<PAGE>
Registration No. 333-64463
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 2
ON
FORM S-3
TO
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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<TABLE>
<S> <C> <C> <C>
United Rentals, Inc. Delaware 7353 06-1522496
United Rentals Trust I Delaware 7353 06-6464494
(Exact name of Registrant (State or other jurisdiction (Primary Standard I Industrial (I.R.S. employer
as specified in its charter) of incorporation or organization) Classification Code Number) identification no.)
</TABLE>
Four Greenwich Office Park
Greenwich, Connecticut 06830
(203) 622-3131
(Address, including zip code, and telephone number, including area code, of
Registrants' 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:
<TABLE>
<S> <C>
Joseph Ehrenreich, Esq. Stephen M. Besen, Esq.
Ehrenreich, Eilenberg, Krause & Zivian LLP Weil, Gotshal & Manges LLP
11 East 44th Street 767 Fifth Avenue
New York, New York 10017 New York, New York 10153
(212) 986-9700 (212) 310-8000
</TABLE>
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
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, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed
Proposed Maximum
Amount Maximum Aggregate Amount of
Title of Each Class of to be Offering Price Offering Registration
Securities to be Registered Registered Per Unit(3) Price(3) Fee
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<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share, of United
Rentals, Inc. ("Common
Stock")(1)................ 776,202 $34(2) $26,390,868 $7,337
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Convertible Quarterly
Income Preferred
Securities ("Preferred
Securities") of United
Rentals Trust I (the
"Issuer")................. 6,000,000 $50.00(4) $300,000,000 $88,500
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Convertible Subordinated
Debentures due 2028 of $300,000,000(5) --(5) --(5) --(3)
United Rentals, Inc. aggregate principal
("Debentures")............ amount
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Common Stock............... --(6) --(6) --(6) --(6)
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Preferred Securities
Guarantee of United
Rentals, Inc.(7).......... --(7) --(7) --(7) --(7)
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Total................... -- -- $326,390,868 $95,837(8)
</TABLE>
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(1) Represents outstanding shares held by certain of the Selling Holders
identified herein.
(2) Represents the average of the high and low sales prices of the Company's
Common Stock on January 20, 1999, as reported on the New York Stock
Exchange Composite Tape.
(3) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457 of the Securities Act.
(4) Represents the liquidation preference of the Preferred Securities
exclusive of accrued interest and distributions, if any.
(5) This Registration Statement covers up to $300,000,000 aggregate principal
amount of Debentures that, under certain circumstances as described
herein, may be distributed to the holders of the Preferred Securities
without the payment of additional consideration. No additional
registration fee is payable pursuant to Rule 457(i) of the Securities Act.
(6) This Registration Statement covers such indeterminate number of shares of
Common Stock as may be issuable upon conversion of the Preferred
Securities and Debentures registered hereby, including such shares as may
be issuable pursuant to anti-dilution adjustments. No additional
registration fee is payable pursuant to Rule 457(i) of the Securities Act.
(7) Includes the obligations of United Rentals, Inc. ("United Rentals") under
the Guarantee (as defined herein) and certain back-up undertakings under
(i) the Indenture (as defined herein) pursuant to which the Debentures
were issued, (ii) the Debentures and (iii) the Amended and Restated
Declaration of Trust of the Issuer (the "Trust Agreement"), including
United Rentals' obligations under such Indenture and Trust Agreement to
pay costs, expenses, debts and liabilities of the Issuer (other than with
respect to the Preferred Securities and the Common Securities of the
Issuer), which in the aggregate provide a full and unconditional guarantee
of amounts due on the Preferred Securities. No separate consideration will
be received for the Guarantee and such back-up undertakings. The Guarantee
is not traded separately. No additional registration fee is payable
pursuant to Rule 457(n) of the Securities Act.
(8) $88,500 was previously paid.
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
(Continued)
776,202 Shares of Common Stock
of United Rentals, Inc.
and
6,000,000 6 1/2% Convertible Quarterly Income Preferred Securities
(Convertible QUIPS SM* Securities)
(Liquidation Preference $50 per Preferred Security)
of United Rentals Trust I
Guaranteed to the extent set forth herein by, and convertible into Common
Stock of,
United Rentals, Inc.
----------------
This Prospectus relates to the following securities (the "Offered
Securities") that may from time to time be sold by the Selling Holders (as
defined herein): (i) up to 776,202 outstanding shares of Common Stock ("Common
Stock") of United Rentals, Inc. ("United Rentals") which were previously
issued in connection with acquisitions, (ii) up to 6,000,000 6 1/2%
convertible quarterly income preferred securities ("Preferred Securities")
which were previously issued as described below, (iii) any Debentures (as
defined herein) that may hereafter be acquired by the holders of the Preferred
Securities in exchange for Preferred Securities and (iv) any Common Stock that
may hereafter be acquired upon conversion of the Preferred Securities and
Debentures. Neither United Rentals nor the Issuer (as defined herein) will
receive any of the proceeds from the sale of the Offered Securities by the
Selling Holders.
The Selling Holders may sell the Offered Securities, from time to time, (1)
directly to purchasers or (2) through underwriters, broker/dealers or agents.
Sales of the Offered Securities may be effected in transactions (which may
involve crosses or block transactions) (i) on any national securities exchange
or quotation service on which the Offered Securities may be listed or quoted
at the time of sale, (ii) in the over-the-counter market or (iii) in
transactions otherwise than on such exchanges or in the over-the-counter
market. Sales of the Offered Securities may be made at fixed prices, at
prevailing market prices at the time of sale, at varying prices determined at
the time of sale or at negotiated prices. See "Plan of Distribution."
The Preferred Securities were issued on August 5, 1998 by United Rentals
Trust I, a statutory business trust created under the laws of the State of
Delaware (the "Issuer"), and represent undivided beneficial interests in the
assets of the Issuer. All of the beneficial interests in the assets of the
Issuer represented by common securities of the Issuer (the "Common
Securities") are owned by United Rentals. The Issuer used the proceeds
received by it from the sale of the Preferred Securities to purchase 6 1/2%
Convertible Subordinated Debentures due August 1, 2028 (the "Debentures"),
having the terms described herein, issued by United Rentals. The Issuer was
formed solely for the purpose of issuing the Preferred Securities and Common
Securities and purchasing the Debentures with the proceeds therefrom and
currently exists solely for the purpose of performing its obligations relating
to such securities. The Preferred Securities have a preference under certain
circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise over the Common Securities. See
"Description of the Preferred Securities--Subordination of Common Securities."
Each Preferred Security is convertible at any time prior to the Conversion
Expiration Date (as defined herein) in the manner described herein at the
option of the holder into shares of Common Stock of United Rentals at the rate
of 1.14593 shares of Common Stock for each Preferred Security (equivalent to a
conversion price of $43.6325 per share of Common Stock), subject to adjustment
in certain circumstances. At any time on or after August 2, 2001, United
Rentals may, at its option, cause the conversion rights of holders of the
Preferred Securities to expire under certain circumstances. See "Description
of the Preferred Securities--Conversion Rights." The last reported sale price
of the Common Stock, which is listed under the symbol "URI" on the New York
Stock Exchange ("NYSE"), on January 21, 1999 was $34 3/8 per share.
Holders of the Preferred Securities are entitled to receive preferential
cumulative cash distributions from the Issuer at an annual rate of 6 1/2% of
the liquidation preference of $50 per Preferred Security accruing from the
date of original issuance and payable quarterly in arrears on February 1, May
1, August 1 and November 1
<PAGE>
of each year, with such distributions having commenced on November 1, 1998
("Distributions"). The distribution rate and the distribution and other
payment dates for the Preferred Securities correspond to the interest rate and
interest and other payment dates for the Debentures, which are the sole assets
of the Issuer. As a result, if principal or interest is not paid on the
Debentures, no amounts will be paid on the Preferred Securities.
United Rentals has the right to defer payment of interest on the Debentures
at any time or from time to time for a period not exceeding 20 consecutive
quarters with respect to each deferral period (each, an "Extension Period"),
provided that no Extension Period may extend beyond the stated maturity of the
Debentures and provided that no Debenture Event of Default (as defined herein)
has occurred and is continuing. Upon the termination of any such Extension
Period and the payment of all amounts then due, United Rentals may elect to
begin a new Extension Period subject to the requirements set forth herein. If
interest payments on the Debentures are so deferred, Distributions on the
Preferred Securities will also be deferred and United Rentals will not be
permitted, subject to certain exceptions set forth herein, to declare or pay
any cash distributions with respect to its capital stock or make any payments
with respect to its debt securities that rank pari passu with or junior to the
Debentures. During an Extension Period, interest on the Debentures will
continue to accrue (and the amount of Distributions to which holders of the
Preferred Securities are entitled will accumulate at the stated rate per
annum, compounded quarterly) and holders of Preferred Securities will continue
to be required to accrue interest income for United States federal income tax
purposes. See "Description of the Debentures--Option to Extend Interest
Payment Period" and "Certain Federal Income Tax Consequences--U.S. Holders--
Interest Income and Original Issue Discount."
Except as provided below, the Preferred Securities are not redeemable by the
Issuer prior to August 2, 2001. The Preferred Securities will be subject to
redemption, in whole or in part, on or after such date, at redemption prices
set forth herein, upon any permitted redemption by United Rentals of
Debentures. The aggregate liquidation preference of the Preferred Securities
and Common Securities so redeemed will equal the aggregate principal amount of
Debentures redeemed by United Rentals, which may not exceed the amount of the
proceeds derived, directly or indirectly, by United Rentals from the issuance
and sale of Common Stock within 12 months preceding the date fixed for
redemption. In the event that, at any time after the Conversion Expiration
Date (as defined herein), less than 5% of the Preferred Securities remains
outstanding, such Preferred Securities shall be redeemable at the option of
the Issuer, in whole but not in part, at a redemption price equal to the
liquidation preference for such Preferred Securities and all accrued and
unpaid Distributions. See "Description of the Preferred Securities--Optional
Redemption." In addition, the Preferred Securities will be subject to
mandatory redemption upon the repayment at maturity, or as a result of
acceleration of, the Debentures. See "Description of the Preferred
Securities--Mandatory Redemption."
Under certain circumstances following the occurrence of a Special Event (as
defined herein), the Preferred Securities are also subject to (i) exchange, at
the option of United Rentals in the manner described herein, for Debentures or
(ii) redemption, at the option of United Rentals, in whole but not in part, at
the Tax Redemption Price (as defined herein) plus accrued and unpaid
Distributions thereon to, but excluding, the date of redemption (the
"Redemption Date"), if such Special Event constitutes a Tax Event (as defined
herein). See "Description of the Preferred Securities--Special Event Exchange
or Redemption." At any time, United Rentals has the right to dissolve the
Issuer and, after satisfaction of liabilities to creditors of the Issuer as
provided by applicable law, cause the Debentures to be distributed to the
holders of the Preferred Securities in liquidation of the Issuer. See
"Description of the Preferred Securities--Distribution of Debentures."
The Debentures are subordinate and junior in right of payment to all
existing and future Secured Indebtedness (as defined herein) of United Rentals
and are structurally subordinated to all obligations of the subsidiaries of
United Rentals. United Rentals has guaranteed the obligations of United
Rentals (North America), Inc. ("URI"), a wholly owned subsidiary of United
Rentals, under URI's Credit Facility (as defined herein) and URI's Term Loan
(as defined herein), and has pledged the common stock of URI as security for
such guarantee (the "Loan Guarantees"). The Loan Guarantees constitute Secured
Indebtedness of United Rentals. The terms of the Debentures do not place any
limitations on the amount of Secured Indebtedness or other indebtedness that
may be incurred by United Rentals. See "Description of the Debentures."
ii
<PAGE>
United Rentals has guaranteed (the "Guarantee") the payment by the Issuer
(but only to the extent that the Issuer has funds on hand available therefor)
of all Distributions payable on the Preferred Securities and any payments
required to be made upon redemption of the Preferred Securities or liquidation
of the Issuer. If United Rentals does not make interest payments on the
Debentures, the Issuer will not have sufficient funds on hand to pay
Distributions on the Preferred Securities. In such event, the Guarantee would
not require payment (since the Guarantee only guarantees payments to the
extent that the Issuer has funds on hand available therefor), but holders of
the Preferred Securities may institute legal proceedings directly against
United Rentals to enforce payment under the Debentures. The obligations of
United Rentals under the Guarantee are subordinate and junior in right of
payment to all existing and future Secured Indebtedness of United Rentals and
are structurally subordinated to all obligations of the subsidiaries of United
Rentals. See "Description of the Guarantee."
Taken together, United Rentals' obligations under the Debentures, the
Indenture (as defined herein), the Trust Agreement (as defined herein) and the
Guarantee provide, in the aggregate, a full, irrevocable and unconditional
guarantee of payments of Distributions and other amounts due on the Preferred
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. See "United
Rentals Trust I," "Description of the Guarantee" and "Description of the
Debentures."
In the event of the liquidation of the Issuer, after satisfaction of
liabilities to creditors of the Issuer as provided by applicable law, the
holders of the Preferred Securities will be entitled to receive a liquidation
preference of $50 per Preferred Security plus accumulated and unpaid
Distributions thereon to the date of payment, which may be in the form of a
distribution of such amount in Debentures, subject to certain exceptions. See
"Description of the Preferred Securities--Liquidation Distribution Upon
Dissolution."
The Preferred Securities are represented by global certificates registered
in the name of The Depository Trust Company ("DTC") or its nominee. Beneficial
interests in the Preferred Securities are shown on, and transfers thereof are
effected only through, records maintained by participants in DTC. Preferred
Securities in certificated form will not be issued in exchange for the global
certificates except under certain limited circumstances. See "Description of
the Preferred Securities--Form, Transfer, Exchange and Book-Entry Procedures--
Exchanges of Book-Entry Certificates for Certificated Preferred Securities"
and "--Certain Book-Entry Procedures for Global Certificates."
See "Risk Factors" beginning on Page 14 for a discussion of certain factors
to be considered in connection with an investment in the Offered Securities.
----------------
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.
----------------
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* QUIPS is a servicemark of Goldman, Sachs & Co.
The date of this Prospectus is January 20, 1999.
iii
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given
or made, such information or representations must not be relied upon as having
been authorized. This Prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the securities to
which it relates or an offer to sell or the solicitation of an offer to buy
such securities in any circumstances in which such offer or solicitation is
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company or the Issuer since the date hereof or
that the information contained herein is correct as of any time subsequent to
its date.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information..................................................... 1
Incorporation of Certain Information by Reference......................... 2
Cautionary Notice Regarding Forward-Looking Statements.................... 2
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 14
Use of Proceeds........................................................... 23
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. 23
Accounting Treatment...................................................... 24
United Rentals Trust I.................................................... 25
Description of the Preferred Securities................................... 26
Description of the Guarantee.............................................. 46
Description of the Debentures............................................. 49
Relationship Among the Preferred Securities, the Debentures and the
Guarantee................................................................ 60
Certain Federal Income Tax Consequences................................... 62
ERISA Considerations...................................................... 70
Selling Holders........................................................... 71
Plan of Distribution...................................................... 73
Validity of the Offered Securities........................................ 73
Experts................................................................... 73
</TABLE>
AVAILABLE INFORMATION
United Rentals files reports, proxy statements, and other information with
the SEC. Such reports, proxy statements, and other information can be read and
copied at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the Public Reference Room. The SEC maintains an internet site
at http://www.sec.gov that contains reports, proxy and information statements
and other information regarding issuers that file electronically with the SEC,
including United Rentals.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(the "Registration Statement") filed by United Rentals with the SEC under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
omits certain of the information contained in the Registration Statement and
reference is hereby made to the Registration Statement and to the exhibits
relating thereto for further information with respect to United Rentals and
the Common Stock. Any statements contained herein concerning the provisions of
any document are not necessarily complete and, in each instance, reference is
made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the SEC. Each such statement is qualified in
its entirety by such reference. The Registration Statement can be obtained
from the SEC as described in the preceding paragraph.
1
<PAGE>
No separate financial statements of the Issuer have been included herein.
The Issuer and United Rentals do not consider that such financial statements
would be material to potential investors because (i) the Issuer was formed
solely for the purpose of issuing the Preferred Securities and the Common
Securities and purchasing the Debentures with the proceeds therefrom and
currently exists solely for the purpose of performing its obligations relating
to such securities and (ii) United Rentals has effectively fully and
unconditionally guaranteed all of the Issuer's obligations under the Preferred
Securities. See "United Rentals Trust I," "Description of the Preferred
Securities," "Description of the Guarantee" and "Description of the
Debentures."
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
United Rentals incorporates herein by reference the following documents that
have been filed with the SEC and any filings that United Rentals makes with
the SEC in the future under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") until this offering is
completed:
. Annual Report on Form 10-K for the year ended December 31, 1997 (the
"1997 10-K");
. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998;
. Current Report on Form 8-K dated January 27, 1998 and Amendment No. 1
thereto on Form 8-K/A dated February 4, 1998;
. Current Report on Form 8-K dated June 18, 1998 and Amendment No. 1
thereto on Form 8-K/A dated July 21, 1998;
. Current Report on Form 8-K dated June 19, 1998;
. Current Report on Form 8-K dated July 21, 1998;
. Current Report on Form 8-K dated August 7, 1998;
. Current Report on Form 8-K dated September 16, 1998;
. Current Report on Form 8-K dated October 9, 1998;
. Current Report on Form 8-K dated December 15, 1998;
. Current Report on Form 8-K dated December 24, 1998; and
. Registration Statement on Form 8-A dated November 7, 1998 (filed on
December 3, 1998) and Registration Statement on Form 8-A dated August 6,
1998.
United Rentals will provide without charge, upon written or oral request, a
copy of any or all of the documents which are incorporated by reference into
this Prospectus. Requests should be directed to: United Rentals, Inc.,
Attention: Corporate Secretary, Four Greenwich Office Park, Greenwich,
Connecticut 06830, telephone number: (203) 622-3131.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Prospectus (or incorporated by
reference herein), are forward-looking in nature. Such statements can be
identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should," or "anticipates" or the negative thereof
or comparable terminology, or by discussions of strategy. Prospective
investors are cautioned that the Company's business and operations are subject
to a variety of risks and uncertainties and, consequently, the Company's
actual results may materially differ from those projected by the forward-
looking statements contained in this Prospectus (or incorporated by reference
herein). Certain of such risks and uncertainties are discussed under "Risk
Factors," beginning on page 14 of this Prospectus, and prospective investors
are urged to carefully consider such factors. The Company makes no commitment
to revise or update any forward-looking statements in order to reflect events
or circumstances after the date any such statement is made.
2
<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 incorporated by reference in this Prospectus. Unless otherwise
indicated or the context clearly requires otherwise, (i) the term "United
Rentals" refers to United Rentals, Inc. and not its subsidiaries, (ii) the term
"the Company" refers to United Rentals and its subsidiaries and (iii) the term
"URI" refers to United Rentals (North America), Inc., a wholly owned subsidiary
of United Rentals.
The Company
The Company is the largest equipment rental company in North America. The
Company offers for rent a wide variety of equipment (on a daily, weekly or
monthly basis) and serves customers that include construction industry
participants, industrial companies, homeowners and others. The Company also
sells used rental equipment, acts as a dealer for certain new equipment, and
sells related merchandise and parts. The executive offices of the Company are
located at Four Greenwich Office Park, Greenwich, Connecticut 06830, and its
telephone number is (203) 622-3131.
Competitive Advantages
The Company believes that it benefits from the following competitive
advantages:
Low-Cost Purchasing. The Company has significant purchasing power due to its
size and volume purchasing. As a result, the Company is able to buy new
equipment at prices that are significantly lower than those generally available
to smaller companies. The Company is also able to purchase many other products
and services--such as insurance, telephone service and fuel--at attractive
rates.
Operating Efficiencies. The Company generally groups its branches into
clusters of 10 to 30 locations within a particular geographic region. The
Company's information technology system links all branches within a cluster and
enables each branch to track and access all equipment at any other branch
within the cluster. The Company believes that its cluster strategy produces
significant operating efficiencies, including:
. the equipment within a cluster is marketed through multiple branches
rather than a single branch--thereby increasing equipment utilization
rates;
. the specialties of different branches are cross-marketed--thereby
increasing revenues without increasing marketing expense; and
. costs are reduced through the centralization of common functions such as
payroll, credit and collection, and heavy maintenance.
Full Range of Rental Equipment. The Company believes that it has one of the
largest and most diverse equipment rental fleets in the industry. The Company
believes that the size and diversity of its fleet provide significant
advantages, including enabling the Company to:
. serve a large and diverse customer base--thereby reducing dependence on
any particular customer;
. satisfy most or all of a customer's equipment rental needs--thereby
increasing the revenues that can be generated from each customer;
. attract customers by providing the benefit of "one-stop" shopping;
. serve the needs of large customers--such as large industrial companies--
which require assurance that large quantities of diverse equipment will
be available as required; and
. minimize lost sales due to equipment being unavailable.
3
<PAGE>
Information Technology System. The Company has a modern information
technology system designed to facilitate rapid and informed decision making.
The system provides management with a wide range of real time operating and
financial data--including data relating to inventory, receivables, customers,
vendors, fleet utilization and price and sales trends. The system also enables
branch personnel to search for needed equipment throughout a geographic region,
determine the closest location of such equipment and arrange for delivery to
the customer's work site.
Geographic Diversity. The Company believes that its geographic diversity
should reduce its sensitivity to fluctuations in regional economic conditions
and enable it to transfer equipment to regions where demand is increasing from
regions where demand is flat or decreasing. The Company also believes that its
geographic diversity and large network of branch locations provide significant
operating advantages, including the ability to service national accounts and
access used equipment re-sale markets across the country.
Experienced Management. The Company believes that it has one of the most
experienced management teams in the equipment rental industry. The Company's
senior management team includes managers with extensive experience in the
equipment rental industry and others with proven track-records in other
industries. The Company's senior management is supported by the Company's
branch managers who have substantial industry experience and knowledge of the
local markets served. The Company's senior management is also supported by a
team of acquisition specialists who are engaged full-time in evaluating
acquisition candidates and executing the Company's acquisition program.
Recent Developments
On December 15, 1998, URI completed the sale of $300 million aggregate
principal amount of 9 1/4% Senior Subordinated Notes due 2009 (the "9 1/4%
Notes"). On January 7, 1999, United Rentals completed the sale of $300 million
of its Series A Perpetual Convertible Preferred Stock (the "Preferred Stock")
to affiliates of Apollo Management IV, L.P. The Preferred Stock is convertible
into 12 million shares of Common Stock at $25 per share (subject to adjustment)
and has no dividend coupon. The net proceeds from the sale of the 9 1/4% Notes
and the Preferred Stock were used to repay outstanding indebtedness under the
Company's revolving line of credit.
4
<PAGE>
United Rentals Trust I
The Issuer is a statutory business trust formed under the Delaware Business
Trust Act (the "Trust Act") pursuant to (i) a trust agreement, dated as of July
22, 1998, executed by United Rentals, as depositor (the "Depositor"), and
certain of the trustees of the Issuer (the "UR Trustees") and (ii) the filing
of a certificate of trust with the Secretary of State of the State of Delaware
on July 22, 1998 (the "Certificate of Trust"). Such trust agreement has been
amended and restated in its entirety (as so amended and restated, the "Trust
Agreement"). United Rentals owns Common Securities having an aggregate
liquidation preference equal to approximately 3% of the total capitalization of
the Issuer. The Issuer was formed for the exclusive purposes of (i) issuing and
selling the Preferred Securities and Common Securities representing undivided
beneficial interests in the assets of the Issuer and investing the gross
proceeds from the sale of the Preferred Securities and Common Securities in the
Debentures; (ii) distributing the Issuer's income; and (iii) engaging in only
those other activities necessary or incidental thereto. Accordingly, the
Debentures are the sole assets of the Issuer, and payments under the Debentures
will be the sole revenue of the Issuer. The Issuer has a term of approximately
40 years, but may terminate earlier as provided in the Trust Agreement. See
"United Rentals Trust I." United Rentals will pay all fees and expenses related
to the Issuer and will pay, directly or indirectly, all ongoing costs and
expenses of the Issuer. See "Description of the Debentures--Expenses of
Issuer." The principal place of business of the Issuer is c/o United Rentals,
Inc., Four Greenwich Office Park, Greenwich, Connecticut 06830.
The Offering
See "Risk Factors" for a discussion of certain factors to be considered in
connection with an investment in the Preferred Securities, including the period
and circumstances during and under which payments on the Preferred Securities
and the Debentures may be deferred and the related federal income tax
consequences.
Securities to Which This Prospectus Relates
This Prospectus relates to the following securities that may from time to
time be sold by the Selling Holders: (i) up to 776,202 shares of Common Stock
which are currently outstanding, (ii) up to 6,000,000 Preferred Securities
which are currently outstanding, (iii) any Debentures that may hereafter be
acquired by the holders of the Preferred Securities in exchange for Preferred
Securities and (iv) any Common Stock that may hereafter be acquired upon
conversion of the Preferred Securities and Debentures.
Use of Proceeds
Neither United Rentals nor the Issuer will receive any of the proceeds from
the sale of the Offered Securities by the Selling Holders.
Plan of Distribution
The Selling Holders may sell the Offered Securities, from time to time, (1)
directly to purchasers or (2) through underwriters, broker/dealers or agents.
Sales of the Offered Securities may be effected in transactions (which may
involve crosses or block transactions) (i) on any national securities exchange
or quotation service on which the Offered Securities may be listed or quoted at
the time of sale, (ii) in the over-the-counter market or (iii) in transactions
otherwise than on such exchanges or in the over-the-counter market. Sales of
the Offered Securities may be made at fixed prices, at prevailing market prices
at the time of sale, at varying prices determined at the time of sale or at
negotiated prices.
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Certain Information Concerning the Preferred Securities
Original Issuance............... 6,000,000 Preferred Securities were
issued on August 5, 1998.
Issuer.......................... United Rentals Trust I, a statutory
business trust formed under the laws of
the State of Delaware.
Distributions................... Distributions on the Preferred Securities
will be cumulative from the date of
original issuance of the Preferred
Securities and will be payable at the
annual rate of 6 1/2% of the liquidation
preference of $50 per Preferred Security.
Distributions will be made quarterly in
arrears on February 1, May 1, August 1
and November 1 of each year, when and to
the extent that funds of the Issuer are
available therefor. The first
distribution was made on November 1,
1998. Interest payment periods on the
Debentures will be quarterly, but may be
deferred from time to time by United
Rentals for periods of up to 20
consecutive quarters, so long as no
Debenture Event of Default (as defined
herein) has occurred and is continuing.
In the event of such a deferral, the
Issuer will be unable to make quarterly
Distribution payments on the Preferred
Securities during the period of any such
deferral. During any such deferral
period, interest on the Debentures will
continue to accrue (and the amount of
Distributions to which holders of the
Preferred Securities are entitled will
accumulate at the stated rate per annum
set forth herein, compounded quarterly)
and holders of Preferred Securities will
continue to be required to accrue
interest income for United States federal
income tax purposes. See "Description of
the Debentures--Option to Extend Interest
Payment Period" and "Certain Federal
Income Tax Consequences--U.S. Holders--
Interest Income and Original Issue
Discount."
Interest Deferral Provisions.... United Rentals has the right to defer
payment of interest on the Debentures at
any time or from time to time for a
period not exceeding 20 consecutive
quarters with respect to each deferral
period (each, an "Extension Period"),
provided that no Extension Period may
extend beyond the stated maturity of the
Debentures. Upon the termination of any
such Extension Period and the payment of
all amounts then due, United Rentals may
elect to begin a new Extension Period
subject to the requirements set forth
herein. If United Rentals defers interest
payments, subject to certain exceptions,
it will be prohibited from paying
dividends on any of its capital stock or
making payments with respect to its debt
securities that rank pari passu with or
junior to the Debentures, until quarterly
interest payments are resumed and all
accrued and unpaid interest on the
Debentures is brought current. United
Rentals will have the right to make
partial payments of such interest during
a deferral of interest payments. See
"Description of Debentures--Option to
Extend Interest Payment Period."
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<PAGE>
Liquidation Preference.......... $50 per Preferred Security, and all
accrued and unpaid Distributions.
Conversion into Common Stock.... Each Preferred Security is convertible in
the manner described below at the option
of the holder, at any time prior to the
Conversion Expiration Date, into shares
of Common Stock at the rate of 1.14593
shares of Common Stock for each Preferred
Security (equivalent to a conversion
price of $43.6325 per share of Common
Stock), subject to adjustment in certain
circumstances. A holder of Preferred
Securities wishing to exercise its
conversion right shall surrender any or
all of such Preferred Securities,
together with an irrevocable conversion
notice, to the paying, conversion and
exchange agent acting on behalf of the
holders of Preferred Securities (the
"Conversion Agent"), which shall exchange
the Preferred Securities for a portion
(equal to the aggregate liquidation
preference of the Preferred Securities
being so converted) of the Debentures
held by the Issuer and immediately
convert such Debentures into Common
Stock. A holder generally will not
recognize taxable gain or loss upon the
exchange through the Conversion Agent of
the Preferred Securities for a
proportionate share of the Debentures,
followed immediately thereafter by the
conversion of the Debentures into Common
Stock. See "Certain Federal Income Tax
Consequences--U.S. Holders--Conversion of
Preferred Securities into Common Stock."
Whenever United Rentals issues shares of
Common Stock, subject to certain
conditions, upon conversion of Preferred
Securities and, at such time, United
Rentals has in effect a Rights Plan (as
defined herein) under which holders of
Common Stock are issued Rights (as
defined herein), United Rentals will
issue, together with each such share of
Common Stock, an appropriate number of
such Rights.
Expiration of Conversion At any time on or after August 2, 2001,
Rights.......................... United Rentals may, at its option, cause
the conversion rights of holders of the
Preferred Securities to expire. United
Rentals may exercise this option only if
for 20 trading days within any period of
30 consecutive trading days, including
the last trading day of such period, the
Current Market Price (as defined herein)
of Common Stock exceeds 120% of the
conversion price of the Preferred
Securities, subject to adjustment in
certain circumstances. In order to
exercise its option to cause the
conversion rights of holders of the
Preferred Securities to expire, United
Rentals must issue a press release for
publication on the Dow Jones News Service
announcing the date upon which conversion
rights will expire, prior to the opening
of business on the second trading day
after any period in which the condition
in the preceding sentence has been met,
but in no event prior to August 2, 2001.
The date upon which such conversion
rights are to expire (the "Conversion
Expiration Date") shall be a date not
less than 30 and not more
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<PAGE>
than 60 days following the date of such
press release. The press release shall
announce the Conversion Expiration Date
and provide the current conversion price
and Current Market Price of the Common
Stock, in each case as of the close of
business on the trading day next
preceding the date of the press release.
Notice will be mailed by first-class mail
by the Property Trustee (as defined
herein) to each holder of Preferred
Securities not more than four Business
Days after issuance of the press release.
