UNITED RENTALS INC /DE, S-3/A, 1999-03-02

UNITED RENTALS INC /DE
S-3/A, 1999-03-02
EQUIPMENT RENTAL & LEASING, NEC

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<PAGE>

As Filed with the Securities and Exchange Commission on March 2, 1999
Registration No. 333-71775

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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------

AMENDMENT NO. 2
To
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
United Rentals, Inc.
(Exact Name of Registrant as Specified in Its Charter)

Delaware 06-1522496
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
--------------

Four Greenwich Office Park
Greenwich, Connecticut 06830
(203) 622-3131
(Address, including Zip Code, and Telephone
Number, Including Area Code, of
Registrant's Principal Executive Offices)

Bradley S. Jacobs
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)

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

A copy of all communications, including communications
sent to the agent for service, should be sent to:

Joseph Ehrenreich, Stephen M. Besen, Esq. Vincent Pisano, Esq.
Esq. Weil, Gotshal & Manges LLP Skadden, Arps, Slate,
Ehrenreich Eilenberg 767 Fifth Avenue Meagher & Flom LLP
Krause New York, NY 10153 919 Third Avenue
& Zivian LLP (212) 310-8000 New York, NY 10022
11 East 44th Street (212) 735-3000
New York, NY 10017 --------------
(212) 986-9700

Approximate date of commencement of proposed sale to the public: As soon as
practicable 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, 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. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]

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

The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this preliminary prospectus is not complete and may be +
+changed. These securities may not be sold until the registration statement +
+filed with the Securities and Exchange Commission is effective. This +
+preliminary prospectus is not an offer to sell nor does it seek an offer to +
+buy these securities in any jurisdiction where the offer or sale is not +
+permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Subject to Completion. Dated March 1, 1999.

8,000,000 Shares

[LOGO] United Rentals

Common Stock

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

This is an offering of shares of common stock of United Rentals, Inc. This
prospectus relates to an offering of 6,400,000 shares in the United States. In
addition, 1,600,000 shares are being offered outside the United States in an
international offering.

United Rentals is offering 2,290,000 of the shares to be sold in the
offering. The selling stockholder identified in this prospectus is offering an
additional 5,710,000 shares. United Rentals will not receive any of the
proceeds from the sale of shares being sold by the selling stockholder.

United Rentals' common stock is traded on the New York Stock Exchange under
the symbol "URI". The last reported sale price of the common stock on February
26, 1999 was $32.1875 per share.

See "Risk Factors" beginning on page 13 to read about certain factors you
should consider before buying shares of the common stock.

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

Neither the Securities and Exchange Commission nor any other regulatory body
has approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.

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<TABLE>
<CAPTION>
Per Share Total
--------- -----
<S> <C> <C>
Initial public offering price................................... $ $
Underwriting discount........................................... $ $
Proceeds, before expenses, to United Rentals.................... $ $
Proceeds, before expenses, to the selling stockholder........... $ $
</TABLE>

The U.S. underwriters may, under certain circumstances, purchase up to an
additional 960,000 shares from United Rentals at the initial public offering
price less the underwriting discount. The international underwriters may
similarly purchase up to an aggregate of an additional 240,000 shares.

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

The underwriters expect to deliver the shares against payment in New York,
New York on , 1999.

Goldman, Sachs & Co. Donaldson, Lufkin & Jenrette
------------

Prospectus dated , 1999.
<PAGE>

MAP SHOWING LOCATIONS IN THE U.S. AND CANADA
<PAGE>

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in, or incorporated by reference in, this
prospectus are forward-looking in nature. Such statements can be identified by
the use of forward-looking terminology such as "believes," "expects," "may,"
"will," "should," or "anticipates" or the negative thereof or comparable
terminology, or by discussions of strategy. You are cautioned that our business
and operations are subject to a variety of risks and uncertainties and,
consequently, our actual results may materially differ from those projected by
any forward-looking statements. Certain of such risks and uncertainties are
discussed below under "Risk Factors." We make no commitment to revise or update
any forward-looking statements in order to reflect events or circumstances
after the date any such statement is made.

WHERE YOU CAN FIND MORE INFORMATION

We file reports, proxy statements, and other information with the SEC. Such
reports, proxy statements, and other information can be read and copied at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the Public
Reference Room. The SEC maintains an internet site at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC, including our company.

INCORPORATION BY REFERENCE

The SEC allows us to "incorporate by reference" the documents that we file
with the SEC. This means that we can disclose important information to you by
referring you to those documents. Any information we incorporate in this manner
is considered part of this prospectus. Any information we file with the SEC
after the date of this prospectus and until this offering is completed will
automatically update and supersede the information contained in this
prospectus.

We incorporate by reference the following documents that we have filed with
the SEC and any filings that we will make with the SEC in the future under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
this offering is completed:

. Annual Report on Form 10-K for the year ended December 31, 1997;

. 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 (only Item 2);

. Current Report on Form 8-K dated December 24, 1998 (only the financial
statements included therein that are identified under the caption
"Experts" in this prospectus);

. Current Report on Form 8-K dated February 17, 1999; and

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. Registration Statement on Form 8-A dated November 27, 1997 (filed on
December 3, 1997) and Registration Statement on Form 8-A dated August
6, 1998.

We will provide without charge, upon written or oral request, a copy of any
or all of the documents which are incorporated by reference into this
prospectus. Requests should be directed to: United Rentals, Inc., Attention:
Corporate Secretary, Four Greenwich Office Park, Greenwich, Connecticut 06830,
telephone number: (203) 622-3131.

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PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information and the financial statements and related notes that are included
elsewhere in this prospectus and in the documents that we incorporate by
reference into this prospectus. In this prospectus, reference to "dollars" and
"$" are United States dollars.

United Rentals

United Rentals is the largest equipment rental company in North America
with 440 branch locations in 39 states, Canada and Mexico. We offer for rent
over 600 different types of equipment on a daily, weekly or monthly basis and
serve customers that include construction industry participants, industrial
companies and homeowners. We also sell used rental equipment, act as a dealer
for many types of new equipment, and sell related merchandise and parts. In the
past year, we have served over 900,000 customers.

We have one of the most comprehensive and newest equipment rental fleets in
the industry. The types of rental equipment that we offer include a broad range
of light to heavy construction and industrial equipment, such as backhoes,
aerial lifts, skid-steer loaders, forklifts, compressors, pumps and generators,
as well as a variety of smaller tools and equipment. Our equipment fleet has an
original purchase price of approximately $2.2 billion and a weighted average
age of approximately 26 months (based on original purchase price).

We began operations in October 1997 and have grown through a combination of
internal growth and the acquisition of 101 companies (through February 26,
1999). Our acquisitions include our merger with U.S. Rentals in September 1998.
At the time of the merger, U.S. Rentals was the second largest equipment rental
company in the United States based on 1997 rental revenues.

Our principal executive offices are located at Four Greenwich Office Park,
Greenwich, Connecticut 06830, and our telephone number is (203) 622-3131.

Competitive Advantages

We believe that we benefit from the following competitive advantages:

Full Range of Rental Equipment. We have one of the largest and most
comprehensive equipment rental fleets in the industry, which enables us to:

. attract customers by providing the benefit of "one-stop" shopping;

. serve a diverse customer base, which reduces our dependence on any
particular customer or group of customers;

. serve large customers that require assurance that substantial
quantities of different types of equipment will be available as
required on a continuing basis; and

. minimize lost sales due to equipment being unavailable.

Operating Efficiencies. We generally group our branches into clusters of 10
to 30 locations that are in the same area. Our management information system
enables each branch to track equipment at any other branch and to access all
available equipment within a cluster. We believe that our cluster strategy
produces significant operating efficiencies by enabling us to:

. market the equipment within a cluster through multiple branches, rather
than a single branch, which increases our equipment utilization rate;

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. cross-market the equipment specialties of different branches within
each cluster, which increases revenues without increasing marketing
expenses; and

. reduce costs by centralizing common functions such as payroll, credit
and collection, and certain equipment delivery.

Significant Purchasing Power. We have significant purchasing power because
of our volume purchases. As a result, we can generally buy new equipment and
related merchandise and parts at prices that are significantly lower than
prices paid by smaller companies. We can also buy many other products and
services--such as insurance, telephone and fuel--at attractive rates.

Management Information System. We have a modern management information
system which facilitates rapid and informed decision-making and enables us to
respond quickly to changing market conditions. The system provides management
with a wide range of real time operating and financial data, including reports
on inventory, receivables, customers, vendors, fleet utilization and price and
sales trends. The system also enables branch personnel to search for needed
equipment throughout a geographic region, determine its closest location and
arrange for delivery to a customer's work site. The system includes software
developed by our Wynne Systems subsidiary, which is the leading provider of
proprietary software for use by equipment rental companies in managing and
operating multiple branch locations. We have an in-house staff of 32 management
information specialists that supports our management information system and
extends it to new locations.

Customer Diversity. Our customer base is highly diversified and ranges from
Fortune 100 companies to small contractors and homeowners. We estimate that our
top ten customers accounted for approximately 4% of our pro forma revenues
during 1998.

Geographic Diversity. We have branches in 39 states, Canada and Mexico. We
believe that our geographic diversity should reduce the impact that
fluctuations in regional economic conditions have on our overall financial
performance. Our geographic diversity and large network of branch locations
also give us the ability to serve national accounts and access used equipment
re-sale markets across the country.

Experienced Senior Management. Our senior management combines executives
who have extensive operating experience in the equipment rental industry with
executives who have proven track records in other industries. Our senior
management includes former officers of United Waste Systems, Inc., which was a
publicly-traded solid waste management company that successfully executed a
growth strategy combining a disciplined acquisition program, the integration
and optimization of acquired facilities, and internal growth. Our senior
management also includes former executives of U.S. Rentals who have extensive
experience in the equipment rental industry.

Strong and Motivated Branch Management. Each of our branches has a full-
time branch manager who is supervised by one of our 35 district managers and
eight regional vice presidents. We believe that our branch and district
managers, who average over 20 years of experience in the equipment rental
industry, are among the most knowledgeable and experienced in the industry. We
encourage entrepreneurship at the branch level by giving branch managers a high
degree of autonomy relating to day-to-day operations. For example, each branch
manager is empowered to make decisions--within budgetary guidelines--concerning
staffing, pricing and equipment purchasing. We also promote entrepreneurship at
the branch level, as well as equipment sharing among branches, through our
profit sharing program which directly ties the compensation of branch personnel
to their branch's financial performance and equipment utilization rates. We
balance the autonomy that we grant branch managers with systems through which
senior management closely tracks branch performance. We also share information
across branches so that each branch can

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measure its operating performance relative to other branches and benefit from
the best practices developed throughout our organization.

Professional Acquisition Team. Our 25-person acquisition team works full-
time on identifying and evaluating acquisition candidates and executing our
acquisition program. The core of this group consists of seasoned acquisition
professionals--most of whom were members of the acquisition team at United
Waste Systems, where they completed over 200 acquisitions. The team also
includes former owners of businesses that we acquired, who have extensive
industry experience and contacts with potential acquisition candidates.

Growth Strategy

Our plan for future growth includes the following key elements:

Continue Strong Internal Growth. We are seeking to sustain our strong
internal growth by:

. expanding and modernizing our equipment fleet;

. increasing the cross-marketing of our equipment specialties at different
locations;

. increasing our advertising--which becomes increasingly cost-effective as
we grow because the benefit is spread over a larger number of branches;

. expanding our national accounts program--which dedicates a portion of
our sales force to establishing and expanding relationships with large
customers that have a national or multi-regional presence; and

. increasing our rentals to industrial companies by developing a
comprehensive marketing program specifically aimed at this sector.

Execute Disciplined Acquisition Program. We intend to continue our
disciplined acquisition program. We generally seek to acquire multiple
locations within the regions that we enter, with the goal of creating clusters
of locations that can share various resources, including equipment, marketing
resources, back office functions and certain equipment delivery. We are
seeking to acquire companies of varying sizes, including relatively large
companies to serve as platforms for new regional clusters and smaller
companies to complement existing or anticipated locations. In considering
whether to buy a company, we evaluate a number of factors, including purchase
price, anticipated impact on earnings, the quality of the target's rental
equipment and management, the opportunities to improve operating margins and
increase internal growth at the target, the economic prospects of the region
in which the target is located, the potential for additional acquisitions in
the region, and the competitive landscape in the target's markets.

Open New Rental Locations. Because most of the businesses that we acquired
grew through developing start-up rental locations, many of our managers have
substantial experience in this area. We intend to leverage this experience by
selectively opening new rental locations in attractive markets where there are
no suitable acquisition targets available or where the economics of a start-up
location are more attractive than buying an existing business.

Increase Cost Savings. We work to reduce costs by efficiently integrating
new and existing operations, eliminating duplicative costs, centralizing
common functions, consolidating locations that serve the same areas, and using
our purchasing power to negotiate discounts from suppliers.

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Continue to Emphasize Management Systems and Controls. We intend to further
strengthen our management systems and controls, which currently include:

. a 12-person internal audit department that is responsible for ensuring
that we have adequate financial, operating, and management information
controls throughout our organization;

. a team of 6 regional controllers and 17 district controllers that
monitors each branch for compliance with financial and accounting
procedures established at corporate headquarters; and

. a 25-person risk management and safety department that is responsible
for: (1) developing and implementing safety programs and procedures,
(2) developing our customer and employee training programs and (3)
investigating and managing any claims that may be asserted against us.

Industry Background

Industry Size and Growth

We estimate that the U.S. equipment rental industry (including used and new
equipment sales by rental companies) generates annual revenues in excess of $20
billion. The combined equipment rental revenues of the 100 largest equipment
rental companies have increased at an estimated compound annual rate of
approximately 23% from 1992 through 1997 (based upon 1992 revenues and 1997 pro
forma revenues, giving effect to certain acquisitions completed after the
beginning of 1997, reported by the Rental Equipment Register, an industry trade
publication). In addition to reflecting general economic growth, we believe
that the growth in the equipment rental industry reflects the following trends:

Recognition of Advantages of Renting. Equipment users are increasingly
recognizing the many advantages that equipment rental may offer compared
with ownership. They recognize that by renting they can: (1) avoid the
large capital investment required for equipment purchases, (2) reduce
storage and maintenance costs, (3) supplement the equipment that they own
and thereby increase the range and number of jobs that they can work on,
(4) access a broad selection of equipment and select the equipment best
suited for each particular job, (5) obtain equipment as needed and minimize
the costs associated with idle equipment, and (6) access the latest
technology without investing in new equipment. These advantages frequently
allow equipment users to reduce their overall costs by renting, rather than
buying, the equipment they need.

Increase in Rentals by Contractors. There has been a fundamental shift
in the way contractors meet their equipment needs. While contractors have
historically used rental equipment on a temporary basis--to provide for
peak period capacity, meet specific job requirements or replace broken
equipment--many contractors are now also using rental equipment on an
ongoing basis to meet their long-term equipment requirements.

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companies to rent equipment. We also believe that these same considerations may
lead other equipment users--such as municipalities, government agencies and
utilities--to increasingly rent equipment. Because the penetration of these
markets by the equipment rental industry is very low in comparison to its
penetration of the construction market, we believe there is significant
potential for additional growth in these markets.

Industry Fragmentation

The equipment rental industry is highly fragmented. It consists of a small
number of multi-location regional or national operators and a large number of
relatively small, independent businesses that serve discrete local markets.
This fragmentation is reflected in the following data:

. in 1997, there were only 10 equipment rental companies that had
equipment rental revenues in excess of $100 million and approximately
100 equipment rental companies that had equipment rental revenues
between $5 million and $100 million (based upon rental revenues for
1997 as reported by the Rental Equipment Register, an industry trade
publication);

. we estimate that there are more than 20,000 companies with annual
equipment rental revenues of less than $5 million; and

. we estimate that the 100 largest equipment rental companies combined
have less than a 30% share of the market.

We believe that the fragmented nature of the industry presents substantial
consolidation and growth opportunities for companies with access to capital and
the ability to implement a disciplined acquisition program. We also believe
that our management team's extensive experience in acquiring and effectively
integrating acquisition targets should enable us to capitalize on these
opportunities.

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The Offering

The following information assumes that the underwriters do not exercise the
option they have been granted to purchase additional shares as described under
"Underwriting."

<TABLE>
<S> <C>
Shares offered by United Rentals... 2,290,000 shares
Shares offered by the selling
stockholder....................... 5,710,000 shares
Shares to be outstanding after the
offering.......................... 70,736,806 shares(1)
New York Stock Exchange Symbol..... URI
Use of Proceeds by United Rentals.. We will use the net proceeds of this
offering to repay a portion of the
approximately $77.5 million of outstanding
indebtedness under our revolving credit
facility. We may reborrow amounts that we
repay under our credit facility. We will
not receive any of the proceeds from the
sale of shares being sold by the selling
stockholder.
</TABLE>
- --------

(1) Does not include (i) 6,539,329 shares issuable upon the exercise of
outstanding warrants, which provide for a weighted average exercise price
of $10.18 per share, (ii) 14,447,647 shares issuable upon the exercise of
outstanding options, which provide for a weighted average exercise price of
$19.93 per share, (iii) 150,365 shares issuable upon conversion of
outstanding convertible notes, which provide for a weighted average
conversion price of $32.45 per share, (iv) 12,000,000 shares issuable upon
conversion of outstanding preferred shares of United Rentals, which provide
for a conversion price of $25.00 per share, and (v) 6,875,580 shares
issuable upon conversion of outstanding preferred securities of a
subsidiary trust of United Rentals, which provide for a conversion price of
$43.63 per share.

Summary Historical and Unaudited Pro Forma Consolidated Financial Information

General

The table below presents selected historical and pro forma financial
information for our company. You should read this information together with (1)
the information set forth under "Use of Proceeds," "Capitalization," "Selected
Historical and Pro Forma Consolidated Financial Information" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations," (2)
the Consolidated Financial Statements and the related notes and Pro Forma
Consolidated Financial Statements and the related notes of our company included
elsewhere in this prospectus or incorporated by reference herein and (3) the
financial statements incorporated by reference herein of certain of the
companies that we acquired.

Accounting For Acquisitions

We commenced operations in October 1997 and have completed 101 acquisitions
(through February 26, 1999), including a merger with U.S. Rentals, Inc. which
was completed in September 1998. We accounted for three of these acquisitions
(including the U.S. Rentals merger) as "poolings-of-interests," which means
that for accounting and financial reporting purposes the acquired company is
treated as having been combined with us at all times since the inception of the
acquired company. Accordingly, we have restated our financial statements to
include the accounts of two of the companies acquired in these pooling-of-
interests transactions (but have not restated our financial statements for the
third transaction, which was not material and which has been combined with us
effective July 1, 1998). As a result of this restatement, our financial
statements include historical financial information for periods that precede
the date on which we commenced our own operations. (For additional information
concerning this restatement, see Note 3 to the Consolidated Financial
Statements of United Rentals included elsewhere herein.) We accounted for our
other 98 acquisitions as "purchases," which means that the results of
operations of the acquired company are included in our financial statements
only from the date of acquisition.

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Pro Forma Data

The table below includes the following pro forma data:

. pro forma income statement and other financial data--intended to show
for the period indicated what our business might have looked like had
each acquisition (other than any pooling-of-interests) completed after
the beginning of the period and any related acquisition financing been
completed on the first day of the period;

. pro forma balance sheet data--intended to show how certain balance sheet
data would have looked at December 31, 1998 had each acquisition
completed after such date and any related acquisition financing been
completed on December 31, 1998; and

. pro forma as adjusted balance sheet data--intended to show how certain
balance sheet data would have looked at December 31, 1998 had the
following transactions been completed on such date: (1) each acquisition
completed after such date and any related acquisition financing, (2) our
issuance of 300,000 shares of Series A Perpetual Convertible Preferred
Stock after such date and our use of the proceeds to repay indebtedness
and (3) the sale of the 2,290,000 shares of common stock offered by
United Rentals in this offering, at an assumed price of $32.19 per
share, and the use of a portion of the offering proceeds to repay
outstanding indebtedness under our credit facility.

We have provided the pro forma data for your information. However, this data
may not be indicative of (1) the actual results that we would have had during
any period if all acquisitions had been completed as of the beginning of the
period or (2) our future results.

<TABLE>
<CAPTION>
As of December 31, 1998
---------------------------------
Pro Forma
Historical Pro Forma As Adjusted
---------- ---------- -----------
(dollars in thousands)
<S> <C> <C> <C>
Balance sheet data:
Cash and cash equivalents.................... $ 20,410 $ 4,000 $ 9,288
Rental equipment, net........................ 1,143,006 1,169,500 1,169,500
Total assets................................. 2,634,663 2,692,592 2,697,880
Total debt................................... 1,314,574 1,365,442 1,013,969
Company-obligated mandatorily redeemable
convertible preferred securities of a
subsidiary trust............................ 300,000 300,000 300,000
Stockholders' equity......................... 726,230 726,230 1,082,991
</TABLE>

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- --------
(1) We recorded an extraordinary item (net of income taxes) of $1.5 million in
1997 and an extraordinary item (net of income taxes) of $21.3 million in
1998. Such charge in 1997 resulted from the prepayment of certain debt by
U.S. Rentals. Such charge in 1998 resulted from the early extinguishment of
certain debt and primarily reflected prepayment penalties on certain debt
of U.S. Rentals.
(2) U.S. Rentals was taxed as a Subchapter S Corporation until its initial
public offering in February 1997, and another company that we acquired was
taxed as a Subchapter S Corporation until being acquired. In general, the
income or loss of a Subchapter S Corporation is passed through to its
owners rather than being subjected to taxes at the entity level. Pro forma
provision for income taxes before extraordinary items and pro forma income
(loss) before extraordinary items reflect a provision for income taxes as
if all such companies were liable for federal and state income taxes as
taxable corporate entities for all periods presented.

(3) Our earnings during 1997 were impacted by $20.3 million of expenses
relating to the termination of certain deferred compensation expenses in
connection with U.S. Rentals' initial public offering, a $7.5 million
charge to recognize deferred tax liabilities of U.S. Rentals and an
extraordinary item (net of income taxes) of $1.5 million. Our earnings
during 1998 were impacted by merger-related expenses of $47.2 million
($33.2 million net of taxes), a $4.8 million charge to recognize deferred
tax liabilities of a company acquired in a pooling-of-interests transaction
and an extraordinary item (net of income taxes) of $21.3 million. Excluding
such amounts, (i) basic earnings per share for the years ended 1997 and
1998, and pro forma basic earnings per share for the year ended 1998 would
have been $0.70, $1.10 and $1.36, respectively, and (ii) diluted earnings
per share for the years ended 1997 and 1998 and pro forma diluted earnings
per share for the year ended 1998 would have been $0.66, $1.00 and $1.24,
respectively.

(4) EBITDA is defined as net income (excluding (i) non-operating income and
expense, (ii) a $20.3 million non-recurring charge incurred by U.S. Rentals
in 1997 arising from the termination of deferred compensation agreements
with certain executives and (iii) $47.2 million in merger-related expenses
in 1998 related to the three acquisitions accounted for as poolings-of-
interests, including the merger with U.S. Rentals) plus interest expense,
income taxes and depreciation and amortization. We have presented EBITDA
data to provide you with additional information concerning our ability to
meet our future debt service obligations and capital expenditure and
working capital requirements. However, EBITDA is not a measure of financial
performance under generally accepted accounting principles. Accordingly,
you should not consider EBITDA an alternative to net income or cash flows
as indicators of our operating performance or liquidity.
(5) EBITDA margin is defined as EBITDA as a percentage of revenues.

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RISK FACTORS

You should carefully consider the following factors and the other
information in this prospectus before making an investment decision.

Sensitivity to Changes in Construction and Industrial Activities

Our equipment is principally used in connection with construction and
industrial activities. Consequently, a downturn in construction or industrial
activity may lead to a decrease in demand for our equipment, which could
adversely affect our business. We have identified below certain of the factors
which may cause such a downturn, either temporarily or long-term:

. a general slow-down of the economy;

. an increase in interest rates; or

. adverse weather conditions which may temporarily affect a particular
region.

Acquired Companies Not Historically Operated as a Combined Business

The businesses that we acquired have been in existence an average of 29
years and some have been in existence for more than 50 years. However, these
businesses were not historically managed or operated as a single business.
Although we believe that we can successfully manage and operate the acquired
businesses as a single business, we cannot be certain of this.

Limited Operating History

We commenced equipment rental operations in October 1997 and have grown
through a combination of internal growth and the acquisition of 101 companies
(through February 26, 1999), including a merger in September 1998 with U.S.
Rentals. Due to the relatively recent commencement of our operations, we have
only a limited history upon which you can base an assessment of our business
and prospects.

Risks Relating to Growth Strategy

Key elements of our growth strategy are to continue to expand through a
combination of internal growth, a disciplined acquisition program and the
opening of new rental locations. We have identified below some of the risks
relating to our growth strategy:

Availability of Acquisition Targets and Sites for Start-Up Locations. We
may encounter substantial competition in our efforts to acquire additional
rental companies and sites for start-up locations. Such competition could have
the effect of increasing the prices that we will have to pay in order to
acquire such businesses and sites. We cannot guarantee that any additional
businesses or sites that we may wish to acquire will be available to us on
terms that are acceptable to us.

Need to Integrate New Operations. Our ability to realize the expected
benefits from completed and future acquisitions depends, in large part, on our
ability to integrate the new operations with our existing operations in a
timely and effective manner. Accordingly, we devote substantial efforts to the
integration of new operations. We cannot, however, guarantee that these efforts
will always be successful. In addition, under certain circumstances, these
efforts could adversely affect our existing operations.

Debt Covenants. Certain of the agreements governing our outstanding
indebtedness provide that we may not make acquisitions unless certain financial
conditions are satisfied or the consent of

13
<PAGE>

the lenders is obtained. Our ability to grow through acquisitions may be
constrained as a result of these provisions.

Certain Risks Related to Start-Up Locations. We expect that start-up
locations may initially have a negative impact on our results of operations and
margins for a number of reasons, including that (1) we will incur significant
start-up expenses in connection with establishing each start-up location and
(2) it will generally take some time following the commencement of operations
for a start-up location to become profitable. Although we believe that start-
ups can generate long-term growth, we cannot guarantee that any start-up
location will become profitable within any specific time period, if at all.

Dependence on Additional Capital to Finance Growth

We will require substantial capital in order to execute our growth
strategy. We will require capital for, among other purposes, completing
acquisitions, establishing new rental locations, and acquiring rental
equipment. If the cash that we generate from our business, together with cash
that we may borrow under our credit facility, is not sufficient to fund our
capital requirements, we will require additional debt and/or equity financing.
We cannot, however, be certain that any additional financing will be available
or, if available, will be available on terms that are satisfactory to us. If we
are unable to obtain sufficient additional capital in the future, our ability
to implement our growth strategy could be limited.

Possible Undiscovered Liabilities of Acquired Companies

Prior to making an acquisition, we seek to assess the liabilities of the
target company that we will become responsible for as a result of the
acquisition. Nevertheless, we may fail to discover certain of such liabilities.
We seek to reduce our risk relating to these possible hidden liabilities by
generally obtaining the agreement of the seller to reimburse us in the event
that we discover any material hidden liabilities. However, this type of
agreement, if obtained, may not fully protect us against hidden liabilities
because (1) the seller's obligation to reimburse us is generally limited in
duration and/or amount and (2) the seller may not have sufficient financial
resources to reimburse us. Furthermore, when we acquire a public company (such
as when we acquired U.S. Rentals) there is no seller from which to obtain this
type of agreement.

Dependence on Management

We are highly dependent upon our senior management team. Consequently, our
business could be adversely affected in the event that we lose the services of
any member of senior management. Furthermore, if we lose the services of
certain members of senior management, it is an event of default under the
agreements governing our credit facility and certain of our other indebtedness,
unless we appoint replacement officers satisfactory to the lenders within 30
days. We do not maintain "key man" life insurance with respect to members of
senior management.

Competition

The equipment rental industry is highly fragmented and competitive. Our
competitors primarily include small, independent businesses with one or two
rental locations; regional competitors which operate in one or more states;
public companies or divisions of public companies; and equipment vendors and
dealers who both sell and rent equipment directly to customers. We may in the
future encounter increased competition from our existing competitors or from
new companies. In addition, certain equipment manufacturers may commence (or
increase their existing efforts relating to) renting and selling equipment
directly to our customers.

14
<PAGE>

Quarterly Fluctuations of Operating Results

We expect that our revenues and operating results may fluctuate from
quarter to quarter due to a number of factors, including:

. seasonal rental patterns of our customers--with rental activity
tending to be lower in the winter;

. changes in general economic conditions in our markets, including
changes in construction and industrial activities;

. the timing of acquisitions, new location openings, and related
expenditures;

. the effect of the integration of acquired businesses and start-up
locations;

. the timing of expenditures for new equipment and the disposition of
used equipment; and

. price changes in response to competitive factors.

Liability and Insurance

We are exposed to various possible claims relating to our business. These
include claims relating to (1) personal injury or death caused by equipment
rented or sold by us, (2) motor vehicle accidents involving our delivery and
service personnel and (3) employment related claims. We carry a broad range of
insurance for the protection of our assets and operations. However, such
insurance may not fully protect us for a number of reasons, including:

. our coverage is subject to a deductible of $0.5 million and limited to
a maximum of $97 million per occurrence;

. we do not maintain coverage for environmental liability, since we
believe that the cost for such coverage is high relative to the
benefit that it provides; and

. certain types of claims, such as claims for punitive damages or for
damages arising from intentional misconduct, which are often alleged
in third party lawsuits, might not be covered by our insurance.

We cannot be certain that insurance will continue to be available to us on
economically reasonable terms, if at all.

Environmental and Safety Regulations

There are numerous federal, state and local laws and regulations governing
environmental protection and occupational health and safety matters. These
include laws and regulations that govern wastewater discharges, the use,
treatment, storage and disposal of solid and hazardous wastes and materials,
air quality and the remediation of contamination associated with the release of
hazardous substances. Under these laws, an owner or lessee of real estate may
be liable for, among other things, (1) the costs of removal or remediation of
hazardous or toxic substances located on, in, or emanating from, the real
estate, as well as related costs of investigation and property damage and
substantial penalties, and (2) environmental contamination at facilities where
its waste is or has been disposed. These laws often impose liability whether or
not the owner or lessee knew of the presence of the hazardous or toxic
substances and whether or not the owner or lessee was responsible for these
substances. Our activities that are or may be affected by these laws include
our use of hazardous materials to clean and maintain equipment and our disposal
of solid and hazardous waste and wastewater from equipment washing. We also
dispense petroleum products from underground and above-ground storage tanks
located at certain rental locations, and at times we must remove or upgrade
tanks to comply with applicable laws. Furthermore, we have acquired or lease
certain locations which have or may have been contaminated by leakage from
underground tanks or other

15
<PAGE>

sources and are in the process of assessing the nature of the required
remediation. Based on the conditions currently known to us, we believe that any
unreserved environmental remediation and compliance costs required with respect
to those conditions will not have a material adverse effect on our business.
However, we cannot be certain that we will not identify adverse environmental
conditions that are not currently known to us, that all potential releases from
underground storage tanks removed in the past have been identified, or that
environmental and safety requirements will not become more stringent or be
interpreted and applied more stringently in the future. If we are required to
incur environmental compliance or remediation costs that are not currently
anticipated by us, our business could be adversely affected depending on the
magnitude of the cost.

Concentrated Control

Following the offering described in this prospectus, the executive officers
and directors of our company will continue to own in the aggregate
approximately 46.4% of our common stock giving effect to the exercise of all
currently exercisable options and warrants (49.6% on a pro forma basis giving
effect to the exercise of all outstanding options and warrants). Such share
ownership may effectively give these persons the power to elect all of the
directors of our company (other than the two directors that are elected
directly by the holders of our outstanding preferred stock as described under
"Management--Right of Holders of Preferred Stock to Elect Directors").

Risks Related to International Operations

Our operations outside the United States are subject to risks normally
associated with international operations. These include the need to convert
currencies, which could result in a gain or loss depending on fluctuations in
exchange rates, and the need to comply with foreign laws.

Year 2000 Issues

Our software vendors have informed us that our recently-installed
management information system is year 2000 compliant. We have, therefore, not
developed any contingency plans relating to year 2000 issues and have not
budgeted any funds for year 2000 issues. Although we believe that our system is
year 2000 compliant, unanticipated year 2000 problems may arise which,
depending on the nature and magnitude of the problem, could adversely affect
our business. Furthermore, year 2000 problems involving third parties may have
a negative impact on our customers or suppliers, the general economy or on the
ability of businesses generally to receive essential services (such as
telecommunications, banking services, etc.). Any such problem could adversely
affect our business. We are unable at this time to assess the possible impact
on our business of year 2000 problems involving any third party.

Absence of Dividends

We have never paid any dividends on our common stock and have no plans to
pay any such dividends in the foreseeable future. Certain of the agreements
governing our outstanding indebtedness prohibit us from paying dividends on our
common stock or restrict our ability to pay such dividends. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Certain Information Concerning the Credit Facility and Certain Indebtedness."

