UNITED RENTALS INC, S-1/A, 1998-02-17

UNITED RENTALS INC
S-1/A, 1998-02-17
EQUIPMENT RENTAL & LEASING, NEC

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 17, 1998

REGISTRATION NO. 333-45605

---------------

AMENDMENT NO. 1

TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

---------------
UNITED RENTALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 7353 06-1493538
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)

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, INC.
FOUR GREENWICH OFFICE PARK
GREENWICH, CONNECTICUT 06830
(203) 622-3131
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

---------------
Copies of all communications to:

JOSEPH EHRENREICH, ESQ. STEPHEN M. BESEN, ESQ. PHYLLIS G. KORFF, ESQ.
EHRENREICH EILENBERG WEIL, GOTSHAL & MANGES LLP SKADDEN, ARPS, SLATE,
KRAUSE & ZIVIAN LLP 767 FIFTH AVENUE MEAGHER & FLOM LLP
11 EAST 44TH STREET NEW YORK, NEW YORK 10153 919 THIRD AVENUE
NEW YORK, NEW YORK 10017 (212) 310-8000 NEW YORK, NEW YORK 10022
(212) 986-9700 (212) 735-3000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please 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, please 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(c)
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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TITLE OF
EACH CLASS
OF PROPOSED PROPOSED
SECURITIES AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TO BE TO BE OFFERING AGGREGATE REGISTRATION
REGISTERED REGISTERED(1) PRICE PER SHARE(2) OFFERING PRICE(2) FEE
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common
Stock,
par
value
$0.01
per
share. 6,325,000 Shares $23.88(3) $151,041,000 $41,537
1,150,000 Shares $26.94(4) $ 30,981,000 $ 8,520
---------------- ------------ -------
Total. 7,475,000 Shares $182,022,000 $50,057
- ------------------------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------

(1) Includes 975,000 shares that the Underwriters have the option to purchase
to cover over-allotments, if any.

(2) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457 of the Securities Act of 1933, as amended (the
"Act").

(3) The Registration Statement as originally filed reflected the registration
of 6,325,000 shares. Pursuant to Rule 457 under the Act, the fee
calculation with respect to such shares is based upon the average of the
high and low sales prices of the Common Stock on the New York Stock
Exchange on January 30, 1998, which date is within five business days
prior to the date of the original filing of this Registration Statement.

(4) This Amendment No. 1 reflects the registration of an additional 1,150,000
shares. Pursuant to Rule 457 under the Act, the fee calculation with
respect to such shares is based upon the average of the high and low sales
prices of the Common Stock on the New York Stock Exchange on February 11,
1998, which date is within five business days prior to the date of the
filing of this Amendment No. 1.

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 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>

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus: one to be used
in connection with an offering in the United States and Canada (the "U.S.
Prospectus") and one to be used in a concurrent offering outside the United
States and Canada (the "International Prospectus"). The two prospectuses are
identical except for the front and back cover pages, the inside front cover
page, and the section entitled "Underwriting." The form of the U.S. Prospectus
is included herein and is followed by the alternate pages to be used in the
International Prospectus. Each of the alternate pages for the International
Prospectus included herein is labeled "Alternate Page for International
Prospectus."
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS, DATED FEBRUARY 17, 1998

PROSPECTUS

6,500,000 SHARES

[LOGO] UNITED
RENTALS

COMMON STOCK

-----------

All of the shares of Common Stock, $.01 par value (the "Common Stock"),
offered hereby are being offered by United Rentals, Inc., a Delaware
corporation (the "Company").

Of the Common Stock offered hereby, 5,200,000 shares are being offered
initially in the United States and Canada by the U.S. Underwriters (the "U.S.
Offering"), and 1,300,000 shares are being offered initially in a concurrent
international offering outside the United States and Canada by the
International Managers (the "International Offering", and together with the
U.S. Offering, the "Offerings"). The public offering price and the underwriting
discount per share are identical for each of the Offerings. See "Underwriting."

The Common Stock is traded on the New York Stock Exchange under the symbol
"URI". On February 13, 1998, the last sale price of the Common Stock as
reported on the New York Stock Exchange was $26 1/16 per share. See "Price
Range of Common Stock."

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share...................................... $ $ $
- ----------------------------------------------------------------------------------
Total(3)....................................... $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

(1) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act"). See "Underwriting."
(2) Before deducting expenses of the Offerings payable by the Company estimated
at $1,000,000.

(3) The Company has granted the U.S. Underwriters and the International
Managers options to purchase up to an additional 780,000 shares and 195,000
shares of Common Stock, respectively, in each case exercisable within 30
days of the date hereof, solely to cover over-allotments, if any. If such
options are exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to the Company will be $ , $ and $ ,
respectively. See "Underwriting."

-----------

The shares of Common Stock are being offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to the approval of certain legal matters by counsel for the Underwriters and to
certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part. It is
expected that delivery of the shares of Common Stock will be made in New York,
New York, on or about , 1998.

-----------
MERRILL LYNCH & CO.

DEUTSCHE MORGAN GRENFELL

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON SMITH BARNEY
-----------

The date of this Prospectus is , 1998.
<PAGE>

[Map Showing Rental Locations]

Certain persons participating in the Offerings may engage in transactions
that stabilize, maintain or otherwise affect the price of the Common Stock.
Such transactions may include stabilizing, the purchase of Common Stock to
cover syndicate short positions and the imposition of penalty bids. For a
description of these activities, see "Underwriting."
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements and
notes thereto appearing elsewhere in this Prospectus. Unless otherwise
indicated, (i) the terms "United Rentals" and "the Company" refer collectively
to United Rentals, Inc. and its subsidiaries and (ii) the term the "Acquired
Companies" refers collectively to the 21 companies acquired by the Company
since its formation in September 1997. All financial and operating data for the
Company contained herein with respect to the year ended December 31, 1997 is on
a pro forma basis giving effect to the acquisition of the Acquired Companies
and the financing thereof as of January 1, 1997. Unless otherwise indicated,
the information contained in this Prospectus assumes no exercise of the
Underwriters' over-allotment options.

THE COMPANY

United Rentals currently operates 68 rental locations in 16 states and
Canada. The Company's locations are managed by experienced professionals who
have extensive industry experience and substantial knowledge of the local
markets served. These managers generally are former owners or employees of the
businesses acquired by the Company. The types of rental equipment offered by
the Company include a broad range of light to heavy construction and industrial
equipment (such as pumps, generators, forklifts, backhoes, cranes, bulldozers,
aerial lifts and compressors), general tools and equipment (such as hand tools
and garden and landscaping equipment) and special event equipment (such as
tents, tables and chairs). The equipment mix varies at each of the Company's
locations, with some locations offering a general mix and some specializing in
specific equipment categories. As of February 13, 1998, the Company's rental
equipment included approximately 34,500 units (not including special event
equipment), had an original purchase price of approximately $225 million and
had a weighted average age (based on original purchase price) of approximately
3.6 years.

THE INDUSTRY

The Company estimates 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 21% from 1992 through 1996 (based upon revenues
reported for such period, the latest period for which data is available, by the
Rental Equipment Register, an industry trade publication). The Company believes
that this growth primarily reflects increasing recognition by customers of the
many advantages that equipment rental may offer compared with ownership,
including the ability to: (i) avoid the large capital investment required for
equipment purchases, (ii) reduce storage and maintenance costs, (iii)
supplement owned equipment, thereby increasing the range and number of jobs
that can be worked on, (iv) access a broad selection of equipment and select
the equipment best suited for each particular job, (v) obtain equipment as
needed and minimize the costs associated with idle equipment, and (vi) access
the latest technology without investing in new equipment.

The equipment rental industry is highly fragmented and consists of a small
number of multi-location regional or national operators and a large number of
relatively small, independent businesses serving discrete local markets. Based
upon rental revenues reported by the Rental Equipment Register for 1996 (the
latest year for which such revenues have been reported): (i) there were only
five equipment rental companies that had 1996 equipment rental revenues in
excess of $100 million (with the largest company having had 1996 equipment
rental revenues of approximately $400 million), (ii) the largest 100 equipment
rental companies combined had less than

3
<PAGE>

a 20% share of the market based on 1996 equipment rental revenues and the
Company's estimate of the size of the market (with the largest company having
had a market share of less than 3%), and (iii) there were approximately 100
equipment rental companies that had 1996 equipment rental revenues between $5
million and $100 million. In addition, the Company estimates that there are
more than 20,000 companies with annual equipment rental revenues of less than
$5 million. The Company believes 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 and effectively integrate and operate acquired companies.

GROWTH STRATEGY

The Company's growth strategy is to expand through a disciplined acquisition
program, the opening of new rental locations and internal growth and to further
diversify its equipment categories and customer markets. The Company believes
that as it expands it should gain competitive advantages relative to smaller
operators, including greater purchasing power, a lower cost of capital, the
ability to provide customers with a broader range of equipment and services and
with newer and better maintained equipment, and greater flexibility to transfer
equipment among locations in response to customer demand.

The Company is seeking to acquire companies of varying size, including
relatively large companies to serve as platforms for regional development and
smaller companies to complement existing or anticipated locations. In
evaluating potential acquisition targets, the Company considers a number of
factors, including 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. The Company will seek expansion
opportunities in the United States and Canada and will pursue acquisition
candidates with varying types of equipment and customer specializations. The
Company believes that geographic and customer diversification will allow the
Company to participate in the overall growth of the equipment rental industry
and reduce the Company's sensitivity to fluctuations in regional economic
conditions or changes that affect particular market segments.

The Company believes that there will be significant opportunities to improve
operating margins at acquired companies through the efficient integration of
new and existing operations, the elimination of duplicative costs, reduction in
overhead, the centralization of functions such as purchasing and information
technology, and the application of best practices. The Company also believes
that a lack of capital has constrained expansion and modernization at many
small and mid-sized equipment rental companies and that as a result there is
significant potential to increase internal growth at many acquired companies
through capital investment. The Company will seek to increase internal growth
by investing in additional and more modern equipment, using advanced
information technology systems to improve asset utilization and tracking,
increasing sales and marketing efforts, expanding the customer segments and
geographic areas served, and opening complementary locations.

BACKGROUND

The Company was founded by eight of the Company's officers, who contributed
an aggregate of $44.4 million in cash to the capital of the Company. Each of
the founders was formerly a senior executive of United Waste Systems, Inc.
("United Waste"), a solid waste management company that was sold in August
1997, or a senior member of United Waste's acquisition team. United Waste
executed a growth strategy that combined a disciplined acquisition program
(including over 200 acquisitions completed from January 1995 through August
1997), the integration and optimization of acquired facilities, and internal
growth. The Company believes that the extensive experience of its management
team in acquiring and effectively integrating and operating acquisition targets
should enable the Company to capitalize on consolidation opportunities in the
equipment rental industry.

United Rentals, Inc. was incorporated under the laws of the State of Delaware
in August 1997, initially capitalized in September 1997 and commenced rental
operations in October 1997 by acquiring six established equipment rental
companies. The executive offices of the Company are located at Four Greenwich
Office Park, Greenwich, Connecticut 06830, and its telephone number is (203)
622-3131.

4
<PAGE>

THE OFFERINGS

<TABLE>
<C> <S>
Common Stock offered hereby ..... 6,500,000 shares(1)
Common Stock to be outstanding
after the Offerings ............ 31,218,808 shares(1)(2)
Use of Proceeds ................. The net proceeds from the Offerings will be
used (i) to repay approximately $125.4
million of outstanding indebtedness under
the Company's $155 million revolving credit
facility (the "Credit Facility") and (ii)
for future acquisitions, capital
expenditures and general corporate
purposes. See "Use of Proceeds."
New York Stock Exchange Symbol .. URI
</TABLE>
- --------
(1) Assumes no exercise of the over-allotment options granted by the Company to
the Underwriters.

(2)Does not include (i) 6,519,058 shares issuable upon the exercise of
outstanding warrants, which provide for a weighted average exercise price of
$10.12 per share, (ii) 931,333 shares issuable upon the exercise of outstanding
options granted pursuant to the Company's 1997 Stock Option Plan, which provide
for exercise prices ranging from $10.00 to $30.00 per share, the weighted
average exercise price being $13.06 per share, (iii) 4,068,667 shares reserved
for possible future grants of options under the Company's 1997 Stock Option
Plan, and (iv) shares issuable upon conversion of a $300,000 convertible note
which provides for a conversion price of $16.20 per share. Also does not
reflect adjustments which may change the number of shares issued as
consideration for the acquisition of one of the Acquired Companies. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Consideration Paid for Acquired Companies," "Management--Capital
Contributions by Officers and Directors" and "Description of Capital Stock--
Warrants, Options and Convertible Notes."

RISK FACTORS

See "Risk Factors" beginning on page 7 for a discussion of certain risks that
should be considered in connection with an investment in the Common Stock
offered hereby.

5
<PAGE>

SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The Company was incorporated in August 1997 and commenced equipment rental
operations in October 1997 by acquiring six established rental companies. The
Company acquired 15 additional companies in the first two months of 1998. The
following unaudited pro forma income statement data for the year ended December
31, 1997 gives effect to the acquisition of each of the Acquired Companies, the
financing of each such acquisition and all issuances of Common Stock after the
beginning of such period, as if all such transactions had occurred at the
beginning of such period. The following unaudited pro forma balance sheet data
as of December 31, 1997 gives effect to the 15 acquisitions completed by the
Company subsequent to such date and the financing of each such acquisition, as
if all such transactions had occurred on such date. The following unaudited pro
forma as adjusted balance sheet data gives effect to the foregoing and to
completion of the Offerings at an assumed public offering price of $26.0625 per
share (the last reported sale price of the Common Stock on February 13, 1998)
and the application of a portion of the estimated net proceeds therefrom to
repay outstanding indebtedness under the Credit Facility. See "Use of Proceeds"
and "Capitalization."

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------------- ----------------------
PERIOD FROM
AUGUST 14, 1997
(INCEPTION) THROUGH YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1997
----------------------- ----------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
INCOME STATEMENT DATA:
Total revenues.......... $ 10,633 $ 188,185
Gross profit............ 3,811 69,771
Operating income........ 238 26,085
Interest expense ....... 454 9,076
Other (income) expense,
net.................... (270) (1,734)
--------- ---------
Income before income
taxes.................. 54 18,743
Income taxes............ 20 7,472
--------- ---------
Net income.............. $ 34 $ 11,271
========= =========
Basic earnings per
share.................. $ 0.00 $ 0.46
========= =========
Diluted earnings per
share.................. $ 0.00 $ 0.43
========= =========
Depreciation and
amortization........... $ 1,301 $ 26,502
EBITDA(1)............... $ 1,539 $ 52,587
<CAPTION>
AS OF DECEMBER 31, 1997
----------------------------------------------------------------------
PRO FORMA
HISTORICAL PRO FORMA AS ADJUSTED
---------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents............ $ 68,608 $ 50 $ 49,728
Rental equipment, net... 33,408 140,482 140,482
Total assets............ 169,110 329,736 379,414
Debt.................... 1,074 119,665 9,831
Stockholders' equity.... 157,730 173,182 332,694
</TABLE>

(1) As used herein, "EBITDA" means net income less non-operating income plus
interest, non-operating expenses, income taxes, depreciation, amortization
and other non-cash items. Management believes that EBITDA, as presented,
represents a useful measure of assessing the performance of the Company's
ongoing operating activities as it reflects the earnings trends of the
Company without the impact of interest, income taxes, non-operating income
and expenses and certain non-cash charges. EBITDA is not intended as an
alternative to cash flow from operating activities as a measure of
liquidity or as an alternative to net income as an indicator of the
Company's operating performance.

6
<PAGE>

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves a high
degree of risk. In addition to the other information in this Prospectus, the
following Risk Factors should be considered carefully in evaluating an
investment in the Common Stock.

RECENTLY FORMED COMPANY; LIMITED OPERATING HISTORY

The Company was incorporated in August 1997 and commenced equipment rental
and related operations in October 1997 by acquiring six established rental
companies. The Company acquired 15 additional companies in the first two
months of 1998. Due to the recent commencement of the Company's operations,
the Company has a limited operating history upon which an evaluation of the
Company and its prospects can be based. Furthermore, the Company's historical
financial statements included herein, which cover the period from inception
through December 31, 1997, do not fully reflect the Company's current
operations in view of the fact that (i) the results of the six companies
acquired in October 1997 are reflected in such financial statements for only a
portion of the period covered thereby and (ii) the results of the 15 companies
acquired in the first two months of 1998 are not reflected in such financial
statements.

ACQUIRED COMPANIES NOT HISTORICALLY OPERATED AS A COMBINED BUSINESS

Although the Acquired Companies have been in existence an average of 21
years, the businesses of these companies have not historically been operated
as a combined business. There can be no assurance that the Company will be
able to integrate successfully the businesses of the Acquired Companies (or
the businesses of any companies acquired in the future), to operate them
profitably on a combined basis, or to manage effectively the combined
business. Failure by the Company to integrate successfully or manage
effectively the Acquired Companies could have a material adverse effect on the
Company's results of operations and financial condition.

RISKS RELATING TO GROWTH STRATEGY

Principal components of the Company's growth strategy include continued
expansion through an ongoing acquisition program, the opening of start-up
locations, and internal growth. However, there can be no assurance that the
Company will successfully implement its growth strategy or that, if
implemented, such strategy will result in continued profitability. In
addition, under the terms of the Company's Credit Facility, the Company may
not make acquisitions unless certain financial conditions are satisfied or the
consent of the lenders is obtained. Furthermore, there can be no assurance
that the Company's growth rate will be comparable to the past or future growth
rate of the overall equipment rental industry or any segment thereof. The
Company's growth strategy involves a number of risks and uncertainties,
including:

Availability of Acquisition Targets and Sites for Start-up Locations. The
Company may encounter substantial competition in its efforts to identify and
acquire appropriate acquisition candidates and sites for start-up locations,
which could have the effect of increasing prices for acquisitions or such
sites. There can be no assurance that the Company will succeed in identifying
appropriate acquisition candidates or sites for start-up locations or that the
Company will be able to acquire any acquisition candidate or site that it does
identify on terms that are acceptable to the Company.

Need to Integrate New Operations. As the Company grows, the Company intends
to focus substantial efforts on the efficient integration of new operations,
the elimination of duplicative costs and the reduction of overhead. There can
be no assurance, however, that the Company will be successful in these efforts
or that these efforts may not in certain circumstances adversely affect
existing operations.

Need to Recruit Additional Personnel. The Company will require additional
personnel in order to implement its growth strategy and support expanded
operations. Accordingly, the Company is in the process of recruiting
additional operating, acquisition, finance and other personnel from the
equipment rental industry and from other industries. There can be no
assurance, however, that the Company will succeed in recruiting the requisite
qualified personnel as and when needed.

7
<PAGE>

Certain Risks Related to Start-up Locations. The Company expects that start-
up locations may initially have a negative impact on results of operations and
margins due to several factors, including: (i) the Company will incur
significant start-up expenses in connection with establishing each start-up
location and (ii) it will generally take some time following the commencement
of operations at a start-up location before profitability can be achieved.
There can be no assurance that any start-up location will become profitable
within the first several years of operations, if at all.

DEPENDENCE ON ADDITIONAL CAPITAL TO FINANCE GROWTH

The Company's growth strategy will require substantial capital investment.
Capital will be required by the Company for, among other purposes, completing
acquisitions, establishing new rental locations, integrating completed
acquisitions, acquiring rental equipment and maintaining the condition of its
rental equipment. The Company intends to pay for future acquisitions using
cash, capital stock, notes and/or assumption of indebtedness. To the extent
that cash generated internally and cash available under the Credit Facility is
not sufficient to provide the capital required for such purposes and future
operations, the Company will require additional debt and/or equity financing
in order to provide for such capital. There can be no assurance, however, that
such financing will be available or, if available, will be available on terms
satisfactory to the Company. Failure by the Company to obtain sufficient
additional capital in the future could limit the Company's ability to
implement its business strategy. Future debt financings, if available, may
result in increased interest and amortization expense, increased leverage and
decreased income available to fund further acquisitions and expansion, and may
limit the Company's ability to withstand competitive pressures and render the
Company more vulnerable to economic downturns. Future equity financings may
dilute the equity interest of existing stockholders.

POSSIBLE UNDISCOVERED LIABILITIES OF ACQUIRED COMPANIES

Although the Company performs a due diligence investigation of each business
that it acquires, there may nevertheless be liabilities of the Acquired
Companies or future acquired companies that the Company fails or is unable to
discover during its due diligence investigation and for which the Company, as
a successor owner, may be responsible. The Company seeks to minimize the
impact of these liabilities by obtaining indemnities and warranties from the
seller which may be supported by deferring payment of a portion of the
purchase price. However, these indemnities and warranties, if obtained, may
not fully cover the liabilities due to their limited scope, amount, or
duration, the financial limitations of the indemnitor or warrantor, or other
reasons.

DEPENDENCE ON MANAGEMENT

The Company is highly dependent upon its senior management team. The loss of
the services of any member of senior management may have a material adverse
effect on the Company. The Company's Credit Facility provides that the failure
of certain members of the Company's current senior management to continue to
hold executive positions with the Company for a period of 30 consecutive days
constitutes an event of default under the Credit Facility unless replacement
officers satisfactory to the lenders are appointed. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources." The Company does not presently maintain "key
man" life insurance with respect to members of senior management.

The Company's rental locations are managed by local managers who have
extensive experience in the equipment rental industry and substantial
knowledge of the local markets served. These managers are generally former
owners or employees of the businesses acquired by the Company. The loss of one
or more of these managers may have a material adverse effect on the Company in
the event that the Company is unable to find a suitable replacement in a
timely manner.

The Company's present dependence on regional and local managers is
heightened by the fact that the Company's founding senior management team,
while having substantial acquisition and operating experience in other
industries (particularly the solid waste industry), did not have experience in
the equipment rental industry prior to founding the Company.

8
<PAGE>

NEED FOR INTEGRATED INFORMATION TECHNOLOGY SYSTEMS

The Company is in the process of installing an integrated information
technology system that will link all locations, integrate operating and
financial data on a Company-wide basis, and enable the real-time tracking of
rental transactions, equipment availability, inventory and other data. The
Company expects that this system will become operational at substantially all
the Company's existing locations in March 1998. The Company thereafter will be
required to expand the system on an ongoing basis as it adds locations.
Although the Company expects the system to become operational in March 1998,
there can be no assurance that the Company will not encounter unexpected
delays or that such system when operational will function in accordance with
the Company's expectations. Failure of the system to become operational or to
function as expected could negatively impact the Company's ability to
implement its growth strategy. Until the new system is operational, each
acquired business will continue to use the systems that it had in place at the
time it was acquired. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources" and
"Business--Information Technology System."

COMPETITION

The equipment rental industry is highly fragmented and competitive. The
Company's competitors include public companies or divisions of public
companies; regional competitors which operate in one or more states; small,
independent businesses with one or two rental locations; and equipment vendors
and dealers who both sell and rent equipment directly to customers. Certain of
the Company's competitors are larger and have greater financial resources than
the Company. There can be no assurance that the Company will not encounter
increased competition from existing competitors or new market entrants or that
equipment manufacturers will not commence, or increase their efforts, to rent
or sell equipment directly to the Company's customers. In addition, to the
extent that competitors seek to gain or retain market share by reducing
prices, the Company may be required to lower its prices, thereby affecting
operating results. See "Business--Competition."

SENSITIVITY TO GENERAL ECONOMIC AND WEATHER CONDITIONS

The Company believes that the equipment rental business is sensitive to
changes in economic conditions and that demand for rental equipment can be
reduced significantly by adverse weather conditions. There can be no assurance
that the Company's business and financial condition will not be adversely
affected by (i) changes in general economic conditions, including national,
regional and local changes in construction and industrial activity, (ii)
increases in interest rates that may result in a higher cost of capital to the
Company, or (iii) adverse weather conditions that may decrease construction
and industrial activity.

QUARTERLY FLUCTUATIONS OF OPERATING RESULTS

The Company expects that its revenues and operating results may fluctuate
from quarter to quarter due to a number of factors, including: seasonal rental
patterns of the Company's customers (with rental activity tending to be lower
in the winter); changes in general economic conditions in the Company's
markets; the timing of acquisitions and the opening of start-up locations
(which generally will require a period of time to become profitable) and
related costs; 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. These
factors, among others, may result in the Company's results of operations in
some future periods not meeting expectations, which could have a material
adverse impact on the market price of the Common Stock.

LIABILITY AND INSURANCE

The Company is subject to various possible claims, including claims for
personal injury or death caused by equipment rented or sold by the Company or
motor vehicle accidents involving Company delivery and service personnel and
compensation and other employment related claims. The Company carries a broad
range of insurance for the protection of its assets and operations. However,
such coverage is subject to a deductible of $250,000 and limited to a maximum
of $25 million per occurrence. In addition, the Company does not maintain
insurance coverage for environmental liability, since the Company believes
that the cost for such coverage is high relative to the benefit that it
provides. Furthermore, 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 the Company's
insurance. There can be no assurance that insurance will continue to be

9
<PAGE>

available to the Company on economically reasonable terms, if at all, that
existing or future claims will not exceed the level of the Company's insurance
or relate to matters not covered by the Company's insurance (such as
environmental liability), or that the Company will have sufficient capital
available to pay any uninsured claims.

ENVIRONMENTAL REGULATION

The Company uses hazardous materials, such as solvents, to clean and
maintain its rental equipment and generates and disposes of wastes such as
used motor oil, radiator fluid, solvents and batteries. In addition, the
Company currently dispenses, or may in the future dispense, petroleum products
from underground and above-ground storage tanks located at certain rental
locations. These and other activities of the Company are subject to various
federal, state and local laws and regulations governing the generation,
handling, storage, transportation, treatment and disposal of hazardous
substances and wastes. Under such laws, an owner or lessee of real estate may
be liable for, among other things, (i) the costs of removal or remediation of
certain hazardous or toxic substances located on, in, or emanating from, such
property, as well as related costs of investigation and property damage and
substantial penalties for violations of such laws, and (ii) environmental
contamination at facilities where its waste is or has been disposed. Such laws
often impose such liability without regard to whether the owner or lessee knew
of, or was responsible for, the presence of such hazardous or toxic
substances. Although the Company investigates each business or property that
it acquires or leases and believes there are no existing material liabilities
relating to non-compliance with environmental laws and regulations, there can
be no assurance that there are no undiscovered potential liabilities relating
to non-compliance with environmental laws and regulations, that historic or
current operations have not resulted in undiscovered conditions that will
require investigation and/or remediation under environmental laws, or that
future uses or conditions will not result in the imposition of environmental
liability upon the Company or expose the Company to third-party actions such
as tort suits. Furthermore, there can be no assurance that changes in
environmental regulations in the future will not require the Company to make
significant capital expenditures to change methods of disposal of hazardous
materials or otherwise alter aspects of its operations. See "Business--
Environmental Regulation."

BROAD DISCRETION ON APPLICATION OF PROCEEDS

The Company's business plan is general in nature and subject to change based
upon changing conditions and opportunities. As a result, the Company will have
broad discretion in applying the portion of the net proceeds not allocated to
the repayment of outstanding indebtedness under the Credit Facility (as well
as the proceeds of any future borrowings under the Credit Facility). The
Company may use the net proceeds for future acquisitions. The Company at
present is not party to any definitive agreements relating to future
acquisitions.

CONCENTRATED CONTROL

Immediately following completion of the Offerings, the officers and
directors of the Company will own an aggregate of 13,262,414 shares of Common
Stock and currently exercisable warrants and options to purchase an additional
6,402,858 shares of Common Stock, representing on a pro forma basis giving
effect to the exercise of such warrants and options approximately 52% of the
Common Stock to be outstanding immediately following completion of the
Offerings (including 10,000,100 shares of Common Stock and warrants to
purchase an additional 5,000,000 shares of Common Stock beneficially owned by
Bradley S. Jacobs, Chairman and Chief Executive Officer of the Company,
representing on such a pro forma basis approximately 41% of the Common Stock
to be outstanding immediately following completion of the Offerings). Such
share ownership may effectively give such persons the ability to elect the
entire Board of Directors of the Company and to control the Company's
management and affairs.

VOLATILITY OF STOCK PRICE

The market price of the Common Stock may experience significant volatility.
The market price of the Common Stock could be subject to significant variation
due to fluctuations in the Company's operating results, the degree of success
the Company achieves in implementing its business strategy, changes in
business or regulatory conditions affecting the Company, its customers or its
competitors, and other factors. In addition, the

10
<PAGE>

financial markets may experience volatility that affects the market prices of
securities in ways unrelated to the operating performance of the issuers of
such securities, and such volatility may adversely affect the market price of
the Common Stock. There can be no assurance that the market price of the
Common Stock will not decline below the price at which the Common Stock is
being offered hereby.

ABSENCE OF DIVIDENDS

The Company has never paid any dividends on its Common Stock and has no
plans to pay dividends on its Common Stock in the foreseeable future. Under
the terms of the Credit Facility, the Company is prohibited from paying
dividends on the Common Stock. See "Dividend Policy."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of Common Stock (including shares issued upon
exercise of warrants or options), or the perception that such sales could
occur, could adversely affect prevailing market prices for the Common Stock.
The number of outstanding shares of Common Stock available for sale in the
public market will be limited by the lock-up agreements described below.
Subject to such agreements, upon completion of the Offerings, substantially
all of the Company's outstanding shares of Common Stock (and all shares that
may hereafter be issued upon the exercise of outstanding warrants) will either
be freely tradeable without restriction under the Securities Act or eligible
for sale pursuant to a shelf registration statement previously filed by the
Company.

The Company and all of its officers and directors (who hold an aggregate of
13,262,414 shares of Common Stock) have agreed not to sell or otherwise
dispose of any shares of Common Stock (including shares that may be acquired
upon the exercise of currently exercisable warrants) for a period of 180 days
after the date of this Prospectus without the prior written consent of Merrill
Lynch & Co., on behalf of the Underwriters (except that the Company may issue
shares as consideration for acquisitions, provided that the Company may not
issue in excess of 750,000 shares for acquisitions unless the recipients of
any excess shares agree to be subject to the foregoing lock-up agreement with
respect to such excess shares). In addition, the holder of 318,712 shares of
Common Stock has agreed not to sell or otherwise dispose of such shares until
June 1998 without the prior written consent of Merrill Lynch & Co.
Furthermore, the Company has agreed not to waive any existing lock-up
agreements between the Company and its stockholders for a period of 180 days
after the date of this Prospectus without the prior written consent of Merrill
Lynch & Co., on behalf of the Underwriters. Such existing lock-up agreements
prohibit the sale or transfer of an aggregate of 2,901,705 shares without the
prior written consent of the Company. Such existing lock-up agreements lapse
in December 1998 (with respect to 712,241shares), January 1999 (with respect
to 400,584 shares), March 1999 (with respect to 21,429 shares), December 1999
(with respect to 728,671 shares) and December 2000 (with respect to 1,038,780
shares). In addition, an aggregate of 404,291 shares of Common Stock not
subject to lock-up agreements and not covered by the Company's shelf
registration statement are "restricted securities" under Rule 144 under the
Securities Act and may not be sold unless registered pursuant to the
Securities Act or an exemption from registration is available. See "Shares
Eligible For Future Sale" and "Underwriting."

ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Certificate of Incorporation and By-
laws, as well as applicable Delaware law, may have the effect of discouraging
unsolicited acquisition proposals or making it more difficult for a third
party to gain control of the Company. These provisions provide, among other
things, that (i) the Board of Directors shall be divided into three classes,
with directors of each class serving for a staggered three-year period, (ii)
directors may be removed only for cause and only upon the affirmative vote of
at least 66 2/3% of the voting power of all the then outstanding shares of
stock entitled to vote, (iii) stockholders may not act by written consent,
(iv) stockholder nominations and proposals may only be made if specified
advance notice requirements are complied with, (v) stockholders are precluded
from calling a special meeting of stockholders, and (vi) the Board of
Directors has the authority to issue up to 5,000,000 shares of preferred stock
in one or more series and

11
<PAGE>

to fix the powers, preferences and rights of any such series without
stockholder approval. Moreover, under certain conditions, Section 203 of the
Delaware General Corporation Law may prevent the Company from engaging in a
"business combination" with an "interested stockholder." See "Certain Charter
and By-law Provisions."

USE OF PROCEEDS

The net proceeds to the Company from the Offerings are estimated to be
$159.5 million ($183.6 million if the Underwriters' over-allotment options are
exercised in full), based upon an assumed public offering price of $26.0625
per share (the last reported sale price of the Common Stock on February 13,
1998) and after deduction of the estimated underwriting discount and offering
expenses. The Company expects to use such net proceeds (i) to repay
approximately $125.4 million of outstanding indebtedness under the Company's
Credit Facility and (ii) for future acquisitions, capital expenditures and
general corporate purposes.

Under the terms of the Credit Facility, the Company may borrow on a
revolving basis up to $155 million until October 8, 2000, at which time all
outstanding loans must be paid in full. Outstanding loans under the Credit
Facility bear interest at a rate per annum equal to, at the Company's option,
either the Eurodollar Rate (Reserve Adjusted) (as defined in the loan
agreement providing for the Credit Facility) applicable to each interest
period plus 1.5% to 2.5% per annum or the Alternate Reference Rate (as defined
in such loan agreement) from time to time in effect plus 0% to .25% per annum.
At February 13, 1998, the weighted average interest rate on the outstanding
indebtedness was 7.4%. The proceeds from the outstanding indebtedness under
the Credit Facility have been used by the Company to fund acquisitions. The
repayment of a portion of the outstanding indebtedness under the Credit
Facility from the proceeds of the Offerings will give the Company additional
flexibility to reborrow funds under the Credit Facility for future
acquisitions, capital expenditures and general corporate purposes. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" for additional information
regarding the Credit Facility.

DIVIDEND POLICY

The Company intends to retain all earnings for the foreseeable future for
use in the operation and expansion of its business and, accordingly, the
Company currently has no plans to pay dividends on its Common Stock. The
payment of any future dividends will be determined by the Board of Directors
in light of conditions then existing, including the Company's earnings,
financial condition and capital requirements, restrictions in financing
agreements, business conditions and other factors. Under the terms of the
Credit Facility, the Company is prohibited from paying dividends on its Common
Stock. In addition, under Delaware law, the Company is prohibited from paying
any dividends unless it has capital surplus or net profits available for this
purpose. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."

PRICE RANGE OF COMMON STOCK

The Company's Common Stock commenced trading on the New York Stock Exchange
on December 18, 1997 under the symbol "URI." The following table sets forth,
for the periods indicated, the high and low sales prices for the Common Stock,
as reported by the New York Stock Exchange.

<TABLE>
<CAPTION>
PRICE RANGE
---------------
1997 HIGH LOW
- ---- ------ -----
<S> <C> <C>
Fourth Quarter (from December 18, 1997)..................... $19 5/16 $14 3/8
<CAPTION>
1998
- ----
<S> <C> <C>
First Quarter (through February 13, 1998)................... 27 3/8 17 1/4
</TABLE>

On February 13, 1998, the last sale price of the Common Stock as reported on
the New York Stock Exchange was $26.0625 per share. As of February 13, 1998,
there were approximately 136 holders of record of the Common Stock. The
Company believes that the number of beneficial owners is substantially greater
than the number of record holders, because a large portion of the Common Stock
is held of record in broker "street names."

12
<PAGE>

CAPITALIZATION

The following table sets forth (i) the capitalization of the Company as of
December 31, 1997, on an historical basis, (ii) such capitalization on a pro
forma basis giving effect to the 15 acquisitions completed by the Company
subsequent to such date and the financing of each such acquisition, and (iii)
such pro forma capitalization as adjusted to give effect to the sale of the
6,500,000 shares offered hereby at an assumed public offering price of
$26.0625 per share (the last reported sale price of the Common Stock on
February 13, 1998) and the application of a portion of the net proceeds
therefrom to repay indebtedness as described under "Use of Proceeds." This
table should be read in conjunction with the Consolidated Financial Statements
and related Notes thereto and the Pro Forma Consolidated Financial Statements
and related Notes thereto of the Company included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Debt:
Credit facility............................... $ -- $109,834 $ --
Equipment notes............................... 574 9,331 9,331
Convertible debt.............................. 500 500 500
-------- -------- --------
Total debt.................................. 1,074 119,665 9,831
Stockholders' equity:
Preferred Stock, $.01 par value, 5,000,000
shares authorized; no shares issued and
outstanding.................................. -- -- --
Common Stock, $.01 par value, 75,000,000
shares authorized; 23,899,119 shares issued
and outstanding, 24,703,994 shares issued and
outstanding pro forma, and 31,203,994 shares
issued and outstanding pro forma as
adjusted(1).................................. 239 247 312
Additional paid-in capital.................... 157,457 172,901 332,348
Retained earnings............................. 34 34 34
-------- -------- --------
Total stockholders' equity.................. 157,730 173,182 332,694
-------- -------- --------
Total capitalization............................ $158,804 $292,847 $342,525
======== ======== ========
</TABLE>
- --------
(1) Does not include (i) 6,519,058 shares issuable upon the exercise of
outstanding warrants, which provide for a weighted average exercise price
of $10.12 per share, (ii) 931,333 shares issuable upon the exercise of
outstanding options which provide for exercise prices ranging from $10.00
to $30.00 per share, the weighted average exercise price being $13.06 per
share, (iii) 4,068,667 shares reserved for possible future grants of
options under the Company's 1997 Stock Option Plan, (iv) shares issuable
upon conversion of a $300,000 convertible note which provides for a
conversion price of $16.20 per share and (v) 14,814 shares issued
subsequent to December 31, 1997, upon conversion of a $200,000 convertible
note. Also does not reflect adjustments which may change the number of
shares issued as consideration for the acquisition of one of the Acquired
Companies. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Consideration Paid for Acquired
Companies," "Management--Capital Contributions by Officers and Directors"
and "Description of Capital Stock--Warrants, Options and Convertible
Notes."

13
<PAGE>

SELECTED HISTORICAL AND PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION

The Company commenced rental operations in October 1997 by acquiring six
established rental companies (the "Initial Acquired Companies") and acquired
15 additional companies in the first two months of 1998. The following table
presents (i) selected unaudited historical income statement and balance sheet
data for the Initial Acquired Companies on a combined basis and (ii) selected
historical and pro forma income statement and balance sheet data for the
Company. The historical income statement and balance sheet data for the
Company are derived from the audited Consolidated Financial Statements of the
Company included elsewhere in this Prospectus. The data presented below with
respect to the Company should be read in conjunction with the Consolidated
Financial Statements and related Notes thereto and the Pro Forma Consolidated
Financial Statements and related Notes thereto of the Company included
elsewhere in this Prospectus.

The following unaudited pro forma income statement data for the year ended
December 31, 1997 gives effect to the acquisition of each of the Acquired
Companies, the financing of each such acquisition and all issuances of Common
Stock after the beginning of such period, as if all such transactions had
occurred at the beginning of such period. The following unaudited pro forma
balance sheet data as of December 31, 1997 gives effect to the 15 acquisitions
completed by the Company subsequent to such date and the financing of each
such acquisition, as if all such transactions had occurred on such date. The
unaudited pro forma income statement data is not necessarily indicative of the
actual results of operations that would have occurred had the foregoing
transactions occurred at the beginning of the period presented or of the
results that may occur in the future. The following unaudited pro forma as
adjusted balance sheet data gives effect to the foregoing and to completion of
the Offerings at an assumed public offering price of $26.0625 per share (the
last reported sale price of the Common Stock on February 13, 1998) and the
application of a portion of the estimated net proceeds therefrom to repay
outstanding indebtedness under the Credit Facility. See "Use of Proceeds" and
"Capitalization."

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
--------------------------------------------------------------------------- ----------
COMBINED INITIAL ACQUIRED COMPANIES COMPANY COMPANY
------------------------------------------------------- ------------------- ----------
PERIOD FROM PERIOD FROM
YEAR ENDED DECEMBER 31, JANUARY 1, AUGUST 14, 1997 YEAR ENDED
---------------------------------- 1997 THROUGH (INCEPTION) THROUGH DECEMBER
1993 1994 1995 1996 ACQUISITION DATE(1) DECEMBER 31, 1997 31, 1997
------- ------- ------- ------- ------------------- ------------------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total revenues.......... $32,549 $38,179 $44,159 $51,889 $49,200 $10,633 $188,185
Total cost of
operations............. 22,961 24,829 28,563 34,737 32,677 6,822 118,414
------- ------- ------- ------- ------- ------- --------
Gross profit............ 9,588 13,350 15,596 17,152 16,523 3,811 69,771
Selling, general and
administrative
expense................ 7,772 9,898 11,537 12,435 12,021 3,311 38,571
Non-rental depreciation
and amortization....... 300 427 502 527 472 262 5,115
------- ------- ------- ------- ------- ------- --------
Operating income........ 1,516 3,025 3,557 4,190 4,030 238 26,085
Interest expense........ 770 846 1,416 2,123 2,288 454 9,076
Other (income) expense.. (336) (412) (306) (412) (382) (270) (1,734)
------- ------- ------- ------- ------- ------- --------
Income before taxes..... 1,082 2,591 2,447 2,479 2,124 54 18,743
Pro forma income
taxes(2)............... 433 1,036 979 992 850 20 7,472
------- ------- ------- ------- ------- ------- --------
Pro forma net
income(2).............. $ 649 $ 1,555 $ 1,468 $ 1,487 $ 1,274 $ 34 $ 11,271
======= ======= ======= ======= ======= ======= ========
Basic earnings per
share.................. $ 0.00 $ 0.46
======= ========
Diluted earnings per $ 0.00 $ 0.43
share.................. ======= ========
Depreciation and
amortization........... $ 4,207 $ 5,340 $ 6,630 $ 8,579 $ 7,344 $ 1,301 $ 26,502
EBITDA(3)............... $ 5,723 $ 8,365 $10,187 $12,769 $11,374 $ 1,539 $ 52,587
Dividends on Common
Stock.................. -- --
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL PRO FORMA AS ADJUSTED
---------------------------------------- --------- -----------
COMBINED INITIAL ACQUIRED
COMPANIES COMPANY COMPANY
------------------------------- -------- ---------------------
AS OF DECEMBER 31,
---------------------------------------- AS OF DECEMBER 31,
1993 1994 1995 1996 1997 1997
------- ------- ------- ------- -------- ---------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents............ $ 2,374 $ 2,349 $ 4,193 $ 3,227 $ 68,608 $ 50 $ 49,728
Rental equipment, net... 10,730 14,270 20,244 27,145 33,408 140,482 140,482
Total assets............ 20,380 25,254 37,022 43,681 169,110 329,736 379,414
Debt.................... 10,104 12,608 21,267 25,959 1,074 119,665 9,831
Stockholders' equity.... 9,003 9,638 10,941 12,308 157,730 173,182 332,694
</TABLE>

14
<PAGE>

- --------

(1) Acquisition Date represents with respect to each Initial Acquired Company
the date in October 1997 on which such Initial Acquired Company was
acquired by the Company.
(2) Certain of the Acquired Companies had elected to be treated as Subchapter
S Corporations prior to being acquired by the Company. 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
net income or loss for the Initial Acquired Companies reflects 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) As used herein, "EBITDA" means net income less non-operating income plus
interest, non-operating expenses, income taxes, depreciation, amortization
and other non-cash items. Management believes that EBITDA, as presented,
represents a useful measure of assessing the performance of the Company's
ongoing operating activities as it reflects the earnings trends of the
Company without the impact of interest, income taxes, non-operating income
and expenses and certain non-cash charges. EBITDA is not intended as an
alternative to cash flow from operating activities as a measure of
liquidity or as an alternative to net income as an indicator of the
Company's operating performance.

15
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Consolidated
Financial Statements and related Notes thereto, the unaudited Pro Forma
Consolidated Financial Statements and related Notes thereto and the "Selected
Historical and Pro Forma Consolidated Financial Information" of the Company
included elsewhere in this Prospectus.

GENERAL

The Company was organized in August 1997 and commenced equipment rental
operations in October 1997 by acquiring six established rental companies. The
Company acquired 15 additional companies in the first two months of 1998. Each
of the acquisitions completed by the Company to date has been accounted for as
a purchase.

The Acquired Companies primarily derived revenues from the following
sources: (i) equipment rental (including additional fees that may be charged
for equipment delivery, fuel, repair of rental equipment, and damage waivers),
(ii) the sale of used rental equipment, (iii) the sale of new equipment, and
(iv) the sale of related merchandise and parts. Rental revenues accounted for
67.0% of the Company's pro forma revenues during 1997.

Cost of operations consists primarily of depreciation costs associated with
rental equipment, the cost of repairing and maintaining rental equipment, the
cost of used and new equipment sold, personnel costs, occupancy costs,
supplies, and expenses related to information systems. The Company records
rental equipment expenditures at cost and depreciates equipment using the
straight-line method over the estimated useful life (which ranges from 2 to 10
years), after giving effect to an estimated salvage value of 0% to 10% of
cost.

Selling, general and administrative expense includes advertising and
marketing expenses, management salaries, and clerical and administrative
overhead.

Non-rental depreciation and amortization includes (i) depreciation expense
associated with equipment that is not offered for rent (such as vehicles,
computers and office equipment) and depreciation expense associated with
leasehold improvements and (ii) the amortization of intangible assets. The
Company's intangible assets include goodwill, which represents the excess of
the purchase price of acquired companies over the estimated fair market value
of the assets acquired.

The Company's acquisition of the Acquired Companies changed the cost
structures of these companies due to changes relating to depreciation and
amortization, interest expense, compensation to former owners and lease
expense for real estate. In view of these changes, the Company believes that
the pre-acquisition historical results of the Acquired Companies are not
indicative of future results. Therefore, the discussion below focuses on the
historical and pro forma results of the Company rather than on pre-acquisition
historical results of the Acquired Companies.

CONSIDERATION PAID FOR THE ACQUIRED COMPANIES

The aggregate consideration paid by the Company for the Acquired Companies
was $176.0 million and consisted of approximately $156.4 million in cash,
1,123,587 shares of Common Stock, a convertible note in the principal amount
of $300,000, and warrants to purchase an aggregate of 30,000 shares of Common
Stock. In addition, the Company repaid or assumed outstanding indebtedness of
the Acquired Companies in the aggregate amount of $121.0 million. The Company
also agreed in connection with two of the acquisitions to pay the former
owners additional amounts based upon specified future revenues. Such amounts
are limited to a maximum of $2.8 million in one case and Cdn$4.0 million in
the other case.

The purchase agreement relating to the acquisition of one of the Acquired
Companies provides that the 318,712 shares of Common Stock that the Company
issued in connection therewith (the "Stock Consideration") will be valued
based upon the average daily closing price of the Common Stock during the 60-
day period commencing on December 18, 1997. If the Stock Consideration as so
valued is not equal to $3.8 million, the

16
<PAGE>

Stock Consideration will be adjusted (by the Company issuing additional shares
or by the holders returning to the Company a portion of the Stock
Consideration) as required to make the Stock Consideration as so valued equal
to $3.8 million.

HISTORICAL RESULTS OF OPERATIONS

The Company's historical financial statements included herein cover the
period from August 14, 1997 (inception) through December 31, 1997. The Company
believes that its historical results for such period do not fully reflect its
current operations in view of the fact that (i) the results of the six
companies acquired in October 1997 are reflected in such financial statements
for only a portion of the period covered thereby and (ii) the results of the
15 companies acquired in the first two months of 1998 are not reflected in
such financial statements.

Revenues. Total revenues were $10.6 million for the period from August 14,
1997 through December 31, 1997. Equipment rental revenues accounted for 66.0%
of such revenues.

Gross Profit. For the period from August 14, 1997 through December 31, 1997,
the gross profit margin was (i) 39.6% from equipment rentals, (ii) 47.8% from
sales of rental equipment and (iii) 21.2% from sales of new equipment,
merchandise and other revenues.

Selling, General and Administrative Expense. For the period from August 14,
1997 through December 31, 1997, selling, general and administrative expense
("SG&A") was $3.3 million or 31.1% of total revenues.

Non-rental Depreciation and Amortization. For the period from August 14,
1997 through December 31, 1997, non-rental depreciation and amortization was
$262,000 or 2.5% of total revenues.

Interest Expense. For the period from August 14, 1997 through December 31,
1997, interest expense was $454,000. Interest expense principally related to
borrowings made under the Company's Credit Facility in order to fund a portion
of the purchase price of the six acquisitions completed in 1997.

Income Taxes. The Company's effective income tax rate for the period from
August 14, 1997 through December 31, 1997 was 37.9%.

PRO FORMA RESULTS OF OPERATIONS

The Pro Forma Consolidated Financial Statements included herein with respect
to 1997 give effect to the acquisition of each of the Acquired Companies, the
financing of each such acquisition, and all issuances of Common Stock after
the beginning of such period, as if all such transactions had occurred at the
beginning of the period. Such pro forma financial statements, however, do not
reflect (i) potential cost savings, synergies and efficiencies that may be
achieved through the integration of the businesses and operations of the
Acquired Companies, (ii) the expenses that the Company may incur as it seeks
to increase internal growth at the Acquired Companies, including expenditures
required in order to expand and modernize rental equipment, increase sales and
marketing efforts, expand and diversify the customer segments served and
install an integrated information technology system, and (iii) the additional
compensation expense relating to the Company's senior management which would
have been incurred had such compensation accrued commencing at the beginning
of the year (rather than in September 1997). The results reflected in such pro
forma financial statements are not necessarily indicative of the actual
results of operations that would have occurred had the acquisitions of the
Acquired Companies occurred at the beginning of period presented or of future
results.

Revenues. Total revenues were $188.2 million for the year ended December 31,
1997. Equipment rental revenues accounted for 67.0% of such revenues.

Gross Profit. For the year ended December 31, 1997, the gross profit margin
from equipment rentals was 43.3% and the gross profit margin from sales of
equipment and merchandise and other revenues was 24.4%.

17
<PAGE>

Selling, General and Administrative Expense. For the year ended December 31,
1997, SG&A was $38.6 million or 20.5% of total revenues.

Non-rental Depreciation and Amortization. For the year ended December 31,
1997, non-rental depreciation and amortization was $5.1 million or 2.7% of
total revenues.

Interest Expense. Interest expense was $9.1 million for the year ended
December 31, 1997. Interest expense principally related to borrowings made
under the Company's Credit Facility in order to fund a portion of the purchase
price of the Acquired Companies.

Income Taxes. Pro forma income taxes was computed for the year ended
December 31, 1997 using an estimated rate of 40%.

LIQUIDITY AND CAPITAL RESOURCES

The Company has funded its cash requirements to date from (i) the sale of
Common Stock and warrants in private placements to the officers and directors
of the Company for aggregate consideration of $46.8 million, (ii) other sales
of Common Stock in private placements for aggregate consideration of $7.9
million, (iii) the sale of shares of Common Stock in the Company's initial
public offering in December 1997 for aggregate consideration of $101.1 million
(after deducting the underwriting discount) and (iv) borrowings under the
Company's Credit Facility.

The Company's Credit Facility with a group of financial institutions, for
which Bank of America National Trust and Savings Association acts as agent,
enables the Company to borrow up to $155 million on a revolving basis. The
facility terminates on October 8, 2000, at which time all outstanding
indebtedness is due. Up to $10 million of the Credit Facility is available in
the form of letters of credit. Borrowings under the Credit Facility accrue
interest, at the Company's option, at either (a) the Floating Rate (which is
equal to the greater of (i) the Federal Funds Rate plus 0.5% and (ii) Bank of
America's reference rate, in each case, plus a margin ranging from 0% to 0.25%
per annum) or (b) the Eurodollar Rate (which is equal to Bank of America's
reserve adjusted eurodollar rate plus a margin ranging from 1.5% to 2.5% per
annum). As of February 13, 1998, there was approximately $125.4 million of
outstanding indebtedness under the Credit Facility. The Company plans to use a
portion of the net proceeds of the Offerings to repay such indebtedness as
described under "Use of Proceeds." The Company will be able to reborrow the
amounts so repaid.

The Credit Facility contains certain covenants that require the Company to,
among other things, satisfy certain financial tests relating to: (a)
maintenance of minimum net worth, (b) the ratio of debt to net worth, (c)
interest coverage ratio, (d) the ratio of funded debt to cash flow, and (e)
the ratio of senior debt to tangible assets. The Credit Facility also contains
certain covenants that restrict the Company's ability to, among other things,
(i) incur additional indebtedness, (ii) permit liens to attach to its assets,
(iii) enter into operating leases requiring payments in excess of specified
amounts, (iv) declare or pay dividends or make other restricted payments with
respect to its equity securities (including the Common Stock) or subordinated
debt, (v) sell assets, (vi) make acquisitions unless certain financial
conditions are satisfied, and (vii) engage in any line of business other than
the equipment rental industry. The Credit Facility provides that the failure
by any two of Messrs. Jacobs, Milne, Nolan and Miner to continue to hold
executive positions with the Company for a period of 30 consecutive days
constitutes an event of default under the Credit Facility unless replacement
officers satisfactory to the lenders are appointed. The Credit Facility is
also subject to other customary events of default. The Credit Facility is
secured by substantially all of the assets of United Rentals, Inc. and by the
stock and assets of its subsidiaries.

The Company expects that following completion of the Offerings its principal
sources of cash will be borrowings under the Credit Facility and cash
generated from operations. The Company estimates that such sources will be
sufficient to fund the cash required for the Company's existing operations
(not including new acquisitions or start-up locations that are not currently
under development, which may require additional financing as discussed below)
for at least 12 months following completion of the Offerings.

18
<PAGE>

The Company expects that following the Offerings its principal needs for
cash relating to its operations will be to fund (i) operating activities and
working capital, (ii) the purchase of equipment on an ongoing basis to
maintain the quality and competitiveness of its existing rental equipment,
(iii) the purchase of equipment required to expand and modernize the rental
equipment at certain locations, (iv) the purchase of equipment and other items
required to maintain sufficient inventory of the new equipment and related
merchandise and parts that the Company offers for sale, and (v) the
installation of an integrated information technology system.

The Company estimates that equipment expenditures for its existing locations
will be in the range of $25 million to $30 million over the next 12 months. In
addition, the Company expects that it will be required to make equipment
expenditures in connection with new acquisitions. The Company cannot quantify
at this time the amount of such equipment expenditures.

Principal elements of the Company's strategy include expansion through a
disciplined acquisition program and the opening of new rental locations. The
Company expects to pay for future acquisitions using cash, capital stock,
notes and/or assumption of indebtedness. The Company expects that cash
required for future acquisitions and start-up locations will be provided by a
combination of borrowings under the Credit Facility, cash generated from
operations, and future debt or equity financings. There can be no assurance
that any such future debt or equity financings will be available or, if
available, will be on terms satisfactory to the Company.

The Company is in the process of developing three start-up locations. See
"Business--Start-up Locations." The Company estimates that the aggregate costs
associated with such start-up locations will be in the range of $2.5 million
to $3.5 million (including expenditures of approximately $346,000 incurred to
date). The Company believes that cash generated from operations and borrowings
under the Credit Facility will be sufficient to fund these costs without
additional debt or equity financings.

The Company is in the process of installing an integrated information
technology system and expects that this system will become operational in
March 1998 at substantially all the Company's existing locations. The Company
estimates that the cost of installing such system at the Company's existing 68
locations and up to 22 additional locations will be approximately $6.5 million
(including approximately $800,000 expended to date). The Company will be
required to expand this system on an ongoing basis as it adds locations. The
Company believes that the system will be year 2000 compliant.

FLUCTUATIONS IN OPERATING RESULTS

The Company is continually involved in the investigation and evaluation of
potential acquisitions. In accordance with generally accepted accounting
principles, the Company capitalizes certain direct out-of-pocket expenditures
(such as legal and accounting fees) relating to potential or pending
acquisitions. Indirect acquisition costs, such as executive salaries, general
corporate overhead, public affairs and other corporate services, are expensed
as incurred. The Company's policy is to charge against earnings any
capitalized expenditures relating to any potential or pending acquisition that
the Company determines will not be consummated. There can be no assurance that
the Company in future periods will not be required to incur a charge against
earnings in accordance with such policy, which charge, depending upon the
magnitude thereof, could adversely affect the Company's results of operations.

The Company will be required to incur significant start-up expenses in
connection with establishing each start-up location. Such expenses may
include, among others, pre-opening expenses related to setting up the
facility, training employees, installing information systems and marketing.
The Company expects that in general

19
<PAGE>

start-up locations will initially operate at a loss or at less than normalized
profit levels. Consequently, the opening of a start-up location may negatively
impact the Company's margins until the location achieves normalized
profitability.

There may be a lag between the time that the Company purchases new equipment
and begins to incur the related depreciation and interest expenses and the
time that the equipment begins to generate revenues at normalized rates. As a
result, the purchase of new equipment, particularly equipment purchased in
connection with expanding and diversifying the Company's rental equipment, may
periodically reduce margins.

GENERAL ECONOMIC CONDITIONS AND INFLATION

The Company's operating results may be adversely affected by (i) changes in
general economic conditions, including national, regional and local changes in
construction and industrial activity, (ii) increases in interest rates that
may result in a higher cost of capital to the Company, or (iii) adverse
weather conditions that may decrease construction and other industrial
activity. Although the Company cannot accurately anticipate the effect of
inflation on its operations, the Company believes that inflation has not had,
and is not likely in the foreseeable future to have, a material impact on its
results of operations.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income," and SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." The Company is required to
adopt the provisions of these Statements in fiscal year 1998. SFAS No. 130
establishes standards for reporting and display of comprehensive income and
its components in a primary financial statement. The Company is currently
evaluating the reporting formats recommended under this Statement. SFAS No.
131 establishes a new method by which companies will report operating segment
information. This method is based on the manner in which management organizes
the segments within a company for making operating decisions and assessing
performance. The Company continues to evaluate the provisions of SFAS No. 131
and, upon adoption, the Company may report operating segments.

20
<PAGE>

BUSINESS

United Rentals was formed in September 1997 for the purpose of creating a
large, geographically diversified equipment rental company in the United
States and Canada. The Company commenced equipment rental operations in
October 1997 by acquiring six established companies and acquired 15 additional
companies in the first two months of 1998. 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 engages in related activities such as selling used rental
equipment, acting as a distributor for certain new equipment, and selling
related merchandise and parts. The Company had pro forma revenues of $188.2
million during the year ended December 31, 1997. The Company's growth strategy
is to expand through a disciplined acquisition program, the opening of new
rental locations and internal growth and to further diversify its equipment
categories and customer markets. The Company believes that as it expands it
should gain competitive advantages relative to smaller operators, including
greater purchasing power, a lower cost of capital, the ability to provide
customers with a broader range of equipment and services and with newer and
better maintained equipment, and greater flexibility to transfer equipment
among locations in response to customer demand.

United Rentals currently operates 68 rental locations in 16 states and
Canada. The Company's locations are managed by experienced professionals who
have extensive industry experience and substantial knowledge of the local
markets served. These managers generally are former owners or employees of the
businesses acquired by the Company. The types of rental equipment offered by
the Company include a broad range of light to heavy construction and
industrial equipment (such as pumps, generators, forklifts, backhoes, cranes,
bulldozers, aerial lifts and compressors), general tools and equipment (such
as hand tools and garden and landscaping equipment) and special event
equipment (such as tents, tables and chairs). The equipment mix varies at each
of the Company's locations, with some locations offering a general mix and
some specializing in specific equipment categories. As of February 13, 1998,
the Company's rental equipment included approximately 34,500 units (excluding
special event equipment), had an original purchase price of approximately $225
million and had a weighted average age (based on original purchase price) of
approximately 3.6 years.

INDUSTRY OVERVIEW

Recognition of Advantages of Renting. There is increasing recognition of the
many advantages that equipment rental may offer compared with ownership,
including the ability to: (i) avoid the large capital investment required for
equipment purchases, (ii) reduce storage and maintenance costs, (iii)
supplement owned equipment thereby increasing the range and number of jobs
that can be worked on, (iv) access a broad selection of equipment and select
the equipment best suited for each particular job, (v) obtain equipment as
needed and minimize the costs associated with idle equipment, and (vi) access
the latest technology without investing in new equipment.

Increase in Contractor Rentals. 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. A survey of contractors conducted
by Merrill Lynch & Co. in September 1996 (the last time such survey was
conducted) found that, on average, the percentage of contractor fleets that
was rented increased from 7% in 1994 to 15% at the time of the survey.

Outsourcing Trend. The general trend toward the corporate outsourcing of
non-core competencies is leading large industrial companies increasingly to
rent, rather than purchase, equipment that they require for repairing,
maintaining and upgrading their facilities.

21
<PAGE>

The equipment rental industry is highly fragmented, consisting of a small
number of multi-location regional or national operators and a large number of
relatively small, independent businesses serving discrete local markets. Based
upon rental revenues reported by the Rental Equipment Register for 1996 (the
latest year for which such revenues have been reported): (i) there were only
five equipment rental companies that had 1996 equipment rental revenues in
excess of $100 million (with the largest company having had 1996 equipment
rental revenues of approximately $400 million), (ii) the largest 100 equipment
rental companies combined had less than a 20% share of the market based on
1996 equipment rental revenues and the Company's estimate of the size of the
market (with the largest company having had a market share of less than 3%),
and (iii) there were approximately 100 equipment rental companies that had
1996 equipment rental revenues between $5 million and $100 million. In
addition, the Company estimates that there are more than 20,000 companies with
annual equipment rental revenues of less than $5 million. The Company believes
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. The Company also believes that
the extensive experience of its management team in acquiring and effectively
integrating acquisition targets should enable the Company to capitalize on
these opportunities.

STRATEGY

The Company's objective is to expand its operations and build a large
geographically diversified equipment rental company in the United States and
Canada. The Company believes that as it expands it should gain competitive
advantages relative to smaller operators, including greater purchasing power,
a lower cost of capital, the ability to provide customers with a broader range
of equipment and services and with newer and better maintained equipment, and
greater flexibility to transfer equipment among locations in response to
customer demand. The Company's plan for achieving this objective includes the
following key elements:

Execute Disciplined Acquisition Program. The Company intends to expand
through a disciplined acquisition program. The Company will seek to acquire
companies of varying size, including relatively large companies to serve as
platforms for regional development and smaller companies to complement
existing or anticipated locations. In evaluating potential acquisition
targets, the Company considers a number of factors, including 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.

Improve Operating Margins. The Company plans to focus significant efforts on
improving operating margins at acquired companies through the efficient
integration of new and existing operations, the elimination of duplicative
costs, reduction in overhead, and centralization of functions such as
purchasing and information technology.

Increase Internal Growth. The Company believes that a lack of capital has
constrained expansion and modernization at many small and mid-sized equipment
rental companies and that as a result there is significant potential to
increase internal growth at many acquired companies through capital
investment. The Company will seek to increase internal growth by investing in
additional and more modern equipment, using advanced information technology
systems to improve asset utilization and tracking, increasing sales and
marketing efforts, expanding and diversifying the customer segments served,
expanding the geographic areas served, and opening complementary locations.

Open New Rental Locations. The Company also intends to grow by selectively
opening new rental locations in attractive markets where there are no suitable
acquisition targets available or where the cost of a start-up location would
be less than the cost of acquiring an existing business.

Diversify Locations, Equipment Categories and Customers. The Company plans
to diversify geographically and to focus on a broad range of equipment catego-
ries and customer markets within the equipment rental industry. The Company
believes that this will allow it to participate in the overall growth of the
equipment rental

22
<PAGE>

industry and reduce the Company's sensitivity to fluctuations in regional eco-
nomic conditions or changes that affect particular market segments. In order
to achieve this diversification, the Company will consider expansion opportu-
nities in the United States and Canada and will pursue acquisition candidates
with varying equipment mixes and customer specializations.

ACQUISITIONS

The Company believes that there will continue to be a large number of
attractive acquisition opportunities in the equipment rental industry due to
the highly fragmented nature of the industry, the inability of many small and
mid-sized equipment rental companies to expand and modernize due to capital
constraints, and the desire of many long-time owners for liquidity. The
Company has an experienced acquisition team, comprised of senior level
executives with extensive acquisition, operating and financial experience,
that is engaged in identifying and evaluating acquisition candidates and
executing the Company's acquisition program. The Company estimates that, since
the formation of the Company in September 1997, it has preliminarily reviewed
more than 150 potential acquisition candidates and has conducted preliminary
market studies or initiated due diligence on more than 50 of these candidates.

The table below provides certain information concerning the 21 acquisitions
completed by the Company to date:

<TABLE>
<CAPTION>
NUMBER OF YEARS IN 1997
COMPANY LOCATIONS RENTAL SITES BUSINESS REVENUES
- ------- ------------------------- ------------ -------- -------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
1997 ACQUISITIONS:
Mercer Equipment Company North Carolina 3 9 $18.5
A&A Tool Rentals and
Sales, Inc. California 2 35 13.8
Coran Enterprises, Inc. California 4 33 9.5
(dba A-1 Rents) and
affiliate
J&J Rental Services Texas 1 19 8.7
Bronco Hi-Lift, Inc. Colorado 1 16 6.5
Rent-It Center, Inc. Utah 1 45 2.9
<CAPTION>
1998 ACQUISITIONS:
<S> <C> <C> <C> <C>
Access Rentals, Inc. and
affiliates Connecticut; Florida; 19 23 52.3
Indiana; Minnesota;
New Jersey; New
York; Pennsylvania;
South Carolina;
Tennessee; Washington;
Ontario, Canada
BNR Equipment Limited
and affiliates New York; Ontario, Canada 8 23 24.0
Channel Equipment
Holdings, Inc. and
affiliates Texas 4 20 11.5
Mission Valley Rentals,
Inc. California 4 22 8.6
Pro-Rentals, Inc. Washington 6 12 5.9
ASC Equipment Co., Inc. North Carolina 3 21 5.4
Nevada High Reach
Equipment, Inc. and
affiliate Nevada 3 13 4.5
Gene's Village Rental &
Sales, Inc. South Carolina 2 24 3.6
Manchester Equipment
Rental & Sales, Inc. Connecticut 1 11 3.3
San Leandro Equipment
Rentals Service, Inc. California 1 36 3.2
Darien Rental Services,
Inc. Connecticut 1 31 1.7
Rents Et. Al., Inc. California 1 10 1.4
Salisbury Rental Center,
Inc. North Carolina 1 10 1.3
Anchor Rental, Inc. Connecticut 1 15 1.0
A-1 Rents of Galveston,
Inc. Texas 1 16 0.6
</TABLE>

23
<PAGE>

The aggregate consideration paid by the Company for the Acquired Companies
was $176.0 million and consisted of approximately $156.4 million in cash,
1,123,587 shares of Common Stock (subject to possible adjustment with respect
to 318,712 of such shares as described under "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Consideration Paid
for Acquired Companies"), a convertible note in the principal amount of
$300,000, and warrants to purchase an aggregate of 30,000 shares of Common
Stock. In addition, the Company repaid or assumed outstanding indebtedness of
the Acquired Companies in the aggregate amount of approximately $121.0
million. The Company also agreed in connection with two of the acquisitions to
pay additional amounts to the former owners based upon specified future
revenues. Such amounts are limited to a maximum of $2.8 million in one case
and Cdn$4.0 million in the other case.

The Company at present is not party to any definitive agreements relating to
future acquisitions. However, the Company is continually investigating and
evaluating potential acquisition candidates and is currently a party to 11
non-binding letters of intent relating to the possible acquisition by the
Company of 11 additional companies having an aggregate of 26 rental locations.
Based upon information provided to the Company in connection with its
preliminary investigation of these businesses, the Company estimates that the
aggregate annualized revenues of these companies is approximately $56 million.
However, in view of the preliminary nature of this estimate, there can be no
assurance that actual revenues will not differ. Furthermore, in view of the
fact that these letters of intent are non-binding and that the Company has not
completed its due diligence investigations with respect thereto, the Company
cannot predict whether these letters of intent will lead to definitive
agreements, whether the terms of any such definitive agreements will be the
same as the terms contemplated by the letters of intent or whether any
transaction contemplated by such letters of intent will be consummated.

