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1 Page 1 1 STATE OF ILLINOIS ) ) ss: 2 COUNTY OF COOK ) 3 IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS COUNTY DEPARTMENT-CHANCERY DIVISION 4 5 TODD MILLER, ) individually and on ) 6 behalf of all others ) similarly situated, ) 7 ) Plaintiff, ) 8 ) No CH vs. ) (Consolidated with) 9 ) 2014 CH 01175; BEAM, INC., MATTHEW J. ) 2014 CH SHATTOCK, A.D. DAVID ) MACKAY, PETER M. WILSON, ) 11 RICHARD A. GOLDSTEIN, ) ANN F. HACKETT, STEPHEN ) 12 W. GOLSBY, ROBERT A. ) STEELE, GRETCHEN W. ) 13 PRICE, SUNTORY HOLDINGS ) LIMITED, and SUS MERGER ) 14 SUB LIMITED, ) ) 15 Defendants. ) 16 REPORT OF PROCEEDINGS held in the 17 above-entitled cause, before the Honorable JEAN PRENDERGAST ROONEY, Judge of said court, on the 18 5th day of March, 2014, Courtroom 2510, at the hour of approximately 10:30 o'clock a.m., located at the 19 Richard J. Daley Center, Chicago, Illinois Reported by: Camille Trok, RPR 23 License No

2 Page A P P E A R A N C E S: 3 ROBBINS, GELLER, RUDMAN & DOWD, LLP, by MR. DAVID T. WISSBROECKER West Broadway, Suite 1900 San Diego, California (619) dwissbroecker@rgrdlaw.com 6 and 7 LASKY & RIFKIND, LTD., by 8 MR. NORMAN RIFKIND 351 West Hubbard Street, Suite Chicago, Illinois (312) rifkind@laskyrifkind.com 11 Appeared on behalf of the Plaintiff; SIDLEY AUSTIN, LLP, by MS. ELIZABETH Y. AUSTIN and 14 MR. WALTER C. CARLSON One South Dearborn Street 15 Chicago, Illinois (312) laustin@sidley.com wcarlson@sidley.com 17 Appeared on behalf of Beam, Inc., and 18 the individual Beam Defendants; 19 EKL, WILLIAMS & PROVENZALE, LLC, by 20 MR. TERRY A. EKL 901 Warrenville Road, Suite Lisle, Illinois (630) tekl@eklwilliams.com 23 Appeared on behalf of Suntory Holding Limited and SUS Merger Sub Limited. 24

3 Page 3 1 THE COURT: Good morning, everyone. Can 2 you please state your names for the record. 3 MR. RIFKIND: Good morning, Your Honor. 4 Norman Rifkind. R-i-f-k-i-n-d, on behalf of 5 Plaintiffs. 6 MR. WISSBROECKER: Good morning, 7 Your Honor, David Wissbroecker, 8 W-i-s-s-b-r-o-e-c-k-e-r, on behalf of the 9 Plaintiffs. 10 MR. CARLSON: Good morning, Your Honor, 11 Walter Carlson and Liz Austin, on behalf of Beam, 12 Inc, and the individual Beam Defendants. 13 MR. EKL: And good morning, Your Honor, 14 Terry Ekl, E-k-l, on behalf of the Suntory 15 Defendants. 16 THE COURT: Okay. Good morning, everyone. 17 Okay. Since we parted company yesterday, I thought 18 since the motions to dismiss was fully briefed and 19 we, in many ways, had -- I had heard argument on it, 20 and you've made arguments on it. 21 The Plaintiff had the disadvantage 22 yesterday of not having the benefit of the reply 23 brief, or having just gotten it before court. So it 24 really wasn't appropriate to fully argue the motion

4 Page 4 1 to dismiss. But I read the reply, I'm presuming 2 Plaintiff did, as well, so that's why I decided it 3 would be best just to set the case for hearing on 4 the motion to dismiss right now before we get to the 5 merits of the motion for expedited discovery. 6 Because they're intertwined, in my view, okay? 7 And I know you've said quite a bit already. 8 MR. CARLSON: I have. 9 THE COURT: And so I took copious notes, so 10 that you're aware. I'm familiar with your filings 11 on both sides and the case law. So today I see as 12 your opportunity to make any final points that you 13 believe you have not already made. 14 MR. CARLSON: Thank you. Let me proceed, 15 Your Honor, because this is our motion, and I know 16 Your Honor has heard extensive argument. 17 For the reasons I set forth at length 18 yesterday, Beam believes that the case must be 19 dismissed pursuant to the forum selection bylaw. 20 I won't go through the affirmative reasons 21 why, that's set forth in our papers and argument 22 yesterday. But I did want to address some arguments 23 that were made by Counsel yesterday, just to 24 highlight them.

5 Page 5 1 I went back and reread the Galaviz case. 2 The Galaviz case is not legally controlling. It was 3 decided before Boilermakers. And Boilermakers 4 subsequently decided expressly rejects the decision 5 in Galaviz. That's at 73 A 3rd at Secondly, The contention that boilermakers 7 did not address contract principles is totally 8 without merit. That decision goes on at length to 9 determine whether or not contractual principles 10 under Delaware law are consistent with the bylaw 11 provision. 12 And in an extensive discussion where the 13 Judge summarizes its conclusion at 73 A 3rd at and summarizes the discussion at 73 A 3rd at He evaluates the contract analysis, extensively 16 concludes that these provisions are enforceable as a 17 matter of Delaware corporate and contract law. 18 Now, yesterday Mr. Wissbroecker persisted 19 in his argument that the Board was engaged in 20 wrongdoing at the time. I reread the complaint. 21 The complaint only alleges wrongdoing as of December 22 15th, that's in Paragraph 39. There's nothing more. 23 Finally, with respect to the enforceability 24 of the bylaw, this bylaw in no way deprives the

