: : I, Homer Parkhill, being duly sworn, state the following under penalty of perjury:

Transcription

1 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x : In re: : : NII Holdings, Inc., et al., 1 : : Debtors. : : x Chapter 11 Case No (SCC) (Jointly Administered) SUPPLEMENTAL DECLARATION OF HOMER PARKHILL IN SUPPORT OF CONFIRMATION OF THE FIRST AMENDED JOINT PLAN OF REORGANIZATION PROPOSED BY THE PLAN DEBTORS AND DEBTORS IN POSSESSION AND THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS I, Homer Parkhill, being duly sworn, state the following under penalty of perjury: 1. I am a Managing Director at Rothschild Inc. ("Rothschild"), a financial advisory services and investment banking firm which has its principal office at 1251 Avenue of the Americas, 33 rd Floor, New York, New York Rothschild has been retained by the Debtors as their financial advisor and investment banker in these chapter 11 cases. 2. I make this Supplemental Declaration in support of the First Amended Joint Plan of Reorganization Proposed by the Plan Debtors and Debtors in Possession and the Official Committee of Unsecured Creditors, dated April 20, 2015 [Docket No. 664] (as it may be modified or amended, the "Plan") The Debtors in the jointly administered bankruptcy cases are comprised of the following thirteen entities (the last four digits of their respective U.S. taxpayer identification numbers follow in parentheses): NII Holdings, Inc. (1412); Nextel International (Services), Ltd. (6566); NII Capital Corp. (6843); NII Aviation, Inc. (6551); NII Funding Corp. (6265); NII Global Holdings, Inc. (1283); NII International Telecom S.C.A. (7498); NII International Holdings S.à r.l. (N/A); NII International Services S.à r.l. (6081); Airfone Holdings, LLC (1746); McCaw International (Brazil), LLC (1850); NII Mercosur, LLC (4079); and NIU Holdings LLC (5902). The location of the Debtors' corporate headquarters and the Debtors' service address is: 1875 Explorer Street, Suite 800, Reston, VA Capitalized terms used but otherwise not defined herein have the meanings ascribed to them in the Plan, the Debtors' brief in support of confirmation or the Disclosure Statement, as applicable. NAI v1

2 3. I hereby incorporate, as if fully stated herein, the testimony highlighted in yellow and green (including testimony highlighted in yellow and underlined in red) in the version of the transcript of my deposition of May 15, 2015 that is attached hereto as Exhibit A. 4. Set forth below is a list of the Plan Proponents hearing exhibits that are true and accurate copies of documents cited or otherwise referred to, or that relate to issues discussed, in my Declaration of May 29, 2015 or the deposition testimony incorporated herein. Hearing Exhibit No. P004 P039 P040 P055 P057 P058 Description Notice of Filing of Solicitation Version of the Disclosure Statement and First Amended Joint Chapter 11 Plan, including exhibits Discussion Materials Overview of Waterfall Model and Settlement Implications, dated December 15, 2014 Presentation to Board of Directors, Revised Plan Support Agreement, dated February 27, 2015 Waterfall model based on Second PSA Timeline of Events in Global Restructuring of NII Holdings, Inc. Simplified Total Plan Distributable Value Illustration P062 chain from Homer Parkhill to Scott Greenberg dated January 23, 2015 P063 P064 chain from Steve Shindler to Homer Parkhill, Scott Greenberg, and Gary Begeman dated January 27, chain from Homer Parkhill to Matthew Chou, Mirag Vamja, Mahir Quraishi, Bilal Bazzy, and Nick Melton dated February 4, 2015 P066 chain from Homer Parkhill to Scott Greenberg dated February 18, 2015 P149 Rothschild Presentation to UCC dated October 20, 2014 P160 chain from Dan Gropper to Homer Parkhill, Daniel Golden, David Botter, Steven Zelin, Mark Brodsky, Dennis Prieto, and Jason Abbruzzese, dated September 11, 2014 NAI v1-2-

3 Hearing Exhibit No. P161 P163 P165 P176 P198 P201 Description from Dan Gropper to Steve Shindler, Scott Greenberg, Homer Parkhill, Daniel Golden, and Dennis Prieto, dated October 19, chain from Steve Shindler to Scott Greenberg, Homer Parkhill, and Gary Begeman, dated January 23, from Mark Brodsky to Homer Parkhill, Dan Gropper, Dennis Prieto, and Steven Zelin, dated September 9, from Mark Brodsky to Steve Shindler, Homer Parkhill, Dan Gropper, and Dennis Prieto, dated February 4, from Mark Brodsky to Homer Parkhill, Dan Gropper, Dennis Prieto, dated September 15, 2014 Declaration of Homer Parkhill in Support of Confirmation of the First Amended Joint Plan of Reorganization Proposed by the Plan Debtors and Debtors in Possession and the Official Committee of Unsecured Creditors I declare under penalty of perjury that the foregoing is true and correct. Dated: June 2, 2015 New York, New York /s/ Homer Parkhill Homer Parkhill Managing Director Rothschild Inc. NAI v1-3-

4 Exhibit A

5 1 2 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK 3 Case No scc x 5 In the Matter of: 6 NII HOLDINGS, INC. and NII INTERNATIONAL HOLDINGS S.a.r.l., 7 Debtors x 9 10 May 15, :17 a.m Deposition of HOMER D. PARKHILL, 13 as an Individual and as a Representative of 14 Debtors, taken by attorneys for the Ad Hoc Group 15 of NII Capital 2021 Noteholders, pursuant to 16 individual notice and 30(b)(6) notice, held at 17 the offices of Latham & Watkins LLP, 885 Third 18 Avenue, New York, New York, before Helen 19 Mitchell, a Shorthand Reporter and Notary 20 Public

6 1 2 A P P E A R A N C E S : 3 4 JONES DAY Attorneys for Debtors John H. McConnell Boulevard Suite Columbus, Ohio BY: ROBERT W. HAMILTON, ESQ. 8 -and- 9 JONES DAY 222 East 41st Street 10 New York, New York BY: SCOTT J. GREENBERG, ESQ LATHAM & WATKINS LLP Attorneys for Ad Hoc Group of NII 14 Capital 2021 Noteholders 885 Third Avenue 15 New York, New York BY: CHRISTOPHER HARRIS, ESQ. SARAH ROGERS, ESQ A P P E A R A N C E S (Cont'd.): 3 4 KRAMER LEVIN NAFTALIS & FRANKEL LLP Attorneys for Official Committee of 5 Unsecured Creditors 1177 Avenue of the Americas 6 New York, New York BY: P. BRADLEY O'NEILL, ESQ. (as noted) 8 STEPHEN D. ZIDE, ESQ. (as noted) 9 NATAN HAMERMAN, ESQ. (as noted) PAUL, WEISS, RIFKIND, WHARTON & 12 GARRISON LLP Attorneys for Capital Research & 13 Management 1285 Avenue of the Americas 14 New York, New York BY: ELIZABETH R. McCOLM, ESQ QUINN EMANUEL URQUHART & SULLIVAN LLP Attorneys for Independent Manager of 18 NII International Holdings, S.a.r.l. 51 Madison Avenue 19 New York, New York BY: ROBERT S. LOIGMAN, ESQ ALSO PRESENT: 23 JEREMY R. STERN FTI Consulting H O M E R D. P A R K H I L L, 3 having been first duly sworn by the Notary 4 Public (Helen Mitchell), was examined and 5 testified as follows: 6 EXAMINATION 7 BY MR. HARRIS: 8 Q Good morning, Mr. Parkhill. 9 A Good morning, Mr. Harris. 10 Q I assume you know this, but 11 I'm from the law firm of Latham & Watkins, we 12 represent the ad hoc group of 2021 noteholders. 13 Have you been -- I assume you 14 have been deposed before? 15 A I have been, yes. 16 Q Many times; is that right? 17 A Many times. 18 Q I won't waste your time with 19 the ground rules, then. 20 I just want to run through 21 some terms I'll be using and make sure we have 22 agreement on them. They're pretty much all from 23 the debtors' disclosure statement. 24 If I use the term "transferred 25 guarantors," do you know what I mean? 5 2 A Yes. 3 Q And "2009 transfers of the 4 transferred guarantors"? 5 A Yes. 6 Q And "the transferred guarantor 7 claims"? 8 A Yes. 9 Q And "the potential litigation 10 claims"? 11 A Broadly speaking? 12 Q I think in the document 13 they're designed as the transferred guarantor 14 claims, the avoidance claims and the 15 recharacterization claims. 16 A Yes. So the basket, yes. 17 Q Yes. 18 The first PSA, do you know 19 what I'm referring to? 20 A Sure. 21 Q And the second PSA, which 22 would be the current one? 23 A Yes. 24 Q And you'd know what I mean by 25 the 2021 notes, the 2019 notes and the (Pages 2 to 5)

7 2 notes? 3 A Yes. 4 Q CapCo and LuxCo? 5 A Yes. 6 Q Okay. And finally, the 7 Aurelius letter that went out on March 4th, , you're familiar with that? 9 A Yes. 10 Q Okay. 11 Can you pull out Exhibit So you know, this is a stack of exhibits that 13 has been used in prior depositions. We'll be 14 using some of them again. 15 So have you seen Exhibit before? 17 A I have. 18 Q And the debtors have 19 designated you as a representative to talk on 20 behalf of some of the topics in here. The first 21 one is topic B2. If you look on page 5, there's 22 topics for examination. 23 A I see them. 24 You said B, as in boy? 25 Q B like boy, yes. 2 A B2. 3 Q And are you prepared to speak 4 on that topic on behalf of the debtors? 5 A To the best I'm able, yes. 6 Q And the next is E3, E like 7 Edgar. 8 A Letter transmittals, yes. 9 Q Are you prepared to speak on 10 that topic? 11 A I am. 12 Q The next is F. Are you 13 prepared to speak on that topic? 14 A Yes. 15 Q And G, are you prepared to 16 speak on that topic? 17 A Yes. 18 Q H, are you prepared to speak 19 on that topic? 20 A Yes. 21 Q And then the last two are J 22 and K. Are you prepared to speak on those two 23 topics? 24 A Yes (Deposition notice to Mr. 3 Parkhill individually marked Exhibit for identification.) 5 MR. HAMILTON: Counsel, it's 6 just a one-page exhibit? 7 MR. HARRIS: It's just the one 8 page. 9 Q You've been handed Exhibit , which is a deposition notice to yourself. 11 Do you understand you're also 12 here testifying in your individual capacity? 13 A I do understand that. 14 Q And what did you do to prepare 15 to testify today? 16 A I reviewed historical 17 presentations that were produced in the 18 discovery response that you provided, or asked 19 of us at Rothschild. I met with Jones Day to 20 discuss those materials and potential 21 questioning related to the subjects at hand. 22 Q Anything else? 23 A No. 24 Q What are the historical 25 presentations you're referring to? 2 A The historical presentations 3 are the -- as I said, the materials that were 4 produced in the discovery response, board 5 presentations, s that were provided to 6 you, the disclosure statement itself. 7 Q Is there anything besides 8 board presentations, s and the disclosure 9 statement? 10 A There -- there are other 11 presentations that were made to different 12 members of the creditor constituency that 13 weren't included in that production which I 14 could have -- which I reviewed. 15 Q And these presentations you're 16 referring to, these are all Rothschild 17 presentations? 18 A Yes, most of them were 19 Rothschild -- to my recollection, all of them 20 were Rothschild presentations. 21 Q Did you review presentations 22 by -- that were created by anyone else? 23 A No, not to my recollection. 24 Q Did you review any materials 25 created by Jones Day? (Pages 6 to 9)

8 10 2 MR. HAMILTON: That's a yes or 3 no question. 4 A It requires more than a yes or 5 no answer because some of the board 6 presentations are labeled "Rothschild and Jones 7 Day," so Jones Day reviewed those board 8 presentations. So if you want to -- Rothschild 9 was the architect, but Jones Day provided 10 commentary on the presentation, which is why I 11 hesitated in the response. 12 With that caveat, they were 13 all produced on -- by my team. 14 Q Did you review any materials 15 that contained any analysis by Jones Day of the 16 potential litigation claims? 17 A No. 18 Q You said you met with Jones 19 Day. When was that? 20 A Our first meeting was last 21 week, I don't recall the exact day, and then we 22 met again twice this week. 23 Q The meeting last week, how 24 long did that last? 25 A Approximately two hours, two 11 2 to three hours. 3 Q And was there anyone present 4 there other than Jones Day people? 5 A In the first meeting, I 6 believe one of my colleagues attended that 7 meeting for a little bit -- for a small part of 8 it. 9 Q Do you remember who that was? 10 A I think Matt Chou. 11 Q And did he attend to provide 12 information on a particular topic or subject? 13 A No, just -- it was a 14 general Q Anyone else? 16 A No. 17 Q Anyone dial in, or you called 18 anyone? 19 A No. 20 Q And then the second meeting, 21 when was that, with Jones Day? 22 A So there were two, I believe, 23 this week. The -- again, the exact -- I think 24 Tuesday was the first. That was approximately 25 two hours-three hours Q And was anyone there other 3 than Jones Day people? 4 A No. 5 Q And then the final meeting, 6 when was that? 7 A That was yesterday. 8 Q And how long did that take? 9 A That took five hours, 10 approximately. 11 Q And again, anyone there other 12 than Jones Day people? 13 A No one there. 14 Q And the materials you 15 mentioned reviewing, are those things you 16 reviewed on your own, outside of your meetings 17 with Jones Day? 18 MR. HAMILTON: You can answer 19 that. 20 A To the extent they were 21 presentations, I -- I reviewed them prior to 22 them being made, at the time they were made, so, 23 yes. To the extent that they were -- I'm sorry, 24 can you repeat the question? 25 Q Sure I wasn't actually trying to 3 get at what you had done historically; I'm just 4 trying to figure out if the materials that you 5 spoke about that you reviewed to prepare, was 6 that -- did you review them on your own to 7 prepare or did you review them in your meeting 8 with Jones Day? 9 MR. HAMILTON: I'm going to 10 object and instruct the witness not to 11 answer or disclose in his answers what 12 he looked at or did not look at at his 13 meeting with Jones Day. He's 14 certainly free to answer any questions 15 about what he looked at on his own. 16 (Mr. Zide enters the room) 17 Q What materials did you look at 18 on your own? 19 A The disclosure statement and 20 the presentations. 21 Q Did any of the s that 22 you looked at refresh your memory about any 23 events or topics? 24 A Sure. Some did, some didn't. 25 Q What s do you have in 4 (Pages 10 to 13)

9 14 2 mind that did? 3 A I can't recall, like, 4 specifically the exact , but... 5 Q Can you remember the topics 6 that you were refreshed about? 7 A Some of them were relating to 8 when proposals came over from constituents. 9 Q Any other topics? 10 A Not that I recall. 11 Q Anything else you did to 12 prepare besides that series of meetings and then 13 the materials you reviewed on your own? Did you 14 talk to anyone else, for instance, to learn some 15 facts? 16 A Outside of Jones Day or any no. 18 Q Let's just get some background 19 information. 20 Can you describe your 21 educational background? 22 A Sure. 23 I have an undergraduate degree 24 and a graduate degree, master's in business, 25 from the University of Texas at Austin Q When did you get that? 3 A 1993 was my undergraduate 4 degree and 1997 was my MBA. 5 Q And can you describe your 6 employment history since college? 7 A Start with -- between 8 undergraduate and business school I worked for 9 Brown & Root, a construction engineering firm. 10 Post graduate school, I worked at -- I started 11 my investment banking career with Houlihan Lokey 12 Howard & Zukin. I was there for approximately a 13 year, I went to work for Conway 14 Delgenio & Gries, here in New York. I was there 15 approximately two and a half years, and joined 16 Rothschild in 2001, and have been with 17 Rothschild in their restructuring debt advisory 18 group for the last 14 years. 19 Q Can you walk through the 20 different positions you've held while at 21 Rothschild. 22 A So I'm a managing director, so 23 we'll just go in reverse. Been a managing 24 director for approximately four years, was a 25 director for approximately two years, a vice 16 2 president for the balance of the time. 3 Q Has there been any industry 4 focus you've had while at Rothschild? 5 A I have done -- it's probably 6 safer to describe it as a geographic focus. I 7 have a lot of experience working in Latin 8 America with Latin American companies, and -- 9 but I also do a lot of work here in the United 10 States. But, as many restructuring 11 professionals, kind of run the gamut of 12 industries and situations, but Q And what are the Latin 14 American engagements that you're referring to? 15 A So in my career I've been 16 involved in multiple restructurings in Mexico would you like me to list them? 18 Q Yes, without -- if you can do 19 so without revealing something that's 20 confidential. 21 A No, no. 22 So started with SanLuis, Grupo 23 SanLuis, then went to Durango Part 1 -- because 24 there was two cases in the Durango 25 restructuring. We had Vitro, Durango Part 2, 17 2 Comercial Mexicana, which is a Mexican grocery 3 company, and currently advising GEO, which is a 4 Mexican home builder. 5 Q How do you spell that? 6 A It's G-E-O. 7 And also -- that's Mexico. In 8 Brazil -- 9 Q Let me just make sure of my 10 handwriting. GEO, above that was Comercial A Comercial Mexicana -- CCM is 12 probably the easiest. 13 Q And then above that was Vitra? 14 A Vitro, V-I-T-R-O. 15 And Durango, there was one and 16 two. 17 Q Right. 18 A And SanLuis Q Okay. 20 A -- which was an automotive 21 company. 22 Q Were those -- were any of 23 those U.S. bankruptcy filings? 24 A So there were Chapter 15's 25 in -- 5 (Pages 14 to 17)

10 18 2 Q They were all Chapter 15's? 3 A In -- not all of them, in some 4 of them. 5 Q Of those six, which were 15's 6 versus... 7 A My recollection, so Durango 1 8 and 2, I think both had a 15, Vitro. SanLuis 9 was not -- I think those were the three. 10 Q And the others? 11 A The others were -- SanLuis was 12 an out-of-court exchange offer, so we actually 13 did that restructuring without having to file 14 either a local proceeding or a U.S. Chapter or Q Okay. 17 A The others were done locally 18 through the Consorcio Mercantil law. 19 Q Okay. 20 A And so that's Mexico. 21 Brazil we have Mirabela, which 22 is an Australian listed Brazilian nickel mine; I 23 advised the bondholders there. 24 OGX, which is Eike Batista's 25 oil and gas venture, advised the bondholders, 19 2 and are currently advising the company in that 3 situation. 4 Those are all -- at least OGX 5 was a local Brazilian filing, Mirabela was an 6 Australian proceeding, and -- I guess that's it, 7 right. 8 Q Any other Latin American 9 restructuring engagements? 10 A I've been involved in U.S. 11 companies that have Latin American operations 12 that have had restructuring, operational 13 restructuring and some balance sheet issues. 14 Tecumseh Products had a 15 significant manufacturing operation in Brazil. 16 They did not file locally or in the U.S., but 17 there were material issues with the balance 18 sheet, local balance sheet. 19 Q Any other U.S. companies with 20 significant Latin American issues? 21 A American Airlines was -- is a 22 dominant player in the Latin American market. I 23 advised American Airlines in its restructuring. 24 Q Okay. 25 A I'm sure there's others Q Nothing else coming to mind 3 right now? 4 A Nothing else coming to mind 5 right now. 6 Q Have you had any telecom 7 engagements before? 8 A No. Not to my recollection. 9 Q How did Rothschild come to be 10 engaged by the debtors? 11 A So in the fall of 2013 we 12 approached the company -- Rothschild has had a 13 historic relationship with the company through 14 our M&A practice, and we approached them through 15 that relationship to discuss balance sheet 16 alternatives that we saw from a public 17 standpoint. It was restricted, it didn't have 18 any material non-public information. Approached 19 the company based on the current pricing of its 20 bonds and our review from a distance of their 21 capital raising options. 22 And so that was the first 23 meeting. 24 We were retained in the first 25 instance to evaluate strategic alternatives, 21 2 which ran the landscape of financing, exchange 3 offer alternatives. 4 That migrated, as the 5 company -- 6 Q And that was in 2013? 7 A Started in That also 8 involved evaluating their business plan at the 9 time, and through the course of that engagement, 10 strategic alternatives engagement (Mr. O'Neill enters the room) 12 A -- the company's financial 13 performance continued to deteriorate, and that 14 mandate was expanded and broadened to include a 15 more formal engagement to advise them on the 16 restructuring process itself. 17 There was a subsequent to that 18 expansion of our role to include post-filing M&A 19 advisory as we led both the restructuring and 20 the post-filing marketing of the company's 21 Mexican and Brazilian operations. 22 Q When you said the initial 23 approach was about -- to discuss balance sheet 24 alternatives, what do you mean by that? 25 A The company's bonds at the 6 (Pages 18 to 21)

11 22 2 time were trading at -- I don't recall the exact 3 levels, but they were trading at distressed 4 pricing -- pricing levels, meaning below par. 5 There was a large amount of cash on the balance 6 sheet, but there was also, in the marketplace, 7 rumors that operationally things weren't going 8 as well as people hoped, and so we thought it 9 was a good approach to basically come in and 10 talk to the company about what we saw as, you 11 know, possible -- the suite and landscape of 12 generic options that debt advisory restructuring 13 firms talk about when they only have public 14 information. 15 Q And what is your role on the 16 Rothschild team? 17 A So I lead the overall 18 engagement, from a restructuring and debt 19 advisory standpoint. I have a partner, Nick 20 Melton, who became actively engaged and led the 21 M&A -- the marketing of the assets. We were 22 tightly, you know, coordinated around all 23 aspects of the interception of the M&A process 24 and the restructuring process, but I lead the 25 engagement for Rothschild Q Now, have you had any personal 3 involvement in the negotiations with the local 4 Brazilian lenders that happened in 2014? 5 A I have not. 6 Q Or has anyone from Rothschild? 7 A No. 8 Q Have you had any personal 9 involvement in Jones Day's investigation into 10 the potential litigation claims? 11 A Only insomuch as -- no. 12 Q Were you interviewed? 13 A No. 14 Q Have you received a download 15 or summary of the results of that investigation? 16 A No, only the kind of result of 17 the settlement. So I have a sense of -- or 18 conclusions based on the basics of the 19 settlement. 20 Q What is the sense you 21 personally have of their conclusions based on 22 the settlement? 23 MR. HAMILTON: I'm going to 24 object and instruct the witness not to 25 disclose the contents of the advice of 24 2 Jones Day to the debtors that may have 3 been shared with you. 4 You are certainly free to talk 5 about what subjects were discussed, 6 but not particular conclusions that 7 were communicated by Jones Day to its 8 client. 9 A What I meant by that reference 10 was the board, after hearing from Jones Day, its 11 advisors on that subject, approved the 12 settlement, and that settlement involved 13 compromise of those claims, and I'm aware of 14 that. 15 Q And based on that, what is the 16 inference that you said you're drawing about 17 what Jones Day's results must have been? 18 A That MR. HAMILTON: Again, I'm 20 going to object and instruct the 21 witness not to disclose the contents 22 of communications by Jones Day to its 23 clients, including any conclusions 24 that Jones Day may have communicated 25 to its clients Q I think you were saying you 3 had an inference not based on what Jones Day 4 told you, but based on the fact that the board 5 approved the settlement; is that right? 6 MR. HAMILTON: If the question 7 is asking what does he infer Jones Day 8 concluded, I'm objecting and instruct 9 him not to answer. 10 If you're asking him what he 11 inferred the board concluded, I'll let 12 you ask that question, but right now 13 it's unclear what your question is, 14 Chris. 15 Q Well, let me ask you. Do you 16 have an inference as to Jones Day's conclusion 17 not based on having seen their analysis, but 18 based on the fact that the board approved the 19 settlement? 20 MR. HAMILTON: I'm going to 21 instruct the witness not to answer 22 that question. 23 MR. HARRIS: On what basis? 24 MR. HAMILTON: You're asking 25 about his views -- or what he knows 7 (Pages 22 to 25)

