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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 9)
RENTAL SERVICE CORPORATION
(Name of Subject Company)
RENTAL SERVICE CORPORATION
(Name of Person(s) Filing Statement)
Common Stock, Par Value $.01 Per Share
(Title of Class of Securities)
76009V102
(CUSIP Number of Class of Securities)
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Robert M. Wilson
Executive Vice President, Chief Financial Officer, Secretary and Treasurer
Rental Service Corporation
6929 East Greenway Parkway, Suite 200
Scottsdale, Arizona 85254
(480) 905-3300
(Name, Address and Telephone Number of Person Authorized to Receive
Notice and Communications on Behalf of the Person(s) Filing Statement)
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Copies to:
Elizabeth A. Blendell, Esq. Mark D. Gerstein, Esq.
Latham & Watkins Latham & Watkins
633 West Fifth Street, Suite 4000 233 South Wacker Drive
Los Angeles, California 90071-2007 Sears Tower, Suite 5800
(213) 485-1234 Chicago, Illinois 60606-6401
(312) 876-7700
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<PAGE>
Item 8. Additional Information to be Furnished.
On May 10, 1999, Rental Service Corporation ("RSC") received a letter from
Bradley S. Jacobs, Chairman of the Board and Chief Executive Officer of United
Rentals, Inc. ("United Rentals"), a copy of which is filed as Exhibit 46 hereto
and incorporated by reference herein.
In addition, on May 10, 1999, United Rentals and its wholly owned
subsidiary, UR Acquisition Corporation (together, the "Bidder"), amended and
supplemented their complaint (as so amended and supplemented, the "Amended
Delaware Complaint") in the action styled UR Acquisition Corporation and United
Rentals, Inc. v. Martin R. Reid, et al., C.A. No. 17090. The Amended Delaware
Complaint alleges, among other things, (1) breaches of fiduciary duty and the
duty of candor owed to RSC's stockholders under Delaware law by the directors on
the RSC Board in connection with the Agreement and Plan of Merger, dated as of
January 20, 1999 (the "NationsRent Merger Agreement"), between RSC and
NationsRent, Inc. ("NationsRent"), and (2) that NationsRent aided and abetted
the directors on the RSC Board in the alleged breach of their fiduciary duties.
The Amended Delaware Complaint seeks, among other things, (1) a
determination that the termination amounts payable under certain circumstances
pursuant to the NationsRent Merger Agreement and the stock options granted by
RSC and NationsRent to each other in connection with the execution of the
NationsRent Merger Agreement are unlawful and invalid, (2) a determination that
the adoption of and the failure to redeem the rights granted to RSC's
stockholders pursuant to the Rights Agreement, dated as of April 16, 1999,
between RSC and ChaseMellon Shareholder Services, L.L.C., as Rights Agent,
constitutes a breach of the fiduciary duties of the directors on the RSC Board,
(3) an order compelling the RSC Board to approve the Bidder's pending tender
offer for all outstanding shares of RSC's common stock for purposes of Section
203 of the General Corporation Law of the State of Delaware, (4) an order
requiring RSC and the RSC Board to provide the Bidder with a fair and equal
opportunity to acquire RSC, and (5) an order enjoining NationsRent and its
employees, agents and all persons acting on its behalf, from aiding and abetting
the breach of the duties of the directors on the RSC Board to RSC's
stockholders.
A copy of the Amended Delaware Complaint is filed as Exhibit 47 hereto and
incorporated by reference herein.
Item 9. Material to be Filed as Exhibits.
46 Letter from Bradley S. Jacobs to John M. Sullivan and Britton H.
Murdoch dated May 10, 1999.
47 First Amended and Supplemental Complaint filed on May 10, 1999 with the
Court of Chancery of the State of Delaware in UR Acquisition Corporation and
United Rentals, Inc. v. Martin R. Reid, et al., C.A. No. 17090.