6 Page 6 1 Plaintiffs here of a remedy. They have their 2 remedy. Their remedy is to proceed in Delaware 3 before a court that is skilled in applying Delaware 4 law. 5 THE COURT: Pardon me. 6 Excuse me. If you need to have a 7 conversation, you need to take it outside. There is 8 no talking while court is in session, it is not 9 courteous. 10 Proceed. I'm sorry for the interruption. 11 MR. CARLSON: There's no problem. 12 So, I mean the point here is they are not 13 deprived of a remedy at all if the case proceeds in 14 Delaware in front of a Judge who is skilled in this 15 law, where it's agreed by everyone that it is 16 Delaware law that applies. 17 We provided Your Honor a reply brief, a 18 series of Illinois cases that show that the policy 19 in Illinois is the same as the policy in Delaware, 20 and that is a corporation can include provisions 21 that say that subsequent bylaw amendments are valid 22 and binding. That's the Illinois Supreme Court's 23 decisions in Steen, and the Appellate Court decision 24 in Williams.

7 Page 7 1 Here, there's clearly no imposition on this 2 particular Plaintiff who claims they are an Illinois 3 resident but haven't pleaded that, because they 4 themselves had filed cases in Delaware previously. 5 There's no hardship, there's no unconscionability. 6 Forum selection clauses of this type are clearly 7 enforceable. So the case should be dismissed under (a)(9). 9 Moving to the 2-619(a)(3). It is 10 undisputed that these cases here and in Delaware are 11 identical. It's undisputed the Delaware case was 12 filed first. It's undisputed that there's no need 13 to have duplicative class actions, and the 14 Plaintiffs themselves pleaded in their complaint 15 that there would be harm from multiple actions. 16 That's at Paragraph 31 of their complaint. 17 It's undisputed that Vice Chancellor Noble 18 has the Delaware cases, and has the hearing set on 19 the Plaintiff's motion to expedite tomorrow morning. 20 It's undisputed that this case solely 21 involves issues of Delaware law, and I think it's 22 undisputed that Vice Chancellor Noble has been on 23 the bench in Delaware sitting on the Court of 24 Chancery since the year 2000.

8 Page 8 1 Judge Epstein considered a situation 2 precisely like this. Went through the factors and 3 said the right answer here is for the case to go 4 forward in Delaware. 5 I can't articulate it better than he did. 6 That's my argument, Your Honor. 7 THE COURT: Thank you. 8 MR. WISSBROECKER: Your Honor, thank you 9 for the opportunity to address the issues that were 10 raised in the reply brief. 11 I think that it's quite obvious here that 12 what this comes down to is whether or not the Court 13 thinks Galaviz and Boilermakers is more instructive 14 on the issue of forum selection revision. And I 15 think that I can solve that conundrum for you. 16 Yesterday the Court asked whether or not 17 the facts were similar in Boilermakers, whether or 18 not there was a factual scenario that was analogous 19 to the one before the Court. And the answer is in 20 the Boilermakers case THE COURT: If you refer to a page, please 22 use the official reporter citation, because I have a 23 Lexis printout, and that's easier for me to find. 24 MR. WISSBROECKER: I usually have Lexis,

9 Page 9 1 too, but for some reason I have Westlaw. I will 2 give you the official citation. 3 At 948 Chancellor Strine makes it clear 4 that this is not an attack on a factual scenario 5 involving a forum selection provision. At 948 he 6 says: This motion is only concerned with the facial 7 statutory and contractual validity of the bylaws. 8 And the motion is expressly not concerned with how 9 the bylaws might be applied in a future real world 10 situation. The only question presented there was 11 whether the bylaw can never operate consistently 12 with the law. It was a facial challenge to -- in 13 the abstract, on a clear day with no misconduct 14 alleged, is it permissible for a board of directors 15 to institute a bylaw provision that purports to 16 select a venue for shareholders. 17 Applying Delaware corporate law, 18 Chancellor Strine answered that in the affirmative. 19 But he expressly reserved this situation that is 20 presented for the Court here, which is where there's 21 a factual scenario that calls for the Court to 22 assess whether or not the venue selection provision 23 is proper in the certain circumstance that's before 24 the Court.

10 Page 10 1 Now, I wanted to also note something about 2 that particular issue, the facial validity of the 3 statute. 4 Chancellor Strine also notes on 956 to the ability of stockholders to check the authority 6 of the Board by repealing boarded opted bylaws, and 7 of course the ability for stockholders to opt -- 8 elect directors that they feel are acting in 9 improper ways at their annual meeting. 10 As I noted yesterday in presenting argument 11 to the Court, neither one of those options was 12 available to shareholders here. There was no 13 opportunity for shareholders to vote either to amend 14 or repeal the bylaws, or perhaps attempt to replace 15 a board of directors that they felt was acting 16 improperly. So those two checks that shareholders 17 have that Chancellor Strine noted in Boilermakers 18 are not present here. Rather, what the Court is 19 presented with is the situation in the Galaviz case. 20 And directing the Court back to that 21 particular case where there was a challenge to a 22 venue selection provision in the midst of a 23 litigation that challenged conduct that was ongoing 24 at the time the venue selection provision was

11 Page 11 1 adopted. That's the real world circumstances that 2 Chancellor Strine talked about in Boilermakers 3 where -- to underscore the fact that that was just a 4 facial validity challenge. 5 In Galaviz, the Court was presented with a 6 real world situation. And if you look at the 7 Galaviz opinion, again citing to the Official 8 Reporter, the relevant language is really 1174 to 9 75, where the Court recites the facts, and I'm going 10 to come back to this section here in a second. 11 Noting that the venue provision was 12 unilaterally adopted by the directors who are 13 Defendants in this action, after the majority that 14 purported wrongdoing is alleged to have occurred, 15 and without the consent of existing shareholders who 16 acquired their shares when no such bylaw was in 17 effect. Under these circumstances there is no basis 18 for the Court to disregard that the Plaintiff's 19 choice of forum, and then it goes on to refer to 20 some forum, non-convenience analysis, but that's 21 what we have here. We have a real world factual 22 circumstance. 23 The scenario that Chancellor Strine said is 24 expressly not before him and will be the subject of

