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
Tuesday, January 27, 2009
11:04 p.m.

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

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CONTINUATION OF THE TELECONFERENCE ON MOTION TO

EXPEDITE PROCEEDINGS

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_______________________________________________________

CHANCERY COURT REPORTERS

34 The Circle
Georgetown, Delaware 19947
(302) 856-5645
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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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15
16
17
18
19
20
21
22
23
24

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1 THE COURT: Good morning, counsel.

2 ALL COUNSEL: Good morning, Your
3 Honor.
4 MR. GALLAGHER: Your Honor, this is
5 Hank Gallagher on behalf of Rohm and Haas. I wonder
6 if I might just ask the Court if Your Honor has a
7 court reporter there? We thought we had made
8 arrangements for one. My colleague, David Ross, is
9 checking right now to verify who Brad Aronstam
10 called.
11 THE COURT: I have one in the office
12 with me.
13 MR. GALLAGHER: All right. Thank you
14 very much, Your Honor.
15 THE COURT: Rather than proceed
16 through a roll call, am I going to have the same
17 people speaking today as yesterday?
18 MR. BERNICK: From the Dow side, yes.
19 David Bernick.
20 MR. WOLINSKY: Marc Wolinsky here,
21 yes, Your Honor. Although I just want to mention
22 that Bob Lonergan, our general counsel, is on the
23 phone with me today, and Chuck Kilal of Dow is as
24 well, Your Honor.

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1 THE COURT: Thank you, gentlemen.

2 Welcome.
3 Mr. Bernick, maybe you ought to
4 begin, because I think we left yesterday with your
5 offering to consult with your client about the
6 schedule that the Court envisioned for this matter.
7 MR. BERNICK: Yes. I'm happy to do
8 that, although it's a tough thing to kind of get our
9 minds around. You know, the bottom line is that
10 we'll make a proposal. There's really no good answer
11 on the schedule for the reasons that the lawsuit
12 exists. And we have been candid with Rohm and Haas
13 in the discussions that have taken place with the
14 principals and in our e-mails to them that we need
15 until June 30th to see if the transaction really can
16 proceed.
17 Those facts have not changed, and
18 follow the newspapers and you will see that every day
19 things tend to get a little bit worse. Therefore, if
20 the trial is set early, it simply embraces the
21 certainty that the uncertainty of the path of trial
22 will be greater, and that there will be this very
23 substantial risk that we're going to litigate about
24 what will happen if you create this entity. And the

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1 review that we have done overnight basically confirms

2 that view.
3 So, we say, well, how do we make a
4 proposal in response to what the Court has suggested,
5 which is that we look for something that also gives
6 force to the Court's duty and obligation to conduct
7 an expedited proceeding? To make a proposal that,
8 from our point of view, fundamentally goes up to and
9 embraces the gorilla in the room, which is the risk
10 of doing anything in a negative environment. Most
11 investors look for liquidity in a negative
12 environment; and we're, in a sense, metaphorically
13 looking for litigation illiquidity. We're going to
14 embrace that.
15 So we try to do two things. One is
16 to take a look at the cases to see if they give us
17 any instruction on this. And second is to see,
18 looking forward in the circumstances surrounding this
19 transaction, if there's anything that is of
20 importance that might actually come to rest, either
21 pro or con, within a narrower timeframe; that is,
22 prior to June the 30th. I think we have identified
23 something, and I think it gives us an indication of
24 what might be a good middle course here.

