<PAGE>
333-74275
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
UNITED RENTALS (NORTH AMERICA), INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 7353 06-1493538
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION NUMBER)
ORGANIZATION)
(FOR CO-REGISTRANTS, PLEASE SEE "TABLE OF CO-REGISTRANTS"
ON THE FOLLOWING PAGE)
FOUR GREENWICH OFFICE PARK
GREENWICH, CONNECTICUT 06830
(203) 622-3131
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
BRADLEY S. JACOBS
UNITED RENTALS (NORTH AMERICA), INC.
GREENWICH, CONNECTICUT 06830
(203) 622-3131
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
A COPY OF ALL COMMUNICATIONS, INCLUDING COMMUNICATIONS SENT TO THE AGENT FOR
SERVICE, SHOULD BE SENT TO:
JOSEPH EHRENREICH, ESQ. STEPHEN M. BESEN, ESQ.
EHRENREICH EILENBERG KRAUSE & ZIVIAN WEIL, GOTSHAL & MANGES LLP
LLP 767 FIFTH AVENUE
11 EAST 44TH STREET NEW YORK, NEW YORK 10153
NEW YORK, NEW YORK 10017 (212) 310-8000
(212) 986-9700
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable following the effectiveness of this
Registration Statement and satisfaction of all other conditions to the
exchange offer described in the prospectus included herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CO-REGISTRANTS
<TABLE>
<CAPTION>
(PRIMARY
(STATE OR OTHER STANDARD
EXACT NAME OF CO- JURISDICTION OF INDUSTRIAL
REGISTRANT AS INCORPORATION OR CLASSIFICATION (I.R.S. EMPLOYER
SPECIFIED IN ITS CHARTER ORGANIZATION) NUMBER) IDENTIFICATION NO.)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
A&A Tool Rentals & Sales,
Inc. California 7353 94-1729580
- -------------------------------------------------------------------------------
A&B Tool & Equipment
Rental, Inc. Alaska 7353 92-0086704
- -------------------------------------------------------------------------------
ABZ Equipment, Inc. Arizona 7353 86-0708381
- -------------------------------------------------------------------------------
ACG, Inc. Indiana 7353 35-1581235
- -------------------------------------------------------------------------------
Adco Equipment, Inc. California 7353 95-3448693
- -------------------------------------------------------------------------------
Alban Equipment Company Ohio 7353 31-4446904
- -------------------------------------------------------------------------------
Arrow Equipment Company Illinois 7353 36-2748973
- -------------------------------------------------------------------------------
Bakersfield Compaction
Equipment California 7353 77-0281198
- -------------------------------------------------------------------------------
Blast Abrasives and
Equipment Corp. Indiana 7353 35-1821890
- -------------------------------------------------------------------------------
BNR Equipment, Inc. New York 7353 16-1487245
- -------------------------------------------------------------------------------
California Equipment
Rental Co. California 7353 33-0399617
- -------------------------------------------------------------------------------
Churchman Equipment Co. Indiana 7353 35-1576779
- -------------------------------------------------------------------------------
Coran Enterprises,
Incorporated California 7353 94-2292438
- -------------------------------------------------------------------------------
Dealers Service Company New Jersey 7353 22-1944238
- -------------------------------------------------------------------------------
Empire Equipment Rental &
Ready Mix, Inc. California 7353 68-0177395
- -------------------------------------------------------------------------------
Forte, Inc. Washington 7353 91-0755497
- -------------------------------------------------------------------------------
Grand Valley Equipment Co. Michigan 7353 38-2279574
- -------------------------------------------------------------------------------
High Lift Equipment, Inc. Wisconsin 7353 39-1757412
- -------------------------------------------------------------------------------
High Reach Co., Inc. Pennsylvania 7353 23-1737104
- -------------------------------------------------------------------------------
Independent Scissor Lifts, California 7353 94-2505169
Inc.
- -------------------------------------------------------------------------------
JBK, Inc. Ohio 7353 34-1291932
- -------------------------------------------------------------------------------
Koral Equipment Company,
Inc. Massachusetts 7353 04-2474604
- -------------------------------------------------------------------------------
Kubota of Grand Rapids,
Inc. Michigan 7353 38-2700834
- -------------------------------------------------------------------------------
Loftin's Rent-All, Inc. Alabama 7353 63-0483871
- -------------------------------------------------------------------------------
Madison Equipment Sales
and Rental, Inc. Alabama 7353 63-0972387
- -------------------------------------------------------------------------------
Mark Equipment, Inc. Alabama 7353 63-1023613
- -------------------------------------------------------------------------------
Mercer Equipment Company North Carolina 7353 56-1686482
- -------------------------------------------------------------------------------
Misco Rents, Inc. Indiana 7353 35-1804651
- -------------------------------------------------------------------------------
Mission Valley Rentals,
Inc. California 7353 94-2367404
- -------------------------------------------------------------------------------
Palmer Equipment Company,
Inc. Michigan 7353 38-2216420
- -------------------------------------------------------------------------------
Paul E. Carlson, Inc. Minnesota 7353 41-1346079
- -------------------------------------------------------------------------------
Rental Tools & Equipment
Co. International, Inc. Maryland 7353 52-1178782
- -------------------------------------------------------------------------------
Rentals Unlimited,
Incorporated Rhode Island 7353 05-0373691
- -------------------------------------------------------------------------------
Rosedale Equipment Rental,
Inc. California 7353 95-3389334
- -------------------------------------------------------------------------------
Southern Equipment, Inc. Louisiana 7353 72-0643772
- -------------------------------------------------------------------------------
Space Maker Systems of
Va., Inc. Virginia 7353 54-1696593
- -------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(PRIMARY
(STATE OR OTHER STANDARD
EXACT NAME OF CO- JURISDICTION OF INDUSTRIAL
REGISTRANT AS INCORPORATION OR CLASSIFICATION (I.R.S. EMPLOYER
SPECIFIED IN ITS CHARTER ORGANIZATION) NUMBER) IDENTIFICATION NO.)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Stephan's Tool Rental &
Sales, Inc. Alaska 7353 92-0087418
- -------------------------------------------------------------------------------
Thoesen Equipment, Inc. Illinois 7353 36-3698654
- -------------------------------------------------------------------------------
Tool Center of Texas, Inc. Texas 7353 76-0215710
- -------------------------------------------------------------------------------
Tool Shed of Greenfield,
Inc. Indiana 7353 35-2005542
- -------------------------------------------------------------------------------
Tool Shed of Indianapolis,
Inc. Indiana 7353 35-1398957
- -------------------------------------------------------------------------------
Trench Safety Equipment
Corp. Arizona 7353 86-0587911
- -------------------------------------------------------------------------------
United Equipment Rentals
of Houston, Inc. Texas 7353 76-0551618
- -------------------------------------------------------------------------------
United Rentals Aerial
Equipment, Inc. Delaware 7353 06-1520087
- -------------------------------------------------------------------------------
United Rentals, Inc. (WA) Washington 7353 91-1400269
- -------------------------------------------------------------------------------
United Rentals Northwest,
Inc. Oregon 7353 93-0257120
- -------------------------------------------------------------------------------
United Rentals of
Colorado, Inc. Colorado 7353 84-1092722
- -------------------------------------------------------------------------------
United Rentals of
Kentucky, Inc. Kentucky 7353 06-1522041
- -------------------------------------------------------------------------------
United Rentals of Nevada,
Inc. Nevada 7353 88-0208294
- -------------------------------------------------------------------------------
United Rentals of New
England, Inc. New York 7353 06-1512550
- -------------------------------------------------------------------------------
United Rentals of Southern
California, Inc. California 7353 95-2592018
- -------------------------------------------------------------------------------
United Rentals of Utah,
Inc. Utah 7353 06-1506299
- -------------------------------------------------------------------------------
US Rentals, Inc. Delaware 7353 94-3061974
- -------------------------------------------------------------------------------
West Georgia Rents, Inc. Georgia 7353 58-1870834
- -------------------------------------------------------------------------------
Westside Rentals, Inc. Tennessee 7353 62-0942062
- -------------------------------------------------------------------------------
W-W Rentals, Inc. Tennessee 7353 62-0808835
- -------------------------------------------------------------------------------
Wynne Systems, Inc. California 7353 33-0507674
- -------------------------------------------------------------------------------
</TABLE>
The Address, Including Zip Code, and Telephone Number, Including Area Code,
of each of the Co-Registrant's Principal Executive Offices is c/o United
Rentals (North America), Inc., Four Greenwich Office Park, Greenwich,
Connecticut 06830, (203) 622-3131.
The Name, Address, Including Zip Code, and Telephone Number, Including Area
Code, of Agent For Service for each of the Co-Registrants is Michael J. Nolan,
c/o United Rentals (North America), Inc., Four Greenwich Office Park,
Greenwich, Connecticut 06830, (203) 622-3131.
<PAGE>
SUBJECT TO COMPLETION DATED MAY 7, 1999
PROSPECTUS
UNITED RENTALS (NORTH AMERICA), INC.
OFFER TO EXCHANGE
$300,000,000 OF 9 1/4% SENIOR SUBORDINATED NOTES DUE 2009, SERIES B
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR
$300,000,000 OF UNREGISTERED 9 1/4% SENIOR SUBORDINATED NOTES
DUE 2009, SERIES A
----------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME
ON , 1999 UNLESS EXTENDED
THE EXCHANGE OFFER
We previously issued $300,000,000 aggregate principal amount of our 9 1/4%
Senior Subordinated Notes due 2009. These securities were not registered under
the Securities Act of 1933. We are now offering you the opportunity to exchange
these unregistered notes for an equivalent amount of registered notes. The
registered notes will be identical in all material respects to the unregistered
notes, except for certain differences relating to transfer restrictions and
registration rights.
. GUARANTEES. The notes will be
TERMS OF THE NOTES guaranteed by our current and
future United States
subsidiaries.
. INTEREST. The notes bear interest
at a fixed annual rate of 9 1/4%.
Interest will be paid on each
January 15 and July 15,
commencing July 15, 1999.
. RANKING. The notes are unsecured
obligations of United Rentals
(North America), Inc. and are
. MATURITY. The notes will mature subordinated to all of our
on January 15, 2009. existing and future senior
indebtedness. The notes are not
. OPTIONAL REDEMPTION. At any time obligations of, and are not
on or after January 15, 2004, we guaranteed by, United Rentals,
may redeem some or all of the Inc., our parent company.
notes at the prices specified
herein.
The guarantee of each guarantor is
the unsecured obligation of that
guarantor and is subordinated to
In addition, on or prior to January all existing and future senior
15, 2002, we may redeem up to 35% indebtedness of that guarantor.
of the notes at the prices
specified herein, but only with the
net cash proceeds from certain
equity offerings of our parent
company.
Our foreign subsidiaries are not
guarantors. As a result, the notes
are effectively subordinated to all
obligations of our foreign
subsidiaries.
. MANDATORY OFFER TO REPURCHASE. If
we undergo a specific kind of
change of control, we must offer
to repurchase the notes at the
prices specified herein.
----------------
INVESTING IN THE NOTES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 16 FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU SHOULD
CONSIDER IN CONNECTION WITH THIS EXCHANGE OFFER AND AN INVESTMENT IN THE NOTES.
----------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
----------------
The date of this prospectus is May , 1999.
<PAGE>
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in, or incorporated by reference in, this
prospectus are forward-looking in nature. Such statements can be identified by
the use of forward-looking terminology such as "believes," "expects," "may,"
"will," "should," or "anticipates" or the negative thereof or comparable
terminology, or by discussions of strategy. You are cautioned that our
business and operations are subject to a variety of risks and uncertainties
and, consequently, our actual results may materially differ from those
projected by any forward-looking statements. Certain of such risks and
uncertainties are discussed below under "Risk Factors." We make no commitment
to revise or update any forward-looking statements in order to reflect events
or circumstances after the date any such statement is made.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements, and other information with the SEC. Such
reports, proxy statements, and other information can be read and copied at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the Public
Reference Room. The SEC maintains an internet site at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC, including our
company.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the documents that we file
with the SEC. This means that we can disclose important information to you by
referring you to those documents. Any information we incorporate in this
manner is considered part of this prospectus. Any information we file with the
SEC after the date of this prospectus and until this exchange offer is
completed will automatically update and supersede the information contained in
this prospectus.
We incorporate by reference the following documents that we have filed with
the SEC and any filings that we will make with the SEC in the future under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until this exchange offer is completed:
. Annual Report on Form 10-K for the year ended December 31, 1998;
. Current Report on Form 8-K dated January 27, 1998 and Amendment No. 1
thereto on Form 8-K/A dated February 4, 1998;
. Current Report on Form 8-K dated June 18, 1998 and Amendment No. 1
thereto on Form 8-K/A dated July 21, 1998;
. Current Report on Form 8-K dated July 21, 1998;
. Current Report on Form 8-K dated December 24, 1998 (only the financial
statements included therein that are identified under the caption
"Experts" in this prospectus);
. Current Report on Form 8-K dated February 18, 1999; and
. Current Report on Form 8-K dated March 19, 1999.
We also incorporate by reference the Schedule 14D-1 Tender Offer Statement
filed by our parent company, United Rentals, Inc., on April 5, 1999, together
with all amendments to such Tender Offer Statement filed as of the date of
this prospectus and any subsequent amendments to such Tender Offer Statement
filed prior to the expiration of this exchange offer.
We will provide without charge, upon written or oral request, a copy of any
or all of the documents which are incorporated by reference into this
prospectus. Requests should be directed to: United Rentals (North America),
Inc., Attention: Corporate Secretary, Four Greenwich Office Park, Greenwich,
Connecticut 06830, telephone number: (203) 622-3131.
3
<PAGE>
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information and the financial statements and related notes that are included
elsewhere in this prospectus or in the documents that we incorporate by
reference into this prospectus.
UNITED RENTALS
United Rentals is the largest equipment rental company in North America with
482 branch locations in 41 states, Canada and Mexico. We offer for rent over
600 different types of equipment on a daily, weekly or monthly basis and serve
customers that include construction industry participants, industrial companies
and homeowners. We also sell used rental equipment, act as a dealer for many
types of new equipment, and sell related merchandise and parts. In the past
year, we have served over 900,000 customers.
We have one of the most comprehensive and newest equipment rental fleets in
the industry. The types of rental equipment that we offer include a broad range
of light to heavy construction and industrial equipment, such as backhoes,
aerial lifts, skid-steer loaders, forklifts, compressors, pumps and generators,
as well as a variety of smaller tools and equipment. Our equipment fleet has an
original purchase price of approximately $2.3 billion and a weighted average
age of approximately 25 months (based on original purchase price).
We began operations in October 1997 and have grown through a combination of
internal growth and the acquisition of 117 companies (through May 4, 1999). Our
acquisitions include our merger with U.S. Rentals in September 1998. At the
time of the merger, U.S. Rentals was the second largest equipment rental
company in the United States based on 1997 rental revenues.
Our principal executive offices are located at Four Greenwich Office Park,
Greenwich, Connecticut 06830, and our telephone number is (203) 622-3131.
COMPETITIVE ADVANTAGES
We believe that we benefit from the following competitive advantages:
FULL RANGE OF RENTAL EQUIPMENT. We have one of the largest and most
comprehensive equipment rental fleets in the industry, which enables us to:
. attract customers by providing the benefit of "one-stop" shopping;
. serve a diverse customer base, which reduces our dependence on any
particular customer or group of customers;
. serve large customers that require assurance that substantial quantities
of different types of equipment will be available as required on a
continuing basis; and
. minimize lost sales due to equipment being unavailable.
OPERATING EFFICIENCIES. We generally group our branches into clusters of 10
to 30 locations that are in the same area. Our management information system
enables each branch to track equipment at any other branch and to access all
available equipment within a cluster. We believe that our cluster strategy
produces significant operating efficiencies by enabling us to:
. market the equipment within a cluster through multiple branches, rather
than a single branch, which increases our equipment utilization rate;
4
<PAGE>
. cross-market the equipment specialties of different branches within each
cluster, which increases revenues without increasing marketing expenses;
and
. reduce costs by centralizing common functions such as payroll, credit
and collection, and certain equipment delivery.
SIGNIFICANT PURCHASING POWER. We have significant purchasing power because of
our volume purchases. As a result, we can generally buy new equipment and
related merchandise and parts at prices that are significantly lower than
prices paid by smaller companies. We can also buy many other products and
services--such as insurance, telephone and fuel--at attractive rates.
MANAGEMENT INFORMATION SYSTEM. We have a modern management information system
which facilitates rapid and informed decision-making and enables us to respond
quickly to changing market conditions. The system provides management with a
wide range of real time operating and financial data, including reports on
inventory, receivables, customers, vendors, fleet utilization and price and
sales trends. The system also enables branch personnel to search for needed
equipment throughout a geographic region, determine its closest location and
arrange for delivery to a customer's work site. The system includes software
developed by our Wynne Systems subsidiary, which is the leading provider of
proprietary software for use by equipment rental companies in managing and
operating multiple branch locations. We have an in-house staff of 35 management
information specialists that supports our management information system and
extends it to new locations.
CUSTOMER DIVERSITY. Our customer base is highly diversified and ranges from
Fortune 100 companies to small contractors and homeowners. We estimate that our
top ten customers accounted for approximately 4% of our pro forma revenues
during 1998.
GEOGRAPHIC DIVERSITY. We have branches in 41 states, Canada and Mexico. We
believe that our geographic diversity should reduce the impact that
fluctuations in regional economic conditions have on our overall financial
performance. Our geographic diversity and large network of branch locations
also give us the ability to serve national accounts and access used equipment
re-sale markets across the country.
EXPERIENCED SENIOR MANAGEMENT. Our senior management combines executives who
have extensive operating experience in the equipment rental industry with
executives who have proven track records in other industries. Our senior
management includes former officers of United Waste Systems, Inc., which was a
publicly-traded solid waste management company that successfully executed a
growth strategy combining a disciplined acquisition program, the integration
and optimization of acquired facilities, and internal growth. Our senior
management also includes former executives of U.S. Rentals who have extensive
experience in the equipment rental industry.
STRONG AND MOTIVATED BRANCH MANAGEMENT. Each of our branches has a full-time
branch manager who is supervised by one of our 44 district managers and eight
regional vice presidents. We believe that our branch and district managers, who
average over 20 years of experience in the equipment rental industry, are among
the most knowledgeable and experienced in the industry. We encourage
entrepreneurship at the branch level by giving branch managers a high degree of
autonomy relating to day-to-day operations. For example, each branch manager is
empowered to make decisions--within budgetary guidelines--concerning staffing,
pricing and equipment purchasing. We also promote entrepreneurship at the
branch level, as well as equipment sharing among branches, through our profit
sharing program which directly ties the compensation of branch personnel to
their branch's financial performance and equipment utilization rates. We
balance the autonomy that we grant branch managers with systems through which
senior management closely tracks branch performance. We also share information
across branches so that each branch can measure its operating performance
relative to other branches and benefit from the best practices developed
throughout our organization.
5
<PAGE>
PROFESSIONAL ACQUISITION TEAM. Our 25-person acquisition team works full-time
on identifying and evaluating acquisition candidates and executing our
acquisition program. The core of this group consists of seasoned acquisition
professionals--most of whom were members of the acquisition team at United
Waste Systems, where they completed over 200 acquisitions. The team also
includes former owners of businesses that we acquired, who have extensive
industry experience and contacts with potential acquisition candidates.
GROWTH STRATEGY
Our plan for future growth includes the following key elements:
CONTINUE STRONG INTERNAL GROWTH. We are seeking to sustain our strong
internal growth by:
. expanding and modernizing our equipment fleet;
. increasing the cross-marketing of our equipment specialties at different
locations;
. increasing our advertising--which becomes increasingly cost-effective as
we grow because the benefits are spread over a larger number of
branches;
. expanding our national accounts program--which dedicates a portion of
our sales force to establishing and expanding relationships with large
customers that have a national or multi-regional presence; and
. increasing our rentals to industrial companies by developing a
comprehensive marketing program specifically aimed at this sector.
EXECUTE DISCIPLINED ACQUISITION PROGRAM. We intend to continue our
disciplined acquisition program. We generally seek to acquire multiple
locations within the regions that we enter, with the goal of creating clusters
of locations that can share various resources, including equipment, marketing
resources, back office functions and certain equipment delivery. We are seeking
to acquire companies of varying sizes, including relatively large companies to
serve as platforms for new regional clusters and smaller companies to
complement existing or anticipated locations. In considering whether to buy a
company, we evaluate a number of factors, including purchase price, anticipated
impact on earnings, the quality of the target's rental equipment and
management, the opportunities to improve operating margins and increase
internal growth at the target, the economic prospects of the region in which
the target is located, the potential for additional acquisitions in the region,
and the competitive landscape in the target's markets.
OPEN NEW RENTAL LOCATIONS. Because most of the businesses that we acquired
grew through developing start-up rental locations, many of our managers have
substantial experience in this area. We intend to leverage this experience by
selectively opening new rental locations in attractive markets where there are
no suitable acquisition targets available or where the economics of a start-up
location are more attractive than buying an existing business.
INCREASE COST SAVINGS. We work to reduce costs by efficiently integrating new
and existing operations, eliminating duplicative costs, centralizing common
functions, consolidating locations that serve the same areas, and using our
purchasing power to negotiate discounts from suppliers.
CONTINUE TO EMPHASIZE MANAGEMENT SYSTEMS AND CONTROLS. We intend to further
strengthen our management systems and controls, which currently include:
. a 12-person internal audit department that is responsible for ensuring
that we have adequate financial, operating, and management information
controls throughout our organization;
. a team of 25 regional and district controllers that monitors each branch
for compliance with financial and accounting procedures established at
corporate headquarters; and
. a 35-person risk management and safety department that is responsible
for: (1) developing and implementing safety programs and procedures, (2)
developing our customer and employee training programs and (3)
investigating and managing any claims that may be asserted against us.
6
<PAGE>
INDUSTRY BACKGROUND
INDUSTRY SIZE AND GROWTH
We estimate that the U.S. equipment rental industry (including used and new
equipment sales by rental companies) generates annual revenues in excess of $20
billion. The combined equipment rental revenues of the 100 largest equipment
rental companies have increased at an estimated compound annual rate of
approximately 23% from 1992 through 1997 (based upon 1992 revenues and 1997 pro
forma revenues, giving effect to certain acquisitions completed after the
beginning of 1997, reported by the Rental Equipment Register, an industry trade
publication). In addition to reflecting general economic growth, we believe
that the growth in the equipment rental industry reflects the following trends:
RECOGNITION OF ADVANTAGES OF RENTING. Equipment users are increasingly
recognizing the many advantages that equipment rental may offer compared
with ownership. They recognize that by renting they can: (1) avoid the
large capital investment required for equipment purchases, (2) reduce
storage and maintenance costs, (3) supplement the equipment that they own
and thereby increase the range and number of jobs that they can work on,
(4) access a broad selection of equipment and select the equipment best
suited for each particular job, (5) obtain equipment as needed and minimize
the costs associated with idle equipment, and (6) access the latest
technology without investing in new equipment. These advantages frequently
allow equipment users to reduce their overall costs by renting, rather than
buying, the equipment they need.
INCREASE IN RENTALS BY CONTRACTORS. There has been a fundamental shift
in the way contractors meet their equipment needs. While contractors have
historically used rental equipment on a temporary basis--to provide for
peak period capacity, meet specific job requirements or replace broken
equipment--many contractors are now also using rental equipment on an
ongoing basis to meet their long-term equipment requirements.
Although growth in the equipment rental industry has to date been largely
driven by the increase in rentals by the construction industry, we believe that
other equipment users may increasingly contribute to future industry growth.
For example, many industrial companies require equipment for operating,
repairing, maintaining and upgrading their facilities, and renting this
equipment will often be more cost-effective than purchasing because typically
this equipment is not used full-time. We believe that the cost and other
advantages of renting, together with the general trend toward the corporate
outsourcing of non-core competencies, may increasingly lead industrial
companies to rent equipment. We also believe that these same considerations may
lead other equipment users--such as municipalities, government agencies and
utilities--to increasingly rent equipment. Because the penetration of these
markets by the equipment rental industry is very low in comparison to its
penetration of the construction market, we believe there is significant
potential for additional growth in these markets.
INDUSTRY FRAGMENTATION
The equipment rental industry is highly fragmented. It consists of a small
number of multi-location regional or national operators and a large number of
relatively small, independent businesses that serve discrete local markets.
This fragmentation is reflected in the following data:
. in 1997, there were only 10 equipment rental companies that had
equipment rental revenues in excess of $100 million and approximately
100 equipment rental companies that had equipment rental revenues
between $5 million and $100 million (based upon rental revenues for 1997
as reported by the Rental Equipment Register, an industry trade
publication);
. we estimate that there are more than 20,000 companies with annual
equipment rental revenues of less than $5 million; and
. we estimate that the 100 largest equipment rental companies combined
have less than a 30% share of the market.
7
<PAGE>
We believe that the fragmented nature of the industry presents substantial
consolidation and growth opportunities for companies with access to capital and
the ability to implement a disciplined acquisition program. We also believe
that our management team's extensive experience in acquiring and effectively
integrating acquisition targets should enable us to capitalize on these
opportunities.
RECENT DEVELOPMENTS
FIRST QUARTER RESULTS
During the first quarter of 1999, the Company had revenues of $392.3 million,
gross profit of $134.0 million, operating income of $57.1 million and net
income of $19.5 million. Selling, general and administrative expenses were
$65.3 million during the quarter and non-rental depreciation and amortization
was $11.6 million. EBITDA (as defined herein) during the first quarter of 1999
was $127.8 million. The first quarter results include the results of companies
that were acquired during the quarter from their respective acquisition dates
(without giving pro forma effect to such acquisitions as of the beginning of
the period) and do not include the results of any companies that were acquired
after the end of the quarter.
TENDER OFFER FOR RENTAL SERVICE CORPORATION
On April 5, 1999, United Rentals, Inc. ("Holdings"), our parent company,
commenced a tender offer to purchase all outstanding shares of common stock of
Rental Service Corporation, a Delaware corporation ("Rental Service"), at a
price of $22.75 per share, net to the seller in cash, without interest. The
terms and conditions of such offer are set forth in a Schedule 14D-1 Tender
Offer Statement, as amended, that has been filed by Holdings with the SEC
pursuant to Section 14(d)(1) of the Securities Exchange Act. The purpose of
this offer and a related proposed second-step merger is to enable Holdings to
acquire control of, and ultimately the entire equity interest in, Rental
Service. We cannot at this time predict whether Holdings will succeed in
acquiring Rental Service.
We estimate that the total amount of funds required to complete the tender
offer and proposed second-step merger, refinance certain of our indebtedness
and pay the costs and expenses relating to the tender offer and second-step
merger is approximately $1.26 billion.
In connection with the tender offer, we entered into a commitment letter with
Goldman Sachs Credit Partners L.P. ("GSCP"), pursuant to which GSCP has
committed to provide us with financing in an aggregate amount of up to $2
billion. Such commitment is subject to a number of conditions including, among
others, completion of the tender offer.
We expect to use the proceeds of the financing under the commitment letter to
refinance certain of our existing debt and for other corporate purposes. We
estimate that the net increase in our aggregate indebtedness would be
approximately $1.46 billion as a result of obtaining the financing contemplated
by the commitment letter.
The financing that we receive pursuant to the commitment letter from GSCP
will constitute Senior Indebtedness (as defined herein) to which the notes
being offered in this exchange offer would be subordinated.
8
<PAGE>
THE EXCHANGE OFFER
The Exchange Offer..........
We previously issued $300 million aggregate
principal amount of our 9 1/4% Senior
Subordinated Notes due 2009. These securities
were not registered under the Securities Act of
1933. At the time we issued these notes, we
entered into a registration rights agreement
which obligated us to offer to exchange the
unregistered notes for registered notes. In order
to satisfy this obligation, we are now offering
you the opportunity to exchange your unregistered
notes for an equivalent amount of registered
notes. The notes may be exchanged only in
multiples of $1,000.
Required Representations....
In order to participate in this exchange offer,
you will be required to make certain
representations in a letter of transmittal,
including that:
. you are not affiliated with us;
. that you are not a broker-dealer that
purchased your notes directly from us;
. that you will acquire the registered
notes in the ordinary course of
business;
. that either (a) you have not agreed with
anyone to distribute the notes or (b)
you have not agreed with us or our
affiliates to distribute the notes and
you are a broker-dealer that purchased
unregistered notes for your own account
as part of market-making or trading
activities; and
. if you are holding the notes as nominee
for a beneficial owner, that the
beneficial owner has made the
representations set forth above.
Resale of the Registered We believe that the registered notes acquired in
Notes...................... this exchange offer may be freely traded without
compliance with the provisions of the Securities
Act of 1933 that call for registration and
delivery of a prospectus, except as described in
the following paragraph.
If you are a broker-dealer that purchased
unregistered notes for your own account as part
of market-making or trading activities, you must
deliver a prospectus when you sell registered
notes. We have agreed in the registration rights
agreement to allow you to use this prospectus for
such purpose during the 30-day period following
consummation of the exchange offer (subject to
our right under certain circumstances to restrict
your use of this prospectus). We may be required
to extend this 30-day period under certain
circumstances described herein.
If you are a broker-dealer, you will be required
to confirm that you will comply with the
prospectus delivery requirements described above.
Accrued Interest on the
Unregistered Original
Notes......................
Any interest that is accrued on an unregistered
original note that is exchanged will be payable
instead on the new registered note received in
the exchange. Such accrued interest will be paid
on the first interest payment date after
conclusion of this exchange offer.
9
<PAGE>
Procedures for Exchanging
Notes...................... In order to exchange notes in this exchange
offer, you must, prior to 5:00 p.m. on the
expiration date:
. deliver the notes to the exchange agent
using the book-entry procedures
described herein; and
. agree to be bound by the terms of the
accompanying letter of transmittal in
accordance with the procedures described
herein.
The procedures mentioned above are described
under the heading "The Exchange Offer--Procedures
for Tendering."
Expiration Date............. 5:00 p.m., New York City time, on , 1999,
unless the exchange offer is extended.
Exchange Date............... We will notify the exchange agent of the date of
acceptance of the notes for exchange.
Withdrawal Rights...........
If you tender your notes for exchange in this
exchange offer and later wish to withdraw them,
you may do so at any time prior to 5:00 p.m., New
York City time, on the day this exchange offer
expires. The procedures for effecting a
withdrawal are described under the heading "The
Exchange Offer--Withdrawal of Tenders."
Acceptance of Original
Notes and Delivery of
Registered Notes...........
We will accept any unregistered original notes
that are properly tendered for exchange prior to
5:00 p.m., New York City time, on the day this
exchange offer expires. The registered notes will
be delivered promptly after expiration of this
exchange offer.
Exchange Offer Conditions... This exchange offer is subject to certain
customary conditions concerning, among other
things, changes to existing law and governmental
approvals. We may waive these conditions.
Tax Consequences............ You should not incur any material federal income
tax consequences from your participation in this
exchange offer.
Use of Proceeds............. We will not receive any cash proceeds from this
exchange offer.
Exchange Agent..............
State Street Bank and Trust Company is serving as
the exchange agent. Their address and telephone
number are provided under the heading "The
Exchange Offer--Exchange Agent."
Effect on Holders of
Unregistered Original
Notes......................
Any unregistered original notes that remain
outstanding after this exchange offer will
continue to be subject to transfer restrictions.
These restrictions provide that notes that are
not registered under the Securities Act of 1933
may not be offered or sold, except in a
transaction that is exempt from or not subject to
the registration requirements of such Act. After
this exchange offer, holders of unregistered
original notes will not have any further right to
have their notes registered (subject to certain
limited exceptions described under the heading
"Registration Rights Agreement--Shelf
Registration Statement.") As a result, any market
for unregistered original notes that are not
exchanged could be adversely affected by the
conclusion of this exchange offer.
10
<PAGE>
SUMMARY OF TERMS OF THE REGISTERED NOTES
This exchange offer applies to $300 million aggregate principal amount of the
unregistered original notes. The terms of the registered notes will be
essentially the same as the unregistered original notes, except that (1) the
registered notes will not be subject to the restrictions on transfer that apply
to the unregistered original notes, (2) the registration rights relating to the
original unregistered notes are different than those relating to the registered
notes and (3) the defaults relating to registration rights that may require the
payment of additional interest are different for the original unregistered
notes and the registered notes. The registered notes issued in this exchange
offer will evidence the same debt as the original unregistered notes and both
series of notes will be entitled to the benefits of the same indenture and
treated as a single class of debt securities. Unless otherwise indicated, all
references to the "notes" refer to both the original unregistered notes and the
registered notes to be issued in this exchange offer.
Issuer......................
The notes have been issued by United Rentals
(North America), Inc. ("URI"), a wholly owned
subsidiary of United Rentals, Inc. ("Holdings").
The notes are the obligation of URI and not of
Holdings.
Notes Offered...............
$300 million of 9 1/4% Senior Subordinated Notes
due 2009, which have been registered under the
Securities Act of 1933.
Maturity.................... January 15, 2009.
Interest Payment Dates...... Each January 15 and July 15, commencing July 15,
1999.
Optional Redemption.........
We may redeem some or all of the notes at our
option at any time on or after January 15, 2004,
at the redemption prices listed under
"Description of the Notes--Optional Redemption."