12 Page 12 1 a decision in whatever jurisdiction the issues come 2 up in the future. That's what the Court is being 3 asked to decide. That's why Galaviz controls here, 4 and not Boilermakers. 5 Boilermakers was a challenge on a clear 6 day, no misconduct. Galaviz in the midst of the 7 wrongdoing, they adopted the provision which is 8 exactly what happened here. In the middle of the 9 merger process when the wrongdoing alleged was 10 ongoing, the provision was adopted by a board, 11 Defendants to this action, who did not seek the 12 consent of shareholders. 13 And just rolling back to the issue of 14 whether or not it was adopted in the midst of a 15 wrongdoing, if that is the sticking point in this 16 decision-making process, that's something that has 17 to be explored through discovery. Because 18 Mr. Carlson can say no, I can say yes, neither one 19 of us has any facts on either side of the equation 20 to be able to allow the Court to decide that issue. 21 So if it comes down to that point, there's got to be 22 discovery as to whether or not this provision was 23 adopted specifically in response to anticipated 24 litigation, in this action or in Delaware or

13 Page 13 1 anywhere else. And if that's the case, then Galaviz 2 would control. I would submit that it's not 3 necessary for the Court to even go beyond the 4 allegations in Plaintiff's complaint, which we noted 5 at Paragraph 36 alleged that the process alleged 6 wrongdoing started in November, provision adopted 7 December, so Galaviz would control. 8 But if there's a dispute about that, it's a 9 discovery issue. It's not something that can be 10 decided as a matter of law. It's sort of like 11 personal jurisdiction motions, or those sorts of 12 things where you don't get to the merits, but you 13 still have to have discovery to determine if the 14 case is properly before the Court. 15 Now, I would note one particular thing that 16 may or may not have sort of a thunderbolt affect on 17 the Court's analysis, and I would suggest it would. 18 I looked back at the bylaw provision, and it's cited 19 on Page 5 of the Beam Defendants' memorandum in 20 support of their motion to dismiss. And it sets 21 forth the bylaw provision. And I submit it would be 22 a great aid to the Court to focus on the last 23 sentence of the provision. And I think this goes 24 directly towards notice, consent, the ability of

14 Page 14 1 shareholders who are existing shareholders to be 2 bound by a subsequent modification to a contract. 3 There the provision states, last sentence: 4 Any person or entity purchasing or otherwise 5 acquiring any interest in shares of capital stock of 6 the company shall be deemed to have notice of and 7 consented to the provisions of this Article 14, or 8 whatever it is. 9 So I think that that language demonstrates 10 the bylaw provision does not apply to Plaintiff's 11 shareholders who are existing shareholders who have 12 in the past acquired, or in the past purchased an 13 interest in the company. 14 I would submit that the Court can use that 15 particular piece of the bylaw to hold that the 16 provision can't be binding on existing shareholders, 17 all of whom -- which is the precise situation before 18 the Court. None of the shareholders, the Plaintiffs 19 here, bought shares after the bylaw provision was 20 amended. So I would submit that even the bylaw by 21 its own terms purports not to bind existing 22 shareholders who have purchased or acquired shares. 23 And the final point -- well, two final 24 points I want to make in response to Defendant's

15 Page 15 1 reply brief. One of which is going back and looking 2 at Galaviz and Boilermakers. I tend to agree with 3 what Mr. Carlson said with respect to the analysis 4 that Chancellor Strine conducted. I said yesterday 5 he conducted an analysis just based on corporate 6 law. I looked back at it, and there was an 7 assessment of the validity of this provision under 8 Federal common law, which is exactly what the 9 Galaviz Court did. The Galaviz Court looked at the 10 Bremen v. Zapata decision and its adoption in that 11 district, the Ninth Circuit, and applied that law to 12 find that the provision was invalid. Strine did the 13 same thing, clear day, no alleged misconduct, no 14 allegation that this was unilaterally amended by the 15 Board, and shareholders had no opportunity to 16 disapprove it. Applying the law, the same Federal 17 common law that the Galaviz Court, Strine Chancellor Strine ended up somewhere else. 19 So that's important for one point that 20 Defendant's raised in their papers, which was a 21 suggestion that the Internal Affairs Doctrine 22 mandates that Delaware corporate law should somehow 23 apply to contractual analysis. Chancellor Strine 24 didn't even apply Delaware corporate law when it

16 Page 16 1 came down to the nitty-gritty of this contract. He 2 would have did what Galaviz did, and applied Federal 3 common law. 4 Now, I think this Court sitting in this 5 jurisdiction should apply Illinois common law 6 contractual law to the issues here, because the 7 contract, if there is one, was executed here in 8 Illinois and all the conflicts of law issues would 9 mandate application of Illinois's law. 10 But the important point here is that the 11 Internal Affairs Doctrine does not mandate that as 12 to the contract Delaware law or Delaware corporate 13 law, common law, or ecclesiastical law would apply 14 to the scenario before the Court. I think that's an 15 important -- and we did look -- we did the all Fed 16 search on Lexis, all cases. We looked everywhere. 17 There is not one Court, not one Court that applied 18 the Internal Affairs Doctrine to say that a 19 particular jurisdiction's contract law should be 20 applied as opposed to the law of the State or the 21 jurisdiction at issue. 22 And on that point, I would refer the Court 23 to the analysis that the Galaviz Court did, which is 24 in the same provision, or the same paragraphs,