START-UP LOCATIONS

The Company is in the process of developing three start-up locations (one in
Florida and two in Texas). These projects were commenced by certain of the
Acquired Companies, prior to their having been acquired by the Company, and
are being continued by the Company. The Company expects that the Florida
location will open in the first quarter of 1998 and that the two Texas
locations will open in the second quarter of 1998.

OPERATIONS

The Company currently operates 68 rental locations in 16 states and Canada.
The Company offers for rent a broad array of equipment including light to
heavy construction and industrial equipment, general tools and equipment, and
special event equipment. The Company also engages in related activities such
as selling used rental equipment, acting as a distributor for certain new
equipment, and selling related merchandise and parts. The Company's customer
base is diverse and includes construction industry participants, industrial
companies, and homeowners and other individuals.

EQUIPMENT RENTAL

The Company offers for rent a broad array of equipment on a daily, weekly,
monthly and multi-month basis. The following are examples of the types of
equipment that the Company offers for rent:

Construction and Industrial: aerial lifts, air compressors, backhoes,
boom lifts, bulldozers, cranes, ditching equipment, forklifts,
generators, high reach equipment, pumps, scissor lifts, tractors.

General Tools and Equipment: garden and landscaping equipment, hand
tools, high-pressure washers, paint sprayers, power tools, roto
tillers.

Special Event: barbecue grills, china and flatware, fountains,
lighting, staging and dance floors, tables and chairs, tents and
canopies.

24
<PAGE>

As of February 13, 1998, the Company's rental equipment included
approximately 34,500 units (excluding special event equipment) and had an
original purchase price of approximately $225 million and a weighted average
age (based on original purchase price) of approximately 3.6 years. The Company
estimates that (based on original purchase price) construction and industrial
equipment represents approximately 94% of the Company's rental equipment,
general tools and equipment represents approximately 5%, and special event
equipment represents approximately 1%. The Company also estimates that four
categories of construction and industrial equipment (aerial lifts, boom lifts,
scissor lifts and high reach equipment) represent approximately 47% of the
Company's rental equipment and accounted for approximately 34% of the
Company's pro forma revenues in 1997.

The equipment mix varies at each of the Company's locations, with some
locations offering a general mix and some specializing in specific equipment
categories. The Company expects that as it integrates the Acquired Companies
it will further expand and modernize its rental equipment and expand and
diversify the customer markets served by certain locations.

RELATED OPERATIONS

In addition to renting equipment, the Company is engaged in a variety of
related or complementary activities.

Sales of Used Equipment. The Company routinely sells used rental equipment
to adjust the age and composition of its rental fleet. The Company sells such
equipment through a variety of means including sales to the Company's existing
rental customers and local customer base, sales to used equipment dealers, and
sales through public auctions. The Company also participates in trade-in
programs in connection with purchasing new equipment.

Sales of New Equipment. The Company, at several locations, is a distributor
for various tool and equipment manufacturers, including American Honda Motor
Co. Inc. (generators and pumps), Edco Manufacturing (surfacing equipment),
Genie Industries, Inc. (aerial lifts), Grove Worldwide (aerial platforms),
Kubota (earthmoving equipment), Multiquip, Inc. (compaction equipment and
compressors), Milwaukee Electric Tool Corporation (power tools), Trak
International (loaders and forklifts), Stihl, Inc. (surface preparation
equipment) and Wacker (compaction equipment). In general, such manufacturers
may terminate the Company's distribution rights at any time.

Sales of Related Merchandise and Parts. The Company, at most locations,
sells a variety of merchandise that may be used in conjunction with rental
equipment (such as saw blades, fasteners, drill bits, hard hats, gloves and
other safety equipment) and also sells parts.

Other. The Company at certain locations offers equipment maintenance
services to customers for equipment that is owned by the customer. This
service is primarily provided with respect to equipment purchased from the
Company.

CUSTOMERS AND SALES AND MARKETING

The Company on a pro forma basis rented equipment to over 157,000 customers
in 1997. No single customer accounted for more than 1% of the Company's pro
forma revenues in 1997, and the Company's top 10 customers accounted for less
than 2.5% of the Company's pro forma revenues in 1997.

The composition of the Company's customer base varies widely by location and
is determined by several factors, including the equipment mix and marketing
focus of the particular location and the business composition of the local
economy. The Company's customer base consists of the following general
categories: (i) construction industry participants (such as construction
companies, contractors and subcontractors), (ii) industrial companies (such as
manufacturers, chemical companies, paper mills and utilities), and (iii)
homeowners and other individuals. The Company estimates that in 1997 (a) sales
to construction industry participants accounted for

25
<PAGE>

approximately 75% of the Company's pro forma revenues, (b) sales to industrial
companies accounted for approximately 17% of the Company's pro forma revenues,
and (c) sales to homeowners and others accounted for approximately 8% of the
Company's pro forma revenues.

The Company markets its products and services through a sales force
consisting of approximately 138 store-based salespeople and 115 field-based
salespeople. The Company supplements the activities of its sales force through
participation in industry trade shows and conferences, direct mailings, and
advertising in local industry publications and the yellow pages in the markets
it serves.

PURCHASING

The Company is in the process of centralizing the purchasing of certain
equipment items, particularly large items with a significant cost and items
that are purchased in volume. The Company believes that such centralization
will give it greater purchasing power with its suppliers and enable it to
obtain discounts.

INFORMATION TECHNOLOGY SYSTEM

The Company is in the process of installing an integrated information
technology system and expects that this system will become operational at
substantially all the Company's existing locations in March 1998. This system
will link all the Company's locations, integrate operating and financial data
on a Company-wide basis, and enable the real-time tracking of rental
transactions, equipment availability, inventory and other data. The Company
expects that this system will enable management to monitor and analyze a wide
range of operating and financial data, including (i) price and sales trends by
store, region, salesperson, equipment category, or customer, (ii) fleet
utilization by individual asset or asset class and (iii) financial results by
store or region. Until the new system is operational, each acquired business
will continue using the systems that it had in place at the time it was
acquired. The Company will be required to expand this system on an ongoing
basis as it adds locations.

COMPETITION

The equipment rental industry is highly fragmented and competitive. The
Company's competitors include: public companies or divisions of public
companies (such as Hertz Equipment Rental Corporation, Prime Service, Inc.,
U.S. Rentals, Inc. and Rental Service Corporation); regional competitors which
operate in one or more states; small, independent businesses with one or two
rental locations; and equipment vendors and dealers who both sell and rent
equipment directly to customers. The Company believes that, in general, large
companies enjoy significant competitive advantages compared to smaller
operators, including greater purchasing power, a lower cost of capital, the
ability to provide customers with a broader range of equipment and services
and with newer and better maintained equipment, and greater flexibility to
transfer equipment among locations in response to customer demand. Certain of
the Company's competitors are larger and have greater financial resources than
the Company.

PROPERTIES

The Company currently operates 68 rental locations (60 in the United States
and 8 in Canada). The rental locations in the United States are in the
following 16 states: California (12), Colorado (1), Connecticut (4), Florida
(2), Indiana (1), Minnesota (2), New York (7), New Jersey (1), Nevada (3),
North Carolina (7), Pennsylvania (1), South Carolina (3), Tennessee (2), Texas
(6), Utah (1), and Washington (7). The rental locations in Canada are all in
Ontario. The Company's rental locations generally include facilities for
displaying equipment and, depending on the location, may include separate
equipment service areas and storage areas.

The Company leases each of its rental locations under leases providing for
various terms, including (i) 33 leases that provide for a remaining term of
more than five years (of which 26 provide for a renewal option), (ii) 23
leases that provide for a remaining term of between one and five years (of
which 13 provide for a renewal option), (iii) four leases that provide for a
remaining term of less than one year (of which two provide for a renewal
option) and (iv) eight leases that are on a month-to-month basis. These leases
were entered into (or assumed) in connection with the acquisitions of the
Acquired Companies and most of the lessors are the former owners of these
companies. The Company believes that its leases generally reflect market
terms.

26
<PAGE>

The Company maintains a fleet of vehicles that is used for delivery,
maintenance and sales functions. A portion of this fleet is owned and a
portion leased and, as of February 13, 1998, this fleet included 615 vehicles.

The Company's corporate headquarters are located in Greenwich, Connecticut,
where it leases approximately 15,000 square feet under a lease that extends
until 2001 (subject to extension rights).

ENVIRONMENTAL REGULATION

EMPLOYEES

At February 13, 1998, the Company employed 1,197 persons, including 31
corporate and regional management employees, 913 operational employees and 253
sales people. Of these employees, 346 are salaried personnel and 851 are
hourly personnel. Collective bargaining agreements relating to nine separate
locations cover approximately 83 of the Company's employees. The Company
considers its labor relations to be good.

LEGAL PROCEEDINGS

The Company and its subsidiaries are parties to various litigation matters,
in most cases involving ordinary and routine claims incidental to the business
of the Company. The ultimate legal and financial liability of the Company with
respect to such pending litigation cannot be estimated with certainty but the
Company believes, based on its examination of such matters, that such ultimate
liability will not have a material adverse effect on the business or financial
condition of the Company.

27
<PAGE>

MANAGEMENT

BACKGROUND

The Company was founded in September 1997 by the following officers of the
Company: Bradley Jacobs, John Milne, Michael Nolan, Robert Miner, Sandra
Welwood, Joseph Kondrup, Jr., Kai Nyby and Richard Volonino. Each of these
officers was formerly a senior executive of United Waste Systems, Inc.
("United Waste") or a senior member of United Waste's acquisition team. United
Waste, a solid waste management company, was formed in 1989 and sold in August
1997 to USA Waste Services, Inc. for stock consideration valued at over $2.2
billion. United Waste executed a growth strategy that combined a disciplined
acquisition program (including over 200 acquisitions completed from January
1995 through August 1997), the integration and optimization of acquired
facilities, and internal growth. At the time it was sold, United Waste was the
sixth largest provider of integrated, non-hazardous solid waste management
services in the United States, as measured by 1996 revenues.

OFFICERS, DIRECTORS AND KEY MANAGERS

The table below identifies, and provides certain information concerning, the
officers, directors and certain key managers of the Company. The Company
expects that an additional independent director will be appointed prior to May
1998. The Company also expects that Mr. Hicks, the Company's President and
Chief Operating Officer, will be appointed a director concurrently with the
appointment of such additional independent director.

<TABLE>
<CAPTION>
NAME AGE POSITIONS(1)(2)
---- --- ---------------
<S> <C> <C>
OFFICERS AND DIRECTORS
Bradley S. Jacobs....... 41 Chairman, Chief Executive Officer and Director
Wayland R. Hicks........ 55 President and Chief Operating Officer
John N. Milne........... 38 Vice Chairman, Chief Acquisition Officer, Secretary and Director
Michael J. Nolan........ 37 Chief Financial Officer
Robert P. Miner......... 48 Vice President, Finance
Sandra E. Welwood....... 42 Vice President, Corporate Controller
Kurtis T. Barker........ 37 Regional Vice President, Operations
Daniel E. Imig.......... 51 Regional Vice President, Operations
Joseph J. Kondrup,
Jr. ................... 39 Vice President, Acquisitions
Kai E. Nyby............. 44 Vice President, Acquisitions
Richard A. Volonino..... 55 Vice President, Acquisitions
Ronald M. DeFeo......... 45 Director
Richard J. Heckmann..... 54 Director
Gerald Tsai, Jr. ....... 68 Director
KEY MANAGERS
Joseph E. Bloodworth.... 46 Manager, District Operations
Joseph A. DiFrancesco... 38 Manager, District Operations
Joseph E. Doran......... 57 Manager, District Operations
William M. Rigsbee...... 41 Manager, District Operations
</TABLE>
- --------
(1) Each officer and director in the table has served in the position(s)
indicated since either September 1997 (in the case of the eight founders),
October 1997 (in the case of Messrs. Barker, Imig, DeFeo and Heckmann),
November 1997 (in the case of Mr. Hicks) or December 1997 (in the case of
Mr. Tsai). The Company's officers are elected by the Board of Directors
and, subject to the employment agreements described below, serve at the
discretion of the Board.
(2) For information concerning the term served by directors, see "--
Classification of Board of Directors."

28
<PAGE>

Bradley S. Jacobs founded United Waste Systems, Inc. in 1989 and served as
its Chairman and Chief Executive Officer from inception until the sale of the
company in August 1997. From 1984 to July 1989, Mr. Jacobs was Chairman and
Chief Operating Officer of Hamilton Resources Ltd., an international trading
company, and from 1979 to 1983, he was Chief Executive Officer of Amerex Oil
Associates, Inc., an oil brokerage firm that he co-founded.

Wayland R. Hicks served in various senior executive positions at Xerox
Corporation where he worked for 28 years (1966-1994). His positions at Xerox
Corporation included Executive Vice President, Corporate Operations (1993-
1994), Executive Vice President, Corporate Marketing and Customer Support
Operations (1989-1993) and Executive Vice President, Engineering and
Manufacturing--Xerox Business Products and Systems Group (1987-1989). Mr.
Hicks served as Vice Chairman and Chief Executive Officer of Nextel
Communications Corp. (1994-1995) and as Chief Executive Officer and President
of Indigo N.V. (1996-1997). He is also a director of Maytag Corporation.

John N. Milne was Vice Chairman and Chief Acquisition Officer of United
Waste Systems, Inc. from 1993 until August 1997 and held other senior
executive positions at United Waste from 1990 until 1993. Mr. Milne had
primary responsibility for implementing United Waste's acquisition program.
From September 1987 to March 1990, Mr. Milne was employed in the Corporate
Finance Department of Drexel Burnham Lambert Incorporated.

Michael J. Nolan served as the Chief Financial Officer of United Waste
Systems, Inc. from February 1994 until August 1997. He served in other finance
positions at United Waste from November 1991 until February 1994, including
Vice President, Finance, from October 1992 to February 1994. From 1985 until
November 1991, Mr. Nolan held various positions at the accounting firm of
Ernst & Young, including senior audit manager, and is a Certified Public
Accountant.

Robert P. Miner was an executive officer of United Waste Systems, Inc. from
November 1994 until August 1997, serving first as Vice President, Finance and
then Vice President, Acquisitions. Prior to joining United Waste, he was a
research analyst with PaineWebber Incorporated (November 1988 to October 1994)
and Needham & Co. (January 1987 to October 1988) and held various executive
positions at General Electric Environmental Services, Inc., Stauffer Chemical
Company, and OHM Corporation.

Sandra E. Welwood served as Vice President, Controller of United Waste
Systems, Inc. from March 1996 until August 1997. From October 1994 to February
1996, she was Assistant Controller of OSi Specialty, Inc., and from October
1993 to September 1994, was Director of Internal Audit of the Gartner Group,
Inc. Prior to this, Ms. Welwood was a senior audit manager at Ernst & Young
from September 1987 to September 1993, and held various positions (including
senior audit manager) at KPMG Peat Marwick from January 1980 to August 1987,
and is a Certified Public Accountant.

Kurtis T. Barker served as Vice President-Operations-Great Lakes Region of
United Waste Systems, Inc. from 1993 until August 1997. From 1991 to 1993, he
was an operations manager at Chambers Development Company, Inc. From 1990 to
1991, Mr. Barker was a project engineer at South Dakota Disposal Systems. From
1986 to 1990, he was a project engineer and then a general manager at Silver
King Mines, Inc.

Daniel E. Imig served as President-Mid-Central Region of Waste Management,
Inc. from 1996 to August 1997. From 1978 to 1996, Mr. Imig served in a number
of operating positions at Waste Management, Inc., including District Manager
and Division President.

Joseph J. Kondrup, Jr. was a senior member of United Waste's acquisition
team from March 1996 until August 1997, with responsibility for the company's
entry into and subsequent development of its Rocky Mountain Region. From July
1987 until March 1996, he was Division President of a subsidiary of Waste
Management, Inc.

Kai E. Nyby was a senior member of United Waste's acquisition team from 1995
until August 1997, with responsibility for acquisitions and business
development in the company's Midwest Region. From 1981 to 1995, Mr. Nyby was
the Regional Manager, Midwest Group for Waste Management, Inc. From 1973 to
1980, Mr. Nyby was General Manager, Operations for a subsidiary of Waste
Management, Inc.

29
<PAGE>

Richard A. Volonino was a senior executive officer of United Waste from
November 1991 until August 1997, serving as Chief Operating Officer from 1991
to 1992 and thereafter as Executive Vice President--Acquisitions. From May
1988 to October 1991, Mr. Volonino held various positions, including Vice
President, Operations, with Chambers Development Company, Inc., and from 1986
to December 1987, was District Manager at Laidlaw, Inc.

Ronald M. DeFeo is the Chief Executive Officer, President, Chief Operating
Officer and a director of Terex Corporation, a leading global provider of
equipment for the manufacturing, mining and construction industries. Mr. DeFeo
joined Terex in 1992 as President of the Terex heavy equipment group and was
appointed President and Chief Operating Officer in 1993 and Chief Executive
Officer in 1995. From 1984 to 1992, Mr. DeFeo held various management
positions at Tenneco, Inc., including Senior Vice President and Managing
Director.

Richard J. Heckmann has served since 1990 as Chairman, President and Chief
Executive Officer of United States Filter Corporation, a leading global
provider of industrial and commercial water and wastewater treatment systems
and services. Mr. Heckmann is also a director of USA Waste Services, Inc. and
K2 Inc.

Gerald Tsai, Jr. served as Chairman, Chief Executive Officer and President
of Delta Life Corporation, an insurance company, from 1993 until the sale of
the company in October 1997. Mr. Tsai was Chairman of the Executive Committee
of the Board of Directors of Primerica Corporation, a diversified financial
services company, from December 1988 until April 1991, and served as Chief
Executive Officer of Primerica Corporation from April 1986 until December
1988. Mr. Tsai is currently a private investor and serves as a director of
Meditrust Corporation, Proffitt's, Inc., Rite Aid Corporation, Sequa
Corporation, Triarc Companies, Inc. and Zenith National Insurance Corp. He
also serves as a trustee of Boston University and New York University Medical
Center.

Joseph E. Bloodworth founded J&J Rental Services, Inc. (and its
predecessors) and served as Chief Executive Officer and President from 1975
until October 1997 when J&J Rental Services, Inc. was acquired by United
Rentals.

Joseph A. DiFrancesco served as General Manager of Access Rentals, Inc. from
1989 until the acquisition of the company by United Rentals in January 1998
and as Controller of Access Rentals from 1985 until 1989. Mr. DiFrancesco is a
Certified Public Accountant.

Joseph E. Doran served as President of A&A Tool Rentals and Sales, Inc. from
1972 until the acquisition of the company by United Rentals in October 1997.
Mr. Doran served on the Board of Directors of the California Rental
Association for 12 years and was its President from 1985 to 1986.

William M. Rigsbee served as President of Mercer Equipment Company from 1990
until the acquisition of the company by United Rentals in October 1997. He has
been employed in the equipment rental industry since 1978. Mr. Rigsbee is a
former President of both the Carolina Rental Association and the North
Carolina Associated Equipment Distributors.

CAPITAL CONTRIBUTIONS BY OFFICERS AND DIRECTORS

The officers and directors of the Company listed below have made capital
contributions to the Company in the aggregate amount of $46.8 million
(excluding amounts paid by certain officers and directors in respect of shares
of Common Stock purchased by them in the Company's initial public offering in
December 1997). Such capital contributions were made in connection with the
sale to such officers and directors in private placements of an aggregate of
13,150,714 shares of Common Stock and 6,342,858 warrants ("Warrants"). Each
such Warrant entitles the holder to purchase one share of Common Stock at an
exercise price of $10.00 per share at any time prior to September 12, 2007.
Such shares and Warrants were sold at a price of $3.50 per unit consisting of
one share of Common Stock and one-half of a Warrant (except that Messrs.
Barker and Tsai purchased only Common Stock at a price of $3.50 per share and
Messrs. Hicks, Imig and Heckmann purchased only Common

30
<PAGE>

Stock at a price of $10.00 per share). The table below indicates (i) the
number of shares of Common Stock and the number of Warrants purchased by such
officers and directors (excluding shares purchased in the Company's initial
public offering) and (ii) the aggregate amount paid by such officers and
directors for such securities:

<TABLE>
<CAPTION>
SECURITIES PURCHASED(1)
-------------------------
COMMON
NAME STOCK WARRANTS PURCHASE PRICE
---- ------------ --------------------------
<S> <C> <C> <C>
Bradley S. Jacobs.................. 10,000,000 5,000,000 $35,000,000
Wayland R. Hicks................... 100,000 -- 1,000,000
John N. Milne...................... 1,428,571 714,286 5,000,000
Michael J. Nolan................... 571,429 285,715 2,000,000
Robert P. Miner.................... 285,714 142,857 1,000,000
Sandra E. Welwood.................. 100,000 50,000 350,000
Kurtis T. Barker................... 100,000 -- 350,000
Daniel E. Imig..................... 5,000 -- 50,000
Joseph J. Kondrup, Jr. ............ 100,000 50,000 350,000
Kai E. Nyby........................ 100,000 50,000 350,000
Richard A. Volonino................ 100,000 50,000 350,000
Richard J. Heckmann................ 20,000 -- 200,000
Gerald Tsai, Jr. .................. 240,000 -- 840,000
</TABLE>
- --------
(1) In certain cases includes securities owned by one or more entities
controlled by the named holder.

CLASSIFICATION OF BOARD OF DIRECTORS

The Board of Directors is divided into three classes. The term of office of
the first class (currently comprised of Mr. Tsai) will expire at the annual
meeting of stockholders following the date of this Prospectus, the term of
office of the second class (currently comprised of Mr. DeFeo and Mr. Heckmann)
will expire at the second annual meeting of stockholders following the date of
this Prospectus, and the term of office of the third class (currently
comprised of Mr. Jacobs and Mr. Milne) will expire at the third annual meeting
of stockholders following the date of this Prospectus. At each annual meeting
of stockholders, successors to directors of the class whose term expires at
such meeting will be elected to serve for three-year terms and until their
successors are elected and qualified. See "Certain Charter and By-Law
Provisions--Classified Board of Directors."

COMMITTEES OF THE BOARD

The Board of Directors has three standing committees: the Audit Committee,
the Compensation/Stock Option Committee, and the Special Stock Option
Committee.

The responsibilities of the Audit Committee include selecting the firm of
independent accountants to be appointed to audit the Company's financial
statements and reviewing the scope and results of the audit with the
independent accountants. The members of this committee are Messrs. DeFeo,
Heckmann and Tsai.

The responsibilities of the Compensation/Stock Option Committee include
making recommendations with respect to the compensation to be paid to officers
and directors, administering the Company's Stock Option Plan, and approving
the grant of options. The members of this committee are Messrs. DeFeo,
Heckmann and Tsai.

The responsibilities of the Special Stock Option Committee include approving
the grant of options to persons other than officers and directors of the
Company. The authority of this committee to approve the grant of options to
such persons is concurrent with the authority of the Compensation/Stock Option
Committee to approve such grants. The members of this committee are Messrs.
Jacobs and Milne.

COMPENSATION OF DIRECTORS

Each director of the Company is paid up to $2,500 per day for each Board of
Directors' meeting such director attends, together with an expense
reimbursement. Messrs. DeFeo, Heckmann and Tsai have each been granted options
to purchase an aggregate of 20,000 shares of Common Stock at an exercise price
of $15.00 per share.

31
<PAGE>

COMPENSATION OF CERTAIN OFFICERS

The Company's executive officers are being compensated, and each has been
compensated since joining the Company, in accordance with the terms of the
Employment Agreements described below.

The following table sets forth information concerning the compensation of
the Chief Executive Officer of the Company and each of the other executive
officers of the Company during the period August 14, 1997 (inception) through
December 31, 1997.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION SALARY($) OPTIONS(#)
- --------------------------- --------- ------------
<S> <C> <C>
Bradley S. Jacobs...................................... $97,039 --
Chief Executive Officer
Wayland R. Hicks....................................... 47,692(1) 450,000
President and Chief Operating Officer
John N. Milne.......................................... 63,577 --
Chief Acquisition Officer
Michael J. Nolan....................................... 58,558 --
Chief Financial Officer
Robert P. Miner........................................ 50,192 --
Vice President, Finance
</TABLE>
- --------
(1)Mr. Hicks' employment with the Company commenced on November 14, 1997.

The following tables summarize the options granted in 1997 to Mr. Hicks, the
potential value of these options at the end of the option term (assuming
certain levels of appreciation of the Company's Common Stock), and the total
number of options held by such executive officer as of December 31, 1997. None
of the other executive officers of the Company named in the Summary
Compensation Table above has been granted options.

OPTION GRANTS IN 1997

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------
POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED RATE OF STOCK
SECURITIES OPTIONS EXERCISE APPRECIATION FOR OPTION
UNDERLYING GRANTED TO PRICE TERM(1)
OPTIONS EMPLOYEES PER EXPIRATION ---------------------------
NAME GRANTED IN 1997 SHARE DATE 5% 10%
- ---- ---------- ---------- -------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Wayland R. Hicks........ 350,000(2) 38.7% $10.00 11/13/07 $ 2,201,131 $ 5,578,099
50,000(2) 5.5% $15.00 11/13/07 64,447 546,871
50,000(2) 5.5% $20.00 11/13/07 -- 296,871
</TABLE>
- --------

(1) These amounts are based on calculations at hypothetical 5% and 10%
compound annual appreciation rates prescribed by the Securities and
Exchange Commission and, therefore, are not intended to forecast possible
future appreciation, if any, of the Company's Common Stock price.
(2) These options are not currently vested. These options will vest one-third
in November 1998, one-third in November 1999 and one-third in November
2000. These options were granted pursuant to the Company's 1997 Stock
Option Plan.

32
<PAGE>

VALUE OF OPTIONS AT DECEMBER 31, 1997

<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS AT MONEY OPTIONS AT
NAME DECEMBER 31, 1997 DECEMBER 31, 1997
- ---- ------------------------------- --------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------- ----------------- ------------- -----------------
<S> <C> <C> <C> <C>
Wayland R. Hicks........ -- 450,000 -- $ 3,475,000
</TABLE>

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements with each of the
executive officers of the Company. Certain information with regard to these
agreements is set forth below.

The agreements provide for base salary to be paid at a rate per annum as
follows: Mr. Jacobs ($290,000), Mr. Hicks ($400,000), Mr. Milne ($190,000),
Mr. Nolan ($175,000), and Mr. Miner ($150,000). The base salary payable to Mr.
Hicks is payable 50% in cash and 50% in Common Stock (valued at the average
closing sales price of the Common Stock during all trading days in the
calendar quarter preceding the quarter in which the payment is made). Shares
of Common Stock issued to Mr. Hicks are subject to certain restrictions on
transfer as described under "Principal Stockholders--Certain Agreements
Relating to Securities Held by Officers." The base salary payable to Messrs.
Jacobs and Milne is subject to possible upward annual adjustments based upon
changes in a designated cost of living index. The agreements do not provide
for mandatory bonuses. However, the agreements provide that in addition to the
compensation specifically provided for, the Company may pay such salary
increases, bonuses or incentive compensation as may be authorized by the Board
of Directors. The agreements with Messrs. Jacobs and Milne provide for each
such executive to receive an automobile allowance of at least $700 per month.
The agreement with Mr. Hicks provides for the Company to reimburse him for
certain relocation expenses up to a maximum of $100,000.

The employment agreements with the following executives provide that the
term shall automatically renew so that at all times the balance of the terms
will not be less than the period hereinafter specified with respect to such
executive: Mr. Jacobs (five years), Mr. Milne (five years), Mr. Nolan (three
years) and Mr. Miner (three years). The employment agreement with Mr. Hicks
provides for a term extending until November 2000. Under each of the
agreements, the Company or the employee may at any time terminate the
agreement, with or without cause, provided that if the Company terminates the
agreement, the Company is required to make severance payments to the extent
described in the following paragraph.

The employment agreements with Messrs. Jacobs and Milne provide that the
executive is entitled to severance benefits in the event that (i) his
employment agreement is terminated by the Company without Cause (as defined in
the employment agreement), (ii) the executive terminates his employment
agreement for Good Reason (as defined in the employment agreement) or because
of a breach by the Company of its obligations thereunder, (iii) his employment
is terminated as a result of death or (iv) the Company or the executive
terminates the employment agreement due to the disability of the executive.
The severance benefits include (i) a lump sum payment equal to five times the
sum of the executive's annual base salary at the time of termination plus the
highest annual bonus paid to the executive in the preceding three years and
(ii) the continuation of the executive's benefits for such specified period.
The employment agreement with Mr. Hicks provides that the executive is
entitled to a severance payment in the amount of $1 million in the event that
his employment agreement is terminated by the Company without Cause (as
defined in the employment agreement) or he terminates his employment for Good
Reason (as defined in the employment agreement). The employment agreements
with the other officers provide that the executive is entitled to severance
benefits of up to three months' base salary in the event that the executive's
employment agreement is terminated without Cause (as defined in the employment
agreement). The employment agreements with Messrs. Jacobs and Milne provide
that if any portion of the

33
<PAGE>

required severance payment to the executive constitutes an "excess parachute
payment" (as defined in Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code")), the executive is entitled to receive a payment
sufficient on an after-tax basis to offset any excise tax payable by the
executive pursuant to Section 4999 of the Code. Any payment constituting an
"excess parachute payment" would not be deductible by the Company.

Each of the agreements provides that all options at any time to be granted
to the executive will automatically vest upon a change of control of the
Company (as defined in the agreement).

Pursuant to the employment agreement with Mr. Hicks, Mr. Hicks has been
granted options to purchase an aggregate of 450,000 shares of Common Stock.
For information concerning these options, see "--Compensation of Certain
Officers."

The agreement with Mr. Hicks provides that at each annual meeting of the
stockholders of the Company which occurs during the term of the agreement and
at which Mr. Hicks' term as director would be scheduled to expire, the Company
will nominate Mr. Hicks for re-election as a director.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

At the time the employment agreements with Messrs. Jacobs and Milne were
approved by the Board of Directors, the sole members of the Board were Messrs.
Jacobs and Milne. No compensation committee interlocks with other companies
have existed.

STOCK OPTION PLAN

The Board of Directors has adopted the Company's 1997 Stock Option Plan (the
"Stock Option Plan") which provides for the granting of options to purchase
not more than an aggregate of 5,000,000 shares of Common Stock. Some or all of
such options may be "incentive stock options" within the meaning of the Code.
All officers, directors and employees of the Company and other persons who
perform services on behalf of the Company are eligible to participate in the
Stock Option Plan. Each option granted pursuant to the Stock Option Plan must
provide for an exercise price per share that is at least equal to the fair
market value per share of Common Stock on the date of grant. No options may be
granted under the Stock Option Plan after August 31, 2007. The Company has
heretofore granted under the Stock Option Plan options to purchase an
aggregate of 931,333 shares of Common Stock (including the options granted to
Mr. Hicks as described under "--Employment Agreements"). These options have a
weighted average exercise price of $13.06 per share.

The Stock Option Plan provides that it is to be administered by the Board of
Directors (or by a committee appointed by the Board). The Board of Directors
(or any such committee) has full power and authority to interpret the
provisions, and supervise the administration, of the Stock Option Plan. The
Board of Directors (or any such committee) determines, subject to the
provisions of the Stock Option Plan, to whom options shall be granted, the
number of shares of Common Stock subject to an option, whether an option shall
be incentive or non-qualified, the exercise price of each option (which may
not be less than the fair market value on the date of grant), the period
during which each option may be exercised and the other terms and conditions
of each option.

34
<PAGE>

PRINCIPAL STOCKHOLDERS

GENERAL

The table below and the notes thereto set forth as of the date of this
Prospectus certain information concerning the beneficial ownership (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934) of the Company's
Common Stock by (i) each director and executive officer of the Company and
(ii) all executive officers and directors of the Company as a group. Except as
indicated in the table, the Company does not know of any stockholder that is
the beneficial owner of more than 5% of the outstanding Common Stock of the
Company. For purposes of the table, each executive officer is deemed to be the
beneficial owner of all shares of Common Stock that may be acquired upon the
exercise of the Warrants held by such officer. The Warrants are currently
exercisable at an exercise price of $10.00 per share (representing an
aggregate exercise price of $61.4 million, assuming the exercise of all
Warrants held by executive officers).
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK PERCENT OF COMMON STOCK OWNED(2)
BENEFICIALLY --------------------------------
NAME OWNED(1)(2) BEFORE OFFERINGS AFTER OFFERINGS
- ---- ------------------- ---------------- ---------------
<S> <C> <C> <C>
Bradley S. Jacobs........ 15,000,100(3)(4) 50.5% 41.4%
Wayland R. Hicks......... 100,000(5) * *
John N. Milne............ 2,142,857(6) 8.4% 6.7%
Michael J. Nolan......... 857,244(7) 3.4% 2.7%
Robert P. Miner.......... 428,571(8) 1.7% 1.4%
Ronald M. DeFeo.......... 22,000(9) * *
Richard J. Heckmann...... 40,000(10) * *
Gerald Tsai, Jr.......... 310,000(11) 1.3% 1.0%
All executive officers
and directors as a group
(8 persons)............. 18,900,772(12) 61.1% 50.5%
</TABLE>
- --------
*Less than 1%.
(1) Unless otherwise indicated, each person has sole investment and voting
power with respect to the shares indicated. For purposes of this table, a
person or group of persons is deemed to have "beneficial ownership" of any
shares as of a given date which such person has the right to acquire
within 60 days after such date. For purposes of computing the percentage
of outstanding shares held by each person or group of persons named above
on a given date, any security which such person or persons has the right
to acquire within 60 days after such date is deemed to be outstanding for
the purpose of computing the percentage ownership of such person or
persons, but is not deemed to be outstanding for the purpose of computing
the percentage ownership of any other person.
(2) In certain cases, includes securities owned by one or more entities
controlled by the named holder.
(3) Consists of 10,000,100 outstanding shares and 5,000,000 shares issuable
upon the exercise of currently exercisable Warrants.

(4) Mr. Jacobs has certain rights relating to the disposition of the shares
and Warrants owned by each of the other officers of the Company (as
described below under "--Certain Agreements Relating to Securities Held by
Officers"). By virtue of such rights, Mr. Jacobs is deemed to share
beneficial ownership (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934) of the shares owned by the other officers
of the Company. The shares that the table indicates are owned by Mr.
Jacobs do not include the shares with respect to which Mr. Jacobs is
deemed to share beneficial ownership as aforesaid. Including such shares,
Mr. Jacobs is deemed the beneficial owner of an aggregate of 19,133,672
shares of Common Stock (comprised of 12,790,814 outstanding shares and
6,342,858 shares issuable upon the exercise of outstanding Warrants).
(5) Does not include 450,000 shares issuable upon the exercise of options
(which are not currently exercisable) granted to Mr. Hicks. See
"Management--Compensation of Certain Officers." Also does not include any
shares that the Company is required to pay Mr. Hicks as part of his base
salary as described under "Management--Employment Agreements."

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(6) Consists of 1,428,571 outstanding shares and 714,286 shares issuable upon
the exercise of currently exercisable Warrants.
(7) Consists of 571,529 outstanding shares and 285,715 shares issuable upon
the exercise of currently exercisable Warrants.
(8) Consists of 285,714 outstanding shares and 142,857 shares issuable upon
the exercise of currently exercisable Warrants.
(9) Consists of 2,000 outstanding shares and 20,000 shares issuable upon the
exercise of currently exercisable options.
(10) Consists of 20,000 outstanding shares and 20,000 shares issuable upon the
exercise of currently exercisable options.
(11) Consists of 290,000 outstanding shares and 20,000 shares issuable upon
exercise of outstanding options.
(12) Consists of 12,697,914 outstanding shares, 6,142,858 shares issuable upon
the exercise of currently exercisable Warrants (which Warrants provide
for an exercise price of $10.00 per share, representing an aggregate
exercise price of $61.4 million assuming exercise of all the Warrants
held by executive officers), and 60,000 shares issuable upon the exercise
of currently exercisable options.

CERTAIN AGREEMENTS RELATING TO SECURITIES HELD BY OFFICERS

Prior to the Company's initial public offering, the officers of the Company
purchased Common Stock (and in certain cases Warrants) from the Company in
private placements, as described under "Management--Capital Contributions by
Officers of Directors." All shares of Common Stock and Warrants purchased by
the officers of the Company prior to the Company's initial public offering
(and any shares of Common Stock acquired upon exercise of such Warrants) are
referred to as the "Private Placement Securities."

Each officer of the Company (other than Mr. Jacobs and Mr. Hicks) has
entered into an agreement with the Company and Mr. Jacobs that provides that
(i) if Mr. Jacobs sells any Private Placement Securities that he beneficially
owns in a commercial, non-charitable transaction, then Mr. Jacobs is required
to use his best efforts to sell (and has the right to sell subject to certain
exceptions) on behalf of such officer a pro rata portion of such officer's
Private Placement Securities at then prevailing prices, and (ii) except for
sales that may be required to be made as aforesaid, the officer shall not
(without the prior written consent of the Company) sell or otherwise dispose
of the Private Placement Securities owned by such officer (subject to certain
exceptions for charitable gifts). The foregoing provisions of the agreements
terminate in September or October 2002.

Each officer of the Company (other than Mr. Jacobs and Mr. Hicks) has also
agreed pursuant to such agreements that the Company, in its sole discretion,
may (i) prior to September 1, 2005, repurchase the Private Placement
Securities owned by such officer in the event that such officer breaches any
agreement with the Company or acts adversely to the interest of the Company
and (ii) repurchase such Private Placement Securities without any cause
(provided that such repurchase right without cause will lapse with respect to
one-third of the securities on the first, second and third anniversaries of
the date of such agreements). The amount to be paid by the Company in the
event of a repurchase will be equal to the amount originally paid by such
officer for such securities plus an amount representing a 10% annual return on
such amount. See "Management--Capital Contributions by Officers and Directors"
for information concerning the amounts paid by such officers of the Company
for the Private Placement Securities owned by them.

Mr. Hicks has agreed that (i) he will not transfer any Private Placement
Securities purchased by him until November 1998 and (ii) he will not transfer
any shares of Common Stock that are hereafter issued to him as compensation
pursuant to his employment agreement for a one-year period following the date
of issuance. See "Management--Employment Agreements."

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DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of the Company consists of 75,000,000 shares of
Common Stock, par value $0.01 per share, and 5,000,000 shares of Preferred
Stock, par value $0.01 per share (the "Preferred Stock"). As of the date of
this Prospectus, there are 24,718,808 shares of Common Stock outstanding.
After giving effect to the Offerings, there will be 31,218,808 shares of
Common Stock outstanding (32,193,808 if the Underwriters' over-allotment
option is exercised in full). As of the date of this Prospectus, there are no
shares of Preferred Stock outstanding or reserved for issuance.

The following description of the Company's capital stock is a summary of the
material terms of such stock. The following does not purport to be complete
and is subject in all respects to applicable Delaware law and to the
provisions of the Company's Certificate of Incorporation and By-laws.

COMMON STOCK

The holders of shares of Common Stock are entitled to one vote per share
held on all matters submitted to a vote at a meeting of stockholders. Each
stockholder may exercise such vote either in person or by proxy. Stockholders
are not entitled to cumulate their votes for the election of directors, which
means that, subject to such rights as may be granted to the holders of shares
of Preferred Stock, if any, the holders of more than 50% of the outstanding
shares of Common Stock are able to elect all of the directors to be elected by
holders of shares of Common Stock and the holders of the remaining shares of
Common Stock will not be able to elect any director. Subject to such
preferences to which holders of shares of Preferred Stock, if any, may be
entitled, the holders of outstanding shares of Common Stock are entitled to
receive ratably such dividends, if any, as may be declared from time to time
by the Board of Directors out of funds legally available therefor. In the
event of a liquidation, dissolution or winding up of the Company, the holders
of outstanding shares of Common Stock are entitled to share ratably in all
assets of the Company which are legally available for distribution to
stockholders, subject to the prior rights on liquidation of creditors and to
preferences, if any, to which holders of shares of Preferred Stock, if any,
may be entitled. The holders of outstanding shares of Common Stock do not have
any preemptive, subscription, redemption or sinking fund rights. The
outstanding shares of Common Stock are, and the shares issued in the Offerings
will upon issuance and sale as contemplated hereby be, duly authorized,
validly issued, fully paid and nonassessable.

PREFERRED STOCK

The Company is authorized by its Certificate of Incorporation to issue up to
5,000,000 shares of Preferred Stock, in one or more series and containing such
rights, privileges and limitations, including dividend rights, voting rights,
conversion privileges, redemption rights, liquidation rights and/or sinking
fund rights, as may from time to time be determined by the Board of Directors
of the Company. Preferred Stock may be issued in the future in connection with
acquisitions, financings or such other matters as the Board of Directors deems
to be appropriate. In the event that any such shares of Preferred Stock shall
be issued, a Certificate of Designation, setting forth the series of such
Preferred Stock and the relative rights, privileges and limitations with
respect thereto, is required to be filed with the Secretary of State of the
State of Delaware. The effect of having such Preferred Stock authorized is
that the Company's Board of Directors alone, within the bounds and subject to
the federal securities laws and the Delaware General Corporation Law (the
"Delaware law"), may be able to authorize the issuance of Preferred Stock,
which may adversely affect the voting and other rights of holders of Common
Stock. The issuance of Preferred Stock may also have the effect of delaying or
preventing a change in control of the Company.

WARRANTS, OPTIONS AND CONVERTIBLE NOTE

There are currently outstanding warrants to purchase an aggregate of
6,519,058 shares of Common Stock. Such warrants provide for a weighted average
exercise price of $10.12 per share.

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There are currently outstanding options to purchase an aggregate of 931,333
shares of Common Stock. These options provide for exercise prices ranging from
$10.00 to $30.00 per share, with the weighted average exercise price being
$13.06 per share. Of these options, options to purchase an aggregate of 60,000
shares of Common Stock are currently exercisable and options to purchase
871,333 shares of Common Stock will become exercisable in installments over
specified periods.

A portion of the consideration paid by the Company for one of the Acquired
Companies consisted of a $300,000 convertible note, which note is convertible
into Common Stock at a conversion price equal to $16.20 per share.

TRANSFER AGENT AND REGISTRAR

American Stock Transfer & Trust Company serves as transfer agent and
registrar for the Common Stock.

CERTAIN CHARTER AND BY-LAW PROVISIONS

The following brief description of certain provisions of the Company's
Certificate of Incorporation (the "Certificate") and By-laws does not purport
to be complete and is subject in all respects to the provisions of the
Certificate and By-laws, copies of which have been filed as exhibits to the
Registration Statement of which this Prospectus forms a part.

CLASSIFIED BOARD OF DIRECTORS

The Certificate provides that the Board shall be divided into three classes
and that the number of directors in each class shall be as nearly equal as is
possible based upon the number of directors constituting the entire Board. The
Certificate effectively provides that the term of office of the first class
will expire at the annual meeting of stockholders following the date of this
Prospectus, the term of office of the second class will expire at the second
annual meeting of stockholders following the date of this Prospectus, and the
term of office of the third class will expire at the third annual meeting of
stockholders following the date of this Prospectus. At each annual meeting of
stockholders, successors to directors of the class whose term expires at such
meeting will be elected to serve for three-year terms and until their
successors are elected and qualified.

The classification of directors has the effect of making it more difficult
for stockholders to change the composition of the Board. At least two annual
meetings of stockholders, instead of one, will generally be required to effect
a change in a majority of the Board. Such a delay may help ensure that the
Company's directors, if confronted by a third party attempting to force a
proxy contest, a tender or exchange offer or other extraordinary corporate
transaction, would have sufficient time to review the proposal as well as any
available alternatives to the proposal and to act in what they believe to be
the best interests of the stockholders. However, such classification
provisions could also have the effect of discouraging a third party from
initiating a proxy contest, making a tender offer or otherwise attempting to
obtain control of the Company, even though such an attempt might be beneficial
to the Company and its stockholders. The classification of the Board could
thus increase the likelihood that incumbent directors will retain their
positions.

NUMBER OF DIRECTORS; REMOVAL; FILLING VACANCIES

The Certificate provides that, subject to any rights of holders of Preferred
Stock to elect additional directors under specified circumstances, the number
of directors comprising the entire Board will be fixed from time to time by
action of not less than a majority of the directors then in office. If the
number of directors is at any time fixed at three or greater, then thereafter
in no event shall such number be less than three or more than nine, unless
approved by action of not less than two-thirds of the directors then in
office. In addition, the Certificate provides that, subject to any rights of
holders of Preferred Stock, newly created directorships resulting from an
increase in the authorized number of directors or vacancies on the Board
resulting from death, resignation, retirement, disqualification or removal of
directors or any other cause may be filled only by the Board (and not

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by the stockholders unless there are no directors in office), provided that a
quorum is then in office and present, or by a majority of the directors then
in office, if less than a quorum is then in office, or by the sole remaining
director. Accordingly, the Board could prevent any stockholder from enlarging
the Board and filling the new directorships with such stockholder's own
nominees.

Under the Delaware law, unless otherwise provided in the certificate of
incorporation, directors serving on a classified board may only be removed by
the stockholders for cause. The Certificate provides that directors may be
removed only for cause and only upon the affirmative vote of holders of at
least 66 2/3% of the voting power of all the then outstanding shares of stock
entitled to vote generally in the election of directors ("Voting Stock"),
voting together as a single class.

The provisions of the Certificate governing the number of directors, their
removal and the filling of vacancies may have the effect of discouraging a
third party from initiating a proxy contest, making a tender offer or
otherwise attempting to gain control of the Company, or of attempting to
change the composition or policies of the Board, even though such attempts
might be beneficial to the Company or its stockholders. These provisions of
the Certificate could thus increase the likelihood that incumbent directors
retain their positions.

LIMITATION ON SPECIAL MEETINGS; NO STOCKHOLDER ACTION BY WRITTEN CONSENT

The Certificate and the By-laws provide that (subject to the rights, if any,
of holders of any class or series of Preferred Stock then outstanding) (i)
only a majority of the Board of Directors or the chief executive officer will
be able to call a special meeting of stockholders; (ii) the business permitted
to be conducted at a special meeting of stockholders shall be limited to
matters properly brought before the meeting by or at the direction of the
Board of Directors; and (iii) stockholder action may be taken only at a duly
called and convened annual or special meeting of stockholders and may not be
taken by written consent. These provisions, taken together, prevent
stockholders from forcing consideration by the stockholders of stockholder
proposals over the opposition of the Board, except at an annual meeting.

ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS AND STOCKHOLDER
PROPOSALS

The By-laws establish an advance notice procedure for stockholders to make
nominations of candidates for election as director, or to bring other business
before an annual meeting of stockholders of the Company (the "Stockholder
Notice Procedure").

The Stockholder Notice Procedure provides that, subject to the rights of any
holders of Preferred Stock, only persons who are nominated by or at the
direction of the Board, any committee appointed by the Board, or by a
stockholder who has given timely written notice to the Secretary of the
Company prior to the meeting at which directors are to be elected, will be
eligible for election as directors of the Company. The Stockholder Notice
Procedure provides that at an annual meeting only such business may be
conducted as has been brought before the meeting by, or at the direction of,
the Board, any committee appointed by the Board, or by a stockholder who has
given timely written notice to the Secretary of the Company of such
stockholder's intention to bring such business before such meeting. Under the
Stockholder Notice Procedure, to be timely, notice of stockholder nominations
or proposals to be made at an annual or special meeting must be received by
the Company not less than 60 days nor more than 90 days prior to the scheduled
date of the meeting (or, if less than 70 days' notice or prior public
disclosure of the date of the meeting is given, then the 15th day following
the earlier of (i) the day such notice was mailed or (ii) the day such public
disclosure was made).

Under the Stockholder Notice Procedure, a stockholder's notice to the
Company proposing to nominate a person for election as director must contain
certain information about the nominating stockholder and the proposed nominee.
Under the Stockholder Notice Procedure, a stockholder's notice relating to the
conduct of business other than the nomination of directors must contain
certain information about such business and about the proposing stockholder.
If the Chairman or other officer presiding at a meeting determines that a
person was

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not nominated, or other business was not brought before the meeting, in
accordance with the Stockholder Notice Procedure, such person will not be
eligible for election as a director, or such business will not be conducted at
such meeting, as the case may be.

By requiring advance notice of nominations by stockholders, the Stockholder
Notice Procedure affords the Board an opportunity to consider the
qualifications of the proposed nominees and, to the extent deemed necessary or
desirable by the Board, to inform stockholders about such qualifications. By
requiring advance notice of other proposed business, the Stockholder Notice
Procedure also provides a more orderly procedure for conducting annual
meetings of stockholders and, to the extent deemed necessary or desirable by
the Board, provides the Board with an opportunity to inform stockholders,
prior to such meetings, of any business proposed to be conducted at such
meetings, together with any recommendations as to the Board's position
regarding action to be taken with respect to such business, so that
stockholders can better decide whether to attend such a meeting or to grant a
proxy regarding the disposition of any such business.

Although the By-laws do not give the Board any power to approve or
disapprove stockholder nominations for the election of directors or proposals
for action, the foregoing provisions may have the effect of precluding a
contest for the election of directors or the consideration of stockholder
proposals and of discouraging or deterring a third party from conducting a
solicitation of proxies to elect its own slate of directors or to approve its
own proposal, if the proper advance notice procedures are not followed,
without regard to whether consideration of such nominees or proposals might be
harmful or beneficial to the Company and its stockholders.

CERTAIN PROVISIONS RELATING TO POTENTIAL CHANGE OF CONTROL

The Certificate authorizes the Board and any committee of the Board to take
such action as it may determine to be reasonably necessary or desirable to
encourage any person or entity to enter into negotiations with the Board and
management regarding any transaction which may result in a change of control
of the Company, or to contest or oppose any such transaction which the Board
determines to be unfair, abusive or otherwise undesirable to the Company, its
business, assets, properties or stockholders. The Board or any such committee
is specifically authorized to adopt plans or to issue securities of the
Company including plans, rights, options, capital stock, notes, debentures or
other debt securities, which securities may be exchangeable or convertible
into cash or other securities on such terms and conditions as the Board or any
such committee determines. In addition, the Board or such committee of the
Board may provide that any holder or class of holders of such designated
securities will be treated differently than all other security holders in
respect of the terms, conditions, provisions and rights of such securities.

The existence of this authority or the actions which may be taken by the
Board pursuant thereto are intended to give the Board flexibility in order to
act in the best interests of stockholders in the event of a potential change
of control transaction. Such provisions may, however, deter potential
acquirors from proposing unsolicited transactions not approved by the Board
and might enable the Board to hinder or frustrate such a transaction if
proposed.

LIMITATION OF LIABILITY OF DIRECTORS

The Certificate provides that a director will not be personally liable to
the Company or its stockholders for monetary damages for any 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 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 so amended.

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AMENDMENT OF THE CERTIFICATE OF INCORPORATION AND BY-LAWS

The Certificate contains provisions requiring the affirmative vote of the
holders of at least 66 2/3% of the voting power of the Voting Stock to amend
certain provisions of the Certificate (including the provisions discussed
above relating to the size and classification of the Board, replacement and/or
removal of directors, action by written consent, special stockholder meetings,
the authorization for the Board to take steps to encourage or oppose, as the
case may be, transactions which may result in a change of control of the
Company, and limitation of the liability of directors) or to amend any
provision of the By-laws by action of stockholders. These provisions make it
more difficult for stockholders to make changes in the Certificate and the By-
laws, including changes designed to facilitate the exercise of control over
the Company.

SHARES ELIGIBLE FOR FUTURE SALE

No prediction can be made as to the effect, if any, that future sales of
Common Stock, or the availability of Common Stock for future sale, will have
on the market price of the Common Stock prevailing from time to time. Sales of
substantial amounts of Common Stock (including shares issued upon exercise of
warrants or options), or the perception that such sales could occur, may
adversely affect prevailing market prices for the Common Stock. The number of
outstanding shares of Common Stock available for sale in the public market
will be limited by the lock-up agreements described below. Subject to such
agreements, upon completion of the Offerings, substantially all of the
Company's outstanding shares of Common Stock (and all shares that may
hereafter be issued upon the exercise of outstanding warrants) will either be
freely tradeable without restriction under the Securities Act or pursuant to a
shelf registration statement previously filed by the Company.

The Company and all of its officers and directors (who hold an aggregate of
13,262,414 shares of Common Stock) have agreed not to sell or otherwise
dispose of any shares of Common Stock (including shares that may be acquired
upon the exercise of currently exercisable warrants) for a period of 180 days
after the date of this Prospectus without the prior written consent of Merrill
Lynch & Co., on behalf of the Underwriters (except that the Company may issue
shares as consideration for acquisitions, provided that the Company may not
issue in excess of 750,000 shares for acquisitions unless the recipients of
any excess shares agree to be subject to the foregoing lock-up agreement with
respect to such excess shares). In addition, the holder of 318,712 shares of
Common Stock has agreed not to sell or otherwise dispose of such shares until
June 1998 without the prior written consent of Merrill Lynch & Co.
Furthermore, the Company has agreed not to waive any existing lock-up
agreements between the Company and its stockholders, for a period of 180 days
after the date of this Prospectus without the prior written consent of Merrill
Lynch & Co., on behalf of the Underwriters. Such existing lock-up agreements
prohibit the sale or transfer of an aggregate of 2,901,705 shares without the
prior written consent of the Company. Such existing lock-up agreements lapse
in December 1998 (with respect to 712,241 shares), January 1999 (with respect
to 400,584 shares), March 1999 (with respect to 21,429 shares), December 1999
(with respect to 728,671 shares), and December 2000 (with respect to 1,038,780
shares). In addition, an aggregate of 404,291 shares of Common Stock not
subject to lock-up agreements and not covered by the Company's shelf
registration statement are "restricted securities" under Rule 144 under the
Securities Act and may not be sold unless registered pursuant to the
Securities Act or an exemption from registration is available. See
"Underwriting."

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CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS

The following is a general discussion of certain United States federal
income and estate tax considerations with respect to the ownership and
disposition of Common Stock applicable to Non-U.S. Holders who hold the Common
Stock as a capital asset within the meaning of Section 1221 of the Code. In
general, a "Non-U.S. Holder" is any holder other than (i) a citizen or
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 state, (iii) an
estate, the income of which is includable in gross income for United States
federal income tax purposes regardless of its source, or (iv) a trust if (a) a
court within the United States is able to exercise primary supervision over
the administration of the trust and (b) one or more United States persons have
the authority to control all substantial decisions of the trust. This
discussion is based on current law, which is subject to change (possibly with
retroactive effect), and is for general information only. This discussion does
not address aspects of United States federal taxation other than income and
estate taxation and does not address all aspects of income and estate taxation
or any aspects of state, local or non-United States taxes, nor does it
consider any specific facts or circumstances that may apply to a particular
Non-U.S. Holder. In addition, persons that hold the Common Stock through
"hybrid entities" may be subject to special rules and may not be entitled to
the benefits of a U.S. income tax treaty. ACCORDINGLY, PROSPECTIVE INVESTORS
ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE UNITED STATES FEDERAL,
STATE, LOCAL AND NON-UNITED STATES INCOME AND OTHER TAX CONSIDERATIONS OF
HOLDING AND DISPOSING OF SHARES OF COMMON STOCK.

For purposes of the discussion below, dividends and gain on the sale,
exchange or other disposition of Common Stock 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
country resident, attributable to a permanent establishment (or, in the case
of an individual, a fixed base) in the United States.

DIVIDENDS

In general, dividends paid to a Non-U.S. Holder will be subject to United
States withholding tax at a 30% rate of the gross amount (or a lower rate
prescribed by an applicable income tax treaty) unless the dividends are U.S.
trade or business income. Dividends that are U.S. trade or business income
generally will not be subject to United States withholding tax if the Non-U.S.
Holder files certain forms, including Internal Revenue Service Form 4224, with
the payor of the dividend, and generally will be subject to United States
federal income tax on a net income basis, in the same manner as if the Non-
U.S. Holder were a resident of the United States. A Non-U.S. Holder that is a
corporation may be subject to an additional branch profits tax at a rate of
30% (or such lower rate as may be specified by an applicable income tax
treaty). To determine the applicability of a tax treaty providing for a lower
rate of withholding under the currently effective United States Treasury
Department regulations (the "Current Regulations"), dividends paid to an
address in a foreign country are presumed to be paid to a resident of that
country absent knowledge to the contrary.

Under United States Treasury Department regulations issued on October 6,
1997 (the "Final Regulations") generally effective for payments made after
December 31, 1998, a Non-U.S. Holder (including in certain cases of Non-U.S.
Holders that are fiscally transparent entities, the owner or owners of such
entity) will be required to provide to the payor certain documentation that
such Non-U.S. Holder (or the owner or owners of such fiscally transparent
entities) is a foreign person in order to claim a reduced rate of withholding
pursuant to an applicable income tax treaty. In addition, if the Common Stock
ceases to be actively traded, then a Non-U.S. Holder claiming the benefits of
a treaty may also be required to provide a U.S. taxpayer identification number
or a certificate of residence in the foreign country (or other acceptable
proof of such residence). Under the Final Regulations, persons claiming that
dividends are U.S. trade or business income will generally be required to
provide a Form W-8, including a taxpayer identification number, certifying
that the income is U.S. trade or business income.

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GAIN ON SALE OR OTHER DISPOSITION OF COMMON STOCK

In general, a Non-U.S. Holder will not be subject to United States federal
income tax on any gain realized upon the sale or other disposition of such
holder's shares of Common Stock unless (i) the gain is U.S. trade or business
income; (ii) the Non-U.S. Holder is an individual who holds shares of Common
Stock as a capital asset and is present in the United States for 183 days or
more in the taxable year of disposition, and certain other tests are met;
(iii) the Non-U.S. Holder is subject to tax pursuant to the provisions of the
U.S. tax law applicable to former citizens and residents of the United States;
or (iv) the Company is or has been a United States real property holding
corporation (a "USRPHC") for United States federal income tax purposes (which
the Company does not believe that it is or is likely to become) at any time
within the shorter of the five year period preceding such disposition or such
Non-U.S. Holder's holding period. If the Company were or were to become a
USRPHC at any time during this period, gains realized upon a disposition of
Common Stock by a Non-U.S. Holder which did not directly or indirectly own
more than 5% of the Common Stock during this period generally would not be
subject to United States federal income tax, provided that the Common Stock is
regularly traded on an established securities market.

ESTATE TAX

Common Stock owned or treated as owned by an individual who is not a citizen
or resident (as defined for United States federal estate tax purposes) of the
United States at the time of death will be includable in the individual's
gross estate for United States federal estate tax purposes unless an
applicable estate tax treaty provides otherwise, and therefore may be subject
to United States federal estate tax.

BACKUP WITHHOLDING, INFORMATION REPORTING AND OTHER REPORTING REQUIREMENTS

The Company must report annually to the Internal Revenue Service and to each
Non-U.S. Holder the amount of dividends paid to, and the tax withheld with
respect to, each Non-U.S. Holder. These reporting requirements apply
regardless of whether withholding was reduced or eliminated by an applicable
tax treaty. Copies of this information also may be made available under the
provisions of a specific treaty or agreement with the tax authorities in the
country in which the Non-U.S. Holder resides or is established.

Under the Current Regulations, United States backup withholding tax (which
generally is imposed at the rate of 31% on certain payments to persons that
fail to furnish the information required under the United States information
reporting requirements) and information reporting requirements (other than
those discussed above under "--Dividends") generally will not apply to
dividends paid on Common Stock to a Non-U.S. Holder at an address outside the
United States. Backup withholding and information reporting generally will
apply, however, to dividends paid on shares of Common Stock to a Non-U.S.
Holder at an address in the United States, if such holder fails to establish
an exemption or to provide certain other information to the payor.

Under the Current Regulations, the payment of proceeds from the disposition
of Common Stock to or through a United States office of a broker will be
subject to information reporting and backup withholding unless the beneficial
owner, under penalties of perjury, certifies, among other things, its status
as a Non-U.S. Holder or otherwise establishes an exemption. The payment of
proceeds from the disposition of Common Stock to or through a non-U.S. office
of a non-U.S. broker generally will not be subject to backup withholding and
information reporting except as noted below. In the case of proceeds from a
disposition of Common Stock paid to or through a non-U.S. office of a broker
that is (i) a United States person, (ii) a "controlled foreign corporation"
for United States federal income tax purposes, or (iii) a foreign person 50%
or more of whose gross income from certain periods is effectively connected
with a United States trade or business, information reporting (but not backup
withholding) will apply unless the broker has documentary evidence in its
files that the owner is a Non-U.S. Holder (and the broker has no actual
knowledge to the contrary).

Under the Final Regulations, the payment of dividends or the payment of
proceeds from the disposition of Common Stock to a Non-U.S. Holder may be
subject to information reporting and backup withholding unless

43
<PAGE>

such recipient provides to the payor certain documentation as to its status as
a Non-U.S. Holder or otherwise establishes an exemption.

Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules from a payment to a Non-U.S. Holder will be refunded
or credited against the Non-U.S. Holder's United States federal income tax
liability, if any, provided that the required information is furnished to the
Internal Revenue Service in a timely manner.

44
<PAGE>

UNDERWRITING

Subject to the terms and conditions set forth in a U.S. purchase agreement
(the "U.S. Purchase Agreement") among the Company and Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch"), Deutsche Morgan Grenfell Inc.,
Donaldson, Lufkin & Jenrette Securities Corporation and Smith Barney Inc.
(together, the "U.S. Underwriters") and concurrently with the sale of
1,300,000 shares of Common Stock to the International Managers (as defined
below), the Company has agreed to sell to the U.S. Underwriters, and each of
the U.S. Underwriters severally has agreed to purchase from the Company, the
number of shares of Common Stock set forth opposite its name below at the
public offering price less the underwriting discount set forth on the cover
page of this Prospectus.

<TABLE>
<CAPTION>
U.S. UNDERWRITER NUMBER OF SHARES
---------------- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
Deutsche Morgan Grenfell Inc. ..........................
Donaldson, Lufkin & Jenrette Securities Corporation.....
Smith Barney Inc. ......................................
---------
Total.............................................. 5,200,000
=========
</TABLE>

The Company has also entered into an international purchase agreement (the
"International Purchase Agreement") with Merrill Lynch International,
Donaldson, Lufkin & Jenrette International, Morgan Grenfell & Co. Limited and
Smith Barney Inc. (the "International Managers" and, together with the U.S.
Underwriters, the "Underwriters"). Subject to the terms and conditions set
forth in the International Purchase Agreement, and concurrently with the sale
of 5,200,000 shares of Common Stock to the U.S. Underwriters pursuant to the
U.S. Purchase Agreement, the Company has agreed to sell to the International
Managers, and the International Managers severally have agreed to purchase
from the Company, an aggregate of 1,300,000 shares of Common Stock. The
offering price per share and the total underwriting discount per share of
Common Stock are identical under the U.S. Purchase Agreement and the
International Purchase Agreement.

In the U.S. Purchase Agreement and the International Purchase Agreement, the
several U.S. Underwriters and the several International Managers,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Common Stock being sold pursuant to
each such agreement if any of the shares of Common Stock being sold pursuant
to such agreement are purchased. The closings with respect to the sale of
shares of Common Stock to be purchased by the U.S. Underwriters and the
International Managers are conditioned upon one another.

The U.S. Underwriters have advised the Company that they propose initially
to offer the shares of Common Stock to the public at the public offering price
set forth on the cover page of this Prospectus, and to certain dealers at such
price less a concession not in excess of $ per share of Common Stock. The
U.S. Underwriters may allow, and such dealers may reallow, a discount not in
excess of $ per share of Common Stock on sales to certain other dealers.
After the shares of Common Stock are released for sale to the public, the
public offering price, concession and discount may be changed.

The Company has granted an option to the U.S. Underwriters, exercisable for
30 days after the date of this Prospectus, to purchase up to an aggregate of
780,000 additional shares of Common Stock at the public offering price set
forth on the cover page of the Prospectus, less the underwriting discount. The
U.S. Underwriters may exercise this option only to cover over-allotments, if
any, made on the sale of the Common Stock offered hereby. To the extent that
the U.S. Underwriters exercise this option, each U.S. Underwriter will be
obligated, subject to certain conditions, to purchase a number of additional
shares of Common Stock proportionate to such U.S. Underwriter's initial amount
reflected in the foregoing table. The Company also has granted an option to
the International Managers, exercisable for 30 days after the date of this
Prospectus, to purchase up to an aggregate of 195,000 additional shares of
Common Stock to cover over-allotments, if any, on terms similar to those
granted to the U.S. Underwriters.

45
<PAGE>

The Company and all its executive officers and directors (who hold an
aggregate of 13,262,414 shares of Common Stock) have agreed, subject to
certain exceptions, not to directly or indirectly (a) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant for the sale of or
otherwise dispose of or transfer any shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock, whether now
owned or thereafter acquired by the person executing the agreement or with
respect to which the person executing the agreement thereafter acquires the
power of disposition, or file a registration statement under the Securities
Act with respect to the foregoing or (b) enter into any swap or other
agreement that transfers, in whole or in part, the economic consequence of
ownership of the Common Stock whether any such swap or transaction is to be
settled by delivery of Common Stock or other securities, in cash or otherwise,
without the prior written consent of Merrill Lynch & Co. on behalf of the
Underwriters for a period of 180 days after the date of this Prospectus. The
foregoing agreement will not limit a stockholder's ability to transfer shares
in a private placement or to pledge shares, provided that the transferee or
pledgee agrees to be bound by such agreement. The foregoing agreement also
will not limit the Company's ability to (i) grant stock options under the 1997
Stock Option Plan, (ii) issue shares as consideration for acquisitions
(provided that the Company may not issue in excess of 750,000 shares for
acquisitions unless the recipients of such excess shares agree to be subject
to the foregoing lock-up with respect to such excess shares), (iii) file a
shelf registration statement with respect to the possible resale of
outstanding shares of Common Stock or shares of Common Stock that may be
acquired upon exercise of outstanding warrants (provided that no sales may be
made under such registration statement during the 180-day lock-up period),
(iv) file a registration statement with respect to Common Stock or other
securities to be issued as consideration for an acquisition or with respect to
the potential resale of shares issued as consideration for an acquisition
(provided that no sales may be made pursuant to such registration statement
except to the extent permitted by clause (ii) above) or (v) file a
registration statement registering the shares that may be issued pursuant to
options granted or to be granted under the 1997 Stock Option Plan.

The Company has also agreed not to waive any existing lock-up agreements
between the Company and its stockholders, without the prior written consent of
Merrill Lynch & Co. on behalf of the Underwriters, for a period of 180 days
after the date of this Prospectus. This effectively prohibits the holders of
an aggregate of 2,901,705 shares of Common Stock from selling or otherwise
disposing of any such shares for a period of 180 days after the date of this
Prospectus, without the prior written consent of Merrill Lynch & Co., on
behalf of the Underwriters. See "Shares Eligible For Future Sale."

The U.S. Underwriters and the International Managers have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") that provides for
the coordination of their activities. Pursuant to the Intersyndicate
Agreement, the U.S. Underwriters and the International Managers are permitted
to sell shares of Common Stock to each other for purposes of resale at the
public offering price, less an amount not greater than the selling concession.
Under the terms of the Intersyndicate Agreement, the U.S. Underwriters and any
dealer to whom they sell shares of Common Stock will not offer to sell or sell
shares of Common Stock to persons who are non-U.S. or non-Canadian persons or
to persons they believe intend to resell to persons who are non-U.S. or non-
Canadian persons, and the International Managers and any dealer to whom they
sell shares of Common Stock will not offer to sell or sell shares of Common
Stock to U.S. persons or to Canadian persons or to persons they believe intend
to resell to U.S. or Canadian persons, except in the case of transactions
pursuant to the Intersyndicate Agreement.

The Company has agreed to indemnify the U.S. Underwriters and the
International Managers against certain liabilities, including certain
liabilities under the Securities Act.

Certain of the Underwriters have from time to time provided, and may in the
future provide, certain investment banking and advisory services to the
Company for which services such Underwriters received customary compensation.
The Underwriters may in the future provide additional investment banking and
advisory services to the Company.

