## Facts

- United Rentals, Inc. (URI) agreed to be acquired in a going-private merger by Cerberus-affiliated entities RAM Holdings, Inc. and RAM Acquisition Corp. at $34.50 per share.
- The transaction documents included a merger agreement plus separate Cerberus-related limited guarantee and equity commitment.
- The merger agreement contained (i) a specific-performance clause (§ 9.10) that, on its face, permitted URI to seek equitable relief but made that right subject to § 8.2(e), and (ii) a remedies/limitation clause (§ 8.2(e)) providing a $100 million reverse termination fee and stating it was URI’s sole and exclusive remedy, barring equitable relief and damages above that amount in the specified circumstances.
- After Cerberus indicated it would not close on the agreed terms and would instead pay the $100 million fee, URI sued in the Delaware Court of Chancery seeking, among other relief, specific performance to compel closing.
- URI moved for partial summary judgment on its specific performance claim; RAM opposed and cross-moved for judgment on that claim based on the contractual limitation of remedies.

## Issues

1. Whether the merger agreement unambiguously entitled URI to specific performance compelling RAM to consummate the merger.
2. Whether the agreement instead limited URI’s remedy to the $100 million reverse termination fee, precluding specific performance and additional damages.
3. Whether, given conflicting remedial provisions, extrinsic evidence and the forthright negotiator principle required construing the agreement to bar specific performance.

## Decision

- The court denied URI’s motion for partial summary judgment seeking specific performance.
- The court found the merger agreement’s remedies provisions conflicted and were ambiguous, defeating URI’s claim of an unambiguous right to specific performance.
- Considering extrinsic evidence, the court concluded the negotiations did not establish a shared intent supporting URI’s interpretation.
- Applying the forthright negotiator principle, the court held RAM’s clearly communicated understanding—that it could walk away by paying $100 million and would not be subject to specific performance—controlled because URI knew or should have known of that understanding.
- The court ruled for RAM on the specific performance claim, holding URI’s remedy was limited to the $100 million reverse termination fee in the circumstances presented.

## Legal Principles

- When contract provisions on remedies are in direct conflict and cannot be reconciled on their face, the agreement is ambiguous and summary judgment based on “unambiguous” meaning is improper.
- If a contract is ambiguous, negotiation history and other extrinsic evidence may be considered, but ambiguous and mixed evidence may be insufficient to establish a common understanding supporting the movant’s interpretation at summary judgment.
- Under Delaware’s forthright negotiator principle, a party may be bound by the other side’s subjective interpretation if that interpretation was clearly communicated and the first party knew or had reason to know of it.
- In an acquisition agreement, a reverse termination fee coupled with an exclusive-remedy provision can operate as a contractual cap and bar specific performance, particularly where the agreement conditions any specific-performance language on the exclusive-remedy clause and the negotiations reflect that allocation of risk.

## Conclusion

The court refused to compel closing because the agreement’s remedial terms were contradictory, the extrinsic record did not show a shared intent to permit specific performance, and the buyer’s consistently communicated position that it could exit by paying $100 million bound the parties under the forthright negotiator principle.


United Rentals, Inc. v. RAM Holdings, Inc., 937 A.2d 810 (Del. Ch. 2007)