17 Page 17 1 sorry, 1174 to 75, stating how the Court actually 2 applied the law, that it first noted the 3 contradictory position that the Defendant had taken 4 asking the Court to apply -- or stating as the 5 Defendants have here, that it's a contract, and then 6 asking the Court to apply corporate law to assess 7 whether or not shareholders can be bound by it. And 8 the Court found that to be a little bit 9 contradictory, and went ahead and applied modern 10 Federal law and says that: Even in the case of a 11 forum contract, the Court merely gives affect to a 12 bilateral agreement between the parties, and that 13 any disputes they may have arising out of that 14 agreement will be litigated in the particular forum. 15 And then goes on to note what I already read into 16 the record, which is the scenario before the Court 17 in Galaviz where Defendants adopt bylaw, wrongdoing 18 ongoing, no shareholder assent, it can't be a valid 19 contract. 20 So I would suggest that even in the 21 Boilermakers framework, which we don't think that is 22 appropriate under the circumstances, the Federal 23 common law as applied in a factual scenario which is 24 before the Court, mandates that the venue selection

18 Page 18 1 provision cannot be found valid and enforceable. 2 Now, we did look also at the Illinois cases 3 that were cited. And two of the cases, the 4 Fritzsche case and the Kotynek case, had no 5 challenge to the bylaws. It's just a general 6 statement of law that bylaws, I guess on a clear 7 day, are valid and enforceable. 8 The Williams case involved a situation 9 where the shareholders actually had an opportunity 10 to vote on the bylaw provision at issue there. And 11 the question was whether or not the shareholder 12 could be bound, even though they decided not to 13 attend the meeting. And in that situation it's 14 obviously different than the one here, because no 15 shareholders had the opportunity to say yes or no to 16 it, although I guess the shareholders here before 17 the Court have said no, and as forcibly as they can 18 without the opportunity to actually go in and 19 replace the Board or have the bylaw provision 20 rescinded. 21 And the other case involved a scenario with 22 a contract that was executed that actually said: I 23 agree to be bound by any subsequent amendment to 24 these bylaws. And there was a recitation in the

19 Page 19 1 contract. So similar to maybe the Carnival Cruise 2 case that the Galaviz Court said was distinguishable 3 is -- okay, it's in a contract somewhere buried, but 4 you at least had the contract there to look at it 5 and had to agree to it in order to move forward with 6 the purchase. So those cases in no way support 7 Defendant's position that the bylaws are a valid 8 contract. That's all that I have to say about that 9 particular issue. 10 And I just wanted to focus very quickly on 11 the other issue, which is the case going on in 12 Delaware. And we submitted with our opposition to 13 the motion to dismiss, I believe, and maybe also in 14 the reply, the order in the Options Express case in 15 Delaware, but just for the Court's convenience, I 16 gave this to Defense Counsel earlier, I just wanted 17 to provide that to the Court. And also, the Court 18 yesterday had shown some interest in getting 19 underlying briefing in similar matters. So for 20 factual context in the Options Express case, that is 21 also the brief that Defendant filed, which was -- we 22 like to call it the world peace motion, where they 23 filed a motion to proceed in one jurisdiction and 24 invite the two Courts to get together and discuss

20 Page 20 1 the issue. And the order is the result of that, and 2 I think the critical part in that order, which I 3 want to make sure that everyone has a chance to 4 examine, is the last whereas paragraph where the 5 Court, and this is the Delaware Court, actually, 6 staying the Delaware action in favor of Judge 7 Mason's case here in Cook County: The Court having 8 conferred with Judge Mason and having agreed that 9 the litigation should proceed before her in light 10 of, and this is the most important part, among other 11 things, her having already devoted judicial 12 resources to the case. 13 Now, I don't think anybody here can argue 14 or contend with a straight face that Your Honor has 15 not devoted substantial resources to this case. 16 We've been standing in front of you arguing probably 17 for four hours, at least, and I know that you've 18 spent a lot of hours reading through that stack of 19 papers as shown by the fact that you are asking very 20 pertinent and relevant questions about what's going 21 on here. And that's important, because as I noted 22 yesterday, there's only two reasons why such a 23 motion should be granted. One of which is when 24 another case is significantly ahead, and that Court

21 Page 21 1 has done a lot of things. For instance, if there 2 had already been a hearing on the motion for 3 expedited proceedings, if discovery was underway, if 4 there was a hearing date set, if the Court in 5 Delaware or anywhere else had already devoted 6 substantial judicial resources to something in such 7 a way that the scale would weigh heavily in favor of 8 that jurisdiction, then I'd have a lot weaker 9 argument. But that's not case here. There is no 10 way that anyone can say Delaware has, or that the 11 Court here has spent more time and energy focused on 12 the issues that are presented. And that's exactly 13 the scenario that led Judge Mason and Vice 14 Chancellor Laster to converse and have Vice 15 Chancellor Laster say: Go ahead, Judge Mason, 16 because you obviously have spent a lot of time on 17 this, and you are focused on it and understand the 18 issues. 19 THE COURT: Well, one of the distinctions I 20 see, in part, and I'd like you to comment on this, 21 between Options Express, and that's how you refer 22 to the case, and this case, is in Options Express 23 the bulk of the litigation, I think, was before 24 Judge Mason.

22 Page 22 1 MR. WISSBROECKER: In terms of the number 2 of cases? 3 THE COURT: Correct. 4 MR. WISSBROECKER: Well, I can look back at 5 my -- I think that we may have had -- 6 THE COURT: Well, I think that that's the 7 case, number one, and number two -- 8 MR. WISSBROECKER: In terms of number of 9 cases? 10 THE COURT: In terms of number of cases. 11 Number two MR. CARLSON: That's certainly true 13 from the schedule on Page 4 of the brief that 14 Mr. Wissbroecker just handed to you. 15 THE COURT: Okay. The other distinction 16 is, I think, and maybe you can clarify this by 17 answering my question. The only thing pending in 18 Delaware is the request for preliminary injunction 19 and the motion to expedite discovery on which 20 hearing is set tomorrow. Meaning there's not motion 21 practice on the subject of -- that we've all been 22 here. Part of what we spent so much time on 23 throughout our discussions on your motions for 24 expedited discovery is well, you need to show good