46
<PAGE>

Until the distribution of the Common Stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters
and certain selling group members to bid for and purchase the Common Stock. As
an exception to these rules, the U.S. Underwriters are permitted to engage in
certain transactions that stabilize the price of the Common Stock. Such
transactions consist of bids or purchases for the purposes of pegging, fixing
or maintaining the price of the Common Stock.

If the Underwriters create a short position in the Common Stock in
connection with the Offerings, i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus, the U.S. Underwriters
may reduce that short position by purchasing Common Stock in the open market.
The U.S. Underwriters may also elect to reduce any short position by
exercising all or part of the over-allotment option described above.

The U.S. Underwriters may also impose a penalty bid on certain Underwriters
and selling group members. This means that if the U.S. Underwriters purchase
shares of Common Stock in the open market to reduce the Underwriters' short
position or to stabilize the price of the Common Stock, they may reclaim the
amount of the selling concession from the Underwriters and selling group
members who sold those shares as part of the Offerings.

In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases. The imposition of a penalty
bid might also have an effect on the price of a security to the extent that it
were to discourage resales of the security.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the Common Stock. In
addition, neither the Company nor any of the Underwriters makes any
representation that the U.S. Underwriters will engage in such transactions or
that such transactions, once commenced, will not be discontinued without
notice.

47
<PAGE>

LEGAL MATTERS

Certain legal matters in connection with the Offerings 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. Certain legal
matters in connection with the Offerings will be passed upon for the
Underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York.

EXPERTS

The financial statements of United Rentals, Inc. at December 31, 1997 and
for the period from August 14, 1997 (Inception) to December 31, 1997, the
financial statements of J&J Rental Services, Inc. at December 31, 1996 and
October 22, 1997 and for each of the two years in the period ended December
31, 1996, the six months ended June 30, 1997 and for the period from July 1,
1997 to October 22, 1997, the financial statements of Bronco Hi-Lift, Inc. at
December 31, 1996 and October 24, 1997 and for each of the two years in the
period ended December 31, 1996 and for the period from January 1, 1997 to
October 24, 1997, and the financial statements of Mission Valley Rentals, Inc.
at June 30, 1996 and 1997 and for the years then ended, appearing in this
Prospectus and Registration Statement, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon appearing
elsewhere herein and in the Registration Statement, and are included in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.

The consolidated financial statements of A&A Tool Rentals & Sales, Inc. and
subsidiary as of October 19, 1997, October 31, 1996, and 1995, and for the
period from November 1, 1996 to October 19, 1997 and for the years ended
October 31, 1996 and 1995, have been included herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, appearing elsewhere herein, and upon the
authority of said firm as experts in accounting and auditing.

The financial statements of MERCER Equipment Company appearing in this
Prospectus have been audited by Webster Duke & Co., independent auditors, as
set forth in their reports thereon included elsewhere herein and in the
Registration Statement of which this Prospectus is a part, and are included in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.

The combined financial statements of Coran Enterprises, Inc. (dba A-1 Rents)
and Monterey Bay Equipment Rental, Inc., appearing in this Prospectus and
Registration Statement, have been audited by Grant Thornton LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein and
in the Registration Statement, and are included in reliance upon such report
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, have been
included herein and in the Registration Statement in reliance upon the report
of KPMG, independent chartered accountants, appearing elsewhere herein, and
upon the authority of said firm as experts in accounting and auditing.

The audited financial statements of Access Rentals, Inc. and Subsidiary and
Affiliate included in this Registration Statement have been included herein in
reliance on 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 on the authority of that firm as experts in
auditing and accounting.

48
<PAGE>

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C. a Registration Statement on Form S-1
(together with all amendments thereto, the "Registration Statement"), under
the Securities Act with respect to the shares of Common Stock offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules filed therewith, certain
portions of which have been omitted as permitted by the rules and regulations
of the Commission. For further information with respect to the Company and the
Common Stock offered hereby, reference is hereby made to the Registration
Statement and to the exhibits and schedules filed therewith. Statements
contained in this Prospectus regarding the contents of any contract or other
document referred to are not necessarily complete and, in each instance,
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being deemed to be
qualified in its entirety by such reference. The Registration Statement,
including all exhibits and schedules thereto, may be inspected and copied at
the public reference facilities maintained by the Commission at the principal
office of the Commission located at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Midwest Regional Office of the Commission located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511 and at the Northeast Regional office of the Commission located at Seven
World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material may be obtained from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Room 1204, Washington, D.C. 20549, at prescribed
rates.

The Company is subject to the informational and periodic reporting
requirements of the Securities Exchange Act of 1934, as amended, and in
accordance therewith, files periodic reports, proxy statements, and other
information with the Commission. Such periodic reports, proxy statements, and
other information may be inspected and copied at the public reference
facilities maintained by the Commission at the principal office of the
Commission in Washington, D.C., and at the Commission's regional offices at
the addresses stated above. Copies of such material may be obtained at
prescribed rates from the Public Reference Section of the Commission at the
address stated above. The Common Stock is listed on the New York Stock
Exchange (the "NYSE"), and the Registration Statement and such reports, proxy
statements and other information can also be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005.

The Commission maintains an Internet web site that contains reports, proxy
and information statements and other information regarding issuers that file
electronically with the Commission. The address of that site is
http://www.sec.gov.

49
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
I. Pro Forma Consolidated Financial Statements of United Rentals, Inc.
Introduction......................................................................... F-4
Pro Forma Consolidated Balance Sheets--December 31, 1997 (unaudited)................. F-5
Pro Forma Consolidated Statements of Operations for the Year Ended December 31, 1997
(unaudited)....................................................................... F-6
Notes to Pro Forma Consolidated Financial Statements................................. F-7
II. Consolidated Financial Statements of United Rentals, Inc.
Report of Independent Auditors....................................................... F-9
Consolidated Balance Sheet--December 31, 1997........................................ F-10
Consolidated Statement of Operations for the period from August 14, 1997
(Inception) to December 31, 1997.................................................... F-11
Consolidated Statement of Stockholders' Equity for the period from August 14, 1997
(Inception) to December 31, 1997.................................................... F-12
Consolidated Statement of Cash Flows for the period from August 14, 1997
(Inception) to December 31, 1997.................................................... F-13
Notes to Consolidated Financial Statements........................................... F-14
III. Consolidated and Combined Financial Statements of Access Rentals, Inc. and subsidiary
and affiliate
Report of Independent Accountants.................................................... F-21
Consolidated and Combined Balance Sheets--March 31, 1996 and 1997 and December 31,
1997 (unaudited).................................................................... F-22
Consolidated and Combined Statements of Income for the Years Ended September 30, 1994
and 1995, for the Six Months Ended March 31, 1996, for the Year Ended March 31, 1997
and for the Nine Months Ended December 31, 1996 and 1997 (unaudited)................ F-23
Consolidated and Combined Statement of Stockholders' Equity for the Years Ended
September 30, 1994 and 1995, for the Six Months Ended March 31, 1996, for the Year
Ended March 31, 1997 and for the Nine Months Ended December 31, 1997 (unaudited).... F-24
Consolidated and Combined Statements of Cash Flows for the Years Ended September 30,
1994 and 1995, for the Six Months Ended March 31, 1996, for the Year Ended March 31,
1997 and for the Nine Months Ended December 31, 1996 and 1997 (unaudited)........... F-25
Notes to Financial Statements........................................................ F-26
IV. Combined Financial Statements of BNR Group of Companies
Report of Independent Auditors....................................................... F-35
Combined Balance Sheets--March 31, 1996 and 1997 and December 31, 1997 (unaudited)... F-36
Combined Statements of Earnings for the Years Ended March 31, 1996 and 1997 and for
the Nine Months Ended December 31, 1996 and 1997 (unaudited)........................ F-37
Combined Statements of Stockholders' Equity for the Years Ended March 31, 1996 and
1997 and for the Nine Months Ended December 31, 1997 (unaudited).................... F-38
Combined Statements of Cash Flows for the Years Ended March 31, 1996 and 1997 and for
the Nine Months Ended December 31, 1996 and 1997 (unaudited)........................ F-39
Notes to Combined Financial Statements............................................... F-40
</TABLE>

F-1
<PAGE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
V. Financial Statements of Mission Valley Rentals, Inc.
Report of Independent Auditors...................................... F-49
Balance Sheets--June 30, 1996 and 1997 and December 31, 1997
(unaudited)........................................................ F-50
Statements of Operations for the Years Ended June 30, 1996 and 1997
and for the Six Months Ended December 31, 1996 and 1997
(unaudited)........................................................ F-51
Statements of Stockholders' Equity for the Years Ended June 30, 1996
and 1997 and for the Six Months Ended December 31, 1997
(unaudited)........................................................ F-52
Statements of Cash Flows for the Years Ended June 30, 1996 and 1997
and the Six Months Ended December 31, 1996 and 1997 (unaudited).... F-53
Notes to Financial Statements....................................... F-54
VI. Financial Statements of MERCER Equipment Company
Independent Auditor's Report........................................ F-60
Balance Sheets--December 31, 1996 and October 24, 1997.............. F-61
Statements of Income and Retained Earnings for the Years Ended
December 31, 1995 and 1996 and for the period from January 1, 1997
to October 24, 1997................................................ F-62
Statements of Cash Flows for the Years Ended December 31, 1995 and
1996 and for the period from January 1, 1997 to October 24, 1997... F-63
Notes to Financial Statements....................................... F-64
VII. Consolidated Financial Statements of A&A Tool Rentals & Sales,
Inc. and subsidiary
Report of Independent Auditors...................................... F-69
Consolidated Balance Sheets--October 31, 1995 and 1996 and October
19, 1997 and July 31, 1997 (unaudited)............................. F-70
Consolidated Statements of Operations for the Years Ended October
31, 1995 and 1996 and for the period from November 1, 1996 to
October 19, 1997 and for the Nine Months Ended July 31, 1996 and
1997 (unaudited)................................................... F-71
Consolidated Statements of Stockholders' Equity for the Years Ended
October 31, 1995 and 1996 and for the period from November 1, 1996
to October 19, 1997 ............................................... F-72
Consolidated Statements of Cash Flows for the Years Ended October
31, 1995 and 1996 and for the period from November 1, 1996 to
October 19, 1997 and for the Nine Months Ended July 31, 1996 and
1997 (unaudited)................................................... F-73
Notes to Consolidated Financial Statements.......................... F-74
VIII. Financial Statements of J&J Rental Services, Inc.
Report of Independent Auditors...................................... F-81
Balance Sheets--December 31, 1996 and October 22, 1997 ............. F-82
Statements of Income for the Years Ended December 31, 1995 and 1996,
for the Six Months Ended June 30, 1997 and for the period from July
1, 1997 to October 22, 1997........................................ F-83
Statements of Stockholders' Equity and Partners' Capital for the
Years Ended December 31, 1995 and 1996 and for the Six Months Ended
June 30, 1997 and for the period from July 1, 1997 to October 22,
1997............................................................... F-84
Statements of Cash Flows for the Years Ended December 31, 1995 and
1996, for the Six Months Ended June 30, 1997 and for the period
from July 1, 1997 to October 22, 1997.............................. F-85
Notes to Financial Statements....................................... F-86
</TABLE>

F-2
<PAGE>

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
IX. Combined Financial Statements of Coran Enterprises, Inc. dba A-1
Rents and Monterey Bay Equipment Rental, Inc.
Report of Independent Certified Public Accountants.................. F-93
Combined Statements of Earnings for the Years Ended December 31,
1995 and 1996 and for the period from January 1, 1997 to October
24, 1997 .......................................................... F-94
Combined Statements of Stockholders' Equity for the Years Ended De-
cember 31, 1995 and 1996 and for the period from January 1, 1997 to
October 24, 1997 .................................................. F-95
Combined Statements of Cash Flows for the Years Ended December 31,
1995 and 1996 and for the period from January 1, 1997 to October
24, 1997 .......................................................... F-96
Notes to Combined Financial Statements.............................. F-97
X. Financial Statements of Bronco Hi-Lift, Inc.
Report of Independent Auditors...................................... F-99
Balance Sheets--December 31, 1996 and October 24, 1997 ............. F-100
Statements of Income for the Years Ended December 31, 1995 and 1996
and for the period from January 1, 1997 to October 24, 1997........ F-101
Statements of Stockholders' Equity for the Years Ended December 31,
1995 and 1996 and for the period from January 1, 1997 to October
24, 1997........................................................... F-102
Statements of Cash Flows for the Years Ended December 31, 1995 and
1996 and for the period from January 1, 1997 to October 24, 1997... F-103
Notes to Financial Statements....................................... F-104
</TABLE>

F-3
<PAGE>

UNITED RENTALS, INC.

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The accompanying unaudited pro forma consolidated balance sheets of the
Company as of December 31, 1997 give effect to the 15 acquisitions completed
by the Company subsequent to such date and the financing of each such
acquisition, as if all such transactions had occurred on December 31, 1997.

The accompanying unaudited pro forma consolidated statements of operations
of the Company for the year ended December 31, 1997 give effect to the
acquisition of each of the Acquired Companies, the financing of each such
acquisition and all issuances of Common Stock after the beginning of such
period, as if all such transactions had occurred at the beginning of the
period.

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 included elsewhere in this Prospectus.

F-4
<PAGE>

UNITED RENTALS, INC.

PRO FORMA CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
UNITED ACCESS BNR GROUP MISSION VALLEY OTHER PRO FORMA PRO FORMA
RENTALS, INC. RENTALS, INC. OF COMPANIES RENTALS, INC. ACQUISITIONS ADJUSTMENTS CONSOLIDATED
------------- ------------- ------------ -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equiva-
lents................. $ 68,607,528 $ 362,817 $ 25,306 $ 505,541 $ 876,450 $(70,327,642)(a) $ 50,000
Accounts receivable,
net................... 7,494,636 10,557,474 5,096,644 721,252 4,978,461 28,848,467
Inventory............. 3,827,446 2,511,326 1,593,190 88,965 3,195,914 11,216,841
Rental equipment,
net................... 33,407,561 63,636,491 9,246,449 5,667,659 24,307,339 4,216,103 (b) 140,481,602
Property and
equipment, net........ 2,272,683 5,386,167 738,032 138,343 2,259,071 (1,514,270)(c) 9,280,026
Intangible assets,
net................... 50,533,736 2,212,368 765,841 2,537 78,817,557 (d) 132,332,039
Prepaid expenses and
other assets.......... 2,966,822 3,934,801 60,147 165,599 399,387 7,526,756
------------ ----------- ----------- ---------- ----------- ------------ ------------
Total Assets....... $169,110,412 $88,601,444 $16,759,768 $8,053,200 $36,019,159 $ 11,191,748 $329,735,731
============ =========== =========== ========== =========== ============ ============
LIABILITIES AND STOCK-
HOLDERS' EQUITY
Liabilities
Accounts payable..... $ 5,697,830 $ 7,160,756 $ 1,456,996 $ 805,462 $ 2,346,852 $ 17,467,896
Debt................. 1,074,474 51,505,595 7,575,767 5,536,280 21,460,482 $(77,895,216)(e) 119,664,530
110,407,148 (f)
Accrued expenses and
other
liabilities.......... 4,608,077 7,821,732 5,016,579 181,461 1,793,196 19,421,045
------------ ----------- ----------- ---------- ----------- ------------ ------------
Total liabilities.. 11,380,381 66,488,083 14,049,342 6,523,203 25,600,530 32,511,932 156,553,471
------------ ----------- ----------- ---------- ----------- ------------ ------------
Stockholders' equity
Common stock......... 238,991 10,000 58,315 1,000 165,837 (235,152)(g) 247,039
8,048 (h)
Additional paid-in
capital.............. 157,457,418 (1,101,494) 223,824 877,670 (g) 172,901,599
15,444,181 (h)
Retained earnings
(deficit)............ 33,622 23,204,855 2,652,111 1,528,997 10,028,968 (37,414,931)(g) 33,622
------------ ----------- ----------- ---------- ----------- ------------ ------------
Total stockholders'
equity............. 157,730,031 22,113,361 2,710,426 1,529,997 10,418,629 (21,320,184) 173,182,260
------------ ----------- ----------- ---------- ----------- ------------ ------------
Total liabilities
and stockholders'
equity............. $169,110,412 $88,601,444 $16,759,768 $8,053,200 $36,019,159 $ 11,191,748 $329,735,731
============ =========== =========== ========== =========== ============ ============
</TABLE>

The accompanying notes are an integral part of these pro forma consolidated
financial statements

F-5
<PAGE>

UNITED RENTALS, INC.

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
UNITED MERCER A&A TOOL CORAN
RENTALS, EQUIPMENT RENTALS AND J & J RENTAL ENTERPRISES, BRONCO ACCESS BNR GROUP
INC. COMPANY SALES, INC. SERVICES, INC. INC. HI-LIFT, INC. RENTALS, INC. OF COMPANIES
----------- ----------- ----------- -------------- ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Equipment
rentals........... $ 7,018,564 $ 6,891,972 $ 6,022,196 $6,368,023 $6,743,497 $4,330,000 $42,316,423 $ 9,402,842
Sales of
equipment and
merchandise and
other revenue..... 3,614,834 8,181,440 5,424,246 703,413 974,713 1,091,176 9,942,738 14,612,355
----------- ----------- ----------- ---------- ---------- ---------- ----------- -----------
Total revenues.. 10,633,398 15,073,412 11,446,442 7,071,436 7,718,210 5,421,176 52,259,161 24,015,197
Cost of revenues
Cost of equipment
rentals,
excluding
depreciation...... 3,203,009 2,300,062 2,583,884 2,992,384 3,764,346 374,845 12,415,655 4,662,325
Rental equipment
depreciation...... 1,038,947 1,428,312 1,465,586 1,531,357 1,328,193 660,598 8,480,016 1,588,710
Cost of sales and
other operating
expenses.......... 2,580,162 6,602,793 4,775,637 373,500 257,838 673,163 8,861,832 10,360,520
----------- ----------- ----------- ---------- ---------- ---------- ----------- -----------
Total cost of
revenues........ 6,822,118 10,331,167 8,825,107 4,897,241 5,350,377 1,708,606 29,757,503 16,611,555
----------- ----------- ----------- ---------- ---------- ---------- ----------- -----------
Gross profit....... 3,811,280 4,742,245 2,621,335 2,174,195 2,367,833 3,712,570 22,501,658 7,403,642
Selling, general
and administrative
expenses........... 3,311,669 3,245,256 2,178,383 1,500,395 1,768,439 2,353,924 10,439,727 5,402,206
Non-rental
depreciation and
amortization....... 262,102 114,654 124,648 86,272 15,370 85,707 1,354,639 104,486
----------- ----------- ----------- ---------- ---------- ---------- ----------- -----------
Operating income... 237,509 1,382,335 318,304 587,528 584,024 1,272,939 10,707,292 1,896,950
Interest expense... 454,072 686,512 642,478 559,000 170,183 229,154 3,700,559 501,428
Other (income)
expense, net....... (270,701) (147,362) (120,047) (37,724) (29,938) (809,146)
----------- ----------- ----------- ---------- ---------- ---------- ----------- -----------
Income before
provision for
income taxes....... 54,138 843,185 (204,127) 66,252 413,841 1,073,723 7,815,879 1,395,522
Provision for
income taxes....... 20,516 15,270 98,000 276,383 2,744,691 458,302
----------- ----------- ----------- ---------- ---------- ---------- ----------- -----------
Net income......... $ 33,622 $ 843,185 $ (219,397) $ (31,748) $ 137,458 $1,073,723 $ 5,071,188 $ 937,220
=========== =========== =========== ========== ========== ========== =========== ===========
Basic Earnings per
share.............. $ 0.00
===========
Diluted Earnings
per share.......... $ 0.00
===========
<CAPTION>
MISSION VALLEY OTHER PRO FORMA PRO FORMA
RENTALS, INC. ACQUISITIONS ADJUSTMENTS CONSOLIDATED
-------------- ------------- --------------- ------------
<S> <C> <C> <C> <C>
Revenues
Equipment
rentals........... $7,852,751 $29,196,487 $126,142,755
Sales of
equipment and
merchandise and
other revenue..... 764,920 16,732,505 62,042,340
-------------- ------------- ------------
Total revenues.. 8,617,671 45,928,992 188,185,095
Cost of revenues
Cost of equipment
rentals,
excluding
depreciation...... 3,436,601 14,362,552 50,095,663
Rental equipment
depreciation...... 1,746,340 6,331,571 $(4,212,534)(a) 21,387,096
Cost of sales and
other operating
expenses.......... 517,661 11,985,137 (57,068)(b) 46,931,175
-------------- ------------- --------------- ------------
Total cost of
revenues........ 5,700,602 32,679,260 (4,269,602) 118,413,934
-------------- ------------- --------------- ------------
Gross profit....... 2,917,069 13,249,732 4,269,602 69,771,161
Selling, general
and administrative
expenses........... 3,062,607 9,496,388 (4,905,383)(c) 38,570,764
717,153 (d)
Non-rental
depreciation and
amortization....... 31,695 441,727 2,494,091 (e) 5,115,391
-------------- ------------- --------------- ------------
Operating income... (177,233) 3,311,617 5,963,741 26,085,006
Interest expense... 433,972 1,908,927 (8,280,685)(f) 9,075,457
8,069,857 (g)
Other (income)
expense, net....... (61,269) (257,700) (1,733,887)
-------------- ------------- --------------- ------------
Income before
provision for
income taxes....... (549,936) 1,660,390 6,174,569 18,743,436
Provision for
income taxes....... (72,801) 645,613 3,286,127 (h) 7,472,101
-------------- ------------- --------------- ------------
Net income......... $ (477,135) $ 1,014,777 $ 2,888,442 $ 11,271,335
============== ============= =============== ============
Basic Earnings per
share.............. $ 0.46
============
Diluted Earnings
per share.......... $ 0.43
============
</TABLE>

The accompanying notes are an integral part of these pro forma consolidated
financial statements

F-6
<PAGE>

UNITED RENTALS, INC.

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

1. BACKGROUND

United Rentals, Inc. was formed in September 1997 for the purpose of
creating a large geographically diversified equipment rental company in the
United States and Canada. The Company commenced equipment rental operations in
October 1997 by acquiring six established companies and acquired 15 additional
companies in the first two months of 1998. 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 engages in related activities such as selling used rental
equipment, acting as a distributor for certain new equipment, and selling
related merchandise and parts.

2. HISTORICAL FINANCIAL STATEMENTS

The historical financial data presented in these pro forma consolidated
financial statements represent the financial position and results of
operations of (i) the Company as of December 31, 1997 and for the period from
inception to December 31, 1997 and (ii) the 15 acquisitions completed by the
Company subsequent to December 31, 1997, as of and for the year ended December
31, 1997. The results of operations for the year ended December 31, 1997 also
includes the results of operations of each Initial Acquired Company for the
period from January 1, 1997 through the date in October 1997 on which such
Initial Acquired Company was acquired by the Company (except that the
financial data of A & A Tool Rentals and Sales, Inc. included in the pro forma
consolidated statements of operations includes the period from November 1,
1996 through the acquisition date). Such data is derived from the respective
financial statements of such companies.

The historical financial statements of the BNR Group of Companies are stated
in Canadian dollars and prepared in accordance with Canadian generally
accepted accounting principles. The historical financial data for the BNR
Group of Companies presented in these pro forma consolidated financial
statements reflect the translation of these statements into US dollars and
have been adjusted to conform to US generally accepted accounting principles.

3. ACQUISITIONS

Since its formation, the Company has completed a total of 21 acquisitions.
These include the acquisition of the six Initial Acquired Companies in October
1997 and the acquisition of 15 additional companies (the "1998 Acquired
Companies") in the first two months of 1998.

The aggregate consideration paid by the Company for the Initial Acquired
Companies (the "1997 Acquisition Consideration") was $57.7 million and
consisted of approximately $53.6 million in cash, 318,712 shares of Common
Stock (subject to possible adjustment as described under "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Consideration Paid for Acquired Companies") and a $300,000 convertible note.

The aggregate consideration paid by the Company for the 1998 Acquired
Companies (the "1998 Acquisition Consideration") was $118.3 million and
consisted of approximately $102.8 million in cash, 804,875 shares of Common
Stock, and warrants to purchase an aggregate of 30,000 shares of Common Stock.

Based upon management's preliminary estimates, it is estimated that the
carrying value of the assets and liabilities of the 1998 Acquired Companies
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 prices of each
of the 1998 Acquired Companies:

<TABLE>
<CAPTION>
ACCESS BNR GROUP
RENTALS, OF MISSION VALLEY OTHER COMBINED
INC. COMPANIES RENTALS, INC. ACQUISITIONS TOTAL
----------- ----------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Purchase price.......... $46,488,114 $15,490,704 $16,695,545 $39,617,440 $118,291,803
Net assets acquired..... 22,113,361 2,710,426 1,529,997 10,418,629 36,772,413
Fair value adjustments:
Rental equipment...... (909,859) 1,061,690 (299,048) 4,363,320 4,216,103
Property and
equipment............ (1,136,167) (38,032) 11,657 (351,728) (1,514,270)
----------- ----------- ----------- ----------- ------------
Intangibles recognized.. $26,420,779 $11,756,620 $15,452,939 $25,187,219 $78,817,557
=========== =========== =========== =========== ============
</TABLE>

F-7
<PAGE>

4. PRO FORMA ADJUSTMENTS

Balance sheet adjustments:

a. Records the portion of the 1998 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 1998 Acquisition Consideration over the
estimated fair value of net assets acquired.

e. Records the repayment of certain indebtedness of the 1998 Acquired
Companies.

f. Records the portion of the 1998 Acquisition Consideration and debt
repayment funded by borrowing under the Company's Credit Facility.

g. Records the elimination of the stockholders' equity of the 1998 Acquired
Companies.

h. Records the portion of the 1998 Acquisition Consideration paid in the
form of Common Stock and warrants.

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.............................................. 2-9 years
Other property and equipment.................................. 2-15 years
</TABLE>

b. Adjusts the method of accounting for inventory at one of the Acquired
Companies from the LIFO method to the FIFO method.
c. Adjusts the compensation to former owners and executives of the Acquired
Companies to current levels of compensation.
d. Adjusts the lease expense for real estate utilized by the Acquired
Companies to current lease agreements.
e. Records the amortization of the excess of cost over net assets acquired
attributable to the acquisitions of the Acquired Companies using an
estimated life of 40 years.
f. Eliminates interest expense related to the outstanding indebtedness of
the Acquired Companies which was repaid by the Company.
g. Records interest expense relating to the portion of the 1997 Acquisition
Consideration and 1998 Acquisition Consideration funded through borrowing
under the Company's Credit Facility using a rate per annum of 7.3%.
h. Records a provision for income taxes at an estimated rate of 40%.

5. EARNINGS PER SHARE

Earnings per share is calculated by dividing the net income by the weighted
average shares outstanding during the period. The weighted average outstanding
shares during the period is calculated as follows:

<TABLE>
<S> <C>
Basic:
Shares outstanding at December 31, 1997....................... 23,899,119
Shares issued for acquisitions................................ 804,875
----------
24,703,994
==========
Dilutive:
Shares outstanding at December 31, 1997....................... 23,899,119
Shares issued for acquisitions................................ 804,875
Common stock equivalents (based on the initial public offering
price of $13.50 per share)................................... 1,792,942
----------
26,496,936
==========
</TABLE>

F-8
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors
United Rentals, Inc.

We have audited the accompanying consolidated balance sheet of United
Rentals, Inc. as of December 31, 1997 and the related consolidated statements
of operations, stockholders' equity and cash flows from August 14, 1997
(Inception) to December 31, 1997. These financial statements are the
responsibility of the management of United Rentals, Inc. Our responsibility is
to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of United Rentals, Inc. at December 31, 1997, and the results of its
operations and its cash flows from August 14, 1997 (Inception) to December 31,
1997, in conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP

MetroPark, New Jersey
January 30, 1998

F-9
<PAGE>

UNITED RENTALS, INC.

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 1997

<TABLE>
<S> <C>
ASSETS
Cash and cash equivalents......................................... $ 68,607,528
Accounts receivable, net of allowance for doubtful accounts of
$1,161,000....................................................... 7,494,636
Inventory......................................................... 3,827,446
Prepaid expenses and other assets................................. 2,966,822
Rental equipment, net............................................. 33,407,561
Property and equipment, net....................................... 2,272,683
Intangible assets, net of accumulated amortization of $241,000.... 50,533,736
------------
$169,110,412
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable................................................ $ 5,697,830
Debt............................................................ 1,074,474
Deferred taxes.................................................. 198,249
Accrued expenses and other liabilities.......................... 4,409,828
------------
Total liabilities............................................. 11,380,381
Commitments and contingencies
Stockholders' equity:
Preferred stock--$.01 par value, 5,000,000 shares authorized, no
shares issued and outstanding.................................. --
Common stock--$.01 par value, 75,000,000 shares authorized,
23,899,119 shares issued and outstanding....................... 238,991
Additional paid-in capital...................................... 157,457,418
Retained earnings............................................... 33,622
------------
Total stockholders' equity.................................... 157,730,031
------------
$169,110,412
============
</TABLE>

See accompanying notes.

F-10
<PAGE>

UNITED RENTALS, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

AUGUST 14, 1997 (INCEPTION) TO DECEMBER 31, 1997

<TABLE>
<S> <C>
Revenues:
Equipment rentals............................................... $ 7,018,564
Sales of rental equipment....................................... 1,011,071
Sales of new equipment, merchandise and other revenues.......... 2,603,763
-----------
Total revenues.................................................... 10,633,398
Cost of revenues:
Cost of equipment rentals, excluding depreciation............... 3,203,209
Depreciation of rental equipment................................ 1,038,747
Cost of rental equipment sales.................................. 527,523
Cost of new equipment and merchandise sales and other operating
costs.......................................................... 2,052,639
-----------
Total cost of revenues............................................ 6,822,118
-----------
Gross profit...................................................... 3,811,280
Selling, general and administrative expenses...................... 3,311,669
Non-rental depreciation and amortization.......................... 262,102
-----------
Operating income.................................................. 237,509
Interest expense.................................................. 454,072
Other (income) expense............................................ (270,701)
-----------
Income before provision for income taxes.......................... 54,138
Provision for income taxes........................................ 20,516
-----------
Net income........................................................ $ 33,622
===========
Basic earnings per share.......................................... $ 0.00
===========
Diluted earnings per share........................................ $ 0.00
===========
</TABLE>

See accompanying notes.

F-11
<PAGE>

UNITED RENTALS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

AUGUST 14, 1997 (INCEPTION) TO DECEMBER 31 , 1997

<TABLE>
<CAPTION>
COMMON STOCK
------------------- ADDITIONAL
NUMBER PAID-IN RETAINED
OF SHARES AMOUNT CAPITAL EARNINGS
---------- -------- ------------ --------
<S> <C> <C> <C> <C>
Balance, August 14, 1997 (Incep-
tion)............................... -- $ -- $ -- $ --
Issuance of common stock and war-
rants............................. 23,899,119 238,991 157,457,418
Net income......................... 33,622
---------- -------- ------------ -------
Balance, December 31, 1997........... 23,899,119 $238,991 $157,457,418 $33,622
========== ======== ============ =======
</TABLE>

See accompanying notes.

F-12
<PAGE>

UNITED RENTALS, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

AUGUST 14, 1997 (INCEPTION) TO DECEMBER 31, 1997

<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income....................................................... $ 33,622
Adjustments to reconcile net income to net cash provided by oper-
ating activities:
Depreciation and amortization.................................. 1,300,849
Gain on sale of rental equipment............................... (483,548)
Deferred taxes................................................. (2,204)
Changes in operating assets and liabilities:
Accounts receivable.......................................... 609,529
Inventory.................................................... 631,484
Prepaid expenses and other assets............................ (755,545)
Accounts payable............................................. 281,056
Accrued expenses and other liabilities....................... (512,507)
------------
Net cash provided by operating activities.................. 1,102,736
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of rental equipment.................................... (1,886,533)
Purchases of property and equipment.............................. (819,557)
Proceeds from sales of rental equipment.......................... 1,011,071
In-process acquisition costs..................................... (128,523)
Purchase of other companies...................................... (51,451,634)
------------
Net cash used in investing activities...................... (53,275,176)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock and warrants, net of
issuance costs.................................................. 154,788,110
Proceeds from debt............................................... 35,000,000
Repayment of debt................................................ (68,222,252)
Payment of debt financing costs.................................. (785,890)
------------
Net cash provided by financing activities.................. 120,779,968
------------
Net increase in cash and cash equivalents........................ 68,607,528
Cash and cash equivalents at beginning of period................. --
------------
Cash and cash equivalents at end of period................. $ 68,607,528
============
Supplemental disclosure of cash flow information:
Cash paid for interest......................................... $ 446,559
============
Supplemental schedule of non cash investing and financing
activities:
The Company acquired the net assets and assumed certain
liabilities of other companies as follows:
Assets, net of cash acquired................................. $ 98,876,932
Liabilities assumed.......................................... (43,300,749)
Less:
Amounts paid in common stock............................... (3,824,549)
Amount paid through issuance of convertible note........... (300,000)
------------
Net cash paid.................................................. $ 51,451,634
============
</TABLE>

See accompanying notes.

F-13
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1997

1. ORGANIZATION AND BASIS OF PRESENTATION

United Rentals, Inc. (together with its subsidiaries the "Company") was
incorporated in August 1997 for the purpose of creating a large,
geographically diversified equipment rental company in the United States and
Canada. The Company rents a broad array of equipment to a diverse customer
base that includes construction industry participants, industrial companies,
homeowners and others. The Company also engages in related activities such as
selling used rental equipment, acting as a distributor for certain new
equipment and selling related merchandise and parts. The nature of the
Company's business is such that short-term obligations are typically met by
cash flow generated from long-term assets. Consequently, consistent with
industry practice, the accompanying balance sheet is presented on an
unclassified basis.

The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three
months or less when purchased to be cash equivalents.

Inventory

Inventory consists of equipment, tools, parts, fuel and related supply
items. Inventory is stated at the lower of average weighted cost or market.

Rental Equipment

Rental equipment is recorded at cost and depreciated over the estimated
useful lives of the equipment using the straight-line method. The range of
useful lives estimated by management for rental equipment is two to ten years.
Rental equipment is depreciated to a salvage value of zero to ten percent of
cost. Rental equipment having a cost of $500 or less is expensed at the time
of purchase. Ordinary maintenance and repair costs are charged to operations
as incurred.

Revenue Recognition

Revenue related to the sale of equipment is recognized at the point of sale.
Revenue related to rental equipment is recognized over the contract term.

Property and Equipment

Property and equipment are recorded at cost and depreciated over their
estimated useful lives using the straight-line method. The range of useful
lives estimated by management for property and equipment is two to ten years.
Ordinary maintenance and repair costs are charged to operations as incurred.

Intangible Assets

Intangible assets consist of the excess of cost over the value of
identifiable net assets of businesses acquired and are being amortized on a
straight line basis over their estimated useful lives of forty years.

Fair Value of Financial Instruments

The carrying amounts reported in the balance sheet for accounts receivable,
accounts payable, accrued expenses and other liabilities approximate fair
value due to the immediate to short-term maturity of these financial
instruments. The fair value of notes payable is determined using current
interest rates for similar instruments as of December 31, 1997 and
approximates the carrying value of these notes due to the fact that the
underlying instruments include provisions to adjust note balances and interest
rates to approximate fair market value.

Advertising Expense

The Company expenses the cost of advertising as incurred. The Company
incurred $146,000 in advertising costs for the period August 14, 1997
(Inception) to December 31, 1997.

F-14
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Income Taxes

The Company uses the liability method of accounting for income taxes. Under
this method, deferred tax assets and liabilities are determined based on the
differences between financial statement and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that are
expected to be in effect when the differences are expected to reverse.
Recognition of deferred tax assets is limited to amounts considered by
management to be more likely than not of realization in future periods.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash investments and
accounts receivable. The Company maintains cash and cash equivalents with high
quality financial institutions. Concentrations of credit risk with respect to
accounts receivable are limited because a large number of geographically
diverse customers make up the Company's customer base. No single customer
represents greater than 10% of total accounts receivable. The Company controls
credit risk through credit approvals, credit limits, and monitoring
procedures.

Stock-Based Compensation

The Company accounts for its stock based compensation arrangements under the
provisions of APB Opinion No. 25, "Accounting for Stock Issued to Employees."
Since stock options will be granted by the Company with exercise prices at or
greater than the fair value of the shares at the date of grant, no
compensation expense will be recognized.

Computation of Earnings Per Share

Earnings per share is calculated under the provisions of recently issued
Statement 128, Earnings Per Share. Common Stock issued for consideration below
the initial public offering price ("IPO price") of $13.50 per share at which
shares were sold in the Company's initial public offering (the "IPO"), and
stock options and warrants granted with exercise prices below the IPO price
per share during the twelve months preceding the date of the initial filing of
the registration statement for the IPO are included in the calculation of
common equivalent shares at the IPO price per share.

Impact of Recently Issued Accounting Standards

F-15
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

3. ACQUISITIONS

During October 1997, the Company purchased all of the outstanding stock of
the following six equipment rental companies for the indicated consideration:

<TABLE>
<CAPTION>
COMPANY CONSIDERATION
------- -------------
<S> <C>
A & A Tool Rentals and Sales, Inc........................... $ 8,593,520
Bronco High-Lift, Inc....................................... 7,949,568
Coran Enterprises, Inc...................................... 15,264,337
J & J Rental Services, Inc.................................. 3,824,549
Mercer Equipment Company.................................... 14,933,242
Rent-It Center, Inc......................................... 6,400,000
</TABLE>

All of the consideration paid for the acquisitions was in cash, with the
exception of Rent-It Center, Inc. which included a $300,000 convertible note
and J & J Rental Services, Inc. where all of the consideration was paid
through the issuance of 318,712 shares of the Company's Common Stock. These
shares are subject to adjustment so that their value will equal $3.8 million
based upon the average daily closing price of the Company's Common Stock
during the 60 day period beginning December 18, 1997. Contingent consideration
is due on the J & J Rental Services, Inc. acquisition based upon a percentage
of revenues up to a maximum of $2.8 million.

These acquisitions have been accounted for as purchases and, accordingly,
the results of their operations have been included in the Company's results of
operations from their respective acquisition dates. The purchase prices have
been allocated to the assets acquired and liabilities assumed based on their
respective fair values at their respective acquisition dates. Contingent
purchase price is capitalized when earned and amortized over the remaining
life of the related asset.

The Company has not completed its valuation of the 1997 purchases and the
purchase price allocations are subject to change when additional information
concerning asset and liability valuations are completed.

The following table summarizes, on an unaudited pro forma basis, the
combined results of operations of the Company for the years ended December 31,
1997 and 1996 as though each acquisition described above was made on January
1, for each of the periods.

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Revenues............................................ $59,832,952 $51,889,258
Net income.......................................... 2,607,127 3,462,371
Basic earnings per share............................ $ 0.16 $ 0.22
Diluted earnings per share.......................... $ 0.14 $ 0.20
</TABLE>

The unaudited pro forma results are based upon certain assumptions and
estimates which are subject to change. These results 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.

4. RENTAL EQUIPMENT

Rental equipment and related accumulated depreciation consists of the
following:

<TABLE>
<S> <C>
Rental equipment................................................ $34,444,129
Less accumulated depreciation................................... (1,036,568)
-----------
Rental equipment, net........................................... $33,407,561
===========
</TABLE>

F-16
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. PROPERTY AND EQUIPMENT

A summary of property and equipment is as follows:

<TABLE>
<S> <C>
Furniture, fixtures and office equipment........................ $2,294,277
Less accumulated depreciation................................... (21,594)
----------
Property and equipment, net..................................... $2,272,683
==========

6. DEBT

Debt consists of the following:

Subordinated convertible notes.................................. $ 500,000
Equipment notes, interest at 7.0% to 10.6%, payable in various
monthly installments through 2001, secured by equipment........ 574,474
----------
Total debt...................................................... $1,074,474
==========
</TABLE>

The Company's credit facility with a group of financial institutions, for
which Bank of America National Trust and Savings Association acts as agent,
enables the Company to borrow up to $155 million on a revolving basis (the
"Credit Facility"). The facility terminates on October 8, 2000, at which time
all outstanding indebtedness is due. Up to $10 million of the Credit Facility
is available in the form of letters of credit. Borrowings under the Credit
Facility accrue interest, at the Company's option, at either (a) the Floating
Rate (which is equal to the greater of (i) the Federal Funds Rate plus 0.5%
and (ii) Bank of America's reference rate, in each case, plus a margin ranging
from 0% to 0.25% per annum) or (b) the Eurodollar Rate (which is equal to Bank
of America's reserve adjusted eurodollar rate plus a margin ranging from 1.5%
to 2.5% per annum). As of December 31, 1997, there was no outstanding
indebtedness under the Credit Facility. The Credit Facility contains certain
covenants that require the Company to, among other things, satisfy certain
financial tests relating to: (a) maintenance of minimum net worth, (b) the
ratio of debt to net worth, (c) interest coverage ratio, (d) the ratio of
funded debt to cash flow, and (e) the ratio of senior debt to tangible assets.
The Credit Facility also contains certain covenants that restrict the
Company's ability to, among other things, (i) incur additional indebtedness,
(ii) permit liens to attach to its assets, (iii) enter into operating leases
requiring payments in excess of specified amounts, (iv) declare or pay
dividends or make other restricted payments with respect to its equity
securities (including the Common Stock) or subordinated debt, (v) sell assets,
(vi) make acquisitions unless certain financial conditions are satisfied, and
(vii) engage in any line of business other than the equipment rental industry.
The Credit Facility provides that the failure by any two of certain of the
Company's executive officers to continue to hold executive positions with the
Company for a period of 30 consecutive days constitutes an event of default
under the Credit Facility unless replacement officers satisfactory to the
lenders are appointed. The Credit Facility is also subject to other customary
events of default. The Credit Facility is secured by substantially all of the
assets of United Rentals, Inc. and by the stock and assets of its
subsidiaries.

The subordinated convertible notes consists of two notes; $300,000 in
principal bearing interest at 7% per annum and $200,000 in principal bearing
interest at 7 1/2% per annum. The $200,000 note was converted into 14,814
shares of Common Stock during January 1998. The $300,000 note is repayable in
equal quarterly installments of principal and interest through October, 2002,
is convertible into the Company's Common Stock at a conversion rate of $16.20
per share and is subordinated to the Company's Credit Facility.

F-17
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Maturities of the Company's debt for each of the next five years at December
31, 1997 are as follows:

7. INCOME TAXES

The provision for federal and state income taxes is as follows:

<TABLE>
<S> <C>
Current State....................................................... $22,720
Deferred State...................................................... 3,041
Deferred Federal.................................................... (5,245)
-------
$20,516
=======
</TABLE>

A reconciliation of the provision for income taxes and the amount computed
by applying the statutory federal income tax rate of 34% to income before
provision for income taxes is as follows:

<TABLE>
<S> <C>
Computed tax benefit at statutory tax rate.......................... $18,407
Increase in tax benefit:
Tax-exempt interest income........................................ (91,971)
Non-deductible expense............................................ 77,078
State income taxes, net of Federal benefit........................ 17,002
-------
$20,516
=======
</TABLE>

The components of deferred income tax assets are as follows:

<TABLE>
<S> <C>
Accrual liabilities.............................................. $ 957,619
Net operating loss carryforward.................................. 313,719
Property & equipment............................................. 43,908
----------
$1,315,246
==========
</TABLE>

The components of deferred income tax liabilities are as follows:

<TABLE>
<S> <C>
Intangibles and other............................................... $633,132
========
</TABLE>

The Company has net short-term deferred tax assets in the amount of
$880,363, which are reported in the balance sheet in prepaid expenses and
other assets.

The Company has net operating loss carryforwards ("NOLs") of $845,681 for
income tax purposes that expire in 2012.

F-18
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

8. CAPITAL STOCK

Preferred Stock: The Company's board of directors has the authority to
designate 5,000,000 shares of $.01 par value preferred stock in series, to
establish as to each series the designation and number of shares to be issued
and the rights, preferences, privileges and restrictions of the shares of each
series, and to determine the voting powers, if any, of such shares. At
December 31, 1997, the Company's Board of Directors had not designated any
shares.

As of December 31, 1997 there are outstanding warrants to purchase an
aggregate of 6,344,058 shares of Common Stock. Each warrant provides for an
exercise price of $10.00 per share and may be exercised at any time until
September 12, 2007.

The Board of Directors has adopted the Company's 1997 Stock Option Plan (the
"Stock Option Plan") which provides for the granting of options to purchase
not more than an aggregate of 5,000,000 shares of Common Stock. All officers,
employees and others who render services to the Company are eligible to
participate in the Stock Option Plan. Each option granted pursuant to the
Stock Option Plan must provide for an exercise price per share that is at
least equal to the fair market value per share of Common Stock on the date of
grant. No options may be granted under the Stock Option Plan after August 21,
2007. The exercise price of each option, the period during which each option
may be exercised and the other terms and conditions of each option are
determined by the Board of Directors (or by a committee appointed by the
Board).

During 1997, 904,583 options to purchase shares of the Company's Common
Stock were granted and remain outstanding at December 31, 1997. The weighted
average exercise price per share of such options was $12.76. Such options had
exercise prices ranging from $10 to $30 per share. Of such options, 818,583
provided for an exercise price per share in the range of $10.00 to $19.99 (the
weighted average exercise price and weighted average remaining life of the
options in this range being $11.84 and 9.9 years, respectively) and 86,000
provided for an exercise price per share in the range of $20.01 to $30.00 (the
weighted average exercise price and weighted average remaining life of the
options in this range being $21.51 and 9.9 years, respectively).

The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" in accounting for stock-based employee
compensation arrangements whereby no compensation cost related to stock
options is deducted in determining net income. Had compensation cost for the
Company's stock option plans been determined pursuant to Financial Accounting
Standards Board Statement No. 123 ("SFAS No. 123"), "Accounting for Stock-
Based Compensation," the Company's net income and earnings per share would
have differed. The Black-Scholes option pricing model estimates fair value of
options using subjective assumptions which can materially affect fair value
estimates and, therefore, do not necessarily provide a single measure of fair
value of options. Using the Black-Scholes option pricing model and a risk-free
interest rate of 5.8%, a volatility factor for the market price of the
Company's Common Stock of .315 and a weighted-average expected life of options
of approximately three years, the Company's net loss, basic earnings per share
and diluted earnings per share would have been $(43,731), $0.00 and $0.00,
respectively. For purposes of these pro forma disclosures, the estimated fair
value of options is amortized over the options' vesting period. Since the
number of options granted and their fair value may vary significantly from
year to year, the pro forma compensation expense in future years may be
materially different.

At December 31, 1997 there are 6,344,058 shares of Common Stock reserved for
the exercise of warrants, 5,000,000 shares of Common Stock reserved for
issuance pursuant to options granted, and that may be granted in the future,
under the Company's 1997 Stock Option Plan and 33,332 shares of Common Stock
reserved for the future conversion of convertible debt.

F-19
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings
per share:

<TABLE>
<S> <C>
Numerator:
Net income....................................................... $ 33,622
===========
Denominator:
Denominator for basic earnings per share--weighted-average
shares.......................................................... 16,319,193
Effect of dilutive securities:
Employee stock options.......................................... 116,061
Warrants........................................................ 1,736,899
-----------
Dilutive potential common shares
Denominator for diluted earnings per share--adjusted weighted-
average shares................................................. 18,172,173
===========
Basic earnings per share........................................... $ 0.00
===========
Diluted earnings per share......................................... $ 0.00
===========
</TABLE>

10. COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases rental equipment, real estate and certain office
equipment under operating leases. Certain real estate leases require the
Company to pay maintenance, insurance, taxes and certain other expenses in
addition to the stated rentals. Future minimum lease payments, by year and in
the aggregate, for noncancellable operating leases with initial or remaining
terms of one year or more are as follows at December 31, 1997:

<TABLE>
<S> <C>
1998.............................................................. $2,676,494
1999.............................................................. 1,860,615
2000.............................................................. 1,213,003
2001.............................................................. 1,155,995
2002.............................................................. 816,400
Thereafter........................................................ 1,929,430
----------
$9,651,937
==========
</TABLE>

Rent expense under non-cancellable operating leases for the period August
14, 1997 (Inception) to December 31, 1997 was $524,752.

11. SUBSEQUENT EVENTS

Subsequent to December 31, 1997, the Company completed the acquisition of 14
equipment rental companies (the "Acquisitions") and the aggregate
consideration paid by the Company for the Acquisitions was $116.4 million and
consisted of approximately $100.9 million in cash, 804,875 shares of Common
Stock and warrants to purchase 30,000 shares of Common Stock. The Company
funded a portion of the cash consideration for these acquisitions with cash on
hand and the balance with borrowings under the Credit Facility.

F-20
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholder of Access Rentals, Inc.

We have audited the accompanying consolidated balance sheet of Access
Rentals, Inc., and subsidiary as of March 31, 1996, and the related
consolidated statements of income, stockholders' equity and cash flows for the
years ended September 30, 1994 and 1995, and the six months ended March 31,
1996. We have also audited the combined balance sheet of Access Rentals, Inc.,
and subsidiary and affiliate as of March 31, 1997, and the related combined
statements of income, stockholders' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated and combined financial statements referred
to above present fairly, in all material respects, the financial position of
Access Rentals, Inc., and subsidiary and affiliate as of March 31, 1996 and
1997, and results of their operations and cash flows for the years ended
September 30, 1994 and 1995, the six months ended March 31, 1996 and the year
ended March 31, 1997 in conformity with generally accepted accounting
principles.

/s/ Battaglia, Andrews & Moag, P.C.
Batavia, New York
January 22, 1998

F-21
<PAGE>

ACCESS RENTALS, INC. AND SUBSIDIARY AND AFFILIATE

CONSOLIDATED AND COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, DECEMBER
1996 1997 31, 1997
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
------
Cash.................................... $ 284,228 $ 399,196 $ 362,817
Accounts receivable, net................ 3,319,859 5,173,046 9,482,265
Unbilled receivables.................... -- -- 1,075,209
Inventory............................... 2,013,125 1,835,687 2,511,326
Rental equipment, net................... 30,865,058 49,551,170 63,636,491
Property and equipment, net............. 2,625,564 4,599,576 5,386,167
Due from related party.................. 1,121,814 1,860,102 2,071,971
Prepaid expenses and other assets....... 1,221,482 1,896,518 1,286,100
Deferred tax asset...................... 458,908 937,585 576,730
Intangibles............................. -- 1,375,005 2,212,368
----------- ----------- -----------
Total assets........................ $41,910,038 $67,627,885 $88,601,444
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities:
Accounts payable, accrued expenses and
other liabilities.................... $ 3,128,407 $ 3,601,707 $ 7,160,756
Deferred tax liability................ 4,675,199 6,350,541 7,821,732
Debt.................................. 19,109,094 39,782,237 51,505,595
----------- ----------- -----------
Total liabilities................... 26,912,700 49,734,485 66,488,083
Commitments and contingencies
Stockholders' equity:
Common stock, $1 par value; 10,000
shares authorized, 300, 300 and
10,000 shares issued and outstanding
for each respective year............. 300 300 10,000
Additional paid-in capital............ 4,500 4,500 4,500
Note receivable from stockholder...... (420,040) (515,606) (1,105,994)
Retained earnings..................... 15,426,922 18,411,049 23,278,389
Equity adjustment for foreign currency
translation.......................... (14,344) (6,843) (73,534)
----------- ----------- -----------
Total stockholders' equity.......... 14,997,338 17,893,400 22,113,361
----------- ----------- -----------
Total liabilities and stockholders'
equity............................. $41,910,038 $67,627,885 $88,601,444
=========== =========== ===========
</TABLE>

See accompanying notes.

F-22
<PAGE>

ACCESS RENTALS, INC. AND SUBSIDIARY AND AFFILIATE

CONSOLIDATED AND COMBINED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS NINE MONTHS ENDED
SEPTEMBER 30, ENDED YEAR ENDED DECEMBER 31,
------------------------ MARCH 31, MARCH 31, ------------------------
1994 1995 1996 1997 1996 1997
----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals...... $15,804,754 $18,382,243 $10,405,814 $30,615,602 $21,391,478 $33,092,299
Sales of equipment and
parts................. 4,731,889 9,426,936 3,629,373 8,963,128 9,279,272 10,258,882
----------- ----------- ----------- ----------- ----------- -----------
Total revenues......... 20,536,643 27,809,179 14,035,187 39,578,730 30,670,750 43,351,181
Cost of revenues:
Cost of rentals
excluding
depreciation.......... 4,867,059 6,129,103 3,870,961 9,937,663 7,341,151 9,819,143
Depreciation, equipment
rentals............... 2,825,381 3,405,797 2,139,726 6,509,012 4,701,737 6,672,741
Cost of equipment and
parts................. 3,468,073 7,115,826 2,703,494 6,494,156 5,200,774 7,568,450
----------- ----------- ----------- ----------- ----------- -----------
Total cost of revenues. 11,160,513 16,650,726 8,714,181 22,940,831 17,243,662 24,060,334
----------- ----------- ----------- ----------- ----------- -----------
Gross profit............ 9,376,130 11,158,453 5,321,006 16,637,899 13,427,088 19,290,847
Selling, general and
administrative
expenses............... 4,414,362 5,394,286 2,329,997 8,747,215 6,261,115 7,953,627
Non-rental depreciation. 489,084 532,659 283,206 946,382 658,899 1,067,156
----------- ----------- ----------- ----------- ----------- -----------
Operating income....... 4,472,684 5,231,508 2,707,803 6,944,302 6,507,074 10,270,064
Interest expense........ 673,532 1,147,616 682,394 2,604,066 1,821,607 2,918,100
Other (income), net..... (220,289) (250,421) (295,443) (605,215) (363,828) (567,759)
----------- ----------- ----------- ----------- ----------- -----------
Income before provision
for income taxes and
cumulative effect of
change in accounting
principle............. 4,019,441 4,334,313 2,320,852 4,945,451 5,049,295 7,919,723
Provision for income
taxes.................. 1,661,994 1,819,455 1,122,851 1,786,724 2,016,066 2,974,033
----------- ----------- ----------- ----------- ----------- -----------
Income before
cumulative effect of
change in accounting
principle............. 2,357,447 2,514,858 1,198,001 3,158,727 3,033,229 4,945,690
Cumulative effect of
change in method of
accounting for taxes... 46,325 -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net income............. $ 2,403,772 $ 2,514,858 $ 1,198,001 $ 3,158,727 $ 3,033,229 $ 4,945,690
=========== =========== =========== =========== =========== ===========
</TABLE>

See accompanying notes.

F-23
<PAGE>

ACCESS RENTALS, INC. AND SUBSIDIARY AND AFFILIATE

CONSOLIDATED AND COMBINED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
NOTE
COMMON STOCK ADDITIONAL RECEIVABLE FOREIGN
-------------- PAID-IN FROM TREASURY RETAINED CURRENCY
SHARES AMOUNT CAPITAL STOCKHOLDER STOCK EARNINGS TRANSLATION
------ ------- ---------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at October 1,
1993................... 6 $ 4,800 $ -- $ (128,069) $(200,000) $ 9,775,310 $ --
Prior period
adjustment............ (265,019)
------ ------- ------ ----------- --------- ----------- --------
Balance, October 1, as
restated............... 6 4,800 -- (128,069) (200,000) 9,510,291 --
Retroactive retirement
of treasury stock..... 200,000 (200,000)
Retroactive effect of
stock split........... 294 (4,500) 4,500
Advances on note
receivable from
stockholder, net...... (199,179)
Net income............. 2,403,772
------ ------- ------ ----------- --------- ----------- --------
Balance at September 30,
1994................... 300 300 4,500 (327,248) -- 11,714,063 --
Advances on note
receivable from
stockholder, net...... (44,180)
Net income............. 2,514,858 (5,557)
------ ------- ------ ----------- --------- ----------- --------
Balance at September 30,
1995................... 300 300 4,500 (371,428) -- 14,228,921 (5,557)
Advances on note
receivable from
stockholder, net...... (48,612)
Net income............. 1,198,001 (8,787)
------ ------- ------ ----------- --------- ----------- --------
Balance at March 31,
1996................... 300 300 4,500 (420,040) -- 15,426,922 (14,344)
Advances on note
receivable from
stockholder, net...... (105,566)
Affiliate owner
contributions......... 10,000
Affiliate owner
distributions......... (174,600)
Net income............. 3,158,727 7,501
------ ------- ------ ----------- --------- ----------- --------
Balance at March 31,
1997................... 300 300 4,500 (515,606) -- 18,411,049 (6,843)
Issuance of common
stock (unaudited)..... 9,700 9,700 (9,700)
Advances on note
receivable from
stockholder, net
(unaudited)........... (590,388)
Affiliate owner
distributions
(unaudited)........... (68,650)
Net income (unaudited). 4,945,690 (66,691)
------ ------- ------ ----------- --------- ----------- --------
Balance at December 31,
1997 (unaudited)....... 10,000 $10,000 $4,500 $(1,105,994) $ -- $23,278,389 $(73,534)
====== ======= ====== =========== ========= =========== ========
</TABLE>

See accompanying notes.

F-24
<PAGE>

ACCESS RENTALS, INC. AND SUBSIDIARY AND AFFILIATE

CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
SEPTEMBER 30, SIX MONTHS YEAR ENDED DECEMBER 31,
------------------------ ENDED MARCH MARCH 31, --------------------------
1994 1995 31, 1996 1997 1996 1997
----------- ----------- ----------- ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income............. $ 2,403,772 $ 2,514,858 $ 1,198,001 $ 3,158,727 $ 3,033,229 $ 4,945,690
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation and
amortization.......... 3,314,465 3,938,456 2,422,932 7,583,689 5,446,164 7,898,802
Deferred income taxes.. 672,080 676,782 667,412 1,151,456 1,048,873 1,835,040
Gain on sales of
equipment............. (778,327) (1,274,170) (533,974) (1,543,192) (1,064,927) (1,767,358)
Cumulative effect of
change in method of
accounting for income
taxes................. (46,325) -- -- -- -- --
Change in assets and
liabilities:
Increase (decrease)
in:
Accounts receivable,
net................. (1,163,341) (43,024) 670,789 (1,853,187) (3,004,185) (4,309,219)
Unbilled receivables. -- -- -- -- -- (1,075,209)
Inventory............ (91,367) (357,333) (741,329) 177,438 (393,457) (675,639)
Prepaid expenses and
other assets........ (740,966) (92,290) 179,547 (584,753) 111,402 560,606
Increase (decrease)
in:
Accounts payable,
accrued expenses and
other liabilities... 213,105 949,842 402,186 473,300 129,992 3,559,049
----------- ----------- ----------- ------------ ------------ ------------
Total adjustments... 1,379,324 3,798,263 3,067,563 5,404,751 2,273,862 6,026,072
Net cash provided by
operating
activities......... 3,783,096 6,313,121 4,265,564 8,563,478 5,307,091 10,971,762
CASH FLOWS FROM
INVESTING ACTIVITIES:
Proceeds from the sale
of property and
equipment............. 2,715,240 4,498,860 3,511,441 5,223,214 3,662,918 6,076,640
Purchase of property
and equipment......... (2,497,803) (4,978,090) (3,789,714) (3,146,679) (333,516) (5,572,825)
Advances on loan
receivable--
stockholder........... (304,436) (248,462) (99,555) (389,594) (293,310) (697,153)
Repayments on loan
receivable--
stockholder........... 105,257 204,282 50,943 284,028 158,829 106,765
Advances on loan
receivable--related
party................. (13,000) -- (531,466) (759,690) (358,798) (246,543)
Repayments on loan
receivable--related
party................. 10,174 7,128 3,673 21,402 15,401 34,674
Advances on note
receivable............ -- (48,322) -- (77,851) -- --
Repayments on note
receivable............ (126,668) 3,283 2,554 6,255 4,632 31,128
Acquisition of
subsidiary............ -- (866,700) -- -- -- --
Payments for
intangibles........... -- -- -- (1,521,984) (1,521,984) (977,583)
----------- ----------- ----------- ------------ ------------ ------------
Net cash provided by
(used by) investing
activities.......... (111,236) (1,428,021) (852,124) (360,899) 1,334,172 (1,244,897)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Affiliate owner
distributions......... -- -- -- (174,600) -- (68,650)
Affiliate owner
contributions......... -- -- -- 10,000 10,000 --
Borrowings on debt
obligations........... 161,297 736,330 2,083,097 23,048,203 16,018,625 22,959,059
Principal payments on
debt obligations...... (3,932,202) (5,601,158) (5,234,451) (30,978,715) (22,599,866) (32,586,962)
----------- ----------- ----------- ------------ ------------ ------------
Net cash used by
financing
activities.......... (3,770,905) (4,864,828) (3,151,354) (8,095,112) (6,571,241) (9,696,553)
Equity translation...... -- (5,557) (8,787) 7,501 7,569 (66,691)
----------- ----------- ----------- ------------ ------------ ------------
Net increase (decrease)
in cash................ (99,045) 14,715 253,299 114,968 77,591 (36,379)
CASH--BEGINNING OF
PERIOD................. 115,259 16,214 30,929 284,228 284,228 399,196
----------- ----------- ----------- ------------ ------------ ------------
CASH--END OF PERIOD..... $ 16,214 $ 30,929 $ 284,228 $ 399,196 $ 361,819 $ 362,817
=========== =========== =========== ============ ============ ============
</TABLE>

See accompanying notes.

F-25
<PAGE>

ACCESS RENTALS, INC. AND SUBSIDIARY AND AFFILIATE

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 1994 AND 1995, AND AS OF AND FOR THE SIX
MONTHS ENDED
MARCH 31, 1996 AND AS OF AND FOR THE YEAR ENDED MARCH 31, 1997
(THE INFORMATION AS OF DECEMBER 31, 1997 AND FOR THE NINE MONTHS ENDED
DECEMBER 31, 1996 AND 1997 IS UNAUDITED)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION AND COMBINATION

The accompanying financial statements include the financial statements of
Access Rentals, Inc. (the "Parent"), Access Lift Equipment, Inc. (the
"Subsidiary") which was acquired in February 1995 and Reinhart Leasing LLC
(the "Affiliate"). The Affiliate, which has common ownership to the Parent,
was formed on June 26, 1996.

The accompanying financial statements include the financial statements of
the Parent for the years ended September 30, 1994 and 1995, as of and for the
six months ended March 31, 1996, as of and for the year ended March 31, 1997
and as of December 31, 1997 and for the nine months ended December 31, 1996
and 1997 and the financial statements of the Subsidiary for the seven months
ended September 30, 1995, as of and for the three months ended December 31,
1995 (included in the financial statements for the six months ended March 31,
1996), as of and for the year ended December 31, 1996 (included in the
financial statements for the year ended March 31, 1997) and the nine months
ended December 31, 1996 and 1997. The consolidated financial statements have
been combined with the financial statements of the Affiliate for the six
months ended December 31, 1996 (included in the financial statements for the
nine months ended December 31, 1996) as of and for the nine months ended March
31, 1997 and as of and for the nine months ended December 31, 1997. All
material intercompany transactions and balances have been eliminated in
consolidation and combination.

BUSINESS

Access Rentals, Inc. and Subsidiary (the Company) rents, sells and repairs
aerial personnel lift equipment primarily to companies in the manufacturing
and construction industries. Sales and rentals primarily occur in areas where
the Company maintains offices, such as the states of New York, Minnesota,
Tennessee, Indiana, New Jersey, Pennsylvania, Connecticut, South Carolina,
Florida, Washington and in and around Toronto, Canada. The nature of the
Company's business is such that short-term obligations are typically met by
cash flow generated from long-term assets. Consequently, consistent with
industry practice, the balance sheet is presented on an unclassified basis.

Reinhart Leasing, LLC rents and sells aerial personnel lift equipment solely
to Access Rentals, Inc.

INTERIM FINANCIAL STATEMENTS

The accompanying balance sheet at December 31, 1997, and the statements of
income, stockholders' equity and cash flows for the nine month periods ended
December 31, 1996 and 1997 are unaudited and have been prepared on the same
basis as the audited financial statements included herein. In the opinion of
management, such unaudited financial statements include all adjustments
necessary to present fairly the information set forth therein, which consists
solely of normal recurring adjustments. The results of operations for such
interim periods are not necessarily indicative of results for the full year.

ACCOUNTS RECEIVABLE

It is the Company's policy to present accounts receivable net of an
allowance for uncollectible accounts. At March 31, 1996 and 1997 and December
31, 1997, the balance of the allowance for uncollectible accounts amounted to
$103,028, $228,885 and $380,000, respectively.

INVENTORY

Inventory consists of equipment and vehicles purchased for resale and
equipment parts purchased for repairs and resale. Equipment is valued at the
lower of cost or market, based on specific identification, and parts are
valued using the average cost method.

F-26
<PAGE>

ACCESS RENTALS, INC. AND SUBSIDIARY AND AFFILIATE

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Inventory amounted to:

<TABLE>
<CAPTION>
MARCH 31,
----------------------- DECEMBER
1996 1997 31, 1997
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Equipment for resale.................. $ 1,371,741 $ 368,723 $ 842,295
Parts................................. 641,384 1,466,964 1,669,031
----------- ----------- -----------
Total............................... $ 2,013,125 $ 1,835,687 $ 2,511,326
=========== =========== ===========
</TABLE>

RENTAL EQUIPMENT

Rental equipment is recorded at cost. Depreciation for rental equipment is
computed using the straight-line method over an estimated six-year useful life
with a 10% salvage value.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost and is being depreciated using the
straight-line and declining balance methods over the estimated useful lives of
the respective assets.

The cost of normal maintenance and repairs is charged to expense as
incurred, whereas expenditures which materially extend property lives are
capitalized. When depreciable property is retired or otherwise disposed of,
the related cost and accumulated depreciation are removed from the accounts
and any gain or loss is reflected in income.

RENTAL REVENUE

Rental revenue is recorded as earned under the operating method.

ADVERTISING COSTS

The Company advertises primarily through trade journals, trade associations
and phone directories. All advertising costs are expensed as incurred.
Advertising expenses amounted to approximately $7,706, $11,349, $6,717,
$10,395, $6,454 and $26,982, for the years ended September 30, 1994 and 1995,
six months ended March 31, 1996, year ended March 31, 1997, and nine months
ended December 31, 1996 and 1997, respectively.

OTHER ASSETS/AMORTIZATION

During the year ended March 31, 1997 and the nine months ended December 31,
1997, the Company acquired assets of two companies. The acquisitions resulted
in goodwill and covenants not-to-compete amounting to approximately $1,777,500
and $700,000, respectively, which are being amortized using the straight-line
method over 15 years and 5 years, respectively. Total amortization expense
amounted to $128,295, $85,528 and $158,905 for the year ended March 31, 1997
and the nine months ended December 31, 1996 and 1997, respectively.

INCOME TAXES

The provision for income tax is based on earnings reported for financial
statement purposes, adjusted for transactions that do not enter into the
computation of income taxes payable. The Parent, Subsidiary and Affiliate file
separate tax returns. The Parent files tax returns in the United States and
the Subsidiary files tax returns in Canada. The Affiliate is a limited
liability company taxed as a partnership; therefore the members are taxed
individually on the income of the Affiliate and a provision for taxes has not
been made in the financial statements.

F-27
<PAGE>

ACCESS RENTALS, INC. AND SUBSIDIARY AND AFFILIATE

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

CONCENTRATION OF CREDIT RISK

Credit is granted to substantially all of the Parent's customers throughout
the United States and the Subsidiary's customers throughout Canada. Management
feels that adequate reserves for potential credit losses are maintained.

FOREIGN CURRENCY TRANSLATION

The Company conducts business through a subsidiary located in Canada. The
Company regards the local currency of the subsidiary to be its functional
currency; consequently, translation gains and losses of the foreign subsidiary
are accumulated and reported as a separate component of stockholders' equity.
Transaction gains and losses that arise from exchange rate fluctuations on the
transactions denominated in a currency other than the local functional
currency are included in the results of operations.

USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. This affects the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those estimates.

