to stop our work.

Q. That -- that wasn't in fact my question.

Were you continuing to do due diligence of Valeant in order to continue with the deal or you had already done enough as of the time that you started purchasing Allergan shares?

MR. HOLSCHER: That's fine. Objection. Vague as to time as to the prior string of questions, but I think this one is okay.

I believe you've been switching back and forth between the February 14th and February-- post February 25th, but I believe this question is appropriate; but objection on the

string of questions, fonn, as to the 2 time, but you can answer. 3 A. I think what Bill is conveying 4 is that, you know, we're ready to go as 5 soon as you guys are ready, you know, 6 that's what Bill's point of view is; and

Page 184

7 again, I don't remember exactly where we 8 were in this time frame, but there came a 9 time when we were comfortable going ahead

10 with the transaction but we still 11 continued to do work, and part of that 12 was preparation ultimately for a public 13 presentation on the company; but, again, 14 I don't remember exactly the timing so. 15 Q. Understood. 16 A. Yeah. 17 Q. When you say a "public 18 presentation on the company" you mean a 19 public presentation on Valeant? 20 A. And Allergan, and the 21 combination. 22 (Whereupon, the above-mentioned 23 one-page e-mail dated March 10, 2014 24 bearing Bates numbers VAL-ALL_00028089

Page 185

was marked Ackman Exhibit 14 for

2 identification.)

3 MS. JOHNSON: Exhibit 14 to

4 your deposition is a one-page e-mail

5 dated March 10, 2014 marked

6 VAL-ALL_00028089.


8 Q. Do you recognize this document?

9 A. Uh, sure.

10 Q. The only question I have on it

11 is were there difficulties in getting

12 information from Valeant during this time

13 period in order to conduct your due

14 diligence?

15 A. No, you know, Valeant is-- it

16 depends what you mean. They're happy to

17 give us anything we wanted except these

18 are busy guys, they run a very lean

19 corporate headqumiers and our diligence

20 requests, you know, they didn't really

21 have a dedicated staff just to handle our

22 due diligence requests and they were busy

23 with, you know, various things, so I just

24 sent an e-mail to Mike saying, hey,

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Page 186

please have your team give us more focus, 2 there's more stuff we want. 3 Q. And any delay you attributed to 4 their being busy rather than their 5 reluctance? 6 A. That's cotTect, they gave us 7 everything we asked for. 8 Q. Including non-public 9 information about their company?

10 A. That's correct. 11 Just remind me in tem1s of 12 timing, what date did we start buying? 13 Q. February 25th. 14 A. So now that I-- so Bill 15 Doyle's statement that Allergan -- that 16 we're rate limiting statements, I think 17 it's more Bill's excitement about going 18 forward than we were necessarily done at 19 that time; so we didn't make an ultimate 20 decision to go forward until very shortly 21 before we went forward. 22 Q. Understood. His e-mail prior 23 to February 25th? 24 A. Yes, the one on the 14th. I

1 assumed that was a day or two before we 2 stmied buying but if it's not then I 3 would assume that we were still doing 4 work. 5 Q. I understand. 6 A. So let me correct that record. 7 Q. Thank you for the 8 clarification. 9 A. No problem.

10 (Whereupon, the above-mentioned 11 e-mail dated March 17, 2014 with an 12 attachment marked PERCAL-0006947 13 through 6967 was marked Ackman 14 15 16 17

Exhibit 15 for identification.) MS. JOHNSON: Exhibit 15 to

your deposition is an e-mail dated March 17, 2014 with an attachment

Page 187

• -• 18 marked PERCAL-0006947 through 6967. • 19 CONTINUED EXAMINATION BY MS. JOHNSON:. 20 Q. Do you recall seeing this • 21 document? 22 A. Yes.

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(Whereupon, the above-mentioned 2 one-page e-mail dated AprilS, 2014, 3 marked PERCAL-0006839 was marked 4 Ackman Exhibit 16 for 5 identification.) 6 MS. JOHNSON: Exhibit 16 to 7 your deposition is a one-page e-mail 8 dated April 5, 2014, marked 9 PERCAL-0006839.

10 CONTINUED EXAMINATION BY MS. JOHNSON: 11 Q. And you write to Mr. Pearson 12 that if you were Apollo, which I assume 13 is Allergan, you would do a leveraged 14 buyback; is that right? 15 A. Urn hum, yes. 16 Q. Is that what-- did you expect 17 Allergan to do a leveraged buyback in 18 response to the unsolicited proposal that 19 you plmmed to announce? 20 A. Not necessarily, urn, we were 21 just trying to contemplate what Allergan 22 might do in response, so this was just 23 one example. 24 Q. Did you expect a range of

defensive measures at this point in time 2 before and after the transaction? 3 A. Possible, possibly, sure. 4 Q. Was doing a leveraged buyback 5 one of the ones that you expected? 6 A. Expect is too strong. It' one 7 of the ones that was possible. 8 Q. Why do you say "it will look 9 shareholder friendly"?

10 A. Allergan has a poor track 11 record of allocating shareholder capital, 12 um, you know, the shareholders, if you 13 read the analysts reports for the last 14 five years, you know, one of these issues 15 that people focus on is the company has 16 not -- there are two ways -- ways to 17 create value for shareholders, running a 18 business and also deploying capital that 19 the business generates, and if you do 20 both well you can create a lot of 21 shareholder value, if you do only one 22 well you leave a lot of money on the

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23 table; and Allergan is a company that has 24 been criticized for years about their

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1 balance sheet and the lack of, uh, 2 discipline they've used with respect to 3 capital; and so if they woke up and 4 started to be more disciplined about the 5 way they use capital it might be, you 6 know, viewed as shareholder-- responsive 7 to shareholders, although, you know, the 8 problem is, of course, that after the bid 9 the stock price was very high and it sort

10 of-- if they were to buy back at current 11 levels then they really throw themselves 12 into criticism for not having bought back 13 stock at half the price less than a year 14 ago. 15 Q. Did you expect the stock price 16 to rise after the announcement of an 17 unsolicited transaction? 18 A Yes. 19 Q. Is there a reason that you 20 nevertheless, expected is a strong word, 21 but anticipated that they may do a 22 leveraged buyback? 23 A It's one of the possible 24 defenses.

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1 Q. Okay.

2 A. Other companies have done 3 similar things.

4 MS. JOHNSON: Let's take a

2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

1

2 3 4 5 6 7

Valeant Board meetings? A. Yes. Q. Um --A. Part of one. Q. Part of one? A Yes. Q. Was it, to your recollection,

in Febmaty of2014? A I think so. Q. What do you recall about that

meeting? A Um, we, uh, met the Board, I

think it was really an opportunity for them to meet us, myself, Bill Doyle, I think just the two of us-- and Jordan might have been there, I'm not 100 percent sure -- and we just talked about our business and what we do and, um, talked about Allergan and.

Q. What kind of questions did the Board ask you about your business?

A. Uh, I don't remember many questions to be honest, just, you know, tell us about your business.

Q. Okay. Can you summarize what you told

them about your business? A. Just what we do for a living

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you want to pay? 1 Q. You say, "Time is the enemy of 2 A Yes. 2 a good deal"; what do you mean by that? 3 Q. Did you talk at all about the 3 A Um, that there's risks 4 structure of a pminership that by which 4 associated with waiting. 5 Valeant and Pershing Square would work 5 Q. Do you list some of the risks 6 together? 6 of waiting that are in your e-mail? 7 A I don't think so. 7 A Yes. 8 Q. Did you discuss the structure 8 Q. One of them is defensive action 9 of any transaction that would end up with 9 by the target. Do you expect as of April

10 a Valeant acquisition of Allergan at that 10 7, 2014 defensive action by Allergan? 11 Board meeting? 11 A Yes. 12 A Nope. 12 Q. You also say "leaks, now that 13 Q. Anything else you recall about 13 bankers are engaged this risk increases 14 the discussion about Allergan? 14 materially"? 15 A This was really a meet the 15 A Yes. 16 people oppmiunity both for us and for 16 Q. What did you mean by that? 17 them. 17 A We had not yet -- this is when 18 Q. So nothing else specifically 18 we were at or around under five percent 19 that you recall about the discussion 19 of the company, and the risk, as I had 20 about Allergan? 20 mentioned before, when you are trying to 21 A No. 21 acquire a stake in a business, uh, if 22 Q. Anything else you recall about 22 that infonnation were to leak into the 23 that particular Board meeting? 23 market the stock price would go up and 24 A I recall meeting various 24 make it more costly to acquire a

Page 199 Page 201

directors. position. 2 Q. Anything else? 2 Q. We've already discussed that by 3 A. No. 3 this time you had already engaged of 4 Q. Did you attend any other 4 course Nomura? 5 Valeant Board meetings other than the 5 A Yes. 6 one? 6 Q. Had Pershing Square engaged 7 A. No. 7 any other bankers at this point in the 8 (Whereupon, the above-mentioned 8 process? 9 one-page e-mail dated April 7, 2014 9 A No, no.