23 Page 23 1 cause. If there's a supportable, and I think it is 2 supportable, obviously, since we've spent so much 3 time discussing Boilermakers and Galaviz, argument 4 under the 2-619(a)(9) and (a)(3), that's where the 5 bulk, if you will, of the arguments and time has 6 been spent, in looking at whether or not there's 7 good cause for your motion to expedite discovery 8 because of these substantive legal arguments, which 9 is different than what perhaps what the Chancellor 10 is dealing with Delaware. We don't know, I don't 11 think, the extent to which he has dealt with the 12 motion to expedite discovery internally. 13 MR. WISSBROECKER: True. 14 THE COURT: And the hearing is set for 15 tomorrow. 16 MR. WISSBROECKER: That is true. However, 17 we have spent a lot of time also talking about the 18 merits, which is our allegations, why we think the 19 Board did wrong here. And that has been -- that's 20 why Defendants had to file their over-length brief, 21 right? Because they wanted to get at those issues. 22 And we have explored those issues. 23 But I think the most important thing you 24 can take away from that analysis is if the Court

24 Page 24 1 decided today to dismiss the case or to not grant 2 expedited discovery, I guarantee you that it will be 3 not an hour from now until there is a letter in 4 front of Vice Chancellor Noble saying: Look what 5 the Court did in Illinois. That is the reason for 6 you not to grant expedition, that is the reason for 7 you not to let this case go forward. So to suggest 8 that what the Court has done here would be nothing 9 in terms of activity, in terms of THE COURT: That nothing is different, 11 because some of the issues that have been argued 12 here in part have been necessarily incorporated into 13 your motion to expedite because of the venue 14 selection issue and whether the bylaw should be 15 honored. 16 MR. WISSBROECKER: Then you've had more to 17 deal with than Vice Chancellor Noble will have to 18 deal with throughout the litigation, I would say. 19 Because you've heard extensive argument on briefing 20 on these issues, and you also have addressed the 21 merits. You have to, to a certain extent, in order 22 to analyze whether or not it's appropriate to grant 23 expedited stay. So THE COURT: Okay. And what about the

25 Page 25 1 argument, I think there's an argument made, and you 2 can correct me if I'm wrong, any of you, that 3 alternatively the proceedings under 2-619(a)(3) 4 should be dismissed and/or stayed. 5 MR. WISSBROECKER: I guess I'm not clear 6 what the Court is asking. 7 THE COURT: Do you have an opinion on that? 8 MR. WISSBROECKER: I think that neither one 9 should be granted. I don't think it's appropriate 10 to dismiss the action under any circumstances. I 11 certainly don't think it's appropriate to stay it, 12 because for the reasons that we discussed. But I 13 think Defendant's position is that they believe the 14 case should be dismissed. 15 THE COURT: I think you're right. Okay. 16 Anything else? 17 MR. WISSBROECKER: That's it, unless the 18 Court has anything further. 19 THE COURT: No. Rebuttal? 20 MR. CARLSON: Yes, Your Honor. 21 Mr. Wissbroecker said a lot. Let me deal with the 22 points I think in the order that he made them, as 23 opposed to sort of a perfect logical order. 24 It is true that Chancellor Strine addressed

26 Page 26 1 the issue of the validity of the forum selection 2 bylaws in a declaratory judgment setting. That's 3 true. But virtually everything else that 4 Mr. Wissbroecker said in terms of characterizing 5 that opinion, is not true. 6 Let me start with the threshold basis for 7 that decision. And this is in the first two pages 8 of his decision, and it underscores the significance 9 of the Internal Affairs Doctrine. And he's now 10 explaining why it is, so this is at Page 938, and 11 he's explaining at the very beginning of his opinion 12 why it's important for him to issue this decision. 13 And he says: And it also aids the administration of 14 justice, because a foreign Court that respects the 15 Internal Affairs Doctrine, as it must, dropping 16 Footnote 3, when faced with a motion to enforce 17 the bylaws, will consider as a first order issue 18 whether the bylaws are valid under the chartering 19 jurisdictions domestic law. So the Internal Affairs 20 Doctrine is the template on which this decision is 21 written. 22 Delaware law governs this action. And if 23 you read Footnote 3 where he cites the 1, 2, 3, 4 24 U.S. Supreme Court cases that have addressed and

27 Page 27 1 reenforced the importance of the Internal Affairs 2 Doctrine, Mr. Wissbroecker's argument that that's 3 not relevant here is simply wrong. 4 Let me now go to Chancellor Strine's 5 rejection of the Galaviz case. Because he didn't 6 just elide over it, and he didn't fail to consider 7 the precise argument that Mr. Wissbroecker said the 8 Judge didn't consider. This is at Page 956 of the 9 opinion. And so he's talking now about: Therefore, 10 when stockholders have authorized the Board to 11 unilaterally adopt bylaws, it follows that the 12 bylaws are not contractually invalid. Simply 13 because the Board adopted bylaw lacks the 14 contemporaneous assent of the stockholders. And he 15 drops Footnote 102: Accordingly, the conclusion 16 reached by the United States District Court for the 17 Northern District of California in Galaviz v. Berg, 18 rest on a -- and I'm skipping two lines here: Rests 19 on a failure to appreciate the contractual framework 20 established by the DGCL for Delaware corporations 21 and their stockholders. 22 So Chancellor Strine addressed precisely 23 the contractual issue that Mr. Wissbroecker said he 24 did not.

