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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

ROHM AND HAAS COMPANY, :


:
Plaintiff, :
:
v. : Civil Action
: No. 4309-CC
THE DOW CHEMICAL COMPANY and :
RAMSES ACQUISITION CORPORATION, :
:
Defendants. :

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Chancery Court
34 The Circle
Georgetown, Delaware
Monday, January 26, 2009
4:04 p.m.

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BEFORE: HON. WILLIAM B. CHANDLER III, Chancellor.

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TELECONFERENCE ON MOTION TO EXPEDITE PROCEEDINGS

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_______________________________________________________

CHANCERY COURT REPORTERS


34 The Circle
Georgetown, Delaware 19947
(302) 856-5645
2

1 APPEARANCES:

2 (via telephone)

3 COLLINS J. SEITZ, JR., ESQ.


HENRY E. GALLAGHER, JR., ESQ.
4 DAVID E. ROSS, ESQ.
BRADLEY R. ARONSTAM, ESQ.
5 Connolly Bove Lodge & Hutz, LLP
-and-
6 MARC WOLINSKY, ESQ.
ELAINE P. GOLIN, ESQ.
7 of the New York Bar
Wachtell, Lipton, Rosen & Katz
8 for Plaintiff

9
MARTIN P. TULLY, ESQ.
10 KENNETH J. NACHBAR, ESQ.
Morris, Nichols, Arsht & Tunnell, LLP
11 -and-
DAVID W. BERNICK, ESQ.
12 of the New York Bar
Kirkland & Ellis, LLP
13 for Defendants

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1 THE COURT: Good afternoon, counsel.


2 MR. SEITZ: Good afternoon, Your
3 Honor. This is CJ Seitz at Connelly Bove.
4 MR. TULLY: And this is Martin Tully
5 and Ken Nachbar at Morris Nichols, Your Honor. Also
6 on the line is David Bernick of the Kirkland and
7 Ellis firm, and he will be speaking for Dow and its
8 acquisition deal.
9 MR. BERNICK: Good afternoon, Your
10 Honor.
11 THE COURT: Good afternoon,
12 Mr. Bernick.
13 MR. SEITZ: Your Honor, with me is
14 Marc Wolinsky from Wachtell Lipton, and he will be
15 speaking on behalf of Rohm and Haas. And also with
16 me in Connelly Bove is Hank Gallagher, David Ross and
17 Brad Aronstam.
18 THE COURT: Welcome to everyone.
19 MR. WOLINKSY: Thank you, Your Honor.
20 THE COURT: I have the papers that
21 have been filed so far.
22 Mr. Wolinsky, perhaps you can begin.
23 MR. WOLINKSY: Sure, thank you, Your
24 Honor. And thank you for hearing us on such short

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1 notice. I'm here with one of my colleagues Elaine


2 Golin, and some other attorneys here.
3 As Your Honor knows, Rohm and Haas
4 filed the complaint today against Dow for specific
5 performance of a merger agreement that was signed
6 back in July of 2008. Dow agreed to buy Rohm and
7 Haas in the merger agreement for $78 per share, plus
8 a ticking fee that started January 10th, 2009. At
9 the time the merger agreement was signed, the parties
10 anticipated that there would be some delay for the
11 receipt of antitrust clearance, and that antitrust
12 clearance was received -- the last antitrust
13 clearance was received on Friday.
14 A couple of notable things about the
15 merger agreement, there is no financing condition in
16 the merger agreement. In addition, at the time the
17 deal was signed, the deal was fully financed, both
18 with a bank bridge loan and equity commitments. Dow
19 covenanted in the merger agreement that it would have
20 the funds to close, and Dow agreed to a very
21 restrictive Material Adverse Effect clause in which
22 it essentially accepted the risk that there would be
23 a further deterioration in the world economy, that
24 there would further deterioration in the chemical

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1 industry, and that there would be further


2 deterioration in the credit market.
3 As I said, the deal was struck on
4 July 10, 2008, you know, after Hexion Huntsman had
5 been filed and was well underway, and after a number
6 of other deals had fallen apart.
7 As I mentioned, the last condition to
8 closing was satisfied just this past Friday,
9 January 23rd, when the FTC cleared the merger. Under
10 the merger agreement, Dow became obligated to close
11 within two business days, which would be tomorrow.
12 Prior to the receipt of that FTC
13 clearance, there had been some discussion between the
14 parties about what we could anticipate on a
15 closing -- nothing to my client's satisfaction --
16 prior to the receipt of the antitrust clearance. And
17 over the weekend Dow told us that it would not close
18 on Tuesday, and I'm quoting the e-mail from
19 Mr. Liveris. He referred it to, quote, concerns
20 about the potential success of the combined
21 organizations.
22 Dow also told us over the weekend
23 that it would not be able to determine whether it
24 would be able to close the transaction or be willing

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1 to close the transaction until June 30th, 2009.


