<table><tr><th>From:</th><th>Richard Kahn &lt;</th></tr><tr><td>Sent:</td><td>Thursday, October 20, 2016 10:14 PM</td></tr><tr><td>To:</td><td>Jeffrey Epstein</td></tr><tr><td>Subject:</td><td>Jawbone</td></tr></table>

Despite Challenges, Jawbone's Rahman Still Upbeat

By Reed =lbergotti Oct. 20, 2016 12:48 PM =DT • Mentions Jawbone, Hosain =ahman and 2 =thers Share full article

It's=been a tough 18 months for Jawbone. A new president hired from Google =ast year, Sameer Samat, returned to Google after just six months. It =aid off 15% of its workforce. The =ompany told one of its business =artners it couldn't make an August payment =eadline. Jawbone breached covenants on its =300 million loan from BlackRock, Jawbone confirmed, prompting the =nvestor to push Jawbone to put itself on the market. That sale process =idn't lead to any bids.

Yet after =11 that, CEO Hosain Rahman is upbeat about Jawbone's prospects. =n an interview with The Information on Wednesday, he declared that =9Ca lot of things" have changed at the wearable maker as he =orks to pivot the business towards medical devices.

## THE =AKEAWAY

Despite =inancial challenges, Jawbone co-founder and helmsman Hosain Rahman =sn't giving up, vowing to vanquish his naysayers as he moves =he company into a new industry.

"We think we have some of =he strongest and most definitive stuff in the market. People are =eally, really excited about what we're doing and what we'=e building but it is a shift from where we've been before,"=he said. A former employee at Jawbone said the company has considered =eveloping a blood glucose monitor similar to those used by =iabetics.

Earlier this month the company told =mployees in an internal email that it was "considering a number =f options" that include "a reincarnation of the =usiness," possibly through a restructuring. It also said the =ompany had arranged "term sheets" from "some of =he largest financial institutions in the world," including one =or another $150 million in funding.

Mr. Rahman =ould not identify the financiers. But he said they had been given =E2 access to a lot of information that you don't =ave."

The latest money-raising is on top =f nearly half a billion dollars Jawbone has raised over the past year =nd a half, including both the BlackRock loan and a $165 million round =eportedly led by Kuwait's sovereign wealth fund in January. Mr. =ahman disputed the amount raised in the Kuwaiti-led round but did not =laborate. Mr. Rahman said Jawbone had invested in product development. =E2 We're excited about where we put (the money] and what =t has yielded," he said.

If Mr. =ahman's upbeat outlook sounds familiar, that's because =e has found himself in this position before. In September of last =ear, Mr. =ahman told The Information <http://go.theinformation.com/51184d> that he had "the =efinitive portfolio" in sensors and wearable technology. "=f you think about Fitbit as sort of the Nokia to Blackberry transition =n phones, we think we have the technology base that's =quivalent to iOS and Android." At the time Mr. Rahman said the =ompany was also sitting on wireless speaker technology that is "t=e next step of where that whole category goes."

## THE =AKEAWAY (cont.)

Things did not go as planned. While Fitbit has =eleased a new line of fitness trackers and software, Jawbone's =ebsite says the products it released last year are out of stock. The =ompany has sold merchandise to a third party reseller. On Amazon, its =itness bands are steeply discounted. Its Up3 tracker for instance, is =eing sold for around $55, compared to the $179 it sold when it came out = little over a year ago. It does not have a single product planned for =he holidays this year.

Mr. Rahman =aid discounting of products was common, reflecting the "nature =f online products and commerce." He added that Jawbone had =roducts in development that were close to launch.

Lawsuit =oss

Meanwhile, Jawbone lost a patent =nfringement and trade-secret violation lawsuit against Fitbit at the =.S. International Trade Commission in two separate rulings, though =awbone says it is appealing. Mr. Rahman referred to the trade secrets =uling as "narrow" and added that Jawbone's =atent portfolio remained strong. (A spokesman noted Jawbone still has a =ase against Fitbit pending in state court in California.)

A BlackRock fund holding $216 million of the debt wrote =t down by 77%, while other Blackrock funds holding about $49 million of =he debt wrote it down by 61%.

Mr. Rahman =tood by the decision to sue. "We have a fiduciary obligation to =rotect our assets," Mr. Rahman said.

BlackRock was one of the investors that believed =r. Rahman could right the ship, leave its troubles behind and forge =head as a leader in consumer electronics. It loaned the $300 million to =awbone with plenty of protections, including at that time the right to =e paid back before any other investor.

But =elations between the firms have become tense. In the email to staff, =r. Rahman noted "I believe everyone knows one of our larger =onstituents has been pushing for us to sell Jawbone," he said. =E2 They continue to fight against the company and the rest of our =hareholders. We do not understand their motivation," he wrote. =e didn't name the firm but a Jawbone spokesman confirmed he was =eferring to BlackRock.

In =ednesday's interview, however, Mr. Rahman said: "We =99re working with BlackRock. It's not accurate to say we have a =isagreement."

At =lackRock's request, Jawbone retained boutique investment bank =JT Partners and Code Advisers to look for buyers. A person familiar =ith the situation said Jawbone conducted the formal search in August. A =pokesman for Jawbone and Mr. Rahman wrote in an email that there were =o offers at the end of the process.

Through a =pokesman, Mr. Rahman said "there had been some discussion"=about selling some of Jawbone's technology separately. "B=t those were very specific and limited discussions and never amounted =o an offer—none of our constituents were interested in this, =9D the spokesman wrote.

A =lackRock fund holding $216 million of the debt wrote it down by 77%, =hile other BlackRock funds holding about $49 million of the debt wrote =t down by 61%, according to securities filings. The writedowns seem to =ndicate the BlackRock funds don't expect to recover most of the =oney. "I don't know how they value things or don'= value things," Mr. Rahman said.

Mr. Rahman said he would eventually explain to the =ublic what happened inside Jawbone over the past year, but not at this =ime. "We're going to do it on our terms," he =aid.

—Alfred Lee contributed to this =rticle

## THE =AKEAWAY (cont.)

Richard Kahn
HBRK Associates Inc.
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New York, NY 10022
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