In addition, on or prior to January 15, 2002, we
may at our option redeem a portion of the notes
at a redemption price of 109.25% of the principal
amount thereof, plus accrued but unpaid interest,
but only if: (1) the net proceeds for such
redemption comes from one or more public equity
offerings by Holdings and (2) following any such
redemption there continues to be outstanding at
least $195 million of notes (including both
unregistered original notes and registered
notes).
Guarantees.................. The notes are unconditionally guaranteed on a
senior subordinated basis by our current and
future United States subsidiaries.
Ranking.....................
The notes are unsecured senior subordinated
obligations of URI. This means that the notes:
. are junior in right of payment to all existing
and future Senior Indebtedness (as defined
herein) of URI;
. are equal in right of payment to any senior
subordinated indebtedness of URI; and
. will be senior in right of payment to any
future subordinated indebtedness of URI.
11
<PAGE>
The guarantees are unsecured senior subordinated
obligations of the guarantors. This means that
the guarantees:
. are junior in right of payment to all existing
and future Guarantor Senior Indebtedness (as
defined herein);
. are equal in right of payment to all existing
and future senior subordinated indebtedness of
the guarantors; and
. will be senior in right of payment to any
future subordinated indebtedness of the
guarantors.
Our foreign subsidiaries are not guarantors of
the notes. As a result, the notes are effectively
junior to all obligations of these subsidiaries.
At December 31, 1998, on a pro forma as adjusted
basis, there was outstanding (i) $252.0 million
of Senior Indebtedness, (2) $63.8 million of
Guarantor Senior Indebtedness (other than
guarantees of URI's Senior Indebtedness), (3)
$18.2 million of obligations of subsidiaries that
are not Guarantors (other than obligations to
URI) and (4) $655.0 million of indebtedness that
is equal in right of payment to the notes. The
foregoing pro forma as adjusted data as of
December 31, 1998, gives effect to (1) all
acquisitions completed by us subsequent to such
date (through March 3, 1999), (2) our issuance
after such date of $250 million of 9% Senior
Subordinated Notes due 2009 and our use of a
portion of the net proceeds to repay indebtedness
and (3) the issuance by Holdings after such date
of 300,000 shares of Series A Perpetual
Convertible Preferred Stock and 2,290,000 shares
of Common Stock (and the contribution of the net
proceeds therefrom to URI and the use of such
proceeds to repay outstanding indebtedness).
The indenture governing the notes permits us and
our subsidiaries to incur additional debt,
subject to certain limitations.
For additional information concerning the above,
see "Description of the Notes--Subordination" and
"--Certain Covenants--Limitation on
Indebtedness."
Change of Control...........
If we or Holdings experience specific kinds of
change of control described herein, we must offer
to repurchase the notes at a price of 101% of the
principal amount thereof, plus accrued but unpaid
interest. See "Description of the Notes--Change
of Control."
Certain Covenants...........
The indenture governing the notes contains
certain covenants, including, among others,
limitations on incurring debt, creating liens,
making specified payments, selling assets and
engaging in mergers or consolidations. These
covenants are subject to important exceptions.
See "Description of the Notes--Certain Covenants"
and "--Consolidation, Merger and Sale of Assets,
Etc."
12
<PAGE>
Registration Rights.........
A broker-dealer that purchased unregistered notes
for its own account as part of market-making or
trading activities must deliver a prospectus when
it sells registered notes. We have agreed in the
registration rights agreement that:
. we will allow these broker-dealers to use this
prospectus for such purpose during the 30-day
period following completion of this exchange
offer and, in certain circumstances, for a
longer period (subject to our right to restrict
the use of this prospectus under certain
circumstances);
. under certain circumstances described herein,
we will file with the SEC a registration
statement covering the resale of any registered
notes that any such broker-dealers continue to
hold after we are no longer required to allow
them to use this prospectus as described above;
and
. if we are obligated to file a registration
statement as described above and fail to comply
with our obligation, the interest rate on the
registered notes will increase under certain
circumstances.
See "Registration Rights Agreement."
Absence of Public Market....
The registered notes that will be issued in this
exchange offer are new securities for which there
is currently no established trading market. We do
not intend to apply for listing of the registered
notes on any securities exchange or for quotation
of such notes through the Nasdaq National Market.
Although Goldman Sachs & Co. has informed us that
it currently intends to make a market in the
registered notes, it is not obligated to do so
and may discontinue its market making activity at
any time without notice. Accordingly, we cannot
provide you with any assurance as to the
development or liquidity of any market for the
notes. If a market for the registered notes
develops, the notes could trade at a discount
from their principal amount.
Although the original unregistered notes are
currently eligible for trading in the Private
Offerings, Resale and Trading through Automated
Linkages ("PORTAL") market of the National
Association of Securities Dealers, Inc., the
registered notes will not be eligible for trading
through PORTAL.
13
<PAGE>
RISK FACTORS
See "Risk Factors" beginning on page 16 for a discussion of certain factors
you should carefully consider in connection with this exchange offer and an
investment in the notes.
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
GENERAL
The tables below presents selected historical and pro forma financial
information for our company. You should read this information together with (1)
the Consolidated Financial Statements and the related notes and Pro Forma
Consolidated Financial Statements and the related notes of our company included
elsewhere in this prospectus or incorporated by reference herein and (2) the
financial statements incorporated by reference herein of certain of the
companies that we acquired.
ACCOUNTING FOR ACQUISITIONS
We commenced operations in October 1997 and have completed 101 acquisitions
(through March 3, 1999), including a merger with U.S. Rentals, Inc. which was
completed in September 1998. We accounted for three of these acquisitions
(including the U.S. Rentals merger) as "poolings-of-interests," which means
that for accounting and financial reporting purposes the acquired company is
treated as having been combined with us at all times since the inception of the
acquired company. Accordingly, we have restated our financial statements to
include the accounts of two of the companies acquired in these pooling-of-
interests transactions (but have not restated our financial statements for the
third transaction, which was not material and which has been combined with us
effective July 1, 1998). As a result of this restatement, our financial
statements include historical financial information for periods that precede
the date on which we commenced our own operations. (For additional information
concerning this restatement, see Note 3 to the Consolidated Financial
Statements of United Rentals, Inc., included in the Annual Report on Form 10-K
incorporated by reference herein.) We accounted for our other 98 acquisitions
as "purchases," which means that the results of operations of the acquired
company are included in our financial statements only from the date of
acquisition.
PRO FORMA DATA
The table below includes the following pro forma data:
. PRO FORMA INCOME STATEMENT AND OTHER FINANCIAL DATA--intended to show
for the period indicated what our business might have looked like had
each acquisition completed after the beginning of the period (other than
any pooling-of-interests and any acquisition completed after March 3,
1999) and any related acquisition financing been completed on the first
day of the period;
. PRO FORMA BALANCE SHEET DATA--intended to show how certain balance sheet
data would have looked at December 31, 1998 had each acquisition
completed after such date (other than any acquisition completed after
March 3, 1999) and any related acquisition financing been completed on
December 31, 1998; and
. PRO FORMA AS ADJUSTED BALANCE SHEET DATA--intended to show how certain
balance sheet data would have looked at December 31, 1998 had the
following transactions been completed on such date: (1) each acquisition
completed after such date (other than any acquisition completed after
March 3, 1999) and any related acquisition financing, (2) the issuance
by Holdings after such date of 300,000 shares of Series A Perpetual
Convertible Preferred Stock and 2,290,000 shares of Common Stock (and
the contribution of the net proceeds therefrom to URI and the use of
such proceeds to repay outstanding indebtedness) and (3) the issuance by
URI after such date of $250 million of 9% Senior Subordinated Notes due
2009 and the use of a portion of the proceeds from such issuance to
repay outstanding indebtedness under the Credit Facility.
14
<PAGE>
We have provided the pro forma data for your information. However, this data
may not be indicative of (1) the actual results that we would have had during
any period if all acquisitions had been completed as of the beginning of the
period or (2) our future results.
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
-------------------------------------------------- ------------
YEAR
ENDED
YEAR ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------- ------------
1994 1995 1996 1997 1998 1998
-------- -------- -------- -------- ---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenues.......... $222,326 $283,432 $354,478 $489,838 $1,220,282 $1,600,486
Gross profit............ 68,557 89,198 113,033 149,292 423,448 563,028
Operating income........ 28,502 42,575 48,925 44,743 145,966 196,597
Interest expense........ 6,245 7,490 11,278 11,847 64,157 88,007
Income before provision
for income taxes and
extraordinary items.... 26,025 33,781 38,146 34,917 86,906 118,880
Net income.............. 25,502 33,297 37,726 3,898 18,598 60,104
Pro forma provision for
income taxes before
extraordinary
items(1)(2)............ 10,637 13,715 15,487 14,176 47,858
Pro forma income before
extraordinary
items(1)(2)............ 15,388 20,066 22,659 20,741 39,048
OTHER FINANCIAL DATA:
EBITDA(3)............... $ 73,446 $101,438 $123,606 $160,554 $ 403,738 $ 515,272
EBITDA margin(4)........ 33.0% 35.8% 34.9% 32.8% 33.1% 32.2%
Interest expense(5)(6).. $ 6,245 $ 7,490 $ 11,278 $ 11,847 $ 64,157 $ 88,007
Depreciation and
amortization........... 44,944 58,863 74,681 95,521 210,594 271,497
Ratio of EBITDA to
interest expense....... 11.8x 13.5x 11.0x 13.6x 6.3x 5.9x
Ratio of total debt to
EBITDA................. 1.5x 1.3x 1.7x 1.6x 3.3x 2.6x
Ratio of earnings to
fixed charges(7)....... 4.5x 4.8x 4.0x 3.4x 2.2x
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
---------------------------------
PRO FORMA
HISTORICAL PRO FORMA AS ADJUSTED
---------- ---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents..................... $ 20,410 $ 4,000 $ 249,269
Rental equipment, net......................... 1,143,006 1,169,500 1,169,500
Total assets.................................. 2,603,470 2,661,399 2,911,706
Total debt.................................... 1,314,574 1,365,442 1,263,969
Stockholder's equity.......................... 1,021,352 1,021,352 1,373,132
</TABLE>
- -------
(1) We recorded an extraordinary item (net of income taxes) of $1.5 million in
1997 and an extraordinary item (net of income taxes) of $21.3 million in
1998. Such charge in 1997 resulted from the prepayment of certain debt by
U.S. Rentals. Such charge in 1998 resulted from the early extinguishment of
certain debt and primarily reflected prepayment penalties on certain debt
of U.S. Rentals.
(2) U.S. Rentals was taxed as a Subchapter S Corporation until its initial
public offering in February 1997, and another acquired company was taxed as
a Subchapter S Corporation until being acquired by us in 1998. In general,
the income or loss of a Subchapter S Corporation is passed through to its
owners rather than being subjected to taxes at the entity level. Pro forma
provision for income taxes before extraordinary items and pro forma income
before extraordinary items reflect a provision for income taxes as if all
such companies were liable for federal and state income taxes as taxable
corporate entities for all periods presented.
(3) EBITDA is defined as net income (excluding (i) non-operating income and
expense, (ii) a $20.3 million non-recurring charge incurred by U.S. Rentals
in 1997 arising from the termination of deferred compensation agreements
with certain executives and (iii) $47.2 million in merger-related expenses
in 1998 related to the three acquisitions accounted for as poolings-of-
interests, including the merger with U.S. Rentals) plus interest expense,
income taxes and depreciation and amortization. EBITDA data is presented to
provide additional information concerning our ability to meet our future
debt service obligations and capital expenditure and working capital
requirements. However, EBITDA is not a measure of financial performance
under generally accepted accounting principles. Accordingly, EBITDA should
not be considered an alternative to net income or cash flows as indicators
of our operating performance or liquidity.
(4) EBITDA margin is defined as EBITDA as a percentage of revenues.
(5) Interest expense excludes the amortization of deferred financing fees.
(6) We are a wholly owned subsidiary of Holdings. Although not legally
obligated to do so, we have made, and expect that we will continue to make,
cash distributions to Holdings in order to enable Holdings to pay dividends
on certain preferred securities that were issued by a subsidiary trust of
Holdings. These distributions are not reflected in our interest expense.
(7) For purposes of determining the ratio of earnings to fixed charges, (i)
earnings consist of income before income taxes and extraordinary items plus
fixed charges and (ii) fixed charges consist of interest expense,
amortization of debt issuance costs, and the estimated interest portion of
rental expense.
15
<PAGE>
RISK FACTORS
You should carefully consider the following factors and the other
information in this prospectus in connection with this exchange offer and an
investment in the notes.
SUBSTANTIAL DEBT
We have incurred substantial debt in connection with our business
acquisitions. As of December 31, 1998, we had total debt of $1.3 billion on a
pro forma as adjusted basis giving effect to (1) all acquisitions completed by
us subsequent to such date (through March 3, 1999), (2) the issuance by
Holdings after such date of 300,000 shares of Series A Perpetual Convertible
Preferred Stock and 2,290,000 shares of Common Stock (and the contribution of
the net proceeds therefrom to URI and the use of such proceeds to repay
outstanding indebtedness) and (3) our issuance after such date of $250 million
of 9% Senior Subordinated Notes due 2009 and our use of a portion of the net
proceeds to repay indebtedness. We will require substantial capital to finance
our continuing growth, and we expect to incur substantial additional debt from
time to time (including borrowing money under our $762.5 million revolving
credit facility (the "Credit Facility")) for a variety of purposes, including
acquiring additional businesses, establishing new locations, and purchasing
equipment. The indenture governing the notes and the agreements governing our
existing indebtedness permit us and our subsidiaries to incur additional debt,
subject to certain limitations. See "--Dependence on Additional Capital to
Finance Growth," "Selected Historical and Pro Forma Consolidated Financial
Information" and "Description of the Notes--Certain Covenants--Limitation on
Indebtedness."
The degree to which we have outstanding debt could have important
consequences for our business, including:
. a substantial portion of our cash flow will go towards payment of
principal and interest on our debt;
. our ability to obtain additional financing may be constrained due to our
existing level of debt;
. a high degree of debt might make us more vulnerable to a downturn in our
business or the economy in general; and
. some of our debt (including all borrowings under our Credit Facility and
our $250 million term loan due 2005 (the "Term Loan")) is or in the
future may be subject to variable interest rates, which might make us
vulnerable to increases in interest rates.
Our ability to make scheduled payments of principal and interest on, or to
refinance, our debt (including the notes) depends on our future financial
performance, which, to a certain extent, is subject to economic, competitive,
regulatory and other factors beyond our control. We cannot guarantee that we
will have sufficient cash from our operations or other sources to service our
debt (including the notes).
SUBORDINATION OF THE NOTES AND GUARANTEES
The notes are general unsecured obligations of URI and will be subordinated
in right of payment to the prior payment of all current and future Senior
Indebtedness of URI. Likewise, the guarantees of the notes are general
unsecured obligations of the guarantors and will be subordinated in right of
payment to the prior payment of all current and future Guarantor Senior
Indebtedness. Finally, our foreign subsidiaries are not guarantors of the
notes, meaning that the notes are effectively subordinated to all obligations
of such subsidiaries, including trade payables of such subsidiaries.
The effect of this subordination is that:
. if URI were to undergo a bankruptcy, liquidation, dissolution,
reorganization or similar proceeding, URI's assets would be available to
pay its obligations on the notes only after all Senior Indebtedness is
paid;
16
<PAGE>
. if a guarantor were to undergo one of those types of proceedings, its
assets would be available to pay its obligations on the guarantees of
the notes only after all its Guarantor Senior Indebtedness is paid;
. if any non-guarantor subsidiary were to undergo one of those types of
proceedings, its assets would be available to pay the notes only after
all its obligations are paid; and
. no cash payments with respect to the notes may be made if a payment
default exists with respect to Senior Indebtedness and, under certain
circumstances, no cash payments with respect to the notes may be made
for a period of up to 179 days (during each period of 360 days) if a
non-payment default exists with respect to Senior Indebtedness.
As of December 31, 1998, on a pro forma as adjusted basis:
. Senior Indebtedness was $252.0 million;
. Guarantor Senior Indebtedness was $63.8 million (not including
guarantees of URI's Senior Indebtedness);
. our subsidiaries that are not guarantors had obligations of $18.2
million (other than obligations to URI); and
. we had debt of $655.0 million that ranks equally in right of payment
with the notes.
The foregoing pro forma as adjusted data as of December 31, 1998, gives
effect to (1) all acquisitions completed by us subsequent to such date
(through March 3, 1999), (2) the issuance by Holdings after such date of
300,000 shares of Series A Perpetual Convertible Preferred Stock and 2,290,000
shares of Common Stock (and the contribution of the net proceeds therefrom to
URI and the use of such proceeds to repay outstanding indebtedness) and (3)
our issuance after such date of $250 million of 9% Senior Subordinated Notes
due 2009 and our use of a portion of the net proceeds to repay indebtedness.
The indenture governing the notes permits us and our subsidiaries to incur
additional debt, subject to certain limitations.
UNSECURED STATUS OF THE NOTES AND GUARANTEES
The indenture governing the notes permits us to incur certain secured
indebtedness, including indebtedness under the Credit Facility and Term Loan
which is secured by a lien on substantially all of our assets and the assets
of the guarantors. If an event of default occurs under such secured
indebtedness, the lenders thereunder will have the right to exercise the
remedies (such as foreclosure) available to a secured lender under applicable
law and the agreements governing such secured indebtedness. Since the notes
are unsecured, the effect of such security interest is to give the lenders
under such secured indebtedness a prior claim on our assets and the assets of
the guarantors, in addition to the priority that they have by virtue of the
subordination provisions described above.
RISKS ASSOCIATED WITH HOLDING COMPANY STRUCTURE
We derive all of our operating income from our subsidiaries and, as of
December 31, 1998, approximately 99% of our consolidated assets were owned by
our subsidiaries. Consequently, our ability to meet our financial obligations,
including our obligations under the notes and other outstanding debt, depends
on the earnings of our subsidiaries and the payment or other distribution to
us of these earnings. Certain provisions of law limit the ability of our
subsidiaries to make payments or other distributions to us, and it is possible
that their ability to do so may be further limited by loan or other agreements
that they might enter into in the future.
POSSIBLE INABILITY TO REPURCHASE NOTES UPON CHANGE OF CONTROL
If a Change of Control (as defined herein) occurs, we may be required to
repurchase the notes and our other outstanding senior subordinated notes.
However, we cannot guarantee that we would have sufficient cash to make
17
<PAGE>
these required repurchases. Furthermore, the terms of our Credit Facility and
Term Loan prohibit us from repurchasing the notes, and future agreements
relating to senior debt may contain the same prohibition. If a Change of
Control were to occur while we were prohibited from repurchasing the notes, we
could seek the consent of our lenders to the repurchases or could seek to
refinance the debt containing the prohibitions. If we failed to get this
consent or to refinance the debt, we would remain prohibited from repurchasing
the notes. In that event, our failure to repurchase the notes would be a
default under the indenture governing the notes which would, in turn, be a
default under our Credit Facility, Term Loan and, potentially, other Senior
Indebtedness. Were all of this to occur, it is likely that payments to holders
of the notes would be restricted by the subordination provisions of the
indenture governing the notes.
FRAUDULENT TRANSFER CONSIDERATIONS
Various fraudulent conveyance laws enacted for the protection of creditors
may apply to the guarantors' issuance of the guarantees. To the extent that a
court were to find that (x) a guarantee was incurred by a guarantor with
actual intent to hinder, delay or defraud any present or future creditor or
(y) such guarantor did not receive fair consideration or reasonably equivalent
value for issuing its guarantee and such guarantor (i) was insolvent, (ii) was
rendered insolvent by reason of the issuance of such guarantee, (iii) was
engaged or about to engage in a business or transaction for which the
remaining assets of such guarantor constituted unreasonably small capital to
carry on its business or (iv) intended to incur, or believed that it would
incur, debts beyond its ability to pay such debts as they matured, the court
could avoid such guarantee or subordinate such guarantee in favor of the
guarantor's creditors. To the extent that the guarantee of a guarantor were
avoided as a fraudulent conveyance or held unenforceable for any other reason,
claims of holders of the notes against such guarantor would be adversely
affected, holders of the notes would be solely creditors of URI and the other
guarantors, and the notes would be effectively subordinated to all obligations
of such guarantor. To the extent that the claims of the holders of the notes
against any guarantor were subordinated in favor of other creditors of such
guarantor, such other creditors would be entitled to be paid in full before
any payment could be made on the notes. In the event that one or more of the
guarantees is avoided or impaired, we cannot guarantee that after providing
for all prior claims there would be sufficient assets remaining to satisfy the
claims of holders of the notes.
Based on financial and other applicable information, we believe that the
notes and the guarantees would not cause a court to take action under any
fraudulent conveyance laws. We cannot, however, be certain that a court would
agree with our conclusion.
RESTRICTIVE COVENANTS
The indenture governing the notes and other agreements governing our
existing long-term indebtedness contain, and future agreements governing our
long-term indebtedness may also contain, certain restrictive financial and
operating covenants which affect, and in many respects significantly limit or
prohibit, among other things, our ability to incur indebtedness, make
prepayments of certain indebtedness, make investments, create liens, make
acquisitions, sell assets and engage in mergers and considerations. These
covenants may significantly limit our operating and financial flexibility.
ABSENCE OF PUBLIC MARKET FOR THE NOTES
There is currently no trading market for the notes. We do not intend to
apply for listing of the notes on any national securities exchange or
quotation of the notes on the Nasdaq National Market. Goldman, Sachs & Co. has
advised us that they currently intend to make a market in the notes, but they
are not obligated to do so, and any market-making for the notes may be
discontinued at any time without notice. We cannot guarantee that a market for
the notes will develop.
Although the original unregistered notes are currently eligible for trading
through PORTAL, the registered notes will not be eligible for trading through
PORTAL.
18
<PAGE>
SENSITIVITY TO CHANGES IN CONSTRUCTION AND INDUSTRIAL ACTIVITIES
Our equipment is principally used in connection with construction and
industrial activities. Consequently, a downturn in construction or industrial
activity may lead to a decrease in demand for our equipment, which could
adversely affect our business. We have identified below certain of the factors
which may cause such a downturn, either temporarily or long-term:
. a general slow-down of the economy;
. an increase in interest rates; or
. adverse weather conditions which may temporarily affect a particular
region.
ACQUIRED COMPANIES NOT HISTORICALLY OPERATED AS A COMBINED BUSINESS
The businesses that we acquired have been in existence an average of 29
years and some have been in existence for more than 50 years. However, these
businesses were not historically managed or operated as a single business.
Although we believe that we can successfully manage and operate the acquired
businesses as a single business, we cannot be certain of this.
LIMITED OPERATING HISTORY
We commenced equipment rental operations in October 1997 and have grown
through a combination of internal growth and the acquisition of 117 companies
(through May 4, 1999), including a merger in September 1998 with U.S. Rentals.
Due to the relatively recent commencement of our operations, we have only a
limited history upon which you can base an assessment of our business and
prospects.
RISKS RELATING TO GROWTH STRATEGY
Key elements of our growth strategy are to continue to expand through a
combination of internal growth, a disciplined acquisition program and the
opening of new rental locations. We have identified below some of the risks
relating to our growth strategy:
AVAILABILITY OF ACQUISITION TARGETS AND SITES FOR START-UP LOCATIONS. We may
encounter substantial competition in our efforts to acquire additional rental
companies and sites for start-up locations. Such competition could have the
effect of increasing the prices that we will have to pay in order to acquire
such businesses and sites. We cannot guarantee that any additional businesses
or sites that we may wish to acquire will be available to us on terms that are
acceptable to us.
NEED TO INTEGRATE NEW OPERATIONS. Our ability to realize the expected
benefits from completed and future acquisitions depends, in large part, on our
ability to integrate the new operations with our existing operations in a
timely and effective manner. Accordingly, we devote substantial efforts to the
integration of new operations. We cannot, however, guarantee that these
efforts will always be successful. In addition, under certain circumstances,
these efforts could adversely affect our existing operations.
DEBT COVENANTS. Certain of the agreements governing our outstanding
indebtedness provide that we may not make acquisitions unless certain
financial conditions are satisfied or the consent of the lenders is obtained.
Our ability to grow through acquisitions may be constrained as a result of
these provisions.
CERTAIN RISKS RELATED TO START-UP LOCATIONS. We expect that start-up
locations may initially have a negative impact on our results of operations
and margins for a number of reasons, including that (1) we will incur
significant start-up expenses in connection with establishing each start-up
location and (2) it will generally take some time following the commencement
of operations for a start-up location to become profitable. Although we
believe that start-ups can generate long-term growth, we cannot guarantee that
any start-up location will become profitable within any specific time period,
if at all.
19
<PAGE>
DEPENDENCE ON ADDITIONAL CAPITAL TO FINANCE GROWTH
We will require substantial capital in order to execute our growth strategy.
We will require capital for, among other purposes, completing acquisitions,
establishing new rental locations, and acquiring rental equipment. If the cash
that we generate from our business, together with cash that we may borrow
under our Credit Facility, is not sufficient to fund our capital requirements,
we will require additional debt and/or equity financing. We cannot, however,
be certain that any additional financing will be available or, if available,
will be available on terms that are satisfactory to us. If we are unable to
obtain sufficient additional capital in the future, our ability to implement
our growth strategy could be limited.
POSSIBLE UNDISCOVERED LIABILITIES OF ACQUIRED COMPANIES
Prior to making an acquisition, we seek to assess the liabilities of the
target company that we will become responsible for as a result of the
acquisition. Nevertheless, we may fail to discover certain of such
liabilities. We seek to reduce our risk relating to these possible hidden
liabilities by generally obtaining the agreement of the seller to reimburse us
in the event that we discover any material hidden liabilities. However, this
type of agreement, if obtained, may not fully protect us against hidden
liabilities because (1) the seller's obligation to reimburse us is generally
limited in duration and/or amount and (2) the seller may not have sufficient
financial resources to reimburse us. Furthermore, when we acquire a public
company (such as when we acquired U.S. Rentals) there is no seller from which
to obtain this type of agreement.
DEPENDENCE ON MANAGEMENT
We are highly dependent upon our senior management team. Consequently, our
business could be adversely affected in the event that we lose the services of
any member of senior management. Furthermore, if we lose the services of
certain members of senior management, it is an event of default under the
agreements governing our Credit Facility, Term Loan and certain of our other
indebtedness, unless we appoint replacement officers satisfactory to the
lenders within 30 days. We do not maintain "key man" life insurance with
respect to members of senior management.
COMPETITION
The equipment rental industry is highly fragmented and competitive. Our
competitors primarily include small, independent businesses with one or two
rental locations; regional competitors which operate in one or more states;
public companies or divisions of public companies; and equipment vendors and
dealers who both sell and rent equipment directly to customers. We may in the
future encounter increased competition from our existing competitors or from
new companies. In addition, certain equipment manufacturers may commence (or
increase their existing efforts relating to) renting and selling equipment
directly to our customers.
QUARTERLY FLUCTUATIONS OF OPERATING RESULTS
We expect that our revenues and operating results may fluctuate from quarter
to quarter due to a number of factors, including:
. seasonal rental patterns of our customers--with rental activity tending
to be lower in the winter;
. changes in general economic conditions in our markets, including changes
in construction and industrial activities;
. the timing of acquisitions, new location openings, and related
expenditures;
. the effect of the integration of acquired businesses and start-up
locations;
. the timing of expenditures for new equipment and the disposition of used
equipment; and
. price changes in response to competitive factors.
20
<PAGE>
LIABILITY AND INSURANCE
We are exposed to various possible claims relating to our business. These
include claims relating to (1) personal injury or death caused by equipment
rented or sold by us, (2) motor vehicle accidents involving our delivery and
service personnel and (3) employment related claims. We carry a broad range of
insurance for the protection of our assets and operations. However, such
insurance may not fully protect us for a number of reasons, including:
. our coverage is subject to a deductible of $0.5 million and limited to a
maximum of $97 million per occurrence;
. we do not maintain coverage for environmental liability, since we
believe that the cost for such coverage is high relative to the benefit
that it provides; and
. certain types of claims, such as claims for punitive damages or for
damages arising from intentional misconduct, which are often alleged in
third party lawsuits, might not be covered by our insurance.
We cannot be certain that insurance will continue to be available to us on
economically reasonable terms, if at all.
ENVIRONMENTAL AND SAFETY REGULATIONS
There are numerous federal, state and local laws and regulations governing
environmental protection and occupational health and safety matters. These
include laws and regulations that govern wastewater discharges, the use,
treatment, storage and disposal of solid and hazardous wastes and materials,
air quality and the remediation of contamination associated with the release
of hazardous substances. Under these laws, an owner or lessee of real estate
may be liable for, among other things, (1) the costs of removal or remediation
of hazardous or toxic substances located on, in, or emanating from, the real
estate, as well as related costs of investigation and property damage and
substantial penalties, and (2) environmental contamination at facilities where
its waste is or has been disposed. These laws often impose liability whether
or not the owner or lessee knew of the presence of the hazardous or toxic
substances and whether or not the owner or lessee was responsible for these
substances. Our activities that are or may be affected by these laws include
our use of hazardous materials to clean and maintain equipment and our
disposal of solid and hazardous waste and wastewater from equipment washing.
We also dispense petroleum products from underground and above-ground storage
tanks located at certain rental locations, and at times we must remove or
upgrade tanks to comply with applicable laws. Furthermore, we have acquired or
lease certain locations which have or may have been contaminated by leakage
from underground tanks or other sources and are in the process of assessing
the nature of the required remediation. Based on the conditions currently
known to us, we believe that any unreserved environmental remediation and
compliance costs required with respect to those conditions will not have a
material adverse effect on our business. However, we cannot be certain that we
will not identify adverse environmental conditions that are not currently
known to us, that all potential releases from underground storage tanks
removed in the past have been identified, or that environmental and safety
requirements will not become more stringent or be interpreted and applied more
stringently in the future. If we are required to incur environmental
compliance or remediation costs that are not currently anticipated by us, our
business could be adversely affected depending on the magnitude of the cost.
CONCENTRATED CONTROL
As of May 4, 1999, the executive officers and directors of our company owned
in the aggregate approximately 45.5% of the Common Stock of Holdings, giving
effect to the exercise of all currently exercisable options and warrants
(48.4% on a pro forma basis giving effect to the exercise of all outstanding
options and warrants). Such share ownership may effectively give these persons
the power to elect all of the directors of Holdings (other than the two
directors that are elected directly by the holders of Holdings' outstanding
preferred stock) and to control our management and affairs.
21
<PAGE>
RISKS RELATED TO INTERNATIONAL OPERATIONS
Our operations outside the United States are subject to risks normally
associated with international operations. These include the need to convert
currencies, which could result in a gain or loss depending on fluctuations in
exchange rates, and the need to comply with foreign laws.
YEAR 2000 ISSUES
Our software vendors have informed us that our recently-installed management
information system is year 2000 compliant. We have, therefore, not developed
any contingency plans relating to year 2000 issues and have not budgeted any
funds for year 2000 issues. Although we believe that our system is year 2000
compliant, unanticipated year 2000 problems may arise which, depending on the
nature and magnitude of the problem, could adversely affect our business.
Furthermore, year 2000 problems involving third parties may have a negative
impact on our customers or suppliers, the general economy or on the ability of
businesses generally to receive essential services (such as
telecommunications, banking services, etc.). Any such problem could adversely
affect our business. We are unable at this time to assess the possible impact
on our business of year 2000 problems involving any third party.
CONSEQUENCES OF FAILURE TO EXCHANGE ORIGINAL NOTES
Any unregistered original notes that remain outstanding after this exchange
offer will continue to be subject to restrictions on their transfer. After
this exchange offer, holders of unregistered original notes will not (with
limited exceptions) have any further rights to have their notes registered.
Any market for unregistered original notes that are not exchanged could be
adversely affected by the conclusion of this exchange offer.
EXCHANGE OFFER PROCEDURES
Issuance of registered notes in exchange for unregistered original notes
will only occur upon completion of the procedure described in this prospectus
under the heading "The Exchange Offer--Procedures for Tendering." Therefore,
holders of unregistered original notes who wish to exchange them for
registered notes should allow sufficient time for timely completion of the
exchange procedure. We are not obligated to notify you of any failure to
follow the proper procedure.
PROSPECTUS DELIVERY REQUIREMENTS APPLICABLE TO CERTAIN BROKER-DEALERS
A broker-dealer that purchased unregistered original notes for its own
account as part of market-making or trading activities, must deliver a
prospectus when it sells registered notes. Our obligation to make this
prospectus available to broker-dealers is limited. Consequently, we cannot
guarantee that a proper prospectus will be available to broker-dealers wishing
to resell their registered notes.
NEED TO MAKE REPRESENTATIONS IN ORDER TO PARTICIPATE IN EXCHANGE OFFER
In order to participate in the exchange offer, you will be required to make
certain representations in a letter of transmittal as described herein. If any
of these representations are falsely made, the notes received in exchange for
your unregistered original notes may be restricted, meaning that they would
not be freely tradable.
22
<PAGE>
CORPORATE INFORMATION
United Rentals (North America), Inc. ("URI") is a wholly owned subsidiary of
United Rentals, Inc. ("Holdings"). URI was incorporated in August 1997,
initially capitalized in September 1997 and commenced equipment rental
operations in October 1997. Holdings was incorporated in July 1998 and became
the parent company of URI on August 5, 1998, in connection with a
reorganization of URI's corporate structure that was effected in order to
facilitate certain financings. As part of such reorganization, the outstanding
common stock of URI was converted, on a share for share basis, into common
stock of Holdings and the common stock of Holdings commenced trading on the
New York Stock Exchange instead of the common stock of URI. Prior to such
reorganization, the name of United Rentals (North America), Inc. was United
Rentals, Inc. Unless otherwise indicated or the context otherwise clearly
requires, (i) the terms "United Rentals" and "Holdings" refer to United
Rentals, Inc., (ii) the term "URI" refers to United Rentals (North America),
Inc. and not its subsidiaries, (iii) the term "the Company" refers to URI and
its subsidiaries, and (iv) the term "Common Stock" refers to the common stock
of URI, with respect to periods prior to such reorganization, and to the
common stock of Holdings, with respect to periods thereafter.
