-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SgAKTY1hHC9zoqqjD7YYGmPuZsEH4UP9URdL6rETw00eH25auNcOXrjYUTem/8T+ 7Up6j+eqa1MlvXdTzbfIRw== 0000950172-99-000455.txt : 19990422 0000950172-99-000455.hdr.sgml : 19990422 ACCESSION NUMBER: 0000950172-99-000455 CONFORMED SUBMISSION TYPE: SC 14D1/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19990421 GROUP MEMBERS: UNITED RENTALS INC /DE GROUP MEMBERS: UR ACQUISITION CORPORATION SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: RENTAL SERVICE CORP CENTRAL INDEX KEY: 0001016572 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 330569350 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1/A SEC ACT: SEC FILE NUMBER: 005-49011 FILM NUMBER: 99598407 BUSINESS ADDRESS: STREET 1: 6929 EAST GREENWAY PARKWAY STREET 2: STE 200 CITY: SCOTTSDALE STATE: AZ ZIP: 85254 BUSINESS PHONE: 6029053300 MAIL ADDRESS: STREET 1: 6929 GREENWAY PARKWAY STREET 2: SUITE 200 CITY: SCOTTSDALE STATE: AZ ZIP: 85254 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: UNITED RENTALS INC /DE CENTRAL INDEX KEY: 0001067701 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 061522496 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1/A BUSINESS ADDRESS: STREET 1: FOUR GREENWICH OFFICE PARK CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2036223131 MAIL ADDRESS: STREET 1: FOUR GREENWICH OFFICE PARK CITY: GREENWICH STATE: CT ZIP: 06830 SC 14D1/A 1 SCHEDULE 14D1 AMENDMENT NO. 6 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14D-1 Amendment No. 6 Tender Offer Statement Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934 Rental Service Corporation (Name of Subject Company) UR Acquisition Corporation United Rentals, Inc. (Bidders) Common Stock, par value $.01 per share (Title of Class of Securities) 76009V 10 2 (CUSIP Number of Class of Securities) United Rentals, Inc. Four Greenwich Office Park Greenwich, CT 06830 Attn.: Bradley S. Jacobs Chairman of the Board and Chief Executive Officer Telephone:(203) 622-3131 Facsimile:(203) 622-6080 (Name, Address and Telephone Number of Person authorized to Receive Notices and Communications on Behalf of Bidders) Copy to: Milton G. Strom, Esq. Skadden, Arps, Slate, Meagher & Flom LLP 919 Third Avenue New York, New York 10022 Telephone: (212) 735-3000 Facsimile: (212) 735-2000 UR Acquisition Corporation, a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of United Rentals, Inc., a Delaware corporation ("Parent"), and Parent hereby amend and supplement their Tender Offer Statement on Schedule 14D-1 (as amended from time to time, the "Schedule 14D-1"), filed with the Securities and Exchange Commission (the "Commission") on April 5, 1999, with respect to the Purchaser's offer to purchase all of the shares of common stock, par value $0.01 per share, and the associated preferred stock purchase rights if and when issued (collectively, the "Shares"), of Rental Service Corporation, a Delaware corporation (the "Company"), at a price of $22.75 per Share, net to the seller in cash (such price, or such higher price per Share as may be paid in the Offer, the "Offer Price"), upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"). Item 10. Additional Information. The information set forth in Item 10(c) of the Schedule 14D-1 is hereby amended and supplemented by the following information: At 11:59 p.m., New York City time, on April 20, 1999, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, expired. The information set forth in Item 10(e) of the Schedule 14D-1 is hereby amended and supplemented by the following information: On April 20, 1999, the Company filed a motion for a preliminary injunction in the United States District Court for the District of Connecticut (the "Court") to prevent Parent and Purchaser from proceeding with the Offer (the "Preliminary Injunction"). In the Preliminary Injunction, the Company claims that Parent stated that the Offer was "fully financed" and provides "certainty" while allegedly failing to state that the Offer is subject to what the Company claims is a financing condition and, as a result, Parent violated Sections 14(d) and 14(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), by allegedly misstating, concealing and failing to adequately disclose certain material terms of the Offer relating to the financing thereof. In the Preliminary Injunction, the Company requested that the Court enjoin Parent's Offer and compel Parent to make correct disclosures. On April 20, 1999, Parent and Purchaser filed a motion to dismiss the Counterclaim of the Company and a memorandum of law in support of the motion to dismiss the Counterclaim (collectively, the "Motion to Dismiss") with respect to the litigation initiated by Parent and Purchaser in the Court on April 7, 1999 (the "Connecticut Litigation"). Parent, in the Motion to Dismiss, argues that the Court should dismiss the Company's allegations that Parent violated Sections 14(d) and 14(e) of the Exchange Act by allegedly misstating, concealing and failing to adequately disclose certain material terms of the Offer relating to the financing thereof. Parent has received a commitment letter (the "Commitment Letter") from Goldman Sachs Credit Partners L.P., a copy of which has been filed as Exhibit (b)(i) to this Schedule 14D-1, and, as such, Parent considers the Offer to be "fully financed". As disclosed in the Offer to Purchase, the Offer is subject to Parent receiving the funds contemplated by the Commitment Letter; however, the Offer is not subject to Parent seeking any other commitment for, or sources of, any financing necessary to consummate the Offer and the Proposed Merger. While the Company alleges that Parent failed to prominently state that the Offer is subject to a financing condition, the "Introduction" to the Offer to Purchase states that the Offer is conditioned on "receipt of the financing pursuant