2 Today, Dow issued a release in which it stated
3 that -- and I will quote again -- "Recent material
4 developments have created unacceptable uncertainties
5 on the funding and economics of the combined
6 enterprise."
7 Your Honor, a couple of notable
8 things about Dow's position. Dow does not say that
9 it cannot close. In fact, as I mentioned, the
10 financing is in place to close the deal. Dow has a
11 fully negotiated bridge loan at this point and equity
12 commitments, and the amount of funds available under
13 those two facilities more than exceed the purchase
14 price. Dow did not say that there has been a
15 material adverse change in Rohm and Haas' business.
16 In fact, Dow has not offered any legal justification
17 for its refusal to close.
18 In light of all this, Your Honor, we
19 filed our complaint today; we filed our motion. We
20 would like to move forward on an as expeditious a
21 timetable as the Court will permit to get an order of
22 specific performance requiring Dow to close.
23 The contract specifically provides
24 for specific performance as a remedy for a breach;

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1 and I think the contract speaks directly to what


2 should happen here. We did have an opportunity to
3 speak to Mr. Bernick and his colleagues before the
4 conference. I think we have some areas of agreement,
5 some areas of disagreement.
6 I believe we have an agreement that
7 we -- Rohm and Haas, we have an agreement on a motion
8 for judgment on the pleadings. And I believe the
9 agreement is that Rohm and Haas -- excuse me, Dow
10 will answer on February 3rd. Rohm and Haas would
11 file its motion on February 5th. So it would be an
12 opposition to the motion of Dow on February 13th.
13 Rohm and Haas would reply on February 16th; and there
14 would be an argument date set by the Court, hopefully
15 an early argument date.
16 I understand that Dow also intends
17 to make a motion to disqualify my firm from
18 representing Rohm and Haas, and we have agreed to a
19 briefing schedule on that motion. Dow would file its
20 motion on February 6th. The opposition would be on
21 February 13th; reply on February 16th. And the
22 briefing schedule essentially tracks the briefing
23 schedule on the motion for judgment on the pleadings.
24 Dow obviously thinks that this case

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1 can't be decided on a motion and that there will be


2 need to be a trial, and that really gets to our area
3 of disagreement. Now that we understand Dow's
4 position better, what we think the Court should do,
5 and what we would like the Court to do, is to set a
6 schedule so that we can proceed on the briefing on
7 the motion in parallel with -- to prepare for trial
8 if the Court deems that one is necessary; and the
9 principle area of difference, I think, is the speed
10 at which that trial should take place.
11 As the Court can appreciate, Rohm and
12 Haas believes that speed is critical here. We have
13 been running the company on the expectation that a
14 deal would close early this year. The company's been
15 taking actions and holding off on taking actions that
16 it would take if it were being run as an independent
17 company.
18 There is tremendous uncertainty in
19 our employee base. People are expecting the deal to
20 close and were planning accordingly, and now there's
21 uncertainty about when the deal will close and their
22 personal futures, and that impacts the business. The
23 uncertainty also has an impact on Rohm and Haas'
24 relationships with its customers. They don't know

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1 whether they're going to be dealing with Rohm and


2 Haas as an independent company or with Rohm and Haas
3 as merged as part of Dow.
4 Typically in cases of this type, the
5 Court proceeds on an expedited basis. That should
6 happen here. Rohm and Haas needs to know if this
7 deal is going to close, and it needs to do so, so it
8 can run its business and preserve the value of the
9 company.
10 So our proposal is that we proceed on
11 a parallel track with the motion for judgment on the
12 pleadings, with an eye toward the trial at the end of
13 February, if the Court decides it needs one. We
14 think that's ample time to do whatever needs to be
15 done. We have not discussed the specific discovery
16 schedule, expedited expert protocol, but if we have a
17 trial date, ample counsel on both sides can work out
18 the mechanics leading to a trial at the end of
19 February.
20 In our motion, we suggested that the
21 trial could take -- could be held in one day. Having
22 listened to our colleagues and Mr. Bernick, I would
23 think it's more realistic for the Court to reserve
24 three days -- although, we think it can be done in

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1 two. I think the most important thing from our


2 perspective is this case to move quickly.
3 The complexity in this case is less
4 than in other cases. There's no claim of material
5 adverse change. No claim of breach of representation
6 of warranty. To my knowledge, there is no dispute on
7 the interpretation of the contract.
8 If the Court thinks there needs to be
9 a trial, I think the focus will be on whether, as a
10 matter of the Court's discretion, the Court should
11 look past the parties' agreement that specific
12 performance is the appropriate remedy and take into
13 account other factors. It's relatively a finite
14 group of issues, and I think that it can be prepared
15 for trial in the four to five-week period that we --
16 that I have laid out.
17 So, with that, Your Honor, unless you
18 have any questions -- you might have some questions,
19 I'm happy to answer them. But that is our position,
20 and that is what we would like to see come out of
21 today's conference.
22 THE COURT: Thank you, Mr. Wolinsky.
23 I don't really have a question at this point. Let me
24 first hear from Mr. Bernick.