Restrictive Covenants

The agreements governing our existing long-term indebtedness contain, and
future agreements governing our long-term indebtedness may also contain,
certain restrictive financial and operating covenants which affect, and in many
respects significantly limit or prohibit, among other things, our ability to
incur indebtedness, make prepayments of certain indebtedness, make investments,
create liens, make acquisitions, sell assets and engage in mergers and
consolidations. These covenants may significantly limit our operating and
financial flexibility.

16
<PAGE>

Shares Eligible For Future Sale

If our stockholders sell substantial amounts of our common stock (including
shares issued upon exercise of warrants, options or convertible securities),
the market price of our common stock could fall. Subject to certain lock-up
agreements to be entered into by the selling stockholder and by our officers
and directors in connection with the offering (as described under
"Underwriting"), substantially all of the outstanding shares of our common
stock may be sold in the public market.

Anti-takeover Provisions

Certain provisions of our Certificate of Incorporation and By-laws, as well
as applicable Delaware law, could make it more difficult for a third party to
acquire our company. These provisions provide, among other things, that:

. the directors of our company (other than directors elected by the
holders of our outstanding preferred stock) are divided into three
classes, with directors of each class serving for a staggered three-
year period;

. 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;

. stockholders may not act by written consent;

. stockholder nominations and proposals may only be made if specified
advance notice requirements are complied with;

. stockholders are precluded from calling a special meeting of
stockholders; and

. the Board of Directors has the authority to issue shares of preferred
stock in one or more series and to fix the powers, preferences and
rights of any such series without stockholder approval.

See "Certain Charter and By-law Provisions."

CORPORATE INFORMATION

United Rentals, Inc. ("Holdings") is principally a holding company and
principally conducts its operations through its wholly owned subsidiary, United
Rentals (North America), Inc. ("URI"), and subsidiaries of URI. URI was
incorporated in August 1997, initially capitalized in September 1997 and
commenced equipment rental operations in October 1997. Holdings was
incorporated in July 1998 and became the parent company of URI on August 5,
1998, in connection with a reorganization of URI's corporate structure that was
effected in order to facilitate certain financings. As part of such
reorganization, the outstanding common stock of URI was converted, on a share
for share basis, into common stock of Holdings and the common stock of Holdings
commenced trading on the New York Stock Exchange instead of the common stock of
URI. Prior to such reorganization, the name of United Rentals (North America),
Inc. was United Rentals, Inc. Unless otherwise indicated or the context
otherwise clearly requires, (i) the terms "United Rentals" and the "Company"
refer collectively to URI and its subsidiaries, with respect to periods prior
to such reorganization, and to Holdings and its subsidiaries, with respect to
periods thereafter, and (ii) the term "Common Stock" refers to the common stock
of URI, with respect to periods prior to such reorganization, and to the common
stock of Holdings, with respect to periods thereafter.

17
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,290,000 shares of
common stock being offered by the Company are estimated to be $69.8 million
($106.8 million, if the underwriters' over-allotment option is exercised in
full), based on an assumed public offering price of $32.19 per share, after
deducting the estimated underwriting discount and offering expenses payable by
the Company. The Company expects to use the net proceeds of this offering to
repay a portion of the approximately $77.5 million of outstanding indebtedness
under our revolving credit facility (the "Credit Facility"). The repayment of
outstanding indebtedness under the Credit Facility from the proceeds of the
offering will give the Company additional flexibility to reborrow funds under
the Credit Facility for future acquisitions, capital expenditures and general
corporate purposes. The Company will not receive any of the proceeds from the
sale of shares by the selling stockholder.

The Credit Facility enables URI to borrow up to $762.5 million on a
revolving basis and permits a Canadian subsidiary of URI (the "Canadian
Subsidiary") to directly borrow up to $40 million under the Credit Facility
(provided that the aggregate borrowings of URI and the Canadian Subsidiary do
not exceed $762.5 million). Up to $25 million of the Credit Facility is
available in the form of letters of credit. The agreement governing the Credit
Facility requires that the aggregate commitment shall be reduced on the last
day of each calendar quarter, beginning September 30, 2001 and continuing
through June 30, 2003, by an amount equal to $19.1 million. The Credit Facility
terminates on September 26, 2003, at which time all outstanding indebtedness is
due.

Borrowings by URI under the Credit Facility accrue interest at URI's
option, at either (a) the Base Rate (which is equal to the greater of (i) the
Federal Funds Rate plus 0.5% or (ii) Bank of America's reference rate) or (b)
the Eurodollar Rate (which for borrowings by URI is equal to Bank of America's
reserve adjusted eurodollar rate) plus a margin ranging from 0.825% to 1.500%
per annum. Borrowings by the Canadian Subsidiary under the Credit Facility
accrue interest, at such subsidiary's option, at either (x) the Prime Rate
(which is equal to Bank of America Canada's prime rate), (y) the BA Rate (which
is equal to Bank of America Canada's BA Rate) plus a margin ranging from 0.825%
to 1.500% per annum or (z) the Eurodollar Rate (which for borrowing by the
Canadian Subsidiary is equal to Bank of America Canada's reserve adjusted
Eurodollar Rate) plus a margin ranging from 0.825% to 1.500% per annum. The
Company is also required to pay the banks an annual facility fee equal to
0.375% of the banks' $762.5 million aggregate lending commitment under the
Credit Facility (which fee may be reduced to 0.300% for periods during which
the Company maintains a specified funded debt to cash flow ratio). As of
February 26, 1999, the amount of indebtedness outstanding under the Credit
Facility was $77.5 million (not including undrawn outstanding letters of credit
in the amount of $1.4 million) and the weighted average interest rate on such
indebtedness was 6.1%. The proceeds from the outstanding indebtedness under the
Credit Facility have been used by the Company to fund acquisitions. See
"Business--Acquisitions." For additional information regarding the Credit
Facility, see "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Certain Information Concerning the Credit Facility and
Other Indebtedness."

18
<PAGE>

PRICE RANGE OF COMMON STOCK

The common stock commenced trading on the NYSE on December 18, 1997 under
the symbol "URI." The table below sets forth, for the periods indicated, the
high and low sales prices for the common stock, as reported on the NYSE
Composite Tape.

<TABLE>
<CAPTION>
High Low
------ ------
<S> <C> <C>
1997:
Fourth Quarter (from December 18, 1997)......................... $19.31 $14.38
1998:
First Quarter................................................... 27.38 17.25
Second Quarter.................................................. 42.00 24.13
Third Quarter................................................... 48.00 18.12
Fourth Quarter.................................................. 33.75 10.56
1999:
First Quarter (through February 26, 1999)....................... 35.69 29.13
</TABLE>

On February 26, 1999, the last reported sale price of the common stock as
reported on the NYSE Composite Tape was $32.19 per share. As of February 1,
1999, there were approximately 280 holders of record of the common stock. The
Company believes that the number of beneficial owners is substantially greater
than the number of record holders, because a large portion of the common stock
is held of record in broker "street names."

DIVIDEND POLICY

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

19
<PAGE>

CAPITALIZATION

The table below sets forth the capitalization of the Company as of December
31, 1998, on an historical and on a pro forma basis. This table should be read
in conjunction with the information set
forth under "Use of Proceeds," "Selected Historical and Pro Forma Consolidated
Financial Information" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
and related notes and the Pro Forma Consolidated Financial Statements and
related notes of the Company included elsewhere in this prospectus.

The following unaudited data as of December 31, 1998 under the column
heading "Pro Forma" gives effect to each acquisition completed by the Company
subsequent to such date and any related acquisition financing, as if all such
transactions had occurred on such date. The following unaudited data under the
column heading "Pro Forma As Adjusted" gives effect to the foregoing and to (1)
the Company's issuance of 300,000 shares of Series A Perpetual Convertible
Preferred Stock after such date and the use of the proceeds therefrom to repay
indebtedness and (2) the sale of the 2,290,000 shares of common stock offered
by the Company as described in this prospectus, at an assumed public offering
price of $32.19 per share, and the application of a portion of the proceeds
therefrom to repay indebtedness.

<TABLE>
<CAPTION>
As of December 31, 1998
-----------------------------------------
Pro Forma
Actual Pro Forma As Adjusted
---------- ---------- -----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents............ $ 20,410 $ 4,000 $ 9,288
========== ========== ==========
Debt (including current portion):
Credit Facility..................... $ 305,000 $ 351,473 $
Term Loan .......................... 250,000 250,000 250,000
9 1/2% Notes........................ 200,000 200,000 200,000
8.80% Notes......................... 200,153 200,153 200,153
9 1/4% Notes........................ 300,000 300,000 300,000
Other Debt.......................... 59,421 63,816 63,816
---------- ---------- ----------
Total debt........................ 1,314,574 1,365,442 1,013,969
Company-obligated mandatorily
redeemable convertible preferred
securities of a subsidiary trust.... 300,000 300,000 300,000
Stockholders' equity:
Preferred stock, $.01 par value,
5,000,000 shares authorized; no
shares issued and outstanding
actual and pro forma; 300,000
shares of Series A Perpetual
Convertible Preferred Stock
(liquidation preference--$300,000)
issued and outstanding pro forma
as adjusted........................ 3
Common stock, $.01 par value,
500,000,000 shares authorized;
68,427,999 shares issued and
outstanding actual; 68,427,999
shares issued and outstanding pro
forma; and 70,717,999 shares
issued and outstanding pro forma
as adjusted(1)(2).................. 684 684 707
Additional paid-in capital.......... 689,018 689,018 1,045,753
Retained earnings................... 36,528 36,528 36,528
---------- ---------- ----------
Total stockholders' equity........ 726,230 726,230 1,082,991
---------- ---------- ----------
Total capitalization................. $2,340,804 $2,391,672 $2,396,960
========== ========== ==========
</TABLE>
- --------

(1) The Company issued an aggregate of 2,069 shares of common stock subsequent
to December 31, 1998. These shares were not issued in connection with
acquisitions and are not reflected in shares outstanding pro forma or pro
forma as adjusted.

(2) Does not include (i) 6,539,329 shares issuable upon the exercise of
outstanding warrants, which provide for a weighted average exercise price
of $10.18 per share, (ii) 14,447,647 shares issuable upon the exercise of
outstanding options, which provide for a weighted average exercise price of
$19.93 per share, (iii) 150,365 shares issuable upon conversion of
outstanding convertible notes, which provide for a weighted average
conversion price of $32.45 per share, (iv) 12,000,000 shares issuable upon
conversion of outstanding preferred shares of United Rentals, which provide
for a conversion price of $25.00 per share, and (v) 6,875,580 shares
issuable upon conversion of outstanding preferred securities of a
subsidiary trust of United Rentals, which provide for a conversion price of
$43.63 per share.

20
<PAGE>

SELECTED HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The tables below present selected historical and pro forma financial
information for the Company. This information should be read together with (1)
the information set forth under "Use of Proceeds," "Capitalization," and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," (2) the Consolidated Financial Statements and the related notes
thereto and Pro Forma Consolidated Financial Statements and the related notes
thereto of the Company included elsewhere in this prospectus and (3) the
financial statements incorporated by reference in this prospectus of certain of
the companies that we acquired.

The balance sheet data presented below as of December 31, 1997 and 1998 and
the income statement data presented below for each of the years in the three-
year period ended December 31, 1998 are derived from the audited Consolidated
Financial Statements of the Company. Such financial statements are included
elsewhere in this prospectus.

The Company commenced operations in October 1997 and has completed 101
acquisitions (through February 26, 1999), including the merger with U.S.
Rentals which was completed in September 1998. Three of these acquisitions
(including the U.S. Rentals merger) were accounted for as "poolings-of-
interests," which means that for accounting and financial reporting purposes
the acquired company is treated as having been combined with the Company at all
times since the inception of the acquired company. Accordingly, the Company's
financial statements have been restated to include the accounts of two of the
companies acquired in these pooling-of-interests transactions (but was not
restated for one that was not material, which has been combined with the
Company effective July 1, 1998). As a result of this restatement, the Company's
financial statements include historical financial information for periods that
precede the date on which the Company commenced its own operations. See Note 3
to the Consolidated Financial Statements of the Company included elsewhere
herein. The other 98 acquisitions completed by the Company were accounted for
as "purchases," which means that the results of operations of the acquired
company are included in the Company's financial statements only from the date
of acquisition.

The following unaudited income statement and other financial data under the
column heading "Pro Forma" with respect to the period presented gives effect to
each acquisition completed by the Company after the beginning of the period and
the financing thereof, as if all such transactions had occurred at the
beginning of the period. The following unaudited balance sheet data as of
December 31, 1998 under the column heading "Pro Forma" gives effect to each
acquisition completed by the Company subsequent to such date and the financing
of each such acquisition, as if all such transactions had occurred on such
date. The following unaudited balance sheet data as of December 31, 1998 under
the column heading "Pro Forma As Adjusted" gives effect to the foregoing and to
(1) the Company's issuance of 300,000 shares of Series A Perpetual Convertible
Preferred Stock after such date and the use of the proceeds therefrom to repay
indebtedness and (2) the sale of the 2,290,000 shares of common stock offered
by the Company as described in this prospectus, at an assumed public offering
price of $32.19 per share, and the application of a portion of the net proceeds
therefrom to repay outstanding indebtedness under the Credit Facility.

The balance sheet data presented below as of December 31, 1996 are derived
from the audited Consolidated Financial Statements of the Company which are not
presented herein.

21
<PAGE>

The pro forma data set forth below is provided for informational purposes.
However, this data may not be indicative of the actual results that the Company
would have had during any period presented, had any or all of the acquisitions
been completed as of the beginning of that period, or of any future results.

<TABLE>
<CAPTION>
Historical Pro Forma
------------------------------ ------------
Year Ended
Year Ended December 31, December 31,
------------------------------ ------------
1996 1997 1998 1998
-------- -------- ---------- ------------
(dollars in thousands, except per share
data)
<S> <C> <C> <C> <C>
Income statement data:
Total revenues................... $354,478 $489,838 $1,220,282 $1,600,486
Total cost of operations......... 241,445 340,546 796,834 1,037,458
-------- -------- ---------- ----------
Gross profit..................... 113,033 149,292 423,448 563,028
Selling, general and
administrative expenses......... 54,721 70,835 195,620 271,791
Merger-related expenses.......... 47,178 47,178
Non-rental depreciation and
amortization.................... 9,387 13,424 35,248 48,026
Termination cost of deferred
compensation agreements......... 20,290
-------- -------- ---------- ----------
Operating income................. 48,925 44,743 145,402 196,033
Interest expense................. 11,278 11,847 64,157 88,007
Preferred dividends of a
subsidiary trust................ 7,854 7,854
Other (income) expense........... (499) (2,021) (4,906) (10,099)
-------- -------- ---------- ----------
Income before provision for
income taxes and extraordinary
items .......................... 38,146 34,917 78,297 110,271
Provision for income taxes....... 420 29,508 43,499 45,211
-------- -------- ---------- ----------
Income before extraordinary
items........................... 37,726 5,409 34,798 54,967
Extraordinary items, net (1)..... 1,511 21,337
-------- -------- ---------- ----------
Net income (1)(2)................ $ 37,726 $ 3,898 $ 13,461 $ 54,967
======== ======== ========== ==========
Pro forma provision for income
taxes before extraordinary items
(1)(2).......................... $ 15,487 $ 14,176 $ 44,386
Pro forma income before
extraordinary
items (1)(2).................... 22,659 20,741 33,911
Basic earnings per share before
extraordinary items ............ $ 1.67 $ 0.12 $ 0.53 $ 0.80
Diluted earnings per share before
extraordinary items............. $ 1.67 $ 0.11 $ 0.48 $ 0.73
Basic earnings per share(3)...... $ 1.67 $ 0.08 $ 0.20 $ 0.80
Diluted earnings per share(3).... $ 1.67 $ 0.08 $ 0.18 $ 0.73
Other financial data:
EBITDA (4)....................... $123,606 $160,554 $ 403,738 $ 515,272
EBITDA margin (5)................ 34.9% 32.8% 33.1% 32.2%
</TABLE>

<TABLE>
<CAPTION>
Historical
----------------------------
Pro Forma as
December 31, Pro Forma Adjusted
---------------------------- ---------- -------------
1996 1997 1998 December 31, 1998
-------- -------- ---------- ----------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance sheet data:
Cash and cash equivalents............................... $ 2,906 $ 72,411 $ 20,410 $ 4,000 $ 9,288
Rental equipment, net................................... 235,055 461,026 1,143,006 1,169,500 1,169,500
Total assets............................................ 381,228 826,010 2,634,663 2,692,592 2,697,880
Total debt.............................................. 214,337 264,573 1,314,574 1,365,442 1,013,969
Company-obligated mandatorily redeemable
convertible preferred securities of a subsidiary trust.. 300,000 300,000 300,000
Stockholders' equity.................................... 105,420 446,388 726,230 726,230 1,082,991
</TABLE>
- -------
(1) We recorded an extraordinary item (net of income taxes) of $1.5 million in
1997 and an extraordinary item (net of income taxes) of $21.3 million in
1998. Such charge in 1997 resulted from the prepayment of certain debt by
U.S. Rentals. Such charge in 1998 resulted from the early extinguishment of
certain debt and primarily reflected prepayment penalties on certain debt
of U.S. Rentals.
(2) U.S. Rentals was taxed as a Subchapter S Corporation until its initial
public offering in February 1997, and another company that we acquired was
taxed as a Subchapter S Corporation until being acquired. In general, the
income or loss of a Subchapter S Corporation is passed through to its
owners rather than being subjected to taxes at the entity level. Pro forma
provision for income taxes before extraordinary items and pro forma income
(loss) before extraordinary items reflect a provision for income taxes as
if all such companies were liable for federal and state income taxes as
taxable corporate entities for all periods presented.

(3) Our earnings during 1997 were impacted by $20.3 million of expenses
relating to the termination of certain deferred compensation expenses in
connection with U.S. Rentals' initial public offering, a $7.5 million
charge to recognize deferred tax liabilities of U.S. Rentals and an
extraordinary item (net of income taxes) of $1.5 million. Our earnings
during 1998 were impacted by merger-related expenses of $47.2 million
($33.2 million net of taxes), a $4.8 million charge to recognize deferred
tax liabilities of a company acquired in a pooling-of-interests transaction
and an extraordinary item (net of income taxes) of $21.3 million. Excluding
such amounts, (i) basic earnings per share for the years ended 1997 and
1998 and pro forma basic earnings per share for the year ended 1998 would
have

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<PAGE>

been $0.70, $1.10 and $1.36, respectively, and (ii) diluted earnings per
share for the years ended 1997 and 1998 and pro forma diluted earnings per
share for the year ended 1998 would have been $0.66, $1.00 and $1.24,
respectively.

(4) EBITDA is defined as net income (excluding (i) non-operating income and
expense, (ii) a $20.3 million non-recurring charge incurred by U.S.
Rentals in 1997 arising from the termination of deferred compensation
agreements with certain executives and (iii) $47.2 million in merger-
related expenses in 1998 related to the three acquisitions accounted for
as pooling-of-interests, including the merger with U.S. Rentals) plus
interest expense, income taxes and depreciation and amortization. We have
presented EBITDA data to provide you with additional information
concerning our ability to meet our future debt service obligations and
capital expenditure and working capital requirements. However, EBITDA is
not a measure of financial performance under generally accepted accounting
principles. Accordingly, you should not consider EBITDA an alternative to
net income or cash flows as indicators of our operating performance or
liquidity.
(5) EBITDA margin is defined as EBITDA as a percentage of revenues.

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

The following discussion should be read in conjunction with the
Consolidated Financial Statements and related notes thereto of the Company
included elsewhere in this prospectus.

Introduction

The Company commenced equipment rental operations in October 1997 and has
completed 101 acquisitions (through February 26, 1999), including the merger
with U.S. Rentals (the "U.S. Rentals Merger") which was completed in September
1998.

Three of the acquisitions completed by the Company (including the U.S.
Rentals Merger) were accounted for as "poolings-of-interests," and the
Company's financial statements have been restated to include the accounts of
two of the companies acquired in such transactions (but were not restated for
one that was not material, which has been combined with the Company effective
July 1, 1998). See Note 3 to the Consolidated Financial Statements of the
Company included elsewhere in this prospectus. As a result of such restatement,
the Company's financial statements include historical financial information of
these two acquired companies for periods that precede the date on which the
Company commenced its own operations.

The other 98 acquisitions completed by the Company were accounted for as
"purchases". The results of operations of the businesses acquired in these
acquisitions are included in the Company's financial statements only from their
respective dates of acquisition. In view of the fact that the Company's
operating results for 1997 and 1998 were impacted by acquisitions that were
accounted for as purchases, the Company believes that the results of its
operations for such periods are not directly comparable.

General

The Company primarily derives revenues from the following sources: (i)
equipment rental (including additional fees that may be charged for equipment
delivery, fuel, repair of rental equipment, and damage waivers), (ii) the sale
of rental equipment, (iii) the sale of new equipment, and (iv) the sale of
related merchandise and parts.

Cost of operations consists primarily of depreciation costs associated with
rental equipment, the cost of repairing and maintaining rental equipment, the
cost of rental and new equipment sold, personnel costs, occupancy costs and
supplies.

The Company records rental equipment expenditures at cost and depreciates
equipment using the straight-line method over the estimated useful life (which
ranges from 2 to 10 years), after giving effect to an estimated salvage value
of 0% to 10% of cost.

Selling, general and administrative expenses include sales commissions,
advertising and marketing expenses, management salaries, and clerical and
administrative overhead.

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

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<PAGE>

Results of Operations

Years ended December 31, 1998 and 1997

Revenues. Total revenues for 1998 were $1,220.3 million, representing an
increase of 149.1% over total revenues in 1997 of $489.8 million. The Company's
revenues in 1998 and 1997 were attributable to: (i) equipment rental ($895.5
million, or 73.4% of revenues, in 1998 compared to $388.2 million, or 79.2% of
revenues, in 1997), (ii) sales of rental equipment ($119.6 million, or 9.8% of
revenues, in 1998 compared to $41.4 million, or 8.5% of revenues, in 1997) and
(iii) sales of new equipment, merchandise and other revenues ($205.2 million,
or 16.8% of revenues, in 1998 compared to $60.3 million, or 12.3% of revenues,
in 1997).

The 149.1% increase in total revenues in 1998 reflected (i) increased
revenues at locations open more than one year (which accounted for
approximately 36.2 percentage points) and (ii) new rental locations acquired
through acquisitions and the opening of start-up locations (which accounted for
approximately 112.9 percentage points). The increase in revenues at locations
open more than one year primarily reflected (a) an increase in the volume of
rental transactions, (b) expansion of the product lines offered by the Company
for sale, (c) an increase in the sale of related merchandise and parts which
was driven by the increase in equipment rental and sales transactions and (d)
an increase in the sale of used equipment in order to maintain the quality of
the Company's rental fleet.

Gross Profit. Gross profit increased to $423.4 million in 1998 from $149.3
million in 1997. This increase in gross profit was primarily attributable to
the increase in revenues described above. The Company's gross profit margin by
source of revenue in 1998 and 1997 was: (i) equipment rental (36.3% in 1998 and
30.0% in 1997), (ii) sales of rental equipment (44.7% in 1998 and 50.6% in
1997) and (iii) sales of new equipment, merchandise and other revenues (22.0%
in 1998 and 19.6% in 1997). The increase in the gross profit margin from rental
revenues in 1998 was primarily attributable to greater equipment utilization
rates and to economies of scale. The decrease in the gross profit margin from
the sales of rental equipment in 1998 primarily reflected (i) a shift in mix
towards more late-model used equipment, which generally generates lower gross
profit margins than somewhat older equipment, and (ii) the sale of certain
equipment items which were acquired through acquisitions and which were not in
optimal condition for sale due to age, usage or other factors. The increase in
the gross profit margin from sales of new equipment, merchandise and other
revenue in 1998 primarily reflected the benefits of greater purchasing power
and a shift in the sales mix to higher margin items.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("SG&A") were $195.6 million, or 16.0% of total
revenues, during 1998 and $70.8 million, or 14.5% of total revenues, during
1997. The increase in SG&A as a percentage of revenues in 1998 primarily
reflected the additional expenses for senior management and corporate overhead
that the Company began incurring in the third quarter of 1997 as it built the
management team and infrastructure required to support its growth strategy.

Merger-related Expenses. The Company incurred merger-related expenses in
1998 of $47.2 million ($33.2 million after-tax) in connection with three
acquisitions completed by the Company in 1998 that were accounted for as
poolings-of-interests. These expenses consisted of: (i) $18.5 million for
investment banking, legal, accounting services and other merger costs, (ii)
$14.5 million of expenses relating to the closing of duplicate facilities,
(iii) $8.2 million for employee severance and related matters, (iv) $2.1
million for the write down of the computer systems acquired through the U.S.
Rentals Merger and one of the other acquisitions accounted for as a pooling-of-
interests and (v) $3.9 million in other expenses.

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<PAGE>

Non-rental Depreciation and Amortization. Non-rental depreciation and
amortization was $35.2 million, or 2.9% of total revenues, in 1998 and $13.4
million, or 2.7% of total revenues, in 1997. The increase in the dollar amount
of non-rental depreciation and amortization in 1998 primarily reflected the
amortization of goodwill attributable to the acquisitions completed at the end
of 1997 and in 1998.

Termination Cost of Deferred Compensation Agreements. The Company's results
for 1997 were impacted by $20.3 million of expenses for "termination cost of
deferred compensation agreements." These expenses reflect one-time expenses
that were incurred by U.S. Rentals in connection with the termination of
certain deferred incentive compensation agreements in connection with U.S.
Rentals' initial public offering in February 1997.

Interest Expense. Interest expense increased to $64.2 million in 1998 from
$11.8 million in 1997. This increase primarily reflected the fact that the
Company's indebtedness significantly increased in 1998, primarily to fund
acquisitions.

Preferred Dividends of a Subsidiary Trust. During 1998, preferred dividends
of a subsidiary trust of United Rentals were $7.9 million. These dividends
relate to the preferred securities issued in August 1998 by such subsidiary
trust. See "--Certain Information Concerning Preferred Securities."

Other (Income) Expense. Other income was $4.9 million in 1998 compared with
$2.0 million in 1997. The increase in other income in 1998 primarily reflected
gain realized in 1998 from the disposition of certain business lines that were
acquired as part of acquisitions but did not fit with the Company's strategy.

Income Taxes. Income taxes increased to $43.5 million, or an effective rate
of 55.6%, in 1998 from $29.5 million, or an effective rate of 84.5%, in 1997.
During 1998, the Company's high effective tax rate reflected (i) the non-
deductibility of $7.4 million for income tax purposes of certain merger related
expenses and (ii) a $4.8 million charge to recognize deferred tax liabilities
of an acquired business, which was a Subchapter S Corporation prior to being
acquired by the Company. During 1997, the Company's high effective tax rate
reflected (i) a $7.5 million charge to recognize deferred tax liabilities of
U.S. Rentals, which was a Subchapter S Corporation prior to its initial public
offering, and (ii) the non-deductibility of $7.5 million for income tax
purposes of certain losses that were incurred by U.S. Rentals prior to a
recapitalization effected in connection with its initial public offering.

Extraordinary Items. The Company recorded an extraordinary charge of $35.6
million ($21.3 million net of taxes) in 1998 and an extraordinary charge of
$2.5 million ($1.5 million net of taxes) in 1997. This charge in 1998 was
incurred in connection with the early extinguishment of certain debt and
primarily reflected prepayment penalties on certain debt of U.S. Rentals. This
charge in 1997 was incurred by U.S. Rentals in connection with the prepayment
of certain debt.

Years Ended December 31, 1997 and 1996

Revenues. Total revenues for 1997 were $489.8 million, representing an
increase of 38.2% over total revenues in 1996 of $354.5 million. The Company's
revenues in 1997 and 1996 were attributable to: (i) equipment rental ($388.2
million, or 79.2% of revenues in 1997, compared to $295.3 million, or 83.3% of
revenues, in 1996), (ii) sales of rental equipment ($41.4 million, or 8.5% of
revenues, in 1997 compared to $25.5 million, or 7.2% of revenues, in 1996) and
(iii) sales of new equipment, merchandise and other revenues ($60.3 million, or
12.3% of revenues, in 1997 compared to $33.7 million, or 9.5% of revenues, in
1996).

The 38.2% increase in total revenues in 1997 reflected (i) increased
revenues at locations open more than one year (which accounted for
approximately 24.8 percentage points) and (ii) new rental

26
<PAGE>

locations acquired through acquisitions and the opening of start-up locations
(which accounted for approximately 13.4 percentage points). The increase in
such revenues at locations open more than one year primarily reflected (a) an
increase in customer demand for rental equipment and for new and used equipment
offered for sale, (b) expansion of the product lines offered by the Company for
sale, (c) an increase in the sale of related merchandise and parts which was
driven by the increase in equipment rental and sales transactions and (d) an
increase in sales efforts relating to used equipment.

Gross Profit. Gross profit increased to $149.3 million in 1997 from $113.0
million in 1996. This increase in gross profit was primarily attributable to
the increase in revenues described above. The Company's gross profit margin by
source of revenue was: (i) equipment rental (30.0% in 1997 and 31.2% in 1996),
(ii) sales of rental equipment (50.6% in 1997 and 58.6% in 1996) and (iii)
sales of new equipment, merchandise and other revenues (19.6% in 1997 and 18.1%
in 1996). The decrease in the gross profit margin from rental revenues in 1997
primarily reflected the fact that the Company in 1997 incurred expenses in
connection with expanding its rental fleet and opening new rental locations.
The increase in the gross profit margin from sales of new equipment,
merchandise and other revenues in 1997 primarily reflected a shift in sales mix
to higher margin items.

Selling, General and Administrative Expenses. SG&A increased to $70.8
million in 1997 from $54.7 million in 1996, but as a percentage of revenues
decreased to 14.5% in 1997 from 15.4% in 1996. This decrease in SG&A as a
percentage of revenues in 1997 primarily reflected (i) increased operating
efficiencies and (ii) certain economies of scale related to the increase in
revenue described above.

Non-rental Depreciation and Amortization. Non-rental depreciation and
amortization was $13.4 million, or 2.7% of total revenues in 1997, and $9.4
million, or 2.6% of total revenues, in 1996. The increase in the dollar amount
of non-rental depreciation and amortization in 1997 primarily reflected
increases in (i) depreciation expense attributable to equipment not offered for
rent, (ii) depreciation expense associated with rental facility locations and
(iii) amortization expense relating to leaseholds.

Interest Expense. Interest expense increased to $11.8 million in 1997 from
$11.3 million in 1996. This increase was primarily the result of an increase in
related party interest expense, offset by a decrease in interest as a result of
lower average debt outstanding during 1997 due to repayment of certain debt
with proceeds from U.S. Rentals' initial public offering.

Other (Income) Expense. Other income was $2.0 million in 1997 compared with
$0.5 million in 1996. The increase in other income in 1997 primarily reflected
increased interest income in 1997 as a result of higher cash balances resulting
from the financing transactions completed during 1997.

Income Taxes. Income taxes were $29.5 million, or an effective rate of
84.5%, in 1997 and $0.4 million, or an effective rate of 1.1%, in 1996. The
Company's low effective tax rate in 1996 reflected the fact that (i) U.S.
Rentals was taxed as a Subchapter S Corporation for federal and state purposes
until its initial public offering in February 1997 and (ii) Rental Tools
(another company that United Rentals acquired in a transaction that was
accounted for as a pooling-of-interests) was taxed as a Subchapter S
Corporation for federal and state purposes until it was acquired by the Company
in 1998. The Company's high effective tax rate in 1997 primarily reflected (i)
a $7.5 million charge to

27
<PAGE>

recognize deferred tax liabilities of U.S. Rentals and (ii) the non-
deductibility of $7.5 million for income tax purposes of certain losses that
were incurred by U.S. Rentals prior to a recapitalization effected in
connection with its initial public offering.

Extraordinary Item. The Company recorded an extraordinary charge of $2.5
million ($1.5 million net of taxes) during 1997. This charge was incurred by
U.S. Rentals in connection with the prepayment of certain debt.

Liquidity and Capital Resources

General

Since commencing operations in October 1997, the Company has funded its
cash requirements from a combination of cash generated from operations, the
sale of rental equipment, borrowings under a revolving credit facility and the
proceeds of other financing transactions. These other financing transactions
included (i) the sale of common stock and warrants in private placements for
aggregate consideration of $54.7 million, (ii) the sale of common stock in two
public offerings for aggregate consideration of $307.0 million (after deducting
underwriting discounts and offering expenses), (iii) the sale of $200 million
aggregate principal amount of 9 1/2% senior subordinated notes (the "9 1/2%
Notes") in May 1998 for aggregate consideration of $193.0 million (after
deducting the initial purchasers' discount and offering expenses), (iv) a $250
million term loan (the "Term Loan") obtained in July 1998, (v) the issuance by
a subsidiary trust of Holdings of preferred securities (the "Trust Preferred
Securities") in August 1998 which resulted in the Company receiving net
proceeds of $290.0 million, (vi) the sale of $205 million aggregate principal
amount of 8.80% senior subordinated notes (the "8.80% Notes") in August 1998
for aggregate consideration of $196.0 million (after deducting the initial
purchaser's discount and offering expenses), (vii) the sale of $300 million
aggregate principal amount of 9 1/4% Senior Subordinated Notes ("9 1/4% Notes")
in December 1998 for aggregate consideration of $292.1 million (after deducting
the initial purchaser's discount and estimated offering expenses) and (viii)
the sale of 300,000 shares of Series A Perpetual Convertible Preferred Stock in
January 1999 for aggregate consideration of $287.0 million (after deducting
issuance fees and expenses). For additional information concerning certain of
the financings described above, see "--Certain Information Concerning the
Credit Facility and Other Indebtedness" and "--Certain Information Concerning
Preferred Securities."