23
<PAGE>
THE EXCHANGE OFFER
The following summary of certain terms of this exchange offer ("the Exchange
Offer") is qualified in its entirety by reference to the full text of the
documents underlying the Exchange Offer, including the Letter of Transmittal
and the Registration Rights Agreement, copies of which are filed as exhibits
to the registration statement of which this prospectus is a part.
Participation in the Exchange Offer is voluntary, and holders of
unregistered original notes (the "Original Notes") should carefully consider
whether to accept. Holders of Original Notes are urged to consult their
financial and tax advisors in making their decision on what action to take.
PURPOSE OF THE EXCHANGE OFFER; EFFECT ON HOLDERS OF ORIGINAL NOTES
The Exchange Offer is being made in order to satisfy certain of URI's
obligations under the Registration Rights Agreement. See "Registration Rights
Agreement."
Upon consummation of the Exchange Offer, the holders of Original Notes will
not have any further registration rights under the Registration Rights
Agreement (subject to limited exceptions as described under "Registration
Rights Agreement--Shelf Registration Statement"). Holders of the Original
Notes who do not tender their Original Notes in the Exchange Offer will
continue to hold such Original Notes and will be entitled to all the rights
and will be subject to all the limitations applicable thereto under the
indenture governing the notes (the "Indenture"). All Original Notes that
remain outstanding upon consummation of the Exchange Offer will continue to be
subject to the restrictions on transfer provided for in the Original Notes and
the Indenture. In general, the Original Notes may not be offered or sold
unless registered under the Securities Act of 1933 (the "Securities Act"),
except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act. To the extent that the
Original Notes are tendered and accepted in the Exchange Offer, the trading
market for untendered Original Notes could be adversely affected.
REQUIRED REPRESENTATIONS
In connection with any tender of Original Notes pursuant to the Exchange
Offer, the Book-Entry Holder (as defined below) of such Original Notes will be
required to make certain representations in the Letter of Transmittal,
including that (i) it is not an affiliate of URI, (ii) it is not a broker-
dealer that purchased such Original Notes directly from URI, (iii) any
registered notes that it acquires in the Exchange Offer (the "Exchange Notes")
will be acquired by it in the ordinary course of its business and (iv) it has
no arrangement with any person to participate in the distribution of the
Exchange Notes; provided, however, that if the Book-Entry Holder is a broker-
dealer that wishes to tender Original Notes that were acquired by it for its
own account as a result of market-making activities or other trading
activities, it may represent, in lieu of the representation set forth in
clause (iv), that it has no arrangement or understanding with URI, or any
affiliate of URI, to participate in the distribution of the Exchange Notes. In
addition, a Book-Entry Holder that holds any Original Notes as nominee will be
required to confirm that the beneficial owner for which it is holding such
Original Notes has made the representations provided for in the preceding
sentence.
The term "Book-Entry Holder" with respect to any notes means the participant
in the system of The Depository Trust Company ("DTC") that is listed as the
holder of such notes in the records maintained by DTC.
RESALE OF EXCHANGE NOTES
Based on interpretations by the staff of the Securities and Exchange
Commission (the "Commission") set forth in no-action letters issued to third
parties, URI believes that (except as provided in the following two
paragraphs) the Exchange Notes issued pursuant to the Exchange Offer may be
offered for resale, resold or otherwise transferred by any holder thereof
(other than an affiliate of URI) without compliance with the registration and
prospectus delivery provisions of the Securities Act (subject to the
representations set forth under "--Required Representations" being made and
being accurate).
24
<PAGE>
Any broker-dealer that receives Exchange Notes in exchange for Original
Notes that were acquired by it for its own account as a result of market-
making activities or other trading activities, must deliver a prospectus
meeting the requirements of the Securities Act in connection with any resales
by it of any such Exchange Notes. This prospectus, as it may be amended or
supplemented from time to time, may, if permitted by URI, be used by a broker-
dealer in order to satisfy such prospectus delivery requirements. URI has
agreed in the Registration Rights Agreement that, for a period of 30 days
following consummation of the Exchange Offer (subject to extension under
certain circumstances described under "Registration Rights Agreement"), it
will make this prospectus available to any broker-dealer for use in connection
with any such resale (subject to the right of URI to restrict the use of this
prospectus under certain circumstances). Each broker-dealer that participates
in the Exchange Offer will be required to confirm that it will comply with the
prospectus delivery requirements described above. A broker-dealer that
delivers a prospectus in connection with the resale of any Exchange Notes will
be subject to certain of the civil liability provisions under the Securities
Act. See "Registration Rights Agreement" and "Plan of Distribution."
In the event that any of the required representations set forth under "--
Required Representations" is not true with respect to a holder that receives
Exchange Notes pursuant to the Exchange Offer, the Exchange Notes received by
such holder may be deemed to be restricted securities and, if so, such
Exchange Notes may not be offered or sold unless registered under the
Securities Act, except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act.
The conclusions set forth in the preceding three paragraphs are based on
interpretations by the staff of the Commission set forth in no-action letters
issued to third parties. URI does not intend to seek its own no-action letter
with respect to the Exchange Offer and there is no assurance that the staff of
the Commission would make a similar determination with respect to the Exchange
Offer as it has in such no-action letters to third parties.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying Letter of Transmittal, URI will accept for exchange
all Original Notes properly tendered and not withdrawn prior to 5:00 p.m., New
York City time, on the Expiration Date (as defined herein). URI will issue
$1,000 principal amount of Exchange Notes in exchange for each $1,000
principal amount of outstanding Original Notes accepted in the Exchange Offer.
Holders may tender some or all of their Original Notes pursuant to the
Exchange Offer in denominations of $1,000 and integral multiples thereof. The
Exchange Offer is not conditioned upon any minimum aggregate principal amount
of Original Notes being tendered.
The terms of the Exchange Notes will be the same in all material respects as
the Original Notes except that (i) the Exchange Notes will be registered under
the Securities Act, and, therefore, will not bear legends restricting the
transfer thereof and (ii) certain of the registration rights, under the
Registration Rights Agreement, relating to the Exchange Notes are different
than those relating to the Original Notes and, therefore, the defaults under
the Registration Rights Agreement that may require URI to pay additional
interest will be different for the Exchange Notes and the Original Notes. See
"Registration Rights Agreement--Certain Provisions Relating to Additional
Interest." The Exchange Notes will evidence the same debt as the Original
Notes and both series of notes will be entitled to the benefits of the
Indenture and treated as a single class of debt securities.
In connection with the issuance of the Original Notes, URI arranged for the
Original Notes to be issued and transferable in book-entry form through the
facilities of DTC, acting as depositary. The Exchange Notes will also be
issuable and transferable in book-entry form through DTC. See "Description of
the Notes--Book Entry; Delivery and Form."
URI shall be deemed to have accepted validly tendered Original Notes when,
as and if URI has given oral or written notice thereof to the Exchange Agent
(as defined herein). The Exchange Agent will act as agent for the tendering
holders of Original Notes for the purposes of receiving the Exchange Notes
from URI and delivering Exchange Notes to such holders. URI's obligation to
accept Original Notes for exchange pursuant to the Exchange Offer is subject
to certain customary conditions as set forth under "--Conditions."
25
<PAGE>
If any tendered Original Notes are not accepted for exchange because of an
invalid tender or the occurrence of certain other events set forth herein,
such unaccepted Original Notes will be returned, without expense, to the
tendering holder thereof as promptly as practicable after the Expiration Date.
Holders of Original Notes who tender pursuant to the Exchange Offer will not
be required to pay brokerage commissions or fees or, subject to the
instructions in the Letter of Transmittal, transfer taxes with respect to the
exchange of Original Notes pursuant to the Exchange Offer. URI will pay all
charges and expenses, other than certain applicable taxes, in connection with
the Exchange Offer. See "--Solicitation of Tenders; Fees and Expenses."
Holders of notes do not have appraisal or dissenters' rights under the
Delaware General Corporation Law or under the Indenture in connection with the
Exchange Offer. URI intends to conduct the Exchange Offer in accordance with
the applicable requirements of Regulation 14E under the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
NEITHER THE BOARD OF DIRECTORS OF URI NOR URI MAKES ANY RECOMMENDATION TO
HOLDERS OF ORIGINAL NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING
ALL OR ANY PORTION OF THEIR ORIGINAL NOTES PURSUANT TO THE EXCHANGE OFFER.
MOREOVER, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS
OF ORIGINAL NOTES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO
THE EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF ORIGINAL NOTES TO
TENDER, AFTER READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND
CONSULTING WITH THEIR ADVISORS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION
AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The Exchange Offer will remain open for acceptance for a period of not less
than 20 business days after the date notice of the Exchange Offer is mailed to
holders of the Original Notes (or longer if required by applicable law). The
Expiration Date will be 5:00 p.m., New York City time, on , 1999, unless
URI, in its sole discretion, extends the Exchange Offer, in which case the
Expiration Date will be the latest business day to which the Exchange Offer is
extended. In order to extend the Expiration Date, URI will notify the Exchange
Agent of any extension by oral or written notice and will mail to the record
holders an announcement thereof, each prior to 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date.
During any such extension, all Original Notes previously tendered and not
withdrawn as herein provided will remain subject to the Exchange Offer and may
be accepted for exchange by URI.
INTEREST ON THE EXCHANGE NOTES
Interest on the notes is payable semi-annually on January 15 and July 15 of
each year, commencing July 15, 1999, at the rate of 9 1/4% per annum. The
Exchange Notes will bear interest from and including the last interest payment
date on the Original Notes (or, if none has yet occurred, the date of issuance
of such Original Notes). Accordingly, holders of Original Notes that are
accepted for exchange will not receive interest that is accrued but unpaid on
the Original Notes at the time of tender, but such interest will be payable in
respect of the Exchange Notes delivered in exchange for such Original Notes on
the first interest payment date after the Expiration Date.
PROCEDURES FOR TENDERING
Only a Book-Entry Holder of Original Notes may tender such Original Notes
pursuant to the Exchange Offer. To tender any Original Notes pursuant to the
Exchange Offer, the Book-Entry Holder of such Original Notes must make book-
entry delivery of such Original Notes by causing DTC to transfer such Original
Notes to the account of the Exchange Agent at DTC in accordance with DTC's
Automated Tender Offer Program
26
<PAGE>
("ATOP") prior to 5:00 p.m., New York City time, on the Expiration Date. In
addition, either (i) DTC must deliver an Agent's Message (as defined below)
prior to 5:00 p.m., New York City time, on the Expiration Date, indicating
that DTC has received from such Book-Entry Holder an express acknowledgment
that such Book-Entry Holder has received and agrees to be bound by the terms
of the Letter of Transmittal or (ii) such Book-Entry Holder must complete,
sign and date the Letter of Transmittal or a facsimile thereof, in accordance
with the instructions contained herein and therein, and deliver such Letter of
Transmittal, or such facsimile, and any other required documentation to the
Exchange Agent at the address set forth herein prior to 5:00 p.m., New York
City time, on the Expiration Date. DELIVERY OF DOCUMENTS TO DTC DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Exchange Agent and forming part of the book-entry
confirmation relating to a book-entry transfer of Original Notes through ATOP,
which states that DTC has received an express acknowledgment from the DTC
participant that is tendering the Original Notes which are the subject of such
book entry confirmation, that such DTC participant has received and agrees to
be bound by the terms of the Letter of Transmittal.
The tender by a holder of Original Notes and the acceptance thereof by URI
will constitute an agreement between such holder and URI in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER.
INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT
OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ASSURE TIMELY DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL SHOULD BE SENT TO URI OR DTC.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Original Notes and withdrawal of tendered
Original Notes will be determined by URI in its sole discretion, which
determination will be final and binding. URI reserves the absolute right to
reject any and all Original Notes not properly tendered or any Original Notes
URI's acceptance of which would, in the opinion of counsel for URI, be
unlawful. URI also reserves the right to waive any irregularities or
conditions of tender as to particular Original Notes. URI's interpretation of
the terms and conditions of the Exchange Offer (including the instructions in
the Letter of Transmittal) will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Original
Notes must be cured within such time as URI shall determine. Neither URI, the
Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Original
Notes, nor shall any of them incur any liability for failure to give such
notification. Tenders of Original Notes will not be deemed to have been made
until such irregularities have been cured or waived. Any Original Notes
received by the Exchange Agent that are not properly tendered or the tender of
which is otherwise rejected by URI and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the Book-Entry Holder that tendered such Original Notes (by crediting
an account maintained at DTC designated by such Book-Entry Holder) as soon as
practicable following the Expiration Date.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Original Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date.
To withdraw a tender of Original Notes pursuant to the Exchange Offer, the
Book-Entry Holder that tendered such Original Notes must, prior to 5:00 p.m.,
New York City time, on the Expiration Date, either (i) withdraw such tender in
accordance with the appropriate procedures of the ATOP system or (ii) deliver
to the Exchange Agent a written or facsimile transmission notice of withdrawal
at the address set forth herein. Any
27
<PAGE>
such notice of withdrawal must contain the name and number of the Book-Entry
Holder, the amount of Original Notes to which such withdrawal relates, the
account at DTC to be credited with the withdrawn Original Notes and the
signature of the Book-Entry Holder. All questions as to the validity, form and
eligibility (including time of receipt) of such withdrawal notices will be
determined by URI in its sole discretion, whose determination will be final
and binding on all parties. Any Original Notes so withdrawn will be deemed not
to have been validly tendered for purposes of the Exchange Offer, and no
Exchange Notes will be issued with respect thereto unless the Original Notes
so withdrawn are validly retendered. Any Original Notes which have been
tendered but which are withdrawn will be returned by the Exchange Agent to the
Book-Entry Holder that tendered such Original Notes (by crediting an account
maintained at DTC designated by such Book-Entry Holder) as soon as practicable
after withdrawal. Properly withdrawn Original Notes may be retendered at any
time prior to the Expiration Date by following the procedures described under
"--Procedures for Tendering."
CONDITIONS
Notwithstanding any other term of the Exchange Offer, URI shall not be
required to accept for exchange, or to exchange Exchange Notes for, any
Original Notes, and may terminate or amend the Exchange Offer as provided
herein before the acceptance of such Original Notes, if:
(a) any action or proceeding is instituted or threatened in any court or by
or before any governmental agency or regulatory authority or any
injunction, order or decree is issued with respect to the Exchange
Offer which, in the sole judgment of URI, might impair the ability of
URI to proceed with the Exchange Offer; or
(b) any law, statute, rule, regulation or interpretation by the Staff of
the Commission is proposed, adopted or enacted, which, in the
reasonable judgment of URI, might materially impair the ability of URI
to proceed with the Exchange Offer; or
(c) there shall have been proposed, adopted or enacted any law, statute,
rule or regulation (or an amendment to any existing law, statute, rule
or regulation) which, in the sole judgment of URI, might materially
impair the ability of URI to proceed with the Exchange Offer.
If URI determines in its reasonable judgment that any of the conditions set
forth above are not satisfied, URI may (i) terminate the Exchange Offer and
refuse to accept any Original Notes and return all tendered Original Notes to
the tendering holders, (ii) extend the Exchange Offer and retain all Original
Notes tendered prior to the expiration of the Exchange Offer subject, however,
to the rights of holders to withdraw such Original Notes (see "--Withdrawals
of Tenders") or (iii) waive such unsatisfied conditions with respect to the
Exchange Offer and accept all properly tendered Original Notes which have not
been withdrawn. Moreover, regardless of whether any of such conditions has
occurred, URI may amend the Exchange Offer in any manner which, in its good
faith judgment, is advantageous to holders of the Original Notes.
The foregoing conditions are for the sole benefit of URI and may be asserted
by URI regardless of the circumstances giving rise to any such condition or
may be waived by URI in whole or in part at any time and from time to time in
its sole discretion. The failure by URI at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. If a waiver constitutes a material change in the Exchange
Offer, URI will disclose such change by means of a supplement to this
prospectus that will be distributed to each Book-Entry Holder, and URI will
extend the Exchange Offer for a period of five to ten business days, depending
upon the significance of the waiver and the manner of disclosure to the Book-
Entry Holders, if the Exchange Offer would otherwise expire during such
period. Any determination by URI concerning the events described above will be
final and binding upon all parties.
In addition, URI will not accept for exchange any Original Notes tendered,
and no Exchange Notes will be issued in exchange for any such Original Notes,
if at such time any stop order shall be threatened or in effect with respect
to the registration statement of which this prospectus is a part or if the
Indenture is not qualified
28
<PAGE>
under the Trust Indenture Act of 1939, as amended. URI is required to use
every reasonable effort to obtain the withdrawal of any such stop order at the
earliest possible time.
The Exchange Offer is not conditioned upon any minimum principal amount of
Original Notes being tendered for exchange.
EXCHANGE AGENT
State Street Bank and Trust Company, the Trustee under the Indenture, has
been appointed as Exchange Agent for the Exchange Offer. In such capacity, the
Exchange Agent has no fiduciary duties to the holders of the notes and will be
acting solely on the basis of directions of URI. All executed Letters of
Transmittal must be delivered to the Exchange Agent at the applicable address
set forth below. Questions and requests for assistance and requests for
additional copies of this prospectus or the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
By Mail: By Facsimile By Overnight or Hand
Transmission:
(registered or certified Delivery:
recommended) (for Eligible
State Street Bank and Institutions only) State Street Bank and
Trust Company Trust Company
Corporate Trust (617) 664-5290 Corporate Trust
Department Attention: Kellie Mullen Department
P.O. Box 778 Confirm by Telephone: Two International Plaza
Boston, MA 02102-0078 (617) 664-5587 Boston, MA 02110-0078
Attention: Kellie Mullen Fourth Floor
Attention: Kellie Mullen
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OR FACSIMILE NUMBER
OTHER THAN SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
SOLICITATION OF TENDERS; FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by URI. The principal solicitation for tenders pursuant to the Exchange
Offer is being made by mail; however, additional solicitations may be made by
telegraph, facsimile, telephone or in person by officers and regular employees
of URI and its affiliates.
URI has not retained any dealer-manager in connection with the Exchange
Offer and will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. URI will, however, pay the
Exchange Agent reasonable and customary fees for its services and will
reimburse the Exchange Agent for its reasonable out-of-pocket expenses in
connection therewith and pay other expenses of the Exchange Offer, including
fees and expenses of the Trustee, filing fees, blue sky fees, and URI's
accounting and legal fees and printing and distribution expenses. URI may also
pay brokerage houses and other custodians, nominees and fiduciaries the
reasonable out-of-pocket expenses incurred by them in forwarding copies of
this prospectus, Letters of Transmittal and related documents to the
beneficial owners of the Original Notes and in handling or forwarding tenders
for exchange.
URI will pay all transfer taxes, if any, applicable to the exchange of
Original Notes pursuant to the Exchange Offer. If, however, Exchange Notes or
Original Notes for principal amounts not tendered or accepted for exchange are
to be delivered to, or are to be registered or issued in the name of, any
person other than the Book-Entry Holder of the Original Notes tendered, or if
a transfer tax is imposed for any reason other than the exchange of Original
Notes pursuant to the Exchange Offer, then the amount of any such transfer
taxes (whether imposed on the Book-Entry Holder or any other persons) will be
payable by the tendering holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with the Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
holder.
29
<PAGE>
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Original Notes for which they are exchanged, which is the aggregate principal
amount of the Original Notes, as reflected in URI's accounting records on the
date of exchange. Accordingly, no gain or loss for accounting purposes will be
recognized in connection with the Exchange Offer. The cost of the Exchange
Offer will be deferred and amortized over the term of the Exchange Notes.
OTHER
URI may in the future seek to acquire untendered Original Notes, to the
extent permitted by applicable law, in open market or privately negotiated
transactions, through subsequent exchange offers or otherwise. URI has no
present plans to acquire any Original Notes that are not tendered in the
Exchange Offer or to file a registration statement to permit resales of any
untendered Original Notes.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain U.S. federal income tax
consequences of the Exchange Offer. This discussion is based on the current
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
applicable Treasury regulations, judicial authority and administrative rulings
and practice. This discussion is generally limited to the tax consequences to
holders that hold the Exchange Notes as capital assets (within the meaning of
Section 1221 of the Code). There can be no assurance that the Internal Revenue
Service (the "Service") will not take a contrary view, and no ruling from the
Service has been or will be sought. Legislative, judicial or administrative
changes or interpretations may be forthcoming that could alter or modify the
statements and conditions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to holders. Certain holders, including insurance companies, tax-
exempt organizations, financial institutions, broker-dealers, foreign
corporations and persons who are not citizens or residents of the United
States, may be subject to special rules not discussed below.
For U.S. federal income tax purposes, the exchange of Original Notes for
Exchange Notes pursuant to the Exchange Offer should not be treated as a
taxable transaction for federal income tax purposes. As a result, there should
be no federal income tax consequences to holders exchanging Original Notes for
Exchange Notes pursuant to the Exchange Offer. A holder should have the same
adjusted basis and holding period in an Exchange Note as it had in an Original
Note immediately prior to the exchange.
THE FOREGOING DISCUSSION IS BASED ON THE PROVISIONS OF THE CODE,
REGULATIONS, TREASURY REGULATIONS, RULINGS AND JUDICIAL DECISIONS NOW IN
EFFECT, ALL OF WHICH ARE SUBJECT TO CHANGE. ANY SUCH CHANGES MAY BE APPLIED
RETROACTIVELY IN A MANNER THAT COULD ADVERSELY AFFECT HOLDERS EXCHANGING
NOTES. EACH HOLDER OF NOTES SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO
THE TAX CONSEQUENCES TO IT, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS, OF EXCHANGING ORIGINAL NOTES FOR EXCHANGE NOTES
PURSUANT TO THE EXCHANGE OFFER.
30
<PAGE>
REGISTRATION RIGHTS AGREEMENT
In connection with the issuance of the Original Notes, the Company entered
into a Registration Rights Agreement with Goldman, Sachs & Co. (the
"Registration Rights Agreement"). Set forth below is a summary of certain
provisions of the Registration Rights Agreement. Such summary does not purport
to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the Registration Rights Agreement, a copy
of which is filed as an exhibit to the registration statement of which this
prospectus forms a part.
EXCHANGE OFFER
The Registration Rights Agreement provides that the Company is obligated to
(unless applicable law or Commission policy does not permit) (i) on or prior
to 90 days after the date (the "Issue Date") the Original Notes were
originally issued, file a registration statement (the "Exchange Registration
Statement") with the Commission with respect to an offer to exchange the
Original Notes for Exchange Notes, (ii) use its best efforts to cause the
Exchange Registration Statement to become effective under the Securities Act
on or prior to 150 days after the Issue Date, (iii) commence the exchange
offer contemplated by the Exchange Registration Statement promptly after the
registration statement is declared effective by the Commission and keep such
exchange offer open for acceptance for a period (the "Exchange Period") of 20
business days after the date notice of the exchange offer is mailed to the
holders of the Original Notes (or for such longer period as may be required by
law), (iv) use its best efforts to issue, promptly after the end of the
Exchange Period, Exchange Notes in exchange for all Original Notes that have
been properly tendered for exchange during the Exchange Period and (v) use its
best efforts to maintain the effectiveness of the Exchange Registration
Statement during the Exchange Period and thereafter until such time as the
Company has issued Exchange Notes in exchange for all Original Notes that have
been properly tendered for exchange during the Exchange Period. The exchange
offer contemplated by the Registration Rights Agreement will be deemed
consummated, for purposes of the Registration Rights Agreement, if the Company
makes such offer, such offer remains open for Exchange Period, and the Company
issues Exchange Notes in respect of all Original Notes that are properly
tendered during the Exchange Period.
The Exchange Offer being made hereby is intended to satisfy the Company's
obligations under the Registration Rights Agreement described in the preceding
paragraph.
SHELF REGISTRATION STATEMENT
If (i) the Company is not permitted to file the Exchange Registration
Statement or to consummate the exchange offer contemplated by the Registration
Rights Agreement because such offer is not permitted by applicable law or
Commission policy; (ii) for any other reason, the exchange offer contemplated
by the Registration Rights Agreement is not consummated within 180 days after
the Issue Date of the Original Notes; (iii) any holder of Original Notes or
Exchange Notes notifies the Company prior to the 20th day following
consummation of the Exchange Offer that (a) due to a change in law or policy
such holder is not entitled to participate in the Exchange Offer, (b) due to a
change in law or policy such holder may not resell the Exchange Notes acquired
by it in the Exchange Offer to the public without delivering a prospectus and
the prospectus contained in the Exchange Registration Statement is not
appropriate or available for such resales by such holder or (c) such holder is
a broker-dealer and owns Original Notes acquired directly from the Company or
an affiliate of the Company; or (iv) the holders of a majority in aggregate
principal amount of the Original Notes are not eligible to participate in the
Exchange Offer and to receive Exchange Notes that they may resell to the
public without restriction under the Securities Act and without restriction
under applicable blue sky or state securities laws, then the Company is
required to file with the Commission a shelf registration statement ("Shelf
Registration Statement") to cover resales of the Transfer Restricted Notes (as
defined below) by the holders thereof.
If the Company is required to file the Shelf Registration Statement as
described in the preceding paragraph, the Company is obligated (i) to use its
best efforts to file the Shelf Registration Statement on or prior to the 90th
day after such filing obligation arises (except that, if the obligation to
file the Shelf Registration Statement arises
31
<PAGE>
because the exchange offer contemplated by the Registration Rights Agreement
has not been consummated within 180 days after the Issue Date, then the
Company will use its best efforts to file the Shelf Registration Statement on
or prior to the 30th day after such filing obligation arises), (ii) following
the filing of the Shelf Registration Statement, to use its best efforts to
cause the Shelf Registration Statement to be declared effective by the
Commission on or prior to the 150th day after such filing obligation arises
and (iii) after the Shelf Registration Statement is declared effective by the
Commission, to use its best efforts to keep such Shelf Registration Statement
continuously effective, supplemented and amended until the second anniversary
of the effective date of the Shelf Registration Statement (or until one year
after the effective date if the Shelf Registration Statement is filed pursuant
to clause (iv) of the preceding paragraph) or such shorter period that will
terminate when all the Transfer Restricted Notes covered by the Shelf
Registration Statement have been sold pursuant thereto.
The term "Transfer Restricted Notes" means (i) each Original Note and (ii)
each Exchange Note that is issued to a broker-dealer in exchange for Original
Notes that were acquired by such broker-dealer for its own account as a result
of market-making activities or other trading activities; provided, however,
that a note shall cease to be a Transfer Restricted Note when (a) such note
has been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or Broker Shelf Registration
Statement (as defined herein), or (b) such note is eligible for distribution
to the public pursuant to Rule 144(k) under the Securities Act (or any similar
provision then in force, but not Rule 144A under the Securities Act), or (c)
such note shall have been otherwise transferred by the holder thereof and a
new note not bearing a legend restricting further transfer shall have been
delivered by the Company and subsequent disposition of such note shall not
require registration or qualification under the Securities Act or any similar
state law then in force, or (d) such note ceases to be outstanding or (e) in
the case of an Exchange Note that is a Transfer Restricted Note, such Exchange
Note is sold to a purchaser who receives from the seller on or prior to the
date of such sale a copy of the prospectus contained in the Exchange
Registration Statement, as amended or supplemented.
CERTAIN PROVISIONS RELATING TO BROKER-DEALERS
A broker-dealer (a "Participating Broker-Dealer") that receives Exchange
Notes in exchange for Original Notes that were acquired by it for its own
account as a result of market-making activities or other trading activities,
will be required to deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales by it of any such Exchange
Notes. This prospectus, as it may be amended or supplemented from time to
time, may, if permitted by the Company, be used by a broker-dealer in order to
satisfy such prospectus delivery requirements. The Company has agreed in the
Registration Rights Agreement that it will use its best efforts to make this
prospectus available to any such broker-dealer for use in connection with any
resales of such Exchange Notes (subject to the right of the Company to
restrict the use of this prospectus under certain circumstances specified in
the Registration Rights Agreement). The obligation of the Company to make this
prospectus available as aforesaid will commence on the day that the Exchange
Offer is consummated and continue in effect for a 30-day period (the "Broker
Prospectus Period"); provided, however, that, if for any day during such
period the Company restricts the use of such prospectus, the Broker Prospectus
Period shall be extended on a day-for-day basis.
If at the end of the Broker Prospectus Period any Participating Broker-
Dealer continues to hold any Exchange Notes that it received in the Exchange
Offer, the Company is required (within the time period specified below), if
any such broker-dealer so requests within 60 days after the end of the Broker
Prospectus Period, to file with the Commission a shelf registration statement
(a "Broker Shelf Registration Statement") to cover the resale of such Exchange
Notes by such broker-dealers and use its best efforts to have such
registration statement declared effective by the Commission; provided,
however, that the Company may in lieu of filing such registration statement
extend the Broker Prospectus Period by 60 days.
If the Company is required to file the Broker Shelf Registration Statement
as described in the preceding paragraph, the Company is obligated to (i) file
the Broker Shelf Registration Statement within 30 days following the date the
request for such registration statement is first made in accordance with the
Registration Rights
32
<PAGE>
Agreement and (ii) use its best efforts to have the Broker Shelf Registration
Statement declared effective by the Commission on or prior to the 90th day
following the date the request for such registration statement is first made
in accordance with the Registration Rights Agreement. The Company will be
required to use its best efforts to keep the Broker Shelf Registration
Statement continuously effective, supplemented and amended for a 60-day
period; provided, however, that, if for any day during such period such
registration statement is not usable in connection with the resale of the
Exchange Notes covered thereby, such period shall be extended on a day-for-day
basis.
CERTAIN PROVISIONS RELATING TO ADDITIONAL INTEREST
If a Registration Default (as defined herein) exists, the interest rate on
the Specified Notes (as defined below) will increase, with respect to the
first 90-day period (or portion thereof) while a Registration Default is
continuing immediately following the occurrence of such Registration Default,
.25% per annum, such interest rate increasing by an additional .25% per annum
at the beginning of each subsequent 90-day period (or portion thereof) while a
Registration Default is continuing until all Registration Defaults have been
cured, up to a maximum rate of additional interest of 1.00% per annum.
Following the cure of all Registration Defaults, the accrual of additional
interest on the Specified Notes will cease and the interest rate will revert
to the original rate. The Registration Rights Agreement provides that
additional interest as aforesaid will constitute liquidated damages and will
be the exclusive monetary remedy available to holders of the Original Notes or
Exchange Notes in respect of any Registration Default. The "Specified Notes"
mean the Original Notes (and not the Exchange Notes); provided, however, that
the Specified Notes means the Exchange Notes (and not the Original Notes) with
respect to (a) any Registration Default that arises pursuant to clause (i) or
(ii) of the definition of such term and relates solely to the Broker Shelf
Registration Statement and (b) any Registration Default that arises solely
pursuant to clause (v) or (vi) of the definition of such term.
A "Registration Default" will exist (subject to the following sentence) if
(i) the Company fails to file any of the registration statements required by
the Registration Rights Agreement on or prior to the date specified for such
filing, (ii) any of such registration statements is not declared effective by
the Commission on or prior to the date specified for such effectiveness, (iii)
an exchange offer is required to be consummated under the Registration Rights
Agreement and is not consummated within 180 days after the Issue Date, (iv)
the Shelf Registration Statement is declared effective but thereafter, during
the period for which the Company is required to maintain the effectiveness of
such registration statement, it ceases to be effective or usable in connection
with the resale of the notes covered by such registration statement for a
period of 60 days, whether or not consecutive, (v) the Exchange Offer
Registration Statement is declared effective but thereafter, during the Broker
Prospectus Period, it ceases to be effective (or the Company restricts the use
of the prospectus included therein) for a period of 60 days, whether or not
consecutive, or (vi) the Broker Shelf Registration Statement is declared
effective but thereafter, during the period for which the Company is required
to maintain the effectiveness of such registration statement, it ceases to be
effective or usable in connection with the resale of the Exchange Notes
covered by such registration statement for a period of 60 days, whether or not
consecutive. Notwithstanding the foregoing, (a) any Registration Default
specified in clause (i), (ii) or (iii) of the preceding sentence that relates
to the Exchange Offer Registration Statement or the Exchange Offer shall be
deemed cured at such time as the Shelf Registration Statement is declared
effective by the Commission and (b) any Registration Default specified in
clause (v) of the preceding sentence shall be deemed cured at such time as the
Broker Shelf Registration Statement is declared effective by the Commission.
33
<PAGE>
USE OF PROCEEDS
URI will not receive any cash proceeds from the issuance of the Exchange
Notes. In consideration for issuing the Exchange Notes as contemplated in this
prospectus, URI will receive in exchange Original Notes in like principal
amount, which will be cancelled. As such, this Exchange Offer will not result
in any increase in indebtedness of URI.
34
<PAGE>
SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The tables below present selected historical and pro forma financial
information for the Company. This information should be read together with (1)
the Consolidated Financial Statements and the related notes thereto and Pro
Forma Consolidated Financial Statements and the related notes thereto of the
Company included elsewhere in this prospectus or incorporated by reference
herein and (2) the financial statements incorporated by reference in this
prospectus of certain of the companies that we acquired.