In the event of any redemption of the
Preferred Securities, the conversion
rights with respect to the Preferred
Securities will expire two Business Days
prior to the scheduled date for the
redemption of the Preferred Securities if
United Rentals has not exercised its
option to cause the conversion rights of
holders of the Preferred Securities to
expire. See "Description of the Preferred
Securities--Conversion Rights--Expiration
of Conversion Rights."
Redemption...................... Except as provided below, the Preferred
Securities are not redeemable by the
Issuer prior to August 2, 2001. From time
to time on or after such date, the
Preferred Securities will be subject to
redemption, in whole or in part, at the
redemption prices set forth herein
(together with all accrued and unpaid
Distributions to the date fixed for
redemption) upon any permitted redemption
of Debentures by United Rentals. However,
the aggregate liquidation preference of
the Preferred Securities and any Common
Securities so redeemed will equal the
aggregate principal amount of Debentures
redeemed by United Rentals which may not
exceed the amount of the proceeds
derived, directly or indirectly, by
United Rentals from the issuance and sale
of Common Stock within the 12 months
preceding the date fixed for redemption.
The Preferred Securities will not be
redeemable unless and until all accrued
and unpaid Distributions thereon have
been paid in full on all outstanding
Preferred Securities through the last
Distribution Date prior to and including
the date of redemption. See "Description
of the Preferred Securities--Optional
Redemption" and "Description of the
Debentures--Optional Redemption." In the
event that, at any time after
the Conversion Expiration Date, less than
5% of the Preferred Securities remains
outstanding, such Preferred Securities
shall be redeemable at the option of the
Issuer, in whole but not in part, at a
redemption price equal to the liquidation
preference for such Preferred Securities
and all accrued and unpaid Distributions.
See "Description of the Preferred
Securities--Optional Redemption." The
Preferred Securities will be subject to
mandatory redemption upon the repayment
at maturity or as a result of
acceleration of the Debentures. See
"Description of the Preferred
Securities--Trust Agreement Events of
Default; Notice" and "Description of the
Preferred Securities--Mandatory
Redemption."
8
<PAGE>
Special Event Exchange or Upon the occurrence of a Tax Event (as
Redemption...................... defined below) or an Investment Company
Event (as defined below), the UR Trustees
shall direct the Conversion Agent to
exchange all outstanding Preferred
Securities for Debentures, provided that,
in the case of a Tax Event, the UR
Trustees shall have the right to direct
that less than all of the Preferred
Securities be so exchanged if and for so
long as United Rentals shall have elected
to pay Additional Sums (as defined below)
such that the amounts received by the
holders of Preferred Securities that
remain outstanding are not reduced
thereby and shall not have revoked any
such election or failed to make such
payments. Upon the occurrence of a Tax
Event, the Debentures may be redeemed, in
whole but not in part, for cash by United
Rentals at the Tax Redemption Price (as
defined below) per Debenture, plus
accrued and unpaid interest thereon. In
the event the Debentures are redeemed by
United Rentals, the Preferred Securities
will be redeemed by the UR Trustees at
the Tax Redemption Price per Preferred
Security together with accrued and unpaid
Distributions thereon. See "Description
of the Preferred Securities--Special
Event Exchange or Redemption."
A "Special Event" means a Tax Event or an
Investment Company Event. A "Tax Event"
means the receipt by the Property
Trustee, on behalf of the Issuer, of an
opinion of counsel, rendered by a law
firm having a national tax and securities
practice (which opinion shall not have
been rescinded by such law firm), to the
effect that, as a result of any amendment
to, or change (including any announced
prospective change) in, the laws (or any
regulations thereunder) of the United
States or any political subdivision or
taxing authority thereof or therein
affecting taxation, or as a result of any
official administrative pronouncement or
judicial decision interpreting or
applying such laws or regulations, which
amendment or change is effective or such
pronouncement or decision is announced on
or after the date of issuance of the
Preferred Securities under the Trust
Agreement, there is more than an
insubstantial risk that (i) the Issuer
is, or will be within 90 days of the date
thereof, subject to United States federal
income tax with respect to income
received or accrued on the Debentures,
(ii) interest payable by United Rentals
on such Debentures is not, or within 90
days of the date thereof will not be,
deductible by United Rentals, in whole or
in part, for United States federal income
tax purposes, or (iii) the Issuer is, or
will be within 90 days of the date
thereof, subject to more than a de
minimis amount of other taxes, duties or
other governmental charges. "Investment
Company Event" means the receipt by the
Property Trustee (as defined herein), on
behalf of the Issuer, of an opinion of
counsel, rendered by a law firm having a
recognized national
9
<PAGE>
tax and securities practice (which
opinion shall not have been rescinded by
such law firm), to the effect that, as a
result of the occurrence of a change in
law or regulation or a change in
interpretation or application of law or
regulation by any legislative body,
court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"),
that there is more than an insubstantial
risk that the Issuer is or will be
considered an "investment company" that
is required to be registered under the
Investment Company Act of 1940, as
amended (the "Investment Company Act"),
which Change in 1940 Act Law becomes
effective on or after the date of
original issuance of the Preferred
Securities.
"Additional Sums" means the additional
amounts as may be necessary in order that
the amount of Distributions then due and
payable by the Issuer on the outstanding
Preferred Securities and Common
Securities of the Issuer shall not be
reduced as a result of any additional
taxes, duties and other governmental
charges to which the Issuer has become
subject as a result of a Tax Event.
"Tax Redemption Price" means, with respect to
a Debenture or Preferred Security, on any
redemption date (A) prior to August 2, 2001,
the greater of (i) the principal amount of
such Debenture or the liquidation preference
of such Preferred Security, as applicable;
and (ii) the greater of (a) the average of
the Market Price (as defined herein) of a
Preferred Security over the five trading days
immediately preceding the day on which the
notice of redemption (the "Redemption
Notice") is given by the Property Trustee or
the Debenture Trustee, as applicable; and (b)
the Market Price of a Preferred Security on
the trading day immediately preceding the day
on which the Redemption Notice is given by
the Property Trustee or the Debenture
Trustee, as applicable; and (B) on or after
August 2, 2001, the principal amount of such
Debenture or the liquidation preference of
such Preferred Security, as applicable.
"Market Price" means on any trading day, the
closing price of a Preferred Security on such
trading day as determined by the Board of
Directors of United Rentals and Goldman,
Sachs & Co. in good faith by agreement, or in
the event that no such agreement can be
reached, the average of the mid-point of the
last bid and ask prices for a Preferred
Security from each of at least three
nationally recognized investment banking
firms which trade Preferred Securities, to be
selected for this purpose by the Board of
Directors of United Rentals and Goldman,
Sachs & Co. in good faith by agreement.
Distribution of Debentures...... At any time, United Rentals has the right
to dissolve the Issuer and, after
satisfaction of the liabilities to
creditors of the Issuer as provided by
applicable law, cause the Debentures to
be
10
<PAGE>
distributed to the holders of the
Preferred Securities in liquidation of
the Issuer. See "Description of the
Preferred Securities--Distribution of
Debentures."
Guarantee....................... Pursuant to the Guarantee, United Rentals
has irrevocably agreed, on a subordinated
basis (as to all Secured Indebtedness of
United Rentals), to guarantee the payment
in full of (a) the Distributions payable
by the Issuer on the Preferred
Securities, to the extent the Issuer has
funds on hand available therefor, (b) the
redemption price (together with
accumulated and unpaid Distributions)
payable by the Issuer with respect to any
Preferred Securities called for
redemption, to the extent the Issuer has
funds on hand available therefor, and (c)
amounts payable in respect of the
Preferred Securities upon liquidation of
the Issuer (unless the Debentures are
distributed to the holders of the
Preferred Securities), to the extent that
there are assets of the Issuer available
for distribution to holders of the
Preferred Securities. A holder of
Preferred Securities may enforce United
Rentals' obligations to make the
aforesaid payments under the Guarantee
directly against United Rentals, and
United Rentals waives any right to
require that an action be brought against
the Issuer or any other person before
proceeding against United Rentals. The
Guarantee is unsecured and is subordinate
and junior in right of payment to all
existing and future Secured Indebtedness
of United Rentals and structurally
subordinated to all obligations of the
subsidiaries of United Rentals. The
Guarantee ranks pari passu with any
unsecured indebtedness now existing or
hereafter incurred by United Rentals. See
"Risk Factors--Subordination of the
Debentures and the Guarantee," "Risk
Factors--Risks Associated with Holding
Company Structure" and "Description of
the Guarantee."
Voting Rights................... Holders of Preferred Securities generally
have limited voting rights relating only
to the modification of the Preferred
Securities. Holders of Preferred
Securities are not entitled to vote to
appoint, remove or replace the UR
Trustees, which voting rights are vested
exclusively in the holder of the Common
Securities. The UR Trustees and United
Rentals may amend the Trust Agreement
without the consent of holders of
Preferred Securities to ensure that the
Issuer will be classified for United
States federal income tax purposes as a
grantor trust even if such action
adversely affects the interests of such
holders. See "Description of the
Preferred Securities--Voting Rights;
Amendment of the Trust Agreement."
Debentures...................... The Debentures have a maturity of 30
years from the date of original issuance
and bear interest at the rate of 6 1/2%
per annum payable quarterly in arrears.
United Rentals has the right from time to
time to select an interest payment period
or periods longer than one quarter
(during which period or
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<PAGE>
periods interest will compound
quarterly), provided that no such
deferral of interest payments will exceed
20 consecutive quarters and provided
further that no such deferral of interest
payments may extend beyond the stated
maturity of the Debentures. Accordingly,
Distribution payments on the Preferred
Securities may not be deferred beyond the
stated maturity of the Debentures. If
United Rentals defers interest payments,
subject to certain exceptions, it will be
prohibited from paying dividends on any
of its capital stock or making payments
with respect to its debt securities that
rank pari passu with or junior to the
Debentures, until quarterly interest
payments are resumed and all accrued and
unpaid interest on the Debentures is
brought current. United Rentals will have
the right to make partial payments of
such interest during a deferral of
interest payments.
The Debentures are convertible into
shares of Common Stock at the option of
the holders thereof at a conversion rate
of 1.14593 shares of Common Stock for
each $50 in principal amount of
Debentures (equivalent to a conversion
price of $43.6325 per share of Common
Stock) subject to certain adjustments set
forth herein. The Issuer has covenanted
not to convert Debentures except pursuant
to a notice of conversion delivered to
the Conversion Agent by a holder of
Preferred Securities.
On and after August 2, 2001, the
Debentures will be redeemable at the
option of United Rentals at any time, in
whole or in part, at the redemption
prices set forth herein, together with
accrued and unpaid interest to the date
fixed for redemption; provided, that the
aggregate principal amount of the
Debentures redeemed may not exceed the
amount of the proceeds derived, directly
or indirectly, by United Rentals from the
issuance and sale of Common Stock within
the 12 months preceding the date fixed
for redemption. The Debentures may not,
however, be redeemed unless and until all
accrued and unpaid interest thereon has
been paid in full on all outstanding
Debentures through the last interest
payment date prior to and including the
date of redemption. See "Description of
the Debentures-- Optional Redemption."
The Debentures are also redeemable, in
whole but not in part, upon the
occurrence and continuation of a Tax
Event. See "Description of the Preferred
Securities--Special Event Exchange or
Redemption."
The Debentures are subordinate and junior
in right of payment to all existing and
future Secured Indebtedness of United
Rentals and are structurally subordinated
to all obligations of the subsidiaries of
United Rentals. The Loan Guarantees
constitute Secured Indebtedness of United
Rentals. At September 30, 1998, on a pro
forma basis (after giving effect
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<PAGE>
to all acquisitions completed by the
Company subsequent to such date (through
January 11, 1999) and the financing
thereof) (i) United Rentals would have
had outstanding $284.2 million of Secured
Indebtedness and (ii) the subsidiaries of
United Rentals would have had outstanding
approximately $1,044.4 million of
obligations (not including the
obligations guaranteed by United Rentals
pursuant to the Loan Guarantees which
constitute Secured Indebtedness). The
terms of the Debentures do not place any
limitation on the amount of Secured
Indebtedness or other indebtedness that
may be incurred by United Rentals or
subsidiaries of United Rentals. See "Risk
Factors--Subordination of the Debentures
and the Guarantee" and "Risk Factors--
Risks Associated with Holding Company
Structure."
While the Preferred Securities are
outstanding, the Issuer does not have the
right to amend the Indenture or the terms
of the Debentures in a way that
materially adversely affects the holders
of the Preferred Securities or to waive a
Debenture Event of Default without the
consent of holders of at least a majority
in aggregate liquidation preference of
the Preferred Securities and, in certain
cases, the Common Securities then
outstanding. See "Description of the
Debentures--Modification of Indenture."
Registration Rights............. United Rentals has filed the Registration
Statement of which this Prospectus forms
a part pursuant to a Registration Rights
Agreement entered into in connection with
the original issuance of the Preferred
Securities. Upon certain failures by
United Rentals to comply with certain of
its obligations under the Registration
Rights Agreement, the interest rate borne
by the Debentures and the distribution
rate borne by the Preferred Securities
may increase. See "Description of the
Preferred Securities."
Listing......................... The Preferred Securities have been
designated for trading on the PORTAL
System of the National Association of
Securities Dealers, Inc. (the "PORTAL
System"). However, Preferred Securities
sold by Selling Holders pursuant to the
registration statement of which this
Prospectus forms a part are not expected
to remain eligible for trading on the
PORTAL System. United Rentals has not
applied, and does not intend to apply,
for listing of the Preferred Securities
on any securities exchange or for
inclusion of the Preferred Securities on
any automated quotation system.
The Common Stock is listed on the NYSE
under the symbol "URI".
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<PAGE>
RISK FACTORS
Prospective purchasers of the Preferred Securities should carefully consider
the risk factors set forth below, as well as the other information appearing
in this Prospectus, before making an investment in the Preferred Securities.
Subordination of the Debentures and the Guarantee
The obligations of United Rentals under the Debentures and the Guarantee are
unsecured and are subordinate and junior in right of payment to all existing
and future Secured Indebtedness of United Rentals. United Rentals has,
pursuant to the Loan Guarantees, guaranteed the obligations of URI relating to
(1) URI's $762.5 million revolving credit facility (the "Credit Facility") and
(ii) a $250 million term loan (the "Term Loan") obtained by URI. In addition,
United Rentals has pledged the outstanding common stock of URI as security for
such guarantee. The Loan Guarantees constitute Secured Indebtedness of United
Rentals.
The Debentures and the Guarantee are obligations of United Rentals and not
of its subsidiaries. As a result, the obligations of United Rentals under the
Debentures and the Guarantee are structurally subordinated to all obligations
of the subsidiaries of United Rentals. The effect of such structural
subordination is that creditors of United Rentals' subsidiaries would be
entitled to a claim on the assets of such subsidiaries prior to any claims by
United Rentals. Consequently, in the event of a liquidation or reorganization
of any subsidiary of United Rentals, creditors of such subsidiary are likely
to be paid in full before any distribution is made to United Rentals, except
to the extent that United Rentals itself is recognized as a creditor of such
subsidiary, in which case the claims of United Rentals would still be
subordinate to any security interest in the assets of such subsidiary and any
indebtedness of such subsidiary senior to that held by United Rentals.
At September 30, 1998, on a pro forma basis (after giving effect to all
acquisitions completed by the Company subsequent to such date (through January
11, 1999) and the financing thereof) (i) United Rentals would have had
outstanding $284.2 million of Secured Indebtedness and (ii) the subsidiaries
of United Rentals would have had outstanding approximately $1,044.4 million of
obligations (not including the obligations guaranteed by United Rentals
pursuant to the Loan Guarantees which constitute Secured Indebtedness). The
terms of the Debentures do not place any limitation on the amount of Secured
Indebtedness or other indebtedness that may be incurred by United Rentals or
subsidiaries of United Rentals.
Risks Associated with Holding Company Structure
United Rentals is principally a holding company having as its principal
asset its investment in URI. URI in turn derives all its operating income from
its subsidiaries. Consequently, United Rentals' ability to meet its financial
obligations, including its obligations under the Debentures and Guarantee, is
dependent upon the earnings of URI and its subsidiaries and the distribution
or other payment of such earnings from URI's subsidiaries to URI and from URI
to United Rentals. The ability of URI and its subsidiaries to make such
distributions or other payments is limited by applicable law generally
governing the payment of dividends and other distributions by corporations. In
addition, the ability of URI to make distributions and other payments to
United Rentals is restricted by the terms of the agreements governing URI's
outstanding indebtedness. As of September 30, 1998, on a pro forma basis
(after giving effect to all acquisitions completed by URI after such date
(through January 11, 1999) and the financing thereof), URI would have been
permitted to distribute up to $618.0 million to United Rentals. URI may in the
future enter into new loan or other agreements that contain additional
restrictions on the ability of URI to make distributions and other payments to
United Rentals. Furthermore, although at present there are no contractual
restrictions that limit the ability of URI's subsidiaries to make
distributions or other payments to URI, certain of URI's subsidiaries may in
the future become subject to loan or other agreements that contain such
restrictions.
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<PAGE>
The ability of the Issuer to pay amounts due on the Preferred Securities
will be solely dependent upon United Rentals making payments on the Debentures
as and when required. Consequently, to the extent that United Rentals is
unable to make payments under the Debentures, the Issuer will be unable to pay
the amounts due on the Preferred Securities.
Level of Indebtedness
As of September 30, 1998, the Company had total debt of $1,031.7 million on
a pro forma basis after giving effect to all acquisitions completed by the
Company after such date (through January 11, 1999) and the financing thereof.
In addition, the Company will require substantial capital to finance its
acquisition growth and expects that it will incur substantial additional
indebtedness from time to time (including borrowings under the Credit
Facility) for a variety of purposes, including completing additional
acquisitions, establishing new rental locations and purchasing equipment. The
agreements governing the Company's existing indebtedness permit the Company
and its subsidiaries to incur additional debt, subject to certain limitations.
See "--Dependence on Additional Capital to Finance Growth."
The level of the Company's indebtedness could have important consequences to
holders of the Preferred Securities and the Debentures, including, but not
limited to, the following: (i) a significant portion of the Company's cash
flow from operations must be dedicated to debt service, and will not be
available for other purposes; (ii) the Company's ability to obtain additional
debt financing in the future for working capital, capital expenditures or
acquisitions may be limited; (iii) the Company's level of indebtedness could
limit its flexibility in reacting to changes in its industry and economic
conditions generally; and (iv) certain of the Company's borrowings (including
all borrowings under the Credit Facility and the Term Loan) are, or in the
future may be, at variable rates which may make the Company vulnerable to
increases in interest rates.
Option to Extend Interest Payment Period; Tax Consequences
United Rentals has the right under the Indenture to defer the payment of
interest on the Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each Extension Period,
provided that no Extension Period may extend beyond the stated maturity of the
Debentures. Upon the termination of any Extension Period and the payment of
all amounts then due, United Rentals may select a new Extension Period and
defer the payments of all amounts then due, subject to the requirements
described herein. As a consequence of any such deferral, quarterly
Distributions on the Preferred Securities by the Issuer will be deferred (and
the amount of Distributions to which holders of the Preferred Securities will
be entitled will accumulate additional Distributions at the stated rate per
annum set forth herein, compounded quarterly) during any such Extension
Period.
Should an Extension Period occur, a holder of Preferred Securities will
continue to accrue income (in the form of original issue discount ("OID")) in
respect of its pro rata share of the deferred interest allocable to the
Debentures held by the Issuer for United States federal income tax purposes.
As a result, a holder of Preferred Securities will include such income in its
gross income for United States federal income tax purposes in advance of the
receipt of cash and will not receive the cash related to such income from the
Issuer if the holder disposes of the Preferred Securities prior to the record
date for the payment of Distributions. See "Certain Federal Income Tax
Consequences--U.S. Holders--Interest Income and Original Issue Discount."
Moreover, if a holder of Preferred Securities converts its Preferred
Securities into Common Stock during an Extension Period, the holder will not
receive any cash related to the deferred Distribution. Additionally, during
the pendency of any Extension Period, United Rentals will not be permitted,
subject to certain exceptions set forth herein, to declare or pay any cash
distribution with respect to United Rentals' capital stock or make any
payments with respect to its debt securities that rank pari passu with or
junior to the Debentures. See "Description of the Preferred Securities--
Distributions."
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<PAGE>
United Rentals has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Debentures. However, should United Rentals elect to exercise such right in the
future, the market price of the Preferred Securities is likely to be affected.
A holder that disposes of its Preferred Securities during an Extension Period,
therefore, might not receive the same return on its investment as a holder
that continues to hold its Preferred Securities. In addition, as a result of
the existence of United Rentals' right to defer interest payments, the price
at which the Preferred Securities (which represent preferred undivided
beneficial interests in the Debentures) trade may be more volatile than the
trading prices of other securities that are not subject to such deferrals.
Expiration of Conversion Rights
On and after August 2, 2001, United Rentals may, subject to certain
conditions, at its option, cause the conversion rights of holders of the
Preferred Securities to expire, provided that the Current Market Price of the
Common Stock exceeds 120% of the conversion price of the Preferred Securities
for a specified period. See "Description of the Preferred Securities--
Conversion Rights--Expiration of Conversion Rights."
Tax Event Redemption
Upon the occurrence of a Tax Event, United Rentals will have the right to
cause the Preferred Securities to be redeemed, in whole but not in part, at
the Tax Redemption Price, together with accrued and unpaid interest to but
excluding the Redemption Date, upon not less than 30 nor more than 60 days'
notice. See "Description of the Preferred Securities--Special Event Exchange
or Redemption."
Possible Exchange of Preferred Securities For Debentures
At any time, United Rentals will have the right to terminate, liquidate or
dissolve the Issuer and, after satisfaction of the liabilities to creditors of
the Issuer as provided by applicable law, cause the Debentures to be
distributed to the holders of the Preferred Securities in liquidation of the
Issuer. In addition, in certain circumstances following the occurrence and
continuation of a Special Event, the Preferred Securities will also be subject
to exchange in whole or, in the case of a Tax Event, in whole or in part, in
the manner described herein, for the Debentures. Because holders of Preferred
Securities may receive Debentures on dissolution of the Issuer or if the
Preferred Securities are exchanged for Debentures in connection with a Special
Event, prospective purchasers of Preferred Securities are also making an
investment decision with regard to the Debentures and should carefully review
all the information regarding the Debentures contained herein. See
"Description of the Preferred Securities--Special Event Exchange or
Redemption" and "Description of the Debentures--General."
Rights Under the Guarantee
Pursuant to the Guarantee, United Rentals has guaranteed to the holders of
the Preferred Securities the following payments (the "Guarantee Payments"), to
the extent not paid by the Issuer: (i) any accumulated and unpaid
Distributions required to be paid on the Preferred Securities, to the extent
that the Issuer has funds on hand available therefor at such time; (ii) the
redemption price with respect to any Preferred Securities called for
redemption, to the extent that the Issuer has funds on hand available therefor
at such time; and (iii) upon a voluntary or involuntary dissolution, winding-
up or liquidation of the Issuer (unless the Debentures are distributed to
holders of the Preferred Securities), the lesser of (a) the aggregate of the
liquidation preference and all accrued and unpaid Distributions to the date of
payment to the extent that the Issuer has funds on hand available therefor at
such time and (b) the amount of assets of the Issuer remaining available for
distribution to holders of the Preferred Securities in liquidation of the
Issuer. In addition, as part of the Guarantee, United Rentals has agreed that
it will honor all obligations described therein relating to the conversion or
exchange of the Preferred Securities into or for Common Stock or Debentures.
If United Rentals were to default on its obligation to pay amounts payable
under the Debentures, the Issuer would lack funds for the payment of
Distributions or amounts payable on redemption of the Preferred Securities
16
<PAGE>
or otherwise. In such event, holders of the Preferred Securities would not be
able to rely upon the Guarantee for payment of such amounts (since the
Guarantee only guarantees payment to the extent that the Issuer has funds
available for such payment). However, the Property Trustee (and, under the
circumstances described below, each holder of Preferred Securities), may
institute proceedings directly against United Rentals to enforce the payment
obligations of United Rentals under the Debentures.
Limitation on Direct Enforcement of Certain Rights by Holders of Preferred
Securities
Upon the occurrence of a default under the Guarantee, the holders of the
Preferred Securities will be required to rely upon the Guarantee Trustee (as
defined herein) to enforce the Guarantee and will not be permitted to
institute proceedings directly against United Rentals to enforce the
Guarantee; provided, however, that a holder of Preferred Securities may
directly institute a proceeding against United Rentals for enforcement of the
Guarantee if (i) the Guarantee Trustee fails to enforce its rights under the
Guarantee after a request therefor by a holder of Preferred Securities or (ii)
the default under the Guarantee is attributable to a failure by United Rentals
to make a Guarantee Payment.
Upon the occurrence of a Debenture Event of Default or Trust Agreement Event
of Default (as defined herein), the holders of the Preferred Securities will
be required to rely upon the Property Trustee to enforce its rights under the
Debentures or the Trust Agreement, and the holders of the Preferred Securities
will not be permitted to institute proceedings directly against United Rentals
for such purpose; provided, however, that (i) if the Property Trustee fails to
enforce its rights as holder of the Debentures after a request therefor by a
holder of Preferred Securities, any holder of Preferred Securities may proceed
to enforce such rights directly against United Rentals and (ii) if the
Debenture Event of Default or Trust Agreement Event of Default is attributable
to the failure of United Rentals to pay interest on or principal of the
Debentures on the date such interest or principal is otherwise payable (or in
the case of redemption, on the redemption date), then, during the continuance
of such event of default, a holder of Preferred Securities may directly
institute a proceeding against United Rentals for enforcement of payment to
such holder of the interest on or principal of Debentures having a principal
amount equal to the aggregate liquidation preference of the Preferred
Securities of such holder (a "Direct Action"). The holders of not less than a
majority in aggregate liquidation amount of the Preferred Securities will have
the right to direct (i) the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or the Property Trustee under the Trust Agreement (including the
right to direct the Property Trustee to exercise the remedies available to it
as a holder of the Debentures) and (ii) the exercise of any trust power
conferred upon the Guarantee Trustee under the Guarantee or the Property
Trustee under the Trust Agreement. See "Description of the Preferred
Securities--Trust Agreement Events of Default; Notice" and "--Voting Rights;
Amendment of the Trust Agreement."
Limited Voting Rights
Holders of Preferred Securities generally have limited voting rights
primarily in connection with directing the activities of the Property Trustee
as the holder of the Debentures. Holders of Preferred Securities are not
entitled to vote to appoint, remove or replace the UR Trustees, which voting
rights are vested exclusively in the holder of the Common Securities. The UR
Trustees and United Rentals may amend the Trust Agreement without the consent
of holders of Preferred Securities to ensure that the Issuer will be
classified for United States federal income tax purposes as a grantor trust
even if such action adversely affects the interests of such holders. See
"Description of the Preferred Securities--Voting Rights; Amendment of the
Trust Agreement."
Possible Tax Legislation
Prospective investors should be aware that legislation has been introduced
in the United States Congress in the past that would, if enacted, deny an
interest deduction to issuers of instruments such as the Debentures. No such
legislation is currently pending. There can be no assurance, however, that
similar legislation will not ultimately be enacted into law, or that other
developments will not occur after the date hereof that would
17
<PAGE>
adversely affect the tax treatment of the Debentures and could result in the
exchange of the Debentures for Preferred Securities or, in certain limited
circumstances, the redemption of the Debentures by United Rentals and the
distribution of the resulting cash in redemption of the Preferred Securities.
See "Description of the Preferred Securities--Special Event Exchange or
Redemption."
Absence of Public Trading Market for the Preferred Securities
There is no existing public trading market for the Preferred Securities and
there can be no assurance as to the liquidity of any such market that may
develop, the ability of the holders of Preferred Securities to sell such
securities, or whether a public trading market, if it develops, will continue.
United Rentals has not applied and does not intend to apply for listing of the
Preferred Securities on any securities exchange or for inclusion of the
Preferred Securities on any automated quotation system.
Trading Price of Preferred Securities
There can be no assurance as to the market prices for the Preferred
Securities, the Debentures that may be distributed in exchange for Preferred
Securities or the Common Stock issuable upon conversion of the Preferred
Securities or the Debentures. Accordingly, the Preferred Securities that an
investor may purchase, the Debentures that a holder of the Preferred
Securities may receive or the Common Stock issuable upon conversion of the
Preferred Securities or the Debentures, may trade at a discount to the price
that the investor paid to purchase the Preferred Securities offered hereby. In
addition, the Preferred Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the
underlying Debentures. A holder disposing of Preferred Securities between
record dates for payments of Distributions thereon will nevertheless be
required for United States federal income tax purposes to include accrued but
unpaid interest on the Debentures through the date of disposition in income as
ordinary income (i.e., OID), and to add such amount to the adjusted tax basis
in the holder's Preferred Securities. To the extent the selling price is less
than the holder's adjusted tax basis (which will include, in the form of
original issue discount, all accrued but unpaid interest), a holder will
recognize a capital loss. Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United States federal
income tax purposes. See "Certain Federal Income Tax Consequences--U.S.
Holders--Sales of Preferred Securities."
Sensitivity to Changes in Construction and Industrial Activities
The Company's equipment is principally used in connection with construction
and industrial activities. Consequently, a downturn in construction or
industrial activity may lead to a decrease in demand for the Company's
equipment, which could adversely affect the Company's business. Set forth
below are certain of the factors which may cause such a downturn either
temporarily or long-term:
. a general slow-down of the economy;
. an increase in interest rates; or
. adverse weather conditions which may temporarily affect a particular
region.
Acquired Companies Not Historically Operated as a Combined Business
The businesses acquired by the Company (through January 11, 1999) have been
in existence an average of 29 years and some have been in existence for more
than 50 years. However, these businesses were not historically managed or
operated as a single business. Although the Company believes that it can
successfully manage and operate the acquired businesses as a single business,
there can be no assurance of this.
Limited Operating History
The Company commenced equipment rental operations in October 1997 with the
acquisition of six well-established rental companies and has grown through a
combination of internal growth, the acquisition of 85 additional companies
(through January 11, 1999), and a merger in September 1998 with U.S. Rentals,
Inc. Due to the relatively recent commencement of the Company's operations,
the Company has a limited history upon which an evaluation of the Company and
its prospects can be based.
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<PAGE>
Risks Relating to Growth Strategy
The Company's growth strategy includes continued expansion through internal
growth, its ongoing acquisition program and the start-up of new locations.
However, there can be no assurance that the Company will successfully
implement its growth strategy or that this strategy will result in continued
profitability. In addition, under the terms of certain of the agreements
governing certain of the Company's outstanding indebtedness, 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. Competition for acquisitions could have the effect of increasing
prices required to be paid for such acquisitions. 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
Realization of the anticipated benefits of completed and future acquisitions
will depend, in part, upon the efficient, effective and timely integration of
acquired operations. Accordingly, the Company intends to continue 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.
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 for a start-up location to become
profitable. Although start-ups can generate long-term growth, there can be no
assurance that any start-up location will become profitable within any
specific time period, 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 Company's
borrowing facilities is not sufficient to fund the Company's capital
requirements, the Company will require additional debt and/or equity
financing. 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 of the Company.
