Delaware has many charms. But for corporate lawyers, the place holds a special attraction: The Delaware Court of Chancery!

It's name may conjure a Dickinsean world of musty cases, but since the merger craze began in the 1980s, the court has been a hotbed of litigation that moves at a rapid pace, especially when M&A deals go sour.

Decisions from the court can make or break deals with billions on the line, as well as set precedent on how these deals can be structured.

There was a time when keeping abreast of a hotly contested case meant a ride on the Metroliner from New York to Wilmington. But now, corporate lawyers can have a bird's eye view on the testimony from the computers at their desks, by logging on to the Courtroom View Network.

The internet-based service broadcasts Chancery Court proceedings live, and allows viewers to examine the exhibits presented at the trial while the testimony is ongoing. Want to know whether a deal is "no shop" or "go shop," or just what a "reverse breakup fee" could mean? It's all here!

The Network is just off a banner week: Chancellor William B. Chandler heard testimony in the case of United Rentals v. RAM Holdings, a lawsuit that seeks to hold the hedge fund Cerberus Capital Management to its $4 billion leveraged buyout to take the rental company private.

Last month, amid tight credit markets, Cerberus walked away from its offer to buy United Rentals for $34.50 a share. United Rentals filed suit, claiming that it negotiated a clause requiring "specific performance" from Cerberus to complete the transaction. Cerberus counters that its liability is capped at the $100 million.

The videotaped testimony has attracted some attention because it offered a glimpse of Stephen Feinberg, Cerberus' chief executive, who's been shy about being seen in public. On Tuesday, Feinberg testified that he wasn't sure about the "legal definition" of specific performance. But, hey, what does he know? He is not a lawyer, after all.

Also testifying on Tuesday was Eric Swedenburg, a lawyer with Simpson Thacher & Bartlett, the New York law firm that lays its claim to fame as Henry Kravis' chief outside counsel and a behemoth in the private equity world.

Simpson Thacher was counsel to United Rentals in the deal, and Swedenberg, who this summer was an eighth-year associate, was the primary negotiator on the deal with Cerberus.

Swedenburg, who just made partner at Simpson Thacher, seemed a good sport on the witness stand. His testimony offers a bit of a primer on the "street lingo" of deal lawyers, as they haggle over the "black lining" and "red lining" of language of every draft document (sacrificing many trees in the process).

Chances are that Swedenburg's testimony will be critical as Chancellor William B. Chander weighs whether there was, in fact, what is known in legal parlance as a "meeting of the minds" on just when United Rentals was entitled to "specific performance."

(For any non-lawyers in the audience, "specific performance" means just what it sounds like: "You gotta follow through on the deal!")

On direct examination, Swedenburg explained that he drafted a very "middle of the road" contract this spring, when United Rentals was entertaining competing bids to take the company private.

Middle of the road? Say it isn't so, especially at Simpson Thacher's prices! But in the lingo, what Swedenburg meant was that there was nothing unusual about the deal.

As it happened, when Cerberus sent back its "black-lined" version of the contract --- inking out the terms it did not like --- Swedenburg had to inform Cerberus' lawyer, Peter Ehrenberg of Lowenstein Sandler in Roseland, New Jersey, that he was "behind on contract."

(Translation: There was too heavy a copy-editing hand! "We tried to convey to Mr. Ehrenberg that their markup was heavier than other markups we had received," Swedenburg testified.)

Even on direct, Swedenburg admitted that United Rentals was looking for a "construct" in the deal that was "off market." (Translation: Different than about 80 to 90 percent of most leveraged buyouts, according to his testimony.)

Here was the deal: Cerberus could withdraw its offer by paying a breakup fee, but only if "at the end of the day, the debt sources just flake and don't show up with the money."

Flake? "Eight years it took me to learn that term," Swendburg said. "That's why I made partner!" (He also testified about sending out a draft document in the wee hours of July 4, the kind of work that most definitely figured in his making partner. At the very least Swedenburg has a sense of humor, which we'd like to hope is another reason he made partner.)

And so, according to Swedenburg, Cerberus agreed to pay $100 million to get out of the deal, only if the debt financing "flaked," and otherwise agreed to go forward with the $4 million deal, regardless of the circumstances.

Even on direct, Swedenburg admitted that, on July 10, in the middle of the negotiations, Ehrenberg "expressed unwillingness to go" in the direction of a specific-performance clause to the deal, describing the conversation as a "broken record" on both sides' at that point.

The tension mounted when Cerberus' lawyer, Scott A, Edelman of Milbank, Tweed, Hadley & McCloy, began to grill Swedenburg. Because, it seems, as negotiations built to a crescendo between July 10 and July 19, the Cerberus lawyers never liked Swedenburg's "construct," which would have allowed the hedge fund out of the deal only if the debt "flaked."

"Peter was pretty emphatic that he wasn't agreeing to your construct," Edelman said; Swedenburg responded, "I agree."

Swedenburg's memory faltered considerably when presented with his own hand-written notes from a negotiating session, in which he said "OK" in handwritten remarks about the breakup fee being the "sole remedy" in the event that the deal fell apart. On cross, Swedenburg said he did not recall any conversation to this effect. "Anything is possible," he said.

The documents suggest that United Rentals was looking for specific performance, but the devil, as with all legal contracts, lies with the details. Every leveraged buyout begins with a shell entity, the vehicle by which a hedge fund like Cerberus buys a company like United Rentals.

The cross highlighted the dangers of legal drafting: For Swedenburg was tripped up on why—oh why—United Rentals could possibly have been seeking a "scary" and "meaningful" breakup clause of $100 million, if, in fact Cerberus was actually beholden to follow through on the $4 billion deal.

When presented with his own hand-written notes, and asked if he said the breakup fee would be the "sole and exclusive remedy" if the deal fell apart, Swedenburg had a failure of memory: "I'd be surprised if I said it, but I can't be sure," he said.

And by the by, Swedenvburg confirmed that Simspon Thacher would get an additional $6 million, on top of it's hourly fees, should the transaction close.

Alas, United Rentals has lost. At about 4 o'clock this afternoon, Chancellor Chandler issued a ruling that will surely send the rental company into the Christmas holiday on a dark note.

The judge invoked Greek mythology at the outset of his 68-page opinion: "It took a demigod to subdue Cerberus, the beastly three-headed god that guarded the gates of the underworld" so the judge begins.

Chandler quickly ventures to point out that, in this case, United Rentals, unlike Heracles or Hedes, faced a real-life battle—namely, the contract provision.

And on that score, the defense has won: At the end of his opus, Chancellor Chandler declared that United Rentals had "failed to meet its burden of demonstrating that the common understanding of the parties permitted specific performance."

Poor Swedenburg! But, as they say. there is always a next time. And if the Courtroom View Network has any say, all those next times will be available live from your PC.

by Karen Donovan