The balance sheet data presented below as of December 31, 1997 and 1998 and
the income statement data presented below for each of the years in the three-
year period ended December 31, 1998 are derived from the audited Consolidated
Financial Statements of the Company. Such financial statements are
incorporated by reference in this prospectus. The balance sheet data presented
below as of December 31, 1996 and the income statement data presented below
for the year ended December 31, 1995 are derived from the audited Consolidated
Financial Statements of the Company which are not included or incorporated by
reference herein. The balance sheet data presented below as of December 31,
1994 and 1995 and the income statement data presented below for the year ended
December 31, 1994 are derived from the unaudited consolidated financial
statements of the Company which include, in the opinion of management of the
Company, all adjustments (consisting of normal recurring accruals) necessary
to present fairly the results of operations and financial position of the
Company for the periods and the dates presented.
The Company commenced operations in October 1997 and has completed 101
acquisitions (through March 3, 1999), including the merger with U.S. Rentals
which was completed in September 1998. Three of these acquisitions (including
the U.S. Rentals merger) were accounted for as "poolings-of-interests," which
means that for accounting and financial reporting purposes the acquired
company is treated as having been combined with the Company at all times since
the inception of the acquired company. Accordingly, the Company's financial
statements have been restated to include the accounts of two of the companies
acquired in these pooling-of-interests transactions (but were not restated for
one that was not material, which has been combined with the Company effective
July 1, 1998). As a result of this restatement, the Company's financial
statements include historical financial information for periods that precede
the date on which the Company commenced its own operations. See Note 3 to the
Consolidated Financial Statements of United Rentals, Inc. included in the
Annual Report on Form 10-K incorporated by reference herein. The other 98
acquisitions completed by the Company (through March 3, 1999) were accounted
for as "purchases," which means that the results of operations of the acquired
company are included in the Company's financial statements only from the date
of acquisition.
The following unaudited income statement and other financial data under the
column heading "Pro Forma" with respect to each period presented gives effect
to each acquisition completed by the Company after the beginning of the period
(through March 3, 1999) and the financing thereof, as if all such transactions
had occurred at the beginning of the period. The following unaudited balance
sheet data as of December 31, 1998 under the column heading "Pro Forma" gives
effect to each acquisition completed after such date (other than any
acquisition completed after March 3, 1999) and the financing of each such
acquisition, as if all such transactions had occurred on such date. The
following unaudited balance sheet data as of December 31, 1998 under the
column heading "Pro Forma As Adjusted" gives effect to: (1) each acquisition
completed after such date (other than any acquisition completed after March 3,
1999) and any related acquisition financing, (2) the issuance by Holdings
after such date of 300,000 shares of Series A Perpetual Convertible Preferred
Stock and 2,290,000 shares of Common Stock (and the contribution of the net
proceeds therefrom to the Company and the use of such proceeds to repay
outstanding indebtedness) and (3) the issuance by the Company after such date
of $250 million of 9% Senior Subordinated Notes due 2009 and the use of a
portion of the proceeds from such issuance to repay outstanding indebtedness
under the Credit Facility.
The pro forma data set forth below is provided for informational purposes.
However, this data may not be indicative of the actual results that the
Company would have had during any period presented, had any or all of the
acquisitions been completed as of the beginning of that period, or of any
future results.
35
<PAGE>
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
-------------------------------------------------- ------------
YEAR ENDED
YEAR ENDED DECEMBER 31, DECEMBER 31,
-------------------------------------------------- ------------
1994 1995 1996 1997 1998 1998
-------- -------- -------- -------- ---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenues.......... $222,326 $283,432 $354,478 $489,838 $1,220,282 $1,600,486
Total cost of
operations............. 153,769 194,234 241,445 340,546 796,834 1,037,458
-------- -------- -------- -------- ---------- ----------
Gross profit............ 68,557 89,198 113,033 149,292 423,448 563,028
Selling, general and
administrative
expenses............... 34,948 39,707 54,721 70,835 195,620 271,791
Merger-related
expenses............... 47,178 47,178
Non-rental depreciation
and amortization....... 5,107 6,916 9,387 13,424 34,684 47,462
Termination cost of
deferred compensation
agreements............. 20,290
-------- -------- -------- -------- ---------- ----------
Operating income........ 28,502 42,575 48,925 44,743 145,966 196,597
Interest expense........ 6,245 7,490 11,278 11,847 64,157 88,007
Other (income) expense,
net.................... (3,768) 1,304 (499) (2,021) (5,097) (10,290)
-------- -------- -------- -------- ---------- ----------
Income before provision
for income taxes and
extraordinary items.... 26,025 33,781 38,146 34,917 86,906 118,880
Provision for income
taxes.................. 523 484 420 29,508 46,971 58,776
-------- -------- -------- -------- ---------- ----------
Income before
extraordinary items.... 25,502 33,297 37,726 5,409 39,935 60,104
Extraordinary items, net
(1).................... 1,511 21,337
-------- -------- -------- -------- ---------- ----------
Net income.............. $ 25,502 $ 33,297 $ 37,726 $ 3,898 $ 18,598 $ 60,104
======== ======== ======== ======== ========== ==========
Pro forma provision for
income taxes before
extraordinary
items (2).............. $ 10,637 $ 13,715 $ 15,487 $ 14,176 $ 47,858
Pro forma income before
extraordinary items
(2).................... 15,388 20,066 22,659 20,741 39,048
OTHER FINANCIAL DATA:
EBITDA(3)............... $ 73,446 $101,438 $123,606 $160,554 $ 403,738 $ 515,272
EBITDA margin(4)........ 33.0% 35.8% 34.9% 32.8% 33.1% 32.2%
Interest expense(5)(6).. $ 6,245 $ 7,490 $ 11,278 $ 11,847 $ 64,157 $ 88,007
Depreciation and
amortization........... 44,944 58,863 74,681 95,521 $ 210,594 271,497
Ratio of EBITDA to
interest expense....... 11.8x 13.5x 11.0x 13.6x 6.3x 5.9x
Ratio of total debt to
EBITDA................. 1.5x 1.3x 1.7x 1.6x 3.3x 2.6x
Ratio of earnings to
fixed charges(7)....... 4.5x 4.8x 4.0x 3.4x 2.2x
</TABLE>
<TABLE>
<CAPTION>
HISTORICAL
----------------------------------------------
PRO FORMA
DECEMBER 31, PRO FORMA AS ADJUSTED
---------------------------------------------- ---------- -----------
1994 1995 1996 1997 1998 DECEMBER 31, 1998
-------- -------- -------- -------- ---------- ----------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents............ $ 2,956 $ 3,728 $ 2,906 $ 72,411 $ 20,410 $ 4,000 $ 249,269
Rental equipment, net... 136,731 182,082 235,055 461,026 1,143,006 1,169,500 1,169,500
Total assets............ 233,359 297,994 381,228 826,010 2,603,470 2,661,399 2,911,706
Total debt.............. 107,284 131,771 214,337 264,573 1,314,574 1,365,442 1,263,969
Stockholder's equity.... 77,600 104,392 105,420 446,388 1,021,352 1,021,352 1,373,132
</TABLE>
- --------
(1) We recorded an extraordinary item (net of income taxes) of $1.5 million in
1997 and an extraordinary item (net of income taxes) of $21.3 million in
1998. Such charge in 1997 resulted from the prepayment of certain debt by
U.S. Rentals. Such charge in 1998 resulted from the early extinguishment
of certain debt and primarily reflected prepayment penalties on certain
debt of U.S. Rentals.
(2) U.S. Rentals was taxed as a Subchapter S Corporation until its initial
public offering in February 1997, and another acquired company was taxed
as a Subchapter S Corporation until being acquired by us in 1998. In
general, the income or loss of a Subchapter S Corporation is passed
through to its owners rather than being subjected to taxes at the entity
level. Pro forma provision for income taxes before extraordinary items and
pro forma income before extraordinary items reflect a provision for income
taxes as if all such companies were liable for federal and state income
taxes as taxable corporate entities for all periods presented.
(3) EBITDA is defined as net income (excluding (i) non-operating income and
expense, (ii) a $20.3 million non-recurring charge incurred by U.S.
Rentals in 1997 arising from the termination of deferred compensation
agreements with certain executives and (iii) $47.2 million in merger-
related expenses in 1998 related to the three acquisitions accounted for
as poolings-of-interests, including the merger with U.S. Rentals) plus
interest expense, income taxes and depreciation and amortization. EBITDA
data is presented to provide additional information concerning our ability
to meet our future debt service obligations and capital expenditure and
working capital requirements. However, EBITDA is not a measure of
financial performance under generally accepted accounting principles.
Accordingly, EBITDA should not be considered an alternative to net income
or cash flows as indicators of our operating performance or liquidity.
(4) EBITDA margin is defined as EBITDA as a percentage of revenues.
(5) Interest expense excludes the amortization of deferred financing fees.
(6) We are a wholly owned subsidiary of Holdings. Although not legally
obligated to do so, we have made, and expect that we will continue to
make, cash distributions to Holdings in order to enable Holdings to pay
dividends on certain preferred securities that were issued by a subsidiary
trust of Holdings. These distributions are not reflected in our interest
expense.
(7) For purposes of determining the ratio of earnings to fixed charges, (i)
earnings consist of income before income taxes and extraordinary items
plus fixed charges and (ii) fixed charges consist of interest expense,
amortization of debt issuance costs, and the estimated interest portion of
rental expense.
36
<PAGE>
DESCRIPTION OF THE NOTES
The Exchange Notes offered hereby will be issued, and the Original Notes
were issued, under the Indenture, dated as of December 15, 1998, among the
Company, the Guarantors and State Street Bank & Trust Company, as trustee (the
"Trustee"). References to the "Notes" include both the Original Notes and the
Exchange Notes. Upon the effectiveness of the registration statement of which
this prospectus is a part, the Indenture will be subject to and governed by
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
The following summary of the material provisions of the Indenture and the
Notes does not purport to be complete and is subject to, and qualified in its
entirety by, reference to the provisions of the Indenture and the Notes,
including the definitions of certain terms contained therein and those terms
made part of the Indenture by reference to the Trust Indenture Act. The
definition of certain capitalized terms used in the following summary are set
forth below under "--Certain Definitions." All references to the Company in
the following summary refer exclusively to URI, and not to any of its
subsidiaries.
ORIGINAL NOTES AND EXCHANGE NOTES WILL REPRESENT SAME DEBT
The Exchange Notes will be issued solely in exchange for an equal principal
amount of Original Notes pursuant to the Exchange Offer. The Exchange Notes
will evidence the same debt as the Original Notes and both series of Notes
will be entitled to the benefits of the Indenture and treated as a single
class of debt securities. The terms of the Exchange Notes will be the same in
all material respects as the Original Notes except that (i) the Exchange Notes
will be registered under the Securities Act, and therefore, will not bear
legends restricting the transfer thereof and (ii) certain of the registration
rights, under the Registration Rights Agreement, relating to the Exchange
Notes are different than those relating to the Original Notes and, therefore,
the defaults under the Registration Rights Agreement that may require the
Company to pay additional interest will be different for the Exchange Notes
and the Original Notes. See "Registration Rights Agreement--Certain Provisions
Relating to Additional Interest" and "--Additional Interest."
If the Exchange Offer is consummated, holders of Original Notes who do not
exchange their Original Notes for Exchange Notes will vote together with
holders of the Exchange Notes for all relevant purposes under the Indenture.
Accordingly, all references herein to specified percentages in aggregate
principal amount of the outstanding Notes shall be deemed to mean, at any time
after the Exchange Offer is consummated, such percentages in aggregate
principal amount of the Original Notes and the Exchange Notes then
outstanding.
GENERAL
The Notes are unsecured senior subordinated obligations of the Company
limited to $300 million aggregate principal amount, and are guaranteed by each
of the Guarantors on a senior subordinated basis as described below. The Notes
may be issued only in registered form without coupons, in denominations of
$1,000 and integral multiples thereof. Principal of, premium, if any, and
interest on the Notes is payable, and the Notes will be transferable, at the
corporate trust office or agency of the Trustee in the City of New York
maintained for such purposes. In addition, interest may be paid at the option
of the Company by check mailed to the person entitled thereto as shown on the
security register. No service charge will be made for any transfer, exchange
or redemption of Notes, except in certain circumstances for any tax or other
governmental charge that may be imposed in connection therewith.
MATURITY, INTEREST AND PRINCIPAL
The Notes will mature on January 15, 2009. Interest on the Notes will accrue
at the rate of 9.25% per annum and will be payable semi-annually in arrears on
each January 15 and July 15, commencing July 15, 1999, to the holders of
record of Notes at the close of business on the January 1 and July 1,
respectively, immediately preceding such interest payment date. Interest on
the Notes will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the original date of issuance of
the Original Notes (the "Issue Date"). Interest will be computed on the basis
of a 360-day year comprised of twelve 30-day months.
37
<PAGE>
ADDITIONAL INTEREST
The interest rate on the Notes is subject to increase under certain
circumstances if the Company is not in compliance with its obligations under
the Registration Rights Agreement. See "Registration Rights Agreement--Certain
Provisions Relating to Additional Interest."
OPTIONAL REDEMPTION
Optional Redemption. The Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or after January 15, 2004, at the
redemption prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest, if any, to the redemption date, if
redeemed during the 12-month period beginning January 15 of the years
indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2004................................... 104.625%
2005................................... 103.083%
2006................................... 101.542%
2007 and thereafter.................... 100.000%
</TABLE>
In addition, at any time, or from time to time, on or prior to January 15,
2002, the Company may, at its option, use the net cash proceeds of one or more
Public Equity Offerings (as defined below) to redeem up to an aggregate of 35%
of the principal amount of the Notes originally issued, at a redemption price
equal to 109.25% of the principal amount thereof plus accrued and unpaid
interest, if any, thereon to the redemption date; provided that at least 65%
of the originally issued principal amount of Notes remains outstanding
immediately after the occurrence of such redemption. In order to effect the
foregoing redemption with the proceeds of any Public Equity Offering the
Company shall send a redemption notice to the Trustee not later than 90 days
after the consummation of any such Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering" means an
underwritten public offering of Common Stock pursuant to a registration
statement filed with the Commission in accordance with the Securities Act.
Selection and Notice. In the event that less than all of the Notes are to be
redeemed at any time, selection of such Notes for redemption will be made by
the Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes
are not then listed on a national securities exchange, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate (subject
to the rules of DTC); provided, however, that Notes shall only be redeemable
in principal amounts of $1,000 or an integral multiple of $1,000. Notice of
redemption shall be mailed by first-class mail at least 30 but not more than
60 days before the redemption date to each holder of Notes to be redeemed at
its registered address. If any Note is to be redeemed in part only, the notice
of redemption that relates to such Note shall state the portion of the
principal amount thereof to be redeemed. A new Note in a principal amount
equal to the unredeemed portion thereof will be issued in the name of the
holder thereof upon surrender for cancellation of the original Note. On and
after the redemption date, interest will cease to accrue on Notes or portions
thereof called for redemption, unless the Company defaults in the payment of
the redemption price.
SINKING FUND
The Notes will not be entitled to the benefit of any mandatory sinking fund.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Company shall be obligated
to make an offer to purchase (a "Change of Control Offer"), on a business day
(the "Change of Control Purchase Date") not more than 60
38
<PAGE>
nor less than 30 days following the occurrence of the Change of Control, all
of the then outstanding Notes tendered at a purchase price in cash (the
"Change of Control Purchase Price") equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, thereon to the Change
of Control Purchase Date. The Company shall be required to purchase all Notes
tendered into the Change of Control Offer and not withdrawn. The Change of
Control Offer is required to remain open for at least 20 business days.
In order to effect such Change of Control Offer, the Company shall, not
later than the 30th day after the Change of Control, mail to each holder of
Notes notice of the Change of Control Offer, which notice shall govern the
terms of the Change of Control Offer and shall state, among other things, the
procedures that holders of Notes must follow to accept the Change of Control
Offer.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
Purchase Price for all of the Notes that might be delivered by holders of
Notes seeking to accept the Change of Control Offer. In addition, there can be
no assurance that the Company's debt instruments will permit such offer to be
made. The agreements governing the Company's Senior Indebtedness do not permit
the Company to make a Change of Control Offer and, in order to make such
offer, the Company would be required to pay off such Senior Indebtedness in
full or seek a waiver from the lenders of such Senior Indebtedness to allow
the Company to make the Change of Control Offer. The occurrence of a Change of
Control is also an event of default under the agreements governing the Credit
Facility and the Term Loan and would entitle the lenders to accelerate all
amounts owing thereunder. Failure to make a Change of Control Offer, even if
prohibited by the Company's debt instruments, would constitute a default under
the Indenture. Pursuant to the indentures governing the Company's other
outstanding senior subordinated debt securities the Company is also required
to make an offer to repurchase those securities upon a Change of Control, and
failure by the Company to make such an offer is an event of default under
those indentures. See "Risk Factors--Possible Inability to Repurchase Notes
upon Change of Control." The Company shall not be required to make a Change of
Control Offer upon a Change of Control if a third party makes the Change of
Control Offer in the manner, at the times and otherwise in compliance with the
requirements applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
The definition of "Change of Control" excludes certain transactions by
Permitted Holders, including a direct or indirect sale, lease, exchange or
other transfer of all or substantially all of the assets of the Company to
Permitted Holders. The provisions of the Indenture may not afford Noteholders
protection in the event of a highly leveraged transaction, reorganization,
restructuring, merger or similar transaction involving the Company if such
transaction is not a transaction defined as a "Change of Control."
The use of the term "all or substantially all" in provisions of the
Indenture such as clause (b) of the definition of "Change of Control" and
under "--Consolidation, Merger, Sale of Assets, Etc." has no clearly
established meaning under New York law (which governs the Indenture) and has
been the subject of limited judicial interpretation in only a few
jurisdictions. Accordingly, there may be a degree of uncertainty in
ascertaining whether any particular transaction would involve a disposition of
"all or substantially all" of the assets of a person, which uncertainty should
be considered by prospective purchasers of Notes.
The Company will comply with Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder, to the extent such laws or
regulations are applicable, in the event that a Change of Control occurs and
the Company is required to purchase Notes as described above.
SUBORDINATION
The indebtedness evidenced by the Notes is subordinated in right of payment
to the prior payment in full in cash of all Senior Indebtedness. The Notes are
senior subordinated indebtedness of the Company ranking senior to all existing
and future Subordinated Indebtedness of the Company.
39
<PAGE>
The Indenture provides that in the event of any insolvency or bankruptcy
case or proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding in connection therewith, relating to the Company or
its assets, or any liquidation, dissolution or other winding-up of the
Company, whether voluntary or involuntary, or any assignment for the benefit
of creditors or other marshalling of assets or liabilities of the Company, all
Senior Indebtedness (including, in the case of Designated Senior Indebtedness,
any interest accruing subsequent to the filing of a petition for bankruptcy
regardless of whether such interest is an allowed
claim in the bankruptcy proceeding) must be paid in full in cash before any
payment is made on account of the principal of, premium, if any, or interest
on the Notes.
During the continuance of any default in the payment of principal, premium,
if any, or interest on any Senior Indebtedness, when the same becomes due, and
after receipt by the Trustee and the Company from representatives of holders
of such Senior Indebtedness of written notice of such default, no direct or
indirect payment (other than payments from trusts previously created pursuant
to the provisions described under "--Defeasance or Covenant Defeasance of
Indenture") by or on behalf of the Company of any kind of character (excluding
certain permitted equity or subordinated securities) may be made on account of
the principal of, premium, if any, or interest on, or the purchase, redemption
or other acquisition of, the Notes unless and until such default has been
cured or waived or has ceased to exist or such Senior Indebtedness shall have
been discharged or paid in full in cash, after which the Company shall resume
making any and all required payments in respect of the Notes, including any
missed payments.
In addition, during the continuance of any other default with respect to any
Designated Senior Indebtedness that permits, or would permit with the passage
of time or the giving of notice or both, the maturity thereof to be
accelerated (a "Non-payment Default") and upon the earlier to occur of (a)
receipt by the Trustee and the Company from the representatives of holders of
such Designated Senior Indebtedness of a written notice of such Non-payment
Default or (b) if such Non-payment Default results from the acceleration of
the maturity of the Notes, the date of such acceleration, no payment (other
than payments from trusts previously created pursuant to the provisions
described under "--Defeasance or Covenant Defeasance of Indenture") of any
kind or character (excluding certain permitted equity or subordinated
securities) may be made by the Company on account of the principal of,
premium, if any, or interest on, or the purchase, redemption, or other
acquisition of, the Notes for the period specified below (the "Payment
Blockage Period").
The Payment Blockage Period shall commence upon the receipt of notice of a
Non-payment Default by the Trustee and the Company from the representatives of
holders of Designated Senior Indebtedness or the date of the acceleration
referred to in clause (b) of the preceding paragraph, as the case may be, and
shall end on the earliest to occur of the following events: (i) 179 days have
elapsed since the receipt of such notice or the date of the acceleration
referred to in clause (b) of the preceding paragraph (provided the maturity of
such Designated Senior Indebtedness shall not theretofore have been
accelerated), (ii) such default is cured or waived or ceases to exist or such
Designated Senior Indebtedness is discharged or paid in full in cash, or (iii)
such Payment Blockage Period shall have been terminated by written notice to
the Company or the Trustee from the representatives of holders of Designated
Senior Indebtedness initiating such Payment Blockage Period, after which the
Company shall promptly resume making any and all required payments in respect
of the Notes, including any missed payments. Only one Payment Blockage Period
with respect to the Notes may be commenced within any 360 consecutive day
period. No Non-payment Default with respect to Designated Senior Indebtedness
that existed or was continuing on the date of the commencement of any Payment
Blockage Period will be, or can be, made the basis for the commencement of a
second Payment Blockage Period, whether or not within a period of 360
consecutive days, unless such default has been cured or waived for a period of
not less than 90 consecutive days. In no event will a Payment Blockage Period
extend beyond 179 days from the date of the receipt by the Trustee of the
notice or the date of the acceleration initiating such Payment Blockage Period
and there must be a 180 consecutive day period in any 360 day period during
which no Payment Blockage Period is in effect.
If the Company fails to make any payment on the Notes when due on account of
the payment blockage provisions referred to above, such failure would
constitute an Event of Default under the Indenture and would enable the
holders of the Notes to accelerate the maturity thereof. See "--Events of
Default."
40
<PAGE>
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company who are holders of Senior Indebtedness may recover
more, ratably, than the holders of the Notes, and funds which would be
otherwise payable to the holders of the Notes will be paid to the holders of
Senior Indebtedness to the extent necessary to pay the Senior Indebtedness in
full, and the Company may be unable to meet its obligations fully with respect
to the Notes.
The Indenture limits, but does not prohibit, the incurrence by the Company
of additional Indebtedness which is senior to the Notes and prohibits the
incurrence by the Company of Indebtedness which is subordinated in right of
payment to any other Indebtedness of the Company and senior in right of
payment to the Notes.
"Designated Senior Indebtedness" means (i) all Indebtedness under the Credit
Facility and the Term Loan and (ii) any other issue of Senior Indebtedness
which (a) at the time of the determination is equal to or greater than $25
million in aggregate principal amount and (b) is specifically designated by
the Company in the instrument evidencing such Senior Indebtedness as
"Designated Senior Indebtedness."
"Senior Indebtedness" means the principal of, premium, if any, and interest
on any Indebtedness of the Company, whether outstanding on the Issue Date or
thereafter created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Notes. Without limiting the
generality of the foregoing, (x) "Senior Indebtedness" shall include the
principal of, premium, if any, and interest on all obligations of every nature
of the Company from time to time owed to the lenders under the Credit Facility
and the Term Loan, including, without limitation, principal of and interest
on, and all fees, indemnities and expenses payable under the Credit Facility
and the Term Loan, and (y) in the case of Designated Senior Indebtedness,
"Senior Indebtedness" shall include interest accruing thereon subsequent to
the occurrence of any Event of Default specified in clause (vii) or (viii)
under "--Events of Default" relating to the Company, whether or not the claim
for such interest is allowed under any applicable Bankruptcy Code.
Notwithstanding the foregoing, "Senior Indebtedness" shall not include (a)
Indebtedness evidenced by the Notes, (b) Indebtedness that is expressly
subordinate or junior in right of payment to any Indebtedness of the Company,
including the Company's 9 1/2% Notes and 8.80% Notes, (c) Indebtedness which,
when incurred and without respect to any election under Section 1111(b) of
Title 11, United States Code, is without recourse to the Company, (d)
Indebtedness which is represented by Redeemable Capital Stock,
(e) Indebtedness for goods, materials or services purchased in the ordinary
course of business or Indebtedness consisting of trade payables or other
current liabilities (other than any current liabilities owing under the Credit
Facility, or the current portion of any long-term Indebtedness which would
constitute Senior Indebtedness but for the operation of this clause (e)), (f)
Indebtedness of or amounts owed by the Company for compensation to employees
or for services rendered to the Company, (g) any liability for federal, state,
local or other taxes owed or owing by the Company, (h) Indebtedness of the
Company to a Subsidiary of the Company or any other Affiliate of the Company
or any of such Affiliate's Subsidiaries, (i) that portion of any Indebtedness
which is incurred by the Company in violation of the Indenture and (j) amounts
owing under leases.
GUARANTEES
Each Guarantor has fully and unconditionally guaranteed, on a senior
subordinated basis, jointly and severally, to each holder and the Trustee, the
full and prompt performance of the Company's obligations under the Indenture
and the Notes, including the payment of principal of and interest on the
Notes. The Guarantees are subordinated to Guarantor Senior Indebtedness on the
same basis as the Notes are subordinated to Senior Indebtedness.
The obligations of each Guarantor are limited to the maximum amount which,
after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by
or on behalf of any other Guarantor in respect of the obligations of such
other Guarantor under its Guarantee or pursuant to its contribution
obligations under the Indenture, will result in the obligations of such
Guarantor under the Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law. See "Risk Factors--Fraudulent
Transfer Considerations."
41
<PAGE>
Each Guarantor that makes a payment or distribution under a Guarantee shall
be entitled to a contribution from each other Guarantor in an amount pro rata,
based on the net assets of each Guarantor, determined in accordance with GAAP.
Each Guarantor may consolidate with or merge into or sell its assets to the
Company or another Guarantor without limitation, or with other persons upon
the terms and conditions set forth in the Indenture. See "--Consolidation,
Merger, Sale of Assets, Etc." In the event all or substantially all of the
assets or the capital stock of a Guarantor is sold and the sale complies with
the provisions set forth in "--Certain Covenants--Limitation on Asset Sales,"
the Guarantor's Guarantee will be automatically discharged and released.
"Guarantor Senior Indebtedness" of a Guarantor means the principal of,
premium, if any, and interest on any Indebtedness of such Guarantor, whether
outstanding on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
Notes or such Guarantor's Guarantee. Without limiting the generality of the
foregoing, (x) "Guarantor Senior Indebtedness" shall include the principal of,
premium, if any, and interest on all obligations of every nature of such
Guarantor from time to time owed to the lenders under the Credit Facility and
Term Loan, including, without limitation, principal of and interest on, and
all fees, indemnities and expenses payable under the Credit Facility and Term
Loan, and (y) in the case of amounts owing under the Credit Facility and Term
Loan and guarantees of Designated Senior Indebtedness, "Guarantor Senior
Indebtedness" shall include interest accruing thereon subsequent to the
occurrence of any Event of Default specified in clause (vii) or (viii) under
"--Events of Default" relating to such Guarantor, whether or not the claim for
such interest is allowed under any applicable Bankruptcy Code. Notwithstanding
the foregoing, "Guarantor Senior Indebtedness" shall not include (a)
Indebtedness evidenced by the Notes or the Guarantees, (b) Indebtedness that
is expressly subordinate or junior in right of payment to any Indebtedness of
such Guarantor, including the Guarantor's guarantee of the Company's 9 1/2%
Notes and 8.80% Notes, (c) Indebtedness which, when incurred and without
respect to any election under Section 1111(b) of Title 11, United States Code,
is without recourse to such Guarantor, (d) Indebtedness which is represented
by Redeemable Capital Stock, (e) Indebtedness for goods, materials or services
purchased in the ordinary course of business or Indebtedness consisting of
trade payables or other current liabilities (other than any current
liabilities owing under the Credit Facility, or the current portion of any
long-term Indebtedness which would constitute Guarantor Senior Indebtedness
but for the operation of this clause (e)), (f) Indebtedness of or amounts owed
by such Guarantor for compensation to employees or for services rendered to
such Guarantor, (g) any liability for federal, state, local or other taxes
owed or owing by such Guarantor, (h) Indebtedness of such Guarantor to the
Company or a Subsidiary of the Company or any other Affiliate of the Company
or any of such Affiliate's Subsidiaries, (i) that portion of any Indebtedness
which is incurred by such Guarantor in violation of the Indenture and (j)
amounts owing under leases.
CERTAIN COVENANTS
The Indenture contains the following covenants, among others:
Limitation on Indebtedness. The Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or in any manner become directly or indirectly liable,
contingently or otherwise (in each case, to "incur"), for the payment of any
Indebtedness (including any Acquired Indebtedness) other than Permitted
Indebtedness; provided, however, that (i) the Company and any Guarantor will
be permitted to incur Indebtedness (including Acquired Indebtedness), and (ii)
a Restricted Subsidiary will be permitted to incur Acquired Indebtedness, if
in each case, after giving pro forma effect to (1) the incurrence of such
Indebtedness and (if applicable) the application of the net proceeds
therefrom, including to refinance other Indebtedness, as if such Indebtedness
were incurred at the beginning of the four full fiscal quarters immediately
preceding such incurrence, taken as one period; (2) the incurrence, repayment
or retirement of any other Indebtedness by the Company and its Restricted
Subsidiaries since the first day of such four-quarter period as if such
Indebtedness was incurred, repaid or retired at the beginning of such four-
quarter period (except that, in making such computation, the amount of
Indebtedness under any revolving credit facility shall be
42
<PAGE>
computed based upon the average daily balance of such Indebtedness during such
four-quarter period); and (3) any Asset Sale or Asset Acquisition occurring
since the first day of such four-quarter period (including to the date of
calculation) as if such acquisition or disposition occurred at the beginning
of such four-quarter period, the Consolidated Fixed Charge Coverage Ratio of
the Company is at least 2:1.
Limitation on Restricted Payments. The Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly:
(a) declare or pay any dividend or make any other distribution or payment
on or in respect of Capital Stock of the Company or any of its Restricted
Subsidiaries or make any payment to the direct or indirect holders (in
their capacities as such) of Capital Stock of the Company or any of its
Restricted Subsidiaries (other than dividends or distributions payable
solely in Capital Stock of the Company (other than Redeemable Capital
Stock) or in options, warrants or other rights to purchase Capital Stock of
the Company (other than Redeemable Capital Stock)) (other than the
declaration or payment of dividends or other distributions to the extent
declared or paid to the Company or any Restricted Subsidiary),
(b) purchase, redeem, defease or otherwise acquire or retire for value
any Capital Stock of the Company or any of its Restricted Subsidiaries or
any options, warrants, or other rights to purchase any such Capital Stock
(other than any such securities owned by the Company or a Restricted
Subsidiary),
(c) make any principal payment on, or purchase, defease, repurchase,
redeem or otherwise acquire or retire for value, prior to any scheduled
maturity, scheduled repayment, scheduled sinking fund payment or other
Stated Maturity, any Subordinated Indebtedness (other than any such
Subordinated Indebtedness owned by the Company or a Restricted Subsidiary),
or
(d) make any Investment (other than any Permitted Investment) in any
person
(such payments or Investments described in the preceding clauses (a), (b),
(c) and (d) are collectively referred to as "Restricted Payments"), unless,
after giving effect to the proposed Restricted Payment (the amount of any
such Restricted Payment, if other than cash, shall be the Fair Market Value
of the asset(s) proposed to be transferred by the Company or such
Restricted Subsidiary, as the case may be, pursuant to such Restricted
Payment), (A) no Default or Event of Default shall have occurred and be
continuing, (B) immediately after giving effect to such Restricted Payment,
the Company would be able to incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) (assuming a market rate of interest with
respect to such additional Indebtedness) and (C) the aggregate amount of
all Restricted Payments declared or made from and after the Issue Date
would not exceed the sum of:
(1) 50% of the aggregate Consolidated Net Income of the Company accrued
on a cumulative basis during the period beginning on May 22, 1998 and
ending on the last day of the fiscal quarter of the Company immediately
preceding the date of such proposed Restricted Payment (or, if such
aggregate cumulative Consolidated Net Income of the Company for such period
shall be a deficit, minus 100% of such deficit);
(2) the aggregate net cash proceeds received by the Company as capital
contributions to the Company after May 22, 1998 and which constitute
shareholders' equity of the Company in accordance with GAAP;
(3) the aggregate net cash proceeds received by the Company from the
issuance or sale of Capital Stock (excluding Redeemable Capital Stock) of
the Company to any person (other than to a Subsidiary of the Company) after
May 22, 1998;
(4) the aggregate net cash proceeds received by the Company from any
person (other than a Subsidiary of the Company) upon the exercise of any
options, warrants or rights to purchase shares of Capital Stock (other than
Redeemable Capital Stock) of the Company after May 22, 1998;
(5) the aggregate net cash proceeds received after May 22, 1998 by the
Company from any person (other than a Subsidiary of the Company) for debt
securities that have been converted or exchanged into or for Capital Stock
of the Company (other than Redeemable Capital Stock) (to the extent such
debt securities
43
<PAGE>
were originally sold for cash) plus the aggregate amount of cash received
by the Company (other than from a Subsidiary of the Company) in connection
with such conversion or exchange;
(6) in the case of the disposition or repayment of any Investment
constituting a Restricted Payment after May 22, 1998, an amount equal to
the lesser of the return of capital with respect to such Investment and the
initial amount of such Investment, in either case, less the cost of the
disposition of such Investment; and
(7) so long as the Designation thereof was treated as a Restricted
Payment made after May 22, 1998, with respect to any Unrestricted
Subsidiary that has been redesignated as a Restricted Subsidiary after the
Issue Date in accordance with "--Limitation on Designations of Unrestricted
Subsidiaries" below, the Fair Market Value of the Company's interest in
such Subsidiary, provided that such amount shall not in any case exceed the
Designation Amount with respect to such Restricted Subsidiary upon its
Designation,
minus:
the Designation Amount (measured as of the date of Designation) with
respect to any Restricted Subsidiary of the Company which has been
designated as an Unrestricted Subsidiary after May 22, 1998 in accordance
with "--Limitations on Designations of Unrestricted Subsidiaries" below.