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<PAGE>
Possible Undiscovered Liabilities of Acquired Companies
Prior to making an acquisition, the Company seeks to assess the liabilities
of the target company that the Company will become responsible for as a result
of the acquisition. Nevertheless, the Company may fail to discover certain of
such liabilities. The Company seeks to reduce its risk relating to these
possible hidden liabilities by generally obtaining the agreement of the seller
to reimburse the Company in the event that the Company discovers any material
hidden liabilities. However, this type of agreement, if obtained, may not
fully protect the Company against hidden liabilities because (1) the seller's
obligation to reimburse the Company is generally limited in duration and/or
amount and (2) the seller may not have sufficient financial resources to
reimburse the Company. Furthermore, when a public company is acquired (such as
when the Company acquired U.S. Rentals) there is no seller from which to
obtain this type of agreement.
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 agreements governing the Credit Facility and Term
Loan provide 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 and Term Loan unless replacement officers satisfactory to the
lenders are appointed. The Company does not presently maintain "key man" life
insurance with respect to members of senior management.
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. 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.
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 period not meeting expectations, which could have a material
adverse impact on the market price of the Preferred Securities and/or 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 the Company's 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 $1 million and limited to
a maximum of $97 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
20
<PAGE>
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 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 and Safety Regulations
The Company's equipment, facilities and operations are subject to certain
federal, state and local laws and regulations relating to environmental
protection and occupational health and safety. These include, among other
things, laws and regulations governing wastewater discharges, the use,
treatment, storage and disposal of solid and hazardous wastes and materials,
air quality and the remediation of contamination associated with the release
of hazardous substances. Under 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. The activities of the Company that are or may be impacted by these
laws include, but are not limited to, the use of hazardous materials to clean
and maintain equipment and the disposal of solid and hazardous waste and
wastewater from equipment washing. In addition, the Company dispenses
petroleum products from underground and above-ground storage tanks located at
certain rental locations and is required from time to time to remove or
upgrade tanks in order to comply with applicable laws. Furthermore, the
Company has acquired or leased certain locations which have or may have been
contaminated by leakage from underground tanks or other sources and is in the
process of assessing the nature of the required remediation. Based on the
conditions currently known to the Company, the Company believes that any
unreserved environmental remediation and compliance costs required with
respect to those conditions will not have a material adverse affect on the
Company. However, there can be no assurance that the Company will not identify
adverse environmental conditions that are not currently known to it, that all
potential releases from underground storage tanks removed in the past have
been identified, or that environmental and safety requirements will not become
more stringent or be interpreted and applied more stringently in the future.
The identification of such adverse environmental conditions or such future
changes or interpretations could result in additional environmental compliance
or remediation costs not currently anticipated by the Company, which depending
on the magnitude of the cost could have a material adverse effect on the
Company.
Concentrated Control
As of the date of this Prospectus the executive officers and directors of
the Company own in the aggregate more than 50% of the outstanding Common
Stock. Such share ownership may effectively give such persons the ability to
elect the entire Board of Directors of United Rentals and to control the
Company's management and affairs.
Volatility of Price of Preferred Securities and Common Stock
The market price of the Preferred Securities and 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 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 Preferred Securities and the Common Stock.
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<PAGE>
Absence of Dividends
United Rentals 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 certain of the agreements governing certain of the Company's
outstanding indebtedness, United Rentals is prohibited from paying dividends
on the Common Stock.
Shares Eligible For Future Sale
Sales of substantial amounts of Common Stock (including shares issued upon
exercise of warrants, options or convertible securities), or the perception
that such sales could occur, could adversely affect prevailing market prices
for the Common Stock.
Anti-takeover Provisions
Certain provisions of United Rentals' 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 shares of preferred stock (up to a
specified limit) in one or more series and 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."
Risks Associated With International Operations
The Company's operations outside the United States are subject to risks
normally associated with international operations, including currency
conversion risks and complying with foreign laws.
Year 2000 Issues
The Company's software vendors have informed the Company that its recently-
installed information technology system is year 2000 compliant. The Company
has, therefore, not developed any contingency plans relating to year 2000
issues and has not budgeted any funds for year 2000 issues. Although the
Company believes that its system is year 2000 compliant, unanticipated year
2000 problems may arise which, depending on the nature and magnitude of the
problem, could adversely affect the Company's business. Furthermore, year 2000
problems involving third parties may have a negative impact on the Company's
customers or suppliers, the general economy or on the ability of businesses
generally to receive essential services (such as telecommunications, banking
services, etc.). Any such occurrence could adversely affect our business.
22
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USE OF PROCEEDS
The Selling Holders will receive all of the proceeds from any sale of the
Offered Securities. Neither the Company nor the Issuer will receive any
proceeds from the sale of the Offered Securities.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended December 31, September 30,
------------------------ --------------
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- --------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to combined fixed
charges and preferred stock dividends
(1).................................. 4.0x 4.5x 4.8x 4.0x 3.4x 1.8x(2)
</TABLE>
- --------
(1) For purposes of calculating this ratio:
. earnings consist of income before income taxes and extraordinary
items plus fixed charges (but only to the extent that fixed charges
were deducted in calculating income);
. fixed charges consist of interest expensed and capitalized; amortized
premiums, discounts and capitalized expenses related to indebtedness;
and the Company's estimate of the interest portion of rental expense;
and
. the dividend amount with respect to any preferred stock is considered
to be the amount of pre-tax earnings that is required to pay the
dividend on such stock.
(2) Earnings during this period were impacted by merger-related expenses of
$42.2 million. Excluding such expenses, the ratio of earnings to combined
fixed charges and preferred stock dividends during this period would have
been 2.7x.
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ACCOUNTING TREATMENT
The financial statements of the Issuer are consolidated with the
Consolidated Financial Statements of the Company that have been incorporated
herein by reference. The Preferred Securities are shown on such Consolidated
Financial Statements as Company-obligated mandatorily redeemable convertible
preferred securities of a subsidiary trust. The sole asset of the Issuer is
the Debentures.
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<PAGE>
UNITED RENTALS TRUST I
The Issuer is a statutory business trust formed under the Trust Act pursuant
to (i) the Trust Agreement and (ii) the Certificate of Trust. United Rentals
owns Common Securities having an aggregate liquidation preference equal to
approximately 3% of the total capital of the Issuer. The Issuer was formed for
the exclusive purposes of (i) issuing and selling the Preferred Securities and
Common Securities representing undivided beneficial interests in the assets of
the Issuer and investing the gross proceeds from the sale of the Preferred
Securities and Common Securities in the Debentures; (ii) distributing the
Issuer's income; and (iii) engaging in only those other activities necessary
or incidental thereto. The Issuer has a term of approximately 40 years, but
may terminate earlier as provided in the Trust Agreement.
Pursuant to the Trust Agreement, the number of UR Trustees is currently
five. Three of the UR Trustees (the "Administrative Trustees") are officers of
United Rentals. The fourth trustee is a financial institution that is
unaffiliated with United Rentals, which trustee serves as institutional
trustee under the Trust Agreement (the "Property Trustee"). The Bank of New
York, a New York banking corporation, is the Property Trustee and will
continue as such until removed or replaced by the holder of the Common
Securities. The Bank of New York also acts as trustee (the "Guarantee
Trustee") under the Guarantee. The fifth trustee is The Bank of New York
(Delaware), which acts as the Delaware Trustee (as defined in the Trust
Agreement) for the purposes of the Trust Act, until removed or replaced by the
holder of the Common Securities. United Rentals, as the direct or indirect
holder of all the Common Securities, has the right to appoint, remove or
replace any UR Trustee and to increase or decrease the number of UR Trustees;
provided, that the number of UR Trustees shall be at least five, a majority of
which shall be Administrative Trustees. See "Description of the Guarantee" and
"Description of the Preferred Securities--Voting Rights; Amendment of the
Trust Agreement."
The Property Trustee holds title to the Debentures for the benefit of the
holders of the Preferred Securities and the Property Trustee has the power to
exercise all rights, powers and privileges under the Indenture as the holder
of the Debentures. In addition, the Property Trustee maintains exclusive
control of a segregated non-interest bearing bank account (the "Property
Account") to hold all payments made in respect of the Debentures for the
benefit of the holders of the Preferred Securities. The Property Trustee makes
payments of Distributions and payments on liquidation, redemption and
otherwise to the holders of the Preferred Securities out of funds from the
Property Account. The Guarantee Trustee holds the Guarantee for the benefit of
the holders of the Preferred Securities. United Rentals will pay all fees and
expenses related to the Issuer. See "Description of the Debentures--Expenses
of Issuer."
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the Trust
Agreement and the Trust Act. See "Description of the Preferred Securities."
The address of the Delaware Trustee in the State of Delaware is The Bank of
New York (Delaware), White Clay Center, Route 273, Newark, Delaware 19711.
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<PAGE>
DESCRIPTION OF THE PREFERRED SECURITIES
This summary of certain terms of the Preferred Securities and of certain
provisions of documents described below do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all of the
provisions of such documents (including the definitions therein of certain
terms), forms of which have been filed as exhibits to the Registration
Statement of which this Prospectus forms a part. Wherever particular Sections
of, or terms defined in, such documents are referred to herein, such Sections
or defined terms are incorporated by reference herein.
General
Pursuant to the terms of the Trust Agreement, the UR Trustees, on behalf of
the Issuer, issued the Preferred Securities and the Common Securities on
August 5, 1998. The Preferred Securities represent preferred undivided
beneficial interests in the assets of the Issuer and the Common Securities
represent common undivided beneficial interests in the assets of the Issuer.
All of the Common Securities are owned by United Rentals. The Preferred
Securities rank pari passu, and payments will be made thereon pro rata, with
the Common Securities except as described under "--Subordination of Common
Securities." Legal title to the Debentures is held by the Property Trustee in
trust for the benefit of the holders of the Preferred Securities and Common
Securities. The Trust Agreement does not permit the issuance by the Issuer of
any securities other than the Preferred Securities and the Common Securities
or the incurrence of any indebtedness by the Issuer. The payment of
Distributions out of money held by the Issuer, and payments upon redemption of
the Preferred Securities or liquidation of the Issuer, are guaranteed by
United Rentals to the extent described under "Description of the Guarantee."
The Guarantee is held by the Guarantee Trustee for the benefit of the holders
of the Preferred Securities. The Guarantee does not cover payment of
Distributions when the Issuer does not have sufficient available funds to pay
such Distributions. The remedy of a holder of Preferred Securities in such an
event is as described herein under "--Enforcement of Certain Rights by Holders
of Preferred Securities" and "--Voting Rights; Amendment of the Trust
Agreement."
Distributions
Distributions on each Preferred Security will be payable at the annual rate
of 6 1/2% of the liquidation preference of $50 per Preferred Security.
Distributions accumulate from the date of original issuance and are payable
quarterly in arrears on February 1, May 1, August 1 and November 1 of each
year to holders of record on the applicable record date, when, as and if
available for payment by the Property Trustee, except as otherwise described
below. The first distribution was made on November 1, 1998. The amount of
Distributions payable for any period will be computed on the basis of a 360-
day year comprised of twelve 30-day months. In the event that any date on
which Distributions are payable on the Preferred Securities is not a Business
Day (as defined below), then payment of the Distributions payable on such date
will be made on the next succeeding day that is a Business Day and without any
additional Distributions or other payment in respect of any such delay (each
date on which Distributions are payable in accordance with the foregoing, a
"Distribution Date"). A "Business Day" shall mean any day other than a
Saturday or a Sunday, or a day on which banking institutions in the City of
New York are authorized or required by law or executive order to remain closed
or a day on which the corporate trust office of the Property Trustee or the
Debenture Trustee is closed for business.
So long as no Debenture Event of Default has occurred and is continuing,
United Rentals has the right under the Indenture to defer the payment of
interest on the Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each deferral period (each
an "Extension Period"), provided that no Extension Period may extend beyond
the stated maturity of the Debentures. As a consequence of any such election,
quarterly Distributions on the Preferred Securities will be deferred by the
Issuer during any such Extension Period. Distributions to which holders of the
Preferred Securities are entitled will accumulate additional Distributions
thereon at the rate per annum set forth herein, compounded quarterly from the
relevant payment date for such Distributions. The term "Distributions" as used
herein shall include any such additional Distributions. During any such
Extension Period, United Rentals may not, and may not cause any of its
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subsidiaries to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any
shares of United Rentals' capital stock, or (ii) make any payment of
principal, interest or premium, if any, on, or repay, repurchase or redeem any
debt securities (including guarantees of indebtedness for money borrowed) of
United Rentals that rank pari passu with or junior to the Debentures (other
than (a) any dividend, redemption, liquidation, interest, principal or
guarantee payment by United Rentals where the payment is made by way of
securities (including capital stock) that rank pari passu with or junior to
the securities on which such dividend, redemption, interest, principal or
guarantee payment is being made, (b) redemptions or purchases of any Rights
(as defined herein) pursuant to a Rights Plan (as defined herein) in the
future, (c) payments under the Guarantee, (d) purchases of Common Stock
related to the issuance of Common Stock under any of United Rentals' benefit
plans for its directors, officers or employees, or the agreements between URI
and certain officers of URI referred to in the 1997 10-K (which is
incorporated by reference herein) under "Item 12--Security Ownership of
Certain Beneficial Owners and Management--Certain Agreements Relating to
Securities Held by Officers," (e) as a result of a reclassification of United
Rentals' capital stock or the exchange or conversion of one series or class of
United Rentals' capital stock for another series or class of United Rentals'
capital stock, and (f) the purchase of fractional interests in shares of
United Rentals' capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or
exchanged). Prior to the termination of any such Extension Period, United
Rentals may further extend the interest payment period, provided that no
Extension Period shall exceed 20 consecutive quarters or extend beyond the
stated maturity of the Debentures. Upon the termination of any such Extension
Period and the payment of all amounts then due, United Rentals may elect to
begin a new Extension Period. See "Description of the Debentures--Option to
Extend Interest Payment Period" and "Certain Federal Income Tax Consequences--
U.S. Holder--Interest Income and Original Issue Discount."
United Rentals has no current intention to exercise its right to defer
payments of interest by extending the interest payment period on the
Debentures.
Distributions with respect to the Preferred Securities must be paid on the
dates payable to the extent that the Issuer has funds available for the
payment of such Distributions in the Property Account. The funds of the Issuer
available for distribution to holders of the Preferred Securities are limited
to payments under the Debentures in which the Issuer invested the proceeds
from the issuance and sale of the Preferred Securities and the Common
Securities. See "Description of the Debentures." If United Rentals does not
make interest payments on such Debentures, the Property Trustee will not have
funds available to pay Distributions on the Preferred Securities. The payment
of Distributions (to the extent the Issuer has funds on hand available for the
payment of such Distributions and cash sufficient to make such payments) is
guaranteed by United Rentals on a limited basis as set forth herein under
"Description of the Guarantee."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the register of the Issuer on the relevant record
dates, which shall be the fifteenth day (whether or not a Business Day) next
preceding the relevant distribution date. As long as the Preferred Securities
remain in book-entry form, subject to any applicable laws and regulations and
the provisions of the Trust Agreement, each such payment will be made as
described under "--Form, Transfer, Exchange and Book-Entry Procedures."
Conversion Rights
General
The Preferred Securities are convertible at any time prior to the Conversion
Expiration Date, at the option of the holder thereof and in the manner
described below, into shares of Common Stock at an initial conversion rate of
1.14593 shares of Common Stock for each Preferred Security (equivalent to a
conversion price of $43.6325 per share of Common Stock), subject to adjustment
as described under "--Conversion Price Adjustments" below. Whenever United
Rentals issues shares of Common Stock upon conversion of Preferred Securities
and United Rentals has in effect at such time a share purchase rights or
similar plan (a "Rights Plan") under which holders of Common Stock are issued
rights ("Rights") entitling the holders thereof under certain circumstances to
purchase an additional share or shares of Common Stock, United Rentals will
issue, together with each such share of Common Stock, an appropriate number of
such rights.
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A holder of Preferred Securities wishing to exercise its conversion right
shall surrender such Preferred Securities together with an irrevocable
conversion notice to the Conversion Agent, which shall, on behalf of such
holder, exchange the Preferred Securities for a portion of the Debentures and
immediately convert such Debentures into Common Stock. So long as a book-entry
system for the Preferred Securities is in effect, however, the procedures for
converting the Preferred Stock that are in the form of Global Certificates
into shares of Common Stock will be as described under "--Form, Transfer,
Exchange and Book-Entry Procedures." United Rentals' delivery upon conversion
of the fixed number of shares of Common Stock into which the Debentures are
convertible (together with the cash payment, if any, in lieu of any fractional
share) shall be deemed to satisfy United Rentals' obligation to pay the
principal amount at maturity of the portion of the Debentures so converted and
any unpaid interest accrued on such Debentures at the time of such conversion.
For a discussion of the taxation of such an exchange to holders, see "Certain
Federal Income Tax Consequences--U.S. Holders--Conversion of Preferred
Securities into Common Stock." Holders may obtain copies of the required form
of the conversion notice from the Conversion Agent.
Accrued Distributions will not be paid on Preferred Securities that are
converted, provided, however, that holders of Preferred Securities at the
close of business on a Distribution payment record date will be entitled to
receive the Distribution payable on such Preferred Securities on the
corresponding Distribution payment date notwithstanding the conversion of such
Preferred Securities on or subsequent to such Distribution record date but
prior to such Distribution payment date. Except as provided in the immediately
preceding sentence, the Issuer will make no payment or allowance for
accumulated and unpaid Distributions, whether or not in arrears, on converted
Preferred Securities. United Rentals will make no payment or allowance for
dividends on the shares of Common Stock issued upon such conversion. Each
conversion will be deemed to have been effected immediately prior to the close
of business on the day on which proper notice was received by the Conversion
Agent.
Shares of Common Stock issued upon conversion of Preferred Securities will
be validly issued, fully paid and non-assessable. No fractional shares of
Common Stock will be issued as a result of conversion, but in lieu thereof
such fractional interest will be paid in cash.
Expiration of Conversion Rights
On and after August 2, 2001, United Rentals may, at its option, cause the
conversion rights of holders of Preferred Securities to expire. United Rentals
may exercise this option only if for 20 trading days within any period of 30
consecutive trading days, including the last trading day of such period, the
Current Market Price of Common Stock exceeds 120% of the conversion price of
the Preferred Securities, subject to adjustment in certain circumstances. In
order to exercise its option to cause the conversion rights of holders of
Preferred Securities to expire, United Rentals must issue a press release for
publication on the Dow Jones News Service announcing the Conversion Expiration
Date prior to the opening of business on the second trading day after any
period in which the condition in the preceding sentence has been met, but in
no event prior to August 2, 2001. The press release shall announce the
Conversion Expiration Date and provide the current conversion price of the
Preferred Securities and the Current Market Price of the Common Stock, in each
case as of the close of business on the trading day next preceding the date of
the press release.
Notice of the expiration of conversion rights will be given by United
Rentals by first-class mail to the holders of the Preferred Securities not
more than four Business Days after United Rentals issues the press release.
Conversion rights will terminate at the close of business on the Conversion
Expiration Date which will be a date selected by United Rentals not less than
30 nor more than 60 days after the date on which United Rentals issues the
press release announcing its intention to terminate conversion rights of the
Preferred Securities. In the event that United Rentals does not exercise its
option to terminate the conversion rights of the Preferred Securities, the
Conversion Expiration Date with respect to the Preferred Securities will be
two Business Days preceding the date set for redemption of the Preferred
Securities.
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The term "Current Market Price" of Common Stock for any day means the last
reported sale price, regular way on such day, or, if no sale takes place on
such day, the average of the reported closing bid and asked prices on such
day, regular way, in either case as reported on the NYSE Consolidated
Transaction Tape, or, if the Common Stock is not listed or admitted to trading
on the NYSE on such day, on the principal national securities exchange on
which the Common Stock is listed or admitted to trading, if the Common Stock
is listed on a national securities exchange, or the National Market System of
the National Association of Securities Dealers, Inc., or, if the Common Stock
is not quoted or admitted to trading on such quotation system, on the
principal quotation system on which the Common Stock may be listed or admitted
to trading or quoted, or, if not listed or admitted to trading or quoted on
any national securities exchange or quotation system, the average of the
closing bid and asked prices of the Common Stock in the over-the-counter
market on the day in question as reported by the National Quotation Bureau
Incorporated, or a similar generally accepted reporting service, or, if not so
available in such manner, as furnished by any NYSE member firm selected from
time to time by the Board of Directors of United Rentals for that purpose or,
if not so available in such manner, as otherwise determined in good faith by
the Board of Directors of United Rentals.
Conversion Price Adjustments
General. The conversion price will be subject to adjustment in certain
events including, without duplication: (i) the payment of dividends (and other
distributions) payable exclusively on Common Stock in Common Stock; (ii) the
issuance to all holders of Common Stock of rights or warrants entitling
holders of such rights or warrants (for a period not exceeding 45 days) to
subscribe for or purchase Common Stock at less than the then Current Market
Price; (iii) subdivisions and combinations of Common Stock; (iv) the payment
of dividends (and other distributions) to all holders of Common Stock
consisting of evidences of indebtedness of United Rentals, securities or
capital stock, cash, or assets (including securities, but excluding those
rights or warrants referred to above in clause (ii) and dividends and
distributions paid exclusively in cash); (v) the payment of dividends (and
other distributions) on Common Stock paid exclusively in cash, excluding cash
dividends if the annualized per share amount thereof does not exceed 12.5% of
the last sale price of Common Stock, as reported on the NYSE Consolidated
Transactions Tape, on the trading day immediately preceding the date of
declaration of such dividend (such adjustment being limited to the amount in
excess of 12.5% of such Current Market Price); and (vi) payment in respect of
a tender or exchange offer (other than an odd-lot offer) by United Rentals or
any subsidiary of United Rentals for Common Stock at a price per share in
excess of 110% of the Current Market Price of Common Stock on the trading day
next succeeding the last date tenders or exchanges may be made pursuant to
such tender or exchange offer (such adjustment being limited, in respect of
the excess over Current Market Price, to the amount in excess of 110% of such
Current Market Price).
United Rentals from time to time may reduce the conversion price of the
Debentures (and thus the conversion price of the Preferred Securities) by any
amount selected by United Rentals for any period of at least 30 days, in which
case United Rentals shall give at least 15 days' notice of such reduction.
United Rentals may, at its option, make such reductions in the conversion
price, in addition to those set forth above, as the Board of Directors of
United Rentals deems advisable to avoid or diminish any income tax to holders
of Common Stock resulting from any dividend or distribution of stock (or
rights to acquire stock) or from any event treated as such for income tax
purposes. See "Certain Federal Income Tax Consequences--U.S. Holders--
Adjustment of Conversion Price."
No adjustment of the conversion price will be made upon the issuance of any
shares of Common Stock pursuant to any present or future plan providing for
the reinvestment of dividends or interest payable on securities of United
Rentals and the investment of additional optional amounts in shares of Common
Stock under any such plan, or the issuance of any shares of Common Stock or
options or rights to purchase such shares pursuant to any present or future
employee benefit plan or program of United Rentals or pursuant to any option,
warrant, right, or exercisable, exchangeable or convertible security which
does not constitute an issuance to all holders of
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Common Stock of rights or warrants entitling holders of such rights or
warrants to subscribe for or purchase Common Stock at less than the Current
Market Price. There shall also be no adjustment of the conversion price in
case of the issuance of any Common Stock (or securities convertible into or
exchangeable for Common Stock), except as specifically described above. If any
action would require adjustment of the conversion price pursuant to more than
one of the anti-dilution provisions, only one adjustment shall be made and
such adjustment shall be the amount of adjustment that has the highest
absolute value to holders of the Preferred Securities. No adjustment in the
conversion price will be required unless such adjustment would require an
increase or decrease of at least 1% of the conversion price, but any
adjustment that would otherwise be required to be made shall be carried
forward and taken into account in any subsequent adjustment.
Merger, Consolidation or Sale of Assets of United Rentals. In the event that
United Rentals is a party to any transaction, including, without limitation, a
merger (other than a merger that does not result in a reclassification,
conversion, exchange or cancellation of Common Stock), consolidation, sale of
all or substantially all of the assets of United Rentals, recapitalization or
reclassification of Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value or as a result of
a subdivision or combination of Common Stock) or any compulsory share exchange
(each of the foregoing being referred to as a "Transaction"), in each case, as
a result of which shares of Common Stock shall be converted into the right to
receive, or shall be exchanged for, (i) in the case of any Transaction other
than a Transaction involving a Common Stock Fundamental Change (as defined
below) (and subject to funds being legally available for such purpose under
applicable law at the time of such conversion), securities, cash or other
property, each Preferred Security shall thereafter be convertible into the
kind and, in the case of a Transaction which does not involve a Fundamental
Change (as defined below), amount of securities, cash and other property
receivable upon the consummation of such Transaction by a holder of that
number of shares of Common Stock into which a Preferred Security was
convertible immediately prior to such Transaction, or (ii) in the case of a
Transaction involving a Common Stock Fundamental Change, common stock, each
Preferred Security shall thereafter be convertible (in the manner described
herein) into common stock of the kind received by holders of Common Stock (but
in each case after giving effect to any adjustment discussed below relating to
a Fundamental Change if such Transaction constitutes a Fundamental Change).
The holders of Preferred Securities will have no voting rights with respect to
any Transaction described in this section.
If any Fundamental Change occurs, then the conversion price in effect will
be adjusted immediately after such Fundamental Change as described below. In
addition, in the event of a Common Stock Fundamental Change, each Preferred
Security shall be convertible solely into common stock of the kind received by
holders of Common Stock as a result of such Common Stock Fundamental Change.
The conversion price in the case of any Transaction involving a Fundamental
Change will be adjusted immediately after such Fundamental Change:
(i) in the case of a Non-Stock Fundamental Change (as defined below), the
conversion price of the Preferred Securities will thereupon become the
lower of (A) the conversion price in effect immediately prior to such Non-
Stock Fundamental Change, but after giving effect to any other prior
adjustments effected pursuant to the preceding paragraphs, and (B) the
result obtained by multiplying the greater of the Applicable Price (as
defined below) or the then applicable Reference Market Price (as defined
below) by a fraction, the numerator of which is $50 and the denominator of
which is (x) the amount of the redemption price per Preferred Security if
the redemption date were the date of such Non-Stock Fundamental Change (or,
for the period commencing on the first date of original issuance of the
Preferred Securities and through July 31, 1999, and the twelve-month
periods commencing August 1, 1999 and August 1, 2000, the product of
106.50, 105.85 and 105.20, respectively, multiplied by $50) plus (y) any
then-accrued and unpaid distributions on one Preferred Security; and
(ii) in the case of a Common Stock Fundamental Change, the conversion
price of the Preferred Securities in effect immediately prior to such
Common Stock Fundamental Change, but after giving effect to any other prior
adjustments effected pursuant to the preceding paragraphs, will thereupon
be adjusted by multiplying such conversion price by a fraction, the
numerator of which is the Purchaser Stock Price (as
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defined below) and the denominator of which is the Applicable Price;
provided, however, that in the event of a Common Stock Fundamental Change
in which (A) 100% of the value of the consideration received by a holder of
Common Stock is common stock of the successor, acquiror, or other third
party (and cash, if any, is paid only with respect to any fractional
interests in such common stock resulting from such Common Stock Fundamental
Change) and (B) all Common Stock will have been exchanged for, converted
into, or acquired for common stock (and cash with respect to fractional
interests) of the successor, acquiror, or other third party, the conversion
price of the Preferred Securities in effect immediately prior to such
Common Stock Fundamental Change will thereupon be adjusted by multiplying
such conversion price by a fraction the numerator of which is one and the
denominator of which is the number of shares of common stock of the
successor, acquiror, or other third party received by a holder of one share
of Common Stock as a result of such Common Stock Fundamental Change.
In the absence of the Fundamental Change provisions, in the case of a
Transaction each Preferred Security would become convertible into the
securities, cash, or property receivable by a holder of the number of shares
of Common Stock into which such Preferred Security was convertible immediately
prior to such Transaction. A failure to apply the Fundamental Change
conversion price adjustments described above could substantially lessen or
eliminate the value of the conversion privilege associated with the Preferred
Securities. For example, if United Rentals were acquired in a cash merger,
each Preferred Security would become convertible solely into cash and would no
longer be convertible into securities whose value would vary depending on the
future prospects of United Rentals and other factors.
The foregoing conversion price adjustments are designed, in certain
circumstances, to reduce the conversion price that would be applicable in
Fundamental Change Transactions where all or substantially all the Common
Stock is converted into securities, cash, or property and not more than 50% of
the value received by the holders of Common Stock consists of stock listed or
admitted for listing subject to notice of issuance on the NYSE or a national
securities exchange or quoted on the Nasdaq National Market (a Non-Stock
Fundamental Change, as defined below). Such reduction would result in an
increase in the amount of the securities, cash, or property into which each
Preferred Security is convertible over that which would have been obtained in
the absence of such conversion price adjustments.
In a Non-Stock Fundamental Change Transaction where the initial value
received per share of Common Stock (measured as described in the definition of
Applicable Price below) was lower than the then applicable conversion price of
a Preferred Security but greater than or equal to the "Reference Market
Price," the conversion price will be adjusted as described above with the
effect that each Preferred Security will be convertible into securities, cash
or property of the same type received by the holders of Common Stock in the
Transaction but in an amount per Preferred Security that would at the time of
the Transaction have had a value equal to the then applicable redemption price
per Preferred Security set forth below under "--Optional Redemption" or, for
periods prior to the date on and after which United Rentals may cause the
conversion rights of the holders of Preferred Securities to expire, the
amounts referred to in (i) above for such periods.
In a Non-Stock Fundamental Change Transaction where the initial value
received per share of Common Stock (measured as described in the definition of
Applicable Price) is lower than both the conversion price of a Preferred
Security in effect prior to any adjustment described above and the Reference
Market Price, the conversion price will be adjusted as described above but
calculated as though such initial value had been the Reference Market Price.
In a Fundamental Change Transaction where all or substantially all the
Common Stock was converted into securities, cash, or property and more than
50% of the value received by the holders of Common Stock consists of listed or
Nasdaq National Market traded common stock (a Common Stock Fundamental Change,
as defined below), the foregoing adjustments are designed to provide in effect
that (a) where Common Stock is converted partly into such common stock and
partly into other securities, cash, or property, each Preferred Security will
be convertible solely into a number of shares of such common stock determined
so that the initial value of such shares (measured as described in the
definition of "Purchaser Stock Price" below) equals the value of the shares
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of Common Stock into which such Preferred Security was convertible immediately
before the Transaction (measured as aforesaid) and (b) where Common Stock is
converted solely into such common stock, each Preferred Security will be
convertible into the same number of shares of such common stock receivable by
a holder of the number of shares of Common Stock into which such Preferred
Security was convertible immediately before such Transaction.