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1 MR. BERNICK: Sure. Thank you for


2 making yourself available, Your Honor. Obviously,
3 this is a matter of tremendous importance.
4 What I will say by way of the
5 background of the case is I think relatively simple.
6 Obviously, you have the benefit -- I don't know if
7 you've had the opportunity to read in detail, but you
8 have had the benefit of their papers, and you
9 obviously don't have the benefit of ours. And I'm
10 not going to try to take time out of this call to go
11 through it in detail, but just to give the Court an
12 overview of the problem and particularly how it bears
13 upon the schedule that's been proposed, let me at
14 least say this: That this deal faces a very, very
15 big problem. It's a huge problem. And the essence
16 of what this case is about is whether somehow that
17 problem is going to go away if there's a forced
18 merger pursuant to the terms that were originally
19 agreed.
20 Our position is that, fundamentally,
21 it doesn't make that problem go away. To get a Court
22 to order it doesn't make everything all of a sudden
23 resolve. Indeed, it has precisely the opposite
24 effect, which is what is a problem of varying

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1 disagrees of magnitude for the two different


2 companies becomes an overwhelming problem for the
3 merged organization, and one that is now a problem
4 for both entities who have now contributed to the
5 merger.
6 This is not a passive investment
7 situation. It is not a situation where a relatively
8 small company is now being bought by a large company.
9 Given the change in capitalization for these two
10 companies, Dow, which started out being the much
11 larger company at the time the transaction was
12 agreed, has now actually got a market capitalization
13 that is smaller than Rohm and Haas. The financing
14 that was arranged for purposes of this transaction --
15 to give the Court, again, a sense of how things have
16 changed -- that financing now exceeds the market
17 capitalization of many of the banks who are
18 participants in the financing.
19 So, it is an enormous problem. It's
20 a problem that, in conversations that took place
21 between the principals in the last few days, the CEO
22 of Dow characterized it's a problem such that both he
23 and Mr. Patel, who is the CEO of Rohm and Haas, would
24 be remembered as presiding over the creation of an

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1 entity that ultimately lead to the deterioration of


2 two of America's finest and longest standing chemical
3 companies. We don't think that that's appropriate
4 for Rohm and Haas.
5 We don't think the problem is solved
6 by the forced merger. We don't think that either CEO
7 really wants to preside over the merged entity. And
8 we don't think that the Court, at the end of the day,
9 will conclude that it wants to preside over what is a
10 forced merger that does not result in an entity which
11 really is viable.
12 The history, again, I will not
13 recount in detail, but the history that has emerged
14 here has actually emerged through a relatively short
15 period of time. The complaint recites that the
16 credit market or the credit crisis was already known
17 in July at the time that this deal was entered into.
18 In point of fact, everybody knows that while the
19 credit crisis was known, what would be in an order of
20 magnitude was never surmised until things went south
21 in September and October. But even then, that is
22 only the backdrop for the problem that lead Dow to
23 the decision that it has taken.
24 In the month of December, as I'm sure

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1 Your Honor has probably read in the newspapers, there


2 was a very dramatic about face politically driven
3 over commercial and its impact by the Kuwaiti
4 interests that were involved in a major transaction
5 that was designed in part to provide liquidity in
6 financing for Dow. That is known as obviously having
7 a major impact.
8 But then way beyond that, the
9 industry as a whole has seen a very, very precipitous
10 decline since December. The earnings performance and
11 the capacity utilization for Dow, a little less than
12 at Rohm and Haas, is at all-time lows at least within
13 recent memory. They are dramatic, dramatic numbers.
14 There will be earnings released next week by Dow. We
15 can't get into the the details of it, but Your Honor
16 will have the opportunity to observe that many of the
17 same trends have continued through January.
18 And, therefore, we're brought to a
19 situation where no matter what it is that we would
20 like to do, and no matter how it is that we have
21 viewed the strategic value of this merger, we can't
22 ignore the reality of what it is that we're dealing
23 with. And that reality is the consummation of this
24 transaction now -- given the circumstances that

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1 presently exist, as well as the continuing