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1 And I want to avoid too much detail

2 on this, Your Honor, because, you know, otherwise
3 we'd have to ask that the record be sealed. I don't
4 see a necessity for it. But if I am sounding a
5 little bit breezy on the details, it's because I
6 would just like to keep the proceeding an open
7 proceeding.
8 So what is it that we think will come
9 into place? The one thing we can identify is that
10 the company is in the process of trying to negotiate
11 an extension of the bridge loan that would be used in
12 large part to finance the transaction. You know, the
13 commitment for that bridge loan expires on July
14 the 9th, and we're trying to essentially get a
15 renegotiation of some of those terms.
16 If we're unsuccessful in
17 renegotiating the bridge, there's not even -- we
18 almost don't get to the question of whether the
19 transaction can even take place at all, because it
20 really can't. If the deal were to close under the
21 terms of the current bridge, while there might not be
22 an immediate event of default, it would be inevitable
23 within a very short period of time. We don't really
24 know even if the banks would close, although they're

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1 technically obliged to close so it kind of would end

2 the thing.
3 If we are successful in this
4 negotiation, we then get to the central issue in the
5 case, which is the balancing of the equities, what
6 are the consequences of going forward or not going
7 forward in creating this merged entity. And there
8 all of the same factors that create the uncertainty
9 and the problems and the risks that are essential to
10 our position will remain: The ability to sell assets
11 without creating so much destruction of the value,
12 the effects of the merged entity; and in particular,
13 there where the company is actively seeking to get a
14 replacement for the K-Dow transaction that didn't go
15 forward, that's not going to happen in this
16 timeframe.
17 The question of liquidity -- we're
18 probably not going to get an answer to the question
19 of liquidity during this timeframe. And that, of
20 course, will depend on earnings. And while we may
21 get more information about earnings, no one is
22 predicting that we're going to see the light at the
23 end of the tunnel on where things are today by, you
24 know, 60, 90 days from now; and of course that also

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1 then effects the credit rating. So, all those other

2 problems will still be out there.
3 But this one issue -- that is the
4 extension of the bridge loan and the availability at
5 least of the financing to do some thing -- will, I
6 think, have come to rest; and here's the schedule on
7 that. Earnings come out on the 3rd of February. We
8 then expect that there will be three to four weeks of
9 fairly -- very intensive negotiations with the lead
10 banks.
11 If that negotiation is successful, we
12 then have 15 other banks to deal with. I guess it is
13 one of the reasons why I don't envy the job of the
14 CFO, because there's a total of 19 banks that are
15 holding up the bridge. Optimistically, but
16 reasonably, we think that we will know one way or
17 another by the latter part of March; and at that
18 point, I think that we would be in a position to at
19 least get to the central issue of the case without
20 debating, you know, in the sense of a threshold issue
21 about whether there's going to be any financing
22 available at all. So that would tend to indicate --
23 that timeline would tend to indicate a trial sometime
24 in the early to mid part of April.

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1 We have taken a look at the cases.

2 The cases -- you know, Wachtell's folks did a very
3 thorough job in their footnotes to their brief, and
4 listed all of the cases and how much time they
5 involved from complaint to trial, and I think it's a
6 good list. Obviously, those cases vary very
7 substantially in size, the size of the transactions.
8 They vary in the time allotted. They vary in the
9 issues that actually get framed.
10 But what's really key is that none of
11 those cases took place in the context of such a
12 traumatically volatile and evolving environment,
13 where, you know, even the levers for deciding this
14 thing are uncertain. And none of them involve such a
15 very large transaction that -- integration
16 transaction where you are melding these two
17 organizations and have to think about what the
18 consequences of that melding are. So we don't think
19 they're terribly instructive.
20 So we come out with a basic proposal
21 that is like this, and it's just a straight up
22 proposal -- there's no other elaboration to it --
23 that we would start the trial on the 8th of April.
24 Rohm and Haas people initially said that the case

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1 would last a day, and then having heard us speak,

2 they recognized that at least our case may take some
3 more time. But if they go for the whole day
4 themselves, the 8th, we would then be able to start
5 our case on the 9th, and then we could take the next
6 five days up through the 15th to try the case, the
7 rest of the case. And that would enable us to
8 conclude the matter by the 15th of April, which is
9 less than twelve weeks after the complaint was filed.
10 So that would be our proposal.
11 THE COURT: Thank you, Mr. Bernick.
12 Mr. Wolinsky?
13 MR. WOLINSKY: Thank you, Your Honor.
14 I guess, let me start by saying you won't be
15 surprised by our reaction of that schedule. Although
16 constructive, it is too slow from Rohm and Haas'
17 perspective.
18 Your Honor, last night I spent time
19 with our client as well, and with my client this
20 morning. And we reflected on your comments; we
21 reflected on what Dow had to say; and we reflected on
22 what made sense here.
23 And I don't want to, you know, repeat
24 myself from yesterday, but we are starting off from