During 1998, the Company (i) generated cash from operations of
approximately $216.1 million, (ii) generated cash from the sale of rental
equipment of approximately $119.6 million and (iii) had net cash from financing
activities of approximately $1,082.1 million. The Company used cash during this
period principally to (i) pay consideration for acquisitions (approximately
$911.8 million), (ii) repay indebtedness in connection with the U.S. Rentals
Merger and the acquisition of Rental Tools (approximately $450.3 million),
(iii) purchase rental equipment (approximately $479.5 million) and (iv)
purchase other property and equipment (approximately $84.6 million). These cash
expenditures were the principal reason for the decrease in cash at December 31,
1998 compared with December 31, 1997.

In September 1998, URI obtained a new $762.5 million revolving credit
facility (the "Credit Facility") from a group of financial institutions. This
facility replaced the credit facility that had previously been used by URI. For
additional information concerning the Credit Facility, see "--Certain
Information Concerning the Credit Facility and Other Indebtedness."

The Company expects that, following the offering described in this
prospectus, its principal existing sources of cash will be cash generated from
operations and borrowings available under the Credit Facility.

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<PAGE>

Certain Balance Sheet Changes

The acquisitions and the equipment purchases made by the Company in 1998
(and the financing of such acquisitions and purchases) were the principal
reasons for the increase in the following items at December 31, 1998 compared
with December 31, 1997: accounts receivable, inventory, rental equipment,
property and equipment, intangible assets, accounts payable, debt, and accrued
expenses and other liabilities.

The increase in prepaid expenses and other assets at December 31, 1998
compared with December 31, 1997 primarily reflects (i) an increase in prepaid
expenses relating to the Company's operations and (ii) certain direct costs
relating to potential acquisitions that were capitalized.

The Company-obligated manditorily redeemable convertible preferred
securities of a subsidiary trust at December 31, 1998, reflects the issuance of
Trust Preferred Securities in August 1998 as described under "--Certain
Information Concerning Preferred Securities."

The increase in stockholders' equity at December 31, 1998 compared with
December 31, 1997, primarily reflects (i) the sale of 8,625,000 shares of
common stock in a public offering in March 1998 for aggregate consideration of
$207.4 million (after deducting underwriting discounts and offering expenses)
and (ii) the issuance of an aggregate of 2,188,255 shares of common stock and
warrants during the year ended December 31, 1998, primarily as consideration
for acquisitions.

Cash Requirements Related to Operations

The Company expects that its principal needs for cash relating to its
existing operations over the next 12 months will be to fund (i) operating
activities and working capital, (ii) the purchase of rental equipment and
inventory of items offered for sale and (iii) debt service. The Company plans
to fund such cash requirements relating to its existing operations with cash
generated from operations supplemented, if required, by borrowings available
under the Credit Facility.

The Company estimates that equipment expenditures over the next 12 months
will be approximately $450.0 million for the existing operations of the
Company. These expenditures are comprised of approximately $240.0 million of
expenditures in order to maintain the average age of the Company's rental fleet
and $210.0 million of discretionary expenditures to increase the size of the
Company's rental fleet. The Company expects that it will fund such expenditures
from a combination of approximately $185.0 million of proceeds expected to be
generated from the sale of used equipment, cash generated from operations and,
if required, borrowings available under the Credit Facility. In addition, the
Company expects that it will be required to make equipment expenditures in
connection with new acquisitions. The Company cannot quantify at this time the
amount of equipment expenditures that will be required in connection with new
acquisitions.

Principal elements of the Company's strategy include continued expansion
through a disciplined acquisition program and the opening of new rental
locations. The Company expects to pay for future acquisitions using cash,
capital stock, notes and/or assumption of indebtedness. To the extent that cash
generated internally and cash available under the Company's borrowing
facilities ($683.6 million available as of February 26, 1999) are not
sufficient to fund such future acquisitions, the Company will require
additional financing and, consequently, the Company's indebtedness may increase
as the Company implements its growth strategy. There can be no assurance,
however, that any additional financing will be available or, if available, will
be on terms satisfactory to the Company.

The Company has almost completed the process of extending its management
information system to the locations acquired through the U.S. Rentals Merger
and other recent acquisitions. The Company estimates that the cost of
completing this work will be approximately $0.5 million.

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<PAGE>

Based upon the terms of the Company's currently outstanding indebtedness,
the Company is scheduled to repay approximately $14.3 million during 1999. In
addition, the Company may be required at any time to repay a $21.5 million
demand note that the Company assumed in connection with the U.S. Rentals
Merger.

Year 2000 Compliance

The Company has been informed by its software vendors that the Company's
new management information 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, there can be no assurance that
unanticipated year 2000 problems will not arise which, depending on the nature
and magnitude of the problem, could have a material adverse effect on the
Company's business and financial condition. 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 problem could have a material adverse effect on the Company's
business and financial condition. The Company is unable at this time to assess
the possible impact on its business of year 2000 problems involving any third
party.

Certain Information Concerning the Credit Facility and Other Indebtedness

Credit Facility. In September 1998, URI obtained a new $762.5 million
revolving Credit Facility from a group of financial institutions. This facility
replaced the credit facility that had previously been used by URI. Set forth
below is certain information concerning the terms of the Credit Facility.

The Credit Facility enables URI to borrow up to $762.5 million on a
revolving basis and permits a Canadian subsidiary of URI (the "Canadian
Subsidiary") to directly borrow up to $40.0 million under the Credit Facility
(provided that the aggregate borrowings of URI and the Canadian Subsidiary do
not exceed $762.5 million). Up to $25.0 million of the Credit Facility is
available in the form of letters of credit. The agreement governing the Credit
Facility requires that the aggregate commitment shall be reduced on the last
day of each calendar quarter, beginning September 30, 2001 and continuing
through June 30, 2003, by an amount equal to $19.1 million. The Credit Facility
terminates on September 26, 2003, at which time all outstanding indebtedness is
due. As of February 26, 1999, the amount of indebtedness outstanding under the
Credit Facility was $77.5 million (not including undrawn outstanding letters of
credit in the amount of $1.4 million).

Borrowings by URI under the Credit Facility accrue interest at URI's
option, at either (a) the Base Rate (which is equal to the greater of (i) the
Federal Funds Rate plus 0.5% or (ii) Bank of America's reference rate) or (b)
the Eurodollar Rate (which for borrowings by URI is equal to Bank of America's
reserve adjusted eurodollar rate) plus a margin ranging from 0.825% to 1.500%
per annum. Borrowings by the Canadian Subsidiary under the Credit Facility
accrue interest, at such subsidiary's option, at either (x) the Prime Rate
(which is equal to Bank of America Canada's prime rate), (y) the BA Rate (which
is equal to Bank of America Canada's BA Rate) plus a margin ranging from 0.825%
to 1.500% per annum or (z) the Eurodollar Rate (which for borrowing by the
Canadian Subsidiary is equal to Bank of America Canada's reserve adjusted
Eurodollar Rate) plus a margin ranging from 0.825% to 1.500% per annum. If at
any time an event of default (as defined in the agreement governing the Credit
Facility) exists, the interest rate applicable to each loan will increase by 2%
per annum. The Company is also required to pay the banks an annual facility fee
equal to 0.375% of the banks' $762.5 million aggregate lending commitment under
the Credit Facility (which fee may be reduced to 0.300% for periods during
which the Company maintains a specified funded debt to cash flow ratio).

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<PAGE>

The obligations of URI under the Credit Facility are (i) secured by
substantially all of its assets, the stock of its United States subsidiaries
and a portion of the stock of URI's Canadian subsidiaries and (ii) guaranteed
by Holdings and secured by the stock of URI. The obligations of the Canadian
Subsidiary under the Credit Facility are guaranteed by URI and secured by
substantially all of the assets of the Canadian Subsidiary and the stock of the
subsidiaries of the Canadian Subsidiary.

The Credit Facility contains certain covenants that require the Company to,
among other things, satisfy certain financial tests relating to: (a) maximum
leverage, (b) the ratio of senior debt to cash flow, (c) minimum interest
coverage ratio, (d) the ratio of funded debt to cash flow, and (e) the ratio of
senior debt to tangible assets. The agreements governing the Credit Facility
also contain various other covenants that restrict the Company's ability to,
among other things, (i) incur additional indebtedness, (ii) permit liens to
attach to its assets, (iii) pay dividends or make other restricted payments on
its common stock and certain other securities and (iv) make acquisitions unless
certain financial conditions are satisfied. In addition, the agreement
governing the Credit Facility (a) requires the Company to maintain certain
financial ratios and (b) provides that failure by any two of Messrs. Jacobs,
Milne, Nolan and Miner to continue to hold executive positions with the Company
for a period of 30 consecutive days constitutes an event of default unless
replacement officers satisfactory to the lenders are appointed.

Term Loan. In July 1998, URI obtained a $250 million term loan from a group
of financial institutions. The term loan matures on June 30, 2005. Prior to
maturity, quarterly installments of principal in the amount of $625,000 are due
on the last day of each calendar quarter, commencing September 30, 1999. The
amount due at maturity is $235,625,000. The term loan accrues interest, at the
Company's option, at either (a) the Base Rate (as defined above with respect to
the Credit Facility) plus a margin ranging from 0% to 0.5% per annum, or (b)
the Eurodollar Rate (as defined above with respect to the Credit Facility for
borrowings by the Company) plus a margin ranging from 1.875% to 2.375% per
annum. The Term Loan is secured pari passu with the Credit Facility. The
agreement governing the Term Loan contains restrictive covenants substantially
similar to those provided under the Credit Facility.

9 1/2% Senior Subordinated Notes. In May 1998, URI issued $200 million
aggregate principal amount of 9 1/2% Notes which are due June 1, 2008. The 9
1/2% Notes are unsecured. URI may, at its option, redeem the 9 1/2% Notes on or
after June 1, 2003 at specified redemption prices which range from 104.75% in
2003 to 100.00% in 2006 and thereafter. In addition, on or prior to June 1,
2001, URI may, at its option, use the proceeds of a public equity offering to
redeem up to 35% of the outstanding 9 1/2% Notes, at a redemption price of
109.5%. The indenture governing the 9 1/2% Notes contains certain restrictive
covenants, including (i) limitations on additional indebtedness, (ii)
limitations on restricted payments, (iii) limitations on liens, (iv)
limitations on dividends and other payment restrictions, (v) limitations on
preferred stock of certain subsidiaries, (vi) limitations on transactions with
affiliates, (vii) limitations on the disposition of proceeds of asset sales and
(viii) limitations on the ability of the Company to consolidate, merge or sell
all or substantially all of its assets.

8.80% Senior Subordinated Notes. In August 1998, URI issued $205 million
aggregate principal amount of 8.80% Notes which are due August 15, 2008. The
8.80% Notes are unsecured. URI may, at its option, redeem the 8.80% Notes on or
after August 15, 2003 at specified redemption prices which range from 104.40%
in 2003 to 100.00% in 2006 and thereafter. In addition, on or prior to August
15, 2001, URI may, at its option, use the proceeds of a public equity offering
to redeem up to 35% of the outstanding 8.80% Notes, at a redemption price of
108.8%. The indenture governing the 8.80% Notes contains restrictions
substantially similar to those applicable to the 9 1/2% Notes.

9 1/4% Senior Subordinated Notes. In December 1998, URI issued $300 million
aggregate principal amount of 9 1/4% Notes which are due January 15, 2009. The
9 1/4% Notes are unsecured.

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URI may, at its option, redeem the 9 1/4% Notes on or after January 15, 2004 at
specified redemption prices which range from 104.625% in 2004 to 100.00% in
2007 and thereafter. In addition, on or prior to January 15, 2002, URI may, at
its option, use the proceeds of a public equity offering to redeem up to 35% of
the outstanding 9 1/4% Notes, at a redemption price of 109.25%. The indenture
governing the 9 1/4% Notes contains restrictions substantially similar to those
applicable to the 9 1/2% Notes.

Certain Information Concerning Preferred Securities

Trust Preferred Securities

In August 1998, a subsidiary trust (the "Trust") of Holdings sold $300
million of 6 1/2% Convertible Quarterly Income Preferred Securities (the "Trust
Preferred Securities"). The net proceeds from the sale of the Trust Preferred
Securities were approximately $290 million. The Trust used such proceeds to
purchase convertible subordinated debentures from Holdings which resulted in
Holdings receiving all of the proceeds from the sale of the Trust Preferred
Securities. Holdings in turn contributed the net proceeds from the sale of the
Trust Preferred Securities to its wholly owned subsidiary URI. The Trust
Preferred Securities are convertible into common stock of Holdings at a
conversion price equivalent to $43.63 per share.

Series A Perpetual Convertible Preferred Stock

In January 1999, Holdings sold 300,000 shares of its Series A Perpetual
Convertible Preferred Stock ("Series A Preferred") to Apollo Investment Fund
IV, L.P. and Apollo Overseas Partners IV, L.P. The net proceeds from the sale
of the Series A Preferred were approximately $287.0 million. Holdings
contributed such net proceeds to URI. For additional information concerning the
Series A Preferred, see "Description of Capital Stock."

Fluctuations in 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 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.

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

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

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

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

General Economic Conditions and Inflation

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

Recently Issued Accounting Standards

For the year ended December 31, 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income". SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components in primary
financial statements. SFAS No. 130 requires the Company's foreign currency
translation adjustments to be included in other comprehensive income. The
adoption of SFAS No. 130 had no impact on the Company's net income or
shareholders' equity.

Effective January 1, 1998, the Company adopted SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information". SFAS No. 131
establishes a new method by which companies will report operating segment
information. This method is based on the manner in which management organizes
the segments within a company for making operating decisions and assessing
performance. SFAS No. 131 also establishes standards for related disclosures
about products and services, geographic areas and major customers. The Company
had included the required disclosures in the notes to the financial statements.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
establishes a new model for accounting for derivatives and hedging activities.
The Company will adopt SFAS No. 133 beginning January 1, 2000. The adoption of
SFAS No. 133 is not expected to have a material effect on the Company's
consolidated financial position or results of operations.

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All pro forma financial and operating data contained under the caption
"Business" with respect to any period gives effect to all acquisitions
completed by the Company after the beginning of the period and the financing of
such acquisitions, as if all such transactions had occurred at the beginning of
the period.

BUSINESS

General

We began operations in October 1997 and have grown through a combination of
internal growth and the acquisition of 101 companies (through February 26,
1999). Our completed acquisitions include our merger with U.S. Rentals in
September 1998. At the time of the merger, U.S. Rentals was the second largest
equipment rental company in the United States based on 1997 rental revenues.

Competitive Advantages

We believe that we benefit from the following competitive advantages:

Full Range of Rental Equipment. We have one of the largest and most
comprehensive equipment rental fleets in the industry, enabling us to:

. attract customers by providing the benefit of "one-stop" shopping;

. serve a diverse customer base, which reduces our dependence on any
particular customer or group of customers;

. serve large customers that require assurance that substantial
quantities of different types of equipment will be available as
required on a continuing basis; and

. minimize lost sales due to equipment being unavailable.

. market the equipment within a cluster through multiple branches,
rather than a single branch, which increases our equipment utilization
rate;

. cross-market the equipment specialities of different branches within
each cluster, which increases revenues without increasing marketing
expenses; and

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. reduce costs by centralizing common functions such as payroll, credit
and collection, and certain equipment delivery.

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Growth Strategy

Our plan for future growth includes the following key elements.

Continue Strong Internal Growth. We are seeking to sustain our strong
internal growth by:

. expanding and modernizing our equipment fleet;

. increasing the cross-marketing of our equipment specialties at
different locations;

. increasing our advertising--which becomes increasingly cost-effective
as we grow because the benefit is spread over a larger number of
branches;

. expanding our national accounts program--which dedicates a portion of
our sales force to establishing and expanding our relationships with
large customers that have a national or multi-regional presence; and

. increasing our rentals to industrial companies by developing a
comprehensive marketing program specifically aimed at this sector.

Execute Disciplined Acquisition Program. We intend to continue our
disciplined acquisition program. We generally seek to acquire multiple
locations within the regions that we enter, with the goal of creating clusters
of locations that can share various resources, including equipment, marketing
resources, back office functions, and certain equipment delivery. We are
seeking to acquire companies of varying sizes, including relatively large
companies to serve as platforms for new regional clusters and smaller
companies to complement existing or anticipated locations. In considering
whether to buy a company, we evaluate a number of factors, including purchase
price, anticipated impact on earnings, the quality of the target's rental
equipment and management, the opportunities to improve operating margins and
increase internal growth at the target, the economic prospects of the region
in which the target is located, the potential for additional acquisitions in
the region, and the competitive landscape in the target's markets.

Continue to Emphasize Management Systems and Controls. We intend to further
strengthen our management systems and controls, which currently include:

. a 12-person internal audit department that is responsible for ensuring
that we have adequate financial, operating, and management information
controls throughout our organization;

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. a team of 6 regional controllers and 17 district controllers that
monitors each branch for compliance with financial and accounting
procedures established at corporate headquarters; and

Industry Background

Industry Size and Growth

Recognition of Advantages of Renting. Equipment users are increasingly
recognizing the many advantages that equipment rental may offer compared
with ownership. They recognize that by renting they can: (1) avoid the
large capital investment required for equipment purchases, (2) reduce
storage and maintenance costs, (3) supplement the equipment that they own
and thereby increase the range and number of jobs that they can work on,
(4) access a broad selection of equipment and select the equipment best
suited for each particular job, (5) obtain equipment as needed and
minimize the costs associated with idle equipment, and (6) access the
latest technology without investing in new equipment. These advantages
frequently allow equipment users to reduce their overall costs by renting,
rather than buying, the equipment they need.

Although growth in the equipment rental industry has to date been largely
driven by the increase in rentals by the construction industry, we believe that
other equipment users may increasingly contribute to future industry growth.
For example, many industrial companies require equipment for operating,
repairing, maintaining and upgrading their facilities, and renting this
equipment is often more cost-effective than purchasing because typically this
equipment is not used full-time. We believe that the cost and other advantages
of renting, together with the general trend toward the corporate outsourcing of
non-core competencies, may increasingly lead industrial companies to rent
equipment. We also believe that these same considerations may lead others
equipment users--such as municipalities, government agencies and utilities--to
increasingly rent equipment. Because the penetration of these markets by the
equipment rental industry is very low in comparison to its penetration of the
construction market, we believe there is significant potential for additional
growth in these markets.

Industry Fragmentation

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. we estimate that there are more than 20,000 companies with annual
equipment rental revenues of less than $5 million; and

. we estimate that the 100 largest equipment rental companies combined
have less than a 30% share of the market.

Acquisitions

Completed Acquisitions

We have completed 101 acquisitions to date (through February 26, 1999),
including a merger with U.S. Rentals that was completed in September 1998. At
the time of the merger, U.S. Rentals was the second largest equipment rental
company in the United States based on 1997 rental revenues.

We believe that there will continue to be a large number of attractive
acquisition opportunities in the equipment rental industry due to the highly
fragmented nature of the industry, the capital constraints facing many small
and mid-sized equipment rental companies looking to expand and modernize, and
the desire of many long-time owners for liquidity. We have an experienced
acquisition team of 25 professionals dedicated to identifying and evaluating
acquisition candidates and executing our acquisition program. The team includes
seasoned acquisition professionals with extensive acquisition, operating and
financial experience. The team also includes former owners of businesses that
we acquired, who have extensive equipment rental industry experience and
contacts with potential acquisition candidates.

Potential Acquisitions

As of February 26, 1999, we were party to 21 non-binding letters of intent
relating to the possible acquisition by us of 21 additional companies having an
aggregate of 72 rental locations. Based upon information provided to us in
connection with our preliminary investigation of these companies, we estimate
that the aggregate 1998 revenues of these companies were approximately $172.6
million. However, in view of the preliminary nature of this estimate, we cannot
be certain that actual revenues did not differ.

Based upon the terms contained in these letters of intent, we estimate that
the aggregate purchase price for the 21 companies under letter of intent would
be approximately $208.6 million plus the assumption of approximately $61.5
million of indebtedness. A portion of the purchase price may be paid in the
form of our common stock.

In view of the fact that the letters of intent are non-binding and that we
have not completed our due diligence investigations of the companies under
letter of intent, we cannot predict whether these letters of intent will lead
to definitive agreements, whether the terms of the definitive agreements will
be the same as the terms contemplated by the letters of intent or whether any
transaction contemplated by these letters of intent will be consummated.

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We are continuously involved in discussions relating to potential
acquisitions of varying size and in due diligence investigations of potential
acquisition candidates. In addition to the potential acquisitions that are
currently under letter of intent, there are additional potential acquisitions
with respect to which we are currently engaged in discussions or due diligence
investigations. These potential acquisitions include the acquisition of smaller
companies to complement existing or anticipated locations and combinations with
large companies that have an established presence in one or more regions.

Start-up Locations

Because most of the businesses that we acquired grew through developing
start-up rental locations, many of our managers have substantial experience in
this area. We intend to leverage this experience by selectively opening new
rental locations in attractive markets where there are no suitable acquisition
targets available or where the economics of a start-up location are more
favorable than buying an existing business.

Products and Services

We offer for rent a wide variety of equipment to customers that include
construction industry participants, industrial companies, homeowners and
others. We also sell used equipment, act as a dealer for many types of new
equipment, and sell related merchandise and parts. In addition, our Wynne
Systems subsidiary develops and markets software for use by equipment rental
companies in managing and operating multiple branch locations.

Equipment Rental

We offer for rent a broad range of light to heavy construction and
industrial equipment and general tools and equipment. Customers may rent
equipment by the hour, day, week or month. The following are examples of the
types of equipment that we offer for rent:

Construction and Industrial: aerial lifts (such as boom and scissor
lifts), air compressors, backhoes, ditching equipment, earth moving
equipment, forklifts, generators, pumps and skid-steer loaders.

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

We believe that our rental fleet is one of the newest, most comprehensive
and well maintained in the industry. As of February 26, 1999, our rental fleet
had an original purchase price of approximately $2.2 billion and a weighted
average age (based on original purchase price) of approximately 26 months. We
estimate that (based on original purchase price) construction and industrial
equipment represents approximately 95% of our rental equipment and that general
tools and equipment represents approximately 5%. We also estimate that each of
the following categories represents more than 12% of our rental equipment: (i)
aerial lift equipment (represents approximately 23%), (ii) earth moving
equipment (represents approximately 17%) and (iii) forklifts (represents
approximately 13%). We vary our equipment mix from branch to branch in response
to local market conditions and customer requirements. Most of our branches
offer a general mix of equipment, while some specialize in specific equipment
categories such as aerial lift equipment.

We seek to maintain the quality of our fleet by regularly investing in new
equipment and selling used equipment. We also devote substantial efforts to
preventive maintenance and believe that we have one of the most advanced
preventive maintenance programs in the equipment rental industry. This program
increases the reliability, extends the life, and enhances the resale value of
our equipment.

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Used Equipment Sales

We routinely sell used rental equipment and are generally able to achieve
favorable prices due to our preventive maintenance program, our national sales
force that can access many resale markets across North America, and our
practice of selling used equipment before the equipment becomes obsolete. In
addition, the incentives created by our profit sharing program motivate our
branch managers to carefully consider the best time for selling equipment in
view of maintenance costs, rental demand patterns and resale prices.

We principally sell used equipment through our sales force and our Internet
web site which includes an online database of most of our used equipment
available for sale. We also sell our used equipment to used equipment dealers
and through public auctions. In addition, we sometimes trade in used equipment
to our vendors when we buy new equipment.

New Equipment Sales

We are a dealer for many leading tool and equipment manufacturers. These
include Genie Industries, Inc., Grove Worldwide, JLG Industries, Inc., and
Snorkel (aerial lifts); Deere & Co., Inc. (scrapers, backhoes, excavators,
loaders); Ingersoll-Rand Co., Inc. (air compressors, tools, pumps); Case
Corporation (loaders, backhoes, skid-steer loaders); Kubota (earthmoving
equipment); Trak International (loaders and forklifts); Multiquip, Inc.
(compaction equipment and compressors); Stihl, Inc. (chain saws and power cut-
off saws); Edco Manufacturing (surfacing equipment); and Wacker (compaction
equipment). Typically, dealership agreements do not have a specific term and
may be terminated at any time. The types of new equipment that we sell varies
by branch.

Related Merchandise, Parts and Other Services

At most of our locations, we sell equipment parts and a variety of supplies
and merchandise that may be used with our rental equipment, such as saw blades,
fasteners, drill bits, hard hats, gloves and other safety equipment. At certain
of our branches, we also offer maintenance services for equipment that is owned
by our customers.

Operations of Our Wynne Systems Subsidiary

Our Wynne Systems subsidiary develops and markets software for use by
equipment rental companies in managing and operating multiple branch locations.
Eight of the ten largest equipment rental companies, including United Rentals,
use software developed by Wynne Systems.

Customers

We estimate that on a pro forma basis we rented equipment to approximately
940,000 customers in 1998. Our customer base is highly diversified and ranges
from Fortune 100 companies to small contractors and homeowners. We estimate
that (1) no single customer accounted for more than 0.5% of our pro forma
revenues during 1998 and (2) our top 10 customers accounted for approximately
4% of our pro forma revenues in 1998.

Our customer base varies widely by branch and is determined by several
factors, including the equipment mix and marketing focus of the particular
branch and the business composition of the local economy. We classify our
customer base into the following general categories:

. construction industry participants--such as construction companies,
contractors and subcontractors--that require equipment for commercial
and residential construction projects;

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. industrial companies--such as manufacturers, chemical companies, paper
mills and utilities--that require equipment for plant maintenance,
upgrades, expansion and construction; and

. homeowners and other individuals.

We estimate that on a pro forma basis (1) construction industry
participants and industrial companies combined accounted for 90% of our
revenues in 1998 and (2) homeowners and others accounted for 10% of such
revenues.

Sales and Marketing

We are establishing a distinct corporate identity throughout North America.
In promoting our corporate identity, we emphasize the benefits that United
Rentals seeks to offer its customers, including:

. a comprehensive selection of equipment that is available when required
by the customer;

. on-time equipment delivery and pick-up;

. equipment that is well-maintained and reliable;

. rapid repair or replacement of equipment when required;

. instructions and training for equipment usage and safety; and

. experienced and knowledgeable sales personnel available to assist
customers.

We market our products and services through multiple channels as described
below.

Sales Force. We market our products and services though our own sales force
which, as of February 26, 1999, consisted of approximately 894 store-based
customer service representatives and 729 field-based salespeople. Our field-
based sales force calls on contractors' offices and job sites and industrial
facilities and assists our customers in planning for their equipment needs. We
provide our sales force with extensive training. Supplier representatives also
frequently visit our facilities and train our personnel on the operating
features and maintenance requirements of new equipment.

We have established a national accounts program. Under this program, a
portion of our sales force is assigned to calling on the corporate headquarters
of our large customers, particularly those with a national or multi-regional
presence. The goal of this program is to expand existing business relationships
with these customers to include additional facilities and construction sites.
The efforts of our national accounts sales force supplement the efforts of our
branch-based sales personnel, who deal directly with the management of the
local facilities of these customers.

Internet Site. We have an Internet web site that describes our locations,
products and services, and used equipment available for sale. The site allows
visitors to search for a particular type of used equipment and obtain detailed
information about each item of used equipment available for sale.

Advertising. We promote our business through advertising in various media,
including trade publications, yellow pages, billboards and direct mail. We also
regularly participate in industry trade shows and conferences.

Branch Management

We currently operate 440 branch locations. Each branch has a full-time
branch manager who is responsible for the day-to-day operations of the branch.
In addition, each branch is staffed with additional personnel which, depending
on the specific needs of the location, may include an assistant

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manager, sales personnel, back office clerks, truck drivers, and mechanics. We
believe that our branch managers, who average over 20 years of experience in
the equipment rental industry, are among the most knowledgeable and experienced
in the industry.

We encourage entrepreneurship at the branch level by giving branch managers
a high degree of autonomy with respect to day-to-day operations. For example,
each branch manager is empowered to make decisions--within budgetary
guidelines--concerning staffing, pricing and equipment purchases. We also
promote entrepreneurship at the branch level, as well as equipment sharing
among our branches, through a profit sharing program that directly ties the
compensation of branch personnel to their branch's financial performance and
equipment utilization rates.

We balance the autonomy that we grant to our branch managers with extensive
systems and procedures through which senior management closely tracks branch
performance. In addition, we share information across branches so that each
branch can measure its operating performance relative to other branches and
benefit from the best practices developed throughout our organization.
Important elements of the systems and procedures that we use to manage our
branches include:

. our eight regional vice presidents and 36 district managers supervise
our branch managers--with each branch manager reporting to a district
manager and each district manager reporting to a regional vice
president;

. all levels of management can obtain a wide range of branch-level
operating data on a real-time basis through our management information
system;

. on a monthly basis (1) each branch manager meets with his or her
district manager and thoroughly reviews the operation of his or her
branch and (2) a detailed operating report for each branch is provided
to senior management;

. each district manager generally meets with a member of senior
management on a quarterly basis to review in detail the operations of
the branches within his or her district;

. our 12-person internal audit department is engaged full-time in
ensuring that we have adequate financial, operating and information
technology controls throughout our organization; and

. our team of six regional controllers and 17 district controllers
monitor each branch for compliance with financial and accounting
procedures established at corporate headquarters.

We encourage cooperation among our branches. In furtherance of this
objective, we have established procedures and policies to facilitate the
sharing of equipment and other resources among the branches in the same
cluster. In addition, we have guidelines that are intended to eliminate
competition among branches for the same customers.

Purchasing

We have significant purchasing power because of our volume purchases. As a
result, we can generally buy new equipment and related merchandise and parts at
prices that are significantly lower than prices paid by smaller companies. We
can also buy many other products and services--such as insurance, telephone and
fuel--at attractive rates. We believe that our purchasing power will continue
to increase as we expand and further consolidate purchasing.

We estimate that on a pro forma basis our largest supplier accounted for
approximately 15% of our equipment purchases in 1998, and that our top 10
largest suppliers accounted for approximately 60% our equipment purchases
during that period. We believe that we have sufficient alternative sources of
supply for the equipment that we purchase in each of our principal product
categories.

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Management Information System

We have a modern management information system designed to facilitate rapid
and informed decision-making and enable us to respond quickly to changing
market conditions. Each branch at which the system is operational is equipped
with a workstation that is electronically linked to each of our other locations
and to our centralized databases. All rental transactions are entered at these
workstations and processed on a real-time basis through a centralized AS400
system located at corporate headquarters. Personnel at each location are able
to access the system 24 hours a day in order to determine equipment
availability, monitor business activity on a real-time basis, and obtain a wide
range of operating and financial data. The data available through the system
includes: (1) inventory reports, (2) accounts receivable information, (3)
customer and vendor information, (4) price and sales trends by store, region,
salesperson, equipment category or customer, (5) fleet utilization by
individual asset or asset class and (6) financial results by store or region.
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 a customer's work site.

Our management information system is supported by our in-house group of 32
management information specialists. This group operates a support desk to
assist branch personnel in the day-to-day use of the system; trains our branch
personnel, either at the branch or at one of our four training centers;
provides hardware and technology support; and extends the system to newly
acquired locations.

It generally takes us three to five weeks to extend our management
information system to newly acquired locations (but may take longer in the case
of very large acquisitions). We have extended the system to substantially all
of the locations that we acquired in the U.S. Rentals Merger and expect to
complete the process by mid-March.

Risk and Safety Management

We place great emphasis on risk reduction and safety and believe that we
have one of the most comprehensive risk management and safety programs in the
industry. We have a separate department, which includes 25 experienced
professionals, that is responsible for: (1) developing and implementing safety
programs and procedures, (2) developing our employer and customer training
programs and (3) investigating and managing any claims that may be asserted
against us.

We are among the few equipment rental companies that have on staff
personnel who are certified by the National Safety Council (a government
sponsored agency) to provide training in the use of equipment. In 1997, our
equipment training program received the National Safety Council Chairman's
Award--granted for effectively promoting safety within a business organization.

Competition

The equipment rental industry is highly fragmented and competitive. Our
competitors primarily include: small, independent businesses with one or two
rental locations; regional competitors which operate in one or more states;
public companies or divisions of public companies; and equipment vendors and
dealers who both sell and rent equipment directly to customers. We believe
that, in general, large companies enjoy significant competitive advantages
compared to smaller operators, including greater purchasing power, a lower cost
of capital, the ability to provide customers with a

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broader range of equipment and services and with newer and better maintained
equipment, and greater flexibility to transfer equipment among locations in
response to customer demand.