2 uncertainties -- will affect basic things like
3 liquidity, financeability, operational viability.
4 All of those things say that it will be imprudent to
5 consummate this transaction, because it simply would
6 have the effect of taking a problem that is already
7 severe and forcing the creation of a new enterprise
8 that is saddled with all those problems and perhaps
9 what you can call the synergistic problems from
10 combining two major entities.
11 So, we have initiated the dialogue
12 with Rohm and Haas, involving principals, after the
13 regulatory approvals, it was clear that they were in
14 fact going to go through. There have been a series
15 of contacts and a series of meetings at very, very
16 high levels. And we have urged upon Rohm and Haas in
17 that process that more time needs to pass; that we
18 can't commit to make a closure for this deal now
19 because to do so would be imprudent. But we will
20 continue as things evolve -- on earnings, on
21 financeability, on liquidity -- to work with Rohm and
22 Haas to see if we can't get to the finish line.
23 We urged them not to initiate
24 litigation, although, obviously we understand they

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1 had a need to do so in order to protect their


2 interests, and we can't fault them for that. But we
3 also urged the dialogue between the companies
4 continue so that we can see if there is a way to
5 resolve this problem.
6 We don't believe that litigation is
7 going to solve this problem. It's simply going to be
8 a distraction from and a poor filter for a
9 businessman's resolution; but they have made that
10 choice and we respect that choice, and we're prepared
11 to litigate the issue.
12 So, with that comes the particular
13 proposal that has been made, and we feel about them
14 pretty much the same way; that is, that obviously
15 Rohm and Haas has decided that the contract language
16 raises an issue of law for the Court to resolve. We
17 don't think that that's true.
18 Even their cases don't say that a
19 contract can provide for specific performance, and
20 somehow that displaces the Court to exercise
21 fundamental equitable powers over whether specific
22 performance should be granted, at best. Contractural
23 provisions regarding irreparable damages are given
24 some weight by some courts, but that is only part of

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1 the equation; balancing equities goes way beyond


2 that.
3 So we don't think the issue of law is
4 really going to play a major role in this case
5 either. We don't think that that's going to be
6 germane after the Court resolves it.
7 At the same time, Rohm and Haas
8 believes that that is an important threshold issue.
9 Yet, in service of moving the litigation along, we
10 have no opposition to that issue being heard first.
11 We have no opposition to it being heard on an
12 expedited basis. And for that reason, we have agreed
13 to the schedule as Mr. Wolinsky indicates that would
14 call for that matter to be briefed and to be
15 presented before the Court on an expedited basis.
16 So, again, we don't think that it's
17 particularly important to advance the ball, but we
18 understand its importance to Rohm and Haas and we are
19 prepared to defer to that and to the Court's
20 convenience and sense about how this thing should
21 layout.
22 What that really means is that we
23 have two remaining significant issues. Yet the
24 contract language is not dispositive, we have to get

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1 into what we believe is inevitable: The reality of


2 what is happening with specific performance and all
3 the facts that bear upon the transaction. We think
4 that is a very, very substantial task.
5 It's a substantial piece of, you
6 know, responsibility both for the parties and for the
7 Court when we're talking about forcing the
8 consummation of an integrated transaction involving
9 tens of thousands of people; and we think that's
10 going to take sometime to develop. We're prepared to
11 work promptly to get it developed on an expedited
12 basis; but we believe that when it comes to a
13 decision, which is a forever decision effecting the
14 lives of lots and lots and lots of people -- there
15 are tens of thousands of jobs that will be involved
16 in this integration process -- that prudence demands
17 that we take the time that is necessary.
18 Nobody gains from having a decision
19 that is an expedited decision. I know Your Honor
20 would, of course, be very careful, but we shouldn't
21 have a process that basically constrains the
22 development of a full record when.
23 What we have said, the original
24 proposal that was made by Mr. Wolinsky on behalf of

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1 his client, is that we would have a sequence process


2 of which the first contract issue is heard, and that
3 there is a one-day trial after the matter is
4 resolved. They have been good -- Rohm and Haas has
5 been good enough -- Mr. Wolinsky has acknowledged
6 that maybe that's not the right idea.
7 So now they have a backup proposal,
8 which is that we not have a sequence process, but we
9 have a parallel track process thereby suggesting I
10 think inevitably, Your Honor, that the contract issue
11 is really not going to be dispositive. But they now
12 want to have a three-day trial to take place at the
13 end of February. We think that's arbitrary. We
14 don't think that that represents a schedule that will
15 enable us to develop a defense.
16 What's the nature of this
17 transaction? I mean, in the real term, what is going
18 to be involved in integrating these two companies in
19 operations all the way up and down the line? The
20 people factor. What is the history of this
21 transaction? Is their recitation accurate, or is the
22 recitation that you will hear from us a fuller
23 picture?
24 What are the circumstances today, and