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1 the premise that the issues here are limited. We

2 thought so limited that the Court could decide them
3 on a motion for judgment on the pleadings.
4 Now, I understand your reaction to
5 our suggestion, but we do think that the Court, in
6 scheduling the case, needs to keep a couple of things
7 in mind.
8 First, Dow admits that it has
9 breached the contract. It's -- the only issue that
10 has been identified for trial is the remedy. We
11 have -- we don't have a formal pleading admitting
12 breach, but from what I understand from counsel's
13 presentation that they have no legal justification
14 for not closing. And I also understand -- understood
15 him to be saying that today they have the ability to
16 draw down on the bridge financing.
17 What will happen in the future to the
18 bridge financing, it is, you know, frankly, not Rohm
19 and Haas' problem. We bargained for a closing. We
20 bargained with the bridge financing in place. And
21 Dow is admitting that the bridge financing today can
22 be drawn upon.
23 The other things -- points that I did
24 want to make, again, this contract was negotiated and

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1 signed in July 2008, at a time when there already was

2 tremendous economic uncertainty. The credit crisis
3 was almost a year old. Bear Stearns had collapsed.
4 Rohm and Haas had already announced a restructuring
5 because it saw a recession coming. Hexion had
6 already filed suit to get out of its deal with
7 Huntsman on the ground that the combined company
8 would be insolvent.
9 So, despite all of this, Dow agreed
10 to pay a very high price, arranged its financing
11 upfront, and agreed to a very restrictive MAE clause.
12 And the reason you don't hear Dow today claiming that
13 it has a legal justification for not proceeding is
14 because the contract was negotiated in that
15 context -- the context that I laid out.
16 And Dow agreed to specific
17 performance, which is not a boilerplate case --
18 boilerplate clause. I'm sure Your Honor is familiar
19 with the Hexion decision. There was no specific
20 performance clause requiring Hexion to close. So
21 that was a negotiated provision here.
22 And one of the reasons why Rohm and
23 Haas took $78 from Dow, instead of $75 from the other
24 bidder, is because of these very favorable contract

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1 terms that were negotiated. And so, that's

2 something, Your Honor, that -- those are all things
3 that need to be taken into account in weighing the
4 ultimate equities, but also in weighing the schedule.
5 Dow is not saying today that it is
6 impossible for it to do the deal. It's not saying
7 that it will go bankrupt if it has to do the deal.
8 And it's not saying an order of specific performance
9 would be futile.
10 So let me get right to the issue of
11 schedule, Your Honor. We went along with the Court's
12 suggestion to avoid motion practice and go straight
13 to trial so that we could get a faster resolution,
14 which is our objective here. Mr. Bernick's schedule
15 is constructive, but I think we can do better.
16 Two points -- two reasons: One is
17 what does delay do to Rohm and Haas; and two, how
18 much time is necessary to really prepare this case
19 for trial? I cannot overemphasize, Your Honor, that
20 delay and uncertainty is hurting Rohm and Haas. It
21 creates uncertainty with employees who say to
22 themselves, every day, "Why should I stay at Rohm and
23 Haas if I don't know when this deal is going through,
24 and, more importantly, I don't know whether if the

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1 deal goes through I'm going to have a job?"