1
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: May 12, 1999 Rental Service Corporation
By: /s/ Robert M. Wilson
---------------------------------
Name: Robert M. Wilson
Title: Executive Vice President, Chief
Financial Officer, Secretary
and Treasurer
<PAGE>
Exhibit 46
[UNITED RENTALS, INC. LETTERHEAD]
May 10, 1999
Mr. John M. Sullivan
Mr. Britton H. Murdoch
Executive Committee of the Board of Directors
Rental Service Corporation
6929 East Greenway Parkway, Suite 200
Scottsdale, AZ 85254
Gentlemen:
I am writing to you in your capacities as the members of the Rental Service
Executive Committee. We have read with great interest the recent amendment to
Rental Service's Schedule 14D-9 stating that Rental Service and NationsRent are
renegotiating the terms of your proposed transaction. Presumably, the Rental
Service Board now recognizes that the terms of this transaction is not in the
best interests of your stockholders.
Back in January we attempted to discuss a transaction with Rental Service's
management. We were rebuffed. Naturally, we were quite surprised to read only
a few days later that Rental Service had agreed to transfer control to
NationsRent in a transaction which it incorrectly characterized as a "merger of
equals."
We believe our $22.75 all cash premium proposal is superior to the
NationsRent merger, based upon, among other things, price, timing and certainty.
We can only assume that you are talking with NationsRent to improve the terms of
your proposed transaction. However, the Rental Service Board cannot cure its
past failure to consider alternatives or to conduct a fair process if it
continues to negotiate and share information with only one bidder. We believe
it is contrary to the best interests of your stockholders for you to continue to
refuse to talk with us.
It is appropriate, and in the best interests of Rental Service
stockholders, that the Rental Service Board establish a level playing field. We
urge you not to continue this flawed process of playing favorites with
NationsRent.
<PAGE>
We urge you not to sign an agreement without first talking with us. We
trust that you will give prompt and serious consideration to our request for a
meeting.
Sincerely,
/s/ Brad Jacobs
Bradley Jacobs
Chairman and Chief Executive Officer
cc: Board of Directors, Rental Service Corporation
Douglas A. Waugaman, Chief Operating Officer,
Rental Service Corporation
Robert M. Wilson, Executive Vice President and Chief Financial
Officer, Rental Service Corporation
<PAGE>
EXHIBIT 47
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
UR ACQUISITION CORPORATION, a Delaware :
corporation, and UNITED RENTALS, INC., a :
Delaware corporation, :
:
Plaintiffs, :
: Civil Action No. 17090 NC
v. :
:
MARTIN R. REID, WILLIAM M. BARNUM, JR., :
JAMES R. BUCH, DAVID P. LANOHA, :
CHRISTOPHER A. LAURENCE, ERIC L. MATTSON, : PUBLIC VERSION PURSUANT TO
BRITTON H. MURDOCH, JOHN M. SULLIVAN, : RULE 5(g)(4)(b)
RENTAL SERVICE CORPORATION, a Delaware :
corporation, and NATIONSRENT, INC., a :
Delaware corporation, :
:
Defendants. :
FIRST AMENDED AND SUPPLEMENTAL COMPLAINT
Plaintiffs UR Acquisition Corporation ("UR Acquisition") and United
Rentals, Inc. ("URI"), as and for their First Amended and Supplemental Complaint
herein, by and through their undersigned attorneys, allege, upon knowledge as to
themselves and their own acts and upon information and belief as to all other
matters, as follows:
NATURE OF THIS ACTION
1. On April 5, 1999, Plaintiff UR Acquisition, a wholly owned
subsidiary of plaintiff URI, commenced a tender offer (the "Tender Offer" or the
"URI Tender Offer") for all of the outstanding shares of defendant Rental
Services Corporation ("RSC") at $22.75 per share in cash. This represented
a 32% premium over the market price for URI's shares (as of the close of trading
on the New York Stock Exchange on April 1, 1999, the last trading day prior to
the opening of the Tender Offer).
2. In an agreement dated as of January 20, 1999 (the "Merger
Agreement"), RSC and defendant NationsRent, Inc. ("NationsRent") agreed to merge
in a stock-for-stock exchange. The RSC board approved the Merger Agreement less
than one week after RSC's Chief Executive Officer rebuffed an offer from URI to
discuss a possible acquisition by URI, stating in substance that RSC was not for
sale.
3. Unlike RSC, the shares of which are owned by a large number
of unaffiliated stockholders, approximately 48% of the outstanding common stock
of NationsRent is controlled by its three founding stockholders (the
"NationsRent Founding Stockholders"). Two of the NationsRent Founding
Stockholders, H. Family Investments, Inc. and James L. Kirk (NationsRent's
chairman and chief executive officer), collectively own approximately 46.1% of
NationsRent's common stock and have entered into a voting agreement with RSC in
which they have agreed to vote their shares together in favor of the NationsRent
merger. The effect of the proposed
<PAGE>
NationsRent/RSC merger would thus be to transfer control of RSC from a disparate
unaffiliated group of stockholders to an entity effectively controlled by the
NationsRent Founding Stockholders.