12 26 2 about Jones Day's conclusions. It's 3 not relevant to anything. 4 MR. HARRIS: You're 5 instructing the witness not to answer 6 on relevance? 7 MR. HAMILTON: No, it's 8 privileged. 9 MR. HARRIS: Well, that's not 10 what you said. So can you 11 articulate MR. HAMILTON: I'm not going 13 to argue with you. I've instructed 14 him not to answer. If you want to 15 call the judge, call the judge. 16 MR. HARRIS: We will be 17 raising MR. HAMILTON: Go ahead. 19 MR. HARRIS: -- privilege 20 issues with the judge MR. HAMILTON: I can't wait to 22 hear it. Let's go, next question. 23 MR. HARRIS: -- I'm happy to 24 add that to the list. 25 Just to be clear, you're 27 2 directing him not to answer whether he 3 drew an inference based on the fact 4 that the board approved a settlement? 5 MR. HAMILTON: No. You asked 6 him about his inference as to Jones 7 Day's conclusions. I'm instructing 8 him not to answer any questions about 9 what he believes or has inferred about 10 Jones Day's conclusions. 11 MR. HARRIS: Based on 12 non-privileged facts; is that correct? 13 MR. HAMILTON: I'm not going 14 to argue with you, Chris. I've 15 instructed him not to answer the 16 question. 17 MR. HARRIS: Okay, I just want 18 to have the record clear. 19 MR. HAMILTON: Whatever. 20 MR. HARRIS: I'm asking him 21 the inference he drew based on 22 non-privileged facts. And you're 23 instructing him not to answer? 24 MR. HAMILTON: That's correct. 25 Have I been unclear about that? 28 2 MR. HARRIS: No, I'm just 3 surprised. 4 I will move on. 5 BY MR. HARRIS: 6 Q Did you have any role in the 7 DIP that the debtors obtained? 8 A Yes. 9 Q And what was your role in 10 that? 11 A Rothschild led the process 12 soliciting proposals for the DIP, and evaluating 13 those proposals and making a recommendation to 14 the board as to the most favorable proposal. 15 Q Did you have any review in the 16 review of SEC filings? 17 I'm sorry, did you have any 18 role in the review of SEC filings? 19 A In the review of SEC filings 20 in the sense of did I -- have I seen their SEC 21 filings, or did prior Q Before they were filed, did 23 you review any of them? 24 A No. 25 Q Did you have any role in the 29 2 preparation and review of the disclosure 3 statement? 4 A Yes, my -- Rothschild, myself, 5 my team, had a role in that process. 6 Q Okay. What was Rothschild's 7 role in that process? 8 A Primarily supporting the 9 components of a disclosure statement that 10 investment banking firms like ours provide 11 perspective and input on. Specifically the 12 valuation section, the going concern valuation 13 section, the resulting recovery analyses that 14 are within the disclosure statement, the math, 15 the associated percentages that are contained 16 therein. 17 Q Do you recall there's a 18 section that discusses the settlement, and as 19 part of that it discusses the potential 20 litigation claims? 21 A I do. 22 Q Is that a section that you 23 reviewed in advance of it being finalized? 24 A No. 25 Q Did you have any role in 8 (Pages 26 to 29)

13 2 analyzing the potential litigation claims? 3 A Not from a legal perspective. 4 Q Did you analyze them from some 5 other perspective? 6 A We analyzed the financial 7 ramifications of different settlement 8 alternatives that included a settlement of 9 certain of those claims. So the waterfall 10 model, as we referred to it, disclosure 11 statement was primarily the responsibility of 12 Rothschild and my team. 13 Q So did you have any role in 14 assessing the merits of the potential litigation 15 claims? 16 A At -- at Rothschild? 17 Q Yes. 18 A No. 19 Q Did you have a role in 20 assessing the merits of the potential litigation 21 claims in some other capacity? 22 A No, but as a 30(b)(6) witness 23 relating to the company's process for evaluating 24 those claims, I think I'm prepared to comment 25 and refer to what the company has done Q So given that you did not have 3 any personal role in evaluating the merits of 4 potential litigation claims, could you explain 5 what steps you took to be prepared to testify on 6 behalf of the company on that topic? 7 A So I was intimately involved 8 throughout this restructuring process, and so 9 I'm keenly aware of the time frames and the work 10 that went behind evaluating these claims that 11 the attorneys performed. I'm keenly aware of 12 the facts and circumstances around that process 13 without knowing the specifics of the exchanges. 14 I'm aware of -- by virtue of being involved in 15 the board meetings and the exchanges with 16 creditor groups at the points in time in those 17 formal meetings where those issues were 18 discussed, because I was specifically asked to 19 leave the room where that was another agenda 20 point that was, you know, on the meeting 21 schedule where -- you know, where I did not 22 participate. So I can speak to the process. 23 Q Can you speak to the results 24 of the process, meaning the assessment of the 25 merits? 32 2 A I can speak to the conclusions 3 surrounding assessment of the merits, which are 4 contained specifically in the disclosure 5 statement. 6 Q Other than having reviewed the 7 statements in the disclosure statement about the 8 merits, do you have any other basis to speak on 9 behalf of the debtors as to their views of the 10 merits of the potential litigation claims? 11 A Besides the experience with 12 the process and the conclusions around the 13 board's conclusions, knowing that, no. 14 Q And by the experience with the 15 process, that experience does not include being 16 privy to the results of Jones Day's analysis; 17 right? 18 MR. HAMILTON: Object to form. 19 You can answer. 20 A No. 21 Q So to prepare today, you did 22 not review the results of Jones Day's analysis, 23 and you don't have any personal knowledge as to 24 the results of Jones Day's analysis as to the 25 merits of the claims? 33 2 A Other than what's contained in 3 the disclosure statement, that's clearly 4 articulated there, no. 5 Q Do you have any personal 6 knowledge as to the views that anyone at the 7 debtors or on the board has shared as to their 8 assessment as to the merits of potential 9 litigation claims? 10 A No. 11 Q So your basis for speaking on 12 behalf of the debtors' assessment on that topic 13 is your knowledge of the process and having read 14 the statements in the disclosure statement; is 15 that a correct summary? 16 MR. HAMILTON: Object to form. 17 That's not all that he said in 18 his prior testimony, and I object to 19 your attempt to try and characterize 20 it in a short and inaccurate way. 21 But you can go ahead and 22 answer the question. 23 MR. HARRIS: That's a speaking 24 objection, sir. 25 MR. HAMILTON: I know exactly 9 (Pages 30 to 33)

14 34 2 what you're doing. He testified at 3 length about his discussions with the 4 other -- 5 MR. HARRIS: Please limit your 6 objections. 7 MR. HAMILTON: It's not an 8 acceptable question. 9 MR. HARRIS: Please limit your 10 objections to form and MR. HAMILTON: I understand 12 the rules, Chris. 13 MR. HARRIS: It does not 14 appear you do. 15 MR. HAMILTON: I do. 16 Q Let me try the question again. 17 And I don't mean to mischaracterize your 18 testimony MR. HAMILTON: But you did. 20 Q -- so you will correct me if 21 I'm saying it incorrectly. 22 So what I really want to know 23 is what you've done to prepare to testify on 24 behalf of the debtors as to the debtors' 25 assessment of the merits of the claims MR. HAMILTON: And he's 3 already answered that question several 4 times, so -- 5 Q So am I correct that you do 6 not have any personal knowledge as to the 7 debtors' assessments of the merits of the 8 claims? 9 A I was not privy to Jones Day's 10 legal conclusions. Those discussions were 11 privileged, so I was kept out of those. I'm 12 aware of the process. I'm aware of the 13 dialogues that took place. I'm aware of the 14 interactions, not just with the board, but with 15 all constituents. I am aware of the 16 perspectives that are shared in the disclosure 17 statement around those claims, which is, I 18 think, what I said previously. 19 Q You are not aware of anyone 20 having -- at the debtors or the board -- having 21 shared their personal views as to the merits of 22 the claims? 23 A Outside of the settlement, 24 meaning being a reasonable settlement in light 25 of all the attenuant facts and circumstances? 36 2 Q So by "the process," you mean 3 an understanding of the steps that were taken, 4 but not of the results of that process; is that 5 right? 6 A Not of the results in the 7 sense I never saw the legal analysis that was 8 performed by Jones Day in assessing the merits 9 and strength and weaknesses of the various 10 arguments that could be made for and against the 11 respective claims, other than to know that they 12 were performed thoroughly and that they were 13 shared at length with our board, and then 14 discussed in exchanges with the professionals 15 for the various constituents of the estate. 16 Q And you were not present when 17 the assessments were shared with the board; 18 right? 19 A Right. 20 Q Were you present when Jones 21 Day's assessments were shared with professionals 22 for the various constituents of the estate? 23 A Not the -- and I'm not even 24 sure what was shared specifically, no, but there 25 were privileged meetings that took place that we 37 2 were not part of. 3 Q And to prepare to testify on 4 this topic today you did not review any 5 materials that indicated what was shared at 6 those privileged meetings? 7 A Not at those privileged 8 meetings, no. 9 Q And one of the topics you've 10 been designated to testify about is the reasons 11 for the debtors' decision to enter into the 12 settlement. 13 What personal knowledge do you 14 have as to the reasons for the debtors' 15 decision? I'm not asking MR. HARRIS: Let me try it a 17 different way. 18 Q You're not on the debtors' 19 board; right? 20 A I'm not. 21 Q And you're not a member of the 22 management of the debtors; right? 23 A I'm not. 24 Q So you were not personally 25 involved in the decision to enter into the 10 (Pages 34 to 37)

15 38 2 settlement; right? 3 MR. HAMILTON: Object to form. 4 You can answer. 5 A In -- I think the better way 6 to describe your -- to answer your question is 7 to describe what I was involved with, which was 8 I was involved in all of the board meetings -- 9 at least components of the board meetings 10 leading up to the decision by the board to enter 11 into the settlement, and I presented on a number 12 of financial topics that supported that 13 decision. 14 Q So you are aware of certain of 15 the issues that were presented to the board and 16 management on the settlement? 17 A Outside of what I've already 18 testified to in terms of what was -- what's in 19 the disclosure statement stipulating the nature 20 of the allegations and the evaluation that 21 underwent the investigation of those 22 allegations, and the findings that there were 23 arguments for supporting certain positions and 24 arguments against supporting certain positions, 25 I was certainly aware of that Q And there presumably were 3 sections of the presentations to the board you 4 said you were not present in, so you don't know 5 what issues were discussed in those sections; 6 right? 7 MR. HAMILTON: Object to form. 8 You can answer if you can 9 understand it. 10 A I was very clear, I thought, 11 earlier with the kind of components of those 12 meetings that I was not involved in; that I was 13 not involved in those components of the meetings 14 which involved the board's discussions of Jones 15 Day's conclusions around -- or views -- maybe 16 "conclusions" is the wrong -- views around the 17 relative strengths and weaknesses of the 18 associated issues in the litigation matters. 19 Q So you don't know what the 20 debtors considered regarding the merits of the 21 potential litigation claims in deciding to enter 22 into the settlement? 23 A The specific legal merits, 24 other than what's in the disclosure statement, 25 outlined in the disclosure statement in terms of 40 2 the issues, I don't have any knowledge based on 3 sitting in the meetings where they were 4 privileged meetings with the board to discuss 5 the strengths and weaknesses of those particular 6 arguments. 7 Q Do you have any knowledge, 8 based on anything else besides the disclosure 9 statement, as to what the board considered 10 regarding the merits of the potential litigation 11 claims in deciding to enter into the settlement? 12 MR. HAMILTON: Object, asked 13 and answered. 14 You can answer again. 15 A Can you repeat the question? 16 Q Sure. 17 Do you have any knowledge as 18 to what the board considered regarding the 19 potential litigation claims in deciding to enter 20 into the settlement, other than what's revealed 21 in the disclosure statement? 22 A I don't believe so, no. 23 (Declaration by Mr. Parkhill 24 submitted March 24, 2015 marked 25 Exhibit 120 for identification.) 41 2 Q Exhibit 120 is a declaration 3 you submitted in this case on March 24th, Do you recognize this 5 declaration? 6 A Yes. 7 Q If you could turn to paragraph 8 four. In the fifth line you indicate that the 9 negotiations among the various parties and 10 interests began in March 2014; right? 11 A Right. 12 Q Have you been personally 13 involved in those negotiations since then? 14 A Yes. 15 Q And we're now 14 months in; is 16 that right? 17 A Yes. 18 Q Would you say you've been more 19 involved than the debtors' CEO in the 20 negotiations? 21 A That's a relative comparison 22 that -- we've been more involved in our capacity 23 as a financial advisor than -- because he's that's our role. He's been more involved in his 25 capacity as CEO, that's his role. So I don't 11 (Pages 38 to 41)

16 42 2 think the question itself is a fair one. 3 Q I'm just focused really on you 4 personally in terms of personal interactions 5 with the other parties -- the creditors that 6 you're negotiating with. So can you -- do you 7 know whether you have had more personal 8 interactions in the negotiations with the 9 creditors, or has Mr. Shindler, or is it hard to 10 say? 11 A I think it -- depending on the 12 individual and what you define as "personal 13 interactions," that it would be -- I think on 14 balance I'm more involved in the dialogue with 15 creditors, but Dave -- Steve has spent a good 16 deal of time with our creditors as well, and has 17 had some individual personal meetings with Mark 18 Brodsky, for example, which are face-to-face. 19 So his time with Mark Brodsky, in terms of 20 personal time, if that's your definition which I'm not sure that it is -- I would say 22 that David, you know, with Mark Brodsky and 23 Steve have spent more personal time together 24 than I have over the course of this case. 25 Q And how about Daigle? 43 2 A It depends on your definition 3 of -- in terms of engagement, I'm not sure the 4 nature of your question. 5 Q I'm just -- I guess I'm trying 6 to figure out, do you think that Mr. Shindler 7 has been kept up to date about the status of the 8 negotiations throughout the course of the last 9 14 months? 10 A Yes. 11 Q Do you think there's any 12 material issues or proposals or facts that he 13 would not be aware of? 14 A I don't know about what he's 15 aware of today, but he was involved in the 16 process, and very involved in the process. I 17 can't speak to his recollection. 18 Q Okay. 19 Did you attempt to update him 20 as to any material issues or proposals during 21 the course of the negotiations? 22 A Of course. He was very 23 involved. 24 Q Likewise, did he attempt to 25 update you on any material issues or proposals? 44 2 A To the extent that I wasn't 3 there and participating, of course. 4 Q If you could turn to paragraph 5 eight. 6 A Yes. 7 Q The first sentence talks about 8 providing creditors with access to a data room 9 containing a voluminous body of information and 10 documentation. 11 Do you see that? 12 A I see it. 13 Q Did any of that information 14 relate to the transferred guarantor claims? 15 A I'm not sure about what Jones 16 Day provided other than to know they provided 17 significant amounts of information to the 18 parties based on their information requests. So 19 I would assume, although I didn't personally 20 review the information, that there was 21 information that was relating to those claims. 22 Q If I reference the transmittal 23 letters that were part of the exchange offer, 24 would you know what I'm talking about? 25 A Based on the mention in the 45 2 disclosure statement of the issue, yes. 3 Q Were the transmittal letters 4 part of the information that was conveyed to the 5 creditors, as far as you know? 6 A I'm not sure, as I said, 7 specifically what was transmitted other than to 8 know that we responded to information requests, 9 and we're very transparent with all of our 10 constituents around their requests and 11 information. 12 Q Have you ever seen the 13 transmittal letters before? 14 A I have not reviewed them. 15 Q Do you recall any discussions 16 about the transmittal letters themselves during 17 the negotiations with the creditors? 18 A Not that I was involved in. 19 Q Or during any board meetings? 20 A Not that I was involved with. 21 Q Or during any meetings with 22 management? 23 A Not that I was involved with. 24 Q So you don't recall any 25 discussion of the transmittal letters in this 12 (Pages 42 to 45)

17 46 2 case? 3 A I know they were discussed. 4 As I mentioned, I know they were discussed based 5 on the mention in the disclosure statement that 6 those -- that issue was evaluated and 7 considered, and my assumption is -- although not 8 from directly participating in those meetings, 9 but what my understanding is based on is the 10 company informing me that that took place, that 11 those issues were considered. 12 Q I just want to be sure that 13 you understand my question. 14 You know what the exchange 15 offer is; right? 16 A Um-hum. 17 MR. HAMILTON: You have to say 18 yes or no for the record. 19 A Yes. 20 Q And my question is not about 21 the exchange offer in general, my question is 22 about the transmittal letters that were provided 23 during the exchange offer. 24 Do you recall specific -- any 25 specific discussions about the transmittal 2 letters? 3 A As I think I said -- maybe I'm 4 not being clear -- there is a specific mention 5 of the transmittal letters in the disclosure 6 statement being something that the company 7 evaluated. And I know, I've been told, that 8 that's something that the company evaluated. 9 And the specific arguments as to the transmittal 10 letters -- and we can pull it out and reference, 11 I can't recall exactly the language, but that 12 this was a particular argument that your clients 13 had as to the nature of why it was not a valid 14 claim, and that that argument was -- was 15 evaluated and considered in contemplating the 16 settlement. 17 Q Why don't we look at the 18 disclosure statement, maybe it will be helpful. 19 A Yup. 20 Q In your stack there there's 21 Exhibit To orient you, it was the 23 first disclosure statement that was filed. 24 MR. GREENBERG: The December? 25 MR. HARRIS: The December one, yes. 3 A So when you were speaking to 4 settlement, you're giving me the first 5 disclosure statement or the second? Because the 6 settlement in my mind, you're referring to the 7 most recent. 8 Q We're going to walk you 9 through these chronologically, all three. 10 MR. GREENBERG: Three? 11 THE WITNESS: All three 12 disclosure statements. 13 Q If you could turn to page of A Okay. 16 Q Do you see the section that 17 says "Transferred Guarantor Claims"? 18 MR. HAMILTON: When he says THE WITNESS: He's talking 21 about the page number at the top. I 22 got it. It's page A I'm there. 24 Q Do you see section three, 25 "Transferred Guarantor Claims"? 49 2 A I do. 3 Q Take a minute to review, but I 4 don't see any mention of the transmittal letters 5 in the December disclosure statement, so I'm 6 trying to find out what it is you're remembering 7 in terms of events in the disclosure letter. So 8 please take a minute, but is there something in 9 here that is what you have in mind when you said 10 there is a description of the transmittal 11 letters? 12 A Oh, I think you're referring 13 to the settlement. When you were referring to 14 the settlement, I was referring to the 15 settlement of the -- that is what's in front in 16 this current disclosure statement and plan are 17 current -- this is our former disclosure 18 statement and plan, which was terminated, so 19 that was my reference. So it's not to this 20 disclosure statement. 21 Q Okay. So you're not saying 22 there's a reference to the transmittal letters 23 in this disclosure statement? 24 A No, because I don't believe 25 that there is. 13 (Pages 46 to 49)

18 50 2 Q Okay. 3 A That's not to say that those 4 issues weren't considered, that's to say that 5 there's no reference in this disclosure 6 statement. 7 Q You have no memory of the 8 transmittal letters ever being discussed in your 9 presence; right? 10 A Correct, other than in the 11 context of the -- and you're talking about in 12 this context, in the past -- in the first PSA? 13 Q In any context do you recall a 14 discussion of the transmittal letters? 15 A In the context of this -- the 16 current -- not this, the current -- PSA it was 17 discussed. 18 Q When? 19 A In the review of the 20 disclosure statement. 21 Q So I'm not asking what the 22 disclosure statement says, I'm asking for your 23 personal knowledge. Do you A Outside of the disclosure 25 statement? 51 2 Q Did you -- I'm sorry, I think 3 you testified you did not review or prepare that 4 section of the disclosure statement; right? 5 A The initial -- I reviewed it 6 post it being prepared, that's right. 7 Q You did not review or prepare 8 it prior to its being submitted; right? 9 A Prior to being finalized, I 10 think was the word you used in my question. 11 Q So I'm not talking about 12 whatever you may have learned from reviewing the 13 disclosure statement. 14 A Okay. 15 Q I'm talking about meetings you 16 were in that you remember, or conversations you 17 were in that you remember. Okay? 18 A Right. 19 Q Do you recall anyone in a 20 meeting or conversation discussing the 21 transmittal letters? 22 A No, not specifically. 23 (Document entitled "First 24 Amended Disclosure Statement" filed 25 March 13, 2015 marked Exhibit 121 for 52 2 identification.) 3 Q So you've been handed a 4 document, Exhibit 121, which is titled "First 5 Amended Disclosure Statement," it was filed on 6 March 13th, Do you see that? 8 A I do. 9 Q And do you remember the 10 debtors submitting a disclosure statement in 11 March? 12 A We did. 13 MR. HAMILTON: Sorry, is that 14 this one here (indicating)? 15 MR. HARRIS: Yes. 16 MR. HAMILTON: All right. 17 Q And then if you could turn to 18 page 228 of A Okay. 20 Q Do you see again there's a 21 section "Transferred Guarantor Claims"? 22 A I do. 23 Q And this was the disclosure 24 statement that was submitted regarding the 25 current settlement; right? 53 2 A Correct. 3 Q Can you look at that section 4 and tell me if there's any mention of the 5 transmittal letters there? 6 (Pause) 7 A There is not. 8 Q Is there any reason that the 9 debtors would have omitted including an 10 important defense that they considered in their 11 evaluation of the merits of the transferred 12 guarantor claims in this section? 13 A You're characterizing it as an 14 important defense. That's your 15 characterization. I don't know that it's an 16 important defense or not Q My question's not specific A -- and I'm not going to Q -- to the transmittal letters. 20 MR. HAMILTON: Are you going 21 to let him answer the question or not? 22 MR. HARRIS: I apologize. 23 A So my understanding is that 24 Jones Day did a complete, thorough evaluation of 25 the merits and arguments surrounding these 14 (Pages 50 to 53)

19 54 2 issues. There are, to my understanding, 3 possibly many other arguments that have not been 4 included. I don't know why specifically there 5 wasn't an inclusion of the transmittal letters 6 in this draft, and I'm not aware that that 7 was -- your characterization -- an important 8 event either. 9 Q You don't know whether Jones 10 Day considered the transmittal letters; right? 11 A I've been told -- I 12 understand -- by the company that they evaluated 13 all of the potential arguments. 14 Q My question's narrow. 15 A And if that's one of the 16 arguments, then my understanding, based on 17 that -- that understanding, they would have. 18 Q Did anyone ever tell you that 19 Jones Day considered the transmittal letters in 20 particular? 21 A Outside of the disclosure 22 statement? I understood from the disclosure 23 statement -- as I said earlier, they're 24 mentioned in the most recent disclosure 25 statement Q I'm not asking about what you 3 understand from having read the disclosure 4 statement, okay. 5 A Or what I've been told. 6 Q I do want to know what you've 7 been told in any meeting or any or any 8 other form that you recall. 9 So do you recall someone 10 telling you that Jones Day evaluated the 11 transmittal letters? 12 A I was told that Jones Day 13 evaluated all potential arguments, and defenses 14 and merits of those arguments, associated with 15 these claims. 16 Q Did anyone tell you that among 17 those arguments that Jones Day considered, one 18 of them was the transmittal letters? 19 A No. 20 Q Now we're going to look at the 21 third disclosure statement. I think we had it 22 out already, but it's Exhibit MR. HAMILTON: Eighty-two, 24 yes. I don't think we've had it out 25 already MR. HARRIS: We haven't? Oh, 3 sorry. 4 MR. HAMILTON: You've avoided 5 asking him about the most current one, 6 even though all his answers were 7 referring to the most current one. 8 MR. HARRIS: No speech. 9 Q So you've been handed the 10 third disclosure statement, dated April 20, And you recall this disclosure 13 statement? 14 A I do. 15 Q If you could turn to page of A I'm there. 18 Q -- you see there's a section 19 "Transferred Guarantor Claims"? 20 A Yes. 21 Q And on page 52 there is a 22 section that begins, "An ad hoc group of 23 holders"; do you see that? 24 A I do. 25 Q Do you recall that this 57 2 paragraph was added at the request of the ad hoc 3 group of 2021 holders? 4 A I don't recall. I wasn't... 5 Q So you don't know that this 6 was a request of Latham & Watkins to include 7 this paragraph? 8 A I don't know that it was a 9 request of Latham & Watkins or a decision based 10 on anybody else who -- another plan proponent 11 who suggested we put it in. I don't know the 12 nature of the answer, other than to know what it 13 says. 14 Q Is the reason that you believe 15 the debtors considered the transmittal letters 16 because of the statement at the end of this 17 paragraph? 18 A I've been Q Last sentence of this 20 paragraph. 21 A I'll look at the sentence. 22 What sentence are you 23 referring to? 24 MR. GREENBERG: Why don't you 25 take a second and read it. 15 (Pages 54 to 57)