Locations and Properties

We currently operate 440 branch locations. Of these locations, 376 are in
the United States, 63 are in Canada and one is in Mexico. The number of
locations in each state or province is shown below:

United States: Alabama (12), Arizona (4), Arkansas (3), California
(83), Colorado (9), Connecticut (7), Delaware (4), Florida (18),
Georgia (3), Idaho (2), Indiana (8), Illinois (6), Kansas (2), Kentucky
(8), Louisiana (3), Maryland (18), Massachusetts (2), Michigan (5),
Minnesota (5), Missouri (2), Nebraska (1), Nevada (11), New Hampshire
(1), New Jersey (6), New Mexico (2), New York (9), North Carolina (17),
Ohio (3), Oklahoma (2), Oregon (25), Pennsylvania (6), Rhode Island
(3), South Carolina (9), Tennessee (5), Texas (32), Utah (8), Virginia
(12), Washington (19), Wisconsin (1)

Canada: Alberta (2), British Columbia (13), Newfoundland (8), Ontario
(30), Quebec (10)

Mexico: Nuevo Leon (1)

Our branch locations generally include facilities for displaying equipment
and, depending on the location, may include separate equipment service areas
and storage areas.

We own 78 of our rental locations and lease the other locations. Our leases
provide for varying terms and include 25 leases that are on a month-to-month
basis and 29 leases that provide for a remaining term of less than one year and
do not provide a renewal option. We are currently negotiating renewals for most
of the leases that provide for a remaining term of less than one year. Certain
of our leases were entered into (or assumed) in connection with acquisitions
and most of the lessors under these leases are former owners of businesses that
we acquired.

We maintain a fleet of vehicles that is used for delivery, maintenance and
sales functions. We own a portion of this fleet and lease a portion. As of
February 26, 1999, this fleet included approximately 9,720 vehicles.

Our corporate headquarters are located in Greenwich, Connecticut, where we
occupy approximately 27,000 square feet under (1) a lease for approximately
15,000 square feet that extends until 2001 (subject to extension rights) and
(2) a lease for approximately 12,000 square feet that extends until 2003.

Environmental and Safety Regulations

There are numerous federal, state and local laws and regulations governing
environmental protection and occupational health and safety. These include laws
and regulations that govern wastewater discharges, the use, treatment, storage
and disposal of solid and hazardous wastes and materials, air quality and the
remediation of contamination associated with the release of hazardous
substances. Under these laws, an owner or lessee of real estate may be liable
for, among other things, (1) the costs of removal or remediation of hazardous
or toxic substances located on, in, or emanating from, the real estate, as well
as related costs of investigation and property damage and substantial
penalties, and (2) environmental contamination at facilities where its waste is
or has been disposed. These laws often impose liability whether or not the
owner or lessee knew of the presence of the hazardous or toxic substances and
whether or not the owner or lessee was responsible for these substances. Our
activities that are or may be affected by these laws include our use of
hazardous materials to clean and maintain equipment and our disposal of solid
and hazardous waste

44
<PAGE>

and wastewater from equipment washing. We also dispense petroleum products from
underground and above-ground storage tanks located at certain rental locations,
and at times we must remove or upgrade tanks to comply with applicable laws.
Furthermore, we have acquired or lease certain locations which have or may have
been contaminated by leakage from underground tanks or other sources and are in
the process of assessing the nature of the required remediation. Based on the
conditions currently known to us, we believe that any unreserved environmental
remediation and compliance costs required with respect to those conditions will
not have a material adverse effect on our business. However, we cannot be
certain that we will not identify adverse environmental conditions that are not
currently known to us, that all potential releases from underground storage
tanks removed in the past have been identified, or that environmental and
safety requirements will not become more stringent or be interpreted and
applied more stringently in the future. If we are required to incur
environmental compliance or remediation costs that are not currently
anticipated by us, our business could be adversely affected depending on the
magnitude of the cost.

Employees

We have 8,217 employees (based on information as of February 26, 1999).
These include 271 corporate and regional management employees, 6,323
operational employees and 1,623 sales people. Of these employees, 2,119 are
salaried personnel and 6,098 are hourly personnel. Collective bargaining
agreements relating to 23 separate locations cover approximately 310 of our
employees. We consider our labor relations to be good.

Legal Proceedings

We and our subsidiaries are parties to various litigation matters, in most
cases involving ordinary and routine claims incidental to our business. We
cannot estimate with certainty our ultimate legal and financial liability with
respect to such pending litigations. However, we believe, based on our
examination of such matters, that our ultimate liability will not have a
material adverse effect on our business.

45
<PAGE>

MANAGEMENT

Background

The Company was founded in September 1997 by a group that included the
following executive officers of the Company: Bradley Jacobs, John Milne,
Michael Nolan and Robert Miner. Each of these officers was formerly a senior
executive of United Waste Systems, Inc. ("United Waste"). United Waste, a solid
waste management company, was formed in 1989 and sold in August 1997 to USA
Waste Services, Inc. for stock consideration valued at over $2.2 billion. At
the time it was sold, United Waste was the sixth largest provider of
integrated, non-hazardous solid waste management services in the United States,
as measured by 1996 revenues.

Executive Officers and Directors

The table below identifies, and provides certain information concerning,
the executive officers and directors of the Company.

<TABLE>
<CAPTION>
Name Age Positions(1)
---- --- ------------
<S> <C> <C>
Bradley S. Jacobs....... 42 Chairman, Chief Executive Officer and Director
Wayland R. Hicks........ 56 Vice Chairman, Chief Operating Officer and Director
John N. Milne........... 39 Vice Chairman, Chief Acquisition Officer,
Secretary and Director
William F. Berry........ 46 President and Director
Michael J. Nolan........ 38 Chief Financial Officer
Robert P. Miner......... 49 Vice President, Strategic Planning
John S. McKinney........ 44 Vice President, Finance and Director
Leon D. Black........... 47 Director(2)
Richard D. Colburn...... 87 Director
Ronald M. DeFeo......... 46 Director
Michael S. Gross........ 37 Director(2)
Richard J. Heckmann..... 55 Director
Gerald Tsai, Jr. ....... 69 Director
Christian M. Weyer...... 74 Director
</TABLE>
- --------
(1) For information concerning the term served by directors, see "--Right of
Holders of Preferred Stock to Elect Directors" and "--Classification of
Board of Directors."
(2) Messrs. Black and Gross were elected directors by the holders of the
Company's Series A Perpetual Convertible Preferred Stock. See "--Right of
Holders of Preferred Stock to Elect Directors."

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

Wayland R. Hicks has been Chief Operating Officer of the Company since
November 1997 and a director since June 1998. He also served as President of
the Company during the period from November 1997 until September 1998, when he
became Vice Chairman. Mr. Hicks previously held various senior executive
positions at Xerox Corporation where he worked for 28 years (1966-1994). His
positions at Xerox Corporation included Executive Vice President, Corporate
Operations (1993-1994), Executive Vice President, Corporate Marketing and
Customer Support Operations (1989-1993) and Executive Vice President,
Engineering and Manufacturing--Xerox Business Products and Systems Group (1987-
1989). Mr. Hicks also served as Vice Chairman and Chief Executive Officer of
Nextel Communications Corp. (1994-1995) and as Chief Executive Officer and
President of Indigo N.V. (1996-1997). He is also a director of Maytag
Corporation.

46
<PAGE>

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

William F. Berry joined the Company as President and a director in
September 1998 following the merger of the Company with U.S. Rentals. Mr. Berry
served as President and Chief Executive Officer of U.S. Rentals from 1987 until
the merger and held numerous other operational and managerial positions at U.S.
Rentals and a predecessor during the more than 30 years that he was employed
there (1966-1998).

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

Robert P. Miner has been an executive officer of the Company since its
formation in September 1997. He currently serves as Vice President, Strategic
Planning (a position he was appointed to in July 1998) and also heads the
Company's Risk Management and Safety Department. He previously served as Vice
President, Finance. Mr. Miner was an executive officer of United Waste Systems,
Inc. from November 1994 until August 1997, serving first as Vice President,
Finance and then Vice President, Acquisitions. Prior to joining United Waste,
he was a research analyst with PaineWebber Incorporated (November 1988 to
October 1994) and Needham & Co. (January 1987 to October 1988) and held various
executive positions at General Electric Environmental Services, Inc., Stauffer
Chemical Company, and OHM Corporation.

John S. McKinney joined the Company as Vice President, Finance and a
director in September 1998 following the merger of the Company with U.S.
Rentals. Mr. McKinney served as Chief Financial Officer of U.S. Rentals from
1990 until the merger and as Controller of U.S. Rentals from 1988 until 1990.
Prior to joining U.S. Rentals, Mr. McKinney's experience included holding
various positions at Iomega Corporation, including Assistant Controller, and at
the accounting firm of Arthur Andersen & Co.

Leon D. Black became a director of the Company in January 1999. Mr. Black
is one of the founding principals of (i) Apollo Advisors, L.P. (which was
established in August 1990 and which, together with its affiliates, acts as the
managing general partner of several private securities investment funds); (ii)
Apollo Real Estate Advisors, L.P. (which, together with its affiliates, acts as
the managing general partner of several real estate investment funds); and
(iii) Lion Advisors, L.P. (a financial advisor to, and representative of
institutional investors with respect to, securities investments). Mr. Black is
also a director of Converse, Inc., Samsonite Corporation, Sequa Industries,
Inc., Telemundo Group Inc. and Vail Resorts, Inc. He also serves as a trustee
of The Museum of Modern Art, Mount Sinai--NYU Medical Center, Lincoln Center
for the Performing Arts, and Vail Valley Foundation.

Richard D. Colburn became a director of the Company in September 1998
following the merger of the Company with U.S. Rentals. Mr. Colburn was Chairman
of U.S. Rentals for 22 years. Mr. Colburn is a private investor.

Ronald M. DeFeo has been a director of the Company since October 1997. Mr.
DeFeo is the Chairman, Chief Executive Officer, President and a director of
Terex Corporation, a leading global provider of equipment for the
manufacturing, mining and construction industries. Mr. DeFeo joined

47
<PAGE>

Terex in 1992 as President of the Terex heavy equipment group and was appointed
President and Chief Operating Officer in 1993 and Chief Executive Officer in
1995. From 1984 to 1992, Mr. DeFeo held various management positions at
Tenneco, Inc., including Senior Vice President and Managing Director of East
Europe.

Michael S. Gross became a director of the Company in January 1999. Mr.
Gross is one of the founding principals of Apollo Advisors, L.P. (which was
established in August 1990 and which, together with its affiliates, acts as the
managing general partner of several private securities investment funds) and of
Lion Advisors, L.P. (a financial advisor to, and representative of
institutional investors with respect to, securities investments). Mr. Gross is
also a director of Alliance Imaging, Inc., Allied Waste Industries, Inc.,
Breuners Home Furnishings, Inc., Converse, Inc., Florsheim Group, Inc., and
Saks Incorporated.

Richard J. Heckmann has been a director of the Company since October 1997.
Mr. Heckmann has served since 1990 as Chairman, President and Chief Executive
Officer of United States Filter Corporation, a leading global provider of
industrial and commercial water and wastewater treatment systems and services.
Mr. Heckmann is also a director of Waste Management, Inc. and K2 Inc.

Gerald Tsai, Jr. has been a director of the Company since December 1997.
Mr. Tsai served as Chairman, Chief Executive Officer and President of Delta
Life Corporation, an insurance company, from 1993 until the sale of the company
in October 1997. Mr. Tsai was Chairman of the Executive Committee of the Board
of Directors of Primerica Corporation, a diversified financial services
company, from December 1988 until April 1991, and served as Chief Executive
Officer of Primerica Corporation from April 1986 until December 1988. Mr. Tsai
is currently a private investor and serves as a director of The Meditrust
Companies, Saks Incorporated, Rite Aid Corporation, Sequa Corporation, Triarc
Companies, Inc. and Zenith National Insurance Corp. He also serves as a trustee
of Boston University, Mount Sinai--NYU Medical Center and Health System and NYU
School of Medicine Foundation Board.

Christian M. Weyer became a director of the Company in December 1998. Mr.
Weyer has been in the international banking business for 31 years and has
served as President of Enerfin S.A., an international trade and financial
advisory firm, since 1985. From May 1988 to December 1992, Mr. Weyer was a
member of senior management at Banque Indosuez in Geneva, Switzerland, with
responsibility for matters relating to commercial banking, and from 1971 to
1985, held various senior management positions at Banque Paribas and its
affiliates (including President of Banque Paribas (Suisse) in Geneva during
1984). Prior to 1971, Mr. Weyer held senior management positions with Chase
Manhattan Bank in Paris and in Geneva.

Capital Contributions by Executive Officers and Directors

The executive officers and directors of the Company listed below have made
capital contributions to the Company in the aggregate amount of $45.3 million
(excluding amounts paid by certain officers and directors in respect of shares
of Common Stock purchased by them in the Company's initial public offering in
December 1997). Such capital contributions were made in connection with the
sale to such officers and directors in private placements in 1997 of an
aggregate of 12,717,714 shares of Common Stock and 6,142,858 warrants
("Warrants"). Each such Warrant entitles the holder to purchase one share of
Common Stock at an exercise price of $10.00 per share at any time prior to
September 12, 2007. Such shares and Warrants were sold at a price of $3.50 per
unit consisting of one share of Common Stock and one-half of a Warrant (except
that Messrs. Tsai and Weyer purchased only Common Stock at a price of $3.50 per
share and Messrs. Hicks and Heckmann purchased only Common Stock at a price of
$10.00 per share). The table below indicates (i) the number of shares of Common
Stock and the number of Warrants purchased by such officers

48
<PAGE>

and directors (excluding shares purchased in the Company's initial public
offering) and (ii) the aggregate amount paid by such officers and directors for
such securities:

<TABLE>
<CAPTION>
Securities Purchased(1)
-------------------------
Common
Name Stock Warrants Purchase Price
---- ------------ --------------------------
<S> <C> <C> <C>
Bradley S. Jacobs.................. 10,000,000 5,000,000 $35,000,000
Wayland R. Hicks................... 100,000 -- 1,000,000
John N. Milne...................... 1,428,571 714,286 5,000,000
Michael J. Nolan................... 571,429 285,715 2,000,000
Robert P. Miner.................... 285,714 142,857 1,000,000
Richard J. Heckmann................ 20,000 -- 200,000
Gerald Tsai, Jr. .................. 240,000 -- 840,000
Christian M. Weyer................. 72,000 -- 252,000
</TABLE>
- --------
(1) In certain cases includes securities owned by one or more entities
controlled by the named holder.

Right of Holders of Preferred Stock to Elect Directors

In January 1999, the Company sold 300,000 shares of its Series A Perpetual
Convertible Preferred Stock ("Series A Preferred") to Apollo Investment Fund
IV, L.P. and Apollo Overseas Partners IV, L.P. (collectively "Apollo").

The holders of the Series A Preferred, voting separately as a single class,
have the right to elect:

. two directors, if (as of the record date for such vote) the aggregate
number of shares of Common Stock that are issuable upon conversion of
Series A Preferred then held by Apollo, Apollo Management IV, L.P., or
their affiliates (plus any shares of Common Stock then held by such
entities that were issued upon conversion of the Series A Preferred) is
at least eight million; or

. one director, if (as of the record date for such vote) the aggregate
number of shares of Common Stock that are issuable upon conversion of
Series A Preferred then held by Apollo, Apollo Management IV, L.P., or
their affiliates (plus any shares of Common Stock then held by such
entities that were issued upon conversion of the Series A Preferred) is
at least four million but less than eight million.

Any director that is elected by the holders of the Series A Preferred,
voting separately as a single class, holds office until the next annual meeting
of stockholders and the election and qualification of a successor (or the
earlier resignation or removal of such director). Leon D. Black and Michael S.
Gross were elected as directors by the holders of the Series A Preferred.
Messrs. Black and Gross are affiliated with Apollo. See "--Executive Officers
and Directors."

If the holders of the Series A Preferred do not have the right, voting
separately as a single class, to elect any directors pursuant to the provisions
described above, then the holders of the Series A Preferred have the right to
vote for the election of directors together with the holders of the Common
Stock, as a single class, with each share of Series A Preferred entitled to one
vote for each share of Common Stock issuable upon conversion of such share of
Series A Preferred.

Classification of Directors

The directors of the Company (excluding any elected by the holders of the
Series A Preferred) are divided into three classes. The term of office of the
first class (currently comprised of Messrs. Hicks, McKinney and Tsai) will
expire at the first annual meeting of stockholders following January 1, 1999,
the term of office of the second class (currently comprised of Messrs. Berry,
DeFeo and Heckmann) will

49
<PAGE>

expire at the second annual meeting of stockholders following January 1, 1999,
and the term of office of the third class (currently comprised of Messrs.
Colburn, Jacobs, Milne and Weyer) will expire at the third annual meeting of
stockholders following January 1, 1999. At each annual meeting of stockholders,
successors to directors of the class whose term expires at such meeting will be
elected to serve for three-year terms and until their successors are elected
and qualified.

Committees of the Board

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

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

The responsibilities of the Compensation/Stock Option Committee include
making recommendations with respect to the compensation to be paid to officers
and directors, administering any stock option plan in which officers or
directors are eligible to participate and approving the grant of options
pursuant to any such plan. The members of this committee are Messrs. DeFeo,
Heckmann and Tsai.

The responsibilities of the Special Stock Option Committee include
administering any stock option plan in which officers and directors are not
eligible to participate and approving the grant of options pursuant to any such
plan to persons who are not officers or directors. The members of this
committee are Messrs. Jacobs and Milne.

Employment Agreements

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

Base Salary. The agreements provide for base salary to be paid at a rate
per annum as follows: Mr. Jacobs ($290,000), Mr. Hicks ($400,000), Mr. Milne
($190,000), Mr. Berry ($225,000), Mr. Nolan ($175,000), Mr. McKinney ($175,000)
and Mr. Miner ($150,000). The base salary payable to Mr. Hicks is payable 50%
in cash and 50% in Common Stock (valued at the average closing sales price of
the Common Stock during all trading days in the calendar quarter preceding the
quarter in which the payment is made). Shares of Common Stock issued to Mr.
Hicks are subject to certain restrictions on transfer as described under
"Principal Stockholders--Certain Agreements Relating to Securities Held by
Officers." The base salary payable to Messrs. Jacobs, Milne, Berry and McKinney
is subject to possible upward annual adjustments based upon changes in a
designated cost of living index.

Bonus. The agreements do not provide for mandatory bonuses. However, the
agreements provide that in addition to the compensation specifically provided
for, the Company may pay such salary increases, bonuses or incentive
compensation as may be authorized by the Board of Directors.

Other Compensation and Benefits. The agreements with Messrs. Jacobs and
Milne provide for each such executive to receive an automobile allowance of at
least $700 per month. The agreements with Messrs. Berry and McKinney provide
that the employee is entitled to participate in an automobile allowance program
which is made available to other senior executives of the Company.

The agreements with Messrs. Hicks and Berry provide for the Company to
reimburse the employee for certain relocation expenses up to a maximum of
$100,000.

Certain of the agreements provide that the employee is entitled to
participate in certain specified insurance, retirement, compensation and
benefit plans if such plans are made available to other specified executives of
the Company.

50
<PAGE>

Term. The employment agreements with the following executives provide that
the term shall automatically renew so that at all times the balance of the
terms will not be less than the period hereinafter specified with respect to
such executive: Mr. Jacobs (five years), Mr. Milne (five years), Mr. Nolan
(three years) and Mr. Miner (three years). The employment agreement with Mr.
Hicks provides for a term extending until November 2000. The employment
agreements with Messrs. Berry and McKinney provide for a term of three years
commencing on September 29, 1998, subject to automatic renewal so that at all
times the balance of the term will not be less than two years.

Termination and Severance. Under each of the agreements, the Company or the
employee may at any time terminate the agreement, with or without cause,
provided that if the Company terminates the agreement, the Company is required
to make severance payments to the extent described below.

The employment agreements with Messrs. Jacobs and Milne provide that the
executive is entitled to severance benefits in the event that (i) his
employment agreement is terminated by the Company without Cause (as defined in
the employment agreement), (ii) the executive terminates his employment
agreement for Good Reason (as defined in the employment agreement) or because
of a breach by the Company of its obligations thereunder, (iii) his employment
is terminated as a result of death or (iv) the Company or the executive
terminates the employment agreement due to the disability of the executive. The
severance benefits include (i) a lump sum payment equal to five times the sum
of the executive's annual base salary at the time of termination plus the
highest annual bonus paid to the executive in the preceding three years and
(ii) the continuation of the executive's benefits for such specified period.
The employment agreements with Messrs. Jacobs and Milne also provide that if
any portion of the required severance payment to the executive constitutes an
"excess parachute payment" (as defined in Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code")), the executive is entitled to receive a
payment sufficient on an after-tax basis to offset any excise tax payable by
the executive pursuant to Section 4999 of the Code. Any payment constituting an
"excess parachute payment" would not be deductible by the Company.

The employment agreement with Mr. Hicks provides that the executive is
entitled to a severance payment in the amount of $1 million in the event that
his employment agreement is terminated by the Company without Cause (as defined
in the employment agreement) or he terminates his employment for Good Reason
(as defined in the employment agreement).

The employment agreements with Messrs. Berry and McKinney provide that if
the employment agreement is terminated by the Company without Cause (as defined
in the employment agreement), the executive is entitled to continue receiving
from the Company his then current monthly base salary and benefits over the
balance of the term.

The employment agreements with the other officers provide that the
executive is entitled to severance benefits of up to three months' base salary
in the event that the executive's employment agreement is terminated without
Cause (as defined in the employment agreement).

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

Pursuant to the employment agreement with Mr. Hicks, Mr. Hicks has been
granted (i) options to purchase an aggregate of 350,000 shares of Common Stock
at a price per share of $10.00, (ii) options to purchase an aggregate of 50,000
shares of Common Stock at a price per share of $15.00, and (iii) options to
purchase an aggregate of 50,000 shares of Common Stock at a price per share of
$20.00. One third of these options vested in November 1998. The balance will
vest one-half in November 1999 and one-half in November 2000.

51
<PAGE>

Pursuant to the employment agreement with Mr. Berry, Mr. Berry has been
granted (i) options to purchase an aggregate of 200,000 shares of Common Stock
at a price per share of $21.375 and (ii) options to purchase an aggregate of
75,000 shares of Common Stock at a price per share of $45. These options will
vest one-third in September 1999, one-third in September 2000 and one-third in
September 2001.

Pursuant to the employment agreement with Mr. McKinney, Mr. McKinney has
been granted (i) options to purchase an aggregate of 100,000 shares of Common
Stock at a price per share of $21.375 and (ii) options to purchase an aggregate
of 37,500 shares of Common Stock at a price per share of $45. These options
will vest one-third in September 1999, one-third in September 2000 and one-
third in September 2001.

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

Compensation Committee Interlocks and Insider Participation

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

Stock Option Plans

1997 Stock Option Plan. Holdings' 1997 Stock Option Plan provides for the
granting of options to purchase not more than an aggregate of 5,000,000 shares
of Common Stock. Some or all of such options may be "incentive stock options"
within the meaning of the Code. All officers, directors and employees of the
Company and other persons who perform services on behalf of the Company are
eligible to participate in this plan. Each option granted pursuant to this plan
must provide for an exercise price per share that is at least equal to the fair
market value per share of Common Stock on the date of grant. No options may be
granted under this plan after August 31, 2007. As of January 28, 1999, options
to purchase an aggregate of 4,852,636 shares of Common Stock were outstanding
under this plan. These options have a weighted average exercise price of $22.69
per share.

1998 Stock Option Plan. Holdings' 1998 Stock Option Plan provides for the
granting of options to purchase not more than an aggregate of 4,000,000 shares
of Common Stock. Some or all of the options issued under the 1998 Stock Option
Plan may be "incentive stock options" within the meaning of the Code. All
officers and directors of Holdings and its subsidiaries are eligible to
participate in the 1998 Stock Option Plan. Each option granted pursuant to the
1998 Stock Option Plan must provide for an exercise price per share that is at
least equal to the fair market value per share of Common Stock on the date of
grant. No options may be granted under the 1998 Stock Option Plan after August
20, 2008. As of January 28, 1999, options to purchase an aggregate of 3,980,000
shares had been granted pursuant to this plan to executive officers and
directors. These options have a weighted average exercise price of $13.12 per
share.

1998 Supplemental Stock Option Plan. Holdings has adopted a stock option
plan pursuant to which options, for up to an aggregate of 2,750,000 shares of
Common Stock, may be granted to employees who are not officers or directors and
to consultants and independent contractors who perform services for Holdings or
its subsidiaries. As of January 28, 1999, options to purchase an aggregate of
923,100 shares had been granted pursuant to this plan. These options have a
weighted average exercise price of $23.58 per share.

52
<PAGE>

PRINCIPAL STOCKHOLDERS

General

The table below and the notes thereto set forth as of February 8, 1999
(unless otherwise indicated in the footnotes), certain information concerning
the beneficial ownership (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of the Common Stock by (i) each director and executive
officer of the Company, (ii) all executive officers and directors of the
Company as a group and (iii) each person known to the Company to be the owner
of more than 5% of the Common Stock.

<TABLE>
<CAPTION>
Percent of Common Stock
Owned(3)
------------------------------
Number of Shares of
Common Stock
Name and Address(1) Beneficially Owned(2)(3) Before Offering After Offering
- ------------------- ------------------------ --------------- --------------
<S> <C> <C> <C>
Bradley S. Jacobs....... 20,117,006(4) 26.9% 26.1%
Wayland R. Hicks........ 515,571(5) * *
John N. Milne........... 2,392,857(6) 3.5% 3.3%
William F. Berry........ 2,170,466(7) 3.1% 3.0%
Michael J. Nolan........ 1,028,911(8) 1.5% 1.5%
John S. McKinney........ 1,088,182(9) 1.6% 1.5%
Robert P. Miner......... 441,904(10) * *
Leon D. Black........... -- (11) * *
Richard D. Colburn...... 13,808,662(12) 20.2% 19.5%
Ronald M. DeFeo......... 73,000(13) * *
Michael S. Gross........ -- (11) * *
Richard J. Heckmann..... 90,000(14) * *
Gerald Tsai, Jr......... 590,001(15) * *
Christian M. Weyer...... 102,000(16) * *
All executive officers
and directors as a
group
(14 persons)........... 38,284,988(17) 47.8% 46.4%
The Equitable Companies
Incorporated........... 4,660,705(18) 6.8% 6.6%
Apollo Investment Fund
IV, L.P. and
Apollo Overseas
Partners IV L.P........ 12,000,000(19) 14.9% 14.5%
Colburn Foundation...... 6,000,000(20) 8.8% *
</TABLE>
- --------
*Less than 1%.
(1) Unless otherwise indicated, the address is c/o the Company.
(2) Unless otherwise indicated, each person has sole investment and voting
power with respect to the shares indicated. For purposes of this table, a
person or group of persons is deemed to have "beneficial ownership" of any
shares as of a given date which such person has the right to acquire
within 60 days after such date. For purposes of computing the percentage
of outstanding shares held by each person or group of persons named above
on a given date, any security which such person or persons has the right
to acquire within 60 days after such date is deemed to be outstanding for
the purpose of computing the percentage ownership of such person or
persons, but is not deemed to be outstanding for the purpose of computing
the percentage ownership of any other person.
(3) In certain cases, includes securities owned by one or more entities
controlled by the named holder.
(4) Consists of 12,790,814 outstanding shares, 6,342,858 shares issuable upon
the exercise of currently exercisable Warrants and 983,334 shares issuable
upon the exercise of currently exercisable options. Does not include
1,966,667 shares issuable upon exercise of options which are not currently
exercisable. Mr. Jacobs has certain rights relating to the disposition of
the shares and Warrants owned by certain of the other officers of United
Rentals as described under "--Certain Agreements Relating to Securities
Held by Officers." By virtue of such rights, Mr. Jacobs is deemed to share
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
Act) of the shares owned by such other officers of United Rentals. The
shares that the table indicates are owned by Mr. Jacobs include the shares
with respect to which Mr.

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<PAGE>

Jacobs is deemed to share beneficial ownership as aforesaid. Excluding such
shares, Mr. Jacobs is deemed the beneficial owner of an aggregate of
15,983,434 shares of Common Stock (composed of 10,000,100 outstanding
shares, 5,000,000 shares issuable upon the exercise of currently
exercisable Warrants and 983,334 shares issuable upon the exercise of
currently exercisable options).
(5) Consists of 107,238 outstanding shares and 408,333 shares issuable upon
the exercise of currently exercisable options. Does not include unissued
shares that the Company is required to pay Mr. Hicks as part of his base
salary as described under "Management--Employment Agreements." Also does
not include 816,667 shares issuable upon exercise of options which are not
currently exercisable.
(6) Consists of 1,428,571 outstanding shares, 714,286 shares issuable upon the
exercise of currently exercisable Warrants and 250,000 shares issuable
upon the exercise of currently exercisable options. Does not include
500,000 shares issuable upon exercise of options which are not currently
exercisable.
(7) Consists of 100 outstanding shares and 2,170,366 shares issuable upon the
exercise of currently exercisable options. Does not include 575,000 shares
issuable upon exercise of options that are not currently exercisable.
(8) Consists of 571,529 outstanding shares, 285,715 shares issuable upon the
exercise of currently exercisable Warrants and 171,667 shares issuable
upon the exercise of currently exercisable options. Does not include
343,333 shares issuable upon exercise of options which are not currently
exercisable.
(9) Consists of 3,000 outstanding shares and 1,085,182 shares issuable upon
the exercise of currently exercisable options. Does not include 337,500
shares issuable upon exercise of options that are not currently
exercisable.
(10) Consists of 285,714 outstanding shares and 142,857 shares issuable upon
the exercise of currently exercisable Warrants and 13,333 shares issuable
upon exercise of currently exercisable options. Does include 66,667 shares
issuable upon exercise of options which are not currently exercisable.
(11) Messrs. Black and Gross disclaim beneficial ownership of certain shares as
described in footnote 19.

(12) Consists of 13,798,662 outstanding shares and 10,000 shares issuable upon
the exercise of currently exercisable options. These outstanding shares
are owned by a corporation wholly owned by Mr. Colburn. Does not include
20,000 shares issuable upon exercise of options that are not currently
exercisable. Mr. Colburn disclaims beneficial ownership of the shares held
by the Colburn Foundation as described in footnote 20.
(13) Consists of 3,000 outstanding shares and 70,000 shares issuable upon the
exercise of currently exercisable options. Does not include 20,000 shares
issuable upon exercise of options that are not currently exercisable.
(14) Consists of 20,000 outstanding shares and 70,000 shares issuable upon
exercise of currently exercisable options. Does not include 20,000 shares
issuable upon exercise of options that are not currently exercisable.
(15) Consists of 270,001 outstanding shares and 320,000 shares issuable upon
exercise of currently exercisable options. Does not include 20,000 shares
issuable upon exercise of options that are not currently exercisable.
(16) Consists of 72,000 outstanding shares and 30,000 shares issuable upon
exercise of currently exercisable options.

(17) Consists of 26,559,915 outstanding shares, 6,142,858 shares issuable upon
the exercise of currently exercisable Warrants and 5,582,215 shares
issuable upon the exercise of currently exercisable options. Does not
include 4,685,834 shares issuable upon exercise of options which are not
currently exercisable.

(18) The following information is as of December 31, 1998, and is based on
information contained in a Schedule 13G filed by the indicated
shareholder. Consists of shares beneficially owned by the following
subsidiaries of The Equitable Companies Incorporated, each of which
operates under independent management and makes independent decisions:
4,337,130 shares beneficially owned by Alliance Capital Management L.P.
(of which it is deemed to have shared power to vote or direct the vote
with respect to 3,853,200 shares); 120,800 shares beneficially owned by a
separate account of The Equitable Life Assurance Society of the United
States; 46,011 shares beneficially owned by Wood Struthers & Winthrop
Management Corporation;

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<PAGE>

and 156,764 shares beneficially owned by Donaldson, Lufkin & Jenrette
Securities Corporation (of which it is deemed to have shared power to
dispose or to direct the disposition with respect to 155,802 shares). The
address of the indicated stockholder is 1290 Avenue of the Americas, New
York, New York 10104.
(19) Consists of shares issuable upon conversion of outstanding shares of the
Company's Series A Preferred. Of the shares indicated, (i) 11,389,040
shares are owned by Apollo Investment Fund IV, L.P. ("AIFIV") and (ii)
610,960 shares are owned by Apollo Overseas Partners IV, L.P. ("Overseas
IV"). Apollo Advisors IV, L.P. ("Advisors IV") is the general partner of
AIFIV and the managing general partner of Overseas IV. Apollo Capital
Management IV, L.P. ("Capital Management IV") is the general partner of
Advisors IV. The directors and principal executive officers of Capital
Management IV are Leon D. Black and John J. Hannan. Messrs. Black and
Hannan are also limited partners of Advisors IV. Messrs. Black, Gross and
Hannan disclaim beneficial ownership of the shares owned by AIFIV and
Overseas IV. The address of both AIFIV and Overseas IV is c/o Apollo
Advisors IV, L.P., Two Manhattanville Road, Purchase, New York 10577.

(20) Of the 6,000,000 shares held by the Colburn Foundation, 5,710,000 are
being offered for sale by this prospectus. Richard D. Colburn is the sole
director and President of the Colburn Foundation. Mr. Colburn disclaims
beneficial ownership of shares held by the Colburn Foundation.