NOTE 2--RENTAL EQUIPMENT

RENTAL EQUIPMENT

Rental equipment and related accumulated depreciation consisted of the
following:

<TABLE>
<CAPTION>
MARCH 31,
----------------------- DECEMBER
1996 1997 31, 1997
----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Rental equipment........................... $43,896,291 $66,007,890 $84,098,558
Less accumulated depreciation.............. 13,031,233 16,456,720 20,462,067
----------- ----------- -----------
Rental equipment, net...................... $30,865,058 $49,551,170 $63,636,491
=========== =========== ===========
</TABLE>

PROPERTY AND EQUIPMENT

Property and equipment and related accumulated depreciation consisted of the
following:

<TABLE>
<CAPTION>
MARCH 31,
--------------------- DECEMBER 31,
1996 1997 1997
---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Land......................................... $ 182,969 $ 182,969 $ 182,969
Buildings and improvements................... 949,741 1,346,619 1,779,975
Office and shop equipment.................... 833,209 1,341,605 1,387,020
Transportation equipment..................... 2,573,492 4,425,156 5,393,695
Less accumulated depreciation................ 1,913,847 2,696,773 3,357,492
---------- ---------- ----------
Property and equipment, net.................. $2,625,564 $4,599,576 $5,386,167
========== ========== ==========
</TABLE>

F-28
<PAGE>

ACCESS RENTALS, INC. AND SUBSIDIARY AND AFFILIATE

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 3--NET INVESTMENT IN SALES-TYPE LEASES

The Company leases some of its rental equipment to customers under sales-
type leases. The following summarizes the net investment in sales-type leases
which are included in prepaid and other assets on the balance sheet:

<TABLE>
<CAPTION>
MARCH 31,
------------------- DECEMBER 31,
1996 1997 1997
--------- --------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Total minimum lease payments to be received.... $ 418,679 $ 573,127 $ 716,961
Less unearned interest income.................. 26,950 38,773 39,627
--------- --------- ---------
Net investment in sales-type leases............ $ 391,729 $ 534,354 $ 677,334
========= ========= =========
</TABLE>

NOTE 4--DEBT

Debt consists of the following:

<TABLE>
<CAPTION>
MARCH 31,
----------------------- DECEMBER 31,
1996 1997 1997
----------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Lines-of-credit.......................... $ 2,130,195 $ 3,788,341 $ 3,828,370
Present value of capital lease
obligations............................. 3,436,191 8,465,249 16,104,886
Various installment obligations
collateralized by rental and
transportation equipment. These notes
bear interest ranging from 6%-9.8%, with
repayment periods ranging from two to
five years.............................. 12,030,127 18,913,002 23,965,117
Term loan payable to a bank, monthly
payments of $50,500 including interest
at 7.84%, maturing July, 2006.
Collateralized by rental equipment...... 270,413 2,217,572 1,887,211
Term loan payable to a bank, requiring
monthly principle payments of $79,511,
plus interest at the prime rate plus
1.75%, or the sum of the LIBOR on the
request day plus 1.75% (7.3125% at
March 31, 1997), maturing July 2002. The
loan is collateralized by rental
equipment of the Affiliate.............. -- 5,088,735 4,325,469
Term loan payable to a bank, quarterly
principal payments of $46,021, plus
interest at 6%, maturing July 1999.
Collateralized by rental equipment of
the Parent.............................. 598,268 414,186 276,124
Subsidiary revolving term loan payable to
a bank, monthly principal payments
totaling Canadian $39,455, plus interest
at Canadian prime rate plus 0.5%, (5.25%
at March 31, 1997), maturing June 2000.
Collateralized by equipment of
Subsidiary and guaranteed by the
Parent.................................. 608,502 878,339 1,116,680
Mortgage payable to third-party lender,
monthly payments of $1,750 including
interest at 9%, maturing January 1998.
Collateralized by real property at 45
Center Street, Batavia, New York........ 35,398 16,813 1,738
----------- ----------- -----------
Total debt........................... $19,109,094 $39,782,237 $51,505,595
=========== =========== ===========
</TABLE>

F-29
<PAGE>

ACCESS RENTALS, INC. AND SUBSIDIARY AND AFFILIATE

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

BANK LINES-OF-CREDIT

The Parent has revolving bank lines-of-credit amounting to $5,000,000
(increased to $6,000,000 on September 1, 1997), which are payable on demand,
with interest due monthly at rates varying from 7.50% to 8.00% as of March 31,
1997. The agreements are collateralized by equipment and receivables of the
Parent. The outstanding balance on these lines-of-credit agreements amounted
to $3,788,341 at March 31, 1997.

The Parent also has revolving term lines-of-credit available from various
lending institutions which aggregate $63,700,000 as of March 31, 1997. The
Company pays interest on the outstanding balances of these agreements at rates
which ranged from 6.65% to 9.8% at March 31, 1997.

The Subsidiary has a $500,000 (Canadian denomination) revolving line-of-
credit available for operating cash requirements and a $2,400,000 (Canadian
denomination) term line-of-credit available to finance up to 75% of the cost
of equipment acquisitions. The operating line-of-credit is payable on demand,
with interest due monthly at the Canadian prime rate of interest plus 0.25%,
(5.00% at March 31, 1997). There was not an outstanding balance on the
operating line-of-credit agreement as of March 31, 1997. Advances on the
equipment line-of-credit are payable over 36 or 48 months, with interest due
monthly at Canadian prime plus 0.50%, (5.25% at March 31, 1997). The
outstanding balance on the equipment line-of-credit agreement was $878,339
(United States denomination) as of March 31, 1997. The line-of-credit
agreements are collateralized by accounts receivable and personal property of
the Subsidiary and are guaranteed by the Parent.

Current maturities of long-term debt for each of the five years subsequent
to March 31, 1997 are as follows:

<TABLE>
<CAPTION>
CAPITAL
DEBT LEASE
OBLIGATIONS OBLIGATIONS TOTAL DEBT
----------- ----------- -----------
<S> <C> <C> <C>
1998.................................. $12,274,967 $2,283,984 $14,558,951
1999.................................. 7,097,078 2,168,855 9,265,933
2000.................................. 5,099,954 1,869,131 6,969,085
2001.................................. 3,002,236 1,379,399 4,381,635
2002.................................. 1,811,547 896,077 2,707,624
Thereafter............................ 2,031,206 1,492,772 3,523,978
----------- ---------- -----------
Total payments........................ 31,316,988 10,090,218 41,407,206
Less interest amount.................. -- 1,624,969 1,624,969
----------- ---------- -----------
Total debt.......................... $31,316,988 $8,465,249 $39,782,237
=========== ========== ===========
</TABLE>

CAPITAL LEASE OBLIGATIONS

The Company and Affiliate lease rental equipment under various agreements
classified as capital leases based on the provisions of Statement of Financial
Accounting Standards No. 13. The economic substance of the leases is that the
Company is financing the acquisition of the equipment through the leases and,
accordingly, they are recorded in the Company's assets and liabilities. These
assets are stated on the balance sheet at their capitalized cost, less
accumulated depreciation, of $4,115,887, $9,091,782 and $16,275,311 as of
March 31, 1996 and 1997 and December 31, 1997, respectively.

F-30
<PAGE>

ACCESS RENTALS, INC. AND SUBSIDIARY AND AFFILIATE

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

NOTE 5--OPERATING LEASES

The Company leases building, shop and office space, and rental equipment
under various long-term and short-term operating lease agreements. Rent
expense under the agreements for the years ended September 30, 1994 and 1995,
six months ended March 31, 1996, year ended March 31, 1997, and nine months
ended December 31, 1996 and 1997 amounted to $328,892, $334,504, $174,189,
$825,229, $758,883 and $1,086,219, respectively.

The total future minimum rental payments required for noncancellable
operating leases as of March 31, 1997 are as follows:

<TABLE>
<S> <C>
1998........................................................... $ 513,782
1999........................................................... 342,859
2000........................................................... 363,925
2001........................................................... 267,697
2002........................................................... 410,846
Thereafter..................................................... 80,785
----------
Total...................................................... $1,979,894
==========
</TABLE>

NOTE 6--PROVISIONS FOR INCOME TAXES

The Company has provided for income tax based on consolidated net income.
Income tax expense is allocated to the Parent and Subsidiary based on the tax
liability and expense relating to the respective taxing authorities.

The provision for income taxes, calculated according to SFAS No. 109,
"Accounting for Income Taxes", amounted to:

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS NINE MONTHS ENDED
SEPTEMBER 30, ENDED YEAR ENDED DECEMBER 31,
--------------------- MARCH 31, MARCH 31, -----------------------
1994 1995 1996 1997 1996 1997
---------- ---------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Current:
Federal income tax.... $ 651,914 $ 844,075 $ 336,022 $ 495,887 $ 699,193 $ 835,885
State income tax...... 338,000 296,054 114,774 93,415 268,000 301,000
Canadian business tax... -- 2,544 4,643 45,966 -- 2,108
---------- ---------- ----------- ----------- ---------- -----------
Total current....... 989,914 1,142,673 455,439 635,268 967,193 1,138,993
Deferred:
Federal income tax.... 577,859 455,576 336,121 866,666 849,733 1,320,725
State income tax...... 94,221 89,206 268,291 194,174 64,000 378,575
Canadian business tax... -- 132,000 63,000 90,616 135,140 135,740
---------- ---------- ----------- ----------- ---------- -----------
Total deferred...... 672,080 676,782 667,412 1,151,456 1,048,873 1,835,040
---------- ---------- ----------- ----------- ---------- -----------
Total provision for
income taxes....... $1,661,994 $1,819,455 $ 1,122,851 $ 1,786,724 $2,016,066 $ 2,974,033
========== ========== =========== =========== ========== ===========
</TABLE>

Deferred taxes are recorded based on differences between the financial
statement and tax basis of assets and liabilities. Temporary differences which
give rise to a significant portion of deferred tax assets and liabilities

F-31
<PAGE>

ACCESS RENTALS, INC. AND SUBSIDIARY AND AFFILIATE

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

were the result of book and tax depreciation and revenue recognition timing
differences, allowance for uncollectible accounts, net operating loss
carryforwards of the Subsidiary and certain tax credits.

The Subsidiary has remaining Canadian net operating loss (NOL) carryforwards
of approximately $415,000 as of March 31, 1997 and December 31, 1997. The NOL
carryforwards begin to expire in 1998 and will be completely expired in 2001.

Application of statutory tax rates to combined pretax income will not be
representative of the provision for income taxes. As previously disclosed, the
income of the Affiliate is taxed individually at the member level.

NOTE 7--RELATED PARTY TRANSACTIONS

Officer Loan--The chief executive officer and a stockholder maintains a
floating loan with the Company. This loan is charged when personal
expenditures are paid by the Company on behalf of the officer. A loan
agreement exists between the parties, in which the Company charges interest of
8.5% on the average outstanding balance. The terms provide for the officer to
make regular, periodic payments to reduce the outstanding balance. The balance
outstanding at March 31, 1996 and 1997 and December 31, 1997 amounted to
$420,040, $515,606 and $1,105,994, respectively. The amounts at March 31, 1997
and December 31, 1997 have been reduced in combination by the Affiliate's
capital account.

Loan Receivable--The Company has a loan receivable which represents cash
advances made to companies owned by an employee and the stockholders. The
Company charges interest on these loans at an annual rate of 8%. The balance
outstanding at March 31, 1996 and 1997 and December 31, 1997 amounted to
$1,121,814, $1,860,102 and $2,071,971, respectively.

Operating Lease Agreement--The Company leases shop, warehouse space and
aircraft from companies owned by an employee and the stockholders. The Company
also leases rental equipment from the Affiliate, the effect of which has been
eliminated in the combination of the financial statements. The leases are on a
month to month basis and require monthly payments of $41,000 for the shop and
warehouse space and $250,000 ($325,000 as of September 1, 1997) for rental
equipment. The terms of the equipment lease with the Affiliate were modified
during the nine months ended December 1997.

Sale/Leaseback of Property--On March 31, 1996, the Company sold four
buildings to a company owned by the stockholders for $1,725,000. Management
estimated that the market value of the property approximated the net book
value. The property is provided for in the operating lease, as disclosed
above.

NOTE 8--CASH FLOW DISCLOSURE INFORMATION

For the years ended September 30, 1994 and 1995, six months ended March 31,
1996, year ended March 31, 1997, and nine months ended December 31, 1996 and
1997, total interest paid amounted to $660,902, $1,132,222, $676,546,
$2,005,464, $1,447,752 and $2,120,907, respectively.

For the years ended September 30, 1994 and 1995, six months ended March 31,
1996, year ended March 31, 1997, and nine months ended December 31, 1996 and
1997, total taxes paid amounted to $887,760, $1,516,861, $584,371, $1,045,652,
$791,179 and $298,321, respectively.

During the years ended September 30, 1994 and 1995, six months ended March
31, 1996, year ended March 31, 1997, and nine months ended December 31, 1996
and 1997, the Company and Affiliate purchased

F-32
<PAGE>

ACCESS RENTALS, INC. AND SUBSIDIARY AND AFFILIATE

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

$7,368,661, $7,127,810, $7,968,504, $28,603,655, $27,336,255 and $21,237,266,
respectively, of equipment which was financed.

NOTE 9--RETIREMENT PLANS

The Parent maintains a defined contribution retirement plan for non-union
employees. The plan qualifies as a deferred compensation plan under Section
401(k) of the Internal Revenue Code. Company contributions are based on a 100%
match of the employees' elective deferral up to 4%.

The Parent also contributes to defined benefit pension plans for employees
covered under six union contracts, Locals #15C, #103, #138, #542C, #825 and
#832 of the International Union of Operating Engineers. A full description of
the membership, benefits and employer and employee obligations to contribute
to these plans are described in the Summary Plan Description and Annual
Reports of the plans.

The actuarial information needed to determine the liabilities and provide
the current disclosure information necessary under FASB No. 87 was
unavailable. Consequently, the financial statements for the years ended
September 30, 1994 and 1995, six months ended March 31, 1996, year ended March
31, 1997 and nine months ended December 1996 and 1997, do not reflect the
financial position, results of operations and expanded disclosures in
accordance with FASB No. 87.

The Subsidiary maintains a non-contributory pension plan, whereby the
Subsidiary contributes 4% of employee compensation to the plan. In addition,
the Subsidiary will contribute a 100% match of the employees' elective
deferral up to a maximum of 2%.

The cost of the plans for the years ended September 30, 1994 and 1995, six
months ended March 31, 1996, the year ended March 31, 1997, and the nine
months ended December 31, 1996 and 1997, amounted to approximately $151,669,
$192,541, $110,857, $329,712, $149,568 and $162,150, respectively.

NOTE 10--COMMITMENTS AND CONTINGENCIES

Access Rentals, Inc. (Parent) guarantees debt obligations of the Subsidiary,
Access Lift Equipment, Inc., the Affiliate, Reinhart Leasing, LLC, and another
related company owned by the stockholders.

At December 31, 1997, the Company had outstanding purchase orders for
equipment in the amount of $4,240,564.

NOTE 11--CHANGE IN METHOD OF ACCOUNTING AND PRIOR YEAR ADJUSTMENT

The accompanying consolidated financial statements for the fiscal year ended
September 30, 1994 have been retroactively restated as a result of
management's change in method of accounting for rental income. In years prior
to the change, the Company recorded revenue for the entire rental period of a
contract upon billing. The change in accounting policy removes the portion of
rental billings pertaining to periods subsequent to the reporting period. The
effect of the restatement resulted in a $265,019 decrease to retained earnings
at September 30, 1993.

F-33
<PAGE>

ACCESS RENTALS, INC. AND SUBSIDIARY AND AFFILIATE

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

A restatement of the September 30, 1994 consolidated statement of income is
summarized as follows:

<TABLE>
<CAPTION>
AS
PREVIOUSLY
REPORTED AS RESTATED
----------- -----------
<S> <C> <C>
Rental income.......................................... $14,730,347 $15,804,754
Income before taxes and cumulative effect of change in
accounting principle.................................. 4,127,869 4,019,441
Provision for income taxes............................. 1,715,048 1,661,994
Income before cumulative effect of change in accounting
principle............................................. 2,412,821 2,357,447
Cumulative effect of change in method of accounting for
income taxes.......................................... 46,325 46,325
Net income............................................. $ 2,459,146 $ 2,403,772
</TABLE>

NOTE 12--ACQUISITION OF SUBSIDIARY

Effective February 26, 1995, the Company acquired 100% of the outstanding
common stock of Access Lift Equipment, Inc., formerly Upright of Canada, Inc.,
for approximately $920,000.

The acquisition, accounted for in accordance with Accounting Principles
Board (APB) Opinion No. 16--Business Combinations, using the purchase method
of accounting, has resulted in the inclusion of the operating results of the
Subsidiary, from the date of acquisition, in the financial statements of the
Company.

NOTE 13--STOCKHOLDERS' EQUITY

On December 30, 1997, Access Rentals, Inc. (Parent) retired 6 shares of
treasury stock then issued its remaining 194 common shares with no par value.

Also, on December 30, 1997, Access Rentals, Inc. (Parent) amended its
certificate of incorporation to increase the number of authorized shares from
200 common with no par value to 100 Class A Voting common shares with a par
value of $1 and 9,900 Class B Non-voting common shares with a par value of $1,
effecting a stock split of 50 shares of new stock for each share of stock.

The retirement of treasury stock and the stock split were given retroactive
effect in the accompanying financial statements.

At December 31, 1997 the following common stock shares were authorized,
issued and outstanding:

<TABLE>
<S> <C>
Class A Voting, $1 par value....................................... 100
Class B Non-voting, $1 par value................................... 9,900
------
Total shares................................................... 10,000
======
</TABLE>

NOTE 14--SUBSEQUENT EVENTS

On September 1, 1997, the Company and Affiliate acquired certain assets of a
company engaged in primarily the same business as Access Rentals, Inc., with
operations in Florida. The purchase price, including the covenant not-to-
compete, amounted to approximately $4,988,850, for which the same amount of
debt was incurred.

During January 1998, the Company sold all real estate owned by the Company
to a related party company. The sales price was determined based upon
appraisals and approximated $605,000.

On January 21, 1998, the Company, Affiliate and stockholders entered into a
stock purchase agreement with United Rentals, Inc. (URI). Under the terms of
the stock purchase agreement, URI purchased all of the issued and outstanding
capital stock of the Company and substantially all of the assets of the
Affiliate. Also, as part of the transaction all of the stock of Access Lift
Equipment, Inc. (Subsidiary) was sold by Access Rentals, Inc., to United
Rentals of Canada, Inc., a wholly-owned subsidiary of URI.

NOTE 15--RECLASSIFICATIONS

Certain reclassifications have been made to previously issued financial
statements in order to conform them to current classifications.

F-34
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors BNR Group of Companies

We have audited the combined balance sheets of BNR Group of Companies as at
March 31, 1996 and 1997 and the combined statements of earnings, stockholders'
equity and cash flows for the years then ended. These combined financial
statements are the responsibility of the companies' management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.

In our opinion, these combined financial statements present fairly, in all
material respects, the combined financial position of BNR Group of Companies
as at March 31, 1996 and 1997 and the results of their operations and their
cash flows for the years then ended in accordance with generally accepted
accounting principles in Canada.

Generally accepted accounting principles in Canada vary in certain
significant respects from generally accepted accounting principles in the
United States. Application of generally accepted accounting principles in the
United States would have affected results of operations for the years ended
March 31, 1996 and 1997 and stockholders' equity as at March 31, 1996 and
March 31, 1997 to the extent summarized in note 14 to the combined financial
statements.

/s/ KPMG
Chartered Accountants

Waterloo, Canada
February 3, 1998

F-35
<PAGE>

BNR GROUP OF COMPANIES

COMBINED BALANCE SHEETS
(AMOUNTS EXPRESSED IN CANADIAN DOLLARS)

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, DECEMBER 31,
1996 1997 1997
--------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash.................................... $ 45,817 $ 62,471 $ 36,157
Trade accounts receivable (note 2)...... 3,807,908 4,692,084 7,281,959
Inventories............................. 1,744,367 1,897,021 2,276,311
Income taxes recoverable................ -- 81,808 --
Prepaid expenses........................ 116,844 128,343 85,937
----------- ----------- -----------
5,714,936 6,861,727 9,680,364
Rental equipment (note 3)................. 8,668,609 10,593,547 13,211,100
Fixed assets (note 4)..................... 731,864 716,381 1,054,482
----------- ----------- -----------
$15,115,409 $18,171,655 $23,945,946
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank indebtedness (note 5).............. $ 120,373 $ 469,860 $ 1,469,042
Short-term borrowings (note 5).......... 1,428,176 1,407,830 1,752,252
Accounts payable........................ 1,950,163 1,957,643 2,081,720
Accrued liabilities..................... 946,688 686,351 433,945
Income taxes payable.................... 67,618 -- 475,417
Current portion of long-term debt (note
6)..................................... 1,618,749 2,390,758 3,233,715
----------- ----------- -----------
6,131,767 6,912,442 9,446,091
Long-term debt (note 6)................... 2,250,744 3,467,720 4,369,061
Redeemable shares (note 7)................ 4,534,975 4,424,975 4,424,975
Deferred income taxes..................... 681,518 975,570 1,385,392
Stockholders' equity:
Share capital (note 8).................. 83,319 83,319 83,319
Retained earnings....................... 1,433,086 2,307,629 4,237,108
----------- ----------- -----------
1,516,405 2,390,948 4,320,427
----------- ----------- -----------
$15,115,409 $18,171,655 $23,945,946
=========== =========== ===========
</TABLE>

See accompanying notes to combined financial statements.

F-36
<PAGE>

BNR GROUP OF COMPANIES

COMBINED STATEMENTS OF EARNINGS
(AMOUNTS EXPRESSED IN CANADIAN DOLLARS)

<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
YEAR ENDED YEAR ENDED ENDED ENDED
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31,
1996 1997 1996 1997
---------- ---------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Rental revenue............. $ 9,286,562 $10,873,631 $ 9,333,864 $11,481,757
Sales of equipment, parts
and supplies.............. 12,276,498 15,829,146 12,292,494 15,836,495
Other...................... 847,000 788,306 682,980 757,443
----------- ----------- ----------- -----------
22,410,060 27,491,083 22,309,338 28,075,695
Cost of revenues:
Cost of equipment rentals,
excluding equipment rental
depreciation.............. 4,352,621 5,277,966 4,103,508 5,282,162
Depreciation on rental
equipment................. 1,609,690 1,936,254 1,451,671 1,715,542
Cost of sales, equipment,
parts and supplies........ 8,883,214 11,818,715 9,303,777 11,832,825
----------- ----------- ----------- -----------
14,845,525 19,032,935 14,858,956 18,830,529
----------- ----------- ----------- -----------
Gross profit................. 7,564,535 8,458,148 7,450,382 9,245,166
Selling, general and adminis-
tration..................... 5,728,380 6,386,710 4,528,911 5,623,444
Non-rental depreciation...... 71,748 78,354 56,903 123,246
----------- ----------- ----------- -----------
Operating earnings........... 1,764,407 1,993,084 2,864,568 3,498,476
Interest expense............. 565,106 691,559 514,503 517,347
----------- ----------- ----------- -----------
Earnings before income taxes. 1,199,301 1,301,525 2,350,065 2,981,129
Income taxes (note 9):
Current.................... 245,436 132,930 480,220 637,328
Deferred................... 118,677 294,052 288,251 409,822
----------- ----------- ----------- -----------
364,113 426,982 768,471 1,047,150
----------- ----------- ----------- -----------
Net earnings................. $ 835,188 $ 874,543 $ 1,581,594 $ 1,933,979
=========== =========== =========== ===========
</TABLE>

See accompanying notes to combined financial statements.

F-37
<PAGE>

BNR GROUP OF COMPANIES

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
(AMOUNTS EXPRESSED IN CANADIAN DOLLARS)

<TABLE>
<CAPTION>
SHARE RETAINED
CAPITAL EARNINGS TOTAL
------- ---------- ----------
<S> <C> <C> <C>
Balances, at March 31, 1995..................... $83,319 $ 597,898 $ 681,217
Net earnings.................................... -- 835,188 835,188
------- ---------- ----------
Balances, at March 31, 1996..................... 83,319 1,433,086 1,516,405
Net earnings.................................... -- 874,543 874,543
------- ---------- ----------
Balances, at March 31, 1997..................... 83,319 2,307,629 2,390,948
Net earnings (unaudited)........................ -- 1,933,979 1,933,979
Dividends (unaudited)........................... -- (4,500) (4,500)
------- ---------- ----------
Balances, at December 31, 1997 (unaudited)...... $83,319 $4,237,108 $4,320,427
======= ========== ==========
</TABLE>

See accompanying notes to combined financial statements.

F-38
<PAGE>

BNR GROUP OF COMPANIES

COMBINED STATEMENTS OF CASH FLOWS
(AMOUNTS EXPRESSED IN CANADIAN DOLLARS)

<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
YEAR ENDED YEAR ENDED ENDED ENDED
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31,
1996 1997 1996 1997
---------- ---------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net earnings............... $ 835,188 $ 874,543 $ 1,581,594 $ 1,933,979
Items not involving cash:
Depreciation and amorti-
zation.................. 1,681,438 2,014,608 1,508,574 1,838,788
Gain on disposal of
rental equipment........ (639,271) (839,394) (725,213) (764,999)
Gain on disposal of fixed
assets.................. (44,016) -- -- --
Deferred income taxes.... 118,677 294,052 288,251 409,822
Change in operating assets:
Accounts receivable...... (894,464) (884,176) (2,814,394) (2,589,875)
Inventories.............. (613,126) (152,654) (186,602) (379,290)
Prepaid expenses......... (63,687) (11,499) 3,516 42,406
Accounts payable......... 408,768 7,480 (209,735) 124,077
Accrued liabilities...... 387,747 (260,337) (600,645) (252,406)
Income taxes............. 9,712 (149,426) 338,842 557,225
----------- ----------- ----------- -----------
1,186,966 893,197 (815,812) 919,727
Cash flows from investing
activities:
Purchase of rental equip-
ment.................... (5,523,247) (7,355,356) (6,419,981) (7,976,473)
Proceeds on disposal of
rental equipment........ 2,900,664 4,333,558 3,489,908 4,408,377
Purchase of fixed assets. (91,794) (62,871) (50,489) (461,347)
Proceeds on disposal of
fixed assets............ 52,648 -- -- --
----------- ----------- ----------- -----------
(2,661,729) (3,084,669) (2,980,562) (4,029,443)
Cash flows from financing
activities:
Net advance (repayment)
of bank indebtedness.... 23,618 349,487 1,256,010 344,422
Net borrowings
(repayment) on short-
term borrowings......... 188,093 (20,346) 338,414 999,182
Borrowings on long-term
debt.................... 2,172,871 2,894,173 3,066,515 2,998,826
Payments on long-term
debt.................... (673,795) (905,188) (783,925) (1,254,528)
Repayment of shareholder
loans................... (41,180) -- -- --
Issuance of share capi-
tal..................... 69,520 -- -- --
Dividends................ -- -- -- (4,500)
Redemption of Class B
special shares.......... (229,725) (110,000) (110,000) --
----------- ----------- ----------- -----------
1,509,402 2,208,126 3,767,014 3,083,402
----------- ----------- ----------- -----------
Increase (decrease) in
cash...................... 34,639 16,654 (29,360) (26,314)
Cash, beginning of period.. 11,178 45,817 45,817 62,471
----------- ----------- ----------- -----------
Cash, end of period........ $ 45,817 $ 62,471 $ 16,457 $ 36,157
=========== =========== =========== ===========
Supplemental Schedule of
Cash Flow Information:
Cash paid during the pe-
riod for interest....... $ 565,106 $ 691,559 $ 514,503 $ 517,347
Cash paid during the pe-
riod for income taxes... 231,521 332,816 183,030 143,383
=========== =========== =========== ===========
</TABLE>

See accompanying notes to combined financial statements.

F-39
<PAGE>

BNR GROUP OF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS
(AMOUNTS EXPRESSED IN CANADIAN DOLLARS)

MARCH 31, 1996 AND 1997
(The information as at December 31, 1997 and for the nine months ended
December 31, 1996 and 1997 is unaudited)

1. SIGNIFICANT ACCOUNTING POLICIES:

(a) Basis of presentation:

The accompanying combined financial statements are presented in accordance
with accounting principles generally accepted in Canada (Canadian GAAP).

The combined financial statements include the accounts of BNR Equipment
Limited (BNR Kitchener), 754643 Ontario Limited (BNR Ottawa), 650310 Ontario
Limited (BNR Barrie), 766903 Ontario Inc. (BNR Owen Sound) and BNR Equipment,
Inc. (BNR Amherst).

As more fully described in note 15, on January 22, 1998, all of the
aforementioned companies were acquired by United Rentals, Inc. in a single
common transaction and, accordingly, these financial statements have been
prepared on a combined basis.

Each of the companies rents and sells industrial supplies and power
equipment. All significant intercompany accounts and transactions have been
eliminated on combination.

These financial statements are prepared on the basis of their predecessor
historical costs and do not include any adjustments that may result on the
acquisition of the BNR Group of Companies by United Rentals, Inc. as more
fully described in note 15.

(b) Interim financial statements:

The accompanying combined balance sheets and statements of stockholders'
equity at December 31, 1997 and the combined statements of earnings,
stockholders' equity and cash flows for the nine month periods ended December
31, 1996 and 1997 are unaudited and have been prepared on a basis that is
consistent with the audited combined financial statements included herein. In
the opinion of management, such unaudited combined financial statements
include all adjustments necessary to present fairly the information set forth
therein, which consist solely of normal recurring adjustments. The results of
operations for such interim periods are not necessarily indicative of results
for the full year.

Revenue related to the sale of industrial supplies and power equipment is
recognized at the point of sale. Revenue related to the rental of industrial
power equipment is recognized ratably over the contract term. The companies
generally rent equipment under short-term agreements of one month or less.

(d) Inventories:

Inventories consisting primarily of power tools, industrial supplies and
power equipment are valued at the lower of cost (first-in, first-out basis)
and net realizable value.

(e) Foreign currency translation:

Monetary assets and liabilities of the companies, which are denominated in
foreign currencies, are translated into Canadian dollars at exchange rates
prevailing at the balance sheet date. Exchange gains and losses resulting from
the translation of these amounts are reflected in the combined statement of
earnings in the period in which they occur.

F-40
<PAGE>

BNR GROUP OF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(AMOUNTS EXPRESSED IN CANADIAN DOLLARS)

(f) Rental equipment, fixed assets and depreciation:

Rental equipment and fixed assets are stated at acquisition cost.
Depreciation is provided using the following methods and annual rates:

<TABLE>
<CAPTION>
ASSET BASIS RATE
----- ----- ----
<S> <C> <C>
Rental equipment...................................... Declining balance 15%
Buildings............................................. Declining balance 5%
Office and shop equipment............................. Declining balance 20%
Signs................................................. Declining balance 20%
Vehicles.............................................. Declining balance 20%
Parking lot........................................... Declining balance 8%
Leasehold improvements................................ Straight-line 20%
</TABLE>

(g) Deferred income taxes:

The companies account for income taxes on the deferred tax allocation
method. Under this method, timing differences between reported and taxable
income result in provisions for taxes not currently payable. Such timing
differences arise principally as a result of claiming depreciation and other
amounts for tax purposes at amounts differing from those charged to income.

(h) Use of estimates:

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

2. TRADE ACCOUNTS RECEIVABLE:

Trade accounts receivable are net of allowances for doubtful accounts of
$nil at March 31, 1996, $68,966 at March 31, 1997 and $215,591 at December 31,
1997.

3. RENTAL EQUIPMENT:

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, DECEMBER 31,
1996 1997 1997
----------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Rental equipment........................ $18,335,170 $22,133,208 $26,466,262
Less accumulated depreciation........... 9,666,561 11,539,661 13,255,162
----------- ----------- -----------
$ 8,668,609 $10,593,547 $13,211,100
=========== =========== ===========
</TABLE>

F-41
<PAGE>

BNR GROUP OF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(AMOUNTS EXPRESSED IN CANADIAN DOLLARS)

4. FIXED ASSETS:

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, DECEMBER 31,
1996 1997 1997
---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Land..................................... $ 201,600 $ 201,600 $ 201,600
Buildings................................ 617,977 617,977 623,066
Office and shop equipment................ 319,208 337,252 363,774
Signs.................................... 17,426 19,163 23,884
Vehicles................................. 53,020 53,020 388,361
Parking lot.............................. -- 7,560 26,448
Leasehold improvements................... 145,646 181,176 251,962
---------- ---------- ----------
1,354,877 1,417,748 1,879,095
Less accumulated depreciation and amorti-
zation.................................. 623,013 701,367 824,613
---------- ---------- ----------
$ 731,864 $ 716,381 $1,054,482
========== ========== ==========
</TABLE>

5. BANK INDEBTEDNESS AND SHORT-TERM BORROWINGS:

Bank indebtedness and short-term borrowings bear interest rates between
prime plus .50% to prime plus .75% and are secured by a general assignment of
book debts, security agreement over all inventories, first collateral
mortgages and demand debenture over land and buildings, a fixed charge and a
chattel mortgage over certain equipment and an assignment of fire insurance
over buildings and equipment.

6. LONG-TERM DEBT:

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, DECEMBER 31,
1996 1997 1997
---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Bank loans, various term loans with
combined monthly payments of $123,078
(as at December 31, 1997) including
interest ranging from prime plus 1% to
prime plus 1.75% due from 1998 through
2001. Collateralized by certain
equipment and fixed assets............ $1,662,704 $2,406,572 $2,021,641
Lien notes, various notes with combined
monthly payments of $300,956 (as at
December 31, 1997) including interest
ranging from prime plus 1.25% to prime
plus 2%, due from 1998 through 2001.
Collateralized by specific equipment . 2,136,540 3,288,692 5,062,094
Other notes, various notes with
combined monthly payments of $26,106
(as at December 31, 1997) including
interest ranging from 2.9% to 10%, due
from 1998 through 2000. Collateralized
by specific equipment and vehicles.... 70,249 163,214 519,041
---------- ---------- ----------
3,869,493 5,858,478 7,602,776
Current portion of long-term debt...... 1,618,749 2,390,758 3,233,715
---------- ---------- ----------
$2,250,744 $3,467,720 $4,369,061
========== ========== ==========
</TABLE>

F-42
<PAGE>

BNR GROUP OF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(AMOUNTS EXPRESSED IN CANADIAN DOLLARS)

6. LONG-TERM DEBT (CONTINUED):

Annual principal payments over each of the next four years are as follows:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1997
----------- ------------
(UNAUDITED)
<S> <C> <C>
1998............ $ 2,390,758 $ 3,233,715
1999............ 1,878,097 2,696,223
2000............ 1,280,955 1,448,045
2001............ 308,668 224,793
----------- -----------
$ 5,858,478 $ 7,602,776
=========== ===========
</TABLE>

7. REDEEMABLE SHARES:

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, DECEMBER 31,
1996 1997 1997
----------------- ----------------- -----------------
(UNAUDITED)
# $ # $ # $
------- --------- ------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
BNR EQUIPMENT LIMITED (BNR
KITCHENER)
Authorized:
Unlimited number of
Class A special
shares, non-voting,
redeemable
Unlimited number of
Class B special
shares, non-voting,
redeemable
Issued:
Class B special
shares.............. 875,975 875,975 765,975 765,975 765,975 765,975
754643 ONTARIO LIMITED (BNR
OTTAWA)
Authorized:
Unlimited number of
special shares, non-
voting, redeemable
Issued:
Special shares....... 159,000 159,000 159,000 159,000 159,000 159,000
650310 ONTARIO LIMITED (BNR
BARRIE)
Authorized:
Unlimited number of
Class C special
shares, non-voting,
redeemable
Unlimited number of
Class D special
shares, non-voting,
redeemable
Issued:
Class C special
shares.............. 1,000 2,315,000 1,000 2,315,000 1,000 2,315,000
Class D special
shares.............. 185,000 185,000 185,000 185,000 185,000 185,000
766903 ONTARIO INC. (BNR OWEN
SOUND)
Authorized:
Unlimited number of
Class C special
shares, non-voting,
redeemable
Issued:
Class C special
shares.............. 1,000 1,000,000 1,000 1,000,000 1,000 1,000,000
--------- --------- ---------
4,534,975 4,424,975 4,424,975
========= ========= =========
</TABLE>

F-43
<PAGE>

BNR GROUP OF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(AMOUNTS EXPRESSED IN CANADIAN DOLLARS)

7. REDEEMABLE SHARES (CONTINUED)

(a) Certain of the BNR Group of Companies have issued special shares, Class
B special shares and Class D special shares which are redeemable at the
holders option at $1 per share. Under Canadian generally accepted accounting
principles, these shares are presented as liabilities in the combined
financial statements at their redemption amounts.

(b) Certain of the BNR Group of Companies have issued Class C special shares
which are redeemable at the holders option at a fixed amount which is in
excess of their stated capital amounts. Under Canadian generally accepted
accounting principles, these Class C special shares are presented as
liabilities in the combined financial statements at their redemption amounts.
The excess of their redemption amounts over their paid-up capital amounts of
$3,314,990 has been charged to retained earnings.

(c) The special shares, Class B special shares, Class C special shares and
Class D special shares have no fixed redemption date and are redeemable at the
option of the holder. Dividends on these shares are discretionary. In the
event of liquidation, dissolution, or wind up of the companies, holders of
these shares are entitled to receive, in priority to all other classes, an
amount equal to the redemption amount plus any declared and unpaid dividends.

(d) Between May 8, 1995 and January 18, 1996, BNR Equipment Limited (BNR
Kitchener) redeemed 229,725 Class B special shares for $229,725.

Between April 18, 1996 and July 15, 1996, BNR Equipment Limited (BNR
Kitchener) redeemed 110,000 Class B special shares for $110,000.

F-44
<PAGE>

BNR GROUP OF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(AMOUNTS EXPRESSED IN CANADIAN DOLLARS)

8. SHARE CAPITAL:

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, DECEMBER 31,
1996 1997 1997
------------ ------------ ------------
(UNAUDITED)
# $ # $ # $
----- ------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
BNR EQUIPMENT LIMITED (BNR
KITCHENER)
Authorized:
Unlimited number of common
shares
Issued:
Common shares................. 6,000 13,693 6,000 13,693 6,000 13,693
754643 ONTARIO LIMITED (BNR OT-
TAWA)
Authorized:
Unlimited number of common
shares
Issued:
Common shares................. 100 100 100 100 100 100
650310 ONTARIO LIMITED (BNR
BARRIE)
Authorized:
Unlimited number of Class A
common shares................
Unlimited number of Class B
convertible common shares
Issued:
Class B convertible common
shares....................... 600 1 600 1 600 1
766903 ONTARIO INC. (BNR OWEN
SOUND)
Authorized:
Unlimited number of Class A
common shares................
Unlimited number of Class B
convertible common shares
Issued:
Class B convertible common
shares....................... 1,000 5 1,000 5 1,000 5
BNR EQUIPMENT INC. (BNR AMHERST)
Authorized:
Unlimited number of common
shares
Issued:
Common shares................. 100 69,520 100 69,520 100 69,520
------ ------ ------
83,319 83,319 83,319
====== ====== ======
</TABLE>

The Class B convertible common shares are convertible into an equivalent
number of Class A common shares for no additional consideration.

F-45
<PAGE>

BNR GROUP OF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(AMOUNTS EXPRESSED IN CANADIAN DOLLARS)

9. INCOME TAXES:

The effective income tax rate differs from the statutory rate that would be
obtained by applying the combined basic federal, state and provincial tax rate
to earnings before income taxes. These differences result from the following
items:

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31,
1996 1997 1996 1997
--------- --------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Combined basic federal, state
and provincial tax rate..... 44.6% 44.6% 44.6% 44.6%
Increase (decrease) in income
tax rate resulting from:
Tax reductions to certain
private companies........... (12.0) (9.9) (11.3) (10.0)
Other permanent differences.. (2.2) (1.9) (.6) .5
----- ---- ----- -----
Effective income tax rate.... 30.4% 32.8% 32.7% 35.1%
===== ==== ===== =====
</TABLE>

10. COMMITMENTS:

The companies are committed to payments under operating leases for
equipment, vehicles and buildings. Annual payments over each of the next five
years are as follows:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1997
---------- ------------
(UNAUDITED)
<S> <C> <C>
1998............ $ 789,000 $ 620,000
1999............ 446,000 522,000
2000............ 275,000 361,000
2001............ 122,000 238,000
2002............ 54,000 148,000
---------- ----------
$1,686,000 $1,889,000
========== ==========
</TABLE>

11. FINANCIAL INSTRUMENTS:

The carrying value of the companies' trade accounts receivable, bank
indebtedness, accounts payable, accrued liabilities, short-term borrowings and
redeemable shares approximate their fair values due to their demand nature or
relatively short periods to maturity.

The fair value of the companies' long-term debt have been determined to be
equal to their carrying values, as the current financing arrangements
represent the borrowing rate presently available to the companies for loans
with similar terms and maturities.

12. RELATED PARTY TRANSACTIONS:

(a) The companies rent certain premises from officers and stockholders of
the companies.

The following are the amounts that have been expensed in each of the
periods:

<TABLE>
<S> <C>
March 31, 1997.................. $202,081
December 31, 1997 (unaudited)... 164,498
</TABLE>

(b) Included in note 10 are operating lease commitments with a company
controlled by certain stockholders:

The following are the amounts that have been expensed in each of the
periods:

<TABLE>
<S> <C>
March 31, 1997................... $57,523
December 31, 1997 (unaudited).... 57,391
</TABLE>

F-46
<PAGE>

BNR GROUP OF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(AMOUNTS EXPRESSED IN CANADIAN DOLLARS)

13. NATURE OF OPERATIONS AND SEGMENT INFORMATION:

The companies only significant activity is the rental and sale of industrial
supplies and power equipment. Geographically segmented information is as
follows:

<TABLE>
<CAPTION>
CANADA UNITED STATES TOTAL
MARCH 31, MARCH 31, MARCH 31,
----------------------- --------------------- -----------------------
YEAR ENDED 1996 1997 1996 1997 1996 1997
------------------------ ----------- ----------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues................ $21,812,899 $24,746,282 $ 597,161 $2,744,801 $22,410,060 $27,491,083
Operating earnings
(loss)................. 1,922,641 1,996,754 (158,234) (3,670) 1,764,407 1,993,084
Identifiable net assets. 1,307,530 1,821,554 208,875 569,394 1,516,405 2,390,948
</TABLE>

<TABLE>
<CAPTION>
CANADA UNITED STATES TOTAL
DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------ ------------- ------------
NINE MONTHS ENDED 1997 1997 1997
------------------------------------- ------------ ------------- ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Revenues............................. $24,447,526 $3,628,169 $28,075,695
Operating earnings................... 3,137,274 361,202 3,498,476
Identifiable net assets.............. 3,251,422 1,069,005 4,320,427
</TABLE>

14. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES:

The companies follow Canadian generally accepted accounting principles which
are different in some respects from those applicable in the United States.

(a) Since redemption of the shares described in note 7 is outside the
control of the companies, the shares are classified as liabilities under
Canadian GAAP. For U.S. GAAP purposes, such redeemable shares can be
classified outside stockholders' equity and below liabilities. This
classification difference has no impact on net income or stockholders' equity
for U.S. GAAP purposes.

(b) The income tax provision is based on the deferral method and adjustments
are generally not made for changes in income tax rates. Under U.S. GAAP,
deferred tax liabilities are measured using the enacted tax rate expected to
apply to taxable income in the periods in which the deferred tax liability is
expected to be settled.

The deferred income tax liability under U.S. GAAP as compared to Canadian
GAAP consists of the following temporary differences:

<TABLE>
<CAPTION>
YEAR YEAR NINE MONTHS
ENDED ENDED ENDED
MARCH 31, MARCH 31, DECEMBER 31,
1996 1997 1997
---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Rental Equipment and Fixed Assets--
Tax depreciation in excess of book
depreciation--
For U.S. GAAP........................... $1,257,257 $1,518,790 $1,833,228
For Canadian GAAP....................... 681,518 975,570 1,385,392
</TABLE>

<TABLE>
<CAPTION>
YEAR YEAR NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31,
1996 1997 1996 1997
--------- --------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net earnings under Canadian
GAAP......................... $835,188 $874,543 $1,581,594 $1,933,979
Income tax adjustment under
the asset and liability
method....................... (66,853) 32,519 56,922 95,384
-------- -------- ---------- ----------
Net earnings under U.S. GAAP.. $768,335 $907,062 $1,638,516 $2,029,363
======== ======== ========== ==========
</TABLE>

F-47
<PAGE>

BNR GROUP OF COMPANIES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
(AMOUNTS EXPRESSED IN CANADIAN DOLLARS)

14. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED):

(d) The following table presents stockholders' equity under U.S. GAAP:

<TABLE>
<CAPTION>
YEAR YEAR NINE MONTHS
ENDED ENDED ENDED
MARCH 31, MARCH 31, DECEMBER 31,
1996 1997 1997
---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Stockholders' equity under Canadian
GAAP.................................. $1,516,405 $2,390,948 $4,320,427
Income tax adjustment under the asset
and liability method.................. (575,739) (543,220) (447,836)
Stockholders' equity under U.S. GAAP... 940,666 1,847,728 3,872,591
</TABLE>

15. SUBSEQUENT EVENT:

On January 22, 1998, all of the outstanding capital stock was acquired by
United Rentals, Inc. All of the shares described in note 7 and all of the
shares described in note 8, except for the shares of the U.S. company BNR
Equipment, Inc. (BNR Amherst) were cancelled and these Canadian companies of
the BNR Group of Companies amalgamated with United Rentals of Canada, Inc. on
January 30, 1998. Subsequent to December 31, 1997 and prior to the acquisition
by United Rentals, Inc., land and buildings with a carrying value of
approximately $500,000 were acquired by certain of the BNR Group of Companies'
stockholders for cash of $665,000 which was used by the companies to repay the
companies' debt. At the same time, the companies entered into operating lease
agreements with the stockholders with respect to these land and buildings.

F-48
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
Mission Valley Rentals, Inc.

We have audited the balance sheets of Mission Valley Rentals, Inc. as of
June 30, 1996 and 1997 and the related statements of operations, stockholders'
equity and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Mission Valley Rentals,
Inc. at June 30, 1996 and 1997, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.

/s/ Ernst & Young LLP

MetroPark, New Jersey
January 23, 1998

F-49
<PAGE>

MISSION VALLEY RENTALS, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30
--------------------- DECEMBER 31,
1996 1997 1997
---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
------
Cash........................................ $ 144,491 $ 527,922 $ 505,541
Accounts receivable, net.................... 470,736 662,006 721,252
Inventory................................... 37,539 58,949 88,965
Rental equipment, net....................... 3,004,111 5,158,789 5,667,659
Property and equipment, net................. 124,597 155,001 138,343
Prepaid expenses and other assets........... 34,850 180,875 165,599
Intangible assets, net...................... 776,003 765,841
---------- ---------- ----------
Total assets............................ $3,816,324 $7,519,545 $8,053,200
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities:
Accounts payable, accrued expenses and
other liabilities........................ $ 246,536 $ 404,689 $ 805,462
Income taxes payable...................... 53,303 (54,283)
Debt...................................... 1,512,074 5,102,143 5,536,280
Deferred income taxes..................... 188,774 319,869 235,744
---------- ---------- ----------
Total liabilities....................... 2,000,687 5,826,701 6,523,203
Commitments and contingencies
Stockholders' equity:
Common stock, no par value and $1.00
stated value, 10,000 shares authorized,
1,000 issued and outstanding at June 30,
1996 and 1997, and December 31, 1997..... 1,000 1,000 1,000
Retained earnings......................... 1,814,637 1,691,844 1,528,997
---------- ---------- ----------
Total stockholders' equity.............. 1,815,637 1,692,844 1,529,997
---------- ---------- ----------
Total liabilities and stockholders'
equity................................. $3,816,324 $7,519,545 $8,053,200
========== ========== ==========
</TABLE>

See accompanying notes.

F-50
<PAGE>

MISSION VALLEY RENTALS, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30 DECEMBER 31
---------------------- ----------------------
1996 1997 1996 1997
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Equipment rentals........... $4,851,942 $6,798,752 $3,365,276 $4,419,275
Sales of rental equipment... 96,987 413,481 346,540 74,642
Sales of parts and supplies. 399,156 558,034 264,193 329,496
---------- ---------- ---------- ----------
Total revenues............ 5,348,085 7,770,267 3,976,009 4,823,413
Cost of revenues:
Cost of equipment rentals,
excluding depreciation..... 1,893,655 2,876,589 1,392,173 1,952,185
Depreciation of rental
equipment.................. 738,229 1,599,457 586,675 733,558
Cost of rental equipment
sales...................... 61,810 413,481 346,540 55,168
Cost of sales of parts and
supplies................... 214,802 377,047 153,444 171,949
---------- ---------- ---------- ----------
Total cost of revenues.... 2,908,496 5,266,574 2,478,832 2,912,860
---------- ---------- ---------- ----------
Gross profit.................. 2,439,589 2,503,693 1,497,177 1,910,553
Selling, general and
administrative expenses...... 1,640,442 2,222,524 1,086,303 1,926,386
Non-rental depreciation....... 25,355 30,154 15,117 16,658
---------- ---------- ---------- ----------
Operating income (loss)....... 773,792 251,015 395,757 (32,491)
Interest expense.............. 139,925 390,047 171,923 215,848
Other (income), net........... (58,767) (62,016) (31,956) (31,209)
---------- ---------- ---------- ----------
Income (loss) before provision
(benefit) for income taxes 692,634 (77,016) 255,790 (217,130)
Provision (benefit) for income
taxes........................ 299,259 45,777 64,295 (54,283)
---------- ---------- ---------- ----------
Net income (loss)............. $ 393,375 $ (122,793) $ 191,495 $ (162,847)
========== ========== ========== ==========
</TABLE>

See accompanying notes.

F-51
<PAGE>

MISSION VALLEY RENTALS, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
-------------- RETAINED
SHARES AMOUNTS EARNINGS
------ ------- ----------
<S> <C> <C> <C>
Balance at July 1, 1995.............................. 1,000 $1,000 $1,421,262
Net income......................................... 393,375
----- ------ ----------
Balance at June 30, 1996............................. 1,000 1,000 1,814,637
Net loss........................................... (122,793)
----- ------ ----------
Balance at June 30, 1997............................. 1,000 1,000 1,691,844
Net loss (unaudited)............................... (162,847)
----- ------ ----------
Balance at December 31, 1997 (unaudited)............. 1,000 $1,000 $1,528,997
===== ====== ==========
</TABLE>

See accompanying notes.

F-52
<PAGE>

MISSION VALLEY RENTALS, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30 DECEMBER 31
--------------------- -------------------
1996 1997 1996 1997
--------- ---------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss)................. $ 393,375 $ (122,793) $191,495 $(162,847)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Depreciation and amortization... 763,584 1,646,105 611,009 760,378
Gain on equipment sales......... (35,177) (19,474)
Deferred taxes.................. 81,859 131,318 87,014 (84,125)
Changes in assets and
liabilities:
Increase in accounts receivable. (81,581) (191,270) (206,289) (59,246)
Increase in inventory........... (10,437) (21,410) (48,417) (30,016)
(Decrease) increase in prepaid
expenses and other assets...... 50,884 (146,248) (104,458) 15,276
Increase in accounts payable,
accrued expenses and other
liabilities.................... 119,054 158,153 65,881 400,773
(Decrease) increase in income
taxes payable.................. 53,303 (53,303) 10,992 (54,283)
--------- ---------- -------- ---------
Total adjustments................. 941,489 1,523,345 415,732 929,283
--------- ---------- -------- ---------
Cash provided by operating
activities..................... 1,334,864 1,400,552 607,227 766,436
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of rental equipment...... (388,116)
Proceeds from sale of rental
equipment........................ 96,987 413,481 346,540 74,642
--------- ---------- -------- ---------
Cash provided by (used in)
investing activities........... (291,129) 413,481 346,540 74,642
CASH FLOWS FROM FINANCING
ACTIVITIES
Principal payments on debt........ (957,424) (4,567,552) (741,982) (863,459)
Principal payments on capital
lease obligations................ (32,258)
Borrowings under credit facility.. 3,169,208
--------- ---------- -------- ---------
Cash used in financing
activities..................... (957,424) (1,430,602) (741,982) (863,459)
--------- ---------- -------- ---------
Increase (decrease) in cash....... 86,311 383,431 211,785 (22,381)
Cash balance at beginning of
year........................... 58,180 144,491 144,491 527,922
--------- ---------- -------- ---------
Cash balance at end of year..... $ 144,491 $ 527,922 $356,276 $ 505,541
========= ========== ======== =========
</TABLE>

See accompanying notes.

F-53
<PAGE>

MISSION VALLEY RENTALS, INC.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 1996 AND 1997
(THE INFORMATION AS OF DECEMBER 31, 1997 AND FOR THE SIX
MONTHS ENDED DECEMBER 31, 1996 AND 1997 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Activity

Mission Valley Rentals, Inc. (the "Company") rents, sells and repairs
construction equipment for use by contractor, industrial and homeowner
markets. The rentals are on a daily, weekly or monthly basis. The Company has
four locations in Northern California and its principal market area is the
entire Bay Area and the San Joaquin Valley. The nature of the Company's
business is such that short-term obligations are typically met by cash flow
generated from long-term assets. Consequently, consistent with industry
practice, the balance sheets are presented on an unclassified basis.

On September 1, 1996, the Company acquired for $2,320,000 a substantial
amount of rental equipment and fixed assets from Rental World, Inc. and
assumed all operations. The Company utilized the funds available under its
line of credit to finance the purchase. The acquisition has been accounted for
as a purchase and, accordingly, at such date the Company recorded the assets
acquired at their estimated fair values.

The acquired assets have been recorded at their estimated fair value at the
date of the acquisition of $1,527,503 with the excess purchase price of
$792,497 being recorded as goodwill.

Interim Financial Statements

The accompanying balance sheet at December 31, 1997 and the statements of
income, stockholders' equity and cash flows for the six-month periods ended
December 31, 1996 and 1997 are unaudited and have been prepared on the same
basis as the audited financial statements included herein. In the opinion of
management, such unaudited financial statements include all adjustments
necessary to present fairly the information set forth therein, which consist
solely of normal recurring adjustments. The results of operations for such
interim period are not necessarily indicative of results for the full year.

Inventory

Inventory consists primarily of general replacement parts and fuel for the
equipment and are stated at the lower of cost, determined under the first-in,
first-out method, or market.

Rental Equipment

Rental equipment is recorded at cost. Depreciation for rental equipment is
computed using the straight-line method over an estimated five-year useful
life with a 10% salvage value.

Ordinary maintenance and repair costs are charged to operations as incurred.
Proceeds from the disposal and the related net book value of the equipment are
recognized in the period of disposal and reported as revenue from sales of
equipment and cost of sales of equipment, respectively, in the statements of
operations.

Property and Equipment

Property and equipment is stated at cost. Depreciation of property and
equipment is computed on the straight-line method over estimated useful lives
of 5 to 10 years.

F-54
<PAGE>

MISSION VALLEY RENTALS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Ordinary maintenance and repair costs are charged to operations as incurred.
The cost of assets sold, retired, or otherwise disposed of, and the related
accumulated depreciation is eliminated from the accounts and any resulting
gain or loss is included in operations.

Intangible assets

Intangible assets are recorded at cost and consist of goodwill, which is
being amortized by the straight line method over its estimated useful life of
forty years. Accumulated amortization at June 30, 1997 and December 31, 1997
is $16,494 and $26,656, respectively.

Rental Revenue

Rental revenue is recorded as earned under the operating method.

Advertising Costs

The Company advertises primarily through phone directories and the
distribution of promotional items. All advertising costs are expensed as
incurred. Advertising expenses amounted to approximately $63,800 and $104,500
in the years ended June 30, 1996 and 1997, respectively, and $52,000 and
$42,000 for the six months ended December 31, 1996 and 1997, respectively.

Income Taxes

The Company uses the "liability method" of accounting for income taxes.
Accordingly, deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax bases of assets and
liabilities, using enacted tax rates in effect for the year in which the
differences are expected to reverse.

Accounting Estimates

2. CONCENTRATIONS OF CREDIT RISK

The Company maintains cash balances with a quality financial institution
and, consequently, management believes funds maintained there are secure.
Concentrations of credit risk with respect to customer receivables are limited
due to the large number of customers comprising the Company's customer base
and its credit policy.

3. RENTAL EQUIPMENT

Rental equipment and related accumulated depreciation consisted of the
following:

<TABLE>
<CAPTION>
JUNE 30
--------------------- DECEMBER 31,
1996 1997 1997
---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Rental equipment....................... $6,384,287 $9,793,816 $10,454,616
Less accumulated depreciation.......... 3,380,176 4,635,027 4,786,957
---------- ---------- -----------
Rental equipment, net.................. $3,004,111 $5,158,789 $ 5,667,659
========== ========== ===========
</TABLE>

F-55
<PAGE>

MISSION VALLEY RENTALS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
JUNE 30
----------------- DECEMBER 31,
1996 1997 1997
-------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Furniture and fixtures..................... $237,744 $273,686 $273,686
Leasehold improvements..................... 268,939 293,557 293,557
-------- -------- --------
506,683 567,243 567,243
Less accumulated depreciation.............. 382,086 412,242 428,900
-------- -------- --------
Total.................................... $124,597 $155,001 $138,343
======== ======== ========
</TABLE>

5. DEBT AND CAPITAL LEASE OBLIGATIONS

Debt and capital lease obligations consist of the following:

<TABLE>
<CAPTION>
JUNE 30
--------------------- DECEMBER 31,
1996 1997 1997
---------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Ingersoll-Rand--Various notes with combined
monthly payments of $3,514 including
interest from 7.9% to 10%................. $ 53,296 $ 100,980 $ 167,744
Clark Equipment Credit Co.--Various notes
with combined monthly payments of $5,217
including interest from 7.9% to 9.9%...... 35,443 194,304 156,550
Fremont Bank--Various notes with combined
monthly payments of $52,073 including
interest from 8.75% to 9.35%.............. 784,633 2,874,127 3,017,141
Ford Motor Credit--Various notes with
combined monthly payments of $1,908
including interest from 8.75% to 9.25%.... 64,948 333,237 374,384
Ford New Holland--Various notes with
combined monthly payments of $3,849
including interest 10.5%.................. 123,539 79,366 55,493
Orix Credit--Various notes with combined
monthly payments of $3,864 including
interest from 6.3% to 9.3%................ 10,264 71,764 51,293
Case Credit--Various notes with combined
monthly payments of $20,216 including
interest from 7.7% to 7.9%................ 209,397 567,827 486,188
Caterpillar Financial Services--Various
notes with combined monthly payments of
$3,615 including interest of 6.6%......... -- 150,936 133,994
Country Ford--Various leases with combined
monthly payments of $6,685 including
interest of 8.0%.......................... -- 351,683 325,197
John Deere--Three notes with combined
monthly payments of $3,038 including
interest of 4.9%.......................... 14,073 53,471 45,788
Associates--Various notes with combined
monthly payments of $5,314 including
interest from 7.5% to 8.98%............... 147,925 182,165 366,594
GMAC--One note with a monthly payment of
$886 including interest of 9.99%.......... -- 20,627 16,254
AEL Lease--Two notes with a combined
monthly payment of $2,736 including
interest of 8.25%......................... 3,244 40,705 82,129
M.E.L. Enterprises--One note with a monthly
payment of $2,595 including interest of
9.0%...................................... 65,312 38,984 24,909
AT&T Finance Corp.--Three notes with a
combined monthly payment of $4,028
including interest of 7.35%............... -- -- 194,253
Other...................................... -- 41,967 38,369
---------- ---------- ----------
$1,512,074 $5,102,143 $5,536,280
========== ========== ==========
</TABLE>

F-56
<PAGE>

MISSION VALLEY RENTALS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Substantially all rental equipment collateralize the above notes.

Subsequent to June 30, 1997, the Company paid $2,766,372 on certain amounts
outstanding under the debt and capital lease agreements. The remaining balance
of $2,335,771 is scheduled for payment in fiscal year 1998.

6. CAPITAL LEASES

The Company leases certain rental equipment under leases accounted for as
capital leases. The following is an analysis of the leased property.

<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31,
1997 1997
-------- ------------
(UNAUDITED)
<S> <C> <C>
Rental equipment.................................... $383,874 $383,874
Less accumulated amortization....................... 39,688 59,688
-------- --------
Net............................................... $344,186 $324,186
======== ========
</TABLE>

Total depreciation expense on assets under capital leases was $39,688 and
$20,000 in the year ended June 30, 1997 and for the six months ended December
31, 1997, respectively.

The following is a schedule by years of future lease payments under capital
leases together with the present value of the net minimum lease payments as of
June 30, 1997:

<TABLE>
<S> <C>
Year ended June 30, 1998........................................ $ 80,223
1999.......................................................... 80,233
2000.......................................................... 80,223
2001.......................................................... 80,223
2002.......................................................... 80,223
Thereafter.................................................... 33,426
--------
Net minimum lease payment....................................... 434,541
Less amount representing interest............................... 82,858
--------
Present value of net minimum lease payments..................... $351,683
========
</TABLE>

7. OPERATING LEASES

The Company leases four store locations on long term leases. The Company is
responsible for all operating expenses of the facilities including property
taxes, assessments, insurance, repairs and maintenance.

Rent expense under these leases totaled $216,725 and $334,725 for the years
ended June 30, 1996 and 1997 and $166,363 and $169,963 for the six months
ended December 31, 1996 and 1997, respectively. Under the lease agreements,
aggregate rent is payable in monthly installments of approximately $28,560.
Under certain lease agreements, the rent shall be increased annually to
reflect the then current fair market rent for the premises, provided that each
annual increase shall not exceed a specific percentage, as defined in the
agreements, of the previous year's rental rate. Future minimum rent
commitments are $342,725 each for years ended June 30, 1998 to June 30, 2004
and $217,563 and $21,000 for fiscal 2005 and 2006 respectively, provided there
is no increase in fair market rent for the premises.

F-57
<PAGE>

MISSION VALLEY RENTALS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

8. INCOME TAXES

The provision (benefit) for income taxes consists of the following:

<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
----------------- ------------------
1996 1997 1996 1997
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Current:.
Federal................................ $184,790 $(85,541) $(22,719) $ 29,842
State.................................. 32,610 -- --
-------- -------- -------- --------
217,400 (85,541) (22,719) 29,842
Deferred:.
Federal................................ 69,580 111,620 74,407 (71,507)
State.................................. 12,279 19,698 12,607 (12,618)
-------- -------- -------- --------
81,859 131,318 87,014 (84,125)
-------- -------- -------- --------
Total.................................. $299,259 $ 45,777 $ 64,295 $(54,283)
======== ======== ======== ========
</TABLE>

Significant components of the Company's deferred tax liability at June 30,
1996 and 1997 and December 31, 1997 (unaudited) are as follows:

<TABLE>
<CAPTION>
JUNE 30
------------------ DECEMBER 31,
1996 1997 1997
-------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Difference in basis of
accounting............. $(33,025) $(41,185) $ --
Cumulative tax
depreciation in excess
of book................ 188,774 319,869 235,744
-------- -------- --------
Deferred tax liability,
net.................... $155,749 $278,684 $235,744
======== ======== ========
</TABLE>

Deferred tax assets at June 30, 1996 and 1997, are included in prepaid
expenses and other assets on the accompanying balance sheet.

9. SUPPLEMENTAL CASH FLOW INFORMATION

For the years ended June 30, 1996 and 1997 and the six months ended December
31, 1996 and 1997, total interest paid was $139,925 and $367,561 and $171,923
and $238,334, respectively.

For the years ended June 30, 1996 and 1997 and the six months ended December
31, 1996 and 1997, total taxes paid were $120,000 and $127,611 and $84,358 and
$ -- , respectively.

For the years ended June 30, 1996 and 1997 and for the six months ended
December 31, 1996 and 1997, the Company purchased $857,779, $3,844,300,
$3,156,404 and $1,297,596, respectively, of equipment which was financed.

For the year ended June 30, 1997 and the six months ended December 31, 1996,
the Company entered into capital lease agreements for rental equipment
totaling $383,874.

10. EMPLOYEE BENEFIT PLAN

On January 1, 1996, the Company established a defined contribution 401(k)
retirement plan which covers substantially all full time employees. The
employees may contribute up to 15% of their weekly gross pay. The Company
matches 20% of the employees contribution. Effective September 1997, the
Company's match

F-58
<PAGE>

MISSION VALLEY RENTALS, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
increased to 70%. Company contributions to the plan were $7,674, $15,211,
$7,807 and $33,159 for the years ended June 30, 1996 and 1997 and for the six
month periods ended December 31, 1996 and 1997, respectively.

11. SUBSEQUENT EVENT

On January 13, 1998, the Company entered into a stock purchase agreement
with United Rentals, Inc. ("United"). Under the terms of the stock purchase
agreement, United purchased all of the issued and outstanding capital stock of
the Company.

F-59
<PAGE>

INDEPENDENT AUDITOR'S REPORT

MERCER Equipment Company:

We have audited the accompanying balance sheets of MERCER Equipment Company
as of December 31, 1996 and October 24, 1997 and the related statements of
income and retained earnings and of cash flows for each of the two years in
the period ended December 31, 1996, and for the period from January 1, 1997 to
October 24, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of MERCER Equipment Company
as of December 31, 1996, and October 24, 1997 and the results of its
operations and its cash flows for each of the two years in the period ended
December 31, 1996 and for the period from January 1, 1997 to October 24, 1997
in conformity with generally accepted accounting principles.

/s/ Webster, Duke & Co. PA

Charlotte, North Carolina
January 21, 1998

F-60
<PAGE>

MERCER EQUIPMENT COMPANY

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER 24,
------------ -----------
1996 1997
------------ -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash................................................ $ 276,639 $ 85,384
Accounts receivable (less allowance for doubtful
accounts: 1996-$182,425, 1997-$254,073)............ 1,819,581 2,398,926
Inventory (Notes 2, 5 and 8)........................ 2,417,425 2,299,512
Miscellaneous receivables........................... 16,604 29,508
Prepaid expenses.................................... - 17,965
----------- -----------
Total current assets.............................. 4,530,249 4,831,295
----------- -----------
RENTAL EQUIPMENT (Notes 2, 5, 8, 9, 10 and 15):
Rental equipment.................................... 14,030,584 15,392,093
Less accumulated depreciation....................... 3,717,218 4,322,744
----------- -----------
Rental equipment, net............................. 10,313,366 11,069,349
----------- -----------
OTHER PROPERTY (Notes 2, 8 and 11):
Other property...................................... 1,003,079 1,091,365
Less accumulated depreciation....................... 395,658 498,962
----------- -----------
Other property, net............................... 607,421 592,403
----------- -----------
OTHER ASSETS (Note 13):
Deposits and other assets........................... 68,639 42,889
Notes receivable-officers........................... 69,980 67,453
----------- -----------
Total other assets................................ 138,619 110,342
----------- -----------
TOTAL............................................. $15,589,655 $16,603,389
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit (Note 4)............................. -- --
Note payable-Bank (Note 4).......................... $ 494,245 $ 5,017,953
Short-term equipment notes (Note 5)................. 189,528 3,619,830
Notes payable-individuals (Notes 6 and 13).......... 609,000 142,000
Current portion of long-term debt................... 2,253,562 56,411
Current portion of capital leases................... 167,445 86,597
Accounts payable.................................... 2,161,340 3,174,282
Accrued expenses.................................... 140,361 254,444
----------- -----------
Total current liabilities......................... 6,015,481 12,351,517
----------- -----------
LONG-TERM DEBT (Non-current Portion):
Revolving credit note (Note 7)...................... 2,430,000 --
Notes payable to bank (Note 8)...................... 1,513,000 --
Notes payable on rental equipment (Note 9).......... 2,195,238 --
Capital leases on rental equipment (Note 10)........ 119,183 176,047
Notes payable on other property..................... 138,543 82,208
----------- -----------
Total long-term debt.............................. 6,395,964 258,255
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock (Notes 2 and 12)....................... 500,001 500,001
Retained earnings (Note 8).......................... 2,678,209 3,493,616
----------- -----------
Total stockholders' equity........................ 3,178,210 3,993,617
----------- -----------
TOTAL............................................. $15,589,655 $16,603,389
=========== ===========
</TABLE>

See notes to financial statements.