2 And the reality is, the best people,
3 the people with the most options, are the people most
4 likely to leave; and the uncertainty is hurting our
5 employee base. The same uncertainty is hurting our
6 customers, and our relationships with our customers.
7 And with the merger agreement in place, Rohm and Haas
8 has to manage the business assuming the deal will
9 close, and not as if it will remain a standalone
10 company.
11 So, we bargained for a quick closing
12 precisely to address these issues. In fact, we
13 bargained for a closing two days after the conditions
14 were satisfied precisely for those reasons. So speed
15 is important to us. It was negotiated for us, and
16 the schedule Mr. Bernick proposes is just simply too
17 slow.
18 The second thing is how much time do
19 we need to get this case ready for trial? You know,
20 Mr. Bernick did not say that the discovery couldn't
21 be completed in the shorter period of time; and I
22 think that's true, because the issues here are
23 relatively limited. We're ready to stipulate that
24 there's a recession. We don't have to take discovery

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1 on that issue.
2 To the extent that discovery is
3 needed, it's really Rohm and Haas of Dow to
4 understand why Dow claims that the sky will fall if
5 the deal that it bargained for will go through; and
6 what have they been doing to satisfy their
7 contractural commitments not only, you know,
8 post-filing lawsuit, but in pre-filing the lawsuit,
9 the contractural commitments to make sure that the
10 money would be there when the closing day came.
11 So we think that's relatively limited
12 discovery. It's not a twenty deposition case. It's
13 not a multimillion document case.
14 So, specifically, Your Honor, going
15 to the precedents. In IBP, the trial was six weeks
16 after the complaint was filed. In Clear Channel,
17 which was a post credit crisis case, it was six weeks
18 after trial. And Your Honor's handling of United
19 Rentals was one month after trial.
20 So, yesterday, I suggested 45 days,
21 which we still think is quite reasonable given the
22 scope of the issues. There will always be
23 uncertainty. You know, I understand Mr. Bernick's
24 point that in 45 to 60 days, maybe there will be less

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1 uncertainty.
2 The only thing that we are certain of
3 is that in 60 days from now, whatever uncertainties
4 resolve in the coming 60 days, there will be new
5 uncertainties in the following 60 days. So, we think
6 that a 45-day schedule is reasonable; it's
7 appropriate. I know that the able lawyers on the
8 other side can be prepared in 45 days, and that's
9 what we believe.
10 Just two specific points, Your Honor.
11 Mr. Bernick was -- you know, I think in terms of
12 allocating trial time, Mr. Bernick gave me one day,
13 and I think he volunteered to take six. Whatever
14 trial schedule, I would assume Your Honor would split
15 it 50/50.
16 And then there is one other important
17 point I just do want to highlight, which is the scope
18 of the trial. Our claim is only for specific
19 performance at this point. If the Court does not
20 grant specific performance, obviously, we would have
21 a claim for damages. I would expect and suggest that
22 the parties agree, and the Court agree, that if
23 specific performance is not granted -- although we
24 think it should be -- that the Court would reserve

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1 jurisdiction over the case to hear our damages, and

2 that that would be bifurcated and dealt with not as
3 part of this trial but at a later trial.
4 We think that has a lot of advantages
5 from everyone's perspective. One is it will speed
6 things along. It will avoid delay. It will focus
7 the Court on what we think is the real issue here.
8 But, obviously, if the Court doesn't agree that we
9 are entitled to specific performance, there is a
10 massive damage claim that my client has, and we would
11 not want to prejudice that claim by going forward
12 only on the claim for specific performance.
13 And of course, as Your Honor knows
14 from IBP, one of the reasons the Court granted
15 specific performance was because it recognized the
16 prospect of a damage award against Tyson would be,
17 you know, worse than the specific -- then whatever
18 the consequences of specific performance would be.
19 So, with that, Your Honor, I think
20 you have our position. We think 45 days is
21 reasonable, which really puts it to the beginning of
22 March to the middle of March.
23 MR. BERNICK: Your Honor, if I could
24 just have a couple of moments to respond just to a

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1 couple of points, with the Court's indulgence?