to the Commitment Letter" and the customary conditions to the Commitment Letter are summarized in "Section 10--Source and Amount of Funds" of the Offer to Purchase. As a result of the foregoing, Parent believes (i) Parent's Motion to Dismiss should be granted and (ii) the Company's motion for the Preliminary Injunction is without merit and Parent intends to vigorously defend itself against this action. The foregoing is qualified in its entirety by reference to the complete text of the Company's Preliminary Injunction, a copy of which is filed as Exhibit (g)(4) hereto, and Parent and Purchaser's Motion to Dismiss, a copy of which is filed as Exhibit (g)(5) hereto, each of which is incorporated by reference herein. The information set forth in Item 10(f) of the Schedule 14D-1 is hereby amended and supplemented by the following information: On April 21, 1999, Parent disseminated a letter to certain institutional and other stockholders of the Company, a copy of which letter is filed as Exhibit (a)(13) hereto and is incorporated by reference herein. Unless otherwise indicated herein, each capitalized term used but not defined herein shall have the meaning ascribed to such term in the Schedule 14D-1 or in the Offer to Purchase referred to therein. Item 11. Materials to be Filed as Exhibits. (a)(13) Letter from Parent to certain institutional and other stockholders of the Company, dated April 21, 1999. (g)(4) Counterclaimant's Motion for Preliminary Injunction, dated April 20, 1999, filed by the Company in the United States District Court for the District of Connecticut. (g)(5) Plaintiff's Motion to Dismiss Counterclaim of Rental Service Corporation and Memorandum of Law in Support of Motion to Dismiss Counterclaim of the Company, dated April 20, 1999, filed by Parent and Purchaser in the United States District Court for the District of Connecticut. SIGNATURE After due 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. UR ACQUISITION CORPORATION By: /S/ JOHN N. MILNE ------------------------ Name: John N. Milne Title: President UNITED RENTALS, INC. By: /S/ BRADLEY S. JACOBS ---------------------------- Name: Bradley S. Jacobs Title: Chairman and Chief Executive Officer Date: April 21, 1999 INDEX TO EXHIBITS Exhibit Number Exhibit - -------- ------- (a)(13) Letter from Parent to certain institutional and other stockholders of the Company, dated April 21, 1999. (g)(4) Counterclaimant's Motion for Preliminary Injunction, dated April 20, 1999, filed by the Company in the United States District Court for the District of Connecticut. (g)(5) Plaintiff's Motion to Dismiss Counterclaim of Rental Service Corporation and Memorandum of Law in Support of Motion to Dismiss Counterclaim of the Company, dated April 20, 1999, filed by Parent and Purchaser in the United States District Court for the District of Connecticut. EX-99 2 EXHIBIT (A)(13) - LETTER TO STOCKHOLDERS UNITED RENTALS, INC. FOUR GREENWICH OFFICE PARK GREENWICH, CT 06830 APRIL 21, 1999 DEAR RENTAL SERVICE CORPORATION STOCKHOLDER: On January 20, 1999, Rental Service's board of directors agreed to a proposed merger with NationsRent, Inc. Under that proposal, the board would essentially surrender control of your company to NationsRent. If the merger is completed, NationsRent will designate 5 of the 9 directors on the board and NationsRent chairman and CEO James Kirk will be CEO. On April 5, United Rentals, Inc. commenced a $22.75 per share all cash tender offer for Rental Service shares, which has resulted in a significant increase in Rental Service's share price. UNITED RENTALS' SUPERIOR OFFER Our tender offer presents a far superior alternative to Rental Service's proposed transaction with NationsRent. United Rentals' $22.75 cash offer provides: o a 45% premium to Rental Service's closing price on December 31, 1998 o a 32% premium to the $17.25 closing price of Rental Service shares on the last trading day prior to our tender offer announcement o 28% premium to the 30-day average closing price prior to announcement of our offer In addition, our offer provides the certainty of cash, compared to the uncertainty of stock in a combined NationsRent-Rental Service company controlled by NationsRent's principal stockholders and management. Our tender offer price is full and fair based on our analysis of the available public data. WE PAY A FULL AND FAIR PRICE FOR COMPANIES WE ACQUIRE, BUT WE WILL NOT OVERPAY. In rejecting our offer, Rental Service incorrectly stated that our transaction would be highly accretive to United Rentals' earnings. While this transaction would be of strategic benefit to United Rentals, our analysis shows only modest accretion to our earnings. The Rental Service board has tried to confuse stockholders by raising questions about the financing of our offer. The truth is that United Rentals has a firm commitment from Goldman, Sachs & Co. to provide financing to complete this transaction and for other corporate purposes. REMEMBER: No deal with United Rentals means that Rental Service shares may fall back to $17.25 per share. THE RENTAL SERVICE BOARD IS DEPRIVING YOU OF YOUR RIGHT TO CHOOSE Rental Service's management and board agreed to a deal that would essentially transfer control of your company to NationsRent just six days after the then-chairman and CEO Martin Reid told us that Rental Service was not for sale. The board also took a series of steps to severely limit other offers. For example: o The board approved an onerous 19.9% lockup option that could MAKE POOLING OF INTERESTS ACCOUNTING TREATMENT IMPOSSIBLE FOR UNITED RENTALS OR ANYONE ELSE. o An unusually high $40 million "break up" fee is payable to NationsRent if the merger is not completed for certain reasons. The Rental Service board has committed YOUR MONEY TO PAY THIS EXORBITANT FEE EVEN IF YOU VOTE AGAINST THE NATIONSRENT MERGER. o The