28 Page 28 1 Now, Mr. Wissbroecker tries to save his 2 complaint by saying the shareholders here didn't 3 have a chance to challenge this bylaw, other than 4 this case. It's not true. The bylaw was 5 promulgated or adopted by the Board on December 4th. 6 It was made public notice on December 10th. 7 Pursuant to the bylaws of Beam, anyone who 8 wanted to bring a shareholder proposal to challenge 9 that bylaw had from December 24th of 2013 until 10 January 23 to file a submission saying: I want to 11 put on the ballot a proposal to rescind that bylaw. 12 Nobody did that. So he's simply wrong about that. 13 Then he says, he's alleged wrongdoing, and therefore 14 this is like Galaviz, not like Boilermakers. 15 THE COURT: Can you repeat the date that 16 you said was the date by which there could be a 17 proposal to rescind the bylaw? 18 MR. CARLSON: Correct. A shareholder 19 proposal needed to be received between December 24th 20 of 2013 and January 23 of THE COURT: Okay. 22 MR. CARLSON: And that schedule was set 23 forth in Beam's proxy in So the shareholders 24 had that notice given to them.

29 Page 29 1 Now, Mr. Wissbroecker said that all of a 2 sudden a thunderbolt struck him, and that there was 3 this sentence at the end of the Beam bylaw that says 4 this doesn't apply here. It's just totally 5 inaccurate for multiple reasons. 6 First of all, if this was a thunderbolt, we 7 would have heard this thunderbolt before, you know, 8 11:00 o'clock on March 5th. It would have been in 9 their papers from the get-go. But the point of that 10 sentence at the end of the bylaw in Beam, and the 11 Beam bylaw, as we said to Your Honor weeks ago, was 12 copied, essentially, from the bylaw that Chancellor 13 Strine approved, is simply to say that anybody who 14 buys this stock is deemed to have notice, whether 15 before or after. And had Strine construed it the 16 way Mr. Wissbroecker now argues it, he would have 17 done an entirely different analysis. He would have 18 done an analysis as to whether it was effective from 19 that date forward, or effective in toto. And the 20 point of the analysis is that the bylaw is effective 21 in toto. 22 I would only be repeating myself if I go 23 back to their complaint about Paragraph 39. That's 24 the only alleged wrongdoing.

30 Page 30 1 The Illinois cases -- 2 THE COURT: Well, I think actually he is 3 suggesting that in his allegations two paragraphs 4 prior that the first approach was made in early 5 November, that he thinks that gets him over the hump 6 needed to get discovery, at least on the question of 7 whether or not there was something that happened 8 with respect that was wrongdoing in the passage of 9 the bylaw before that actually happened. 10 MR. CARLSON: He can say that. That does 11 not entitle him to discovery. It doesn't entitle 12 him to any challenge to this bylaw. As you'll read 13 from Chancellor Strine's opinion, the bylaws are 14 entitled to a presumption of validity. And in fact, 15 you know, this whole case we have here today is, 16 from my perspective, challenging in the following 17 respect. 18 Mr. Wissbroecker pleads the management of 19 Beam overseen by this Board has overseen a fabulous 20 performance. The shareholders are getting the right 21 to vote on a fabulous price. For him to turn around 22 and now say they were engaged in some wrongdoing 23 starting from the very moment they received an 24 unsolicited letter, is just preposterous. They

31 Page 31 1 shouldn't be allowed to come in here and say: I get 2 discovery on everything because of that type of 3 allegation. That's not an allegation of wrongdoing. 4 And when you read Chancellor Strine's opinion, which 5 goes to the problem that litigation of this type and 6 multiple forums has created, the bylaw is the 7 reaction to try to get the litigation into a forum 8 that has competence and expertise so that cases of 9 this type, if there is any merit, will be quickly 10 found and not subject to being imposed upon people 11 like Your Honor, who are just as good as the judges 12 in Delaware but don't have the context and the 13 background that the person who sits in Chancery 14 every day in Delaware would have. 15 And if you -- I'm sure you read the 16 Boilermakers' opinion, but the reason the FedEx 17 Board and the Chevron Board adopted these bylaws was 18 to prevent litigation in competing jurisdictions. 19 Those bylaws were meant to address the situation 20 that occurred in Options Express, where there was 21 litigation in Delaware and litigation in Illinois. 22 And so those judges legitimately had to have a 23 conference call to figure out which case could go 24 forward. And in that case Vice Chancellor Laster

32 Page 32 1 said: Okay, Judge Mason, your case is farther 2 ahead, you take it. 3 But here there's been a solution entirely 4 consistent with Delaware law to say these cases need 5 to go forward in Delaware. That's the whole thesis 6 of the bylaw, and why it's enforceable and why it 7 applies here, and why it's the grounds for 8 dismissal. 9 Now, Mr. Wissbroecker marginalized the 10 Illinois Supreme Court's decision in the Steen case. 11 In the Steen case, the legal principle in the Steen 12 case is the following: And the legal principle at 13 Steen is at well, I guess it's 296 Illinois at 111: The power to enact bylaws is inherent 15 in every corporation as an incident of its 16 existence. This power is a continuous one, and no 17 one has a right to presume that bylaws will remain 18 unchanged. Where the contract contains an express 19 provision reserving the right to amend or change 20 bylaws, it cannot be doubted that the society has 21 the right so to do. 22 That is exactly our situation. Where the 23 charter of Beam said the bylaws could be amended, 24 the bylaws have been amended. Illinois law clearly

33 Page 33 1 supports the decision that the Delaware Courts have 2 followed. 3 With respect to the 2-619(a)(3) motion, 4 there's a case going forward in Delaware in front of 5 a Judge who knows this law. He's got eight cases, 6 you've got three. We're not further advanced on the 7 merits of this case at all. We're advanced on the 8 issue of should it be dismissed as a result of a 9 bylaw in 2-619(a)(3) because of the duplicative 10 litigation. And we're not going to go running to 11 Delaware and say that you dismissed it on the merits 12 or didn't find a colorable claim. The motion we're 13 here on today is should this case go forward in 14 Illinois. 15 And we respectfully submit that it should 16 be dismissed. 17 THE COURT: Thank you. The one point that 18 I didn't hear you quite address that was raised just 19 now by Mr. Carlson has to do with the proposal to 20 rescind that could be made between December 24th and 21 January 23rd. That somehow rebuts your argument 22 that the shareholders lacked the ability to consent 23 or otherwise have a say with regard to the bylaw. 24 Do you care to address that?