10 marked PERCAL-0004528 was marked 10 Q. Did Pershing Square 11 Ackman Exhibit 17 for identification.) 11 subsequently engage additional bankers? 12 MR. HOLSCHER: Is this 17? 12 A Um, yes. 13 THE REPORTER: Yes. 13 Q. Who? 14 MS. JOHNSON: Exhibit 17 to 14 A Credit Suisse. 15 your deposition is a one-page e-mail 15 Q. When, if you know? 16 dated April 7, 2014 marked 16 A We put out a press release, 17 PERCAL-0004528. 17 much later. 18 CONTINUED EXAMINATION BY MS. JOHNSON : 18 Q. Did Pershing Square engage any 19 Q. Do you recognize this document? 19 additional bankers in connection with 20 A. Yes. 20 this transaction? 21 Q. What is it? 21 A No. 22 A. E-mail to Mike Pearson. 22 Q. Did Pershing Square itself or 23 Q. That you wrote? 23 PS Fund 1 engage Credit Suisse? 24 A. From me. 24 A I don't remember.

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Q. Did Pershing Square or PS Fund 2 1 engage Nomura? 3 MR. HOLSCHER: I'm going to 4 object as to fonn with respect to 5 engaging of a counterpatiy. Fonn, 6 ambiguous. 7 A I can help. So PS Fund 1 is 8 the counterparty for Nomura. 9 Q. Not Pershing Square?

10 A That's -- that's conect. 11 Q. Okay. 12 A Pershing Square may be a 13 guarantor of some of PS Fund 1 's 14 obligations. 15 Q. Where would that relationship

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16 be spelled out, meaning whether Pershing 17 Square is the guarantor for PS Fund 1 's 18 obligations? 19 A In the agreements with Nomura. 20 Q. What kind of agreements with 21 Nomura were entered into? 22 A Uh, forward contracts and 23 options. 24 Q. Approximately how many?

1 A Well, for each option I think 2 there's only one agreement but there are,

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3 you know, probably multiple -- every time 4 we did a transaction, which could be 5 every day, there could be a trade, or 6 every few days, there could be like a 7 trade sheet summarizing the terms of part 8 of an execution of a transaction. 9 Q. But one overarching agreement

1 0 between PS Fund 1 as the counterparty to 11 Nomura? 12 A I'm not 100 percent sure. 13 Q. To your knowledge was Valeant a 14 party to that, any of those agreements 15 that we're talking about right now? 16 A Uh, no. Well, PS Fund 1 was 17 the counterparty, not Pershing Square or 18 Valeant. 19 Q. And these --that agreement, 20 the overarching agreement between --21 A I don't know if there is an 22 overarching one; so I think there are a 23 series of agreements that relate to 24 forward contracts entered into between

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PS Fund 1 and Nomura relating to forward 2 contracts and options. 3 Q. To your knowledge was Valeant a 4 party to any of those contracts? 5 A Uh, I don't know what "party" 6 means, but as a member ofPS Fund 1 are 7 they a party to the agreement? I don't 8 know. 9 Q. You also mention in Exhibit 17

10 that "As of today, A is at the lowest 11 price since we started and volume is near 12 the highest." 13 Do you have an understanding as 14 to why volume was near the highest as of 15 April 7th? 16 A No. 17 Q. This is-- this appears to be a 18 discussion with Mr. Pearson about timing 19 and you appear to be advocating for 20 moving more quickly; is that fair? 21 A Yes, not waiting around, for 22 sure. 23 Q. Was there a discussion about 24 this in which he disagreed with your view

on timing? 2 A No, but as I mentioned before, 3 we, you know, uh, we debated the issue. 4 Q. Had you made a decision at this 5 point, April 7th, that you wanted to 6 cross the five percent threshold and go 7 ahead? 8 A I need to know whether I'm at 9 the five percent threshold or not. Was I

10 atApril7th? 11 Q. I actually don't know the 12 answer to that at this point. 13 A Okay. 14 Q. Let me ask, was your decision 15 to -- was your decision to cross the five 16 percent threshold made close in time to 17 when you crossed it or a less specific 18 time but ahead of time? 19 A We didn't make the decision 20 until after we got there. We didn't know 21 how long it would take to get to 4.9 22 percent. Once we got to 4.9 percent we 23 were going to stop and then have a 24 discussion about it, that's what we did.

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Q. And once you got to 4.9 percent 2 were you then quickly ready -- you 3 meaning yourself-- were you quickly 4 ready to move across --5 A. I'm always ready. 6 Q. --that 4.9 percent threshold? 7 A. The answer is when we decided 8 to go forward we decided to go forward. 9 I don't know what you mean by "quickly

10 ready." It didn't require anything to 11 get ready. 12 Q. It required a decision? 13 A. Conect. It was a mutual one of 14 Valeant and us and it required some 15 discussion and debate, uh, and we had 16 that discussion and debate for a period 1 7 of time and then we made a decision one 18 day to go forward. 19 Q. What, if anything, did Mr. 20 Pearson tell you about advocating for a 21 more slow, you know, time period? 22 A. His concem was that our 23 purchases had driven up the stock price 24 of Allergan and what they were very

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focused on was the premium -- how people 2 would look at the premium of the offer 3 relative to the market price; and we have 4 more experience in acquiring securities 5 than Valeant does, they are not really 6 experienced in buying stocks in the open 7 market or swaps or contracts or options,

· 8 et cetera, and so I think they wanted to 9 create, you know, enough time for the

10 stock price to settle before, uh, you 11 know, we decided to go forward and buy 12 more shares; and the question is how much 13 time should that be. And that was -- I 14 was of the view that a day or two was 15 enough, you know, they were not so sure, 16 we had a discussion on it. We had to 17 agree before we decided to go forward. 18 Q. And I guess to answer your 19 question to me this was before -- April 20 7th was before you crossed the threshold? 21 A. Yes. 22 Q. So does that--23 A. What was the date? Tell me the 24 date that we --

Q. April10th.

2 A. Okay, so that sounds about

3 right.

4 Q. Okay. All right.

5 So during the April 7th time

6 period you were discussing with him the

7 idea of when-- how the timing would work

8 out?

9 A. That's right.

10 Q. Anything else you recall about

11 those discussions regarding whether to

12 move quickly or slowly?

13 A. That's it.

14 Q. Okay.


16 one-page e-mail on April 10, 2014

17 marked PERCAL-0003170 was marked

18 Ackman Exhibit 18 for

19 identification.)

20 MS. JOHNSON: Exhibit 18 to

21 your deposition is a one-page e-mail

22 on April I Oth marked PERCAL-0003170.

Page 208



A. Yes. 2 Q. Is it an e-mail exchange 3 between you and Mr. Pearson? 4 A. Yes.

Page 209

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identification.) 2 THE WITNESS: You can pretty 3 much of do whatever you want unless 4 my lawyer objects. 5 MS. JOHNSON: But if he doesn't 6 instruct you not to answer. 7 MR. HOLSCHER: Which did you 8 mark? 9 MS. JOHNSON: Would you prefer

• 10 I mark them separately? I just

• 11 wanted to for ease of discussion put

• 12 them both in front of him.

• 13 MR. HOLSCHER: Okay, so, you're

• 14 going to put -- yeah, I think you

• 15 should mark them separately because

• 16 they are two different documents,

• 17 they're not attached.

• 18 MS. JOHNSON: That's right.

• 19 Can you mark the second one as

• 20 the next one in order.

• 21 (Whereupon, the above-mentioned

• 22 one-page e-mail dated April 12, 2014,

• 23 Bates stamped VAL-ALL_ 00027448 was

• 24 marked Ackman Exhibit 20 for

Page 211 Page 213

identification.) 2 MR. HOLSCHER: The short one is 3 19, the longer one is 20. 4 MS. JOHNSON: Exhibit 19 is a 5 one-page e-mail dated April 12, 2014, 6 Bates stamped VAL-ALL_00028958. 7 Exhibit 20 is a one-page e-mail 8 of the same date, Bates stamped 9 VAL-ALL 00027448.

10 They are different documents 11 but they are sent on the same day and 12 in case one refreshed your 13 recollection about the other I wanted 14 you to have them both in front of 15 you. 16 CONTINUED EXAMINATION BY MS. JOHNSON:

17 MS. JOHNSON: I'm going to put 17 Q. Do you recognize Exhibit 19? 18 these he two documents together if 18 A. It was an e-mail that I sent to 19 you'll permit me. 19 Mike. 20 THE WITNESS: Pennitted. 20 Q. And you say "I have a good 21 (Whereupon, the above-mentioned 21 idea." 22 one-page e-mail dated April12, 2014, 22 A. Yes. 23 Bates stamped VAL-ALL_ 00028958 was 23 Q. Do you recall what you were 24 marked Ackman Exhibit 19 for 24 talking about?

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A. I have a lot of good ideas. I 2 have no idea. I have a lot of ideas I 3 think are good, let's put it that way. 4 Q. You don't have a particular 5 recollection? 6 A. No. 7 Q. About this day? 8 A. No.

Q. Okay.

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Q. You also mention a tax issue. Do you recall what you were referr-ing to?

17 A. No. 18 (Whereupon, the above-mentioned 19 one-page e-mail dated April 13, 2014, 20 Bates stamped V AL-ALL_00003284 was 21 marked Ackman Exhibit 21 for 22 identification.) 23 THE WITNESS: Can I go off the 24 record for one second?