Rental Service board responded to our offer by adopting a "poison pill" TO MAKE IT MORE DIFFICULT FOR UNITED RENTALS, OR ANYONE ELSE, TO BUY YOUR SHARES. We believe that you should decide for yourself, without the board's interference, whether to give up control of your company TO NATIONSRENT IN A NO PREMIUM MERGER, or to accept UNITED RENTALS' 32% PREMIUM CASH TENDER OFFER. Send a Message to the Rental Service Board-- TENDER YOUR SHARES NOW By tendering your shares now, you can send a strong message to the Rental Service board that they should support our offer. Time is short. Our tender offer expires on April 30, 1999. We urge you to tender your shares today. Sincerely, Bradley Jacobs Chairman and Chief Executive Officer IF YOU HAVE QUESTIONS, OR NEED ASSISTANCE WITH TENDERING YOUR SHARES YOU MAY CALL GEORGESON & COMPANY INC. BANKS AND BROKERS, CALL TOLL FREE (212) 440-9800 ALL OTHERS, CALL COLLECT 1-800-223-2064 Certain Information Concerning Participants United Rentals, Inc.("United Rentals"), UR Acquisition Corporation ("UR Acquisition") and the following persons named below may be deemed to be "participants" in the solicitation of consents and/or proxies from stockholders of Rental Service Corporation ("Rental Service"): the directors of United Rentals (Bradley S. Jacobs (Chairman of the Board and Chief Executive Officer), Wayland R. Hicks (Vice Chairman and Chief Operating Officer), John N. Milne (Vice Chairman, Chief Acquisition Officer and Secretary), William F. Berry (President), John S. McKinney (Vice President, Finance), Leon D. Black, Richard D. Colburn, Ronald M. DeFeo, Michael S. Gross, Richard J. Heckmann, Gerald Tsai, Jr. and Christian M. Weyer); the following executive officers and employees of United Rentals: Michael J. Nolan (Chief Financial Officer) and Robert P. Miner (Vice President, Strategic Planning); the nominees of United Rentals (the "Nominees") to stand for election to the Board of Directors of Rental Service (Messrs. Jacobs, Richard N. Daniel, Heckmann, Hicks, Milne, Nolan, Raymond S. Troubh and Tsai, and Ms. Stephanie R. Joseph); and the alternate nominees of United Rentals (the "Alternate Nominees") to stand for election to the Board of Directors of Rental Service (Messrs. William Aaron, David Bronner, Peter Gold, David Katz, Elliot Levine and Jeffrey Parker). As of the date hereof, United Rentals is the beneficial owner of 100 shares of common stock, par value $0.01 per share (the "Common Stock"), of Rental Service. Other than as set forth herein, as of the date hereof, neither United Rentals, UR Acquisition nor any of the persons listed above, has any interest, direct or indirect, by security holding or otherwise, in Rental Service. United Rentals has retained Goldman, Sachs & Co. ("Goldman Sachs") to act as its financial advisor and the Dealer Managers in connection with the tender offer (the "Offer") by United Rentals and UR Acquisition to purchase the shares of Common Stock of Rental Service for $22.75 per share in cash, for which Goldman Sachs may receive substantial fees, as well as reimbursement of reasonable out-of-pocket expenses. In addition, United Rentals has agreed to indemnify Goldman Sachs and certain related persons against certain liabilities, including certain liabilities under the federal securities laws, arising out of its engagement. United Rentals has also entered into a commitment letter with Goldman Sachs Credit Partners L.P. ("GSCP") relating to the financing of the Offer pursuant to which GSCP may receive substantial fees, as well as reimbursement of reasonable out-of-pocket expenses. Goldman Sachs does not admit that it or any of its partners, directors, officers, employees, affiliates or controlling persons, if any, is a "participant" as defined in Schedule 14A promulgated under the Securities Exchange Act of 1934, as amended, in the solicitation of consents and/or proxies, or that Schedule 14A requires the disclosure of certain information concerning Goldman Sachs. In connection with Goldman Sachs' role as financial advisor to United Rentals, the following investment banking employees of Goldman Sachs may communicate in person, by telephone or otherwise with a limited number of institutions, brokers or other persons who are stockholders of Rental Service and may solicit consents and/or proxies there from: Bruce J. Evans, Robert D. Lipman, Jeffrey M. Moslow and Cody J. Smith. Goldman Sachs engages in a full range of investment banking, securities trading, market-making and brokerage services for institutional and individual clients. In the normal course of its business Goldman Sachs may trade securities of Rental Service for its own account and the accounts of its customers, and accordingly, may at any time hold a long or short position in such securities. Goldman Sachs has informed United Rentals that, as of the date hereof, Goldman Sachs held no shares of the Common Stock of Rental Service for its own account. Goldman Sachs and certain of its affiliates may have voting and dispositive power with respect to certain shares of Rental Service Common Stock held in asset management, brokerage and other accounts. Goldman Sachs and such affiliates disclaim beneficial ownership of such shares of Rental Service Common Stock. EX-99 3 EXHIBIT (G)(4) - COUNTERCLAIMANT'S MOTION FOR PRELIMINARY INJUNCTION UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT ========================================= UR ACQUISITION CORPORATION : CIVIL ACTION NO. and UNITED RENTALS, INC. 399CV00625 (DJS) : Plaintiffs, : V. : JAMES L. KIRK, RENTAL SERVICE CORPORATION and NATIONSRENT, INC. : APRIL 20, 1999 Defendant. : ========================================= COUNTERCLAIMANT'S MOTION FOR PRELIMINARY INJUNCTION Pursuant to Federal Rule of Civil Procedure 65, Rental Service Corporation ("RSC") hereby moves for an order enjoining UR