F-61
<PAGE>

MERCER EQUIPMENT COMPANY

STATEMENTS OF INCOME AND RETAINED EARNINGS

<TABLE>
<CAPTION>
PERIOD FROM JANUARY 1, 1997
YEAR ENDED DECEMBER 31, TO OCTOBER 24, 1997
------------------------ ---------------------------
1995 1996 1997
----------- ----------- ---------------------------
<S> <C> <C> <C>
REVENUE:
Sales of new
equipment............. $ 2,479,358 $ 3,415,523 $3,709,356
Sales of supplies and
parts................. 1,558,273 2,067,403 1,831,345
----------- ----------- ----------
Total goods sold..... 4,037,631 5,482,926 5,540,701
Sales of rental
equipment............. 872,621 1,102,621 1,876,001
Rental revenues........ 4,950,614 7,380,137 6,891,972
Service department
revenues.............. 357,039 488,216 764,738
----------- ----------- ----------
Total revenues....... 10,217,905 14,453,900 15,073,412
----------- ----------- ----------
DIRECT COSTS OF REVENUE:
Cost of goods sold..... 3,171,168 4,469,790 4,677,328
Cost of rental
equipment sold, net... 530,102 702,254 1,218,507
Rental department
expenses (including
depreciation of
$1,035,352, $1,492,131
and $1,428,312)....... 2,226,420 3,589,936 3,728,374
Service department
expenses.............. 460,382 648,882 706,958
----------- ----------- ----------
Total direct costs of
revenue............. 6,388,072 9,410,862 10,331,167
----------- ----------- ----------
GROSS MARGIN............. 3,829,833 5,043,038 4,742,245
----------- ----------- ----------
OPERATING EXPENSES:
Sales expenses......... 752,722 1,386,812 1,345,705
Administrative and
general expenses...... 1,930,124 2,247,556 2,014,205
----------- ----------- ----------
Total operating
expenses............ 2,682,846 3,634,368 3,359,910
----------- ----------- ----------
MARGIN FROM OPERATIONS... 1,146,987 1,408,670 1,382,335
----------- ----------- ----------
OTHER INCOME (EXPENSE):
Miscellaneous income... 78,258 110,340 147,362
Interest expense....... (486,976) (813,339) (686,512)
----------- ----------- ----------
Total other income
(expense)........... (408,718) (702,999) (539,150)
----------- ----------- ----------
NET INCOME............... 738,269 705,671 843,185
BEGINNING RETAINED
EARNINGS................ 1,450,936 2,045,871 2,678,209
----------- ----------- ----------
Total................ 2,189,205 2,751,542 3,521,394
LESS DIVIDENDS PAID...... 143,334 73,333 27,778
----------- ----------- ----------
ENDING RETAINED
EARNINGS................ $ 2,045,871 $ 2,678,209 $3,493,616
=========== =========== ==========
</TABLE>

See notes to financial statements.

F-62
<PAGE>

MERCER EQUIPMENT COMPANY

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1,
YEAR ENDED DECEMBER 31, 1997 TO
------------------------ OCTOBER 24,
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................. $ 738,269 $ 705,671 $ 843,185
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization........ 1,117,783 1,610,918 1,542,966
Cost of rental equipment sold, net... 530,102 702,254 1,218,507
Cost of other property sold, net..... 14,800
Changes in assets and liabilities:
Accounts receivable, net........... (418,132) (398,900) (579,345)
Inventory.......................... (900,532) (325,339) 117,913
Miscellaneous receivables.......... (5,437) (4,065) (12,904)
Prepaid expenses................... (17,965)
Other assets....................... (16,000) (24,239) 14,400
Accounts payable................... 651,668 558,903 944,210
Accrued expenses................... 29,098 24,329 114,083
----------- ----------- ----------
Net cash provided by operating
activities...................... 1,726,819 2,864,332 4,185,050
----------- ----------- ----------
CASH FLOWS (TO) INVESTING ACTIVITIES:
Purchase of rental equipment........... (2,466,039) (2,001,083) (1,601,703)
Purchase of other property............. (131,695) (171,319) (81,117)
Increase in other asset................ (1,650)
----------- ----------- ----------
Net cash (to) investing
activities...................... (2,599,384) (2,172,402) (1,682,820)
----------- ----------- ----------
CASH FLOWS FROM (TO) FINANCING
ACTIVITIES:
Repayments of notes receivable--
officers.............................. 2,264 3,019 2,527
Repayments by stockholders............. 220,602
Loans to stockholders.................. (247,729)
Repayments under line of credit........ (125,000) (8,792)
Borrowings under line of credit........ --
Repayments of short-term equipment
notes................................. (130,301) (618,854) (597,500)
Repayments of notes payable--
individuals........................... (52,500) (491,000)
Repayments of long term debt........... (1,051,070) (1,950,688) (1,794,942)
Repayments of capital leases........... (22,009) (150,279)
Net borrowings under note payable--
bank.................................. 465,200 29,045 --
Borrowings under revolving credit
note.................................. 1,000,000 1,700,000 200,000
Proceeds from bank loans............... 1,120,588
Proceeds from notes payable
individuals........................... 305,000 23,000 24,000
Dividends paid......................... (143,334 ) (73,333) (27,778)
----------- ----------- ----------
Net cash from (to) financing
activities...................... 1,173,609 (869,988) (2,693,485)
----------- ----------- ----------
NET INCREASE (DECREASE) IN CASH.......... 301,044 (178,058) (191,255)
BEGINNING CASH BALANCE................... 153,653 454,697 276,639
----------- ----------- ----------
ENDING CASH BALANCE...................... $ 454,697 $ 276,639 $ 85,384
=========== =========== ==========
</TABLE>

See notes to financial statements

F-63
<PAGE>

MERCER EQUIPMENT COMPANY

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1996 AND OCTOBER 24, 1997

1. ORGANIZATION AND BUSINESS

Organization--MERCER Equipment Company (MERCER) is a North Carolina
corporation. For income tax purposes, it has elected treatment under
Subchapter S of the Internal Revenue Code of 1986.

Business--MERCER sells, rents, and repairs construction equipment, primarily
to contractors, industry, utilities, and municipalities. MERCER operates two
branches in the Charlotte, North Carolina area and one branch in Greensboro,
North Carolina.

2. ACCOUNTING PRINCIPLES

Basis of Accounting--MERCER prepares its financial statements on the accrual
basis of accounting.

Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reported period. Actual results could differ from those estimates.

Inventory--Inventory consists of new equipment and merchandise for resale
and of parts for resale or repair of equipment.

MERCER records inventory using the last-in, first-out (LIFO) cost
assumptions. MERCER maintains separate LIFO pools for new equipment,
merchandise, and parts; and uses government indices to determine the cost of
LIFO layers.

At December 31, 1996 and October 24, 1997, the difference between LIFO and
first-in, first-out cost was $310,346 and $347,936 respectively.

Rental Equipment--MERCER records rental equipment at cost and depreciates
that cost using the straight-line method over 60 months (50 months for rental
equipment purchased after December 31, 1995). MERCER estimates the salvage
value on rental equipment to be 28% (50% for rental equipment purchased after
December 31, 1995). (See Note 15).

Other Property--MERCER records other property at cost and depreciates that
cost using the straight-line method over lives of 5 or 7 years.

Notes Receivable--Officers--At December 31, 1996, and October 24, 1997 the
notes receivable from officers are due in monthly payments of $600, including
principal and interest, for 15 years. At December 31, 1995, the notes
receivable from officers were due in quarterly installments of $1,264,
including principal and interest, for 14 years.

Common Stock--MERCER has two classes of common stock: Class A common stock
which has voting rights and Class B common stock which has no voting rights.
The preferences, limitations, and relative rights of classes are the same
except the nonvoting stock has no voting rights other than in those cases in
which nonvoting stock is expressly granted voting rights under North Carolina
law.

F-64
<PAGE>

MERCER EQUIPMENT COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

At December 31, 1996 and October 24, 1997, the number of shares authorized
and outstanding of each class of stock was as follows:

<TABLE>
<CAPTION>
AUTHORIZED OUTSTANDING
---------- -----------
<S> <C> <C>
Class A, voting....................................... 25,000 16,667
Class B, nonvoting.................................... 175,000 150,000
</TABLE>

Rental Revenue--MERCER generally rents equipment under short-term agreements
of one month or less and accounts for these agreements as operating leases.

Lease Expense--MERCER leases its facilities and certain delivery vehicles
under leases classified as operating leases. MERCER leases certain rental
equipment and new equipment inventory under leases classified as capital
leases.

Income Taxes--MERCER has elected taxation under Subchapter S of the Internal
Revenue Code of 1986 and its stockholders report the taxable income or loss of
the company on their individual income tax returns. For income tax purposes,
MERCER generally uses accelerated depreciation methods (without salvage value)
and deducts bad debts as they are written off.

Statement of Cash Flows--MERCER considers all instruments with a maturity of
three months or less to be cash equivalents. MERCER paid interest expense and
purchase various assets through incurrence of notes payable as follows:

<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1,
YEAR ENDED DECEMBER 1997 TO
31 OCTOBER 24,
1995 1996 1997
---------- ---------- -----------
<S> <C> <C> <C>
Interest paid................................ $ 464,090 $ 807,169 $ 683,596
Debt incurred to purchase:
Inventory.................................. 357,306 88,509
Rental equipment........................... 2,300,291 2,530,234 1,801,029
Fixed assets............................... 142,174 163,756 7,169
</TABLE>

3. PURCHASE OF BUSINESS

On September 29, 1995, MERCER acquired the branch retail operations of
Builders Equipment & Tool Co., Inc. (BETCO) in a transaction accounted for as
a purchase. The accompanying financial statements include the results of the
Greensboro operation from that date. MERCER purchased substantially all of the
resale and rental inventory and the fixed assets at the branch. The purchase
price was $600,000. There were no intangible assets purchased nor are there
any contingent payments or commitments.

4. NOTE PAYABLE--BANK

At December 31, 1996, MERCER had a note payable to a bank that is due May
31, 1997. The note provides for monthly payment of interest at the bank's
prime rate plus 1/2%. The original amount of the note was $500,000.

In connection with the purchase of MERCER's common stock (see Note 16),
substantially all of the outstanding debt at October 24, 1997 was paid off.

5. SHORT-TERM EQUIPMENT NOTES

MERCER has purchased rental equipment and inventory with short-term (less
than 12 months) notes payable with a nominal interest charge. At December 31,
1996, rental equipment and inventory with a cost of $434,972 and $135,522,
respectively, is pledged as collateral.

F-65
<PAGE>

MERCER EQUIPMENT COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

In connection with the purchase of MERCERs common stock (see Note 16),
substantially all of the outstanding debt at October 24, 1997 was paid off.

6. NOTES PAYABLE--INDIVIDUALS

Notes payable--individuals provide for quarterly interest payments at the
Wall Street prime rate plus one percent and allows MERCER to delay payment of
principal for up to one year and a day after request. At December 31, 1996 and
October 24, 1997, $178,000 and $ -- , respectively, of this amount was due
stockholders.

7. REVOLVING CREDIT NOTES

MERCER has a $3,000,000 revolving credit note with a bank. At December 31,
1996 MERCER had termed the revolver's outstanding balance and will repay the
principal over 36 months beginning in June 1997. The repayment provides for
monthly payment of $45,000 principal plus interest at the bank's prime rate
plus 1/4%. At December 31, 1995 and during 1996, only interest payments were
due on the note (see Note 9 for collateral).

In connection with the purchase of MERCERs common stock (see Note 16),
substantially all of the outstanding debt at October 24, 1997 was paid off.

8. NOTES PAYABLE TO BANK

MERCER's note payable to bank consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
Bank note--8.25%, principal of $49,750 plus interest paid
monthly through November 1998; balance of $635,750 due December
1998........................................................... $1,780,000
Bank note--interest at prime plus 1/2%, principal of $10,000
plus interest paid monthly through August 1998; $250,000 due
September 30, 1998............................................. 450,000
----------
Total........................................................... 2,230,000
Less current portion............................................ 717,000
----------
Noncurrent portion.............................................. $1,513,000
==========
</TABLE>

All accounts receivable and inventory and rental equipment, unless otherwise
encumbered, are given as security for the notes payable to bank.

The loan agreement with the bank provides for maintenance of certain
absolute and ratio amounts relating to working capital, net worth, cash flow
coverage, and debt/equity and limits amounts that can be paid in dividends. At
December 31, 1996, MERCER had obtained a waiver on the cash flow coverage
ratio.

In connection with the purchase of MERCERs common stock (see Note 16),
substantially all of the outstanding debt at October 24, 1997 was paid off.

9. NOTES PAYABLE ON RENTAL EQUIPMENT

MERCER finances purchases of rental equipment and inventory through various
arrangements with vendors, their related finance entities, and other lenders.
These notes provide for monthly payments of either a fixed principal plus
interest or a level payment of principal and interest.

These note have terms of 36 to 60 months and generally provide for
accelerated repayment if the underlying equipment is sold. At December 31,
1995 and 1996, the weighted interest rates were 10.1%, and 8.6%, respectively.

F-66
<PAGE>

MERCER EQUIPMENT COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

At December 31, 1996, $480,801 of floor plan notes, which have not yet begun
to require payments of principal or interest, are included in notes payable on
rental equipment. The financial statements assume their conversion upon
expiration of the floor plan period.

At December 31, 1996, rental equipment and inventory of $4,637,033 and
$88,509, respectively, were collateral for all of the above notes.

In connection with the purchase of MERCER's common stock (see Note 16),
substantially all of the outstanding debt at October 24, 1997 was paid off.

10. CAPITAL LEASES

MERCER leases certain rental equipment under leases accounted for as capital
leases. The following is an analysis of the leased property:

<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER 24,
------------ -----------
1996 1997
------------ -----------
<S> <C> <C>
Rental equipment.................................... $408,081 $386,153
Less accumulated amortization....................... 78,561 138,706
-------- --------
Net............................................... $329,520 $247,447
======== ========
</TABLE>
The following is a schedule by years of future lease payments under capital
leases together with the present value of the net minimum lease payments as of
October 24, 1997:
<TABLE>
<S> <C>
Year ended December 31, 1997....................................... $106,795
1998............................................................. 98,730
1999............................................................. 74,158
2000............................................................. 23,177
--------
Net minimum lease payments......................................... 302,860
Less amount representing interest.................................. 40,216
--------
Present value of net minimum lease payments........................ 262,644
Less current portion............................................... 86,597
--------
Long-term portion.................................................. $176,047
========
</TABLE>

11. NOTES PAYABLE ON OTHER PROPERTY

The notes payable on other property provide for monthly payment of principal
and interest at rates from 9.0% to 10.8%. At December 31, 1996 and October 24,
1997, related assets with a cost of $287,430 and $232,599 are collateral for
the notes.

The annual amounts of principal due for the next five years is as follows:
1997--$56,411; 1998--$50,318; 1999--$25,082; and 2000--$6,808.

12. COMMITMENTS AND CONTINGENCIES

As of December 31, 1996 and October 24, 1997, MERCER's cash balance had
$100,000 of FDIC insurance and is at one bank.

F-67
<PAGE>

MERCER EQUIPMENT COMPANY

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

As of October 24, 1997, MERCER leased all of its facilities from a limited
liability company (LLC) whose members own 72% of MERCER's outstanding stock.
The leases provided for initial terms of five to seven years; two of the
leases provide for annual cost of living increases and have renewal options of
five years. MERCER is also responsible for the property taxes, insurance, and
repairs (see Note 13). In connection with the sale of MERCER's common stock
(see Note 16), the leases were rewritten to provide for an initial term of ten
years with two five-year options. The leases provide for minimum rentals of
$28,000 per month, after five years, minimum rents will be adjusted for
changes in the Consumer Price Index. MERCER has also guaranteed debt of
approximately $2,000,000 that the LLC has borrowed against the buildings.

MERCER had a stock repurchase agreement with two stockholders, each owning
30,000 shares of the outstanding Class B common stock. Among other provisions,
the stock repurchase agreement allows MERCER first refusal on a sale of such
shares at no less than the book value per share of the stock. At December 31,
1996 the minimum purchase price under this plan was $1,121,950. MERCER had a
salary continuation agreement with the same two stockholders. MERCER has
agreed to pay these stockholders' beneficiaries an amount equal to twice the
prior year's wages. This amount is payable over 24 months, and at December 31,
1996, the potential obligation under the salary continuation plan was
$672,672. In connection with the Purchase of MERCER's common stock both of
these agreements were canceled. (See Note 16)

13. RELATED PARTIES

At December 31, 1996 and October 24, 1997, other assets includes rental
deposits of $42,889 and $42,889, respectively, with the LLC described in Note
12. For the years ended December 31, 1995 and 1996 and for the period from
January 1, 1997 to October 24, 1997, MERCER paid building rentals to the LLC
of $149,500, $278,000 and $273,000, respectively.

For the years ended December 31, 1995 and 1996 and for period from January
1, 1997 to October 24, 1997, MERCER paid interest of $17,808, $15,672 and
$14,576, respectively to stockholders on the notes payable--individuals.

14. PROFIT-SHARING PLAN

MERCER has adopted a profit-sharing plan that covers substantially all
employees and provides for discretionary employer and voluntary employee
contributions. For the years ended December 31, 1995, and 1996, and for the
period from January 1, 1997 to October 24, 1997, no profit-sharing
contribution was made. For the years ended December 31, 1995, and 1996, and
for the period from January 1, 1997 to October 24, 1997, MERCER made matching
payments of $21,969, $14,777, and $24,287, respectively under Section 401(k)
of the Internal Revenue Code of 1986.

15. CHANGE IN ACCOUNTING ESTIMATE

In 1996 MERCER changed the depreciable life and estimated salvage value of
its rental equipment purchased after December 31, 1995 from 60 months to 50
months and from 28% to 50%. The effect of these changes in estimated life and
salvage value was to decrease depreciation on rental equipment by $58,859.

16. SUBSEQUENT EVENT

On October 24, 1997, United Rentals, Inc. purchased all of MERCER's issued
and outstanding common stock.

F-68
<PAGE>

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
A&A Tool Rentals & Sales, Inc.:

We have audited the accompanying consolidated balance sheets of A&A Tool
Rentals & Sales, Inc. and subsidiary as of October 31, 1995 and 1996 and
October 19, 1997 and the related consolidated statements of operations,
stockholders' equity, and cash flows for the years ended October 31, 1995 and
1996, and the period from November 1, 1996 to October 19, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of A&A Tool
Rentals & Sales, Inc. and subsidiary as of October 31, 1995 and 1996 and
October 19, 1997 and the results of their operations and their cash flows for
the years ended October 31, 1995 and 1996, and the period from November 1,
1996 to October 19, 1997, in conformity with generally accepted accounting
principles.

/s/ KPMG Peat Marwick LLP

Sacramento, California
November 20, 1997

F-69
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
OCTOBER 31,
--------------------- OCTOBER 19, JULY 31,
1995 1996 1997 1997
---------- ---------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Cash............................ $ 336,304 $ 308,331 $ 108,327 $ 187,082
Trade accounts receivable, less
allowance for doubtful accounts
of $85,000 at October 31, 1995,
$80,000 at October 31, 1996 and
at October 19, 1997, and
$94,608 at July 31, 1997
(notes 2 and 3)................ 1,360,476 1,416,142 1,415,775 1,324,684
Merchandise inventory........... 750,556 847,035 862,200 906,969
Rental equipment, primarily ma-
chinery, at cost, net of accu-
mulated depreciation and amor-
tization of $5,388,046 at Octo-
ber 31, 1995, $5,909,751 at Oc-
tober 31, 1996, $6,822,441 at
October 19, 1997, and
$6,727,264 at July 31, 1997
(notes 2 and 3)................ 2,136,948 3,190,093 2,780,854 3,133,863
Operating property and equip-
ment, net of accumulated depre-
ciation and amortization of
$967,822 at October 31, 1995,
$912,230 at October 31, 1996,
$955,007 at October 19, 1997,
and $975,498 at July 31, 1997
(notes 2 and 3)................ 356,336 384,759 281,593 306,415
Due from related party (note
5)............................. 229,485 228,737 332,613 316,364
Prepaid expenses and other as-
sets........................... 183,681 234,976 303,553 152,251
---------- ---------- ---------- ----------
Total assets................ $5,353,786 $6,610,073 $6,084,915 $6,327,628
========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Short-term debt (note 2)........ $1,679,244 $ 90,400 $ 449,670 $ 484,700
Accounts payable................ 705,460 766,465 1,040,494 703,583
Accrued liabilities............. 235,258 244,938 203,709 221,763
Income tax payable.............. -- 6,019 12,262 2,992
Long-term debt and capital lease
obligations (note 3)........... 1,723,384 4,351,394 3,463,807 3,868,069
---------- ---------- ---------- ----------
Total liabilities........... 4,343,346 5,459,216 5,169,942 5,281,107
---------- ---------- ---------- ----------
Commitments (notes 6 and 9).....
Stockholders' equity:
Common stock, Class A--voting
par value $.10. Authorized
2,000,000 shares; issued and
outstanding 720,000 shares... 72,000 72,000 72,000 72,000
Common stock, Class B--nonvot-
ing. Authorized 5,000,000
shares; issued and outstand-
ing 335,586 shares at October
31, 1995, 277,172 shares at
October 31, 1996, 272,491
shares at October 19, 1997,
and 275,242 shares at July
31, 1997..................... 457,813 395,201 378,714 393,058
Retained earnings............. 480,627 683,656 464,259 581,463
---------- ---------- ---------- ----------
Total stockholders' equity.. 1,010,440 1,150,857 914,973 1,046,521
---------- ---------- ---------- ----------
Total liabilities and
stockholders' equity....... $5,353,786 $6,610,073 $6,084,915 $6,327,628
========== ========== ========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-70
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM
NOVEMBER 1, NINE MONTHS
YEAR ENDED OCTOBER 31, 1996 TO ENDED JULY 31,
------------------------ OCTOBER 19, ----------------------
1995 1996 1997 1996 1997
----------- ----------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Equipment rentals..... $ 4,800,767 $ 5,918,148 $6,022,196 $4,165,881 $4,501,537
New equipment sales... 4,283,294 4,463,117 4,355,965 3,310,409 3,228,472
Sales of parts, sup-
plies and rent-
al equipment......... 848,193 1,027,943 778,141 824,910 657,572
Other................. 237,205 296,926 290,140 198,144 215,542
----------- ----------- ---------- ---------- ----------
Total revenues.......... 10,169,459 11,706,134 11,446,442 8,499,344 8,603,123
----------- ----------- ---------- ---------- ----------
Costs of Revenues:
Cost of equipment
rentals, excluding
equipment rental de-
preciation and
amortization......... 2,049,172 2,542,965 2,583,884 1,976,183 2,097,280
Depreciation and amor-
tization, equipment
rentals.............. 1,040,233 1,382,048 1,465,586 902,347 1,193,986
Cost of new equipment
sales................ 4,054,467 4,304,301 4,148,874 3,234,457 3,016,957
Cost of sales of
parts, supplies, and
equipment............ 598,545 622,956 595,424 330,714 296,725
Other................. 38,358 32,582 31,339 24,337 33,115
----------- ----------- ---------- ---------- ----------
Total costs of
revenues............... 7,780,775 8,884,852 8,825,107 6,468,038 6,638,063
----------- ----------- ---------- ---------- ----------
Gross Profit............ 2,388,684 2,821,282 2,621,335 2,031,306 1,965,060
Selling, general and
administration....... 2,063,730 2,215,936 2,178,383 1,614,263 1,696,104
Non-rental
depreciation and
amortization......... 107,390 120,757 124,648 88,896 95,171
----------- ----------- ---------- ---------- ----------
Operating income
(loss)................. 217,564 484,589 318,304 328,147 173,785
Other income
(expense)............ 50,090 116,539 80,080 61,119 105,777
----------- ----------- ---------- ---------- ----------
Income before interest
and taxes.............. 267,654 601,128 398,384 389,266 279,562
----------- ----------- ---------- ---------- ----------
Interest income....... 56,053 54,993 39,967 51,898 34,590
Interest expense...... (324,957) (401,204) (642,478) (264,613) (410,345)
----------- ----------- ---------- ---------- ----------
Net interest
expense............ (268,904) (346,211) (602,511) (212,715) (375,755)
----------- ----------- ---------- ---------- ----------
Income (loss) before
income taxes........... (1,250) 254,917 (204,127) 176,551 (96,193)
Income tax expense
(note 4)............. (1,600) (7,619) (15,270) (1,600) (6,000)
----------- ----------- ---------- ---------- ----------
Income (loss) from
continuing operations.. (2,850) 247,298 (219,397) 174,951 (102,193)
Loss from operation of
discontinued
subsidiary (note 1).. (55,929) -- -- -- --
Loss from disposal of
discontinued
subsidiary (note 1).. -- (44,269) -- (16,318) --
----------- ----------- ---------- ---------- ----------
Net income (loss)....... $ (58,779) $ 203,029 $ (219,397) $ 158,633 $ (102,193)
=========== =========== ========== ========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-71
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON COMMON
STOCK STOCK
CLASS A CLASS B
--------------- ----------------- RETAINED
SHARES AMOUNT SHARES AMOUNT EARNINGS TOTAL
------- ------- ------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balances at October 31,
1994................... 720,000 $72,000 363,433 $487,609 $539,406 $1,099,015
Purchase Class B common
stock from ESOP........ -- -- (27,847) (29,796) -- (29,796)
Net loss................ -- -- -- -- (58,779) (58,779)
------- ------- ------- -------- -------- ----------
Balances at October 31,
1995................... 720,000 72,000 335,586 457,813 480,627 1,010,440
Purchase Class B common
stock from ESOP........ -- -- (58,414) (62,612) -- (62,612)
Net income.............. -- -- -- -- 203,029 203,029
------- ------- ------- -------- -------- ----------
Balances at October 31,
1996................... 720,000 72,000 277,172 395,201 683,656 1,150,857
Purchase Class B common
stock from ESOP........ -- -- (4,681) (16,487) -- (16,487)
Net loss................ -- -- -- -- (219,397) (219,397)
------- ------- ------- -------- -------- ----------
Balances at October 19,
1997................... 720,000 $72,000 272,491 $378,714 $464,259 $ 914,973
======= ======= ======= ======== ======== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-72
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED OCTOBER 31, NOVEMBER 1, 1996 NINE MONTHS ENDED JULY 31,
------------------------ TO OCTOBER 19, ----------------------------
1995 1996 1997 1996 1997
----------- ----------- ---------------- ----------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss)...... $ (58,779) $ 203,029 $ (219,397) $ 158,633 $ (102,193)
Adjustments to recon-
cile net income (loss)
to net cash provided
by operating activi-
ties:
Depreciation and
amortization.......... 1,147,623 1,502,805 1,590,234 991,243 1,289,157
Provision for bad
debts................. 71,600 96,216 73,894 52,515 59,985
Provision for write-
down of inventory..... 31,709 -- 35,403 -- 35,403
Gain on sale of equip-
ment.................. (213,049) (364,504) (220,017) (196,325) (167,944)
Changes in operating
assets:
(Increase) decrease
in trade accounts
receivable........... (282,115) (151,882) (73,527) (190,069) 31,473
(Increase) decrease
in related party re-
ceivables............ (54,741) 748 (103,876) (30,385) (87,627)
(Increase) decrease
in merchandise in-
ventory.............. 38,955 (96,479) (50,568) (348,187) (95,337)
(Increase) decrease
in prepaid expenses
and other assets..... (29,102) 10,934 (174,821) (42,445) (50,309)
Increase (decrease)
in accounts payable,
trade................ 18,196 61,005 274,029 114,982 (62,882)
Increase (decrease)
in accrued liabili-
ties................. 52,801 9,680 (41,229) (39,228) (23,175)
Decrease in deferred
revenue.............. (4,440) -- -- -- --
Increase (decrease)
in income tax pay-
able................. -- 6,019 6,243 -- (3,027)
----------- ----------- ---------- ----------- ----------
Net cash provided by
operating
activities.......... 718,658 1,277,571 1,096,368 470,734 823,524
----------- ----------- ---------- ----------- ----------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Proceeds from the sale
of rental equipment
and operating property
and equipment......... 277,390 469,489 348,374 245,232 213,013
Purchases of rental
equipment and operat-
ing property
and equipment......... (1,620,011) (2,689,358) (1,206,186) (2,042,083) (1,199,652)
Proceeds from sale of
marketable securi-
ties.................. 4,954 2,514 -- 2,514 --
----------- ----------- ---------- ----------- ----------
Net cash used in
investing
activities.......... (1,337,667) (2,217,355) (857,812) (1,794,337) (986,639)
----------- ----------- ---------- ----------- ----------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Borrowings on long-term
debt.................. 788,967 3,062,482 855,435 3,224,342 828,345
Payments on long-term
debt.................. (574,595) (1,121,435) (1,743,022) (572,655) (1,311,670)
Net borrowings (pay-
ments) on short-term
debt.................. 513,771 (901,881) 359,270 (1,553,999) 394,300
Premiums paid for offi-
cers' life insurance.. (60,042) (64,743) (93,756) (50,799) (66,966)
Drawings on cash sur-
render value of offi-
cers' life insurance.. -- -- 200,000 -- 200,000
Purchase of Class B
common stock.......... (29,796) (62,612) (16,487) (59,590) (2,143)
----------- ----------- ---------- ----------- ----------
Net cash provided by
(used in) financing
activities.......... 638,305 911,811 (438,560) 987,299 41,866
----------- ----------- ---------- ----------- ----------
Net increase (de-
crease) in cash..... 19,296 (27,973) (200,004) (336,304) (121,249)
Cash at beginning of
period................. 317,008 336,304 308,331 336,304 308,331
----------- ----------- ---------- ----------- ----------
Cash at end of period... $ 336,304 $ 308,331 $ 108,327 $ -- $ 187,082
=========== =========== ========== =========== ==========
SUPPLEMENTAL SCHEDULE OF
CASH FLOW INFORMATION:
Cash paid during the
period for:
Interest............... $ 324,957 $ 401,204 $ 516,307 $ 264,613 $ 410,345
=========== =========== ========== =========== ==========
Income taxes........... $ 1,600 $ 1,600 $ 4,606 $ 1,600 $ 10,627
=========== =========== ========== =========== ==========
NONCASH INVESTING AND
FINANCING ACTIVITIES:
Sale of property and
equipment for
promissory note....... $ 10,000 $ -- $ -- $ -- $ --
=========== =========== ========== =========== ==========
Conversion of short-
term debt to long-term
debt.................. $ -- $ 686,963 $ -- $ -- $ --
=========== =========== ========== =========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-73
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 1995 AND 1996 AND PERIOD FROM NOVEMBER 1, 1996 TO OCTOBER 19, 1997
(THE INFORMATION AS OF JULY 31, 1997 AND FOR THE NINE MONTHS ENDED JULY 31,
1997 AND 1996 IS UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Organization and Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiary Operations Management Systems,
Inc. (OMS). The Company rents and sells construction and industrial supplies
and power equipment in Northern California. OMS marketed and sold computer
hardware and software to construction related businesses. All significant
intercompany accounts and transactions were eliminated in consolidation. The
nature of the Company's business is such that short-term obligations are
typically met by cash flow generated from long-term assets. Consequently,
consistent with industry practice, the accompanying consolidated balance
sheets are presented on an unclassified basis.

As of October 31, 1995, the Company decided to discontinue the operations of
its subsidiary, OMS. Certain assets of OMS were sold as of October 31, 1995.
The Company disposed of the remaining assets and liabilities of OMS, which
included cash, accounts receivable, inventory, property and equipment,
accounts payable and accrued liabilities, during fiscal year 1996. The Company
recognized a loss on disposal of the remaining assets. The loss from the
disposal of OMS assets was $44,269 for the year ended October 31, 1996 and
$16,318 for the nine months ended July 31, 1996. The loss from the operations
of OMS was $55,929 for the year ending October 31, 1995.

(b) Interim Financial Statements

The accompanying consolidated balance sheet at July 31, 1997 and the
consolidated statements of operations, stockholders' equity and cash flows for
the nine month periods ended July 31, 1996 and 1997 are unaudited and have
been prepared on the same basis as the audited consolidated financial
statements included herein. In the opinion of management, such unaudited
consolidated financial statements include all adjustments necessary to present
fairly the information set forth therein, which consist solely of normal
recurring adjustments. The results of operations for such interim periods are
not necessarily indicative of results for the full year.

Merchandise inventory is stated at the lower of cost or market. Cost is
determined using the weighted-average method.

(d) Revenue Recognition

Revenue related to the sale of construction and industrial supplies and
power equipment is recognized at the point of sale. Revenue related to the
rental of construction and industrial power equipment is recognized at the
time of return for rentals of twenty-eight days or less, and ratably over the
contract term for rentals in excess of twenty-eight days.

(e) Property and Equipment

Property and equipment are stated at cost and consist of rental equipment
and operating property and equipment. Property and equipment under capital
leases are stated at the present value of minimum lease payments.

Depreciation on property and equipment is calculated using an accelerated
method.

F-74
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Depreciation for property and equipment is taken over the asset's useful
life of 5 years, except for leasehold improvements which are amortized over 10
to 20 years.

(f) Other Assets

Other assets consist primarily of the cash surrender value of officers' life
insurance net of loans against the cash surrender value of the policies and
unbilled rental revenue. The loans outstanding were $410,000 at October 31,
1995 and 1996, and $610,000 at October 19, 1997 and July 31, 1997. The Company
is named beneficiary under the life insurance policy. Unbilled rental revenue
represents the revenue recognized on contracts over twenty-eight days, but not
billed. At October 19, 1997 unbilled rental revenue was $180,178.

(g) Income Taxes

The Company accounts for income taxes using the asset and liability method
under which deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Under the asset
and liability method, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

(h) Use of Estimates

(i) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

The Company adopted the provisions of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
on November 1, 1996. This Statement requires that long-lived assets and
certain identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which
the carrying amount of the assets exceed the fair value of the assets. Assets
to be disposed of are reported at the lower of the carrying amount or fair
value less costs to sell. Adoption of this statement did not have a material
impact on the Company's financial position, results of operations, or
liquidity.

(j) Reclassifications

Certain amounts in the 1995 and 1996 consolidated financial statements have
been reclassified to conform to the 1997 consolidated financial statement
presentation.

(2) SHORT-TERM DEBT

As of October 31, 1995 and 1996, the Company had borrowed $255,525 and
$90,400, respectively, on a credit facility that allows the Company to borrow
up to $500,000 at the bank's prime rate (9.25% and 8.25% at October 31, 1995
and 1996, respectively) plus 2%. Borrowings under this facility are
collateralized by trade

F-75
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

accounts receivable. As of October 31, 1995, the Company had also borrowed
$1,303,719 on three additional credit facilities that allowed borrowing up to
$1,800,000 bearing interest at the bank's prime rate (9.25% at October 31,
1995) plus 2%. Borrowings under these facilities were collateralized by
equipment. In addition, as of October 31, 1995, the Company had borrowed
$120,000 on an additional credit facility that allowed borrowings of up to
$200,000 bearing interest at the bank's prime rate (9.25% at October 31, 1995)
plus 2%. Borrowings under this facility were unsecured.

In 1997, the Company had borrowed on a credit facility that allows the
Company to borrow up to $500,000 at the bank's prime rate (8.5% at October 19,
1997 and July 31, 1997) plus 2%. At October 19, 1997 and July 31, 1997, the
amounts outstanding were $449,670 and $484,700, respectively.

(3) LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

Long-term debt and capital lease obligations consist of the following:

<TABLE>
<CAPTION>
OCTOBER 31,
--------------------- OCTOBER 19, JULY 31,
1995 1996 1997 1997
---------- ---------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CURRENT PAYOR AND TERMS
Union Safe Deposit Bank--
Various notes with combined
monthly payments of $54,592
including interest at prime
plus 2%, due from 1996
through 1999. Collateralized
by equipment and accounts
receivable.................. $ 62,547 $1,382,482 $851,741 $989,334
American Equipment Leasing--
Various leases with combined
monthly payments of $24,149
including interest ranging
from 11.5% to 12%, due from
1997 through 1998.
Collateralized by
equipment................... 351,766 510,567 377,619 381,122
Atlas Copco, Inc.--Various
notes with a combined
monthly payment of $22,212
including interest ranging
from 8.5% to 12.36%, due
from 1996 through 1998.
Collateralized by
equipment................... 190,310 352,446 257,875 323,727
Clark Equipment Credit Co.--
Various notes with a
combined monthly payment of
$3,546 including interest
ranging from 8.7% to 12.39%,
due from 1996 through 1999.
Collateralized by
equipment................... 236,363 105,889 39,083 45,433
Ingersoll-Rand--One note with
a monthly payment of $3,254
including interest at 9.75%,
due in 1999. Collateralized
by equipment................ -- 91,121 52,069 61,832
Prospect Leasing--Two leases
with a combined monthly
payment of $1,798 including
interest at 10%, due in
1998. Collateralized by
equipment................... -- 36,364 18,712 24,106
</TABLE>

F-76
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

<TABLE>
<CAPTION>
OCTOBER 31,
--------------------- OCTOBER 19, JULY 31,
1995 1996 1997 1997
---------- ---------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CURRENT PAYOR AND TERMS--
(CONTINUED)
Miller Electric Finance--Two
notes with a combined monthly
payment of $3,964 including
interest ranging from 10.25%
to 11.3%, due in 1999.
Collateralized by equipment.. -- 72,746 89,813 101,704
The Associates--Various notes
and leases with a combined
monthly payment of $35,365
including interest ranging
from 9% to 13.5%, due from
1996 through 2000.
Collateralized by equipment.. 609,507 924,064 1,002,327 1,175,627
JI Case Credit Corporation--
Three notes with combined
monthly payments of $14,428
including interest ranging
from 6.9% to 8.2%, due from
1997 through 2000.
Collateralized by equipment.. 268,365 515,184 349,235 346,540
Orix Credit--One note with a
monthly payment of $1,835
including interest at 9.5%,
due in 1996. Collateralized
by equipment................. 14,681 -- -- --
John Deere--One note with a
monthly payment of $885
including interest at 8.75%,
due in 1998. Collateralized
by equipment................. 24,779 14,159 3,540 6,195
Caterpillar Financial
Services--Various notes with
a combined monthly payment of
$12,279 including interest
ranging from 9.4% to 11.3%,
due from 1998 through 2001.
Collateralized by equipment.. 65,842 546,420 458,438 493,833
Colonial Pacific Leasing--One
note with a monthly payment
of $1,323 including interest
at 10%, due in 1997.
Collateralized by equipment.. 21,171 5,293 -- --
Newcourt Financial--Two notes
with a combined monthly
payment of $4,207 including
interest ranging from 10% to
11%, due in 1998 and 2001.
Collateralized by equipment.. 50,638 196,194 148,508 158,329
Other......................... 30,730 80,773 62,181 105,030
---------- ---------- ---------- ----------
Total long-term debt.......... 1,926,699 4,833,702 3,711,141 4,212,812
Less amounts representing
interest..................... 203,315 482,308 247,334 344,743
---------- ---------- ---------- ----------
Long-term debt, net of
interest..................... $1,723,384 $4,351,394 $3,463,807 $3,868,069
========== ========== ========== ==========
</TABLE>

Subsequent to October 19, 1997, all amounts outstanding under the long-term
debt agreements and capital lease agreements were paid except for $18,546
which is scheduled for payment in fiscal year 1998.

F-77
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(4) INCOME TAXES

Income tax expense consists of the following:

<TABLE>
<CAPTION>
PERIOD FROM
YEAR ENDED NOVEMBER 1, NINE MONTHS
OCTOBER 31, 1996 TO ENDED JULY 31,
------------- OCTOBER 19, ---------------
1995 1996 1997 1996 1997
------ ------ ----------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current............................ $1,600 $7,619 $15,270 $ 1,600 $ 6,000
Deferred........................... -- -- -- -- --
------ ------ ------- ------- -------
$1,600 $7,619 $15,270 $ 1,600 $ 6,000
====== ====== ======= ======= =======
</TABLE>

Deferred tax assets and deferred tax liabilities are comprised of the
following:

<TABLE>
<CAPTION>
OCTOBER 31,
-------------------- OCTOBER 19, JULY 31,
1995 1996 1997 1997
--------- --------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Current deferred tax assets:
Allowance for bad debts..... $ 36,800 $ 34,600 $ 34,600 $ 41,000
Inventory reserve........... 13,800 -- 6,600 --
Noncurrent deferred tax
assets:
Depreciation and
amortization expense....... 12,700 12,000 14,000 11,300
Net operating loss.......... 285,400 188,300 236,800 198,800
Alternative minimum taxes... 12,300 25,500 39,000 29,900
--------- --------- --------- ---------
Total deferred tax assets... 361,000 260,400 331,000 281,000
Less: Valuation allowance... (361,000) (260,400) (331,000) (281,000)
--------- --------- --------- ---------
Total deferred tax assets... -- -- -- --
Total deferred tax
liabilities................ -- -- -- --
--------- --------- --------- ---------
Net deferred tax
asset/liability.......... $ -- $ -- $ -- $ --
========= ========= ========= =========
</TABLE>

The effective rate for income tax expense differs from the statutory tax
rate of 34% when applied to income (loss) from continuing operations before
income taxes as a result of the following:

<TABLE>
<CAPTION>
OCTOBER 31,
------------ OCTOBER 19, JULY 31,
1995 1996 1997 1997
----- ----- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Expected U.S. Federal income tax...... (34%) 34% (34%) (34%)
State franchise tax, net.............. 128% 1% -- 2%
Net operating loss carryforward....... -- (34%) -- --
Effect of valuation allowance......... 34% -- 34% 34%
Alternative minimum tax............... -- 2% 7% 4%
----- ----- --- ----
Total............................. 128% 3% 7% 6%
===== ===== === ====
</TABLE>

F-78
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The net change in the total valuation allowance for the year ended October
31, 1995 and 1996 and the period from November 1, 1996 to October 19, 1997 was
an increase of $8,000, a decrease of $100,600 and an increase of $70,600,
respectively.

(5) RELATED PARTY TRANSACTIONS

Building

The Company leased its Stockton, California premises from officers and
stockholders of the Company. The Company executed a new five year lease on
June 1, 1993 with monthly rent of $21,500. On October 20, 1997, this lease was
amended for an additional five years with monthly rent of $17,000. In
addition, the Company as lessee is to pay all taxes and insurance relating to
the property. At October 19, 1997, the remaining commitment under this lease,
as amended, is $1,020,000 plus property taxes and insurance.

Due From Related Party

Due from related party comprise the following:

<TABLE>
<CAPTION>
OCTOBER 31,
----------------- OCTOBER 19, JULY 31,
DUE FROM 1995 1996 1997 1997
-------- -------- -------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
President and shareholder.......... $206,296 $228,737 $317,613 $316,364
Vice president and shareholder..... 23,189 -- 15,000 --
-------- -------- -------- --------
$229,485 $228,737 $332,613 $316,364
======== ======== ======== ========
</TABLE>

The amounts due from related parties were paid subsequent to October 19,
1997.

(6) OPERATING LEASES

The Company leases vehicles from various unrelated companies through 1999.
The vehicle leases, as well as the lease for the Company's business premises,
are classified as operating leases. At October 19, 1997, future minimum lease
payments under the operating leases including amounts amended as discussed in
note (5) are:

<TABLE>
<CAPTION>
YEAR ENDING OCTOBER 31
----------------------
<S> <C>
1998............................................................ $ 442,636
1999............................................................ 305,036
2000............................................................ 204,000
2001............................................................ 204,000
2002............................................................ 204,000
----------
$1,359,672
==========
</TABLE>

Operating lease expense aggregated $520,210, $533,619 and $501,473 in 1995,
1996 and for the period from November 1, 1996 to October 19, 1997,
respectively, and $167,032 and $359,378 for the nine months ended July 31,
1996 and 1997, respectively.

(7) EMPLOYEE STOCK OWNERSHIP PLAN

Effective October 31, 1972, the Company established an Employee Stock
Ownership Plan (ESOP) for the benefit of its eligible employees. The ESOP is
designed to invest primarily in the stock of the Company. Contributions to the
ESOP are determined annually by the Board of Directors, however, in no case
may the

F-79
<PAGE>

A & A TOOL RENTALS & SALES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

contribution exceed the lesser of (a) fifteen percent (15%) of the
compensation of eligible employees, or (b) $30,000 for each participant. No
contributions were made in the years ended October 31, 1995 and 1996 or the
period from November 1, 1996 to October 19, 1997.

The ESOP measures compensation for Plan purposes as the Company's
contribution to the Plan. No compensation cost was recognized by the Plan for
the years ended October 31, 1995 and 1996, or the period from November 1, 1996
to October 19, 1997.

The ESOP held 335,586, 277,172, 272,491 and 275,242 allocated shares at
October 31, 1995 and 1996, October 19, 1997, and July 31, 1997, respectively.
No committed-to-be-released or suspense shares were held by the ESOP at
October 31, 1995 and 1996, October 19, 1997, or at July 31, 1997.

Following termination of employment, participants receive a distribution of
their vested ESOP account balance in the form of cash or Company shares in
accordance with the provisions of the ESOP. If shares are distributed to the
participant, the participant has the right to sell the shares back to the
Company, for a limited period of time, at the fair market value of the shares.

(8) PROFIT SHARING PLAN

In August 1995, the Company established a Profit Sharing/401(k) Savings Plan
(Plan) under Section 401 and 501 of the Internal Revenue Code. Substantially
all employees are eligible for the Plan. Yearly employer contributions to the
Plan are discretionary. Employees may also elect to contribute to the Plan.
For the years ended October 31, 1995 and 1996, and the period from November 1,
1996 to October 19, 1997, the Company contributed $8,245, $27,422, and
$27,064, respectively to the Plan and $19,780 and $19,779 for the nine months
ended July 31, 1996 and 1997.

(9) COMMITMENTS

Litigation, contingent liabilities, and claims, all arising in the ordinary
course of business, are not expected to involve any amounts that could be
material to the Company's financial position or results of operations.

(10) SUBSEQUENT EVENT

On October 17, 1997, the Company entered into a stock purchase agreement
with United Rentals, Inc. (United). The transaction closed on October 20, 1997
and under the terms of the stock purchase agreement, United purchased all of
the issued and outstanding common stock of the Company.

F-80
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
J & J Rental Services, Inc.

We have audited the balance sheets of the predecessor companies to J & J
Rental Services, Inc. (see Note 1) as of December 31, 1996 and for J&J Rental
Services, Inc. as of October 22, 1997 and the related statements of income,
stockholders' equity and partners' capital and cash flows for each of the two
years in the period ended December 31, 1996, the six months ended June 30,
1997 and for the period from July 1, 1997 to October 22, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the predecessor companies
to J & J Rental Services, Inc. at December 31, 1996, and for J&J Rental
Services, Inc. as of October 22, 1997 and the results of their operations and
their cash flows for each of the two years in the period ended December 31,
1996, the six months ended June 30, 1997 and for the period from July 1, 1997
to October 22, 1997 in conformity with generally accepted accounting
principles.

/s/ Ernst & Young LLP

MetroPark, New Jersey
January 23, 1998

F-81
<PAGE>

J & J RENTAL SERVICES, INC.

BALANCE SHEETS
(NOTE 1)

<TABLE>
<CAPTION>
PREDECESSORS COMPANY
------------ -----------
DECEMBER 31, OCTOBER 22,
1996 1997
------------ -----------
<S> <C> <C>
ASSETS
Cash................................................. $ 666,153 $ 1,431,287
Accounts receivable, net of allowance for doubtful
accounts of $428,270, and $226,273 at 1996 and 1997,
respectively........................................ 1,502,119 1,470,608
Trade notes receivable, net of allowance for doubtful
accounts of $93,337 at 1996......................... 37,081
Rental equipment, net................................ 6,669,365 7,961,850
Property and equipment, net.......................... 467,460 319,219
Investments in marketable equity securities.......... 81,175
Due from Predecessor Stockholder..................... 120,000
Due from Related Party............................... 354,388
Prepaid expenses and other assets.................... 126,221 4,006
Intangible assets, net............................... 3,270,614
---------- -----------
Total assets................................... $9,669,574 $14,811,972
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY AND PARTNERS'
CAPITAL
Liabilities:
Accounts payable................................... $ 628,252 $ 936,725
Accrued expenses................................... 336,884 360,990
Income tax payable................................. 24,814
Deferred tax liability............................. 430,000
Debt............................................... 5,766,651 14,078,932
Due to Predecessor Stockholder..................... 336,498
---------- -----------
Total liabilities.............................. 7,523,099 15,376,647
Commitments and contingencies
Stockholders' equity and partners' capital:
Stockholder's equity--J & J Equipment, Inc.
Common stock, $1.00 par value, 50,000 shares
authorized, issued and outstanding.............. 50,000
Unrealized gain on marketable equity securities.. 1,165
Retained earnings................................ 981,955
----------
1,033,120
Partners' capital--Tri-Star Rentals, Ltd........... 1,113,355
----------
Stockholders' equity--J & J Rental Services, Inc.
Common stock, no par value, 1,000,000 shares au-
thorized, 77,500 shares issued and outstanding.. 1,000
Accumulated deficit.............................. (565,675)
-----------
Total stockholders' equity (deficit) and partners'
capital............................................. 2,146,475 (564,675)
---------- -----------
Total liabilities and stockholders' equity and
partners' capital............................... $9,669,574 $14,811,972
========== ===========
</TABLE>

See accompanying notes.

F-82
<PAGE>

J & J RENTAL SERVICES, INC.

STATEMENTS OF INCOME
(NOTE 1)

<TABLE>
<CAPTION>
PREDECESSORS COMPANY
------------------------------------------ ---------------
THE PERIOD FROM
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JULY 1, TO
------------------------ JUNE 30, OCTOBER 22,
1995 1996 1997 1997
----------- ----------- ---------------- ---------------
<S> <C> <C> <C> <C>
Revenues:
Equipment rentals................................................. $7,573,784 $7,769,716 $3,823,790 $2,544,233
Sales of equipment and parts...................................... 1,810,400 1,243,297 573,450 129,963
----------- ----------- ---------- ----------
Total revenues.................................................. 9,384,184 9,013,013 4,397,240 2,674,196
Cost of revenues:
Cost of revenues, excluding depreciation.......................... 3,906,336 3,544,040 1,629,299 1,363,085
Depreciation, equipment rentals................................... 2,048,619 2,389,929 1,171,685 359,672
Cost of revenues of equipment and parts........................... 898,190 452,522 326,847 46,653
----------- ----------- ---------- ----------
Total cost of revenues.......................................... 6,853,145 6,386,491 3,127,831 1,769,410
----------- ----------- ---------- ----------
Gross profit........................................................ 2,531,039 2,626,522 1,269,409 904,786
Selling, general and administrative expenses........................ 1,840,973 1,521,562 713,488 786,907
Non-rental depreciation............................................. 125,004 123,971 78,643 7,629
----------- ----------- ---------- ----------
Operating income................................................ 565,062 980,989 477,278 110,250
Interest expense.................................................... 411,731 478,341 180,769 378,231
Other (income), net................................................. (45,103) (27,523) (11,418) (26,306)
----------- ----------- ---------- ----------
Income (loss) before provision for income taxes................. 198,434 530,171 307,927 (241,675)
Provision for income taxes.......................................... 35,678 49,685 98,000 --
----------- ----------- ---------- ----------
Net income (loss)............................................... $ 162,756 $ 480,486 $ 209,927 $ (241,675)
- --------------------------------------------------
=========== =========== ========== ==========
</TABLE>

See accompanying notes.

F-83
<PAGE>

J & J RENTAL SERVICES, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL
(NOTE 1)

<TABLE>
<CAPTION>
UNREALIZED
(LOSS) GAIN ON
COMMON STOCK MARKETABLE RETAINED PARTNERS'
SHARES AMOUNT SECURITIES EARNINGS CAPITAL
------ ------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Predecessors:
Balance at January 1,
1995................... 50,000 $50,000 $(6,500) $ 796,096 $ 927,272
Net income.............. 75,762 86,994
Distributions paid to
partners............... (169,741)
Unrealized gain on
marketable securities.. 9,250
------ ------- ------- ---------- ---------
Balance at December 31,
1995................... 50,000 50,000 2,750 871,858 844,525
Net income.............. 110,097 370,389
Distributions paid to
partners............... (101,559)
Unrealized loss on
marketable securities.. (1,585)
------ ------- ------- ---------- ---------
Balance at December 31,
1996................... 50,000 50,000 1,165 981,955 1,113,355
Net income (loss) from
January 1, 1997 to June
30, 1997............... 311,262 (101,335)
Distributions paid to
partners............... (50,500)
------ ------- ------- ---------- ---------
Balance at June 30,
1997................... 50,000 $50,000 $ 1,165 $1,293,217 $ 961,520
====== ======= ======= ========== =========
Company:
Issuance of common
stock.................. 77,500 $ 1,000
Net loss from July 1,
1997 to October 22,
1997................... $ (241,675)
Basis adjustment........ (324,000)
------ ------- ------- ---------- ---------
Balance at October 22,
1997................... 77,500 $ 1,000 $ (565,675)
====== ======= ======= ========== =========
</TABLE>

See accompanying notes.

F-84
<PAGE>

J & J RENTAL SERVICES, INC.

STATEMENTS OF CASH FLOWS
(NOTE 1)

<TABLE>
<CAPTION>
PREDECESSORS COMPANY
------------------------------------ -----------
THE PERIOD
SIX MONTHS FROM JULY 1
YEAR ENDED DECEMBER 31, ENDED TO
------------------------ JUNE 30, OCTOBER 22,
1995 1996 1997 1997
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)......................................................... $ 162,756 $ 480,486 $ 209,927 $ (241,675)
Adjustments to reconcile net income to net cash provided by (used in) op-
erating activities:
Depreciation and amortization............................................. 2,173,623 2,513,900 1,250,328 396,823
Bad debt expense (recovery)............................................... 128,092 (57,621) 7,214 226,273
Gain on sale of rental equipment.......................................... (396,704) (369,379) (210,390) (43,878)
Gain on sale of property and equipment.................................... (2,809) (6,591) -- --
Deferred taxes............................................................ 23,000 12,000 -- --
Changes in assets and liabilities:
Increase in accounts receivable.......................................... (64,895) (10,430) (512,942) (1,696,881)
(Increase) decrease in trade notes receivable............................ (170,337) 39,859 37,081 --
Increase in prepaid expenses and other assets............................ (31,561) (84,918) (26,028) (4,006)
Increase (decrease) in accounts payable.................................. 46,476 (41,052) 372,230 936,725
Increase in accrued expenses............................................. 53,632 1,919 123,765 360,990
Increase in income tax payable........................................... 7,613 17,201 73,186 --
Increase in Related Party receivable..................................... (354,388)
----------- ----------- ---------- ----------
Cash provided by (used in) operating activities......................... 1,928,886 2,495,374 1,324,371 (420,017)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment..................................... (270,369) (195,823) (614,414) (548,346)
Proceeds from sale of rental equipment.................................... 930,860 755,122 1,227,501 232,148
Proceeds from sale of property and equipment.............................. 24,634 74,585 -- --
Purchase of other company, net of cash acquired........................... (7,238,924)
Unrealized gain/(loss) on marketable securities........................... 9,250 (1,585) -- --
Purchase of marketable securities......................................... (9,250) (28,425) -- --
Payments on loans to Predecessor Stockholder.............................. (21,573) (73,724) (79,254) --
Proceeds received on Predecessor Stockholder loans........................ 94,857 -- 6,884 --
Loan to Predecessor Stockholder........................................... (120,000) -- -- --
----------- ----------- ---------- ----------
Cash provided by (used in) investing activities......................... 638,409 530,150 540,717 (7,555,122)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing under credit facilities......................................... 871,496 351,958 -- 10,000,000
Principal payments on debt................................................ (3,117,926) (3,171,213) (1,920,472) (593,574)
Distributions paid........................................................ (169,741) (101,559) (50,500) --
----------- ----------- ---------- ----------
Cash provided by (used in) financing activities......................... (2,416,171) (2,920,814) (1,970,972) 9,406,426
----------- ----------- ---------- ----------
Increase (decrease) in cash ............................................... 151,124 104,710 (105,884) 1,431,287
Cash at beginning of year.................................................. 410,319 561,443 666,153 --
----------- ----------- ---------- ----------
Cash at end of year..................................................... $ 561,443 $ 666,153 $ 560,269 $1,431,287
- --------------------------------------------------
=========== =========== ========== ==========
</TABLE>

See accompanying notes.

F-85
<PAGE>

J & J RENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1995 AND 1996
AND OCTOBER 22, 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

J & J Rental Services, Inc. (the "Company") was formed in May 1997, and
pursuant to the terms of an Asset Purchase Agreement (the "Agreement"), on
June 30, 1997 acquired all of the rental equipment and property and equipment
from J & J Equipment, Inc. ("J & J"), and Tri-Star Rentals, Ltd. ("Tri-Star")
(collectively, the "Predecessors") and assumed all operations of the
Predecessors (the "Acquisition"). The purchase price of $10,700,000 consisted
of cash of $7,200,000 and a promissory note payable for $3,500,000. The sole
stockholder and partner of J & J and Tri-Star, respectively, (the "Predecessor
Stockholder") has, on a fully-diluted basis, a 9% ownership interest in the
outstanding common stock of the Company, and has continued in a management
role as chief operating officer.

The accompanying financial statements as of December 31, 1996 and for the
years ended December 31, 1995 and 1996, and for the six month period ended
June 30, 1997 present the accounts and results of operations of the
Predecessors on a combined, historical cost basis. Although the financial
statements of the Predecessors have been combined, the balance sheets and
statements of income and cash flows do not represent those of a single legal
entity. All significant intercompany accounts and transactions have been
eliminated in combination.

The financial statements as of October 22, 1997 and for the period from July
1 to October 22, 1997 present the accounts and results of operations of the
Company since the Acquisition.

The Acquisition has been accounted for as a purchase effective July 1, 1997
and, accordingly, at such date the Company recorded the assets acquired at
their estimated fair values, adjusted for the impact of the Predecessor
Stockholder's continuing residual interest as described below. The assets
acquired have been reduced by $324,000 representing the Predecessor
Stockholder's continuing residual interest in the Company with a corresponding
charge against the Company's retained earnings.

The adjusted purchase price and the preliminary allocation of the adjusted
purchase price to the historical assets of the Company as of July 1, 1997 are
as follows:

<TABLE>
<S> <C>
Purchase price.................................................. $10,739,000
Adjustment necessary to value Predecessor Stockholder's
continuing residual interest at Predecessor's basis............ 324,000
-----------
Adjusted purchase price......................................... $10,415,000
===========
Allocation of adjusted purchase price:
Net assets acquired, at fair values........................... $ 7,115,000
Covenant not to compete....................................... 50,000
Goodwill...................................................... 3,250,000
-----------
Total adjusted purchase price allocation.................... $10,415,000
===========
</TABLE>

Business Activity

The Company rents and sells light weight and heavy off-road construction
equipment for use by construction and maintenance companies, and has ancillary
sales of parts and supplies. The rentals are on a daily,

F-86
<PAGE>

J & J RENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
weekly or monthly basis. The Company has two locations in Houston, Texas and
its principal market area is the state of Texas. The nature of the Company's
business is such that short-term obligations are typically met by cash flow
generated from long-term assets. Consequently, consistent with industry
practice, the balance sheets are presented on an unclassified basis.

Rental Equipment

Rental equipment is recorded at cost. Depreciation for rental equipment is
computed using the straight-line method over estimated useful lives of three
to five years through June 30, 1997 and two to ten years subsequent to June
30, 1997 with no salvage value. Rental equipment costing less than $500 is
immediately expensed at the date of purchase. Equipment rental revenue is
recorded as earned under the operating method. Equipment rental revenue in the
statements of operations includes revenues earned on equipment rentals, and
related fuel sales and rental equipment delivery fees. Proceeds from the
disposal and the related net book value of the equipment are recognized in the
period of disposal and reported as revenue from rental equipment sales in the
statements of operations. Ordinary maintenance and repair costs are charged to
operations as incurred.

Property and Equipment

Property and equipment is stated at cost. Depreciation of property and
equipment is computed on the straight-line method over estimated useful lives
of 5 to 10 years.

The cost of assets sold, retired, or otherwise disposed of, and the related
accumulated depreciation is eliminated from the accounts and any resulting
gain or loss is included in operations. Ordinary maintenance and repair costs
are charged to operations as incurred.

Advertising Costs

The Company advertises primarily through trade journals, phone directories
and the distribution of promotional items. All advertising costs are expensed
as incurred. Advertising expenses amounted to approximately $40,095 and
$52,483 in the years ended December 31, 1995 and 1996, respectively, $1,297 in
the six months ended June 30, 1997, and $9,433 from July 1 to October 22,
1997.

Income Taxes

J & J applied an asset and liability approach to accounting for income
taxes. Deferred income tax assets and liabilities arise from differences
between the tax basis of an asset or liability and its reported amount in the
financial statements. Deferred tax balances are determined by using tax rates
expected to be in effect when the taxes will actually be paid or refunds
received. Under federal and state income tax law, Tri-Star, a partnership, is
not a taxable entity and, therefore, incurs no income tax liability. Any
profits and losses of Tri-Star flow through to the individual partners.

Investments

The Company's investments consist of marketable equity securities and are
classified as available for sale. Any unrealized gains or losses are excluded
from income and are presented as a component of stockholders' equity.

Intangible assets

Intangible assets are recorded at cost and consist of goodwill of $3,250,134
and covenant not to compete of $50,000. Goodwill is being amortized by the
straight-line method over its estimated useful life of forty years. The
covenant not to compete reflects an agreement made regarding confidentiality
and restricting competitive activity and is being amortized by the straight-
line method over the period of the agreement, which is 5 years. Amortization
expense was $29,520 for the period from July 1 to October 22, 1997.

F-87
<PAGE>

J & J RENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Accounting Estimates

2. CONCENTRATIONS OF CREDIT RISK

The Company maintains cash balances with a quality financial institution
and, accordingly, management believes this mitigates the amount of credit
risk. Concentrations of credit risk with respect to customer receivables are
limited due to the large number of customers comprising the Company's customer
base and its credit policy.

3. RENTAL EQUIPMENT

Rental equipment and related accumulated depreciation consists of the
following:

<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER 22,
1996 1997
------------ -----------
<S> <C> <C>
Rental equipment.................................... $12,520,482 $8,313,840
Less accumulated depreciation....................... 5,851,117 351,990
----------- ----------
Rental equipment, net............................... $ 6,669,365 $7,961,850
=========== ==========
</TABLE>

4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER 22,
1996 1997
------------ -----------
<S> <C> <C>
Transportation equipment............................ $ 763,402 $166,003
Furniture, fixtures and office equipment............ 92,082 59,760
Shop equipment...................................... 39,356
Leasehold improvements.............................. 38,386
Construction in progress............................ 101,085
--------- --------
933,226 326,848
Less accumulated depreciation....................... 465,766 7,629
--------- --------
Total............................................... $ 467,460 $319,219
========= ========
</TABLE>

F-88
<PAGE>

J & J RENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

5. DEBT

Debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER 22,
1996 1997
------------ -----------
<S> <C> <C>
CIT Group--Various notes dated from September 21,
1995 through August 5, 1997, with annual interest
rates ranging from 8% to 9.4% due in monthly
payments ranging from $867 to $43,987. ............. $ 1,246,231 $637,956
The Associates--Note dated April 1, 1996, with annual
interest of 8.8% due in monthly payments of
$3,609. ............................................ 110,450
Case Power & Equipment--Various notes dated from
January 1, 1992 through December 30, 1996, with
annual interest rates ranging from 5.5% to 7.9% due
in monthly payments ranging from $408 to $7,747. ... 795,344
Sterling Bank--Various notes dated from January 26,
1994 through December 20, 1996, with annual interest
rates ranging from 8% to 11% due in monthly payments
ranging from $582 to $2,084. ....................... 306,708
KDC Financial--Various notes dated from June 14, 1993
through December 31, 1996, with annual interest
rates ranging from 4.5% to 9.5% due in monthly
payments ranging from $840 to $4,691. .............. 1,443,971
John Deere Financial--Notes dated December 31, 1995
and September 10, 1996, with annual interest rates
of 7.9% and 6.9% due in monthly payments of $807 and
$1,083. ............................................ 69,247
Frost National Bank--Various notes dated from January
25, 1995 through August 15, 1995, with annual
interest rates ranging from 8.75% to 9.5% due in
monthly principal payments ranging from $582 to
$8,492. ............................................ 101,771
Citicorp--Note dated June 15, 1993, with an annual
interest rate of 5.9% due in monthly payments of
$921. .............................................. 5,433
First Prosperity Bank--Various notes dated from
September 8, 1994 through December 13, 1996, with
annual interest ranging from 7.25% through 9.9% due
in monthly payments ranging from $354 to $1,039. ... 55,139
CAT Financial--Notes dated June 2, 1995 and December
31, 1994, with annual interest rates of 9.69% and
9.5% due in monthly payments of $4,227 and
$3,036. ............................................ 152,293
CAT Financial--Notes dated October 11, 1996 and
November 25, 1996, non-interest bearing, with
monthly payments of $1,205 and $3,522. ............. 161,102
Chase/Clark Credit--Various notes dated from March
17, 1994 through September 28, 1994, with annual
interest rates ranging from 9.75% to 12.765% due in
monthly installments ranging from $194 to $1,430. .. 30,232
First Prosperity--Various notes dated from August 16,
1993 through December 13, 1996, with annual interest
rates ranging from 6.4% to 11% due in monthly
installments ranging from $423 to $4,205............ 171,518
Associates Commercial Credit Corp.--Various notes
dated from May 16, 1994 through July 8, 1996, with
annual interest rates ranging from 7.75% to 11.25%
due in monthly installments ranging from $912 to
$6,656.............................................. 246,570
</TABLE>

F-89
<PAGE>

J & J RENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER 22,
1996 1997
------------ -----------
<S> <C> <C>
Ingersoll-Rand Company--Various notes dated from June
30, 1992 through September 8, 1996 with annual
interest rates ranging from 7% to 9.5% due in
monthly installments ranging from $301 to $7,794.... 316,003
Wacker Corporation--Various notes dated from January
7, 1994 through May 25, 1996, with annual interest
rates ranging from 6.25% to 10.25% due in monthly
installments ranging from $854 to $2,889............ 99,666
AEL Leasing Co., Inc.--Various notes dated from April
21, 1994 through May 20, 1996, with annual interest
rates ranging from 8.72% to 12.93% due in monthly
installments ranging from $371 to $4,883............ 261,043
AEL Leasing Co., Inc.--Various non-interest bearing
notes dated from April 21, 1994 through February 26,
1996, due in 12 principal installments ranging from
$8,022 to $18,249................................... 36,498
Shandee--Note dated August 31, 1995, with an annual
interest rate of 11.25% due in monthly installments
of $2,803........................................... 21,510
Sterling Bank--Note dated January 2, 1996, with an
annual interest rate of 9.5% due in 24 principal
installments of $4,118.............................. 53,538
Miller Financing--Various notes dated from February
15, 1996 through June 1, 1996, with annual interest
rates ranging from 9.25 % to 10.25% due in monthly
installments ranging from $375 to $2,922............ 82,384
Toyota Motor Credit Corp.--Notes dated July 12 and
August 28, 1997, with annual interest rates of 5.4%
and 6.9%, respectively, due in monthly installments
of $543 and $ 561, respectively..................... 47,460
AEL Leasing Co., Inc.--Note dated October 10, 1997
with annual interest of 9.33% due in monthly
payments of $3,345.................................. 157,807
Case Credit--Various notes dated June 30, 1997 with
an annual interest rate of 7.9% due in monthly
installments ranging from $1,685 to $2,254.......... 290,260
Case Credit--Term note dated June 30, 1997, with
interest due monthly at prime plus .75% (9.25% at
September 30, 1997). Principal is due June 30, 2002.
This note is secured by all of the Company's rental
assets and property, plant and equipment, and is
personally guaranteed by the majority owners of the
Company............................................. 7,445,449
J & J and Tri-Star--Promissory note dated June 30,
1997 with an annual interest rate of 7.5%. Principal
payments of $175,000 are due quarterly beginning
October 1, 2000..................................... 3,500,000
Equus II Incorporated--Senior subordinated note dated
June 30, 1997, with interest to be paid monthly on
the unpaid principal balance at a variable rate not
to exceed 10% (10% at September 30, 1997). Principal
is to be paid in four annual installments of
$500,000 beginning June 30, 2001.................... 2,000,000
---------- -----------
$5,766,651 $14,078,932
========== ===========
</TABLE>

Substantially all rental equipment collateralize the above notes.