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THE VIDEOGRAPHER: We're off 2 the record at 1 :27. 3 (Discussion held off the 4 record.) 5 THE VIDEOGRAPHER: We're back 6 on the record at 1:28. 7 MS. JOHNSON: Exhibit 21 to 8 your deposition is a one-page e-mail 9 dated April13, 2014, Bates stamped

10 VAL-ALL 00003284. 11 CONTINUED EXAMINATION BY MS. JOHNSON 12 Q. Do you recognize this document? 13 A. Yes. 14 Q. What is it? 15 A. E-mail from me to Mike Pearson. 16 Q. You say, "Let's make our HSR 17 filing Monday next before offer. We can 18 state that this has been done. More 19 certainty." 20 What were you referring to? 21 A. Um, we were almost done buying 22 our stake in the company, and so the idea 23 was to just to file HSR as promptly as 24 possible so that we could fairly quickly

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announce that we had made the filing, you 2 know, starting the clock on when we 3 acquired the shares, creating more 4 commitment, more certainty. 5 Q. And by "stake in the company" 6 you mean Allergan? 7 A. That's right. 8 Q. And by "HSR filing" you mean 9 PS Fund 1's HSR filing?

10 A. Yes. 11 Q. Did you end up filing before 12 the offer was announced? 13 A. I think we did shortly 14 afterwards. 15 Q. Why did you not do it before 16 the offer as opposed to after? 17 A. I think if we would do it 18 before it would have been shortly after 19 we bought the stock and we had a lot of 20 other things going on so I think it just 21 didn't happen. 22 Q. What did you mean by --23 specifically by "more certainty" with 24 respect to the timing of the HSR filing?

1 2 3 4 5 6 7 8 9

10 :11 12 13 14 15 16 17 18 19 20 21 22 23 24

1 2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

A. You know, again, when investors are looking at the commitment of the parties in a transaction there are a series of things that have to get done in order for a deal to get done.

The very beginning in this

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case, you know, we owned forward contracts and options, people don't think of that, people think of that as differently, excuse me, promoting stocks, and by the sooner we file for HSR the sooner we get to close on the shares.

Q. And by "people" who do you mean?

A. Investors, people who own Allergan, investors who are thinking of buying Allergan, members of the even community, event-driven investments.

Q. And what makes you conclude that members of the event-driven investment community and other shareholders and investors think of forward option contracts, forward contracts and option contracts as

different than owning shares? A. Experience. You know, when

institutions look askance at options and derivatives versus actual stocks.

And if you're T. Rowe Price,

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you know, you own the stock, you want to make sure your interests are aligned with theirs; and so they want us to own the same thing they do as opposed to a relatively short-tenn instmment.

Q. Okay. Just for the record will you

describe the forward option -- the forward contracts and the option contracts that you bought in Allergan during this time period?

A. Sure. The forward contracts, we

committed to purchase stock in a company at a future date subject to our getting regulatory approval, it's like a contract to acquire shares.

Option contracts, you know, we had the option to acquire stock in the

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company, we stmcture the options as very 2 deep in the money, the strike price was 3 something pretty close to a dollar or one 4 percent of the market value of the 5 company, um, so there was very little 6 what I would call optionality in the 7 option, this was not a device used to 8 obtain leverage, this was simply a way to 9 acquire an economic stake in the company

10 under the exemption for options under the 11 HSR mles. 12 Q. Are options that are so far 13 deep in the money ce1iain to be 14 exercised? 15 A You're not going to let them 16 expire worthless, you could sell them. 17 Q. Then the buyer would be certain 18 to exercise them; right? 19 A Uh, no, you can unwind them, 20 right? So you can buy deep in the money 21 options, you can sell it or you can 22 exercise it, you're not going to let it 23 expire, it's w01ihless. 24 Q. Okay.

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(Whereupon, the above-mentioned 2 one-page e-mail dated April18, 2014, 3 marked PERCAL-0003060 was marked 4 Ackman Exhibit 22 for identification.) 5 Q. And you acquired these deep in 6 the money options for the express purpose 7 of exercising them? 8 A Not for the express purpose of 9 exercising. We acquired -- our

1 0 preference would have been to buy the 11 stock but you can't buy the stock until 12 you get the HSR approval, and so options 13 are exempt. 14 The FTC allows you to buy an 15 option on a stock prior to getting 16 approval and that's what we did. 17 Q. You could have bought shares; 18 right? 19 A No, because the partnership --20 the co-bidders, the joint venture could 21 only own $79.5 million in stocks, we 22 already purchased $79.5 million, we were 23 limited, and the only thing we could buy 24 from that point going forward that would

give us economic exposure to Allergan 2 were basically forward contracts and 3 options, maybe a total retum swap as 4 well. 5 Q. Because that's how the 6 partnership agreement had been 7 negotiated? 8 A No, that's law, those are HSR 9 restrictions.

10 Q. What I mean is isn't it the 11 case that you could have bought shares, 12 they just would have triggered an HSR 13 filing requirement? 14 A No, no, okay. We did buy 15 shares, we bought $75.9 million, but 16 that's the most we were able to buy and 17 thereafter we were not pennitted to buy 18 shares without first getting approval by 19 the FTC. 20 Q. I understand. 21 MS. JOHNSON: Exhibit 22 to 22 your deposition is a one-page e-mail 23 dated April18, 2014, marked 24 PERCAL-0003060.

Page 224

-----------------

Page 225

1 CONTINUED EXAMINATION BY MS. JOHNSON: 2 Q. Do you recognize this document?

3 A. Yes. 4 Q. What is it? 5 A. Looks like a quotation from the 6 13D rules.

7 Q. And you sent this quotation to

8 Mr. Pearson? 9 A. Yes.

10 Q. Why was that? 11 A. We were getting close to having 12 to make the required filing and the

13 question was what time of day do we have 14 to make the filing.

15 We were debating as to when to 16 make the filing and when to make the

17 offer. 18 Q. And you were apparently 19 debating this outside of the presence of

20 your respective lawyers?

21 A. Or e-mail between me and Mike, 22 unless the lawyers were listening,

23 stepping in to receive our e-mails. It

24 was just the two of us.

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Page 226

Q. Why were you having that 2 discussion with Mr. Pearson? What led to 3 that discussion? 4 A We were debating when to make 5 the filing, when to make the offer. 6 Q. What else do you recall about 7 that discussion? 8 A. That's it. 9 Q. Did you have a phone

10 conversation preceding this e-mail? 11 A I don't know. 12 Q. Did you have a conversation 13 after this e-mail? 14 MR. HOLSCHER: Objection, fonn, 15 foundation, vague. 16 A I don't know if there are other 17 e-mails. I mean this is -- either this 18 is responsive to a conversation we had 19 before or to an e-mail we had before. 20 Q. You don't recall anything 21 specific about this topic being discussed 22 at this time? 23 A Sure, I do, we were debating 24 when to -- when to file and when to make

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the offer, should we, you know, should we 2 file -- we didn't want to make an offer 3 at 7:00 at night, right? Urn, and so the 4 question was when do we make the 13D 5 filing and then when do we make the 6 offer. 7 Q. And by "offer" you mean the 8 publicly announced unsolicited proposal 9 for Allergan shares?

10 A That's conect. For the 11 company, not for the shares, for the 12 company. 13 Q. Okay. 14 A Yeah. 15 Q. Anything else you recall about 16 that discussion? 17 MR. HOLSCHER: Objection. 18 Foundation. He does not recall 19 whether it was a discussion or 20 e-mails. Asked and answered. 21 A Uh, I presume we had a 22 discussion or an e-mail exchange. If you 23 don't have the other e-mails then my 24 guess is we had a discussion, don't know ______ ,. ___

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for sure; but I think that's the most 2 likely thing, um, but I don't really 3 recall anything more about it other than 4 what I just described. 5 Q. Okay. Thanks. 6 (Whereupon, the above-mentioned 7 e-mail dated Apr:il20, 2014, Bates 8 number VAL-ALL_ 00027431, was marked 9 Ackman Exhibit 23 for identification.)

10 MS. JOHNSON: Exhibit 23 to 11 your deposition is a very short 12 e-mail dated April20, 2014, 13 VAL-ALL 00027431. 14 CONTINUED EXAMINATION BY MR. LI: 15 Q. It's a one-line e-mail from you 16 to Mr. Pearson; conect? 17 A Yes. 18 Q. You say, "New idea on timing to 19 discuss." 20 We just looked at an e-mail 21 that was -- in which you were discussing 22 the timing on making a 13D disclosure. 23 Do you recall what "new idea on timing" 24 you had on this particular date?

1 2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

--------·---·----·

A It wasn't just on the 13D, it was when to make the offer.

Q. What do you recall? A Do you want to make the offer

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in the middle of the day? Do you want to make it in the moming? We didn't want to have too much spacing between the acquisition of the shares and the announcement of the offer.

We didn't want to -- we didn't want to, uh, limit our purchases, we wanted to use up all the available time, right? So that meant that we would, uh, you know, we wanted to keep buying until at least 4:00 before we, you know, so I think the question was we had a 13D filed that's going to have Valeant and us in it and then we'd go a whole day, ovemight before there was an offer, and -- and, uh, I think we were concemed about what speculation there might be between the time of the 13D filing and the following day, but we didn't want the offer to be made at nighttime because from a PR point

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of view it didn't make sense. 2 I think my idea was to give a 3 story to the press, and that's what we 4 ultimately decided to do. 5 (Whereupon, the above-mentioned 6 13D filed by Pershing Square Capital 7 Management on 04/21114 was marked 8 Ackman Exhibit 24 for 9 identification.)