Certain Agreements Relating to Securities Held By Officers

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

Each holder of Private Placement Securities (other than Mr. Jacobs and Mr.
Hicks) has entered into an agreement with the Company and Mr. Jacobs that
provides that (1) if Mr. Jacobs sells any Private Placement Securities that he
beneficially owns in a commercial, non-charitable transaction, then Mr. Jacobs
is required to use his best efforts to sell (and has the right to sell subject
to certain exceptions) on behalf of such holder a pro rata portion of such
holder's Private Placement Securities at then prevailing prices, and (2)
except for sales that may be required to be made as aforesaid, the officer
shall not (without the prior written consent of the Company) sell or otherwise
dispose of the Private Placement Securities owned by such officer (subject to
certain exceptions for charitable gifts). The foregoing provisions of the
agreements terminate, depending on the individual, in either September or
October 2002.

Each holder of Private Placement Securities (other than Mr. Jacobs and Mr.
Hicks) has also agreed pursuant to such agreements that the Company, in its
sole discretion, may (1) prior to September 1, 2005, repurchase the Private
Placement Securities owned by such officer in the event that such officer
breaches any agreement with the Company or acts adversely to the interest of
the Company and (2) repurchase such Private Placement Securities without any
cause (provided that such repurchase right without cause has lapsed with
respect to one-third of the securities and will lapse with respect to an
additional one-third on each of the second and third anniversaries of the date
of such agreements). The amount to be paid by the Company in the event of a
repurchase will be equal to (1) in the case of Messrs. Milne, Nolan and Miner,
$9.125 per share of Common Stock and $0.625 per Warrant plus an amount
representing a 4% annual return on such amounts from the date on which such
securities were purchased and (2) in the case of any other holder of Private
Placement Securities, the amount originally paid by such holder for such
securities plus an amount representing a 10% annual return on such amount. See
"Management--Capital Contributions by Executive Officers and Directors" for
information concerning the amounts paid by the executive officers of the
Company for the Private Placement Securities owned by them.

Mr. Hicks has agreed that he will not transfer any shares of Common Stock
that are issued to him as compensation pursuant to his employment agreement
for a one-year period following the date of issuance. See "Management--
Employment Agreements."

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<PAGE>

SELLING STOCKHOLDER

The Colburn Foundation (the "selling stockholder") is selling 5,710,000 of
the shares offered hereby. The Colburn Foundation is a non-profit corporation
organized by Richard D. Colburn who is a non-officer director of United
Rentals. See "Management." The shares that are being offered by the selling
stockholder were originally owned by an affiliate of Richard D. Colburn and
were transferred by such affiliate to the selling stockholder. Mr. Colburn was
formerly Chairman of U.S. Rentals and became a director of the Company
following the U.S. Rentals Merger. The shares that the affiliate of Mr. Colburn
transferred to the selling stockholder were acquired by such affiliate in
connection with the U.S. Rentals Merger. Following completion of the offering,
the selling stockholder will continue to own 290,000 shares of Common Stock and
an affiliate of Mr. Colburn will continue to own 13,798,662 shares (which
shares in the aggregate will represent 19.5% of the Common Stock outstanding
after the offering, assuming the underwriters do not exercise their over-
allotment option).

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DESCRIPTION OF CAPITAL STOCK

General

The authorized capital stock of Holdings consists of 500,000,000 shares of
Common Stock, par value $0.01 per share, and 5,000,000 shares of preferred
stock, par value $0.01 per share (the "Preferred Stock").

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

Common Stock

As of February 1, 1999, there were 68,446,806 shares of Common Stock
outstanding. The holders of shares of Common Stock are entitled to one vote per
share held on all matters submitted to a vote at a meeting of stockholders.
Each stockholder may exercise such vote either in person or by proxy.
Stockholders are not entitled to cumulate their votes for the election of
directors, which means that, subject to such rights as may be granted to the
holders of shares of Preferred Stock, the holders of more than 50% of the
outstanding shares of Common Stock are able to elect all of the directors to be
elected by holders of shares of Common Stock and the holders of the remaining
shares of Common Stock will not be able to elect any director. Subject to such
preferences to which holders of shares of Preferred Stock may be entitled, the
holders of outstanding shares of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared from time to time by the Board of
Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, the holders of
outstanding shares of Common Stock are entitled to share ratably in all assets
of the Company which are legally available for distribution to stockholders,
subject to the prior rights on liquidation of creditors and to preferences to
which holders of shares of Preferred Stock may be entitled. The holders of
outstanding shares of Common Stock do not have any preemptive, subscription,
redemption or sinking fund rights.

Preferred Stock

General

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

Series A Perpetual Convertible Preferred Stock

Holdings has designated 300,000 shares of Preferred Stock as Series A
Perpetual Convertible Preferred Stock ("Series A Preferred"). A complete
description of the terms of the Series A Preferred

57
<PAGE>

is set forth in the Certificate of Designation therefor (the "Designation"), a
copy of which is filed as an exhibit to the Registration Statement of which
this prospectus forms a part. Set forth below is a summary of certain terms of
the Series A Preferred, which summary is qualified in its entirety by reference
to the Designation.

Dividends. The Series A Preferred bears no stated dividend. However, in the
event that Holdings declares or pays any dividends or other distributions upon
the Common Stock, Holdings must (subject to certain exceptions) also declare
and pay to the holders of the Series A Preferred, at the same time that it
declares and pays such dividends or other distributions to the holders of the
Common Stock, the dividends or distributions which would have been declared and
paid with respect to the Common Stock issuable upon conversion of the Series A
Preferred had all of the outstanding shares of Series A Preferred been
converted immediately prior to the record date for such dividend or
distribution, or if no record date is fixed, the date as of which the record
holders of Common Stock entitled to such dividends or distributions are
determined.

Conversion Rights. Each share of Series A Preferred is convertible at any
time, at the option of the holder thereof, into shares of Common Stock
initially at the rate of 40 shares of Common Stock for each share of Series A
Preferred (equivalent to an initial conversion price of $25 per share of Common
Stock based on the liquidation preference of $1,000 per share of Series A
Preferred). The conversion price is subject to adjustment in certain events as
set forth in the Designation.

Voting. Under certain circumstances the holders of the Series A Preferred,
voting separately as a single class, have the right to elect one or two
directors as described under "Management--Right of Holders of Preferred Stock
to Elect Directors."

Except as described above with respect to the election of directors and
except as otherwise required by applicable law, the holders of Series A
Preferred are entitled to vote together with the holders of the Common Stock as
a single class on all matters submitted to stockholders of Holdings for a vote.
Each share of Series A Preferred is entitled to one vote for each share of
Common Stock issuable upon conversion of such share of Series A Preferred.

In addition, Holdings may not, without the affirmative vote or consent of
the holders of at least a majority of the shares of Series A Preferred then
outstanding voting or consenting as the case may be, as a separate class, take
certain actions specified in the Designation.

Ranking. The Series A Preferred ranks senior to the Common Stock with
respect to distributions upon the liquidation, winding-up and dissolution of
Holdings.

Liquidation Preference. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of Holdings or reduction or decrease in its capital
stock resulting in a distribution of assets to the holders of any class or
series of Holdings' capital stock, the holders Series A Preferred will be
entitled to payment out of the assets of Holdings available for distribution of
an amount equal to $1,000 per share of Series A Preferred (the "Liquidation
Preference"), plus accrued and unpaid dividends, if any, to the date fixed for
liquidation, dissolution, winding-up or reduction or decrease in capital stock,
before any distribution is made on the Common Stock. After payment in full of
the Liquidation Preference and such dividends, if any, to which holders of
Series A Preferred are entitled, such holders will not be entitled to any
further participation in any distribution of assets of Holdings.

Redemption; Automatic Conversion. If Holdings is subject to a Change in
Control (as defined in the Designation) in connection with an acquisition which
is not accounted for under the "pooling-of-interests" method of generally
accepted accounting principles, Holdings must offer to purchase within 10
business days after the Change in Control all of the then outstanding shares of
Series A Preferred at a purchase price per share, in cash, equal to the
Liquidation Preference thereof plus an amount

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<PAGE>

equal to 6.25% of the Liquidation Preference, compounded annually from January
7, 1999 to the purchase date (the "Call Price"). Upon the occurrence of a
Change in Control in connection with an acquisition which is accounted for
under the "pooling-of-interests" method of accounting, all of the then
outstanding Series A Preferred will be automatically converted into Common
Stock having a market value equal to 109.5% of the Call Price, valued at the
closing price of the Common Stock at the close of business on the business day
prior to the date of the Change in Control.

If, after 2 1/2 years following the date of issuance of the Series A
Preferred, Holdings issues for cash Common Stock or a series of preferred stock
convertible into Common Stock, in either a public offering or a bona fide
private financing, for a price for the Common Stock (including any amount
payable upon conversion of such preferred stock) below the then current
conversion price of Series A Preferred into Common Stock (currently $25 per
share) (a "Reduced Price Offering"), then Holdings must make an offer to apply
towards the purchase of outstanding shares of Series A Preferred, at the Call
Price, 40% of the amount by which the net cash proceeds from any such Reduced
Price Offering and for all other Reduced Price Offerings consummated during the
preceding 12 months (but excluding any Reduced Price Offerings prior to June
30, 2001) exceeds an aggregate of $50,000,000, less a credit for all amounts
theretofore paid for such purchases during such 12-month period.

Warrants, Options and Convertible Securities

There are currently outstanding warrants to purchase an aggregate of
6,539,329 shares of Common Stock. Such warrants provides for a weighted average
exercise price of $10.18 per share.

There are currently outstanding options to purchase an aggregate of
14,447,647 shares of Common Stock (which includes options to purchase 4,013,039
shares which were assumed in the U.S. Rentals Merger). These options provide
for a weighted average exercise price of $19.93 per share. Of these options,
options to purchase an aggregate of 4,810,394 shares of Common Stock are
currently exercisable and options to purchase 9,637,253 shares of Common Stock
will become exercisable in installments over specified periods.

Convertible Quarterly Income Preferred Securities

A subsidiary trust of Holdings has issued $300 million of Trust Preferred
Securities as described under "Management's Discussion and Analysis of
Financial Conditions and Results of Operations--Certain Information Concerning
Preferred Securities." These securities are convertible at the option of the
holders thereof into Common Stock at a conversion price equivalent to $43.63
per share (subject to adjustment).

Transfer Agent and Registrar

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

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<PAGE>

CERTAIN CHARTER AND BY-LAW PROVISIONS

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

Classified Board of Directors

The Certificate provides that the directors (other than directors elected
by holders of Preferred Stock) shall be divided into three classes and that the
number of directors in each class shall be as nearly equal as is possible based
upon the number of directors constituting the entire Board. The Certificate
effectively provides that the term of office of the first class will expire at
the first annual meeting of stockholders following January 1, 1999, the term of
office of the second class will expire at the second annual meeting of
stockholders following January 1, 1999, and the term of office of the third
class will expire at the third annual meeting of stockholders following January
1, 1999. At each annual meeting of stockholders, successors to directors of the
class whose term expires at such meeting will be elected to serve for three-
year terms and until their successors are elected and qualified.

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

Number of Directors; Removal; Filling Vacancies

The Certificate provides that, subject to any rights of holders of
Preferred Stock to elect directors, the number of directors comprising the
entire Board will be fixed from time to time by action of not less than a
majority of the directors then in office. If the number of directors is at any
time fixed at three or greater, then thereafter in no event shall such number
be less than three or more than nine, unless approved by action of not less
than two-thirds of the directors then in office. In addition, the Certificate
provides that, subject to any rights of holders of Preferred Stock, newly
created directorships resulting from an increase in the authorized number of
directors or vacancies on the Board resulting from death, resignation,
retirement, disqualification or removal of directors or any other cause may be
filled only by the Board (and not by the stockholders unless there are no
directors in office), provided that a quorum is then in office and present, or
by a majority of the directors then in office, if less than a quorum is then in
office, or by the sole remaining director. Accordingly, the Board could prevent
any stockholder from enlarging the Board and filling the new directorships with
such stockholder's own nominees.

Under the Delaware law, unless otherwise provided in the certificate of
incorporation, directors serving on a classified board may only be removed by
the stockholders for cause. The Certificate provides that directors may be
removed only for cause and only upon the affirmative vote of holders

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<PAGE>

of at least 66 2/3% of the voting power of all the then outstanding shares of
stock entitled to vote generally in the election of directors ("Voting Stock"),
voting together as a single class.

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

Limitation on Special Meetings; No Stockholder Action by Written Consent

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

Advance Notice Provisions for Stockholder Nominations and Stockholder Proposals

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

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

Under the Stockholder Notice Procedure, a stockholder's notice to Holdings
proposing to nominate a person for election as director must contain certain
information about the nominating stockholder and the proposed nominee. Under
the Stockholder Notice Procedure, a stockholder's notice relating to the
conduct of business other than the nomination of directors must contain certain
information about such business and about the proposing stockholder. If the
Chairman or other officer presiding at a meeting determines that a person was
not nominated, or other business was not brought before the meeting, in
accordance with the Stockholder Notice Procedure, such person will not be
eligible for election as a director, or such business will not be conducted at
such meeting, as the case may be.

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

LEGAL MATTERS

Certain legal matters in connection with the offering described in this
prospectus will be passed upon for the Company by Weil, Gotshal & Manges LLP,
New York, New York, and Ehrenreich Eilenberg Krause & Zivian LLP, New York, New
York. Certain legal matters in connection with the offering will be passed upon
for the Underwriters by Skadden, Arps, Slate, Meagher & Flom 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 included herein
or incorporated in this prospectus by reference:

. the consolidated financial statements of United Rentals, Inc. as of
December 31, 1998 and 1997 and for each of the three years in the period
ended December 31, 1998, included herein;

. 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; and

. the financial statements of Power Rental Co. Inc. at July 31, 1997 and
for the year then ended, included in the Company's Current Report on
Form 8-K/A dated July 21, 1998 and in the Company's Current Report on
Form 8-K dated December 24, 1998.

These financial statements are included herein or incorporated herein by
reference in reliance on their reports, given on their authority as experts in
accounting and auditing.

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The combined financial statements of Equipment Supply Co., Inc. and
Affiliates as of December 31, 1997 and 1996 and for each of the three years in
the period ended December 31, 1997, included in the Company's Current Reports
on Form 8-K dated July 21, 1998 and December 24, 1998, have been audited by BDO
Seidman, LLP independent certified public accountants, as set forth in their
report thereon included therein, and are incorporated by reference herein in
reliance on such report given upon the authority of such firm as experts in
accounting and auditing.

The consolidated financial statements of McClinch, Inc. and subsidiaries as
of January 31, 1998 and August 31, 1998, and for the year ended January 31,
1998 and the financial statements of McClinch Equipment Services, Inc. as of
December 31, 1997 and August 31, 1998, and for the year ended December 31,
1997, included in the Company's Current Report on Form 8-K dated December 24,
1998, have been audited by PricewaterhouseCoopers L.L.P., independent
accountants, as set forth in their reports thereon included therein, and are
incorporated by reference herein in reliance on such reports given upon the
authority of such firm as experts in accounting and auditing.

The combined financial statements of BNR Group of Companies as of March 31,
1996 and 1997 and for the years ended March 31, 1996 and 1997 included in the
Company's Current Report on Form 8-K/A dated February 4, 1998, have been
audited by KPMG LLP, independent chartered accountants, as set forth in their
report thereon included therein and are incorporated by reference herein in
reliance on such report given upon the authority of such firm as experts in
accounting and auditing.

The audited financial statements of Access Rentals, Inc. and Subsidiary and
Affiliate, included in the Company's Current Report on Form 8-K/A dated
February 4, 1998, have been incorporated by reference herein in reliance upon
the report of Battaglia, Andrews & Moag, P.C., independent certified public
accountants, 210 East Main Street, Batavia, New York 14020, for the periods
indicated, given upon the authority of such firm as experts in accounting and
auditing.

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INDEX TO FINANCIAL STATEMENTS

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Page
----
<C> <S> <C>
Pro Forma Unaudited Consolidated Financial Statements of United
I. Rentals, Inc.
Introduction....................................................... F-2
Pro Forma Consolidated Balance Sheet--December 31, 1998
(unaudited)....................................................... F-3
Pro Forma Consolidated Statement of Operations for the year ended
December 31, 1998 (unaudited)..................................... F-4
Notes to Pro Forma Unaudited Consolidated Financial Statements..... F-5
II. Consolidated Financial Statements of United Rentals, Inc.
Report of Independent Auditors..................................... F-7
Consolidated Balance Sheets--December 31, 1998 and 1997............ F-8
Consolidated Statements of Operations for the years ended December
31, 1998, 1997 and 1996........................................... F-9
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1998, 1997 and 1996.................................. F-10
Consolidated Statements of Cash Flows for the years ended December
31, 1998, 1997 and 1996........................................... F-11
Notes to Consolidated Financial Statements......................... F-13
</TABLE>

F-1
<PAGE>

UNITED RENTALS, INC.

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following pro forma unaudited consolidated balance sheet of the Company
gives effect to the acquisitions completed by the Company subsequent to
December 31, 1998 and the financing thereof, as if all such transactions had
occurred on December 31, 1998.

The following pro forma unaudited consolidated statement of operations with
respect to the year ended December 31, 1998, gives effect to each acquisition
completed by the Company after the beginning of the year and the financing
thereof and as if all such transactions had occurred at the beginning of the
year.

The pro forma consolidated financial statements are based upon certain
assumptions and estimates which are subject to change. These statements are not
necessarily indicative of the actual results of operations that might have
occurred, nor are they necessarily indicative of expected results in the
future.

The pro forma consolidated financial statements should be read in
conjunction with the Company's historical Consolidated Financial Statements and
related notes included elsewhere in this prospectus and the Financial
Statements and related notes incorporated by reference in this prospectus of
certain of the companies we acquired.

F-2
<PAGE>

UNITED RENTALS, INC.

PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET

December 31, 1998

<TABLE>
<CAPTION>
United
Rentals Acquisitions Adjustments Pro Forma
---------- ------------ ----------- ----------
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Cash and cash
equivalents............ $ 20,410 $ 577 $ (16,987)(a) $ 4,000
Accounts receivable,
net.................... 233,282 5,331 238,613
Inventory............... 70,994 3,242 74,236
Rental equipment, net... 1,143,006 16,974 9,520 (b) 1,169,500
Property and equipment,
net.................... 185,511 1,893 (380)(c) 187,024
Intangible assets, net.. 922,065 35,697 (d) 957,762
Prepaid expenses and
other assets........... 59,395 2,062 61,457
---------- ------- --------- ----------
$2,634,663 $30,079 $ 27,850 $2,692,592
========== ======= ========= ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Liabilities:
Accounts payable,
accrued expenses and
other liabilities...... $ 293,859 $ 7,061 $ 300,920
Debt.................... 1,314,574 14,052 $ (14,052)(e) 1,365,442
50,868 (f)
---------- ------- --------- ----------
Total liabilities...... 1,608,433 21,113 36,816 1,666,362
Company-obligated
mandatorily redeemable
convertible preferred
securities of a
subsidiary trust....... 300,000 300,000
Stockholders' equity:
Common stock............ 684 99 (99)(g) 684
Additional paid-in
capital................ 689,018 (1,039) 1,039 (g) 689,018
Retained earnings....... 36,528 9,906 (9,906)(g) 36,528
---------- ------- --------- ----------
Total stockholders'
equity................ 726,230 8,966 (8,966) 726,230
---------- ------- --------- ----------
$2,634,663 $30,079 $ 27,850 $2,692,592
========== ======= ========= ==========
</TABLE>

See notes to pro forma unaudited Consolidated Financial Statements.

F-3
<PAGE>

UNITED RENTALS, INC.

PRO FORMA UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS

For the Year Ended December 31, 1998

<TABLE>
<CAPTION>
Equipment
Supply McClinch Inc.
Access Power Co., Inc. and McClinch
United Rentals, Rental and Equipment Other
Rentals Inc. Co., Inc. Affiliates Service, Inc. Acquisitions Adjustments Pro Forma
--------- -------- --------- ---------- ------------- ------------ ----------- ----------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Equipment rentals...... $ 895,466 $2,313 $ 6,295 $34,382 $16,515 $173,847 $1,128,818
Sales of equipment,
merchandise and other
revenue............... 324,816 841 1,555 8,958 5,601 129,897 471,668
--------- ------ ------- ------- ------- -------- ------- ----------
Total revenues.......... 1,220,282 3,154 7,850 43,340 22,116 303,744 1,600,486
Cost of revenues
Cost of equipment
rentals, excluding
depreciation.......... 394,750 1,131 3,416 12,529 6,770 69,511 488,107
Depreciation of rental
equipment............. 175,910 402 2,987 10,368 3,316 40,176 $(9,124)(a) 224,035
Cost of sales and other
operating costs....... 226,174 741 638 7,267 3,795 86,701 325,316
--------- ------ ------- ------- ------- -------- ------- ----------
Total cost of revenues.. 796,834 2,274 7,041 30,164 13,881 196,388 (9,124) 1,037,458
--------- ------ ------- ------- ------- -------- ------- ----------
Gross profit............ 423,448 880 809 13,176 8,235 107,356 9,124 563,028
Selling, general and
administrative
expenses............... 195,620 774 3,200 9,672 3,535 76,315 (17,258)(b) 271,791
(67)(c)
Merger-related
expenses............... 47,178 47,178
Non-rental depreciation
and amortization....... 35,248 23 304 359 382 4,897 6,813 (d) 48,026
--------- ------ ------- ------- ------- -------- ------- ----------
Operating income
(loss)................. 145,402 83 (2,695) 3,145 4,318 26,144 19,636 196,033
Interest expense........ 64,157 147 631 4,220 763 10,662 (16,423)(e) 88,007
23,850 (f)
Preferred dividends of a
subsidiary trust....... 7,854 7,854
Other (income) expense,
net.................... (4,906) (52) (95) (198) (51) (4,797) (10,099)
--------- ------ ------- ------- ------- -------- ------- ----------
Income (loss) before
provision for income
taxes and extraordinary
item................... 78,297 (12) (3,231) (877) 3,606 20,279 12,209 110,271
Provision for income
taxes.................. 43,499 (2,638) 896 2,087 11,460 (g) 55,304
--------- ------ ------- ------- ------- -------- ------- ----------
Income (loss) before
extraordinary item..... $ 34,798 $ (12) $(3,231) $ 1,761 $ 2,710 $ 18,192 $ 749 $ 54,967
========= ====== ======= ======= ======= ======== ======= ==========
Basic earnings per share
before extraordinary
item................... $ 0.53 $ 0.80
========= ==========
Diluted earnings per
share before
extraordinary item..... $ 0.48 $ 0.73
========= ==========
</TABLE>

See notes to pro forma unaudited Consolidated Financial Statements.

F-4
<PAGE>

UNITED RENTALS, INC.

NOTES TO PRO FORMA UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands)

1. Basis of Presentation

The Company is a large geographically diversified equipment rental company
in the United States, Canada and Mexico. The Company rents a broad array of
equipment to a diverse customer base that includes construction industry
participants, industrial companies, homeowners and other individuals. The
Company also sells rental equipment, acts as a distributor for certain new
equipment, and sells related merchandise and parts.

The financial data for United Rentals, Inc. is derived from the historical
financial statements of the Company. The financial data for each of the
acquisitions is derived from the respective historical financial statements of
such companies. The results of operations for each acquisition acquired during
a period presented includes the results of operations from the beginning of
such period through the date of acquisition.

2. Acquisitions

Since its formation, the Company has completed a total of 101 acquisitions
through February 26, 1999.

Based upon management's preliminary estimates, it is estimated that the
carrying value of the assets and liabilities of the 11 companies acquired by
the Company subsequent to December 31, 1998 approximates fair value, with the
exception of rental equipment and other property and equipment, which required
adjustments to reflect fair market value. The following table presents the
allocation of purchase price of each of the 11 companies acquired by the
Company subsequent to December 31, 1998:

<TABLE>
<CAPTION>
<S> <C>
Purchase price......................................................... $53,803
Net assets acquired.................................................... 8,966
Fair value adjustments:
Rental equipment..................................................... 9,520
Property and equipment............................................... (380)
-------
Intangible assets recorded............................................. $35,697
=======
</TABLE>

3. Pro Forma Adjustments

Balance sheet adjustments:

a. Records the portion of the acquisition consideration and debt repayment
paid from available cash on hand.

b.Adjusts the carrying value of rental equipment to fair market value.

c.Adjusts the carrying value of property and equipment to fair market
value.

d. Records the excess of the acquisition consideration over the estimated
fair value of net assets acquired.

e.Records the repayment of certain indebtedness of the acquisitions.

f. Records the portion of the acquisition consideration and debt repayment
funded by borrowing under United Rentals' credit facility and seller
notes.

F-5
<PAGE>

g.Records the elimination of the stockholders' equity of the acquisitions.

Statement of operations adjustments:

a. Adjusts the depreciation of rental equipment and other property and
equipment based upon adjusted carrying values utilizing the following
lives (subject to a salvage value ranging from 0 to 10%):

<TABLE>
<S> <C>
Rental equipment.............................................. 2-10 years
Other property and equipment.................................. 2-15 years
</TABLE>

b. Adjusts the compensation to former owners and executives of the
acquisitions to current levels of compensation.

c. Adjusts the lease expense for real estate utilized by the acquisitions
to current lease agreements.

d. Records the amortization of the excess of cost over net assets acquired
attributable to the acquisitions using an estimated life of 40 years.

e. Eliminates interest expense related to the outstanding indebtedness of
the acquisitions which was repaid by United Rentals.

f. Records interest expense relating to the portion of the acquisitions
funded through borrowing under United Rentals' credit facility using a
rate per annum of 7%, senior subordinated notes using a rate per annum
of 9 1/2%, term loan using a rate per annum of 7.6% and seller notes
using a rate per annum of 7.0%.

g. Records a provision for income taxes at an estimated rate of 41%, less
the tax benefit for merger-related expenses of $14,000 and a charge of
$4,750 to recognize deferred tax liabilities of a company acquired in a
pooling-of-interests transaction.

4. Earnings Per Share

Pro forma earnings per share is calculated by dividing income before
extraordinary item by the weighted average shares outstanding during the
period. The weighted average outstanding shares during the period is
calculated as follows:

<TABLE>
<S> <C>
Basic:
Weighted average common shares........................................ 66,225
Adjustment for shares issued for acquisitions......................... 2,196
------
68,421
======
Diluted:
Weighted average common shares........................................ 66,225
Adjustment for shares issued for acquisitions......................... 2,196
Effect of dilutive securities......................................... 6,850
------
75,271
======
</TABLE>

F-6
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors
United Rentals, Inc.

We have audited the accompanying consolidated balance sheets of United
Rentals, Inc. as of December 31, 1998 and 1997 and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 1998. These consolidated financial
statements are the responsibility of the management of United Rentals, Inc. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of United Rentals, Inc. at December 31, 1998 and 1997, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1998 in conformity with generally accepted accounting
principles.

/s/ Ernst & Young LLP

MetroPark, New Jersey

February 17, 1999,

except for Note 17, as
to which the date is

February 26, 1999

F-7
<PAGE>

UNITED RENTALS, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
December 31
--------------------
1998 1997
---------- --------
(In thousands,
except share data)
<S> <C> <C>
Assets
Cash and cash equivalents................................. $ 20,410 $ 72,411
Accounts receivable, net of allowance for doubtful
accounts of $41,201 and $11,085 at 1998 and 1997,
respectively............................................. 233,282 82,592
Inventory................................................. 70,994 21,778
Prepaid expenses and other assets......................... 59,395 16,287
Rental equipment, net..................................... 1,143,006 461,026
Property and equipment, net............................... 185,511 98,268
Intangible assets, net of accumulated amortization of
$14,520 and $568 at 1998 and 1997, respectively.......... 922,065 73,648
---------- --------
$2,634,663 $826,010
========== ========
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable........................................ $ 121,940 $ 41,392
Debt.................................................... 1,314,574 264,573
Deferred taxes.......................................... 43,560 24,395
Accrued expenses and other liabilities.................. 128,359 49,262
---------- --------
Total liabilities..................................... 1,608,433 379,622
Commitments and contingencies
Company-obligated manditorily redeemable convertible
preferred securities of a subsidiary trust............... 300,000
Stockholders' equity:
Preferred stock--$.01 par value, 5,000,000 shares
authorized, No shares issued and outstanding...........
Common stock--$.01 par value, 500,000,000 shares
authorized in 1998 and 75,000,000 in 1997, 68,427,999
shares issued and outstanding in 1998 and 56,239,375 in
1997................................................... 684 562
Additional paid-in capital.............................. 689,018 401,758
Retained earnings....................................... 36,809 44,068
Accumulated other comprehensive income.................. (281)
---------- --------
Total stockholders' equity............................ 726,230 446,388
---------- --------
$2,634,663 $826,010
========== ========
</TABLE>

See accompanying notes.

F-8
<PAGE>

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------------
1998 1997 1996
-------------- ------------- -------------
(in thousands, except per share amounts)
<S> <C> <C> <C>
Revenues:
Equipment rentals.............. $ 895,466 $388,181 $ 295,308
Sales of rental equipment...... 119,620 41,406 25,518
Sales of new equipment,
merchandise and other
revenues...................... 205,196 60,251 33,652
-------------- ------------- -------------
Total revenues.................. 1,220,282 489,838 354,478
Cost of revenues:
Cost of equipment rentals,
excluding depreciation........ 394,750 189,578 138,018
Depreciation of rental
equipment..................... 175,910 82,097 65,294
Cost of rental equipment
sales......................... 66,136 20,455 10,570
Cost of new equipment and
merchandise sales and other
operating costs............... 160,038 48,416 27,563
-------------- ------------- -------------
Total cost of revenues.......... 796,834 340,546 241,445
-------------- ------------- -------------
Gross profit.................... 423,448 149,292 113,033
Selling, general and
administrative expenses........ 195,620 70,835 54,721
Merger-related expenses......... 47,178
Non-rental depreciation and
amortization................... 35,248 13,424 9,387
Termination cost of deferred
compensation agreements........ 20,290
-------------- ------------- -------------
Operating income................ 145,402 44,743 48,925
Interest expense................ 64,157 11,847 11,278
Preferred dividends of a
subsidiary trust............... 7,854
Other (income) expense, net..... (4,906) (2,021) (499)
-------------- ------------- -------------
Income before provision for
income taxes and extraordinary
items.......................... 78,297 34,917 38,146
Provision for income taxes...... 43,499 29,508 420
-------------- ------------- -------------
Income before extraordinary
items.......................... 34,798 5,409 37,726
Extraordinary items, net of tax
benefit of $14,255 in 1998 and
$995 in 1997................... 21,337 1,511
-------------- ------------- -------------
Net income...................... $ 13,461 $ 3,898 $ 37,726
============== ============= =============
Basic earnings before
extraordinary items per share.. $ 0.53 $ 0.12 $ 1.67
============== ============= =============
Diluted earnings before
extraordinary items per share.. $ 0.48 $ 0.11 $ 1.67
============== ============= =============
Basic earnings per share........ $ 0.20 $ 0.08 $ 1.67
============== ============= =============
Diluted earnings per share...... $ 0.18 $ 0.08 $ 1.67
============== ============= =============
Unaudited pro forma data (Note
9):
Historical income before income
taxes and extraordinary
items......................... $ 78,297 $ 34,917 $ 38,146
Pro forma income tax expense... 44,386 14,176 15,487
-------------- ------------- -------------
Pro forma income before
extraordinary items........... $ 33,911 $ 20,741 $ 22,659
============== ============= =============
Pro forma basic income before
extraordinary items per
share......................... $ 0.51 $ 0.44 $ 1.00
============== ============= =============
Pro forma diluted income before
extraordinary items per
share......................... $ 0.46 $ 0.42 $ 1.00
============== ============= =============
</TABLE>

See accompanying notes.

F-9
<PAGE>

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
Common Stock
------------------
Accumulated
Additional Other
Number Paid-in Retained Comprehensive Comprehensive
of Shares Amount Capital Earnings Income Income
---------- ------ ---------- -------- ------------- -------------
(In thousands, except share amounts)
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1995................... 22,661,994 $227 $ 13,383 $ 90,719
Subchapter S
distributions of a
pooled entity........ (36,530)
Treasury stock
purchase............. (25,229) (105)
Net income............ 37,726
---------- ---- -------- -------- ------- -----
Balance, December 31,
1996................... 22,636,765 227 13,278 91,915
Issuance of common
stock and warrants... 33,602,610 335 343,797
Distribution of non-
operating assets,
net.................. (4,219)
Reclassification of
Subchapter S
accumulated earnings
to paid-in capital... 48,902 (48,902)
Subchapter S
distributions of a
pooled entity........ (2,843)
Net income............ 3,898
---------- ---- -------- -------- ------- -----
Balance, December 31,
1997................... 56,239,375 562 401,758 44,068
Comprehensive income:
Net income........... 13,461 $13,461
Other comprehensive
income:
Foreign currency
translation
adjustments....... (281) $(281)
-------
Comprehensive income.. $13,180
=======
Issuance of common
stock and warrants... 10,813,255 108 267,214
Conversion of
convertible notes.... 30,947 461
Cancellation of common
stock................ (137,600) (1) 1
Reclassification of
Subchapter S
accumulated earnings
to paid-in-capital... 18,979 (18,979)
Pooling-of-interests.. 1,456,997 15 (14) 1,795
Exercise of common
stock options........ 25,025 619
Subchapter S
distributions of a
pooled entity........ (3,536)
---------- ---- -------- -------- -----
Balance, December 31,
1998................... 68,427,999 $684 $689,018 $ 36,809 $(281)
========== ==== ======== ======== =====
</TABLE>

See accompanying notes.