20 58 2 Q The last sentence of the 3 paragraph. 4 A The last sentence of the 5 paragraph? Of which paragraph? The sentence 6 that begins "An ad hoc group of holders"? 7 Q Yes. 8 MR. HAMILTON: You have the 9 opportunity to read the entire 10 paragraph if you want. 11 THE WITNESS: Okay, sure, I'll 12 do that. 13 (Pause) 14 A Okay, yeah, I've read the 15 sentence. 16 Q Is that statement in the 17 disclosure statement the basis for your belief 18 that the debtors considered the transmittal 19 letters? 20 A This statement, and I've been 21 told by the debtors that they've thoroughly 22 reviewed all of the potential claims and 23 arguments associated with these claims. 24 Q Did someone from the debtors 25 tell you they reviewed an argument based on the 59 2 letters of transmittal? 3 A I think you've asked me that 4 before, and I've said no, not specific to the 5 letters of transmittal, other than what's in 6 this disclosure statement saying "each of the 7 plan proponents," which the debtors are one, 8 "and independent manager considered" -- I can 9 read the sentence further if you'd like me. I 10 think you know what it says. 11 Q So the only basis for your 12 belief that the debtors considered the letters 13 of transmittal is this sentence? 14 A And what I understand from 15 what the company has told me, that they 16 considered all arguments. I think I've said 17 that now seven times. 18 So this would be one of the 19 arguments. By definition of that statement, 20 this is included in that statement. 21 Q How do you know that when 22 someone told you they considered all the 23 arguments, that that meant they considered the 24 letter of transmittal? 25 A Specifically it's mentioned 60 2 here (indicating). 3 Q Okay, we may be going in a 4 circle. 5 MR. HAMILTON: We are. 6 Q I understand that this 7 statement indicates that the plan proponents 8 considered the letters of transmittal. Is there 9 any other statement that someone has made to you 10 in your presence where they said they considered 11 the letters of transmittal? 12 A I responded to that. 13 MR. HAMILTON: Objection, 14 asked and answered A No. 16 MR. HAMILTON: -- you can 17 answer again for the eighth time. 18 Q Do you know who drafted this 19 section of the disclosure statement? 20 A Individually? Specific Q Yes. 22 A No. 23 Q How about in terms of what 24 entity drafted it; was it drafted by the 25 debtors, by Jones Day? 61 2 A I -- usually these drafts are 3 first prepared by the debtors, and my -- I would 4 be surmising, I don't know, because I didn't 5 draft this section, who drafted the specific 6 words, whether it's the debtors, but I presume 7 it's -- the first draft was the debtors, but it 8 received comments, I have no doubt, from every 9 one of the other plan proponents. 10 Q The plan proponents all 11 received and had the right to comment on the 12 disclosure statement before it was finalized; 13 right? 14 A That's -- yes, I'm assuming 15 that's right. 16 Q Do you recall seeing any 17 comments from the plan proponents on this 18 section of the disclosure statement? 19 A I don't. 20 Q Or either of the two prior 21 disclosure statements we looked at? 22 A I don't. Not in this section, 23 no. 24 Q Okay, let's go back to your 25 declaration, which was Exhibit (Pages 58 to 61)

21 62 2 We're on paragraph eight. 3 A Okay. 4 Q In the middle of the paragraph 5 there's a reference to "extensive diligence 6 requests from such advisors." Let me know when 7 you've located that. 8 A I see it. 9 Q When you spoke of extensive 10 diligence requests, do you know if any of those 11 diligence requests involved the transferred 12 guarantor claims? 13 A Yes, they would have. 14 Q Do you recall any diligence 15 requests specific to the transmittal letters? 16 A I don't. 17 It's not to say that they 18 weren't made Q You don't recall? 20 A -- I just don't know. 21 Q Would you turn to paragraph This paragraph is discussing 24 the creditors committee; right? 25 A Yes Q And the second sentence says, 3 "The professionals representing the creditors 4 committee have been intimately involved in 5 analyzing the potential litigation claims"; 6 right? 7 A Yes. 8 Q What did you mean by that? 9 A When the creditors committee 10 was formed, one of their principal areas of 11 diligence -- and they had many, but one of the 12 primary areas of diligence was on the nature of 13 these litigation claims broadly. It began with 14 an information request specific to those those allegations, and the debtor fulfilled, to 16 the best of its ability, those information 17 requests. And so I'm certainly aware that there 18 were a large amount of information -- a large 19 amount of dialogue surrounding the litigation 20 issues that the committee was focused on. 21 Q And how are you aware of that? 22 A Because just generally being 23 involved in the process of -- of the broader 24 restructuring. Obviously, this was one of the 25 substantive issues that we were having to 64 2 address. 3 Q You weren't personally 4 involved in any of the discussions with the 5 committee about evaluating the merits of the 6 potential litigation claims? 7 A Other than the logistics and 8 the specific timelines and coordination for 9 those meetings, which was -- gave me very good 10 visibility into what was happening, but the 11 specifics of the legal positions around those 12 issues, you know, we were not in the room for 13 the general exchanges. 14 Q So you don't know what 15 particular legal issues and defenses the 16 committee's professionals analyzed? 17 A Other than the mention in the 18 disclosure statement, which mentions plan 19 proponents, and the general nature of the 20 allegations that I'm aware of based on the 21 disclosure statement, and the letter that was 22 mentioned -- the Aurelius letter and the like, 23 no. 24 Q So you don't have any personal 25 knowledge as to what issues the creditors 65 2 committee's professionals analyzed regarding the 3 potential litigation claims? 4 A Other than knowing that they 5 analyzed those issues. 6 Q I think -- you may not 7 understand when I say "personal knowledge," I'm 8 not referring to what you may have learned from 9 reading A Or being told. Or knowing 11 that the dialogues took place. 12 Q I would like to know if you 13 recall specific conversations where someone told 14 you something, so that I would like to know. 15 So do you recall any specific 16 conversations where someone told you which 17 defenses to the potential litigation claims the 18 creditors committee professionals were 19 analyzing? 20 A No. 21 Q And you were not present at 22 any meetings where the creditors committee's 23 professionals analyzed claims or discussed what 24 issues they had analyzed? 25 A When you say "analyzed 17 (Pages 62 to 65)

22 66 2 claims," the legal merits of the claims -- 3 Q Yes. 4 A -- or the financial impacts of 5 the claims? 6 Q The legal merits. 7 A The legal merits, no. 8 Q Let's look at paragraph Do you see that paragraph discusses the prior 10 PSA, and in the fourth line says that "The 11 settlement contained therein still did not have 12 the support of the LuxCo group"? 13 Do you see that? 14 A I do. 15 Q And the next paragraph says, 16 "Accordingly," and then discusses the 17 appointment of the independent manager. 18 Do you see that? 19 A I do. 20 Q Is that indicating that the 21 reason for the appointment of the independent 22 manager was that the prior PSA did not have the 23 support of the LuxCo group? 24 MR. HAMILTON: Object to form. 25 You can answer if you can A I'm just reviewing this 3 again -- 4 Q Sure. 5 A -- so if you give me a moment, 6 please. 7 (Pause) 8 A Okay, would you ask the 9 question again, please. 10 Q When you said "accordingly," 11 in paragraph 18, were you indicating that the 12 reason for the appointment of the independent 13 manager was that the prior PSA did not have the 14 support of the LuxCo group? 15 A It's in accordance with the 16 prior PSA. We had agreed to do this. So that 17 was what we had agreed with the parties that 18 supported the PSA to do, was to appoint the 19 independent manager. So I -- it's just in 20 accordance -- and I point you to the first line 21 of paragraph 18, after "accordingly"; "and in 22 accordance with the prior PSA and the prior plan 23 term sheets." So it was contained within that 24 agreement that we would appoint an independent 25 manager Q Who made the initial 3 suggestion to appoint the independent manager? 4 A I don't recall. 5 Q Was it a suggestion of the 6 debtors? 7 A It was a topic that was 8 discussed very openly with the parties, all 9 parties. I don't -- so, yes, the debtors 10 discussed it, and it was very -- it was a -- I 11 just don't recall who made the initial 12 suggestion. 13 Q Do you recall any discussions 14 about whether or not to appoint an independent 15 manager? 16 A There was. I recall there 17 were a number of discussions between the lawyers 18 about whether or not an independent manager, in 19 the various forms of the proposals that were 20 being discussed, would be advisable, as a legal 21 matter. 22 Q When you say you recall there 23 were discussions between the lawyers, were you 24 present in those discussions? 25 A No, other than to say we you know, discussing the merits. 3 Q What's your understanding 4 about why an agreement was reached to appoint 5 the independent manager? 6 A There was a view that it would 7 help the process to have an independent manager 8 and professional -- the professionals associated 9 with that independent manager evaluate the 10 settlement and make a recommendation to the 11 LuxCo board as it relates to that settlement. 12 Q Why would it help the process? 13 A Some of these claims, in the 14 broad basket of the litigation claims, are 15 intra-debtor claims, and for those claims, to 16 the extent there was litigation associated with 17 those claims, having an "independent" manager 18 opining as to the settlement would be helpful 19 for the process, is what I understood. 20 Q Why would it be helpful? 21 A To the -- why would it be 22 helpful? 23 Those are legal conclusions 24 generally. It was driven by a legal assessment, 25 so I wouldn't want to speculate any more as to 18 (Pages 66 to 69)

23 70 2 why it would be helpful. 3 Q So your understanding is there 4 was some legal basis for concluding it would be 5 helpful to have an independent manager? 6 A That's my understanding, yeah. 7 Q And it had to do with the fact 8 that there were inter-debtor claims? 9 A Certain of the claims were 10 inter-debtor claims, is my understanding. 11 MR. HAMILTON: Chris, I don't 12 want to interrupt your flow, but at 13 some point we're going to need to take 14 a break. 15 MR. HARRIS: Sure, we can 16 break now. 17 (Recess taken) 18 BY MR. HARRIS: 19 Q I want to make sure I have 20 your testimony clear on the record. 21 Is your testimony on behalf of 22 the debtors that one of the issues the debtors 23 considered in evaluating the settlement is they 24 considered the letters of transmittal? 25 A Let's be specific about 71 2 settlement, because when I was speaking 3 settlement the last time, you pulled out a 4 disclosure statement that wasn't the settlement 5 I was referring to, so let's talk about the 6 settlement. 7 The settlement being the 8 existing disclosure statement and plan on file? 9 Q Yes. So let me ask it this 10 way: 11 Are you testifying on behalf 12 of the debtors that in deciding to enter into 13 the second PSA, the debtors had evaluated the 14 transmittal letters? 15 A Yes. 16 Q And that evaluation was 17 conducted by Jones Day? 18 A That would be my 19 understanding, yes. 20 MR. HARRIS: Counsel, I would 21 request all materials prepared by 22 Jones Day discussing the transmittal 23 letters and all the communications 24 between Jones Day and the client 25 discussing the transmittal letters MR. HAMILTON: You can request 3 it. We'll respond accordingly. I can 4 tell you right now we're going to 5 object on privilege grounds. 6 (Mr. O'Neill and Mr. Stern 7 reenter the room) 8 MR. HARRIS: Do we need a 9 further meet-and-confer on this or is 10 your position MR. HAMILTON: You should 12 probably submit the request in 13 writing, and then we'll respond in 14 writing. 15 MR. HARRIS: Okay. 16 Q Let's go back to your 17 declaration. 18 We're on paragraph 18, and we 19 had been discussing the legal reason for 20 appointing the independent manager. 21 Do you have any understanding 22 why the fact that there were intercompany 23 transactions created a legal reason to appoint 24 the independent manager? 25 A My recollection is -- it's a 73 2 legal basis, as you mentioned in the opening of 3 the question, what the legal reasons were, so 4 I'd prefer to let lawyers respond to the legal 5 reasons. 6 Q I'm just wondering if you 7 heard anything that led you to have an 8 understanding as to what was the legal reason. 9 A Other than it was advisable 10 for -- or the conclusion of the group was that 11 it was advisable to have an independent manager 12 for the purposes of the LuxCo board. 13 Q In that paragraph it goes on 14 to define the independent manager. It says he 15 was to "evaluate and advise the managers of 16 LuxCo regarding the reasonableness of a 17 settlement of the proposed litigation claims" MR. HAMILTON: Potential 19 litigation claims. 20 MR. HARRIS: I'm sorry. 21 Q You indicated that his 22 engagement was to "evaluate and advise the 23 managers of LuxCo regarding the reasonableness 24 of a settlement of the potential litigation 25 claims, and as subsequently revised, the 19 (Pages 70 to 73)

24 74 2 proposed settlement to LuxCo." 3 Is that right? 4 A Whether to recommend that 5 LuxCo join the proposed settlement as it 6 specifically says in the sentence, yes. 7 Q And to recommend -- I'm sorry, 8 and to evaluate the reasonableness of a 9 settlement to LuxCo? 10 A Yes. 11 Q Do you know of any discussions 12 about whether to appoint a CapCo independent 13 manager? 14 A Associated with this PSA, no. 15 Q Or at any time? 16 A There were discussions early 17 on in the case about the -- the judgment about 18 whether to appoint an independent manager at the 19 various boxes that I recall, some discussions of 20 past cases where that decision had been made, so 21 I know it was discussed. 22 Q Do you know anything about do you recall a discussion specific to whether 24 to appoint an independent manager or director 25 for CapCo? 75 2 A Nothing specific about those 3 discussions, no. 4 Q Do you know anything about why 5 an independent manager or director wasn't 6 appointed for CapCo? 7 A Other than to conclude that 8 the legal conclusion was that one wasn't needed, 9 no. 10 Q So your understanding is there 11 was a legal conclusion made that an independent 12 manager or director was not needed for CapCo? 13 A "Conclusion" maybe is the 14 wrong word, I should rephrase that. 15 There was a decision to 16 appoint an independent manager for the purposes 17 of this settlement at LuxCo. That did not 18 include an independent manager at CapCo. 19 Q So you don't know whether 20 there was a separate analysis made about whether 21 to appoint an independent manager or director 22 for CapCo? 23 A I know that -- I believe that 24 it was considered by the lawyers. And the 25 conclusion, by virtue of what we did, was to not 76 2 appoint. 3 Q What's your basis for 4 believing that issue was considered by the 5 lawyers? 6 A The lawyers were considering 7 many issues associated with this, including the 8 issue of whether or not an appointment of an 9 independent manager for LuxCo made sense. 10 Q But you don't recall anyone 11 discussing in your presence whether to appoint 12 an independent manager or director for CapCo? 13 A I recall that being discussed 14 generally. I can't recall specifically the 15 context. 16 Q Okay. 17 And what is the time frame in 18 which you recall that being discussed? 19 A Broadly, very early on in the 20 engagement with the constituents around possible 21 proposals. 22 Q Do you recall in the 23 negotiations around the first PSA there being 24 any discussion among the constituents about 25 appointing an independent manager or director 77 2 for CapCo? 3 A As I said, that took place 4 very early on, the discussion of independents at 5 the various entities; that predated the 6 agreement. So those issues were very much 7 considered front and center as it relates to the 8 proposals we were receiving. 9 Q Do you recall in your -- your 10 discussions with the creditors suggesting the 11 appointment of an independent manager for CapCo? 12 A In my discussions, Homer 13 Parkhill? No. 14 Q Or anyone opposing the 15 appointment of an independent manager for CapCo? 16 A In my discussions, I don't 17 recall. 18 Q In your discussions with the 19 creditors, do you recall any discussion about 20 the appointment of an independent manager for 21 CapCo? 22 A As I said, early on I do 23 recall generally the topics discussed about that they were being discussed. I remember that 25 being part of the dialogue that the attorneys 20 (Pages 74 to 77)

25 78 2 were having on all sides, those around the 3 table, about the nature of the proposals, and 4 how those proposals could -- would or wouldn't 5 be implemented was very much, as I said, a topic 6 of discussion between the professionals. 7 Q And when you say "early on," 8 do you mean in the spring or do you mean the 9 summer? What do you have in mind? 10 A Prior to the first PSA, 11 post-filing, there was -- as you know, there was 12 a separation of the cross-holder group into a 13 group of LuxCo -- predominantly LuxCo holders, 14 there was the continued existence of the 15 Aurelius group, and there was, post-filing, the 16 committee, and there was the committee 17 individuals that sat on the committee, David 18 Daigle, Aurelius, and the individuals in their 19 capacity as fiduciaries for the committee. 20 So during that time there was 21 a lot of discussions around potential proposals 22 that each side was making, that we were 23 evaluating or commenting on, prior to getting to 24 the first PSA. 25 During that time there was 79 2 discussions amongst the lawyers around the 3 issues of the independents, the wisdom of 4 appointing an independent manager based on the 5 various proposals, and it could differ, and I 6 don't recall exactly the specific conversations 7 around CapCo, but I know that those issues were 8 very much in the scope of the dialogue 9 surrounding those proposals. 10 Q So in that time frame between 11 the bankruptcy filing and the signing of the 12 first PSA, you do recall discussions around 13 whether to appoint a CapCo independent manager 14 or director? 15 A I recall during that time not specifically like who said it -- that there 17 was the conversation surrounding the appointment 18 of independent managers by various lawyers on 19 LuxCo and the CapCo constituents that included 20 discussions of appointment of an independent 21 manager of CapCo and of LuxCo. 22 Q And in that time period you 23 don't recall anyone advocating for or against 24 the appointment of an independent manager of 25 CapCo? 80 2 A I don't recall specifically. 3 Like I said, I know it was discussed. So there 4 could have been -- there could have been an 5 advocacy, but not that I recall specifically. 6 And it could have been also 7 depending on the proposal, right. Very much who 8 was inside the proposal makes a difference, to 9 my understanding. 10 Q Do you recall anyone making a 11 proposal that involved the appointment of an 12 independent manager of CapCo? 13 A I don't specifically, no. 14 Q All right, let's move on to 15 paragraph 20. This paragraph involves the 16 debtors' termination of the first PSA; right? 17 A Yes. 18 Q And in the first line you 19 write, "The debtors determined to exercise the 20 debtors' right to terminate the prior PSA." 21 A Right. 22 Q And what did you mean by "the 23 debtors' right"? What right did you have in 24 mind? 25 A To enter into -- again, it's a 81 2 legal point, but to my understanding, to enter 3 into the actual sale agreement required us to 4 terminate the existing PSA because it was in 5 violation of the existing PSA for us to agree to 6 sell a significant portion of our assets. 7 Q But what gave you the -- what 8 gave the debtors the right to terminate the PSA 9 that you mention here? 10 A The fiduciary -- I think the 11 fiduciary. 12 Q And what is it about the sale 13 transaction that created a fiduciary duty to 14 terminate the prior PSA? 15 A The sale transaction to AT&T, 16 generally described, was at a valuation of a 17 billion 875, which was substantially higher than 18 the valuation that was ascribed to Mexico in the 19 original PSA. 20 Q And what is it about the 21 increased valuation that triggered a fiduciary 22 duty to terminate the first PSA? 23 A Can you repeat that question? 24 Q Sure. 25 What is it about the increased 21 (Pages 78 to 81)

26 82 2 valuation that triggered a fiduciary duty to 3 terminate the first PSA? 4 A So the first PSA embodied a 5 settlement that had an agreed-to value of -- for 6 Mexico and Brazil that totaled $4 billion, round 7 numbers. Specifically for Mexico, my 8 recollection is Mexico was approximately a 9 billion four of that $4 billion, give or take. 10 And the price for Mexico that AT&T was prepared 11 to pay was a billion 875, so higher than the 12 billion four. 13 For us to enter into the 14 agreement, which was prohibited by the PSA, we 15 had to terminate the PSA to enter into the sales 16 agreement. So we terminated it based on the 17 higher value that was reflected in the AT&T bid 18 versus the PSA, which had a lower value for 19 Mexico. 20 Q So -- I want to make sure I 21 understand. 22 The fiduciary duty, you had a 23 duty to obtain more money for creditors, and 24 therefore you had to get out of the first PSA in 25 order to do this transaction; is that a fair 83 2 characterization? 3 A I don't -- I'll say it in my 4 words. 5 Q Sure. 6 A We had an agreement that had 7 as its underpinnings a valuation settlement that 8 implicit in that agreement there was an 9 agreement for the value of Mexico. The price 10 that we achieved in the sale process was higher 11 than that price that was implied in the 12 agreement. So by virtue of that one aspect, 13 which was an important aspect changing, the 14 existing agreement wasn't operative anymore, so 15 we -- we -- we couldn't just plug in the billion into the existing agreement, the plumbing 17 and the mechanics weren't set up in that way, so 18 we chose to terminate that agreement and execute 19 the sale -- execute -- sign the SPA or the 20 agreement to move forward with the SPA. 21 Q Was part of the debtors' 22 decision to exercise the right to terminate a 23 view that it was not fair to bind the creditors 24 to the existing allocation now that the whole 25 size of the pie was greater? 84 2 A I wouldn't say it that way. I 3 would say that the existing agreement didn't 4 function with the -- there was no agreement -- 5 the agreement was multidimensional. As you 6 know, there was a lot of aspects to that 7 settlement, including valuation -- valuation of 8 the various components, settlement percentages 9 for the litigation claims, that all provide, you 10 know, a result as to the financial splits of the 11 company. 12 That agreement, because there 13 was this intervening event of a sale, is no 14 longer practical because it was a higher price. 15 Q Okay, let's look at paragraph Do you recall the PSA was 18 terminated on January 25th? That's what 19 paragraph 20 indicates. 20 A Right. 21 Q And then in paragraph 21, the 22 second sentence, you discuss a meeting on 23 January 29th; right? 24 A Yes. 25 Q And then you say, "From this 85 2 meeting whereas the outline of an agreement in 3 principle on the key economic terms of the 4 debtors's restructuring"; do you see that? 5 A Right. 6 Q When you say "from this 7 meeting," do you mean by the end of the meeting 8 there was an agreement in principle on the key 9 economic terms? 10 MR. HAMILTON: Object to form. 11 You can answer. 12 A So my recollection -- a little 13 history is probably helpful. 14 The potential sale to AT&T was 15 something that was on the scope of the radar of 16 all of the constituents who were around the 17 table. The knowledge -- the market had the 18 knowledge that we were out in the market, the 19 holders specifically who were signed to NDAs had 20 the knowledge that we were in dialogues with 21 AT&T. Back in December they understood that. 22 Restricted parties. 23 During that period of time, we 24 started talking about the plumbing and the 25 potential architecture for modifying the 22 (Pages 82 to 85)