The term "Applicable Price" means (i) in the case of a Non-Stock Fundamental
Change in which the holders of the Common Stock received only cash, the amount
of cash received by the holder of one share of Common Stock and (ii) in the
event of any other Non-Stock Fundamental Change or any Common Stock
Fundamental Change, the average of the Closing Prices (as defined below) for
the Common Stock during the ten trading days prior to and including the record
date for the determination of the holders of Common Stock entitled to receive
such securities, cash, or other property in connection with such Non-Stock
Fundamental Change or Common Stock Fundamental Change or, if there is no such
record date, the date upon which the holders of the Common Stock shall have
the right to receive such securities, cash, or other property (such record
date or distribution date being hereinafter referred to as the "Entitlement
Date"), in each case as adjusted in good faith by United Rentals to
appropriately reflect any of the events referred to in clauses (i) through
(vi) of the first paragraph under "--Conversion Price Adjustments--General."
The term "Closing Price" means on any day the reported last sale price on
such day or in case no sale takes place on such day, the average of the
reported closing bid and asked prices in each case on the NYSE Consolidated
Transactions Tape or, if the stock is not listed or admitted to trading on the
NYSE, on the principal national securities exchange on which such stock is
listed or admitted to trading or, if not listed or admitted to trading on any
national securities exchange, the average of the closing bid and asked prices
as furnished by any NYSE member firm selected by the Debenture Trustee for
that purpose.
The term "Common Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board of
Directors of United Rentals) of the consideration received by holders of
Common Stock consisted of common stock that for each of the ten consecutive
trading days prior to the Entitlement Date had been admitted for listing or
admitted for listing subject to notice of issuance on a national securities
exchange or quoted on the Nasdaq National Market; provided, however, that a
Fundamental Change shall not be a Common Stock Fundamental Change unless
either (i) United Rentals continues to exist after the occurrence of such
Fundamental Change and the outstanding Preferred Securities continue to exist
as outstanding Preferred Securities or (ii) not later than the occurrence of
such Fundamental Change, the outstanding Preferred Securities are converted
into or exchanged for shares of convertible preferred stock of an entity
succeeding to the business of United Rentals or a subsidiary thereof, which
convertible preferred stock has powers, preferences, and relative,
participating, optional, or other rights, and qualifications, limitations, and
restrictions, substantially similar to those of the Preferred Securities.
The term "Fundamental Change" means the occurrence of any Transaction or
event in connection with a plan pursuant to which all or substantially all of
the Common Stock was exchanged for, converted into, acquired for, or
constitute solely the right to receive securities, cash, or other property
(whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization, or
otherwise), provided, that in the case of a plan involving more than one such
Transaction or event, for purposes of adjustment of the conversion price, such
Fundamental Change shall be deemed to have occurred when substantially all of
the Common Stock shall be exchanged for, converted into, or acquired for or
constitute solely the right to receive securities, cash, or other property,
but the adjustment shall be based upon the consideration that a holder of
Common Stock received in such Transaction or event as a result of which more
than 50% of the Common Stock shall have been exchanged for, converted into, or
acquired for or constitute solely the right to receive securities, cash, or
other property.
The term "Non-Stock Fundamental Change" means any Fundamental Change other
than a Common Stock Fundamental Change.
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The term "Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the Closing Prices for the common stock
received in such Common Stock Fundamental Change for the ten consecutive
trading days prior to and including the Entitlement Date, as adjusted in good
faith by United Rentals to appropriately reflect any of the events referred to
in clauses (i) through (vi) of the first paragraph under "--Conversion Price
Adjustments--General."
The term "Reference Market Price" shall initially mean $23.46 (which is an
amount equal to 66 2/3% of the reported last sales price for Common Stock on
the NYSE Consolidated Tape on July 30, 1998), and in the event of any
adjustment of the conversion price other than as a result of a Non-Stock
Fundamental Change, the Reference Market Price shall also be adjusted so that
the ratio of the Reference Market Price to the conversion price after giving
effect to any such adjustment shall always be the same as the ratio of the
initial Reference Market Price to the initial conversion price of the
Preferred Securities.
Special Event Exchange or Redemption
At any time following the occurrence and the continuation of a Tax Event or
an Investment Company Event, the Administrative Trustees shall direct the
Conversion Agent to exchange all outstanding Preferred Securities for
Debentures, provided, that in the case of a Tax Event, United Rentals shall
have the right to (a) direct that less than all, or none, of the Preferred
Securities be so exchanged if and for so long as United Rentals shall have
elected to pay any Additional Sums such that the net amounts received by the
holders of Preferred Securities not so exchanged in respect of Distributions
and other distributions are not reduced as a result of such Tax Event, and
shall not have revoked any such election or failed to make such payments or
(b) redeem the Debentures (and, as a result, the Preferred Securities) in the
manner set forth below.
If a Tax Event shall occur or be continuing, United Rentals shall have the
right, upon not less than 30 nor more than 60 days' notice, to redeem the
Debentures, in whole but not in part, for cash at the Tax Redemption Price,
plus accrued and unpaid interest thereon. Promptly following such redemption,
Preferred Securities and Common Securities with an aggregate liquidation
preference equal to the aggregate principal amount of the Debentures so
redeemed will be redeemed by the Issuer at the Tax Redemption Price plus
accrued and unpaid Distributions thereon to the redemption date on a pro rata
basis. The Common Securities will be redeemed on a pro rata basis with the
Preferred Securities, except that if a Trust Agreement Event of Default has
occurred and is continuing, the Preferred Securities will have a priority over
the Common Securities with respect to the Tax Redemption Price. See also "--
Subordination of Common Securities."
Holders of Preferred Securities, by purchasing such Preferred Securities,
will be deemed to have agreed to be bound by these exchange provisions in
regard to the exchange of such Preferred Securities for Debentures on the
terms described above.
Distribution of Debentures
At any time, United Rentals will have the right to dissolve the Issuer and,
after satisfaction of the liabilities to creditors of the Issuer as provided
by applicable law, cause the Debentures to be distributed to the holders of
the Preferred Securities in liquidation of the Issuer. Under current United
States federal income tax law and interpretations and assuming, as expected,
the Issuer is not treated as an association taxable as a corporation for
United States federal income tax purposes, a distribution of the Debentures
should not be a taxable event to the Issuer and holders of the Preferred
Securities. Should there be a change in law, a change in legal interpretation,
a Special Event or other circumstances, however, the distribution could be a
taxable event to holders of the Preferred Securities. See "Certain Federal
Income Tax Consequences--U.S. Holders--Redemption of Preferred Securities for
Debentures or Cash Upon Liquidation of the Issuer."
After the liquidation date fixed for any distribution of Debentures for
Preferred Securities (i) such Preferred Securities will no longer be deemed to
be outstanding, (ii) DTC or its nominee, as the record holder of such
Preferred Securities, will receive a registered global certificate or
certificates representing the Debentures to be
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delivered upon such distribution and (iii) any certificates representing such
Preferred Securities not held by DTC or its nominee will be deemed to
represent the Debentures having a principal amount equal to the liquidation
preference of such Preferred Securities, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid Distributions on such
Preferred Securities until such certificates are presented to the Property
Trustee for transfer or reissuance.
Optional Redemption
Except as provided under "--Mandatory Redemption" below, the Preferred
Securities may not be redeemed by the Issuer prior to August 2, 2001.
On and after such date, upon any permitted redemption by United Rentals of
Debentures, the Preferred Securities will, subject to the next succeeding
sentence, be subject to redemption, in whole or in part, at the following
percentages of the liquidation preference thereof plus accrued and unpaid
Distributions, if any, to the date fixed for redemption if redeemed during the
twelve-month period commencing August 1 (August 2 with regards to 2001) in
each of the following years indicated:
<TABLE>
<CAPTION>
Redemption
Year Price
- ---- ----------
<S> <C>
2001.................... 104.55%
2002.................... 103.90%
2003.................... 103.25%
2004.................... 102.60%
</TABLE>
<TABLE>
<CAPTION>
Redemption
Year Price
- ---- ----------
<S> <C>
2005.................... 101.95%
2006.................... 101.30%
2007.................... 100.65%
2008 and thereafter..... 100.00%
</TABLE>
The aggregate liquidation preference of the Preferred Securities and Common
Securities so redeemed will equal the aggregate principal amount of Debentures
redeemed by United Rentals, which may not exceed the amount of the proceeds
derived, directly or indirectly, by United Rentals from the issuance and sale
of Common Stock within 12 months preceding the date fixed for redemption.
The Issuer may not redeem the Preferred Securities in any case unless all
accrued and unpaid Distributions have been paid in full on all outstanding
Preferred Securities for all quarterly distribution periods terminating prior
to and including the redemption date. If fewer than all the outstanding
Preferred Securities are to be redeemed, the Preferred Securities to be so
redeemed will be selected as described under "--Redemption Procedures" and "--
Form, Transfer, Exchange and Book-Entry Procedures."
In the event United Rentals redeems the Debentures in certain circumstances
upon the occurrence of a Tax Event as described under "--Special Event
Exchange or Redemption," the Preferred Securities will be redeemed at the Tax
Redemption Price thereof together with accrued and unpaid Distributions to,
but excluding, the redemption date.
If at any time following the Conversion Expiration Date, less than 5% of the
Preferred Securities offered hereby remain outstanding, such Preferred
Securities shall be redeemable at the option of the Issuer, in whole but not
in part, at a redemption price of $50 per Preferred Security, plus all accrued
and unpaid Distributions.
Mandatory Redemption
Upon repayment at maturity or as a result of the acceleration of the
Debentures upon the occurrence of a "Debenture Event of Default" described
under "Description of the Debentures--Debenture Events of Default," the
Debentures shall be subject to mandatory redemption, in whole but not in part,
by United Rentals, and the proceeds from such repayment will be applied to
redeem Preferred Securities and Common Securities having an aggregate
liquidation preference equal to the aggregate principal amount of Debentures
so repaid or redeemed at a redemption price equal to the respective
liquidation preference of the Preferred Securities and Common Securities or,
in the case of a redemption of the Debentures, at the redemption price paid
with respect to the Debentures, as described below, together with accrued and
unpaid distributions on the Preferred Securities and
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<PAGE>
Common Securities to the date of redemption. In the case of an acceleration of
the Debentures, the Preferred Securities will be redeemed only when repayment
of the Debentures has actually been received by the Issuer. In addition, as
described above under "--Special Event Exchange or Redemption," upon the
occurrence of a Special Event, Preferred Securities shall be exchanged for
Debentures unless, in the case of a Tax Event, United Rentals shall have
elected to (a) pay any Additional Sums such that the net amounts of
Distributions received by the holders of any Preferred Securities not so
exchanged are not reduced as a result of such Tax Event and shall not have
revoked any such election or failed to make such payments or (b) redeem the
Debentures (and, as a result, the Preferred Securities) as further set forth
in "--Special Event Exchange or Redemption."
Redemption Procedures
Preferred Securities redeemed on the date fixed for redemption shall be
redeemed at the redemption price with the applicable proceeds from the
contemporaneous redemption of the Debentures. Redemptions of the Preferred
Securities shall be made and the redemption price shall be payable on the
redemption date only to the extent that the Issuer has funds on hand available
for the payment of such redemption price. See also "--Subordination of Common
Securities."
Notice of any redemption (optional or mandatory) of Preferred Securities
(which notice will be irrevocable) will be given by the Property Trustee to
each record holder of Preferred Securities that are being redeemed not fewer
than 30 nor more than 60 days prior to the redemption date. If the Property
Trustee gives a notice of redemption in respect of the Preferred Securities,
then, by 11:00 a.m., New York City time, on the redemption date, to the extent
funds are available, the Property Trustee will deposit irrevocably with DTC or
the Conversion Agent, as the case may be, funds sufficient to pay the
applicable redemption price and will give DTC or the Conversion Agent, as the
case may be, irrevocable instructions and authority to pay the redemption
price to the holders of such Preferred Securities. See "--Form, Transfer,
Exchange and Book-Entry Procedures--Certain Book-Entry Procedures for Global
Certificates." If such Preferred Securities are no longer in book-entry form,
the Property Trustee, to the extent funds are available, will irrevocably
deposit with the Paying Agent funds sufficient to pay the applicable
redemption price and will give the Paying Agent irrevocable instructions and
authority to pay the redemption price to the holders thereof upon surrender of
their certificates evidencing such Preferred Securities. Notwithstanding the
foregoing, Distributions payable on or prior to the redemption date for any
Preferred Securities called for redemption shall be payable to the holders of
such Preferred Securities as of the relevant record dates for the related
distribution dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit, all rights of the
holders of such Preferred Securities so called for redemption will cease,
except the right of the holders of such Preferred Securities to receive the
redemption price, but without interest on such redemption price, and such
Preferred Securities will cease to be outstanding. In the event that any date
fixed for redemption of Preferred Securities is not a Business Day, then
payment of the redemption price on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day. In the event that payment of the redemption price in
respect of Preferred Securities called for redemption is improperly withheld
or refused and not paid either by the Issuer or by United Rentals pursuant to
the Guarantee as described under "Description of the Guarantee," Distributions
on such Preferred Securities will continue to accrue at the then applicable
rate, from the redemption date originally established by the Issuer to the
date such redemption price is actually paid, in which case the actual payment
date will be the date fixed for redemption for purposes of calculating the
redemption price.
Subject to applicable law (including, without limitation, United States
federal securities law), United Rentals or its subsidiaries may at any time
and from time to time purchase outstanding Preferred Securities by tender, in
the open market or by private agreement.
Payment of the redemption price on the Preferred Securities and any
distribution or exchange of Debentures to holders of Preferred Securities
shall be made to the applicable record holders thereof as they appear on the
Securities Register for such Preferred Securities on the relevant record date,
which shall be the fifteenth day (whether or not a Business Day) prior to the
redemption date or liquidation date, as applicable.
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<PAGE>
If less than all of the Preferred Securities and Common Securities issued by
the Issuer are to be redeemed on a redemption date, then the aggregate
liquidation preference of such Preferred Securities and Common Securities to
be redeemed shall be allocated on a pro rata basis among the Preferred
Securities and the Common Securities to be redeemed. The particular Preferred
Securities to be redeemed shall be selected not more than 60 days prior to the
redemption date by the Property Trustee from the outstanding Preferred
Securities not previously called for redemption, by lot or by such method as
the Property Trustee shall deem fair and appropriate and which may provide for
the selection for redemption of portions (equal to $50 or an integral multiple
of $50 in excess thereof) of the liquidation preference of the Preferred
Securities. The Property Trustee shall promptly notify the Securities
Registrar and the Conversion Agent in writing of the Preferred Securities
selected for redemption and, in the case of any Preferred Securities selected
for partial redemption, the liquidation preference thereof to be redeemed; it
being understood that, in the case of Preferred Securities held by DTC (or any
successor) or its nominee, the distribution of the proceeds of such redemption
will be made in accordance with the procedures of DTC or its nominee. For all
purposes of the Trust Agreement, unless the context otherwise requires, all
provisions relating to the redemption of Preferred Securities shall relate, in
the case of any Preferred Securities redeemed or to be redeemed only in part,
to the portion of the aggregate liquidation preference of Preferred Securities
which has been or is to be redeemed.
Notice of any redemption of Debentures will be mailed at least 30 days but
not more than 60 days before the redemption date to each holder of Debentures
to be redeemed at its registered address. Unless United Rentals defaults in
payment of the redemption price, on and after the redemption date interest
ceases to accrue on such Debentures or portions thereof called for redemption.
Subordination of Common Securities
Payment of Distributions on, and the redemption price of, the Preferred
Securities and Common Securities, as applicable, shall be made pro rata based
on the liquidation preference of such Preferred Securities and Common
Securities; provided, however, that if on any distribution date or redemption
date a Trust Agreement Event of Default shall have occurred and be continuing,
no payment of any Distribution on, or redemption price of, any of the Common
Securities, and no other payment on account of the redemption, liquidation or
other acquisition of such Common Securities, shall be made unless payment in
full in cash of all accumulated and unpaid Distributions on all of the
outstanding Preferred Securities for all Distribution periods terminating on
or prior thereto, or in the case of payment of the redemption price the full
amount of such redemption price on all of the outstanding Preferred Securities
then called for redemption, shall have been made or provided for, and all
funds available to the Property Trustee shall first be applied to the payment
in full in cash of all Distributions on, or redemption price of, the Preferred
Securities then due and payable.
In the case of any Trust Agreement Event of Default, United Rentals, as
holder of the Common Securities, will be deemed to have waived any right to
act with respect to any such Trust Agreement Event of Default until all such
Trust Agreement Events of Default with respect to the Preferred Securities
have been cured, waived or otherwise eliminated. Until any such Trust
Agreement Events of Default with respect to the Preferred Securities have been
so cured, waived or otherwise eliminated, the Property Trustee shall act
solely on behalf of the holders of the Preferred Securities and not on behalf
of United Rentals as holder of the Common Securities, and only the holders of
the Preferred Securities will have the right to direct the Property Trustee to
act on their behalf.
Liquidation Distribution upon Dissolution
In the event of any voluntary or involuntary liquidation, termination,
dissolution or winding up of the Issuer (each, a "Liquidation"), the holders
of the Preferred Securities at that time will be entitled to receive out of
the assets of the Issuer, after satisfaction of liabilities to creditors of
the Issuer, distributions in an amount equal to the aggregate of the stated
liquidation preference of $50 per Preferred Security plus accrued and unpaid
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<PAGE>
Distributions thereon to the date of payment (the "Liquidation Distribution"),
unless, in connection with such Liquidation, after satisfaction of liabilities
to creditors of the Issuer, Debentures in an aggregate principal amount equal
to the aggregate stated liquidation preference of, with an interest rate
identical to the distribution rate of, and accrued and unpaid interest equal
to accrued and unpaid Distributions on, the Preferred Securities, have been
distributed on a pro rata basis to the holders of Preferred Securities in
exchange for such Preferred Securities. See "--Distribution of Debentures."
If such Liquidation Distribution can be paid only in part because the Issuer
has insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Issuer on the Preferred
Securities shall be paid on a pro rata basis. The holder(s) of the Common
Securities will be entitled to receive Liquidation Distributions upon any such
liquidation pro rata with the holders of the Preferred Securities, except that
if a Trust Agreement Event of Default has occurred and is continuing, the
Preferred Securities shall have a priority over the Common Securities. See "--
Subordination of Common Securities."
Pursuant to the Trust Agreement, the Issuer shall automatically dissolve
upon expiration of its term and shall dissolve on the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of United Rentals;
(ii) the distribution of Debentures to the holders of the Preferred Securities
and Common Securities, if United Rentals, as Depositor, has given written
direction to the Property Trustee to dissolve the Issuer (which direction is
optional and wholly within the discretion of United Rentals, as Depositor);
(iii) the redemption, conversion, or exchange of all of the Preferred
Securities and Common Securities; (iv) the entry by a court of competent
jurisdiction of an order for the dissolution of the Issuer; and (v) the
occurrence of a Special Event, except in the case of a Tax Event following
which United Rentals has elected (a) to pay any Additional Sums such that the
net amount received by holders of Preferred Securities in respect of
Distributions is not reduced as a result of such Tax Event and United Rentals
has not revoked any such election or failed to make such payment or (b) redeem
all or some of the Debentures in the manner set forth under "--Special Event
Exchange or Redemption."
Trust Agreement Events of Default; Notice
An event of default under the Indenture (a "Debenture Event of Default")
will constitute an event of default under the Trust Agreement with respect to
the Preferred Securities and the Common Securities (a "Trust Agreement Event
of Default"), whatever the reason for such Debenture Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body.
Within ten days after the occurrence of any Trust Agreement Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Trust Agreement Event of Default to the holders of the
Preferred Securities, the Administrative Trustees and United Rentals, as
Depositor, unless such Trust Agreement Event of Default shall have been cured
or waived. United Rentals, as Depositor, and the Administrative Trustees, on
behalf of the Issuer, are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Trust Agreement.
If a Trust Agreement Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities upon
dissolution of the Issuer as described above. See "--Liquidation Distribution
Upon Dissolution." The existence of a Trust Agreement Event of Default does
not entitle the holders of Preferred Securities to accelerate the maturity
thereof.
Enforcement of Certain Rights by Holders of Preferred Securities
If a Trust Agreement Event of Default has occurred and is continuing, then
the holders of Preferred Securities would rely on the enforcement by the
Property Trustee of its rights as a holder of the Debentures against United
Rentals. In addition, the holders of a majority in aggregate liquidation
preference of the Preferred
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<PAGE>
Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee or
to direct the exercise of any trust or power conferred upon the Property
Trustee under the Trust Agreement, including the right to direct the Property
Trustee to exercise the remedies available to it as a holder of the
Debentures. If the Property Trustee fails to enforce its rights as holder of
the Debentures after a request therefor by a holder of Preferred Securities,
such holder may proceed to enforce such rights directly against United
Rentals. Notwithstanding the foregoing, if a Trust Agreement Event of Default
has occurred and is continuing and such event is attributable to the failure
of United Rentals to pay interest or principal on the Debentures on the date
such interest or principal is otherwise payable (or in the case of redemption,
on the redemption date), then a holder of Preferred Securities shall have the
right to institute a Direct Action against United Rentals for enforcement of
payment to such holder of the principal of or interest on the Debentures
having a principal amount equal to the aggregate liquidation preference of the
Preferred Securities of such holder on or after the respective due date
specified in the Debentures. In connection with any such Direct Action, the
rights of United Rentals will be subrogated to the rights of such holder of
Preferred Securities under the Trust Agreement to the extent of any payment
made by United Rentals to such holder of Preferred Securities in such Direct
Action. The holders of Preferred Securities will not be able to exercise
directly against United Rentals any other remedy available to the Property
Trustee unless the Property Trustee first fails to do so.
Merger or Consolidation of UR Trustees
Any corporation into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which such UR Trustee shall be a party,
or any corporation succeeding to all or substantially all the corporate trust
business of such UR Trustee, shall be the successor of such UR Trustee under
the Trust Agreement, provided such corporation shall be otherwise qualified
and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Issuer
The Issuer may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below. The Issuer may, at the request of United Rentals, with the
consent of the Administrative Trustees and without the consent of the Property
Trustee, the Delaware Trustee or the holders of the Preferred Securities,
merge with or into, consolidate, amalgamate, be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to a
trust organized as such under the laws of any state; provided that (i) such
successor entity either (a) expressly assumes all of the obligations of the
Issuer with respect to the Preferred Securities or (b) substitutes for the
Preferred Securities other securities having substantially the same terms as
the Preferred Securities (the "Successor Securities") so long as the Successor
Securities rank the same as the Preferred Securities rank in priority with
respect to Distributions and payments upon liquidation, redemption and
otherwise, (ii) United Rentals expressly appoints a trustee of such successor
entity possessing the same powers and duties as the Property Trustee as the
holder of the Debentures, (iii) the Successor Securities are listed, or any
Successor Securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which the Preferred
Securities are then listed, if any, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Preferred Securities (including any Successor Securities) to be downgraded by
any nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does
not adversely affect the rights, preferences and privileges of the holders of
the Preferred Securities (including any Successor Securities) in any material
respect, (vi) such successor entity has a purpose identical to that of the
Issuer, (vii) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, United Rentals has received an opinion from
independent counsel to the Issuer experienced in such matters to the effect
that (a) such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences and
privileges of the holders of the Preferred Securities (including any Successor
Securities) in any material respect (other than with respect to any dilution
of the holders' interest in the new entity), (b) following
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<PAGE>
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease, neither the Issuer nor such successor entity will be required to
register as an investment company under the Investment Company Act and (c)
except where 100% of the holders of Preferred Securities have consented as set
forth in the following sentence, following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Issuer or such
successor entity will be treated as a grantor trust for United States federal
income tax purposes and (viii) United Rentals or any permitted successor or
assignee owns all of the Common Securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding
the foregoing, the Issuer shall not, except with the consent of holders of
100% in aggregate liquidation preference of the Preferred Securities,
consolidate, amalgamate, merge with or into, be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to
any other entity or permit any other entity to consolidate, amalgamate, merge
with or into, or replace it if such consolidation, amalgamation, merger,
replacement, conveyance, transfer or lease would cause the Issuer or the
successor entity to be classified as other than a grantor trust for United
States federal income tax purposes.
Voting Rights; Amendment of the Trust Agreement
Except as provided below and under "Description of the Guarantee--Amendments
and Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Preferred Securities will have no voting rights.
The Trust Agreement may be amended from time to time by United Rentals and
the UR Trustees, without the consent of the holders of the Preferred
Securities (i) to cure any ambiguity, correct or supplement any provisions in
the Trust Agreement that may be inconsistent with any other provision, or to
make any other provisions with respect to matters or questions arising under
the Trust Agreement that shall not be inconsistent with the other provisions
of the Trust Agreement, (ii) to modify, eliminate or add to any provision of
the Trust Agreement to such extent as shall be necessary to ensure that the
Issuer will be classified for United States federal income tax purposes as a
grantor trust at all times that any Preferred Securities and Common Securities
are outstanding or to ensure that the Issuer will not be required to register
as an "investment company" under the Investment Company Act or be classified
as other than a grantor trust for United States federal income tax purposes or
(iii) to maintain the qualification of the Trust Agreement under the Trust
Indenture Act; provided, however, that in the case of clause (i), such action
shall not adversely affect in any material respect the interests of any holder
of Preferred Securities or Common Securities, and any amendments of the Trust
Agreement shall become effective when notice thereof is given to the holders
of Preferred Securities and Common Securities. The Trust Agreement may be
amended by the UR Trustees and United Rentals with (a) the consent of holders
representing not less than a majority (based upon liquidation preferences) of
the outstanding Preferred Securities and Common Securities, acting as a single
class, and (b) receipt by the UR Trustees of an opinion of counsel to the
effect that such amendment or the exercise of any power granted to the UR
Trustees in accordance with such amendment will not affect the Issuer's status
as a grantor trust for United States federal income tax purposes or the
Issuer's exemption from the status of an "investment company" under the
Investment Company Act; provided further that without the consent of each
holder of Preferred Securities and Common Securities, the Trust Agreement may
not be amended to (i) change the amount or timing of any Distribution on the
Preferred Securities and Common Securities or otherwise adversely affect the
amount of any Distribution required to be made in respect of the Preferred
Securities and Common Securities as of a specified date or (ii) restrict the
right of a holder of Preferred Securities and Common Securities to institute
suit for the enforcement of any such payment on or after such date.
If any proposed amendment of the Trust Agreement provides for, or the UR
Trustees otherwise propose to effect, the dissolution, winding-up or
termination of the Issuer, other than pursuant to the terms of the Trust
Agreement, then the holders of the then outstanding Preferred Securities, as a
class, will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of the
holders of the majority in aggregate liquidation preference of the outstanding
Preferred Securities.
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<PAGE>
The holders of a majority in aggregate liquidation preference of Preferred
Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee or
to direct the exercise of any trust or power conferred upon the Property
Trustee under the Trust Agreement, including the right to direct the Property
Trustee to exercise the remedies available to it as a holder of the
Debentures. So long as any Debentures are held by the Property Trustee, the UR
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee (as defined
herein) or executing any trust or power conferred on the Debenture Trustee
with respect to such Debentures, (ii) waive any past default that is waivable
under the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Debentures shall be due and payable,
or (iv) consent to any amendment, modification or termination of the Indenture
or the Debentures where such consent shall be required, without in each case,
obtaining the prior approval of the holders of a majority in aggregate
liquidation preference of all outstanding Preferred Securities (except in the
case of clause (iv), which consent, in the event that no Trust Agreement Event
of Default shall occur and be continuing, shall be of the holders of Preferred
Securities and Common Securities, voting together as a single class);
provided, however, that where a consent under the Indenture would require the
consent of each holder of Debentures affected thereby, no such consent shall
be given by the Property Trustee without the prior written consent of each
holder of the Preferred Securities. The UR Trustees shall not revoke any
action previously authorized or approved by a vote of the holders of the
Preferred Securities except by subsequent vote of the holders of the Preferred
Securities. The Property Trustee shall notify each holder of record of the
Preferred Securities of any notice of default received from the Debenture
Trustee with respect to the Debentures.
A waiver of a Debenture Event of Default will constitute a waiver of the
corresponding Trust Agreement Event of Default.
Any required approval or direction of holders of Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of the Preferred Securities
and the Common Securities or pursuant to written consent. The Property Trustee
will cause a notice of any meeting at which holders of Preferred Securities
are entitled to vote, or of any matter upon which action by written consent of
such holders is to be taken, to be given to each holder of record of Preferred
Securities in the manner set forth in the Trust Agreement.
No vote or consent of the holders of Preferred Securities will be required
for the Issuer to redeem and cancel the Preferred Securities in accordance
with the Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by United Rentals, the UR Trustees or
any affiliate of any UR Trustee shall, for purposes of such vote or consent,
be treated as if such Preferred Securities were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "--Form, Transfer, Exchange and Book-
Entry Procedures--Certain Book-Entry Procedures for Global Certificates."
Holders of the Preferred Securities will have no rights to appoint or remove
the UR Trustees, who may be appointed, removed or replaced solely by United
Rentals, as the direct or indirect holder of all the Common Securities.
Payment and Paying Agency
Payments in respect of the Preferred Securities shall be made to DTC, which
shall credit the relevant accounts at DTC on the applicable distribution dates
or, if the Preferred Securities are not held by DTC, such payments shall be
made by check mailed to the address of the holder entitled thereto as such
address shall appear on the Securities Register. The paying agent (the "Paying
Agent") shall initially be the Property Trustee and
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any co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and United Rentals. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee and United Rentals. In the event that the Property Trustee
shall no longer be the Paying Agent, the Administrative Trustees shall appoint
a successor (which shall be a bank or trust company acceptable to the
Administrative Trustees and United Rentals) to act as Paying Agent.
Form, Transfer, Exchange and Book-Entry Procedures
The Preferred Securities are represented by one or more certificates in
registered, global form (collectively, the "Global Certificates"). The Global
Certificates were deposited upon issuance with the Property Trustee as
custodian for DTC in New York, New York, and registered in the name of DTC or
its nominee, in each case for credit to an account of a direct or indirect
participant in DTC as described below.
Transfers of beneficial interests in the Global Certificates are subject to
the applicable rules and procedures of DTC and its direct or indirect
participants, which may change from time to time.
Except as set forth below, the Global Certificates may be transferred, in
whole and not in part, only to another nominee of DTC or to a successor of DTC
or its nominee. Beneficial interests in the Global Certificates may not be
exchanged for Preferred Securities in certificated form except in the limited
circumstances described below under "--Exchanges of Book-Entry Certificates
for Certificated Preferred Securities."
The Trust Agreement provides that the certificates representing certain of
the Preferred Securities (and the Common Stock acquired upon conversion
thereof) are required to bear a restrictive legend and are subject to certain
restrictions on transfer. However the certificates representing any Preferred
Securities (or Common Stock acquired upon conversion thereof) that are covered
by this Prospectus and are transferred by a Selling Holder pursuant to the
Registration Statement of which this Prospectus forms a part will not be
required to bear a restrictive legend, provided that the prospectus delivery
requirements of the Securities Act are complied with and the Selling Holder
delivers a notice of sale to the Property Trustee substantially in the form of
Exhibit A hereto.