All debt at October 22, 1997, except for $200,000 of the J & J and Tri-Star
note, were paid off by October 31, 1997 as a result of the acquisition
discussed in Note 10.

F-90
<PAGE>

J & J RENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

6. INCOME TAXES

The provision for income taxes relates to the operating results of J & J
before July 1, 1997 and consists of the following:

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE
--------------- 30,
1995 1996 1997
------- ------- ----------
<S> <C> <C> <C>
Current:
Federal............................................ $ 7,216 $32,054 $86,500
State.............................................. 5,462 5,631 11,500
------- ------- -------
12,678 37,685 98,000
Deferred:
Federal............................................ 20,300 10,600 --
State.............................................. 2,700 1,400 --
------- ------- -------
23,000 12,000 --
------- ------- -------
Total............................................ $35,678 $49,685 $98,000
======= ======= =======
</TABLE>

Tri-Star is a pass-through entity and, therefore incurs no tax liability.
Significant components of J & J's deferred tax liability at December 31, 1996
is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
Difference in basis of accounting......................... $221,000
Cumulative tax depreciation in excess of book............. 209,000
--------
Deferred tax liability $430,000
========
</TABLE>

Effective July 1, 1997, the Company and its shareholders have elected to be
taxed under the provisions of Subchapter S of the Internal Revenue Code for
federal tax purposes. Under those provisions the Company does not pay federal
income taxes; instead, the shareholders are liable for individual income taxes
on the Company's profit. Therefore, no provision for federal income taxes is
included in the Company's financial statements for the period from July 1 to
October 22, 1997.

7. SUPPLEMENTAL CASH FLOW INFORMATION

For the years ended December 31, 1995 and 1996; the six months ended June
30, 1997; and the period from July 1 to October 22, 1997, total interest paid
was $411,731 and $478,341; $180,769; and $259,705, respectively.

For the years ended December 31, 1995 and 1996; the six months ended June
30, 1997; and the period from July 1 to October 22, 1997, total income taxes
paid was $ -- and $ --; $24,814; and $ --, respectively.

During the years ended December 31, 1995 and 1996, and the six months ended
June 30, 1997, and for the period from July 1 to October 22, 1997 the Company
purchased $3,738,807, and $3,160,914; $1,172,917; and $1,172,506,
respectively, of equipment which was financed.

F-91
<PAGE>

J & J RENTAL SERVICES, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

8. EMPLOYEE BENEFIT PLAN

The Predecessor sponsored a defined contribution 401(k) retirement plan,
which was implemented during 1995 and covers substantially all full time
employees. The Predecessor matched a portion of the participants'
contributions. Predecessor contributions to the plan were $9,272, $6,395, $--,
and $ -- for the years ended December 31, 1995, and 1996, for the six month
period ended June 30, 1997 and for the period from July 1 to October 22, 1997,
respectively.

9. RELATED PARTY TRANSACTIONS

On November 27, 1995, Tri-Star loaned $120,000 to the Predecessor
Stockholder. This non-interest bearing note is unsecured, and is due on
demand. The outstanding balance on this note receivable at December 31, 1996
was $120,000.

On November 30, 1995, Tri-Star issued a $100,000 note payable to the
Predecessor Stockholder, which bears interest at 11.4% per annum, requires
monthly principal and interest payments of $6,097, and is unsecured. The
outstanding balance on this note at December 31, 1996 was $79,254.

J & J has a note payable outstanding to the Predecessor Stockholder, which
required interest to be paid quarterly at 6.5% per annum, and is due on
January 1, 1998. The outstanding balance on this note payable at December 31,
1996 was $257,244.

During the period from July 1 to October 22, 1997 the Company made payments
of $354,388 on behalf of another Company owned by the Company's Stockholder.

The Company leases its operating facilities from the Predecessor
Stockholder, and paid monthly rent of $8,600 through June 30, 1997. These
leases are month-to-month and can be canceled by either party.

10. SUBSEQUENT EVENT

On October 23, 1997, the Company entered into a stock purchase agreement
with United Rentals, Inc. ("United"). Under the terms of the stock purchase
agreement, United purchased all of the issued and outstanding capital stock of
the Company.

F-92
<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Coran Enterprises, Inc.
and
Monterey Bay Equipment Rental, Inc.

We have audited the accompanying combined statements of earnings,
stockholders' equity, and cash flows of Coran Enterprises, Inc., dba A-1
Rents, and Monterey Bay Equipment Rental, Inc. for the years ended
December 31, 1995 and 1996. We have also audited the combined statement of
earnings, stockholders' equity, and cash flows for the period January 1, 1997
through October 24, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined results of operations and combined cash
flows of Coran Enterprises, Inc. dba A-1 Rents, and Monterey Bay Equipment
Rental, Inc. for the years ended December 31, 1995 and 1996, and also for the
period January 1, 1997 through October 24, 1997 in conformity with generally
accepted accounting principles.

/s/ Grant Thornton LLP

San Jose, California
January 21, 1998

F-93
<PAGE>

CORAN ENTERPRISES, INC.
DBA A-1 RENTS AND
MONTEREY BAY EQUIPMENT RENTAL, INC.

COMBINED STATEMENTS OF EARNINGS

<TABLE>
<CAPTION>
PERIOD
JANUARY 1,
1997
YEAR ENDED DECEMBER 31, THROUGH
----------------------- OCTOBER 24,
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Equipment rentals........................ $ 6,962,130 $ 7,679,713 $6,743,497
Sales of parts, supplies and rental
equipment............................... 565,586 738,330 974,713
----------- ----------- ----------
Total revenues......................... 7,527,716 8,418,043 7,718,210
Costs
Cost of equipment rentals................ 3,835,982 4,254,243 3,764,346
Rental equipment depreciation............ 611,577 1,304,847 1,328,193
Cost of sales of supplies................ 200,746 257,500 204,248
Other.................................... 49,523 115,758 53,590
----------- ----------- ----------
Total costs............................ 4,697,828 5,932,348 5,350,377
----------- ----------- ----------
Gross margin........................... 2,829,888 2,485,695 2,367,833
Selling, general and administrative........ 1,786,650 2,062,246 1,768,439
Non-rental depreciation.................... 28,435 17,202 15,370
----------- ----------- ----------
Operating Income....................... 1,014,803 406,247 584,024
Interest expense........................... 21,120 96,464 170,183
----------- ----------- ----------
Earnings before income taxes........... 993,683 309,783 413,841
Provision for income taxes................. 12,275 8,221 276,383
----------- ----------- ----------
Net earnings............................. $ 981,408 $ 301,562 $ 137,458
=========== =========== ==========
</TABLE>

The accompanying notes are an integral part of these statements.

F-94
<PAGE>

CORAN ENTERPRISES, INC.
DBA A-1 RENTS AND
MONTEREY BAY EQUIPMENT RENTAL, INC.

COMBINED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
SHARES ISSUED
-------------
CEI MBERI
------ ------ ADDITIONAL
$1 PAR NO PAR COMMON PAID-IN RETAINED
VALUE VALUE STOCK CAPITAL EARNINGS TOTAL
------ ------ -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1995................... 75,000 10,000 $275,000 $37,920 $1,691,541 $2,004,461
Net earnings.......... -- -- -- -- 981,408 981,408
------ ------ -------- ------- ---------- ----------
Balance at December 31,
1995................... 75,000 10,000 275,000 37,920 2,672,949 2,985,869
Net earnings.......... -- -- -- -- 301,562 301,562
Dividends paid to
stockholders......... -- -- -- -- (750,000) (750,000)
------ ------ -------- ------- ---------- ----------
Balance at December 31,
1996................... 75,000 10,000 275,000 37,920 2,224,511 2,537,431
Net earnings January
1, 1997 through
October 24, 1997..... -- -- -- -- 137,458 137,458
Dividends paid to
stockholders......... -- -- -- -- (781,852) (781,852)
Stock redemption...... -- (2,500) (50,000) -- (200,000) (250,000)
------ ------ -------- ------- ---------- ----------
Balance at October 24,
1997................... 75,000 7,500 $225,000 $37,920 $1,380,117 $1,643,037
====== ====== ======== ======= ========== ==========
</TABLE>

The accompanying notes are an integral part of this statement.

F-95
<PAGE>

CORAN ENTERPRISES, INC.
DBA A-1 RENTS AND MONTEREY BAY EQUIPMENT RENTAL, INC.

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD
JANUARY 1,
YEAR ENDED 1997
DECEMBER 31, THROUGH
---------------------- OCTOBER 24,
1995 1996 1997
--------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings............................. $ 981,408 $ 301,562 $ 137,458
Adjustments to reconcile net earnings to
net cash provided by operating
activities:
Depreciation and amortization............ 640,012 1,322,049 1,343,563
Gain on sale of equipment................ (85,747) (163,753) (446,621)
Change in assets and liabilities:
Accounts receivable..................... (210,091) 60,246 (61,976)
Other assets............................ 5,220 (3,108) 59,276
Accounts payable and accrued
liabilities............................ 36,638 32,355 625,287
--------- ----------- -----------
Net cash provided by operating
activities............................ 1,367,440 1,549,351 1,656,987
Cash flows from investing activities:
Purchases of rental equipment............ (633,519) (4,017,946) (315,346)
Proceeds from sale of equipment.......... 110,273 205,639 492,977
--------- ----------- -----------
Net cash provided by (used in)
investing activities.................. (523,246) (3,812,307) 177,631
Cash flows from financing activities:
Change in bank overdraft................. (15,760) -- --
Borrowings on equipment loans............ 244,235 1,096,820 --
Payments on equipment loans.............. (46,853) (158,893) (42,649)
Payment of dividends..................... -- (750,000) (781,853)
Stock redemption......................... -- -- (250,000)
Borrowings on notes payable--
stockholders............................ -- 1,249,988 --
Payments on notes payable--stockholders.. (95,888) -- (538,156)
--------- ----------- -----------
Net cash provided by (used in)
financing activities.................. 85,734 1,437,915 (1,612,658)
--------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS...................... 929,928 (825,041) 221,960
Cash and cash equivalents--beginning of
period................................... 35,259 965,187 140,146
--------- ----------- -----------
Cash and cash equivalents--end of period.. $ 965,187 $ 140,146 $ 362,106
========= =========== ===========
Supplementary disclosures of cash flow
information:
Cash paid during the period for:
Interest................................. $ 21,120 $ 95,958 $ 151,792
========= =========== ===========
Income taxes............................. $ 1,600 $ 23,047 $ 800
========= =========== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-96
<PAGE>

CORAN ENTERPRISES, INC.
DBA A-1 RENTS ANDMONTEREY BAY EQUIPMENT RENTAL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1995 AND 1996
AND THE PERIOD FROM JANUARY 1, 1997 THROUGH OCTOBER 24, 1997

NOTE A--SUMMARY OF ACCOUNTING POLICIES

1. Nature of Business and Basis of Presentation

The combined financial statements include the accounts of Coran Enterprises,
Inc. and Monterey Bay Equipment Rental, Inc. (collectively the "Company").
Coran Enterprises, Inc. ("CEI") and Monterey Bay Equipment Rental, Inc.
("MBERI") are combined due to common ownership and operations which are
complimentary. All significant intercompany balances and transactions have
been eliminated in combination.

The Company leases equipment for home and contractors' use under short-term
rental agreements principally in the Northern California area.

2. Property and Equipment

The Company provides for depreciation in amounts sufficient to relate the
costs of depreciable assets to operations over their estimated service lives
using the double-declining balance method. Leasehold improvements are
amortized on a straight-line basis over the lives of the improvements or the
term of the lease, whichever is shorter. Maintenance and repairs costs are
expensed as incurred. Supplies and replacement parts are expensed when
purchased.

3. Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.

4. Use of estimates

In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements, as well as revenues and expenses during the reporting period.
Actual results could differ from those estimates.

NOTE B--RELATED PARTY TRANSACTIONS

The Company leases facilities from its stockholders on a month-to-month
basis. Total rent expense on the facilities was $662,880 and $667,638 for the
years ended December 31, 1995 and 1996. Total rent expense for the period from
January 1, 1997 through October 24, 1997 was $545,702.

The Company incurred interest expense of $17,755 and $27,627, respectively,
for the years ended December 31, 1995 and 1996, related to notes payable to
stockholders. For the period from January 1, 1997 through October 24, 1997 the
interest expense related to the stockholder notes was $80,693.

NOTE C--INCOME TAXES

The stockholders of the Company have elected "S" Corporation status for
income tax purposes. Therefore, income or loss for federal and California
state income tax purposes is reported on the shareholders' individual income
tax returns. Although the "S" Corporation tax treatment is recognized by the
State of California, the net corporate income is subject to a 1.5% corporate
surtax. (See Note E)

F-97
<PAGE>

CORAN ENTERPRISES, INC.
DBA A-1 RENTS AND
MONTEREY BAY EQUIPMENT RENTAL, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)

YEARS ENDED DECEMBER 31, 1995 AND 1996
AND THE PERIOD FROM JANUARY 1, 1997 THROUGH OCTOBER 24, 1997

NOTE D -- EQUIPMENT LOANS

Equipment loans consist of notes payable, collateralized by equipment, due
in monthly installments ranging from $1,095 to $5,375 with interest rates from
5.75% to 8.75%. These loans were paid in full as of October 31, 1997. Interest
expense on the equipment loans aggregated $3,365 and $68,837, respectively,
for the years ended December 31, 1995 and 1996. Interest expense on the
equipment loans was $89,455 for the period January 1, 1997 through October 24,
1997.

NOTE E--CHANGE IN OWNERSHIP

Effective October 24, 1997, the stockholders of CEI and MBERI sold 100% of
the outstanding shares of each company to United Rentals, Inc. The Company
provided $270,000 for state income taxes resulting from the stock sale.

F-98
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
Bronco Hi-Lift, Inc.

We have audited the balance sheets of Bronco Hi-Lift, Inc. as of December
31, 1996 and October 24, 1997 and the related statements of income,
stockholders' equity and cash flows for the years ended December 31, 1995 and
1996, and the period from January 1, 1997 to October 24, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Bronco Hi-Lift, Inc. at
December 31, 1996 and October 24, 1997, and the results of its operations and
its cash flows for the years ended December 31, 1995 and 1996, and the period
from January 1, 1997 to October 24, 1997 in conformity with generally accepted
accounting principles.

/s/ Ernst & Young LLP

MetroPark, New Jersey
January 19, 1998

F-99
<PAGE>

BRONCO HI-LIFT, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER
1996 24, 1997
------------ ----------
<S> <C> <C>
ASSETS
Cash................................................... $ 305,506 $ 180,745
Accounts receivable, net............................... 826,849 998,467
Unbilled receivables................................... 40,722 283,865
Inventory.............................................. 67,825 273,119
Rental equipment, net.................................. 1,972,910 2,725,464
Property and equipment, net............................ 234,914 423,918
Due from related party................................. -- --
Prepaid expenses and other assets...................... 13,530 44,273
---------- ----------
Total assets....................................... $3,462,256 $4,929,851
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable, accrued expenses and other liabili-
ties................................................ $ 90,584 $ 277,651
Debt................................................. 3,051,711 3,473,516
---------- ----------
Total liabilities.................................. 3,142,295 3,751,167
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value and $1.00 stated value,
100,000 shares authorized, 10,000 issued and out-
standing at December 31, 1996, and October 24, 1997. 10,000 10,000
Additional paid-in capital........................... 598,000 598,000
Notes receivable from stockholders................... (300,000) --
Retained earnings.................................... 11,961 570,684
---------- ----------
Total stockholders' equity......................... 319,961 1,178,684
---------- ----------
Total liabilities and stockholders' equity......... $3,462,256 $4,929,851
========== ==========
</TABLE>

See accompanying notes.

F-100
<PAGE>

BRONCO HI-LIFT, INC.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
PERIOD
FROM
JANUARY 1,
YEAR ENDED DECEMBER 31 1997 TO
------------------------ OCTOBER
1995 1996 24, 1997
----------- ----------- ----------
<S> <C> <C> <C>
Revenues:
Equipment rentals...................... $ 3,427,596 $ 4,313,855 $4,330,000
New equipment sales.................... 266,308 611,033 533,370
Sales of parts, supplies and rental
equipment............................. 155,331 410,957 375,451
Other.................................. 147,214 194,469 182,355
----------- ----------- ----------
Total revenues....................... 3,996,449 5,530,314 5,421,176
Cost of revenues:
Cost of equipment rentals, excluding
depreciation.......................... 335,028 699,455 374,845
Depreciation, equipment rentals........ 637,766 736,525 660,598
Cost of new equipment sales............ 206,268 479,920 412,592
Cost of sales of parts, supplies and
equipment............................. 107,989 293,987 148,464
Other.................................. 32,418 119,315 112,107
----------- ----------- ----------
Total cost of revenues............... 1,319,469 2,329,202 1,708,606
----------- ----------- ----------
Gross profit............................. 2,676,980 3,201,112 3,712,570
Selling, general and administrative
expenses................................ 2,540,699 2,359,326 2,353,924
Non-rental depreciation.................. 84,463 99,669 85,707
----------- ----------- ----------
Operating income..................... 51,818 742,117 1,272,939
Interest expense......................... 171,305 334,035 229,154
Other (income), net...................... (26,575) (46,175) (29,938)
----------- ----------- ----------
Net income (loss).................... $ (92,912) $ 454,257 $1,073,723
=========== =========== ==========
</TABLE>

See accompanying notes.

F-101
<PAGE>

BRONCO HI-LIFT, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK NOTES RECEIVABLE RETAINED
----------------- PAID-IN FROM EARNINGS
SHARES AMOUNT CAPITAL STOCKHOLDERS (DEFICIT)
------- -------- --------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
Balance at January 1,
1995................... 20,000 $ 20,000 $ 345,020 $ -- $ 693,596
Purchase and
retirement of common
stock................ (12,000) (12,000) (345,020) (1,042,980)
Issuance of common
stock................ 2,000 2,000 598,000 (500,000)
Net loss.............. (92,912)
------- -------- --------- -------- -----------
Balance at December 31,
1995................... 10,000 10,000 598,000 (500,000) (442,296)
Payment on notes
receivable from
stockholders......... 200,000
Net income............ 454,257
------- -------- --------- -------- -----------
Balance at December 31,
1996................... 10,000 10,000 598,000 (300,000) 11,961
Payments on notes
receivable from
stockholders......... 300,000
Net income............ 1,073,723
Dividends paid........ (515,000)
------- -------- --------- -------- -----------
Balance at October 24,
1997................... 10,000 $ 10,000 $ 598,000 $ -- $ 570,684
======= ======== ========= ======== ===========
</TABLE>

See accompanying notes.

F-102
<PAGE>

BRONCO HI-LIFT, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1,
YEAR ENDED DECEMBER 31 1997 TO
------------------------ OCTOBER 24,
1995 1996 1997
----------- ------------ -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)...................... $ (92,912) $ 454,257 $ 1,073,723
Adjustments to reconcile net income to
net cash provided by operating activi-
ties:
Depreciation........................... 722,229 836,194 746,305
Gain on equipment sales................ (317,871) (302,777) (355,159)
Interest expense not requiring cash.... 17,500
Changes in assets and liabilities:
Increase in accounts receivable....... (132,976) (235,655) (171,618)
Decrease (increase) in unbilled re-
ceivables............................ 5,646 27,632 (243,143)
(Increase) decrease in inventory...... (102,542) 89,645 (205,294)
Decrease (increase) in prepaid ex-
penses and other assets.............. 30,774 20,171 (30,743)
(Decrease) increase in accounts
payable, accrued expenses and other
liabilities.......................... (60,113) (14,377) 187,067
---------- ------------ -----------
Total adjustments.................... 145,147 438,333 (72,585)
---------- ------------ -----------
Cash provided by operating
activities.......................... 52,235 892,590 1,001,138
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of rental equipment........... (92,727) (1,368,253) (1,631,309)
Proceeds from sale of rental equip-
ment.................................. 350,739 745,687 573,316
Purchases of property and equipment,
net................................... (101,985) (90,932) (304,711)
---------- ------------ -----------
Cash provided by (used in) investing
activities.......................... 156,027 (713,498) (1,362,704)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid.................... (485,000)
Issuance of stock...................... 100,000
Re-payments on notes due from stock-
holders............................... 200,000 300,000
Principal payments on debt............. (742,891) (802,358) (278,195)
Principal payments on capital lease ob-
ligations............................. (32,711)
Advances to related party.............. (412,113)
Borrowings under credit facility....... 900,000 500,000 700,000
---------- ------------ -----------
Cash provided by (used) in financing
activities.......................... (187,715) (102,358) 236,805
---------- ------------ -----------
Increase (decrease) in cash............ 20,547 76,734 (124,761)
Cash balance at beginning period..... 208,225 228,772 305,506
---------- ------------ -----------
Cash balance at end of period........ $ 228,772 $ 305,506 $ 180,745
========== ============ ===========
</TABLE>

See accompanying notes.

F-103
<PAGE>

BRONCO HI-LIFT, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 1995 AND 1996 AND OCTOBER 24, 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Activity

Bronco Hi-Lift, Inc. (the "Company") rents, sells and repairs aerial lift
equipment for use by construction companies and maintenance and media crews.
The rentals are on a daily, weekly or monthly basis. The Company is located in
Denver, Colorado and its principal market area is the state of Colorado. The
nature of the Company's business is such that short-term obligations are
typically met by cash flow generated from long-term assets. Consequently,
consistent with industry practice, the balance sheets are presented on an
unclassified basis.

Inventory

Inventories consists primarily of general replacement parts and fuel for the
equipment and are stated at the lower of cost, determined under the first-in,
first-out method, or market.

Rental Equipment

Rental equipment is recorded at cost. Depreciation for rental equipment is
computed using the straight-line method over an estimated five-year useful
life with no salvage value.

Property and Equipment

Property and equipment is stated at cost. Depreciation of property and
equipment is computed on the straight-line method over estimated useful lives
of 5 to 10 years.

Rental Revenue

Rental revenue is recorded as earned under the operating method.

Advertising Costs

The Company advertises primarily through trade journals, trade associations
and phone directories. All advertising costs are expensed as incurred.
Advertising expenses amounted to approximately $74,400 and $43,000 in the
years ended December 31, 1995 and 1996, respectively, and $49,500 in the
period from January 1, 1997 to October 24, 1997.

Income Taxes

The Company has elected, by unanimous consent of its shareholders, to be
taxed under the provisions of Subchapter S of the Internal Revenue Code for
both federal and state purposes. Under those provisions the Company does not
pay federal or state income taxes; instead, the shareholders are liable for
individual income taxes on the Company's profits. Therefore, no provision for
federal or state income taxes is included in the accompanying financial
statements.

F-104
<PAGE>

BRONCO HI-LIFT, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Accounting Estimates

2. CONCENTRATIONS OF CREDIT RISK

3. RENTAL EQUIPMENT

Rental equipment and related accumulated depreciation consisted of the
following:

<TABLE>
<CAPTION>
OCTOBER
DECEMBER 31, 24,
1996 1997
------------ ----------
<S> <C> <C>
Rental equipment.................................... $5,176,658 $5,943,569
Less accumulated depreciation....................... 3,203,748 3,218,105
---------- ----------
Rental equipment, net............................... $1,972,910 $2,725,464
========== ==========
</TABLE>

4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, OCTOBER 24,
1996 1997
------------ -----------
<S> <C> <C>
Furniture and fixtures.............................. $ 59,572 $172,839
Transportation equipment............................ 520,356 664,543
Shop equipment...................................... 37,591 37,591
-------- --------
617,519 874,973
Less accumulated depreciation....................... 382,605 451,055
-------- --------
Total............................................. $234,914 $423,918
======== ========
</TABLE>

F-105
<PAGE>

BRONCO HI-LIFT, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

5. DEBT

Debt consists of the following:

<TABLE>
<CAPTION>
OCTOBER
DECEMBER 31 24,
1996 1997
----------- ----------
<S> <C> <C>
Citicorp Dealer Finance Agreement.................... $1,585,000 $2,135,000
GMAC note dated October 27, 1994 paid in full in
August 1997......................................... 17,564 --
Kenworth/Trial-EZE dated July 11, 1994 paid in full
in September 1997................................... 49,147 --
Notes payable to a former shareholder for $900,000
and $500,000 at an annual interest rate of 9%. The
$900,000 note requires monthly interest payments
through January 31, 1998 at which time the note is
due in full. The $500,000 note requires monthly
interest payments through January 31, 1997.
Beginning February 1, 1997, the note is payable in
60 monthly installments of principal and interest of
$10,379 through December 31, 2001. The above
$500,000 note is subordinated to the Citicorp Dealer
Finance Agreement................................... 1,400,000 1,338,516
---------- ----------
$3,051,711 $3,473,516
========== ==========
</TABLE>

Substantially all of the Company's assets collateralize the debt outstanding
under the Financing Agreement. All debt at October 24, 1997 was paid off in
connection with the acquisition discussed in Note 10.

6. OPERATING LEASES

During 1994, the Company leased 7,000 square feet of office and shop space
on a twelve month lease, renewable annually. For the period from January 1,
1995 to April 30, 1995, the Company leased approximately 7,000 square feet of
office and shop space under a new month to month lease. Effective May 1, 1995,
the Company moved to a new location and entered into a lease agreement with a
related party, Coyote Investments, LLC ("Coyote") (see Note 9). The facility
consists of 17,000 square feet of office and shop area located on 1.8 acres.
The 15 year lease expires April 30, 2010. The Company is responsible for all
operating expenses of the facility including property taxes, assessments,
insurance, repairs and maintenance.

Rent expense under these leases totaled $52,000 and $78,000 for the years
ended December 31, 1995 and 1996 and $65,000 for the period from January 1,
1997 to October 24, 1997. Under the lease agreement with Coyote, rent is
payable in monthly installments of $6,500 for the first two years of the
lease. Thereafter the rent shall be increased annually to reflect the then
current fair market rent for the premises, provided that each annual increase
shall not exceed 10% of the previous year's rental rate. Future minimum rent
commitments are $78,000 each for years ended December 31, 1998 to December 31,
2009 and $26,000 for January 1, 2010 to April 30, 2010, provided there is no
increase in fair market rent for the premises.

7. COMMITMENTS

The Company has employment agreements, which expire in 1998, with three
officers which grant certain severance pay rights to these officers provided
that certain conditions of employment are met. Under terms of the employment
agreements, the officers received approximately $253,000, $703,000, and
$521,000 for the years ended December 31, 1995 and 1996 and for the period
from January 1, 1997 to October 24, 1997, respectively.

F-106
<PAGE>

BRONCO HI-LIFT, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Additional compensation to be paid to the officers, until the agreements
expire, amounts to approximately $100,000 for the two months ended December
31, 1997 and $270,000 during 1998.

The Company guarantees Coyote's debt on the building leased by the Company
(see Note 9).

8. SUPPLEMENTAL CASH FLOW INFORMATION

For the years ended December 31, 1995 and 1996 and for the period from
January 1, 1997 to October 24, 1997, total interest paid was $171,305,
$335,686 and $224,016, respectively.

During 1995, the Company purchased $726,355, of equipment which was
financed. There were no purchases in 1996 or for the period from January 1,
1997 to October 24, 1997.

On December 20, 1995, the Company purchased and retired 12,000 shares of its
stock for two notes totaling $1,400,000. On December 21, 1995, the Company
issued 2,000 shares of its stock to two officers of the Company in exchange
for $100,000 cash and $500,000 of notes receivable from these officers. During
1996, the officers repaid $200,000 in accordance with the note agreements. In
October of 1997, the notes were repaid in full.

During 1997, the Company paid dividends of $515,000, of which $30,000
represented a non-cash transfer of a fixed asset.

9. RELATED PARTY TRANSACTIONS

Coyote is owned by the shareholders of the Company. The Company leases its
office and shop facility from Coyote (see Note 6). All stockholders and the
Company have guaranteed Coyote's debt on the facility. The amount of debt
principal on the facility was $555,080 at December 31, 1996 and $540,200 at
October 24, 1997.

Advances to Coyote were $412,113 at December 31, 1995. Coyote paid $3,434 of
interest to the Company during 1996. As part of the Citicorp Amendment No. 1
Refinancing Agreement, the Company owed Coyote $152,187, which it paid with
interest of $7,990 during August 1996. These obligations were fulfilled with a
non-cash transaction in connection with the above mentioned amended agreement.

On December 21, 1995 the Company issued 2,000 shares to two officers of the
Company in exchange for $100,000 cash and two notes for $250,000 each. The
notes bear interest at 9% per annum and are payable bi-annually. Principal on
each note is payable $100,000 in 1996, $100,000 in 1997 and $50,000 in 1998.
Interest paid to the Company during 1996 by these stockholders was $42,400. In
October of 1997, the notes were repaid in full.

10. SUBSEQUENT EVENT

On October 24, 1997, the Company entered into a stock purchase agreement
with United Rentals, Inc. ("United"). Under the terms of the stock purchase
agreement, United purchased all of the issued and outstanding capital stock of
the Company.

F-107
<PAGE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERINGS COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AU-
THORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTI-
TUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK
IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS
OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

---------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Summary Historical and Pro Forma Consolidated Financial Information....... 6
Risk Factors.............................................................. 7
Use of Proceeds........................................................... 12
Dividend Policy........................................................... 12
Price Range of Common Stock............................................... 12
Capitalization............................................................ 13
Selected Historical and Pro Forma Consolidated Financial Information...... 14
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 16
Business.................................................................. 21
Management................................................................ 28
Principal Stockholders.................................................... 35
Description of Capital Stock.............................................. 37
Certain Charter and By-Law Provisions..................................... 38
Shares Eligible for Future Sale........................................... 41
Certain United States Federal Tax Considerations.......................... 42
Underwriting.............................................................. 45
Legal Matters............................................................. 48
Experts................................................................... 48
Available Information..................................................... 49
</TABLE>

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

6,500,000 SHARES

[LOGO] UNITED RENTALS

COMMON STOCK

---------------

PROSPECTUS

---------------

MERRILL LYNCH & CO.

DEUTSCHE MORGAN GRENFELL

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON SMITH BARNEY

, 1998

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PRELIMINARY PROSPECTUS, DATED FEBRUARY 17, 1998

PROSPECTUS

6,500,000 SHARES

[LOGO] UNITED RENTALS

COMMON STOCK

----------

All of the shares of Common Stock, $.01 par value (the "Common Stock"),
offered hereby are being offered by United Rentals, Inc., a Delaware
corporation (the "Company").

Of the Common Stock offered hereby, 1,300,000 shares are being offered
initially outside the United States and Canada by the International Managers
(the "International Offering"), and 5,200,000 shares are being offered
initially in a concurrent offering in the United States and Canada by the U.S.
Underwriters (the "U.S. Offering", and together with the International
Offering, the "Offerings"). The public offering price and the underwriting
discount per share are identical for each of the Offerings. See "Underwriting."

The Common Stock is traded on the New York Stock Exchange under the symbol
"URI." On February 13, 1998, the last sale price of the Common Stock as
reported on the New York Stock Exchange was $26 1/16 per share. See "Price
Range of Common Stock."

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

----------

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share...................................... $ $ $
- ----------------------------------------------------------------------------------
Total(3)....................................... $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

(3) The Company has granted the International Managers and the U.S.
Underwriters options to purchase up to an additional 195,000 shares and
780,000 shares of Common Stock, respectively, in each case exercisable
within 30 days of the date hereof, solely to cover over-allotments, if any.
If such options are exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to the Company will be $ , $ and
$ , respectively. See "Underwriting."

----------

----------
MERRILL LYNCH INTERNATIONAL

DEUTSCHE MORGAN GRENFELL

DONALDSON, LUFKIN & JENRETTE INTERNATIONAL

SALOMON SMITH BARNEY INTERNATIONAL

----------

The date of this Prospectus is , 1998.
<PAGE>

UNDERWRITING

Subject to the terms and conditions set forth in an international purchase
agreement (the "International Purchase Agreement") among the Company and
Merrill Lynch International, Donaldson, Lufkin & Jenrette International,
Morgan Grenfell & Co. Limited and Smith Barney Inc. (together, the
"International Managers") and concurrently with the sale of 5,200,000 shares
of Common Stock to the U.S. Underwriters (as defined below), the Company has
agreed to sell to the International Managers, and each of the International
Managers severally has agreed to purchase from the Company, the number of
shares of Common Stock set forth opposite its name below at the public
offering price less the underwriting discount set forth on the cover page of
this Prospectus.

<TABLE>
<CAPTION>
INTERNATIONAL MANAGER NUMBER OF SHARES
--------------------- ----------------
<S> <C>
Merrill Lynch International.............................
Donaldson, Lufkin & Jenrette International..............
Morgan Grenfell & Co. Limited...........................
Smith Barney Inc........................................
---------
Total.............................................. 1,300,000
=========
</TABLE>

The Company has also entered into a U.S. purchase agreement (the "U.S.
Purchase Agreement") with Merrill Lynch, Pierce, Fenner & Smith ("Merrill
Lynch"), Donaldson, Lufkin & Jenrette Securities Corporation, Deutsche Morgan
Grenfell Inc. and Smith Barney Inc. (the "U.S. Underwriters" and, together
with the International Managers, the "Underwriters"). Subject to the terms and
conditions set forth in the U.S. Purchase Agreement, and concurrently with the
sale of 1,300,000 shares of Common Stock to the International Managers
pursuant to the International Purchase Agreement, the Company has agreed to
sell to the U.S. Underwriters, and the U.S. Underwriters severally have agreed
to purchase from the Company, an aggregate of 5,200,000 shares of Common
Stock. The offering price per share and the total underwriting discount per
share of Common Stock are identical under the U.S. Purchase Agreement and the
International Purchase Agreement.

The International Managers have advised the Company that the International
Managers propose initially to offer the shares of Common Stock to the public
at the public offering price set forth on the cover page of this Prospectus,
and to certain dealers at such price less a concession not in excess of $
per share of Common Stock. The International Managers may allow, and such
dealers may reallow, a discount not in excess of $ per share of Common Stock
on sales to certain other dealers. After the shares of Common Stock are
released for sale to the public, the public offering price, concession and
discount may be changed.

The Company has granted an option to the International Managers, exercisable
for 30 days after the date of this Prospectus, to purchase up to an aggregate
of 195,000 additional shares of Common Stock at the public offering price set
forth on the cover page of the Prospectus, less the underwriting discount. The
International Managers may exercise this option only to cover over-allotments,
if any, made on the sale of the Common Stock offered hereby. To the extent
that the International Managers exercise this option, each International
Manager will be obligated, subject to certain conditions, to purchase a number
of additional shares of Common Stock proportionate to such International
Manager's initial amount reflected in the foregoing table. The Company also
has granted an option to the U.S. Underwriters, exercisable for 30 days after
the date of this Prospectus, to purchase up to an aggregate of 780,000
additional shares of Common Stock to cover over-allotments, if any, on terms
similar to those granted to the International Manager.

45
<PAGE>

right or warrant for the sale of or otherwise dispose of or transfer any
shares of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock, whether now owned or thereafter acquired by the
person executing the agreement or with respect to which the person executing
the agreement thereafter acquires the power of disposition, or file a
registration statement under the Securities Act with respect to the foregoing
or (b) enter into any swap or other agreement that transfers, in whole or in
part, the economic consequence of ownership of the Common Stock whether any
such swap or transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, without the prior written consent of Merrill
Lynch & Co. on behalf of the Underwriters for a period of 180 days after the
date of this Prospectus. The foregoing agreement will not limit a
stockholder's ability to transfer shares in a private placement or to pledge
shares, provided that the transferee or pledgee agrees to be bound by such
agreement. The foregoing agreement also will not limit the Company's ability
to (i) grant stock options under the 1997 Stock Option Plan, (ii) issue shares
as consideration for acquisitions (provided that the Company may not issue in
excess of 750,000 shares for acquisitions unless the recipients of such excess
shares agree to be subject to the foregoing lock-up with respect to such
excess shares), (iii) file a shelf registration statement with respect to the
possible resale of outstanding shares of Common Stock or shares of Common
Stock that may be acquired upon exercise of outstanding warrants (provided
that no sales may be made under such registration statement during the 180-day
lock-up period), (iv) file a registration statement with respect to Common
Stock or other securities to be issued as consideration for an acquisition or
with respect to the potential resale of shares issued as consideration for an
acquisition (provided that no sales may be made pursuant to such registration
statement except to the extent permitted by clause (ii) above) or (v) file a
registration statement registering the shares that may be issued pursuant to
options granted or to be granted under the 1997 Stock Option Plan.

The Company has also agreed not to waive any existing lock-up agreements
between the Company and its stockholders without the prior written consent of
Merrill Lynch & Co. on behalf of the Underwriters, for a period of 180 days
after the date of this Prospectus. This effectively prohibits the holders of
an aggregate of 2,901,705 shares of Common Stock from selling or otherwise
disposing of any such shares for a period of 180 days after the date of this
Prospectus, without the prior written consent of Merrill Lynch & Co., on
behalf of the Underwriters. See "Shares Eligible for Future Sales."

The Company has agreed to indemnify the U.S. Underwriters and the
International Managers against certain liabilities, including certain
liabilities under the Securities Act.

Certain of the Underwriters have from time to time provided certain
investment banking and advisory services to the Company for which services
such Underwriters received customary compensation. The Underwriters may in the
future provide additional investment banking and advisory services to the
Company.

46
<PAGE>

Each International Manager has agreed that (i) it has not offered or sold
and, prior to the expiration of the period of six months from the closing date
of the Offerings, will not offer or sell any shares of Common Stock to persons
in the United Kingdom, except to persons whose ordinary activities involve
them in acquiring, holding, managing or disposing of investments (as principal
or agent) for the purposes of their businesses or otherwise in circumstances
which do not constitute an offer to the public in the United Kingdom within
the meaning of the Public Offers of Securities Regulations 1995; (ii) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the
Common Stock in, from or otherwise involving the United Kingdom; and it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issuance of Common Stock to
a person who is of a kind described in Article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to
whom such document may otherwise lawfully be issued or passed on.

No action has been or will be taken in any jurisdiction (except in the
United States) that would permit a public offering of the shares of Common
Stock, or the possession, circulation or distribution of this Prospectus or
any other material relating to the Company or shares of Common Stock in any
jurisdiction where acting for that purpose is required. Accordingly, the
shares of Common Stock may not be offered or sold, directly or indirectly, and
neither this Prospectus nor any other offering material or advertisements in
connection with the shares of Common Stock may be distributed or published, in
or from any country or jurisdiction except in compliance with any applicable
rules and regulations of any such country or jurisdiction.

Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the offering price set forth on the cover page hereof.

LEGAL MATTERS

47
<PAGE>

EXPERTS

The audited financial statements of Access Rentals, Inc., and Subsidiary and
Affiliate included in this Registration Statement have been included herein in
reliance on 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 on the authority of that firm as experts in
auditing and accounting.

AVAILABLE INFORMATION

48
<PAGE>

by such reference. The Registration Statement, including all exhibits and
schedules thereto, may be inspected and copied at the public reference
facilities maintained by the Commission at the principal office of the
Commission located at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Midwest Regional Office of the Commission located at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and at the
Northeast Regional office of the Commission located at Seven World Trade
Center, Suite 1300, New York, New York 10048. Copies of such material may be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Room 1204, Washington, D.C. 20549, at prescribed rates.

The Company is subject to the informational and periodic reporting
requirements of the Exchange Act, and in accordance therewith, files periodic
reports, proxy statements, and other information with the Commission. Such
periodic reports, proxy statements, and other information may be inspected and
copied at the public reference facilities maintained by the Commission and at
the Commission's regional offices at the addresses stated above. Copies of
such material may be obtained at prescribed rates from the Public Reference
Section of the Commission at the address stated above. The Common Stock is
listed on the New York Stock Exchange (the "NYSE"), and the Registration
Statement and such reports, proxy statements and other information can also be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York
10005.

49
<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CON-
NECTION WITH THE OFFERINGS COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHO-
RIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.

IN THE PROSPECTUS, REFERENCES TO "DOLLARS" AND "$" ARE TO UNITED STATES
DOLLARS, UNLESS OTHERWISE INDICATED.

---------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Summary Historical and Pro Forma Consolidated Financial Information....... 6
Risk Factors.............................................................. 7
Use of Proceeds........................................................... 12
Dividend Policy........................................................... 12
Price Range of Common Stock............................................... 12
Capitalization............................................................ 13
Selected Historical and Pro Forma Consolidated Financial Information...... 14
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 16
Business.................................................................. 21
Management................................................................ 28
Principal Stockholders.................................................... 35
Description of Capital Stock.............................................. 37
Certain Charter and By-Law Provisions..................................... 38
Shares Eligible for Future Sale........................................... 41
Certain United States Federal Tax Considerations.......................... 42
Underwriting.............................................................. 45
Legal Matters............................................................. 47
Experts................................................................... 48
Available Information..................................................... 48
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

6,500,000 SHARES

[LOGO] UNITED RENTALS

COMMON STOCK

---------------

PROSPECTUS

---------------

MERRILL LYNCH INTERNATIONAL

DEUTSCHE MORGAN GRENFELL

DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL
SALOMON SMITH BARNEY
INTERNATIONAL

, 1998

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

<TABLE>
<S> <C>
SEC Registration Fee.......................................... $ 50,057
Listing Fee................................................... $ 24,500
NASD Filing Fee............................................... $ 15,878
Accounting Fees and Expenses*................................. $ 350,000
Printing and Engraving Expenses*.............................. $ 200,000
Legal Fees and Expenses (other than blue sky)*................ $ 250,000
Blue Sky Fees and Expenses*................................... $ 5,000
Transfer Agent and Registrar Fees*............................ $ 5,000
Miscellaneous Expenses*....................................... $ 99,565
----------
Total*........................................................ $1,000,000
==========
</TABLE>
- --------
* Estimated.

ITEM 14. 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
each 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.

II-1
<PAGE>

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 15. RECENT SALES OF UNREGISTERED SECURITIES.

Set forth below is a listing of all sales by the Company of unregistered
securities since the Company was incorporated on August 14, 1997. All such
sales were exempt from registration under the Securities Act of 1933, as
amended (the "Act"), pursuant to Section 4(2) of the Act (and, in the case of
the private placement described in paragraph 3 below, Regulation D
thereunder), as they were transactions not involving a public offering. The
Company believes that each of the issuances made pursuant to Section 4(2) was
made to a sophisticated investor, who had the financial resources to bear the
risk of the investment and who had the means and opportunity to obtain
information concerning the Company. The consideration paid to the Company in
respect of each issuance was cash, unless otherwise indicated. All sales
described below were made by the Company without the assistance of any
underwriters.

1. In September, October, November and December 1997, the Company issued
an aggregate of 12,910,714 shares of Common Stock and 6,342,858 warrants to
certain officers of the Company (including, in certain cases, one or more
entities controlled by the officer) for an aggregate amount of $46.01
million (not including 240,000 shares that were issued in the private
placement described in paragraph 3 below to a person who subsequently
became a director). See "Management--Capital Contributions by Officers and
Directors" in the prospectus which is part of this Registration Statement.

2. In October 1997, the Company sold an aggregate of 118,572 shares of
Common Stock to five employees of the Company and one consultant at a price
of $3.50 per share.

3. In September 1997, the Company in a private placement sold an
aggregate of 2,496,121 shares of Common Stock, at a price of $3.50 per
share, to 51 accredited investors. Such sale was made in accordance with
Regulation D promulgated under the Act.

4. In October 1997, the Company issued 318,712 shares of Common Stock as
part of the consideration for the acquisition by the Company of one of the
Initial Acquired Companies. The number of such shares is subject to
adjustment as described under "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Consideration for Acquired
Companies."

5. In October 1997, the Company issued, in connection with certain
acquisitions, a convertible note in the principal amount of $300,000 and a
convertible note in the principal of $200,000.

6. Options with respect to 931,333 shares of Common Stock were granted to
employees of the Company. Such options have exercise prices ranging from
$10.00 per share to $30.00 per share and a weighted average exercise price
of $13.06 per share.

7. In November 1997, the Company issued (i) 5,000 shares of Common Stock
as compensation for certain recruiting services and (ii) a warrant to
purchase 1,200 shares of Common Stock (at a $10.00 per share exercise
price) as compensation for certain consulting services.

8. In January 1998, the Company issued (i) as part of the consideration
for certain acquisitions, an aggregate of 804,875 shares of Common Stock
and a warrant to purchase 30,000 shares of Common Stock at an exercise
price of $13.50 per share, (ii) as compensation to certain persons
providing consulting services to the Company, warrants to purchase an
aggregate of 110,000 shares of Common Stock at an exercise price of $13.50
per share, (iii) as part of the consideration payable under the lease for
one of the Company's facilities, warrants to purchase an aggregate of
55,000 shares of Common Stock at an exercise price of $18.50 per share and
(iv) upon conversion of the $200,000 convertible note referred to in
paragraph 5 above, 14,814 shares of Common Stock.

II-2
<PAGE>

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
-------- -----------------------
<C> <S>
1(a)* Form of United States Purchase Agreement
1(b)* Form of International Purchase Agreement
3(a)** Amended and Restated Certificate of Incorporation of the Company, in
effect as of the date hereof
3(b)** By-laws of the Company, in effect as of the date hereof
4** Form of Common Stock Certificate
5* Opinion of Ehrenreich Eilenberg Krause & Zivian LLP
10(a)*** $155 Million Revolving Credit Facility, dated as of December 24,
1997, between the Company, various financial institutions, and Bank
of America National Trust and Savings Association, as agent
10(b)** 1997 Stock Option Plan
10(c)** Form of Warrant Agreement(1)
10(d)** Form of Private Placement Purchase Agreement entered into by certain
officers of the Company in connection with purchasing shares and
warrants from the Company(2)
10(e)** Form of Subscription Agreement for September 1997 Private
Placement(3)
10(f)** Form of Indemnification Agreement for Officers and Directors of the
Company
10(g)** Employment Agreement between the Company and Bradley S. Jacobs, dated
as of September 19, 1997
10(h)** Employment Agreement between the Company and John N. Milne, dated as
of September 19, 1997
10(i)** Employment Agreement between the Company and Michael J. Nolan, dated
as of October 14, 1997
10(j)** Employment Agreement between the Company and Robert P. Miner, dated
as of October 10, 1997
10(k)** Stock Purchase Agreement, dated as of October 24, 1997, among the
Company and the shareholders of Mercer Equipment Company+
10(l)** Stock Purchase Agreement, dated as of October 24, 1997, among the
Company and the shareholders of Bronco Hi-Lift Inc.+
10(m)** Stock Purchase Agreement, dated as of October 24, 1997, among the
Company and Coran Enterprises, Inc., Monterey Bay Equipment Rentals,
Inc., James M. Shade, Carol A. Shade, James M. Shade and Carol Anne
Shade, Trustees under the James M. Shade and Carol A. Shade Trust
Agreement dated September 14, 1982, Randall Shade and Corey Shade.+
10(n)** Stock Purchase Agreement, dated as of October 24, 1997, among the
Company and the shareholders of Rent-It Center, Inc.+
10(o)** Stock Purchase Agreement, dated as of October 20, 1997, among the
Company and A&A Tool Rentals & Sales, Inc., Joseph E. Doran, Patrick
J. Doran, and A&A Tool Rentals & Sales, Inc. Employee Stock Ownership
Plan.+
10(p)** Agreement and Plan of Merger, dated as of October 23, 1997, among the
Company, UR Acquisition Subsidiary, Inc. and J&J Rental Services,
Inc.+
10(q)** Convertible Note dated October 24, 1997
10(r)** Subscription Agreement dated November 14, 1997, between Wayland R.
Hicks and the Company
10(s)** Agreement dated November 14, 1997, between the Company and Wayland R.
Hicks
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
-------- -----------------------
<C> <S>
10(t)*** Purchase Agreement, dated as of January 22, 1998, among the Company,
United Rentals of Canada, Inc., Access Rentals, Inc., Reinhart
Leasing, LLC and the Stockholders of Access Rentals, Inc.+
10(u)*** Stock Purchase Agreement, dated as of January 13, 1998, among the
Company, Mission Valley Rentals, Inc., Charles F. Journey and Connie
J. Journey+
10(v)*** Stock Purchase Agreement, dated as of January 22, 1998, among the
Company, United Rentals of Canada, Inc. and BNR Equipment Limited and
Affiliates+
21* Subsidiaries of the Registrant
23(a) Consent of Ehrenreich Eilenberg Krause & Zivian LLP (included in
opinion filed as Exhibit 5)
23(b)* Consent of Weil, Gotshal & Manges LLP
23(c)* Consent of Ernst & Young LLP
23(d)* Consent of Ernst & Young LLP
23(e)* Consent of Ernst & Young LLP
23(f)* Consent of Ernst & Young LLP
23(g)* Consent of KPMG Peat Marwick LLP
23(h)* Consent of KPMG
23(i)* Consent of Webster Duke & Co. PA
23(j)* Consent of Grant Thornton LLP
23(k)* Consent of Battaglia, Andrews & Moag, P.C.
23(l)*** Consent of Wayland R. Hicks
24 Power of Attorney (included in Part II of the original Registration
Statement under the caption "Signatures")
27*** Financial Data Schedule
</TABLE>
- --------
* Filed herewith.
** Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's Registration Statement on Form S-1 (Registration No. 333-
39117).

*** Previously filed.
+ Filed without exhibits and schedules (to be provided supplementally upon
request of the Commission).
(1) The Company issued a warrant in this form to the following officers of the
Company (or in certain cases to an entity controlled by such officer) for
the number of shares indicated: Bradley S. Jacobs (5,000,000); John N.
Milne (714,286); Michael J. Nolan (285,715); Robert P. Miner (142,857);
Sandra E. Welwood (50,000); Joseph J. Kondrup, Jr. (50,000); Kai E. Nyby
(50,000); and Richard A. Volonino (50,000).
(2) Each officer of the Company who purchased securities prior to the
Company's initial public offering in December 1997, other than Messrs.
Jacobs and Hicks, entered into a Private Placement Purchase Agreement in
this form (modified, in the case of Messrs. Barker and Imig, to reflect
the fact that such officers did not purchase Warrants) with respect to the
shares of Common Stock and Warrants purchased by such officer from the
Company as described under "Management--Capital Contributions by Officers
and Directors."
(3) Each purchaser of shares of Common Stock in the Company's September 1997
private placement entered into a Subscription Agreement in this form with
respect to the shares purchased.

ITEM 17. UNDERTAKINGS.

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 foregoing provisions, 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

II-4
<PAGE>

a claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses 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 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.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
a registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to be part
of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
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.

II-5
<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 FEBRUARY 13, 1998.

United Rentals, Inc.

/s/ Michael J. Nolan
By: _________________________________
MICHAEL J. NOLAN
CHIEF FINANCIAL OFFICER

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THEIR
RESPECTIVE CAPACITIES AND ON THE RESPECTIVE DATES SET FORTH OPPOSITE THEIR
NAMES.

SIGNATURE TITLE DATE

Chairman, Chief
/s/ * Executive Officer February 13,
- ------------------------------------- and Director 1998
BRADLEY S. JACOBS (Principal
Executive Officer)

Director
/s/ * February 13,
- ------------------------------------- 1998
JOHN N. MILNE

Director
/s/ * February 13,
- ------------------------------------- 1998
RONALD M. DEFEO

Director
/s/ * February 13,
- ------------------------------------- 1998
RICHARD J. HECKMANN

Director
/s/ * February 13,
- ------------------------------------- 1998
GERALD TSAI, JR.

/s/ Michael J. Nolan Chief Financial
- ------------------------------------- Officer (Principal February 13,
MICHAEL J. NOLAN Financial Officer) 1998

/s/ Sandra E. Welwood Vice President,
_____________________________________ Corporate February 13,
SANDRA E. WELWOOD Controller 1998
(Principal
Accounting Officer)

*By Michael J. Nolan
_________________________________
MICHAEL J. NOLAN

ATTORNEY-IN-FACT
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF EXHIBITS NUMBER
-------- ----------------------- ------
<C> <S> <C>
1(a)* Form of United States Purchase Agreement
1(b)* Form of International Purchase Agreement
3(a)** Amended and Restated Certificate of Incorporation of the
Company, in effect as of the date hereof
3(b)** By-laws of the Company, in effect as of the date hereof
4** Form of Common Stock Certificate
5* Opinion of Ehrenreich Eilenberg Krause & Zivian LLP
10(a)*** $155 Million Revolving Credit Facility, dated as of December
24, 1997, between the Company, various financial
institutions, and Bank of America National Trust and Savings
Association, as agent
10(b)** 1997 Stock Option Plan
10(c)** Form of Warrant Agreement(1)
10(d)** Form of Private Placement Purchase Agreement entered into by
certain officers of the Company in connection with
purchasing shares and warrants from the Company(2)
10(e)** Form of Subscription Agreement for September 1997 Private
Placement(3)
10(f)** Form of Indemnification Agreement for Officers and Directors
of the Company
10(g)** Employment Agreement between the Company and Bradley S.
Jacobs, dated as of September 19, 1997
10(h)** Employment Agreement between the Company and John N. Milne,
dated as of September 19, 1997
10(i)** Employment Agreement between the Company and Michael J.
Nolan, dated as of October 14, 1997
10(j)** Employment Agreement between the Company and Robert P.
Miner, dated as of October 10, 1997
10(k)** Stock Purchase Agreement, dated as of October 24, 1997,
among the Company and the shareholders of Mercer Equipment
Company+
10(l)** Stock Purchase Agreement, dated as of October 24, 1997,
among the Company and the shareholders of Bronco Hi-Lift
Inc.+
10(m)** Stock Purchase Agreement, dated as of October 24, 1997,
among the Company and Coran Enterprises, Inc., Monterey Bay
Equipment Rentals, Inc., James M. Shade, Carol A. Shade,
James M. Shade and Carol Anne Shade, Trustees under the
James M. Shade and Carol A. Shade Trust Agreement dated
September 14, 1982, Randall Shade and Corey Shade.+
10(n)** Stock Purchase Agreement, dated as of October 24, 1997,
among the Company and the shareholders of Rent-It Center,
Inc.+
10(o)** Stock Purchase Agreement, dated as of October 20, 1997,
among the Company and A&A Tool Rentals & Sales, Inc., Joseph
E. Doran, Patrick J. Doran, and A&A Tool Rentals & Sales,
Inc. Employee Stock Ownership Plan.+
10(p)** Agreement and Plan of Merger, dated as of October 23, 1997,
among the Company, UR Acquisition Subsidiary, Inc. and J&J
Rental Services, Inc.+
10(q)** Convertible Note dated October 24, 1997
10(r)** Subscription Agreement dated November 14, 1997, between
Wayland R. Hicks and the Company
10(s)** Agreement dated November 14, 1997, between the Company and
Wayland R. Hicks
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION OF EXHIBITS NUMBER
-------- ----------------------- ------
<C> <S> <C>
10(t)*** Purchase Agreement, dated as of January 22, 1998, among the
Company, United Rentals of Canada, Inc., Access Rentals,
Inc., Reinhart Leasing, LLC and the Stockholders of Access
Rentals, Inc.+
10(u)*** Stock Purchase Agreement, dated as of January 13, 1998,
among the Company, Mission Valley Rentals, Inc., Charles F.
Journey and Connie J. Journey+
10(v)*** Stock Purchase Agreement, dated as of January 22, 1998,
among the Company, United Rentals of Canada, Inc. and BNR
Equipment Limited and Affiliates+
21* Subsidiaries of the Registrant
23(a) Consent of Ehrenreich Eilenberg Krause & Zivian LLP
(included in opinion filed as Exhibit 5)
23(b)* Consent of Weil, Gotshal & Manges LLP
23(c)* Consent of Ernst & Young LLP
23(d)* Consent of Ernst & Young LLP
23(e)* Consent of Ernst & Young LLP
23(f)* Consent of Ernst & Young LLP
23(g)* Consent of KPMG Peat Marwick LLP
23(h)* Consent of KPMG
23(i)* Consent of Webster Duke & Co. PA
23(j)* Consent of Grant Thornton LLP
23(k)* Consent of Battaglia, Andrews & Moag, P.C.
23(l)*** Consent of Wayland R. Hicks
24 Power of Attorney (included in Part II of the original
Registration Statement under the caption "Signatures")
27*** Financial Data Schedule
</TABLE>
- --------
* Filed herewith.
** Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's Registration Statement on Form S-1 (Registration No. 333-
39117).

<PAGE>

================================================================================

United Rentals, Inc.
(A Delaware Corporation)

5,200,000 Shares of Common Stock

U.S. PURCHASE AGREEMENT
-----------------------

Dated: _______ , 1998

================================================================================
<PAGE>

Table of Contents

Page
----

U.S. PURCHASE AGREEMENT.................................................... 1
SECTION 1. Representations and Warranties........................... 3
(a) Representations and Warranties by the Company............ 3
(i) Compliance with Registration Requirements....... 3
(ii) Independent Accountants ..................... 4
(iii) Financial Statements............................ 4
(iv) No Manipulation of Market Prices................ 5
(v) No Material Adverse Change in Business.......... 5
(vi) Good Standing of the Company.................... 5
(vii) Good Standing of Subsidiaries................... 6
(viii) Capitalization .............................. 6
(ix) Authorization of Agreement ..................... 6
(x) Authorization and Description of Securities..... 6
(xi) Absence of Defaults and Conflicts............... 7
(xii) Absence of Labor Dispute........................ 7
(xiii) Absence of Proceedings.......................... 8
(xiv) Accuracy of Representations and Warranties...... 8
(xv) Accuracy of Exhibits ..................... 8
(xvi) Possession of Intellectual Property............. 8
(xvii) Absence of Further Requirements................. 9
(xviii) Possession of Licenses and Permits.............. 9
(xix) Title to Property .............................. 9
(xx) Investment Company Act ..................... 10
(xxi) Environmental Laws.............................. 10
(b) Officer's Certificates................................... 11

SECTION 2. Sale and Delivery to U.S. Underwriters; Closing.......... 11
(a) Initial Securities....................................... 12
(b) Option Securities ....................................... 12
(c) Payment.................................................. 12
(d) Denominations; Registration.............................. 13

SECTION 3. Covenants of the Company................................. 13
(a) Compliance with Securities Regulations and Commission
Requests................................................. 13
(b) Filing of Amendments..................................... 14
(c) Delivery of Registration Statements...................... 14
(d) Delivery of Prospectuses................................. 14
(e) Continued Compliance with Securities Laws................ 14

i
<PAGE>

(f) Blue Sky Qualifications.................................. 15
(g) Rule 158................................................. 15
(h) Use of Proceeds ....................................... 15
(i) Listing.................................................. 15
(j) Restriction on Sale of Securities........................ 15
(k) Reporting Requirements................................... 17

SECTION 4. Payment of Expenses...................................... 17
(a) Expenses ................................................ 17
(b) Termination of Agreement................................. 17

SECTION 5. Conditions of U.S. Underwriters' Obligations............. 18
(a) Effectiveness of Registration Statement.................. 18
(b) Opinions of Counsel for Company.......................... 18
(c) Opinion of Counsel for U.S. Underwriters................. 18
(d) Officers' Certificate.................................... 19
(e) Accountant's Comfort Letters............................. 19
(f) Bring-down Comfort Letters............................... 19
(g) Approval of Listing...................................... 19
(h) No Objection............................................. 20
(i) Lock-up Agreements....................................... 20
(j) Purchase of Initial International Securities............. 20
(k) Conditions to Purchase of U.S. Option Securities......... 20
(l) Additional Documents..................................... 21
(m) Termination of Agreement................................. 21

SECTION 6. Indemnification.......................................... 21
(a) Indemnification of U.S. Underwriters..................... 21
(b) Indemnification of Company, Directors and Officers....... 22
(c) Actions against Parties; Notification.................... 23
(d) Settlement without Consent if Failure to Reimburse....... 24

SECTION 7. Contribution............................................. 24

SECTION 8. Representations, Warranties and Agreements to Survive
Delivery................................................. 25

SECTION 9. Termination of Agreement................................. 26
(a) Termination; General..................................... 26
(b) Liabilities.............................................. 26

SECTION 10. Default by One or More of the U.S. Underwriters.......... 26

ii
<PAGE>

SECTION 11. Notices................................................. 27

SECTION 12. Parties................................................. 27

SECTION 13. GOVERNING LAW AND TIME.................................. 28

SECTION 14. Effect of Headings...................................... 28

SCHEDULES
Schedule A .............................................. Sch A-1
Schedule B .............................................. Sch B-1
Schedule C .............................................. Sch C-1

EXHIBITS
Exhibit A-1 - Form of Opinion of Company's Counsel................... A-1
Exhibit A-2 - Form of Opinion of Company's Counsel................... A-2
Exhibit B - Form of Lock-up Letter................................... B-1

ANNEX
Annex A - Form of Accountants' Comfort Letter
Pursuant to Section 5(e)....................................... Annex A-1

iii
<PAGE>

United Rentals, Inc.

(a Delaware corporation)

5,200,000 Shares of Common Stock

(Par Value $.01 Per Share)

U.S. PURCHASE AGREEMENT
------------------------

_______ , 1998

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Deutsche Morgan Grenfell Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Smith Barney Inc.
as U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1208

Ladies and Gentlemen:

United Rentals, Inc., a Delaware corporation (the "Company"), confirms its
agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), Deutsche Morgan Grenfell Inc., Donaldson Lufkin
& Jenrette Securities Corporation and Smith Barney Inc. (collectively, the "U.S.
Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 10 hereof), with respect to the issue and sale
by the Company and the purchase by the U.S. Underwriters, acting severally and
not jointly, of the respective numbers of shares of Common Stock, par value $.01
per share, of the Company ("Common Stock") set forth in Schedule A hereto, and
with respect to the grant by the Company to the U.S. Underwriters, acting
severally and not jointly, of the option described in Section 2(b) hereof to
purchase all or any part of 780,000 additional shares of Common Stock to cover
over-allotments, if any. The aforesaid 5,200,000 shares of Common Stock (the
"Initial U.S. Securities") to be purchased by the U.S. Underwriters and all or
any part of the 780,000 shares
<PAGE>

of Common Stock subject to the option described in Section 2(b) hereof (the
"U.S. Option Securities") are hereinafter called, collectively, the "U.S.
Securities".

It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "International Purchase Agreement")
providing for the offering by the Company of an aggregate of 1,300,000 shares of
Common Stock (the "Initial International Securities") through arrangements with
Merrill Lynch International, Donaldson, Lufkin & Jenrette International, Morgan
Grenfell & Co. Limited and Smith Barney Inc. (the "International Managers") and
the grant by the Company to the International Managers, acting severally and not
jointly, of an option to purchase all or any part of the 195,000 additional
shares of Common Stock solely to cover over-allotments, if any (the
"International Option Securities" and, together with the U.S. Option Securities,
the "Option Securities"). The Initial International Securities and the
International Option Securities are hereinafter called the "International
Securities". It is understood that the Company is not obligated to sell and the
U.S. Underwriters are not obligated to purchase, any Initial U.S. Securities
unless all of the Initial International Securities are contemporaneously
purchased by the International Managers.

The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters". The Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities". The U.S. Securities and the International Securities are
hereinafter collectively called the "Securities".

The Underwriters will concurrently enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the direction
of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (in
such capacity, the "Global Coordinator").

The Company understands that the U.S. Underwriters propose to make a public
offering of the U.S. Securities as soon as the U.S. Underwriters deem advisable
after this Agreement has been executed and delivered.

The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-_____) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b).
Two forms of prospectus are to be used in connection with the offering and sale
of the Securities: one relating to the U.S. Securities (the "Form of U.S.
Prospectus") and one relating to the International Securities (the "Form of
International

2
<PAGE>

Prospectus"). The Form of International Prospectus is identical to the Form of
U.S. Prospectus, except for the front cover and back cover pages and the
information under the caption "Underwriting." The information, if any, included
in any such prospectus or in any such Term Sheet, as the case may be, that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule
430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as
"Rule 434 Information." Each Form of U.S. Prospectus and Form of International
Prospectus used before such registration statement became effective, and any
prospectus that omitted, if applicable, the Rule 430A Information or the Rule
434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto,
schedules thereto at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final Form of U.S.
Prospectus and the final Form of International Prospectus in the forms first
furnished to the Underwriters for use in connection with the offering of the
Securities are herein called the "U.S. Prospectus" and the "International
Prospectus," respectively, and collectively, the "Prospectuses." If Rule 434 is
relied on, the terms "U.S. Prospectus" and "International Prospectus" shall
refer to the preliminary U.S. Prospectus dated February 17, 1998 and the
preliminary International Prospectus dated February 17, 1998, respectively, each
together with the applicable Term Sheet and all references in this Agreement to
the date of such Prospectuses shall mean the date of the applicable Term Sheet.
For purposes of this Agreement, all references to the Registration Statement,
any preliminary prospectus, the U.S. Prospectus, the International Prospectus or
any Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("EDGAR").

SECTION 1. Representations and Warranties.
-------------------------------

(a) Representations and Warranties by the Company. The Company
represents and warrants to each U.S. Underwriter as of the date hereof (and
agrees that each such representation and warranty will be deemed to be made by
the Company as of the Closing Time referred to in Section 2(c) hereof, and as of
each Date of Delivery (if any) referred to in Section 2(b) hereof) and agrees
with each U.S. Underwriter, as follows:

(i) Compliance with Registration Requirements. Each of the
-----------------------------------------
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the

3
<PAGE>

knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with.

At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any U.S. Option
Securities are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations and did not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading. Neither of the Prospectuses nor
any amendments or supplements thereto (including any prospectus wrapper),
at the time the Prospectuses or any amendments or supplements thereto were
issued and at the Closing Time (and, if any U.S. Option Securities are
purchased, at the Date of Delivery), included or will include an untrue
statement of a material fact or omitted or will omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Rule 434 is
used, the Company will comply with the requirements of Rule 434 and the
Prospectuses shall not be "materially different", as such term is used in
Rule 434, from the prospectuses included in the Registration Statement at
the time it became effective. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or the U.S. Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any U.S.
Underwriter expressly for use in the Registration Statement or the U.S.
Prospectus.

Each preliminary prospectus and the prospectuses filed as part of
the Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectuses delivered to the Underwriters
for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.

(ii) Independent Accountants. The accountants who certified the
-----------------------
financial statements and supporting schedules of the Company and its
subsidiaries included in the Registration Statement are independent public
accountants as required by the 1933 Act and the 1933 Act Regulations.

4
<PAGE>

indicated in the applicable financial statement) and cash flows and (in the
case of a Reported Entity for which a statement of stockholders' equity is
included) stockholders' equity (and partners' capital if so indicated in
the applicable financial statement) of the Reported Entity for the
period(s) specified; said financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP") applied
on a consistent basis throughout the periods involved (except as otherwise
indicated in such financial statements). Any supporting schedules included
in the Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected historical
financial data and the summary historical financial information included in
the Prospectuses present fairly the information shown therein and, in the
case of historical financial data or information of the Company, have been
compiled on a basis consistent with that of the audited financial
statements included in the Registration Statement. The pro forma financial
statements and the related notes thereto included in the Registration
Statement and the Prospectuses present fairly the information shown
therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements and have been
properly compiled on the bases described therein, and the assumptions used
in the preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and circumstances
referred to therein.