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1 is this transaction one that has the prospect of


2 making things feasible? And critically, how do we
3 believe the circumstances are going to change between
4 now and June, when we believe it is appropriate that
5 this matter be finally resolved by the Court, if it
6 can't be resolved by the parties?
7 This involves a lot of evidence.
8 It's not just a financial advisor. It's operating
9 people, chemistry industry specialists, the people
10 who know the transaction, know about liquidity, and
11 one day obviously they recognized was not enough.
12 Two or three days is not enough either.
13 Now, so that we can avoid trying to
14 have, you know, in a sense a comity, a decision in
15 the absence we believe, Your Honor, of having a paper
16 before the Court that represents Dow's views, we
17 propose that instead of having this matter resolved
18 this afternoon, that we would submit a response to
19 their motion to expedite that dealt with the second
20 part of the case; that is, the trial on the merits of
21 specific performance. I believe that they don't have
22 an opposition to that nor have they provided for it.
23 So we would propose that we have the
24 schedule as they indicated on the briefing on the

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1 motion for judgment on the pleadings. Yet, at the


2 same time, we have a schedule for Dow to submit its
3 brief on what should happen with the scheduling of
4 the trial in this case. We're prepared to submit
5 that brief on the 6th of February. That would be the
6 same day that they move for judgment on the pleading.
7 We would file, now with the benefit of our answer, a
8 brief that deals with the second part of this case,
9 and why it is that we believe that more time is
10 require.
11 We're also prepared to file our
12 motion for disqualification at the same time. Let me
13 say there that we hope that this can be resolved
14 without the need for the Court's intervention. But
15 if it can't be resolved, I think we're going to have
16 to go ahead and file that. And we're prepared to
17 have that heard on a parallel track; that is, we will
18 not assert that Wachtell has a conflict with respect
19 to the briefing on the motion for judgment on the
20 pleadings. That way Your Honor would not have to be
21 concerned with the request to rule on the
22 disqualification issue before proceeding with that
23 motion.
24 So, we think that it's appropriate to

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1 do that; and we're prepared to have the motion heard,


2 only insofar as it would relate to subsequent
3 proceedings in the case after the motion for judgment
4 on the pleadings is resolved.
5 THE COURT: Is that all you have,
6 Mr. Bernick, at this point?
7 MR. BERNICK: Yes, and thank you for
8 indulging me. I'm sorry to have gone on for so long.
9 THE COURT: No, that is quite all
10 right. I appreciate hearing from you. And you are
11 quite right -- I have in front of me only the matters
12 that have been submitted by Rohm and Haas, and I
13 don't have Dow Chemical's papers regarding its
14 position. So I have listened very carefully to your
15 explanation.
16 Although, I am inclined to tell you
17 my thoughts right now, maybe I should not do that.
18 Let me first, Mr. Wolinsky, as the
19 moving party you have a right to reply.
20 MR. WOLINKSY: Sure.
21 THE COURT: If you would like to do
22 that before you hear from me, feel free.
23 MR. WOLINKSY: Sure, Your Honor. Let
24 me be brief and just pick up on something that

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1 Mr. Bernick said. Obviously, we think the contract


2 says what it says. The contract says specific
3 performance is the appropriate and agreed upon
4 remedy; and we think the Court should proceed on the
5 basis of the parties' agreement.
6 We understand Dow's position, and I
7 think Mr. Bernick's words were that it is inevitable
8 that we're going to proceed on some alternate basis,
9 and it is inevitable that there will be a trial. The
10 point that I want to emphasize, though, is if it is
11 inevitable that there's going to be a trial -- and
12 that's Dow's position -- it is critical to Rohm and
13 Haas that that trial be heard on an expedited basis.
14 That is the essence of the harm that Rohm and Haas
15 suffers from a delay in resolving these issues. So
16 expedition is our most important consideration here.
17 I've heard Mr. Bernick, you know,
18 refer to the complexity of this case. At the end of
19 the day, we don't think that the evidence the Court
20 is going to need, if it decides it needs evidence, is
21 all that complicated. Does Dow have the money to
22 close? Yes or no.
23 If Dow closes, what will be the
24 consequences to Dow? What steps could Dow take to

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1 ameliorate the harm that Mr. Liveris has referred to?