Exchanges of Book-Entry Certificates for Certificated Preferred Securities
A beneficial interest in a Global Certificate may not be exchanged for a
certificated Preferred Security unless (i) DTC (x) notifies the Issuer and the
Company that it is unwilling or unable to continue as depositary for the
Global Certificate or (y) has ceased to be a clearing agency registered under
the Exchange Act and in either case the Issuer and the Company thereupon fails
to appoint a successor depositary, (ii) the Issuer and the Company, at their
option, notify the Property Trustee in writing that they elect to cause the
issuance of the Preferred Securities in certificated form or (iii) there shall
have occurred and be continuing a Trust Agreement Event of Default or any
event which after notice or lapse of time or both would be a Trust Agreement
Event of Default. In all cases, certificated Preferred Securities delivered in
exchange for any Global Certificate or beneficial interests therein will be
registered in the names, and issued in any approved denominations, requested
by or on behalf of the depositary (in accordance with its customary
procedures). Any such exchange will be effected through the DTC
Deposit/Withdraw at Custodian ("DWAC") system and an appropriate adjustment
will be made in the records of the Security Registrar to reflect a decrease in
the principal amount of the relevant Global Certificate.
Certain Book-Entry Procedures for Global Certificates
The descriptions of the operations and procedures of DTC that follow are
provided solely as a matter of convenience. These operations and procedures
are solely within the control of the respective settlement systems and are
subject to changes by them from time to time. The Issuer and the Company take
no responsibility for these operations and procedures and urge investors to
contact the settlement system or their participants directly to discuss these
matters.
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DTC has advised the Issuer and the Company as follows: DTC is a limited
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "Clearing Agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its participants ("participants") and facilitate the
clearance and settlement of securities transactions between participants
through electronic book-entry changes in accounts of its participants, thereby
eliminating the need for physical transfer and delivery of certificates.
Participants include securities brokers and dealers, banks, trust companies
and clearing corporations and may include certain other organizations.
Indirect access to the DTC system is available to other entities such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly
("indirect participants").
DTC has advised the Issuer and the Company that its current practice, upon
the issuance of a Global Certificate, is to credit, on its internal system,
the respective principal amount of the individual beneficial interests
represented by such Global Certificate to the accounts with DTC of the
participants through which such interests are to be held. Ownership of
beneficial interests in a Global Certificate is shown on, and the transfer of
that ownership is effected only through, records maintained by DTC or its
nominees (with respect to interests of participants) and the records of
participants and indirect participants (with respect to interests of persons
other than participants).
As long as DTC, or its nominee, is the registered holder of a Global
Certificate, DTC or such nominee, as the case may be, is considered the sole
owner and holder of the Preferred Securities represented by such Global
Certificate for all purposes under the Trust Agreement and the Preferred
Securities.
Except in the limited circumstances described above, owners of beneficial
interests in a Global Certificate are not entitled to have any portions of
such Global Certificate registered in their names, are not entitled to receive
physical delivery of Preferred Securities in definitive form and are not
considered the owners or holders of the Global Certificate (or any Preferred
Securities represented thereby) under the Trust Agreement or the terms of the
Preferred Securities.
Investors may hold their interests in a Global Certificate directly through
DTC, if they are participants in such system, or indirectly through
organizations which are participants in such system. All interests in a Global
Certificate are subject to the procedures and requirements of DTC.
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer beneficial interests in a Global Certificate to such persons may be
limited to that extent. Because DTC can act only on behalf of its
participants, which in turn act on behalf of indirect participants and certain
banks, the ability of a person having beneficial interests in a Global
Certificate to pledge such interest to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
interests, may be affected by the lack of a physical certificate evidencing
such interests.
Payments of Distributions on Global Certificates will be made to DTC or its
nominee as the registered owner thereof. Neither the Issuer, the Company, the
Property Trustee nor any of their respective agents will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global
Certificate or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
The Issuer and the Company expect that DTC or its nominee, upon receipt of
any payment of Distributions in respect of a Global Certificate representing
any Preferred Securities held by it or its nominee, will immediately credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global
Certificate for such Preferred Securities as shown on the records of DTC or
its nominee. The Issuer and the Company also expect that payments by
participants to owners of beneficial interests in such Global Certificate held
through such participants will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of
customers registered in "street name." Such payments will be the
responsibility of such participants.
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Interests in the Global Certificates will trade in DTC's settlement system
and secondary market trading activity in such interests are therefore expected
to settle in immediately available funds, subject in all cases to the rules
and procedures of DTC and its participants. Transfers between participants in
DTC are expected to be effected in accordance with DTC's procedures, and will
be settled in same-day funds.
DTC has advised the Issuer and the Company that it will take any action
permitted to be taken by a holder of certificates (including the presentation
of Preferred Securities for exchange as described below and the conversion of
Preferred Securities) only at the direction of one or more participants to
whose account with DTC interests in the Global Certificates are credited and
only in respect of such portion of the aggregate liquidation preference of the
Preferred Securities as to which such participant or participants has or have
given such direction. However, if there is a Trust Agreement Event of Default,
DTC reserves the right to exchange the Global Certificates for Preferred
Securities in certificated form, and to distribute such Preferred Securities
to its participants.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of beneficial ownership interests in a Global Certificate among
participants of DTC, it is under no obligation to perform or continue to
perform such procedures, and such procedures may be discontinued at any time.
None of the Issuer, United Rentals, the Property Trustee nor any of their
respective agents will have any responsibility for the performance by DTC, its
participants or indirect participants of their respective obligations under
the rules and procedures governing their operations, including maintaining,
supervising or reviewing the records relating to, or payments made on account
of, beneficial ownership interests in Global Certificates.
Redemption notices shall be sent to Cede & Co. as the registered holder of
the Preferred Securities. If less than all of the Preferred Securities are
being redeemed, DTC's current practice is to determine by lot the amount of
the interest of each participant to be redeemed.
Although voting with respect to the Preferred Securities is limited to the
holders of record of the Preferred Securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to Preferred Securities. Under its usual procedures, DTC would mail an
omnibus proxy (the "Omnibus Proxy") to the Property Trustee as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those participants to whose accounts such
Preferred Securities are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Conveyance of notices and other communications by DTC to participants, by
participants to indirect participants, and by participants and indirect
participants to beneficial owners of the Preferred Securities and the voting
rights of participants, indirect participants and beneficial owners of
Preferred Securities will be governed by arrangements among them, subject to
any statutory or regulatory requirements as may be in effect from time to
time.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
the Property Trustee and United Rentals.
Transfer Agent, Registrar and Paying, Conversion and Exchange Agent
The Property Trustee presently acts as transfer agent, registrar and paying,
conversion and exchange agent for the Preferred Securities.
Registration of transfers or exchanges of Preferred Securities will be
effected without charge by or on behalf of the Issuer, but only upon payment
of any tax or other governmental charges that may be imposed in connection
with any transfer or exchange. The Issuer will not be required to register or
cause to be registered the transfer of the Preferred Securities after such
Preferred Securities have been called for redemption.
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Information Concerning the Property Trustee
United Rentals and certain of its subsidiaries may maintain deposit accounts
and conduct other banking and corporate securities transactions and
relationships with the Property Trustee in the ordinary course of their
businesses. The Property Trustee, other than during the occurrence and
continuance of a Trust Agreement Event of Default, undertakes to perform only
such duties as are specifically set forth in the Trust Agreement and, after
such Trust Agreement Event of Default, must exercise the same degree of care
and skill as a prudent person would exercise or use in the conduct of his or
her own affairs. Subject to this provision, the Property Trustee is under no
obligation to exercise any of the powers vested in it by the Trust Agreement
at the request of any holder of Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby. If no Trust Agreement Event of Default has occurred and is
continuing and the Property Trustee is required to decide between alternative
causes of action, construe ambiguous provisions in the Trust Agreement or is
unsure of the application of any provision of the Trust Agreement, and the
matter is not one on which holders of Preferred Securities are entitled under
the Trust Agreement to vote, then the Property Trustee shall take such action
as is directed by United Rentals and, if not so directed, shall take such
action as it deems advisable and in the best interests of the holders of the
Preferred Securities and the Common Securities and will have no liability
except for its own bad faith, negligence or willful misconduct.
Miscellaneous
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Issuer in such a way that the Issuer will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a
corporation for United States federal income tax purposes and so that the
Debentures will be treated as indebtedness of United Rentals for United States
federal income tax purposes. In this connection, United Rentals and the
Administrative Trustees are authorized to take any action, not inconsistent
with applicable law, the Certificate of Trust of the Issuer or the Trust
Agreement, that United Rentals and the Administrative Trustees determine in
their discretion to be necessary or desirable for such purposes, as long as
such action does not materially adversely affect the interests of the holders
of the Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
The Issuer may not borrow money or issue debt or mortgage or pledge any of
its assets.
Registration Rights Agreement
United Rentals and the Issuer entered into a registration rights agreement
(the "Registration Rights Agreement") with the initial purchasers of the
Preferred Securities, pursuant to which United Rentals and the Issuer agreed:
(a) to file with the SEC, within 90 days after the date of issuance of the
Preferred Securities (the "Closing Date") a shelf registration statement (the
"Shelf Registration Statement") with respect to the resale of the Preferred
Securities, the Debentures, the Guarantee and the Common Stock issuable upon
conversion of the Preferred Securities and the Debentures (the "Registrable
Securities"); (b) to use their reasonable best efforts to cause the
Registration Statement to become effective within 180 days after the Closing
Date; and (c) to keep the Shelf Registration Statement effective until the
earliest of (i) the expiration of two years from the effective time, (ii) such
time as all Registrable Securities have been sold pursuant to the Shelf
Registration Statement, transferred pursuant to Rule 144 under the Securities
Act or otherwise transferred in a manner that results in a new security not
subject to transfer restrictions under the Securities Act being delivered and
(iii) such time as in the opinion of counsel, all of the Registrable
Securities held by non-affiliates of the issuer thereof are eligible for
resale pursuant to Rule 144(k) under the Securities Act and the restrictive
legend provided for in the Trust Agreement has been removed from such
Registrable Securities (the "Effectiveness Period"). The Registration
Statement of which this Prospectus forms a part was filed by United Rentals
and the Issuer in order to comply with the Registration Rights Agreement and
constitutes the Shelf Registration Statement contemplated by the Registration
Rights Agreement.
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The Registration Rights Agreement provides that in the event that the Shelf
Registration Statement ceases to be effective during the Effectiveness Period
for more than 90 days, whether or not consecutive, during any 12-month period,
then the interest rate borne by the Debentures and the distribution rate borne
by the Preferred Securities will each increase by an additional 0.50% per
annum from the 91st day of the applicable 12-month period such Shelf
Registration Statement ceases to be effective until such time as the Shelf
Registration Statement again becomes effective. The payments provided for in
this paragraph will constitute liquidated damages ("Liquidated Damages") and
will be the exclusive monetary remedy available to holders of the Registrable
Securities in respect to matters discussed in this paragraph.
The Registration Rights Agreement provides that holders of 33 1/3% of the
Registrable Securities (calculated on a Common Stock equivalent basis) may
elect to have one underwritten offering. The managing underwriter(s) for any
such offering must be selected by holders of 50% of the Registrable Securities
(calculated on a Common Stock equivalent basis) to be included in the
underwritten offering and must be reasonably acceptable to United Rentals.
United Rentals has the right to defer any underwritten offering for up to 120
days for a valid business reason.
United Rentals will pay all fees and expenses incident to the filing of the
Shelf Registration Statement and maintaining its effectiveness for resales of
Registrable Securities. In addition, United Rentals will pay up to a maximum
of $80,000 for the fees and disbursements of a single counsel selected by
holders of not less than 25% of the Registrable Securities (calculated on a
Common Stock equivalent basis) to represent them in connection with the Shelf
Registration Statement. Except as provided in the preceding sentence, the
holders of Registrable Securities included in the Shelf Registration Statement
will be responsible (on a pro rata basis based on the amount of Registrable
Securities (calculated on a Common Stock equivalent basis) included therein)
for the fees and disbursements of such counsel.
In the case of an underwritten offering, United Rentals will pay up to a
maximum of $200,000 for the fees and expenses in connection therewith (the
fees and disbursements of one counsel for the holders participating in such
offering being included in such fees and expenses). The holders participating
in such offering will be responsible (on a pro rata basis based on the amount
of Registrable Securities (calculated on a Common Stock equivalent basis)
included in such offering) for all fees and expenses of such underwritten
offering in excess of $200,000, including any fees and expenses of counsel to
the holders, counsel to United Rentals and United Rentals' independent public
accountants that may constitute part of such excess amount.
In no event will United Rentals be responsible for underwriting discounts or
commissions.
In the Registration Rights Agreement, United Rentals, URI and the Issuer
agreed to indemnify the holders of Registrable Securities against certain
liabilities, including liabilities under the Securities Act, and each holder
of Registrable Securities included in the Shelf Registration Statement will be
obligated to indemnify United Rentals, the Issuer and any other holder against
any liability with respect to any information furnished by such holder in
writing to United Rentals (including, without limitation, in a Selling
Securityholder's Questionnaire) expressly for use in the Shelf Registration
Statement.
Use of the prospectus included in the Shelf Registration Statement is
subject to suspension by the Issuer or United Rentals at certain times under
certain circumstances relating to pending corporate developments affecting the
Company and public filings with the SEC and similar events.
This summary of certain provisions of the Registration Rights Agreement does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, all the provisions of the Registration Rights Agreement, a copy
of the form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part.
Governing Law
The Trust Agreement and the Preferred Securities are governed by, and
construed in accordance with, the internal laws of the State of Delaware
without regard to its conflict of laws principles and excluding sections 3540
and 3561 of Title 12 of the Delaware Code Annotated.
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DESCRIPTION OF THE GUARANTEE
The Guarantee was executed and delivered by United Rentals concurrently with
the issuance by the Issuer of the Preferred Securities for the benefit of the
holders from time to time of such Preferred Securities. The Bank of New York
acts as trustee ("Guarantee Trustee") under the Guarantee. This summary of
certain provisions of the Guarantee does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all of the
provisions of the Guarantee, the form of which has been filed as an exhibit to
the Registration Statement of which this Prospectus forms a part. The
Guarantee Trustee holds the Guarantee for the benefit of the holders of the
Preferred Securities.
General
Pursuant to and to the extent set forth in the Guarantee, United Rentals
irrevocably agreed to pay in full on a subordinated basis, the Guarantee
Payments to the holders of the Preferred Securities, as and when due,
regardless of any defense, right of set-off or counterclaim that the Issuer
may have or assert other than the defense of payment. The following payments
with respect to the Preferred Securities, to the extent not paid by or on
behalf of the Issuer (the "Guarantee Payments"), are subject to the Guarantee:
(i) any accumulated and unpaid Distributions required to be paid on the
Preferred Securities, to the extent that the Issuer has funds on hand
available therefor at such time, (ii) the redemption price (together with
accumulated and unpaid Distributions) with respect to any Preferred Securities
called for redemption, to the extent that the Issuer has funds on hand
available therefor at such time and (iii) upon a voluntary or involuntary
dissolution, winding up or liquidation of the Issuer (unless the Debentures
are distributed to holders of the Preferred Securities), the lesser of (a) the
Liquidation Distribution, to the extent that the Issuer has funds on hand
available therefor at such time, and (b) the amount of assets of the Issuer
remaining available for distribution to holders of Preferred Securities.
United Rentals' obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by United Rentals to the holders of the
Preferred Securities or by causing the Issuer to pay such amounts to such
holders.
The Guarantee is an irrevocable guarantee on a subordinated basis of the
Issuer's obligations under the Preferred Securities, but applies only to the
extent that the Issuer has funds sufficient to make such payments, and is not
a guarantee of collection. If United Rentals does not make interest payments
on the Debentures held by the Issuer, the Issuer will not be able to pay
Distributions on the Preferred Securities and will not have funds legally
available therefor.
United Rentals has, through the Guarantee, the Trust Agreement, the
Debentures and the Indenture, taken together, fully, irrevocably and
unconditionally guaranteed all of the Issuer's obligations under the Preferred
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only
the combined operation of these documents that has the effect of providing a
full, irrevocable and unconditional guarantee of the Issuer's obligations
under the Preferred Securities. See "Relationship Among the Preferred
Securities, the Debentures and the Guarantee."
United Rentals has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the Issuer with respect to the Common Securities
to the same extent as the Guarantee, except that upon the occurrence and
during the continuation of a Trust Agreement Event of Default, holders of
Preferred Securities shall have priority over holders of Common Securities
with respect to distributions and payments on liquidation, redemption or
otherwise.
Status of the Guarantee
The Guarantee constitutes an unsecured obligation of United Rentals and
ranks subordinate and junior in right of payment to all Secured Indebtedness
of United Rentals. United Rentals has guaranteed the obligations of URI under
the Credit Facility and the Term Loan, and has pledged the outstanding common
stock of URI as
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security for such guarantee. The Loan Guarantees will constitute Secured
Indebtedness of United Rentals. The terms of the Guarantee, the Preferred
Securities and the Debentures do not place any limitation on the amount of
Secured Indebtedness or other indebtedness that may be incurred by United
Rentals or subsidiaries of United Rentals. See "Description of the
Debentures."
The Guarantee constitutes a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee is held for the benefit of the holders of the Preferred Securities.
The Guarantee will not be discharged except by payment of the Guarantee
Payments in full to the extent not paid by the Issuer or upon distribution of
the Debentures to the holders of the Preferred Securities. The Guarantee will
not place a limitation on the amount of additional indebtedness that may be
incurred by United Rentals or any of its subsidiaries.
Amendments and Assignment
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Preferred Securities (in which case no vote will
be required), the Guarantee may not be amended without the prior approval of
the holders of not less than a majority in aggregate liquidation preference of
such outstanding Preferred Securities. The manner of obtaining any such
approval will be as set forth under "Description of the Preferred Securities--
Voting Rights; Amendment of the Trust Agreement." All guarantees and
agreements contained in the Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of United Rentals and shall inure to
the benefit of the holders of the Preferred Securities then outstanding.
Certain Covenants of United Rentals
United Rentals has covenanted in the Guarantee that if and so long as (i)
the Issuer is the holder of all the Debentures, (ii) a Tax Event in respect of
the Issuer has occurred and is continuing and (iii) United Rentals has
elected, and has not revoked such election, to pay Additional Sums in respect
of the Preferred Securities and Common Securities, United Rentals, subject to
the subordination provisions hereinafter referenced, will pay to the Issuer
such Additional Sums. United Rentals has also covenanted that it will not, and
it will not cause any of its subsidiaries to, (i) declare or pay any dividends
or distributions on, or redeem, purchase, acquire, or make a liquidation
payment with respect to, any shares of United Rentals' capital stock or (ii)
make any payment of principal of or, interest or premium, if any, on or repay
or repurchase or redeem any debt securities (including guarantees of
indebtedness for money borrowed) of United Rentals that rank pari passu with
or junior to the Debentures (other than (a) any dividend, redemption,
liquidation, interest, principal or guarantee payment by United Rentals where
the payment is made by way of securities (including capital stock) that rank
pari passu with or junior to the securities on which such dividend,
redemption, interest, principal or guarantee payment is being made, (b)
redemptions or purchases of any Rights pursuant to a Rights Plan in the
future, (c) payments under the Guarantee, (d) purchases of Common Stock
related to the issuance of Common Stock under any of United Rentals' benefit
plans for its directors, officers or employees, or the agreements between URI
and certain officers of URI referred to in the 1997 10-K (which is
incorporated by reference herein) under "Item 12--Security Ownership of
Certain Beneficial Owners and Management--Certain Agreements Relating to
Securities Held by Officers," (e) as a result of a reclassification of United
Rentals' capital stock or the exchange or conversion of one series or class of
United Rentals' capital stock for another series or class of United Rentals'
capital stock and (f) the purchase of fractional interests in shares of United
Rentals' capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged) if at such
time (i) there shall have occurred any event of which United Rentals has
actual knowledge that (a) with the giving of notice or the lapse of time, or
both, would constitute a Debenture Event of Default and (b) in respect of
which United Rentals shall not have taken reasonable steps to cure, (ii)
United Rentals shall be in default with respect to its payment of any
obligations under the Guarantee or (iii) United Rentals shall have given
notice of its election of an Extension Period as provided in the Indenture
with respect to the Debentures and shall not have rescinded such notice, or
such Extension Period, or any extension thereof, shall be continuing. United
Rentals has also covenanted (i) for so long as Preferred Securities are
outstanding, not to convert Debentures
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except pursuant to a notice of conversion delivered to the Conversion Agent by
a holder of Preferred Securities, (ii) to maintain directly or indirectly 100%
ownership of the Common Securities, provided that certain successors which are
permitted pursuant to the Indenture may succeed to United Rentals' ownership
of the Common Securities, (iii) not to voluntarily terminate, wind-up or
liquidate the Issuer, except (a) in connection with a distribution of the
Debentures to the holders of the Preferred Securities in liquidation of the
Issuer or (b) in connection with certain mergers, consolidations or
amalgamations permitted by the Trust Agreement, (iv) to maintain the
reservation for issuance of the number of shares of Common Stock that would be
required from time to time upon the conversion of all the Debentures then
outstanding, (v) to use its reasonable efforts, consistent with the terms and
provisions of the Trust Agreement, to cause the Issuer to remain classified as
a grantor trust and not as an association taxable as a corporation for United
States federal income tax purposes and (vi) to deliver shares of Common Stock
upon an election by the holders of the Preferred Securities to convert such
Preferred Securities into Common Stock.
As part of the Guarantee, United Rentals has agreed that it will honor all
obligations described therein relating to the conversion or exchange of the
Preferred Securities into or for Common Stock or Debentures.
Events of Default
An event of default under the Guarantee will occur upon the failure of
United Rentals to perform any of its payment or other obligations thereunder.
The holders of a majority in aggregate liquidation preference of the Preferred
Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee.
If the Guarantee Trustee fails to enforce the Guarantee, any holder of the
Preferred Securities may institute a legal proceeding directly against United
Rentals to enforce its rights under the Guarantee without first instituting a
legal proceeding against the Issuer, the Guarantee Trustee or any other person
or entity. In addition, any record holder of Preferred Securities shall have
the right, which is absolute and unconditional, to proceed directly against
United Rentals to obtain Guarantee Payments, without first waiting to
determine if the Guarantee Trustee has enforced the Guarantee or instituting a
legal proceeding against the Issuer, the Guarantee Trustee or any other person
or entity. United Rentals will waive any right or remedy to require that any
action be brought first against the Issuer, or any other person or entity
before proceeding directly against United Rentals.
United Rentals, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not United Rentals is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and continuance of a
default by United Rentals in performance of the Guarantee, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after default with respect to the Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs. Subject to this
provision, the Guarantee Trustee is under no obligation to exercise any of the
powers vested in it by the Guarantee at the request of any holder of Preferred
Securities unless it is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby.
Termination of the Guarantee
The Guarantee will terminate and be of no further force and effect upon full
payment of the redemption price of the Preferred Securities, upon full payment
of the amounts payable upon liquidation of the Issuer, upon the distribution,
if any, of Common Stock to the holders of Preferred Securities in respect of
the conversion of all such holders' Preferred Securities into Common Stock or
upon distribution of Debentures to the holders of the Preferred Securities in
exchange for all of the Preferred Securities. The Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
holder of Preferred Securities must restore payment of any sums paid under
such Preferred Securities or the Guarantee.
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DESCRIPTION OF THE DEBENTURES
The Debentures were issued under a Convertible Subordinated Indenture, dated
as of August 5, 1998 (the "Indenture"), between United Rentals and The Bank of
New York as trustee (the "Debenture Trustee"), the form of which has been
filed as an exhibit to the Registration Statement of which this Prospectus
forms a part. This summary of certain terms and provisions of the Debentures
and the Indenture does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the Indenture. Whenever particular
defined terms of the Indenture are referred to herein, such defined terms are
incorporated herein by reference.
General
The Debentures are unsecured and rank junior and subordinate in right of
payment to all existing and future Secured Indebtedness of United Rentals. The
Debentures are limited in aggregate principal amount to approximately $309.3
million, such amount being the sum of the aggregate stated liquidation
preference of the Preferred Securities and capital contributed by United
Rentals in exchange for the Common Securities. The Indenture does not limit
the incurrence or issuance of other secured or unsecured debt of United
Rentals, whether under the Indenture or any existing or other indenture that
United Rentals may enter into in the future or otherwise. See "--
Subordination."
Concurrently with the issuance of the Preferred Securities, the Issuer
invested the proceeds thereof and the consideration paid by United Rentals for
the Common Securities in the Debentures. The aggregate principal amount of the
Debentures is equal to the aggregate stated liquidation preference of the
Preferred Securities plus United Rentals' concurrent investment in the Common
Securities.
The Debentures are not subject to any sinking fund provision. The entire
principal amount of the Debentures will mature, and become due and payable,
together with any accrued and unpaid interest thereon, on August 1, 2028.
Interest
The Debentures bear interest at the annual rate of 6 1/2% per annum, payable
quarterly in arrears on February 1, May 1, August 1 and November 1 of each
year, having commenced on November 1, 1998 (each, an "Interest Payment Date"),
to the person in whose name each Debenture is registered at the close of
business on the Regular Record Date next preceding such Interest Payment Date,
subject to certain exceptions. It is anticipated that, until the liquidation,
if any, of the Issuer, each Debenture will be held in the name of the Property
Trustee in trust for the benefit of the holders of the Preferred Securities
and the Common Securities. The amount of interest payable for any period will
be computed on the basis of a 360-day year comprised of twelve 30-day months.
In the event that any date on which interest is payable on the Debentures is
not a Business Day, then payment of the interest payable on such date will be
made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay). Accrued interest that
is not paid on the applicable Interest Payment Date will bear additional
interest on the amount thereof (to the extent permitted by law) at the stated
rate per annum, compounded quarterly. The term "interest" as used herein shall
include quarterly interest payments, interest on quarterly interest payments
not paid on the applicable Interest Payment Date and Additional Sums, as
applicable.
Global Securities
If distributed to holders of the Preferred Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of the Issuer
as a result of the occurrence of a Special Event, the Debentures will be
issued in the same form as the Preferred Securities which such Debentures
replace. Any Global Certificate will be replaced by one or more global
certificates (each a "Global Security") registered in the name of the
depositary or its nominee. Except under the limited circumstances described
below, the Debentures represented by the Global Security will not be
exchangeable for, and will not otherwise be issuable
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as, Debentures in definitive form. The Global Securities described above may
not be transferred except by the depositary to a nominee of the depositary or
by a nominee of the depositary to the depositary or another nominee of the
depositary or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a Global
Security are not entitled to receive physical delivery of Debentures in
definitive form and will not be considered the holders thereof for any purpose
under the Indenture, and no Global Security representing Debentures shall be
exchangeable, except for another Global Security of like denomination and
tenor to be registered in the name of the depositary or its nominee or to a
successor depositary or its nominee. Accordingly, each beneficial owner of
Preferred Securities must rely on the procedures of DTC, or if such person is
not a participant, on the procedures of the participant through which such
person owns its interest, to exercise any rights of a holder under the
Indenture.
If Debentures are distributed to holders of Preferred Securities in
liquidation of such holders' interests in the Issuer and a Global Security is
issued, DTC will act as securities depositary for the Debentures represented
by such Global Security. For a description of DTC and the specific terms of
the depositary arrangements, see "Description of the Preferred Securities--
Form, Transfer, Exchange and Book-Entry Procedures." As of the date of this
Prospectus, the description herein of DTC's book-entry system and DTC's
practices as they relate to purchases, transfers, notices and payments with
respect to the Preferred Securities apply in all material respects to any debt
obligations represented by one or more Global Securities held by DTC. United
Rentals may appoint a successor to DTC or any successor depositary in the
event DTC or such depositary is unable or unwilling to continue as a
depositary for the Global Securities.
None of United Rentals, the Debenture Trustee, any Paying Agent or the
Securities Registrar have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of the Global Security representing such Debentures or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
A Global Security is exchangeable for Debentures registered in the names of
persons other than DTC or its nominee only if (i) DTC notifies United Rentals
that it is unwilling or unable to continue as a depositary for such Global
Debenture and no successor depositary shall have been appointed by United
Rentals within 90 days, or if at any time DTC ceases to be a clearing agency
registered under the Exchange Act at a time when DTC is required to be so
registered to act as such depositary, (ii) United Rentals in its sole
discretion determines that such Global Security shall be so exchangeable, or
(iii) there shall have occurred and be continuing an Event of Default with
respect to such Global Security. Any Global Security that is exchangeable
pursuant to the preceding sentence shall be exchangeable for definitive
certificates registered in such names as DTC shall direct. It is expected that
such instructions will be based upon directions received by DTC from its
participants with respect to ownership of beneficial interests in such Global
Security. In the event that Debentures are issued in definitive form, such
Debentures will be in denominations of $50 and integral multiples thereof and
may be transferred or exchanged at the offices described in "--Payment and
Paying Agents" below.
Payment and Paying Agents
Payments on Debentures represented by a Global Security will be made to DTC,
as the depositary for the Debentures. In the event Debentures are issued in
definitive form, principal of and premium, if any, and any interest on
Debentures will be payable, the transfer of the Debentures will be
registrable, and the Debentures will be exchangeable for Debentures of other
denominations of a like aggregate principal amount at the corporate office of
the Debenture Trustee in the City of New York or at the office of such Paying
Agent or Paying Agents as United Rentals may designate, except that at the
option of United Rentals, payment of any interest may be made (i) by check
mailed to the address of the Person entitled thereto as such address shall
appear in the
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Securities Register or (ii) by wire transfer to an account maintained by the
Person entitled thereto as specified in the Securities Register, provided that
proper transfer instructions have been received by the Regular Record Date.
Payment of any interest on Debentures will be made to the Person in whose name
such Debentures are registered at the close of business on the Regular Record
Date for such interest, except in the case of Defaulted Interest. The Regular
Record Date for the interest payable on any Interest Payment Date shall be the
fifteenth day (whether or not a Business Day) next preceding such Interest
Payment Date. United Rentals may at any time designate additional Paying
Agents or rescind the designation of any Paying Agent.
Any monies deposited with the Debenture Trustee or any Paying Agent, or then
held by United Rentals in trust, for the payment of the principal of and
premium, if any, or interest on any Debentures and remaining unclaimed for two
years after such principal and premium, if any, or interest has become due and
payable shall, at the request of United Rentals, be repaid to United Rentals
and the holder of such Debentures shall thereafter look, as a general
unsecured creditor, only to United Rentals for payment thereof.
Option to Extend Interest Payment Period
So long as no Event of Default under the Indenture has occurred and is
continuing, United Rentals will have the right under the Indenture to defer
the payment of interest (including any Liquidated Damages) on the Debentures
at any time or from time to time for a period not exceeding 20 consecutive
quarters with respect to each Extension Period, provided that no Extension
Period may extend beyond the stated maturity of the Debentures. At the end of
such Extension Period, United Rentals must pay all interest then accrued and
unpaid (together with interest thereon at the stated annual rate, compounded
quarterly, to the extent permitted by applicable law). During an Extension
Period, interest will continue to accrue and holders of Debentures (or holders
of Preferred Securities while the Preferred Securities are outstanding) will
continue to be required to accrue interest income for United States federal
income tax purposes. See "Certain Federal Income Tax Consequences--U.S.