10 MS. JOHNSON: Exhibit 24 to 11 your deposition is a 13D filed by 12 Pershing Square Capital Management 13 that is publicly available but not

Page 230

2 3 4 5 6 7 8 9

10 11 12 13

agreement, I'm not 100 percent sure of the technical, legal version.

We were partners from the

Page 232

beginning, um, in substance and I think they were contractually obligated to come into the deal prior to our crossing the threshold, um, so yeah, I don't know the legal answer as to whether they were a member from the time we had an agreement or whether when they signed the LLC agreement, I don't know.

Q. Leaving that legal issue aside, this is the first time they signed an

14 Bates stamped. 14 15 CONTINUED EXAMINATION BY MS. JOHNSON: 15

agreement becoming a member of PS Fund 1; correct?

16 Q. Do you recognize this document? 16 A. I don't know for sure but if you tell me that to be the case I'll 17 A. I do. 17

18 Q. What is it? 19 20

A. It's exactly as you described. Q. Is this the 13D that Pershing

21 Square Capital Management filed following 22 its accumulation of shares of Allergan? 23 A. Yes. 24 Q. The exhibit marked Exhibit

1 99.4, it's the last attachment to the 2 document --3 A. Okay? 4 Q. --is the Amended and Restated

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5 Limited Liability Company Agreement of 6 PS Fund 1 LLC; conect? 7 A. Yes. 8 Q. It's dated April3, 2014; 9 right?

10 A. Yes. 11 Q. And on the final page of that 12 exhibit it indicates an electronic 13 signature of Mr. Pearson on behalf of 14 Valeant Pharmaceuticals International; 15 correct? 16 A. Yes. 1 7 Q. Is this the first time V aleant 18 became a member of PS Fund 1 LLC? 19 A. Um, I don't know as a technical 20 matter. I mean they were obligated to as 21 part of our agreement, I believe, to 22 become a member in effect. I don't know 23 if that made them a member or not, or 24 could be at the time we signed this

18 accept it as true. 19 Q. My question is your prior 20 testimony explained that a reason for not 21 having Valeant become a member early on 22 was confidentiality from -- I don't mean 23 to characterize your testimony -- but 24 confidentiality from the counterparty to

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your trades. 2 Did something change between 3 the time PS Fund 1 was established and 4 April 3rd that changed your view on 5 having Valeant be a member? 6 A. Yes, yes. 7 Q. And what was that? 8 A. We started -- we made a deal 9 with Nomura.

10 Q. And if another entity joined 11 the PS Fund 1 LLC agreement you had no 12 obligation to update Nomura on that fact?

A. That's correct. 13 14 Q. So once you had entered into 15 the contracts that we described earlier 16 with Nomura, your concern about 17 confidentiality was lessened? 18 A. Conect. 19 Q. And at that point Valeant 20 agreed to sign the LLC agreement; right? 21 A. That's conect. 22 Q. Were you ever obligated to tell 23 Nomura about Valeant's signing the LLC 24 agreement before it became public?

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A. No. THE WITNESS: You handed it to

me and then you took it away, for the record I just want to point that out.

(Whereupon, the above-mentioned one-page e-mail dated April 22, 2014, marked VAL-ALL 00028948 was marked Ackman Exhibit 25 for identification.)

THE WITNESS: Opposing counsel has played cat-and-mouse with witness.

MS. JOHNSON: I object. THE WITNESS: I get punchy four

hours into the deposition. MS. JOHNSON: Okay. THE WITNESS: I mean that in

the legal sense punchy. Thank you. MS. JOHNSON: Exhibit 25 to

your deposition is a one-page e-mail dated April22, 2014, marked VAL-ALL 00028948.

Page 234

2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23

don't forget to put in a good word about Valeant.

Q. Did you then take his advice? A. I don't know, I'd have to

check, but yeah, we've been, you know, over time, I don't know about this particular moment, but we've certainly been very supportive of-- ofValeant because we believe it's a very good company and we believe that if you're bored you'll take the time to sit with them and you might get any of their questions or concems addressed.

THE WITNESS: Is it imprimatur or imprimatur? What's the proper pronunciation?

MR. HOLSCHER: Imprimatur. THE WITNESS: That's what I

said, but sometimes I hear it otherwise.

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24 CONTINUED EXAMINATION BY MS. JOHNSON :24

I'm concerned because it's a videotaped deposition and I didn't want to look bad in front the Judge.

(Whereupon, the above-mentioned

Page 235

1 Q. Do you recognize this e-mail? 2 A. Yes. 3 Q. Is it from Mr. Pearson to you? 4 A. Indeed it is. 5 Q. Subject line is "You've been 6 busy with the press," and he says "Maybe 7 you should also emphasize quality of our 8 company." 9 Did you have any discussions

10 with him about this particular e-mail? 11 A. No. 12 Q. Do you have any understanding 13 of what he meant? 14 A. My guess is what he meant, uh, 15 as I mentioned at the very beginning, one 16 of the value adds we brought here as a 17 partner was the due diligence we did on 18 Valeant and the imprimatur we could help 19 give to their company by virtue of our 20 having done the work and being known as a 21 smart investor and, you know, we-- you 22 know, I think most --my guess is most of 23 the press is about the tenns and other 24 stuff and Mike sort of reminded me, hey,

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2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

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an e-mail dated May 4, 2014 stamped VAL-ALL_ 00028263 through 28264 with attachment was marked Ackman Exhibit 26 for identification.)

THE WITNESS: If he's the type that talks about imprimaturs instead of imprimaturs I might lose him. Okay. It's a higher level standard when you do a videotaped deposition.

I'm not wasting time, I'm just waiting for a question for you.

MS. JOHNSON: You aren't. THE WITNESS: Keeping the

audience engaged. MS. JOHNSON: Now you are

because she can't mark the exhibit until you stop talking.

THE WITNESS: Or you stop talking. Laughter.

MS. JOHNSON: Exhibit 26 to your deposition is an e-mail dated May 4, 2014 stamped VAL-ALL_00028263 through -- I've got an attachment that is not sequential -- through

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28264, and the attachment is

2 VAL-ALL_00037624 through 37627.

3 From the production it appears

4 that the attachment, while

5 insequentially Bates stamped, was

6 attached to the original e-mail,

7 although you don't have to take my

8 representation on it.

i 9 CONTINUED EXAMINATION BY MS. JOHNSON:Iiiiiiiiiiiiiil 1


11 A. I do.

12 Q. What is it?

13 A. Uh, you just did a really good

14 job in describing it.

15 Q. Thank you.

16 A. I don't think I could do

17 better.

18 Q. Allright.

19 Can you describe what you are

20 conferring with Mr. Pearson about in this

21 e-mail?

22 A. In which e-mail? There's a

23 whole bunch.

24 Q. Starting with the first

exchange. 2 A. So I've drafted a letter to the 3 lead director and I sent a draft to 4 Pearson to see what he thought of it. 5 Q. Did you have any discussions 6 with Mr. Pearson about the draft letter

other than that are reflected in this e-mail?

I don't know.

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18 All right. 19 (Whereupon, the above-mentioned 20 e-mail dated May 11, 2014 Bates 21 stamped VAL-ALL_ 00028 617 to 618 was 22 marked Ackman Exhibit 27 for 23 identification.) 24 MS. JOHNSON: Exhibit 27 to

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your deposition is an e-mail dated 2 May 11, 2014 Bates stamped 3 VAL-ALL 00028617to618. 4 CONTINUED EXAMINATION BY MS. JOHNSON:

5 Q. Do you recognize this document? 6 A. Yes. 7 Q. Of course feel free to take 8 time to review it if you'd like, but this 9 is an e-mail exchange between you and

10 Mr. Pearson in which he forwards an 11 e-mail from him to Mr. Pyott? 12 A. Yup. 13 Q. In your e-mail, second from the 14 top it, you say "I will follow-up. We 15 have a draft of the referendum doc and 16 will do our best to get it done by 17 tomorrow." 18 What are you referring to? 19 A. Uh, the idea we had was because 20 the special meeting provisions are so 21 burdensome that by the time, again, our 22 original plan was if the Board turns us 23 down to call a special meeting of the 24 shareholders, the problem is that could

take six months, and that's a long time. 2 So we came up with this idea --

. 3 actually one of our lawyers did -- of 4 having a town hall type referendum that 5 people could show, and that's what we 6 called the referendum. 7 Q. You then later determined not 8 to go forward were the referendum? 9 A. That's con·ect.

10 Q. Why was that? 11 A. Because at that Sanford 12 Bemstein conference we met with all the 13 big shareholders, they were generally --

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14 they generally said the company has made 15 it very clear they will ignore whatever 16 is said at the referendum, it is going to 17 cause delay for you to go through the 18 process ofhaving that meeting, we'd 19 rather that you start the clock on the 20 special meeting immediately and not waste 21 time with a referendum. We thought it 22 was good advice and we took it. 23 Q. Who were those shareholders? 24 A. Big shareholders of the

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company, you know, I think it was the 2 general consensus of the people in both 3 meetings that we had that it was a bad 4 idea. 5 Q. Do you recall any shareholders' 6 names in particular? 7 A. No. 8 (Whereupon, the above-mentioned 9 one page e-mail dated May 16, 2014

10 Bates stamped VAL-ALL_0002760 was 11 marked Ackman Exhibit 28 for 12 identification.) 13 MS. JOHNSON: Exhibit 28 to 14 15 16

youi· deposition is a one page e-mail dated May 16, 2014 marked VAL-ALL 0002760.