27 86 2 agreement, the mechanics of how we might do 3 that, understanding that we'd have to go to an 4 auction, so it's more of a -- call it a 5 mechanical discussion of how would you take a 6 bid from Mexico and a potential auction, and the 7 overbid, and we started having intimate 8 discussions with the FAs. Because the mechanics 9 of that, while it sounds maybe fairly easy to 10 do, aren't that simple because you have issues 11 of time, issues of cash, issues of how overbids 12 could be allocated and how that would impact the 13 waterfall. So we started having that discussion 14 well before this January date. 15 When we reached this time 16 frame, post the announcement of the sale which the creditor constituents all knew and 18 supported, if you recall, as is disclosed in our 19 disclosure statement -- all of the creditor 20 constituents, including the LuxCo constituents, 21 signed letters of support for the sale -- we 22 reengaged in that dialogue of how could we take 23 this now known bid, known price -- before it was 24 a theoretical exercise -- and apply it into the 25 settlement mechanics and the settlement 87 2 waterfall. 3 And that understanding of the 4 basic mechanics and the basic plumbing happened 5 fairly soon in the process. There were a number 6 of finer points that threatened to derail the 7 overall agreement, which we ultimately reached 8 in mid-february, that took a few weeks to iron 9 out, but the basic underlying plumbing, and the 10 basic general framework, was agreed to earlier. 11 Q By "earlier" do you mean at 12 this January 29th meeting? 13 A Again, the basic plumbing so it depends on your kind of threshold of when 15 do you have -- you know, you don't have an 16 agreement until you have it signed, but the 17 basic plumbing and architecture, to my 18 recollection, took shape very, very quickly. 19 Now, the finer points of those final terms did 20 take a while to nail down. 21 Q Just so I understand the time, 22 by "very quickly" you mean at this meeting on 23 January 29th? Or by the conclusion of it? 24 A I don't think it was -- well, 25 again, the plumbing and the mechanics, some of 88 2 the big building blocks were taken out coming 3 out of this meeting. It took another -- I don't 4 recall exactly -- another few days to get the 5 kind of basic framework of the final 6 percentages, the 21 percent, the treatment of -- 7 ultimately the final point that took the longest 8 was the treatment of professional fees and the 9 associated -- not surprisingly, in these cases 10 sometimes that's the last sticking point -- but 11 it was a very material point because we were 12 down to our last dollar in terms of people's 13 tolerance for continued concessions. 14 Q You think within a few days 15 after the January 29th meeting you had agreement 16 on the key economic terms other than 17 professional fees? 18 A I don't have to -- I don't 19 have my calendar in front of me, but that sounds 20 generally right, yeah. In the early part of 21 February the basic plumbing was designed, kind 22 of midpart of February, as it -- I need to keep 23 reading. 24 Yeah, midpart of February we 25 had the basic construct Q I guess what I'm trying to 3 figure out is, you describe a January 29th 4 meeting where the -- you say that from this 5 meeting emerged the outline of an agreement in 6 principle on the key economic terms. 7 A Um-hum. 8 Q And then you go on to say -- 9 talk about a consensus that ultimately was 10 reached in mid-february 2015, and I'm trying to 11 understand, when you talk about, in the prior 12 sentence, "an agreement in principle on the key 13 economic terms," are you saying that was reached 14 in mid-february, or are you saying that was 15 reached sometime earlier, a few days after 16 January 29th? 17 MR. HAMILTON: The previous 18 sentence refers to an outline of an 19 agreement in principle. 20 THE WITNESS: Right. 21 MR. HARRIS: That's what I'm 22 asking. 23 A That's what it was. 24 MR. HAMILTON: No, that's not 25 what your question was. Your question 23 (Pages 86 to 89)

28 90 2 was agreement in principle. 3 MR. HARRIS: Counselor, you 4 don't need to speak and make a speech. 5 MR. HAMILTON: But you can ask 6 questions that are a little bit more 7 precise. 8 MR. HARRIS: Your objections 9 are supposed to be limited to the 10 nature of the objection. You're not 11 to make a speech, direct the witness 12 to particular items MR. HAMILTON: Can you read 14 the entire pending question back, 15 please, because it's quite long. 16 (Record read) 17 MR. HAMILTON: Object to form. 18 You can answer if you 19 understand his question. 20 A I think I do, but there's not 21 a bright line, as probably you've -- the nature 22 of your questions highlights. 23 This was a continuum. So we 24 had the outline of an agreement, as I said, the 25 framework, the plumbing. We had been talking 91 2 about that for, actually, for many weeks, not 3 just two days. And that continued to be evolved 4 and to be refined and to get to, kind of, we'll 5 call it the place where the major points stopped 6 moving, but you have -- but it was a 7 progression. 8 Q So putting aside the dispute 9 over professional fees, where in the progression 10 do you think the other economic terms had been 11 agreed upon? 12 A By mid-february, as this says, 13 there was general consensus. 14 Q I think you said previously 15 there was a consensus on everything but the 16 professional fees sometime prior MR. HAMILTON: No, that's not 18 what he said. 19 MR. HARRIS: Will you let me 20 finish, then your objection can be 21 "misstates the record" or whatever 22 you'd like. 23 MR. HAMILTON: You're giving a 24 speech -- you're not asking a 25 question, you're giving a speech about 92 2 his prior testimony, and I'm telling 3 you your speech is inaccurate. If you 4 want to ask your question, go ahead, 5 but if you're going to give speeches, 6 I'm going to give speeches. 7 MR. HARRIS: Which you've been 8 doing all day. 9 MR. HAMILTON: We can disagree 10 on that. 11 MR. HARRIS: Well, the record 12 will say what it says. 13 MR. HAMILTON: It sure will. 14 Q I believe your testimony was 15 there was agreement on the economic terms, such 16 as 21 percent, prior to there being agreement on 17 professional fees; correct? 18 A I don't think that's what I 19 said. 20 Q Was there agreement on the 21 economic terms other than the 21 percent prior 22 to there being agreement on the professional 23 fees? 24 A The 21 percent was related to 25 some component of the professional fees. So 93 2 there was -- I think continued after the 3 21 percent, which related to the professional 4 fees in part -- there was a final tweak of that 5 number. There was continued discussions about 6 professional fees that went on for quite some 7 time, even after that agreement was reached on 8 the 21 percent, which did relate to professional 9 fees, which is why the answer is not as simple 10 as Q And so the 21 percent was 12 being adjusted up or down based on the 13 professional fees? 14 A Not just based on the 15 professional fees. 16 Q Based on the professional fees 17 and other economic factors as well? 18 A There was a negotiation, and 19 the final move of the percentage related to 20 professional fees, in part. 21 Q And what were the other 22 factors that caused the 21 percent to be 23 adjusted? 24 A Trying to reach a settlement. 25 Q Well, there was a negotiation 24 (Pages 90 to 93)

29 94 2 over the 21 percent that was influenced by 3 professional fees and some other factors, you 4 said? 5 A Valuation, the -- the other 6 settlement percentages in the claims, the 7 perspectives of all the constituents around 8 their recoveries based on new valuation 9 standards -- or new valuation results based on 10 the sale of Mexico, cash, the arguments 11 existed -- the arguments for the LuxCo holders 12 for a post-petition interest; a whole number of 13 things that went into the settlement. 14 Q All of those things caused the percent to be adjusted up or down? 16 A The settlement is related. 17 All of the things -- we think of the settlement 18 because it's -- factually what it is is it's a 19 collection of agreements that interrelate, so, 20 yes. 21 Q And specific to this time 22 period, in early to mid-february, when you 23 recall the 21 percent being subject to 24 adjustment, what were the factors that were 25 causing, in that time period, the 21 percent to 95 2 be adjusted up or down? 3 A We could reread the factors 4 that I've already testified to. 5 Q All of those factors were 6 still at play and were being discussed and 7 causing the 21 percent to move up or down in 8 that time period? 9 A All of those factors played 10 into an -- I'm not sure what you're talking 11 about, two different -- what week period, 12 two-week period. 13 All of those factors play into 14 the -- all of those factors, it's a package of 15 different settlement agreements, and all of them 16 relate to each other, from my view. 17 Q And adjusting any one of them 18 could cause the 21 percent to be adjusted 19 accordingly? Is that how the negotiations 20 worked? 21 A You're saying could have 22 caused, in theory? Maybe. I don't know. But 23 all of those aspects were being negotiated and 24 were being thought about by all the 25 constituents, so I can't speculate on if an 96 2 adjustment of one specific thing would cause an 3 adjustment of another, but they all could. 4 Q In the negotiations you 5 remember, was the 21 percent adjusted because of 6 changes made to other factors? 7 A Just if we look at the 8 history. So there was an agreement, which was 9 terminated by virtue of the sale of Mexico. The 10 parties reengaged and got to a settlement, 11 considering all those factors. 12 Q All right, back in paragraph 13 21, you talk about the consensus which 14 ultimately was reached in mid-february Do you see that? 16 A I do. 17 Q And then you talk about 18 remaining issues that had the potential of 19 jeopardizing the agreement on the key economic 20 terms. 21 Do you see that? 22 A I do. 23 Q So what were those remaining 24 issues? 25 A Continued issues around 97 2 professional fees, caps on professional fees, 3 concessions on the professional fees that were 4 being asked. 5 Q Any other issues besides 6 professional fees? 7 A There could have been. 8 Professional fees were more on -- focused on -- 9 obviously, being a professional, it was a focus 10 of attention of ours, so that's the one I recall 11 most acutely. 12 Q What do you mean that they had 13 the potential of jeopardizing the agreement? 14 A There was -- there were times 15 where parties made statements on either side 16 that if we can't have X, Y or Z as a solution, 17 then we're not prepared to go forward. 18 Q And is that the reason the 19 debtor delayed the announcement of the PSA until 20 March 5th? 21 A Finalizing those last small 22 economic points were the reason -- but 23 important, because without them being resolved 24 we didn't have an agreement -- were the reasons 25 for the delay. 25 (Pages 94 to 97)

30 98 2 Q Until they were resolved, you 3 were not sure you would have a definitive 4 agreement? 5 A You're never sure until you 6 have a definitive agreement. I think the view 7 was that based on the narrowness of the 8 economics, that the probability was that we were 9 going to have an agreement, and it was just a 10 matter of kind of refining these last small, on 11 the relative scheme of a case of this size, 12 issues. Surprisingly, it took a lot longer to 13 refine those last few points than it should 14 have, but it did. 15 Q I think that's always true for 16 professional fees. 17 All right, let's look at 18 paragraph In the second paragraph you 20 write that you personally spent dozens of hours 21 communicating and interacting, negotiating the 22 final agreed terms of the PSA and the plan term 23 sheet. 24 Do you see that? 25 A I do Q And that is after the economic 3 terms were agreed to? Or was that -- are you 4 referring to -- 5 A I'm just rereading the 6 paragraph to answer specifically your question. 7 Q Sure. 8 (Pause) 9 A This is really -- let me tell 10 you what happened. And this is in reference to, 11 I think, more broad -- broadly, our role 12 throughout this case in facilitating the 13 dialogue around the economic consequences of 14 potential settlements, which involve the aspects 15 I mentioned previously in my testimony. 16 So Rothschild, very early on 17 in the process, was responsible for developing 18 and facilitating communication around what we 19 termed the financial waterfall model, or the 20 waterfall model, which is the financial model 21 that the parties utilize to understand the 22 implications of changes to key terms and the 23 common -- was the common language of the 24 financial ramification tool and language of the 25 financial ramification -- to understand the financial ramifications of the proposals back 3 and forth. So that started very early on, and 4 continued throughout the case. 5 Q Were you involved in 6 negotiating the final terms of the PSA after the 7 key economic terms were decided? 8 A What -- what do you mean in 9 terms of the final terms? You mean the actual 10 legal agreement and provisions for -- what? 11 Q Well, let me ask it this way. 12 When you say in your 13 declaration that you were negotiating the final 14 agreed terms, which terms were you referring to? 15 A So at -- we, the debtors and Rothschild was involved in the negotiation 17 of the terms -- financial terms -- we reviewed 18 the PSA, we were involved -- it wasn't like the 19 financial terms was where our involvement 20 stopped. We were involved along the way, so I'm 21 not sure -- I'm not sure of the nature of your 22 question. 23 Q So are you saying -- when you 24 used the phrase "final agreed terms" you were 25 referring -- you personally were involved in negotiating a broad set of the terms in the PSA? 3 A I'm not sure which terms 4 you're talking about, so maybe you can be 5 specific about the terms you're asking about and 6 I can respond specifically. 7 Q I'm asking what you meant when 8 you put this phrase -- and if you don't 9 remember, that's fine, but do you remember what 10 are the terms that you were involved in 11 negotiating? 12 MR. HAMILTON: Object to the 13 form. 14 You can answer. 15 A So the key economic terms. 16 The terms relating to things like reviewing and 17 having an opinion on things like the milestones, 18 right. We were involved in that. 19 Other than milestones and key 20 economic terms and -- we reviewed the term sheet 21 and plan support agreement, so I'm not sure what 22 other terms -- my recollection of other specific 23 terms, being involved in them, is unclear. But 24 if you want to point to something and ask was I 25 involved, then I'm happy to respond. 26 (Pages 98 to 101)

31 102 2 Q By "milestones" do you mean 3 the ability of the parties to terminate if 4 milestones were not reached? 5 A Right. 6 Q Look at paragraph This is about the concessions 8 that were reached in the second PSA; right? 9 A Right. 10 Q In the third sentence you 11 discuss what the LuxCo group has relinquished. 12 Do you see that? 13 A I do. 14 Q And the first item you mention 15 is "a greater proportion of its recoveries from 16 the cash proceeds of the sale transaction." 17 Do you see that? 18 A I do. 19 Q What did you mean by that? 20 A Creditors have certain 21 priorities of their claims based on the legal 22 structure and where their claims sit -- at least 23 arguments for certain priorities on claims. So 24 starting with the -- if you think about our 25 claims' waterfall schedule, value flows up from the operating subs. 3 The transferred guarantor 4 claims sit in the waterfall model at a level 5 that's more senior than everybody else. The 6 LuxCo box is junior to those transferred 7 guarantor debtors, and junior to that is CapCo, 8 and junior to that is Holdings. 9 So LuxCo had the ability to 10 argue that it had the preferential right to cash 11 based on its seniority in the capital 12 structure -- seniority in the capital structure. 13 So when talking about this specific point, "a 14 greater proportion of its recoveries from the 15 cash proceeds of the sale transaction," it's 16 speaking to the nature of their ability to argue 17 that they have a right to all of the cash coming 18 out of the operating company's flow in the 19 waterfall. 20 Q So is this a reference to 21 their receiving their recovery in the form of 22 cash instead of equity? 23 A Right. 24 Q And that was a valuable right 25 in some way, to receive it in the form of cash instead of equity? 3 A Consideration -- the nature of 4 the consideration is always an important 5 component of a negotiation amongst creditor 6 groups, in my experience, and so cash -- there's 7 no debate about what cash is being -- the value 8 of cash. Or let's just say it's hard to debate 9 that. 10 The value of a reorg post-reorg equity is often the subject of 12 debate. So when thinking about the most 13 favorable consideration to receive of a pool of 14 value, depending on that creditor's view of the 15 implied value, or the stipulated value for the 16 post-reorg equity, one could have a preference 17 for one or the other. In my experience, 18 creditors generally want cash. 19 Q And in these negotiations did 20 any creditors express a preference for cash over 21 equity? 22 A Yes. 23 Q Did all of them? 24 A I don't know if all of them is 25 a fair characterization. Many of them Q Who do you recall expressing a 3 preference for cash over equity? 4 A The LuxCo creditors, the CapCo 5 creditors that were around the table. The -- my 6 understanding is the local creditors would -- 7 through that negotiation, seeing the negotiation 8 on amortization, enjoyed cash as well. 9 Q Did Aurelius express a 10 preference for cash over equity? 11 A Yes. 12 Q Do you recall anyone 13 expressing a preference for equity over cash? 14 A I recall a discussion around 15 the option, preference for having an option of 16 electing more equity versus cash. 17 Q But you don't recall anyone 18 expressing a preference just for receiving 19 equity over cash? 20 A No. 21 Q Is there any way to quantify 22 how much more valuable cash is than equity? 23 A It's in the eyes of the 24 constituent. 25 You're saying for each 27 (Pages 102 to 105)

32 106 2 constituent? I assume your question is is there 3 a way to quantify it for each constituent, and I 4 wouldn't suggest to know what's in their minds. 5 Q So you can't quantify a value 6 to LuxCo of receiving a greater proportion of 7 its recoveries from the cash proceeds of the 8 sale transaction? 9 A We have to be very careful in 10 terms of how you -- I can't calculate -- in what 11 context? I can calculate based on the plan 12 value that -- in terms of as a valuation matter 13 that there's -- but I can't calculate the 14 preference. 15 Q As a valuation matter, there's 16 no difference; right? 17 A As a valuation matter, pegging 18 it to the reorg value, there would be no 19 difference. Assuming they viewed the reorg 20 value as the penultimate value. 21 Q And you don't have a way to 22 quantify how much additional value the LuxCo 23 group placed on receiving the recoveries in cash 24 versus equity? 25 A There are ways you could try to quantify that. I haven't tried to quantify 3 it. It would depend on a series of things, like 4 where you were at a point in time, the nature of 5 the environment. 6 Q Okay. 7 The second item you mention in 8 paragraph 23 in this list is "potential accrued 9 post-petition interest on its members' claims." 10 A Right. 11 Q Do you see that? 12 And what did you mean by 13 "potential"? 14 A They would have an argument, 15 to the extent they could prove solvency is my 16 understanding of the standard, to argue for 17 post-petition interest. 18 Q Are you aware of there being 19 arguments made against solvency at the time? 20 A There were potentially 21 valuation arguments, yes. 22 Q And did the debtors have a 23 view one way or another whether the LuxCo group 24 was entitled to accrued post-petition interest? 25 A So there are two aspects to that; could be entitled, or were entitled. I 3 don't think we ever expressed a view formally. 4 I think we understood that there were arguments 5 that they could make, valuation arguments, that 6 would create reasonable arguments for them to 7 try to assert that claim. I think we -- I don't 8 want to speculate on what we would have done, 9 how we would have behaved, but there were 10 arguments they could have made to assert that 11 claim. 12 There was also the presence of 13 an auction, and the possibility for a bid that 14 would have been higher than even the bid that 15 was on the table of a billion 875, which would 16 have strengthened those arguments. 17 Q What were the arguments -- the 18 valuation arguments that the debtors could have 19 made to oppose the right to accrued 20 post-petition interest? 21 A To be honest, I don't recall 22 the specifics in enough detail to articulate 23 that in a confident way right now. It's 24 something we looked at. 25 Q Do you recall anyone sharing their views which side of the argument they 3 thought was stronger? 4 MR. HAMILTON: Well, I'm going 5 to -- I'm going to object and instruct 6 the witness in answering that question 7 not to disclose whatever advice that 8 Jones Day gave to its clients in that 9 regard. But to the extent other 10 people communicated views to other 11 parties, you're free to answer that 12 question. 13 A As is typical in a 14 negotiation, you -- before I answer, you can 15 probably guess the people's positions on the 16 subject, but I will give you my recollection of 17 people's positions. 18 The LuxCo creditors believed 19 they had the better argument. The CapCo 20 creditors believed they had the better argument. 21 That's my recollection of the position. 22 Q And did the debtors ever 23 express a view? 24 A I don't recall the debtors 25 formally expressing a view. 28 (Pages 106 to 109)

33 110 2 Q And how about internally, do 3 you recall any discussions among the debtors and 4 their professionals about which side had the 5 better argument? 6 MR. HAMILTON: That's a -- 7 THE WITNESS: That's -- 8 MR. HAMILTON: You can answer 9 that question yes or no, but you 10 should not disclose what 11 communications were made either to 12 Jones Day lawyers or from Jones Day 13 lawyers on that subject. 14 A Yes. 15 Q And what views do you recall 16 being expressed internally? 17 MR. HAMILTON: Object, 18 instruct the witness not to answer 19 that question. 20 Q You don't recall any views 21 being expressed other than those that were 22 expressed in the presence of Jones Day? 23 A This was a very highly legal, 24 and financially -- highly legal issue that 25 related to financial issues, and so the discussions that I recall were very much with a 3 legal financial dialogue; it wasn't independent 4 of Jones Day. 5 Q Let me just focus on the 6 valuation question. I think you said your 7 understanding is there was a valuation dispute? 8 A It's -- I didn't say -- I 9 don't think I said there was a valuation 10 dispute. I said I think the issue surrounding 11 the argument centers around solvency of the 12 particular debtor, in this case of LuxCo. 13 Q And do you recall any 14 discussions not about the legal conclusions to 15 be drawn from the facts, but any discussions of 16 the facts, whether or not the LuxCo group was 17 solvent? 18 A I don't recall conclusions 19 around whether the LuxCo group was solvent. 20 Q Do you recall people 21 expressing views about the factual issue of 22 solvency among the debtors or their 23 professionals, outside the presence of Jones 24 Day? 25 A I recall there were arguments, I think I said very early on, for and against. 3 Q Do you recall anyone 4 expressing their view about the -- about the 5 factual issue of solvency -- 6 MR. HARRIS: Let me try it 7 again. 8 Q Do you recall anyone 9 expressing the view amongst the debtors and 10 their professionals that the stronger view is 11 that LuxCo was insolvent? 12 MR. HAMILTON: Object and 13 instruct the witness not to answer to 14 the extent you're asking for him to 15 disclose any communications that were 16 made to or from Jones Day attorneys to 17 their clients. 18 A I don't recall conclusions. 19 Q Or anyone expressing a view 20 that the stronger view was that LuxCo was 21 solvent? 22 MR. HAMILTON: Again, object, 23 and I instruct the witness not to 24 answer the question on privilege 25 grounds MR. HARRIS: So you're going 3 to exclude communications, you're just 4 directing him not to answer the 5 question -- 6 MR. HAMILTON: I'm instructing 7 him not to answer that question. 8 Q Let's look at the third item 9 you mentioned back in paragraph 23, and this 10 talks about "any additional recovery on account 11 of its members' claims in the event a higher and 12 better bid that exceeded plan distributable 13 value had emerged." 14 Do you see that? 15 A Yes. 16 Q And I think you said there was 17 a go-shop period; is that right? And is that a 18 reference to that a higher bid might emerge 19 during the go-shop period? 20 A That's right. 21 Q Is the way that the second PSA 22 was structured that LuxCo was unable to 23 participate in any additional recovery if a 24 higher bid emerged? 25 A Recovery being defined as 29 (Pages 110 to 113)

34 114 2 recovering a hundred percent of their par claim, 3 plus pre-petition interest. That recovery was 4 capped at a hundred cents. 5 Q And so even if a better bid 6 emerged, their recovery was not going to 7 increase? 8 A I'll give a specific example. 9 If a bid came in at $3 billion 10 for Mexico, the arguments for solvency of LuxCo 11 would be, let's just say, substantially 12 improved. They agreed to waive their right to 13 post-petition interest under that circumstance, 14 or arguments for the right for post-petition 15 interest under my hypothetical. 16 Q Is there any other possibility 17 for additional recovery besides post-petition 18 interest that they were waiving? 19 A Not to my knowledge, no. 20 Q So the second and third items 21 are both about waiving the possibility of 22 obtaining post-petition interest? 23 A Yes. 24 Q Then at the end of that 25 paragraph you talk about how the recovery to the CapCo 2021 noteholders increased between the 3 first and second PSA. 4 Do you see that? 5 A I do. 6 Q And then in footnote 5 you 7 calculate how much the recovery increased once 8 you account for the rights offering; right? 9 A Right. 10 Q And once you account for that, 11 the increase was about 140 million; is that 12 right? 13 A Yep, that looks right. 14 Q When evaluating how much the 15 recovery increased, is there any reason it would 16 be inappropriate to take into account the rights 17 offering? 18 A "Inappropriate" maybe isn't 19 the right term. I think one way to reasonably 20 look at it would be to not take into account the 21 rights offering for the following primary 22 reason: The rights offering is just that it's a 23 right to participate, it's not an obligation, or 24 it's not certain whether or not the party could 25 participate in that rights offering, or would participate in that rights offering, or would 3 find the right valuable, so oftentimes -- you 4 look at it both ways. 5 Q But often the right to 6 participate is deemed to be valuable? 7 A Oftentimes, yes. 8 Q And in this case the debtors 9 deemed it to have value? 10 A Yes. 11 Q Okay, paragraph 24. It says, 12 "Ultimately the debtors concluded that the plan 13 term sheet represents the best path forward." 14 Do you see that? 15 A I do. 16 Q And then at the end of this 17 page it mentions it has advantages over other 18 constructs. 19 Do you see that? 20 A Yes. 21 Q And then it says, "for 22 example, the plan term sheet," and then on the 23 following page there's some bullets listing 24 examples; right? 25 A Yes Q And the first bullet is -- 3 contemplates "the complete and final settlement 4 of and incremental concessions with respect to 5 the potential litigation claims." 6 Do you see that? 7 A I do. 8 Q And then it mentions 9 eliminating the cost and delay of litigating 10 those claims to conclusion; right? 11 A Yes. 12 Q And you don't personally know 13 how much it would cost to litigate the potential 14 litigation claims to conclusion; right? 15 A Precisely I don't have a 16 number, but I have a general sense, being 17 involved in many other cases, of how expensive 18 litigations can be. 19 Q What's your general sense of 20 how expensive it would be to litigate the 21 potential litigation claims? 22 A All of them? Tens of millions 23 of dollars would be my guess. 24 Q And then -- have you been 25 involved in litigation of recharacterization 30 (Pages 114 to 117)