Holders--Interest Income and Original Issue Discount."
During any such Extension Period, United Rentals may not, and may not cause
any of its subsidiaries to, (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect
to, any shares of United Rentals' capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities (including guarantees of indebtedness for money borrowed) of
United Rentals that rank pari passu with or junior to the Debentures (other
than (a) any dividend, redemption, liquidation, interest, principal or
guarantee payment by United Rentals where the payment is made by way of
securities (including capital stock) that rank pari passu with or junior to
the securities on which such dividend, redemption, interest, principal or
guarantee payment is being made, (b) redemptions or purchases of any Rights
pursuant to a Rights Plan, and the declaration of a dividend of any Rights or
the issuance of preferred stock under any Rights Plan in the future, (c)
payments under the Guarantee, (d) purchases of Common Stock related to the
issuance of Common Stock under any of United Rentals' benefit plans for its
directors, officers or employees or the agreements between URI and certain
officers of URI referred to in the 1997 10-K (which is incorporated by
reference herein) under "Item 12--Security Ownership of Certain Beneficial
Owners and Management--Certain Agreements Relating to Securities Held by
Officers," (e) as a result of a reclassification of United Rentals' capital
stock or the exchange or conversion of one series or class of United Rentals'
capital stock for another series or class of United Rentals' capital stock,
and (f) the purchase of fractional interests in shares of United Rentals'
capital stock pursuant to the conversion or exchange provisions of such
capital stock or the security being converted or exchanged). Prior to the
termination of any such Extension Period, United Rentals may further extend
the interest payment period, provided that no Extension Period shall exceed 20
consecutive quarters or extend beyond the stated maturity of the Debentures.
Upon the termination of any such Extension Period and the payment of all
amounts then due, United Rentals may elect to begin a new Extension Period
subject to the above requirements. No interest shall be due and payable during
an Extension Period, except at the end thereof. United Rentals shall give the
Property Trustee, the Administrative Trustees and the Debenture Trustee notice
of its election to begin any Extension Period at least one Business Day prior
to the earlier of (i) the record date for the date Distributions on the
Preferred Securities (or, if no Preferred Securities are outstanding, for the
date interest on the Debentures) would have been payable except for
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the election to begin such Extension Period and (ii) the date the Property
Trustee (or, if no Preferred Securities are outstanding, the Debenture
Trustee) is required to give notice to the NYSE or other applicable self-
regulatory organization or to holders of such Preferred Securities (or, if no
Preferred Securities are outstanding, to the holders of such Debentures) of
such record date. The Debenture Trustee and the Property Trustee shall give
notice of United Rentals' election to begin an Extension Period to the holders
of the Debentures and the Preferred Securities, respectively.
Mandatory Redemption
Upon repayment at maturity or as a result of acceleration upon the
occurrence of a Debenture Event of Default, United Rentals will redeem the
Debentures, in whole but not in part, at a redemption price equal to 100% of
the principal amount thereof, together with any accrued and unpaid interest
thereon. Any payment pursuant to this provision shall be made prior to 11:00
a.m., New York City time, on the date of such repayment or acceleration or at
such other time on such earlier date as the parties thereto shall agree. The
Debentures are not entitled to the benefit of any sinking fund or, except as
set forth above or as a result of acceleration, any other provision for
mandatory prepayment.
Optional Redemption
On and after August 2, 2001, and subject to the next succeeding sentence,
United Rentals will have the right, at any time and from time to time, to
redeem the Debentures, in whole or in part, upon notice given as provided
below, during the twelve month periods beginning on August 1 (August 2 with
regards to 2001) in each of the following years and at the indicated
redemption prices (expressed as a percentage of the principal amount of the
Debentures being redeemed), together with any accrued but unpaid interest on
the portion being redeemed.
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2001.................... 104.55%
2002.................... 103.90%
2003.................... 103.25%
2004.................... 102.60%
</TABLE>
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2005.................... 101.95%
2006.................... 101.30%
2007.................... 100.65%
2008 and thereafter..... 100.00%
</TABLE>
The aggregate principal amount of the Debentures so redeemed may not,
however, exceed the amount of the proceeds derived, directly or indirectly, by
United Rentals from the issuance and sale of Common Stock within 12 months
preceding the date fixed for redemption.
For so long as the Issuer is the holder of all the outstanding Debentures,
the proceeds of any such redemption will be used by the Issuer to redeem
Preferred Securities and Common Securities in accordance with their terms.
United Rentals may not, in any case, redeem the Debentures unless all accrued
and unpaid interest thereon has been paid in full on all outstanding
Debentures for all quarterly interest periods terminating prior to and
including the redemption date. See "Description of the Preferred Securities--
Optional Redemption."
If a Tax Event shall occur or be continuing, United Rentals shall also have
the right, upon not less than 30 nor more than 60 days' notice, to redeem the
Debentures, in whole but not in part, for cash at the Tax Redemption Price,
plus accrued and unpaid interest thereon, as described in "Description of the
Preferred Securities--Special Event Exchange or Redemption."
If at any time following the Conversion Expiration Date, less than 5% of the
original aggregate principal amount of the Debentures remains outstanding,
such Debentures shall be redeemable at the option of United Rentals, in whole
but not in part, at a redemption price equal to the principal amount thereof,
plus any accrued and unpaid interest.
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Redemption Procedures
Notices of any redemption of the Debentures and the procedures for such
redemption shall be as provided with respect to the Preferred Securities under
"Description of the Preferred Securities--Redemption Procedures." Notice of
any redemption will be mailed at least 30 days but not more than 60 days
before the redemption date to each holder of Debentures to be redeemed at its
registered address. Unless United Rentals defaults in payment of the
redemption price, on and after the redemption date interest ceases to accrue
on such Debentures or portions thereof called for redemption.
Distribution of Debentures
At any time, United Rentals has the right to terminate the Issuer and cause
the Debentures to be distributed to the holders of the Preferred Securities in
liquidation of the Issuer after satisfaction of liabilities to creditors of
the Issuer as provided by applicable law. If distributed to holders of
Preferred Securities in liquidation, the Debentures will initially be issued
in the form of one or more global securities and DTC, or any successor
depositary for the Preferred Securities, will act as depositary for the
Debentures. It is anticipated that the depositary arrangements for the
Debentures would be substantially identical to those in effect for the
Preferred Securities. There can be no assurance as to the market price of any
Debentures that may be distributed to the holders of Preferred Securities. For
a description of DTC and the terms of the depositary matters, see "Description
of the Preferred Securities--Form, Transfer, Exchange and Book-Entry
Procedures."
Conversion of the Debentures
The Debentures are convertible at the option of the holders of the
Debentures into Common Stock, at any time prior to the earlier of the
redemption or maturity thereof or the Conversion Expiration Date, initially at
the rate of 1.14593 shares of Common Stock for each $50 in principal amount of
the Debentures (equivalent to a conversion price of $43.6325 per share of
Common Stock), subject to the conversion price adjustments described under
"Description of the Preferred Securities--Conversion Rights." The Issuer has
covenanted for so long as the Preferred Securities are outstanding not to
convert the Debentures except pursuant to a notice of conversion delivered to
the Conversion Agent by a holder of Preferred Securities. Upon surrender of
such Preferred Securities to the Conversion Agent for conversion, the Issuer
will distribute the commensurate principal amount of the Debentures to the
Conversion Agent on behalf of the holder of every Preferred Security so
converted, whereupon the Conversion Agent will convert such Debentures into
Common Stock on behalf of such holder. United Rentals' delivery to the holders
of the Debentures (through the Conversion Agent) of the fixed number of shares
of Common Stock into which the Debentures are convertible (together with the
cash payment, if any, in lieu of fractional shares) will be deemed to satisfy
United Rentals' obligation to pay the principal amount of the Debentures, and
the accrued and unpaid interest attributable to the period from the last date
to which interest has been paid or duly provided for.
Expiration of Conversion Rights
The conversion rights of any Debentures held by the Issuer shall expire upon
the expiration of the conversion rights of the Preferred Securities on the
terms described above under "Description of the Preferred Securities--
Conversion Rights--Expiration of Conversion Rights." In the case of any
Debentures that have been exchanged for Preferred Securities under the
conditions described under "Description of the Preferred Securities--Special
Event Exchange or Redemption," on and after August 2, 2001, United Rentals
may, at its option, cause the conversion rights of holders of such Debentures
to expire. United Rentals may exercise this option only if for 20 trading days
within any period of 30 consecutive trading days, including the last trading
day of such period, the Current Market Price of the Common Stock of United
Rentals exceeds 120% of the conversion price of the Debentures, subject to
adjustment in certain circumstances. In order to exercise its conversion
expiration option, United Rentals must issue a press release for publication
on the Dow Jones News Service announcing the Conversion Expiration Date prior
to the opening of business on the second trading day after any period in which
the condition in the preceding sentence has been met, but in no event prior to
August 2, 2001.
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The press release shall announce the Conversion Expiration Date and provide
the current conversion price and Current Market Price of the Common Stock, in
each case as of the close of business on the trading day next preceding the
date of the press release.
Notice of the expiration of conversion rights will be given by first-class
mail to the holders of the Debentures not more than four Business Days after
United Rentals issues the press release. The Conversion Expiration Date will
be a date selected by United Rentals not less than 30 nor more than 60 days
after the date on which United Rentals issues the press release announcing its
intention to terminate the conversion rights of Debenture holders. In the
event that United Rentals does not exercise its conversion expiration option,
the Conversion Expiration Date with respect to the Debentures will be two
Business Days preceding the date set for redemption of the Debentures.
Modification of Indenture
From time to time, United Rentals and the Debenture Trustee may, without the
consent of the holders of Debentures, amend, waive or supplement the Indenture
for specified purposes, including, among other things, curing ambiguities,
defects or inconsistencies (provided that any such action does not materially
adversely affect the interest of the holders of the Debentures, or the holders
of the Preferred Securities so long as they remain outstanding) and
qualifying, or maintaining the qualification of, the Indenture under the Trust
Indenture Act. The Indenture will contain provisions permitting United Rentals
and the Debenture Trustee, with the consent of the holders of not less than a
majority in principal amount of the outstanding Debentures, to modify the
Indenture in a manner affecting the rights of the holders of the Debentures;
provided that no such modification may, without the consent of the holder of
each outstanding Debenture so affected, (i) change the stated maturity of the
Debentures, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon (other than deferrals of the
payments of interest as described under "--Option to Extend Interest Payment
Period") or impair any right to institute suit for the enforcement of any such
payment, or change the subordination provisions of the Indenture or any right
to convert any Debentures in a manner adverse to the holders or (ii) reduce
the percentage of principal amount of the Debentures, the holders of which are
required to consent to any such modification of the Indenture, provided that,
so long as any of the Preferred Securities remain outstanding, no such
modification may be made that adversely affects the holders of such Preferred
Securities in any material respect, and no termination of the Indenture may
occur, and no waiver of any Debenture Event of Default or compliance with any
covenant under the Indenture may be effective, without the prior consent of
the holders of at least a majority in aggregate liquidation preference of the
Preferred Securities then outstanding unless and until the principal of the
Debentures and all accrued and unpaid interest thereon has been paid in full.
Prior to the acceleration of the maturity of any Debentures, the holders of
a majority in aggregate principal amount of the Debentures at the time
outstanding with respect to which a default or an Event of Default shall have
occurred and be continuing (voting as one class) may on behalf of the holders
of all such affected Debentures waive any past default or a Debenture Event of
Default and its consequences, except a default or a Debenture Event of Default
in respect of a covenant or provision of the Indenture or of any Debentures
which cannot be modified or amended without the consent of the holder of each
of the Debentures affected.
Debenture Events of Default
The occurrence of any of the following events with respect to the Debentures
will constitute a "Debenture Event of Default" with respect to such
Debentures:
(i) failure for 30 days to pay any interest on the Debentures, when due
(subject to the deferral of any due date in the case of an Extension
Period);
(ii) failure to pay any principal of or premium, if any, on the
Debentures when due whether at maturity, upon redemption by declaration or
otherwise;
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(iii) failure by United Rentals to deliver shares of Common Stock upon an
appropriate election by holders of the Debentures to convert such
Debentures;
(iv) default for 90 days by United Rentals in the observance or
performance of any other covenant or agreement contained in the Indenture
relating to the Debentures after written notice thereof as provided in the
Indenture; or
(v) certain events of bankruptcy, insolvency or reorganization relating
to United Rentals or URI.
A default or event of default under any Secured Indebtedness of United
Rentals will not constitute a default under the Indenture or a Debenture Event
of Default. However, in the event of payment defaults under, or acceleration
of, Secured Indebtedness of United Rentals, the subordination provisions of
the Indenture provide that no payments may be made in respect of the
Debentures until such Secured Indebtedness has been paid in full or any
payment default thereunder has been cured or waived. Failure to make required
payments on the Debentures would constitute a Debenture Event of Default.
If a Debenture Event of Default shall have occurred and be continuing,
either the Debenture Trustee or the holders of not less than 25% in aggregate
principal amount of the Debentures then outstanding may declare the principal
amount of all Debentures and the interest, if any, accrued thereon to be due
and payable immediately and, should the Debenture Trustee or the holders of
the Debentures fail to make such declaration, the holders of at least 25% in
aggregate liquidation preference of the Preferred Securities then outstanding
shall have such right.
Upon certain conditions, any such declarations may be rescinded and annulled
if all Debenture Events of Default, other than the nonpayment of accelerated
principal, with respect to the Debentures then outstanding shall have been
cured or waived as provided in the Indenture by the holders of a majority in
aggregate principal amount of the Debentures then outstanding and, should the
holders of the Debentures fail to waive such default, the holders of a
majority in aggregate liquidation preference of the Preferred Securities shall
have such right.
The Indenture provides that the Debenture Trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the request, order
or direction of the holders of the Debentures, unless such holders shall have
offered to the Debenture Trustee reasonable indemnity. Subject to such
provisions for indemnity and certain other limitations contained in the
Indenture, the holders of a majority in aggregate principal amount of the
Debentures then outstanding (voting as one class) will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred
on the Debenture Trustee, with respect to the Debentures.
The Indenture provides that no holder of the Debentures may institute any
action against United Rentals under the Indenture (except actions for payment
of overdue principal, premium or interest) unless such holder previously shall
have given to the Debenture Trustee written notice of default and continuance
thereof and unless the holders of not less than 25% in aggregate principal
amount of the Debentures then outstanding (voting as one class) shall have
requested the Debenture Trustee to institute such action and shall have
offered the Debenture Trustee reasonable indemnity, the Debenture Trustee
shall not have instituted such action within 60 days of such request and the
Debenture Trustee shall not have received direction inconsistent with such
request by the holders of a majority in aggregate principal amount of the
Debentures then outstanding (voting as one class).
The Indenture requires United Rentals to furnish to the Debenture Trustee
annually a statement as to United Rentals' compliance with all conditions and
covenants under the Indenture. The Indenture provides that the Debenture
Trustee may withhold notice to the holders of the Debentures of any default
(except defaults as to payment of principal, premium or interest on the
Debentures) if it considers such withholding to be in the interest of the
holders of the Debentures.
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Enforcement of Certain Rights by Holders of Preferred Securities
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of United Rentals to pay interest or
principal on the Debentures on the date such interest or principal is
otherwise payable, a holder of Preferred Securities may institute a Direct
Action for payment after the respective due date specified in the Debentures.
United Rentals may not amend the Indenture to remove the foregoing right to
bring a Direct Action without the prior written consent of the holders of all
of the Preferred Securities. Notwithstanding any payment made to such holder
of Preferred Securities by United Rentals in connection with a Direct Action,
United Rentals shall remain obligated to pay the principal of or interest on
the Debentures held by the Issuer or the Property Trustee and United Rentals
shall be subrogated to the rights of the holder of such Preferred Securities
with respect to payments on the Preferred Securities to the extent of any
payments made by United Rentals to such holder in any Direct Action.
Consolidation, Merger, Sale of Assets and Other Transactions
The Indenture provides that United Rentals shall not consolidate with or
merge into any other Person or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, and no Person shall
consolidate with or merge into United Rentals or convey, transfer or lease its
properties and assets substantially or as an entirety to United Rentals,
unless (i) if United Rentals consolidates with or merges into another Person
or conveys, transfers or leases its properties and assets substantially as an
entirety to any Person, the successor Person is organized under the laws of
the United States or any state or the District of Columbia, and such successor
Person expressly assumes United Rentals' obligations on the Debentures; (ii)
immediately after giving effect thereto, no Debenture Event of Default, and no
event which, after notice or lapse of time or both, would become a Debenture
Event of Default, shall have happened and be continuing; (iii) in the case of
the Debentures, such transaction is permitted under the Trust Agreement and
Guarantee and does not give rise to any breach or violation of the Trust
Agreement or Guarantee; and (iv) certain other conditions as prescribed in the
Indenture are met.
The general provisions of the Indenture do not afford holders of the
Debentures protection in the event of a highly leveraged or other transaction
involving United Rentals that may adversely affect holders of the Debentures.
Expenses of Issuer
Pursuant to the Indenture, United Rentals will pay all of the costs,
expenses or liabilities of the Issuer, other than obligations of the Issuer to
pay to the holders of any Preferred Securities or Common Securities the
amounts due such holders pursuant to the terms of the Preferred Securities or
Common Securities.
Subordination
The indebtedness evidenced by the Debentures is subordinated in right of
payment to the prior payment in full in cash of all Secured Indebtedness. The
Debentures are subordinated indebtedness of United Rentals.
The Indenture provides that in the event of any insolvency or bankruptcy
case or proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding in connection therewith, relating to United Rentals
or its assets, or any liquidation, dissolution or other winding-up of United
Rentals, whether voluntary or involuntary, or any assignment for the benefit
of creditors or other marshalling of assets or liabilities of United Rentals,
all Secured Indebtedness (including, in the case of Designated Senior
Indebtedness, any interest accruing subsequent to the filing of a petition for
bankruptcy regardless of whether such interest is an allowed claim in the
bankruptcy proceeding) must be paid in full in cash before any payment is made
on account of the principal of, premium, if any, or interest on the
Debentures.
During the continuance of any default in the payment of principal of,
premium, if any, or interest, on any Secured Indebtedness, when the same
becomes due, and after receipt by the Debenture Trustee and United
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Rentals from representatives of holders of such Secured Indebtedness of
written notice of such default, no direct or indirect payment by or on behalf
of United Rentals of any kind or character (excluding certain permitted equity
or subordinated securities) may be made on account of the principal of,
premium, if any, or interest on, or the purchase, redemption or other
acquisition of, the Debentures unless and until such default has been cured or
waived or has ceased to exist or such Secured Indebtedness shall have been
discharged or paid in full in cash, after which United Rentals shall resume
making any and all required payments in respect of the Debentures, including
any missed payments.
In addition, during the continuance of any other default with respect to any
Designated Senior Indebtedness that permits, or would permit with the passage
of time or the giving of notice or both, the maturity thereof to be
accelerated (a "Non-payment Default") and upon the earlier to occur of (a)
receipt by the Debenture Trustee and United Rentals from the representatives
of holders of such Designated Senior Indebtedness of a written notice of such
Non-payment Default or (b) if such Non-payment Default results from the
acceleration of the maturity of the Debentures, the date of such acceleration,
no payment of any kind or character (excluding certain permitted equity or
subordinated securities) may be made by United Rentals on account of the
principal of, premium, if any, or interest on, or the purchase, redemption, or
other acquisition of, the Debentures for the period specified below (the
"Payment Blockage Period").
The Payment Blockage Period shall commence upon the receipt of notice of a
Non-payment Default by the Debenture Trustee and United Rentals from the
representatives of holders of Designated Senior Indebtedness or the date of
the acceleration referred to in clause (b) of the preceding paragraph, as the
case may be, and shall end on the earliest to occur of the following events:
(i) 179 days have elapsed since the receipt of such notice or the date of the
acceleration referred to in clause (b) of the preceding paragraph (provided
the maturity of such Designated Senior Indebtedness shall not theretofore have
been accelerated), (ii) such default is cured or waived or ceases to exist or
such Designated Senior Indebtedness is discharged or paid in full in cash or
(iii) such Payment Blockage Period shall have been terminated by written
notice to United Rentals or the Debenture Trustee from the representatives of
holders of Designated Senior Indebtedness initiating such Payment Blockage
Period, after which United Rentals shall promptly resume making any and all
required payments in respect of the Debentures, including any missed payments.
Only one Payment Blockage Period with respect to the Debentures may be
commenced within any 360 consecutive day period. No Non-payment Default with
respect to Designated Senior Indebtedness that existed or was continuing on
the date of the commencement of any Payment Blockage Period shall be, or can
be, made the basis for the commencement of a second Payment Blockage Period,
whether or not within a period of 360 consecutive days, unless such default
has been cured or waived for a period of not less than 90 consecutive days. In
no event will a Payment Blockage Period extend beyond 179 days from the date
of the receipt by the Debenture Trustee of the notice or the date of the
acceleration initiating such Payment Blockage Period and there must be a 180
consecutive day period in any 360 day period during which no Payment Blockage
Period is in effect.
If United Rentals fails to make any payment on the Debentures when due on
account of the payment blockage provisions referred to above, such failure
would constitute a Debenture Event of Default under the Indenture and would
enable the holders of the Debentures to accelerate the maturity thereof. See
"--Debenture Events of Default."
By reason of such subordination, in the event of liquidation or insolvency,
creditors of United Rentals who are holders of Secured Indebtedness may
recover more, ratably, than the holders of the Debentures, and funds which
would be otherwise payable to the holders of the Debentures will be paid to
the holders of Secured Indebtedness to the extent necessary to pay the Secured
Indebtedness in full, and United Rentals may be unable to meet its obligations
fully with respect to the Debentures.
At September 30, 1998, on a pro forma basis (after giving effect to all
acquisitions completed by the Company subsequent to such date (through January
11, 1999) and the financing thereof) (i) United Rentals would have had
outstanding $284.2 million of Secured Indebtedness and (ii) the subsidiaries
of United Rentals would have had outstanding approximately $1,044.4 million of
obligations (not including the obligations guaranteed by
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United Rentals pursuant to the Loan Guarantees which constitutes Secured
Indebtedness). The terms of the Debentures do not place any limitation on the
amount of Secured Indebtedness or other indebtedness that may be incurred by
United Rentals or subsidiaries of United Rentals.
"Designated Senior Indebtedness" means (i) all Indebtedness of United
Rentals under or as a result of a guarantee of the Credit Facility and the
Term Loan and (ii) any issue of Secured Indebtedness which (a) at the time of
determination is equal to or greater than $25 million in aggregate principal
amount and (b) is specifically designated by United Rentals in the instrument
evidencing such Secured Indebtedness as "Designated Senior Indebtedness."
"Indebtedness" means, with respect to any person, whether recourse is to all
or a portion of the assets of such person and whether or not contingent, (i)
every obligation of such person for money borrowed, (ii) every obligation of
such person evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in connection with the acquisition
of property, assets or businesses, (iii) every reimbursement obligation of
such person with respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such person, (iv) every obligation of
such person issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business), (v) every capital lease obligation of
such person and (vi) every obligation of the type referred to in clauses (i)
through (v) of another person and all dividends of another person the payment
of which, in either case, such person has guaranteed or is responsible for or
liable, directly or indirectly, as obligor or otherwise.
"Secured Indebtedness" means the principal (including without limitation all
unpaid drawings with respect to letters of credit) of and premium, if any, and
interest (including interest accruing on or after the filing of any petition
in bankruptcy relating to United Rentals at the relevant contractual rate
whether or not such claim for post-petition interest is allowed in such
proceeding) on, and all other amounts owing with respect to, the following,
whether outstanding on the date of execution of the Indenture or thereafter
incurred, created or assumed, to the extent (but only to the extent) the same
is secured by a lien, charge, mortgage or other encumbrance on property or
assets of United Rentals or its subsidiaries (which term as used in this
paragraph, shall not refer to the Issuer): (i) Indebtedness of United Rentals
for money borrowed (including purchase money obligations, except Indebtedness
to trade creditors) or evidenced by debentures (other than the Debentures),
notes, bankers' acceptances or other corporate debentures or similar
instruments; (ii) all capital lease obligations of United Rentals; (iii) all
obligations with respect to letters of credit; (iv) all obligations with
respect to currency hedging agreements, interest rate protection agreements
and other similar agreements; (v) all Indebtedness of others of the type
referred to in the preceding clauses (i) through (iv) assumed by or guaranteed
in any manner by United Rentals or in effect guaranteed by United Rentals; and
(vi) renewals, extensions or refundings of any of the Indebtedness referred to
in the preceding clauses (i), (ii), (iii), (iv) and (v) and in this clause
(vi). For purposes of the foregoing definition, all Indebtedness secured by a
lien, charge, mortgage or other encumbrance on property or assets of United
Rentals or its subsidiaries shall be deemed to be secured for purposes of said
definition, notwithstanding any determination that the amount of Indebtedness
so secured exceeds the value of the assets serving as security therefor and
notwithstanding any determination in any bankruptcy or other proceeding that a
portion of such Indebtedness shall be treated as unsecured because of any
insufficiency in the value of the collateral securing such Indebtedness.
Without limiting the foregoing, in any event all obligations of United
Rentals with respect to (including any guarantees of obligations under) the
Credit Facility and the Term Loan, including under the Loan Guarantees, shall
constitute Secured Indebtedness.
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Information Concerning the Debenture Trustee
The Debenture Trustee is under no obligation to exercise any of the powers
vested in it by the Indenture at the request of any holder of the Debentures,
unless offered reasonable indemnity by such holder against the costs, expenses
and liabilities which might be incurred thereby. The Debenture Trustee is not
required to expend or risk its own funds or otherwise incur personal financial
liability in the performance of its duties if the Debenture Trustee reasonably
believes that repayment or adequate indemnity is not reasonably assured to it.
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RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE DEBENTURES
AND THE GUARANTEE
Full and Unconditional Guarantee
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Issuer has funds available for the payment of such
Distributions) are irrevocably guaranteed by United Rentals as and to the
extent set forth under "Description of the Guarantee." Taken together, United
Rentals' obligations under the Debentures, the Indenture, the Trust Agreement
and the Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of Distributions and other amounts due on
the Preferred Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Issuer's obligations under the Preferred Securities. If and to the extent that
United Rentals does not make payments on the Debentures, the Issuer will not
pay Distributions or other amounts due on the Preferred Securities. The
Guarantee does not cover payment of Distributions when the Issuer does not
have sufficient funds to pay such Distributions. In such event, a holder of
Preferred Securities may institute a Direct Action against United Rentals to
enforce payment to such holder of the interest on or principal of Debentures
having a principal amount equal to the aggregate liquidation preference of the
Preferred Securities of such holder. All obligations of United Rentals under
the Guarantee are subordinate and junior in right of payment to all existing
and future Secured Indebtedness of United Rentals on substantially the same
terms as provided above with respect to the Debentures; and pari passu with
any unsecured debt, now or hereafter incurred by United Rentals.
Sufficiency of Payments
As long as payments of interest and other payments are made when due on the
Debentures, such payments will be sufficient to cover Distributions and other
payments due on the Preferred Securities, primarily because (i) the aggregate
principal amount of the Debentures will be equal to the sum of the aggregate
stated liquidation preference of the Preferred Securities and Common
Securities; (ii) the interest rate and interest and other payment dates on the
Debentures will match the Distribution rate and Distribution and other payment
dates for the Preferred Securities; (iii) United Rentals shall pay for all and
any costs, expenses and liabilities of the Issuer except the Issuer's
obligations to holders of the Preferred Securities and Common Securities under
such Preferred Securities and Common Securities; and (iv) the Trust Agreement
provides that the Issuer will not engage in any activity that is not
consistent with the limited purposes of the Issuer.
Notwithstanding anything to the contrary in the Indenture, United Rentals
has the right to set-off any payment it is otherwise required to make
thereunder with and to the extent United Rentals has theretofore made, or is
concurrently on the date of such payment making, a payment under the
Guarantee.
Enforcement Rights of Holders of Preferred Securities
If default under the Guarantee is attributable to a failure by United
Rentals to make a Guarantee Payment, a holder of any Preferred Securities may
institute a legal proceeding directly against United Rentals to enforce its
rights under the Guarantee without first instituting a legal proceeding
against the Guarantee Trustee, the Issuer or any other person or entity.
Limited Purpose of Issuer
The Preferred Securities evidence a beneficial interest in the Issuer, and
the Issuer was formed for the sole purpose of issuing the Preferred Securities
and Common Securities and investing the proceeds thereof in the Debentures. A
principal difference between the rights of a holder of Preferred Securities
and a holder of Debentures is that a holder of Debentures is entitled to
receive from United Rentals the principal amount of and
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interest accrued on Debentures held, while a holder of Preferred Securities is
entitled to receive Distributions from the Issuer (or from United Rentals
under the Guarantee) if and to the extent the Issuer has funds available for
the payment of such Distributions.
Rights upon Dissolution
Upon any Liquidation of the Issuer, the holders of the Preferred Securities
at that time will be entitled to receive out of assets held by the Issuer,
after satisfaction of liabilities to creditors of the Issuer, the Liquidation
Distribution in cash unless, in connection with such Liquidation, after
satisfaction of liabilities to creditors of the Issuer, Debentures in an
aggregate principal amount equal to the aggregate stated liquidation
preference of, with an interest rate identical to the distribution rate of,
and accrued and unpaid interest equal to accrued and unpaid Distributions on,
the Preferred Securities, have been distributed on a pro rata basis to the
holders of Preferred Securities in exchange for such Preferred Securities. See
"Description of the Preferred Securities--Liquidation Distribution Upon
Dissolution." Upon any voluntary or involuntary liquidation or bankruptcy of
United Rentals, the Property Trustee, as holder of the Debentures, would be a
subordinated creditor of United Rentals, subordinated in right of payment to
all Secured Indebtedness, but entitled to receive payment in full of principal
and interest before any stockholders of United Rentals receive payments or
distributions. Since United Rentals is the guarantor under the Guarantee and
has agreed to pay for all costs, expenses and liabilities of the Issuer (other
than the Issuer's obligations to the holders of the Preferred Securities and
Common Securities), the positions of a holder of such Preferred Securities and
a holder of such Debentures relative to other creditors and to stockholders of
United Rentals in the event of liquidation or bankruptcy of United Rentals
would be substantially the same.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain of the material United States federal
income tax consequences of the purchase, ownership, disposition and conversion
of the Preferred Securities. This summary does not consider all aspects of
federal income taxation that may be relevant to a particular investor in light
of his or her particular circumstances. In particular, it does not deal with
the United States federal income tax consequences to investors subject to
special treatment under the Code such as banks, thrifts, real estate
investment trusts, regulated investment companies, insurance companies,
dealers in securities or currencies, tax-exempt investors, or persons that
will hold the Preferred Securities as a position in a "straddle," or as part
of a "synthetic security" or "hedge," "conversion transaction" or other
integrated investment, persons that have a "functional currency" other than
the U.S. Dollar and investors in pass-through entities, such as partnerships.