F-10
<PAGE>

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Year Ended December 31
---------------------------------
1998 1997 1996
----------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income.................................. $ 13,461 $ 3,898 $ 37,726
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.............. 211,158 95,521 74,681
Amortization of original issue discount and
deferred financing fees................... 1,153
Gain on sale of rental equipment........... (53,484) (20,951) (14,948)
Gain on sales of businesses................ (4,189)
Write down of assets held for sale......... 4,040
Non-cash interest, net..................... 201
Extraordinary items........................ 35,592 2,506
Deferred taxes............................. 27,345 25,075
Changes in operating assets and liabilities:
Accounts receivable........................ (53,368) (19,837) (8,271)
Inventory.................................. (6,392) (3,785) (1,148)
Prepaid expenses and other assets.......... (3,526) (9,821) (2,219)
Accounts payable........................... 39,251 11,704 (7,966)
Accrued expenses and other liabilities..... 5,088 8,618 8,116
----------- --------- ---------
Net cash provided by operating activities.. 216,129 93,129 85,971
----------- --------- ---------
Cash Flows From Investing Activities:
Purchases of rental equipment............... (479,534) (268,548) (116,021)
Purchases of property and equipment......... (84,617) (53,653) (27,269)
Proceeds from sales of rental equipment..... 119,620 41,406 25,518
Proceeds from sales of businesses........... 10,640
Collection of notes receivable.............. 122 2,537
Purchase of other companies................. (911,837) (115,528) (15,033)
Payment of contingent purchase price........ (3,956)
In-process acquisition costs................ (241) (129)
----------- --------- ---------
Net cash used in investing activities...... (1,349,925) (396,330) (130,268)
----------- --------- ---------
Cash Flows From Financing Activities:
Proceeds from issuance of common stock, net
of issuance costs.......................... 207,005 340,738
Proceeds from debt.......................... 2,363,637 308,858 131,053
Payments on debt............................ (1,785,667) (271,418) (50,713)
Proceeds from sale-leaseback................ 35,000
Proceeds from the issuance of redeemable
convertible preferred securities........... 300,000
Payment of financing costs.................. (34,982) (1,631) (230)
Proceeds from the exercise of common stock
options.................................... 619
Subchapter S distributions of a pooled
entity..................................... (3,536) (2,843) (36,530)
Purchase of treasury stock.................. (105)
Cash retained by Predecessor in connection
with Recapitalization...................... (998)
----------- --------- ---------
Net cash provided by financing activities.. 1,082,076 372,706 43,475
Effect of foreign exchange rates............ (281)
----------- --------- ---------
Net increase (decrease) in cash and cash
equivalents................................ (52,001) 69,505 (822)
Cash and cash equivalents at beginning of
year....................................... 72,411 2,906 3,728
----------- --------- ---------
Cash and cash equivalents at end of year.... $ 20,410 $ 72,411 $ 2,906
=========== ========= =========
</TABLE>

See accompanying notes.

F-11
<PAGE>

UNITED RENTALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)

<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------
1998 1997 1996
---------- -------- -------
(In thousands)
<S> <C> <C> <C>
Supplemental disclosure of cash flow information:
Cash paid for interest........................... $ 43,157 $ 13,090 $13,766
Cash paid for taxes.............................. $ 10,224 $ 11,487 $ 399
Deferred compensation and bonus payments through
issuance of common stock........................ $ 486
Net assets retained by Predecessor in connection
with Recapitalization........................... $ 3,221
Supplemental schedule of non-cash investing and
financing activities
During the year ended December 31, 1998,
convertible notes in the original principal
amount of $500 were converted into 31 shares of
common stock
The Company acquired the net assets and assumed
certain liabilities of other companies as
follows:
Assets, net of cash acquired.................... $1,501,467 $162,954 $15,033
Liabilities assumed............................. (518,861) (43,301)
Less:
Amounts paid in common stock and warrants....... (60,304) (3,825)
Amounts paid through issuance of debt........... (10,465) (300)
---------- -------- -------
Net cash paid.................................... $ 911,837 $115,528 $15,033
========== ======== =======
</TABLE>

See accompanying notes.

F-12
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

1. Organization and Basis of Presentation

United Rentals, Inc. is principally a holding company ("Holdings") and
conducts its operations primarily through its wholly owned subsidiary United
Rentals (North America), Inc. ("URI") and subsidiaries of URI. URI was
incorporated in August 1997, initially capitalized in September 1997 and
commenced equipment rental operations in October 1997. Holdings was
incorporated in July 1998 and became the parent of URI on August 5, 1998,
pursuant to the reorganization of the legal structure of URI described in Note
10. Prior to such reorganization, the name of URI was United Rentals, Inc.
References herein to the "Company" refer to Holdings and its subsidiaries, with
respect to periods following the reorganization, and to URI and its
subsidiaries, with respect to periods prior to the reorganization. As a result
of the reorganization, Holdings' primary asset is its sole ownership of all
issued and outstanding shares of common stock of URI. URI's various credit
agreements and debt instruments place restrictions on its ability to transfer
funds to its shareholder.

The Company rents a broad array of equipment to a diverse customer base
that includes construction industry participants, industrial companies,
homeowners and others in the United States, Canada and Mexico. The Company also
engages in related activities such as selling rental equipment, acting as a
distributor for certain new equipment and selling related merchandise and
parts. The nature of the Company's business is such that short-term obligations
are typically met by cash flow generated from long-term assets. Consequently,
consistent with industry practice, the accompanying balance sheets are
presented on an unclassified basis.

The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, giving retroactive effect for
the reorganization for all periods presented. All significant intercompany
accounts and transactions have been eliminated. The accompanying consolidated
financial statements for the years ended December 31, 1997 and 1996 include the
accounts of certain acquisitions completed in 1998 that were accounted for as
poolings-of-interests, as described in Note 3.

2. Summary of Significant Accounting Policies

Cash Equivalents

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

Inventory

Inventory consists of equipment, tools, parts, fuel and related supply
items. Inventory is stated at the lower of cost or market. Cost is determined
on either a weighted average or first-in, first-out method.

Rental Equipment

Rental equipment is recorded at cost and depreciated over the estimated
useful lives of the equipment generally using the straight-line method. The
range of useful lives estimated by management for rental equipment is two to
ten years. Rental equipment is depreciated to a salvage value of zero to ten
percent of cost. Rental equipment having a cost of $0.5 or less is expensed at
the time of purchase. Ordinary maintenance and repair costs are charged to
operations as incurred.

F-13
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Property and Equipment

Property and equipment are recorded at cost and depreciated over their
estimated useful lives using the straight-line method. The range of useful
lives estimated by management for property and equipment is two to thirty-nine
years. Ordinary maintenance and repair costs are charged to operations as
incurred. Leasehold improvements are amortized using the straight-line method
over their estimated useful lives or the remaining life of the lease, whichever
is shorter.

Intangible Assets

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

Long-Lived Assets

Long-lived assets are recorded at the lower of amortized cost or fair
value. As part of an ongoing review of the valuation of long-lived assets,
management assesses the carrying value of such assets if facts and
circumstances suggest they may be impaired. If this review indicates that the
carrying value of these assets may not be recoverable, as determined by a
nondiscounted cash flow analysis over the remaining useful life, the carrying
value would be reduced to its estimated fair value. There have been no material
impairments recognized in these financial statements.

Fair Value of Financial Instruments

The carrying amounts reported in the balance sheets for accounts
receivable, accounts payable, accrued expenses and other liabilities
approximate fair value due to the immediate to short-term maturity of these
financial instruments. The fair values of the Credit Facility, other lines of
credit, the Term Loan and the demand note to stockholder are determined using
current interest rates for similar instruments as of December 31, 1998 and 1997
and approximate the carrying value of these financial instruments due to the
fact that the underlying instruments include provisions to adjust interest
rates to approximate fair market value. The estimated fair value of the
Company's other financial instruments at December 31, 1998 and 1997 are based
upon available market information and are as follows:

<TABLE>
<CAPTION>
1998 1997
-------------------------- --------------------------
Carrying Amount Fair Value Carrying Amount Fair Value
--------------- ---------- --------------- ----------
<S> <C> <C> <C> <C>
Redeemable convertible
preferred securities... $300,000 $289,128
Senior subordinated
notes.................. 700,153 705,425
Seller notes............ 10,465 10,465
Other debt.............. 27,456 27,456 $6,360 $6,360
</TABLE>

Revenue Recognition

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

F-14
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Advertising Expense

The Company advertises primarily through trade publications and yellow
pages. Advertising costs are expensed as incurred and totaled $13,540, $6,866
and $4,487 for the years ended December 31, 1998, 1997 and 1996, respectively.

Income Taxes

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

U.S. Rentals, Inc. ("U.S. Rentals") (prior to February 20, 1997) and Rental
Tools and Equipment Co. ("Rental Tools") (prior to August 24, 1998) elected to
be treated as Subchapter S Corporations (See Note 9).

Use of Estimates

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

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash investments and
accounts receivable. The Company maintains cash and cash equivalents with high
quality financial institutions.

Concentration of credit risk with respect to accounts receivable are
limited because a large number of geographically diverse customers make up the
Company's customer base. No single customer represents greater than 10% of
total accounts receivable. The Company controls credit risk through credit
approvals, credit limits, and monitoring procedures.

Stock-Based Compensation

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

Computation of Earnings Per Share

Earnings per share is calculated under the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share". Common
stock issued for consideration below the initial public offering price ("IPO
price") of $13.50 per share at which shares were sold in the Company's initial
public offering (the "IPO"), and stock options and warrants granted with
exercise prices below the IPO price per share during the twelve months
preceding the date of the initial filing of the registration statement for the
IPO are included in the calculation of common equivalent shares at the IPO
price per share.

F-15
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Related Party Transactions

As disclosed in these financial statements, the Company has participated in
certain transactions with related parties. In the opinion of management, all
transactions with related parties have been conducted on terms which are fair
and equitable.

Insurance

The Company is insured for general liability, workers' compensation, and
group medical claims up to a specified claim and aggregate amounts (subject to
a deductible of $500). Insured losses subject to this deductible are accrued
based upon the aggregate liability for reported claims incurred and an
estimated liability for claims incurred but not reported. These liabilities are
not discounted.

Impact of Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
establishes a new model for accounting for derivatives and hedging activities.
The Company is required to adopt SFAS No. 133 beginning January 1, 2000. The
adoption of SFAS No. 133 is not expected to have a material effect on the
Company's consolidated financial position or results of operations.

Reclassifications

Certain prior year balances have been reclassified to conform to the 1998
presentation.

3. Acquisitions

During the year ended December 31, 1998, the Company completed 84
acquisitions. Three of such acquisitions were accounted for as poolings-of-
interests (the "Pooling Transactions") and 81 were accounted for as purchases.

Acquisitions Accounted for as Poolings-of-Interests

On August 24, 1998, the Company issued 2,744,368 shares of its common stock
for all of the outstanding shares of common stock of Rental Tools. This
transaction was accounted for as a pooling-of-interests and, accordingly, the
1997 and 1996 consolidated financial statements were previously restated to
include the accounts of Rental Tools.

F-16
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

On September 24, 1998, the Company issued 1,456,997 shares of its common
stock for all of the outstanding shares of common stock of Wynne Systems, Inc.
("Wynne"). This transaction was accounted for as a pooling-of-interests;
however, this transaction was not material to the Company's consolidated
operations and financial position and, therefore, the Company's financial
statements have not been restated for this transaction but have been combined
beginning July 1, 1998.

On September 29, 1998, a merger (the "Merger") of United Rentals, Inc. and
U.S. Rentals was completed. The Merger was effected by having a wholly owned
subsidiary of United Rentals, Inc. merge with and into U.S. Rentals. Following
the Merger, United Rentals, Inc. contributed the capital stock of U.S. Rentals
to URI, a wholly owned subsidiary of United Rentals, Inc. Pursuant to the
Merger, each outstanding share of common stock of U.S. Rentals was converted
into the right to receive 0.9625 of a share of common stock of United Rentals,
Inc. An aggregate of approximately 29.6 million shares of United Rentals, Inc.
common stock were issued in the Merger in exchange for the outstanding shares
of U.S. Rentals common stock. The Merger was accounted for as a pooling-of-
interests and, accordingly, the 1997 and 1996 consolidated financial statements
were previously restated to include the accounts of U.S. Rentals.

The table below shows the separate revenue and net income (loss) of the
Company prior to the above mergers ("United"), U.S. Rentals and Rental Tools
for periods prior to combination:

<TABLE>
<CAPTION>
U.S. Rental
United Rentals Tools Combined
-------- -------- ------- --------
<S> <C> <C> <C> <C>
For the nine months ended September 30,
1998:
Revenues.............................. $311,919 $451,101 $41,242 $804,262
Net income (loss)..................... (53,178) 43,670 4,695 (4,813)
For the year ended December 31, 1997:
Revenues.............................. 10,633 430,443 48,762 489,838
Net income (loss)..................... 34 4,830 (966) 3,898
For the year ended December 31, 1996:
Revenues.............................. 306,118 48,360 354,478
Net income............................ 33,084 4,642 37,726
</TABLE>

Acquisitions Accounted for as Purchases

The acquisitions completed during the years ended December 31, 1998, 1997
and 1996 include 81, 15 and 2 acquisitions, respectively, that were accounted
for as purchases. The results of operations of the businesses acquired in these
acquisitions have been included in the Company's results of operations from
their respective acquisition dates.

In January 1998 the Company purchased the outstanding stock and certain
assets of (i) Access Rentals, Inc. and Affiliate, (ii) the BNR Group of
Companies and (iii) Mission Valley Rentals, Inc. The aggregate initial
consideration paid by the Company for these three acquisitions that were
accounted for as purchases was $88,674 and consisted of approximately $81,433
in cash and 370,231 shares of common stock and warrants to purchase an
aggregate of 30,000 shares of the Company's common stock. In addition, the
Company repaid or assumed outstanding indebtedness of these three companies
acquired in the aggregate amount of $64,011.

Also during 1998, the Company purchased the outstanding stock and certain
assets of (i) Power Rental Co., Inc., in June (ii) Equipment Supply Co., Inc.
and Affiliates in June and (iii) McClinch Inc. and Subsidiaries and McClinch
Equipment Services, Inc. in September. The aggregate initial consideration paid
by the Company for these three acquisitions that were accounted for as
purchases was $298,401 and consisted of approximately $277,969 in cash and
496,063 shares of

F-17
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

common stock. In addition, the Company repaid or assumed outstanding
indebtedness of these three companies acquired in the aggregate amount of
$155,414.

The aggregate initial consideration paid by the Company for other 1998
acquisitions that were accounted for as purchases was $550,437 and consisted of
approximately $507,326 in cash and 1,083,997 shares of common stock, and seller
notes of $10,465. In addition, the Company repaid or assumed outstanding
indebtedness of the other companies acquired in 1998 in the aggregate amount of
$211,837.

In October 1997, the Company purchased the outstanding stock of (i) A&A
Tool Rentals and Sales, Inc., (ii) Bronco High-Lift, Inc., (iii) Coran
Enterprises, Inc., (iv) J&J Rental Services, Inc., (v) Mercer Equipment Company
and (vi) Rent-It Center, Inc. The aggregate consideration paid for these
acquisitions was $56,965 in cash with the exception of two acquisitions. One
acquisition included a $300 convertible note and the consideration for another
acquisition was paid through the issuance of 318,712 shares of the Company's
common stock. These shares were subject to adjustment so that their value will
equal $3,800 based upon the average daily closing price of the Company's common
stock during the 60 day period beginning December 18, 1997. In accordance with
such provision, 137,600 shares of common stock issued by the Company in
connection with such acquisition were canceled. In addition, the Company repaid
or assumed outstanding indebtedness of the 1997 companies acquired in the
aggregate amount of $43,301.

The aggregate initial consideration paid by the Company for other 1997
acquisitions was $66,820 in cash.

The aggregate initial consideration paid by the Company for the 1996
acquisitions was $15,033 in cash.

The Company has agreed, through December 31, 1998 in connection with 14
acquisitions to pay to former owners additional amounts based upon specified
future revenues and/or new store openings. Such amounts are limited (i) in the
case of 13 of the acquisitions, to a specified maximum amount which varies from
$300 to $10,000 (with the average being $1,786) and (ii) in the case of one
acquisition, to an amount based upon the performance of a single store.

The purchase prices for all acquisitions accounted for as purchases have
been allocated to the assets acquired and liabilities assumed based on their
respective fair values at their respective acquisition dates. However, the
Company has not completed its valuation of all of its purchases and,
accordingly, the purchase price allocations are subject to change when
additional information concerning asset and liability valuations are completed.
Contingent purchase price is capitalized when earned and amortized over the
remaining life of the related asset.

The following table summarizes, on an unaudited pro forma basis, the
combined results of operations of the Company for the years ended December 31,
1998 and 1997 as though each acquisition described above was made on January 1,
for each of the periods.

<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Revenues.............................................. $1,550,744 $1,306,406
Net income............................................ 51,963 53,264
Basic earnings per share.............................. $ 0.76 $ 0.78
========== ==========
Diluted earnings per share............................ $ 0.69 $ 0.75
========== ==========
</TABLE>

The unaudited pro forma results are based upon certain assumptions and
estimates which are subject to change. These results are not necessarily
indicative of the actual results of operations that might have occurred, nor
are they necessarily indicative of expected results in the future.

F-18
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Merger-Related Expenses and Extraordinary Items

The results of operations for the year ended December 31, 1998, include
pre-tax expenses related to the three Pooling Transactions totaling
approximately $47,200 ($33,200 after-tax), consisting of (i) $18,500 for
investment banking, legal, accounting services and other merger costs, (ii)
$14,500 of expenses relating to the closing of duplicate facilities, (iii)
$8,200 for employee severance and related matters, (iv) $2,100 for the write
down of computer systems acquired through the U.S. Rentals merger and one of
the other acquisitions accounted for as a pooling-of-interests and (v) $3,900
in other expenses.

The Company recorded pre-tax extraordinary items of $35,592 ($21,337 after-
tax) in 1998 and $2,506 ($1,511 after tax) in 1997. The charge in 1998 related
to the early extinguishment of debt primarily related to the Merger with U.S.
Rentals. The charge in 1997 resulted from the prepayment of certain debt by
U.S. Rentals.

4. Related Party Transactions

On February 20, 1997, U.S. Rentals completed a recapitalization upon
completing its initial public offering whereby it exchanged 20,748,975 shares
of its common stock for all the operating assets and liabilities of its
predecessor (the "Recapitalization"). The predecessor retained only non-
operating assets and liabilities, including $25,700 of notes receivable from an
affiliate and $24,400 of notes payable to related parties. In conjunction with
the Recapitalization, certain deferred compensation agreements totaling $20,290
were terminated and expensed. Unless otherwise indicated, U.S. Rentals also
refers to the Predecessor prior to the Recapitalization.

Prior to the Recapitalization, the Company earned interest income from the
affiliate of $555 and $3,420 for the years ended December 31, 1997 and 1996,
respectively, and the accompanying financial statements include principal
adjustments in notes receivable and other income in the amounts of $146 and
$572 for the years ended December 31, 1997 and 1996, respectively. The
accompanying financial statements include related party interest expense of
$1,311, $1,245 and $3,078 for the years ended December 31, 1998, 1997 and 1996
respectively (See Note 8 for related party note to stockholder).

5. Rental Equipment

Rental equipment consists of the following:
<TABLE>
<CAPTION>
December 31
---------------------
1998 1997
---------- ---------
<S> <C> <C>
Rental equipment...................................... $1,490,572 $ 718,960
Less accumulated depreciation......................... (347,566) (257,934)
---------- ---------
Rental equipment, net................................. $1,143,006 $ 461,026
========== =========
</TABLE>

6. Property and Equipment

Property and equipment consist of the following:
<TABLE>
<CAPTION>
December 31
------------------
1998 1997
-------- --------
<S> <C> <C>
Land..................................................... $ 36,855 $ 24,102
Buildings................................................ 61,851 34,474
Transportation equipment................................. 81,168 52,407
Machinery and equipment.................................. 21,545 7,751
Furniture and fixtures................................... 26,820 9,521
Leasehold improvements................................... 18,578 17,846
-------- --------
246,817 146,101
Less accumulated depreciation and amortization........... (61,306) (47,833)
-------- --------
Property and equipment, net.............................. $185,511 $ 98,268
======== ========
</TABLE>

F-19
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

7. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consist of the following:

<TABLE>
<CAPTION>
December 31
----------------
1998 1997
-------- -------
<S> <C> <C>
Accrued profit sharing.................................... $ 31,536 $12,844
Accrued insurance......................................... 20,553 11,665
Accrued interest.......................................... 21,934 924
Other..................................................... 54,336 23,829
-------- -------
$128,359 $49,262
======== =======
</TABLE>

8. Debt

Debt and note payable to related party consists of the following:

<TABLE>
<CAPTION>
December 31
-------------------
1998 1997
---------- --------
<S> <C> <C>
Credit Facility, interest payable at 6.25% at December
31, 1998.............................................. $ 305,000
Term Loan, interest payable at 7.25% at December 31,
1998.................................................. 250,000
Senior Subordinated Notes, interest payable semi-
annually, (9 1/2% at December 31, 1998)............... 200,000
Senior Subordinated Notes, interest payable semi-
annually, (8.80% at December 31, 1998)................ 200,153
Senior Subordinated Notes, interest payable semi-
annually, (9 1/4% at December 31, 1998)............... 300,000
Seller notes, interest payable at various rates ranging
from 6.5% to 8.5% at December 31, 1998, due through
2003.................................................. 10,465
Other debt, interest payable at various rates ranging
from 6.1% to 10.6% at December 31, 1998 and 1997, due
through 2005.......................................... 27,456 $ 6,360
Demand note to stockholder, interest payable monthly at
a rate indexed to the Company's revolving line of
credit (7.0% and 5.90% at December 31, 1998 and 1997,
respectively)......................................... 21,500 17,000
U.S. Rentals' revolving line of credit, interest
payable monthly at various rates ranging from 6.03% to
6.34% at December 31, 1997............................ 203,000
Rental Tools' revolving line of credit, interest
payable monthly at various rates ranging from 7.58% to
8.50% at December 31, 1997............................ 38,213
---------- --------
$1,314,574 $264,573
========== ========
</TABLE>

Credit Facility. The Credit Facility enables URI to borrow up to $762,500 on
a revolving basis and permits a Canadian subsidiary of URI (the "Canadian
Subsidiary") to directly borrow up to $40,000 under the Credit Facility
(provided that the aggregate borrowings of URI and the Canadian Subsidiary do
not exceed $762,500). Up to $25,000 of the Credit Facility is available in the
form of letters of credit. The agreement governing the Credit Facility requires
that the aggregate commitment shall be reduced on the last day of each calendar
quarter, beginning September 30, 2001 and

F-20
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

continuing through June 30, 2003, by an amount equal to $19,100. The Credit
Facility terminates on September 26, 2003, at which time all outstanding
indebtedness is due.

Borrowings by URI under the Credit Facility accrue interest at URI's
option, at either (a) the Base Rate (which is equal to the greater of (i) the
Federal Funds Rate plus 0.5% or (ii) Bank of America's reference rate) or (b)
the Eurodollar Rate (which for borrowings by URI is equal to Bank of America's
reserve adjusted eurodollar rate) plus a margin ranging from 0.825% to 1.500%
per annum. Borrowings by the Canadian Subsidiary under the Credit Facility
accrue interest, at such subsidiary's option, at either (x) the Prime Rate
(which is equal to Bank of America Canada's prime rate), (y) the BA Rate (which
is equal to Bank of America Canada's BA Rate) plus a margin ranging from 0.825%
to 1.500% per annum or (z) the Eurodollar Rate (which for borrowing by the
Canadian Subsidiary is equal to Bank of America Canada's reserve adjusted
Eurodollar Rate) plus a margin ranging from 0.825% to 1.500% per annum. If at
any time an event of default (as defined in the agreement governing the Credit
Facility) exists, the interest rate applicable to each loan will increase by 2%
per annum. The Company is also required to pay the banks an annual facility fee
equal to 0.375% of the banks' $762,500 aggregate lending commitment under the
Credit Facility (which fee may be reduced to 0.300% for periods during which
the Company maintains a specified funded debt to cash flow ratio).

The Credit Facility contains certain covenants that require the Company to,
among other things, satisfy certain financial tests relating to: (a) maximum
leverage, (b) the ratio of senior debt to cash flow, (c) minimum interest
coverage ratio, (d) the ratio of funded debt to cash flow, and (e) the ratio of
senior debt to tangible assets. The agreements governing the Credit Facility
also contain various other covenants that restrict the Company's ability to,
among other things, (i) incur additional indebtedness, (ii) permit liens to
attach to its assets, (iii) pay dividends or make other restricted payments on
its common stock and certain other securities and (iv) make acquisitions unless
certain financial conditions are satisfied. In addition, the agreement
governing the Credit Facility (a) requires the Company to maintain certain
financial ratios and (b) provides that failure by any two of certain of the
Company's executive officers to continue to hold executive positions with the
Company for a period of 30 consecutive days constitutes an event of default
unless replacement officers satisfactory to the lenders are appointed.

The revolving lines of credit of U.S. Rentals and Rental Tools were repaid
and terminated at the time of acquisition by the Company.

Term Loan. URI obtained a $250,000 term loan (the "Term Loan") from a group
of financial institutions. The term loan matures on June 30, 2005. Prior to
maturity, quarterly installments of principal in the amount of $625 are due on
the last day of each calendar quarter, commencing September 30, 1999. The
amount due at maturity is $235,625. The term loan accrues interest, at the
Company's option, at either (a) the Base Rate (as defined above with respect to
the Credit Facility) plus a margin ranging from 0% to 0.5% per annum, or (b)
the Eurodollar Rate (as defined above with respect to the Credit Facility for
borrowings by the Company) plus a margin ranging from 1.875% to 2.375% per
annum. The Term Loan is secured pari passu with the Credit Facility. The
agreement governing the Term Loan contains restrictive covenants substantially
similar to those provided under the Credit Facility.

F-21
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

9 1/2% Senior Subordinated Notes. URI issued $200,000 aggregate principal
amount of 9 1/2% senior subordinated notes, (the "9 1/2 Notes") which are due
June 1, 2008. The 9 1/2% Notes are unsecured. URI may, at its option, redeem
the 9 1/2% Notes on or after June 1, 2003 at specified redemption prices which
range from 104.75% in 2003 to 100.00% in 2006 and thereafter. In addition, on
or prior to June 1, 2001, URI may, at its option, use the proceeds of a public
equity offering to redeem up to 35% of the outstanding 9 1/2% Notes, at a
redemption price of 109.5%. The indenture governing the 9 1/2% Notes contains
certain restrictive covenants, including (i) limitations on additional
indebtedness, (ii) limitations on restricted payments, (iii) limitations on
liens, (iv) limitations on dividends and other payment restrictions, (v)
limitations on preferred stock of certain subsidiaries, (vi) limitations on
transactions with affiliates, (vii) limitations on the disposition of proceeds
of asset sales and (viii) limitations on the ability of the Company to
consolidate, merge or sell all or substantially all of its assets.

8.80% Senior Subordinated Notes. URI issued $205,000 aggregate principal
amount of 8.80% senior subordinated notes, (the "8.80% Notes") which are due
August 15, 2008. The 8.80% Notes are unsecured. URI may, at its option, redeem
the 8.80% Notes on or after August 15, 2003 at specified redemption prices
which range from 104.40% in 2003 to 100.00% in 2006 and thereafter. In
addition, on or prior to August 15, 2001, URI may, at its option, use the
proceeds of a public equity offering to redeem up to 35% of the outstanding
8.80% Notes, at a redemption price of 108.8%. The indenture governing the 8.80%
Notes contains restrictions substantially similar to those applicable to the 9
1/2% Notes.

9 1/4% Senior Subordinated Notes. URI issued $300,000 aggregate principal
amount of 9 1/4% senior subordinated notes, the ("9 1/4% Notes") which are due
January 15, 2009. The 9 1/4% Notes are unsecured. URI may, at its option,
redeem the 9 1/4% Notes on or after January 15, 2004 at specified redemption
prices which range from 104.625% in 2004 to 100.00% in 2007 and thereafter. In
addition, on or prior to January 15, 2002, URI may, at its option, use the
proceeds of a public equity offering to redeem up to 35% of the outstanding 9
1/4% Notes, at a redemption price of 109.25%. The indenture governing the 9
1/4% Notes contains restrictions substantially similar to those applicable to
the 9 1/2% Notes.

Maturities of the Company's debt for each of the next five years at
December 31, 1998 are as follows:

<TABLE>
<S> <C>
1999................................ $ 35,827
2000................................ 11,521
2001................................ 11,154
2002................................ 5,486
2003................................ 310,299
Thereafter.......................... 940,287
</TABLE>

F-22
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

9. Income Taxes

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

<TABLE>
<CAPTION>
Year ended December 31
--------------------------
1998 1997 1996
-------- -------- -------
<S> <C> <C> <C>
Historical:
Domestic federal:
Current....................................... $ 14,291 $ 3,765
Deferred...................................... 21,047 14,276
Deferred tax recorded upon Recapitalization... 6,141
-------- -------- ------
35,338 24,182
Domestic state:
Current....................................... 1,067 668 $ 420
Deferred...................................... 7,020 3,279
Deferred tax recorded upon Recapitalization... 1,379
-------- -------- ------
8,087 5,326 420
-------- -------- ------
43,425 29,508 420
Foreign federal:
Current....................................... 519
Deferred...................................... (492)
-------- -------- ------
27
Foreign provincial:
Current....................................... 277
Deferred...................................... (230)
-------- -------- ------
74
-------- -------- ------
$ 43,499 $ 29,508 $ 420
======== ======== ======
</TABLE>

A reconciliation of the provision for income taxes and the amount computed
by applying the statutory federal income tax rate of 35% to income before
provision for income taxes is as follows:

<TABLE>
<CAPTION>
Year ended
December 31
----------------
1998 1997
------- -------
<S> <C> <C>
Computed tax rate at statutory tax rate................... $27,404 $12,221
State income taxes, net of federal tax benefit............ 4,177 1,716
Cumulative deferred taxes recorded upon Recapitalization.. 7,520
Loss prior to Recapitalization excluded from taxable
income................................................... 7,543
Non-deductible expenses................................... 7,400
Provision for deferred taxes of Subchapter S Corporation
at time of pooling....................................... 4,750
Other..................................................... (232) 508
------- -------
$43,499 $29,508
======= =======
</TABLE>

F-23
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The components of deferred income tax assets (liabilities) are as follows:

<TABLE>
<CAPTION>
December 31
-------------------
1998 1997
--------- --------
<S> <C> <C>
Property and equipment............................... $(115,355) $(36,290)
Intangibles.......................................... (7,044) (633)
Reserves............................................. 28,468 11,291
Net operating loss carryforward...................... 38,102 314
Other................................................ 12,269 923
--------- --------
$ (43,560) $(24,395)
========= ========
</TABLE>

U.S. Rentals was taxed as a Subchapter S Corporation until its initial
public offering in February 1997, and Rental Tools was taxed as a Subchapter S
Corporation until being acquired by the Company. In general, the income or loss
of a Subchapter S Corporation is passed through to its stockholders rather than
being subjected to taxes at the corporate level. Pro forma net income reflects
a provision for income taxes on a pro forma basis for all periods presented as
if all such companies were liable for federal and state income taxes as taxable
corporate entities for all periods presented.

The Company has net operating loss carryforwards ("NOL's") of $90,000 for
federal income tax purposes that expire through 2018.

10. Holding Company Reorganization

URI was formerly named United Rentals, Inc. On August 5, 1998, a
reorganization was effected pursuant to which (i) URI became a wholly owned
subsidiary of Holdings, a newly formed holding company, (ii) the name of URI
was changed from United Rentals, Inc. to United Rentals (North America), Inc.,
(iii) the name of the new holding company became United Rentals, Inc., (iv) the
outstanding common stock of URI was automatically converted, on a share-for-
share basis, into Common Stock of Holdings and (v) the Common Stock of Holdings
commenced trading on the New York Stock Exchange under the symbol "URI" instead
of the common stock of URI. The purpose of the reorganization was to facilitate
certain financings. The business operations of the Company did not change as a
result of the new legal structure. The stockholders of Holdings have the same
rights, privileges and interests with respect to Holdings as they had with
respect to URI immediately prior to the reorganization.

11. Company-Obligated Mandatorily Redeemable Convertible Preferred Securities
of a Subsidiary Trust

A subsidiary trust (the "Trust") of Holdings issued and sold in a private
offering (the "Preferred Securities Offering") $300,000 of 30 year, 6 1/2%
Convertible Quarterly Income Preferred Securities (the "Preferred Securities").
The net proceeds from the Preferred Securities Offering were approximately
$290,000. The Trust used the proceeds from the Preferred Securities Offering to
purchase 6 1/2% convertible subordinated debentures due 2028, the
("Debentures") from Holdings which resulted in Holdings receiving all of the
net proceeds of the Preferred Securities Offering. Holdings in turn contributed
the net proceeds of the Preferred Securities Offering to URI. The Preferred
Securities are non-voting securities, carry a liquidation value of $50 per
security and are

F-24
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

convertible into the Company's common stock at an initial rate of 1.146 shares
per security (equivalent to an initial conversion price of $43.63 per share).
They are convertible at any time at the holders' option and are redeemable, at
the Company's option, after three years, subject to certain conditions.