2 We don't think that's very complicated. We don't
3 think it's going to take months to pre-try it, and we
4 think it can certainly be tried within three days.
5 So, with that said, Your Honor, let
6 me conclude and ask you if you have any questions, or
7 hear Your Honor's ruling.
8 THE COURT: Well, I have several
9 thoughts as I listen to both of you. Obviously, you
10 both make very compelling arguments for your side.
11 One thing that sort of strikes me --
12 not knowing as much about this case as either of you
13 or your colleagues -- it strikes me that, A, there is
14 a fundamental business problem here, and it is always
15 my view that business problems are better resolved by
16 business people; and that to the extent that the
17 Court is called upon to resolve a legal issue, the
18 Court will do that, of course, and will do it as
19 promptly as possible. This Court obviously tries to
20 accommodate parties who come and ask for expedited
21 proceedings or accelerated proceedings because of the
22 business necessities that a particular legal question
23 implicates.
24 So, with that said, and with the hope

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1 that even after we resolve this immediate problem of


2 how to go forward and in what manner to go forward,
3 with the hope and trust that you will carry back --
4 and I am sure you will -- that the view of the Court
5 is that it would be even better if the parties
6 continue to try to figure out a way to resolve this
7 business problem amongst the business people.
8 Of course, the other thing that I
9 would emphasize, that everyone on the phone knows as
10 well, is that this is a court of equity. To the
11 extent that contracts invoke equitable remedy, there
12 is a long series of jurisprudence that emphasizes the
13 importance of the discretionary nature of equitable
14 remedy; and that the Court of Chancery always must,
15 in the end, weigh not only a party's legal
16 entitlement to a remedy, but must weigh other
17 circumstances that may bear upon whether it is
18 prudent and appropriate to deploy a particular
19 equitable remedy.
20 So those are the backdrop thoughts
21 that I have about the matter in front of me.
22 On the particulars of the logistics
23 of how to move this forward on either one track or
24 two tracks, you probably won't be surprised to hear

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1 me say that simpler is always better, and that I have


2 found from experience that to the extent you can
3 avoid two tracks, it is better. It is simpler to do
4 one track.
5 In contract disputes like this, my
6 experience, again, over and over, is that rather than
7 devote energies and effort and time and money into
8 briefing what appears to one side, at least, to be a
9 fairly clear legal question, sometimes discretion is
10 the better part of valor, so to speak. It is better
11 to accept the proposition that one track, which would
12 resolve all of the issues and bring all of the
13 factors, including the circumstances surrounding the
14 appropriateness of the remedy being sought to the
15 Court at one time, might be a more efficient way of
16 doing this.
17 And so, my initial reaction is do we
18 really want to go down the path of briefing motions
19 for judgment on the pleadings and scheduling oral
20 arguments, and having the Court issue an opinion on
21 that question, while simultaneously the parties are
22 engaged in discovery and exchange of documents and
23 perhaps identifying experts in preparation for the
24 potentiality of a trial that might or might not

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1 occur. Given Rohm and Haas' desire that, in any


2 event, this all be done on an expedited basis, my
3 initial thought is that we ought to think carefully
4 about whether the motion for judgment on the
5 pleadings ought to just be dispensed with and we
6 schedule a trial that can be three days, four days,
7 five days, and do it fairly promptly.
8 I am not sure when Mr. Bernick says
9 that there are a variety of people that could explain
10 to the Court the nature of this transaction and how
11 circumstances, credit events and liquidity events
12 have all perhaps changed and would bear upon the
13 appropriateness of a specific performance remedy in
14 these unique circumstances. I am not sure what -- I
15 am not trying to fault Mr. Bernick. I am not sure
16 what I am supposed to draw from that about how hard
17 that would be to produce all of that information and
18 those witnesses in 30 to 45 days, if we weren't doing
19 parallel briefing on the motion for judgment on the
20 pleadings.
21 So, those are my initial reactions.
22 I am not sure if I have helped you at all. I can
23 tell you, just as a logistical matter, that the
24 schedule you have proposed with the two motions --

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28

1 the motion to disqualify and the motion for judgment


2 on the pleadings and the briefing dates -- the Court
3 can easily accommodate that. If the final brief is
4 filed on February 16th, I can give you oral argument
5 on February 16th or February 17th, and I can commit
6 to having a decision to you by the end of that week,
7 or by that day perhaps.
8 And so, the prospect then of
9 scheduling a trial in the event that the legal issue
10 could not be resolved in a dispositive way at that
11 stage, I can also assure you that I have time
12 available at the end of February and up through the
13 middle of March, and even throughout March is
14 available for me to schedule a trial of some length,
15 whether it is three days or five days. If it is
16 going to go two weeks, I can still do it, but it
17 would mean moving things around. But I want to
18 commit to you that whatever it takes to do it, I
19 will, for the parties and for counsel, make that
20 possible.
21 With that, maybe I ought to start
22 with you, Mr. Wolinsky, what about the idea of
23 dispensing with the motions, or is it your view that
24 that has to occur first?