(iv) No Manipulation of Market Prices. The Company has not taken or
--------------------------------
caused to be taken and will not take or cause to be taken, either directly
or indirectly, any action designed to cause or result in, or which action
constitutes or which might reasonably be expected to constitute, the
stabilization or manipulation of the market price of the Common Stock,
including but not limited to those actions prohibited by Section 9(a) of
the 1934 Act, the 1934 Act Regulations and Regulation M promulgated by the
Commission.

(v) No Material Adverse Change in Business. Since the respective
--------------------------------------
dates as of which information is given in the Registration Statement and
the Prospectuses, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or to the best knowledge of the Company business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business (a "Material
Adverse Effect"), (B) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary course
of business, which are material with respect to the Company and its
subsidiaries considered as one enterprise, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the Company
on any class of its capital stock.

5
<PAGE>

and perform its obligations under this Agreement; and the Company is duly
qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect.

(vii) Good Standing of Subsidiaries. Each subsidiary of the
-----------------------------
Company has been duly organized and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectuses and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good standing
would not result in a Material Adverse Effect; except as otherwise
disclosed in the Registration Statement, all of the issued and outstanding
capital stock of each such subsidiary has been duly authorized and validly
issued, is fully paid and non-assessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity (except for any
security interest or pledge contemplated by the Credit Agreement filed as
Exhibit 10(a) to the Registration Statement); none of the outstanding
shares of capital stock of any subsidiary was issued in violation of the
preemptive or similar rights of any securityholder of such subsidiary. The
only subsidiaries of the Company (other than inactive subsidiaries) are the
subsidiaries listed on Exhibit 21 to the Registration Statement.

(viii) Capitalization. The authorized, issued and outstanding
--------------
capital stock of the Company is as set forth in the Prospectuses under
"Description of Capital Stock--General" (except for subsequent issuances,
if any, pursuant to this Agreement, pursuant to reservations, agreements or
employee benefit plans referred to in the Prospectuses or pursuant to the
exercise of convertible securities, warrants or options referred to in the
Prospectuses). The shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar rights
of any security holder of the Company. All sales of the Company's capital
stock prior to the date hereof were either (1) made pursuant to a
registration statement filed by the Company with the Commission under the
1933 Act or (2) at all relevant times exempt from the registration
requirements of the 1933 Act and in case (1) and (2) duly registered with
or the subject of an available exemption from the registration requirements
of the applicable state securities or blue sky laws.

(ix) Authorization of Agreement. This Agreement and the
--------------------------
International Purchase Agreement have been duly authorized, executed and
delivered by the Company.

6
<PAGE>

(x) Authorization and Description of Securities. The Securities
-------------------------------------------
to be purchased by the U.S. Underwriters and the International Managers
from the Company have been duly authorized for issuance and sale to the
U.S. Underwriters pursuant to this Agreement and the International Managers
pursuant to the International Purchase Agreement, respectively, and, when
issued and delivered by the Company pursuant to this Agreement and the
International Purchase Agreement, respectively, against payment of the
consideration set forth herein and the International Purchase Agreement,
respectively, will be validly issued, fully paid and non-assessable; the
Common Stock conforms to all statements relating thereto contained in the
Prospectuses and such description conforms to the rights set forth in the
instruments defining the same; no holder of the Securities will be subject
to personal liability by reason of being such a holder; and the issuance of
the Securities is not subject to the preemptive or other similar rights of
any security holder of the Company.

(xi) Absence of Defaults and Conflicts. Neither the Company nor
---------------------------------
any of its subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which it or any of them may be bound, or to which any of the property or
assets of the Company or any subsidiary is subject (collectively,
"Agreements and Instruments") except for such defaults that would not
result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement and the International Purchase Agreement and
the consummation of the transactions contemplated in this Agreement, the
International Purchase Agreement and in the Registration Statement
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Prospectuses
under the caption "Use of Proceeds") and compliance by the Company with its
obligations under this Agreement and the International Purchase Agreement
have been duly authorized by all necessary corporate action and do not and
will not, whether with or without the giving of notice or passage of time
or both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
or any subsidiary pursuant to, the Agreements and Instruments (except for
such conflicts, breaches or defaults or liens, charges or encumbrances that
would not result in a Material Adverse Effect), nor will such action result
in any violation of the provisions of the charter or by-laws of the Company
or any subsidiary or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any subsidiary or any of their assets, properties or operations.
As used herein, a "Repayment Event" means any event or condition which
gives the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any subsidiary.

7
<PAGE>

(xii) Absence of Labor Dispute. No labor dispute with the
------------------------
employees of the Company or any subsidiary exists or, to the knowledge of
the Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any
subsidiary's principal suppliers, manufacturers, customers or contractors,
which, in either case, may reasonably be expected to result in a Material
Adverse Effect.

(xiii) Absence of Proceedings. There is no action, suit,
----------------------
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or
any subsidiary, which is required to be disclosed in the Registration
Statement (other than as disclosed therein), or which might reasonably be
expected to result in a Material Adverse Effect, or which might reasonably
be expected to materially and adversely affect the consummation of the
transactions contemplated in this Agreement and the International Purchase
Agreement or the performance by the Company of its obligations hereunder or
thereunder; the aggregate of all pending legal or governmental proceedings
to which the Company or any subsidiary is a party or of which any of their
respective property or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation incidental to
the business, could not reasonably be expected to result in a Material
Adverse Effect.

(xiv) Accuracy of Representations and Warranties. To the
------------------------------------------
knowledge of the Company, the representations and warranties made by each
of the Acquired Companies (as defined in the Registration Statement and the
Prospectuses) and the selling stockholders in the respective agreements
pursuant to which the Company acquired the Acquired Companies did not as of
the respective dates thereof contain any inaccuracies that might, singly or
in the aggregate, reasonably be expected to have a Material Adverse Effect.

(xv) Accuracy of Exhibits. There are no contracts or documents
--------------------
which are required to be described in the Registration Statement or the
Prospectuses or to be filed as exhibits thereto which have not been so
described and filed as required.

(xvi) Possession of Intellectual Property. The Company and its
-----------------------------------
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by them, and neither the Company nor any of its subsidiaries
has received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any of its subsidiaries therein, and which infringement or
conflict (if the subject of any

8
<PAGE>

unfavorable decision, ruling or finding) or invalidity or inadequacy,
singly or in the aggregate, would result in a Material Adverse Effect.

(xvii) Absence of Further Requirements. No filing with, or
-------------------------------
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale of
the Securities under this Agreement and the International Purchase
Agreement or the consummation of the transactions contemplated by this
Agreement and the International Purchase Agreement, except (i) such as have
been already obtained or as may be required under the 1933 Act or the 1933
Act Regulations, the 1934 Act and the rules and regulations of the
Commission under the 1934 Act (the "1934 Act Regulations") and foreign or
state securities or blue sky laws.

(xviii) Possession of Licenses and Permits. The Company and its
----------------------------------
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them, except where the
failure to so possess such Government Licenses would not, singly or in the
aggregate, have a Material Adverse Effect; the Company and its subsidiaries
are in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in the
aggregate, have a Material Adverse Effect; all of the Governmental Licenses
are valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect would not have, singly or in the aggregate, a
Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.

(xix) Title to Property. The Company and its subsidiaries have
-----------------
good and marketable title to all real property described in the Prospectus
as owned by the Company and its subsidiaries and good title to all other
properties described in the Prospectus as owned by them, in each case, free
and clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (a) are described
in the Prospectuses or are not required to be described therein pursuant to
the 1933 Act or the 1933 Act Regulations or (b) do not, singly or in the
aggregate, materially interfere with the use made and proposed to be made
of such property by the Company or any of its subsidiaries; and all of the
leases and subleases material to the business of the Company and its
subsidiaries, considered as one enterprise, and under which the Company or
any of its subsidiaries holds properties described in the Prospectuses, are
in full force and effect, and neither the Company nor any subsidiary has
any notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any

9
<PAGE>

subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or such subsidiary to
the continued possession of the leased or subleased premises under any such
lease or sublease, which claim, if upheld, would result in a Material
Adverse Effect.

(xx) Investment Company Act. The Company is not, and upon the
----------------------
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectuses
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").

(xxi) Environmental Laws. Except as described in the
------------------
Registration Statement or except as would not, singly or in the aggregate,
result in a Material Adverse Effect or except as would not be required to
be described in the Registration Statement or the Prospectuses pursuant to
the 1933 Act or the 1933 Act Regulations: (A) neither the Company nor any
of its subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) neither the Company nor any of its subsidiaries
is lacking any permits, authorizations and approvals required under any
applicable Environmental Laws or are in violation of the requirements of
such Environmental Laws, (C) there are no pending or to the best knowledge
of the Company, threatened administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental Law
against the Company or any of its subsidiaries and (D) to the knowledge of
the Company there are no events or circumstances that might reasonably be
expected to form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or governmental body or
agency, against or affecting the Company or any of its subsidiaries
relating to Hazardous Materials or any Environmental Laws.

(xxii) Statistical and Market Data. Nothing has come to the
---------------------------
attention of the Company that has caused the Company to believe that the
statistical and market-related data included in the Prospectus are not
based on or derived from sources that are reliable and accurate in all
material respects.

10
<PAGE>

(xxiii) Taxes. The Company and each of its subsidiaries have
-----
filed all necessary federal, state, local and foreign income, payroll,
franchise and other tax returns (after giving effect to extensions) and
have paid all taxes shown as due thereon or with respect to the Company or
any of its properties (except where the failure to so file or pay would
not, singly or in the aggregate, have a Material Adverse Effect), and there
is no tax deficiency that has been, or to the knowledge of the Company is
likely to be, asserted against the Company, any of its subsidiaries or any
of their properties or assets that would result in a Material Adverse
Effect, except for taxes that are being contested in good faith by
appropriate proceedings and with respect to which the Company has
established adequate reserves in accordance with GAAP.

(xxiv) Insurance. Neither the Company nor any subsidiary has
---------
received notice from any insurer providing insurance coverage for the
Company and its subsidiaries or agent of such insurer that capital
improvements or other expenditures will have to be made in order to
continue present insurance coverage, except such as could not reasonably be
expected, singularly or in the aggregate, to have a Material Adverse
Effect.

(xxv) Maintenance of Sufficient Internal Controls. The Company
-------------------------------------------
and its subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.

(xxvi) Registration Rights. There are no persons with
-------------------
registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement.

(xxvii) Fees. Other than pursuant to this Agreement, the
----
International Purchase Agreement or as described in the Registration
Statement and the Prospectuses, there are no contracts, agreements or
understandings between either the Company or its subsidiaries and any
person that give rise to a valid claim against the Company, any of its
subsidiaries or any of the Underwriters for a brokerage commission,
finder's fee or other like payment relating to the transactions
contemplated hereby.

(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Global Coordinator, the U.S.
Underwriters or to counsel for the U.S. Underwriters shall be deemed a
representation and warranty by the Company to each U.S. Underwriter as to the
matters covered thereby.

11
<PAGE>

SECTION 2. Sale and Delivery to U.S. Underwriters; Closing.
-----------------------------------------------

(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each U.S. Underwriter, severally and not
jointly, and each U.S. Underwriter, severally and not jointly, agrees to
purchase from the Company, at the price per share set forth in Schedule B, the
number of Initial U.S. Securities set forth in Schedule A opposite the name of
such U.S. Underwriter, plus any additional number of Initial U.S. Securities
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.

(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the U.S. Underwriters,
severally and not jointly, to purchase up to an additional 780,000 shares of
Common Stock at the price per share set forth in Schedule B, less an amount per
share equal to any dividends or distributions declared by the Company and
payable on the Initial U.S. Securities but not payable on the U.S. Option
Securities. The option hereby granted will expire 30 days after the date hereof
and may be exercised in whole or in part from time to time only for the purpose
of covering over-allotments which may be made in connection with the offering
and distribution of the Initial U.S. Securities upon notice by the Global
Coordinator to the Company setting forth the number of U.S. Option Securities as
to which the several U.S. Underwriters are then exercising the option and the
time and date of payment and delivery for such U.S. Option Securities. Any such
time and date of delivery for the U.S. Option Securities (a "Date of Delivery")
shall be determined by the Global Coordinator, but shall not be earlier than
three or later than seven full business days after the exercise of said option
or at such earlier time as may be agreed upon by the Global Coordinator and the
Company, nor in any event prior to the Closing Time, as hereinafter defined. If
the option is exercised as to all or any portion of the U.S. Option Securities,
each of the U.S. Underwriters, acting severally and not jointly, will purchase
that proportion of the total number of U.S. Option Securities then being
purchased which the number of Initial U.S. Securities set forth in Schedule A
opposite the name of such U.S. Underwriter bears to the total number of Initial
U.S. Securities, subject in each case to such adjustments as the Global
Coordinator in its discretion shall make to eliminate any sales or purchases of
fractional shares.

(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York
10022, or at such other place as shall be agreed upon by the Global Coordinator
and the Company, at 9:00 A.M. (Eastern time) on the third (fourth, if the
pricing occurs after 4:30 P.M. (Eastern time) on any given day) business day
after the date hereof (unless postponed in accordance with the provisions of
Section 10), or such other time not later than ten business days after such date
as shall be agreed upon by the Global Coordinator and the Company (such time and
date of payment and delivery being herein called "Closing Time").

12
<PAGE>

In addition, in the event that any or all of the U.S. Option Securities are
purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, such U.S. Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Company, on each Date of Delivery as specified in the
notice from the Global Coordinator to the Company.

Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the U.S. Underwriters of certificates for the U.S. Securities to be purchased by
them. It is understood that each U.S. Underwriter is authorized, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial U.S. Securities and the U.S. Option Securities, if any,
which it has agreed to purchase. Merrill Lynch, individually and not as
representative of the U.S. Underwriters, may (but shall not be obligated to)
make payment of the purchase price for the Initial U.S. Securities or the U.S.
Option Securities, if any, to be purchased by any U.S. Underwriter whose funds
have not been received by the Closing Time or the relevant Date of Delivery, as
the case may be, but such payment shall not relieve such U.S. Underwriter from
its obligations hereunder.

(d) Denominations; Registration. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Underwriters may request
in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates for the Initial
U.S. Securities and the U.S. Option Securities, if any, will be made available
for examination and packaging by the U.S. Underwriters in The City of New York
not later than 10:00 A.M. (Eastern time) on the business day prior to the
Closing Time or the relevant Date of Delivery, as the case may be.

SECTION 3. Covenants of the Company. The Company covenants with each
------------------------
U.S. Underwriter as follows:

(a) Compliance with Securities Regulations and Commission
Requests. The Company, subject to Section 3(b) hereof, will comply with the
requirements of Rule 430A or Rule 434, as applicable, and will notify the
Global Coordinator immediately, and confirm the notice in writing, (i) when
the Registration Statement or any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectuses or any amended Prospectuses shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectuses or for additional information, and (iv)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of
the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for
any of such purposes. The Company will promptly

13
<PAGE>

effect the filings necessary pursuant to Rule 424(b) and will take such
steps as it deems necessary to ascertain promptly whether the form of
prospectus transmitted for filing under Rule 424(b) was received for filing
by the Commission and, in the event that it was not, it will promptly file
such prospectus. The Company will make every reasonable effort to prevent
the issuance of any stop order and, if any stop order is issued, to obtain
the lifting thereof at the earliest possible moment.

(b) Filing of Amendments. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or
to the Prospectuses, will furnish the Global Coordinator with copies of any
such documents a reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file or use any such document to
which the Global Coordinator or counsel for the U.S. Underwriters shall
object.

(c) Delivery of Registration Statements. The Company has
furnished or will deliver to the U.S. Underwriters and counsel for the U.S.
Underwriters, without charge, signed copies of the Registration Statement
as originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the U.S.
Underwriters, without charge, a conformed copy of the Registration
Statement as originally filed and of each amendment thereto (without
exhibits) for each of the U.S. Underwriters. The copies of the
Registration Statement and each amendment thereto furnished to the U.S.
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.

(d) Delivery of Prospectuses. The Company has delivered to each
U.S. Underwriter, without charge, as many copies of each preliminary
prospectus as such U.S. Underwriter reasonably requested, and the Company
hereby consents to the use of such copies for purposes permitted by the
1933 Act. The Company will furnish to each U.S. Underwriter, without
charge, during the period when the U.S. Prospectus is required to be
delivered under the 1933 Act or the 1934 Act, such number of copies of the
U.S. Prospectus (as amended or supplemented) as such U.S. Underwriter may
reasonably request. The U.S. Prospectus and any amendments or supplements
thereto furnished to the U.S. Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.

(e) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement, the International

14
<PAGE>

Purchase Agreement and in the Prospectuses. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with
sales of the Securities, any event shall occur or condition shall exist as
a result of which it is necessary, in the opinion of counsel for the U.S.
Underwriters or for the Company, to amend the Registration Statement or
amend or supplement any Prospectus in order that the Prospectuses will not
include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of
such counsel, at any such time to amend the Registration Statement or amend
or supplement any Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare
and file with the Commission, subject to Section 3(b), such amendment or
supplement as may be necessary to correct such statement or omission or to
make the Registration Statement or the Prospectuses comply with such
requirements, and the Company will furnish to the U.S. Underwriters such
number of copies of such amendment or supplement as the U.S. Underwriters
may reasonably request.

(f) Blue Sky Qualifications. The Company will use its best
efforts, in cooperation with the U.S. Underwriters, to qualify the
Securities for offering and sale under the applicable securities laws of
such states and other jurisdictions (domestic or foreign) as the Global
Coordinator may designate and to maintain such qualifications in effect for
a period of not less than one year from the later of the effective date of
the Registration Statement and any Rule 462(b) Registration Statement;
provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is
not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In
each jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by the
laws of such jurisdiction to continue such qualification in effect for a
period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.

(g) Rule 158. The Company will timely file such reports pursuant
to the 1934 Act as are necessary in order to make generally available to
its securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.

(h) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified in
the Prospectuses under "Use of Proceeds".

(i) Listing. The Company will use its best efforts to effect the
listing of the Securities on the New York Stock Exchange.

15
<PAGE>

(j) Restriction on Sale of Securities. During a period of 180
days from the date of the Prospectuses, the Company will not, without the
prior written consent of the Global Coordinator on behalf of the
Underwriters, (i) directly or indirectly, offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant for the sale of or
otherwise dispose of or transfer any share of Common Stock or any
securities convertible into or exchangeable or exercisable for Common
Stock, whether now owned or hereafter acquired or with respect to which the
power of disposition is acquired, or file any registration statement under
the 1933 Act with respect to any of the foregoing (other than as
contemplated in (E), (F) and (G) below), (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Common
Stock, whether any such swap or transaction is to be settled by delivery of
Common Stock or other securities, in cash or otherwise, or (iii) waive any
Stockholder Lock-up Agreement (as such term is defined in the Registration
Statement and the Prospectuses). Clauses (i) and (ii) of the foregoing
sentence shall not limit the Company's ability (A) to sell the Securities
hereunder or under the International Purchase Agreement, (B) to issue
shares of Common Stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof and referred to in
the Prospectuses, (C) to grant stock options under the 1997 Stock Option
Plan (as such term is defined in the Registration Statement and the
Prospectuses), (D) to issue shares of Common Stock as consideration for
future acquisitions, provided, however, that the Company may not issue in
excess of 750,000 shares for acquisitions unless the recipients of such
excess shares enter into agreements containing the limitations set forth in
the first sentence of this paragraph with respect to such additional
shares, (E) to file a shelf registration statement pursuant to Rule 415
under the 1933 Act relating to (a) shares of Common Stock outstanding as of
the date of the Prospectuses and (b) shares of Common Stock underlying
warrants or convertible notes outstanding as of the date of the
Prospectuses, provided, however, that no sales of Common Stock may be made
pursuant to such registration statement during the period of 180 days from
the date of the Prospectuses, (F) to file a registration statement under
the 1933 Act with respect to shares of Common Stock or other securities to
be issued after the date hereof as consideration for an acquisition or with
respect to the potential resale of shares issued after the date hereof as
consideration for an acquisition, provided, however, that no sales may be
made pursuant to such registration statement except to the extent permitted
by clause (D) hereof, or (G) file a registration statement under the 1933
Act registering the shares of Common Stock that may be issued pursuant to
options granted or to be granted under the 1997 Stock Option Plan. In
addition to the foregoing, the Company will (i) require any individual who
becomes an officer or director of the Company and purchases shares of
Common Stock of the Company subsequent to the date of the Prospectuses to
enter into a Lock-up Agreement in the form contained in Exhibit B hereto
and (ii) in the event any registration rights are granted by the Company in
regard to shares of Common Stock issuable upon the conversion of any
outstanding securities of the Company (as contemplated in (B) above, and
including, but not limited to, a $300,000 principal amount note issued as
consideration

16
<PAGE>

for the acquisition of one of the Initial Acquired Companies), also require
the holders of shares of Common Stock that are the subject of such
registration rights to enter into a Lock-up Agreement in the form of
Exhibit B hereto.

(k) Reporting Requirements. The Company, during the period when
the Prospectuses are required to be delivered under the 1933 Act or the
1934 Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act
and the rules and regulations of the Commission thereunder.

(l) Compliance with Rule 463. The Company will file with the
Commission such information as may be required pursuant to Rule 463 of the
1933 Act Regulations.

SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay
-------------------
all expenses incident to the performance of its obligations under this
Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Agreement, the International Purchase
Agreement, the Intersyndicate Agreement and Agreement Among Managers and such
other documents as may be required in connection with the offering, purchase,
sale, issuance or delivery of the Securities, (iii) the preparation, issuance
and delivery of the certificates for the Securities to the Underwriters,
including any stock or other transfer taxes and any stamp or other duties
payable upon the sale, issuance or delivery of the Securities to the
Underwriters and the transfer of the Securities between the U.S. Underwriters
and the International Managers, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus, any Term
Sheets and of the Prospectuses and any amendments or supplements thereto, (vii)
the preparation, printing and delivery to the Underwriters of copies of the Blue
Sky Survey and any supplement thereto, (viii) the fees and expenses of any
transfer agent or registrar for the Securities, (ix) the filing fees incident
to, and the reasonable fees and disbursements of counsel to the Underwriters in
connection with, the review by the National Association of Securities Dealers,
Inc. (the "NASD") of the terms of the sale of the Securities and (x) the fees
and expenses incurred in connection with the listing of the Securities on the
New York Stock Exchange.

(b) Termination of Agreement. If this Agreement is terminated by the U.S.
Underwriters in accordance with the provisions of Section 5 or Section 9(a)(i)
hereof, the Company shall reimburse the U.S. Underwriters for all of their
reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the U.S. Underwriters,

17
<PAGE>

provided however, that any reimbursement by the Company pursuant to this Section
4(b) shall be limited to an aggregate of $500,000.

SECTION 5. Conditions of U.S. Underwriters' Obligations. The
--------------------------------------------
obligations of the several U.S. Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company or any
subsidiary of the Company delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations hereunder, and
to the following further conditions:

(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the U.S.
Underwriters. If the Company has elected to rely on Rule 430A,
Prospectuses containing the Rule 430A Information shall have been filed
with the Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the
Company has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 424(b).

(b) Opinions of Counsel for Company. At Closing Time, the U.S.
Underwriters shall have received the favorable opinions, dated as of
Closing Time, of Ehrenreich Eilenberg Krause & Zivian LLP and Weil, Gotshal
& Manges LLP, counsel for the Company, in form and substance reasonably
satisfactory to counsel for the U.S. Underwriters, together with signed or
reproduced copies of such letters for each of the other U.S. Underwriters
to the effect set forth in Exhibits A-1 and A-2, respectively, hereto and
to such further effect as counsel to the U.S. Underwriters may reasonably
request. In giving such opinions, such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the law of the State of
New York, the federal law of the United States and the General Corporation
Law of the State of Delaware, upon the opinions of counsel reasonably
satisfactory to counsel to the U.S. Underwriters. Such counsel may also
state that, insofar as such opinions involve factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of
the Company and its subsidiaries and certificates of public officials.

(c) Opinion of Counsel for U.S. Underwriters. At Closing Time,
the U.S. Underwriters shall have received the favorable opinion, dated as
of Closing Time, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for
the U.S. Underwriters, together with signed or reproduced copies of such
letter for each of the other U.S. Underwriters in form and substance
reasonably satisfactory to the U.S. Underwriters. In

18
<PAGE>

giving such opinion such counsel may rely, as to all matters governed by
the laws of jurisdictions other than the law of the State of New York, the
federal law of the United States and the General Corporation Law of the
State of Delaware, upon the opinions of counsel satisfactory to the U.S.
Underwriters. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Company and its subsidiaries and
certificates of public officials.

(d) Officers' Certificate. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectuses, any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and
the U.S. Underwriters shall have received a certificate of the Chief
Executive Officer of the Company and of the Chief Financial Officer of the
Company, dated as of Closing Time, to the effect that (i) there has been no
such material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) the Company has
complied in all material respects with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to Closing
Time, and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or are pending or, to the best knowledge of the
Company, are contemplated by the Commission.

(e) Accountant's Comfort Letters. At the time of the execution
of this Agreement, the U.S. Underwriters shall have received from Ernst &
Young LLP, Webster, Duke & Co. PA, KPMG Peat Marwick LLP, Grant Thornton,
LLP, KPMG Peat Marwick (Canada) and Battaglia, Andrews & Moag, P.C.
letters dated such date, in form and substance satisfactory to the U.S.
Underwriters, together with signed or reproduced copies of such letters for
each of the other U.S. Underwriters, to the effect set forth in Annex A
hereto, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect to
the financial statements audited by such accountants and certain financial
information contained in the Registration Statement and the Prospectuses.

(f) Bring-down Comfort Letters. At Closing Time, the U.S.
Underwriters shall have received from Ernst & Young LLP, Webster, Duke &
Co. PA, KPMG Peat Marwick LLP, Grant Thornton, LLP, KPMG Peat Marwick
(Canada) and Battaglia, Andrews & Moag, P.C. letters, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letters
furnished pursuant to subsection (e) of this Section 5, except that the
specified date referred to shall be a date not more than three business
days prior to Closing Time.

19
<PAGE>

(g) Approval of Listing. At Closing Time, the Securities shall
have been approved for listing on the New York Stock Exchange, subject only
to official notice of issuance.

(h) No Objection. The NASD has confirmed that it has not raised
any objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.

(i) Lock-up Agreements. At the date of this Agreement, the U.S.
Underwriters shall have received an agreement substantially in the form of
Exhibit B hereto signed by each of the persons listed on Schedule C hereto.

(j) Purchase of Initial International Securities. Contemporaneously
with the purchase by the U.S. Underwriters of the Initial U.S. Securities under
this Agreement, the International Managers shall have purchased the Initial
International Securities under the International Purchase Agreement.

(k) Conditions to Purchase of U.S. Option Securities. In the
event that the U.S. Underwriters exercise their option provided in Section
2(b) hereof to purchase all or any portion of the U.S. Option Securities,
the representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company or any subsidiary
of the Company hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the U.S. Underwriters shall
have received:

(i) Officers' Certificate. A certificate, dated such Date of
---------------------
Delivery, of the Chief Executive Officer of the Company and of the
Chief Financial Officer of the Company confirming that the certificate
delivered at the Closing Time pursuant to Section 5(d) hereof remains
true and correct as of such Date of Delivery.

(ii) Opinions of Counsel for Company. The favorable opinions of
-------------------------------
Ehrenreich Eilenberg Krause & Zivian LLP and Weil, Gotshal & Manges
LLP, counsel for the Company, in form and substance reasonably
satisfactory to counsel for the U.S. Underwriters, dated such Date of
Delivery, relating to the U.S. Option Securities to be purchased on
such Date of Delivery and otherwise to the same effect as the opinions
required by Section 5(b) hereof.

(iii) Opinion of Counsel for U.S. Underwriters. The favorable
----------------------------------------
opinion of Skadden, Arps, Slate, Meagher & Flom, LLP, counsel for the
U.S. Underwriters, dated such Date of Delivery, relating to the U.S.
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(c)
hereof.

20
<PAGE>

(iv) Bring-down Comfort Letters. Letters from Ernst & Young LLP,
--------------------------
Webster, Duke & Co. PA, KPMG Peat Marwick LLP, Grant Thornton LLP,
KPMG Peat Marwick (Canada) and Battaglia, Andrews & Moag, P.C., in
form and substance satisfactory to the U.S. Underwriters and dated
such Date of Delivery, substantially in the same form and substance as
the letters furnished to the U.S. Underwriters pursuant to Section
5(f) hereof, except that the "specified date" in the letters furnished
pursuant to this paragraph shall be a date not more than five days
prior to such Date of Delivery.

(l) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the U.S. Underwriters shall have been furnished with
such documents and opinions as they may reasonably require for the purpose
of enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection
with the issuance and sale of the Securities as herein contemplated shall
be reasonably satisfactory in form and substance to the U.S. Underwriters
and counsel for the U.S. Underwriters.

(m) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of U.S.
Option Securities on a Date of Delivery which is after the Closing Time,
the obligations of the several U.S. Underwriters to purchase the relevant
Option Securities, may be terminated by the U.S. Underwriters by notice to
the Company at any time at or prior to Closing Time or such Date of
Delivery, as the case may be, and such termination shall be without
liability of any party to any other party except as provided in Section 4
and except that Sections 1, 6, 7 and 8 shall survive any such termination
and remain in full force and effect.

SECTION 6. Indemnification.
---------------

(a) Indemnification of U.S. Underwriters. The Company agrees to indemnify
and hold harmless each U.S. Underwriter and each person, if any, who controls
any U.S. Underwriter within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act as follows:

(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information
and the Rule 434 Information, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectuses (or any
amendment or supplement thereto), or the omission

21
<PAGE>

or alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;

(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Company; and

(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and disbursements of
counsel chosen by Merrill Lynch), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;

provided, however, that this indemnity agreement shall not apply to any loss,
- -------- -------
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
U.S. Underwriter expressly for use in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the U.S. Prospectus
(or any amendment or supplement thereto); provided, further, that the Company
-------- -------
will not be liable to any Underwriter or any person controlling such Underwriter
with respect to any such untrue statement or omission made in any Preliminary
Prospectus that is corrected in the Prospectus (or any amendment or supplement
thereto) if the person asserting any such loss, claim, damage or liability
purchased Securities from such Underwriter but was not sent or given a copy of
the Prospectus (as amended or supplemented) at or prior to the written
confirmation of the sale of such Securities to such person in any case where
such delivery of the Prospectus (as amended or supplemented) is required by the
Act, unless such failure to deliver the Prospectus (as amended or supplemented)
was a result of noncompliance by the Company with Sections 5(d) or 5(e) of this
Agreement.

(b) Indemnification of Company, Directors and Officers. Each U.S.
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto),

22
<PAGE>

including the Rule 430A Information and the Rule 434 Information, if applicable,
or any preliminary U.S. prospectus or the U.S. Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by such U.S. Underwriter expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the U.S. Prospectus (or any amendment or supplement thereto).

(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall (subject to the following sentence) be
selected by Merrill Lynch, and, in the case of parties indemnified pursuant to
Section 6(b) above, counsel to the indemnified parties shall be selected by the
Company. In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof with counsel satisfactory to such indemnified party;

provided, however, that counsel to the indemnifying party shall not (except with
- -------- -------
the consent of the indemnified party) also be counsel to the indemnified party
and provided, further, that if the defendants in any such action include both
-------- -------
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances; after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will not be liable to
such indemnified party under this Section 6 for any legal or other expenses,
other than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to local counsel) in any
one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the U.S. Underwriters in the case of paragraph (a) of this Section
6, representing the indemnified parties under such paragraph (a) who are parties
to such action or actions) or (ii) the indemnifying party

23
<PAGE>

does not promptly retain counsel satisfactory to the indemnified party or (iii)
the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. The indemnifying
party will not be liable for the costs and expenses of any settlement of such
action effected by such indemnified party without the consent of the
indemnifying party.

No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.

(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.

SECTION 7. Contribution. If the indemnification provided for in
------------
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the U.S. Underwriters on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and of the
U.S. Underwriters on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.

The relative benefits received by the Company on the one hand and the U.S.
Underwriters on the other hand in connection with the offering of the U.S.
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the U.S.
Securities pursuant to this Agreement (before deducting expenses)

24
<PAGE>

received by the Company and the total underwriting discount received by the U.S.
Underwriters, in each case as set forth on the cover of the U.S. Prospectus, or,
if Rule 434 is used, the corresponding location on the Term Sheet, bear to the
aggregate initial public offering price of the U.S. Securities as set forth on
such cover.

The relative fault of the Company on the one hand and the U.S. Underwriters
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the U.S. Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission or any violation of the nature referred to in Section
6(a)(ii) hereof.

The Company and the U.S. Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the U.S. Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

Notwithstanding the provisions of this Section 7, no U.S. Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the U.S. Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
U.S. Underwriter has otherwise been required to pay by reason of any such untrue
or alleged untrue statement or omission or alleged omission.

No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

For purposes of this Section 7, each person, if any, who controls a U.S.
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company. The U.S.
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial U.S. Securities set forth
opposite their respective names in Schedule A hereto and not joint.

25
<PAGE>

SECTION 8. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. All representations, warranties and agreements contained in this
- --------
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any U.S.
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the U.S. Underwriters.

SECTION 9. Termination of Agreement.
------------------------

(a) Termination; General. The U.S. Underwriters may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the U.S. Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the U.S.
Underwriters, impracticable to market the Securities or to enforce contracts for
the sale of the Securities, or (iii) if trading in any securities of the Company
has been suspended or materially limited by the Commission or the New York Stock
Exchange, or if trading generally on the American Stock Exchange or the New York
Stock Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority, or (iv) if a banking moratorium has
been declared by either Federal or New York authorities.

(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.

SECTION 10. Default by One or More of the U.S. Underwriters. If one or
-----------------------------------------------
more of the U.S. Underwriters shall fail at Closing Time or a Date of Delivery
to purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the U.S. Underwriters shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting U.S. Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the U.S.
Underwriters shall not have completed such arrangements within such 24-hour
period, then:

26
<PAGE>

(a) if the number of Defaulted Securities does not exceed 10% of
the number of U.S. Securities to be purchased on such date, each of the
non-defaulting U.S. Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting U.S. Underwriters, or

(b) if the number of Defaulted Securities exceeds 10% of the
number of U.S. Securities to be purchased on such date, this Agreement or,
with respect to any Date of Delivery which occurs after the Closing Time,
the obligation of the U.S. Underwriters to purchase and of the Company to
sell the Option Securities to be purchased and sold on such Date of
Delivery shall terminate without liability on the part of any non-
defaulting U.S. Underwriter.

No action taken pursuant to this Section shall relieve any defaulting U.S.
Underwriter from liability in respect of its default.

In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the U.S.
Underwriters to purchase and the Company to sell the relevant U.S. Option
Securities, as the case may be, either the U.S. Underwriters or the Company
shall have the right to postpone Closing Time or the relevant Date of Delivery,
as the case may be, for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements. As used herein, the term "U.S. Underwriter" includes
any person substituted for a U.S. Underwriter under this Section 10.

SECTION 11. Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the U.S.
Underwriters shall be directed to Merrill Lynch at North Tower, World Financial
Center, New York, New York 10281-1201, attention of Robert A. Simensky; and
notices to the Company shall be directed to it at Four Greenwich Office Park,
Greenwich, Connecticut 06830, attention of Bradley S. Jacobs, with copies to
Oscar D. Folger, 321 Fifth Avenue, 24/th/ Floor, New York, New York 10281 and
Joseph Ehrenreich, Ehrenreich Eilenberg Krause & Zivian LLP, 11 East 44/th/
Street, New York, New York 10017.

SECTION 12. Parties. This Agreement shall each inure to the benefit of
-------
and be binding upon the U.S. Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the U.S.
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the U.S. Underwriters

27
<PAGE>

and the Company and their respective successors, and said controlling persons
and officers and directors and their heirs and legal representatives, and for
the benefit of no other person, firm or corporation. No purchaser of Securities
from any U.S. Underwriter shall be deemed to be a successor by reason merely of
such purchase.

SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
----------------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.

SECTION 14. Effect of Headings. The Article and Section headings herein
------------------
and the Table of Contents are for convenience only and shall not affect the
construction hereof.

28
<PAGE>

If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the U.S. Underwriters and the Company in accordance with its terms.

Very truly yours,

UNITED RENTALS, INC.

By
_______________________________________
Name:
Title:

CONFIRMED AND ACCEPTED,
as of the date first above written:

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
DEUTSCHE MORGAN GRENFELL INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
SMITH BARNEY INC.

BY: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED

By ___________________________________
Authorized Signatory

29
<PAGE>

SCHEDULE A

Number of
Initial
Name of Underwriter Securities
------------------- ----------

Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................
Deutsche Morgan Grenfell Inc...............................
Donaldson, Lufkin & Jenrette Securities Corporation........
Smith Barney Inc...........................................

Total...................................................... 5,200,000
==========

Sch A-1
<PAGE>

SCHEDULE B

United Rentals, Inc.
5,200,000 Shares of Common Stock
(Par Value $.01 Per Share)

1. The public offering price per share for the Securities,
determined as provided in said Section 2, shall be $_____.

2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $______ , being an amount equal to the public
offering price set forth above less $_____ per share; provided that the
purchase price per share for any Option Securities purchased upon the exercise
of the over-allotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by the Company
and payable on the Initial Securities but not payable on the Option Securities.

Sch B-1
<PAGE>

SCHEDULE C

List of persons and entities
subject to lock-up

[TO BE INSERTED]

Sch C-1
<PAGE>

Exhibit A-1

FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)

As to various questions of fact material to our opinion, we have relied
upon the certificates of officers and upon certificates of public officials.
With regard to the due incorporation of corporations (other than the Company)
and the good standing of corporations (other than the Company), we have (subject
to the next sentence) relied entirely upon certificates of public officials.
With regard to the tax good standing of certain corporations (other than the
Company), we have relied solely upon a certificate of an officer of such
corporation to the effect that the corporation has filed the most recent annual
report required by the law of such jurisdiction and that all franchise taxes
required to be paid under such law have been paid. We have also examined such
corporate documents and records and other certificates, and have made such
investigations of law, as we have deemed necessary in order to render the
opinion hereinafter set forth. We have assumed the authenticity of all
documents submitted to us as originals, the genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
documents submitted to us as copies. We have also assumed that all documents
examined by us have been duly and validly authorized, executed and delivered by
each of the parties thereto other than the Company.

(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware.

(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Purchase
Agreement.

(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so
to qualify or to be in good standing would not result in a Material Adverse
Effect.

A-1-1
<PAGE>

duly authorized and validly issued and are fully paid and non-assessable;
and none of the outstanding shares of capital stock of the Company was
issued in violation of any preemptive or other similar rights of any
security holder of the Company arising by statute or the Company's
certificate of incorporation or by-laws or, to the best of our knowledge,
any other preemptive or other similar rights of any security holder of the
Company.

(v) The Securities have been duly authorized for issuance and sale to
the Underwriters pursuant to the Purchase Agreement and, when issued and
delivered by the Company pursuant to the Purchase Agreement against payment
of the consideration set forth in the Purchase Agreement, will be validly
issued and fully paid and non-assessable and no holder of the Securities is
or will be subject to personal liability by reason of being such a holder.

(vi) The issuance of the Securities is not subject to preemptive or
other similar rights of any security holder of the Company arising by
statute or the Company's certificate of incorporation or by-laws or, to the
best of our knowledge, any other preemptive or other similar rights of any
security holder of the Company.

(vii) Each subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so
to qualify or to be in good standing would not result in a Material Adverse
Effect; except as otherwise disclosed in the Registration Statement and
other than as contemplated by the Credit Agreement of the Company filed as
Exhibit 10(a) to the Registration Statement, all of the issued and
outstanding capital stock of each subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and, to the best of our
knowledge, is owned by the Company, directly or through subsidiaries, free
and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity; none of the outstanding shares of capital stock of any
subsidiary was issued in violation of the preemptive or similar rights of
any security holder of such subsidiary.

(viii) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.

(ix) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; any
required filing of the Prospectus pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b); and, to the
best of our knowledge, no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration

A-1-2
<PAGE>

Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or threatened by the
Commission.

(x) The Registration Statement, including any Rule 462(b) Registration
Statement, the Rule 430A Information and the Rule 434 Information, as
applicable, the Prospectus, and each amendment or supplement to the
Registration Statement and Prospectus, as of their respective effective or
issue dates (other than the financial statements and supporting schedules
included therein or omitted therefrom, as to which we need express no
opinion) complied as to form in all material respects with the requirements
of the 1933 Act and the 1933 Act Regulations.

(xi) If Rule 434 has been relied upon, the Prospectus was not
"materially different," as such term is used in Rule 434, from the
prospectus included in the Registration Statement at the time it became
effective.

(xii) The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the charter and by-laws
of the Company and the requirements of the New York Stock Exchange.

(xiii) To the best of our knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to which
the Company or any subsidiary is a party, or to which the property of the
Company or any subsidiary is subject, before or brought by any court or
governmental agency or body, domestic or foreign, which might reasonably be
expected to result in a Material Adverse Effect, or which might reasonably
be expected to materially and adversely affect the properties or assets
thereof or the consummation of the transactions contemplated in the
Purchase Agreement or the performance by the Company of its obligations
thereunder.

(xiv) The information in the Prospectus under "Dividend Policy" and
"Description of Capital Stock", "Certain Charter and By-Law Provisions",
and in the Registration Statement under Item 14 and Item 15, insofar as
they purport to constitute a summary of the terms of the Common Stock, the
provisions of the Company's certificate of incorporation or By-laws or
specific provisions of the Delaware General Corporation Law referred to
therein, are accurate summaries in all material respects of such terms or
provisions, as the case may be.

(xv) To the best of our knowledge, neither the Company nor any
subsidiary is in violation of its charter or by-laws.

A-1-3
<PAGE>

note, lease or other agreement or instrument that is described or referred
to in the Registration Statement or the Prospectus or filed or incorporated
by reference as an exhibit to the Registration Statement which violations
or defaults are required to be described in the prospectus and are not so
described or would, individually or in the aggregate, have a Material
Adverse Effect or effect the validity of the Securities.

(xvii) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the 1933 Act and
the 1933 Act Regulations and the 1934 Act and the 1934 Act Regulations,
which have been obtained, or as may be required under the securities or
blue sky laws of the various states, as to which we need express no
opinion) is necessary or required in connection with the due authorization,
execution and delivery of the Purchase Agreement or for the offering,
issuance or sale of the Securities.

(xviii) The execution, delivery and performance of the Purchase
Agreement and the consummation of the transactions contemplated in the
Purchase Agreement and in the Registration Statement (including the
issuance and sale of the Securities and the use of a portion of the net
proceeds from the sale of the Securities to repay outstanding indebtedness
as described in the Prospectus under the caption "Use Of Proceeds") and
compliance by the Company with its obligations under the Purchase Agreement
(A) after reasonable investigation do not and will not, whether with or
without the giving of notice or lapse of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined in
Section 1(a)(x) of the Purchase Agreement) under or result in the creation
or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any subsidiary pursuant to any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease
or any other agreement or instrument, known to us, to which the Company or
any subsidiary is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Company or any subsidiary is
subject (except for such conflicts, breaches or defaults, Repayment Events
or liens, charges or encumbrances that would not have a Material Adverse
Effect), (B) result in any violation of the provisions of the charter or
by-laws of the Company or any subsidiary, or (C) to the best of our
knowledge, result in any violation of the provisions of any applicable law,
statute, rule or regulation of the United States of America or included in
the Delaware General Corporate Law (except we express no opinion as to
"blue sky" laws), judgment, order, writ or decree, known to us, of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any subsidiary or any of their
respective properties, assets or operations.

(xix) To the best of our knowledge, there are no persons with
registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement.

A-1-4
<PAGE>

(xx) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
1940 Act.

(xxi) We have reviewed the Prospectus and the Registration Statement
and participated in discussions with your representatives and those of the
Company, its accountants and its other counsel. Although we have not
undertaken, except as otherwise indicated in this opinion, to investigate
or verify independently, and do not assume responsibility for, the
accuracy, completeness or fairness of the statements contained in the
Registration Statement, on the basis of the information that we gained in
the course of the performance of such services and our representation of
the Company, we confirm to you that nothing that came to our attention in
the course of such review or representation has caused us to belief that
(i) the Registration Statement or any amendment thereto, including the Rule
430A Information and Rule 434 Information (if applicable), (except for
financial statements and schedules and other financial data included
therein or omitted therefrom, as to which we need make no statement), at
the time such Registration Statement or any such amendment became
effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus or any
amendment or supplement thereto (except for financial statements and
schedules and other financial data included therein or omitted therefrom,
as to which we need make no statement), at the time the Prospectus was
issued, at the time any such amended or supplemented prospectus was issued
or at the Closing Time, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading or (ii) that there are any
franchises, contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto other than those
described or referred to therein or filed or incorporated by reference as
exhibits thereto or that any descriptions of or references to any of the
foregoing are not correct in all material respects.

In rendering such opinion, such counsel may rely, as to matters of
fact (but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).

A-1-5
<PAGE>

Exhibit A-2

FORM OF OPINION OF COMPANY'S
COUNSEL TO BE DELIVERED PURSUANT
TO SECTION 5(b)

(i) The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as described in the Prospectuses and to enter into and
perform its obligations under the Purchase Agreements.

(ii) The authorized, issued and outstanding capital stock of the Company is
as set forth in the Prospectuses under the caption entitled "Description of
Capital Stock-General" (except for subsequent issuances pursuant to the Purchase
Agreements or pursuant to reservations, agreements, rights, or stock option or
employee benefit plans referred to in the Prospectuses, or pursuant to the
exercise of convertible securities, warrants, rights or options referred to in
the Prospectuses, or pursuant to an adjustment to the amount of the Stock
Consideration (as defined in the Prospectuses)). All of the issued and
outstanding shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable; and none of the outstanding
shares of capital stock of the Company were issued in violation of preemptive
rights pursuant to law or in the Company's certificate of incorporation or by-
laws.

(iii) The Securities have been duly authorized and, when issued
and delivered as contemplated by the Purchase Agreements against payment of the
consideration therefor set forth in the Purchase Agreements, will be validly
issued, fully paid and nonassessable and free of preemptive rights pursuant to
law or in the Company's certificate of incorporation or by laws, and no holder
of the Securities is or will be subject to personal liability solely by reason
of being such a holder.

(iv) The execution, delivery and performance of the Purchase Agreements by
the Company have been duly authorized by all necessary corporate action on the
part of the Company. The Purchase Agreements have been duly and validly executed
and delivered by the Company.

(v) We have been informed that the Registration Statement was declared
effective under the 1933 Act as of ____ a.m./p.m. on __________ , 1998, and to
our knowledge, as of ____ a.m./p.m. on the date hereof, no stop order suspending
the effectiveness of the Registration Statement has been issued under the 1933
Act and, to our knowledge, no proceedings for that purpose have been instituted
or are pending or threatened by the Commission. The Prospectuses have been
filed with the Commission pursuant to Rule 424(b) under the 1933 Act.

(vi) The Registration Statement and the Prospectuses (except for the
financial statements and the notes thereto and the other financial, statistical
and accounting data included in the Registration Statement or the Prospectuses,
as to which we express no opinion) comply as to

A-2-2
<PAGE>

form in all material respects with the requirements of the 1933 Act and the
rules and regulations thereunder.

(vii) The statements contained in the Prospectuses under the
captions "Dividend Policy," "Description of Capital Stock," "Certain Charter and
By-Law Provisions" and "Certain United States Federal Tax Considerations," and
in Part II of the Registration Statement under Item 14 and Item 15, insofar as
they purport to describe the provisions of the documents referred to therein or
matters of federal or Delaware corporate law, constitute a fair summary thereof
in material respects; and all descriptions in the Registration Statement of
contracts or agreements to which the Company or any of its subsidiaries is a
party are accurate in all material respects.

(viii) No consent, approval, waiver, license or authorization or
other action by or filing with any New York, Delaware corporate or federal
governmental authority is required in connection with the execution and delivery
by the Company of the Purchase Agreements or the consummation by the Company of
the transactions contemplated thereby, except for filings and other actions
required under or pursuant to (i) the 1933 Act and the rules and regulations
promulgated thereunder, which have been made or obtained, and (ii) the 1934 Act
and the rules and regulations promulgated thereunder, any other federal or state
securities or "blue sky" laws, and the rules of the New York Stock Exchange, as
to which we express no opinion.

(ix) The Company is not an "investment company" or an entity
"controlled" by an investment company", as such terms are defined in the 1940
Act.

(x) To our knowledge, there are no persons with registrations
rights or other similar rights to have any securities registered pursuant to the
Registration Statement.

(xi) We have participated in conferences with directors, officers
and other representatives of the Company, representatives of the independent
public accountants for the Company, representatives of the Underwriters and
representatives of counsel for the Underwriters, at which conferences the
contents of the Registration Statement and the Prospectuses and related matters
were discussed, and, although we have not independently verified and are not
passing upon and assume no responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and
Prospectuses (except to the extent specified in the foregoing opinions), no
facts have come to our attention which lead us to believe that the Registration
Statement, on the effective date thereof, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements contained therein not misleading or that the
Prospectuses, on the date thereof or on the date hereof, contained or contain an
untrue statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading (it being understood that we express no view with respect to the
financial statements and related notes, the financial statement schedules and
<PAGE>

the other financial, statistical and accounting data included in the
Registration Statement or Prospectuses).

A-2-3
<PAGE>

FORM OF LOCK-UP FROM DIRECTORS, OFFICERS AND OTHER STOCKHOLDERS
PURSUANT TO SECTION 5(i)

Exhibit B
_______ , 1998

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
Deutsche Morgan Grenfell Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Smith Barney Inc.

as Representatives of the several
Underwriters to be named in the
within-mentioned Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209

Re: Proposed Public Offering by United Rentals, Inc.
------------------------------------------------

Ladies and Gentlemen:

The undersigned, a stockholder and an officer and/or director of United
Rentals, Inc., a Delaware corporation (the "Company"), understands that Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch"), Deutsche Morgan Grenfell Inc., Donaldson, Lufkin & Jenrette Securities
Corporation and Smith Barney Inc. propose to enter into a Purchase Agreement
(the "Purchase Agreement") with the Company providing for the public offering of
shares (the "Securities") of the Company's common stock, par value $.01 per
share (the "Common Stock"). In recognition of the benefit that such an offering
will confer upon the undersigned as a stockholder and an officer and/or director
of the Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees with each
underwriter to be named in the Purchase Agreement that, during a period of 180
days from the date of the Purchase Agreement, the undersigned will not, without
the prior written consent of Merrill Lynch on behalf of the Underwriters named
in the Purchase Agreement, directly or indirectly, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant for the sale of, or
otherwise dispose of or transfer any shares of the Company's Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether now

B-1
<PAGE>

owned or hereafter acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition, or file any
registration statement under the Securities Act of 1933, as amended, with
respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock, whether
any such swap transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise.

Nothing contained herein limits the ability of the undersigned (i) to
transfer shares of Common Stock in a private placement pursuant to an exemption
from the registration requirements of the 1933 Act or (ii) to pledge shares of
Common Stock as security of indebtedness, provided, however, in either case the
transferee or pledgee agrees to be bound by the limitations contained herein.

Very truly yours,

Signature: _____________________________
Print Name:

B-2
<PAGE>

Annex A

FORM OF ACCOUNTANTS' COMFORT LETTER
PURSUANT TO SECTION 5(e)

(i) We are independent public accountants with respect to the
Company/1/ within the meaning of the 1933 Act and the applicable
published 1933 Act Regulations.

(ii) In our opinion, the financial statements audited by us and the
related financial statement schedules included in the Registration
Statement and the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act and the
published rules and regulations thereunder.

(iii)/2/ On the basis of procedures (but not an examination in
accordance with generally accepted auditing standards) consisting of a
reading of the unaudited interim financial statements of the Company for
the _____ month periods ended _____________, 1996 and ______________, 1997,
(collectively, the "Quarterly Financials"), a reading of the latest
available unaudited interim financial statements of the Company, a reading
of the minutes of all meetings of the stockholders and directors of the
Company and the _________________ and __________________ Committees of the
Board of Directors of the Company since _____, 1997/3/, inquiries of
certain officials of the Company responsible for financial and accounting
matters, a review of interim financial information in accordance with
standards established by the American Institute of Certified Public
Accountants in Statement on Auditing Standards No. 71, Interim Financial
Information ("SAS 71"), with respect to the Quarterly Financials and such
other inquiries and procedures as may be specified in such letter, nothing
came to our attention that caused us to believe that:

- --------------------
/1/ As used in this Annex A, the "Company" refers to United Rentals, Inc.
or any of its subsidiaries, the respective financial statements of which
have been prepared by the accounting firm rendering the comfort letter.

/2/ Paragraph (iii) should be included for those comfort letters addressing
financial statements that include unaudited interim information.

/3/ Insert date that is one day after the end of the last audit period.

Annex A-1
<PAGE>

included in the Registration Statement and the Prospectus for them to
be in conformity with generally accepted accounting principles;

(B) at _______, 199__/4/ and at a specified date not more than
five days/5/ prior to the date of this Agreement, there was any change
in the shareholder's equity of the Company or any decrease in the
assets of the Company or any increase in the liabilities of the
Company in each case as compared with amounts shown in the latest
balance sheet of the Company included in the Registration Statement,
except in each case for changes, decreases or increases that the
Registration Statement discloses have occurred or may occur; or

(C) for the period from _________, 19___ to _________, 19___
and/6/ for the period from _________, 19___ to a specified date not
more than five days prior to the date of this Agreement, there was any
decrease in the cash and cash equivalents, net rental equipment, total
assets, debt or stockholders' equity in each case as compared with the
comparable period in the preceding year, except in each case for any
decreases that the Registration Statement discloses have occurred or
may occur.

(iv) Based upon the procedures set forth in clause (ii) above and
a reading of the Selected Financial Data included in the Registration
Statement and a reading of the financial statements from which such
data were derived, nothing came to our attention that caused us to
believe that the Selected Financial Data included in the Registration
Statement do not comply as to form in all material respects with the
disclosure requirements of Item 301 of Regulation S-K of the 1933 Act,
that the amounts included in the Selected Financial Data are not in
agreement with the corresponding amounts in the audited financial
statements for the respective periods or that the

/4/ Insert the date of most recent balance sheet of the Company, if those
statements are more recent than the unaudited interim financial
statements included in the Registration Statement.

/5/ The specified date should be five calendar days prior to the date of
the Underwriting Agreement.

/6/ Insert dates to describe the period from the date of the most recent
financial statements in the Registration Statement to the date of the
most recent unaudited interim financial statements of the Company, if
those dates are different. Regardless of whether this language is
inserted or not, the period including five days prior to the date of
the Underwriting Agreement should run from the date of the last
financial statement included in the Registration Statement, not from
the later one that is not included in the Registration Statement.

Annex A-2
<PAGE>

financial statements not included in the Registration Statement from which
certain of such data were derived are not in conformity with generally
accepted accounting principles.

(v) We have compared the information in the Registration Statement
under selected captions with the disclosure requirements of Regulation S-K
of the 1933 Act and on the basis of limited procedures specified herein
nothing came to our attention that caused us to believe that this
information does not comply as to form in all material respects with the
disclosure requirements of Items 302, 402 and 503(d), respectively, of
Regulation S-K.

(vi) Based upon the procedures set forth in clause (iii) above, a
reading of the unaudited financial statements of the Company for the most
recent period that have not been included in the Registration Statement and
a review of such financial statements in accordance with SAS 71, nothing
came to our attention that caused us to believe that the unaudited amounts
for the most recent period do not agree with the amounts set forth in the
unaudited financial statements for those periods or that such unaudited
amounts were not determined on a basis substantially consistent with that
of the corresponding amounts in the audited financial statements.

(vii) We are unable to and do not express any opinion on the Pro
Forma Consolidated Financial Statements (the "Pro Forma Statement")
included in the Registration Statement or on the pro forma adjustments
applied to the historical amounts included in the Pro Forma Statement;
however, for purposes of this letter we have:

(A) read the Pro Forma Statement;

(B) performed an audit of the financial statements to which the
pro forma adjustments were applied;

(C) made inquiries of certain officials of the Company who have
responsibility for financial and accounting matters about the basis
for their determination of the pro forma adjustments and whether the
Pro Forma Statement complies as to form in all material respects with
the applicable accounting requirements of Rule 11-02 of Regulation S-
X; and

(D) proved the arithmetic accuracy of the application of the pro
forma adjustments to the historical amounts in the Pro Forma
Statement; and on the basis of such procedures and such other
inquiries and procedures as specified herein, nothing came to our
attention that caused us to believe that (i) the Pro Forma Statement
included in the Registration Statement does not comply as to form in
all material respects with the applicable requirements of Rule 11-02
of Regulation S-X

Annex A-3
<PAGE>

or (ii) the pro forma adjustments have not been properly applied to
the historical amounts in the compilation of those statements.

(viii) In addition to the procedures referred to in clause (iii)
above, we have performed other procedures, not constituting an audit, with
respect to certain amounts, percentages, numerical data and financial
information appearing in the Registration Statement, which are specified
herein, and have compared certain of such items with, and have found such
items to be in agreement with, the accounting and financial records of the
Company.

Annex A-4

<PAGE>

==============================================================================

United Rentals, Inc.

(A Delaware Corporation)

1,300,000 Shares of Common Stock

INTERNATIONAL PURCHASE AGREEMENT

Dated: _________, 1998

- ------------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<PAGE>

TABLE OF CONTENTS PAGE
<S> <C>
SECTION 1. Representations and Warranties...................................................4
(a) Representations and Warranties by the Company.................................4

(i) Compliance with Registration Requirements.............................4
(ii) Independent Accountants................................................5
(iii) Financial Statements...................................................5
(iv) No Manipulation of Market Prices.......................................6
(v) No Material Adverse Change in Business.................................6
(vi) Good Standing of the Company...........................................6
(vii) Good Standing of Subsidiaries..........................................6
(viii) Capitalization......................................................7
(ix) Authorization of Agreement.............................................7
(x) Authorization and Description of Securities............................7
(xi) Absence of Defaults and Conflicts......................................8
(xii) Absence of Labor Dispute...............................................8
(xiii) Absence of Proceedings..........................................9
(xv) Accuracy of Exhibits...................................................9
(xvi) Possession of Intellectual Property....................................9
(xvii) Absence of Further Requirements.......................................10
(xviii)Possession of Licenses and Permits....................................10
(xix) Title to Property.....................................................10
(xx) Investment Company Act................................................11
(xxi) Environmental Laws....................................................11

(b) Officer's Certificates.......................................................13

SECTION 2. Sale and Delivery to International Managers; Closing.........................13
(a) Initial Securities...........................................................13
(b) Option Securities............................................................13
(c) Payment......................................................................14
(d) Denominations; Registration..................................................15
</TABLE>

i
<PAGE>

<TABLE>
<S> <C>
SECTION 3. Covenants of the Company......................................................15
(a) Compliance with Securities Regulations and Commission Requests...............15
(b) Filing of Amendments.........................................................16
(c) Delivery of Registration Statements..........................................16
(d) Delivery of Prospectuses.....................................................16
(e) Continued Compliance with Securities Laws....................................16
(f) Blue Sky Qualifications......................................................17
(g) Rule 158.....................................................................17
(h) Use of Proceeds..............................................................17
(i) Listing.....................................................................18
(j) Restriction on Sale of Securities...........................................18
(k) Reporting Requirements.......................................................19
(l) Compliance with Rule 463.....................................................19

SECTION 4. Payment of Expenses..........................................................19
(a) Expenses.....................................................................19
(b) Termination of Agreement.....................................................20

SECTION 5. Conditions of International Managers' Obligations...............................20
(a) Effectiveness of Registration Statement......................................20
(b) Opinions of Counsel for Company..............................................20
(c) Opinion of Counsel for International Managers................................21
(d) Officers' Certificate........................................................21
(e) Accountant's Comfort Letters.................................................22
(f) Bring-down Comfort Letter....................................................22
(g) Approval of Listing..........................................................22
(i) Lock-up Agreements...........................................................22
(j) Purchase of Initial U.S. Securities..........................................22
(k) Conditions to Purchase of International Option Securities....................23

(i) Officers' Certificate.................................................23
(ii) Opinions of Counsel for Company.......................................23
(iii) Opinion of Counsel for International Managers.........................23
(iv) Bring-down Comfort Letters............................................23
</TABLE>

ii
<PAGE>

<TABLE>
<S> <C>
(l) Additional Documents.........................................................24
(m) Termination of Agreement.....................................................24

SECTION 6. Indemnification.................................................................24
(a) Indemnification of International Managers....................................24
(b) Indemnification of Company, Directors and Officers...........................26
(c) Actions against Parties; Notification........................................26
(d) Settlement without Consent if Failure to Reimburse...........................27

SECTION 7. Contribution....................................................................28

SECTION 8. Representations, Warranties and Agreements to Survive Delivery..................29

SECTION 9. Termination of Agreement........................................................29
(a) Termination; General.........................................................29
(b) Liabilities..................................................................30

SECTION 10. Default by One or More of the International Managers...........................30

SECTION 11. Notices........................................................................31

SECTION 12. Parties........................................................................31

SECTION 13. GOVERNING LAW AND TIME.........................................................32

SECTION 14. Effect of Headings.............................................................32
</TABLE>
iii
<PAGE>

<TABLE>
<S> <C>
SCHEDULES

Schedule A.....................................................................Sch A-1
Schedule B.....................................................................Sch B-1
Schedule C.....................................................................Sch C-1

EXHIBITS

Exhibit A-1 - Form of Opinion of Company's Counsel ...............................A-1
Exhibit A-2 - Form of Opinion of Company's Counsel................................A-2
Exhibit B - Form of Lock-up Letter.............................................B-1

ANNEX

Annex A - Form of Accountants' Comfort Letter

Pursuant to Section 5(e) ....................................................Annex A-1
</TABLE>
iv
<PAGE>

United Rentals, Inc.

(a Delaware corporation)

1,300,000 Shares of Common Stock

(Par Value $.01 Per Share)

INTERNATIONAL PURCHASE AGREEMENT

__________, 1998

MERRILL LYNCH INTERNATIONAL

Morgan Grenfell & Co. Limited
Donaldson, Lufkin & Jenrette International

Smith Barney Inc.
as International Managers

c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street

London EC2Y 9LY
England

Ladies and Gentlemen:

United Rentals, Inc., a Delaware corporation (the "Company"), confirms
its agreement with Merrill Lynch International ("Merrill Lynch"), Morgan
Grenfell & Co. Limited, Donaldson, Lufkin & Jenrette International and Smith
Barney Inc. (collectively, the "International Manag ers", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), with respect to the issue and sale by the Company and the purchase by
the International Managers, acting severally and not jointly, of the respective
numbers of shares of
<PAGE>

Common Stock, par value $.01 per share, of the Company ("Common Stock") set
forth in Schedule A hereto, and with respect to the grant by the Company to the
International Managers, acting severally and not jointly, of the option
described in Section 2(b) hereof to purchase all or any part of 195,000
additional shares of Common Stock to cover over-allotments, if any. The
aforesaid 1,300,000 shares of Common Stock (the "Initial International
Securities") to be purchased by the International Managers and all or any part
of the 195,000 shares of Common Stock subject to the option described in Section
2(b) hereof (the "International Option Securi ties") are hereinafter called,
collectively, the "International Securities".

It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "U.S. Purchase Agreement") providing for
the offering by the Company of an aggregate of 5,200,000 shares of Common Stock
(the "Initial U.S. Securities") through arrange ments with Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Deutsche Morgan Grenfell Inc., Donaldson,
Lufkin & Jenrette Securities Corporation and Smith Barney Inc. in the United
States and Canada (the "U.S. Underwriters") and the grant by the Company to the
U.S. Underwriters, acting severally and not jointly, of an option to purchase
all or any part of the 780,000 additional shares of Common Stock solely to cover
over-allotments, if any (the "U.S. Option Securities" and, together with the
International Option Securities, the "Option Securities"). The Initial U.S.
Securities and the U.S. Option Securities are hereinafter called the "U.S.
Securities". It is understood that the Company is not obligated to sell and the
International Managers are not obligated to purchase, any Initial International
Securities unless all of the Initial U.S. Securities are contemporaneously
purchased by the U.S. Underwriters.

The International Managers and the U.S. Underwriters are hereinafter
collectively called the "Underwriters", the Initial International Securities and
the Initial U.S. Securities are hereinaf ter collectively called the "Initial
Securities". The International Securities, and the U.S. Securities are
hereinafter collectively called the "Securities".

The Underwriters will concurrently enter into an Intersyndicate
Agreement of even date herewith (the "Intersyndicate Agreement") providing for
the coordination of certain transactions among the Underwriters under the
direction of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated (in such capacity, the "Global Coordinator").

The Company understands that the International Managers propose to make
a public offering of the International Securities as soon as the International
Managers deem advisable after this Agreement has been executed and delivered.

2
<PAGE>

The Company has filed with the Securities and Exchange Commission (the
"Commis sion") a Registration Statement on Form S-1 (No. 333-_____) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agree ment, the Company will
either (i) prepare and file a prospectus in accordance with the provisions of
Rule 430A ("Rule 430A") of the rules and regulations of the Commission under the
1933 Act (the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule
424(b)") of the 1933 Act Regulations or (ii) if the Company has elected to rely
upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term
sheet (a "Term Sheet") in accordance with the provi sions of Rule 434 and Rule
424(b). Two forms of prospectus are to be used in connection with the offering
and sale of the Securities: one relating to the International Securities (the
"Form of International Prospectus") and one relating to the U.S. Securities (the
"Form of U.S. Prospec tus"). The Form of International Prospectus is identical
to the Form of U.S. Prospectus, except for the front cover and back cover pages
and the information under the caption "Underwriting." The information, if any,
included in any such prospectus or in any such Term Sheet, as the case may be,
that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each Form of International Prospectus and
Form of U.S. Prospectus used before such registration statement became
effective, and any prospectus that omitted, if applicable, the Rule 430A
Information or the Rule 434 Information, that was used after such effectiveness
and prior to the execution and delivery of this Agreement, is herein called a
"preliminary prospectus." Such registration statement, including the exhibits
thereto and schedules thereto at the time it became or will become effective and
including the Rule 430A Information and the Rule 434 Information, as applicable,
is herein called the "Registration Statement." Any registration statement filed
pursuant to Rule 462(b) of the 1933 Act Regulations is herein referred to as the
"Rule 462(b) Registration Statement," and after such filing the term
"Registration Statement" shall include the Rule 462(b) Registration Statement.
The final Form of International Prospectus and the final Form of U.S. Prospectus
in the forms first furnished to the Underwriters for use in connection with the
offering of the Securities are herein called the "International Prospectus" and
the "U.S. Prospectus," respectively, and collectively, the "Prospectuses." If
Rule 434 is relied on, the terms "Interna tional Prospectus" and "U.S.
Prospectus" shall refer to the preliminary International Prospectus dated
February 17, 1998 and preliminary U.S. Prospectus dated February 17, 1998,
respectively, each together with the applicable Term Sheet and all references in
this Agreement to the date of such Prospectuses shall mean the date of the
applicable Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the International
Prospectus, the U.S. Prospectus or any Term Sheet or any amendment or supple-

3
<PAGE>

ment to any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("EDGAR").

SECTION 1. Representations and Warranties.
------------------------------
(a) Representations and Warranties by the Company. The Company
represents and warrants to each International Manager as of the date hereof (and
agrees that each such representation and warranty will be deemed to be made by
the Company as of the Closing Time referred to in Section 2(c) hereof, and as of
each Date of Delivery (if any) referred to in Section 2(b) hereof) and agrees
with each International Manager, as follows:

(i) Compliance with Registration Requirements. Each of the
-----------------------------------------
Registration Statement and any Rule 462(b) Registration Statement has
become effective or will become effective under the 1933 Act and no stop
order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement has been issued under the 1933 Act
and no proceedings for that purpose have been instituted or are pending
or, to the knowledge of the Company, are contemplated by the Commission,
and any request on the part of the Commission for additional information
has been complied with.