Acquisition Corporation, United Rentals, Inc. and Bradley Jacobs (collectively, "URI") from proceeding with their unsolicited, highly conditional tender offer (or any future tender offer) for the purchase of RSC's outstanding shares, unless and until URI complies with all applicable provisions of the federal securities laws and the effects of URI's unlawful conduct have dissipated. In support of this motion, RSC states: 1. Seizing on an industry-wide drop in the prices of equipment rental companies, URI announced, on April 5, 1999, an unsolicited, highly conditional tender offer for all of the outstanding shares of RSC common stock (the "Offer"). Concurrently, on April 5, 1999, URI's chairman and chief executive officer, Bradley Jacobs, stated publicly that URI's Offer was "fully financed" and offered greater "certainty" than RSC's pending "merger of equals" with NationsRent, Inc. Similarly, URI's April 5 summary advertisement and press release described several conditions of the Offer, but never mentioned any need to secure financing or any financing condition. URI's voluminous Securities and Exchange Commission filing also omitted the financing condition in its summary of the conditions to the Offer. 2. URI's only disclosure of this key condition to date was at the very end of a boilerplate description of the conditions to the offer at the back of its filing. URI's misleading statements about the financing for the Offer and its failure properly to disclose its financing in its public documents are violations of Sections 14(e) and (d) of the Securities Exchange Act of 1934 (the "Exchange Act"). 3. The provisions of Section 14 of the Exchange Act are designed to protect stockholders by ensuring that they have adequate and accurate information on which to base their decisions to sell, tender or hold their shares. URI's efforts to mischaracterize and conceal its financing condition and financing uncertainty are depriving RSC, its stockholders and the investing public of the protections of Section 14. URI's conduct has harmed RSC's and the public's interest in full disclosure in connection with tender offers and sound financial markets. 4. Unless URI is ordered to make corrective disclosures and is enjoined from such further actions, RSC and its stockholders will be forced to make decisions with respect to the Offer based on inaccurate and misleading information that does not comply the federal regulatory scheme. 5. Therefore, RSC requests an order enjoining URI from proceeding with its tender offer unless and until it complies with all applicable provisions of the federal securities laws and the effects of URI's unlawful conduct have been dissipated. RSC will file a Memorandum of Points and Authorities in support of this Motion after discovery is completed and a full record is assembled. For the foregoing reasons, RSC's Motion for a Preliminary Injunction should be granted. DEFENDANT AND COUNTERCLAIMANT RENTAL SERVICE CORPORATION By: /s/ William H. Champlin III ------------------------------- William H. Champlin III OF COUNSEL CT04202 Marc W. Rappel TYLER COOPER & ALCORN, LLP James J. Farrell CityPlace - 35th Floor LATHAM & WATKINS Hartford, CT 06103-3488 633 W. 5th Street, Suite 4000 (860) 725-6200 Los Angeles, CA 90071 Fax: (860) 278-3802 (213) 485-1234 Its Attorneys Fax: (213) 891-8763 ORDER The foregoing motion having been heard is hereby ORDERED: GRANTED/ DENIED. BY THE COURT ________________________________ Judge/Clerk/Asst. Clerk CERTIFICATION This is to certify that I have served a copy of the foregoing on all counsel and pro se parties of record by causing it to be mailed on this 20th day of April, 1999 postage prepaid and properly addressed to: Thomas J. Groark, Jr. Richard M. Reynolds Philip S. Wellman Day, Berry & Howard, LLP CityPlace I Hartford, CT 06103 Joseph B. Frumkin Sullivan & Cromwell 125 Broad St. New York, NY 10004 James L. Kirk 450 East Las Olas Blvd. Suite 1400 Fort Lauderdale, FL 33301 NationsRent, Inc. 450 East Las Olas Blvd. Suite 1400 Fort Lauderdale, FL 33301 /s/ William H. Champlin III ------------------------------- William H. Champlin III EX-99 4 EXHIBIT (G)(5) - MOTION TO DISMISS UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT UR ACQUISITION CORPORATION : and UNITED RENTALS, INC., : : Plaintiffs, : : CIVIL ACTION NO. -against- : 399CV00625(DJS) : JAMES L. KIRK, RENTAL SERVICES : CORPORATION, and NATIONSRENT, : INC., : : Defendants. : April 20, 1999 PLAINTIFFS' MOTION TO DISMISS COUNTERCLAIM OF RENTAL SERVICE CORPORATION Pursuant to Federal Rule of Civil Procedure 12(b)(6), the Plaintiffs-Counterdefendants UR Acquisition Corp. and United Rentals, Inc., and additional Counterdefendant Bradley S. Jacobs, move to dismiss the Counterclaim of Defendant Rental Service Corporation because it does not state claims upon which relief can be granted. The grounds for this Motion are set forth in the accompanying Memorandum of Law. PLAINTIFFS-COUNTERDEFENDANTS UR ACQUISITION CORPORATION and UNITED RENTALS, INC. ADDITIONAL COUNTERDEFENDANT BRADLEY S. JACOBS By: /s/ Robin L. Smith ----------------------------- Thomas J. Groark, Jr. (ct04245) Richard M. Reynolds (ct06124) Philip S. Wellman (ct09636) Robin L. Smith (ct13345) DAY, BERRY & HOWARD LLP CityPlace I Hartford, Connecticut 06103 (860) 275-0100 Their Attorneys 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 CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing has been served on the following counsel and parties this date, via overnight courier: Marc W. Rappel, Esquire LATHAM & WATKINS 633 West Fifth Street Suite 4000 Los Angeles, CA 90071 Joseph B. Frumkin, Esquire SULLIVAN & CROMWELL 125 Broad Street New York, NY 10004 James L. Kirk 450 East Las Olas Boulevard Suite 1400 Fort Lauderdale, FL 33301 Rental Service Corporation 6929 East Greenway Parkway Suite 200 Scottsdale, AZ 