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1 MR. WOLINKSY: No, Your Honor. I


2 will take your lead. I think, you know, what you say
3 makes sense. So, if Your Honor -- let me just throw
4 out, if we have a 30-day pretrial period followed by
5 a trial in 45 days, that would be something that
6 would be perfectly acceptable to Rohm and Haas.
7 MR. BERNICK: Your Honor, again,
8 taking your lead, we would be, particularly if Rohm
9 and Haas is not going to press to have the matter
10 heard -- obviously, the motion to disqualify is a
11 different proposition -- we would obviously be
12 amenable to trying to schedule a trial as well. We
13 don't believe that's going to be achievable in 45
14 days, the middle of March.
15 I have to talk to my client about how
16 much more time than that we would seek, where we
17 would be -- we would consider that in light of Your
18 Honor's guidance; that is to say that we believe that
19 actually time is very important, not only developing
20 a record, but having the external record settled to
21 some degree with respect to some of the variables
22 that drive the feasibility of this transaction.
23 So it's not simply a question from
24 our point of view about how fast people can take a

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1 bunch of depositions; it's also a question of what


2 happens to external events. But with all that said,
3 we're not here simply to drag our feet.
4 So I'm happy to go back to my client
5 and try to figure out what would make sense to our
6 proposal to when this thing could be tried on the
7 merits and to report back to the Court. We could
8 report back to the Court very, very promptly. But if
9 we do that, it would be very important for us to know
10 that while the Court is very familiar now with the
11 desire of Rohm and Haas to proceed, ultimately, the
12 draw on how much time we need is a judgment call on
13 our part.
14 And if we come back and very candidly
15 said, you know, within reason, this is the way we
16 think it really needs to be, that just as Rohm and
17 Haas is getting, you know, in a sense -- I won't say
18 deference, but its views on the need for expedition
19 are being accommodated by a court as prepared as you
20 are to proceed promptly, that in a sense our view of
21 the world cuts almost in the exact opposite
22 direction.
23 The sooner means that more
24 uncertainty is embraced. Greater uncertainty means

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1 that it makes it more difficult to see the


2 feasibility of this transaction. Whereas if there's
3 more time, both to get ready for the case and to
4 allow things to settle in the marketplace -- we're
5 not talking about a lot -- that that actually makes
6 it less uncertain what the circumstances are and
7 perhaps easier to make this transaction proceed. So
8 we think that it's not simply a matter of how long it
9 takes to get the depositions done, but also on
10 external developments.
11 With all that said, we would be happy
12 to talk internally and report back to the Court with
13 our proposal of what that timing we think should be.
14 THE COURT: Mr. Bernick, I hear you
15 loud and clear. Of course, you are making a little
16 more nuance a point; that is, your point is that it
17 may be that the passage of some additional time will
18 help bring greater certainty to the business people
19 for certain business issues in question. Believe me,
20 I understand that, I appreciate it, and I know where
21 you are coming from. I agree with you.
22 However, our law is that when a party
23 files a lawsuit in the Court of Chancery and asks for
24 expedition --

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1 MR. BERNICK: Right.


2 THE COURT: -- I have a
3 constitutional duty to try to move it as quickly.
4 MR. BERNICK: I understand.
5 THE COURT: Also, quite frankly, I
6 want you to know, tell your client that I am trying
7 to do this in a way that recognizes the business
8 interests that you are speaking for and I understand.
9 I am also trying, I hope you understand, to do this
10 in a way that is efficient, and cost efficient to
11 both sides. I am trying to save a little bit of
12 money here for everybody.
13 MR. BERNICK: Right.
14 THE COURT: So I will give you some
15 time to come back. How much time do you think you
16 need?
17 MR. BERNICK: Well, I don't know. I
18 would expect -- how about if we -- well, we'll talk
19 immediately following this call, and how would it be
20 if we -- if the only issue that we're going to go
21 back on here is this issue and -- I mean, I don't
22 know, and I don't mean to be presumptuous, but if the
23 Court is settled that this is the direction that we
24 should take -- that is, that we're not going to have

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1 the first motion for judgment on the pleaing, that


2 we're going to aim for a trial on the merit that is
3 on the merits that takes place on an expedited basis,
4 on a date to be determined by the Court, then if
5 that's the only matter on which we're conferring, I
6 think we'll be able to be back to the Court very,
7 very promptly. I mean either -- I don't know.
8 What time is it now? Well, it's 5:00
9 now. So I think probably tomorrow morning would
10 certainly be something that we could do.
11 THE COURT: Well, that's fine,
12 Mr. Bernick. I was not trying to press you to do
13 something in answering me tonight. I was going to
14 suggest that. So, if you can provide -- let's say by
15 noon tomorrow -- the position of Dow?
16 MR. BERNICK: Sure, sure. Yes,
17 absolutely. I think it would be -- we're not going
18 to -- just so I'm clear, we could try to put
19 something together in writing that would lay out all
20 of the reasons why, and maybe we will do that. But I
21 think it might -- if I could at least impose upon the
22 Court to have a short conference, we'll be prepared
23 to identify with specificity why it is that we think
24 we need the time that we need, and maybe we can have

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1 a dialogue about that.