2 THE COURT: Certainly.
3 MR. BERNICK: Yeah. First, to be
4 clear, when Mr. Wolinsky says that Dow is not saying
5 it can't close -- Dow is saying that at this point in
6 time, with the financing in its current state, for
7 all practical purposes it cannot close because to
8 close would be putting itself into a position where
9 within a very short period of time, and just for
10 technical reasons only -- that is, it wouldn't happen
11 immediately -- for only technical reasons would there
12 been any lapse, but we would have almost a certain
13 default. And it would be the height of folly to say
14 that Dow, under those circumstances, would be
15 responsible or it would be responsible for even Rohm
16 and Haas to embrace the certainty that you are
17 creating an entity that is in immediate default. And
18 that is just an irresponsible, we would submit,
19 position. So that's where we are under the current
20 financing.
21 Number two, Dow actually is very
22 sensitive to the effect of this whole process on the
23 Rohm and Haas' employees. In fact, I think that Rohm
24 and Haas fails to appreciate that one of the central

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1 concerns that drives this particular dispute is

2 precisely sensitivity to what Rohm and Haas'
3 employees are going to do.
4 Mr. Wolinsky talks about Rohm and
5 Haas' employees being nervous about their jobs today.
6 One of the huge, huge aspects of this case which
7 depends for its viability -- this deal depends for
8 its viability on the realization of synergy. If you
9 don't have the synergy, there is no way this
10 transaction can work.
11 Well, who is going to produce the
12 synergies? Well, it's going to be the employees
13 working together in the integrated transaction which
14 is why this case is such a tough case. What are
15 those employees going to do if they're working for a
16 company that is hobbled financially; that is
17 essentially an LBO with no light at the end of the
18 tunnel. They're not going to stick around.
19 This is what the proofs are going to
20 get into. The very fact that Mr. Wolinsky identifies
21 and saying that there's irreparable harm every day is
22 precisely one of the main problems with the
23 transaction after it closes. And he may say, "Well,
24 Rohm and Haas doesn't care." But the Court, we

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1 believe, needs to care about what is in the interest

2 of not only Dow, but the interests of Rohm and Haas,
3 the entity, that's going to become part of Dow in the
4 going forward basis.
5 So the very fact of the tenuous
6 purchase that any company has over its employees is a
7 fact that's really, really critical, that although
8 this be an expedited proceeding, that the Court get
9 it right. That's in the interests of the employees,
10 that's in the interests of both companies -- for the
11 Court to get it right, which then gets us back to the
12 timing issue. And I have listened very carefully to
13 what Mr. Wolinsky had to say.
14 First, with regard to the discovery,
15 discovery is going to be extensive. It's going to
16 get into all features of what this deal will look
17 like in the post closing period of time. Could it be
18 accomplished on an expedited basis? Sure, it can.
19 The problem is what is the record
20 that you're creating? Is the record that you're
21 creating after all these depositions one that is
22 going to be so incomplete that it's changing day by
23 day? There's no point in having the record complete,
24 and then turning around and having to recommence

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1 discovery because there's a huge element that has now

2 come into play or not come into play, which is the
3 negotiation -- renegotiation of the bridge loan. We
4 can't speed that up. It is what it is.
5 And I didn't hear Mr. Wolinsky say at
6 any point in time that that is not hugely impactful.
7 Indeed, it's enormously impactful. You can't close
8 the deal if you don't have the money to close the
9 deal.
10 So we go forward and do all this
11 discovery on an expedited basis, and have lawyers
12 running all over the country taking depositions on
13 both sides -- and they will be on both sides -- only
14 then to have to continue to take more depositions
15 perhaps of the same people, as this piece of the
16 puzzle continues to evolve. We've tried to make a
17 proposal that at least gets that piece of the puzzle
18 in place before we have this thing heard. And I
19 don't hear anybody saying that that's not material.
20 It certainly is material.
21 So far as the timing of the trial is
22 concerned, I confess to have been mistaken. I
23 thought that it was the position of Rohm and Haas
24 that this was a very limited case that would require