4. RSC and NationsRent agreed in their Merger Agreement to a breakup
fee of more than 11% of the value of the merger consideration (calculated as a
percentage of the market capitalization of equity in the proposed transaction
contemplated by the Merger Agreement) (the "Breakup Fee"), as well as a "lock-
up" cross-stock option (the "Lockup Option") which permits NationsRent and RSC
to purchase approximately 19.9% of each other's common stock. The Lockup Option
becomes exercisable upon the occurrence of any event that would result in
NationsRent becoming entitled to the Breakup Fee.
5. The Breakup Fee and Lock Up were granted not to seal in a
superior proposal but to preclude an active bidding process for control of RSC.
Prior to entering into the Merger Agreement, RSC's Chairman and Chief Executive
Officer had been told of URI's interest in acquiring RSC. RSC responded by
almost immediately agreeing to the Merger Agreement on terms which, because they
preclude alternative proposals and coerce stockholders into supporting the
Merger, are highly unfavorable to RSC and its stockholders.
6. On April 16, 1999, RSC announced that its directors had voted to
reject URI's offer and to declare a dividend distribution of one Preferred Share
Purchase Right on each outstanding share of RSC common stock (the "Rights
Plan"). The Rights Plan is specifically designed to thwart URI's Tender Offer
unless the Individual Defendants vote to redeem it in favor of URI.
7. Despite the Individual Defendants' fiduciary duty to act to
maximize the value obtained for all RSC stockholders, the Breakup Fee, Lockup
Option and other actions alleged more fully herein are designed to preclude, and
have the effect of precluding, among other things, a superior offer for RSC from
URI.
8. Plaintiffs' Tender Offer is non-discriminatory, non-coercive and
provides a substantial premium to the stockholders of RSC in exchange for their
RSC shares. Through the Tender Offer and a proposed second-step merger,
plaintiffs intend to acquire control of, and ultimately the entire equity
interest in, RSC. However, the Tender Offer is conditioned upon, among other
things, the setting aside of the Breakup Fee contained in RSC's Merger Agreement
with NationsRent and the attendant Lockup Option.
9. In an April 16, 1999 press release and SEC filing on Schedule
14D-9, RSC disclosed, for the first time, that its Chief Executive Officer,
Martin Reid ("Reid"), had been granted a "medical leave of absence due to a
heart condition." RSC and the Individual Defendants however, failed to disclose
to RSC stockholders, among other things, [REDACTED] RSC's April 16 press release
and Schedule 14D-9 filed that same day contain other materially false and
misleading statements in violation of the fiduciary duties of candor owed by the
Individual Defendants to RSC and its shareholders.
10. Accordingly, plaintiffs seek declaratory, injunctive and other
relief as set forth herein to remedy the violations alleged herein.
THE PARTIES
<PAGE>
11. Plaintiff URI is a Delaware corporation with its principal
executive offices in Connecticut. URI, an owner of RSC stock, is primarily
engaged in the equipment rental business, as are RSC and NationsRent.
12. Plaintiff UR Acquisition is a Delaware corporation with its
principal executive offices in Connecticut. UR Acquisition is a wholly owned
subsidiary of URI.
13. Defendant RSC is a Delaware corporation with its principal
place of business in Scottsdale, Arizona.
14. Based upon RSC's public disclosures, defendant Reid is the
Chairman and Chief Executive Officer of RSC. In a press release dated as of
April 16, 1999, RSC announced to its stockholders for the first time that Reid
had taken a medical leave of absence due to a heart condition. According to RSC,
"Mr. Reid's leave is based upon the advice of his physicians and will last until
evaluation and comprehensive treatment of his medical condition have been
completed." [REDACTED]
15. Defendant Daniel P. Lanoha is Senior Vice President of Operations
and a director of RSC.