Further, it does not include any description of any alternative minimum tax
consequences or those arising under United States federal gift and estate
taxes (except to the limited extent set forth below under "Non-U.S. Holders")
or the tax laws of any state, local or foreign government that may be
applicable to the Preferred Securities.
This discussion is generally limited to the United States federal income tax
consequences to investors who hold the Preferred Securities as capital assets
(within the meaning of Section 1221 of the Internal Revenue Code of 1986, as
amended (the "Code")).
This summary is based on the Code, final and proposed Treasury regulations
thereunder and administrative and judicial interpretations thereof, as of the
date hereof, all of which are subject to change, possibly on a retroactive
basis.
INVESTORS ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO THE UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF PREFERRED
SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT
OF ANY STATE, LOCAL, FOREIGN OR OTHER TAX LAWS AND OF POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.
Classification of the Debentures
United Rentals has taken the position that the Debentures will be classified
for United States federal income tax purposes as indebtedness of United
Rentals under current law and, by acceptance of Preferred Securities, each
holder covenants to treat the Debentures as indebtedness and the Preferred
Securities as evidence of an indirect beneficial ownership interest in the
Debentures. No assurance can be given, however, that such position of United
Rentals will not be challenged by the Internal Revenue Service (the "Service")
or, if challenged, that such a challenge will not be successful. The remainder
of this discussion assumes that the Debentures will be classified as
indebtedness of United Rentals for United States federal income tax purposes.
Classification of the Issuer
In the opinion of Weil, Gotshal & Manges LLP, special United States tax
counsel to the Issuer and United Rentals, the Issuer will be classified as a
grantor trust for United States federal income tax purposes. Accordingly, for
United States federal income tax purposes, each holder of Preferred Securities
generally will be considered the owner of an undivided interest in the
Debentures, and each holder will be required to include in its gross income
its pro-rata share of interest income (and original issue discount, if any)
with respect to those Debentures.
U.S. Holders
The following discussion is limited to the United States federal income tax
consequences relevant to a holder of Preferred Securities that is a U.S.
Holder. As used herein, a "U.S. Holder" means a person who is (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 any political
subdivision thereof, (iii) an estate the income of which is subject to
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United States federal income tax without regard to its source or (iv) a trust
with respect to which a court within the United States is able to exercise
primary supervision over its administration and one or more United States
persons have the authority to control all of its substantial decisions.
Interest Income and Original Issue Discount
Under the Indenture, United Rentals has the option to defer the payment of
interest on the Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each Extension Period,
provided that no Extension Period may extend beyond the stated maturity of the
Debentures. United Rentals' option to extend the interest period will cause
the Debentures to be subject to the "original issue discount" ("OID") rules
for United States federal income tax purposes. Accordingly, regardless of a
U.S. Holder's regular method of the accounting, a U.S. Holder will recognize
interest income (in the form of OID) on a daily basis under a constant yield
method over the term of the Debentures (including during any Extension
Period), regardless of the receipt of cash with respect to the period to which
such income is attributable and regardless of whether United Rentals exercises
its option to extend any interest payment period. The amount of OID that will
be recognized in any quarter will approximately equal the amount of income
that accrues on the Debentures in that quarter at the stated interest rate.
As a result, U.S. Holders of record during an Extension Period will continue
to include interest (in the form of OID) in gross income in advance of the
receipt of cash, and any such U.S. Holders who dispose of Preferred Securities
or convert Preferred Securities into Common Stock prior to the record date for
the payment of distributions following such Extension Period will include
interest in gross income but will not receive any cash related thereto from
the Issuer.
Acquisition Premium and Bond Premium. The amount of OID required to be
included in gross income by a U.S. Holder that acquires a Debenture would be
reduced as described below if such U.S. Holder's adjusted tax basis in the
Debenture immediately after such purchase (i) exceeds the "adjusted issue
price" of the Debenture, and (ii) is less than or equal to its stated
redemption price at maturity (reduced by any payments made on the Debenture
other than payments of qualified stated interest). Any such excess of adjusted
basis over adjusted issue price is considered "acquisition premium."
The amount of the reduction in OID would be equal to the amount of OID
otherwise includible multiplied by a fraction, the numerator of which is the
amount of acquisition premium and the denominator of which is the excess of
the stated redemption price at maturity of the Debenture (reduced as described
above) over the adjusted issue price.
If a subsequent U.S. Holder acquires a Debenture at less than the adjusted
issue price of the Debenture, such U.S. Holder's OID would not exceed that of
the original U.S. Holder. See, however, the discussion below under the caption
"Market Discount."
If a U.S. Holder's initial tax basis in a Debenture exceeds the amount
payable at maturity on the Debenture (such excess being "bond premium"), the
U.S. Holder would not accrue OID and may elect to amortize the bond premium
over the period from its acquisition date to the maturity date of the
Debenture and, except as Treasury regulations may otherwise provide, reduce
the amount of interest included in income in respect of the Debenture by such
amount.
Except as may otherwise be provided in any Treasury regulations ultimately
promulgated, amortizable bond premium may be offset against interest realized
in respect of the taxable year of the U.S. Holder in an amount that is based
upon the U.S. Holder's yield to maturity determined by using the U.S. Holder's
tax basis in the Debenture and compounding at the close of each accrual
period.
A U.S. Holder who elects to amortize bond premium must reduce its adjusted
basis in the Debenture by the amount of such allowable amortization. An
election to amortize bond premium would apply to amortizable bond premium on
all taxable bonds held at or acquired after the beginning of the U.S. Holder's
taxable year as to which the election is made.
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Market Discount
If a Debenture is acquired at a "market discount," some or all of any gain
realized upon a subsequent sale, other disposition, or full or partial
principal payment, of such Debenture may be treated as ordinary income, and
not capital gain, as described below. For this purpose, "market discount" in
the case of a debt obligation issued with OID is the excess (if any) of its
adjusted issue price over the basis of such debt obligation immediately after
its acquisition by the taxpayer, subject to a statutory de minimis exception.
Unless a U.S. Holder has elected to include the market discount in income as
it accrues, gain, if any, realized on any subsequent disposition (other than
in connection with certain nonrecognition transactions) or full or partial
principal payment of such Debenture will be treated as ordinary income to the
extent of the accrued market discount that has not previously been included in
income.
The amount of market discount treated as having accrued will be determined
either (i) on a straight-line basis by multiplying the market discount times a
fraction, the numerator of which is the number of days the Debenture was held
by the U.S. Holder and the denominator of which is the total number of days
after the date such U.S. Holder acquired the Debenture up to and including the
date of its maturity or (ii) if the U.S. Holder so elects, on a constant
interest rate method.
A U.S. Holder of a Debenture acquired at a market discount may elect to
include market discount in income currently, through the use of either the
straight-line inclusion method or the elective constant interest method in
lieu of recharacterizing gain upon disposition as ordinary income to the
extent of accrued market discount at the time of disposition. Once made, this
election will apply to all notes and other obligations acquired by the
electing U.S. Holder at a market discount during the taxable year for which
the election is made, and all subsequent taxable years. If an election is made
to include market discount in income currently, the basis of the Debenture in
the hands of the U.S. Holder will be increased by the market discount thereon
as it is included in income.
Unless a U.S. Holder who acquires a Debenture at a market discount elects to
include market discount in income currently, such U.S. Holder may be required
to defer deductions for any interest paid on indebtedness incurred or
continued to purchase or carry such Debenture in an amount not exceeding the
deferred income, until such income is realized.
Redemption of Preferred Securities for Debentures or Cash Upon Liquidation of
the Issuer
Under certain circumstances, the Debentures may be distributed to U.S.
Holders in exchange for the Preferred Securities. Under current law, such a
distribution to U.S. Holders should be treated, for United States federal
income tax purposes, as a nontaxable event and each U.S. Holder would receive
an aggregate tax basis in the Debentures distributed equal to such U.S.
Holder's aggregate tax basis in its Preferred Securities exchanged therefor. A
U.S. Holder's holding period in the Debentures so received would include the
period during which the Preferred Securities were held by such U.S. Holder.
If, however, the exchange is caused by a Tax Event which results in the Issuer
being treated as an association taxable as a corporation, the distribution
would likely constitute a taxable event to both the Issuer and U.S. Holders of
the Preferred Securities.
Under certain circumstances described herein (see "Description of the
Preferred Securities--Special Event Exchange or Redemption"), the Debentures
may be redeemed for cash and the proceeds of such redemption distributed to
U.S. Holders in redemption of their Preferred Securities. Under current law,
such a redemption would, for United States federal income tax purposes,
constitute a taxable disposition of the redeemed Preferred Securities, and a
U.S. Holder would recognize gain or loss in the same manner as if it sold such
redeemed Preferred Securities for cash. See "--Sales of Preferred Securities."
Sales of Preferred Securities
A U.S. Holder that sells Preferred Securities will recognize gain or loss
equal to the difference between the amount realized on the sale of the
Preferred Securities and the U.S. Holder's adjusted tax basis in such
Preferred Securities. The tax basis of a Preferred Security will be increased
by the amount of any interest in the form of
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OID that is included in the U.S Holder's income and by any amounts includible
in income as market discount (if the U.S. Holder elect to include such
discount in income on a current basis), and will be decreased by the amount of
any payments made by United Rentals on the Debentures and by any amortized
bond premium previously deducted from income. In general, except to the extent
of any market discount that the U.S. Holder did not elect to accrue into
income currently, such gain or loss will be a capital gain or loss and will be
a long-term capital gain or loss if the Preferred Securities have been held
for more than one year at the time of sale. Generally, as a result of recently
enacted legislation, long-term capital gain of an individual U.S. Holder is
subject to a maximum tax rate of 20% in respect of capital assets held for
more than one year.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the
underlying Debentures. A U.S. Holder who disposes of its Preferred Securities
between record dates for payments of distributions thereon will be required to
include in income as ordinary income any accrued but unpaid interest (in the
form of OID) on the Debentures to the day before the date of disposition and
to add such amount to its adjusted tax basis in its pro rata share of the
underlying Debentures deemed disposed of. To the extent the selling price is
less than the U.S. Holders adjusted tax basis, such U.S. Holder will recognize
a capital loss. Subject to certain limited exceptions, capital losses cannot
be applied to offset ordinary income for United States federal income tax
purposes.
Conversion of Preferred Securities Into Common Stock
A U.S. Holder of Preferred Securities generally will not recognize income,
gain or loss upon the conversion of the Preferred Securities into Common Stock
through the Conversion Agent. A U.S. Holder of Preferred Securities will,
however, recognize gain upon the receipt of cash in lieu of a fractional share
of Common Stock generally equal to the amount of cash received less such U.S.
Holder's tax basis in such fractional share. Such a U.S. Holder's tax basis in
Common Stock received upon conversion should generally be equal to such U.S.
Holder's tax basis in the Preferred Securities delivered to the Conversion
Agent for exchange less the basis allocated to any fractional share for which
cash is received, and such U.S. Holder's holding period in the Common Stock
received upon conversion should generally begin on the date such U.S. Holder
acquired the Preferred Securities delivered to the Conversion Agent for
exchange.
U.S. Holders of Preferred Securities should not recognize gain or loss upon
expiration of the conversion rights. Such expiration should not effect a
significant modification of the underlying Debentures within the meaning of
applicable Treasury Regulations and, thus, should not be considered a sale or
exchange for United States federal income tax purposes.
Adjustment of Conversion Price
Section 305 of the Code treats as a distribution taxable as a dividend (to
the extent of the issuing corporation's current or accumulated earnings and
profits) certain actual or constructive distributions of stock with respect to
stock or convertible securities. Under the Treasury Regulations, an adjustment
in the conversion price of the Debentures may, under certain circumstances, be
treated as a constructive dividend. A U.S. Holder of Preferred Securities
would be required to include the amount of any such constructive dividend in
gross income but will not receive any cash related thereto. In addition, a
U.S. Holder's tax basis in a Preferred Security would be increased by the
amount of any such constructive dividend.
Backup Withholding
A U.S. Holder may be subject to backup withholding at a rate of 31% with
respect to payments made on, and proceeds from the sale of, the Preferred
Securities, any Debentures distributed by the Issuer or any Common Stock
received on conversion, unless the U.S. Holder (i) is a corporation or comes
within certain other exempt categories of recipients and, when required,
demonstrates that status, or (ii) provides a correct taxpayer identification
number, certifies as to no loss of exemption from backup withholding and
otherwise complies with the applicable requirements of the backup withholding
rules. U.S. Holders should consult with their tax advisors as to their
qualification for exemption from backup withholding and the procedure for
obtaining such exemption.
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Backup withholding is not an additional tax. Any amount withheld as backup
withholding would be refunded or credited against the U.S. Holder's federal
income tax liability, provided that the required information is provided to
the Service.
Non-U.S. Holders
The following summary is limited to the United States federal income and
estate tax consequences to a holder of a Preferred Security that is a person
other than a U.S. Holder (a "Non-U.S. Holder"). This summary does not deal
with all aspects of United States federal income and estate taxation that may
be relevant to the purchase, ownership or disposition of Preferred Securities
by any specific Non-U.S. Holder in light of such holder's particular
circumstances, including holding Preferred Securities through a partnership.
In addition, persons who hold the Preferred Securities through hybrid entities
(i.e., entities that are fiscally transparent for United States tax purposes
but not foreign law purposes) may not be entitled to any applicable treaty
benefits. Persons who are partners in foreign partnerships or beneficiaries of
foreign trusts or estates and who are subject to United States federal income
tax because of their own status, such as United States residents or foreign
persons engaged in a trade or business in the United States, may be subject to
United States federal income tax even though the entity is not subject to
United States federal income tax on the disposition of its Preferred Security.
For purposes of the withholding tax on interest, a non-resident alien or other
non-resident fiduciary of an estate or trust will be considered to be a Non-
U.S. Holder.
For purposes of the summary below, interest (including OID), dividends and
gain on the sale, exchange or other disposition of Preferred Securities or
Common Stock issued upon conversion thereof will be considered to be "United
States trade or business income" if such income or gain is (i) effectively
connected with the conduct of a United States trade or business or (ii) in the
case of a resident of a country with which the United States has an income tax
treaty, attributable to a United States permanent establishment (or, in the
case of an individual, a fixed base) in the United States.
Interest
Interest (including OID) paid by United Rentals to a Non-U.S. Holder will
not be subject to United States federal income or withholding tax if such
interest is not United States trade or business income and is "portfolio
interest." Interest will be portfolio interest if the Non-U.S. Holder (i) does
not actually or constructively own 10% or more of the total combined voting
power of all classes of stock of United Rentals; (ii) is not a controlled
foreign corporation with respect to which United Rentals is a "related person"
within the meaning of the Code and (iii) certifies, under penalties of
perjury, that such holder is not a United States person and provides such
holder's name and address. For purpose of determining whether the Non-U.S.
Holder owns 10% or more of the combined voting power of all classes of stock
of United Rentals, the Preferred Securities are treated as if the holder had
exercised its option to convert the Preferred Securities into Common Stock.
The gross amount of payments of interest that do not qualify for the
portfolio interest exception and that are not United States trade or business
income will be subject to United States withholding tax at a rate of 30%
unless a treaty applies to reduce or eliminate withholding. United States
trade or business income will be taxed at regular graduated United States
rates rather than the 30% gross rate. In the case of a Non-U.S. Holder that is
a corporation, such United States trade or business income may also be subject
to the branch profits tax (which generally is imposed on a foreign corporation
on the actual or deemed repatriation from the United States of earnings and
profits attributable to United States trade or business income) at a rate of
30%. The branch profits tax may not apply (or may apply at a reduced rate) if
the recipient is a qualified resident of certain countries with which the
United States has an income tax treaty.
To claim exemption from withholding or to claim the benefits of a treaty, a
Non-U.S. Holder must provide a properly executed Form 1001 or 4224 (or such
successor form as the Service designates), as applicable prior to the payment
of interest. These forms must be periodically updated. Under regulations not
yet in effect (the "Future Withholding Regulations"), the Forms 1001 and 4224
will be replaced by a Form W-8. Also under the
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Future Withholding Regulations, a Non-U.S. Holder who is claiming the benefits
of a treaty may be required in certain instances to obtain a United States
taxpayer identification number and to provide certain documentary evidence
issued by the appropriate foreign governmental authority to prove residence in
the foreign country. Certain special procedures are provided in the Future
Withholding Regulations for payments through qualified intermediaries. The
Future Withholding Regulations are effective January 1, 2000, although valid
withholding certificates that are held on December 31, 1999 will remain valid
until the earlier of December 31, 2000 or the expiration date of the
certificate under the rules currently in effect.
Dividends
In general, dividends paid to a Non-U.S. Holder of Common Stock will be
subject to withholding of United States federal income tax at a 30% rate
unless such rate is reduced by an applicable tax treaty. Dividends that are
United States trade or business income are generally subject to United States
federal income tax on a net basis at regular income tax rates, and are not
generally subject to the 30% withholding tax, if the Non-U.S. Holder provides
the appropriate form to the payor. Any United States trade or business income
received by a Non-U.S. Holder that is a corporation may also, under certain
circumstances, be subject to the branch profits tax.
Under existing regulations, dividends paid to an address in a foreign
country generally are presumed (absent actual knowledge to the contrary) to be
paid to a resident of such country for purposes of the withholding discussed
above and for purposes of determining the applicability of a tax treaty rate.
Generally, beginning January 1, 2000, however, a Non-U.S. Holder who wishes to
claim the benefit of an applicable income tax treaty will have to comply with
the requirements of the Future Withholding Regulations discussed above under
Interest. A Non-U.S. Holder of Common Stock that is eligible for a reduced
rate of United States withholding tax pursuant to a tax treaty may obtain a
refund of any excess amounts currently withheld by filing an appropriate claim
for a refund with the Service.
Conversion
A Non-U.S. Holder will generally not be subject to United States federal
income tax on the conversion of the Preferred Securities into Common Stock.
Cash received in lieu of fractional shares may give rise to gain that would be
subject to the rules below with respect to gain on disposition. In addition,
cash or Common Stock treated as issued for accrued interest would be treated
as interest under the rules described above.
Gain on Disposition
Except as described below and subject to the discussion concerning backup
withholding, any gain realized by a Non-U.S. Holder on a sale, redemption or
other disposition of a Preferred Security or Common Stock issued upon
conversion thereof will generally not be subject to United States federal
income tax, unless (i) the gain is effectively connected with the conduct of a
trade or business within the United States by the Non-U.S. Holder; (ii) in the
case of a Non-U.S. Holder who is a nonresident alien individual and holds the
Preferred Security or Common Stock as a capital asset, such holder is present
in the United States for 183 or more days in the taxable year and certain
other requirements are met; (iii) the Non-U.S. Holder is subject to the
special rules applicable to certain former citizens and residents of the
United States; or (iv) United Rentals is or has been a "United States real
property holding corporation" (a "USRPHC") for United States federal income
tax purposes and assuming, that the Common Stock is "regularly traded on an
established securities exchange," such Non-U.S. Holder has held, directly or
constructively, more than 5% of the outstanding Common Stock within the five-
year period ending on the date of the sale or exchange. (United Rentals
believes that it has not been, is not currently, and is not likely to become,
a USRPHC. However, no assurance can be given that United Rentals will not be a
USRPHC.)
Federal Estate Taxes
If interest on the Preferred Security is exempt from withholding of United
States federal income tax as portfolio interest described above, the Preferred
Security will not be included in the estate of a deceased Non-U.S. Holder for
United States federal estate tax purposes. Common Stock owned or treated as
owned by an
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individual who is not a citizen or resident of the United States (for United
States federal estate tax purposes) at the time of his or her death will be
included in such individual's gross estate for United States federal estate
tax purposes, unless an applicable estate tax treaty otherwise provides.
Information Reporting and Backup Withholding
United Rentals must report annually to the Service and to each Non-U.S.
Holder any interest or dividend paid to the Non-U.S. Holder that is subject to
withholding or that is exempt from United States withholding tax pursuant to a
tax treaty or, in the case of interest, under the portfolio interest exception
described above. Copies of these returns may also be made available under the
provisions of a specific treaty or other agreement to the tax authorities of
the country in which the Non-U.S. Holder resides.
In the case of payments of interest (including OID) or dividends to Non-U.S.
Holders, information reporting and backup withholding at a rate of 31% will
not apply to such payments with respect to which either the requisite
certification has been received or an exemption has otherwise been established
(provided that neither United Rentals nor its paying agent has actual
knowledge that the holder is a U.S. Holder or that the conditions of any other
exemption are not, in fact, satisfied).
Backup withholding and information reporting will not apply to payment of
principal on the Preferred Securities to a Non-U.S. Holder if such holder
certifies as to its non-United States status under penalties of perjury or
otherwise establishes an exemption from backup withholding (provided that
neither United Rentals nor its withholding agent has actual knowledge that the
holder is a United States person or that the conditions of any other exemption
are not, in fact, satisfied).
The payment of the proceeds from the disposition of Preferred Securities or
Common Stock to or through the United States office of any broker, United
States or foreign, will be subject to information reporting and possible
backup withholding unless the owner certifies as its non-United States status
under penalties of perjury or otherwise establishes an exemption, provided
that the broker does not have actual knowledge that the Holder is a United
States person or that the conditions of any other exemption are not, in fact,
satisfied. The payment of the proceeds from the disposition of Preferred
Securities to or through a non-United States office of a non-United States
broker will not be subject to information reporting or backup withholding,
unless the non-United States broker has certain types of relationships with
the United States.
In the case of the payment of proceeds from the disposition of Preferred
Securities or Common Stock to or through a non-United States office of a
broker that is either a United States person or a United States related
person, the Treasury Regulations require information reporting (but not back-
up withholding) on the payment unless the broker has documentary evidence in
its files that the owner is a Non-U.S. Holder and the broker has no knowledge
to the contrary.
As mentioned above the Treasury Department recently promulgated final
regulations regarding the withholding and information reporting rules
discussed above (the Future Withholding Regulations). In general, the Future
Withholding Regulations do not significantly alter the substantive withholding
and information reporting requirements but rather unify current certification
procedures and forms and clarify reliance standards. The Future Withholding
Regulations are generally effective for payments made after December 31, 1999,
subject to certain transition rules.
Non-U.S. Holders should consult their own tax advisors with respect to the
impact, if any, of the Future Withholding Regulations.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules may be refunded or credited against the Non-U.S.
Holder's United States federal income tax liability, provided that the
required information is furnished to the Service.
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Possible Tax Changes
Prospective investors should be aware that legislation has been introduced
in the United States Congress in the past that would, if enacted, deny an
interest deduction to issuers of instruments such as the Debentures. No such
legislation is currently pending. There can be no assurance, however, that
similar legislation will not ultimately be enacted into law, or that other
developments will not occur after the date hereof that would adversely affect
the tax treatment of the Debentures and could result in the exchange of the
Debentures for Preferred Securities or, in certain limited circumstances, the
redemption of the Debentures by United Rentals and the distribution of the
resulting cash in redemption of the Preferred Securities. Moreover, the
Company is aware of at least one case now pending before the United States Tax
Court in which the Service is seeking to disallow the deduction for interest
payable on a loan issued to a partnership that, in turn, issued "monthly
income preferred securities". An adverse decision by the Tax Court in that
case (or some other similar case) could result in the redemption of the
Debentures by the Company and the distribution of the resulting cash in
redemption of the Preferred Securities. See "Description of the Preferred
Securities--Special Event Exchange or Redemption."
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ERISA CONSIDERATIONS
Under the Department of Labor "plan assets" regulation, 29 C.F.R. (S)
2510.3-101 ("Plan Assets Regulation"), the assets of the Issuer might become
subject to the fiduciary standards and the prohibited transaction provisions
under the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and Section 4975 of the Code by reason of the acquisition and
holding of equity interests in the Issuer (such as the Preferred Securities)
by employee benefit plans subject to ERISA, plans within the meaning of
Section 4975 of the Code, or persons which are treated as using assets of such
employee benefit plans or plans (collectively, "Plans") unless an exception
set forth in the Plan Assets Regulation applies. There are no assurances that
any of the exceptions set forth in the Plan Assets Regulation would apply to
the Issuer. Accordingly, Plans should not acquire or hold Preferred Securities
unless the fiduciaries acting on behalf of the Plans determine that the
acquisition and holding of Preferred Securities would not result in a non-
exempt prohibited transaction under ERISA or Section 4975 of the Code,
particularly with respect to the operation of the Issuer and the activities of
the UR Trustees.
In that regard, it is noted that United Rentals, the obligor with respect to
the Debentures held by the Issuer and to the Guarantee, is a "party in
interest" and "disqualified person" for purposes of the prohibited transaction
provisions of ERISA and Section 4975 of the Code with respect to certain
employee benefit plans covering employees of the Company ("Company Plans"),
including certain multiemployer pension plans which are not administered or
managed by the Company. Any direct or indirect loan or other extension of
credit between a Company Plan and United Rentals might constitute a prohibited
transaction unless a statutory or administrative exemption from the prohibited
transaction provisions of ERISA and Section 4975 of the Code applies. However,
the Company does not currently provide services (other than possibly equipment
rental or other related business activities) to Plans other than the Company
Plans and accordingly might not be treated as a party in interest or
disqualified person to any Plans other than Company Plans. If the Company is
not a party in interest or disqualified person with respect to a Plan which is
not a Company Plan, then a direct or indirect loan between the Company and
such Plan would not appear to constitute a prohibited transaction.
If the assets of the Issuer are considered "plan assets" of Plans holding
Preferred Securities for purposes of ERISA and Section 4975 of the Code,
service providers with respect to the assets of the Issuer may become parties
in interest or disqualified persons with respect to investing Plans, and any
discretionary authority exercised with respect to the Debentures by such
persons could be deemed to constitute or give rise to a prohibited transaction
under ERISA or the Code. To better avoid such prohibited transactions, each
investing Plan will be deemed, by purchasing the Preferred Securities, to have
appointed the UR Trustees and to have directed the Issuer to invest in the
Debentures, to enter into the Guarantee and to undertake the ministerial
duties set forth in the Trust Agreement.
A fiduciary with respect to a Plan subject to ERISA (excludes individual
retirement accounts) should consider whether the purchase of Preferred
Securities could result in a delegation of fiduciary authority to the Property
Trustee, and, if so, whether such a delegation of authority is permissible
under the Plan's governing instrument or any investment management agreement
with the Plan. In making such determination, a Plan fiduciary should note that
the Property Trustee is a U.S. bank qualified to be an investment manager
(within the meaning of section 3(38) of ERISA) to which such delegation of
authority generally would be permissible under ERISA. Further, prior to a
Debenture Event of Default, with the Property Trustee will have only limited
custodial and ministerial authority with respect to Trust assets.
Any purchaser proposing to acquire Preferred Securities with assets of any
Plan should consult with its counsel, particularly with respect to the
applicability of such prohibited transaction provisions. Each fiduciary with
respect to a Plan who is responsible for the acquisition of Preferred
Securities by such Plan shall be deemed to have represented and warranted for
the benefit of the Company and the UR Trustees that the acquisition and
holding of Preferred Securities by such Plan does not result in or give rise
to a non-exempt prohibited transaction under ERISA or Section 4975 of the
Code.
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SELLING HOLDERS
General
The Selling Holders may from time to time offer and sell pursuant to this
Prospectus any or all of the Offered Securities. The term "Selling Holder"
includes (i) each person and entity that is identified as a Selling Holder in
the tables below (as such tables may be supplemented or amended from time to
time by means of a supplement or amendment hereto), and (ii) any transferee,
donee, pledgee or other successor or any such person or entity that acquires
any of the Offered Securities in a transaction exempt from the registration
requirements of the Securities Act and that is identified in a supplement or
amendment hereto.
Preferred Securities and Related Securities
The Offered Securities include (i) an aggregate of 6,000,000 Preferred
Securities, (ii) any shares of Common Stock acquired upon conversion of
Preferred Securities and (iii) any Debentures acquired in exchange for
Preferred Securities. The table below identifies each Selling Holder that may
offer and sell the foregoing securities pursuant to this Prospectus and (based
on information provided by such Selling Holders) sets forth (a) the number of
Preferred Securities beneficially owned by each such Selling Holder and (b)
the shares of Common Stock currently issuable upon conversion of such
Preferred Securities. This Prospectus covers all securities shown in the table
below (and any Debentures acquired in exchange therefor).
<TABLE>
<CAPTION>
# of Shares of Common Stock
# of Preferred Issuable Upon Conversion of
Selling Holder(1) Securities Owned Preferred Securities(2)
----------------- ---------------- ---------------------------
<S> <C> <C>
AAM / Zazove Institutional Income
Fund, L.P........................ 102,500 117,457
AIG / National Union Fire
Insurance........................ 8,000 9,167
Aim Balanced Fund................. 120,000 137,511
Allstate Insurance Company........ 97,500 111,728
American Travellers Life Insurance
Co. Convertible.................. 10,000 11,459
Argent Classic Convertible
Arbitrage Fund (Bermuda) L.P..... 100,000 114,593
Argent Classic Convertible
Arbitrage Fund L.P............... 25,000 28,648
Argent Convertible Arbitrage Fund
Ltd.............................. 25,000 28,648
Aristeia International, Ltd....... 28,692 32,879
Aristeia Trading, L.L.C........... 21,308 24,417
BNP Arbitrage SNC................. 177,500 203,402
Century National Insurance
Company.......................... 12,000 13,751
Chrysler Insurance Company-- Total
Return........................... 500 572
Conseco Direct Life Insurance Co.. 18,000 20,626
Conseco Health Insurance Co.
Convertible...................... 10,000 11,459
Deutsche Bank A.G.(3)............. 574,250 658,050
Donaldson, Lufkin & Jenrette
Securities Corp.(4).............. 222,600 255,084
Goldman, Sachs & Co.(4)........... 336,050 385,089
Hamilton Partners Limited......... 200,000 229,186
Highbridge Capital Corporation.... 175,000 200,537
LDG Limited....................... 3,000 3,437
National Union Fire Insurance
Company of Pittsburgh............ 30,000 34,377
Orrington International Fund Ltd.. 12,000 13,751
Orrington Investments Limited
Partnership...................... 18,000 20,626
Palladin Securities, LLC.......... 12,000 13,751
Paloma Securities L.L.C........... 107,000 122,614
R2 Investments, L.D.C............. 67,500 77,350
Shepherd Investments
International, Ltd............... 161,250 184,781
SoundShore Holdings............... 25,000 28,648
Southport Management Partners,
L.P.............................. 13,600 15,584
Southport Partners International,
Ltd.............................. 26,400 30,252
Starvest -- Combined Portfolio.... 10,500 12,032
State of Oregon / SAIF
Corporation...................... 100,000 114,593
Teachers Insurance and Annuity
Association of America........... 60,000 68,755
TQA Arbitrage Fund, L.P........... 20,000 22,918
TQA Leverage Fund, L.P............ 10,000 11,459
TQA Vantage Fund, Ltd............. 7,000 8,021
TQA Vantage Plus Fund, Ltd........ 5,000 5,729
United National Insurance Company. 28,000 32,086
Westfield Life Insurance Company.. 9,000 10,313
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
# of Shares of Common Stock
# of Preferred Issuable Upon Conversion of
Selling Holder(1) Securities Owned Preferred Securities(2)
----------------- ---------------- ---------------------------
<S> <C> <C>
Additional Selling Holders that
may be identified in a supplement
or amendment hereto.............. 3,010,850 3,450,223
</TABLE>
- --------
(1) Each Selling Holder named above is the beneficial owner of the indicated
Preferred Securities. In certain cases, the indicated Preferred Securities
may be held of record by a nominee or custodian for the account of the
Selling Holder.