85254 Nationsrent, Inc. 450 East Las Olas Boulevard Suite 1400 Fort Lauderdale, FL 33301 and via hand delivery to: William H. Champlin III, Esquire Mark V. Connolly, Esquire TYLER, COOPER & ALCORN, LLP CityPlace I - 35th Floor Hartford, CT 06103-3488 /s/ Robin L. Smith ------------------------- Robin L. Smith UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT UR ACQUISITION CORPORATION : and UNITED RENTALS, INC., : : Plaintiffs, : : CIVIL ACTION NO. -against- : 399CV00625(DJS) : JAMES L. KIRK, RENTAL SERVICES : CORPORATION, and NATIONSRENT, : INC., : : Defendants. : April 20, 1999 MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS COUNTERCLAIM OF RENTAL SERVICE CORPORATION Plaintiffs and Counter Defendants UR Acquisition Corp. and United Rentals, Inc. (collectively, "URI") and additional Counter Defendant Bradley S. Jacobs respectfully submit this memorandum of law in support of their motion, pursuant to Fed. R. Civ. P. 12(b)(6) and Section 14 of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. ss. 78n, to dismiss the Counterclaim of Defendant Rental Service Corporation ("RSC"). PRELIMINARY STATEMENT RSC's counterclaim, which alleges that URI has failed to disclose the conditional nature of financing for its tender offer, disregards two facts: (i) Goldman Sachs provided a firm $2 billion commitment to consummate URI's tender offer and proposed merger, to refinance certain RSC indebtedness, and for other corporate purposes, and (ii) URI has fully disclosed the limited, customary conditions contained in its signed commitment letter. RSC's counterclaim is little more than a frivolous public relations gambit. RSC acknowledges, as it must, that URI has in fact disclosed all the conditions to the Goldman Sachs financing. Nonetheless, RSC complains that URI violated the securities law anti-fraud provisions when it disclosed these customary conditions to its financing "only at the very end of a boilerplate description of the conditions to the offer at the back of its filing" and not in a summary advertisement, press release, or interview with a reporter. This aspect of RSC's claim is factually flawed and legally irrelevant. This circuit routinely holds that an allegation - like RSC's - that an offeror "buried" information in its filings fails to state a claim under section 14(e) of the Williams Act when the information in fact appears in those filings and is accessible to the reasonable investor. Far from "burying" the customary conditions to the Goldman Sachs commitment, URI has disclosed all conditions to financing in its Schedule 14D-1 filing. The customary conditions of which RSC complains were disclosed expressly in the introduction to and section 10 ("Source and Amount of Funds") of the Offer to Purchase, included as an exhibit to URI's filing with the Securities and Exchange Commission. They were disclosed yet again (and in more detail) when URI attached the Commitment Letter from Goldman Sachs as another exhibit to the filing and were referenced yet again when, on April 19, 1999, URI filed its fifth amendment to Schedule 14D-1 which directly addresses (and includes in full) RSC's counterclaim. Because URI has complied fully with the Williams Act, RSC's counterclaim should be dismissed. STATEMENT OF FACTS(1) On April 5, 1999, URI commenced a non-discriminatory, non-coercive, all-cash offer to purchase all outstanding shares of RSC common stock at a price of $22.75 per share, representing a 32% premium over the closing price of such shares on the last trading day prior to the offer ("Tender Offer"). On that day, URI filed with the Securities and Exchange Commission information required to be disclosed by Section 14(d) of the Exchange Act and the rules and regulations promulgated thereunder: a Schedule 14D-1 ("14D-1"), and attached several exhibits, including an Offer to Purchase dated April 5, 1999 ("Offer to Purchase"), Summary Advertisement dated April 5, 1999 ("Summary Advertisement"), Press Release dated April 5, 1999 ("Press Release"), and Commitment Letter from Goldman Sachs Credit Partners L.P. ("Goldman Sachs") dated April 4, 1999 ("Commitment Letter"). (The 14D-1, including all exhibits is attached hereto as Exhibit A.) The 14D-1, with its exhibits, discloses in detail the terms and conditions of the Tender Offer. In the first sentence of the filing, URI states that the Tender Offer is made "upon the terms and subject to the conditions set forth in the Offer to Purchase". See 14D-1 at 1. The Offer to Purchase, in turn, consists of an introduction and seventeen sections, all referenced in a table of contents, that stockholders are told should be read in their entirety. See Offer to Purchase at 6. Section 10 of the Offer to Purchase is a two-and-a-half page section entitled "Source and Amount of Funds," in which URI details the firm financing arrangements made with Goldman Sachs in connection with the Tender Offer. In this section, the Offer to Purchase states that Goldman Sachs has committed to provide the financing for the Tender Offer "upon the terms and subject to the conditions set forth in the Commitment Letter". See Offer to Purchase at 18-19. Moreover, the section discloses that funding, will be subject to customary closing conditions, including, among others (1) execution of satisfactory documentation, (2) granting of perfected first priority security interests in all assets to the extent described above, (3) since December 31, 1998, there shall not have been any adverse change in or affecting the general affairs, management, prospects, financial position, shareholders' equity or results of operations of [URI] or [RSC], together with their respective subsidiaries, which [Goldman Sachs], in its judgment deems material, (4) no disruption of financial and capital markets, (5) the receipt of all necessary governmental and third party approvals