35 118 2 claims? 3 A I -- yes. 4 Q What case are you referring 5 to? 6 A Vitro was a case of -- 7 involved, I think, fraudulent conveyance and 8 recharacterization of intercompany claims. 9 Tronox had issues of more 10 fraudulent conveyance. 11 The Anadarco liabilities. 12 Most cases have issues of 13 threats of recharacterization of intercompany 14 claims. I'm involved in one now that I can't 15 mention that has that as a litigation threat. 16 I actually can mention it, 17 it's U.S. Steel Canada. It is public that I'm 18 involved in that case, and there's a threat of 19 recharacterization. 20 Q Have you been involved in any 21 cases where there was litigation of -- regarding 22 whether a guaranty was in place? 23 A Not -- like a release 24 guaranty, like this specific situation? Not 25 that I recall specifically. But I'd have to go back and review my cases because it's quite 3 possible that there was those issues. 4 Q But there's nothing, sitting 5 here today, you have in mind about your personal 6 involvement in a litigation regarding whether a 7 guaranty had been released? 8 A Not to my recollection. 9 Q You don't have any personal 10 basis to estimate how long it would take just to 11 litigate issues regarding a release of the 12 guaranty? 13 A Other than what I have 14 understood based on this case and commentary 15 from others that I've heard. 16 Q What do you mean, commentary 17 from others? 18 A Discussion of kind of the 19 nature of the litigation. My understanding is 20 the nature of the litigation for a release 21 guaranty claim is -- is not an intra-debtor 22 litigation, it's a litigation of a contract 23 matter, and so consequently it will vary -- it's 24 varied from the other two. That's my 25 understanding MR. HAMILTON: Can you pardon 3 me for just a second? 4 MR. HARRIS: Yes. 5 (Pause) 6 MR. HAMILTON: Can I hear that 7 last question and answer -- or just 8 the last question, please. 9 (Record read) 10 MR. HAMILTON: Okay, thanks. 11 Q What's your understanding 12 about how -- the fact that release is a 13 guaranty -- as a contractual matter, about how 14 that fact affects how long it would take to 15 litigate? 16 A My understanding is the scope 17 of evidence is narrower, so by comparison less 18 intensive. But that's by comparison. 19 My understanding of that 20 litigation is that it would still involve a 21 significant amount of time and be subject to 22 appeal and not something that could be, even in 23 isolation, done quickly. And I know that 24 because in the discussion of different plan 25 alternatives, one of the plan alternatives that was discussed was isolating just that 3 litigation, and there was a discussion at that 4 point in time -- between the attorneys, that I 5 wasn't directly involved in, but secondarily 6 understood -- part of the issue was the length 7 of time it was going to take to get to the 8 resolution. 9 Q And is it your understanding 10 that purely legal, as opposed to a factual 11 matter, could be litigated more quickly? 12 MR. HAMILTON: Really, Chris? 13 A Repeat the question. 14 MR. HARRIS: The witness 15 said MR. HAMILTON: All right. 17 MR. HARRIS: -- he had 18 extensive experience based on his 19 restructuring knowledge. 20 MR. HAMILTON: I understand. 21 If you think that's helpful for the 22 judge, go ahead. 23 You can answer the question. 24 MR. HARRIS: Counsel, you were 25 not in the six depositions that your 31 (Pages 118 to 121)

36 122 2 law firm took of my clients in which 3 they asked literally that question. 4 So I can understand your view, but 5 your colleagues don't share it. 6 MR. HAMILTON: Okay. 7 Q So my question is, is it your 8 understanding that purely legal issues could be 9 litigated more quickly than factual matters? 10 A My understanding, I think I 11 said, is that the evidence associated and 12 evaluated with that specific claim are less 13 expansive, because the other two are more 14 fact-specific. 15 Q And as a result there's the 16 potential of them being resolved more quickly? 17 A I didn't say that. I just 18 said that there's a difference in terms of the 19 amount of material that could be relevant. 20 Q And then -- you said there 21 were plan alternatives discussed that would 22 involve isolating the transferred guarantor 23 litigation? 24 A Early on in the case, yes. 25 Q What do you mean by "isolating the transferred guarantor litigation"? 3 A Reserving the transferred 4 guaranty and emerging with that as the issue -- 5 or maybe not even emerging, but litigating it, 6 if parties would agree to narrowly agree to 7 litigate that issue, which the parties did not, 8 so it became a litigate everything, all or 9 nothing, reality. 10 Q Was it CapRe that proposed to 11 only litigate the transferred guaranty issues? 12 A I think, actually, they both 13 at different times. I don't recall precisely. 14 They actually had that construct, but that 15 construct, in and of itself, doesn't inform the 16 profile of the reality that existed because that 17 construct is only relevant when added to all the 18 other constructs that were to be embedded in 19 that proposal, which is why none of them ever 20 got off the ground. 21 Q In deciding to enter into the 22 current plan support agreement, were the debtors 23 relying on your analysis as to the cost and 24 delay of litigating the potential litigation 25 claims? A No. 3 Q It's your understanding they 4 were relying on analysis provided by Jones Day 5 on that issue? 6 A They'd be relying on Jones 7 Day's perspective on cost and time, yes. That's 8 just one of the factors that went into the 9 decision to enter into the settlement. 10 Q Are you aware of what Jones 11 Day's perspective was on cost and time? 12 MR. HAMILTON: Object, 13 instruct the witness not to answer. 14 Q So I take it you did not do 15 anything to date to inform yourself as to what 16 Jones Day's perspective was on the cost and time 17 of litigating these claims? 18 MR. HAMILTON: Object, and 19 instruct the witness not to answer. 20 MR. HARRIS: Just to be clear, 21 I said this yesterday as well, we will 22 move to preclude any testimony based 23 on that factor if we're not allowed to 24 conduct discovery into it. 25 MR. HAMILTON: I'm not exactly sure what you mean by "that factor," 3 but you can do whatever you want to 4 do, Chris, I'm not really intimidated. 5 MR. HARRIS: I didn't mean to, 6 I just said it because your counsel 7 yesterday -- 8 MR. HAMILTON: I understand. 9 MR. HARRIS: -- had 10 reconsidered his position when I made 11 that clear. 12 MR. HAMILTON: Lee's an 13 interesting guy. 14 I understand the consequences 15 of instructing the witness not to 16 answer the question. I also 17 understand the consequences of 18 asserting the attorney-client 19 privilege. I also know what these 20 debtors are going to have to do if 21 this settlement's not approved. 22 You're not going to get our 23 privileged advice to our client on 24 these claims. So you can ask it as 25 many times as you want in this 32 (Pages 122 to 125)

37 126 2 deposition, and I'm going to object 3 every time. 4 MR. HARRIS: I really didn't 5 mean to get into an argument with you, 6 I was just -- 7 MR. HAMILTON: You started it. 8 MR. HARRIS: I was just making 9 sure you were aware. 10 MR. HAMILTON: I am very much 11 aware of the consequences of my 12 positions. 13 MR. HARRIS: Okay. 14 MR. HAMILTON: I don't need 15 you to educate me on them. 16 Q Okay, let's look back at this 17 bullet. 18 A Which bullet? 19 Q Still the first bullet at the 20 top of the page. 21 A Okay. 22 Q After discussing the cost and 23 delay of litigating those claims to conclusion, 24 you then mention "the risk the key amendments 25 with the debtors' lenders in Brazil would begin to unravel or lead to defaults." 3 Do you see that? 4 A Yes. 5 Q And you haven't had any -- 6 personally any discussions with those lenders; 7 right? 8 A I -- as I said earlier, I had 9 not -- no, I have not. 10 Q And you don't have any 11 personal knowledge as to whether they'd be 12 willing to amend the deadlines in those 13 agreements; right? 14 A No. I haven't had any 15 discussions, as I said, so there wouldn't be 16 personal knowledge other than what I understand 17 from people at the company. 18 Q Okay. 19 And you don't have any 20 personal knowledge as to whether the lenders 21 would or would not call an event of default? 22 A I don't have any personal 23 knowledge about that, no. 24 Q Have you had discussions with 25 people at the company about whether the lenders in Brazil would agree to extensions or 3 additional forbearances? 4 A We had discussions around the 5 ask of the lenders, and around the desire to get 6 as much time as possible to try to implement our 7 restructuring, but also around the reality that 8 those lenders have a very -- "tenuous" may not 9 be the right word, but that's the only word 10 that's coming to mind -- relationship with the 11 company given its history of business plan and 12 forecast misses and its inability to actually 13 deliver over the last two years on any of the 14 financial projections that have been put in 15 front of them, so there's a crisis of confidence 16 that exists within the lender group, as I 17 understand it. That would be the local lenders, 18 and China Development Bank in terms of this 19 company being able to do what it has said it was 20 going to do, or committed to do in the 21 agreements that had been put forward. 22 So that was a challenge very 23 early on in the case, it was identified as a 24 challenge, and it's been a concern -- the 25 stability of the local markets have -- and those relationships -- have been a concern from the 3 very beginning of the case in light of that 4 reality. 5 So going back and having a 6 dialogue around extending a deadline is not 7 something I know the company would take lightly. 8 Q After those amendments and 9 forbearances were entered into, since then have 10 you had any discussions with anyone at the 11 company about obtaining additional extensions or 12 forbearances? 13 A I have not. 14 Q The fourth bullet on the page 15 says, "Permits post-petition financing pending 16 the closing of the sale transaction." 17 Do you see that? 18 A Yes. 19 Q What is that a reference to? 20 A So the plan would permit, with 21 the approval of the plan proponents, the company 22 raising additional incremental exit financing, 23 with the approval of the plan. That's what 24 that's a reference to. 25 Q Have the debtors looked into 33 (Pages 126 to 129)

38 130 2 obtaining exit financing? 3 A We -- when we went to market 4 with the DIP request we asked for two types of 5 responses from the participants we engaged with. 6 First was a -- we termed it DIP to sale, which 7 was a DIP that would exist only until the sale 8 of Mexico, and then it would be repaid. The 9 second was a DIP to exit. 10 So we did actually go to 11 market with exit financing in that process, 12 until we got responses in that process on the 13 cost and relative terms that people at that time 14 would be willing to provide for exit financing. 15 Q And what were the responses 16 that you received? 17 A The responses were, from the 18 collective view of the plan proponents and the 19 debtors, were that the cost and the associated 20 benefit of the incremental liquidity that would 21 be generated were not warranted; the rates for 22 exit financing were significant -- were very 23 high, the amount of liquidity that parties were 24 willing to extend were low. 25 Just to give you an example, the parties were willing to extend exit 3 financing, but only so long as we maintained 4 a -- an amount -- significant amount of cash in 5 a collateral account, such that they could 6 foreclose on that collateral to the extent there 7 was any problem. 8 So it clearly spoke to the 9 market's concern around the ability of the 10 company to turn the corner from an operational 11 perspective, and reflected the realities that 12 this company, on a trailing basis, is 13 significantly negative in terms of its EBIDTA, 14 and on a cash flow basis is even worse because 15 we're continuing to invest in the network, so we 16 haven't turned a corner. 17 Q So what were the rates that 18 were proposed? 19 A I don't recall precisely the 20 rates, but there were -- in general -- I don't 21 recall precisely, so I don't want to comment. 22 They were higher, significantly higher, than the 23 DIP. 24 Q By "significant," tell me 25 roughly in terms of basis points A Yeah, three basis points wide 3 of the DIP. 4 I'm sure it's probably in your 5 discovery request. There's a presentation we 6 made to the board which outlined that. 7 Q What would be the general time 8 period of that presentation? 9 A It would have been around the 10 time that we were seeking approval to move 11 forward with the DIP, so in about the 12 February-March time frame. I'm not sure 13 exactly. 14 Q The debtors have not made any 15 inquiries about stand-alone exit financing? 16 A When you say "stand-alone," 17 what do you mean by "stand-alone"? 18 Q I believe the proposals you 19 saw were for a DIP plus exit financing? 20 A It was A DIP that would 21 convert into exit financing. So that's 22 effectively standalone exit financing. The 23 reason why we wanted to structure it in that way 24 was to save the cost and expense of having to 25 doing two financings So true to tradition, we did 3 it at American, we raised a significant amount 4 of capital in the DIP that didn't roll to exit 5 upon emergence from bankruptcy, and saved the 6 estate a significant amount of fees. So we 7 raised a significant amount of cash in the DIP 8 of American Airlines, and used a similar 9 structure of a DIP to sale, and it had the 10 benefits of saving a significant -- the estate a 11 significant amount of fees. 12 So we tried to do the same 13 thing here, but found that the exit proposals 14 were so unattractive and so cash collateralized 15 that no one felt it was a reasonable path 16 forward. 17 Q Back on Exhibit 82, the next 18 bullet says, "Allows the reorganized debtor to 19 seek market-tested exit financing, which would 20 allow them to raise exit capital with less cost, 21 at better rates and on better terms." 22 Do you see that? 23 A Yes. 24 Q So what is that reference to 25 market-tested exit financing? 34 (Pages 130 to 133)

39 134 2 A Sorry, let me reread it. 3 Q Sure. 4 (Pause) 5 A So this first bullet -- I may 6 have misspoken earlier -- was speaking to the 7 DIP financing. The second bullet is speaking to 8 exit financing. 9 Q So when you say -- when you go 10 on to say, "which would allow them to raise exit 11 capital with less cost, at better rates and on 12 better terms," that's less cost, better rates 13 and on better terms compared to what? 14 A It says, "to seek 15 market-tested exit financing." 16 Q Right. 17 A So if it could be achieved, 18 then Q But it's less cost than what? 20 A Well, there's no requirement 21 that would bind us to the DIP proposal, 22 presumably. 23 I have to -- let me go back 24 and look at the context of this date. 25 (Pause) A Yeah, so this would have been 3 really relating to the fact that if we could go 4 out and we could raise cheaper financing at a 5 later date, we could do that. 6 Q At the time you provided this 7 declaration, did you believe that was a 8 reasonable possibility? 9 A You never want to foreclose 10 possibilities, so -- we had just completed the 11 market exercise for finding the DIP, so it was 12 just reflecting that we had that flexibility 13 should that develop, but I wouldn't say I was 14 optimistic that there would be better financing. 15 Q You thought it was meaningful 16 enough to list it as a reason to support the 17 plan term sheet; correct? 18 A To note, yeah. 19 Q In paragraph 26 you say, 20 "After considering, among other things, the 21 facts and opinions noted above." 22 Do you see that? 23 A Yes. 24 Q What opinions were you 25 referring to there? A You want me to reread this 3 whole declaration and point to whether it's 4 opinion or whether it's fact? 5 Q If that would be helpful to 6 you. It wasn't clear to me -- I'll just let you 7 know what I'm wondering. 8 When you refer to "opinions" 9 there, are you referring to the independent 10 manager's reports, which you mentioned on page 11 25, or are you referring to something else? 12 A Well, I just think it's 13 referring to there are things in this 14 declaration that are facts and there are things 15 that may be opinions. 16 (Mr. Hamerman man enters the 17 room) 18 Q Do you know whether the board 19 relied on the recommendation of the independent 20 manager in deciding to enter into the second 21 PSA? 22 MR. GREENBERG: Can you 23 clarify which board? 24 A Which board? 25 Q That's a good question The guaranty board. 3 A Holdings board? 4 Q Holdings board. 5 Do you know whether the 6 Holdings board relied on the recommendation of 7 the independent manager? 8 A Relied on or considered? 9 Q Start with relied on. 10 A I don't know. 11 Q Do you know if the Holdings 12 board considered the recommendation of the 13 independent manager in deciding to enter into 14 the second PSA? 15 A I don't -- I don't know. It 16 depended on the timing. My guess is -- I don't 17 know. I don't know. 18 You're talking Holdings board 19 specifically; right? 20 Q Yes. 21 A Okay. 22 MR. HARRIS: Okay, we can move 23 past this document. 24 THE WITNESS: Can I actually 25 rephrase that, because I'm just 35 (Pages 134 to 137)

40 138 2 refreshing on the timing? 3 MR. HARRIS: Yes. 4 A So the timing was the LuxCo 5 board -- I'm just looking at my declaration -- 6 on -- approved the settlement, the PSA, on 7 February 25th, and the Holdings board was on 8 March the 5th, so I'm sure that was part of 9 their consideration. 10 Q Were you in a board meeting 11 where the independent manager's recommendation 12 was discussed? 13 A Not with me in the room. 14 Q So you don't personally know 15 whether the board discussed it or considered it? 16 MR. GREENBERG: I think you 17 have to clarify which board again. 18 Sorry. 19 MR. HAMILTON: Chris, let me 20 ask -- I don't want to have a speaking 21 objection, but we had a little 22 confusion earlier when you started 23 about "do you have personal 24 knowledge" MR. HARRIS: That's fair MR. HAMILTON: So when you say 3 "personally" I'm not exactly sure what 4 you mean. Can you be more precise? 5 Q And I think it's tricky, just 6 to get this all on the table, but you're both 7 being deposed in your personal capacity -- 8 A Right. 9 Q -- and you're being deposed as 10 a representative. So in this instance I just 11 want to know not about things you've learned to 12 prepare to speak on behalf of the company. 13 A So me personally? 14 Q You personally. So let me ask 15 it again to make it clear, so let's start again. 16 You don't personally know 17 whether the Holdings board discussed or 18 considered the independent manager's 19 recommendations? 20 A I wasn't personally there when 21 it was discussed, but I know it was part of 22 their process for coming to their conclusions. 23 Q And how do you know that? 24 A I recall now, looking at the 25 timing, that having the independent manager speak to its views -- at least at the LuxCo 3 level of that claim -- was something that, from 4 a sequencing perspective, was important for the 5 Holdings board. 6 Q And how do you know it was 7 important to the Holdings board? 8 A Just from recollection of the 9 calendar, when we were planning the board 10 meetings, in terms of vacations. 11 Q Do you recall someone telling 12 you that? 13 A I recall talking about we were 14 going to have a Holdings board after the LuxCo 15 board, and the LuxCo board's approval, yes. 16 Q So you're inferring from that 17 that it was important to the board to first have 18 the independent manager's recommendation? 19 (Mr. O'Neill leaves the room) 20 A To have the results of whether 21 the independent manager made the -- whether the 22 LuxCo board approved the transaction. 23 Q But no one told you that was 24 important to the board? 25 MR. HAMILTON: Object to form You can answer. 3 A No one told me personally that 4 that was important in that way, "this is 5 important to the board," other than knowing that 6 the timeline was LuxCo meets and approves the 7 transaction based on -- or doesn't approve the 8 transaction based on the perspective of the 9 independent manager, among other things. 10 Q Okay. 11 (Mr. Zide leaves the room) 12 MR. HARRIS: I'm shifting to 13 another topic. We could break for 14 lunch, or whatever you'd like to do. 15 MR. HAMILTON: What do you 16 want to do? 17 THE WITNESS: Let's break for 18 a bathroom break and let's -- how much 19 longer do you have, do you think? 20 MR. HARRIS: I have a lot 21 left, so I'm not halfway done. 22 MR. HAMILTON: Let's just 23 break for lunch then. That would be 24 the most efficient way to do it. 25 MR. HARRIS: Okay, let's do 36 (Pages 138 to 141)

41 142 2 that. 3 (Luncheon recess: 12:06 p.m.) AFTERNOON SESSION 3 12:38 p.m. 4 (Document headed "Notice of 5 Filing Plan Support Agreement" dated 6 March 5, 2015 marked Exhibit 123 for 7 identification.) 8 H O M E R D. P A R K H I L L, 9 having been previously duly sworn, was examined 10 and testified further as follows: 11 CONTINUED EXAMINATION 12 BY MR. HARRIS: 13 Q You've been handed Exhibit , which is a filing dated March 5th, called "Notice of Filing Plan Support 16 Agreement." If you see starting on, I guess, 17 the fourth page of the document, it's page 4 of at the top, it's the plan support agreement. 19 A Right. 20 Q Can you turn to section 7, 21 "Termination Events." 22 MR. GREENBERG: Page MR. HARRIS: Yes, it's page of A Yes Q And I think this is the 3 section that contains the termination milestones 4 that you said you were involved in; right? 5 A Yeah, that we reviewed and 6 were involved in, yes. 7 Q Are you aware that my clients 8 have submitted an objection to the proofs of 9 claims filed by the 2016 and 2019 trustees? 10 A I'm generally aware, yes. 11 Q And that we've asked for the 12 claim objection to be heard on June 3rd, right 13 before the confirmation hearing? Are you aware 14 of that? 15 A Generally aware, yes. 16 Q If our claim objection is 17 denied and we lose that, do the debtors believe 18 that that would give anybody to terminate the 19 PSA? 20 A I'm sorry, can you repeat the 21 question? 22 Q Sure. 23 If our claim objection is 24 denied, do the debtors believe that that would 25 give anyone a basis to terminate the PSA? MR. HAMILTON: I'm going to 3 object and instruct the witness not to 4 in his answer disclose any 5 communications that Jones Day has 6 received from its client or given to 7 its client on that particular issue. 8 A I'm not sure. 9 Q Take a look at section 7.01, 10 "Termination Events," which I think you 11 participated in drafting. 12 If you could look at these 13 termination events listed below and let me know 14 if there are any of them that you believe would 15 be triggered by our confirmation objection being 16 denied. 17 A Denied? 18 Q Denied? 19 MR. GREENBERG: The claims 20 objection? 21 MR. HARRIS: I'm sorry, our 22 claims objection being denied. 23 Q So let me ask it again so I'm 24 not confusing you. 25 Are there any of these 37 (Pages 142 to 145)

42 146 2 termination events that you believe would be 3 triggered by our claim objection being denied? 4 MR. HAMILTON: I want to make 5 sure that the record's clear -- I'm 6 not sure it's an appropriate question, 7 but putting that aside, when you say 8 "denied," is that the same thing as 9 not ruled upon, or heard and denied? 10 MR. HARRIS: Heard and denied. 11 MR. HAMILTON: Okay, fair 12 enough. 13 Do you understand the 14 question? If you understand the 15 question, you can answer. 16 THE WITNESS: I do understand 17 the question. 18 A And we have to take a time out 19 and I have to read these termination events 20 and -- each one again and try to Q I would appreciate that. 22 (Pause) 23 A Okay. 24 I don't see anything there 25 that would constitute a termination event in my quick review, if the -- as I understood the 3 question, if the claim objection was heard and 4 denied. 5 Q Okay. 6 Different topic, "Common 7 Interest Agreements." Have the debtors entered 8 into any common interest agreements since 9 March 4th, 2014? 10 A Since March 4th, 2014? 11 The first common interest 12 agreement occurred at the signing of the first 13 PSA. That terminated when the PSA terminated. 14 The second common interest 15 agreement occurred, I believe, at the end of 16 February, when the parties reached agreement on 17 the basic construct -- I'm not sure the exact 18 date -- on the basic construct and economic 19 agreement for the second PSA. 20 Q And who were the parties to 21 the first common interest agreement? 22 A The signatories to the plan. 23 Q And is it encompassed in 24 writing anywhere other than in the PSA? You 25 said it's in there A I'm not sure. 3 Q Who are the parties to the 4 second common interest agreement? 5 A The signatories to the PSA is 6 my understanding. 7 Q And that would be the 8 committee, Aurelius, CapRe, the LuxCo group and 9 the debtors? 10 A That's right, I think you've 11 covered it. 12 Q The independent manager is not 13 a party to the common interest agreement; 14 correct? 15 MR. HAMILTON: Object to form. 16 You can answer. 17 A I'm actually not sure, in 18 terms of the legal, whether they're -- he's a 19 party to -- he specifically is a party to that 20 agreement. I just can't recall. 21 Q He would be a party to the 22 agreement if he was a party -- a signatory to 23 the PSA; is that right? 24 A I believe so. 25 Q And it's the debtors' understanding that the only parties to the 3 common interest agreement are those entities 4 that are parties to the PSA? 5 A Again, I'm not sure about -- 6 the independent manager's a kind of unique 7 animal in terms of his role here, so I'm not 8 sure if Scott Winn or his firm are -- in his 9 capacity as independent managers are a party to 10 the common interest agreement. I just don't 11 know. 12 MR. HARRIS: Counsel, one of 13 the topics we had designated, and the 14 witness has been identified as being a 15 witness on behalf of, is the common 16 interest agreements, and that's an 17 essential part of it. And I'm not 18 criticizing the witness in any way, 19 but we do need to know whether the 20 debtors believe that they have a 21 common interest agreement with the 22 independent manager. 23 MR. HAMILTON: Yes, we do. He 24 is a board member. 25 MR. GREENBERG: He's a board 38 (Pages 146 to 149)