2 Again, the other side just got papers
3 and I don't want -- I don't want to stand on the
4 ceremony of having to file, being given time to file
5 a robust response to that. But I would like to ask
6 instead the opportunity to address the Court so we
7 can explain the reasons.
8 THE COURT: I am happy to do that,
9 and I will make myself available tomorrow,
10 Mr. Bernick. And I am sure Mr. Wolinsky and his side
11 can -- or I hope they can. We can continue the
12 dialogue and you can explain the position with
13 respect to why you think more time is better than
14 less time.
15 MR. BERNICK: Sure.
16 THE COURT: Specifically, be able to
17 tell me what is the earliest date you think it is
18 doable.
19 MR. BERNICK: Yes, I understand that.
20 And, you know, part of our -- and this is perhaps a
21 little bit of a subtle point, but I know that Your
22 Honor has already anticipated some of our subtle
23 points, is that part of our thinking is because of
24 the extraordinary nature of the remedy, not only are

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1 the business people in better position, but the Court


2 is in a better position to be able to weigh this
3 matter if more is known rather than unknown. That
4 really is kind of the hard part of our position on
5 that. But I will be prepared to address that with
6 more specificity tomorrow, and I hope briefly
7 nonetheless so that you don't have to hear a long
8 speech.
9 THE COURT: Thank you, Mr. Bernick.
10 Don't worry about that, I have plenty of time.
11 Let me see if we can clarify one
12 thing. Are both of you in agreement then that one of
13 the motions, at least -- the disqualification
14 motion -- is going to go forward, and is there any
15 reason that it shouldn't go forward on the schedule
16 that you have already agreed to?
17 MR. BERNICK: No, we're kind of fine
18 with that. Our hope, again, is we can work it out.
19 But if we can't, we're happy to do that; and if Your
20 Honor would hear that on the 16th, that's fine with
21 us.
22 MR. WOLINKSY: Your Honor, this is
23 Marc Wolinsky. That's fine with us as well, Your
24 Honor.

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1 THE COURT: All right. So we have an


2 agreement on that much at least. As I said, we can
3 convene again tomorrow. Why don't we just talk about
4 that? What time would be a good time for everyone to
5 be on the phone tomorrow?
6 MR. BERNICK: We're totally available
7 at the Court's convenience. If 11 o'clock is
8 appropriate, or -- 11 o'clock would probably be best
9 for us because I know we'll be ready by then.
10 MR. WOLINKSY: Your Honor, there is
11 nothing more important we are doing than this. So
12 you tell us what time and we will be there.
13 THE COURT: All right. Since
14 Mr. Bernick has said 11 o'clock -- I have something
15 scheduled at 11:00, but I am going to move that.
16 MR. BERNICK: Well --
17 THE COURT: No, no, that's not a
18 problem. I can move that. It's an oral argument on
19 another motion to expedite, but I would rather move
20 that anyway to an earlier time. So we will reconvene
21 at 11 o'clock tomorrow.
22 Can I impose on one side or the other
23 to initiate the call to my office?
24 MR. WOLINKSY: Yes, Your Honor. This

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1 is Marc Wolinsky. We will do that.


2 THE COURT: All right. Then 11
3 o'clock tomorrow, we will reconvene.
4 MR. BERNICK: Great. Thank you very
5 much, Your Honor.
6 MR. WOLINKSY: Thank you, Your Honor.
7 THE COURT: Thank you to everyone.
8 (The teleconference was adjourned at
9 4:48 p.m.)
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1 CERTIFICATE

2
3 I, JENNIE L. WASHINGTON, Official Court

4 Reporter of the Chancery Court, State of Delaware,

5 do hereby certify that the foregoing pages numbered

6 3 through 37 contain a true and correct

7 transcription of the proceedings as stenographically

8 reported by me at the hearing in the above cause

9 before the Chancellor of the State of Delaware, on

10 the date therein indicated.

11 IN WITNESS WHEREOF I have hereunto set my

12 hand at Georgetown, this 27th day of January, 2009.

13
14 /s/Jennie L. Washington
Official Court Reporter
15 of the Chancery Court
State of Delaware
16
17
Certification Number: 140-PS
18 Expiration: Permanent

19
20
21
22
23
24

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