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1 very limited proof. If that's true, I don't know why

2 it is that they need more than a day. But if they
3 insist that the trial be split 50/50, we are
4 certainly going to need more than a day. We are
5 going to need three or four, perhaps five days.
6 Now, in order to accommodate that
7 within this schedule, which tries to get to closure
8 by the 15th of April, maybe we should be talking
9 about -- and I am now arguing contrary to my client's
10 preferred position to start the trial somewhat
11 earlier -- maybe we should start the trial sometime
12 towards the back end of the week of the 30th of
13 March, beginning of April.
14 I, unfortunately, have a criminal
15 case on the 6th and 7th. I would ask the Court's
16 indulgence with respect to that. I can't get out of
17 it. But we are prepared to start the trial towards
18 the back end of -- the first of April, the week of
19 March the 30th. We think it would really be
20 imprudent to start it in March because of the bridge
21 financing situation.
22 But, you know, we're prepared to
23 start then and that will give us, you know, six days
24 from the 1st, 2nd, 3rd, 8th, 9th, 10th, 13th, 14th --

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1 you know, however long it's going to take. If they

2 want to go 50/50, we're prepared to start somewhat
3 earlier.
4 MR. WOLINSKY: Your Honor, this is
5 Marc Wolinsky. Would you like to hear from me
6 further or would you just like to move forward?
7 THE COURT: I appreciate the offer,
8 Mr. Wolinsky. I am studying, a little bit what you
9 have both told me. I don't think that -- with all
10 due respect, I think you could probably give me more
11 reasons why I ought to schedule this, the dates you
12 have presented, and Mr. Bernick could do the same and
13 we could continue this conference call for a long
14 time. You are both very good, and you do excellent
15 work. I think it is just going to require me coming
16 down somewhere in the calendar.
17 It strikes me that this may be the
18 first time ever I have had a motion to expedite in a
19 case like this where the moving party has, it seems
20 to me, successfully and satisfactorily demonstrated
21 that they have both a colorable claim that they're
22 proceeding on, and that there is a risk of
23 irreparable harm or injury to that party if the
24 matter is not expedited. While, at the same time,

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1 the party opposing expedition has made a persuasive

2 argument that scheduling the matter on an expedited
3 basis risks imminent irreparable harm to all of the
4 parties.
5 It is a position I have not occupied
6 before, but I am square in the middle of it looks
7 like irresistible force and the immovable object; and
8 it is not a comfortable position.
9 My first reaction when I looked at
10 the complaint and looked at the motion, and when I
11 heard you yesterday, what was most striking was that
12 I didn't hear the sorts of arguments that I am
13 accustomed to hearing in resisting motions to
14 expedite regarding the difficult legal issues
15 involved, the ambiguity of the contractural language
16 that the Court's going to be asked to examine, and
17 the nature of the proof that will have to be
18 discovered and offered to the Court. I didn't hear
19 all of those things.
20 And so, my instincts were then, as
21 they still are, to avoid motion practice in an effort
22 to try to streamline the proceeding and save expenses
23 and time and effort and go straight to a trial.
24 Frankly, it seemed to me that it could be a very

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1 abbreviated trial of one to two days, perhaps three

2 at the outside. In thinking of that, it struck me
3 that this matter probably could be tried in February.
4 I strongly believed at the time --
5 that is yesterday -- that if I was going to schedule
6 it, I ought to schedule it the third or fourth week
7 of February. As I told you yesterday, I have those
8 days available: The week of the 16th and the week of
9 the 23rd to hold a trial, whether it be a two-day
10 trial or a two-week trial -- I could do either one.
11 But Mr. Bernick has argued that the
12 circumstances about the economic conditions that we
13 are in, and the specific details of Dow's ability to
14 renegotiate the bridge loan with a number of banks --
15 19 in all -- is going to create factual uncertainties
16 that are going to plague any trial that I schedule,
17 until such time as those efforts to renegotiate the
18 bridge loans have been completed -- and we know
19 exactly where that situation rests. And so,
20 Mr. Bernick's view is we should wait at least until
21 mid April, mid to late April so that we have all of
22 those circumstances fully developed so that they can
23 be presented to the Court.
24 Mr. Wolinsky's position, however, is