43 150 2 member. 3 MR. HAMILTON: He's a board 4 member of the debtor. The debtor is 5 signatory of the PSA. He is part of 6 what we are asserting is the group 7 that is covered by the common interest 8 privilege in connection with the 9 current PSA. 10 MR. HARRIS: Okay. So he is a 11 member of the common interest 12 agreements? 13 MR. HAMILTON: In his capacity 14 as a member of the LuxCo board, as a 15 board manager MR. HARRIS: Okay. 17 MR. HAMILTON: -- and his 18 legal advisors. 19 MR. HARRIS: Okay. 20 In particular, Susheel. 21 Q Have there been any 22 negotiations among the creditors since 23 February 20th, 2015 that you're aware of? 24 A Since February 20th, 2015? 25 There were small economic points that remained outstanding -- professional 3 fees, as I mentioned earlier -- that were being 4 negotiated. 5 Q Anything else? 6 A Not to my recollection right 7 now. 8 Q Any negotiations between the 9 debtors and any of the creditors since 10 February 20th? 11 A The debtors and any of the 12 creditors since February 20th? 13 Besides the interactions with 14 your clients, if you want to characterize those 15 as negotiations, not that I'm aware. 16 Q I'm going to ask you about the 17 debtors' judgment in agreeing to the second PSA. 18 We talked about it some by reference to your 19 declaration. If it's helpful to you, you can 20 look back at it, it's Exhibit My question is going to be to 22 please tell me all of the factors that you're 23 aware of that the debtors considered in deciding 24 to enter into the second PSA. And if it's 25 easier for to you do it by reference to the list in your declaration, that's fine; however you'd 3 like. 4 A I'm just going to take a 5 moment to re-review the bullets and contemplate 6 whether there's any others. 7 (Pause) 8 A I think these bullets 9 generally cover the landscape. 10 Q Was one of the factors the 11 debtors considered an assessment of the merits 12 of the transferred guarantor claims? 13 A One of the factors that was 14 considered in entering into this settlement 15 was -- yes, was the merits of claims. 16 Q And who provided that 17 assessment of the merits? Was it Jones Day? 18 A As MR. HAMILTON: Whoa, whoa, 20 wait, let's hear -- are you done with 21 your question? 22 MR. HARRIS: I am. 23 MR. HAMILTON: Can I hear the 24 question read back, please? 25 (Record read) MR. HAMILTON: Object, 3 instruct the witness not to answer 4 that particular question. 5 If you want to rephrase it in 6 a way that doesn't ask for Jones Day's 7 advice to its client, I won't object. 8 Q Well, did Jones Day provide an 9 assessment of the merits of the transferred 10 guarantor claims? 11 A Jones Day, as well as the 12 other claim proponents, as was stated in the 13 disclosure statement, evaluated the relative 14 strengths and weaknesses of the arguments for 15 and against each of the specific claims. 16 Q Did Jones Day provide to the 17 board an assessment of the merits of the 18 transferred guarantor claims? 19 A I don't mean to be specific, 20 but I don't know what you mean by "merits." 21 I know that Jones Day had a 22 number of discussions with the board at relating to the strengths and weaknesses of 24 the -- of those arguments. 25 Q Do you know whether Jones Day 39 (Pages 150 to 153)

44 154 2 provided a conclusion as to how strong the 3 transferred guarantor claims are? 4 MR. HAMILTON: I'm going to 5 object and instruct the witness not to 6 answer that question. 7 MR. HARRIS: You're not 8 allowing him to answer whether or not 9 Jones Day provided a conclusion as to 10 how strong the transferred guarantor 11 claims are? 12 MR. HAMILTON: I believe the 13 witness has testified that the client 14 received advice from its counsel about 15 the strength or weaknesses of the 16 claims and defenses. Anything beyond 17 that we're asserting privilege. 18 If you want to take it to the 19 judge, go for it. 20 MR. HARRIS: All right. 21 And just so we have a clear 22 record, I'm going to ask another 23 question. 24 MR. HAMILTON: Okay. 25 Q What was Jones Day's assessment of the strength of the transferred 3 guarantor claims? 4 MR. HAMILTON: Object, 5 instruct the witness not to answer. 6 Q Is one of the factors that the 7 debtors considered in deciding to enter into the 8 second PSA Jones Day's assessment of the 9 strengths of the transferred guarantor claims? 10 A One of the factors that the 11 board considered -- of many factors -- was the 12 relative strengths and weaknesses of the claims. 13 Q And that analysis of the 14 relative strengths and weaknesses of the claims 15 that you're referring to, you're referring to an 16 analysis by Jones Day? 17 A If I use the term 18 "analysis" -- Jones Day provided its perspective 19 on the relative strengths and weaknesses. Your 20 term "analysis," I'm not sure how you'd want to 21 describe it. I know they provided their 22 perspective in numerous meetings. 23 Q And that is what the board 24 considered regarding the relative strengths and 25 weaknesses of the claims? MR. HAMILTON: I'm going to -- 3 you can answer that question. 4 A Yes, that's my understanding. 5 Q Did they consider anyone 6 else's input regarding the relative strength and 7 weaknesses of the claims besides Jones Day's 8 input? 9 MR. GREENBERG: Can you 10 clarify, the board or MR. HARRIS: The board. 12 A Not to my knowledge. 13 Q Is one of the factors that the 14 board considered the length of time it would 15 take to litigate the potential litigation 16 claims? 17 A The board -- my understanding 18 is in the discussion of the strengths and 19 weaknesses of these claims there was a 20 discussion about the cost and potential time to 21 litigate. So did they consider that? It was 22 discussed, so it was considered. Among a number 23 of other issues, it was considered. 24 Q And what was the board told 25 regarding the likely cost to litigate the potential litigation claims? 3 MR. HAMILTON: Object, 4 instruct the witness not to answer. 5 Q What was the board told 6 regarding the potential time to litigate the 7 potential litigation claims? 8 MR. HAMILTON: Object, 9 instruct the witness not to answer. 10 Q Was the board given advice as 11 to how long it would take to litigate the 12 transferred guarantor claims just by themselves? 13 MR. HAMILTON: Object, 14 instruct the witness not to answer. 15 Q Did the board rely on any 16 advice given as to how long it would take to 17 litigate the transferred guarantor claims by 18 themselves? 19 MR. HAMILTON: I am -- you can 20 answer this question. 21 A I'm not sure. 22 Q Did the board rely on any 23 advice given as to how expensive it would be to 24 litigate the transferred guarantor claims by 25 themselves? 40 (Pages 154 to 157)

45 158 2 A I'm not sure. In your narrow 3 definition, I don't know. 4 Q Did the board rely on any 5 advice as to how likely the debtors would be to 6 succeed if they were to litigate just the 7 transferred guarantor claims by themselves? 8 A Again, I'm not sure if they 9 considered it in such a narrow context. 10 Q Look back at the disclosure 11 statement, which is Exhibit the final 12 disclosure statement. 13 A Okay. 14 Q Would you look at page 23 of Do you see there's a chart? 16 A Table, yes. 17 Q Table. 18 Are you familiar with this 19 table? 20 A Yes. 21 Q Do you see in the row for 22 transferred guarantor claims it lists an 23 estimated allowed amount for those claims at million? 25 Do you see that? A I do. 3 Q So these claims are being 4 settled for an estimated allowed amount of million? 6 A That's correct. 7 Q And did the debtors reach a 8 stand-alone judgment that 285 million in 9 isolation was a reasonable amount to pay for the 10 transferred guarantor claims? 11 MR. HAMILTON: Object to form. 12 You can answer if you 13 understand the question. 14 A A couple points, I think, on 15 this. 16 People talk a lot about 17 $285 million as the settlement amount for the 18 claim, and I think that's fair and true, that 19 that's the settlement amount for that claim. 20 The impact to the 2021 to your clients of that 21 settlement is $150 million, so they're not 22 bearing the full brunt of the $285 million 23 number that people have referenced. 24 That's point number one. 25 Point number two is the this settlement, the 21 percent for the 3 transferred guarantors, was considered in 4 conjunction with the other aspects of the 5 settlement; the 25 percent for the avoidance 6 claim settlement, the 25 percent for the 7 recharacterization settlement, the valuation 8 settlement for Brazil, the treatment of cash, 9 the agreement by the LuxCo group, as we've 10 already went through in terms of the other 11 rationale for the PSA so I won't repeat them, 12 but the claims and the like that they agreed to 13 forgo, or at least forgo arguing. 14 So it was considered, but 15 considered in connection with the totality of 16 the agreement. 17 Q So the debtors didn't reach a 18 judgment that 285 million, or 150 million, was 19 reasonable to settle the transferred guarantor 20 claims by themselves? 21 MR. HAMILTON: Object to form. 22 You can answer if you 23 understand the question. 24 A As an element to the -- can 25 you repeat the question Q Sure. 3 A -- because I'm not sure what 4 you -- 5 Q Just to be clear, I understand 6 the debtors considered the elements combined in 7 the settlement as an integrated whole and 8 reached a view that it was reasonable, so I'm 9 not asking about the conclusion as to the 10 reasonableness of the settlement overall. I'm 11 wondering if in addition to that the debtors 12 reached a conclusion that 285 million -- or million -- by itself was a reasonable amount 14 to settle the transferred guarantor claims. 15 MR. HAMILTON: Object to form. 16 You can answer if you 17 understand the question. 18 A The problem with the question 19 is -- I think it is -- the answer to that 20 question is no, we didn't consider it 21 independently, because settling that claim for 22 $150 million, for example, in the context of outside of an agreement doesn't put the 24 appropriate context around the overall benefits 25 of the settlement. So I don't think it was ever 41 (Pages 158 to 161)

46 162 2 considered in isolation. No issue was 3 considered in isolation. They work together and 4 it's integrated, so my view is it was never 5 considered in a vacuum. 6 Q And likewise, they did not 7 consider the 21 percent figure in isolation, 8 whether that in isolation would be reasonable? 9 MR. HAMILTON: Object to form. 10 You can answer if you 11 understand the question. 12 A It was never my -- my belief 13 is there was never any discussion of any of the 14 aspects of the settlement that was presented in 15 isolation to the board. So it was never 16 considered in isolation, it was never presented 17 in isolation, it was always presented in the 18 context of the agreement that embodied the 19 overall settlement. 20 Q Does the 21 percent figure 21 reflect a judgment by the debtors that the 22 transferred guarantor claims are 21 percent 23 likely to succeed? 24 A No. 25 Q If you move forward to page of 285, the second paragraph begins, "An 3 analysis of all the issues." 4 Do you see that? 5 A Yes. 6 Q And in the second line it 7 says -- I'm sorry, it says, "Analysis to all the 8 issues relevant to the transferred guarantor 9 claims likely would have been a complex legal 10 undertaking for the bankruptcy court and may 11 have required extensive discovery." 12 Do you have an understanding 13 of what is meant by "extensive discovery"? 14 A No, I don't know how to 15 characterize "extensive discovery" versus 16 discovery. 17 Q And when the debtors say "may 18 have," do you have an understanding of what that 19 means? 20 A Other than what it says, "may 21 have"? 22 Q I don't know if "may have" 23 means a 1 percent chance, a 50 percent chance. 24 I don't know if you have a better sense than I 25 do, from reading the document, what the debtors' intended to convey. 3 A Other than it may have, I 4 can't put a percentage. If we wanted a 5 percentage, we would have written a percentage. 6 Q If you recall, the first PSA 7 settled the transferred guarantor claims at percent. 9 A I do. 10 Q And then in the negotiations 11 between the first and second PSA, do you recall 12 there was a 17.5 percent figure discussed at one 13 point, and a 20 percent figure discussed, and 14 then the parties ended up settling at percent? 16 A I do. 17 Q Do the debtors have a view as 18 to whether all of those settlements would be 19 reasonable? 20 MR. HAMILTON: Object A I think MR. HAMILTON: I'm going to 23 object to form. 24 You can answer. 25 A You'd have to look at the proposal, as I've mentioned before, in the 3 context of what it -- what ultimately when it's 4 presented to the board it is, which is an 5 integrated settlement. So looking at any of 6 those figures that you just quoted in isolation 7 I think would be a mistake, and was never 8 something that the board considered. So I can't 9 respond to whether or not that figure in 10 isolation was reasonable or not without the 11 specific facts around the other areas of the 12 settlement. 13 I can speak to the second PSA, 14 and the decisions around that that the board 15 ultimately made, but as to other possibilities, 16 without giving me all the other specifics in 17 your hypothetical, I wouldn't be able to 18 respond. 19 Q Well, let's take the second 20 PSA and say the only variable that was changed 21 was the percentage assigned to the transferred 22 guarantor claims. 23 Do the debtors have a view as 24 to whether a settlement at 1 percent, or percent, or 50 percent, would be reasonable? 42 (Pages 162 to 165)

47 166 2 MR. HAMILTON: Object to form. 3 You can answer. 4 A So the board has made its 5 conclusions around the settlement in total, and 6 that settlement included a 21 percent settlement 7 of the transferred guarantor claims. 8 So to respond to your 9 hypothetical, I think all of these percentages 10 usually, in my experience, are pinpoint 11 estimates, they are ranges. And would I, in 12 your hypothetical, believe that the board would 13 easily conclude that a significant deviation 14 from the 21 percent -- if that's the only thing 15 you're going to move -- would result in their 16 approval, I don't know. But I think the wider 17 you kind of move from that 21 percent, the more 18 uncomfortable I become in being able to make any 19 sort of guesstimate on how they would conclude. 20 But I think you'd have to -- that would be 21 speculation on my part. 22 Q I take it the board did not 23 determine there was a particular range of what a 24 reasonable settlement would be for the 25 transferred guarantor claims? A I don't know because I 3 wasn't -- as you know, I wasn't privy to 4 discussions around the transferred guarantor 5 claims and the strengths and weaknesses. I know 6 what the board approved, which was they approved 7 the first PSA, which embodied a bunch of 8 considerations, and at 27-1/2 percent, and they 9 approved the last PSA, which had a bunch of 10 different considerations and a 21 percent. 11 Q So you don't know whether the 12 board determined there was a lower or upper 13 bound or reasonable settlement for the 14 transferred guarantor claims? 15 MR. HAMILTON: Object to form. 16 A I think I've explained, I 17 don't think the board's ever considered those 18 claims in isolation. They've considered those 19 claims in the totality of the settlement that's 20 been brought before the board. We never, to my 21 knowledge, made any presentations on this narrow 22 issue and asked them to provide a -- a range or 23 a range of comfort; it's always been presented 24 in total, as a package. 25 Q In the course of the negotiations that you've been in and discussions 3 with management and discussions with the board, 4 do you recall any discussion of New York General 5 Obligation Law ? 6 A My personal? 7 Q Yes. 8 A I don't recall. 9 Q And on behalf of the debtors, 10 is it the debtors' position that they have 11 analyzed New York General Obligation Law as a potential defense to the transferred 13 guarantor claims? 14 MR. HAMILTON: Can I hear that 15 question read back, please, before the 16 witness answers. 17 (Record read) 18 MR. HAMILTON: You can answer 19 if you understand the question. 20 A I'm taking a moment just to 21 refer to the disclosure statement. 22 (Pause) 23 A I don't see a reference to 24 that in the disclosure statement. However, that 25 does not mean it wasn't considered. I understand that the debtors considered the 3 strength and weaknesses of all the arguments, 4 including those defenses, so it could 5 possibly -- they could have considered that, but 6 I'm not aware specifically of that. 7 Q What is the debtors' view as 8 to the merits of the avoidance claims? 9 MR. HAMILTON: I'm going to 10 just caution the witness not to 11 disclose the contents of 12 communications by Jones Day to its 13 client or by its client to Jones Day 14 in answering that question. But to 15 the extent you have knowledge of the 16 debtors' views independent of what 17 communications were with counsel, you 18 should go ahead and answer. 19 A As it's described in the 20 disclosure statement, the debtors evaluated the 21 strengths and weaknesses of the avoidance claims 22 arguments -- we can turn to that section, if 23 you'd like, for the record -- and noted that 24 there were arguments that were for the defense 25 of those claims and there were certain arguments 43 (Pages 166 to 169)

48 170 2 that were against. 3 Q So do the debtors have a -- 4 noting there are arguments for and against, do 5 the debtors have a view as to the merits of the 6 avoidance claims, whether they have merit or are 7 meritless? 8 MR. HAMILTON: Same caution, 9 you can go ahead and answer. 10 A Besides stating what I've 11 stated already in terms of there being arguments 12 for, being arguments against, I think, at least 13 in my view, if there are arguments for and 14 against, then the claims were -- would -- you 15 know, we have to be careful about the context you know, would have a reason to settle. So I 17 don't know what your definition of "merit" is, 18 or "meritless," but there was clearly enough on 19 both sides of the argument to warrant a 20 settlement. 21 Q Do you have a view of what personally, of what the term "meritless" means? 23 A In a legal context? 24 Q In the context of disclosure 25 by a company in SEC filings to the investing public. 3 A In my personal experience, 4 statements by a company that a claim that's 5 being asserted by an outside party that -- that 6 contained the word "meritless" does not mean 7 specifically that that claim -- if this is where 8 you're going with the question -- there's no 9 grounds for settlement of that claim. Which is 10 why I was specific with my answer, that there 11 are arguments for and against, as we said, in 12 the disclosure statement, and the claims, in the 13 debtors' view, in light of the benefits of the 14 overall settlement, are worthy of settlement. 15 Q So your view is when a company 16 in an SEC filing states that it believes a claim 17 is meritless, it is conveying that there are 18 arguments for the claim? 19 A I said -- that's not what I 20 said. 21 I said it does not mean 22 necessarily that the claim is unworthy of 23 settlement. 24 Q So when a company in an SEC 25 filing states that it believes a claim is meritless, is it conveying that it believes 3 there are arguments in favor of the claim? 4 A It's not -- I said very 5 explicitly in my response I don't know what the 6 company's trying to convey in the hypothetical 7 of when other companies make the statement it's 8 meritless, or this company made the statement 9 that the claim is meritless. My view is when 10 companies make that statement it doesn't 11 necessarily mean that the company is not worthy 12 of settlement. 13 Q You do know that the debtors 14 stated in their SEC filings that they believed 15 the transferred guarantor claims are meritless; 16 correct? 17 A I'm aware. 18 Q And is it your understanding 19 that when the debtors made that statement, they 20 were conveying to the investing public that they 21 believed the claims had some merit? 22 A My view was that they weren't 23 conveying to the investing public that the 24 claims were not worthy of settlement, some 25 settlement. However you want to try to parse my words, I'm being very explicit. 3 Q Is it your understanding that 4 when the debtors made the statement that they 5 believed the transferred guarantor claims were 6 meritless, they were conveying to the investing 7 public that they thought there were reasonable 8 arguments in favor of the transferred guarantor 9 claims? 10 A No, that's not what they were 11 conveying. But it doesn't mean that just 12 because they weren't trying to convey that which who would want to convey that if you're 14 trying to get to a settlement -- publicly, or if 15 you're in the middle of investigating the merits 16 of that claim doesn't necessarily mean that companies all the time make those type of 18 disclosures around issues and settle the claim. 19 I think the implication of 20 your question is that somehow because of that 21 disclosure there was a rationale for -- that 22 existed at the time that there shouldn't be a 23 settlement, which is not -- not true, in my 24 experience. Not reality. 25 Q On the avoidance claims, 44 (Pages 170 to 173)

49 174 2 they're being settled for -- as if 25 percent of 3 the challenged transactions are avoided; is that 4 correct? 5 A Generally correct, yes, in 6 terms of how the math works in the waterfall 7 model. 8 Q And do you know how much 9 greater is the recovery to the CapCo notes than 10 if the claims had been settled for nothing? 11 A I think you have to -- it very 12 much depends on all the other assumptions that 13 are baked into the waterfall model. So that 14 question in isolation isn't a question I'll be 15 able to answer. 16 Q If that was the only 17 assumption that was changed, and nothing else in 18 the settlement changed, do you know how much the 19 recovery to the CapCo notes would have changed? 20 A Which, the transferred 21 guarantor -- no, you said the avoidance claims? 22 Q No, the avoidance claims. 23 A I don't -- if that's the only 24 one that moves, I don't know for sure. 25 Q Same question for the recharacterization claims; do you know how much 3 the recovery for the CapCo notes is different 4 than if they had been settled at zero percent? 5 A If that's the only one that 6 moves, I don't know. 7 Q What is the best way to figure 8 that out? It's not -- there's not a statement 9 to that effect in the disclosure statement. 10 A We could -- I mean, I just 11 don't know off the top of my head. I could go 12 run it. 13 Q It's not unknowable? 14 A It's not unknowable, no. I 15 just don't know, sitting here today, what the 16 answer is if you move only one and keep 17 everything the same, or move the other one and 18 keep everything else the same. 19 Q Still in the disclosure 20 statement, tab sorry, page Do you see the first full 22 paragraph says, "In the months since the 23 debtors' receipt of the Aurelius letters, Jones 24 Day has reviewed tens of thousands of documents 25 and s, and conducted interviews of numerous employees of the debtors." 3 Do you see that? 4 A I do. 5 Q Was one of the things the 6 debtors considered in evaluating the second PSA 7 this investigation by Jones Day? 8 A In evaluating the second PSA? 9 Q Yes. 10 A By implication are you 11 suggesting it wasn't involved in the first? 12 Q No. 13 A Okay. 14 So, yes. 15 Q Do you know when this 16 investigation occurred? 17 A This investigation occurred 18 post the receipt of the letter, as it states 19 here, and continued through the interaction with 20 creditor constituents and the independent 21 manager, but was very much a focus of the 22 engagement with creditors throughout the 23 process, so Q And in terms of the review of 25 tens of thousands of documents and s and the interviews that took place, were those steps 3 completed by the time of the bankruptcy filing? 4 A From Jones Day's perspective, 5 I think they were. My -- my understanding is 6 they were substantially completed. There was a 7 significant amount of work that was done prior 8 to the first PSA, which put us in the position 9 of being able to sign the first PSA and give the 10 recommendation to the board that we collectively 11 did as a group of advisors so they could move 12 forward. 13 Those -- those efforts 14 continued through the support of the independent 15 manager's review and the review of the 16 documents, and the dialogue continued, so I 17 don't know that there was ever a -- an end point 18 to that, you know, work. It continued to be a 19 dialogue amongst creditors until the time there 20 was a second PSA. 21 Q The second sentence in that 22 paragraph, it says, "The plan debtors have used 23 Jones Day's analysis of the potential litigation 24 claims in their efforts to negotiate a 25 consensual restructuring." 45 (Pages 174 to 177)