Holders of the Preferred Securities are entitled to preferential cumulative
cash distributions from the Trust at an annual rate of 6 1/2% of the
liquidation value, accruing from the original issue date and payable quarterly
in arrears beginning February 1, 1999. The distribution rate and dates
correspond to the interest rate and payments dates on the Debentures. Holdings
may defer interest payments on the Debentures for up to twenty consecutive
quarters, but not beyond the maturity date of the Debentures. If interest
payments on the Debentures are deferred, so are the payments on the Preferred
Securities. Under this circumstance, Holdings will be prohibited from paying
dividends on any of its capital stock or making payments with respect to its
debt that rank pari passu with or junior to the Debentures.

Holdings has executed a guarantee with regard to payment of the Preferred
Securities to the extent that the Trust has sufficient funds to make the
required payments.

12. Capital Stock

At a special meeting of stockholders held on September 29, 1998, the
shareholders approved an amendment to the Company's Certificate of
Incorporation increasing the number of authorized shares of common stock from
75,000,000 to 500,000,000.

As of December 31, 1998 there are outstanding warrants to purchase an
aggregate of 6,539,329 shares of common stock. The weighted average exercise
price of the warrants is $10.18 per share. All warrants are currently
exercisable and may be exercised at any time through 2008.

The Company's Board of Directors has the authority to designate 5,000,000
shares of $.01 par value preferred stock in series, to establish as to each
series the designation and number of shares to be issued and the rights,
preferences, privileges and restrictions of the shares of each series, and to
determine the voting powers, if any, of such shares. At December 31, 1998, the
Company's Board of Directors had not designated any shares.

1997 Stock Option Plan. The Company's 1997 Stock Option Plan provides for
the granting of options to purchase not more than an aggregate of 5,000,000
shares of common stock. Some or all of such options may be "incentive stock
options" within the meaning of the Internal Revenue Code. All officers,
directors and employees of the Company and other persons who perform services
on behalf of the Company are eligible to participate in this plan. Each option
granted pursuant to this plan must provide for an exercise price per share that
is at least equal to the fair market value per share of common stock on the
date of grant. No options may be granted under this plan after August 31, 2007.
As of December 31, 1998 and 1997, options to purchase an aggregate of 4,859,875
shares and 904,583 shares of common stock, respectively, were outstanding under
this plan. The exercise price of each option, the period during which each
option may be exercised and other terms and conditions of each option are
determined by the Board of Directors (or by a committee appointed by the Board
of Directors).

F-25
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

1998 Stock Option Plan. The Company's 1998 Stock Option Plan provides for
the granting of options to purchase not more than an aggregate of 4,000,000
shares of common stock. Some or all of the options issued under the 1998 Stock
Option Plan may be "incentive stock options" within the meaning of the Internal
Revenue Code. All officers and directors of the Company and its subsidiaries
are eligible to participate in the 1998 Stock Option Plan. Each option granted
pursuant to the 1998 Stock Option Plan must provide for an exercise price per
share that is at least equal to the fair market value per share of common stock
on the date of grant. No options may be granted under the 1998 Stock Option
Plan after August 20, 2008. As of December 31, 1998, options to purchase an
aggregate of 3,980,000 shares of common stock were outstanding pursuant to this
plan to executive officers and directors. The exercise price of each option,
the period during which each option may be exercised and other terms and
conditions of each option are determined by the Board of Directors (or by a
committee appointed by the Board of Directors).

1998 Supplemental Stock Option Plan. The Company has adopted a stock option
plan pursuant to which options, for up to an aggregate of 2,750,000 shares of
common stock, may be granted to employees who are not officers or directors and
to consultants and independent contractors who perform services for the Company
or its subsidiaries. As of December 31, 1998, options to purchase an aggregate
of 1,194,400 shares were outstanding pursuant to this plan. The exercise price
of each option, the period during which each option may be exercised and other
terms and conditions of each option are determined by the Board of Directors
(or by a committee appointed by the Board of Directors).

1997 Performance Award Plan. Effective February 20, 1997, U.S. Rentals
adopted the 1997 Performance Award Plan under which stock options and other
awards could be granted to key employees and directors at prices and terms
established by U.S. Rentals at the date of grant. Options to purchase an
aggregate of 3,921,116 shares of common stock were outstanding at December 31,
1997. The options vest ratably over periods ranging from five to ten years and
expire in 2007. As a result of the Merger, all outstanding options to purchase
shares of U.S. Rentals common stock became fully vested and were converted into
options to purchase the Company's common stock.

A summary of the transactions within the Company's stock option plans
follows:

<TABLE>
<CAPTION>
Weighted
Average
Exercise
Shares Price
---------- --------
<S> <C> <C>
Outstanding at January 1, 1997..........................
Granted............................................... 4,825,699 $19.52
Exercised.............................................
Canceled..............................................
----------
Outstanding at December 31, 1997........................ 4,825,699 19.52
Granted............................................... 9,453,718 19.78
Exercised............................................. (43,313) 20.78
Canceled.............................................. (191,290) 22.94
----------
Outstanding at December 31, 1998........................ 14,044,814 $19.60
========== ======
Exercisable at December 31, 1998........................ 4,787,474 $20.64
========== ======
</TABLE>

F-26
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
-------------------------------- --------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Amount Contractual Exercise Amount Exercise
Range of Exercise Prices Outstanding Life Price Exercisable Price
- ------------------------ ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$10.00 - $15.00.......... 4,561,791 9.6 years $12.31 295,775 $12.10
15.01 - 20.00.......... 180,844 9.2 years 19.32 87,347 19.28
20.01 - 25.00.......... 8,028,836 8.8 years 21.61 4,309,992 21.06
25.01 - 30.00.......... 295,276 9.4 years 26.10 52,127 26.13
30.01 - 50.00.......... 978,067 9.5 years 35.19 42,233 33.50
---------- ---------
14,044,814 9.1 years 19.60 4,787,474 20.64
========== =========
</TABLE>

The Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees" in accounting for stock-based employee compensation arrangements
whereby no compensation cost related to stock options is deducted in
determining net income. Had compensation cost for the Company's stock option
plans been determined pursuant to SFAS No. 123, "Accounting for Stock-Based
Compensation", the Company's net income and earnings per share would have
differed. The Black-Scholes option pricing model estimates fair value of
options using subjective assumptions which can materially affect fair value
estimates and, therefore, does not necessarily provide a single measure of fair
value of options. Using the Black-Scholes option pricing model and a risk-free
interest rate average of 4.6% in 1998 and ranging from 5.8% to 6.61% in 1997, a
volatility factor for the market price of the Company's common stock of 85% in
1998 and 32% in 1997 and a weighted-average expected life of options of
approximately three years in 1998 and three to five years in 1997, the
Company's net income (loss), basic earnings (loss) per share and diluted
earnings (loss) per share would have been $(13,372), $(0.20) and $(0.20),
respectively for the year ended December 31, 1998 and, after giving affect to
the Recapitalization, would have been $17,055, $0.37 and $0.35, respectively
for the year ended December 31, 1997. For purposes of these pro forma
disclosures, the estimated fair value of options is amortized over the options'
vesting period. Since the number of options granted and their fair value may
vary significantly from year to year, the pro forma compensation expense in
future years may be materially different.

At December 31, 1998 there are 6,539,329 shares of common stock reserved
for the exercise of warrants, 15,687,244 shares of common stock reserved for
issuance pursuant to options granted, and that may be granted in the future,
under the Company's stock option plans, 6,875,580 shares of common stock
reserved for the issuance of outstanding preferred securities of a subsidiary
trust and 86,961 shares of common stock reserved for the conversion of
convertible debt.

F-27
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

13. Earnings Per Share

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

<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Numerator:
Income before extraordinary items........ $ 34,798 $ 5,409 $ 37,726
========== ========== ==========
Denominator:
Denominator for basic earnings per share-
weighted-average shares................. 66,225,492 46,660,955 22,654,599
Effect of dilutive securities:
Employee stock options.................. 2,641,194 743,597
Warrants................................ 4,208,434 1,644,445
---------- ---------- ----------
Denominator for dilutive earnings per
share- adjusted weighted-average
shares.................................. 73,075,120 49,048,997 22,654,599
========== ========== ==========
Earnings per equivalent share-basic:
Income before extraordinary items........ $ 0.53 $ 0.12 $ 1.67
Extraordinary items, net................. 0.33 0.04
---------- ---------- ----------
Net income............................... $ 0.20 $ 0.08 $ 1.67
========== ========== ==========
Earnings per equivalent share-diluted:
Income before extraordinary items........ $ 0.48 $ 0.11 $ 1.67
Extraordinary items, net................. 0.30 0.03
---------- ---------- ----------
Net income............................... $ 0.18 $ 0.08 $ 1.67
========== ========== ==========
</TABLE>

14. Commitments and Contingencies

Operating Leases

The Company leases rental equipment, real estate and certain office
equipment under operating leases. Certain real estate leases require the
Company to pay maintenance, insurance, taxes and certain other expenses in
addition to the stated rentals. Future minimum lease payments, by year and in
the aggregate, for noncancellable operating leases with initial or remaining
terms of one year or more are as follows at December 31, 1998:
<TABLE>
<CAPTION>
Rental
and Other
Real Estate Equipment
Leases Leases
----------- ---------
<S> <C> <C>
1999...................................................... $ 17,516 $11,380
2000...................................................... 15,713 8,846
2001...................................................... 14,028 5,538
2002...................................................... 12,808 3,452
2003...................................................... 9,711 3,014
Thereafter................................................ 32,269 2,794
-------- -------
$102,045 $35,024
======== =======
</TABLE>

The Company was the seller-lessee in a sales-leaseback transaction during
1998 where it sold rental equipment for proceeds of $35,000. The Company will
lease back the rental equipment over a five year period beginning December
1998 and recognized a deferred gain on the sale of approximately $600. The
future payments under the lease are included in the table above.

F-28
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Rent expense under non-cancelable operating leases totaled $20,501, $6,367
and $4,151 for the years ended December 31, 1998, 1997 and 1996, respectively.

Employee Benefit Plans

The Company currently sponsors one defined contribution 401(k) retirement
plan which is subject to the provisions of ERISA. Under the plan, the Company
matches a minimum of 50% of the participants contributions up to a specified
amount. Company contributions to the plan were $1,001, $358 and $316 for the
years ended December 31, 1998, 1997 and 1996, respectively.

Legal Matters

The Company is party to legal proceedings and potential claims arising in
the ordinary course of its business. In the opinion of management, the Company
has adequate legal defenses, reserves, or insurance coverage with respect to
these matters so that the ultimate resolution will not have a material adverse
effect on the Company's financial position, results of operations, or cash
flows. The Company has accrued $16,168 and $9,563 at December 31, 1998 and
1997, respectively, to cover the uninsured portion of possible costs arising
from these pending claims and other potential unasserted claims.

Environmental Matters

The Company and its operations are subject to various laws and related
regulations governing environmental matters. Under such laws, an owner or
lessee of real estate may be liable for the costs of removal or remediation of
certain hazardous or toxic substances located on or in, or emanating from, such
property, as well as investigation of property damage. The Company incurs
ongoing expenses associated with the removal of underground storage tanks and
the performance of appropriate remediation at certain of its locations. The
Company believes that such removal and remediation will not have a material
adverse effect on the Company's financial position, results of operations, or
cash flows.

F-29
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

15. Segment Information

Effective January 1, 1998, the Company adopted SFAS No. 131, "Disclosure
about Segments of an Enterprise and Related Information". SFAS No. 131
establishes a new method by which companies will report operating segment
information. This method is based upon the manner in which management organizes
the segments within a company for making operating decisions and assessing
performance. SFAS No. 131 also establishes standards for related disclosures
about products and services, geographic areas and major customers.

The Company operates in one industry segment consisting of the rental and
sales of equipment and related merchandise and parts. The Company's operations
are managed as one segment, or strategic unit, because it offers similar
products and services in similar markets and the factors determining strategic
decisions are comparable for all products and services.

The Company operates in the United States, Canada and Mexico. Revenues are
attributable to countries based upon the location of the customers. Geographic
area information for the years ended December 31, 1998, 1997 and 1996 is as
follows:

<TABLE>
<CAPTION>
Year ended December 31
----------------------------
1998 1997 1996
---------- -------- --------
<S> <C> <C> <C>
Revenues from external customers
Domestic......................................... $1,166,471 $489,838 $354,478
Foreign.......................................... 53,811
---------- -------- --------
Total revenues from external customers............ $1,220,282 $489,838 $354,478
========== ======== ========
Rental equipment, net
Domestic......................................... $1,089,132 $461,026 $235,055
Foreign.......................................... 53,874
---------- -------- --------
Total consolidated rental equipment, net.......... $1,143,006 $461,026 $235,055
========== ======== ========
Property and equipment, net
Domestic......................................... $ 179,777 $ 98,268 $ 56,443
Foreign.......................................... 5,734
---------- -------- --------
Total consolidated property and equipment, net.... $ 185,511 $ 98,268 $ 56,443
========== ======== ========
Intangible assets, net
Domestic......................................... $ 867,090 $ 73,648 $ 1,035
Foreign.......................................... 54,975
---------- -------- --------
Total consolidated intangible assets, net......... $ 922,065 $ 73,648 $ 1,035
========== ======== ========
</TABLE>

F-30
<PAGE>

UNITED RENTALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

16. Quarterly Financial Information (Unaudited)

Selected Financial Data

The following table of quarterly financial information has been prepared
from unaudited financial statements of the Company, and reflects adjustments
which are, in the opinion of management, necessary for a fair presentation of
the interim periods presented.

<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
-------- -------- -------- --------
<S> <C> <C> <C> <C>
For the year ended December 31, 1998:
Total revenues...................... $171,141 $254,047 $379,074 $416,020
Gross profit........................ 47,911 87,422 138,717 149,398
Income (loss) before extraordinary
item............................... 6,704 19,976 (10,156) 18,274
Extraordinary item.................. 21,337
Net income (loss)................... 6,704 19,976 (31,493) 18,274
Basic earnings (loss) before
extraordinary item per share....... $ 0.11 $ 0.30 $ (0.15) $ 0.26
Diluted earnings (loss) before
extraordinary item per share....... 0.11 0.27 (0.13) 0.24
For the year ended December 31, 1997:
Total revenues...................... 90,409 108,395 129,020 162,014
Gross profit........................ 22,025 32,515 45,464 49,288
Income (loss) before extraordinary
item............................... (24,165) 8,062 11,258 10,254
Extraordinary item.................. 1,511
Net income (loss)................... (25,676) 8,062 11,258 10,254
Basic earnings (loss) before
extraordinary item per share....... $ (0.58) $ 0.17 $ 0.24 $ 0.21
Diluted earnings (loss) before
extraordinary item per share....... (0.56) 0.16 0.23 0.20
</TABLE>

The data relating to the first and second quarters of 1998 above differ
from the amounts as shown in the Company's Form 10-Q filings for the periods
ended March 31, 1998 and June 30, 1998, respectively, because of the mergers
with U.S. Rentals and Rental Tools. These mergers were accounted for as
poolings-of-interests. Thus the Company's financial statements for the quarters
prior to the mergers were restated to include the accounts of U.S. Rentals and
Rental Tools.

17. Subsequent Events

Subsequent to December 31, 1998 and through February 26, 1999, the Company
completed the acquisitions of 11 equipment rental companies and the aggregate
consideration paid by the Company for the acquisitions was $53,803 and
consisted of approximately $49,408 in cash and $4,395 in seller notes. The
Company funded the cash consideration for these acquisitions with cash on hand
and borrowings under the Credit Facility.

In January 1999, the Company sold 300,000 shares of its Series A Perpetual
Convertible Preferred Stock ("Series A Preferred"). The net proceeds from the
sale of the Series A Preferred were approximately $287.0 million. The Series A
Preferred is convertible into 12,000,000 shares of the Company's common stock
at $25 per share.

F-31
<PAGE>

UNDERWRITING

The Company, the selling stockholder and the underwriters for the U.S.
offering (the "U.S. Underwriters") named below have entered into an
underwriting agreement with respect to the shares being offered in the United
States. Subject to certain conditions, each U.S. Underwriter has severally
agreed to purchase the number of shares indicated in the following table.

<TABLE>
<CAPTION>
Underwriters Number of Shares
------------ ----------------
<S> <C>
Goldman, Sachs & Co. ........................................
Donaldson, Lufkin & Jenrette Securities Corporation..........
---------
Total...................................................... 6,400,000
=========
</TABLE>

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

If the U.S. Underwriters sell more shares than the total number set forth
in the table above, the U.S. Underwriters have an option to buy up to an
additional 960,000 shares from the Company to cover such sales. They may
exercise that option for 30 days. If any shares are purchased pursuant to this
option, the U.S. Underwriters will severally purchase shares in approximately
the same proportion as set forth in the table above.

The following tables show the per share and total underwriting discounts
and commissions to be paid to the U.S. Underwriters by the Company and the
selling stockholder. Such amounts are shown assuming both no exercise and full
exercise of the U.S. Underwriters' option to purchase 960,000 additional
shares.

Paid by the Company

<TABLE>
<CAPTION>
No Full
Exercise Exercise
-------- --------
<S> <C> <C>
Per Share............................................... $ $
Total................................................... $ $
</TABLE>

Paid by the selling stockholder

Shares sold by the U.S. Underwriters to the public will initially be
offered at the initial public offering price set forth on the cover of this
prospectus. Any shares sold by the U.S. Underwriters to securities dealers may
be sold at a discount of up to $ per share from the initial public offering
price. Any such securities dealers may resell any shares purchased from the
U.S. Underwriters to certain other brokers or dealers at a discount of up to
$ per share from the initial public offering price. If all the shares are
not sold at the initial public offering price, the U.S. Underwriters may change
the initial offering price and the other selling terms.

The Company and the selling stockholder have entered into an underwriting
agreement with the Underwriters for the sale of 1,600,000 shares outside of the
United States. The terms and conditions

U-1
<PAGE>

of both offerings are the same and the sale of shares in both offerings are
conditioned on each other. Goldman Sachs International and Donaldson, Lufkin &
Jenrette International are the underwriters for the international offering
outside the United States (the "International Underwriters"). The Company has
granted the International Underwriters a similar option to purchase up to an
aggregate of an additional 240,000 shares.

The underwriters for both of the offerings have entered into an agreement
in which they agree to restrictions on where and to whom they and any dealer
purchasing from them may offer shares as a part of the distribution of the
shares. The underwriters also have agreed that sales may be made between the
U.S. Underwriters and the International Underwriters.

The selling stockholder, Richard D. Colburn, and Ayr, Inc. (an affiliate of
Mr. Colburn) have agreed that until 270 days after the date of this prospectus
neither they nor any of their affiliates will, without the prior written
consent of Goldman, Sachs & Co., offer, sell, contract to sell or otherwise
dispose of, any shares of common stock of United Rentals or any other
securities of United Rentals or any derivative securities, whether or not such
securities have been registered and whether or not such sale could otherwise be
made under Rule 144 or otherwise. Subject to certain conditions, the foregoing
agreement does not limit transfers (a) upon the consummation of any merger or
reorganization of United Rentals in which the surviving entity is not
controlled by the persons who controlled United Rentals before such
consummation, (b) to one or more affiliates or one or more members of Mr.
Colburn's family, or a trust, corporation, partnership or limited liability
company, the sole beneficiaries of which are members of Mr. Colburn's family,
or (c) to one or more charitable organizations. In the case of any transfer
pursuant to clause (b) or (c) of the preceding sentence, the transferee is
required to agree in writing to be bound by the terms of the foregoing lock-up,
except that charitable organizations which receive shares under clause (c) may
after completion of the offering sell such shares pursuant to Rule 144 so long
as no individual charitable organization sells more than 25,000 of such shares
under Rule 144 and so long all such charitable organizations together sell no
more than 100,000 of such shares under Rule 144.

The Company and all of the Company's executive officers and directors
(other than Mr. Colburn, who entered into the lock-up described in the
preceding paragraph) have agreed that until 90 days after the date of this
prospectus they will not offer, sell, contract to sell, or otherwise dispose of
any shares of any class of common stock of the Company (except that Mr. Berry
may sell up to 723,455 shares and Mr. McKinney may sell up to 361,727 shares)
or any other securities which are convertible into, or exercisable or
exchangeable for, common stock of the Company, without the prior written
consent of Goldman, Sachs & Co. The foregoing agreement will not limit a
stockholder's ability to transfer shares in a private placement or to pledge
shares, provided that the transferee or pledgee agrees to be bound by such
agreement. The foregoing agreement also will not limit the Company's ability to
(i) grant stock options under the existing stock option plans described under
"Management--Stock Option Plans" or issue shares upon the exercise of stock
options granted pursuant to such plans, (ii) issue shares upon exercise or
conversion of outstanding options, warrants and convertible securities, (iii)
issue shares, warrants or convertible securities as consideration for
acquisitions, provided that the number of shares, warrants or convertible
securities (calculated on a common stock equivalent basis in the case of
warrants and convertible securities) that may be issued as consideration for
acquisitions may not exceed 5,000,000 unless the recipients of such excess
shares, warrants or convertible securities agree with the Company (which
agreement may not be amended without the prior written consent of Goldman,
Sachs & Co.) to be subject to the foregoing lock-up agreement with respect to
such excess shares, warrants or convertible securities or (iv) issue shares
upon the exercise of any warrants or convertible securities issued pursuant to
the preceding clause, provided that such shares will be subject to the
foregoing lock-up to the same extent, if any, as the warrants or convertible
securities pursuant to which such shares were issued.

In connection with the offering described in this prospectus, the
Underwriters may purchase and sell shares of common stock in the open market.
These transactions may include short sales, over-

U-2
<PAGE>

allotment and stabilizing transactions and purchases to cover positions created
by short sales. Short sales involve the sale by the Underwriters of a greater
number of shares than they are required to purchase in the offering.
Stabilizing transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of the common
stock while the offering is in progress.

The Underwriters also may impose a penalty bid. This occurs when a
particular Underwriter repays to the Underwriters a portion of the underwriting
discount received by it because an Underwriter has repurchased shares sold by
or for the account of such Underwriter in stabilizing or short covering
transactions.

These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of the common stock. As a result, the price of the
common stock may be higher than the price that otherwise might exist in the
open market. If these activities are commenced, they may be discontinued by the
Underwriters at any time. These transactions may be effected on the NYSE, in
the over-the-counter market or otherwise.

The Company estimates that the total expenses of the offering, excluding
underwriting discounts and commissions, will be approximately $1,000,000. The
Company will pay all such expenses.

Each of the Underwriters has from time to time provided, and may in the
future provide, certain investment banking services to the Company and certain
of its affiliates, for which such Underwriter has received or may receive
customary fees and commissions. Affiliates of Donaldson, Lufkin & Jenrette
Securities Corporation, a co-manager in the offering, currently hold for the
benefit of various accounts and funds an aggregate of approximately 4,660,705
shares of common stock of the Company, or approximately 6.8% of the total
outstanding shares of common stock of the Company.

The Company, the selling stockholder and Richard D. Colburn have agreed to
indemnify the Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933. In addition, the Company has agreed to
reimburse the Underwriters for certain of their expenses.

This prospectus may be used by the Underwriters and other dealers in
connection with offers and sales of the shares, including sales of shares
initially sold by the Underwriters in the offering being made outside of the
United States, to persons located in the United States.

U-3
<PAGE>

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

No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely
on any unauthorized information or representations. This prospectus is an
offer to sell only the shares offered hereby, and only under circumstances and
in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.

-----------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Cautionary Notice Regarding Forward-Looking Statements................... 3
Where You Can Find More Information...................................... 3
Incorporation by Reference............................................... 3
Prospectus Summary....................................................... 5
Risk Factors............................................................. 13
Corporate Information.................................................... 17
Use of Proceeds.......................................................... 18
Price Range of Common Stock.............................................. 19
Dividend Policy.......................................................... 19
Capitalization........................................................... 20
Selected Historical and Pro Forma Consolidated Financial Information..... 21
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 24
Business................................................................. 34
Management............................................................... 46
Principal Stockholders................................................... 53
Selling Stockholder...................................................... 56
Description of Capital Stock............................................. 57
Certain Charter and By-Law Provisions.................................... 60
Legal Matters............................................................ 62
Experts.................................................................. 62
Index to Financial Statements............................................ F-1
Underwriting............................................................. U-1
</TABLE>

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

8,000,000 Shares

United Rentals, Inc.

Common Stock

-----------

[LOGO] United Rentals

-----------

Goldman, Sachs & Co.
Donaldson, Lufkin & Jenrette

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

PART II

ITEM 14. Other Expenses of Issuance and Distribution

<TABLE>
<S> <C>
SEC Registration Fee.......................................... $ 89,107
Printing and engraving expenses............................... 300,000
Listing Fee................................................... 10,000
NASD Fee...................................................... 30,500
Legal fees and expenses (other than blue sky)................. 250,000
Blue Sky fees and expenses.................................... 15,000
Accounting fees and expenses.................................. 150,000
Transfer agent fees........................................... 15,000
Miscellaneous................................................. 140,393
----------
Total..................................................... $1,000,000
==========
</TABLE>

All of such expenses will be paid by Holdings.

ITEM 15. Indemnification of Directors and Officers

The Certificate of Incorporation (the "Certificate") of Holdings provides
that a director will not be personally liable to Holdings 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 Holdings will be eliminated or limited to the fullest extent permitted by
the Delaware Law as amended.

Holdings, 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 Holdings. 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. Holdings has
entered into indemnification agreements with its directors and officers. In
general, these agreements require Holdings 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 Holdings or guaranteed any obligations of
Holdings, 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 Holdings,
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 Holdings due to willful misconduct in the
performance of his duties to Holdings (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, Holdings 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>
1(a)* Form of U.S. Underwriting Agreement
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) Form of Certificate of Designation for Series A Perpetual Convertible
Preferred Stock (incorporated by reference to the United Rentals
Registration Statement on Form S-3, No. 333-64463)
4(d) 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(e) Form of certificate representing United Rentals, Inc. Common Stock
(incorporated by reference to Exhibit 4 to the United Rentals
Registration Statement on Form S-1, No. 333-39117)
5(a)** Opinion of Ehrenreich Eilenberg Krause & Zivian LLP
23(a)** Consent of Ehrenreich Eilenberg Krause & Zivian LLP (included in the
opinion filed as Exhibit 5(a))
23(b)* Consent of Ernst & Young LLP
23(c)* Consent of PricewaterhouseCoopers LLP
23(d)* Consent of KPMG LLP
23(e)* Consent of Battaglia, Andrews, & Moag, P.C.
23(f)* Consent of BDO Siedman LLP
24(a)** Power of Attorney (included in Part II of the original Registration
Statement under the caption "Signatures")
</TABLE>

- --------

*Filed herewith.

**Previously filed.

II-2
<PAGE>

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.

(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

II-3
<PAGE>

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 March
1, 1999.

United Rentals, Inc.

/s/ Michael J. Nolan
By: _________________________________
Michael J. Nolan
Chief Financial Officer

Signatures Title Date

* Chairman, Chief
- ------------------------------------- Executive Officer March 1, 1999
Bradley S. Jacobs and Director
(Principal
Executive Officer)

* Director
- ------------------------------------- March 1, 1999
Wayland R. Hicks

* Director
- ------------------------------------- March 1, 1999
John N. Milne

* Director
- ------------------------------------- March 1, 1999
William F. Berry

* Director
- ------------------------------------- March 1, 1999
John S. McKinney

* Director
- ------------------------------------- March 1, 1999
Leon D. Black

Director
- -------------------------------------
Richard D. Colburn

* Director
- ------------------------------------- March 1, 1999
Ronald M. DeFeo

* Director
- ------------------------------------- March 1, 1999
Michael S. Gross

II-5
<PAGE>

Signatures Title Date

* Director
- ------------------------------------ March 1, 1999
Richard J. Heckmann

* Director
- ------------------------------------ March 1, 1999
Gerald Tsai, Jr.

* Director
- ------------------------------------ March 1, 1999
Christian M. Weyer

/s/ Michael J. Nolan Chief Financial
- ------------------------------------ Officer (Principal March 1, 1999
Michael J. Nolan Financial Officer)

/s/ John S. Mckinney Vice President, March 1, 1999
- ------------------------------------ Finance (Principal
Accounting
John S. Mckinney Officer)

*By /s/ Michael J. Nolan
---------------------------- March 1, 1999
Michael J. Nolan Attorney-in-Fact

II-6

<PAGE>

EXHIBIT 1(a)

United Rentals, Inc.

Common Stock, $.01 par value

Underwriting Agreement
----------------------

February ___, 1999
------------
Goldman, Sachs & Co.,
Donaldson, Lufkin & Jenrette Securities Corporation
c/o Goldman, Sachs & Co.
85 Broad Street,
New York, New York 10004

Ladies and Gentlemen:

United Rentals, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
1,832,000 shares and, at the election of the Underwriters, up to 960,000
additional shares of Common Stock (the "Common Stock"), of the Company and the
stockholder of the Company named in Schedule II hereto (the "Selling
Stockholder") proposes, subject to the terms and conditions stated herein, to
sell to the Underwriters an aggregate of 4,568,000 shares of Common Stock. The
aggregate of 6,400,000 shares to be sold by the Company and the Selling
Stockholder is herein called the "Firm Shares" and the aggregate of 960,000
additional shares to be sold by the Company is herein called the "Optional
Shares". The Firm Shares and the Optional Shares that the Underwriters elect to
purchase pursuant to Section 2 hereof are herein collectively called the
"Shares".

It is understood and agreed to by all parties that the Company, Goldman
Sachs International, Donaldson, Lufkin & Jenrette International, the Selling
Stockholder, Ayr, Inc., a California corporation ("Ayr"), and Richard D.
Colburn are concurrently entering into an agreement (the "International
Underwriting Agreement") providing for the sale by the Company and the Selling
Stockholder of up to a total of 1,840,000 shares of Common Stock (the
"International Shares"), including the overallotment option thereunder, through
arrangements with certain underwriters outside the United States (the
"International Underwriters"), for whom Goldman Sachs International and
Donaldson, Lufkin & Jenrette International are acting as lead managers.
Anything herein or therein to the contrary notwithstanding, the respective
closings under this Agreement and the International Underwriting Agreement are
hereby expressly made conditional on one another. The Underwriters hereunder
and the International Underwriters are simultaneously entering into an agreement
between U.S. and International Underwriting Syndicates (the "Agreement between
Syndicates") which provides, among other things, for the transfer of shares of
Common Stock between the two syndicates. Two forms of prospectus are to be used
in connection with the offering and sale of shares of Common Stock contemplated
by the foregoing, one relating to the Shares hereunder and the other relating to
the International Shares. The latter form of prospectus will be identical to
the former except for certain substitute pages as included in the registration
statement and amendments thereto as mentioned below. Except as used in Sections
2, 3, 4, 9 and 11 herein, and except as the context may otherwise require,
references hereinafter to the Shares shall include
<PAGE>

all the shares of Common Stock which may be sold pursuant to either this
Agreement or the International Underwriting Agreement, and references herein to
any prospectus whether in preliminary or final form, and whether as amended or
supplemented, shall include both the U.S. and the international versions
thereof.

1. (a) The Company represents and warrants to, and agrees with, each of
the Underwriters that:

(i) A registration statement on Form S-3 (File No. 333-
71775) (the "Initial Registration Statement") in respect of the Shares has been
filed with the Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement and any post-effective amendment thereto, each in
the form heretofore delivered to you, and, excluding exhibits thereto but
including all documents incorporated by reference in the prospectus contained
therein, to you for each of the other Underwriters, have been declared effective
by the Commission in such form; other than a registration statement, if any,
increasing the size of the offering (a "Rule 462(b) Registration Statement"),
filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Act"), which became effective upon filing, no other document with respect to
the Initial Registration Statement or document incorporated by reference therein
has heretofore been filed with the Commission; and no stop order suspending the
effectiveness of the Initial Registration Statement, any post-effective
amendment thereto or the Rule 462(b) Registration Statement, if any, has been
issued and no proceeding for that purpose has been initiated or threatened by
the Commission (any preliminary prospectus included in the Initial Registration
Statement or filed with the Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the Act is hereinafter called a "Preliminary
Prospectus"; the various parts of the Initial Registration Statement and the
Rule 462(b) Registration Statement, if any, including all exhibits thereto and
including (i) the information contained in the form of final prospectus filed
with the Commission pursuant to Rule 424(b) under the Act in accordance with
Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to be part
of the Initial Registration Statement at the time it was declared effective and
(ii) the documents incorporated by reference in the prospectus contained in the
Initial Registration Statement at the time such part of the Initial Registration
Statement became effective, each as amended at the time such part of the Initial
Registration Statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "Registration Statement"; such final
prospectus, in the form first filed pursuant to Rule 424(b) under the Act, is
hereinafter called the "Prospectus"; any reference herein to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act, as of the date of such Preliminary Prospectus or Prospectus, as
the case may be; any reference to any amendment or supplement to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any
documents filed after the date of such Preliminary Prospectus or Prospectus, as
the case may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; and any reference to any amendment to the
Registration Statement shall be deemed to refer to and include any annual report
of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act
after the effective date of the Initial Registration Statement that is
incorporated by reference in the Registration Statement).