34 Page 34 1 MR. WISSBROECKER: That's in our papers, 2 Your Honor, Page 4 of the opposition of the motion 3 to dismiss. We lay out how it's impossible, even 4 after the notice was given, the annual meeting is 5 not until April, so... 6 THE COURT: There's no practical way for 7 the shareholders to address it, is what you're 8 saying. 9 MR. WISSBROECKER: Yes -- well, there's no 10 actual way at this point. Even if Mr. Carlson is 11 correct that in that month period of time that 12 somehow there was a window, because the meetings the meeting that Mr. Carlson referred to that is set 14 forth in the 2013 proxy, that occurs in April. 15 That's not this vote on the merger. So the merger 16 will have closed, and that meeting will never take 17 place. That's what we say in our papers. But from 18 a practical standpoint, it would be impossible for 19 shareholders to get together and go through the 20 proxy solicitation process in one month. That's why 21 they get nine months to make a proposal. So it's 22 really a gun to the head even if he's right, which 23 he's not. Because we lay out in our papers that 24 that meeting doesn't take place until after the

35 Page 35 1 shareholder votes. There would be no way that it 2 could have been presented to all of the shareholders 3 to vote on the bylaw provision as a temporal matter. 4 But -- and this is the other point made. 5 I'll just make it real quick again. Even if 6 shareholders had done that, the Beam Board can five 7 minutes later go back and say: You know what? 8 We'll reinstitute this bylaw. That's kind of the 9 conundrum here. 10 Now, if we're talking about replacing the 11 Board, that's a process that takes years. And that 12 would be the only way -- if the Board was dead set 13 on locking in this provision, the Board would keep 14 doing that over and over again, even in the face of 15 shareholder dissent, unless there was some 16 opportunity to replace the Board. 17 THE COURT: Okay. Anything further by 18 anyone else? 19 MR. CARLSON: No, Your Honor. 20 THE COURT: Okay. I'll take a recess, and 21 then I'll come back and give you my ruling. 22 MS. AUSTIN: Thank you, Your Honor. 23 MR. WISSBROECKER: Thank you, Your Honor. 24 MR. CARLSON: Thank you, Your Honor.

36 Page 36 1 (After a short recess, the hearing 2 resumed as follows:) 3 THE COURT: Good afternoon, ladies and 4 gentlemen. This is 14 CH 932, Miller vs. Beam. 5 Would you like to state your names for the 6 record. 7 MR. RIFKIND: Norman Rifkind, for the 8 Plaintiffs. 9 MR. WISSBROECKER: David Wissbroecker, for 10 the Plaintiffs. 11 MR. CARLSON: Walter Carlson and Liz Austin 12 for Beam, Inc., and the Beam individual Defendants. 13 MR. EKL: Terry Ekl, the last name is 14 E-k-l, on behalf of Suntory Defendants. 15 THE COURT: Okay. Good afternoon. And 16 Madam Court Reporter, if at any point -- I'm going 17 to read, so if you need me to slow down, just tell 18 me. I have written out my decision. It's not going 19 to be -- the order that you'll prepare will simply 20 incorporate the report of proceedings into the 21 order, because I thought that was more expeditious, 22 given the way that the litigation is going, I 23 thought that was the best way to approach it, as 24 opposed to making you wait until tomorrow with a

37 Page 37 1 formal written order. 2 Presently pending before the Court are two 3 motions. The first filed motion is Plaintiff's 4 motion to expedite discovery, which was unsupported 5 by affidavit and originally unsupported by any 6 requests for preliminary injunction. 7 Since the filing of the motion to expedite 8 discovery Plaintiff's have filed a request for 9 preliminary injunction. Thus arguably eliminating 10 any perceived procedural barrier to the motion to 11 expedite discovery. 12 The second motion before the Court is the 13 motion to dismiss pursuant to Section 2-619(a)(3) 14 and (a)(9) of the Illinois Code of Civil Procedure, 15 which is filed by the Beam Defendants, including 16 Beam, Inc., the individual members of the Board of 17 directors: Shattock, Mackay, Wilson, Goldstein, 18 Hackett, Golsby, Steele and Price. Defendants 19 Suntory Holdings, Limited, and SUS Merger SUB 20 Limited have not filed a motion at this time. Both 21 motions are fully briefed as of yesterday, March 22 4th, and the motion to expedite discovery was fully 23 orally argued as of yesterday. 24 Today the Court by its own order heard oral

38 Page 38 1 arguments on the Beam Defendants' motion to dismiss, 2 primarily because the Court determined that the 3 legal arguments made therein could be dispositive of 4 the good cause aspect of the Plaintiff's request for 5 expedited discovery. 6 This Court holds as follows, and rules as 7 follows: The Beam Defendants have met their burden 8 under Section 2-619(a)(9) and (a)(3) of the Illinois 9 Code of Civil Procedure to demonstrate both that the 10 venue selection bylaw passed by the Board of 11 directors is enforceable and should be honored under 12 the facts and circumstances of this case as 13 currently presented to the Court, and thus properly 14 precludes litigation of Plaintiff's claims in 15 Illinois. 16 For the same or similar reasons, (a)(3) is also granted, because the Court finds 18 that the proper venue for litigation of this case is 19 in Delaware. 20 The motion to expedite discovery is 21 therefore denied as moot. 22 So that I'm guessing you would like to know 23 my reasons, so if that's the case then I'll 24 continue. There's no controlling Illinois case on