Page 250 -2 Q. And this idea ended up making 3 its way into the revised offer; right? 4 A. Yes, we're patiners. We 5 occasionally have some good ideas 6 bringing value to this partnership. 7 Q. Occasionally? 8 A Occasionally. More than 9 occasionally, that understates it.

10 Q. And the revised offer was 11 re-revised two days later; conect? 12 A Two days later from when? 13 Q. From the time that the revised 14 offer was announced. 15 16

A Yes. Q. How did that come about?

17 CONTINUED EXAMINATION BY MS. JOHNSON: 17 MR. HOLSCHER: Objection. 18 Q. Do you recognize this document? 18 Vague. 19 A. Yes. 19 A Yes, I know what you're talking

20 about, to save time and get to my soccer 21 game I will help you.

20 Q. Is it an e-mail from you to 21 Mr. Pearson and others?

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22 A. Yes. 22 So I think May 29th we had --

r~-·~~~~~~~~~=~~~- 23 28th, 29th, something like that, it was 24 the Sanford Bemstein healthcare

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conference, and since a lot of investors 2 at the conference were very interested in 3 this transaction they offered to give us

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4 a conference room there so that we could, 5 uh, anange for investors who wanted to 6 meet with us meet with us. 7 Q. Who is "they"? 8 A Sanford Bemstein. 9 So we had two meetings, one

10 with basically hedge funds and one with 11 1 0 or 11 of the top shareholders of the 12 company and, um, the -- to get their 13 reaction and advice to the proposal, at 14 least that was one of our agenda items. 15 Q. And those meetings were at your 16 invitation? 17 A No, I think-- I think Sanford 18 Bemstein made it known that we would be 19 coming and that anyone who was interested 20 could come, and we talked about the deal, 21 we talked about-- addressed questions 22 that people had and then we asked, you 23 know, what does it take to get a deal 24 done, and the consensus in tenns of


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value, you know, the arbs wanted more, as 2 they always do, but the biggest 3 shareholders, you know, we asked them 4 the question and they came back and said, 5 look, if you can deliver $180.00 a share 6 in Valeant in the value of the bid today 7 then, uh, we'll support the transaction 8 and we like the deal, we think it's 9 strategic, you know, a lot of the

10 people -- big shareholders actually also 11 owned Valeant stock and so they 12 understood the company, urn, and so they 13 wanted $180.00 a share in value; and so 14 we left the meeting and I called Pearson, 15 uh, finally got him I think the following 16 moming, and I told him what transpired 17 and the problem was that they had said 18 they wouldn't rebid unless Allergan 19 engaged and I said, look, we just met 20 with the biggest shareholders of the 21 company, urn, they are prepared to do a 22 deal ifwe get to 180 and we will 23 contribute more value to the deal if you 24 guys contribute more value to the deal,

1 we'll chip in and get it done, we're 2 partners; right? 3 So we agreed to take two 4 billion less cash, freeing up $2 billion

Page 255

5 for the other shareholders, and we agreed 6 to take less stock, freeing up more stock 7 for the other shareholders, and in 8 exchange they agreed to raise their bid 9 in tenns of the amount of cash that they

10 offered to $72.00 a share and that's what 11 happened. 12 Q. That. meeting where you said 1 0 13 or 11 larger shareholders of Allergan 14 were there --15 A. Yes. • 16 Q. --you can't recall • 17 specifically who any of them were? • 18 A. I know who some of them were, •

sure. •

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I I I I I I-I •

• • • • .. -• • • • •

7 MS. JOHNSON: And the tape is 8 almost done. Let's take a break. 9 THE WITNESS: Okay.

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10 THE VIDEOGRAPHER: This ends 11 tape number four. We're off the 12 record at 2:07. 13 (Whereupon, a brief recess was 14 taken.) 15 THE VIDEOGRAPHER: This begins 16 tape number five in the deposition of 17 William Ackman. We're on the record 18 at2:11. 19 MS. JOHNSON: I'll ask the 20 court reporter to hand you what's 21 been marked as Exhibit 29 to your 22 deposition. 23 (Whereupon, the above-mentioned 24 letter from William Ackman to Michael

Gallagher dated May 5, 2014 was

2 marked Ackman Exhibit 29 for

3 identification.)

4 MS. JOHNSON: Exhibit 29 is

5 publicly available but not Bates

6 stamped.

8 Q. Can you tell me if you

9 recognize this document?

10 A. I do.

11 Q. What is it?

12 A. It's a letter I wrote to

13 Michael Gallagher on May 5th.

14 Q. The first paragraph you say,

15 "As Allergan's largest shareholder with

16 9.7 percent of the common stock, we look

17 forward to working with you and the rest

18 of the Board to maximize value for all

19 Allergan shareholders."

20 By "as Allergan's largest

21 shareholder we" are you refening toPS

22 Fund 1?

23 A. Yes.

24 Q. In the second-- at the second

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page near the bottom near your signature? 2 A. Yup. 3 Q. You again say "As Allergan's 4 largest shareholder, we are supportive of 5 Allergan making the best possible deal 6 with Valeant or identifying a superior 7 transaction with another company." 8 Does that remain PS Fund 1 's 9 view today?

10 A. Yes. 11 Q. If another--12 A. It's what -- it's their 13 obligation. 14 Q. I'm son·y? 15 A. It's Allergan's obligation to 16 do what's in the best interest of the 17 shareholders. 18 Q. And is it also PS Fund 1 's 19 obligation? 20 A. We believe the highest and best 21 transaction is a merger with Valeant. 22 Q. Unless a superior transaction 23 with another company comes along? 24 A. Sure. I don't know that there ----------------------------'

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is one. You know, Valeant, you know, by um, when there is three billion in 2 virtue of being in the same business line 2 synergies, you know, today's stock price 3 as Allergan, you know, we think is the 3 is not reflective of the stock price --4 only company that brings real synergies. 4 the value of the Valeant consideration is 5 Someone else could 5 the value of what you get when the deal 6 theoretically pay more than what the 6 closes, right? What you get when the 7 company's worth, that can always happen, 7 deal closes is a combined company. 8 but we don't -- we weren't in this for -- 8 The stock market is not yet 9 I'd much rather take less value in 9 valuing Valeant until they get the deal

10 Valeant's stock today and get a little 10 done, because Va1eant with of all the 11 bit more in cash than miss out on the 11 uncertainties, because of the special 12 opportunity in the next several years, 12 meeting, because of the hostile response 13 because we think the combination creates 13 from Allergan. 14 a very dominant valuable business over 14 So yes, number one, I don't 15 time. 15 think that today's value represents fair 16 So I would want a very 16 value and, number two, you know, we-- we 17 substantial premium to the nominal value; 17 like the prospects of business over the 18 and one of the mistakes that I think that 18 next five years, we're not looking to 19 Valeant made is to value the Valeant 19 make money over the next, you know, 60 20 transaction on the basis of the nominal 20 days. 21 value of where Valeant's stock is trading 21 (Whereupon, the above-mentioned 22 today. 22 Valeant Phannaceuticals International, 23 We believe the right way to 23 Inc. Form S-4 was marked Ackman 24 look at it or the correct way to look at 24 Exhibit 30 for identification.)

Page 263 Page 265

it is what the value of the combined MS. JOHNSON: Exhibit 30 to

2 company is. 2 your deposition is an S-4 filed by

3 So judged on that basis I 3 Valeant Pharmaceuticals on June,

4 think it's very hard for anyone else to 4 2014, publically available but not

5 compete. 5 Bates stamped.

6 Q. Do I understand your answer to 6 CONTINUED EXAMINATION BY MS. JOHNSON:

7 suggest that if another company came in 7 Q. Do you recognize this document?

8 with a nominally higher value but with 8 A. Yes.

9 more cash you may not consider that a 9 Q. Did you read it before it was

10 superior deal, superior transaction with 10 filed by any chance?

11 another company? 11 A. Uh, probably. It's only part

12 MR. HOLSCHER: Objection. 12 of the document, it's an excerpt of it.

13 Incomplete hypothetical. 13 Q. Thank you. 14 A I mean, I think that a slightly 14 MS. JOHNSON: Correction for

15 higher deal versus the nominal value of 15 the record, it's an excerpt of the

16 the Valeant bid today is not nearly as 16 S-4 filed on June 19, 2014 by

17 attractive as this merger. 17 Valeant.

18 Q. Why? 18 Q. The last page of the excerpt

19 A Because, you know, we think 19 it's marked page 49?

20 that Valeant's stock price reflects a 20 A. Actually it goes to page 50 so

21 substantial discount to where the, uh, 21 it's the penultimate page.

22 when you are combining two businesses of 22 Q. Thank you for the correction.

23 similar size, right, you've got a 45 -- 23 A. No problem.