(2) The conversion rate is subject to adjustment under certain circumstances
as described under "Description of the Preferred Securities--Conversions
Rights--Conversion Price Adjustments."
(3) The indicated Selling Holder was one of the initial purchasers of the
Preferred Securities from the Issuer and was paid customary compensation
in connection with the distribution of such securities. In addition, the
indicated Selling Holder (or its affiliates) (i) has, from time to time,
provided other investment banking services to the Company for which the
Selling Holder was paid customary compensation and (ii) has provided
certain financing to the Company.
(4) The indicated Selling Holder was one of the initial purchasers of the
Preferred Securities from the Issuer and was paid customary compensation
in connection with the distribution of such securities. In addition, the
indicated Selling Holder (or its affiliates) has, from time to time,
provided other investment banking services to the Company for which the
Selling Holder was paid customary compensation.
Acquisition Shares
The Offered Securities include an aggregate of 776,202 outstanding shares of
Common Stock that the Company issued in connection with acquisitions. The
table below (i) identifies each Selling Holder that may offer and sell such
shares pursuant to this Prospectus and (ii) sets forth the number of such
shares that each such Selling Holder may offer and sell pursuant to this
Prospectus.
<TABLE>
<CAPTION>
Number of
Name of Selling Holder(1)(2) Shares
---------------------------- ---------
<S> <C>
Aspen Foundation................................................. 12,200
William Butler................................................... 107,500
Dawn Cave........................................................ 1,698
Robert W. Jones & Lavina R. Jones, Joint Tenants................. 182,229
McDonald Family Trust 4/6/98 (Paul C. McDonald &
Catherine McDonald Trustees).................................... 210,291
John E. McKenzie................................................. 2,386
Ronald W. Mobley & Susan H. Mobley, Joint Tenants................ 181,800
Sonya M. Sakash & Christopher A. Jones, as Co-Trustees of
the Sonya M. Sakash Trust....................................... 39,049
Sonya M. Sakash & Christopher A. Jones, as Co-Trustees of
the Christopher A. Jones Trust.................................. 39,049
</TABLE>
- --------
(1) Each of the Selling Holders identified in this table is a former owner of
a business that we acquired (or an affiliate or relative of such a former
owner) or a trust or charitable organization that acquired shares from
such a former owner (or such affiliate or relative).
(2) Each of the Selling Holders identified in this table serves as an employee
of, or consultant to, the Company (or is an affiliate, relative or
transferee of such an employee or consultant), except for Dawn Cave.
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PLAN OF DISTRIBUTION
The Offered Securities may be sold from time to time to purchasers directly
by the Selling Holders. Alternatively, the Selling Holders may from time to
time offer the Offered Securities to or through underwriters, broker/dealers
or agents, who may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Holders or the purchasers of such
securities for whom they may act as agents. The Selling Holders and any
underwriters, broker/dealers or agents that participate in the distribution of
Offered Securities may be deemed to be "underwriters" within the meaning of
the Securities Act and any profit on the sale of such securities and any
discounts, commissions, concessions or other compensation received by any such
underwriter, broker/dealer or agent may be deemed to be underwriting discounts
and commissions under the Securities Act. The Offered Securities may be sold
from time to time in one or more transactions at fixed prices, at prevailing
market prices at the time of sale, at varying prices determined at the time of
sale or at negotiated prices. The sale of the Offered Securities may be
effected in transactions (which may involve crosses or block transactions) (i)
on any national securities exchange or quotation service on which the Offered
Securities may be listed or quoted at the time of sale, (ii) in the over-the-
counter market or (iii) in transactions otherwise than on such exchanges or in
the over-the-counter market.
See "Description of the Preferred Securities--Registration Rights Agreement"
for certain information regarding the respective obligations of United Rentals
and the Selling Holders (i) to pay certain costs and expenses related to the
Registration Statement of which this Prospectus forms a part and the offer and
sale of the Offered Securities, and (ii) to provide indemnification against
certain liabilities arising under the Securities Act.
VALIDITY OF THE OFFERED SECURITIES
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of the Issuer by Morris, Nichols,
Arsht & Tunnell, Wilmington, Delaware, special Delaware counsel to the Issuer.
Certain legal matters relating to the validity of the Debentures, the
Guarantees, and the Common Stock issuable upon conversion of the Debentures
and the Preferred Securities will be passed upon for the Company by Weil,
Gotshal & Manges LLP, New York, New York. Certain legal matters relating to
the validity of the other shares of Common Stock included in the Offered
Securities will be passed upon for the Company by Ehrenreich Eilenberg Krause
& Zivian LLP, New York, New York.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the following
financial statements, as set forth in their reports, which are incorporated in
this prospectus by reference:
. the consolidated financial statements of United Rentals, Inc. as of
December 31, 1997 and 1996 and for each of the two years in the period
ended December 31, 1997, included in the Company's Current Report on
Form 8-K dated December 15, 1998;
. the financial statements of Mission Valley Rentals, Inc. at June 30,
1996 and 1997 and for the years then ended, included in the Company's
Current Report on Form 8-K/A dated February 4, 1998;
. the financial statements of Power Rental Co. Inc. at July 31, 1997 and
for the year then ended, included in the Company's Current Report on
Form 8-K/A dated July 21, 1998 and in the Company's Current Report on
Form 8-K dated December 24, 1998;
. the combined financial statements of Valley Rentals, Inc. at December
31, 1997 and for the year then ended; 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
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ended December 31, 1996 and for the period from January 1, 1997 to
October 24, 1997; the financial statements of Pro Rentals, Inc. at
December 31, 1997 and for the year then ended; the combined financial
statements of Able Equipment Rental, Inc. at December 31, 1997 and for
the year then ended; the combined financial statements of Channel
Equipment Holding, Inc. at December 31, 1997 and for the year then
ended; the financial statements of ASC Equipment Company, Inc. at
December 31, 1997 and for the year then ended; and the combined
financial statements of Adco Equipment, Inc. at December 31, 1997 and
for the year then ended, included in the Company's Current Report on
Form 8-K dated December 24, 1998.
These financial statements are incorporated by reference in reliance on their
reports, given on their authority as experts in accounting and auditing.
The consolidated statements of income, of cash flows and of changes in
stockholders' equity of United Rentals, Inc. for the year ended December 31,
1995, included in the Company's Current Report on Form 8-K dated December 15,
1998, and the financial statements of U.S. Rentals, Inc. at December 31, 1997
and 1996 and for each of the three years in the period ended December 31,
1997, incorporated by reference in the Company's Current Report on Form 8-K
dated October 9, 1998, have been audited by PricewaterhouseCoopers LLP,
independent accountants, as set forth in their reports thereon included
therein, and are incorporated by reference herein in reliance on such reports
given upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of A&A Tool Rentals & Sales, Inc. and
subsidiary as of October 19, 1997 and October 31, 1996, and for the period
from November 1, 1996 to October 19, 1997 and for the years ended October 31,
1996 and 1995, included in the Company's Current Report on Form 8-K dated
December 24, 1998, have been audited by KPMG LLP, independent certified public
accountants, as set forth in their report thereon included therein, and are
incorporated by reference herein in reliance on such report given upon the
authority of such firm as experts in accounting and auditing.
The financial statements of MERCER Equipment Company included in the
Company's Current Report on Form 8-K dated December 24, 1998 have been audited
by Webster Duke & Co., independent auditors, as set forth in their reports
thereon included therein, and are incorporated by reference herein in reliance
on such reports given upon the authority of such firm as experts in accounting
and auditing.
The combined financial statements of Coran Enterprises, Inc. (dba A-1 Rents)
and Monterey Bay Equipment Rental, Inc. included in the Company's Current
Report on Form 8-K dated December 24, 1998 have been audited
by Grant Thornton LLP, independent auditors, as set forth in their report
thereon appearing therein, and are incorporated by reference herein in
reliance on such report given upon the authority of such firm as experts in
accounting and auditing.
The combined financial statements of BNR Group of Companies as of March 31,
1996 and 1997 and for the years ended March 31, 1996 and 1997 included in the
Company's Current Report on Form 8-K/A dated February 4, 1998; and the
consolidated financial statements of Perco Group Ltd. as of December 31 1997
and for the year ended December 31, 1997, included in the Company's Current
Report on Form 8-K dated December 24, 1998, have been audited by KPMG LLP,
independent chartered accountants, as set forth in their reports thereon
included therein and are incorporated by reference herein in reliance on such
reports given upon the authority of such firm as experts in accounting and
auditing.
The audited financial statements of Access Rentals, Inc. and Subsidiary and
Affiliate, included in the Company's Current Report on Form 8-K/A dated
February 4, 1998, have been incorporated by reference herein in reliance upon
the report of Battaglia, Andrews & Moag, P.C., independent certified public
accountants, 210 East Main Street, Batavia, New York 14020, for the periods
indicated, given upon the authority of such firm as experts in accounting and
auditing.
74
<PAGE>
The financial statements of West Main Rentals & Sales, Incorporated as of
December 31, 1997, and the year then ended, included in the Company's Current
Report on Form 8-K dated December 24, 1998, have been incorporated by
reference herein in reliance upon the report of Moss Adams LLP, independent
certified public accountants, appearing therein and upon the authority of such
firm as experts in accounting and auditing.
The combined financial statements of Equipment Supply Co., Inc. and
Affiliates as of December 31, 1997 and 1996 and for each of the three years in
the period ended December 31, 1997, included in the Company's Current Reports
on Form 8-K dated July 21, 1998 and December 24, 1998, have been audited by
BDO Seidman, LLP independent certified public accountants, as set forth in
their report thereon included therein, and are incorporated by reference
herein in reliance on such report given upon the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements of McClinch Inc. and subsidiaries as
of January 31, 1998 and August 31, 1998, and for the year ended January 31,
1998 and the financial statements of McClinch Equipment Services, Inc. as of
December 31, 1997 and August 31, 1998, and for the year ended December 31,
1997, included in the Company's Current Report on Form 8-K dated December 24,
1998, have been audited by PricewaterhouseCoopers L.L.P., independent
accountants, as set forth in their reports thereon included therein, and are
incorporated by reference herein in reliance on such reports given upon the
authority of such firm as experts in accounting and auditing.
The financial statements of Lift Systems, Inc. as of December 31, 1997 and
the year then ended included in the Company's Current Report on Form 8-K dated
December 24, 1998 are incorporated by reference herein in reliance upon the
report of Altschuler, Melvoin and Glasser LLP, independent accountants,
appearing therein and upon the authority of such firm as experts in accounting
and auditing.
The financial statements of Reitzel Rentals Ltd. as of February 28, 1998 and
for the year ended February 28, 1998, included in the Company's Current Report
on Form 8-K dated December 24, 1998, have been audited by
PricewaterhouseCoopers LLP, independent chartered accountants, as set forth in
their report thereon included therein, and are incorporated by reference
herein in reliance on such report given upon the authority of such firm as
experts in accounting and auditing.
The combined financial statements of Grand Valley Equipment Co., Inc. and
Kubota of Grand Rapids, Inc. as of December 31, 1997, and the year then ended,
included in the Company's Current Report on Form 8-K dated December 24, 1998,
have been audited by Beene Garter LLP, independent certified public
accountants, as set forth in their report thereon included therein, and are
incorporated by reference herein in reliance on such given upon the authority
of such firm as experts in accounting and auditing.
The financial statements of Paul E. Carlson, Inc. (d/b/a/ Carlson Equipment
Company) as of February 28, 1998, and for the year then ended, included in the
Company's Current Report on Form 8-K dated December 24, 1998, have been
audited by McGladrey & Pullen, LLP, independent auditors, as stated in their
report appearing therein, and are incorporated by reference herein in reliance
on such report given upon the authority of such firm as experts in accounting
and auditing.
The financial statements of Industrial Lift, Inc. as of December 31, 1997
and 1996 and the years then ended included in the Company's Current Report on
Form 8-K dated December 24, 1998 are incorporated by reference herein in
reliance upon the report of Schalleur & Surgent, LLC, independent auditors,
appearing therein and upon the authority of such firm as experts in accounting
and auditing.
75
<PAGE>
Exhibit A
NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
The Bank of New York, as Trustee
United Rentals, Inc.
c/o The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Attention: Corporate Trust Administration
Re: 6 1/2% Convertible Quarterly Income Preferred Securities of
United Rentals Trust I
(the "Preferred Securities")
Dear Sirs:
Please be advised that has transferred
Preferred Securities pursuant to an effective Registration Statement on Form
S-3 (File No. 333-64463).
The undersigned hereby certifies that the prospectus delivery requirements,
if any, of the Securities Act of 1933, as amended, have been satisfied and
that the above-named beneficial owner of the Preferred Securities is named as
a "Selling Holder" in the Prospectus dated January 20, 1999 included in the
Registration Statement, or in supplements thereto, and that the aggregate
number of the Preferred Securities transferred are included in the Preferred
Securities listed in such Prospectus (or supplement thereto) opposite such
owner's name.
Very truly yours,
Name: _______________________________
By: _________________________________
Authorized Signature
Title of Signatory: _________________
Dated:
76
<PAGE>
PART II
ITEM 14. Other Expenses of Issuance and Distribution
<TABLE>
<S> <C>
SEC Registration Fee.......................................... $ 95,837
Printing and engraving expenses............................... 350,000
Legal fees and expenses....................................... 200,000
Accounting fees and expenses.................................. 200,000
Transfer agent and trustee fees............................... 50,000
Miscellaneous................................................. 104,163
----------
Total..................................................... $1,000,000
==========
</TABLE>
ITEM 15. 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 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 directors and officers against any liability
asserted against or incurred by them in such capacity or arising out of their
status as such. The Registrant has entered into indemnification agreements
with certain members of its management in the form filed as an exhibit to this
registration statement.
II-1
<PAGE>
ITEM 16. Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
4(a) Amended and Restated Certificate of Incorporation of United Rentals
dated August 5, 1998 (incorporated by reference to Exhibit 3.1 to the
United Rentals Report on Form 10-Q for the quarterly period ended June
30, 1998)
4(b) Certificate of Amendment to the United Rentals Certificate of
Incorporation dated September 29, 1998 (incorporated by reference to
Exhibit 4.2 to the United Rentals Registration Statement on Form S-3,
No. 333-70151)
4(c) By-laws of United Rentals (incorporated by reference to Exhibit 3.2 to
the United Rentals Report on Form 10-Q for the quarterly period ended
June 30, 1998)
4(d) Certificate of Trust of United Rentals Trust I (previously filed)
4(e) Amended and Restated Trust Agreement dated August 5, 1998 among United
Rentals, Inc., The Bank of New York, as Property Trustee, The Bank of
New York (Delaware), as Delaware Trustee, and the Administrative
Trustees named therein (incorporated by reference to Exhibit 10(ii) of
United Rentals, Inc. Registration Statement on Form S-4, Registration
No. 333-63171)
4(f) Indenture dated August 5, 1998 by and between United Rentals, Inc. and
The Bank of New York, as Trustee (incorporated by reference to Exhibit
10(hh) of United Rentals, Inc. Registration Statement on Form S-4,
Registration No. 333-63171)
4(g) Guarantee Agreement dated August 5, 1998 between United Rentals, Inc.
and The Bank of New York (incorporated by reference to Exhibit 10(jj)
of United Rentals, Inc. Registration Statement on Form S-4,
Registration No. 333-63171)
4(h) Form of Certificate representing 6 1/2% Convertible Quarterly Income
Preferred Securities (previously filed)
4(i) Form of Certificate representing 6 1/2% Convertible Subordinated
Debentures (previously filed)
4(j) Form of certificate representing United Rentals, Inc. Common Stock
(incorporated by reference to Exhibit 4 of United Rentals, Inc.
Registration Statement on Form S-1, Registration No. 333-39117)
4(k) Form of Certificate of Designation for Perpetual Convertible Preferred
Stock (previously filed)
5(a) Opinion of Weil, Gotshal & Manges LLP (previously filed)
5(b) Opinion of Morris Nichols Arsht & Tunnell (previously filed)
5(c)* Opinion of Ehrenreich Eilenberg Krause & Zivian LLP
8(a) Opinion of Weil, Gotshal & Manges LLP re tax matters (previously
filed)
12 Statement re computation of ratio of earnings to combined fixed
charges and preferred stock dividends (previously filed)
23(a)* Consent of Ehrenreich Eilenberg Krause & Zivian LLP (included in the
opinion filed as Exhibit 5(c))
23(b) Consent of Weil, Gotshal & Manges LLP (included in opinion filed as
Exhibit 5(a))
23(c) Consent of Morris Nichols Arsht & Tunnell (included in opinion filed
as Exhibit 5(b))
23(d)* Consent of Ernst & Young LLP
23(e)* Consent of PricewaterhouseCoopers LLP
23(f)* Consent of KPMG LLP
23(g)* Consent of Webster Duke & Co.
23(h)* Consent of Grant Thornton LLP
23(i)* Consent of KPMG LLP
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
23(j)* Consent of Battaglia, Andrews, & Moag, P.C.
23(k)* Consent of Moss Adams LLP
23(l)* Consent of BDO Siedman LLP
23(m)* Consent of PricewaterhouseCoopers LLP
23(n)* Consent of Altschuler, Melvoin and Glasser LLP
23(o)* Consent of PricewaterhouseCoopers LLP
23(p)* Consent of Beene Garter LLP
23(q)* Consent of McGladrey & Pullen LLP
23(r)* Consent of Schalleur & Surgent LLC
23(s)* Consent of KPMG LLP
24(a) Power of Attorney (included in Part II of the original Registration
Statement under the caption "Signatures")
25(a) Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York as Property Trustee (previously filed)
25(b) Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of The Bank of New York
as Delaware Trustee (previously filed)
25(c) Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of the Bank of New York as Guarantee Trustee (previously filed)
</TABLE>
- --------
*Filed herewith.
ITEM 17. Undertakings
A. The registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective Registration Statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
II-3
<PAGE>
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities and Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 20 above, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expense incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted against the registrant by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
D. The undersigned registrant hereby undertakes that:
(i) For the purpose of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(ii) 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-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, United Rentals,
Inc. certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Amendment No.
2 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
January 21, 1999.
United Rentals, Inc.
/s/ Michael J. Nolan
By: _________________________________
Michael J. Nolan
Chief Financial Officer
Signatures Title Date
* Chairman, Chief
- ------------------------------------- Executive Officer January 21,
Bradley S. Jacobs and Director 1999
(Principal
Executive Officer)
* Director
- ------------------------------------- January 21,
John N. Milne 1999
* Director
- ------------------------------------- January 21,
Wayland R. Hicks 1999
* Director
- ------------------------------------- January 21,
Ronald M. DeFeo 1999
* Director
- ------------------------------------- January 21,
Richard J. Heckmann 1999
* Director
- ------------------------------------- January 21,
Gerald Tsai, Jr. 1999
Director January ,
- ------------------------------------- 1999
Christian M. Weyer
II-5
<PAGE>
Signatures Title Date
Director
/s/ William F. Berry January 21,
- ------------------------------------ 1999
William F. Berry
Director
/s/ John S. McKinney January 21,
- ------------------------------------ 1999
John S. McKinney
Director January ,
- ------------------------------------ 1999
Richard D. Colburn
/s/ Michael J. Nolan Chief Financial
- ------------------------------------ Officer (Principal January 21,
Michael J. Nolan Financial Officer) 1999
/s/ Sandra E. Welwood
- ------------------------------------
Sandra E. Welwood Vice President,
Corporate January 21,
Controller 1999
(Principal
Accounting
Officer)
/s/ Michael J. Nolan
*By_________________________________ January 21,
Michael J. Nolan 1999
Attorney-in-Fact
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, United Rentals
Trust I certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No. 2 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
January 21, 1999.
UNITED RENTALS TRUST I
/s/ John N. Milne
By:__________________________________
John N. Milne
Administrative Trustee
/s/ Michael J. Nolan
By:__________________________________
Michael J. Nolan
Administrative Trustee
/s/ Robert P. Miner
By:__________________________________
Robert P. Miner
Administrative Trustee
II-7
<PAGE>
EXHIBIT 5(c)
January 22, 1999
United Rentals, Inc.
Four Greenwich Office Park
Greenwich, Connecticut 06830
Re: Registration Statement on Form S-3, No. 333-64463 (the
Registration Statement")
Gentlemen:
The Registration Statement relates to, among other securities, 776,202
outstanding shares of Common Stock, par value $.01 per share (the "Shares"), of
United Rentals, Inc. (the "Company") that may from time to time be sold by the
holders thereof. You have requested our opinion in connection with the
Registration Statement.
We have reviewed copies of the Amended and Restated Certificate of
Incorporation of the Company (including amendments thereto), 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 Shares have been duly authorized and are validly issued, fully paid and non-
assessable.
We hereby consent to the reference to us under the caption "Validity
of The Offered Securities" 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 23(d)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 2 to the Registration Statement on Form S-3 and related Prospectus for
registering up to 776,202 shares of its Common Stock, up to 6,000,000 of 6.5%
Preferred Securities and to the incorporation by reference therein of our report
dated November 17, 1998, with respect to the consolidated financial statements
of United Rentals, Inc. included in the Company's Current Report on Form 8-K
dated December 15, 1998; our report dated January 23, 1998, with respect to the
financial statements of Mission Valley Rentals, Inc. included in the Company's
Current Report on Form 8-K/A dated February 4, 1998; our report dated June 24,
1998, with respect to the financial statements of Power Rental Co., Inc.
included in the Company's Current Report on Form 8-K/A dated July 21, 1998 and
in the Company's Current Report on Form 8-K dated December 24, 1998; and (i) our
report dated April 20, 1998, except for Note 10, as to which the date is April
22, 1998, with respect to the combined financial statements of Valley Rentals,
Inc., (ii) our report dated January 23, 1998, with respect to the financial
statements of J&J Rental Services, Inc., (iii) our report dated January 19,
1998, with respect to the financial statements of Bronco Hi-Lift, Inc., (iv) our
report dated April 22, 1998, with respect to the financial statements of Pro
Rentals, Inc., (v) our report dated April 15, 1998, with respect to the combined
financial statements of Able Equipment Rental, Inc., (vi) our report dated April
21, 1998, with respect to the combined financial statements of Channel Equipment
Holding, Inc., (vii) our report dated April 22, 1998, with respect to the
financial statements of ASC Equipment Company, Inc. and (viii) our report dated
July 17, 1998, with respect to the combined financial statements of Adco
Equipment, Inc. included in the Company's Current Report on Form 8-K dated
December 24, 1998, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
MetroPark, New Jersey
January 22, 1999
<PAGE>
Exhibit 23(e)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 (Amendment No. 2)
of United Rentals, Inc. of our report dated November 17, 1998 relating to the
financial statements of United Rentals, Inc. and of our report dated January 28,
1998 relating to the financial statements of U.S. Rentals, Inc., which appear in
such Prospectus. We also consent to the references to us under the heading
"Experts" in such Prospectus.
PRICEWATERHOUSECOOPERS LLP
Sacramento, California
January 22, 1999
<PAGE>
Exhibit 23(f)
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
A & A Tool Rentals & Sales, Inc.:
We consent to the incorporation by reference in the Registration Statement
(No. 333-64463) on Form S-3 of United Rentals, Inc. of our report dated November
20, 1997, with respect to the consolidated balance sheets of A & A Tool Rentals
& Sales, Inc. and subsidiary as of October 19, 1997 and October 31, 1996, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for the period from November 1, 1996 to October 19, 1997 and for the
years ended October 31, 1996 and 1995, which report appears in the Form 8-K of
United Rentals, Inc. dated December 24, 1998. We also consent to the reference
to our firm under the heading "Experts" in the Registration Statement.
KPMG LLP
Sacramento, California
January 22, 1999
<PAGE>
Exhibit 23(g)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement on Amendment No. 2 on Form S-3 (No. 333-64463) and
the related Prospectus of United Rentals, Inc. (the "Company"), and to the
incorporation by reference therein of our report dated January 21, 1998 with
respect to the financial statements of MERCER Equipment Company, included in the
Company's Report on Form 8-K dated December 24, 1998.
Webster Duke & Co. PA
January 22, 1999
<PAGE>
Exhibit 23(h)
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., appearing in the United Rentals, Inc.
Report on Form 8-K dated December 24, 1998, which are incorporated by reference
in this Registration Statement on Form S-3. We consent to the incorporation
by reference in the Registration Statement and Prospectus of the aforementioned
report and to the use of our name as it appears under the caption "Experts."
Grant Thorton LLP
San Jose, California
January 22, 1999
<PAGE>
Exhibit 23(i)
CONSENT OF INDEPENDENT AUDITORS
BOARD OF DIRECTORS
THE BNR GROUP OF COMPANIES:
We consent to the incorporation by reference in the Registration Statement
(No. 333-64463) on Form S-3 of United Rentals, Inc. of our report dated
February 3, 1998, with respect to the combined financial statements of BNR Group
of Companies as of March 31, 1997 and 1996 and for the years ended March 31,
1997 and 1996 which report appears in the Form 8-K/A of United Rentals, Inc.
dated February 4, 1998. We also consent to the reference to our firm under the
heading "Experts" in the Registration Statement.
KPMG LLP
Waterloo, Canada
January 22, 1999
<PAGE>
Exhibit 23(j)
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' CONSENT
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 2 to the Registration Statement on Form S-3 (No. 333-64463) and the related
Prospectus of United Rentals, Inc. (the Company), and to the incorporation by
reference therein of our report dated January 22, 1998 with respect to the
financial statements of Access Rentals, Inc., and Subsidiary and Affiliate,
included in the Company's Report on Form 8-K/A dated February 4, 1998.
Battaglia, Andrews & Moag, P.C.
Batavia, New York
January 22, 1999
<PAGE>
Exhibit 23(k)
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of Amendment No. 2 (Registration No. 333-64463) of this
Registration Statement of United Rentals, Inc., (the "Company") on Form S-3, of
our report dated April 22, 1998, relating to the financial statements of West
Main Rentals and Sales, Incorporated, which appear in the Company's Report on
Form 8-K dated December 24, 1998. We also consent to the reference to our Firm
under the heading "Experts" in the Prospectus.
Moss Adams LLP
Eugene, Oregon
January 21, 1999
<PAGE>
Exhibit 23(l)
CONSENT OF INDEPENDENT AUDITORS
Equipment Supply Co., Inc. and Affiliates
Burlington, New Jersey
We hereby consent to the incorporation by reference in the Prospectus
constituting part of Amendment No. 2 (Registration No. 333-64463) of this
Registration Statement of United Rentals, Inc., (the "Company") on Form S-3,
of our report dated June 19, 1998, except for Notes 9 and 15 which are as of
July 10, 1998, relating to the combined financial statements of Equipment Supply
Co., Inc. and Affiliates, which appear in the Company's Reports on Form 8-K
dated July 21, 1998 and December 24, 1998. We also consent to the reference to
us under the caption "Experts" in the Prospectus.
BDO Seidman LLP
Philadelphia, Pennsylvania
January 21, 1999
<PAGE>
Exhibit 23(m)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 (No. 333-64463) of
United Rentals, Inc. and United Rentals Trust I of our reports dated March 6,
1998 and October 28, 1998, on our audits of the financial statements of McClinch
Equipment Services, Inc. as of December 31, 1997 and August 31, 1998 and for the
year ended December 31, 1997 and of our reports dated March 25, 1998 and October
28, 1998 on our audits of the consolidated financial statements of McClinch,
Inc. and Subsidiaries as of January 31, 1998 and August 31, 1998 and for the
year ended January 31, 1998. We also consent to the reference to our firm under
the caption "Experts".
PricewaterhouseCoopers LLP
Stamford, Connecticut
January 22, 1999
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EXHIBIT 23(n)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Amendment No. 2 on Form S-3 to Registration Statement (No. 333-64463) of
United Rentals, Inc. and to the incorporation by reference therein of our report
dated March 12, 1998, except for Note 8 as to which the date is July 28, 1998,
with respect to the financial statements of Lift Systems, Inc.
Altschuler, Melvoin and Glasser LLP
Chicago, Illinois
January 22, 1999
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EXHIBIT 23(o)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-3 (No. 333-64463) of United Rentals, Inc. of
our report dated July 27, 1998 relating to the financial statements of Reitzel
Rentals Ltd. which appears in such Prospectus. We also consent to the reference
to us under the heading "Experts" in such Prospectus.
PricewaterhouseCoopers LLP
Kitchener, Ontario
January 22, 1999
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EXHIBIT 23(p)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 (No. 333-64463) and the related Prospectus
of United Rentals, Inc. (the "Company"), and to the incorporation by reference
therein of our report dated July 23, 1998 with respect to the combined financial
statements of Grand Valley Equipment Co., Inc. and Kubota of Grand Rapids, Inc.,
included in the Company's Report on Form 8-K dated December 24, 1998.
Beene Garter LLP
January 22, 1999
Grand Rapids, Michigan
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EXHIBIT 23(q)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement on Form S-3 (No. 333-64463) Amendment No. 2 and the
related Prospectus of United Rentals, Inc. (the "Company"), and to the
incorporation by reference therein of our report dated April 21, 1998 with
respect to the financial statements of Paul E. Carlson, Inc. (d/b/a Carlson
Equipment Company), included in the Company's Report on Form 8-K dated December
24, 1998.
McGladrey & Pullen LLP
January 22, 1999
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EXHIBIT 23(r)
INDEPENDENT AUDITOR'S CONSENT
We consent to the reference to our firm under the caption "Experts" in
this Amendment No. 2 to Registration Statement Number 333-64463 on Form S-3 to
Form S-1 and the related Prospectus of United Rentals, Inc. (the "Company") and
to the incorporation by reference therein of our report dated February 26, 1998
with respect to the financial statements of Industrial Lift, Inc., included in
the Company's Report on Form 8-K dated December 24, 1998.
Schalleur & Surgent LLC
January 22, 1999
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EXHIBIT 23(s)
CONSENT OF INDEPENDENT AUDITORS
BOARD OF DIRECTORS
PERCO GROUP LTD
We consent to the incorporation by reference in the Amendment No. 2 to the
Registration Statement (No. 333-64463) on Form S-3 of United Rentals, Inc. of
our report dated February 2, 1998, except as to note 14 which is as of May 22,
1998, with respect to the consolidated financial statements of Perco Group Ltd
as of December 31, 1997 and for the year then ended which report appears in the
Form 8-K of United Rentals, Inc. dated December 24, 1998. We also consent to the
reference to our firm under the heading "Experts" in the Registration Statement.
KPMG LLP
Montreal, Canada
January 22, 1999