16. Defendants William M. Barnum, Jr., James R. Buch, Christopher A.
Laurence, Eric L. Mattson, Britton H. Murdoch and John M. Sullivan are directors
of RSC. According to RSC's filing on Form 10-K for the year ended December 31,
1998, its board of directors "presently consists of eight members, including
four independent directors." Thus, by RSC's own admission, its board lacks a
majority of independent directors.
17. On April 16, 1999, RSC announced that in light of Mr. Reid's
medical condition, it had established an Executive Committee of the Board
comprised of directors Sullivan and Murdoch "to work with and supervise the
executive management of the Company."
18. Defendant NationsRent is a Delaware corporation with its
principal executive offices in Ft. Lauderdale, Florida.
THE MERGER AGREEMENT
19. In December 1998, a representative of URI's financial advisor
telephoned defendant Reid to arrange a meeting between them. While Reid stated
he did not believe it was a good time to sell RSC, he agreed to meet in January
1999.
20. On January 15, 1999, such a meeting took place with Reid and
Robert M. Wilson, RSC's Executive Vice President, Secretary and Treasurer. At
the meeting, Reid was asked whether RSC was interested in discussing a business
combination with URI, and Reid stated that his company was not for sale.
21. Six days later, NationsRent and RSC announced that they had
entered into the Merger Agreement, pursuant to which RSC would merge with
NationsRent in a stock-for-stock transaction valued at approximately $360
million when the agreement was announced. That agreement was approved by the
Individual Defendants at a meeting on January 20. The Merger Agreement further
contemplated that James L. Kirk, NationsRent's Chairman and Chief Executive
Officer, would become CEO of the combined entity and defendant Reid would become
Chairman.
22. Pursuant to the Merger Agreement, each share of NationsRent
<PAGE>
would be converted into 0.355 share of RSC common stock. Also pursuant to the
Merger Agreement, NationsRent would have the right to nominate five of the nine
directors of the combined companies.
23. Under the circumstances presented here, the aggregate effect of
the structural barriers to an alternative transaction created by the NationsRent
transaction is both preclusive and coercive. Pursuant to the Merger Agreement, a
termination by either party under certain specified circumstances requires the
terminating party to pay the other party $35 million as a Breakup Fee, and an
additional $5 million in expenses. As of the date of the Merger Agreement, the
$40 million total Breakup Fee (including expenses) represented approximately 11%
of the market capitalization of the equity of the NationsRent transaction.
24. RSC and NationsRent have also each granted to the other the
Lockup Option to purchase approximately 19.9% of the stock of their respective
corporations pursuant to a "stock option agreement" dated on or about January
20, 1999. The Lockup Option becomes exercisable upon the occurrence of any event
that would result in the holder of the option being entitled to receive payment
of the Breakup Fee under the Merger Agreement. Among other things, the Lockup
Option is designed (i) to ensure that the only transaction that RSC stockholders
are permitted to consider is between RSC and NationsRent; (ii) to deter URI from
seeking to acquire RSC upon terms that are economically superior to the
NationsRent/RSC Merger Agreement; and (iii) to penalize either party to the
Merger Agreement should it attempt to secure a better transaction for its
stockholders. Thus, should RSC decide to accept an offer for a different
business combination transaction from URI or should RSI shareholders fail to
approve the NationsRent/RSC Merger Agreement -- no matter how advantageous to
RSC's stockholders -- RSC would be forced to allow NationsRent to purchase
approximately 19.9% of the common equity of RSC at an undisclosed price, as well
as being forced to pay NationsRent $40 million.
URI TAKES ITS CASE DIRECTLY TO RSC'S STOCKHOLDERS
25. On April 5, 1999, plaintiffs announced the commencement of a
tender offer to purchase all of the outstanding common stock of RSC at $22.75
per share in cash -- a 32% premium over RSC's closing price prior to the tender
offer.
26. Among other things, consummation of the offer is conditioned
upon the Breakup Fee and the Lockup Option's having been terminated or
invalidated without any funds having been paid or stock having been issued
thereunder. The cost to plaintiffs of their Tender Offer if NationsRent were to
exercise the Lockup Option and then to tender its shares into plaintiffs' Tender
Offer would be increased significantly. Moreover, the mere existence of the
Lockup Option prevents transactions other than the NationsRent/RSC Merger from
occurring.
27. On April 5, 1999, URI's Chairman and Chief Executive Officer
sent a letter to Mr. Reid of RSC advising him of the Tender Offer and the
benefits of a combination between URI and RSC, and offering to meet with him and
RSC directors to discuss the URI proposal and answer relevant questions.