50 178 2 Do you see that? 3 A Yes. 4 Q What does it mean that the 5 debtors have used Jones Day's analysis in their 6 negotiations? 7 A Well, as I said -- and as I 8 think it says here in the disclosure 9 statement -- the plan proponents evaluated the 10 strengths and weaknesses of the arguments, for 11 and against, strength of the defenses and 12 exposure, and communicated their perspective on 13 the strengths and weaknesses of that -- of those 14 issues to the board at various points in time, 15 and, as I understand it, had a dialogue with the 16 other professionals in the case, the other 17 attorneys, relating to the litigation claims and 18 the strengths and weaknesses. 19 Q So was Jones Day's analysis 20 shared with the creditors? 21 A Again, the term "analysis," 22 I'm not sure -- I'm sure they had discussions 23 with the creditors, as I said. I don't know 24 that there was any deck or document -- I didn't 25 participate in those meetings, but I'm not aware of any deck or document that was passed along. 3 Q Do you know if a deck or 4 document reflecting Jones Day's work or analysis 5 was shared with the independent manager? 6 A I don't -- I'm not -- I don't 7 believe so, but I'm not sure. 8 Q Look in your stack, there 9 should be an Exhibit Do you recognize this 11 document? 12 A I do. 13 MR. HAMERMAN: Do you happen 14 to have an extra copy? 15 MR. HAMILTON: It's the 16 Aurelius letter from March of You don't have it memorized? 18 Q Are you familiar with the 19 letter? 20 A I'm generally familiar with 21 the letter, yes. 22 Q And if you look at page 2, the 23 second -- the December 30th, 2009 transfer; do 24 you see that? 25 A I do Q Do you see that section 3 alleges a breach of section of the 4 indenture? 5 A Yes. 6 Q And then the next page -- and 7 then on page 3, the next section is "Purported 8 Release of Guaranties." 9 Do you see that? 10 A I do. 11 Q Do you see that section 12 alleges that because there was a breach of 13 section 2.04, the guaranties are -- the release 14 of the guaranties are ineffective? 15 A I'm sorry, where are you 16 asking me to reference? 17 Q The third paragraph. 18 A You said 2.04 or 10.04? 19 Q I should have said A You may have. 21 Okay. 22 Q So do you see that the letter 23 alleges that because there was a breach of , guaranty releases were ineffective? 25 A Yes Q Do you recall when you first 3 saw the letter? 4 A I don't recall exactly, but it 5 was soon after it was delivered. 6 Q Did you personally have a 7 reaction to those allegations? 8 A No. 9 Q Have you ever reviewed the 10 indenture yourself? 11 A Not for these specific issues. 12 Q So I take it you don't have a 13 personal view as to the merits of these claims? 14 A I do not. 15 Q But you are aware that the 16 debtors, in their SEC disclosures, have said 17 they believe these claims are meritless; right? 18 A I'm aware they had that 19 disclosure, yes. 20 Q And are you aware that is 21 still the company's belief? 22 A I'm not -- in that context I'm aware of the disclosure that was made. I'm 24 not aware that -- in terms of your definition of 25 meritless, if that is meaning to imply not 46 (Pages 178 to 181)

51 182 2 worthy of settlement, that's not clearly where 3 we are. 4 Q I don't know what -- myself 5 know what the debtors meant when they said 6 "meritless," of course. Whatever the debtors 7 meant, is it -- 8 MR. HARRIS: Let me ask a 9 different question. 10 Q Is it your understanding that 11 the debtors' views as to the merits of the 12 transferred guarantor claims have changed since 13 their initial SEC disclosure? 14 A Because I wasn't involved in 15 any of the discussions surrounding these 16 transactions directly, I couldn't give you a 17 specific citation of how, if at all, their views 18 have changed. I think -- so I'm not sure if 19 they changed or -- I know they thoroughly looked 20 at all of the issues, for and against. 21 Q So as a result of having 22 looked at those issues thoroughly, do you know 23 whether that review caused the debtors' views to 24 change as to the merits of the transferred 25 guarantor claims? A I don't know what the debtors' 3 views were of the merits of the transfer -- I'm 4 going to use my words. 5 I know that the debtors 6 reviewed strengths and weaknesses of each of 7 those claims thoroughly, and concluded, based on 8 that review, this a settlement was warranted. 9 Q That was not my question. My 10 question is whether the review caused the 11 debtors' views to change. 12 A And I don't know. 13 Q Are you aware the debtors in 14 their SEC disclosures have indicated that the 15 three classes of CapCo notes are entitled to 16 pari passu treatment? 17 MR. HAMILTON: Object to form. 18 You can answer. 19 A Am I aware that -- sorry, can 20 you repeat the question? 21 Q Yes. 22 Are you aware that the 23 debtors, in their SEC disclosures, have 24 indicated that the three classes of CapCo notes 25 are entitled to equal treatment? A Which -- 3 MR. HAMILTON: Object to form. 4 You can answer. 5 A I'm aware that the debtors' 6 views were that the bonds were pari passu. 7 Q And that is still the 8 company's belief; right? 9 A For the MR. HAMILTON: Object to form. 11 You can answer. 12 A For the claims that exist at 13 the CapCo level, that's still true, still the 14 treatment. 15 Q I want to make sure I 16 understand what you're saying. 17 When you said "equal 18 treatment," did you also mean equal treatment in 19 terms of what entities are guaranteeing the 20 notes? 21 MR. HAMILTON: Object to form. 22 You can answer. 23 A I can speak to what the 24 settlement implications are. So I'm not going 25 to speak specifically, I don't know the company's current views, other than to know what 3 the settlement embodies and to know that the 4 board is comfortable with the benefits of the 5 settlement. 6 Q So you don't know whether, 7 despite the settlement, the company believes 8 that the correct answer under the terms of the 9 indenture is that the three CapCo notes should 10 be treated equally in terms of what entities 11 guaranty those notes? 12 A When you say "the correct 13 answer," I know that was the company's view, and 14 they -- claims assert a differing view, the 15 company evaluated the strengths and weaknesses 16 of those claims, and agreed to a settlement, 17 which was a partial recognition of those claims. 18 That's what I know. 19 Q In the course of the 20 negotiations, do you recall anyone advocating 21 the position that the 2021 notes should share 22 equally in the transferred guarantor claims with 23 the 2016 and '19 notes? 24 A I don't recall. 25 Q In the course of negotiations, 47 (Pages 182 to 185)

52 186 2 have you heard other parties express their views 3 as to the merits of the transferred guarantor 4 claims? 5 A Only in kind of passing 6 commentary in the negotiation, not in the 7 detailed discussion of the merits, because I 8 didn't participate in those, or in what I'll say 9 principal chatter around -- and positioning 10 around those claims. 11 Q Well, in the passing 12 commentary you recall, do you recall CapRe 13 indicating that in their views the claims lacked 14 merit? 15 A I don't recall specifically 16 the phrase "lacked merit," but I know that in 17 their commentary around the claims they whether it's positioning or whether it's their 19 belief fundamentally, I don't know, you've asked 20 them, I presume, so -- they viewed the claims as 21 being worthy of settlement, because they are a 22 signatory to the PSA, but they believe they have 23 the better position if it was to come to a 24 litigation. 25 Q CapRe indicated they believed the claims are weak; right? 3 A Not -- I can't recall them 4 specifically saying that, but that's not -- that 5 would not be a surprising characterization. 6 Q The LuxCo group also indicated 7 that in their view the claims were weak; right? 8 A Again, I can't say "right," I 9 don't -- they haven't said that specifically, 10 but it wouldn't be a surprising 11 characterization. 12 Q Have you been in any meetings 13 or calls or seen s where the LuxCo group 14 expressed their views as to the merits of the 15 transferred guarantor claims? 16 A Again, their positioning with 17 us is only -- you have to respect the position 18 we're in, right, and everything that we hear we 19 have to take with a grain of salt, we're 20 negotiating. So their position has been understandably, because it would harm their 22 recoveries -- is that the claims are -- are not 23 great claims. That's been their position. 24 Q Has anyone other than 25 Aurelius, that you're aware of, ever indicated that the claims are great claims? 3 A Again, I'm using their words, 4 so I'm trying to recollect what people have 5 said. There are actually a little less 6 appropriate terms that I could use for the 7 claim. 8 So has anybody besides 9 Aurelius suggested that these are, your word, 10 "great claims"? 11 The specific language, again, 12 aside, I think we have to be careful to 13 characterize people's positioning statements and 14 not take the leap that those positioning 15 statements mean anything more than what they 16 are, which is positioning statements. 17 I think everybody who signed 18 up to this PSA has reached the conclusion, after 19 looking at the strengths and weaknesses of these 20 claims, that the settlement is a positive for 21 the estate and for the constituents of the 22 estate. 23 Q Okay. 24 So I have a narrow question. 25 Has anyone other than Aurelius ever told you that they believe the transferred guarantor 3 claims are strong claims? 4 A Strong claims, using those 5 words? 6 Q Yes. 7 A No. 8 Q Anyone other than Aurelius 9 ever told you that they believed it was more 10 likely than not that the transferred guarantor 11 claims would succeed? 12 A No. 13 Q Is it right that in the 14 negotiations with the creditors, the debtors' 15 primary goal was to achieve a consensus and a 16 confirmable plan? 17 A One of its objectives was to 18 achieve a confirmable plan. I wouldn't -- the 19 other objectives would be to maximize the value 20 of the estate as fiduciary. So that value 21 maximization, for example, would have been a 22 sale to XYZ party for a price of -- some 23 hypothetical price. If it wasn't associated 24 with a confirmable plan, that would be what we 25 would do. So -- I think, again, kind of 48 (Pages 186 to 189)

53 190 2 narrowing the two things would be inappropriate, 3 to one of the objectives of our many objectives. 4 Q Were the primary goals, then, 5 to maximize the value of the estate and achieve 6 consensus among the creditors? 7 A In every restructuring you 8 have to be thoughtful about making sure that you 9 have a requisite amount of creditors supporting 10 your plan. If you move forward in negotiation 11 with -- I'm just going to use an example to make 12 the point -- with -- had a detailed negotiation 13 with creditors representing 2 percent of your 14 claims pool and reach an agreement, you can't 15 have as much confidence that that actual 16 agreement is going to memorialize into a plan 17 that can actually resolve the estate's issues, 18 versus if you have a negotiation with creditors 19 who represent 98 percent of your claim pool. So 20 always, in a restructuring negotiation, you are 21 looking at and trying to evaluate the relative 22 position of the creditors that you are 23 negotiating with. 24 So is one of the things that 25 we look at the proportion and the representation of the creditors that we are in a dialogue with? 3 Yes. 4 Q So what was the debtors' 5 primary goal in the plan negotiations? 6 A The primary goal was to 7 maximize value, attempt to resolve the disputes 8 that were creating conflict in a fair and 9 reasonable way, to protect -- which goes along 10 with maximizing value, but to protect the 11 enterprise from -- from the risk associated with 12 instability, and to achieve, hopefully, a plan 13 that could meet all those tenets and be 14 confirmable. 15 Q Fair to say that CapRe, 16 Aurelius and the LuxCo group have been in 17 negotiations since the Aurelius letter came out? 18 A Not in those components, but 19 in terms of people, parties who were sitting who are members of those groups have been in and 21 around the table since the letter came out, yes. 22 Q And among other items, they've 23 been negotiating the division of value among the 24 different creditor groups? 25 A Sure, among other items Q And would you describe the 3 debtors' role in the negotiations as a quasi 4 mediator among the creditors? 5 A I guess terms of -- often get 6 used to describe roles, and so it may be fairer 7 just to describe the role a little more 8 expansively what it is that we did as the 9 debtors' professionals, versus to pigeonhole us 10 into a description that has maybe different 11 connotations for different people. 12 So as the financial advisor in 13 conjunction with Jones Day, the legal advisor, 14 we saw our role in this case as central to 15 trying to facilitate a dialogue, one, between 16 creditors to attempt to, one, provide a 17 landscape of common language, so we built a 18 waterfall model, we provided data in a diligence 19 access so people could understand the nature of 20 the claims, and shared our views on important 21 considerations with each of the constituents, 22 our views on value and how value could be 23 impacted, our views on the strengths and 24 weaknesses of the claims, and our -- and react 25 and respond to the proposals that were ultimately received through the course of that 3 negotiation from these various groups. There 4 are often times where we were providing our 5 perspective specifically on key points in terms 6 that each side was bringing forward in their 7 proposal, and rejecting those points. 8 So in my words why I gave you 9 a much more expansive answer than were we the 10 mediator, it's a pretty all-encompassing role 11 and very proactive role that we took. 12 Q Is it fair to describe you as 13 a very active facilitator of the discussions 14 among the creditors? 15 A We were a very active 16 facilitator, very active fiduciaries -- the 17 board is fiduciary for the estates -- providing 18 our advice to those fiduciaries we took very 19 seriously, and responding to the constituents 20 around their proposals and their ideas, and the 21 implications of whether or not we could 22 recommend that to the fiduciaries of the estates 23 to support was something that we did on a 24 regular basis. 25 Q The debtors did not provide 49 (Pages 190 to 193)

54 194 2 their own stand-alone proposals, but rather 3 commented on and provided advice regarding the 4 proposals that the creditors had made? 5 MR. HAMILTON: Object to form. 6 You can answer if you 7 understand the question. 8 A Did we provide a term sheet? 9 At the very beginning of the 10 process, I believe we verbally kind of gave a 11 description of -- you know, a framework 12 potentially that people could react to. I don't 13 recall whether that was provided in presentation 14 or just given orally. 15 We pushed, negotiated, 16 coordinated responses to both sides, and playing 17 the role of an active fiduciary helped shape all 18 of the proposals. 19 Q So the debtors never provided 20 their own stand-alone written term sheet or 21 proposal? 22 MR. HAMILTON: Object to form. 23 You can answer, if you can. 24 A It was our view that us just 25 filing a proposal with no support was not something that was wise. So we reacted to the 3 proposals that were coming from our creditor 4 groups, which did have the basis of at least 5 support from the parties who were providing it, 6 trying to push those proposals to a more common 7 ground between all parties, if possible. So we 8 reacted to the proposals versus providing our 9 own. 10 And we also reacted to certain 11 proposals that were -- you know, and ideas that 12 were -- so we didn't provide our own kind of 13 stand-alone term sheet, but we were very active 14 in all of the terms that each proposal was 15 reflecting. 16 Q Did the debtors ever tell the 17 creditors that any particular split of the 18 economics between the creditors was unacceptable 19 or forbidden? 20 A Again, in our negotiations 21 with creditors, I can recall specifically 22 talking about -- because ultimately we can't 23 speak for the board, right, so you always say in 24 these contexts, "This is the advice and 25 perspective, I don't think we'll be able to support this" -- those are the words, right, 3 versus an explicit reaction, you know, of "the 4 board says." As professionals, we gave 5 reactions to aspects of those proposals all the 6 time, saying, "We don't think we're going to be 7 able to support this." 8 Q My questions are specific to 9 the portions of the proposals that have to do 10 with splitting the economics A I understand. 12 Q -- between the different 13 credit groups. 14 So do you recall at some point 15 you telling some group of creditors that a 16 particular way that they wished to split the 17 economics was not something that you would be 18 willing to support? 19 A Yes. 20 Q What split do you have in mind 21 that you said was not something you thought 22 you'd be able to support? 23 A It was a reaction to a verbal 24 discussion with the LuxCo group, just from 25 recollection of one example, around a potential starting place for a valuation for a proposal 3 they were considering making. 4 Q Okay. And what was the 5 valuation? 6 A That they were -- it was below 7 the -- our range, let's put it that way. 8 Q It was a valuation of what? 9 A Valuation of the enterprise. 10 Which is the ultimate beginning place for how 11 economic splits occur. 12 Q And what was the range that 13 you were referring to? When you said "our 14 range," what do you mean? 15 A We didn't have a range at that 16 point in time that we formalized, that we put in 17 front of the board, but the position that the 18 LuxCo group creditors were taking relative to 19 value, as I said before, without a formal 20 response, I said, "It's our view that this is 21 likely not going to be able to be supported." 22 Q Okay. 23 Any other instances you can 24 recall where you informed a creditor that you 25 would not be able to support a particular 50 (Pages 194 to 197)

55 198 2 economic split they had proposed? 3 A I think very early on we had a 4 very wide book in between Aurelius' position on 5 economics and the cross-over holders group on 6 economics. I think we told Aurelius that we 7 weren't going to be able to support their 8 position, and we had said to the LuxCo group, et 9 al., we're not going to be able to support their 10 position, and that led us to start talking about 11 the concept of an all reserve plan. 12 Q When you say "the position on 13 economics," what are you referring to? 14 A The collective proposal. 15 Again, all the proposals that we really 16 considered had elements and assumptions embedded 17 in them around the host of issues. 18 Q Is the position on economics 19 you're referring to also the overall valuation 20 of the enterprise? 21 A Not necessarily. For example, 22 for the CapCo, I don't recall exactly whether 23 their valuation position was the problem or 24 whether the percentage settlements were the 25 issue Q Do you ever recall ever 3 telling a creditor that some split of economics 4 that was reflected in a formal written proposal 5 was unacceptable? 6 A We said it may be 7 unacceptable. There was a question -- I'm just 8 trying to recollect because, obviously, there 9 were many proposals and many -- it's now months 10 ago. 11 In the discussions with the 12 LuxCo and the Aurelius group, and the markups of 13 their term sheet, in those dialogues I'm sure 14 we -- we came back with many terms and said, 15 "This isn't, you know, acceptable now," in 16 pushing them on economics and on percentages and 17 the like. 18 Q You actually recall a 19 particular economic term or percentage in a 20 written term sheet that you pushed back and said 21 was unacceptable? 22 A I don't recall explicitly the 23 term, but -- trying to recollect. I believe 24 there was a proposal that the LuxCo group had 25 made which had a very, very low percentage that was implied for a settlement that we thought was 3 going to be very, very difficult to defend, and 4 I can remember saying, "We don't think this is a 5 reasonable place to start." 6 This is the professional 7 speaking, not speaking for the board, and we're 8 negotiating. 9 Q A low percentage of what? 10 A Of the litigation percent. 11 Q For a particular A Settlement. 13 For a particular aspect. 14 For example -- I don't 15 remember exactly the number, but let's just say 16 it's 2 percent. 17 Q So you recall that they 18 proposed some settlement percentage for the 19 claims overall, and that your reaction was that 20 was not a reasonable place to start? 21 MR. HAMILTON: You have to say 22 yes or no for the record. 23 A Yes. 24 Q Do you recall ever providing a 25 reaction to a settlement percentage for the transferred guarantor claims as being 3 unreasonable? 4 A Not specifically. 5 Q Do you ever recall suggesting 6 that the transferred guarantor claims should be 7 settled at a certain percentage? 8 A As far as giving an explicit 9 "thou shalt settle at" at this percent Q Yes. 11 A -- or giving a perspective 12 that that seems like a reasonable place to be? 13 Which one? 14 Q Let's start with "thou shalt." 15 A I don't recall a "thou shalt" 16 message from us. 17 Q Do you ever recall conveying 18 what a reasonable range of percentage for the 19 transferred guarantor claims would be? 20 A I only recall reacting to the 21 bid and the ask that existed between the 22 creditors, and commenting that that -- believing 23 at the time that that should be close enough for 24 them to get to a settlement. 25 Q In terms of the bid and the 51 (Pages 198 to 201)

56 202 2 ask, you did not indicate that one or the other 3 was reasonable? 4 A In isolation, again, we only 5 did that as a board and as an estate at the time 6 when the proposal was presented in its 7 consolidated form, which is the appropriate time 8 to respond to any one specific item. 9 Q So you don't recall ever 10 conveying to a creditor that a particular 11 percentage settlement proposal for the 12 transferred guarantor claims was unreasonably 13 low or unreasonably high? 14 A Not specific to the 15 transferred guarantor, as I said earlier. 16 Q Do you recall there were 17 discussions about creating an equity reserve at 18 some point, and litigating the claims after the 19 plan emergence? 20 A Yes. 21 Q Did the debtors have a cap on 22 the amount of equity they would have been 23 willing to set aside? 24 A It was a -- no. That was a depending on the plan, it was -- the reserve is tied to all the valuation and the potential 3 litigation outcome impact to the distribution of 4 the equity to the estate constituents, so it's a 5 math exercise. So it very much depended on 6 where people settled on value, which there was 7 never an agreement. 8 Q Would the debtors have been 9 amenable to a reserve plan? 10 MR. HAMILTON: Object to form. 11 You can answer. 12 Q If the creditors had agreed 13 upon one. 14 MR. HAMILTON: Same objection. 15 A We pursued the exploration of 16 a reserve plan, and -- without knowing -- it 17 never came to fruition, so I don't know all the 18 details, but in concept it was something we were 19 willing to consider, yes. Can I speak to 20 whether or not we would have approved it 21 ultimately? Depends on the terms for that 22 reserve plan. I was certainly willing, as I 23 said earlier, to consider it. 24 Q Do you recall the debtors 25 believing there were any unsolvable issues with the reserve plan? 3 A There are certain implications 4 of the reserve plan which are negative 5 regardless, that you can't resolve -- that you 6 can't fix. It's just by definition the problem 7 with the reserve plan. And those include the 8 fact that it's very difficult to convey to the 9 investing community and your customers and 10 vendors the story of how the company's being 11 governed and -- it's a very unnatural place for 12 a company to be, to have a large percentage of 13 its shares sitting in a litigation reserve and a 14 very limited public flow. 15 So that was going to create and we had a big -- we had a big discussion with 17 the company around this issue, and they were 18 very concerned about the implications to their 19 ability to deal with the regulators and to deal 20 with their local banks and to get people 21 comfortable with it if we were actually to 22 advance it past the discussion with the 23 bondholders. 24 So we never got that far, but 25 those are fundamental problems that a reserve plan has, at least one. 3 Q What do you mean by 4 "implications with the ability to deal with the 5 regulators"? 6 A The business is a regulated 7 business, as you're aware. There's a regulator 8 in Brazil, the ANP, that is -- my 9 understanding -- certainly very keenly aware of 10 the challenges that we as a company are facing. 11 Any cloud to -- it's my 12 understanding, any cloud to that message of 13 direction, control, ability to respond and 14 participate in the market, ability to be a 15 positive force, is a bad thing for us in that 16 market with that relationship with the 17 regulators. 18 Q Do you recall the debtors 19 expressing to CapRe that they had a conflict 20 that prevented them from advising on how the 21 value should be allocated among the debtor 22 entities? 23 A Advising CapRe, you said? 24 Q From interfering in the 25 negotiations between the creditors regarding how 52 (Pages 202 to 205)

57 206 2 value should be allocated among the debtor 3 entities. 4 A No, I don't recall that. We 5 were very much involved in that dialogue. 6 Q So the debtors don't believe 7 they had a conflict in deciding how the 8 inter-debtor claims should be addressed? 9 A We were talking about the 10 negotiation and facilitating the negotiation, 11 helping them decide. There was no -- I'm not 12 aware of any view that we've ever expressed to 13 anyone that we had any issue facilitating/being 14 an active fiduciary participant, mediating however you want to label it -- in that dialogue 16 around those issues. 17 Q Did the debtors express that 18 they should not be the ones deciding how the 19 inter-debtor claims were resolved? 20 A The inter-debt -- to the ultimately we can't decide for the creditors how 22 those are going to be resolved in the sense of 23 either they're going to be litigated or they're 24 going to be consensually solved and people agree 25 to a settlement, which is what we have in front of us. I'm not sure what you're -- 3 Q Because ultimately it was up 4 to the creditors how to resolve these claims? 5 MR. HAMILTON: Object to the 6 form. 7 You can answer. 8 A My understanding of the 9 inter-debtor claims is that given the 10 implications for the credit groups that these 11 inter-debtor claims had, is that settling those 12 inter-debtor claims on our own, in the face of a 13 litigation, was a problem. 14 Q What do you mean by settling 15 those inter-debtor claims on your own? 16 A We can't just wait -- what I 17 mean is it wasn't -- even though they're 18 intra-debtor claims, they impact the other 19 creditors, so they had to be part of the 20 dialogue. We couldn't just go off in a room and 21 decide here's how we're going to settle the 22 inter-debtor claims and resolve the cases, all 23 right. There would be litigation in that 24 context because of the impact to creditors. So 25 we involved them in -- and played an active role in evaluating the nature and the merits and 3 strengths and weaknesses of those claims, and 4 trying to resolve them consensually. 5 Q Did the debtors ever request 6 information from CapRe or Aurelius, or the 7 trustees for the CapCo notes, in terms of 8 documents indicating when they acquired their 9 shares or their knowledge of the exchange offer, 10 or any documents relevant to the transferred 11 guarantor claims? 12 A I don't -- I don't know. 13 Q You don't recall that request 14 occurring in the course of the negotiations? 15 A No, but that request wouldn't 16 come from me, the FA, it would come from Jones 17 Day if it came from anywhere. 18 Q Okay. 19 In the course of negotiations 20 do you recall Aurelius ever indicating it was 21 making a final offer? 22 A I think every one of the 23 creditors had that statement at least probably 24 five or six times in this discussion. 25 Q Has Aurelius ever indicated that they had made a final offer on the 3 transferred guarantor claim percentage? 4 A Yeah, sure. 5 Q Many times? 6 A Multiple times that I can -- 7 verbally or in writing. Same thing with David. 8 I also heard "we're done and we're litigating" 9 multiple times. 10 Q I think I saw an that 11 ended "good-bye." 12 MR. GREENBERG: "Good luck." 13 MR. HARRIS: "Good luck," that 14 was it. 15 Q Do you recall in the first PSA 16 how the creditors ended up arriving at the percent number for the transferred 18 guarantor claims? 19 A So that would be to take you 20 through the history of the negotiations that led 21 up to the settlement, which have been detailed, 22 but how they arrived at it was through a series 23 of exchanges and proposals and counterproposals 24 around a host of terms, including economics aggregate economic split between Brazil and 53 (Pages 206 to 209)