For purposes of the preceding clause (C)(4), the value of the aggregate net
proceeds received by the Company upon the issuance of Capital Stock upon the
exercise of options, warrants or rights will be the net cash proceeds received
upon the issuance of such options, warrants or rights plus the incremental
amount received by the Company upon the exercise thereof.
None of the foregoing provisions will prohibit, so long, in the case of
clauses (ii), (iii), (v), (vi) and (vii) below, as there is no Default or
Event of Default continuing, (i) the payment of any dividend or distribution
within 60 days after the date of its declaration, if at the date of
declaration such payment would be permitted by the first paragraph of this
covenant; (ii) the redemption, repurchase or other acquisition or retirement
of any shares of any class of Capital Stock of the Company in exchange for, or
out of the net cash proceeds of, a substantially concurrent issue and sale of
other shares of Capital Stock of the Company (other than Redeemable Capital
Stock) to any person (other than to a Subsidiary of the Company); provided,
however, that such net cash proceeds are excluded from clause (C) of the first
paragraph of this covenant; (iii) any redemption, repurchase or other
acquisition or retirement of Subordinated Indebtedness by exchange for, or out
of the net cash proceeds of, a substantially concurrent issue and sale of (1)
Capital Stock (other than Redeemable Capital Stock) of the Company to any
person (other than to a Subsidiary of the Company); provided, however, that
any such net cash proceeds are excluded from clause (C) of the first paragraph
of this covenant; or (2) Indebtedness of the Company so long as such
Indebtedness is Subordinated Indebtedness which (w) has no scheduled principal
payment prior to the 91st day after the Maturity Date, (x) has an Average Life
to Stated Maturity greater than the remaining Average Life to Stated Maturity
of the Notes and (y) is subordinated to the Notes in the same manner and to
the same extent as the Subordinated Indebtedness so purchased, exchanged,
redeemed, acquired or retired; (iv) Investments constituting Restricted
Payments made as a result of the receipt of non-cash consideration from any
Asset Sale or other sale of assets or property made pursuant to and in
compliance with the Indenture; (v) payments to purchase Capital Stock of the
Company from officers of the Company, pursuant to agreements in effect as of
May 22, 1998, in an amount not to exceed $15 million in the aggregate; (vi)
payments (other than those covered by clause (v)) to purchase Capital Stock of
the Company from management or employees of the Company or any of its
Subsidiaries, or their authorized representatives, upon the death, disability
or termination of employment of such employees, in aggregate amounts under
this clause (vi) not to exceed $1 million in any fiscal year of the Company;
(vii) payments to Holdings in an amount sufficient to permit it to make
scheduled payments of interest on its 6 1/2% Convertible Subordinated
Debentures due August 1, 2028, issued to United Rentals Trust I; (viii)
payments to Holdings in an amount sufficient to enable Holdings to pay (1) its
taxes, legal, accounting, payroll, benefits and corporate overhead expenses
(including Commission, stock exchange and transfer agency fees and expenses),
and expenses of United Rentals Trust I payable by Holdings pursuant to the
terms of the trust agreement governing such trust, (2) trade, lease, payroll,
benefits and other
44
<PAGE>
obligations in respect of goods to be delivered to, services (including
management and consulting services) performed for and properties used by, the
Company and its Restricted Subsidiaries, (3) the purchase price for
Investments in other persons, provided that promptly following such Investment
either (x) such other person either becomes a Restricted Subsidiary or is
merged or consolidated with, or transfers or conveys all or substantially all
of its assets to, the Company or a Restricted Subsidiary, or (y) such
Investment would otherwise be permitted under the Indenture if made by the
Company and such Investment is contributed or transferred by Holdings to the
Company or a Restricted Subsidiary, and (4) reasonable and customary
incidental expenses (other than expenses described in the preceding clause
(1)) not to exceed $500,000 in any fiscal year of the Company; and (ix) the
payment of any dividend or distribution by a Restricted Subsidiary to the
holders of its Capital Stock on a pro rata basis. Any payments made pursuant
to clauses (i), (v), (vi) or (vii) of this paragraph shall be taken into
account in calculating the amount of Restricted Payments made from and after
May 22, 1998.
Limitation on Liens. The Company will not, and will not permit any of its
Restricted Subsidiaries to, create, incur, assume or suffer to exist any Liens
of any kind against or upon any of its property or assets, or any proceeds
therefrom, unless the Notes are equally and ratably secured (except that Liens
securing Subordinated Indebtedness shall be expressly subordinate to Liens
securing the Notes to the same extent such Subordinated Indebtedness is
subordinate to the Notes), except for (a) Liens securing Senior Indebtedness;
(b) Liens securing the Notes; (c) Liens in favor of the Company on assets of
any Subsidiary of the Company; (d) Liens securing Indebtedness which is
incurred to refinance Indebtedness which has been secured by a Lien permitted
under the Indenture and which has been incurred in accordance with the
provisions of the Indenture; provided, however, that such Liens do not extend
to or cover any property or assets of the Company or any its Restricted
Subsidiaries not securing the Indebtedness so refinanced; and (e) Permitted
Liens.
Disposition of Proceeds of Asset Sales. The Company will not, and will not
permit any of its Restricted Subsidiaries to, make any Asset Sale unless (a)
the Company or such Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the Fair Market
Value of the shares or assets sold or otherwise disposed of and (b) at least
75% of such consideration consists of cash or Cash Equivalents or Replacement
Assets; provided, however, that the amount of any liabilities (as shown on the
most recent balance sheet of the Company or such Restricted Subsidiary) of the
Company or such Restricted Subsidiary that are assumed by the transferee of
such assets and any securities, notes or other obligations received by the
Company or such Restricted Subsidiary from such transferee that are converted
within 30 days into cash or Cash Equivalents (to the extent of the cash or
Cash Equivalents received) shall be deemed to be cash for the purposes of this
provision; provided further, that the 75% limitation referred to in clause (b)
will not apply to any Asset Sale in which the cash or Cash Equivalent portion
of the consideration received therefrom, determined in accordance with the
foregoing provision, is equal to or greater than what the after-tax proceeds
would have been had such Asset Sale complied with the aforementioned 75%
limitation. To the extent that the Net Cash Proceeds of any Asset Sale are not
required to be applied to repay, and permanently reduce the commitments under,
Senior Indebtedness of the Company, or are not so applied, the Company or such
Restricted Subsidiary, as the case may be, may apply the Net Cash Proceeds
from such Asset Sale, within 360 days of such Asset Sale, to an investment in
properties and assets that replace the properties and assets that were the
subject of such Asset Sale or in properties and assets that are used or useful
in the business of the Company and its Restricted Subsidiaries conducted at
such time or in businesses reasonably related thereto or in Capital Stock of a
person, the principal portion of whose assets consist of such property or
assets ("Replacement Assets"). Any Net Cash Proceeds from any Asset Sale that
are neither used to repay, and permanently reduce the commitments under,
Senior Indebtedness nor invested in Replacement Assets within such 360-day
period constitute "Excess Proceeds" subject to disposition as provided below.
When the aggregate amount of Excess Proceeds equals or exceeds $10 million,
the Company shall make an offer to purchase (an "Asset Sale Offer"), from all
holders of the Notes, an aggregate principal amount of Notes equal to such
Excess Proceeds, at a price in cash equal to 100% of the outstanding principal
amount thereof plus accrued and unpaid interest, if any, to the purchase date
(the "Asset Sale Offer Price"). To the extent that the
45
<PAGE>
aggregate principal amount of Notes tendered pursuant to an Asset Sale Offer
is less than the Excess Proceeds, the Company may use such deficiency for
general corporate purposes. The Notes shall be purchased by the Company, at
the option of the holder thereof, in whole or in part in integral multiples of
$1,000, on a date that is not earlier than 30 days and not later than 60 days
from the date the notice is given to holders, or such later date as may be
necessary for the Company to comply with the requirements under the Exchange
Act. If the aggregate principal amount of Notes validly tendered and not
withdrawn by holders thereof exceeds the Excess Proceeds, Notes to be
purchased will be selected on a pro rata basis. Notwithstanding the foregoing,
if the Company is required to commence an Asset Sale Offer at any time when
securities of the Company ranking pari passu in right of payment with the
Notes are outstanding and the terms of such securities provide that a similar
offer must be made with respect to such other securities, then the Asset Sale
Offer for the Notes shall be made concurrently with such other offers and
securities of each issue will be accepted on a pro rata basis in proportion to
the aggregate principal amount of securities of each issue which the holders
thereof elect to have purchased. Any Asset Sale Offer will be made only to the
extent permitted under, and subject to prior compliance with, the terms of
agreements governing Senior Indebtedness. Upon completion of such Asset Sale
Offer, the amount of Excess Proceeds shall be reset to zero.
The Company will comply with Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder, to the extent such laws and
regulations are applicable, in the event that an Asset Sale occurs and the
Company is required to purchase Notes as described above.
Limitation on Preferred Stock of Restricted Subsidiaries. The Company will
not permit any Restricted Subsidiary to issue any Preferred Stock other than
Preferred Stock issued to the Company or a Wholly-Owned Restricted Subsidiary.
The Company will not sell, transfer or otherwise dispose of Preferred Stock
issued by a Restricted Subsidiary of the Company or permit a Restricted
Subsidiary to sell, transfer or otherwise dispose of Preferred Stock issued by
a Restricted Subsidiary, other than to the Company or a Wholly-Owned
Restricted Subsidiary. Notwithstanding the foregoing, nothing in such covenant
will prohibit Preferred Stock (other than Redeemable Capital Stock) issued by
a person prior to the time (A) such person becomes a Restricted Subsidiary of
the Company, (B) such person merges with or into a Restricted Subsidiary of
the Company or (C) a Restricted Subsidiary of the Company merges with or into
such person; provided that such Preferred Stock was not issued or incurred by
such person in anticipation of a transaction contemplated by subclause (A),
(B), or (C) above.
Limitation on Transactions with Affiliates. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly,
enter into any transaction or series of related transactions (including,
without limitation, the sale, transfer, disposition, purchase, exchange or
lease of assets, property or services) with, or for the benefit of, any of its
Affiliates (other than Restricted Subsidiaries), except (a) on terms that are
no less favorable to the Company or such Subsidiary, as the case may be, than
those which could have been obtained in a comparable transaction at such time
from persons who are not Affiliates of the Company, (b) with respect to a
transaction or series of related transactions involving aggregate payments or
value equal to or greater than $2 million, the Company shall have delivered an
officer's certificate to the Trustee certifying that such transaction or
transactions comply with the preceding clause (a), and (c) with respect to a
transaction or series of related transactions involving aggregate payments or
value equal to or greater than $5 million, such transaction or transactions
shall have been approved by a majority of the Disinterested Members of the
Board of Directors of the Company.
Notwithstanding the foregoing, the restrictions set forth in this covenant
shall not apply to (i) transactions with or among the Company and the
Restricted Subsidiaries, (ii) customary directors' fees, indemnification and
similar arrangements, consulting fees, employee salaries, bonuses or
employment agreements, compensation or employee benefit arrangements and
incentive arrangements with any officer, director or employee of the Company
or any Restricted Subsidiary entered into in the ordinary course of business,
(iii) any dividends made in compliance with "--Limitation on Restricted
Payments" above, (iv) loans and advances to officers, directors and employees
of the Company or any Restricted Subsidiary for travel, entertainment, moving
and other relocation expenses, in each case made in the ordinary course of
business, (v) the incurrence of intercompany
46
<PAGE>
Indebtedness which constitutes Permitted Indebtedness, (vi) transactions
pursuant to agreements in effect on the Issue Date, (vii) the purchase of
equipment for its Fair Market Value from Terex Corporation or its Affiliates
in the ordinary course of business of each of Terex Corporation and the
Company and (viii) transactions described in or permitted by clauses (vii) and
(viii) of the last paragraph under the caption "--Limitation on Restricted
Payments."
Limitation on Dividends and other Payment Restrictions Affecting Restricted
Subsidiaries. The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary of the Company to (a) pay dividends, in
cash or otherwise, or make any other distributions on or in respect of its
Capital Stock or any other interest or participation in, or measured by, its
profits, (b) pay any Indebtedness owed to the Company or any other Restricted
Subsidiary of the Company, (c) make loans or advances to the Company or any
other Restricted Subsidiary of the Company, (d) transfer any of its properties
or assets to the Company or any other Restricted Subsidiary of the Company or
(e) guarantee any Indebtedness of the Company or any other Restricted
Subsidiary of the Company, except for such encumbrances or restrictions
existing under or by reason of (i) applicable law or any applicable rule,
regulation or order, (ii) customary non-assignment provisions of any contract
or any lease governing a leasehold interest of the Company or any Restricted
Subsidiary of the Company, (iii) customary restrictions on transfers of
property subject to a Lien permitted under the Indenture, (iv) the Credit
Facility and the Term Loan as in effect on the Issue Date, (v) any agreement
or other instrument of a person acquired by the Company or any Restricted
Subsidiary of the Company in existence at the time of such acquisition (but
not created in contemplation thereof), which encumbrance or restriction is not
applicable to any person, or the properties or assets of any person, other
than the person, or the property or assets of the person, so acquired, (vi) an
agreement entered into for the sale or disposition of Capital Stock or assets
of a Restricted Subsidiary or an agreement entered into for the sale of
specified assets (in either case, so long as such encumbrance or restriction,
by its terms, terminates on the earlier of the termination of such agreement
or the consummation of such agreement and so long as such restriction applies
only to the Capital Stock or assets to be sold), (vii) any agreement in effect
on the Issue Date, (viii) the Indenture and the Guarantees, (ix) the
indentures governing the 9 1/2% Notes and the 8.80% Notes and (x) any
agreement that amends, extends, refinances, renews or replaces any agreement
described in the foregoing clauses, provided that the terms and conditions of
any such agreement are not materially less favorable to the holders of the
Notes with respect to such dividend and payment restrictions than those under
or pursuant to the agreement amended, extended, refinanced, renewed or
replaced.
Limitation on Designations of Unrestricted Subsidiaries. The Company may
designate after the Issue Date any Restricted Subsidiary as an "Unrestricted
Subsidiary" under the Indenture (a "Designation") only if:
(i) no Default shall have occurred and be continuing at the time of or
after giving effect to such Designation;
(ii) the Company would be permitted to make an Investment (other than a
Permitted Investment, except a Permitted Investment covered by clause (x)
of the definition thereof) at the time of Designation (assuming the
effectiveness of such Designation) pursuant to the first paragraph of "--
Limitation on Restricted Payments" above in an amount (the "Designation
Amount") equal to the Fair Market Value of the Company's interest in such
Subsidiary on such date calculated in accordance with GAAP; and
(iii) the Company would be permitted under the Indenture to incur $1.00
of additional Indebtedness (other than Permitted Indebtedness) pursuant to
the covenant described under "--Limitation on Indebtedness" at the time of
such Designation (assuming the effectiveness of such Designation).
In the event of any such Designation, the Company shall be deemed to have
made an Investment constituting a Restricted Payment pursuant to the covenant
"--Limitation on Restricted Payments" for all purposes of the Indenture in the
Designation Amount.
47
<PAGE>
The Company shall not, and shall not cause or permit any Restricted
Subsidiary to, at any time (x) provide credit support for or subject any of
its property or assets (other than the Capital Stock of any Unrestricted
Subsidiary) to the satisfaction of, any Indebtedness of any Unrestricted
Subsidiary (including any undertaking, agreement or instrument evidencing such
Indebtedness), (y) be directly or indirectly liable for any Indebtedness of
any Unrestricted Subsidiary or (z) be directly or indirectly liable for any
Indebtedness which provides that the holder thereof may (upon notice, lapse of
time or both) declare a default thereon or cause the payment thereof to be
accelerated or payable prior to its final scheduled maturity upon the
occurrence of a default with respect to any Indebtedness of any Unrestricted
Subsidiary (including any right to take enforcement action against such
Unrestricted Subsidiary), except any non-recourse guarantee given solely to
support the pledge by the Company or any Restricted Subsidiary of the Capital
Stock of an Unrestricted Subsidiary. All Subsidiaries of Unrestricted
Subsidiaries shall automatically be deemed to be Unrestricted Subsidiaries.
The Company may revoke any Designation of a Subsidiary as an Unrestricted
Subsidiary (a "Revocation") if:
(i) no Default shall have occurred and be continuing at the time of and
after giving effect to such Revocation; and
(ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at
such time, have been permitted to be incurred for all purposes of the
Indenture.
In the event the Company or a Restricted Subsidiary makes any Investment in
any person which was not previously a Subsidiary and such person thereby
becomes a Subsidiary, such person shall automatically be an Unrestricted
Subsidiary and the Company may designate such Subsidiary as a Restricted
Subsidiary only if it meets the foregoing requirements.
All Designations and Revocations must be evidenced by Board Resolutions of
the Company delivered to the Trustee certifying compliance with the foregoing
provisions.
Limitation on the Issuance of Subordinated Indebtedness. The Company will
not, directly or indirectly, incur any Indebtedness (including Acquired
Indebtedness) that is subordinate in right of payment to any Indebtedness of
the Company and senior in right of payment to the Notes.
Additional Subsidiary Guarantees. If the Company or any of its Restricted
Subsidiaries acquires, creates or designates another domestic Restricted
Subsidiary, then such newly acquired, created or designated Restricted
Subsidiary shall, within 30 days after the date of its acquisition, creation
or designation, whichever is later, execute and deliver to the Trustee a
supplemental indenture in form reasonably satisfactory to the Trustee pursuant
to which such Subsidiary shall unconditionally guarantee all of the Company's
obligations under the Notes and the Indenture on the terms set forth in the
Indenture. Thereafter, such Subsidiary shall be a Guarantor for all purposes
of the Indenture.
Reporting Requirements. For so long as the Notes are outstanding, whether or
not the Company is subject to Section 13(a) or 15(d) of the Exchange Act, or
any successor provision thereto, the Company shall file with the Commission
(if permitted by Commission practice and applicable law and regulations) the
annual reports, quarterly reports and other documents which the Company would
have been required to file with the Commission pursuant to such Section 13(a)
or 15(d) or any successor provision thereto if the Company were so subject,
such documents to be filed with the Commission on or prior to the respective
dates (the "Required Filing Dates") by which the Company would have been
required so to file such documents if the Company were so subject. If,
notwithstanding the preceding sentence, filing such documents by the Company
with the Commission is not permitted by Commission practice or applicable law
or regulations, the Company shall transmit (or cause to be transmitted) by
mail to all holders of Notes, as their names and addresses appear in the Note
register, copies of such documents within 15 days after the Required Filing
Date. In addition, for so long as any Notes remain outstanding, the Company
will furnish to the holders of Notes and to securities analysts and
prospective
48
<PAGE>
investors, upon their request, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act, and, to any beneficial
holder of Notes, if not obtainable from the Commission, information of the
type that would be filed with the Commission pursuant to the foregoing
provisions upon the request of any such holder.
CONSOLIDATION, MERGER, SALE OF ASSETS, ETC.
The Company will not, in any transaction or series of transactions, merge or
consolidate with or into, or sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of its properties and assets as
an entirety to, any person or persons, and the Company will not permit any of
its Restricted Subsidiaries to enter into any such transaction or series of
transactions if such transaction or series of transactions, in the aggregate,
would result in a sale, assignment, conveyance, transfer, lease or other
disposition of all or substantially all of the properties and assets of the
Company or the Company and its Restricted Subsidiaries, taken as a whole, to
any other person or persons, unless at the time and after giving effect
thereto (a) either (i) if the transaction or transactions is a merger or
consolidation, the Company or such Restricted Subsidiary, as the case may be,
shall be the surviving person of such merger or consolidation, or (ii) the
person formed by such consolidation or into which the Company, or such
Restricted Subsidiary, as the case may be, is merged or to which the
properties and assets of the Company or such Restricted Subsidiary, as the
case may be, substantially as an entirety, are transferred (any such surviving
person or transferee person being the "Surviving Entity") shall be a
corporation organized and existing under the laws of the United States of
America, any state thereof or the District of Columbia and shall expressly
assume by a supplemental indenture executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of the Company or such
Restricted Subsidiary, as the case may be, under the Notes, the Indenture and
the Registration Rights Agreement, and in each case, the Indenture shall
remain in full force and effect; (b) immediately after giving effect to such
transaction or series of transactions on a pro forma basis (including, without
limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of transactions),
no Default or Event of Default shall have occurred and be continuing; and (c)
except in the case of any merger of the Company with any wholly-owned
Subsidiary of the Company or any merger of Guarantors (and, in each case, no
other persons), the Company or the Surviving Entity, as the case may be, after
giving effect to such transaction or series of transactions on a pro forma
basis (including, without limitation, any Indebtedness incurred or anticipated
to be incurred in connection with or in respect of such transaction or series
of transactions), could incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) (assuming a market rate of interest with respect to
such additional Indebtedness).
In connection with any consolidation, merger, transfer, lease, assignment or
other disposition contemplated hereby, the Company shall deliver, or cause to
be delivered, to the Trustee, in form and substance reasonably satisfactory to
the Trustee, an officers' certificate and an opinion of counsel, each stating
that such consolidation, merger, transfer, lease, assignment or other
disposition and the supplemental indenture in respect thereof comply with the
requirements under the Indenture.
Upon any consolidation or merger, or any sale, assignment, conveyance,
transfer, lease or disposition of all or substantially all of the properties
and asset of the Company in accordance with the immediately preceding
paragraphs, the successor person formed by such consolidation or into which
the Company or a Restricted Subsidiary, as the case may be, is merged or the
successor person to which such sale, assignment, conveyance, transfer, lease
or disposition is made shall succeed to, and be substituted for, and may
exercise every right and power of the Company under the Notes, the Indenture
and/or the Registration Rights Agreement, as the case may be, with the same
effect as if such successor had been named as the Company in the Notes, the
Indenture and/or in the Registration Rights Agreement, as the case may be and,
except in the case of a lease, the Company or such Restricted Subsidiary shall
be released and discharged from its obligations thereunder.
The Indenture provides that for all purposes of the Indenture and the Notes
(including the provision of this covenant and the covenants described in "--
Certain Covenants--Limitation on Indebtedness," "--Limitation on Restricted
Payments," and "--Limitation on Liens"), Subsidiaries of any surviving person
shall, upon such
49
<PAGE>
transaction or series of related transactions, become Restricted Subsidiaries
unless and until designated Unrestricted Subsidiaries pursuant to and in
accordance with "--Limitation on Designations of Unrestricted Subsidiaries"
and all Indebtedness, and all Liens on property or assets, of the Company and
the Restricted Subsidiaries in existence immediately after such transaction or
series of related transactions will be deemed to have been incurred upon such
transaction or series of related transactions.
EVENTS OF DEFAULT
The following are "Events of Default" under the Indenture:
(i) default in the payment of the principal of or premium, if any, when
due and payable, on any of the Notes (at Stated Maturity, upon optional
redemption, required purchase or otherwise); or
(ii) default in the payment of an installment of interest on any of the
Notes, when due and payable, for 30 days; or
(iii) (a) default in the performance, or breach, of any covenant or
agreement of the Company under the Indenture (other than a default in the
performance or breach of a covenant or agreement which is specifically
dealt with in clauses (i), (ii) or (iv)) and such default or breach shall
continue for a period of 30 days after written notice has been given, by
certified mail, (x) to the Company by the Trustee or (y) to the Company and
the Trustee by the holders of at least 25% in aggregate principal amount of
the outstanding Notes; or
(iv) (a) there shall be a default in the performance or breach of the
provisions of "--Consolidation, Merger and Sale of Assets, Etc."; (b) the
Company shall have failed to make or consummate an Asset Sale Offer in
accordance with the provisions of the Indenture described under "--Certain
Covenants--Dispositions of Proceeds of Asset Sales"; or (c) the Company
shall have failed to make or consummate a Change of Control Offer in
accordance with the provisions of the Indenture described under "--Change
of Control"; or
(v) default or defaults under one or more agreements, instruments,
mortgages, bonds, debentures or other evidences of Indebtedness under which
the Company or any Restricted Subsidiary of the Company then has
outstanding Indebtedness in excess of $15 million, individually or in the
aggregate, and either (a) such Indebtedness is already due and payable in
full or (b) such default or defaults have resulted in the acceleration of
the maturity of such Indebtedness; or
(vi) one or more judgments, orders or decrees of any court or regulatory
or administrative agency of competent jurisdiction for the payment of money
in excess of $15 million, either individually or in the aggregate, shall be
entered against the Company or any Restricted Subsidiary of the Company or
any of their respective properties and shall not be discharged and there
shall have been a period of 60 days after the date on which any period for
appeal has expired and during which a stay of enforcement of such judgment,
order or decree, shall not be in effect; or
(vii) the entry of a decree or order by a court having jurisdiction in
the premises (A) for relief in respect of the Company or any Significant
Subsidiary in an involuntary case or proceeding under the Federal
Bankruptcy Code or any other federal, state or foreign bankruptcy,
insolvency, reorganization or similar law or (B) adjudging the Company or
any Significant Subsidiary bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or composition of or in respect of
the Company or any Significant Subsidiary under the Federal Bankruptcy Code
or any other similar federal, state or foreign law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Company or any Significant Subsidiary or of any
substantial part of any of their properties, or ordering the winding up or
liquidation of any of their affairs, and the continuance of any such decree
or order unstayed and in effect for a period of 60 consecutive days; or
50
<PAGE>
(viii) the institution by the Company or any Significant Subsidiary of a
voluntary case or proceeding under the Federal Bankruptcy Code or any other
similar federal, state or foreign law or any other case or proceedings to
be adjudicated a bankrupt or insolvent, or the consent by the Company or
any Significant Subsidiary to the entry of a decree or order for relief in
respect of the Company or any Significant Subsidiary in any involuntary
case or proceeding under the Federal Bankruptcy Code or any other similar
federal, state or foreign law or to the institution of bankruptcy or
insolvency proceedings against the Company or any Significant Subsidiary,
or the filing by the Company or any Significant Subsidiary of a petition or
answer or consent seeking reorganization or relief under the Federal
Bankruptcy Code or any other similar federal, state or foreign law, or the
consent by it to the filing of any such petition or to the appointment of
or taking possession by a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or other similar official) of any of the Company
or any Significant Subsidiary or of any substantial part of its property,
or the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as
they become due or the taking of corporate action by the Company or any
Significant Subsidiary in furtherance of any such action; or
(ix) any of the Guarantees ceases to be in full force and effect or any
of the Guarantees is declared to be null and void and unenforceable or any
of the Guarantees is found to be invalid or any of the Guarantors denies
its liability under its Guarantee (other than by reason of release of a
Guarantor in accordance with the terms of the Indenture).
If an Event of Default (other than those covered by clause (vii) or (viii)
above with respect to the Company) shall occur and be continuing, the Trustee,
by notice to the Company and the representatives of the holders of Designated
Senior Indebtedness, or the holders of at least 25% in aggregate principal
amount of the Notes then outstanding, by notice to the Trustee, the Company
and the representatives of the holders of Designated Senior Indebtedness, may
declare the principal of, premium, if any, and accrued and unpaid interest, if
any, on all of the outstanding Notes due and payable immediately, upon which
declaration, all amounts payable in respect of the Notes shall be due and
payable as of the date which is five business days after the giving of such
notice to the representative of the holders of Designated Senior Indebtedness.
If an Event of Default specified in clause (vii) or (viii) above with respect
to the Company occurs and is continuing, then the principal of, premium, if
any, and accrued and unpaid interest, if any, on all the outstanding Notes
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any holder of Notes.
After a declaration of acceleration under the Indenture, but before a
judgment or decree for payment of the money due has been obtained by the
Trustee, the holders of a majority in aggregate principal amount of the
outstanding Notes, by written notice to the Company and the Trustee, may
rescind such declaration if (a) the Company has paid or deposited with the
Trustee a sum sufficient to pay (i) all sums paid or advanced by the Trustee
under the Indenture and the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, (ii) all overdue interest
on all Notes, (iii) the principal of and premium, if any, on any Notes which
have become due otherwise than by such declaration of acceleration and
interest thereon at the rate borne by the Notes, and (iv) to the extent that
payment of such interest is lawful, interest upon overdue interest and overdue
principal at the rate borne by the Notes which has become due otherwise than
by such declaration of acceleration; (b) the rescission would not conflict
with any judgment or decree of a court of competent jurisdiction; and (c) all
Events of Default, other than the non-payment of principal of, premium, if
any, and interest on the Notes that has become due solely by such declaration
of acceleration, have been cured or waived.
The holders of not less than a majority in aggregate principal amount of the
outstanding Notes may on behalf of the holders of all the Notes waive any past
defaults under the Indenture, except a default in the payment of the principal
of, premium, if any, or interest on any Note, or in respect of a covenant or
provision which under the Indenture cannot be modified or amended without the
consent of the holder of each Note outstanding.
No holder of any of the Notes has any right to institute any proceeding with
respect to the Indenture or any remedy thereunder, unless the holders of at
least 25% in aggregate principal amount of the outstanding Notes
51
<PAGE>
have made written request, and offered reasonable indemnity, to the Trustee to
institute such proceeding as Trustee under the Notes and the Indenture, the
Trustee has failed to institute such proceeding within 45 days after receipt
of such notice and the Trustee, within such 45-day period, has not received
directions inconsistent with such written request by holders of a majority in
aggregate principal amount of the outstanding Notes. Such limitations do not
apply, however, to a suit instituted by a holder of a Note for the enforcement
of the payment of the principal of, premium, if any, or interest on such Note
on or after the respective due dates expressed in such Note.
During the existence of an Event of Default, the Trustee is required to
exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise thereof as a prudent person
would exercise under the circumstances in the conduct of such person's own
affairs. Subject to the provisions of the Indenture relating to the duties of
the Trustee, whether or not an Event of Default shall occur and be continuing,
the Trustee under the Indenture is not under any obligation to exercise any of
its rights or powers under the Indenture at the request or direction of any of
the holders unless such holders shall have offered to the Trustee reasonable
security or indemnity. Subject to certain provisions concerning the rights of
the Trustee, the holders of a majority in aggregate principal amount of the
outstanding Notes have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee under the Indenture.
If a Default or an Event of Default occurs and is continuing and is known to
the Trustee, the Trustee shall mail to each holder of the Notes notice of the
Default or Event of Default within 30 days after obtaining knowledge thereof.
Except in the case of a Default or an Event of Default in payment of principal
of, premium, if any, or interest on any Notes, the Trustee may withhold the
notice to the holders of such Notes if a committee of its trust officers in
good faith determines that withholding the notice is in the interest of the
Noteholders.
The Company is required to furnish to the Trustee annual and quarterly
statements as to the performance by the Company of its obligations under the
Indenture and as to any default in such performance. The Company is also
required to notify the Trustee within five days of any event which is, or
after notice or lapse of time or both would become, an Event of Default.
NO LIABILITY FOR CERTAIN PERSONS
No director, officer, employee or stockholder of Holdings or the Company,
nor any director, officer or employee of any Guarantor, as such, will have any
liability for any obligations of the Company or any Guarantor under the Notes,
the Guarantees or the Indenture based on or by reason of such obligations or
their creation. Each holder by accepting a Note waives and releases all such
liability. The foregoing waiver and release are an integral part of the
consideration for the issuance of the Notes. Such waiver may not be effective
to waive liabilities under the federal securities laws.
DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
The Company may, at its option and at any time, terminate the obligations of
the Company with respect to the outstanding Notes ("defeasance") to the extent
set forth below. Such defeasance means that the Company shall be deemed to
have paid and discharged the entire Indebtedness represented by the
outstanding Notes, except for (i) the rights of holders of outstanding Notes
to receive payment in respect of the principal of, premium, if any, and
interest on such Notes when such payments are due, (ii) the Company's
obligations to issue temporary Notes, register the transfer or exchange of any
Notes, replace mutilated, destroyed, lost or stolen Notes and maintain an
office or agency for payments in respect of the Notes, (iii) the rights,
powers, trusts, duties and immunities of the Trustee, and (iv) the defeasance
provisions of the Indenture. In addition, the Company may, at its option and
at any time, elect to terminate the obligations of the Company with respect to
certain covenants that are set forth in the Indenture, some of which are
described under "--Certain Covenants" above, and any subsequent failure to
comply with such obligations shall not constitute a Default or an Event of
Default with respect to the Notes ("covenant defeasance").