28. On April 13, 1999, URI filed with the United States Securities
and Exchange Commission preliminary proxy materials to solicit proxies from RSC
shareholders against the RSC/NationsRent merger and a preliminary consent
solicitation soliciting written consents from RSC stockholders to, among other
things, remove the members of the RSC Board.
<PAGE>
THE RSC BOARD'S RESPONSE
29. At meetings held during the week ending on April 16, 1999, RSC's
board voted to reject URI's offer; to stand by the URI/NationsRent transaction;
and to adopt a shareholder Rights Plan for the stated purpose of impeding the
URI Tender Offer. Specifically, the URI Board declared a dividend of one
Preferred Share Purchase Right ("Right") on each outstanding share of RSC common
stock. As outlined in RSC's Form 8-K filed on April 16, 1999, the Rights Plan
contains both "flip-in" and "flip-over" provisions. The flip-in provision allows
the holder of a Right to acquire additional shares of RSC voting stock at a
substantially reduced price.
30. The flip-over provision gives the holder the ability to exercise
the Right in exchange for shares of any acquiring company, with the holder
receiving a certain number of shares of the acquiror with a market value twice
that of the existing purchase price of one Right. In other words, if URI were to
acquire RSC without the RSC Board having first redeemed the Rights, current RSC
stockholders would be able to double the value of their Preferred Purchase Share
Rights overnight by exchanging them for URI stock. URI's capitalization, in
turn, would be impaired.
THE MISLEADING RSC SCHEDULE 14D-9
31. In a press release and filing on Schedule 14D-9 both dated April
16, 1999, RSC announced its decision, and actions taken, with respect to the URI
Tender Offer. That announcement was preceded earlier in the day by an earnings
release that failed fully to disclose all material information, including that
it was based on certain extraordinary non-recurring items. The press release and
Schedule 14D-9 also disclosed, for the first time, that RSC's Chairman and chief
Executor Officer, had taken a "medical leave of absence." For example, a "Dear
Stockholder" letter, is signed by defendant Sullivan, states in the next to last
paragraph:
You should be aware of a separate development. The Company has established
an Executive Committee of the Board, of which I will serve as Chairman and
which includes my fellow director, Britton H. Murdoch. The Committee will
work with and supervise the executive management of the Company, including
Robert M. Wilson, Executive Vice President and Chief Financial Officer, and
Douglas A. Waugaman, newly appointed Chief Operating Officer, during the
absence of Martin R. Reid, our Chairman and Chief Executive Officer. Mr.
Reid, upon the advice of his physicians, has requested and been granted a
medical leave to complete evaluation and pursue treatment of a heart
condition.
[REDACTED]. Letters to suppliers and customers, which are included in the
Schedule 14D-9 as exhibits, misleadingly state:
Marty's tremendous energy has always been a force of excitement and
vitality throughout our Company. Please join us in wishing him a speedy
recovery and return."
[REDACTED]
32. [REDACTED]
33. In other publicly filed documents, RSC has stated that its
business depends to a significant extent on the contributions of executive
officers and directors, and that the loss of the services of key employees
<PAGE>
or directors could have an adverse effect on RSC's business. [REDACTED]
34. [REDACTED]
35. In addition, the Schedule 14D-9 disclosed that the RSC Board
continued to believe "that the NationsRent Merger represents an attractive
transaction for RSC's stockholders, consistent with the RSC Board's long-term
growth strategy . . . ." The Schedule 14D-9 also discussed that the RSC Board
received a letter from NationsRent dated April 12 in which NationsRent
"reconfirm[ed]" its "strong commitment" to the merger transaction and that "[i]n
response to this letter, RSC has engaged in discussions with NationsRent and its
financial and legal advisors with respect to the NationsRent Merger in light of
the commencement of the Tender Offer and anticipates engaging in such
discussions in the future." However, RSC has failed to disclose to its
shareholders and the investing public the nature of these discussions.
IRREPARABLE INJURY
36. Defendants' conduct has irreparably harmed and, unless enjoined,
will continue to irreparably harm plaintiffs by depriving them of the unique
opportunity to acquire RSC. The actions of the Individual Defendants constitute
a breach of the fiduciary duties owed by the Individual Defendants to RSC's
stockholders. Plaintiffs' resulting injury is not compensable in monetary
damages and they, therefore, have no adequate remedy at law.