At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
either became effective or will become effective and at the Closing Time
(and, if any International Option Securities are purchased, at the Date
of Delivery), the Registration Statement, the Rule 462(b) Registra tion
Statement and any amendments and supplements thereto complied and will
comply in all material respects with the requirements of the 1933 Act
and the 1933 Act Regula tions and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, at the time the Prospectuses or any amendments or
supplements thereto were issued and at the Closing Time (and, if any
International Option Securities are purchased, at the Date of Delivery),
included or will include an untrue statement of a material fact or
omitted or will omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which
they were made, not misleading. If Rule 434 is used, the Company will
comply with the requirements of Rule 434 and the Prospectuses shall not
be "materially different", as such term is used in Rule 434, from the
prospectuses included in the Registration Statement at the time it
became effective. The representations and warranties in this subsection
shall not apply to

4
<PAGE>

statements in or omissions from the Registration Statement or the
International Prospec tus made in reliance upon and in conformity with
information furnished to the Company in writing by any International
Manager expressly for use in the Registration Statement or the
International Prospectus.

Each preliminary prospectus and the prospectuses filed as part of
the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectuses
delivered to the Underwriters for use in connection with this offering
was identical to the electroni cally transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.

(ii) Independent Accountants. The accountants who certified the
-----------------------
financial statements and supporting schedules of the Company and its
subsidiaries included in the Registration Statement are independent
public accountants as required by the 1933 Act and the 1933 Act
Regulations.

(iii) Financial Statements. Each of the historical financial
--------------------
statements included in the Registration Statement and Prospectus,
together with related schedules and Notes, present fairly (on a
consolidated basis where so indicated) the financial condition of the
entity or entities to which such financial statement purports to relate
(the "Reported Entity") at the date(s) indicated and the statement of
operations (or income or earnings as indicated in the applicable
financial statement) and cash flows and (in the case of a Reported
Entity for which a statement of stockholders' equity is included)
stockholders' equity (and partners' capital if so indicated in the
applicable financial statement) of the Reported Entity for the period(s)
specified; said financial statements have been prepared in conformity
with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved (except as otherwise
indicated in such financial statements). Any supporting schedules
included in the Registration Statement present fairly in accordance with
GAAP the information required to be stated therein. The selected
historical financial data and the summary historical financial
information included in the Prospectuses present fairly the information
shown therein and, in the case of historical financial data or
information of the Company, have been compiled on a basis consistent
with that of the audited financial statements included in the
Registration Statement. The pro forma financial statements and the
related notes thereto included in the Registration Statement and the
Prospectuses present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines

5
<PAGE>

with respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in the
preparation thereof are reason able and the adjustments used therein are
appropriate to give effect to the transactions and circumstances
referred to therein.

(vi) No Manipulation of Market Prices. The Company has not
--------------------------------
taken or caused to be taken and will not take or cause to be taken,
either directly or indirectly, any action designed to cause or result
in, or which action constitutes or which might reasonably be expected to
constitute, the stabilization or manipulation of the market price of the
Common Stock, including but not limited to those actions prohibited by
Section 9(a) of the 1934 Act, the 1934 Act Regulations and Regulation M
promulgated by the Commis sion.

(v) No Material Adverse Change in Business. Since the respective
--------------------------------------
dates as of which information is given in the Registration Statement and
the Prospectuses, except as otherwise stated therein, (A) there has been
no material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or, to the best knowledge of the
Company, business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business (a "Material Adverse Effect"), (B) there have been no
transactions entered into by the Company or any of its subsidiaries,
other than those in the ordinary course of business, which are material
with respect to the Company and its subsidiaries considered as one
enterprise, and (C) there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock.

(vi) Good Standing of the Company. The Company has been duly
----------------------------
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectuses and to enter into and perform
its obligations under this Agreement; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing in
each other jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.

6
<PAGE>

operate its properties and to conduct its business as described in the
Prospectuses and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing
of property or the conduct of business, except where the failure so to
qualify or to be in good standing would not result in a Material Adverse
Effect; except as otherwise disclosed in the Registration Statement, all
of the issued and outstanding capital stock of each such subsidiary has
been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity (except for any security interest or
pledge contemplated by the Credit Agreement filed as Exhibit 10(a) to
the Registration Statement); none of the outstanding shares of capital
stock of any subsidiary was issued in violation of the preemptive or
similar rights of any security holder of such subsidiary. The only
subsidiaries of the Company (other than inactive subsidiaries) are the
subsidiaries listed on Exhibit 21 to the Registration State ment.

(viii) Capitalization. The authorized, issued and outstanding
--------------
capital stock of the Company is as set forth in the Prospectuses under
"Description of Capital Stock-General" (except for subsequent issuances,
if any, pursuant to this Agreement, pursuant to reserva tions,
agreements or employee benefit plans referred to in the Prospectuses or
pursuant to the exercise of convertible securities, warrants or options
referred to in the Prospectuses). The shares of issued and outstanding
capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable; none of the outstand ing
shares of capital stock of the Company was issued in violation of the
preemptive or other similar rights of any security holder of the
Company. All sales of the Company's capital stock prior to the date
hereof were either (1) made pursuant to a registration statement filed
by the Company with the Commission under the 1933 Act or (2) at all
relevant times exempt from the registration requirements of the 1933 Act
and in case (1) and (2) duly registered with or the subject of an
available exemption from the registration requirements of the applicable
state securities or blue sky laws.

(ix) Authorization of Agreement. This Agreement and the U.S.
--------------------------
Purchase Agreement have been duly authorized, executed and delivered by
the Company.

(x) Authorization and Description of Securities. The Securities
-------------------------------------------
to be pur chased by the International Managers and the U.S. Underwriters
from the Company have been duly authorized for issuance and sale to the
International Managers pursuant to this Agreement and the U.S.
Underwriters pursuant to the U.S. Purchase Agreement, respec-

7
<PAGE>

tively, and, when issued and delivered by the Company pursuant to this
Agreement and the U.S. Purchase Agreement, respectively, against payment
of the consideration set forth herein and the U.S. Purchase Agreement,
respectively, will be validly issued, fully paid and non-assessable; the
Common Stock conforms to all statements relating thereto contained in
the Prospectuses and such description conforms to the rights set forth
in the instruments defining the same; no holder of the Securities will
be subject to personal liability by reason of being such a holder; and
the issuance of the Securities is not subject to the preemptive or other
similar rights of any security holder of the Company.

(xi) Absence of Defaults and Conflicts. Neither the Company nor
---------------------------------
any of its subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement
or instrument to which the Company or any of its subsidiaries is a party
or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any subsidiary is subject
(collectively, "Agreements and Instruments") except for such defaults
that would not result in a Material Adverse Effect; and the execution,
delivery and performance of this Agreement and the U.S. Purchase
Agreement and the consumma tion of the transactions contemplated in this
Agreement, the U.S. Purchase Agreement and in the Registration Statement
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the
Prospectuses under the caption "Use of Proceeds") and compliance by the
Company with its obliga tions under this Agreement and the U.S. Purchase
Agreement have been duly authorized by all necessary corporate action
and do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined below) under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any subsidiary pursuant to, the
Agreements and Instruments (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation
of the provisions of the charter or by-laws of the Company or any
subsidiary or any applicable law, statute, rule, regulation, judgment,
order, writ or decree of any government, government instru mentality or
court, domestic or foreign, having jurisdiction over the Company or any
subsidiary or any of their assets, properties or operations. As used
herein, a "Repayment Event" means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness (or any
person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any subsidiary.

8
<PAGE>

(xii) Absence of Labor Dispute. No labor dispute with the
------------------------
employees of the Company or any subsidiary exists or, to the knowledge
of the Company, is imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employ ees of any of its
or any subsidiary's principal suppliers, manufacturers, customers or
contractors, which, in either case, may reasonably be expected to result
in a Material Adverse Effect.

(xiii) Absence of Proceedings. There is no action, suit,
-----------------------
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the
Company or any subsidiary, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which might
reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the
consummation of the transactions contemplated in this Agreement and the
U.S. Purchase Agreement or the performance by the Company of its
obligations hereunder or thereunder; the aggregate of all pending legal
or governmental proceedings to which the Company or any subsidiary is a
party or of which any of their respective property or assets is the
subject which are not described in the Registration Statement, including
ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.

(xiv) Accuracy of Representations and Warranties. To the
------------------------------------------
knowledge of the Company, the representations and warranties made by
each of the subsidiaries (as defined in the Registration Statement and
the Prospectuses) and the selling stockholders in the respective
agreements pursuant to which the Company acquired the subsidiaries did
not as of the respective dates thereof contain any inaccuracies that
might, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

9
<PAGE>

neither the Company nor any of its subsidiaries has received any notice
or is otherwise aware of any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property or of any
facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company or any of
its subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.

(xvii) Absence of Further Requirements. No filing with, or
-------------------------------
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering, issuance or
sale of the Securities under this Agreement and the U.S. Purchase
Agreement or the consumma tion of the transactions contemplated by this
Agreement and the U.S. Purchase Agree ment, except such as have been
already obtained or as may be required under the 1933 Act or the 1933
Act Regulations, the 1934 Act or the rules and regulations of the
Commission under the 1934 Act (the "1934 Act Regulations") and foreign
or state securities or blue sky laws.

(xviii) Possession of Licenses and Permits. The Company and its
----------------------------------
subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them except
where the failure to so possess such Government Licenses would not,
singly or in the aggregate, have a Material Adverse Effect; the Company
and its subsidiaries are in compliance with the terms and conditions of
all such Governmental Licenses, except where the failure so to comply
would not, singly or in the aggregate, have a Material Adverse Effect;
all of the Governmental Licenses are valid and in full force and effect,
except when the invalidity of such Governmental Licenses or the failure
of such Govern mental Licenses to be in full force and effect would not
have, singly or in the aggregate, a Material Adverse Effect; and neither
the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Govern mental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.

(xix) Title to Property. The Company and its subsidiaries
-----------------
have good and marketable title to all real property described in the
Prospectus as owned by the Company and its subsidiaries and good title
to all other properties described in the Prospectus as

10
<PAGE>

owned by them, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any
kind except such as (a) are de scribed in the Prospectuses or are not
required to be described therein pursuant to the 1933 Act or the 1933
Act Regulations or (b) do not, singly or in the aggregate, materially
interfere with the use made and proposed to be made of such property by
the Company or any of its subsidiaries; and all of the leases and
subleases material to the business of the Company and its subsidiaries,
considered as one enterprise, and under which the Com pany or any of its
subsidiaries holds properties described in the Prospectuses, are in full
force and effect, and neither the Company nor any subsidiary has any
notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any subsidiary under any
of the leases or subleases mentioned above, or affecting or questioning
the rights of the Company or such subsidiary to the continued possession
of the leased or subleased premises under any such lease or sublease,
which claim, if upheld, would result in a Material Adverse Effect.

(xx) Investment Company Act. The Company is not, and upon the
----------------------
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectuses will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Invest ment Company Act of 1940, as amended (the "1940 Act").

11
<PAGE>

no pending or to the best knowledge of the Company, threatened
administrative, regula tory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncom pliance or violation,
investigation or proceedings relating to any Environmental Law against
the Company or any of its subsidiaries and (D) to the knowledge of the
Company there are no events or circumstances that might reasonably be
expected to form the basis of an order for clean-up or remediation, or
an action, suit or proceeding by any private party or governmental body
or agency, against or affecting the Company or any of its subsidiaries
relating to Hazardous Materials or any Environmental Laws.

(xxiii) Taxes. The Company and each of its subsidiaries have
-----
filed all necessary federal, state, local and foreign income, payroll,
franchise and other tax returns (after giving effect to extensions) and
have paid all taxes shown as due thereon or with respect to the Company
or any of its properties (except where the failure to so file or pay
would not singly or in the aggregate, have a Material Adverse Effect),
and there is no tax deficiency that has been, or to the knowledge of the
Company is likely to be, asserted against the Company, any of its
subsidiaries or any of their properties or assets that would result in a
Material Adverse Effect, except for taxes that are being contested in
good faith by appropriate proceedings and with respect to which the
Company has established adequate reserves in accordance with GAAP.

(xxiv) Insurance. Neither the Company nor any subsidiary has
---------
received notice from any insurer providing insurance coverage for the
Company and its subsidiaries or agent of such insurer that capital
improvements or other expenditures will have to be made in order to
continue present insurance coverage, except such as could not reason
ably be expected, singularly or in the aggregate, to have a Material
Adverse Effect.

(xxv) Maintenance of Sufficient Internal Controls. The Company
-------------------------------------------
and its subsidiar ies maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the<PAGE>
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

(xxvi) Registration Rights. There are no persons with
-------------------
registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement.

(xxvii) Fees. Other than pursuant to this Agreement, the U.S.
----
Purchase Agreement or as described in the Registration Statement and the
Prospectuses, there are no contracts , agreements or understandings
between either the Company or its subsidiaries and any person that give
rise to a valid claim against the Company, any of its subsidiaries or
any of the Underwriters for a brokerage commission, finder's fee or
other like payment relating to the transactions contemplated hereby.

(b) Officer's Certificates. Any certificate signed by any officer
of the Company or any of its subsidiaries delivered to the Global Coordinator,
the International Managers or to counsel for the International Managers shall be
deemed a representation and warranty by the Company to each International
Manager as to the matters covered thereby.

SECTION 2. Sale and Delivery to International Managers; Closing.
----------------------------------------------------
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each International Manager, severally and
not jointly, and each International Manager, severally and not jointly, agrees
to purchase from the Company, at the price per share set forth in Schedule B,
the number of Initial International Securities set forth in Schedule A opposite
the name of such International Manager, plus any additional number of Initial
International Securities which such International Manager may become obligated
to purchase pursuant to the provisions of Section 10 hereof.

12
<PAGE>

which may be made in connection with the offering and distribution of the
Initial International Securities upon notice by the Global Coordinator to the
Company setting forth the number of International Option Securities as to which
the several International Managers are then exercising the option and the time
and date of payment and delivery for such International Option Securi ties. Any
such time and date of delivery for the International Option Securities (a "Date
of Delivery") shall be determined by the Global Coordinator, but shall not be
earlier than three or later than seven full business days after the exercise of
said option or at such earlier time as may be agreed upon by the Global
Coordinator and the Company, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or any portion of the
International Option Securities, each of the International Managers, acting
severally and not jointly, will purchase that proportion of the total number of
International Option Securities then being purchased which the number of Initial
International Securities set forth in Schedule A opposite the name of such
International Manager bears to the total number of Initial International
Securities, subject in each case to such adjustments as the Global Coordinator
in its discretion shall make to eliminate any sales or purchases of fractional
shares.

(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York
10022, or at such other place as shall be agreed upon by the Global Coordinator
and the Company, at 9:00 A.M. (Eastern time) on the third (fourth, if the
pricing occurs after 4:30 P.M. (Eastern time) on any given day business day
after the date hereof (unless postponed in accordance with the provisions of
Section 10), or such other time not later than ten business days after such date
as shall be agreed upon by the Global Coordinator and the Company (such time and
date of payment and delivery being herein called "Closing Time").

In addition, in the event that any or all of the International Option
Securities are pur chased by the International Managers, payment of the purchase
price for, and delivery of certificates for, such International Option
Securities shall be made at the above-mentioned offices, or at such other place
as shall be agreed upon by the Global Coordinator and the Company, on each Date
of Delivery as specified in the notice from the Global Coordinator to the
Company.

Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the respective accounts of the International Managers of certificates for the
International Securities to be purchased by them. It is understood that each
International Manager is authorized, for its account, to accept delivery of,
receipt for, and make payment of the purchase price for, the Initial
International Securities and

13
<PAGE>

the International Option Securities, if any, which it has agreed to purchase.
Merrill Lynch, individually and not as representative of the International
Managers, may (but shall not be obligated to) make payment of the purchase price
for the Initial International Securities or the International Option Securities,
if any, to be purchased by any International Manager whose funds have not been
received by the Closing Time or the relevant Date of Delivery, as the case may
be, but such payment shall not relieve such International Manager from its
obligations hereunder.

(d) Denominations; Registration. Certificates for the Initial
International Securities and the International Option Securities, if any, shall
be in such denominations and registered in such names as the International
Managers may request in writing at least one full business day before the
Closing Time or the relevant Date of Delivery, as the case may be. The
certificates for the Initial International Securities and the International
Option Securities, if any, will be made available for examination and packaging
by the International Managers in The City of New York not later than 10:00 A.M.
(Eastern time) on the business day prior to the Closing Time or the relevant
Date of Delivery, as the case may be.

SECTION 3. Covenants of the Company. The Company covenants with
------------------------
each International Manager as follows:

(a) Compliance with Securities Regulations and Commission
Requests. The Company, subject to Section 3(b) hereof, will comply with
the requirements of Rule 430A or Rule 434, as applicable, and will
notify the Global Coordinator immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration
Statement shall become effective, or any supplement to the Prospectuses
or any amended Prospectuses shall have been filed, (ii) of the receipt
of any comments from the Commis sion, (iii) of any request by the
Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectuses or for additional
information, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of
any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Securities
for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Company
will promptly effect the filings necessary pursuant to Rule 424(b) and
will take such steps as it deems necessary to ascertain promptly whether
the form of prospectus transmitted for filing under Rule 424(b) was
received for filing by the Commission and, in the event that it was not,
it will promptly file such prospectus. The Company will make every
reasonable effort to

14
<PAGE>

prevent the issuance of any stop order and, if any stop order is issued,
to obtain the lifting thereof at the earliest possible moment.

(b) Filing of Amendments. The Company will give the Global
Coordi nator notice of its intention to file or prepare any amendment to
the Registration State ment (including any filing under Rule 462(b)),
any Term Sheet or any amendment, supplement or revision to either the
prospectus included in the Registration Statement at the time it became
effective or to the Prospectuses, will furnish the Global Coordinator
with copies of any such documents a reasonable amount of time prior to
such proposed filing or use, as the case may be, and will not file or
use any such document to which the Global Coordinator or counsel for the
International Managers shall object.

(c) Delivery of Registration Statements. The Company has
furnished or will deliver to the International Managers and counsel for
the International Managers, without charge, signed copies of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference
therein) and signed copies of all consents and certificates of experts,
and will also deliver to the International Managers, without charge, a
conformed copy of the Registration Statement as originally filed and of
each amendment thereto (without exhibits) for each of the International
Managers. The copies of the Registration Statement and each amendment
thereto furnished to the International Managers will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.

(d) Delivery of Prospectuses. The Company has delivered to
each International Manager, without charge, as many copies of each
preliminary prospectus as such International Manager reasonably
requested, and the Company hereby consents to the use of such copies for
purposes permitted by the 1933 Act. The Company will furnish to each
International Manager, without charge, during the period when the
International Prospectus is required to be delivered under the 1933 Act
or the 1934 Act, such number of copies of the International Prospectus
(as amended or supplemented) as such International Manager may
reasonably request. The International Prospectus and any amendments or
supplements thereto furnished to the International Managers will be
identical to the electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.

(e) Continued Compliance with Securities Laws. The Company
will comply with the 1933 Act and the 1933 Act Regulations so as to
permit the completion of

15
<PAGE>

the distribution of the Securities as contemplated in this Agreement,
the U.S. Purchase Agreement and in the Prospectuses. If at any time when
a prospectus is required by the 1933 Act to be delivered in connection
with sales of the Securities, any event shall occur or condition shall
exist as a result of which it is necessary, in the opinion of counsel
for the International Managers or for the Company, to amend the
Registration Statement or amend or supplement any Prospectus in order
that the Prospectuses will not include any untrue statements of a
material fact or omit to state a material fact necessary in order to
make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if
it shall be necessary, in the opinion of such counsel, at any such time
to amend the Registration Statement or amend or supplement any
Prospectus in order to comply with the requirements of the 1933 Act or
the 1933 Act Regulations, the Company will promptly prepare and file
with the Commission, subject to Section 3(b), such amendment or
supplement as may be necessary to correct such statement or omission or
to make the Registration Statement or the Prospectuses comply with such
requirements, and the Company will furnish to the International Managers
such number of copies of such amendment or supplement as the
International Managers may reasonably request.

(f) Blue Sky Qualifications. The Company will use its best
efforts, in cooperation with the International Managers, to qualify the
Securities for offering and sale under the applicable securities laws of
such states and other jurisdictions (domestic or foreign) as the Global
Coordinator may designate and to maintain such qualifications in effect
for a period of not less than one year from the later of the effective
date of the Registration Statement and any Rule 462(b) Registration
Statement; provided, however, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in
which it is not so qualified or to subject itself to taxation in respect
of doing business in any jurisdiction in which it is not otherwise so
subject. In each jurisdiction in which the Securities have been so
qualified, the Company will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification
in effect for a period of not less than one year from the effective date
of the Registration Statement and any Rule 462(b) Registration
Statement.

(g) Rule 158. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally
available to its security holders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.

16
<PAGE>

(h) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified
in the Prospectuses under "Use of Proceeds".

(i) Listing. The Company will use its best efforts to
effect the listing of the Securities on the New York Stock Exchange.

(j) Restriction on Sale of Securities. During a period of
180 days from the date of the Prospectuses, the Company will not,
without the prior written consent of the Global Coordinator on behalf of
the Underwriters, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the
sale of or otherwise dispose of or transfer any share of Common Stock or
any securities convertible into or exchange able or exercisable for
Common Stock, whether now owned or hereafter acquired or with respect to
which the power of disposition is acquired, or file any registration
statement under the 1933 Act with respect to any of the foregoing (other
than as contemplated in (E), (F) and (G) below), (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of
ownership of the Common Stock, whether any such swap or transaction is
to be settled by delivery of Common Stock or other securities, in cash
or otherwise, or (iii) waive any Stockholder Lock-up Agreement (as such
term is defined in the Registration Statement and the Prospectuses).
Clauses (i) and (ii) of the foregoing sentence shall not limit the
Company's ability (A) to sell the Securities hereunder or under the
International Purchase Agreement, (B) to issue shares of Common Stock
upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and referred to in the
Prospectuses, (C) to grant stock options under the 1997 Stock Option
Plan (as such term is defined in the Registration Statement and the
Prospectuses), (D) to issue shares of Common Stock as consideration for
future acquisitions, provided, however, that the Company may not issue
in excess of 750,000 shares for acquisitions unless the recipients of
such excess shares enter into agreements containing the limitations set
forth in the first sentence of this paragraph with respect to such
additional shares, (E) to file a shelf registration statement pursuant
to Rule 415 under the 1933 Act relating to (a) shares of Common Stock
outstanding as of the date of the Prospectuses and (b) shares of Common
Stock underlying warrants or convertible notes outstanding as of the
date of the Prospec tuses, provided, however, that no sales of Common
Stock may be made pursuant to such registration statement during the
period of 180 days from the date of the Prospectuses, (F) to file a
registration statement under the 1933 Act with respect to shares of
Common Stock or other securities to be issued after the date hereof as
consideration for an acquisi-

17
<PAGE>

tion or with respect to the potential resale of shares issued after the
date hereof as consideration for an acquisition, provided, however, that
no sales may be made pursuant to such registration statement except to
the extent permitted by clause (D) hereof, or (G) file a registration
statement under the 1933 Act registering the shares of Common Stock that
may be issued pursuant to options granted or to be granted under the
1997 Stock Option Plan. In addition to the foregoing, the Company will
(i) require any individual who becomes an officer or director of the
Company and purchases shares of Common Stock of the Company subsequent
to the date of the Prospectuses to enter into a Lock-up Agreement in the
form contained in Exhibit B hereto and (ii) in the event any
registration rights are granted by the Company in regard to shares of
Common Stock issuable upon the conversion of any outstanding securities
of the Company (as contemplated in (B) above, and including, but not
limited to, a $300,000 principal amount note issued as consideration for
the acquisition of one of the Initial Acquired Companies), also require
the holders of shares of Common Stock that are the subject of such
registration rights to enter into a Lock-up Agreement in the form of
Exhibit B hereto.

(k) Reporting Requirements. The Company, during the period
when the Prospectuses are required to be delivered under the 1933 Act or
the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by
the 1934 Act and the rules and regulations of the Commission thereunder.

(l) Compliance with Rule 463. The Company will file with
the Commission such information as may be required pursuant to Rule 463
of the 1933 Act Regulations.

SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay all
expenses incident to the performance of its obligations under this Agreement,
including (i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, the U.S. Purchase Agreement, the Intersyndicate
Agreement and Agreement Among Managers and such other documents as may be
required in connection with the offering, purchase, sale, issuance or delivery
of the Securities, (iii) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, including any stock or
other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the Underwriters and the transfer of
the Securities between the U.S. Underwriters and the International Managers,
(iv) the fees and disbursements of the Company's counsel, accountants and other
advisors, (v) the qualification of the Securities

18
<PAGE>

under securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospec tus, any Term
Sheets and of the Prospectuses and any amendments or supplements thereto, (vii)
the preparation, printing and delivery to the Underwriters of copies of the Blue
Sky Survey and any supplement thereto, (viii) the fees and expenses of any
transfer agent or registrar for the Securities, (ix) the filing fees incident
to, and the reasonable fees and disbursements of counsel to the Underwriters in
connection with, the review by the National Association of Securities Dealers,
Inc. (the "NASD") of the terms of the sale of the Securities and (x) the fees
and expenses incurred in connection with the listing of the Securities on the
New York Stock Exchange.

(b) Termination of Agreement. If this Agreement is terminated by
the Interna tional Managers in accordance with the provisions of Section 5 or
Section 9(a)(i) hereof, the Company shall reimburse the International Managers
for all of their reasonable out-of-pocket expenses, including the reasonable
fees and disbursements of counsel for the International Managers; provided,
however, that any reimbursement by the Company pursuant to this Section 4(b)
shall be limited to an aggregate of $500,000.

SECTION 5. Conditions of International Managers' Obligations. The
obligations of the several International Managers hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company or any
subsidiary of the Company delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations hereunder, and
to the following further conditions:

(a) Effectiveness of Registration Statement. The
Registration Statement, including any Rule 462(b) Registration
Statement, has become effective and at Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the Interna tional Managers.
If the Company has elected to rely on Rule 430A, Prospectuses containing
the Rule 430A Information shall have been filed with the Commission in
accordance with Rule 424(b) (or a post-effective amendment providing
such information shall have been filed and declared effective in
accordance with the requirements of Rule

19
<PAGE>

430A) or, if the Company has elected to rely upon Rule 434, a Term Sheet
shall have been filed with the Commission in accordance with Rule
424(b).

(b) Opinions of Counsel for Company. At Closing Time, the
Interna tional Managers shall have received the favorable opinions,
dated as of Closing Time, of Ehrenreich Eilenberg Krause & Zivian LLP
and Weil, Gotshal & Manges LLP, counsel for the Company, in form and
substance reasonably satisfactory to counsel for the International
Managers, together with signed or reproduced copies of such letters for
each of the other International Managers to the effect set forth in
Exhibits A-1 and A-2, respectively, hereto and to such further effect as
counsel to the International Managers may reasonably request. In giving
such opinions such counsel may rely, as to all matters governed by the
laws of jurisdictions other than the law of the State of New York, the
federal law of the United States and the General Corporation Law of the
State of Delaware, upon the opinions of counsel reasonably satisfactory
to counsel to the International Managers. Such counsel may also state
that, insofar as such opinions involve factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of
the Company and its subsidiaries and certificates of public officials.

(c) Opinion of Counsel for International Managers. At
Closing Time, the International Managers shall have received the
favorable opinion, dated as of Closing Time, of Skadden, Arps, Slate,
Meagher & Flom LLP, counsel for the International Managers, together
with signed or reproduced copies of such letter for each of the other
International Managers in form and substance reasonably satisfactory to
the International Managers. In giving such opinion such counsel may
rely, as to all matters governed by the laws of jurisdictions other than
the law of the State of New York, the federal law of the United States
and the General Corporation Law of the State of Delaware, upon the
opinions of counsel satisfactory to the International Managers. Such
counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and
certificates of public officials.

20
<PAGE>

Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Section 1(a)
hereof are true and correct with the same force and effect as though
expressly made at and as of Closing Time, (iii) the Company has complied
in all material respects with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to
Closing Time, and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or, to the best knowledge of
the Company, are contemplated by the Commission.

(e) Accountant's Comfort Letters. At the time of the
execution of this Agreement, the International Managers shall have
received from Ernst & Young LLP, Webster, Duke & Co., PA, KPMG Peat
Marwick LLP, Grant Thornton, LLP, KPMG Peat Marwick (Canada) and
Battaglia, Andrews & Moag, P.C. letters dated such date, in form and
substance satisfactory to the International Managers, together with
signed or reproduced copies of such letters for each of the other
International Managers, to the effect set forth in Annex A hereto,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements audited by such accountants and certain financial
information contained in the Registration Statement and the
Prospectuses.

(f) Bring-down Comfort Letter. At Closing Time, the
International Managers shall have received from Ernst & Young LLP,
Webster, Duke & Co., PA, KPMG Peat Marwick, Grant Thornton, LLP, KPMG
Peat Marwick (Canada) and Battaglia, Andrews & Moag, P.C. letters, dated
as of Closing Time, to the effect that they reaffirm the statements made
in the letters furnished pursuant to subsection (e) of this Section 5,
except that the specified date referred to shall be a date not more than
three business days prior to Closing Time.

(g) Approval of Listing. At Closing Time, the Securities
shall have been approved for listing on the New York Stock Exchange,
subject only to official notice of issuance.

(h) No Objection. The NASD has confirmed that it has not
raised any objection with respect to the fairness and reasonableness of
the underwriting terms and arrangements.

21
<PAGE>

(i) Lock-up Agreements. At the date of this Agreement, the
Interna tional Managers shall have received an agreement substantially
in the form of Exhibit B hereto signed by each of the persons listed on
Schedule C hereto.

(j) Purchase of Initial U.S. Securities. Contemporaneously
with the purchase by the International Managers of the Initial
International Securities under this Agreement, the U.S. Underwriters
shall have purchased the Initial U.S. Securities under the U.S. Purchase
Agreement.

(k) Conditions to Purchase of International Option
Securities. In the event that the International Managers exercise their
option provided in Section 2(b) hereof to purchase all or any portion of
the International Option Securities, the represen tations and warranties
of the Company contained herein and the statements in any certificates
furnished by the Company or any subsidiary of the Company hereunder
shall be true and correct as of each Date of Delivery and, at the
relevant Date of Delivery, the International Managers shall have
received:

(i) Officers' Certificate. A certificate, dated
such Date of Deliv ery, of the Chief Executive Officer of
the Company and of the Chief Financial Officer of the
Company confirming that the certificate delivered at the
Closing Time pursuant to Section 5(d) hereof remains true
and correct as of such Date of Delivery.

(ii) Opinions of Counsel for Company. The favorable
opinions of Ehrenreich Eilenberg Krause & LLP Zivian and
Weil, Gotshal & Manges LLP, counsel for the Company, in
form and substance reasonably satisfac tory to counsel for
the International Managers, dated such Date of Deliv ery,
relating to the International Option Securities to be
purchased on such Date of Delivery and otherwise to the
same effect as the opinions required by Section 5(b)
hereof.

(iii) Opinion of Counsel for International Managers.
The favorable opinion of Skadden, Arps, Slate, Meagher &
Flom LLP, counsel for the International Managers, dated
such Date of Delivery, relating to the International
Option Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion required
by Section 5(c) hereof.

22
<PAGE>

(vi) Bring-down Comfort Letters. Letters from
Ernst & Young LLP, Webster, Duke & Co., PA, KPMG Peat
Marwick LLP, Grant Thorn ton, LLP, KPMG Peat Marwick
(Canada) and Battaglia, Andrews & Moag, P.C., in form and
substance satisfactory to the International Manag ers and
dated such Date of Delivery, substantially in the same
form and substance as the letters furnished to the
International Managers pursuant to Section 5(f) hereof,
except that the "specified date" in the letters furnished
pursuant to this paragraph shall be a date not more than
five days prior to such Date of Delivery.

(l) Additional Documents. At Closing Time and at each Date of
Delivery counsel for the International Managers shall have been furnished with
such documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company in connection with the issuance and
sale of the Securities as herein contemplated shall be reasonably satisfactory
in form and substance to the International Managers and counsel for the
International Managers.

(m) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of International
Option Securities on a Date of Delivery which is after the Closing Time, the
obligations of the several International Managers to purchase the relevant
Option Securities may be terminated by the International Managers by notice to
the Company at any time at or prior to Closing Time or such Date of Delivery, as
the case may be, and such termination shall be without liability of any party to
any other party except as provided in Section 4 and except that Sections 1, 6, 7
and 8 shall survive any such termination and remain in full force and effect.

SECTION 6. Indemnification.

(a) Indemnification of International Managers. The Company agrees
to indemnify and hold harmless each International Manager and each person, if
any, who controls any International Manager within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act as follows:

(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue

23
<PAGE>

statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospec tuses (or any amendment or
supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading;

(ii) against any and all loss, liability, claim, damage
and expense whatso ever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission; provided that (subject to
Section 6(d) below) any such settlement is effected with the
written consent of the Company; and

(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and
disbursements of counsel chosen by Merrill Lynch), reasonably
incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii)
above;

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
International Manager through the International Managers expressly for use in
the Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the International Prospectus (or any amendment or supplement
thereto); provided, further, that the Company will not be liable to any
Underwriter or any person controlling such Underwriter with respect to any such
untrue statement or omission made in any Preliminary Prospectus that is
corrected in the Prospectus (or any amendment or supplement thereto) if the
person asserting any such loss, claim, damage or liability purchased Securities
from such Underwriter but was not sent or given a copy of the Prospectus (as
amended or supplemented) at or prior to the written

24
<PAGE>

confirmation of the sale of such Securities to such person in any case where
such delivery of the Prospectus (as amended or supplemented) is required by the
Act, unless such failure to deliver the Prospectus (as amended or supplemented)
was a result of noncompliance by the Company with Sections 5(d) or 5(e) of this
Agreement.

(b) Indemnification of Company, Directors and Officers. Each
International Manager severally agrees to indemnify and hold harmless the
Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
international prospectus or the International Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by such International Manager expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the International Prospectus (or any amendment or supplement thereto).

(c) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement. In the case of parties indemnified pursuant to Section 6(a)
above, counsel to the indemnified parties shall (subject to the following
sentence) be selected by Merrill Lynch, and, in the case of parties indemnified
pursuant to Section 6(b) above, counsel to the indemnified parties shall be
selected by the Company. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof with counsel satisfactory to such
indemnified party; provided, however, that counsel to the indemnifying party
shall not (except with the consent of the indemnified party) also be counsel to
the indemnified party and provided, further, that if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be one or more
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnify

25
<PAGE>

ing party, the indemnifying party shall not have the right to direct the defense
of such action on behalf of such indemnified party or parties and such
indemnified party or parties shall have the right to select separate counsel to
defend such action on behalf of such indemnified party or parties. In no event
shall the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances; After notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof and
approval by such indemnified party of counsel appointed to defend such action,
the indemnifying party will not be liable to such indemnified party under this
Section 6 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel) in any one action or separate
but substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, designated by the U.S. Underwriters
in the case of paragraph (a) of this Section 6, representing the indemni fied
parties under such paragraph (a) who are parties to such action or actions) or
(ii) the indemnifying party does not promptly retain counsel satisfactory to the
indemnified party or (iii) the indemnifying party has authorized the employment
of counsel for the indemnified party at the expense of the indemnifying party.
The indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the consent
of the indemnifying party.

No indemnifying party shall, without the prior written consent of
the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.

26
<PAGE>

settlement of the nature contemplated by Section 6(a) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.

SECTION 7. Contribution. If the indemnification provided for in Section
------------
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the International Managers on the other hand from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
International Managers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.

The relative benefits received by the Company on the one hand and the
International Managers on the other hand in connection with the offering of the
International Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
International Securities pursuant to this Agreement (before deducting expenses)
received by the Company and the total underwriting discount received by the
International Managers, in each case as set forth on the cover of the
International Prospectus, or, if Rule 434 is used, the corresponding location on
the Term Sheet, bear to the aggregate initial public offering price of the
International Securities as set forth on such cover.

The relative fault of the Company on the one hand and the International
Managers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the International Managers and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission or any violation of the nature referred to in
Section 6(a)(ii) hereof.

The Company and the International Managers agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation (even

27
<PAGE>

if the International Managers were treated as one entity for such purpose) or by
any other method of allocation which does not take account of the equitable
considerations referred to above in this Section 7. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 7 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

Notwithstanding the provisions of this Section 7, no International
Manager shall be required to contribute any amount in excess of the amount by
which the total price at which the International Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such International Managers has otherwise been required to pay
by reason of any such untrue or alleged untrue statement or omission or alleged
omission.

For purposes of this Section 7, each person, if any, who controls an
International Manager within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
International Manager, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company.
The International Managers' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the number of Initial International
Securities set forth opposite their respective names in Schedule A hereto and
not joint.

SECTION 8. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery.
--------
All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any
International Manager or controlling person, or by or on behalf of the Company,
and shall survive delivery of the Securities to the International Managers.

28
<PAGE>

SECTION 9. Termination of Agreement.
-------------------------
(a) Termination; General. The International Managers may
terminate this Agreement, by notice to the Company, at any time at or prior to
Closing Time (i) if there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
International Prospectus, any material adverse change in the condi tion,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or the international financial markets, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or development
involving a prospec tive change in national or international political,
financial or economic conditions, in each case the effect of which is such as to
make it, in the judgment of the International Managers, impracti cable to market
the Securities or to enforce contracts for the sale of the Securities, or (iii)
if trading in any securities of the Company has been suspended or materially
limited by the Commission or the New York Stock Exchange, or if trading
generally on the American Stock Exchange or the New York Stock Exchange or in
the Nasdaq National Market has been suspended or materially limited, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices have
been required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) if a banking moratorium has been declared by
either Federal or New York authorities.

(b) Liabilities. If this Agreement is terminated pursuant to this
-----------
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.

SECTION 10. Default by One or More of the International Managers. If one
----------------------------------------------------
or more of the International Managers shall fail at Closing Time or a Date of
Delivery to purchase the Securities which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"), the International Managers
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting International Managers, or any other underwriters,
to purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth; if, however,
the International Managers shall not have completed such arrangements within
such 24-hour period, then:

29
<PAGE>

(a) if the number of Defaulted Securities does not exceed
10% of the number of International Securities to be purchased on such
date, each of the non-defaulting International Managers shall be
obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Interna tional Managers, or

(b) if the number of Defaulted Securities exceeds 10% of
the number of International Securities to be purchased on such date,
this Agreement or, with respect to any Date of Delivery which occurs
after the Closing Time, the obligation of the Interna tional Managers to
purchase and of the Company to sell the Option Securities to be
purchased and sold on such Date of Delivery shall terminate without
liability on the part of any non-defaulting International Manager.

No action taken pursuant to this Section shall relieve any defaulting
International Manager from liability in respect of its default.

In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
International Managers to purchase and the Company to sell the relevant
International Option Securities, as the case may be, either the International
Managers or the Company shall have the right to postpone Closing Time or the
relevant Date of Delivery, as the case may be, for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements. As used herein, the term
"International Manager" includes any person substituted for an International
Manager under this Section 10.

SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
International Managers shall be directed to Merrill Lynch International at North
Tower, World Financial Center, New York, New York 10281-1201, attention of
Robert A. Simensky; and notices to the Company shall be directed to it at Four
Greenwich Office Park, Greenwich, Connecticut 06830, attention of Bradley S.
Jacobs, with copies to Oscar D. Folger, 321 Fifth Avenue, 24th Floor, New York,
New York 10281 and Joseph Ehrenreich, Ehrenreich Eilenberg Krause & Zivian LLP,
11 East 44th Street, New York, New York 10017.

30
<PAGE>

SECTION 12. Parties. This Agreement shall each inure to the benefit of
and be binding upon the International Managers and the Company and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the International Managers and the Company and their respective successors
and the controlling persons and officers and directors referred to in Sections 6
and 7 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the International Managers and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any International Manager shall be deemed to be a successor by reason merely of
such purchase.

SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
----------------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY
TIME.

SECTION 14. Effect of Headings. The Article and Section headings herein
------------------
and the Table of Contents are for convenience only and shall not affect the
construction hereof.

31
<PAGE>

If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the International Managers and the Company in accordance with its terms.

Very truly yours,

UNITED RENTALS, INC.

By
-----------------------------
Name:
Title:

CONFIRMED AND ACCEPTED,
as of the date first above written:

MERRILL LYNCH INTERNATIONAL
MORGAN GRENFELL & CO. LIMITED
DONALDSON, LUFKIN & JENRETTE INTERNATIONAL
SMITH BARNEY INC.

BY: MERRILL LYNCH INTERNATIONAL

By
----------------------------
Authorized Signatory

32
<PAGE>

SCHEDULE A

Number of
Initial International
Name of International Manager Securities

Merrill Lynch International...................................
Morgan Grenfell & Co. Limited.................................
Donaldson, Lufkin & Jenrette International....................
Smith Barney Inc..............................................

Total......................................................... 1,300,000
============

Sch A - 1
<PAGE>

SCHEDULE B

United Rentals, Inc.

1,300,000 Shares of Common Stock
(Par Value $.01 Per Share)

1. The public offering price per share for the Securities,
determined as provided in said Section 2, shall be $_____.

2. The purchase price per share for the International Securities
to be paid by the several International Managers shall be $_____, being an
amount equal to the public offering price set forth above less $_____ per share;
provided that the purchase price per share for any International Option
Securities purchased upon the exercise of the over-allotment option described in
Section 2(b) shall be reduced by an amount per share equal to any dividends or
distributions declared by the Company and payable on the Initial International
Securities but not payable on the International Option Securities.
Sch B - 1
<PAGE>

SCHEDULE C

List of persons and entities
subject to lock-up

[TO BE INSERTED]

Sch C - 1
<PAGE>

Exhibit A-1

FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO

SECTION 5(b)

As to various questions of fact material to our opinion, we have relied
upon the certificates of officers and upon certificates of public officials.
With regard to the due incorporation of corporations (other than the Company)
and the good standing of corporations (other than the Company), we have (subject
to the next sentence) relied entirely upon certifi cates of public officials.
With regard to the tax good standing of certain corporations (other than the
Company), we have relied solely upon a certificate of an officer of such
corporation to the effect that the corporation has filed the most recent annual
report required by the law of such jurisdiction and that all franchise taxes
required to be paid under such law have been paid. We have also examined such
corporate documents and records and other certificates, and have made such
investigations of law, as we have deemed necessary in order to render the
opinion hereinafter set forth. We have assumed the authenticity of all documents
submitted to us as originals, the genuineness of all signatures, the legal
capacity of natural persons and the conformity to the originals of all documents
submitted to us as copies. We have also assumed that all documents examined by
us have been duly and validly authorized, executed and delivered by each of the
parties thereto other than the Company.

(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware.

(ii) The Company has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in
the Prospectus and to enter into and perform its obligations under the
Purchase Agreement.

(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure
so to qualify or to be in good standing would not result in a Material
Adverse Effect.

A-1-1
<PAGE>

(iv) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus under "Description of
Capital Stock--General" (except for subsequent issuances, if any,
pursuant to the Purchase Agreement or pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectus or
pursuant to the exercise of convertible securities, warrants or options
referred to in the Prospectus); the shares of issued and outstanding
capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable; and none of the
outstanding shares of capital stock of the Company was issued in
violation of any preemptive or other similar rights of any security
holder of the Company arising by statute or the Company's certificate of
incorporation or by-laws or, to the best of our knowledge, any other
preemptive or other similar rights of any security holder of the
Company.

(v) The Securities have been duly authorized for issuance and
sale to the Underwriters pursuant to the Purchase Agreement and, when
issued and delivered by the Company pursuant to the Purchase Agreement
against payment of the consideration set forth in the Purchase
Agreement, will be validly issued and fully paid and non-assessable and
no holder of the Securities is or will be subject to personal liability
by reason of being such a holder.

(vi) The issuance of the Securities is not subject to preemptive
or other similar rights of any security holder of the Company arising by
statute or the Com pany's certificate of incorporation or by-laws or, to
the best of our knowledge, any other preemptive or other similar rights
of any security holder of the Company.

(vii) Each subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualifica tion is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would
not result in a Material Adverse Effect; except as otherwise disclosed
in the Registration Statement and other than as contemplated by the
Credit Agreement of the Company filed as Exhibit 10(a) to the
Registration Statement, all of the issued and outstanding capital stock
of each subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable and, to the best of our knowledge, is owned by
the Company, directly or through subsidiaries, free and clear of any
security interest,

A-1-2
<PAGE>

mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of any subsidiary was issued in
violation of the preemptive or similar rights of any security holder of
such subsidiary.

(viii) The Purchase Agreement has been duly authorized, executed
and delivered by the Company.

(ix) The Registration Statement, including any Rule 462(b)
Registra tion Statement, has been declared effective under the 1933 Act;
any required filing of the Prospectus pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b);
and, to the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registra
tion Statement has been issued under the 1933 Act and no proceedings for
that purpose have been instituted or are pending or threatened by the
Commission.

(x) The Registration Statement, including any Rule 462(b)
Registration Statement, the Rule 430A Information and the Rule 434
Information, as applicable, the Prospectus, and each amendment or
supplement to the Registration Statement and Prospectus, as of their
respective effective or issue dates (other than the financial statements
and supporting schedules included therein or omitted therefrom, as to
which we need express no opinion) complied as to form in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations.

(xii) The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the charter and
by-laws of the Company and the require ments of the New York Stock
Exchange.

A-1-3
<PAGE>

which might reasonably be expected to materially and adversely affect
the properties or assets thereof or the consummation of the transactions
contemplated in the Purchase Agreement or the performance by the Company
of its obligations thereunder.

(xiv) The information in the Prospectus under "Dividend
Policy" and "Description of Capital Stock", "Certain Charter and By-Law
Provisions", and in the Registration Statement under Item 14 and Item
15, insofar as they purport to constitute a summary of the terms of the
Common Stock, the provisions of the Company's certificate of
incorporation or By-laws or specific provisions of the Delaware General
Corporation Law referred to therein, are accurate summaries in all
material respects of such terms or provisions, as the case may be.

(xv) To the best of our knowledge, neither the Company nor any
subsidiary is in violation of its charter or by-laws.

(xvi) To the best of our knowledge, neither the Company nor any
subsidiary is in default in the due performance or observance of any
material obliga tion, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument that is described or referred to in the
Registration Statement or the Prospectus or filed or incorporated by
reference as an exhibit to the Registration Statement which violations
or defaults are required to be described in the prospectus and are not
so described or would, individu ally or in the aggregate, have a
Material Adverse Effect or effect the validity of the Securities.

(xvii) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign (other than under
the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934
Act Regulations, which have been obtained, or as may be required under
the securities or blue sky laws of the various states, as to which we
need express no opinion) is necessary or required in connection with the
due authoriza tion, execution and delivery of the Purchase Agreement or
for the offering, issuance or sale of the Securities.

A-1-4
<PAGE>

indebtedness as described in the Prospectus under the caption "Use Of
Proceeds") and
<PAGE>

compliance by the Company with its obligations under the Purchase
Agreement (A) after reasonable investigation do not and will not,
whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or Repayment Event
(as defined in Section 1(a)(x) of the Purchase Agreement) under or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any subsidiary pursuant to
any contract, inden ture, mortgage, deed of trust, loan or credit
agreement, note, lease or any other agreement or instrument, known to
us, to which the Company or any subsidiary is a party or by which it or
any of them may be bound, or to which any of the property or assets of
the Company or any subsidiary is subject (except for such conflicts,
breaches or defaults, Repayment Events or liens, charges or encumbrances
that would not have a Material Adverse Effect), (B) result in any
violation of the provisions of the charter or by-laws of the Company or
any subsidiary, or (C) to the best of our knowledge, result in any
violation of the provisions of any applicable law, statute, rule or
regulation of the United States of America or included in the Delaware
General Corporate Law (except we express no opinion as to "blue sky"
laws), judgment, order, writ or decree, known to us, of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any subsidiary or any of their
respective properties, assets or operations.

(xix) To the best of our knowledge, there are no persons with
registra tion rights or other similar rights to have any securities
registered pursuant to the Registration Statement.

(xx) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in
the 1940 Act.

data included therein or omitted therefrom, as to which we need make no
statement), at the time such Registration Statement or any such
amendment became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto (except for financial
statements and schedules and other financial data included therein or
omitted there from, as to which we need make no statement), at the time
the Prospectus was issued, at the time any such amended or supplemented
prospectus was issued or at the Closing Time, included or includes an
untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading or
(ii) that there are any franchises, contracts, indentures, mortgages,
loan agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to therein or
filed or incorporated by reference as exhibits thereto or that any
descriptions of or references to any of the foregoing are not correct in
all material respects.

In rendering such opinion, such counsel may rely, as to matters
of fact (but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).

A-1-5
<PAGE>

Exhibit A-2

FORM OF OPINION OF COMPANY'S
COUNSEL TO BE DELIVERED PURSUANT

TO SECTION 5(b)

(i) The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as described in the Prospectuses and to enter into and
perform its obligations under the Purchase Agreements.

(ii) The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectuses under the caption entitled "Description of
Capital Stock-General" (except for subsequent issuances pursuant to the Purchase
Agreements or pursuant to reservations, agreements, rights, or stock option or
employee benefit plans referred to in the Prospectuses, or pursuant to the
exercise of convertible securities, warrants, rights or options referred to in
the Prospectuses, or pursuant to an adjustment to the amount of the Stock
Consideration (as defined in the Prospectuses)). All of the issued and
outstanding shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable; and none of the outstanding
shares of capital stock of the Company were issued in violation of preemptive
rights pursuant to law or in the Company's certificate of incorporation or
by-laws.

(iii) The Securities have been duly authorized and, when issued and
delivered as contemplated by the Purchase Agreements against payment of the
consideration therefor set forth in the Purchase Agreements, will be validly
issued, fully paid and nonassessable and free of preemptive rights pursuant to
law or in the Company's certificate of incorporation or by laws, and no holder
of the Securities is or will be subject to personal liability solely by reason
of being such a holder.

(iv) The execution, delivery and performance of the Purchase Agreements
by the Company have been duly authorized by all necessary corporate action on
the part of the Company. The Purchase Agreements have been duly and validly
executed and delivered by the Company.

(v) We have been informed that the Registration Statement was declared
effective under the 1933 Act as of _______ a.m./p.m. on _______, 1998, and to
our knowledge, as of _____a.m./p.m. on the date hereof, no stop order suspending
the effectiveness of the Registration Statement has been issued under the 1933
Act and, to our knowledge, no proceedings for that

A-2-1
<PAGE>

purpose have been instituted or are pending or threatened by the Commission. The
Prospectuses have been filed with the Commission pursuant to Rule 424(b) under
the 1933 Act.

(vii) The statements contained in the Prospectuses under the captions
"Dividend Policy," "Description of Capital Stock," "Certain Charter and By-Law
Provisions" and "Certain United States Federal Tax Considerations," and in Part
II of the Registration Statement under Item 14 and Item 15, insofar as they
purport to describe the provisions of the documents referred to therein or
matters of federal or Delaware corporate law, constitute a fair summary thereof
in material respects; and all descriptions in the Registration Statement of
contracts or agreements to which the Company or any of its subsidiaries is a
party are accurate in all material respects.

(viii) No consent, approval, waiver, license or authorization or other
action by or filing with any New York, Delaware corporate or federal
governmental authority is required in connection with the execution and delivery
by the Company of the Purchase Agreements or the consummation by the Company of
the transactions contemplated thereby, except for filings and other actions
required under or pursuant to (i) the 1933 Act and the rules and regulations
promulgated thereunder, which have been made or obtained, and (ii) the 1934 Act
and the rules and regulations promulgated thereunder, any other federal or state
securities or "blue sky" laws, and the rules of the New York Stock Exchange, as
to which we express no opinion.

(ix) The Company is not an "investment company" or an entity
"controlled" by an investment company", as such terms are defined in the 1940
Act.

(x) To our knowledge, there are no persons with registrations rights or
other similar rights to have any securities registered pursuant to the
Registration Statement.

A-2-2
<PAGE>

assume no responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and Prospectuses (except to
the extent specified in the foregoing opinions), no facts have come to our
attention which lead us to believe that the Registration Statement, on the
effective date thereof, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements contained therein not misleading or that the Prospectuses,
on the date thereof or on the date hereof, contained or contain an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading (it being understood that we express no view with respect to the
financial statements and related notes, the financial statement schedules and
the other financial, statistical and accounting data included in the
Registration Statement or Prospectuses).

In rendering such opinion, such counsel may rely, as to matters
of fact (but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).

A-2-3
<PAGE>

FORM OF LOCK-UP FROM DIRECTORS, OFFICERS AND OTHER STOCKHOLDERS
PURSUANT TO SECTION 5(i)

Exhibit B

____________, 1998

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
Deutsche Morgan Grenfell Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Smith Barney Inc.
as Representatives of the several Underwriters to
be named in the within-mentioned Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, NY 10281-1209

Re: Proposed Public Offering by United Rentals, Inc.

Ladies and Gentlemen:

B-1
<PAGE>

shares (the "Securities") of the Company's common stock, par value $.01 per
share (the "Common Stock"). In recognition of the benefit that such an offering
will confer upon the undersigned as a stockholder and an officer and/or director
of the Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees with each
underwriter to be named in the Purchase Agreement that, during a period of 180
days from the date of the Purchase Agreement, the undersigned will not, without
the prior written consent of Merrill Lynch on behalf of the Underwriters named
in the Purchase Agreement, directly or indirectly, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant for the sale of, or
otherwise dispose of or transfer any shares of the Company's Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether now owned or hereafter acquired by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of disposition, or
file any registration statement under the Securities Act of 1933, as amended,
with respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock, whether
any such swap or transaction is to be settled by delivery of Common Stock or
other securities, in cash or otherwise.

Very truly yours,

Signature:___________________________

Print Name:__________________________

B-2
<PAGE>

Annex A

FORM OF ACCOUNTANTS' COMFORT LETTER PURSUANT TO SECTION 5(e)

(i) We are independent public accountants with respect to the
Company1 within the meaning of the 1933 Act and the applicable published
1933 Act Regulations.

(ii) In our opinion, the financial statements audited by us and
the related financial statement schedules included in the Registration
Statement and the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act and the
published rules and regulations thereunder.

(iii)2 On the basis of procedures (but not an examination in
accordance with generally accepted auditing standards) consisting of a
reading of the unaudited interim financial statements of the Company for
the _____ month periods ended _____________, 1996 and ______________,
1997, (collectively, the "Quarterly Financials"), a reading of the
latest available unaudited interim financial statements of the Company,
a reading of the minutes of all meetings of the stockholders and
directors of the Company and the _________________ and
__________________ Committees of the Board of Directors of the Company
since _____, 19973, inquiries of certain officials of the Company
responsible for financial and accounting matters, a review of interim
financial information in accordance with standards established by the
American Institute of Certified Public Accountants in Statement on
Auditing Standards No. 71, Interim Financial Information ("SAS 71"),
with respect to the Quarterly Financials and such other inquiries and
procedures as may be specified in such letter, nothing came to our
attention that caused us to believe that:

- --------
/1/ As used in this Annex A, the "Company" refers to United Rentals, Inc. or any
of its subsidiar ies, the respective financial statements of which have been
prepared by the accounting firm rendering the comfort letter.

/2/ Paragraph (iii) should be included for those comfort letters addressing
financial statements that include unaudited interim information.

/3/ Insert date that is one day after the end of the last audit period.

Annex A-1
<PAGE>

(A) the Quarterly Financials included in the Registration
Statement and the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of
the 1933 Act and the 1933 Act Regulations or any material
modifications should be made to the unaudited financial
statements included in the Registration Statement and the
Prospectus for them to be in conformity with generally accepted
accounting principles;

(B) at _______, 199__4 and at a specified date not more
than five days5 prior to the date of this Agreement, there was
any change in the shareholder's equity of the Company or any
decrease in the assets of the Company or any increase in the
liabilities of the Company in each case as compared with amounts
shown in the latest balance sheet of the Company included in the
Registration Statement, except in each case for changes,
decreases or increases that the Registration Statement discloses
have occurred or may occur; or

(C) for the period from _________, 19___ to _________,
19___ and6 for the period from _________, 19___ to a specified
date not more than five days prior to the date of this Agreement,
there was any decrease in the cash and cash equivalents, net
rental equipment, total assets, debt or stockholders' equity in
each case as compared with the comparable period in the preceding
year, except in each case for any decreases that the Registration
Statement discloses have occurred or may occur.

- --------
/4/ Insert the date of most recent balance sheet of the Company, if those
statements are more recent than the unaudited interim financial statements
included in the Registration Statement.

/5/ The specified date should be five calendar days prior to the date of the
Underwriting Agreement.

/6/ Insert dates to describe the period from the date of the most recent
financial statements in the Registration Statement to the date of the most
recent unaudited interim financial statements of the Company, if those
dates are different. Regardless of whether this language is inserted or
not, the period including five days prior to the date of the Underwriting
Agreement should run from the date of the last financial statement
included in the Registration Statement, not from the later one that is not
included in the Registration Statement.

Annex A-2
<PAGE>

(iv) Based upon the procedures set forth in clause (ii) above and
a reading of the Selected Financial Data included in the Registration
Statement and a reading of the financial statements from which such data
were derived, nothing came to our attention that caused us to believe
that the Selected Financial Data included in the Registration Statement
do not comply as to form in all material respects with the disclosure
requirements of Item 301 of Regulation S-K of the 1933 Act, that the
amounts included in the Selected Financial Data are not in agreement
with the corresponding amounts in the audited financial statements for
the respective periods or that the financial statements not included in
the Registration Statement from which certain of such data were derived
are not in conformity with generally accepted accounting principles.

(v) We have compared the information in the Registration
Statement under selected captions with the disclosure requirements of
Regulation S-K of the 1933 Act and on the basis of limited procedures
specified herein nothing came to our attention that caused us to believe
that this information does not comply as to form in all material
respects with the disclosure requirements of Items 302, 402 and 503(d),
respectively, of Regulation S-K.

(vi) Based upon the procedures set forth in clause (iii) above,
a reading of the unaudited financial statements of the Company for the
most recent period that have not been included in the Registration
Statement and a review of such financial statements in accordance with
SAS 71, nothing came to our attention that caused us to believe that the
unaudited amounts for the most recent period do not agree with the
amounts set forth in the unaudited financial statements for those
periods or that such unaudited amounts were not determined on a basis
substantially consistent with that of the corresponding amounts in the
audited financial statements.

(A) read the Pro Forma Statement;

(B) performed an audit of the financial statements to
which the pro forma adjustments were applied;

Annex A-3
<PAGE>

(C) made inquiries of certain officials of the Company who
have responsibility for financial and accounting matters about
the basis for their determination of the pro forma adjustments
and whether the Pro Forma Statement complies as to form in all
material respects with the applicable accounting requirements of
Rule 11-02 of Regulation S-X; and

(D) proved the arithmetic accuracy of the application of
the pro forma adjustments to the historical amounts in the Pro
Forma Statement; and on the basis of such procedures and such
other inquiries and procedures as specified herein, nothing came
to our attention that caused us to believe that (i) the Pro Forma
Statement included in the Registration Statement does not comply
as to form in all material respects with the applicable
requirements of Rule 11-02 of Regulation S-X or (ii) the pro
forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements.

(viii) In addition to the procedures referred to in clause (iii)
above, we have performed other procedures, not constituting an audit,
with respect to certain amounts, percentages, numerical data and
financial information appearing in the Registration Statement, which are
specified herein, and have compared certain of such items with, and have
found such items to be in agreement with, the accounting and financial
records of the Company.

Annex A-4

<PAGE>

EXHIBIT 5

[LETTERHEAD OF EHRENREICH EILENBERG KRAUSE & ZIVIAN, LLP]

11 East 44th Street
New York, New York 10017

---

Telephone: (212) 986-9700
Facsimile: (212) 986-2399

February 17, 1998

United Rentals, Inc.
Four Greenwich Office Park
Greenwich, Connecticut 06830

Re: Registration Statement on Form S-1 (No. 333-45605)

Gentlemen:

You have requested our opinion with respect to certain matters in
connection with the above-referenced registration statement, as amended (the
"Registration Statement"). Such Registration Statement relates to 7,475,000
shares of Common Stock (including 975,000 shares subject to an underwriter's
over-allotment option) that the Registration Statement contemplates will be sold
in an underwritten public offering (the foregoing shares being referred to as
the "Offered Shares").

We have reviewed copies of the Amended and Restated Certificate of
Incorporation of the Company, the By-laws of the Company, the Registration
Statement and exhibits thereto and have examined such corporate documents and
records and other certificates, and have made such investigations of law, as we
have deemed necessary in order to render the opinion hereinafter set forth. As
to certain questions of fact material to our opinion, we have relied upon the
certificate of an officer of the Company and upon certificates of public
officials.

Based upon and subject to the foregoing, we are of the opinion that the
<PAGE>

Offered Shares will, when sold and paid for as contemplated by the Registration
Statement and the Purchase Agreements filed as an exhibit thereto, be duly
authorized, validly issued, fully paid and non-assessable.

We hereby consent to the reference to us under the caption "Legal
Matters" in the Registration Statement and to the use of this opinion as an
exhibit to the Registration Statement. In giving this consent, we do not hereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.

Very truly yours,

Ehrenreich Eilenberg Krause & Zivian, LLP

<PAGE>

EXHIBIT 21

UNITED RENTALS SUBSIDIARIES

NAME JURISDICTION OF INCORPORATION

Mercer Equipment Company, Inc. North Carolina
Gene's Village Rental & Sales, Inc. South Carolina
Access Rentals, Inc. New York
BNR Equipment, Inc. New York
United Rentals Of Canada, Inc. Canada
Access Lift Equipment, Inc. Canada
Manchester Equipment Rental & Sales, Inc. Connecticut
Darien Rental Services, Inc. Connecticut
Anchor Rental, Inc. Connecticut
ASC Equipment Co., Inc. North Carolina
Coran Enterprises, Inc. California
A&A Tool Rentals & Sales, Inc. California
Rent-It-Center, Inc. Utah
J&J Rental Services, Inc. Texas
Bronco Hi-Lift, Inc. Colorado
Mission Valley Rentals, Inc. California
River City Machinery, Inc. Texas
Pro Rentals, Inc. Washington
San Leandro Equipment Rentals
Service, Inc. California
Nevada High Reach Equipment, Inc. Nevada
Rents Et. Al., Inc. California

<PAGE>

EXHIBIT 23(B)

WEIL, GOTSHAL & MANGES LLP

A Limited Liability Partnership Including

Professional Corporations

767 Fifth Avenue

New York, New York 10153

Telephone: (212) 310-8000

Telecopy: (212) 310-8007

February 17, 1998

United Rentals, Inc.

Four Greenwich Office Park

Greenwich, Connecticut 06830

We hereby consent to the reference to our firm under the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement on
Form S-1 (the "Registration Statement") filed by United Rentals, Inc., a
Delaware corporation (the "Company"), with the Securities and Exchange
Commission relating to the registration by the Company of 7,475,000 shares of
its common stock, $.01 par value per share, under the Securities Act of 1933,
as amended (the "Securities Act"), without admitting that we are "experts"
under the Securities Act or the rules and regulations promulgated thereunder
with respect to any part of the Registration Statement or that we are
otherwise within the class of persons whose consent is required pursuant to
Section 7 of the Securities Act.

Very truly yours,

/s/ WEIL, GOTSHAL & MANGES LLP

<PAGE>

EXHIBIT 23(C)

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated January 30, 1998, with respect to the consolidated
financial statements of United Rentals, Inc. in Amendment No. 1 to the
Registration Statement (Form S-1 No. 333-45605) and the related Prospectus of
United Rentals, Inc. for the registration of 7,475,000 shares of its common
stock.

/s/ Ernst & Young LLP

MetroPark, New Jersey

February 17, 1998

<PAGE>

EXHIBIT 23(D)

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated January 23, 1998, with respect to the financial
statements of J&J Rental Services, Inc. in Amendment No. 1 to the Registration
Statement (Form S-1 No. 333-45605) and the related Prospectus of United
Rentals, Inc. for the registration of 7,475,000 shares of its common stock.

/s/ Ernst & Young LLP

MetroPark, New Jersey

February 17, 1998

<PAGE>

EXHIBIT 23(E)

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated January 19, 1998, with respect to the financial
statements of Bronco Hi-Lift, Inc., in Amendment No. 1 to the Registration
Statement (Form S-1 No. 333-45605) and the related Prospectus of United
Rentals, Inc. for the registration of 7,475,000 shares of its common stock.

/s/ Ernst & Young LLP

MetroPark, New Jersey

February 17, 1998

<PAGE>

EXHIBIT 23(F)

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated January 23, 1998, with respect to the financial
statements of Mission Valley Rentals, Inc., in Amendment No. 1 to the
Registration Statement (Form S-1 No. 333-45605) and the related Prospectus of
United Rentals, Inc. for the registration of 7,475,000 shares of its common
stock.

/s/ Ernst & Young LLP

MetroPark, New Jersey

February 17, 1998

<PAGE>

EXHIBIT 23(G)

The Board of Directors
A&A Tool Rentals & Sales, Inc.:

We consent to the use of our report dated November 20, 1997, with respect to
the financial statements of A&A Tool Rentals & Sales, Inc. included herein and
to the reference to our firm under the heading "Experts" in the prospectus.

KPMG Peat Marwick LLP

Sacramento, California

February 16, 1998

<PAGE>

EXHIBIT 23(H)

Board of Directors
The BNR Group of Companies:

We consent to the use of our reports included herein and to the reference to
our firm under the heading "Experts" in the prospectus.

KPMG

Waterloo, Canada

February 17, 1998

<PAGE>

EXHIBIT 23(I)

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated January 21, 1998, with respect to the financial
statements of MERCER Equipment Company in the Registration Statement (Form S-1
No. 333-45605) and the related Prospectus of United Rentals, Inc. for the
registration of 7,475,000 shares of its common stock filed with the Securities
and Exchange Commission. We also consent to the incorporation by reference of
such report into any related Registration Statement filed pursuant to Rule
462(b) under the Securities Act of 1933 in order to increase the number of
shares being offered pursuant to the offering contemplated by such Prospectus.

/s/ Webster, Duke & Co. PA

Charlotte, North Carolina

February 13, 1998

<PAGE>

EXHIBIT 23(J)

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have issued our report dated January 21, 1998, accompanying the combined
financial statements of Coran Enterprises, Inc., dba A-1 Rents, and Monterey
Bay Equipment Rental, Inc. contained in the Registration Statement and
Prospectus. We consent to the use of the aforementioned report in the
Registration Statement and Prospectus, on Form S-1 (File No. 333-45605), and
to the use of our name as it appears under the caption "Experts." We also
consent to the incorporation by reference of such report into any related
Registration Statement filed pursuant to Rule 462(b) under the Securities Act
of 1933 in order to increase the number of shares being offered pursuant to
the offering contemplated by such prospectus.

/s/ Grant Thornton LLP

San Jose, California

February 17, 1998

<PAGE>

EXHIBIT 23(K)

INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT

We hereby consent to the use in the Registration Statement on Form S-1-No.
333-45605 of our report dated January 22, 1998 relating to the financial
statements of Access Rentals, Inc., and Subsidiary and Affiliate. We also
consent to the reference to us under the heading "Experts" in such
Registration Statement. We also consent to the incorporation by reference of
such report into any related Registration Statement filed pursuant to Rule
462(b) under the Securities Act of 1933 in order to increase the number of
shares being offered.

/s/ BATTAGLIA, ANDREWS & MOAG, P.C.

Batavia, New York

February 17, 1998