52
<PAGE>
In order to exercise either defeasance or covenant defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the holders of the Notes, cash in United States dollars, U.S. Government
Obligations (as defined in the Indenture), or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm
of independent public accountants, to pay the principal of, premium, if any,
and interest on the outstanding Notes to redemption or maturity (except lost,
stolen or destroyed Notes which have been replaced or paid); (ii) the Company
shall have delivered to the Trustee an opinion of counsel to the effect that
the holders of the outstanding Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such
defeasance or covenant defeasance had not occurred (in the case of defeasance,
such opinion must refer to and be based upon a ruling of the Internal Revenue
Service or a change in applicable federal income tax laws); (iii) no Default
or Event of Default shall have occurred and be continuing on the date of such
deposit (other than a default under the Indenture caused by the incurrence of
Indebtedness to make such deposit); (iv) such defeasance or covenant
defeasance shall not cause the Trustee to have a conflicting interest with
respect to any securities of the Company; (v) such defeasance or covenant
defeasance shall not result in a breach or violation of, or constitute a
default under, any agreement or instrument to which the Company is a party or
by which it is bound (other than a default under the Indenture caused by the
incurrence of Indebtedness to make such deposit); (vi) the Company shall have
delivered to the Trustee an opinion of counsel to the effect that after the
91st day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally; (vii) the Company shall have
delivered to the Trustee an officers' certificate stating that the deposit was
not made by the Company with the intent of preferring the holders of the Notes
over the other creditors of the Company with the intent of hindering, delaying
or defrauding creditors of the Company or others; (viii) no event or condition
shall exist that would prevent the Company from making payments of the
principal of, premium, if any, and interest on the Notes on the date of such
deposit or at any time ending on the 91st day after the date of such deposit;
and (ix) the Company shall have delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that all conditions
precedent under the Indenture to either defeasance or covenant defeasance, as
the case may be, have been complied with.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (i) either (a) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or repaid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust) have been delivered to the Trustee for
cancellation or (b) all Notes not theretofore delivered to the Trustee for
cancellation (except lost, stolen or destroyed Notes which have been replaced
or paid) have become due and payable and the Company has irrevocably deposited
or caused to be deposited with the Trustee funds in an amount sufficient to
pay and discharge the entire Indebtedness on the Notes not theretofore
delivered to the Trustee for cancellation, for principal of, premium, if any,
and interest on the Notes to the date of deposit together with irrevocable
instructions from the Company directing the Trustee to apply such funds to the
payment thereof at maturity or redemption, as the case may be; (ii) the
Company has paid all other sums payable under the Indenture by the Company;
and (iii) the Company has delivered to the Trustee an officers' certificate
and an opinion of counsel stating that all conditions precedent under the
Indenture relating to the satisfaction and discharge of the Indenture have
been complied with.
AMENDMENTS AND WAIVERS
From time to time, the Company, when authorized by a resolution of its Board
of Directors, and the Trustee may, without the consent of the holders of any
outstanding Notes, amend, waive or supplement the Indenture or the Notes for
certain specified purposes, including, among other things, curing ambiguities,
defects or
53
<PAGE>
inconsistencies, qualifying, or maintaining the qualification of, the
Indenture under the Trust Indenture Act, or making any change that does not
adversely affect the rights of any holder of Notes. Other amendments and
modifications of the Indenture or the Notes may be made by the Company and the
Trustee with the consent of the holders of not less than a majority of the
aggregate principal amount of the outstanding Notes; provided, however, that
no such modification or amendment may, without the consent of the holder of
each outstanding Note affected thereby, (i) reduce the principal amount of,
extend the fixed maturity of or alter the redemption provisions of, the Notes,
(ii) change the currency in which any Notes or any premium or the interest
thereon is payable, (iii) reduce the percentage in principal amount of
outstanding Notes that must consent to an amendment, supplement or waiver or
consent to take any action under the Indenture or the Notes, (iv) impair the
right to institute suit for the enforcement of any payment on or with respect
to the Notes, (v) waive a default in payment with respect to the Notes, (vi)
amend, change or modify the obligation of the Company to make and consummate a
Change of Control Offer in the event of a Change of Control or make and
consummate the offer with respect to any Asset Sale or modify any of the
provisions or definitions with respect thereto, (vii) reduce or change the
rate or time for payment of interest on the Notes or (viii) to modify or
change any provision of the Indenture affecting the ranking of the Notes in a
manner adverse to the holders of the Notes.
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee thereunder will perform only such duties as are
specifically set forth in the Indenture. If an Event of Default has occurred
and is continuing, the Trustee will exercise such rights and powers vested in
it under the Indenture and use the same degree of care and skill in its
exercise as a prudent person would exercise under the circumstances in the
conduct of such person's own affairs.
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain limitations on the rights of the Trustee thereunder,
should it become a creditor of the Company, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of
any such claims, as security or otherwise. The Trustee is permitted to engage
in other transactions; provided, however, that if it acquires any conflicting
interest (as defined in such Act) it must eliminate such conflict or resign.
GOVERNING LAW
The Indenture and the Notes are governed by the laws of the State of New
York, without regard to the principles of conflicts of law.
CERTAIN DEFINITIONS
"8.80% Notes" means the $205 million aggregate principal amount of 8.80%
Senior Subordinated Notes due 2008 issued by the Company under the indenture,
dated as of August 12, 1998, among the Company, as issuer, its United States
subsidiaries, as guarantors, and the Trustee.
"9 1/2% Notes" means the $200 million aggregate principal amount of 9 1/2%
Senior Subordinated Notes due 2008 issued by the Company under the indenture,
dated as of May 22, 1998, among the Company, as issuer, its United States
subsidiaries, as guarantors, and the Trustees.
"Acquired Indebtedness" means Indebtedness of a person (a) assumed in
connection with an Asset Acquisition from such person or (b) existing at the
time such person becomes a Subsidiary of any other person and not incurred in
connection with, or in contemplation of, such Asset Acquisition or such person
becoming a Subsidiary.
"Affiliate" means, with respect to any specified person, (i) any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person, (ii) any other
54
<PAGE>
person that owns, directly or indirectly, 10% or more of such specified
person's Capital Stock, or (iii) any officer or director of (A) any such
specified person, (B) any Subsidiary of such specified person or (C) any
person described in clauses (i) or (ii) above.
"Asset Acquisition" means (a) an Investment by the Company or any Restricted
Subsidiary of the Company in any other person pursuant to which such person
shall become a Restricted Subsidiary of the Company or any Restricted
Subsidiary of the Company, or shall be merged with or into the Company or any
Restricted Subsidiary of the Company, or (b) the acquisition by the Company or
any Restricted Subsidiary of the Company of the assets of any person which
constitute all or substantially all of the assets of such person, any division
or line of business of such person or any other properties or assets of such
person other than in the ordinary course of business.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition by the Company or any Restricted Subsidiary of the Company to any
person other than the Company or a Restricted Subsidiary of the Company, of
(a) any Capital Stock of any Restricted Subsidiary of the Company; (b) all or
substantially all of the properties and assets of any division or line of
business of the Company or any Restricted Subsidiary of the Company; or (c)
any other properties or assets of the Company or any Restricted Subsidiary of
the Company, other than (i) sales of obsolete, damaged or used equipment or
other equipment or inventory sales in the ordinary course of business, (ii)
sales of assets in one or a series of related transactions for an aggregate
consideration of less than $1 million, (iii) sales of Permitted Investments,
and (iv) sales of accounts receivable for financing purposes. For the purposes
of this definition, the term "Asset Sale" shall not include any sale,
issuance, conveyance, transfer, lease or other disposition of properties or
assets that is governed by the provisions described under "--Consolidation,
Merger, Sale of Assets, Etc."
"Average Life to Stated Maturity" means, with respect to any Indebtedness,
as at any date of determination, the quotient obtained by dividing (i) the sum
of the products of (a) the number of years from such date to the date or dates
of each successive scheduled principal payment (including, without limitation,
any sinking fund requirements) of such Indebtedness and (b) the amount of each
such principal payment by (ii) the sum of all such principal payments.
"Board of Directors" means the board of directors of a company or its
equivalent, including managers of a limited liability company, general
partners of a partnership or trustees of a business trust, or any duly
authorized committee thereof.
"Capital Stock" means, with respect to any person, any and all shares,
interests, participations, rights in or other equivalents (however designated)
of such person's capital stock or equity participations, and any rights (other
than debt securities convertible into capital stock), warrants or options
exchangeable for or convertible into such capital stock and, including,
without limitation, with respect to partnerships, limited liability companies
or business trusts, ownership interests (whether general or limited) and any
other interest or participation that confers on a person the right to receive
a share of the profits and losses of, or distributions of assets of, such
partnerships, limited liability companies or business trusts.
"Capitalized Lease Obligation" means any obligation under a lease of (or
other agreement conveying the right to use) any property (whether real,
personal or mixed) that is required to be classified and accounted for as a
capital lease obligation under GAAP, and, for the purpose of the Indenture,
the amount of such obligation at any date shall be the capitalized amount
thereof at such date, determined in accordance with GAAP.
"Cash Equivalents" means, at any time, (a) any evidence of Indebtedness,
maturing not more than one year after such time, issued or guaranteed by the
United States Government or any agency thereof, (b) commercial paper, maturing
not more than one year from the date of issue, or corporate demand notes, in
each case rated at least A-1 by Standard & Poor's Ratings Group or P-1 by
Moody's Investors Service, Inc., (c) any certificate of deposit (or time
deposits represented by such certificates of deposit) or bankers acceptance,
maturing not more
55
<PAGE>
than one year after such time, or overnight Federal Funds transactions that
are issued or sold by a commercial banking institution that is a member of the
Federal Reserve System and has a combined capital and surplus and undivided
profits of not less than $500 million, (d) any repurchase agreement entered
into with any commercial banking institution of the stature referred to in
clause (c) which (i) is secured by a fully perfected security interest in any
obligation of the type described in any of clauses (a) through (c) and (ii)
has a market value at the time such repurchase agreement is entered into of
not less than 100% of the repurchase obligation of such commercial banking
institution thereunder, (e) investments in short term asset management
accounts managed by any bank party to the Credit Facility which are invested
in indebtedness of any state or municipality of the United States or of the
District of Columbia and which are rated under one of the two highest ratings
then obtainable from Standard & Poor's Ratings Group or by Moody's Investors
Service, Inc. or investments of the types described in clauses (a) through (d)
above, and (f) investments in funds investing primarily in investments of the
types described in clauses (a) through (e) above.
"Change of Control" means the occurrence of any of the following events: (a)
any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act), excluding Permitted Holders, is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that a person shall be deemed to have "beneficial ownership" of all securities
that such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of
more than 50% of the total Voting Stock of the Company or Holdings; provided,
however, that a "Change of Control" shall not be deemed to have occurred under
this subclause (a) unless the Permitted Holders do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors of the Company or Holdings; (b)
the Company or Holdings consolidates with, or merges with or into, another
person or sells, assigns, conveys, transfers, leases or otherwise disposes of
all or substantially all of its assets to any person, or any person
consolidates with, or merges with or into, the Company (or Holdings), in any
such event pursuant to a transaction in which the outstanding Voting Stock of
the Company or Holdings is converted into or exchanged for cash, securities or
other property, other than any such transaction where (i) the outstanding
Voting Stock of the Company or Holdings is converted into or exchanged for
Voting Stock (other than Redeemable Capital Stock) of the surviving or
transferee corporation and (ii) immediately after such transaction no "person"
or "group" (as such terms are used in Section 13(d) and 14(d) of the Exchange
Act), excluding Permitted Holders, is the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 50% of the
total Voting Stock of the surviving or transferee corporation; (c) during any
consecutive two-year period, individuals who at the beginning of such period
constituted the Board of Directors of the Company or Holdings (together with
any new directors whose election by such Board of Directors or whose
nomination for election by the stockholders of the Company or Holdings was
approved by a vote of 66 2/3% of the directors then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors of the Company or Holdings
then in office; or (d) the Company is liquidated or dissolved or adopts a plan
of liquidation.
"Common Stock" means the common stock, par value $.01 per share, of
Holdings.
"Company" means United Rentals (North America), Inc., a Delaware
corporation.
"Consolidated Cash Flow Available for Fixed Charges" means, with respect to
any person for any period, (i) the sum of, without duplication, the amounts
for such period, taken as a single accounting period, of (a) Consolidated Net
Income, (b) Consolidated Non-cash Charges, (c) Consolidated Interest Expense,
(d) Consolidated Income Tax Expense (other than income tax expense (either
positive or negative) attributable to extraordinary gains or losses), (e) one-
third of Consolidated Rental Payments and (f) if any Asset Sale or Asset
Acquisition shall have occurred since the first day of any four quarter period
for which "Consolidated Cash Flow Available for Fixed Charges" is being
calculated (including to the date of calculation) (A) the cost of any
56
<PAGE>
compensation, remuneration or other benefit paid or provided to any employee,
consultant, Affiliate or equity owner of the entity involved in any such Asset
Acquisition to the extent such costs are eliminated or reduced (or public
announcement has been made of the intent to eliminate or reduce such costs)
prior to the date of such calculation and not replaced and (B) the amount of
any reduction in general, administrative or overhead costs of the entity
involved in any such Asset Acquisition, to the extent such amounts under
clauses (A) and (B) would be permitted to be eliminated in a pro forma income
statement prepared in accordance with Rule 11-02 of Regulation S-X, less
(ii)(x) non-cash items increasing Consolidated Net Income and (y) all cash
payments during such period relating to non-cash charges that were added back
in determining Consolidated Cash Flow Available for Fixed Charges in the most
recent Four Quarter Period.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
person, the ratio of the aggregate amount of Consolidated Cash Flow Available
for Fixed Charges of such person for the four full fiscal quarters, treated as
one period, for which financial information in respect thereof is available
immediately preceding the date of the transaction (the "Transaction Date")
giving rise to the need to calculate the Consolidated Fixed Charge Coverage
Ratio (such four full fiscal quarter period being referred to herein as the
"Four Quarter Period") to the aggregate amount of Consolidated Fixed Charges
of such person for the Four Quarter Period. In calculating "Consolidated Fixed
Charges" for purposes of determining the denominator (but not the numerator)
of this "Consolidated Fixed Charge Coverage Ratio," (i) interest on
outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter shall
be deemed to have accrued at a fixed rate per annum equal to the rate of
interest on such Indebtedness in effect on the Transaction Date; and (ii) if
interest on any Indebtedness actually incurred on the Transaction Date may
optionally be determined at an interest rate based upon a factor of a prime or
similar rate, a eurocurrency interbank offered rate, or other rates, then the
interest rate in effect on the Transaction Date will be deemed to have been in
effect during the Four Quarter Period. If such person or any of its Restricted
Subsidiaries directly or indirectly guarantees Indebtedness of a third person,
the above clause shall give effect to the incurrence of such guaranteed
Indebtedness as if such person or such Subsidiary had directly incurred or
otherwise assumed such guaranteed Indebtedness.
"Consolidated Fixed Charges" means, with respect to any person for any
period, the sum of, without duplication, the amounts for such period of (i)
Consolidated Interest Expense, (ii) the aggregate amount of dividends and
other distributions paid or accrued during such period in respect of
Redeemable Capital Stock of such person and its Restricted Subsidiaries on a
consolidated basis and (iii) one-third of Consolidated Rental Payments.
"Consolidated Income Tax Expense" means, with respect to any person for any
period, the provision for federal, state, local and foreign income taxes of
such person and its Restricted Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any person for any
period, without duplication, the sum of (i) the interest expense of such
person and its Restricted Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP, including, without limitation, (a)
any amortization of debt discount, (b) the net cost under Interest Rate
Protection Obligations (including any amortization of discounts), (c) the
interest portion of any deferred payment obligation, (d) all commissions,
discounts and other fees and charges owed with respect to letters of credit,
bankers' acceptance financing or similar facilities and (e) all accrued
interest and (ii) the interest component of Capitalized Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by such person and its
Restricted Subsidiaries during such period as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any person, for any period,
the consolidated net income (or loss) of such person and its Restricted
Subsidiaries for such period as determined in accordance with GAAP, adjusted,
to the extent included in calculating such net income, by excluding, without
duplication, (i) all extraordinary gains or losses (net of fees and expenses
relating to the transaction giving rise thereto), (ii) the portion of net
income of such person and its Restricted Subsidiaries allocable to minority
interests in
57
<PAGE>
unconsolidated persons or to Investments in Unrestricted Subsidiaries to the
extent that cash dividends or distributions have not actually been received by
such person or one of its Restricted Subsidiaries, (iii) net income (or loss)
of any person combined with such person or one of its Restricted Subsidiaries
on a "pooling of interests" basis attributable to any period prior to the date
of combination, (iv) gains or losses in respect of any Asset Sales by such
person or one of its Restricted Subsidiaries (net of fees and expenses
relating to the transaction giving rise thereto), on an after-tax basis, (v)
the net income of any Restricted Subsidiary of such person to the extent that
the declaration of dividends or similar distributions by that Restricted
Subsidiary of that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulations
applicable to that Restricted Subsidiary or its stockholders and (vi) any gain
or loss realized as a result of the cumulative effect of a change in
accounting principles.
"Consolidated Non-cash Charges" means, with respect to any person for any
period, the aggregate depreciation, amortization (including amortization of
goodwill and other intangibles) and other non-cash expenses of such person and
its Restricted Subsidiaries reducing Consolidated Net Income of such person
and its Restricted Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP (excluding any such charges constituting an
extraordinary item or loss).
"Consolidated Rental Payments" of any person means, for any period, the
aggregate rental obligations of such person and its Restricted Subsidiaries
(not including taxes, insurance, maintenance and similar expenses that the
lessee is obligated to pay under the terms of the relevant leases), determined
on a consolidated basis in accordance with GAAP, payable in respect of such
period (net of income from subleases thereof, not including taxes, insurance,
maintenance and similar expenses that the sublessee is obligated to pay under
the terms of such sublease), whether or not such obligations are reflected as
liabilities or commitments on a consolidated balance sheet of such person and
its Restricted Subsidiaries or in the notes thereto, excluding, however, in
any event, (i) that portion of Consolidated Interest Expense of such person
representing payments by such person or any of its Restricted Subsidiaries in
respect of Capitalized Lease Obligations (net of payments to such person or
any of its Restricted Subsidiaries under subleases qualifying as capitalized
lease subleases to the extent that such payments would be deducted in
determining Consolidated Interest Expense) and (ii) the aggregate amount of
amortization of obligations of such person and its Restricted Subsidiaries in
respect of such Capitalized Lease Obligations for such period (net of payments
to such person or any of its Restricted Subsidiaries and subleases qualifying
as capitalized lease subleases to the extent that such payments could be
deducted in determining such amortization amount).
"control" when used with respect to any specified person means the power to
direct the management and policies of such person, directly or indirectly,
whether through ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Credit Facility" means the Credit Agreement dated as of September 29, 1998
among the Company, Holdings, United Rentals of Canada, Inc., various financial
institutions, Bank of America Canada, as Canadian Agent, and Bank of America
National Trust and Savings Association, as U.S. Agent, including any notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended (including any amendment and
restatement thereof), modified, renewed, refunded, replaced or refinanced from
time to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including increasing the amount of
available borrowings thereunder or adding Subsidiaries of the Company as
additional borrowers or guarantors thereunder) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement
and whether by the same or any other agents, lender or group of lenders.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Disinterested Member of the Board of Directors of the Company" means, with
respect to any transaction or series of transactions, a member of the Board of
Directors of the Company other than a member who has any
58
<PAGE>
material direct or indirect financial interest in or with respect to such
transaction or series of transactions or is an Affiliate, or an officer,
director or an employee of any person (other than the Company or Holdings) who
has any direct or indirect financial interest in or with respect to such
transaction or series of transactions.
"Event of Default" has the meaning set forth under "--Events of Default"
herein.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to any asset, the price which could
be negotiated in an arm's- length free market transaction, for cash, between a
willing seller and a willing buyer, neither of which is under pressure or
compulsion to complete the transaction. Fair Market Value shall be determined
by the Board of Directors of the Company in good faith.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States of America, which are applicable at the date
of the Indenture.
"guarantee" means, as applied to any obligation, (i) a guarantee (other than
by endorsement of negotiable instruments for collection in the ordinary course
of business), direct or indirect, in any manner, of any part or all of such
obligation and (ii) an agreement, direct or indirect, contingent or otherwise,
the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of nonperformance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts available to be drawn down under letters of credit of
another person.
"Holdings" means United Rentals, Inc., a Delaware corporation.
"Indebtedness" means, with respect to any person, without duplication, (a)
all liabilities of such person for borrowed money or for the deferred purchase
price of property or services, excluding any trade payables and other accrued
current liabilities incurred in the ordinary course of business, but
including, without limitation, all obligations, contingent or otherwise, of
such person in connection with any letters of credit, banker's acceptance or
other similar credit transaction, (b) all obligations of such person evidenced
by bonds, notes, debentures or other similar instruments, (c) all indebtedness
created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such person (even if the rights
and remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), but excluding
trade accounts payable arising in the ordinary course of business, (d) all
Capitalized Lease Obligations of such person, (e) all Indebtedness referred to
in the preceding clauses of other persons and all dividends of other persons,
the payment of which is secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon property (including, without limitation, accounts and contract
rights) owned by such person, even though such person has not assumed or
become liable for the payment of such Indebtedness (the amount of such
obligation being deemed to be the lesser of the value of such property or
asset or the amount of the obligation so secured), (f) all guarantees of
Indebtedness referred to in this definition by such person, (g) all Redeemable
Capital Stock of such person valued at the greater of its voluntary or
involuntary maximum fixed repurchase price plus accrued dividends, (h) all
obligations under or in respect of Interest Rate Protection Obligations of
such person, and (i) any amendment, supplement, modification, deferral,
renewal, extension, refinancing or refunding of any liability of the types
referred to in clauses (a) through (h) above; provided, however, that
Indebtedness shall not include (i) any holdback or escrow of the purchase
price of property, services, businesses or assets or (ii) any contingent
payment obligations incurred in connection with the acquisition of assets or
businesses, which are contingent on the performance of the assets or
businesses so acquired. For purposes hereof, the "maximum fixed repurchase
price" of any Redeemable Capital Stock which does not have a fixed repurchase
price shall be calculated in accordance with the terms of such Redeemable
Capital Stock as if such Redeemable Capital Stock were purchased on any date
on which Indebtedness shall be
59
<PAGE>
required to be determined pursuant to the Indenture, and if such price is
based upon, or measured by, the fair market value of such Redeemable Capital
Stock, such fair market value shall be approved in good faith by the board of
directors of the issuer of such Redeemable Capital Stock. In the case of
Indebtedness of other persons, the payment of which is secured by a Lien on
property owned by a person as referred to in clause (e) above, the amount of
the Indebtedness of such person attributable to such Lien at any date shall be
the lesser of the Fair Market Value at such date of any asset subject to such
Lien and the amount of the Indebtedness secured.
"Interest Rate Protection Agreement" means, with respect to any person, any
arrangement with any other person whereby, directly or indirectly, such person
is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such person calculated by
applying a fixed or a floating rate of interest on the same notional amount
and shall include without limitation, interest rate swaps, caps, floors,
collars and similar agreements.
"Interest Rate Protection Obligations" means the obligations of any person
pursuant to any Interest Rate Protection Agreements.
"Investment" means, with respect to any person, any direct or indirect loan
or other extension of credit (including, without limitation, a guarantee) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any other person.
"Lien" means any mortgage, charge, pledge, lien (statutory or other),
security interest, hypothecation, assignment for security, claim, or
preference or priority or other encumbrance upon or with respect to any
property of any kind. A person shall be deemed to own subject to a Lien any
property which such person has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement.
"Maturity Date" means January 15, 2009.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents (except to the extent that such obligations are financed or sold
with recourse to the Company or any Restricted Subsidiary of the Company) net
of (i) brokerage commissions and other fees and expenses (including, without
limitation, fees and expenses of legal counsel and investment bankers,
recording fees, transfer fees and appraisers' fees) related to such Asset
Sale, (ii) provisions for all taxes payable as a result of such Asset Sale,
(iii) amounts required to be paid to any person (other than the Company or any
Restricted Subsidiary of the Company) owning a beneficial interest in the
assets subject to the Asset Sale, (iv) payments made to retire Indebtedness
where payment of such Indebtedness is secured by the assets or properties the
subject of such Asset Sale, and (v) appropriate amounts to be provided by the
Company or any Restricted Subsidiary of the Company, as the case may be, as a
reserve required in accordance with GAAP against any liabilities associated
with such Asset Sale and retained by the Company or any Restricted Subsidiary
of the Company, as the case may be, after such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, all as reflected in an officers'
certificate delivered to the Trustee.
"Permitted Holder" means (i) Holdings and (ii) Bradley S. Jacobs, John N.
Milne, Michael J. Nolan and their respective Affiliates, and trusts
established for the benefit of a Permitted Holder or members of his immediate
family.
"Permitted Indebtedness" means, without duplication:
(a) Indebtedness of the Company and the Guarantors evidenced by up to
$300 million principal amount of the Notes and the Guarantees;
60
<PAGE>
(b) Indebtedness of the Company and Restricted Subsidiaries under (i) the
Credit Facility in an aggregate principal amount at any one time
outstanding not to exceed the greater of (x) $850 million or (y) 100% of
Tangible Assets, less, in either case, any amounts permanently repaid in
accordance with the covenant described under "--Certain Covenants--
Disposition of Proceeds of Asset Sales" and (ii) the Term Loan in an
aggregate amount not to exceed $250 million, less the amount of any
repayments of the Term Loan;
(c) Indebtedness of the Company or any Restricted Subsidiary outstanding
on the Issue Date, including the 9 1/2% Notes, the 8.80% Notes and the
respective guarantees thereof;
(d) Indebtedness of the Company or any Restricted Subsidiary of the
Company incurred in respect of performance bonds, bankers' acceptances and
letters of credit in the ordinary course of business, including
Indebtedness evidenced by letters of credit issued in the ordinary course
of business consistent with past practice to support the insurance or self-
insurance obligations of the Company or any of its Restricted Subsidiaries
(including to secure workers' compensation and other similar insurance
coverages), in the aggregate amount not to exceed $10 million at any time;
but excluding letters of credit issued in respect of or to secure money
borrowed;
(e) (i) Interest Rate Protection Obligations of the Company covering
Indebtedness of the Company and (ii) Interest Rate Protection Obligations
of any Restricted Subsidiary covering Permitted Indebtedness of such
Restricted Subsidiary provided that, in the case of either clause (i) or
(ii), (x) any Indebtedness to which any such Interest Rate Protection
Obligations correspond bears interest at fluctuating interest rates and is
otherwise permitted to be incurred under the "Limitation on Indebtedness"
covenant and (y) the notional principal amount of any such Interest Rate
Protection Obligations that exceeds the principal amount of the
Indebtedness to which such Interest Rate Protection Obligations relate
shall not constitute Permitted Indebtedness;
(f) Indebtedness of a Restricted Subsidiary owed to and held by the
Company or another Restricted Subsidiary, except that (i) any transfer of
such Indebtedness by the Company or a Restricted Subsidiary (other than to
the Company or another Restricted Subsidiary) and (ii) the sale, transfer
or other disposition by the Company or any Restricted Subsidiary of the
Company of Capital Stock of a Restricted Subsidiary (other than to the
Company or a Restricted Subsidiary) which is owed Indebtedness of another
Restricted Subsidiary shall, in each case, be an incurrence of Indebtedness
by such Restricted Subsidiary subject to the other provisions of the
Indenture;
(g) Indebtedness of the Company owed to and held by a Restricted
Subsidiary which is unsecured and subordinated in right of payment to the
payment and performance of the obligations of the Company under the
Indenture and the Notes, except that (i) any transfer of such Indebtedness
by the Company or a Restricted Subsidiary (other than to another Restricted
Subsidiary) and (ii) the sale, transfer or other disposition by the Company
or any Restricted Subsidiary of the Company (other than to the Company or a
Restricted Subsidiary) of Capital Stock of a Restricted Subsidiary which is
owed Indebtedness of the Company shall, in each case, be an incurrence of
Indebtedness by the Company, subject to the other provisions of the
Indenture;
(h) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except
in the case of daylight overdrafts) drawn against insufficient funds in the
ordinary course of business; provided, however, that such Indebtedness is
extinguished within five business days of incurrence;
(i) Indebtedness of the Company or any Restricted Subsidiary under
equipment purchase or lines of credit or for Capitalized Lease Obligations
not to exceed $25 million in aggregate principal amount outstanding at any
time;
61
<PAGE>
(j) Indebtedness of the Company or any Restricted Subsidiary, in addition
to that described in clauses (a) through (i) of this definition, in an
aggregate principal amount outstanding at any time not to exceed $15
million;
(k) (i) Indebtedness of the Company the proceeds of which are used solely
to refinance (whether by amendment, renewal, extension or refunding)
Indebtedness of the Company or any of its Restricted Subsidiaries and (ii)
Indebtedness of any Restricted Subsidiary of the Company the proceeds of
which are used solely to refinance (whether by amendment, renewal,
extension or refunding) Indebtedness of such Restricted Subsidiary,
provided, however, that (x) the principal amount of Indebtedness incurred
pursuant to this clause (k) (or, if such Indebtedness provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof, the original issue
price of such Indebtedness) shall not exceed the sum of principal amount of
Indebtedness so refinanced, plus the amount of any premium required to be
paid in connection with such refinancing pursuant to the terms of such
Indebtedness or the amount of any premium reasonably determined by the
Company as necessary to accomplish such refinancing by means of a tender
offer or privately negotiated purchase, plus the amount of expenses in
connection therewith, and (y) in the case of Indebtedness incurred by the
Company pursuant to this clause (k) to refinance Subordinated Indebtedness,
such Indebtedness (A) has no scheduled principal payment prior to the 91st
day after the Maturity Date, (B) has an Average Life to Stated Maturity
greater than the remaining Average Life to Stated Maturity of the Notes and
(C) is subordinated to the Notes in the same manner and to the same extent
that the Subordinated Indebtedness being refinanced is subordinated to the
Notes;
(l) Indebtedness arising from agreements of the Company or any Restricted
Subsidiary providing for indemnification, adjustment or holdback of
purchase price or similar obligations, in each case, incurred or assumed in
connection with the acquisition or disposition of any business, assets or a
Subsidiary, other than guarantees of Indebtedness incurred by any person
acquiring all or any portion of such business, assets or Subsidiary for the
purpose of financing such acquisition; and
(m) guarantees by the Company or a Restricted Subsidiary of Indebtedness
that was permitted to be incurred under the Indenture.
"Permitted Investments" means any of the following: (i) Investments in the
Company or in a Restricted Subsidiary; (ii) Investments in another person, if
as a result of such Investment (A) such other person becomes a Restricted
Subsidiary or (B) such other person is merged or consolidated with or into, or
transfers or conveys all or substantially all of its assets to the Company or
a Restricted Subsidiary; (iii) Investments representing Capital Stock or
obligations issued to the Company or any of its Restricted Subsidiaries in
settlement of claims against any other person by reason of a composition or
readjustment of debt or a reorganization of any debtor of the Company or such
Restricted Subsidiary; (iv) Investments in Interest Rate Protection Agreements
on commercially reasonable terms entered into by the Company or any of its
Subsidiaries in the ordinary course of business in connection with the
operations of the business of the Company or its Restricted Subsidiaries to
hedge against fluctuations in interest rates on its outstanding Indebtedness;
(v) Investments in the Notes; (vi) Investments in Cash Equivalents; (vii)
Investments acquired by the Company or any Restricted Subsidiary in connection
with an Asset Sale permitted under "--Certain Covenants--Disposition of
Proceeds of Asset Sales" to the extent such Investments are non-cash proceeds
as permitted under such covenant; (viii) advances to employees or officers of
the Company in the ordinary course of business; (ix) any Investment to the
extent that the consideration therefor is Capital Stock (other than Redeemable
Capital Stock) of the Company and (x) other Investments not to exceed $5
million at any time outstanding.
"Permitted Liens" means the following types of Liens:
(a) any Lien existing as of the date of the Indenture;
(b) Liens securing Senior Indebtedness;
62
<PAGE>
(c) any Lien securing Acquired Indebtedness created prior to (and not
created in connection with, or in contemplation of) the incurrence of such
Indebtedness by the Company or any Restricted Subsidiary, if such Lien does
not attach to any property or assets of the Company or any Restricted
Subsidiary other than the property or assets subject to the Lien prior to
such incurrence;
(d) Liens in favor of the Company or a Restricted Subsidiary;
(e) Liens on and pledges of the Capital Stock of any Unrestricted
Subsidiary securing any Indebtedness of such Unrestricted Subsidiary;
(f) Liens for taxes, assessments or governmental charges or claims either
(i) not delinquent or (ii) contested in good faith by appropriate
proceedings and as to which the Company or its Restricted Subsidiaries
shall have set aside on its books such reserves as may be required pursuant
to GAAP;
(g) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
(h) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(i) judgment Liens not giving rise to an Event of Default so long as such
Lien is adequately bonded and any appropriate legal proceedings which may
have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(j) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company
or any of its Restricted Subsidiaries;
(k) any interest or title of a lessor under any Capitalized Lease
Obligation or operating lease;
(l) purchase money Liens to finance property or assets of the Company or
any Restricted Subsidiary of the Company acquired in the ordinary course of
business; provided, however, that (i) the related purchase money
Indebtedness shall not be secured by any property or assets of the Company
or any Subsidiary of the Company other than the property and assets so
acquired and (ii) the Lien securing such Indebtedness shall be created
within 90 days of such acquisition;
(m) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to
such letters of credit and products and proceeds thereof;
(n) Liens securing refinancing Indebtedness permitted under clause (k) of
the definition of "Permitted Indebtedness," provided such Liens do not
exceed the Liens replaced in connection with such refinanced Indebtedness;
(o) Liens incurred in the ordinary course of business by the Company or
any Restricted Subsidiary with respect to obligations that do not exceed $5
million at any time outstanding;
(p) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Company
or any of its Restricted Subsidiaries, including rights of offset and set-
off; and
(q) Liens securing Interest Rate Protection Obligations which Interest
Rate Protection Obligations relate to Indebtedness that is secured by Liens
otherwise permitted under this Indenture.