COUNT I: BREACH OF FIDUCIARY DUTY
37. Plaintiffs repeat and reallege each of the foregoing allegations
as if fully set forth herein.
38. By virtue of their positions as directors of RSC, the Individual
Defendants owe fiduciary duties to RSC and its stockholders. These duties
include, but are not limited to, the obligation to consider and fairly evaluate
all offers for RSC, the obligation to act reasonably to seek a transaction
offering the highest value reasonably available to RSC's stockholders in the
sale or merger of RSC, and the obligation not to put self-interests and personal
considerations, or any other considerations, ahead of the interests of RSC's
stockholders. The Individual Defendants are also obligated to conduct the
affairs of RSC with due care.
39. The conduct of the Individual Defendants in, among other things,
agreeing and then failing to rescind the Breakup Fee and Lockup Option and in
failing to redeem or otherwise render inapplicable to URI the Rights Plan
demonstrates a lack of good faith, could not have been based upon a reasonable
inquiry, and unreasonably precludes any possibly superior offer for RSC such as
the Tender Offer.
40. In engaging in the foregoing conduct, the RSC directors breached
their fiduciary duties by, among other things, failing to act in a manner that
was entirely fair to all RSC stockholders. The Individual Defendants have also
failed to obtain a transaction offering the best value available to all RSC
stockholders. Further, the conduct of the Individual Defendants was wholly
unreasonable in relation to any "threat" posed by URI and was not undertaken in
good faith and after reasonable investigation.
41. Unless enjoined by this Court, the Individual Defendants will
continue to breach their fiduciary duties, to the detriment of RSC and its
stockholders, including URI.
<PAGE>
42. Plaintiffs have no adequate remedy at law.
COUNT II: BREACH OF THE DUTY OF CANDOR
43. Plaintiffs repeat and reallege each of the foregoing allegations
as if fully set forth herein.
44. Defendants RSC and the Individual Defendants have failed to
disclose material facts and have made materially false and misleading statements
and alleged more fully above.
45. The foregoing unlawful activities constitute violations of the
duty of complete forthrightness and candor owed to shareholders of Delaware
corporations.
46. Plaintiffs have no adequate remedy at law.
COUNT III: BREACH OF FIDUCIARY DUTY
IN CONNECTION WITH 8 DEL. C. section 203
47. Plaintiffs repeat and reallege each of the foregoing allegations
as if fully set forth in this paragraph.
48. The Tender Offer is non-coercive and non-discriminatory. It is
fair to RSC stockholders, poses no threat to RSC's corporate policy and
effectiveness, and represents a substantial premium over both the market price
of RSC common stock prior to the announcement of the Tender Offer and the
implied value of RSC's proposed Merger Agreement with NationsRent.
49. Section 203 of the Delaware General Corporation Law, 8 Del. C.
section 203, entitled "Business Combinations with Interested Stockholders",
applies to any Delaware corporation, including RSC, that has not opted out of
such statute's coverage.
50. Among other things, Section 203, which was designed to impede
coercive and inadequate tender and exchange offers, provides that if a person
acquires 15% or more of a corporation's stock (thereby becoming an "interested
stockholder"), such interested stockholder may not engage in a "business
combination" with the corporation (defined to include a merger or consolidation)
for three years after the person becomes an interested stockholder, unless (i)
prior to the 15% acquisition, the board of directors has approved either the
acquisition or the business combination; (ii) the interested stockholder
acquires 85% of the corporation's voting stock in the transaction in which it
crosses the 15% threshold; or (iii) on or subsequent to the date of the 15%
acquisition, the business combination is approved by the board of directors and
authorized at an annual or special meeting of stockholders (and not by written
consent) by the affirmative vote of at least 66-2/3% of the outstanding voting
stock which is not owned by the interested stockholder.
51. Section 203 may not properly be used by the RSC Board to obstruct
RSC's stockholders from considering URI's non-coercive, non-discriminatory, all
cash offer, which offer is superior to that implied in the Merger Agreement with
NationsRent, nor may it be used to prevent substantive negotiations between URI
and RSC that could lead to an even more advantageous deal between URI and RSC.