in connection with the Facilities and the consummation of the Offer, and (6) the absence of any litigation that could be reasonably likely to have a material adverse effect in or affecting the general affairs, management, prospects, financial position, shareholders' equity or results of operations of [URI] or [RSC], together with their respective subsidiaries, taken as a whole, or the Offer or the Proposed Merger or any of the Facilities. Although [URI] expects that the Facilities will be available to provide funds for the consummation of the Offer and the Proposed Merger in accordance with their respective terms, there can be no assurance that the Facilities will be consummated. See "Conditions to the Offer" set forth in Section 14 hereof. Offer to Purchase at 20. Section 14 of the Offer to Purchase states that in the event "[URI] shall not have received the financing for the Offer and the Proposed Merger pursuant to the Commitment Letter," URI may terminate the Tender Offer. See Offer to Purchase at 30. URI's 14D-1 also attaches the Commitment Letter from Goldman Sachs. Beyond establishing the firm nature of the Goldman Sachs commitment, thi sletteralso details the precise terms and conditions of the financing. See Commitment Letter, 14D-1, Exhibit (b)(1). In the Commitment Letter, Goldman Sachs states that it is "pleased to confirm its commitment to provide [URI] the full $2.0 billion of the Facilities . . . on the terms and subject to the conditions contained in this Commitment Letter." See Commitment Letter at 2. Among the conditions specified in the Commitment Letter are the customary conditions to closing that URI disclosed in Section 10 of the Offer to Purchase. On April 19, 1999, URI filed a fifth amendment to its Schedule 14D-1 (the "Amendment") (attached hereto as Exhibit B) and took issue directly with RSC's counterclaims. As an exhibit to the Amendment, URI includes the full text of RSC's counterclaim. Moreover, in the Amendment, URI discloses that it considers this Tender Offer to indeed be "fully financed" because, given the Goldman Sachs firm $2 billion commitment, no other source of financing will be necessary to effect the transaction. The amendment again acknowledges the customary conditions to the Goldman Sachs commitment (which were, of course, already disclosed in full in the initial 14D-1 filing). In short, this filing places RSC's and URI's positions on this entire issue squarely before RSC's stockholders. ARGUMENT I. THE UNDERLYING REGULATORY FRAMEWORK: THE WILLIAMS ACT, AS AMENDED The Williams Act amendments to the Exchange Act enacted in 1960 is a broad anti-fraud statute specifically aimed at tender offers for securities. Its purpose is "to compel the disclosure of information pertaining to tender offers and offering parties to the public shareholders of target companies, thereby enabling those shareholders to make informed decisions regarding the tender offers for their stock." Sydell v. Ares-Serono, 892 F. Supp. 498, 501 (S.D.N.Y. 1995) (citing Schreiber v. Burlington Northern, Inc., 472 U.S. 1, 10-11, 105 S.Ct. 2458, 2463-64 (1985)). The Williams Act does not "favor one side or the other in a tender offer dispute." Iavarone v. Raymond Keyes Assoc., Inc., 733 F. Supp. 727, 734 (S.D.N.Y. 1990) (citations omitted). Rather, the Act and the regulatory scheme promulgated by the SEC thereunder contain affirmative obligations and negative restrictions regarding communications with shareholders applicable both to the offeror and the target company. The purpose of the disclosure requirements under the Williams Act are fully satisfied "when shareholders receive the information required to be filed." Treadway Cos. v. Care Corp., 638 F.2d 357, 380 (2d Cir. 1980). First, an offeror may commence a tender offer by making an announcement in the manner proscribed in SEC Rule 14d-2, including by publication or other public announcement. 17 CFR ss. 240.14d-2. As soon as practicablE on the date of commencement of a tender offer, the offeror must file a 14D-1 that, among other things, identifies the offeror, the offeror's purpose in making the tender offer and the terms of the offer. See SEC Rule 14d-3, 17 CFR ss. 240.14d-3. The tender offer must be published, sent, or given to the shareholders of the target company, and a copy of the 14D-1 must be hand-delivered to the target at its principal executive office. Id. Once a tender offer has commenced, the conduct of the target is also highly regulated. A target may immediately issue a "stop, look, and listen" statement to its shareholders advising them of when the target will issue a recommendation with respect to the offer. See SEC Rule 14d-1, 17 CFR ss. 240.14d-9. The target, however, may not issue any solicitation or recommendation to shareholders, unless as soon as practicable on the date the solicitation or recommendation is first made, the target files and distributes a Schedule 14D-9 ("14D-9") setting forth, in full with detailed reasoning, the target's recommendation with respect to the tender offer. Finally, all communications regarding the tender offer, including the 14D-1, 14D-9, any amendments thereto, and any press releases or other public statements, are subject to Section 14(e) of the Williams Act, which prohibits any person from making "any untrue statement of a material fact or omit[ting] to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, . . . in connection with any tender offer or request or invitation for tenders, or any solicitation of security holders in opposition to or in favor of any such offer, request, or invitations." 