63
<PAGE>
"person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Preferred Stock," as applied to any person, means Capital Stock of any
class or classes (however designated) which is preferred as to the payment of
dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such person, over
shares of Capital Stock of any other class of such person.
"Redeemable Capital Stock" means any class or series of Capital Stock that,
either by its terms, by the terms of any security into which it is convertible
or exchangeable or by contract or otherwise, is or upon the happening of an
event or passage of time would be, required to be redeemed prior to the
Maturity Date or is redeemable at the option of the holder thereof at any time
prior to the Maturity Date, or is convertible into or exchangeable for debt
securities at any time prior to the Maturity Date; provided that Capital Stock
will not constitute Redeemable Capital Stock solely because the holders
thereof have the right to require the Company to repurchase or redeem such
Capital Stock upon the occurrence of a Change of Control or an Asset Sale.
"Restricted Subsidiary" means any Subsidiary of the Company that is not an
Unrestricted Subsidiary.
"Significant Subsidiary" of any person means a Restricted Subsidiary of such
person which would be a significant subsidiary of such person as determined in
accordance with the definition in Rule 1-02(w) of Article 1 of Regulation S-X
promulgated by the Commission and as in effect on the date of the Indenture.
"Stated Maturity" means, when used with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is
due and payable, and when used with respect to any other Indebtedness, means
the date specified in the instrument governing such Indebtedness as the fixed
date on which the principal of such Indebtedness, or any installment of
interest thereon, is due and payable.
"Subordinated Indebtedness" means, with respect to the Company, Indebtedness
of the Company which is expressly subordinated in right of payment to the
Notes.
"Subsidiary" means, with respect to any person, (i) a corporation a majority
of whose Voting Stock is at the time, directly or indirectly, owned by such
person, by one or more Subsidiaries of such person or by such person and one
or more Subsidiaries thereof and (ii) any other person (other than a
corporation), including, without limitation, a partnership, limited liability
company, business trust or joint venture, in which such person, one or more
Subsidiaries thereof or such person and one or more Subsidiaries thereof,
directly or indirectly, at the date of determination thereof, has at least
majority ownership interest entitled to vote in the election of directors,
managers or trustees thereof (or other person performing similar functions).
For purposes of this definition, any directors' qualifying shares or
investments by foreign nationals mandated by applicable law shall be
disregarded in determining the ownership of a Subsidiary.
"Tangible Assets" means all assets of the Company and its Subsidiaries,
excluding all Intangible Assets. For purposes of the foregoing, "Intangible
Assets" means goodwill, patents, trade names, trade marks, copyrights,
franchises, organization expenses and any other assets properly classified as
intangible assets in accordance with GAAP.
"Term Loan" means the Term Loan Agreement, dated as of July 10, 1998, as
amended on September 29, 1998, among the Company, various financial
institutions and Bank of America National Trust and Savings Association, as
agent, including any notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended
(including any amendment and restatement thereof), modified, renewed,
refunded, replaced or refinanced from time to time, including any agreement
extending the maturity of, refinancing, replacing or otherwise restructuring
(including increasing the amount of
64
<PAGE>
available borrowings thereunder or adding additional guarantors thereunder)
all or any portion of the Indebtedness under such agreement or any successor
or replacement agreement and whether by the same or any other agent, lender or
group of lenders.
"Unrestricted Subsidiary" means each Subsidiary of the Company designated as
such pursuant to and in compliance with the covenant described under "--
Certain Covenants--Limitation on Designations of Unrestricted Subsidiaries."
"Voting Stock" means any class or classes of Capital Stock pursuant to which
the holders thereof have the general voting power under ordinary circumstances
to elect at least a majority of the board of directors, managers or trustees
of any person (irrespective of whether or not, at the time, stock of any other
class or classes shall have, or might have, voting power by reason of the
happening of any contingency).
"Wholly-Owned Restricted Subsidiary" means any Restricted Subsidiary of the
Company of which 100% of the outstanding Capital Stock is owned by the Company
or another Wholly-Owned Restricted Subsidiary of the Company. For purposes of
this definition, any directors' qualifying shares or investments by foreign
nationals mandated by applicable law shall be disregarded in determining the
ownership of a Subsidiary.
BOOK-ENTRY; DELIVERY AND FORM
The Original Notes are represented by permanent, global notes (the "Original
Global Securities"), in definitive, fully registered book-entry form, and the
Exchange Notes will be represented by permanent global notes (the "Exchange
Global Securities"), in definitive, fully registered book-entry form. The
Original Global Securities are, and the Exchange Global Securities will be,
registered in the name of a nominee of DTC. Pursuant to procedures established
by DTC, interests in the Original Global Securities and the Exchange Global
Securities (collectively, the "Global Securities") will be shown on, and the
transfer of such interest will be effected only through, records maintained by
DTC or its nominee (with respect to interests of persons who have accounts
with DTC ("Participants")) and the records of Participants (with respect to
interests of persons other than Participants).
So long as DTC or its nominee is the registered owner or holder of the
Global Securities, DTC or such nominee will be considered the sole owner or
holder of the Notes represented by the Global Securities for all purposes
under the Indenture and under the Notes represented thereby. No beneficial
owner of an interest in the Global Securities will be able to transfer such
interest except in accordance with the applicable procedures of DTC in
addition to those provided for under the Indenture. The laws of some states
require that certain persons take physical delivery in definitive form of
securities that they own. Consequently, the ability to transfer beneficial
interest in a Global Security to such persons will be limited to that extent.
Because DTC can act only on behalf of Participants, which in turn act on
behalf of Indirect Participants (as defined herein), the ability of a person
having beneficial interests in a Global Security to pledge such interests to
persons or entities that do not participate in the DTC system, or otherwise
take actions in respect of such interests, may be affected by the lack of a
physical certificate evidencing such interests.
Payments of the principal of, premium, if any, and interest on the Notes
represented by the Global Securities will be made to DTC or its nominee, as
the case may be, as the registered owner thereof. None of the Company, the
Trustee or any paying agent under the Indenture will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in the Global Securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
the principal of, premium, if any, and interest on the Notes represented by
the Global Securities, will credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the Global
Securities as shown in the records of DTC or its nominee. The Company also
expects that payments by Participants to owners of beneficial interests in the
Global Securities held through such Participants will be governed by standing
65
<PAGE>
instructions and customary practice as is now the case with securities held
for the accounts of customers registered in the names of nominees for such
customers. Such payment will be the responsibility of such Participants.
DTC has advised the Company that DTC will take any action permitted to be
taken by a holder of Notes (including the presentation of Notes for exchange
as described below) only at the direction of one or more Participants to whose
account the DTC interests in the Global Securities are credited and only in
respect of the aggregate principal amount as to which such Participant or
Participants has or have given such direction. However, if there is an Event
of Default under the Indenture, DTC will exchange the Global Securities for
certificated securities, which it will distribute to its Participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and facilitate the clearance and settlement of
securities transactions between Participants through electronic book-entry
changes in accounts of its Participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such
as banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a Participant, either directly or indirectly
("Indirect Participants").
Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interests in the Global Securities among Participants
of DTC it is under no obligation to perform such procedures, and such
procedures may be discontinued at any time. Neither the Company nor the
Trustee will have any responsibility for the performance by DTC or its
Participants or Indirect Participants of their respective obligations under
the rules and procedures governing their operations.
Interests in the Global Securities will be exchanged for certificated
securities if (i) DTC notifies the Company that it is unwilling or unable to
continue as depositary for the Global Securities, or DTC ceases to be a
"Clearing Agency" registered under the Exchange Act, and a successor
depositary is not appointed by the Company within 90 days, or (ii) an Event of
Default has occurred and is continuing with respect to the Notes. Upon the
occurrence of any of the events described in the preceding sentence, the
Company will cause the appropriate certificated securities to be delivered.
66
<PAGE>
PLAN OF DISTRIBUTION
Any broker-dealer (a "Participating Broker-Dealer") that, pursuant to the
Exchange Offer, receives Exchange Notes in exchange for Original Notes that
were acquired by it for its own account as a result of market-making
activities or other trading activities, will be required to deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resales by it of any such Exchange Notes. Each Participating Broker-Dealer
will be required to acknowledge in the Letter of Transmittal that it will
comply with such prospectus delivery requirement in connection with any resale
of Exchange Notes. The Letter of Transmittal states that by making such
acknowledgment a Participating Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
Based on interpretations by the Staff of the Commission set forth in no-
action letters issued to third parties, the Company believes that this
prospectus, as it may be amended or supplemented from time to time, may, if
permitted by the Company, be used by Participating Broker-Dealers in order to
satisfy the prospectus delivery requirements applicable to Participating
Broker-Dealers in connection with the resale of Exchange Notes as described
above. The Company has agreed in the Registration Rights Agreement that it
will use its best efforts to make this Prospectus available to each
Participating Broker-Dealer for use in connection with any resales of such
Exchange Notes (subject to the right of the Company to restrict the use of
this prospectus under certain circumstances specified in the Registration
Rights Agreement). The obligation of the Company to make this prospectus
available as aforesaid will commence on the day that the Exchange Offer is
consummated and continue in effect for a 30-day period (the "Broker Prospectus
Period"); provided, however, that, if for any day during such period the
Company restricts the use of such prospectus, the Broker Prospectus Period
shall be extended on a day-for-day basis. See "Registration Rights Agreement."
Any sale of Exchange Notes by Participating Broker-Dealers will be for their
own account, and the Company will not receive any proceeds of such sales.
Participating Broker-Dealers may from time to time sell Exchange Notes that
were received by them in the Exchange Offer in one or more transactions in the
over-the-counter market, in privately negotiated transactions, through the
writing of options on the Exchange Notes or otherwise, and such sales may be
made at the market price prevailing at the time of sale, a price related to
such prevailing market price or a negotiated price. Such sales of Exchange
Notes may be made directly to purchasers or, alternatively, may be offered
from time to time through agents, brokers, dealers or underwriters, who may
receive compensation in the form of concessions or commissions from the
Participating Broker-Dealers or purchasers of the Exchange Notes (which
compensation may be in excess of customary commissions). Any agents, brokers
or dealers that participate in the distribution of the Exchange Notes may be
deemed to be underwriters and any commissions received by them and any profit
on the resale of such Exchange Notes sold by them might be deemed to be
underwriting discounts and commissions under the Securities Act.
During the Broker Prospectus Period, the Company will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any Participating Broker-Dealer that requests such documents
(subject to the right of the Company to restrict the use of this Prospectus
under certain circumstances specified in the Registration Rights Agreement).
Any such requests should be directed to United Rentals (North America), Inc.,
Attention: Corporate Secretary, Four Greenwich Office Park, Greenwich,
Connecticut 06830, telephone: (203) 622-3131.
The Company has agreed in the Registration Rights Agreement to indemnify
each Participating Broker-Dealer that resells Exchange Notes pursuant to this
prospectus, and their officers, directors and controlling persons, against
certain liabilities in connection with the offer and sale of the Exchange
Notes, including liabilities under the Securities Act, or to contribute to
payments that such Participating Broker-Dealers may be required to make in
respect thereof.
67
<PAGE>
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain United States federal
income and estate tax consequences of the acquisition, ownership and
disposition of Notes. This discussion is a summary for general information
purposes only and does not consider all aspects of federal income taxation
that may be relevant to a particular investor in light of his or her personal
circumstances. This discussion is generally limited to the tax consequences to
initial holders of the Notes that hold the Notes as capital assets (within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the
"Code")) and that purchase the Notes at the "issue price." For this purpose,
the "issue price" of a Note is the first price at which a substantial part of
the Notes are sold to the public for money (excluding sales to bond houses,
brokers, or similar persons or organizations acting in the capacity of
underwriters, placement agents or wholesalers).
This discussion is based upon the United States federal income tax laws now
in effect, which are subject to change, possibly retroactively. This
discussion generally does not describe the treatment of investors in pass-
through entities that hold the Notes. In addition, certain other holders
(including insurance companies, tax exempt organizations, financial
institutions and broker-dealers, persons who hold the Notes as part of a
"straddle," "hedge," or "conversion transaction" or other integrated
transaction, or persons that have a "functional currency" other than the U.S.
dollar) may be subject to special rules not discussed below.
For a discussion of certain U.S. Federal income tax consequences of the
Exchange Offer, see "The Exchange Offer--Certain U.S. Federal Income Tax
Considerations."
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF ACQUIRING, HOLDING AND
DISPOSING OF NOTES, AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER THE
LAWS OF ANY FOREIGN, STATE, LOCAL OR OTHER TAXING JURISDICTION.
U.S. HOLDERS
The following discussion is limited to the U.S. federal income tax
consequences to a "U.S. Holder" of a Note. For purposes of this discussion, a
"U.S. Holder" means a holder that is (i) an individual who is a citizen or a
resident of the United States; (ii) a corporation created or organized in the
United States or under the laws of the United States or of any political
subdivision thereof; (iii) an estate whose income is includable in gross
income for United States federal income tax purposes regardless of its source
or (iv) a trust, if a U.S. court is able to exercise primary supervision over
the administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust.
Stated Interest
Stated interest on a Note will be taxable to a U.S. Holder as ordinary
income either at the time it accrues or is received in accordance with such
U.S. Holder's method of accounting. If the Company fails to comply with
certain provisions requiring registration of the Notes, the interest rate may
increase. Assuming that the contingency that the Company will pay such
additional interest is remote or incidental (within the meaning of applicable
Treasury regulations) such additional interest should be taxable to U.S.
Holders at the time it accrues or is received in accordance with each such
U.S. Holder's method of accounting.
Redemption
In the event of a Change of Control, the U.S. Holders of Notes will have the
right to require the Company to purchase their Notes. The Treasury regulations
provide that the right of U.S. Holders of the Notes to require redemption of
the Notes upon the occurrence of a Change of Control will not affect the yield
or maturity date of the Notes unless, based on all the facts and circumstances
as of the Issue Date, it is more likely than not that a Change of Control
giving rise to the redemption right will occur. The Company does not intend to
treat this redemption provision of the Notes as affecting the computation of
the yield to maturity of the Notes.
The Company may redeem the Notes at any time on or after a certain date,
and, in certain circumstances, may redeem or repurchase all or a portion of
the Notes at any time prior to the maturity date. Under the Treasury
regulations, the Company will be deemed to exercise any option to redeem the
Notes if the exercise of such
68
<PAGE>
option would lower the yield of the debt instrument. The Company believes, and
intends to take the position for all income tax purposes, that it will not be
treated as having exercised the option to redeem the Notes under these rules.
Sale, Exchange, or Repayment of the Notes
Upon the disposition of a Note by sale, exchange redemption or repayment,
the U.S. Holder will recognize gain or loss equal to the difference between
(i) the amount realized on the disposition (other than amounts attributable to
accrued interest not yet taken into income) and (ii) the U.S. Holder's tax
basis in the Note. A U.S. Holder's tax basis in the Note generally will equal
the cost of the Note.
Because the Note is held as a capital asset, such gain or loss will
generally be capital gain or loss and will be long-term capital gain if the
Note is held for longer than one year. U.S. Holders are advised to consult
their tax advisors concerning these provisions on the taxation of capital
gains.
Backup Withholding
A U.S. Holder may be subject to backup withholding at a rate of 31% with
respect to interest, principal payments on the Notes, and proceeds from the
disposition of Notes unless the U.S. Holder (i) is a corporation or comes
within certain other exempt categories of recipients and, when required,
demonstrates that status, or (ii) provides a correct taxpayer identification
number, certifies as to no loss of exemption from backup withholding and
otherwise complies with the applicable requirements of the backup withholding
rules. U.S. Holders should consult their tax advisors as to their
qualification for exemption from backup withholding and the procedure for
obtaining such exemption.
Backup withholding is not an additional tax. Any amount withheld as backup
withholding would be refunded or credited against the U.S. Holder's federal
income tax liability, provided that the required information is provided to
the Internal Revenue Service (the "IRS").
NON-U. S. HOLDERS
The following discussion is limited to the U.S. federal income and estate
tax consequences to a holder of a Note that is a person other than a United
States person (a "Non-United States Holder"). For purposes of the withholding
tax on interest, a non-resident alien or other non-resident fiduciary of an
estate or trust will be considered to be a Non-United States Holder.
For purposes of the discussion below, interest and gain on the sale,
exchange or other disposition of Notes will be considered to be "U.S. trade or
business income" if such income or gain is (i) effectively connected with the
conduct of a U.S. trade or business or (ii) in the case of a treaty resident,
attributable to a U.S. permanent establishment (or, in the case of an
individual, a fixed base) in the United States.
Interest
Interest paid by the Company to a Non-United States Holder will not be
subject to United States federal income or withholding tax if such interest is
not U.S. trade or business income and is "portfolio interest." Interest will
be portfolio interest if the Non-United States Holder (i) does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote; (ii) is not a controlled
foreign corporation with respect to which the Company is a "related person"
within the meaning of the Code and (iii) certifies, under penalties of
perjury, that such holder is not a United States person and provides such
holder's name and address.
The gross amount of payments of interest that do not qualify for the
portfolio interest exception and that are not U.S. trade or business income
will be subject to U.S. withholding tax at a rate of 30% unless a treaty
applies
69
<PAGE>
to reduce or eliminate withholding. U.S. trade or business income will be
taxed at regular, graduated U.S. rates rather than the 30% gross rate. In the
case of a Non-United States Holder that is a corporation, such U.S. trade or
business income may also be subject to the branch profits tax equal to 30% (or
such lower treaty rate as may be applicable) of its "effectively connected
earnings and profits." To claim exemption from withholding or to claim the
benefits of a treaty, a Non-United States Holder must provide a properly
executed Form 1001 or 4224 (or such successor form as the IRS designates), as
applicable prior to the payment of interest. These forms must be periodically
updated. Under regulations not yet in effect, the Forms 1001 and 4224 will be
replaced by a Form W-8. Also under these regulations, a Non-United States
Holder who is claiming the benefits of a treaty may be required in certain
instances to obtain a U.S. taxpayer identification number and to provide
certain documentary evidence issued by foreign governmental authorities to
prove residence in the foreign country.
Gain on Disposition
A Non-United States Holder will generally not be subject to United States
federal income tax on gain recognized on a sale, redemption or other
disposition of a Note unless (i) the gain is effectively connected with the
conduct of a trade or business within the United States by the Non-United
States Holder; (ii) in the case of a Non-United States Holder who is a
nonresident alien individual and holds the Note as a capital asset, such
holder is present in the United States for 183 or more days in the taxable
year and certain other requirements are met; or (iii) the Non-United States
Holder is subject to the special rules applicable to certain former citizens
and residents of the United States.
Federal Estate Taxes
If the interest on the Notes is exempt from withholding of United States
federal income tax as portfolio interest described above, the Notes will not
be included in the estate of a deceased Non-United States Holder for United
States federal estate tax purposes.
Information Reporting and Backup Withholding
The Company must report annually to the IRS and to each Non-United States
Holder any interest paid to the Non-United States Holder. Copies of these
information returns may also be made available under the provisions of a
specific treaty or other agreement to the tax authorities of the country in
which the Non-United States Holder resides.
In the case of payments of interest to Non-United States Holders, Treasury
regulations provide that the 31% backup withholding tax and certain
information reporting will not apply to such payments with respect to which
either the requisite certification, as described above, has been received or
an exemption has otherwise been established; provided that neither the Company
nor its payment agent has actual knowledge that the holder is a United States
person or that the conditions of any other exemption are not in fact
satisfied. The payment of the proceeds from the disposition of Notes to or
through the United States office of any broker, U.S. or foreign, will be
subject to information reporting and possible backup withholding unless the
owner certifies as to its non-U.S. status under penalty of perjury or
otherwise establishes an exemption, provided that the broker does not have
actual knowledge that the Holder is a United States person or that the
conditions of any other exemption are not, in fact, satisfied. The payment of
the proceeds from the disposition of Notes to or through a non-U.S. office of
a non-U.S. broker will not be subject to information reporting or backup
withholding unless the non-U.S. broker has certain types of relationships with
the United States (a "United States Related Person").
In the case of the payment of proceeds from the disposition of Notes to or
through a non-United States office of a broker that is either a United States
person or a United States Related Person, the regulations require information
reporting on the payment unless the broker has documentary evidence in its
files that the owner is a Non-United States Holder and the broker has no
knowledge to the contrary. Backup withholding will not apply to payments made
through foreign offices of a broker that is not a United States person nor a
United States Related Person (absent actual knowledge that the payee is a
United States person).
70
<PAGE>
The Treasury Department recently promulgated final regulations (the "Final
Regulations") regarding the withholding and information reporting rules
discussed above. In general, the Final Regulations do not significantly alter
the substantive withholding and information reporting requirements but rather
unify current certification procedures and forms and clarify reliance
standards. The Final Regulations are generally effective for payments made
after December 31, 1999, subject to certain transition rules. Non-United
States Holders should consult their own tax advisors with respect to the
impact, if any, of the new Final Regulations.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules may be refunded or credited against the Non-United
States Holder's United States federal income tax liability, provided that the
required information is furnished to the IRS.
71
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the Exchange Offer will be passed
upon for the Company by Weil, Gotshal & Manges LLP, New York, New York, and
Ehrenreich Eilenberg Krause & Zivian LLP, New York, New York.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the following
financial statements, as set forth in their reports, which are incorporated in
this prospectus by reference:
. the consolidated financial statements of United Rentals (North America),
Inc. as of December 31, 1998 and 1997 and for each of the three years in
the period ended December 31, 1998, included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998;
. the financial statements of Mission Valley Rentals, Inc. at June 30,
1997 and 1996 and for the years then ended, included in the Company's
Current Report on Form 8-K/A dated February 4, 1998; and
. the financial statements of Power Rental Co. Inc. at July 31, 1997 and
for the year then ended, included in the Company's Current Report on
Form 8-K/A dated July 21, 1998 and in the Company's Current Report on
Form 8-K dated December 24, 1998.
These financial statements are incorporated herein by reference in reliance on
their reports, given on their authority as experts in accounting and auditing.
The combined financial statements of Equipment Supply Co., Inc. and
Affiliates as of December 31, 1997 and 1996 and for each of the three years in
the period ended December 31, 1997, included in the Company's Current Reports
on Form 8-K dated July 21, 1998 and December 24, 1998, have been audited by
BDO Seidman, LLP independent certified public accountants, as set forth in
their report thereon included therein, and are incorporated by reference
herein in reliance on such report given upon the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements of McClinch, Inc. and subsidiaries as
of January 31, 1998 and August 31, 1998, and for the year ended January 31,
1998 and the financial statements of McClinch Equipment Services, Inc. as of
December 31, 1997 and August 31, 1998, and for the year ended December 31,
1997, included in the Company's Current Report on Form 8-K dated December 24,
1998, have been audited by PricewaterhouseCoopers L.L.P., independent
accountants, as set forth in their reports thereon included therein, and are
incorporated by reference herein in reliance on such reports given upon the
authority of such firm as experts in accounting and auditing.
The combined financial statements of BNR Group of Companies as of March 31,
1996 and 1997 and for the years ended March 31, 1996 and 1997 included in the
Company's Current Report on Form 8-K/A dated February 4, 1998, have been
audited by KPMG LLP, independent chartered accountants, as set forth in their
report thereon included therein and are incorporated by reference herein in
reliance on such report given upon the authority of such firm as experts in
accounting and auditing.
The audited financial statements of Access Rentals, Inc. and Subsidiary and
Affiliate, included in the Company's Current Report on Form 8-K/A dated
February 4, 1998, have been incorporated by reference herein in reliance upon
the report of Battaglia, Andrews & Moag, P.C., independent certified public
accountants, 210 East Main Street, Batavia, New York 14020, for the periods
indicated, given upon the authority of such firm as experts in accounting and
auditing.
72
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
I. Pro Forma Unaudited Consolidated Financial Statements of United
Rentals (North America), Inc.
Introduction........................................................ F-2
Pro Forma Consolidated Balance Sheet--December 31, 1998
(unaudited)........................................................ F-3
Pro Forma Consolidated Statement of Operations for the year ended
December 31, 1998 (unaudited)...................................... F-4
Notes to Pro Forma Unaudited Consolidated Financial Statements...... F-5
</TABLE>
F-1
<PAGE>
UNITED RENTALS (NORTH AMERICA), INC.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following pro forma unaudited consolidated balance sheet of the Company
gives effect to the acquisitions completed by the Company subsequent to
December 31, 1998 (through March 3, 1999) and the financing thereof, as if all
such transactions had occurred on December 31, 1998.
The following pro forma unaudited consolidated statement of operations with
respect to the year ended December 31, 1998, gives effect to each acquisition
completed by the Company after the beginning of the year (through March 3,
1999) and the financing thereof and as if all such transactions had occurred
at the beginning of the year.
The pro forma consolidated financial statements are based upon certain
assumptions and estimates which are subject to change. These statements are
not necessarily indicative of the actual results of operations that might have
occurred, nor are they necessarily indicative of expected results in the
future.
The pro forma consolidated financial statements should be read in conjunction
with the Company's historical Consolidated Financial Statements and related
notes and the financial statements and related notes of certain of the
companies we acquired incorporated by reference in this prospectus.
F-2
<PAGE>
UNITED RENTALS (NORTH AMERICA), INC.
PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
<TABLE>
<CAPTION>
UNITED
RENTALS ACQUISITIONS ADJUSTMENTS PRO FORMA
---------- ------------ ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Cash and cash
equivalents............ $ 20,410 $ 577 $ (16,987)(a) $ 4,000
Accounts receivable,
net.................... 233,282 5,331 238,613
Inventory............... 70,994 3,242 74,236
Rental equipment, net... 1,143,006 16,974 9,520 (b) 1,169,500
Property and equipment,
net.................... 170,537 1,893 (380)(c) 172,050
Intangible assets, net.. 922,065 35,697 (d) 957,762
Prepaid expenses and
other assets........... 43,176 2,062 45,238
---------- ------- --------- ----------
$2,603,470 $30,079 $ 27,850 $2,661,399
========== ======= ========= ==========
LIABILITIES AND
STOCKHOLDER'S EQUITY:
Liabilities:
Accounts payable,
accrued expenses and
other liabilities...... $ 267,544 $ 7,061 $ 274,605
Debt.................... 1,314,574 14,052 $ (14,052)(e) 1,365,442
50,868 (f)
---------- ------- --------- ----------
Total liabilities...... 1,582,118 21,113 36,816 1,640,047
Stockholder's equity:
Common stock............
Additional paid-in
capital................ 984,345 (940) 940 (g) 984,345
Retained earnings....... 37,007 9,906 (9,906)(g) 37,007
---------- ------- --------- ----------
Total stockholder's
equity................ 1,021,352 8,966 (8,966) 1,021,352
---------- ------- --------- ----------
$2,603,470 $30,079 $ 27,850 $2,661,399
========== ======= ========= ==========
</TABLE>
See notes to pro forma unaudited consolidated financial statements.
F-3
<PAGE>
UNITED RENTALS (NORTH AMERICA), INC.
PRO FORMA UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
EQUIPMENT
SUPPLY MCCLINCH INC.
ACCESS POWER CO., INC. AND MCCLINCH
UNITED RENTALS, RENTAL AND EQUIPMENT OTHER
RENTALS INC. CO., INC. AFFILIATES SERVICE, INC. ACQUISITIONS ADJUSTMENTS PRO FORMA
--------- -------- --------- ---------- ------------- ------------ ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Equipment rentals...... $ 895,466 $2,313 $ 6,295 $34,382 $16,515 $173,847 $1,128,818
Sales of equipment,
merchandise and other
revenue............... 324,816 841 1,555 8,958 5,601 129,897 471,668
--------- ------ ------- ------- ------- -------- ------- ----------
Total revenues.......... 1,220,282 3,154 7,850 43,340 22,116 303,744 1,600,486
Cost of revenues
Cost of equipment
rentals, excluding
depreciation.......... 394,750 1,131 3,416 12,529 6,770 69,511 488,107
Depreciation of rental
equipment............. 175,910 402 2,987 10,368 3,316 40,176 $(9,124)(a) 224,035
Cost of sales and other
operating costs....... 226,174 741 638 7,267 3,795 86,701 325,316
--------- ------ ------- ------- ------- -------- ------- ----------
Total cost of revenues.. 796,834 2,274 7,041 30,164 13,881 196,388 (9,124) 1,037,458
--------- ------ ------- ------- ------- -------- ------- ----------
Gross profit............ 423,448 880 809 13,176 8,235 107,356 9,124 563,028
Selling, general and
administrative
expenses............... 195,620 774 3,200 9,672 3,535 76,315 (17,258)(b) 271,791
(67)(c)
Merger-related
expenses............... 47,178 47,178
Non-rental depreciation
and amortization....... 34,684 23 304 359 382 4,897 6,813 (d) 47,462
--------- ------ ------- ------- ------- -------- ------- ----------
Operating income
(loss)................. 145,966 83 (2,695) 3,145 4,318 26,144 19,636 196,597
Interest expense........ 64,157 147 631 4,220 763 10,662 (16,423)(e) 88,007
23,850 (f)
Other (income) expense,
net.................... (5,097) (52) (95) (198) (51) (4,797) (10,290)
--------- ------ ------- ------- ------- -------- ------- ----------
Income (loss) before
provision for income
taxes and extraordinary
item................... 86,906 (12) (3,231) (877) 3,606 20,279 12,209 118,880
Provision for income
taxes.................. 46,971 (2,638) 896 2,087 11,460 (g) 58,776
--------- ------ ------- ------- ------- -------- ------- ----------
Income (loss) before
extraordinary item..... $ 39,935 $ (12) $(3,231) $ 1,761 $ 2,710 $ 18,192 $ 749 $ 60,104
========= ====== ======= ======= ======= ======== ======= ==========
</TABLE>
See notes to pro forma unaudited consolidated financial statements.
F-4
<PAGE>
UNITED RENTALS (NORTH AMERICA), INC.
NOTES TO PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
1. BASIS OF PRESENTATION
The Company is a large geographically diversified equipment rental company in
the United States, Canada and Mexico. The Company rents a broad array of
equipment to a diverse customer base that includes construction industry
participants, industrial companies, homeowners and other individuals. The
Company also sells rental equipment, acts as a distributor for certain new
equipment, and sells related merchandise and parts.
The financial data for United Rentals (North America), Inc. is derived from
the historical financial statements of the Company. The financial data for
each of the acquisitions is derived from the respective historical financial
statements of such companies. The results of operations for each acquisition
acquired during a period presented includes the results of operations from the
beginning of such period through the date of acquisition.
2. ACQUISITIONS
Since its formation, the Company has completed a total of 101 acquisitions
through March 3, 1999.
Based upon management's preliminary estimates, it is estimated that the
carrying value of the assets and liabilities of the 11 companies acquired by
the Company subsequent to December 31, 1998 (through March 3, 1999)
approximates fair value, with the exception of rental equipment and other
property and equipment, which required adjustments to reflect fair market
value. The following table presents the allocation of purchase price of each
of the 11 companies acquired by the Company subsequent to December 31, 1998:
<TABLE>
<CAPTION>
<S> <C>
Purchase price......................................................... $53,803
Net assets acquired.................................................... 8,966
Fair value adjustments:
Rental equipment..................................................... 9,520
Property and equipment............................................... (380)
-------
Intangible assets recorded............................................. $35,697
=======
</TABLE>
3. PRO FORMA ADJUSTMENTS
Balance sheet adjustments:
a. Records the portion of the acquisition consideration and debt repayment
paid from available cash on hand.
b.Adjusts the carrying value of rental equipment to fair market value.
c.Adjusts the carrying value of property and equipment to fair market
value.
d. Records the excess of the acquisition consideration over the estimated
fair value of net assets acquired.
e.Records the repayment of certain indebtedness of the acquisitions.
f. Records the portion of the acquisition consideration and debt repayment
funded by borrowing under United Rentals' credit facility and seller
notes.
g.Records the elimination of the stockholders' equity of the acquisitions.
F-5
<PAGE>
Statement of operations adjustments:
a. Adjusts the depreciation of rental equipment and other property and
equipment based upon adjusted carrying values utilizing the following
lives (subject to a salvage value ranging from 0 to 10%):
<TABLE>
<S> <C>
Rental equipment.............................................. 2-10 years
Other property and equipment.................................. 2-15 years
</TABLE>
b. Adjusts the compensation to former owners and executives of the
acquisitions to current levels of compensation.
c. Adjusts the lease expense for real estate utilized by the acquisitions
to current lease agreements.
d. Records the amortization of the excess of cost over net assets acquired
attributable to the acquisitions using an estimated life of 40 years.
e. Eliminates interest expense related to the outstanding indebtedness of
the acquisitions which was repaid by United Rentals.
f. Records interest expense relating to the portion of the acquisitions
funded through borrowing under United Rentals' credit facility using a
rate per annum of 7%, senior subordinated notes using a rate per annum
of 9 1/2%, term loan using a rate per annum of 7.6% and seller notes
using a rate per annum of 7.0%.
g. Records a provision for income taxes at an estimated rate of 41%, less
the tax benefit for merger-related expenses of $14,000 and a charge of
$4,750 to recognize deferred tax liabilities of a company acquired in a
pooling-of-interests transaction.
