*NEW FILING* Elon Musk EXPOSES Twitter's BREACH of Contract

hey everyone me kevin here so many

people are convinced that elon musk has

to buy twitter especially the armchair

attorneys who spent 45 minutes searching

through tweets on twitter suggesting

that well elon musk has waived his due

diligence and therefore has to buy

twitter and therefore don't worry that

twitter is down another five percent

today

presenting a substantial arbitrage

opportunity between the price of where

it is now under 40 bucks a share all the

way up to 54.20 which is what elon has

agreed to pay and if elon doesn't

complete the deal well then everybody's

just going to sue elon and they'll get

their money anyway those are what the um

the arguments made of course by the

armchair attorneys but what we need to

do is talk about reality here because

armchair attorneys on twitter don't

always have all of the facts and i'm

going to try my best to provide you a

little bit more color in terms of what's

actually going on so first there are a

few things that are very helpful to know

and they have to do with timing because

the screenshots you see on twitter don't

always give you the proper timing so it

starts with the disclosure that we get

on april 14th which is actually a

disclosure from the day before april

13th let's pull that up here's what the

disclosure says on april 13th the

reporting person delivered a letter blah

blah blah basically april 13th here

right but take a look at this the

proposal

of elon buying twitter is non-buying and

structured and agreed upon conditioned

upon other things including uh

confirmatory legal business regulatory

accounting tax due diligence and uh and

obviously financing due diligence would

be included in this as well so right

here on the 14th disclosure we know okay

we've still got these contingencies

right we still got to work out details

of the transaction even though we're

talking about it there are a lot of

things that could go wrong

now on the april 21st disclosure we get

this line right here the proposal was

and remains a non-binding so we've got a

non-binding proposal here and this is

sort of an amendment to the proposal

right and it says here at the time of

delivery the proposal was subject to the

completion of financing and business due

diligence but is no longer subject to

financing and uh due diligence and is no

longer subject to business due diligence

this is that quote you keep seeing going

around on twitter that in these proposal

disclosures it says hey our proposal is

good we're no longer worried about

business due diligence but then and the

timing here is extremely important then

we get the merger agreement

that merger agreement gets disclosed on

april 25th

and what that merger agreement shows is

right here

section 6.4

of the merger agreement which comes

after this no due diligence disclosure

that everybody keeps sharing on twitter

this section here 6.4 says that upon

reasonable notice the company twitter

shall provide elon musk

property access books and records of the

company and all information concerning

the business that is reasonably

requested in other words for elon musk

to review and conduct diligence on now

that's very important because if this

information doesn't corroborate what was

previously publicly disclosed then there

could be an argument that either this is

a contingency clause which allows elon

musk to cancel the transaction or it

allows elon musk to claim that he was

fraudulently misled based on twitter's

public filings let's go back to the

board right over this side this video is

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the sec has a rule rule 10b5

and it says that a company can be held

liable for material emissions to their

public information or material

information that is misstated and so

there are two potential arguments here

that could be made one potential

argument is that elon musk still has

contingencies for due diligence and

therefore if he wants to he could either

cancel the deal or renegotiate because

of section 6.4 of the merger agreement

which came after this original proposal

talk so in other words elon musk could

make one argument that hey we're still

contingent y'all are still required to

provide us information and if you're

refusing to provide us the information

that we want then we could potentially

cancel the deal because you're not

following the contract which we have a

merger agreement and this is why if we

pull up the ipad right now this is why

we get a letter right here saying that

the issuer or twitter is potentially in

material breach of their obligations

under the merger agreement section 6.4

so elon musk's attorneys are saying hey

look here right here we're letting you

know we are putting you on notice that

you are in material breach of your

obligations under this agreement so

let's go back to the board here and try

to wrap this up and understand this

elon musk has two potential arguments

number one twitter

still is required to provide information

if they don't provide information

they're actually breaching their

agreement so number one is just

a straight up breach of the agreement

number two so potential argument number

two is that okay fine we got information

which

was the same information we got in the

sec reports however that information was

misleading and it is material

information because if we're buying a

company that has five times as many bots

as we thought it did that is a material

misstatement even though twitter says in

their annual 10k report their annual

report that the 5 estimate of bots could

be higher than 5

will this cover your but

line actually protect twitter in an

argument that well we're not misleading

anyone we said it could be higher sure

but how much higher so all of this comes

down to judgment and ultimately will

probably result in a lot of lawsuits but

elon does have some potential ways of

escaping this number one arguing

twitter's not following the merger

agreement which again came after that

due diligence disclosure right that

merger agreement is the most recent

document which usually carries the most

weight or he can make the argument that

he had misleading material information

or both

hear me and i'm not an attorney i don't

think elon musk is necessarily in a

position where he is forced to buy

twitter so be careful with that argument