15 U.S.C. ss. 78n(e) (1998). URI's disclosures in connection with this Tender Offer are complete and accurate, and they comport fully with the requirements of the Williams Act. URI's full and fair disclosure of all the conditions of its financing, coupled with the frivolous character of RSC's claimed "omissions", require that this counterclaim be dismissed. II. URI, IN ITS INITIAL SCHEDULE 14D-1, FAIRLY AND FULLY DISCLOSED THE NATURE OF ITS FINANCING COMMITMENT A. URI Fairly and Fully Disclosed The Fact That Goldman Sachs Has Made a Firm Commitment of $2 Billion, And The Conditions To That Commitment The gravamen of RSC's claim is that URI has deceived RSC shareholders. RSC contends that because URI has stated to the media that it has a firm financing commitment from Goldman Sachs, but has not at the same time discussed, in each communication all the conditions to that firm commitment, URI has engaged in a deceptive scheme in violation of the securities laws. Countercl. P. P. 18, 23. RSC claims that corrective disclosures and an injunction are necessary to prevent RSC's stockholders from making a decision based on "inaccurate and misleading" information. See Countercl. Prayer For Relief. i. The Goldman Sachs Commitment The Commitment Letter speaks for itself: Goldman Sachs has provided a firm $2 billion commitment to consummate URI's tender offer and proposed merger, to refinance certain RSC indebtedness, and for other corporate purposes. RSC may choose to ignore the import of a firm commitment from Goldman Sachs, but that does not somehow transform the legitimate representations that URI has made to the public regarding the security of this financing into Williams Act violations. With the Goldman Sachs commitment in place, URI need not secure any other source of financing to complete its Tender Offer. URI has made a certain offer to the RSC stockholders, and URI's statements to that effect have been accurate. RSC's claim to the contrary is nonsense. ii. The Commitment Is Subject Only To Customary and Usual Conditions In the face of URI's fully-financed, all-cash offer, RSC points to standard and customary conditions for a transaction of this nature, and attempts to create a cloud of doubt and uncertainty as to URI's ability to finance the Tender Offer. None of the conditions, however, undermines Goldman Sachs' firm commitment, and all of them were disclosed to RSC's stockholders. The conditions to Goldman Sachs' commitment themselves are unremarkable. See Offer to Purchase ss. 10; Commitment Letter at 2. A reasonable investor would not be surprised to discover that Goldman Sachs insists on proper loan documentation before providing $2 billion for a transaction. Nor would an investor debate why it is that Goldman Sachs insists that a proposed transaction comply with governmental regulations before supplying this amount of capital, or why it insists that the business prospects of the companies involved are, at the time the finds are provided, be as they were stated to be when the commitment was made. Simply put, a reasonable investor would not consider these customary financing conditions as significant factors in his or her decision-making process. In fact, a reasonable stockholder would be shocked if customary conditions such as these were not part of a $2 billion financing commitment. Of equal importance, the very conditions that RSC claims have been "omitted" from URI's statements to RSC shareholders are in fact fully disclosed in URI's public filings. Section 10 of URI's Offer to Purchase details the conditions to the Goldman Sachs financing. Furthermore, the Commitment letter itself, is an exhibit to URI's 14D-1 filing. And now, to ensure that this issue is rendered moot, URI has again referenced these customary conditions as part of full public disclosure of RSC's meritless claims. See Schedule 14D-1 Amendment No. 5. There is no misrepresentation here. RSC's claims are groundless and must be dismissed. B. URI Did Not "Bury" The Conditions RSC does not and cannot dispute that the very conditions of which it complains are in fact fully disclosed in URI's public filings. Instead, RSC complains that URI "buried" these "troubling" conditions regarding its Tender Offer financing "deep within the Offer to Purchase". Countercl. P. 12. As discussed above, RSC's premise is simply wrong, as the customary conditions to the Goldman Sachs commitment are discussed directly in two separate portions of URI's 14D-1. More importantly, as a legal matter, RSC's premise is irrelevant, because all of the conditions to URI's financing (indeed, to the entire Tender Offer) are in fact disclosed in a full and fair fashion. This Court need look no further than URI's public filings to dispose of RSC's meritless counterclaims. See In re Hunter Envtl. Servs., Inc. SEC Litg., 921 F. Supp. at 914, 918 (D. Conn. 1996) (In a securities case, "if the [SEC filings and other] documents portray a picture substantially different from that painted by the plaintiff in the complaint, the court will base its decision on the scenario supported by the complete exhibits."). At least one District Court in this Circuit has addressed and rejected an argument nearly identical to the one RSC advances. In Consolidated Gold Fields v. Anglo American Corp. of South Africa, Ltd, 713 F. Supp. 1457 (S.D.N.Y. 1989), the target of a tender offer claimed that the offeror had violated the Williams Act by "burying" valuation information in its 14D-1 filing. The court disagreed, relying on the principal that it is sufficient if the company provides information as to material facts in a format from which a reasonable investor could reach his own conclusions as to the risks of the transaction. Consolidated Gold Fields, 713 F. Supp. at 1470. In that case, the valuation information was not prominently displayed, but was referenced in footnotes. Because the information was available and accessible to the reasonable investor, there was simply no violation of the anti-fraud provisions of the securities laws. Id. at 1471. As a general proposition, this Circuit has routinely rejected