24 two 45, $50 billion companies merging, 24 Q. The category marked

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HIGHLY CONFIDENTIAL

"Synergies"? 2 A. Yes. 3 Q. Do you have an understanding of 4 how those were calculated? 5 A. I mean to some extent, sure.

8 Q. That was my next question, 9 whether you --

10 A. I do my best to anticipate your 11 question. 12 Q. It was very well done. 13 Neither Pershing Square nor in 14 your role as involvement in Pershing--15 PS Fund 1 independently computed 16 synergies of an anticipated combined 17 company?

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18 A. What we did do was we looked at 19 back-of-the-envelope whether we thought 20 they were realistic. 21 Q. As calculated by Valeant? 22 A. That's correct. 23 They, as part of our due 24 diligence they said, look, here's what we

---

2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23

•

think the synergies are and here are the categories in which we see the synergies

Page 268

and then we looked at the numbers, the combined SG&A of the company by category and said is this reasonable in light of what they've achieved before.

Q. And the results of your back-of-the-envelope calculation were that you agreed with them?

A. I think back-of-the-envelope may be understating a little bit, but it was not, you know, there's only a limit to what we could do, we did investment analysis like we nonnally do.

Q. Okay. On or around August 22nd -

A. Are we done with this one [indicating]?

Q. Yes, we are. -- more than 25 percent of the

stockholders of Allergan provided written don't call a special meeting?

A. Yes .

• Page 269

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6 Q. Let me ask you a question 7 before I get to the list and that is can 8 you describe the first meeting that you 9 testified about at that conference, the

1 0 one that was not the 1 0 or 11 Allergan 11 stockholders meeting. 12 A. Sure. 13 So that was probably 35 or 40,

Page 270

14 maybe 50 hedge funds, uh, some of whom 15 were long-tenn shareholders ofValeant 16 and more recently shareholders of 17 Allergan, some of them were long-term 18 shareholders of All erg an, some of whom 19 were short-tenn arbs -- arbitragers in 20 both companies, and, you know, it was an 21 opportunity for us to really just answer 22 their questions about the transaction and 23 get their advice on how to proceed and, 24 uh, you know, they had questions about

Page 271

our commitment, Valeant's commitment, uh, 2 and they gave us advice on how to 3 proceed, and actually it was they who 4 advised us to launch a tender offer. 5 Q. Who specifically? 6 A. Uh, it was kind of-- I don't 7 remember -- I don't remember actually the 8 names of almost anyone in the room but, 9 uh, you know, it was one of the ideas

10 that had been recommended by, you know, 11 the people in the room, pmi of the 12 discussion we had; and their advice was, 13 you know, really relating to what can we 14 do to -- what can we do to increase the 15 probability of success, and everyone in 16 the room believed that the more certainty 17 that Valeant showed about its commitment, 18 the concern that the arbitragers had 19 about V aleant is that they have shown 20 price discipline in transactions, so the 21 last two hostile deals -- unsolicited 22 hostile deals that they did -- ultimately 23 they didn't -- someone else paid more and 24 so in this transaction where no one else

Page 272

has showed up, you know, if the company 2 is intransigent about negotiating, you 3 know, at what point does Valeant pursue 4 other opportunities. 5 And so they said that, you 6 know, one of the things that's hmiing 7 Valeant's stock price and therefore the 8 value of the consideration is that people 9 are a little uncertain about how

10 committed they are to the transaction, 11 why haven't you launched a tender offer, 12 et cetera; and so I took that back to 13 Mike, plus the feedback on price in the 14 previous meeting, and we revised our 15 offer or we agreed to in effect put up 16 two billion more in cash for other 17 shareholders by taking 100 percent stock, 18 uh, and taking less stock if we had more 19 stock than others, getting them to pay 20 more, we wanted this to be kind of the 21 definitive thing that gets the 22 transaction done and pull every lever 23 that we can pull and as a result we 24 decided to launch the exchange offer as

part of the deal. 2 Q. In that meeting as you 3 described people asking why haven't you 4 launched a tender offer did you provide 5 any sort or a response? 6 A. Uh, I don't remember exactly 7 but, you know, I-- I didn't-- ifl, you 8 know, I'm not sure; but my guess is 9 'cause it has no-- at least in my mind

10 it had no substantive value, but 11 apparently the arbitragers weighed it as 12 sort of an incremental sign of 13 commitment; and then when I talked to 14 lawyers about it they told me -- they 15 reminded me that the company has to

Page 273

16 respond within some reasonable period of 17 time in a 14-D9 and that in that document 18 they have to provide infonnation about 19 how they analyze the bids, so on the 20 margins, we get the benefit of some 21 incremental infonnation that might be 22 helpful in the contest. 23 Q. And by "the company" you are 24 refening to Allergan?

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A. That's right. 2 Q. But you don't recall anything 3 specific about your response at that 4 meeting to the question about why you 5 haven't launched a tender offer? 6 A. I don't lrnow if the question 7 was why we haven't launched a tender 8 offer, it was more in the context of what 9 more we could do to increase the

10 perception of commitment on the part of 11 V aleant, and this was one of the 12 suggestions that was made, there were 13 others, but this was just one that I 14 remember. 15 Q. And do you recall making any 16 response to that suggestion? 17 A. We'll take it under advisement. 18 Q. Anything else? 19 A. No. 20 Q. Okay.

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13 Q. How well do you know-- what is 14 your relationship with the six 15 individuals that have been nominated to 16 potentially replace existing Allergan 17 directors? 18 A. Sure, one of them, John Zumer, 19 was a potential candidate for the Air

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20 Products Board, so we were introduced to 21 him through a search finn and we 22 interviewed him in connection with that 23 situation. We ended up not using him as 24 a director but I had met him, uh, once or

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twice in connection with that, um, the 2 other directors I never met before this 3 process. 4 Q. Y au didn't --just to go 5 through them -- Betsy Atkins you've never 6 met? 7 A No. 8 Q. Kathleen Black? 9 A No.

10 Q. Frederick Eschelman? 11 A No. 12 Q. Steve Schulman? 13 A No. 14 Q. And David Wilson? 15 A No, I have not met. I have not 16 met, spoken to -- I've heard of Kathy 17 Black, but not the others. 18 Q. In a Pershing Square disclosure 19 statement David Wilson was listed as 20 having purchased 50 shares of Allergan 21 stock on April 16, 2014? 22 A Right. 23 Q. Do you know how that came 24 about?

A I've read that as well. I 2 think it said it was in a discretionary 3 account but whether his investment 4 advisor bought the stock and I had no 5 knowledge of it, but I only know what I 6 read. 7 Q. You had no knowledge of that? 8 A I certainly had no knowledge of 9 that until I read it in our proxy that we

10 filed. 11 Q. Okay. 12 MS. JOHNSON: This is not an 13 excerpt, son-y. Can you mark it as 14 the next exhibit in order. 15 (Whereupon, the above-mentioned 16 Fonn 425 filed on April23, 2014 by 1 7 Valeant Phannaceuticals was marked 18 Ackman Exhibit 31 for 19 identification.) 20 MS. JOHNSON: Exhibit 31 to 21 your deposition is a Fonn 425 filed 22 on April23, 2014 by Valeant 23 Phannaceuticals. It is not Bates 24 stamped but it is publicly available.

Page 291

Page 292


2 Q. Have you ever seen this document

3 before?

4 A. Yes, I have. But, uh, seen

5 this document, I mean it's a transcript

6 of our presentation that I gave so I'm

7 not sure I've seen it before but it's

8 about something I was at.

9 Q. And it's from a meeting I guess

10 entitled Perspectives From Allergan's

11 Largest Shareholder; is that correct?

12 A. Yes.

13 Q. And you were one of the

14 speakers?

15 A. I was.

16 Q. Okay.

17 A. So I think my lawyers filed

18 this as required under the rules.

19 Q. Following the--

20 A. Following the event.

21 Q. The event?

22 A. But I have not read it

23 subsequent.

24 Q. Okay. If you turn to page 167?

A Mines not -- oh, not Bates 2 stamped, okay. 3 Q. Not Bates stamped but they have 4 little page numbers smi of at the top of 5 the text. 6 A Okay, yes, I'm with you. 7 Q. Okay. 8 And there's a question, the 9 questioners are not identified but it

10 says, question, it's right in the middle 11 is where I'll stati reading: My question 12 is, is this -- let me start over: 13 "My question is this is a

Page 293

14 unique process between the two of you and 15 so what's the commitment to the process 16 of getting the hostile deal effective, 17 both in tenns oftimeframe and your 18 commitment to it. And then a follow-up 19 question." It's marked "Bill: Me, I'll 20 take that." Is that you? 21 A I don't know. It's also a 22 video so we can check. 23 Q. Okay. 24 I'm looking for if there is

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another Bill that spoke at the meeting 2 and there is, there is also Bill Doyle. 3 A I don't know if the transcript 4 is accurate so I don't know. If it was 5 me it's not the most memorable thing I 6 said, so I don't know. 7 Q. There is sort of a memorable 8 thing coming up so I want to see if it 9 refreshes your recollection.