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1 that the contract is clear; that the obligation to

2 have financing to close the deal was part of the
3 negotiated transaction and is reflected in the
4 contract that governs the parties with respect to
5 this proposed merger; and that each day of delay is
6 another day of threatened harm to Rohm and Haas.
7 As I said, it is the immovable object
8 and the irresistible force. My instincts, however,
9 haven't been changed much from yesterday when I still
10 believed that this was a matter that it would be
11 better, and in the interests of both companies, to
12 have this resolved sooner rather than later. So I
13 still am pulled in the direction of a more expedited
14 trial schedule than Mr. Bernick is asking and
15 imploring me to agree to.
16 45 days out is roughly March the 9th.
17 I have that time available and can schedule the trial
18 for March the 9th. The other option would be to
19 schedule it for March the 23rd.
20 I am reluctant to do that a bit,
21 Mr. Bernick, and it's not because I want to inflict
22 discomfort on you, but you have a criminal trial
23 coming up in April --
24 MR. BERNICK: Actually, the truth

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1 is -- and I hoped not to get to this -- that criminal

2 trial is starting earlier. It starts in late
3 February. And we're -- we have dark days beginning
4 on the 30th of March for an extended period of time.
5 I didn't want to raise it because, you know, this is
6 a very, very important matter. And my client
7 believes that, you know, my availability is not as
8 important as the need to get into April where I
9 actually, you know, beginning in mid April would have
10 further conflicts.
11 But I would be free beginning March
12 the 30th, and going forward. And I am hopeful of
13 getting a dispensation on the two days on the 6th
14 and 7th. It's the Grace bankruptcy case which is
15 across town. This is a criminal trial in Montezuma,
16 Montana. And I am the lead lawyer for Grace as I am
17 the lead lawyer for Dow in this case. So the
18 difference between the 23rd and the 30th is pretty
19 material.
20 THE COURT: What about the difference
21 between the 9th and the 23rd?
22 MR. BERNICK: That doesn't make it --
23 the judge requires that -- I will be in contempt of
24 court if I am not present in court those days. I

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1 would not be able to participate in this case, which

2 would obviously have a significant impact. I don't
3 want to overstate that. I've known enough of the
4 world to know that not everybody gets the ideal
5 circumstance. But I would not be free with certainty
6 until -- I mean, I know I won't be free until
7 the 30th of March.
8 THE COURT: Well, Mr. Wolinsky, it
9 looks like I am being sandwiched into scheduling
10 something the 30th of March.
11 MR. WOLINSKY: Well, Your Honor, let
12 me just state something that maybe it goes without
13 saying, but I have the highest regard for
14 Mr. Bernick. I have known him for a very long time.
15 I think he was one or two years ahead of me or behind
16 me in law school; and I can certainly understand why
17 Dow would want him to be in the courtroom.
18 Kirkland and Ellis is a very fine and
19 very large firm. Mr. Tully and Mr. Nachbar are
20 accomplished lawyers.
21 There is nothing more important to my
22 client than this case. And with deference to
23 Mr. Bernick and his schedule, you know, putting my
24 client in the face of a threat of irreparable harm

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1 because of one lawyer's -- you know, because one

2 skilled lawyer, a lawyer who is very much in demand,
3 to drive the schedule is, I think, just not the right
4 way to proceed here.
5 I think Your Honor's initial
6 reactions were appropriate. Obviously, you know, I
7 was happy to hear them. Delaying the trial because
8 one lawyer is committed is, to my mind, not the right
9 way to go here.
10 MR. BERNICK: I don't really think,
11 though, that -- you know, I understand Your Honor's
12 effort here to do -- to deal with a very, very knotty
13 problem. But I would urge that actually the fact
14 that it is unprecedented, and the fact that it is so
15 knotty, really underscores the importance of making
16 sure that it really is right.
17 I mean, you've got thousands and
18 thousands of people in both organizations that are
19 going to depend upon it. The notion that somehow if
20 the transaction that has been pinked since last July,
21 somehow it makes all the difference in the world to
22 have a couple more weeks when the company is going to
23 be in the middle -- I mean, exactly during this
24 period of time, Your Honor, day by day, in the middle

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1 of renegotiating the bank loan.