claims similar to RSC's where a purported violation was premised on the placement of information in a required filing. See Kramer v. Time Warner, 937 F.2d 767 (2d Cir. 1991) (Warner management's conflict of interest was adequately disclosed where the filing incorporated by reference relevant portions of the Joint Proxy Statement that disclosed the information); Feder v. MacFadden Holdings, Inc., 698 F. Supp. 47, 51 (S.D.N.Y. 1988) (condition to tender offer was not "buried" when it was mentioned in the introductory section of the Offer to Purchase and was cross-referenced and discussed in more detail in a subsequent section of the document). There is no doubt that URI's disclosure of its financing condition is well within the bounds of the securities laws. The Tender Offer begins with an admonition that it is subject to the conditions in the Offer to Purchase. The Offer to Purchase, in turn, devotes an entire section to the financing of the tender offer, including the customary conditions to the Commitment Letter imposed by Goldman Sachs. See Offer to Purchase at 18-21 (ss. 10). Finally, URI included in its 14D-1 the Commitment Letter itself, so that any investor may examine all aspects of the Goldman Sachs agreement. In short, the information regarding the Goldman Sachs $2 billion commitment, including the customary conditions thereto closing, is readily available to RSC's stockholders. Because this is plain from the documents themselves, RSC's claims should be rejected. III. IN ANY CASE, THIS ISSUE HAS BEEN FULLY ADDRESSED IN URI'S AMENDED 14D-1 FILING Even if, arguendo, the disclosures in URI's initial 14D-1 were, in any way, incomplete --which they were not --URI's Amendment to its Schedule 14D-1 (Amendment No.5) filed on April 19, 1999, renders RSC's counterclaim moot. In the Amendment, URI puts before RSC's stockholders the full nature of the current dispute. Far from attempting to conceal facts from the public, URI has again provided RSC stockholders with all the information necessary to make an informed choice. Even if there had been some confusion among RSC stockholders regarding URI's financing -and there was not - that confusion would now be gone. RSC stockholders can therefore decide for themselves whether the Goldman Sachs $2 billion commitment represents certainty in this Tender Offer. A. The Amendment Discloses Both Rsc's and Uri's Positions in Full To eliminate any doubt that RSC stockholders have a full and fair picture of the Tender Offer's financing and RSC's complaints in this regard, URI, in the Amendment, fully discloses both RSC's and URI's position on this issue. RSC's counterclaim is included, in full, as an exhibit to the filing, so it cannot be asserted that URI is mischaracterizing RSC's position. URI offers a brief restatement of its own position. Finally, all possible contingencies with the financing of the Tender Offer are set out, once again, either directly, or by reference to prior filings, so that stockholders may make their own assessment of the certainty of URI's offer. Given the full nature of the disclosure on this issue, RSC's counterclaim is moot. See West Point -Pepperell, Inc. v. Farley, Inc., 711 F. Supp. 1088, 1094 (N.D. Ga. 1989); Arvin Industries v. Wanandi, 722 F. Supp. 532, 539 (S.D. Ind. 1989) Avnet v. Scope, 499 F. Supp. 1121, 1124 (S.D.N.Y. 1980) (amendment to SEC filling was sufficient to cure any defect in prior filing) B. The Total Mix of Information On This Issue Is Complete URI believes that all of the material facts regarding the financing of this Tender Offer have been disclosed, at multiple times and in multiple places. To the extent that any additional facts might exist on this issue, such facts could not alter the total mix of information already available to the RSC shareholders, and hence, they would not be material. Before an omission runs afoul of the Williams Act, it must be material. Consolidated Gold Fields, 713 F. Supp. at 1470 (citing Basic Inc. v. Levinson, 485 U.S. 224 (1988)). The test for materiality is well-established: The omitted fact must have been one that would have had actual significance in the deliberations of the reasonable shareholder, or, put another way there must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the 'total mix' of information made available. Avnet v. Scope Industries, 499 F. Supp. 1121, 1127 (S.D.N.Y. 1980) (citing TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (1976) (emphasis added)). WHEREFORE, In light of URI's full disclosure of the Commitment Letter, RSC's claim should be dismissed, with prejudice. PLAINTIFFS-COUNTER DEFENDANTS UR ACQUISITION CORPORATION and UNITED RENTALS, INC. and COUNTER- DEFENDANT BRADLEY JACOBS By: /s/ Robin L. Smith _________________________________ Thomas J. Groark, Jr. (ct04245) Richard M. Reynolds (ct06124) Philip S. Wellman (ct09636) Robin L. Smith (ct13345) DAY, BERRY & HOWARD LLP CityPlace I Hartford, Connecticut 06103 (860) 275-0100 Their Attorneys 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 CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing has been served on the following counsel and parties this date, via overnight courier: Marc W. Rappel, Esquire LATHAM & WATKINS 633 West Fifth Street Suite 4000 Los Angeles, CA 90071 Joseph B. Frumkin, Esquire SULLIVAN & CROMWELL 125 Broad Street New York, NY 10004 James L. Kirk 450 East Las Olas Boulevard Suite 1400 Fort Lauderdale, FL 33301 Rental Service Corporation 6929 East Greenway Parkway Suite 200 Scottsdale, AZ 85254 Nationsrent, Inc. 450 East Las Olas Boulevard Suite 1400 Fort Lauderdale, FL 33301 and via hand delivery: Willaim H. Champlin III, Esquire Mark V. Connolly, Rsquire TYLER, COOPER & ALCORN, LLP Cityplace I - 35th Floor Hartford, Ct 06103-3488 /s/ Robin L. Smith ________________________ Robin L. Smith -----END PRIVACY-ENHANCED MESSAGE-----