F-6
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION ABOUT THIS EXCHANGE
OFFER THAT IS NOT INCLUDED IN THIS PROSPECTUS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
REGISTERED NOTES IN ANY PLACE WHERE, OR TO ANY PERSON TO WHOM, IT IS ILLEGAL
TO DO SO. USE OF THIS PROSPECTUS DOES NOT IMPLY IN ANY WAY THAT THE
INFORMATION IN THIS PROSPECTUS, AND OUR BUSINESS AFFAIRS GENERALLY, HAVE NOT
CHANGED SINCE THE DATE OF THIS PROSPECTUS.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Cautionary Notice Regarding Forward Looking Statements..................... 3
Where You Can Find More Information........................................ 3
Incorporation by Reference................................................. 3
Prospectus Summary......................................................... 4
Risk Factors............................................................... 16
Corporate Information...................................................... 23
The Exchange Offer......................................................... 24
Registration Rights Agreement.............................................. 31
Use of Proceeds............................................................ 34
Selected Historical and Pro Forma Consolidated Financial Information....... 35
Description of the Notes................................................... 37
Plan of Distribution....................................................... 67
Certain United States Federal Income Tax Considerations.................... 68
Legal Matters.............................................................. 72
Experts.................................................................... 72
Index to Financial Statements.............................................. F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$300,000,000
UNITED RENTALS (NORTH AMERICA), INC.
OFFER TO EXCHANGE
REGISTERED 9 1/4% SENIOR SUBORDINATED
NOTES DUE 2009, SERIES B
FOR UNREGISTERED 9 1/4% SENIOR SUBORDINATED
NOTES DUE 2009, SERIES A
---------------------------------
PROSPECTUS
---------------------------------
MAY , 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Certificate of Incorporation (the "Certificate") of the company provides
that a director will not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law (the "Delaware
Law"), which concerns unlawful payments of dividends, stock purchases or
redemptions, or (iv) for any transaction from which the director derived an
improper personal benefit. If the Delaware Law is subsequently amended to
permit further limitation of the personal liability of directors, the
liability of a director of the Company will be eliminated or limited to the
fullest extent permitted by the Delaware Law as amended.
The Registrant, as a Delaware corporation, is empowered by Section 145 of
the Delaware Law, subject to the procedures and limitation stated therein, to
indemnify any person against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him
in connection with any threatened, pending or completed action, suit or
proceeding in which such person is made a party by reason of his being or
having been a director, officer, employee or agent of the Registrant. The
statute provides that indemnification pursuant to its provisions is not
exclusive of other rights of indemnification to which a person may be entitled
under any by-law, agreement, vote of stockholders or disinterested directors,
or otherwise. The Company has entered into indemnification agreements with
certain of its directors and officers. In general, these agreements require
the Company to indemnify each of such persons against expenses, judgments,
fines, settlements and other liabilities incurred in connection with any
proceeding (including a derivative action) to which such person may be made a
party by reason of the fact that such person is or was a director, officer or
employee of the Company or guaranteed any obligations of the Company, provided
that the right of an indemnitee to receive indemnification is subject to the
following limitations: (i) an indemnitee is not entitled to indemnification
unless he acted in good faith and in a manner that he reasonably believed to
be in or not opposed to the best interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe such
conduct was unlawful and (ii) in the case of a derivative action, an
indemnitee is not entitled to indemnification in the event that he is judged
in a final non-appealable decision of a court of competent jurisdiction to be
liable to the Company due to willful misconduct in the performance of his
duties to the Company (unless and only to the extent that the court determines
that the indemnitee is fairly and reasonably entitled to indemnification).
Pursuant to Section 145 of the Delaware Law, the Registrant has purchased
insurance on behalf of its present and former directors and officers against
any liability asserted against or incurred by them in such capacity or arising
out of their status as such. The Registrant has entered into indemnification
agreements with certain members of its management in the form filed as an
exhibit to this registration statement.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
4(a) Indenture dated December 15, 1998, among the Registrant, the
Guarantors named therein and State Street Bank and Trust Company, as
trustee (incorporated by reference to Exhibit 10(uu) of the
Registration Statement on Form S-4 filed by the Registrant,
Registration No. 333-64227)
4(b) Notes Registration Rights Agreement dated as of December 15, 1998,
among the Registrant, the subsidiaries of the Registrant named
therein, and Goldman, Sachs & Co. (incorporated by reference to
Exhibit 10(vv) of the Registration Statement on Form S-4 filed by the
Registrant, Registration No. 333-64227)
5(a)* Opinion of Ehrenreich Eilenberg Krause & Zivian LLP
12* Statement re computation of ratios of earnings to fixed charges
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
23(a)* Consent of Ehrenreich Eilenberg Krause & Zivian LLP (included in
opinion filed as Exhibit 5)
23(b)* Consent of Ernst & Young LLP
23(c)* Consent of KPMG LLP
23(d)* Consent of Battaglia, Andrews, & Moag, P.C.
23(e)* Consent of PricewaterhouseCoopers LLP
23(f)* Consent of BDO Seidman, LLP
24(a) Power of Attorney (included in Part II of the Registration Statement
under the caption "Signatures")
25(a)* Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of State Street Bank and Trust Company
99(a)* Form of Letter of Transmittal
</TABLE>
- --------
*Filed herewith.
ITEM 22. UNDERTAKINGS
A. The registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective Registration Statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
B. (1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of
a prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145, the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
II-2
<PAGE>
(2) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act of 1933 and is used
in connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 20 above, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expense incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted against the registrant by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
D. The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
E. The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on May 7, 1999.
United Rentals (North America), Inc.
/s/ Michael J. Nolan
By: _________________________________
MICHAEL J. NOLAN
CHIEF FINANCIAL OFFICER
<TABLE>
<S> <C> <C>
SIGNATURES TITLE
DATE
* Chairman, Chief May 7, 1999
- ------------------------------------- Executive Officer
BRADLEY S. JACOBS and Director
(Principal
Executive Officer)
* Director May 7, 1999
- -------------------------------------
WAYLAND R. HICKS
* Director May 7, 1999
- -------------------------------------
JOHN N. MILNE
* Director May 7, 1999
- -------------------------------------
WILLIAM F. BERRY
* Director May 7, 1999
- -------------------------------------
JOHN S. MCKINNEY
Director
- -------------------------------------
LEON D. BLACK
* Director May 7, 1999
- -------------------------------------
RICHARD D. COLBURN
</TABLE>
II-4
<PAGE>
<TABLE>
SIGNATURES TITLE DATE
<S> <C> <C>
* Director May 7, 1999
- ------------------------------------
RONALD M. DEFEO
Director
- ------------------------------------
MICHAEL S. GROSS
Director
- ------------------------------------
RICHARD J. HECKMANN
Director
- ------------------------------------
GERALD TSAI, JR.
* Director May 7, 1999
- ------------------------------------
CHRISTIAN M. WEYER
/s/ Michael J. Nolan Chief Financial May 7, 1999
- ------------------------------------ Officer (Principal
MICHAEL J. NOLAN Financial Officer)
/s/ John S. McKinney Vice President, May 7, 1999
- ------------------------------------ Finance (Principal
JOHN S. MCKINNEY Accounting
Officer)
/s/ Michael J. Nolan May 7, 1999
*By: _______________________________
MICHAEL J. NOLAN
ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each co-
registrant listed on the cover page of this Amendment No. 1 to Registration
Statement has duly caused this Amendment No. 1 to Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York, State of New York, on May 7, 1999.
THE CO-REGISTRATION LISTED ON
THE COVER PAGE OF THIS REGISTRATION
STATEMENT
By: /s/ Michael J. Nolan
----------------------------------
Michael J. Nolan
Vice President
of Each Co-Registrant
<TABLE>
<S> <C> <C>
SIGNATURES TITLE
DATE
/s/ John N. Milne President and May 7, 1999
- ------------------------------------- Director of each
JOHN N. MILNE Co-Registrant
(Principal
Executive Officer)
/s/ Michael J. Nolan Vice President of May 7, 1999
- ------------------------------------- each
MICHAEL J. NOLAN Co-Registrant
(Principal
Financial Officer)
/s/ John S. McKinney Principal Accounting May 7, 1999
- ------------------------------------- Officer of each Co-
JOHN S. MCKINNEY Registrant
</TABLE>
II-6
<PAGE>
Exhibit 5(a)
[Letterhead of Ehrenreich Eilenberg Krause & Zivian LLP]
May 7, 1999
United Rentals (North America), Inc.
Four Greenwich Office Park
Greenwich, Connecticut 06830
Ladies and Gentlemen:
We have acted as counsel for United Rentals (North America), Inc. (the
"Company") in connection with the registration statement on Form S-4 (Reg. No.
333-74275), as amended, (the "Registration Statement"), filed by the Company
with the Securities and Exchange Commission (the "Commission") relating to the
proposed offer (the "Exchange Offer") by the Company to exchange $300,000,000
aggregate principal amount of 9 1/4% Senior Subordinated Notes due 2009, Series
B (the "Exchange Notes") of the Company for a like amount of outstanding 9 1/4%
Senior Subordinated Notes due 2009, Series A (the "Original Notes"). The
Exchange Notes will be issued pursuant to the Indenture (the "Indenture") dated
December 15, 1998 among the Company, certain subsidiaries of the Company, as
guarantors (the "Guarantors"), and State Street Bank and Trust Company as
trustee (the "Trustee"). All capitalized terms not otherwise defined herein have
the same meanings given to such terms in the Registration Statement.
In connection with the foregoing, we have examined, among other things,
(i) the Registration Statement, (ii) the Indenture, (iii) the form of Exchange
Notes to be issued pursuant to the Indenture and (iv) originals, photocopies or
conformed copies of all such corporate records, agreements, instruments and
documents of the Company, certificates of public officials and other
certificates and
1
<PAGE>
opinions, and have made such other investigations as we have deemed necessary
for the purpose of rendering the opinion set forth herein. In our examination,
we have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as photocopies or conformed copies, and the
authenticity of the originals of such latter documents. We have relied, to the
extent we deem such reliance proper, upon representations, statements or
certificates of public officials and officers and representatives of the
Company.
We are opining herein as to the effect on the subject transaction only
of the internal laws of the state of New York, and we express no opinion with
respect to the applicability thereto, or the effect thereon, of the laws of any
other jurisdiction or as to any matters of municipal law or the laws of any
other local agencies within the state.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Exchange Notes have been duly authorized by the Company and,
when issued and delivered in exchange for the Original Notes in
the manner set forth in the Registration Statement and executed
and authenticated in accordance with the terms and conditions of
the Indenture will constitute legal, valid and binding obligations
of the Company.
2. The Guarantees, when executed in accordance with the terms of the
Indenture and upon due execution, authentication and delivery of
the Exchange Notes by or on behalf of the Company, will be legally
valid and binding obligations of the respective Guarantors,
enforceable against the Guarantors in accordance with their terms.
The opinions rendered in paragraphs 1 and 2 are subject to the
following exceptions, limitations and qualifications: (i) the effect of
bankruptcy, insolvency, fraudulent transfer, fraudulent conveyance,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting the rights and remedies of creditors; (ii) the effect
on the Company and the Guarantors of general principles of equity, whether
enforcement is considered in a proceeding in equity or law, and the discretion
of the court before which any proceeding therefor may be brought; (iii) the
unenforceability under certain circumstances under law or court decisions of
provisions providing for the indemnification of or contribution to a party with
respect to a liability where such indemnification or contribution is contrary to
public policy; and (iv) we express no opinion concerning the enforceability of
any waiver of rights or defenses contained in the Indenture.
To the extent that the obligations of the Company and the Guarantors
under the Indenture may be dependent upon such matters, we assume for purposes
of this opinion that the Trustee is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization; that the Trustee is
duly qualified to engage in the activities contemplated by the Indenture; that
the Indenture has been duly authorized, executed and delivered by the Trustee
and constitutes the legally valid, binding and enforceable obligation of the
Trustee enforceable against the Trustee in
2
<PAGE>
accordance with its terms; that the Trustee is in compliance, generally and with
respect to acting as a trustee under the Indenture, with all applicable laws and
regulations; and that the Trustee has the requisite organizational and legal
power and authority to perform its obligations under the Indenture.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the heading "Legal
Matters" in the prospectus that forms a part thereof.
Very truly yours,
/s/ Ehrenreich Eilenberg Krause & Zivian LLP
3
<PAGE>
EXHIBIT 12a
UNITED RENTALS (NORTH AMERICA), INC.
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Earnings:
Income before
provision for income
taxes and extraordinary
items.................... $26,025 $33,781 $38,146 $34,917 $ 86,906
Interest expense.......... 6,245 7,490 11,278 11,847 64,157
Amortization of debt
issuance costs........... 27 78 124 1,423
Interest portion of
rent expense (1)......... 1,239 1,358 1,514 2,305 6,834
------- ------- ------- ------- --------
Earnings as
adjusted............... $33,509 $42,656 $51,016 $49,193 $159,320
======= ======= ======= ======= ========
Fixed charges:
Interest expense.......... $ 6,245 $ 7,490 $11,278 $11,847 $ 64,157
Amortization of debt
issuance costs........... 27 78 124 1,423
Interest portion of
rent expense (1)......... 1,239 1,358 1,514 2,305 6,834
------- ------- ------- ------- -------
Fixed charges........... $ 7,484 $ 8,875 $12,870 $14,276 $ 72,414
======= ======= ======= ======= ========
Ratio of earnings to
fixed charges.............. 4.5x 4.8x 4.0x 3.4x 2.2x
</TABLE>
- --------
(1) The interest portion of rent expense is estimated to be one-third of rent
expense.
<PAGE>
EXHIBIT 23(b)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to the Registration Statement (Form S-4 No. 333-74275) and related
Prospectus of United Rentals (North America), Inc. and to the incorporation by
reference therein of our report dated February 17, 1999, with respect to the
consolidated financial statements of United Rentals (North America), Inc.
included in its Annual Report (Form 10-K) for the year ended December 31, 1998,
our report dated January 23, 1998 with respect to financial statements of
Mission Valley Rentals, Inc. included in the Company's Current Report on Form
8-K/A dated February 4, 1998; and our report dated June 24, 1998, with respect
to the financial statements of Power Rental Co., Inc. included in the Company's
Current Report on Form 8-K/A dated July 21, 1998 and in the Company's Current
Report on Form 8-K dated December 24, 1998, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
MetroPark, New Jersey
May 7, 1999
<PAGE>
EXHIBIT 23(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Prospectus constituting part
of this Registration Statement on Form S-4 (No. 333-74275) of United Rentals
(North America), Inc. (the "Company") of our report dated February 3, 1998 with
respect to the combined financial statements of BNR Group of Companies as of
March 31, 1997 and 1996 and for the years ended March 31, 1997 and 1996 which
report appears in the Form 8-K/A of the Company dated February 4, 1998. We also
consent to the reference to our firm under the caption "Experts" in the
Registration Statement.
KPMG LLP
Waterloo, Canada
May 7, 1999
<PAGE>
EXHIBIT 23(d)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 (No. 333-74275) of
United Rentals (North America), Inc. (the "Company") of our report dated January
22, 1998 with respect to the financial statements of Access Rentals, Inc. and
Subsidiary and Affiliate, included in the Company's report on Form 8-K/A dated
February 4, 1998. We also consent to the reference to our firm under the caption
"Experts".
Battaglia, Andrews & Moag, P.C.
Batavia, New York
May 7, 1999
<PAGE>
EXHIBIT 23(e)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-4 (No. 333-74275) of
United Rentals (North America), Inc. of our reports dated March 6, 1998 and
October 28, 1998, on our audits of the financial statements of McClinch
Equipment Services, Inc. as of December 31, 1997 and August 31, 1998 and for the
year ended December 31, 1997 and of our reports dated March 25, 1998 and October
28, 1998 on our audits of the consolidated financial statements of McClinch,
Inc. and Subsidiaries as of January 31, 1998 and August 31, 1998 and for the
year ended January 31, 1998 which reports appear in Form 8-K of United Rentals,
Inc. dated December 24, 1998. We also consent to the reference to our firm under
the caption "Experts" in the Registration Statement.
PricewaterhouseCoopers LLP
Stamford, Connecticut
May 7, 1999
<PAGE>
EXHIBIT 23(f)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No. 1 to Registration Statement on Form S-4
(No. 333-74275) of United Rentals (North America), Inc. (the "Company") of our
report dated June 19, 1998 except for Notes 9 and 15 which are as of July 10,
1998 with respect to the combined financial statements of Equipment Supply co.,
Inc. and Affiliates, included in the Company's reports on Form 8-K dated July
21, 1998 and December 24, 1998. We also consent to the reference to our firm
under the caption "Experts".
BDO Seidman LLP
Philadelphia, Pennsylvania
May 7, 1999
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2)
STATE STREET BANK AND TRUST COMPANY
(Exact name of Trustee as specified in its charter)
MASSACHUSETTS 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. National Bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code
Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
UNITED RENTALS (NORTH AMERICA), INC.
(Exact name of obligor as specified in its charter)
DELAWARE 06-1493538
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
FOUR GREENWICH OFFICE PARK, 3rd FLOOR
GREENWICH, CONNECTICUT 06830
(Address of principal executive offices) (Zip Code)
9-1/4% SENIOR SUBORDINATED NOTES DUE 2009
(Title of indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System,
Washington, D.C., Federal Deposit Insurance Corporation,
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with Obligor.
If the Obligor is an affiliate of the trustee, describe each
such affiliation.
The obligor is not an affiliate of the trustee or of its
parent, STATE STREET CORPORATION.
(see note on page 2.)
Item 3. through item 15. Not Applicable.
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of
eligibility.
1. A copy of the articles of association of the trustee as now in
effect.
A copy of the articles of Association of the trustee, as
now in effect, is on file with the Securities and
Exchange Commission as Exhibit 1 to Amendment No. 1
to the Statement of Eligibility and Qualification of
Trustee (Form T-1) filed with the Registration Statement
of Morse Shoe, Inc. (File No. 22-17940) and is
incorporated herein by reference thereto.
2. A copy of the certificate of authority of the trustee to
commence business, if not contained in the articles of
association.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the
trustee to commence business was necessary or issued is
on file with the Securities and Exchange Commission as
Exhibit 2 to Amendment No. 1 to the Statement of
Eligibility and Qualification of Trustee (Form T-1)
filed with the Registration Statement of Morse Shoe,
Inc. (File No. 22-17940) and is incorporated herein by
reference thereto.
3. A copy of the authorization of the trustee to exercise
corporate trust powers, if such authorization is not contained in the documents
specified in paragraph (1) or (2), above.
A copy of the authorization of the trustee to exercise
corporate trust powers is on file with the Securities and
Exchange Commission as Exhibit 3 to Amendment No. 1 to the
Statement of Eligibility and Qualification of Trustee (Form T-1)
filed with the Registration Statement of Morse Shoe, Inc. (File
No. 22-17940) and is incorporated herein by reference thereto.
4. A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.
A copy of the by-laws of the trustee, as now in effect,
is on file with the Securities and Exchange Commission
as Exhibit 4 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the
Registration Statement of Eastern Edison Company (File
No. 33-37823) and is incorporated herein by reference
thereto.
1
<PAGE>
5. A copy of each indenture referred to in Item 4. if the obligor is in
default.
Not applicable.
6. The consents of United States institutional trustees required by
Section 321(b) of the Act.
The consent of the trustee required by Section 321(b) of the Act
is annexed hereto as Exhibit 6 and made a part hereof.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining authority.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising or
examining authority is annexed hereto as Exhibit 7 and
made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the April 9, 1999
STATE STREET BANK AND TRUST COMPANY
By: /s/ Laurel Melody-Casasanta
-------------------------------
NAME Laurel Melody-Casasanta
TITLE Assistant Vice President
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by United
Rentals (North America), Inc., we hereby consent that reports of examination by
Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Laurel Melody-Casasanta
--------------------------------
NAME Laurel Melody-Casasanta
TITLE Assistant Vice President
Dated: April 9, 1999
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business December 31, 1998,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act and in accordance
with a call made by the Commissioner of Banks under General Laws, Chapter 172,
Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin 1,209,293
Interest-bearing balances 12,007,895
Securities 9,705,731
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary 9,734,476
Loans and lease financing receivables:
Loans and leases, net of unearned income 6,973,125
Allowance for loan and lease losses 84,308
Allocated transfer risk reserve 0
Loans and leases, net of unearned income and allowances 6,888,817
Assets held in trading accounts 1,574,999
Premises and fixed assets 523,514
Other real estate owned 0
Investments in unconsolidated subsidiaries 612
Customers' liability to this bank on acceptances outstanding 47,334
Intangible assets 212,743
Other assets 1,279,224
-----------
Total assets 43,184,638
======================
LIABILITIES
Deposits:
In domestic offices 10,852,862
Noninterest-bearing 8,331,830
Interested-bearing 2,521,032
In foreign offices and Edge subsidiary 16,761,573
Noninterest-bearing 83,010
Interest-bearing 16,678,563
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary 10,041,324
Demand notes issued to the U.S. Treasury 108,420
Trading liabilities 1,240,938
Other borrowed money 322,331
Subordinated notes and debentures 0
Bank's liability on acceptances executed and outstanding 47,334
Other liabilities 1,126,058
Total liabilities 40,500,840
-----------
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common stock 29,931
Surplus 468,511
Undivided profits and capital reserves/Net unrealized holding 2,164,055
gains (losses)
Net unrealized holding gains (losses) on available-for-sale 21,638
securities
Cumulative foreign currency translation adjustments (337)
Total equity capital 2,683,798
-----------
Total liabilities and equity capital 43,184,638
-----------
4
</TABLE>
<PAGE>
I, Rex S. Schutte, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schutte
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Truman S. Casner
<PAGE>
Exhibit 99(a)
LETTER OF TRANSMITTAL
Offer to Exchange
9 1/4% Senior Subordinated Notes Due 2009, Series B
For Any and All Outstanding
9 1/4% Senior Subordinated Notes Due 2009, Series A
of
United Rentals (North America), Inc.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
[____________], UNLESS EXTENDED (THE "EXPIRATION DATE").
To: State Street Bank and Trust Company (the "Exchange Agent")
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Overnight or Hand
(registered or certified Delivery:
recommended)
State Street Bank and Trust (617) 664-5587 State Street Bank and
Company Attention: Kellie Mullen Trust Company
Corporate Trust Department Confirm by Telephone: Corporate Trust Department
P.O. Box 778 (617) 664-5290 Two International Place
Boston, MA 02102-0078 Boston, MA 02110-0078
Attention: Kellie Mullen Fourth Floor
Attention: Kellie Mullen
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF THIS INSTRUMENT VIA A FACSIMILE NUMBER OTHER THAN THE FACSIMILE
NUMBER LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED. Capitalized terms used but not defined
herein shall have the same meaning given them in the Prospectus (as defined
below).
<PAGE>
The undersigned has provided the information below in order to indicate the
Original Notes, if any, that the undersigned wishes to tender pursuant to the
Exchange Offer (as defined below).
- ---------------------------------------
- ---------------------------------------
- ---------------------------------------
Name and Address of Book-Entry Holder
- ---------------------------------------
DTC Account Number of Book Entry Holder
- ---------------------------------------
Transaction Code Number
- ---------------------------------------
Aggregate Principal Amount of Original
Notes Tendered
Ladies and Gentlemen:
The undersigned acknowledges receipt of the Prospectus dated
[______________] (the "Prospectus") of United Rentals (North America), Inc., a
Delaware corporation (the "Company"), and this Letter of Transmittal (the
"Letter of Transmittal"), which together constitute the Company's offer (the
"Exchange Offer") to exchange its 9 1/4% Senior Subordinated Notes Due 2009,
Series B (the "Exchange Notes"), the issuance of which has been registered under
the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement of which the Prospectus is a part, for a like principal
amount of its outstanding 9 1/4% Senior Subordinated Notes Due 2009, Series A
(the "Original Notes"), upon the terms and subject to the conditions set forth
in the Prospectus. Capitalized terms used but not defined herein have the
respective meanings given to them in the Prospectus.
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company the principal amount of Original Notes indicated
above. Subject to, and effective upon, the acceptance for exchange of the
principal amount of Original Notes tendered in accordance with this Letter of
Transmittal, the undersigned sells, assigns and transfers to, or upon the order
of, the Company all right, title and interest in and to the Original Notes
tendered hereby. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent its agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as the agent of the Company) with respect to the
tendered Original Notes, with full power of substitution, to: (i) deliver
Original Notes and all accompanying evidence of transfer and authenticity to or
upon the order of the Company upon receipt by the Exchange Agent, as the
undersigned's agent, of the Exchange Notes to which the undersigned is entitled
upon the acceptance by the Company of the Original
2
<PAGE>
Notes tendered under the Exchange Offer; and (ii) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Original Notes,
all in accordance with the terms of the Exchange Offer. The power of attorney
granted in this paragraph shall be deemed to be irrevocable and coupled with an
interest.
The undersigned hereby represents and warrants that it has full power and
authority to tender, exchange, assign and transfer the Original Notes tendered
hereby and that the Company will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges and encumbrances and not
subject to any adverse claim, when the same are acquired by the Company. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Company to be necessary or desirable to complete the exchange,
assignment and transfer of the Original Notes tendered.
The undersigned hereby represents and warrants that (i) it is not an
affiliate of the Company, (ii) if the undersigned is a broker-dealer, none of
the Original Notes being tendered hereby were purchased by it directly from the
Company, (iii) any Exchange Notes that it acquires in the Exchange Offer will be
acquired by it in the ordinary course of its business and (iv) it has no
arrangement with any person to participate in the distribution of the Exchange
Notes; provided, however, that if the undersigned is a broker-dealer and is
tendering hereby Original Notes that were acquired by it for its own account as
a result of market-making activities or other trading activities, the
undersigned represents and warrants, in lieu of the representation set forth in
clause (iv) immediately above, that it has no arrangement or understanding with
the Company, or any affiliate of the Company, to participate in the distribution
of the Exchange Notes. In addition, if the undersigned is not the beneficial
owner of any of the Original Notes being tendered hereby, the undersigned
confirms that the beneficial owner of such Original Notes has made the
representations and warranties provided for in the preceding sentence.
The undersigned understands that any broker-dealer (a "Participating
Broker-Dealer") that, pursuant to the Exchange Offer, receives Exchange Notes in
exchange for Original Notes that were acquired by it for its own account as a
result of market-making activities or other trading activities, will be required
to deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales by it of any such Exchange Notes. If the
undersigned is a Participating Broker-Dealer, the undersigned acknowledges that
it will comply with such prospectus delivery requirement in connection with any
resale of Exchange Notes. In addition, if the undersigned is not the beneficial
owner of any of the Original Notes being tendered hereby, the undersigned
confirms that the beneficial owner of such Original Notes has made the
acknowledgment provided for in the preceding sentence. By making the
acknowledgment provided for in this paragraph, a Participating Broker- Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
The undersigned understands that tenders of Original Notes pursuant to the
procedures described under "The Exchange Offer--Procedures for Tendering" in the
Prospectus and in the instruction attached hereto will, upon the Company's
acceptance for exchange of such tendered
3
<PAGE>
Original Notes, constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Exchange Offer. The
undersigned recognizes that, under certain circumstances set forth in the
Prospectus, the Company may not be required to accept for exchange any of the
Original Notes tendered hereby.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, legal
representatives, successors, assigns, executors and administrators.
Please sign below
X________________________________________________________Date:__________________
(Signature(s) of Book Entry Holder of Original Notes)
Area Code and Telephone Number:_________________________________________________
Taxpayer Identification or Social Security Number:______________________________
(The above lines must be signed by the Book-Entry Holder of Original Notes
exactly as the name of such Book-Entry Holder appears on the records of DTC)
If signature is by a trustee, executor, administrator, guardian, attorney-in-
fact, officer of a corporation or other person acting in a fiduciary or
representative capacity, then such person must (i) set forth his or her full
name and title below, and (ii) unless waived by the Company, submit evidence
satisfactory to the Company of such person's authority so to act.
Name(s):________________________________________________________________________
(Please Type or Print)
Capacity (Full
Title):_________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
4
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Original Notes. The term
---------------------------------------------------------
"Book Entry Holder" with respect to any Original Notes means the participant in
the DTC system that is listed as the holder of such notes in the records
maintained by DTC. Only a Book-Entry Holder of Original Notes may tender such
Original Notes pursuant to the Exchange Offer. Tenders of Original Notes will be
accepted only in integral multiples of $1,000. To tender any Original Notes
pursuant to the Exchange Offer, the Book-Entry Holder of such Original Notes
must make book-entry delivery of such Original Notes by causing DTC to transfer
such Original Notes to the account of the Exchange Agent at DTC in accordance
with DTC's Automated Tender Offer Program ("ATOP") prior to 5:00 p.m., New York
City time, on the Expiration Date. In addition, either (i) DTC must deliver an
Agent's Message (as defined below) prior to 5:00 p.m., New York City time, on
the Expiration Date, indicating that DTC has received from such Book-Entry
Holder an express acknowledgment that such Book-Entry Holder has received and
agrees to be bound by the terms of the Letter of Transmittal or (ii) such Book-
Entry Holder must complete, sign and date the Letter of Transmittal or a
facsimile thereof, in accordance with the instructions contained herein and
deliver such Letter of Transmittal, or such facsimile, to the Exchange Agent at
the address set forth above prior to 5:00 p.m., New York City time, on the
Expiration Date. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO
THE EXCHANGE AGENT.
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Exchange Agent and forming part of the book-entry confirmation
relating to a book-entry transfer of Original Notes through ATOP, which states
that DTC has received an express acknowledgment from the DTC Participant that is
tendering the Original Notes which are the subject of such book entry
confirmation, that such DTC Participant has received and agrees to be bound by
the terms of the Letter of Transmittal.
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL TO THE EXCHANGE AGENT
IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS
RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY TO THE
EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL SHOULD BE
SENT TO THE COMPANY.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Original Notes and withdrawal of tendered
Original Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute right
to reject any and all Original Notes not properly tendered or any Original Notes
the Company's acceptance of which would, in the opinion of counsel for the
Company, be unlawful. The Company also reserves the right to waive any
irregularities or conditions of tender as
5
<PAGE>
to particular Original Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Original Notes must be
cured within such time as the Company shall determine. Neither the Company, the
Exchange Agent nor any other person shall be under any duty to give notification
of defects or irregularities with respect to tenders of Original Notes, nor
shall any of them incur any liability for failure to give such notification.
Tenders of Original Notes will not be deemed to have been made until such
irregularities have been cured or waived. Any Original Notes received by the
Exchange Agent that are not properly tendered or the tender of which is
otherwise rejected by the Company and as to which the defects or irregularities
have not been cured or waived will be returned by the Exchange Agent to the
Book-Entry Holder that tendered such Original Notes (by crediting an account
maintained at DTC designated by such Book-Entry Holder) as soon as practicable
following the Expiration Date.
2. Withdrawals. Tenders of Original Notes may be withdrawn at any time
-----------
prior to 5:00 p.m., New York City time, on the Expiration Date. To withdraw a
tender of Original Notes pursuant to the Exchange Offer, the Book-Entry Holder
that tendered such Original Notes must, prior to 5:00 p.m., New York City time,
on the Expiration Date, either (i) withdraw such tender in accordance with the
appropriate procedures of the ATOP system or (ii) deliver to the Exchange Agent
a written or facsimile transmission notice of withdrawal at the address set
forth herein. Any such notice of withdrawal must contain the name and number of
the Book-Entry Holder, the amount of Original Notes to which such withdrawal
relates, the account at DTC to be credited with the withdrawn Original Notes and
the signature of the Book-Entry Holder. All questions as to the validity, form
and eligibility (including time of receipt) of such withdrawal notices will be
determined by the Company, whose determination will be final and binding on all
parties. Any Original Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer, and no Exchange Notes will be
issued with respect thereto unless the Original Notes so withdrawn are validly
retendered. Any Original Notes which have been tendered but which are withdrawn
will be returned by the Exchange Agent to the Book-Entry Holder that tendered
such Original Notes (by crediting an account maintained at DTC designated by
such Book-Entry Holder) as soon as practicable after withdrawal. Properly
withdrawn Original Notes may be retendered at any time prior to the Expiration
Date by following the procedures described in paragraph 1 above.
3. Transfer Taxes. The Company will pay all transfer taxes, if any,
--------------
applicable to the exchange of Original Notes pursuant to the Exchange Offer. If,
however, Exchange Notes or Original Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be registered or issued
in the name of, any person other than the Book-Entry Holder of the Original
Notes tendered, or if a transfer tax is imposed for any reason other than the
exchange of Original Notes pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the Book-Entry Holder or any other
persons) will be payable by the tendering Holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering Holder.
6
<PAGE>
4. Requests for Assistance or Additional Copies. Questions and requests
--------------------------------------------
for assistance and requests for additional copies of the Prospectus or this
Letter of Transmittal may be directed to the Exchange Agent at the address
specified in the Prospectus.
7