10 A Uh huh. 11 Q. Mike said: "It's probably more 12 a question to you. Are you committed?" 13 A Who was Mike asking? 14 Q. I'm son-y? 15 A Who was Mike asking the 16 question to? 17 Q. I mean, I can tell you my point 18 of view but Mike is likely Mike Pearson; 19 would you agree with me? 20 A No, I think it's Mike Pearson. 21 Oh, it says "Me, I'll take that," and 22 then the next line is "It's probably more 23 a question to you. Are you committed?" 24 Is he asking the pers~m in the

1 audience? Is he asking me? 2 Q. Ifi pose that question to you 3 I imagine the answer will be I don't 4 know? 5 6 7

A Q.

I don't know. Okay.

Then the questioner says: 8 "And, is there an exchange offer to be 9 launched?" Do you see that?

10 A Yes. 11 Q. And it says "Bill" and I'll 12 read it and you say if you recall whether 13 this is you and I understand that there is 14 a video and we can check: 15 "Bill: So, we're committed. 16 We're contractually committed. Again,

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1 7 after we did our due diligence, decided 18 we wanted this deal, we are contractually 19 committed to take it unless and until 20 there's a superior offer that Valeant 21 chooses not to respond to. So as long as 22 this deal happens, you know, we're in. 23 You know, the best evidence that we're in 24 is the scale of our commitment as a

percentage of our capital, and the scale 2 of our commitment on an absolute basis. 3 In tenns." 4 Do you see that? 5 A That's me. 6 Q. Okay. 7 A And I think me I'll take that

Page 296

8 is me, and the question I was answering 9 is am I committed. I'm answering Mike's

10 question, he was asking me. 11 Q. Are you committed? 12 A That'scorrect. 13 Q. And that was your answer? 14 A That's conect. 15 Q. Mike says, "And the price of 16 this event"? 17 A Right. 18 Q. Which gets laughter, from the 19 transcript? 20 A Yes. 21 Q. And male voice says "And my 22 bun·ito." That was the memorable thing I 23 was referring to. 24 A Right.

Q. Do you think that was you? Do 2 you recall saying that? 3 A I don't know but I would check 4 the video. 5 Q. Okay. 6 It next reads: "You know, in 7 tenns of what we'll do from here, I think 8 that anyone in the room who talks to a

Page 297

9 good M&A attomey will understand, you'll 10 read the documents on the company, there 11 are opportunities to call special 12 meetings. There are opportunities for 13 investors to launch various kinds of 14 offers. You should assume that we're 15 familiar with all of these various 16 techniques. I think the first choice for 17 evet-yone on the podium and for 18 ultimately, I think, the Allergan 19 shareholders and for Valeant shareholders 20 is, this is an extremely attractive offer 21 from the Allergan shareholders' 22 perspective." 23 MR. HOLSCHER: That's not his 24 full answer; right?

75 (Pages 294 - 297)

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HIGHLY CONFIDENTIAL

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A. I just want to read the rest of 2 it. 3 Q. I'm happy to read the rest of 4 it. 5 A. Go ahead. Or I can do it. 6 Q. You go ahead. 7 A. "Now, I'm sure the Board will 8 have some input, and some ideas ... " 9 "Now, I'm sure the Board will

10 have some input, and some ideas and some 11 feedback, and I think the best thing that 12 can happen here is for this management 13 team to sit down with Allergan's 14 management team and board of directors, 15 and work out a transaction that's in the 16 best interests of everyone." 17 Q. And your answer continued on 18 the next page. 19 A. Okay. Hold on. 20 "You know, one of the things 21 that, the reason why I have a day job is 22 because very often, even very high 23 quality companies do things that are not 24 in their shareholders' interests, or

refuse to pursue things that are actually 2 in their shareholders' interests, and 3 that causes stock prices to trade below 4 what they're worth, because not every 5 management team is as shareholder 6 oriented as this management team. And 7 so, our role is to make sure the 8 companies do the right thing for their

Page 299

9 shareholders. We will do that here. We 10 are committed to doing that here, and we 11 have enonnous economic and reputational 12 insensitive for delivering." 13 Q. Do you believe that that is an 14 answer that you gave? 15 A. Yes. 16 Q. That was my question. Since 17 it's not identified I wanted to see if it 18 is your recollection that it was you 19 speaking. 20 A. It's me. 21 Q. Thank you. 22 MS. JOHNSON: If we can take a 23 short break, I'll wrap this up before 24 3:10.

Page 300

THE WITNESS: Okay, sure,

2 appreciate it.

3 MS. JOHNSON: Thanks.

4 THE VIDEOGRAPHER: We're off

5 the record at 2:42.

6 (Whereupon, a brief recess was

7 taken.)

8 THE VIDEOGRAPHER: We're back

9 on the record at 2:48.


11 Q. Mr. Ackman, on September 23rd --

12 A. I'm not Bill by now?

13 Q. Still too formal.

14 On September 23rd you signed a

15 letter to the Board of Directors of

16 Allergan talking about another

17 acquisition and your belief that it

18 should be put to a shareholder vote; do

19 you recall that?

20 A. If you can show me the letter I

21 would be better.

22 Q. Sure.


24 one-page letter dated September 23,

Page 301

2014 from William Ackman to the Board 2 of Directors of Allergan was marked 3 Ackman Exhibit 32 for 4 identification.) 5 MS. JOHNSON: Exhibit 32 to 6 your deposition is a one-page letter 7 dated September 23, 2014, it appears 8 to be from you to the Board of 9 Directors of Allergan.

10 THE WITNESS: Yes. 11 Q. Is that, in fact, what it is? 12 A. I'm sorry, what is the 13 question? I was reading it. 14 Q. Okay. 15 I said it appears to be a 16 letter from you to the Board of Directors 1 7 of Allergan; is that conect? 18 A. Yes. 19 Q. What-- it references published 20 reports. What prompted you to write this 21 letter? 22 A. Uh, there was a Wall Street 23 Joumal story and some other Bloomberg 24 and other stories saying that, uh, the

76 (Pages 298- 301)


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HIGHLY CONFIDENTIAL

Page 302

company was looking to make a large -- I 2 think the company itself had hinted that 3 they were looking at various things but I 4 think, if this, uh, I think relates to 5 the Salix transaction. 6 Q. And my question is what, if 7 anything, prompted you to write this 8 letter, you said to The Wall Street 9 Journal article, anything else?

10 A. Well, our concern was that the 11 company would go in an attempt to defend 12 itself below $15 billion overpaying for 13 some asset and that would be very 14 damaging to shareholders and to do that, 15 you know, in the face of a shareholder 16 meeting where the Board is up for being 17 voted out I thought, you know, I wanted 18 to put the Board on notice that I thought 19 that this was wrong. 20 Q. And you just mentioned below 21 $15 billion; what do you mean by that? 22 A. Well, the company has 23 publically stated that their financial 24 capacity to do the deal is some number in

Page 303

order of magnitude of $15 billion if they 2 use up there bonds. 3 Q. Other than reading The Wall 4 Street Journal article, do you have any 5 other infonnation that led you to write 6 this letter is my question. 7 A. I mean it's all over --8 MR. HOLSCHER: Objection, form, 9 vague.

10 A. Maybe you can be very specific 11 about what you want and I'm happy to 12 answer. 13 Q. Yes, infonnation that you 14 received about a potential transaction 15 other than what's in the press. 16 A. I mean or the rumor mill, I 17 mean this is going around -- a rumor at 18 least certainly led by The Wall Street 19 Joumal presented as if it's not a rumor. 20 I mean, the Journal wrote an article 21 saying, you know, uh, that All erg an is 22 close to a sale, that's what inspired the 23 letter. 24 Q. Did you have any conversations

with anyone at ISS about this topic? 2 A. Uh, yes. 3 Q. With who? 4 A. Chris Cernich. 5 Q. When? 6 A. Friday. 7 Q. What was the last name again? 8 A. Cernich. 9 Q. And what did you discuss?

1 0 A. I said -- I called to ask him 11 whether they were, uh, were looking at 12 this situation, whether it's something 13 that they would ever write on. 14 Q. What is your relationship with 15 Chris Cernich? 16 A. He's the head ofiSS and, you

Page 304

17 know, we are an active shareholder and, 18 you know, in the various proxy contests 19 we've had over the years maybe in one or 20 two of them he's been the lead person and 21 we've met with him in that context. 22 Q. Do you talk with him 23 frequently? 24 A. No.

2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Q. Have you talked with him about Allergan before your conversation last Friday?

A. Yes. Q. About what?

Page 305

A. We met -- we went down and met with Chris in connection with the consent, we asked to meet with Allergan and with us, we had an hour and a half to two-hour meeting where we made our case for our reason why we believed the meeting should be called.

Q. Any other communications you've had with anyone at ISS about Allergan?

A. No. Q. What did he say in response to

you in your communication last Friday? A. Saying they were looking at it

very closely and that he might write something but he wasn't sure.

Q. Anything else that you recall about that conversation?

A. No. Q. All right.

77 (Pages 302 - 305)

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HIGHLY CONFIDENTIAL

2 3 4 5 6 7 8 9

10 11 12 13 14 15 16

17 18 19 20 21 22 23 24

2 3 4

5 6 7 8 9

10 11

Page 306

MS. JOHNSON: Thank you very much for your time today.

THE WITNESS: Sure. Thank you. MR. HOLSCHER: Thank you. MR. HEUER: Sony Can we go

off the record for a second? THE VIDEOGRAPHER: Going off

the record. We're off the record. The time is 2:54.

[Discussion held off the record.]