58 210 2 Mexico, percentages on both the avoidance 3 claims, the recharacterization claims and the 4 transferred guarantor claims, the treatment of 5 cash in the waterfall, et cetera, et cetera. So 6 that happened over the course -- as we've 7 documented in our disclosure statement, over the 8 course of pre-filing, post-filing, leading up to 9 the first settlement. 10 Q Do you know why in the first 11 settlement the transferred guarantor claims were 12 allocated only to the 2016 and '19 notes, not to 13 the 2021s? 14 A I don't know. 15 Q Do you recall any discussions 16 about whether to allocate those claims to the s? 18 A Not that I -- nope. 19 Q Do you recall any internal 20 discussions amongst the debtors about whether to 21 allocate those claims to the 2021s? 22 A No. 23 Q Do you know whether Jones Day 24 provided advice on that issue? 25 A We wouldn't have run our our waterfall model with that had we not had 3 perspective from -- on classifications. So 4 Jones Day was providing perspective on 5 classification, but not to me, other than 6 "Here's how we're going to classify, this is how 7 you should run the waterfall model." 8 Q Are you aware that an argument 9 has been raised that if the transferred 10 guarantors are still guarantying certain CapCo 11 notes, that legally that guaranty should also 12 extend to the 2021 notes? 13 A I'm aware that that argument 14 has been made. 15 Q Okay. 16 Do you know whether or not 17 Jones Day has provided advice on the validity of 18 that argument? 19 A I'm going to refer to the 20 disclosure statement just to check something. 21 Q Sure. 22 MR. HAMILTON: Eighty-two? 23 THE WITNESS: Eighty-two. 24 (Pause) 25 A I'm sorry, would you repeat the question as I'm trying to refresh my memory 3 on the disclosure statement language? 4 Q Let me read the question 5 before you also, so you've got it all. 6 The question was, "Are you 7 aware that an argument has been raised that if 8 the transferred guarantors are still guarantying 9 certain CapCo notes, that legally that guaranty 10 should also extend to the 2021 notes?" And you 11 said, "I'm aware that that argument has been 12 made." And then my question is do you know 13 whether or not Jones Day has provided advice on 14 the validity of that argument. 15 A I believe they have provided 16 advice on the validity of that -- that 17 perspective has been considered. 18 Q And what is your basis for 19 saying that that perspective has been considered 20 and that Jones Day provided advice? 21 A Because in the kind of 22 perspective of this issue of the transferred 23 guarantors, all kind of claims, defenses of that 24 issue have been evaluated, and -- to get to the 25 reasonableness of the settlement, and we have Q That issue is not explicitly 3 mentioned in this section of the disclosure 4 statement. 5 MR. HAMILTON: Well, if you're 6 going to ask him that question, I'm 7 going to insist you give him the 8 opportunity to read all of section 3. 9 It starts on page 51 of 285 and 10 continues all the way to page 53 of MR. HARRIS: That's fine. 13 MR. HAMILTON: Take your time. 14 (Pause) 15 A So I think it's here, in the 16 release of the guaranties -- let me ask, is this 17 the issue that you're referring to in the 18 release of the guaranty paragraph on page 52 of that begins -- it says, "Section 10.05A5 20 contains two express exceptions to the release, 21 but there is a question whether the release of 22 guaranties under A5 can occur if a guaranty capital note becomes a foreign 24 restricted subsidiary." I'll stop there, it 25 keeps going, but is that the issue you're 54 (Pages 210 to 213)

59 214 2 referring to? 3 Q It is not. 4 A Okay. 5 Q I believe that issue has to do 6 with whether, even if there were a breach, is 7 there still a release of the guaranty. And my 8 question was asking about a different issue, 9 which is that if there has not been a release 10 does that mean that the guaranty still applies 11 to the 2021 notes? 12 A Okay. Not been a release. 13 MR. GREENBERG: Just said 14 another way, if there's a transferred 15 guarantor, does everyone share in it? 16 Is that a fair assessment? 17 MR. HARRIS: Yes. 18 MR. HAMILTON: Just read the 19 whole section. 20 THE WITNESS: We can take a 21 break while I read the section, if you 22 like. 23 MR. HARRIS: If you'd like. 24 We've been going a while. 25 THE WITNESS: Then I'll read MR. HAMILTON: You're going to 3 need a bathroom break, too. Read the 4 whole section, answer this question 5 and then we'll take a break. 6 MR. HARRIS: Sure. 7 (Pause) 8 THE WITNESS: One more time, 9 Mr. Harris. 10 MR. HAMILTON: Read the whole 11 section. To the end. 12 THE WITNESS: Go ahead, one 13 more time, just do it. 14 Q My question -- my ultimate 15 question is do you know whether Jones Day 16 provided advice on the validity of the argument 17 that if the transferred guarantor claims exist, 18 they should be shared among all three classes of 19 CapCo notes? 20 A If the TG claims exist, which 21 I know that our view is there's a proof of claim 22 on file that exists for the '16 and '19 holders, 23 and there's a valid claim that exists there, and 24 there's not a valid claim that exists for the 25 '21 holders. So I'm aware of that, and I know that's our view. 3 Q Other than the filing of a 4 proof of claim, are you aware of any other basis 5 for excluding the 2021 noteholders from sharing 6 in the transferred guarantor claims? 7 MR. HAMILTON: I'm going to 8 object. 9 I'm going to object, but you 10 can go ahead and answer the question. 11 Object to form. 12 A Other than reading the 13 explicit terms of what's in the transferred 14 guarantor release claim, section 3, 35 and 36 or or marked Q Is there something in there 17 you're A No, I just don't -- I mean, 19 I'm not sure what you're trying to get at, so MR. HAMILTON: Again, if 21 you're going to ask him about what's 22 in that section of the disclosure 23 statement, I want him to have the 24 opportunity to read the entire section 25 to its end before he answers the question. 3 MR. HARRIS: And just to be 4 clear, my interest is not in what's in 5 the disclosure statement, it's in 6 whether Jones Day provided advice on 7 this topic. And then you then turned 8 to the disclosure statement to see if 9 that would help you answer. 10 A There was a reference MR. HAMILTON: That's right, 12 and then you were saying is there 13 something in the disclosure 14 statement MR. HARRIS: That helps you 16 answer. 17 MR. HAMILTON: -- answer that. 18 Q So I'm fine in you taking all 19 the time you want. Just to be clear, my 20 interest is really in whether Jones Day provided 21 advice. 22 MR. HAMILTON: You've got to 23 read all the way -- the whole section 24 of 3, from 35 to (Pause) 55 (Pages 214 to 217)

60 218 2 A Yeah, so the last sentence, 3 for the reasons -- this is the last sentence on 4 page 53 of 285, of the first paragraph: "For 5 this reason, among others, plan proponents 6 believe none of the holders of the CapCo percent notes, nor any indenture trustee 8 under the CapCo percent notes indentures, 9 has a cognizable claim against any of the 10 transferred guarantors." 11 Q And the reference to "for this 12 reason" is reference to the fact that no proof 13 of claim was filed for the 2021s; is that right? 14 A Yes. 15 Q And when it says "among 16 others," are you aware of any other reasons? 17 A I'm not, but there's other 18 reasons. 19 Q And your reason for saying 20 that is because it says "among others" in this 21 sentence? 22 A Yes. 23 Q Besides reading it, is there 24 any other basis you have for saying that there 25 are other reasons? A No. 3 Q Do you know why, in the first 4 PSA, the transferred guarantor claims were only 5 assigned to the 2016 and '19s? 6 A I don't. Other than that was 7 the view from counsel. 8 Q You believe counsel -- so the 9 first PSA was agreed to on November 24th, A Um-hum. 11 Q And you believe by that time 12 counsel for the debtors had provided advice that 13 the transferred guarantor claims should only be 14 assigned to the 2016 and '19s? 15 MR. HAMILTON: I'm going to 16 object and instruct the witness not to 17 answer as to what Jones Day's advice 18 was to its client. 19 He's already testified that he 20 was given instructions on 21 classification, which may not be the 22 same thing as legal advice to the 23 client, so I don't know how to walk 24 that, but given the question you just 25 asked, I'm going to object and instruct him not to answer that 3 question. 4 Q Do you believe that by the 5 time -- do you believe that by the time the 6 debtors agreed to the first PSA, November 24th, , Jones Day had provided legal advice as to 8 whether or not it was appropriate for the 2021s 9 to share in the transferred guarantor claims? 10 A I believe they provided legal 11 advice as to whether or not -- recognizing as a 12 part of MR. HAMILTON: It's a yes or 14 no answer. I don't want you to 15 disclose what the advice was 16 inadvertently, so THE WITNESS: Okay. 18 MR. HAMILTON: -- let's do it 19 yes or no and go from there. 20 A We had a -- can you repeat the 21 question? 22 Q Sure. 23 Do you believe that by the 24 time the debtors agreed to the first PSA, Jones 25 Day had provided legal advice as to whether or not it was appropriate for the 2021s to share in 3 the transferred guarantor claims? 4 A I'll say yes, because we had a 5 waterfall model that was reviewed by 6 constituents, which reflected those claims going 7 to the '16 and '19 holders and not to the 2021s, 8 although I didn't participate in the discussion. 9 Q It's possible that the reason 10 it was allocated to the 2016 and '19s and not to 11 the 2021s is because that's what the creditors 12 agreed to; right? 13 A I wouldn't comment on your 14 possibility. I don't think that that's likely. 15 I think we just didn't -- just because creditors 16 agreed to it doesn't mean that -- whether it's 17 valuation or a legal position on claims doesn't 18 mean that we just blindly say "That's fine with 19 us"; it has to comport with what we think is 20 reasonable. 21 Q Okay. 22 So what was the reason that 23 the debtors thought it was reasonable on 24 November 24, 2011 to assign the transferred 25 guarantor claims only to 2016 and '19s and not 56 (Pages 218 to 221)

61 222 2 to the 2021s? 3 A With the division of labor, 4 I'll let the attorneys respond to that. 5 Q You don't have any -- 6 A Not any. 7 Q You don't recall any 8 discussions about that issue? 9 A Not explicitly, no. 10 Q Okay. 11 MR. HAMILTON: You know, we 12 lost our break, we need to take a 13 break. 14 MR. HARRIS: Absolutely. 15 (Recess taken) 16 BY MR. HARRIS: 17 Q Going back to the disclosure 18 statement, do you see a reference in there to 19 this argument we've been discussing about 20 whether the 2021s should share in the 21 transferred guarantor claims? 22 A I don't. 23 Q Given that A Other than the argument that I 25 referenced, the claim argument, right Q You've also been designated 3 the company's representative to speak on behalf 4 of the plan. 5 And you're familiar with the 6 claim objection that we have filed; right? 7 A Generally. 8 Q Does the company believe that 9 if the claim is disallowed -- our claim 10 objection is granted -- that the plan is still 11 confirmable? 12 MR. HAMILTON: See, I don't 13 think that's a legitimate question 14 under the 30(b)(6). He hasn't been 15 prepped on that, and the plan was 16 filed before you filed the claim 17 objection. That's a question for 18 counsel, that's not a question for 19 this witness. 20 MR. HARRIS: I absolutely 21 understand that objection. You were 22 not there, but your colleagues asked 23 extremely similar questions as to what 24 would be the litigation positions that 25 our clients would take if X, Y or Z took. 3 MR. HAMILTON: And I'm sure 4 you objected. 5 MR. HARRIS: I did. I didn't 6 instruct people not to answer. 7 MR. HAMILTON: And I didn't 8 instruct not to answer, I'm just 9 objecting MR. HARRIS: I'm sorry, I 11 apologize. 12 MR. HAMILTON: I'd be floored 13 if this witness knows the answer to 14 your question, because he didn't go to 15 law school. 16 But if you know, go ahead and 17 answer. 18 Q My question was does the 19 company believe that if this claim is 20 disallowed, that the plan is still confirmable? 21 A I don't know. 22 Q If the plan is not confirmed 23 the week of June 3rd, do you have any sense how 24 long it would take to renegotiate an agreement? 25 A Or even if an agreement can be renegotiated. I don't. 3 Q If the court were to determine 4 that the transferred guarantor claims are worth 5 zero, so that economic element is off the 6 table -- slightly different question -- do you 7 have any sense how long it would take to 8 renegotiate an agreement? 9 A Or even if an agreement could 10 be renegotiated. I don't. 11 Q The last time an agreement had 12 to be renegotiated was when the first PSA was 13 terminated; right? 14 A That's right. 15 Q And it took a little less than 16 a month to come to an agreement on economic 17 terms; right? 18 A It's not exactly the way I'd 19 characterize it because, as I mentioned in my 20 prior testimony around the nature of the asset 21 sale, that dialogue actually started back in 22 December to start talking about the possibility 23 of a sale of Mexico and how we would 24 mechanically go about amending the waterfall and 25 dealing with those issues amongst the FAs. 57 (Pages 222 to 225)

62 226 2 So we had actually done a lot 3 of ground work prior to terminating the PSA on 4 that subject, which allowed us to engage pretty 5 efficiently post the announcement. 6 Q So the fact that the parties 7 had already been evaluating and considering this 8 contingency helped speed negotiations? 9 A The fact that we were aware it wasn't a contingency, it was a Q Possibility? 12 A -- it was a possibility, 13 allowed us to -- I was just responding to it 14 took us a month. It was actually a lot longer. 15 Q Have the parties discussed the 16 possibility of the court holding the transferred 17 guarantor claims are worth zero? 18 A We discussed -- can you repeat 19 the question? 20 Q Sure. 21 Have the parties to the PSA 22 discussed the possibility of the court holding 23 that the transferred guarantor claims are worth 24 zero? 25 MR. HAMILTON: I am going to assert the common interest privilege, 3 so -- I don't think -- I mean, if you 4 want to break that down between before 5 February 20th and after -- 6 MR. HARRIS: Sure. 7 MR. HAMILTON: -- but I think 8 after February 20th, I think that kind 9 of discussion would be covered by the 10 common interest privilege. 11 MR. HARRIS: And to be clear, 12 I'm not asking for the legal views 13 that were shared as to how likely that 14 is to occur MR. HAMILTON: You mean like 16 discussing a potential settlement? 17 MR. HARRIS: That is what I'm 18 trying to get. 19 MR. HAMILTON: Let me withdraw 20 the objection, and try again. Because 21 I agree, that's fair. 22 MR. GREENBERG: Was that in 23 context with your claims objection, or 24 is this in the context of the court 25 shooting down the plan? I'm confused by the question. 3 MR. HARRIS: Well -- 4 MR. HAMILTON: Let him ask the 5 question -- 6 MR. GREENBERG: Sorry. 7 MR. HAMILTON: Let him re-ask 8 the question, we'll go from there. 9 Q You are aware that my clients 10 have, for a considerable period of time, 11 notified the debtors that they believe the 12 transferred guarantor claims have no merit? 13 A I'm aware that they've filed 14 an objection to the claim. 15 Q And even before then my 16 clients took positions, for instance, requesting 17 a mediation; are you aware of that? 18 A In late February or early 19 March? 20 Q Yes. 21 A Yes. 22 Q So since my clients have 23 appeared publicly, have there been any 24 discussions among the parties to the PSA about 25 how economics might be redivided if the court were to determine that the transferred guarantor 3 claims are worthless, or are worth less than 4 allocated in the plan? 5 A No. 6 Q Would you agree that if the 7 court were to hold that the transferred 8 guarantor claims were worthless and the parties 9 had to attempt to renegotiate, that would at 10 least take one of the different issues off the 11 table? 12 A Would I agree that one of the 13 issues would be off the table? 14 Q Yes. 15 A The answer is, I think, by 16 definition if that court rules, that's going to 17 create a whole other host of issues. I'm not 18 sure that the court ruling takes the issue off 19 the table. I'm not sure legally if there's an 20 appeal of that ruling, so I'm not sure is the 21 answer. I'm not sure that it's off the table. 22 I can tell you if the court 23 rules in that way, it blows up the existing 24 agreement, and the prospects for stability and 25 recovery for all creditors, I think, would, you 58 (Pages 226 to 229)

63 230 2 know, get put into question. 3 Q Okay. 4 Now, I believe you said you 5 met with the LuxCo independent manager? 6 A We have, yes. 7 Q Did you discuss the 8 transferred guarantor claims with him? 9 A Not the legal merits of the 10 argument, only the -- me, Rothschild -- only the 11 mechanical aspects of the settlement and how it 12 would impact the waterfall. 13 Q Did he share any views on the 14 merits of the transferred guarantor claims? 15 A Not with us. 16 Q Have you heard from anyone 17 else, any indication before he actually issued 18 his report, on what his views were on the merits 19 of the transferred guarantor claims? 20 A Only secondhand. 21 Q And what did you hear 22 secondhand? 23 MR. HAMILTON: I'm going to 24 object and instruct the witness in 25 answering this question not to disclose the contents of 3 communications from Jones Day to its 4 client in this regard. 5 THE WITNESS: Okay. 6 A I think it was in a comment -- 7 attributing a comment from Jones Day. 8 Q In the course of the 9 bankruptcy, do you know what options the debtors 10 have considered in attempting to resolve the 11 transferred guarantor claims during the 12 bankruptcy? 13 A So as I said earlier, there's 14 really two ways to think about all of these 15 litigation matters, there's to litigate them and 16 there's settlement, and both aspects were 17 considered. 18 Q So what mechanisms do you 19 recall being considered in terms of litigating 20 the transferred guarantor claims? 21 A The context of litigating 22 these claims, there was the possibility of 23 litigating them in -- outside of the bankruptcy 24 process in this all-reserve plan structure, 25 there was -- that was discussed, and evaluated, you know. There was the context of settling the 3 avoidance and recharacterization claims and 4 litigating the transferred guarantor claims, 5 either in or out of bankruptcy, but narrowly 6 kind of litigating that issue that at one time 7 was on the table as a theoretical possibility, 8 that were advanced by -- I think I mentioned 9 earlier at different points in time advanced by 10 creditors, so that was on the table. 11 And aside from those kind of 12 variants of litigating the claim in conjunction 13 with litigating the other claims or litigating 14 the claim in conjunction with settling the other 15 claims, I'm not aware of any other options that 16 were considered. 17 Q Do you recall what options 18 were considered in terms of different ways to 19 litigate the transferred guarantor claims within 20 the bankruptcy proceeding? 21 A I don't recall the specifics. 22 Q Do you recall anyone 23 discussing the possibility of filing a claim 24 objection? 25 A I don't recall that specifically. 3 Q Do you recall anyone 4 discussing the possibility of filing an 5 adversary proceeding seeking a declaratory 6 judgment? 7 A I can't recall specifically 8 that. 9 It's not to say that that 10 wasn't evaluated, I just can't recall the 11 specifics. There was a lot of things that we 12 considered. 13 Q In your extensive experience 14 as a structuring professional, have you ever 15 seen litigation issues resolved within nine 16 months in a bankruptcy before? 17 A When you say "litigation 18 issues," what do you mean? 19 Q For instance, a breach of 20 contract issue. 21 A I've seen it -- I've seen 22 things resolved inside a bankruptcy, sure. I've 23 seen also things not resolved and extend for 24 many, many months. So Q Have you ever seen fraudulent 59 (Pages 230 to 233)

64 234 2 conveyance issues resolved within nine months in 3 a bankruptcy? 4 A I'm sure it's happened. I 5 haven't -- I haven't been a part of a case -- in 6 fact, I've had more experience with the 7 fraudulent conveyance issues taking much longer. 8 Q In terms of the breach of 9 contract issues, did you say you have had 10 experience with having those resolved within 11 bankruptcy? 12 A I can't -- I'm sure I've been 13 involved in cases with breach of contract issues 14 because of the number of cases I've been 15 involved in. I just can't remember any -- I 16 couldn't recite those cases, so MR. HAMILTON: Homer, you've 18 got to keep your hands lower than your 19 mouth or she's not going to hear some 20 of what you're saying. 21 THE WITNESS: Sorry. 22 Q Do you recall there was 23 discussion among the creditors about resolving 24 the claim through arbitration? 25 A Yes Q And would that process have 3 been acceptable to the debtors? 4 A To the extent that all the 5 other aspects of that settlement were acceptable 6 to the debtors, possibly. 7 Q Was there any discussion about 8 resolving the claims through arbitration during 9 the bankruptcy process? 10 A I don't recall the specifics 11 of the governing time frames, whether in or out, 12 if it was in conjunction with the reserve plan 13 constructs, so I don't recall the specifics. I 14 recall arbitration, binding arbitration, being 15 discussed, I just can't recall the forum. 16 Q Do you know why the debtors 17 didn't file a claim objection to the proofs of 18 claim filed by the 2016 and 2019 trustees? 19 A I don't. 20 Q What risks do you see to the 21 debtors' operations if confirmation does not 22 occur in early June? 23 A My understanding of -- based 24 on my experience with this company for the last months is that one thing that the constituents, broadly, are seeking -- these 3 being the constituents outside of the creditor 4 constituents -- this would be customers, 5 vendors, regulators, local creditors -- are 6 seeking a certainty and the ability to have 7 confidence in the direction of the company in 8 light of what we've just been through since 9 filing in September. 10 The -- so the consequences are 11 that you put at risk the stability of the 12 relationships with those important constituents, 13 and what the consequences of that are, if you 14 have a -- under that assumption where we don't 15 have a confirmed plan, question whether or not 16 we have a -- a plan at all at that point, given 17 the termination provisions, and under that 18 environment, I think there is material risk that 19 the company is unable to kind of meet the 20 provisions that it's obligated itself to meet in 21 the local amendments. It would have to engage 22 in a dialogue with the local creditors, which 23 would have an uncertain outcome. It would have 24 to deal with the regulator. It would have 25 concerns about its ability to continue to perform its capital expansion plans and 3 participate in the market. 4 So there's a host of things, I 5 think, becoming -- certainly are very much of a 6 concern and on the company's mind. 7 Q How are those risks different 8 from those that the debtors have already 9 successfully managed in the ongoing bankruptcy 10 process? 11 A Well, we've managed because 12 we've gotten to an agreement fairly quickly 13 despite the long history preceding the filing. 14 Fairly quickly post-filing we were able to 15 announce our first PSA and project some level of 16 stability. We were able to negotiate amendments 17 with our local creditors that we agreed to enter 18 into and for them to honor. 19 So I think it's a -- a wholly 20 different set of circumstances if we're 21 unable -- we're having to unwind that stability 22 and not deliver on what we said we were going to 23 be able to deliver to our local constituents. 24 Q When the first PSA was 25 terminated, did the debtors see any operational 60 (Pages 234 to 237)

65 effects as a result? I 3 A Not to my knowledge, but to 4 understand the backdrop between the first PSA 5 that was terminated, we were selling in Mexico, I 6 and I think we even stated that we were in I 7 negotiations with creditors to reengage on a I 8 plan, so the messaging for the creditors locally 9 was that "We have good news, we're being able to I 10 divest this operation, and we're going to be 11 back to you after we sort out how we're going 12 to -- in light of this new information -- emerge 13 from bankruptcy, so give us a little more time, 14 but we still are confident we will be able to 15 meet our commitments to you and our obligations 16 under the agreement." 17 Q That was helpful messaging to 18 give, you're indicating? 19 A That-- my understanding is 20 that was the messaging that was provided. Now, 21 the context you're asking me to provide in a 22 hypothetical environment some perspective on 23 what are the concerns, it's a very different 24 environment. It's an environment where we've 25 had the blow because of inter-creditor fighting, not because of a prevailing good news 3 event, so to speak. 4 Q Some people would consider our 5 victory a good news event; right? 6 A Sure, maybe your clients, but 7 I think it would be somewhat of a Pyrrhic 8 victory, because I think the impacts that I'm 9 talking about are real risks, and are real risks 10 to our client's recovery. So they could be 11 excited about the PSA blowing up, but our view 12 is that would be a very short-sighted way to 13 look at this overall situation, and a very 14 short-sighted way to look at the risk associated 15 with unwinding what is a very integrated 16 agreement www. veritext.com 61 (Pages 238 to 241)