Section 203 was designed to allow a board of directors to ensure that their
stockholders received the highest possible value for their shares, not to allow
the board to refuse to consider all possible alternatives to their chosen deal
or to deny
<PAGE>
stockholders the right to vote on any other deal.
52. Pursuant to Section 203, the Individual Defendants can render the
statute inapplicable to the URI Tender Offer by approving it. The Individual
Defendants' presumptive failure to approve the URI Tender Offer for purposes of
Section 203 and to take any other steps necessary to render Section 203
inapplicable (presumed based upon the conduct of RSC and the Individual
Defendants towards URI to this point) constitutes a breach of the fiduciary duty
owed by the Board to RSC's stockholders.
53. Plaintiffs have no adequate remedy at law.
COUNT IV: AIDING AND ABETTING LIABILITY
54. Plaintiffs repeat and reallege each of the foregoing allegations
as if fully set forth herein.
55. The Individual Defendants have breached their fiduciary duties to
RSC and its stockholders.
56. NationsRent has aided and abetted the Individual Defendants in
their breaches of fiduciary duty. As a direct participant in the Merger
Agreement between NationsRent and RSC, NationsRent knew of the breaches of
fiduciary duty set forth herein, and in fact actively encouraged and
participated in said breaches of fiduciary duty. NationsRent induced the
Individual Defendants' breaches in order to obtain the substantial financial
benefits that the Merger Agreement between NationsRent and RSC would provide it
at the expense of RSC's stockholders.
57. Plaintiffs have no adequate remedy at law.
WHEREFORE, Plaintiffs UR Acquisition and URI respectfully request
that this Court:
A. Declare and decree that (i) the Breakup Fee provisions of
the Merger Agreement, and (ii) the Lockup Option were approved (and not
rescinded) in breach of the fiduciary duties of the Individual Defendants
and that each of them is unlawful and invalid, null and void and of no
further effect;
B. Temporarily, preliminarily and permanently enjoin NationsRent,
RSC, and their respective employees, agents and all persons acting on their
behalf from taking further steps or any actions with respect to (i) the Lockup
Option and/or (ii) the Breakup Fee and/or (iii) any other unlawful provisions of
the Merger Agreement;
C. Temporarily, preliminarily and permanently enjoin RSC and the
Individual Defendants to render Section 203 inapplicable to the URI Tender Offer
by approving the URI Tender Offer for purposes of Section 203;
D. Declare and decree that the adoption of and failure to redeem the
Rights Plan constitutes a breach of the fiduciary duties of the Individual
Defendants;
E. Temporarily, preliminarily and permanently enjoin the adoption or
exercise of any other measures by RSC or the Individual Defendants which have
the effect of impeding, thwarting, frustrating or interfering with the URI
Tender Offer;
F. Require RSC and the Individual Defendants to take all steps
<PAGE>
necessary to provide plaintiffs with a fair and equal opportunity to acquire
RSC, including furnishing to URI the same information and access to information
as was provided to NationsRent;
G. Declaring that the Individual Defendants have violated their
fiduciary duties of candor and ordering RSC to make all appropriate disclosures
and correct all false or misleading statements and omissions of material fact
regarding the NationsRent merger and/or the URI Tender Offer;
H. Temporarily, preliminarily and permanently enjoin NationsRent,
and its employees, agents and all persons acting on its behalf, from aiding and
abetting the Individual Defendants' breach of their fiduciary duties to RSC and
its stockholders, including with respect to the Merger Agreement, the Breakup
Fee, the Lockup Option, the Rights Plan, or the Tender Offer Commenced by
plaintiffs; and
I. Grant such other and further relief as the Court may deem just
and proper, including the costs and disbursements of this action and reasonable
plaintiffs' attorneys' fees.
/s/ Edward P. Welch
---------------------------------
Edward P. Welch
Stephen D. Dargitz
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
One Rodney Square
P.O. Box 636
Wilmington, Delaware 19899
(302) 651-3000
David J. Margules
WOLF, BLOCK, SCHORR &
SOLIS-COHEN LLP
One Rodney Square, Suite 300
Wilmington, DE 19899
Attorneys for Plaintiffs,
UR Acquisition Corporation and
United Rentals, Inc.
OF COUNSEL:
Jay B. Kasner
Steven J. Kolleeny
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
919 Third Avenue
New York, New York 10022
(212) 735-3000
Dated: May 10, 1999