MR. HEUER: Back on the record. This is about Exhibit 9 of the

Ackman deposition, it was also a document marked at the Doyle deposition.

At the Doyle deposition I reserved our right to clawback the text in the top e-mail because the top e-mail communication involved only counsel for Valeant.

After discussions with counsel, in consideration we've agreed not to claw back that portion of the document

on the condition that opposing counsel agrees that our decision to do so will not be deemed a waiver over privilege for any other document or communication.

MS. JOHNSON: Agreed. MR. HEUER: Thank you. [Whereupon, a brief recess was

taken.]

Page 307

THE VIDEOGRAPHER: We are back on the record at 3:00.

12 This concludes today's 13 proceeding. Total number of tapes 14 used was five. We're off the record 15 at3:00. 16 17 18 19 20 21 22 23 24 ·------···········- ----------------

Page 308

2 CERTIFICATION

3

4 5 I, KATHLEEN PIAZZA LUONGO, a

6 Notary Public for and within the State of

7 New York, do hereby certify that the

8 foregoing witness, WILLIAM ACKMAN, was duly

9 sworn on the date indicated, and that the

10 foregoing is a true and accurate

11 transcription of my stenographic notes.

12 I further certify that I am not

13 employed by nor related to any party to

14 this action.

15

16

17 18

19 20

21

22

23 24

KATHLEEN PIAZZA LUONGO

Page 309 INDEX

3 WITNESS

4 William Ackman

EXAMINATION BY PAGE

Ms Johnson 5-307

EXHIBITS

10

II

PLAINTIFF'S DESCRIPTION PAGE

12

13 Exhibit I Allergan, Inc 14

Schedule I 4A

14

15 Exhibit 2 e-mail dated 21

fcbmary 8, 2014

16 bearing Bates numbers I'ERCAL-

17 0014170. 175

18

Exhibit 3 e-mail dated 35

19 Febmary 8, 2014

beating Bates 20 numbers PERCAL-

0038059- 061

21

22 Exhibit 4 e-mail dated 49

Fcbmary 8, 2014,

23 bearing Bates numbers PERCAL-

24 0038071 . 073 ·------------ ---········---·····

78 (Pages 306 - 309)


Exhibit 1 -Page 93 888-391-3376


HIGHLY CONFIDENTIAL -------------·-----,--------------------------,

4 5

i 10

II 12

13 14

15

I6

17 18

19

20 21

22

23

24

4

(Cont'd]

PLAINTIFF'S DESCRIPTION

Exhibit 5 Februaty 9, 2014 65 execution version of a confidentiality agreement between Pershing Square and Valcant

Exhibit 6 Limited Liability 68 Agreement of PS fund I dated Febmary I I, 2014

Exhibit 7 fcbrumy 14,2014 89 e-mail bearing Bates stamp PERCAL-0001464

Exhibit 8 document entitled 93 A MOE Feb 16th 2014, bearing Bates statnps VAL-ALL_00037942-37967

Exhibit 9 e-mail dated 109 Febmaty 18,2014, bearing Bates numbers VAL-ALL -00004174,4177

Exhibit 10 e-mail dated 134 Februaty 20,2014, bearing Bates numbers VAL-ALL 00028337, 28344

--.-··~------·

(Cont'd]


Exhibit 11 document marked "Execution Version Confidential" of an agreement between Pershing Square and Valeant Phannaceuticals

158

Exhibit 12 one-page e-mail 175 dated Febmary 27,

I 0 2014 bearing Bates numbers PERCAL-0000363

II 12 Exhibit 13 e-mail dated 179

13

14

March 6, 2014 bearing Bates numbcrsPERCAL-0065474

15 Exhibit 14 one-page e-mail 184 dated March I 0,

16 20I4, bearing Bates numbers VAL-ALL_

17 000280809 18

Exhibit 15 e-mail dated 187 19 March 17,2014

with an attachment 20 marked PERCAL-0006947

through 696 7 21 22 Exhibit 16 one-page e-mail 192

dated April 5, 2014, 23 marked PERCAL-0006839 24

www.veritext.com

PAGE

PAGE

Page 310

-----·

Page 311

[Cont'd]

PLAINTIFF'S DESCRIPTION 4 5 Exhibit 17 one-page e-mail 199

dated Aptil 7, 20 14 marked PERCAL-0004528

Exhibit 18 one-page e-mail 208 on April 10, 2014 marked PERCAL-0003170

10 Exhibit 19 one-page e-mail 211 dated April 12,2014,

II Bates stamped VAL-ALL_00028958

12 13 Exhibit 20 one-page e-mail 212

dated April 12, 14 2014, Bates stamped

VAL-ALL_ 00027448 15 16 Exhibit 21 one-page e-mail 217

dated April 13, 2014, 17 Bates stamped

VAL-ALL_00003284 18 19 Exhibit 22 one-page e-mail 223

dated Aprill8, 20 20 14, marked

PERCAL-0003060 21 22 Exhibit 23 e-mail dated 228

23

24

4

9

10 II

12

13 14

15

16 17

18

19 20

21

22 23

24

[Cont'd]

Aptil20, 2014, Bates number VAL-ALL_0002743l


Exhibit 24 13D filed by 230 Pershing Square Capital Management 04121/14

Exhibit 25 one-page e-mail 234 dated April22, 2014, Bates number VAL-ALL_ 00028948

Exhibit 26 e-mail dated 236 May 4, 2014 stamped VAL-ALL_00028263 through 28264 with attachment

Exhibit 27 e-mail dated 247 May 11,2014 Bates stamped V AL~ALL_. 00028617 to 618

Exhibit 28 one page e-mail 250 dated May 16,2014 Bates stamped VAL-ALL_0002760

Exhibit 29 letter from William 259 Ackman to Michael Gallagher dated May 5, 2014

Exhibit 30 Valeant Phannaceuticals Intemational, Inc Fonn S-4 264


Page 312

PAGE

--·---··----··---

Page 313

PAGE

79 (Pages 310- 313)

888-391-3376


HIGHLY CONFIDENTIAL

2 [Cont'd.] 3

4 5

6

7 8

9

10

II 12


Exhibit 31 Fonn 425 filed on 291 April23, 2014 by Valeant Pharmaceuticals

Exhibit 32 one-page letter 30 I dated September 23, 2014 from William Ackman to the Board of Directors of Allergan

Page314

PAGE

13 EXHIBITS RETAINED BY COURT REPORTER 14 15 16 17 18 19 20 21 22 23 24

2

DEPOSITION REVIEW CERTifiCATION OF WITNESS

ASSIGNMENT NO: 1938648 CASE NAME: Allergan, Inc, etc v Valeant Pharmaceuticals DATE OF DEPOSITION: 10/2/2014

4 WITNESS' NAME: William Ackman 5 In accordance with the Rules of Civil

Procedure, I have read the entire transcript of my testimony or it has been read to me

I have made no changes to the testimony as transcribed by the comt repotter

9 Date William Ackman I 0 Sv.,rorn to and subscribed before me, a

Notaty Public in and for the State and County, II the referenced witness did personally appear

and acknowledge that: 12

They have read the transcript; 13 They signed the foregoing Swam

Statement; and 14 Their execution of this Statement is of

their fl-ee act and deed 15

16

17

18 19

20 21 22 23 24 25

I have affixed my name and official seal

this~-·-- day of~-· ..

Notmy Public

Commission Expiration Date

Page 315

DEPOSITION REVIEW

CERTIFICATION OF WITNESS

ASSIGNMENT NO: t938648

3 CASE NAME: Allcrgan, Inc, etc v Valeant Phannaceuticals DATE OF DEPOSITION: I0/2/20t4

4 WITNESS' NAME: William Ackman

5 In accordance with the Rules of Civil

Procedure, I have read the entire transc1ipt of 6 my testimony or it has been read to me

7 I have listed my changes on the attached Enata Sheet, listing page and line numbers as

8 well as the reason(s) for the change(s) 9 I request that these changes be entered

<1s part of the record of my testimony

10

I have executed the Enata Sheet, as well ll as this Certificate, and request and authorize

that both be appended to the transcript of my 12 testimony and be incorporated therein

l3 ~----Date William Ackman

t4

Sworn to and subscribed before me, a 15 Notmy Public in and for the State and County,

the referenced witness did personally appear

16 and acknowledge that:

17 They have read the transcript; They have listed all of their conections

18 in the appended Errata Sheet;

They signed the foregoing Sworn

19 Statement; and Their execution of this Statement is of

20 their free act and deed

21 I have affixed my name and official seal

22 this~- day of~~~~~ 23

Notmy Public

24

25 Commission Expiration Date

ERRATA SHEET

,20_

VERITEXT LEGAL SOLUTIONS MIDWEST

2 ASSIGNMENT NO: 1938648

3 P AGE/LINE(S) I CHANGE /REASON

Page 316

Page 317

4 ______________________________________ _

5 6

7

8

9

10

11

12

13

14

15

16 -----------------------

17 --------------------------------------18

19

20 Date William Ackman

21 SUBSCRIBED AND SWORN TO BEFORE ME THIS 22 DAY OF ________________ , 20 __ .

23

Notary Public

24

25 Commission Expiration Date ------·---------------

80 (Pages 314 - 31 7)


Exhibit 1 -Page 95 888-391-3376


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