2 And what's then going to happen at
3 trial -- this is the other thing that just starts to
4 roll forward on the reality train -- what's going to
5 happen? Everything that happens during this trial is
6 going to effect, potentially, the last stage -- well,
7 actually not the last stage -- but negotiating with
8 fourteen banks. Why does anybody believe that the
9 banks won't be paying attention to what's happening
10 in trial?
11 We're going to have to assert during
12 the course of that trial the grim reality of how bad
13 things can get. We have to do that because of the
14 essence of the problems the company faces. So,
15 every day in court, we're going to wonder in, or
16 somebody standing in my place is going to wonder in
17 and say, "Let me tell you, Your Honor, we're going to
18 put on testimony about how bad things might get," if
19 we are persuasive on that -- we may not persuade the
20 Court, although I'm very hopeful we will -- but we
21 could well persuade the banks. Them saying, "What in
22 the world are we doing renegotiating this deal, and
23 why in the world would we want to go forward?"
24 And then in the middle of trial,

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1 we're then trying to keep that together: "What did

2 we say in court? Who do the banks think?" And if
3 the banks walk away, then no matter what it is, I
4 think -- with due respect to the Court -- Your Honor
5 decides, we can't make it happen.
6 That's the difficulty of this thing,
7 is that the picture is evolving. We tried, Your
8 Honor, in good faith. I could have taken the Court
9 through all of the other elements of this transaction
10 and made the same speech with respect to sale of
11 assets. We're talking about potential sales of
12 assets where, depending upon what the market thinks
13 of our condition, the potential buyers either, A,
14 will not be there, or, B, will be demanding
15 absolutely rock bottom discounts. And we could be
16 talking about deltas of billions of dollars, again,
17 depending upon what happens in court.
18 And so, we are -- Your Honor's caught
19 between a rock and a hard place. We're caught
20 between a rock and a hard place. And I would venture
21 to say that Rohm and Haas, too, is caught between a
22 rock and a hard place because it's not as simple as
23 saying, "We don't care." All of the people of Rohm
24 and Haas who do care ought to care.

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1 So, coming back to the proposition

2 that my schedule is unfortunate, but I don't think
3 it's the real mover here. I think the real mover
4 here is almost the impossibility of trying to put
5 this case on when you don't even know if the
6 financing is there; to make a deal happen even if
7 there is an order; and where the very fact of putting
8 the case on potentially jinxes that financing.
9 And I think that the idea that
10 somehow we've got to do this before the end of March
11 or, you know, catastrophe falls, I think, is a false
12 threat. There has been uncertainty about this
13 transaction for weeks. It has been in the
14 newspapers.
15 THE COURT: Thank you, Mr. Bernick,
16 Mr. Wolinsky. I appreciate both of you being
17 available again this morning and providing me with
18 further thoughts to consider.
19 I am going to do this: I am going to
20 end the conference call. I am going to give you a
21 decision in the next two or three hours, roughly
22 speaking. It will be within that time, not longer
23 than that time. And I will give it to you in writing
24 so that you will be able to share that with your

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1 clients and we will know where we are going from

2 there.
3 MR. BERNICK: Thank you very much,
4 Your Honor.
5 MR. WOLINSKY: Thank you, Your Honor.
6 We very much appreciate your prompt attention to the
7 matter.
8 THE COURT: Certainly.
9 (The teleconference was adjourned at
10 11:42 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 33 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

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