39 Page 39 1 the issue of the validity of the venue selection 2 bylaw that was unilaterally passed by the board of 3 directors, like the one in this case. 4 The two primary cases argued by the parties 5 on this issue are Galaviz vs. Berg from the Federal 6 Court in California, 2011, and the more recent 7 decision of Boilermakers vs. Chevron from the Court 8 of Chancery of Delaware from 2013, with Boilermakers 9 being the most recent pronouncement. 10 Even though it is procedurally different 11 from this case, the Court finds Boilermakers to be 12 persuasive. 13 The Beam Defendants cite Boilermakers to 14 support their argument that Delaware courts enforce 15 venue bylaws adopted by the Board without 16 shareholder approval. 17 Boilermakers, the bylaws at issue, or like 18 the bylaw at issue here, shareholders must bring 19 claims against the company in Delaware, but 20 shareholders are in no way limited by what type of 21 claim they may bring. 22 The Defendants in Boilermakers maintain 23 that the venue bylaws are necessary so that large 24 corporations who are subject to multi-district

40 Page 40 1 litigation, especially if the corporation's place of 2 incorporation and place of business are in two 3 different states, as they are here. 4 The Plaintiffs in Boilermakers argued that 5 the bylaws are facially invalid under the Delaware 6 General Corporation's Law 109(b). Plaintiffs there 7 also argued that the bylaws, venue bylaw provision 8 violated Section 109 because they attempted to 9 regulate external matters as opposed to internal 10 matters of corporate governance. 11 The Boilermakers court rejected the 12 Plaintiff's arguments and held that the venue bylaws 13 at issue did not violate 109(b), because the law 14 allows corporations to adopt rules to expedite the 15 convenient functioning of business. By extension, 16 the Court held that venue bylaws are process 17 oriented because they regulate where stockholders 18 may file suit, not whether they may file suit. 19 Next the Plaintiffs in Boilermakers argue 20 that even if the bylaws were presumptively valid 21 under Section 109, they're invalid when unilaterally 22 adopted by the Board. 23 The Court there rejected this argument, as 24 does this Court, by pointing to a long line of

41 Page 41 1 Delaware cases that hold that the bylaws constitute 2 a contract between the corporation and its 3 stockholders, and that the shareholders are on 4 notice that Section 109(b) allows the Board to adopt 5 unilateral bylaws. 6 The Court in Boilermakers reason that when 7 a shareholder buys shares of a Delaware corporation, 8 that shareholder has assented to the contractual 9 framework established by the DGCL and certificates 10 of incorporation that explicitly recognizes that 11 stockholders will be bound by bylaws unilaterally 12 adopted by their Board. 13 The Court in Boilermakers noted, though, 14 that the shareholders do not -- do have the 15 protection of 109(a), which gives them the power to 16 amend, adopt or a repeal bylaws that are legally 17 sacrosanct. 18 The Court also noted that shareholders can 19 elect a new board if they are unsatisfied, and 20 additionally, the bylaws are part of a larger 21 contract with the corporation and still subject to 22 the forum selection principles adopted by the 23 United States Supreme Court in Bremen. 24 Therefore, the venue bylaw is valid,

42 Page 42 1 provided that it is unaffected by fraud, undue 2 influence, or overweening bargaining power, and the 3 provisions should be enforced unless the enforcement 4 is shown by the resisting party to be unreasonable. 5 In contrast, in Galaviz the Court held 6 there that the corporate directors were prohibited 7 from controlling venue for shareholders derivative 8 actions by unilaterally adopting a bylaw designating 9 the Court of Chancery in the State of Delaware as 10 the proper venue for the shareholder actions in that 11 case. 12 The conduct at issue in Galaviz concerned 13 claims for breach of fiduciary duty, of use of 14 control related to Oracle's Software sales to the 15 United States Government for a period of eight 16 years. Oracle was alleged to have engaged in an 17 overbill scheme. During the execution of that 18 scheme, Oracle's board of directors adopted a 19 resolution amending the corporate bylaws to add a 20 forum selection provision. 21 In Galaviz, the Court acknowledged that the 22 United States Supreme Court, through its decision in 23 Bremen, concluded that venue selection provisions 24 are freely negotiated contracts that should not be

43 Page 43 1 set aside absent a strong showing that enforcement 2 would be unjust, or that the clause was invalid for 3 reasons such as fraud or overreaching. 4 thus, the United States Supreme Court has adopted a 5 presumption in favor of enforcing contractual venue 6 clauses. Thereafter, the Ninth Circuit distilled a 7 rule that a contractual forum selection clause must 8 be given affect unless there's a showing that its 9 incorporation as to the contract was the result of 10 fraud, undue influence or overweening bargaining 11 power. The selected forum is so gravely difficult 12 or inconvenient that the complaining party would be, 13 as a practice matter, deprived of its day in court, 14 or that the enforcement of the cause would 15 contravene a strong public policy in favor of the 16 forum where this suit is brought. 17 In Galaviz, the salient part of the 18 decision provides, and I quote: Here in contrast, 19 the venue provision was unilaterally adopted by the 20 directors, who are defendants in this action, after 21 a majority of the purported wrongdoing is alleged to 22 have occurred, and without the consent of the 23 existing shareholders who acquired their shares when 24 no such bylaw was in effect. Thus, the Court

44 Page 44 1 determined that under the circumstances of Galaviz, 2 the Court should not disregard the Plaintiff's 3 choice of forum there. 4 In this case, this Court holds that Galaviz 5 is distinguishable, given its facts, and that 6 Boilermakers' analysis in holding it as applied are 7 simply more persuasive analytically. 8 Boilermakers is more persuasive, 9 considering the relevant portions of the DGCL that 10 are almost identical to the corresponding provisions 11 of the Illinois Business Corporations Act, just as (b) of the DGCL allows Boards to unilaterally 13 adopt bylaws, Section 2.25 of the Illinois Business 14 Corporations Act allows boards to do the same. 15 Next, the corporations in Boilermakers 16 argued, and this Court agrees, that it would be 17 unreasonable, unpractical and costly to litigate in 18 multiple jurisdictions. It's entirely reasonable 19 for a corporation like Beam in this case, 20 incorporated in Delaware and headquartered in 21 Illinois, to want to limit litigation to one venue 22 so that the corporation does not have to pass the 23 cost of litigation onto the shareholders by 24 litigating in multiple venues.