(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material respects to
the requirements of the Act and the rules and

2
<PAGE>

regulations of the Commission thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter through Goldman, Sachs & Co. expressly
for use therein or by a Selling Stockholder expressly for use in the preparation
of the answers therein to Item 7 of Form S-3.

(iii) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements of the Act
or the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and any
further documents so filed and incorporated by reference in the Prospectus or
any further amendment or supplement thereto, when such documents become
effective or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder and will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by an Underwriter through
Goldman, Sachs & Co. expressly for use therein.

(iv) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the Registration
Statement or the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date as to
the Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by an Underwriter through
Goldman, Sachs & Co. expressly for use therein or by a Selling Stockholder
expressly for use in the preparation of the answers therein to Item 7 of
Form S-3.

(v) The accountants who certified the financial
statements and supporting schedules included in the Registration Statement are
independent certified public accountants with respect to the Company and its
subsidiaries within the meaning of Regulation S-X under the Act.

(vi) Each of the historical financial statements included
in the Registration Statement, together with related schedules and notes,
present fairly (on a consolidated basis where so indicated) the financial
condition of the entity or entities to which such financial statement

3
<PAGE>

purports to relate (the "Reported Entity") at the date(s) indicated and the
statement of operations (or income or earnings as indicated in the applicable
financial statement) and cash flows and (in the case of a Reported Entity for
which a statement of stockholders' equity is included) stockholders' equity (and
partners' capital if so indicated in the applicable financial statement) of the
Reported Entity for the period(s) specified; said financial statements have been
prepared in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved (except as
otherwise indicated in such financial statements). Any supporting schedules
included in the Registration Statement present fairly in accordance with GAAP
the information required to be stated therein. The selected historical financial
information and the summary historical financial information included in the
Registration Statement present fairly the information shown therein and, in the
case of historical financial data or information of the Company, have been
compiled on a basis consistent with that of the audited financial statements
included in the Registration Statement. The pro forma financial statements and
the related notes thereto included in the Registration Statement present fairly
the information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial statements
and have been properly compiled on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions and
circumstances referred to therein.

(vii) The Company has not taken or caused to be taken and
will not take or cause to be taken, either directly or indirectly, any action
designed to cause or result in, or which action constitutes or which might
reasonably be expected to constitute, the stabilization or manipulation of the
market price of any security in contravention of any applicable law, including
but not limited to those actions prohibited by Section 9(a) of the Exchange Act,
the rules and regulations thereunder and Regulation M promulgated by the
Commission.

(viii) Neither the Company nor any of the Subsidiaries (as
defined below) has sustained since the date of the latest financial statements
included or incorporated by reference in the Prospectus any loss or interference
with its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree which would be material to the Company and the Subsidiaries
taken as a whole, otherwise than as reserved for as disclosed in the Company's
financial statements or financial statements of certain Subsidiaries included in
the Prospectus; and since the respective dates as of which information is given
in the Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
Subsidiaries considered as one enterprise (a "Material Adverse Effect"), whether
or not arising in the ordinary course of business, (B) there has not been any
change in the capital stock of the Company (other than the issuance of Common
Stock pursuant to outstanding stock options) or increase in the long-term debt
(other than accretion or scheduled repayments thereof) of the Company and the
Subsidiaries taken as a whole, (C) there have been no transactions entered into
by the Company or any of the Subsidiaries, other than those in the ordinary
course of business, which are material with respect to the Company and the
Subsidiaries considered as one enterprise, and (D) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class of
its capital stock.

4
<PAGE>

(ix) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware and has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and to
enter into and perform its obligations under this Agreement and the
International Underwriting Agreement; and the Company is duly qualified as a
foreign corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not cause a Material
Adverse Effect.

(x) Each subsidiary of the Company (each, a "Subsidiary")
has been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so to
qualify or to be in good standing would not result in a Material Adverse Effect;
except as otherwise disclosed in the Prospectus, all of the issued and
outstanding capital stock of each such Subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by the Company,
directly or through Subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity (except for any security
interest or pledge contemplated by the Credit Agreement dated September 29, 1998
among the Company, United Rentals, United Rentals of Canada, Inc. and Bank of
America National Trust and Savings Association ("B of A"), as U.S. Agent, Bank
of America Canada, as Canadian Agent, and various financial institutions (the
"Credit Agreement") and the Term Loan Agreement dated July 10, 1998 between the
Company, certain financial institutions and B of A, as agent, as amended by the
First Amendment to the Term Loan Agreement, dated September 29, 1998 (the "Term
Loan Agreement")); none of the outstanding shares of capital stock of any
Subsidiary was issued in violation of the preemptive or similar rights of any
security holder of such Subsidiary. The only Subsidiaries of the Company (other
than inactive Subsidiaries) are the Subsidiaries listed in a certificate of
officers of the Company to be delivered to the Purchaser prior to the Time of
Delivery and each Subsidiary of the Company which constitutes a "significant
subsidiary" (as such term is defined in Rule 1-02 of Regulation S-X under the
Act); provided, however, that such determination shall be made by reference to
-------- -------
the Company's pro forma financial statements as permitted by Rule 3-05(b)(3) of
Regulation S-X (each, a "Significant Subsidiary"), is marked with a "*" in such
certificate.

(xi) The Company has an authorized capitalization as set
forth in the Prospectus. As of the date hereof, there are [ ] shares of common
stock, par value $0.01 per share (the "Common Stock") outstanding. The shares of
issued and outstanding capital stock of the Company have been duly authorized
and validly issued and are fully paid and non-assessable and conform to the
description thereof contained in the Prospectus; none of the outstanding shares
of capital stock of the Company was issued in violation of the preemptive or
other similar rights of any security holder of the Company.

5
<PAGE>

(xii) This Agreement and the International Underwriting
Agreement have been duly authorized, executed and delivered by the Company.

(xiii) The Shares and the International Shares to be issued
and sold by the Company to the Underwriters hereunder and under the
International Underwriting Agreement have been duly and validly authorized and,
when issued and delivered against payment therefor as provided herein, will be
duly and validly issued and fully paid and non-assessable and will conform to
the description of the Common Stock contained in the Prospectus.

(xiv) The statements set forth in the Prospectus under the
caption "Description of Capital Stock", insofar as they purport to constitute a
summary of the terms of the Common Stock and under the caption "Underwriting",
insofar as they purport to describe the provisions of the laws and documents
referred to therein, are accurate, complete and fair in all material respects.

(xv) Neither the Company nor any of its Subsidiaries is
in violation of its charter or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which any of them may be bound, or to which any of
the property or assets of the Company or any of its Subsidiaries is subject
(collectively, "Agreements and Instruments") except for such defaults that would
not result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement and the International Underwriting Agreement and
any other agreement or instrument entered into or issued or to be entered into
or issued by the Company in connection with the transactions contemplated hereby
or thereby or in the Prospectus and the consummation of the transactions
contemplated herein and in the Prospectus and compliance by the Company with its
obligations hereunder have been duly authorized by all necessary corporate
action and do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or default or
a Repayment Event (as defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its Subsidiaries pursuant to, the Agreements and Instruments
except for such conflicts, breaches or defaults or liens, charges or
encumbrances that, singly or in the aggregate, would not result in a Material
Adverse Effect, nor will such action result in any violation of the provisions
of the charter or by-laws of the Company or any of its Subsidiaries or any
applicable law, statute, rule, regulation, judgment, order, writ or decree of
any government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its Subsidiaries or any of their assets
or properties. As used herein, a "Repayment Event" means any event or condition
which gives the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such indebtedness by
the Company or any of its Subsidiaries.

(xvi) No labor dispute with the employees of the Company or
any of its Subsidiaries exists or, to the knowledge of the Company, is imminent,
and the Company is not aware of any existing or imminent labor disturbance by
the employees of any of its or any of its

6
<PAGE>

Subsidiaries' principal suppliers, manufacturers, customers or contractors,
which, in either case, may reasonably be expected to result in a Material
Adverse Effect.

(xvii) There is no action, suit, proceeding, inquiry or
investigation before or by any court or governmental agency or body, domestic or
foreign, now pending, or, to the knowledge of the Company, threatened, against
or affecting the Company or any Subsidiary thereof which is required to be
disclosed in the Prospectus (other than as will be disclosed therein), or which
might reasonably be expected to result in a Material Adverse Effect, or which
might reasonably be expected to materially and adversely affect the consummation
of this Agreement and the International Underwriting Agreement or the
performance by the Company of its obligations hereunder. The aggregate of all
pending legal or governmental proceedings to which the Company or any Subsidiary
thereof is a party or of which any of their respective property or assets is the
subject which are not described in the Prospectus including ordinary routine
litigation incidental to the business, would not reasonably be expected to
result in a Material Adverse Effect.

(xviii) To the knowledge of the Company, the representations
and warranties made by each of the 97 companies that have been acquired by the
Company (collectively, the "Acquired Companies") and the selling stockholders in
the respective agreements pursuant to which the Company acquired the Acquired
Companies did not as of the respective dates thereof contain any inaccuracies
that might, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

(xix) There are no contracts or documents which are
required to be described in the Prospectus which will not be so described.

(xx) The Company and its Subsidiaries own or possess, or
can acquire on reasonable terms, adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") necessary to carry on the
business now operated by them, and neither the Company nor any of its
Subsidiaries has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company or any of
its Subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly
or in the aggregate, would result in a Material Adverse Effect.

(xxi) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency is necessary or required for the performance by
the Company of its obligations hereunder or by the Company in connection with
the offering, issuance or sale of the Shares hereunder or the consummation of
the transactions contemplated by this Agreement and the International
Underwriting Agreement, except (i) the registration under the Act of the Shares
and the International Shares, (ii) such as may be required under foreign or
state securities or blue sky laws in connection with the purchase and
distribution of the Shares and the International Shares by the Underwriters and
the International

7
<PAGE>

Underwriters and (iii) such as may be required after the Time of Delivery
pursuant to the Company's periodic reporting requirements on its Annual Report
on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K to
be filed with the Commission under Sections 13 and 15(d), respectively, of the
Exchange Act.

(xxii) The Company and its Subsidiaries possess such
permits, licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state, local or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by them, except where the failure to so possess such Government
Licenses would not, singly or in the aggregate, have a Material Adverse Effect;
the Company and its Subsidiaries are in compliance with the terms and conditions
of all such Governmental Licenses, except where the failure so to comply would
not, singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except where the
invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not have, singly or in the
aggregate, a Material Adverse Effect; and neither the Company nor any of its
Subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
result in a Material Adverse Effect.

(xxiii) The Company and its Subsidiaries have good and
marketable title to all real property described in the Prospectus as owned by
the Company and its Subsidiaries and good title to all other properties
described in the Prospectus as owned by them, in each case, free and clear of
all mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are pursuant to the Credit Agreement
and the Term Loan Agreement as described in the Prospectus or (b) do not, singly
or in the aggregate, materially interfere with the use made and proposed to be
made of such property by the Company or any of its Subsidiaries; and all of the
leases and subleases material to the business of the Company and its
Subsidiaries, considered as one enterprise, and under which the Company or any
of its Subsidiaries holds properties described in the Prospectus, are in full
force and effect, and neither the Company nor any Subsidiary has any notice of
any material claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any Subsidiary under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company or such
Subsidiary to the continued possession of the leased or subleased premises under
any such lease or sublease, which claim, if upheld, would result in a Material
Adverse Effect.

(xxiv) Neither the Company nor any Subsidiary is, or upon
the issuance and sale of the Shares as herein contemplated and the application
of the net proceeds therefrom as described in the Prospectus will be, an
"investment company" or an entity "controlled" by an "investment company" as
such terms are defined in the Investment Company Act of 1940, as amended (the
"1940 Act").

(xxv) Except as described in the Prospectus or except as
would not, singly or in the aggregate, result in a Material Adverse Effect: (A)
neither the Company nor any of its Subsidiaries is in violation of any federal,
state, local or foreign statute, law, rule, regulation, ordinance, code, policy
or rule of common law or any judicial or administrative interpretation thereof,

8
<PAGE>

including any judicial or administrative order, consent, decree or judgment,
relating to pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws and
regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) neither the Company nor any of its Subsidiaries is lacking any
permits, authorizations and approvals required under any applicable
Environmental Laws or are in violation of the requirements of such Environmental
Laws, (C) there are no pending or, to the best knowledge of the Company,
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of its Subsidiaries and (D) to the knowledge of the Company there
are no events or circumstances that might reasonably be expected to form the
basis of an order for clean-up or remediation, or an action, suit or proceeding
by any private party or governmental body or agency, against or affecting the
Company or any of its Subsidiaries relating to Hazardous Materials or any
Environmental Laws.

(xxvi) Nothing has come to the attention of the Company that
has caused the Company to believe that the statistical and market-related data
included in the Prospectus are not based on or derived from sources that are
reliable and accurate in all material respects.

(xxvii) The Company and each of its Subsidiaries have filed
all necessary federal, state, local and foreign income, payroll, franchise and
other tax returns (after giving effect to extensions) and have paid all taxes
shown as due thereon (except where the failure to so file or pay would not,
singly or in the aggregate, have a Material Adverse Effect), and there is no tax
deficiency that has been, or to the knowledge of the Company is likely to be,
asserted against the Company, any of its Subsidiaries or any of their properties
or assets that would result in a Material Adverse Effect, except for taxes that
are being contested in good faith by appropriate proceedings and with respect to
which the Company has established adequate reserves in accordance with GAAP.

(xxviii) Neither the Company nor any of its Subsidiaries is or
has ever been a Personal Holding Company within the meaning of Section 542 of
the Internal Revenue Code of 1986, as amended.

(xxix) Neither the Company nor any Subsidiary has received
notice from any insurer providing insurance coverage for the Company and its
Subsidiaries or agent of such insurer that capital improvements or other
expenditures will have to be made in order to continue present insurance
coverage, except such as would not reasonably be expected, singularly or in the
aggregate, to have a Material Adverse Effect.

(xxx) The Company and its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded

9
<PAGE>

as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.

(xxxi) Other than pursuant to this Agreement and the
International Underwriting Agreement, there are no contracts, agreements or
understandings between either the Company or its Subsidiaries and any person
that give rise to a valid claim against the Company, any of its Subsidiaries or
the Underwriters for a brokerage commission, finder's fee or other like payment
relating to the transactions contemplated hereby.

(xxxii) No person or entity has the legal right by contract
or otherwise to require registration under the Act of shares of capital stock or
other securities convertible into capital stock of the Company solely because of
the filing or effectiveness of the Registration Statement and the consummation
of the transactions contemplated by this Agreement and the International
Underwriting Agreement (such rights are hereinafter referred to as "Registration
Rights").

(xxxiii) Neither the Company nor any of its Subsidiaries has
violated any provisions of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or the rules and regulations promulgated thereunder,
except for such violations which, singly or in the aggregate, would not have a
Material Adverse Effect.

(xxxiv) Any certificate signed by any officer of the Company
or any of its Subsidiaries delivered to the Underwriters or to counsel for the
Underwriters pursuant to this Agreement or the International Underwriting
Agreement shall be deemed a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.

(xxxv) With respect to the information systems of the
Company and its Subsidiaries, the Company does not believe that the Year 2000
Problem will have a Material Adverse Effect or result in any material loss or
interference with the Company's business or operations. In addition, the Company
has no reason to believe that, with respect to the information systems of any
third parties with which the Company or any of its Subsidiaries has a material
relationship, the Year 2000 Problem will have a Material Adverse Effect or
result in any material loss or interference with the Company's business or
operations. The "Year 2000 Problem" as used herein means any significant risk
that computer hardware or software used in the receipt, transmission,
processing, manipulation, storage, retrieval, retransmission or other
utilization of data or in the operation of mechanical or electrical systems of
any kind will not, in the case of dates or time periods occurring after December
31, 1999, function at least as effectively as in the case of dates or time
periods occurring prior to January 1, 2000.

(b) Each of the Selling Stockholder and Richard D. Colburn, jointly and
severally, represents and warrants to, and agrees with, each of the Underwriters
that:

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<PAGE>

(i) No consent, approval, authorization or order is required for
the execution and delivery by such Selling Stockholder of this Agreement, the
International Underwriting Agreement, the Power of Attorney or the Custody
Agreement hereinafter referred to, or for the sale and delivery of the Shares to
be sold by such Selling Stockholder hereunder, except such as have been obtained
under the Act and such as may be required under state securities or Blue Sky
laws or securities laws of any jurisdiction outside the United States in
connection with the purchase and distribution of such Shares by the Underwriters
and the International Underwriters; and such Selling Stockholder has full right,
power and authority to enter into this Agreement, the International Underwriting
Agreement, the Power-of-Attorney and the Custody Agreement and to sell, assign,
transfer and deliver the Shares to be sold by such Selling Stockholder
hereunder;

(ii) The sale of the Shares to be sold by such Selling
Stockholder hereunder and under the International Underwriting Agreement, and
the compliance by such Selling Stockholder with all of its obligations under
this Agreement, the International Underwriting Agreement, the Power of Attorney
and the Custody Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or violation
of any of the terms or provisions of, or constitute a default under, any
statute, indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which such Selling Stockholder is a party or by which such
Selling Stockholder is bound or to which any of the property or assets of such
Selling Stockholder is subject, nor will such action result in any violation of
the provisions of [name governing instrument of Colburn Foundation], any statute
or any order, rule or regulation of any court or governmental agency or body
having jurisdiction over such Selling Stockholder or the property of such
Selling Stockholder, except that no representation is made under this paragraph
(ii) as to any violation under any state securities or Blue Sky laws or
securities laws of any jurisdiction outside the United States in connection with
the purchase and distribution of the Shares by the Underwriters and the
International Underwriters;

(iii) Such Selling Stockholder has, and immediately prior to each
Time of Delivery (as defined in Section 4 hereof) such Selling Stockholder will
have, good and valid title to the Shares to be sold by such Selling Stockholder
hereunder or under the International Underwriting Agreement, free and clear of
all liens, encumbrances, equities or claims; and, upon delivery of such Shares
and payment therefor pursuant hereto, good and valid title to such Shares, free
and clear of all liens, encumbrances, equities or claims, will pass to the
several Underwriters;

(iv) The Selling Stockholder and Richard D. Colburn will comply
with the terms of the letter agreement, dated February 4, 1999, among the
Selling Stockholder, Ayr and Richard D. Colburn addressed to Goldman, Sachs &
Co.;

(v) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has constituted
or which might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares;

(vi) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or

11
<PAGE>

supplement thereto are made in reliance upon and in conformity with written
information furnished to the Company by such Selling Stockholder expressly for
use therein, such Preliminary Prospectus and the Registration Statement did, and
the Prospectus and any further amendments or supplements to the Registration
Statement and the Prospectus, when they become effective or are filed with the
Commission, as the case may be, will conform in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading;

(vii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 with respect to the transactions herein contemplated, such Selling
Stockholder will deliver to you prior to or at the Time of Delivery (as
hereinafter defined) a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof);

(viii) Certificates in negotiable form representing all of the
Shares to be sold by such Selling Stockholder hereunder and under the
International Underwriting Agreement have been placed in custody under a Custody
Agreement, in the form heretofore furnished to you (the "Custody Agreement"),
duly executed and delivered by such Selling Stockholder to O'Melveny & Myers
LLP, as custodian (the "Custodian"), and such Selling Stockholder has duly
executed and delivered a Power of Attorney, in the form heretofore furnished to
you (the "Power of Attorney"), appointing the persons indicated in Schedule II
hereto, and each of them, as such Selling Stockholder's attorneys-in-fact (the
"Attorneys-in-Fact") with authority to execute and deliver this and the
International Underwriting Agreement on behalf of such Selling Stockholder, to
authorize the delivery of the Shares to be sold by such Selling Stockholder
hereunder and otherwise to act on behalf of such Selling Stockholder in
connection with the transactions contemplated by this Agreement, the
International Underwriting Agreement and the Custody Agreement;

(ix) The Shares represented by the certificates held in custody
for such Selling Stockholder under the Custody Agreement are subject to the
interests of the Underwriters hereunder and the International Underwriter
pursuant to the International Underwriting Agreement; the arrangements made by
such Selling Stockholder for such custody, and the appointment by such Selling
Stockholder of the Attorneys-in-Fact by the Power of Attorney, are to that
extent irrevocable; the obligations of the Selling Stockholder hereunder shall
not be terminated by operation of law, whether by the death or incapacity of any
individual Selling Stockholder or, in the case of an estate or trust, by the
death or incapacity of any executor or trustee or the termination of such estate
or trust, or in the case of a partnership or corporation, by the dissolution of
such partnership or corporation, or by the occurrence of any other event; if any
individual Selling Stockholder or any such executor or trustee should die or
become incapacitated, or if any such estate or trust should be terminated, or if
any such partnership or corporation should be dissolved, or if any other such
event should occur, before the delivery of the Shares hereunder, certificates
representing the Shares shall be delivered by or on behalf of the Selling
Stockholder in accordance with the terms and conditions of this Agreement, the
International Underwriting Agreement and the Custody Agreement; and actions
taken by the Attorneys-in-Fact pursuant to the Powers of Attorney shall be

12
<PAGE>

as valid as if such death, incapacity, termination, dissolution or other event
had not occurred, regardless of whether or not the Custodian, the Attorneys-in-
Fact, or any of them, shall have received notice of such death, incapacity,
termination, dissolution or other event; and

(x) The sale of the Shares by the Selling Stockholder is not
subject to the preemptive or other similar rights of any securityholder of the
Company arising under any applicable contract of such Selling Stockholder.

(i) No consent, approval, authorization or order is required for
the execution and delivery by Ayr of this Agreement and the International
Underwriting Agreement and Ayr has full right, power and authority to enter into
this Agreement and the International Underwriting Agreement;

(ii) Ayr will comply with the terms of the letter agreement, dated
February 4, 1999, among the Selling Stockholder, Ayr and Richard D. Colburn
addressed to Goldman, Sachs & Co.l and

(iii) The representations and warranties of the Selling Stockholder
and Richard D. Colburn contained in Section 1(b) are true and correct.

2. Subject to the terms and conditions herein set forth, (a) each of the
Company and the Selling Stockholder agrees, severally and not jointly, to sell
to each of the Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from each of the Company and the Selling Stockholder,
at a purchase price per share of $..........., the number of Firm Shares (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
the aggregate number of Firm Shares to be sold by each of the Company and the
Selling Stockholder as set forth opposite their respective names in Schedule II
hereto by a fraction, the numerator of which is the aggregate number of Firm
Shares to be purchased by such Underwriter as set forth opposite the name of
such Underwriter in Schedule I hereto and the denominator of which is the
aggregate number of Firm Shares to be purchased by all of the Underwriters from
the Company and the Selling Stockholder hereunder and (b) in the event and to
the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Company agrees to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, at the purchase price per share set forth in clause
(a) of this Section 2, that portion of the number of Optional Shares as to which
such election shall have been exercised (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying such number of Optional
Shares by a fraction the numerator of which is the maximum number of Optional
Shares which such Underwriter is entitled to purchase as set forth opposite the
name of such Underwriter in Schedule I hereto and the denominator of which is
the maximum number of Optional Shares that all of the Underwriters are entitled
to purchase hereunder.

The Company, as and to the extent indicated in Schedule II hereto, hereby
grants to the Underwriters the right to purchase at their election up to 960,000
Optional Shares, at the purchase

13
<PAGE>

price per share set forth in the paragraph above, for the sole purpose of
covering over-allotments in the sale of the Firm Shares. Any such election to
purchase Optional Shares may be exercised only by written notice from you to the
Company, given within a period of 30 calendar days after the date of this
Agreement and setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless you and the Attorneys-in-Fact otherwise
agree in writing, earlier than two or later than ten business days after the
date of such notice.

3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.

4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Goldman, Sachs & Co. may request upon at least forty-eight hours' prior
notice to the Company and the Selling Stockholder shall be delivered by or on
behalf of the Company and the Selling Stockholder to Goldman, Sachs & Co.,
through the facilities of the Depository Trust Company ("DTC"), for the account
of such Underwriter, against payment by or on behalf of such Underwriter of the
purchase price therefor by wire transfer of Federal (same-day) funds to the
account specified by the Company and the Custodian to Goldman, Sachs & Co., at
least forty-eight hours in advance. The Company will cause the certificates
representing the Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with respect
thereto at the office of Goldman, Sachs & Co., 85 Broad Street, New York, New
York 10004 (the "Designated Office"). The time and date of such delivery and
payment shall be, with respect to the Firm Shares, 9:30 a.m., New York time, on
............., 1999 or such other time and date as Goldman, Sachs & Co., the
Company and the Selling Stockholder may agree upon in writing, and, with respect
to the Optional Shares, 9:30 a.m., New York time, on the date specified by
Goldman, Sachs & Co., in the written notice given by Goldman, Sachs & Co., of
the Underwriters' election to purchase such Optional Shares, or such other time
and date as Goldman, Sachs & Co., the Company and the Selling Stockholder may
agree upon in writing. Such time and date for delivery of the Firm Shares is
herein called the "First Time of Delivery", such time and date for delivery of
the Optional Shares, if not the First Time of Delivery, is herein called the
"Second Time of Delivery", and each such time and date for delivery is herein
called a "Time of Delivery".

(b) The documents to be delivered at each Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross receipt
for the Shares and any additional documents requested by the Underwriters
pursuant to Section 7(l) hereof, will be delivered at the offices of Skadden,
Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022 (the
"Closing Location"), and the Shares will be delivered at the Designated Office,
all at such Time of Delivery. A meeting will be held at the Closing Location
prior to such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto.

5. The Company agrees with each of the Underwriters:

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<PAGE>

(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) under the Act; to make no
further amendment or any supplement to the Registration Statement or
Prospectus prior to the last Time of Delivery which shall be disapproved by
you promptly after reasonable notice thereof; to advise you, promptly after
it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and
to furnish you with copies thereof; to file promptly all reports and any
definitive proxy or information statements required to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of the Prospectus and for so
long as the delivery of a prospectus is required in connection with the
offering or sale of the Shares; to advise you, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of
any order preventing or suspending the use of any Preliminary Prospectus or
prospectus, of the suspension of the qualification of the Shares for
offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the issuance
of any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus or suspending any such qualification,
promptly to use its best efforts to obtain the withdrawal of such order;

(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with
such laws so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be necessary to complete the
distribution of the Shares, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;

(c) Prior to 10:00 a.m., New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to
furnish the Underwriters with copies of the Prospectus and each amendment
or supplement thereto in such quantities as you may from time to time
reasonably request, and, if the delivery of a prospectus is required at any
time prior to the expiration of nine months after the date of the
Prospectus in connection with the offering or sale of the Shares and if at
such time any event shall have occurred as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if for any
other reason it shall be necessary or desirable during such same period to
amend or supplement the Prospectus or to file under the Exchange Act any
document incorporated by reference in the Prospectus in order to comply
with the Act or the

15
<PAGE>

Exchange Act, to notify you and upon your request to file such documents
and to prepare and furnish without charge to the Underwriters and to any
dealer in securities as many copies as you may reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct
such statement or omission or effect such compliance, and in case any
Underwriter is required to deliver a prospectus in connection with sales of
any of the Shares at any time nine months or more after the time of issue
of the Prospectus, upon your request but at the expense of such
Underwriter, to prepare and deliver to such Underwriter as many copies as
you may request of an amended or supplemented Prospectus complying with
Section 10(a)(3) of the Act;

(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations of the Commission thereunder (including, at the
option of the Company, Rule 158);

(e) During the period beginning from the date hereof and continuing to
and including the date 90 days after the date of the Prospectus, not to
offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder and under the International Underwriting Agreement, any shares of
any class of common stock of the Company or any other securities that are
convertible into, or exercisable or exchangeable for, or that represent the
right to receive, common stock of the Company, without your prior written
consent. The foregoing agreement will not limit the Company's ability to
(i) grant stock options under the existing stock option plans or issue
shares upon the exercise of stock options granted pursuant to such plans,
(ii) issue shares upon exercise or conversion of outstanding options,
warrants and convertible securities, (iii) issue shares, warrants or
convertible securities as consideration for acquisitions, provided that the
number of shares, warrants or convertible securities (calculated on a
common stock equivalent basis in the case of warrants and convertible
securities) that may be issued as consideration for acquisitions may not
exceed 5,000,000 unless the recipients of such excess shares, warrants or
convertible securities agree with the Company (which agreement may not be
amended without the prior written consent of Goldman, Sachs & Co.) to be
subject to the foregoing lock-up agreement with respect to such excess
shares, warrants or convertible securities or (iv) issue shares upon the
exercise of any warrants or convertible securities issued pursuant to the
preceding clause, provided that such shares will be subject to the
foregoing lock-up to the same extent, if any, as the warrants or
convertible securities pursuant to which such shares were issued;

(f) Not to be or become, at any time prior to the expiration of two
years after the last Time of Delivery, an open-end investment company, unit
investment trust, closed-end investment company or face-amount certificate
company that is or is required to be registered under Section 8 of the 1940
Act;

16
<PAGE>

(g) During a period of five years from the date of the Prospectus, to
furnish to you copies of all reports or other communications (financial or
other) furnished to stockholders of the Company generally, and to deliver
to you (i) as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission or any
securities exchange on which the Common Stock or any class of securities of
the Company is listed; and (ii) such additional public information
concerning the business and financial condition of the Company as you may
from time to time reasonably request (such financial statements to be on a
consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its stockholders
generally or to the Commission);

(h) To use the net proceeds received by it from the sale of the
Securities pursuant to this Agreement and the International Underwriting
Agreement in the manner specified in the Prospectus under the caption "Use
of Proceeds";

(i) To use its best efforts to list the Shares on the New York Stock
Exchange (the "Exchange"); and

(j) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of this
Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or
give irrevocable instructions for the payment of such fee pursuant to Rule
111(b) under the Act.

6. The Company and the Selling Stockholder covenant and agree with one
another and with the Underwriter that (a) the Company will pay or cause to be
paid the following: (i) the fees, disbursements and expenses of the Company's
counsel and accountants in connection with the registration of the Shares under
the Act and all other expenses in connection with the preparation, printing and
filing of the Registration Statement, any Preliminary Prospectus and the
Prospectus and any amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers; (ii) the cost of
printing or producing any Agreement among Underwriters, this Agreement, the
International Underwriting Agreement, the Agreement between Syndicates, the
Selling Agreements, the International Underwriting Agreement, the Agreement
between Syndicates, the Selling Agreements, the Blue Sky and Legal Investment
Memoranda, closing documents (including any compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Shares; (iii) all expenses in connection with the qualification of the Shares
for offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky and legal
investment surveys; (iv) any fees and expenses in connection with listing the
Shares on the Exchange; (v) the filing fees incident to, and the fees and
disbursements of counsel for the Underwriters in connection with, securing any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the Shares; (vi) the cost of preparing stock certificates;
(vii) the costs and charges of any transfer agent and registrar, (viii) the fees
and expenses of counsel for the Selling Stockholder in an amount not

17
<PAGE>

to exceed $30,000 and (ix) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section and (b) Selling Stockholder will pay or cause to be
paid all costs and expenses incident to the performance of such Selling
Stockholder's obligations hereunder which are not otherwise specifically
provided for in this Section, including (i) any fees and expenses of counsel for
such Selling Stockholder in excess of $30,000, (ii) the fees and expenses of the
Attorneys-in-Fact and the Custodian, and (iii) all expenses and taxes incident
to the sale and delivery of the Shares to be sold by such Selling Stockholder to
the Underwriters hereunder. In connection with clause (c) (iii) of the preceding
sentence, Goldman, Sachs & Co. agrees to pay New York State stock transfer tax,
and the Selling Stockholder agrees to reimburse Goldman, Sachs & Co. for
associated carrying costs if such tax payment is not rebated on the day of
payment and for any portion of such tax payment not rebated. It is understood,
however, that the Company shall bear, and the Selling Stockholder shall not be
required to pay or to reimburse the Company for, any other cost incurred by the
Company for matters not directly relating to the sale and purchase of the Shares
pursuant to this Agreement, and that, except as provided in this Section, and
Sections 8 and 11 hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel, transfer taxes on resale of any
of the Shares by them, and any advertising expenses connected with any offers
they may make.

7. The obligations of the Underwriters hereunder, and under the
International Underwriting Agreement, as to the Shares to be delivered at each
Time of Delivery, shall be subject, in their discretion, to the condition that
all representations and warranties and other statements of the Company and of
the Selling Stockholder, Ayr and Richard D. Colburn herein are, at and as of
such Time of Delivery, true and correct, the condition that the Company and the
Selling Stockholder shall have performed all of its and their obligations
hereunder theretofore to be performed, and the following additional conditions:

(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing
by the rules and regulations under the Act and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 P.M.,
Washington, D.C. time, on the date of this Agreement; no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction;

(b) Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the
Underwriters, shall have furnished to you such opinion or opinions, dated
such Time of Delivery, with respect to the matters as you may reasonably
request, and such counsel shall have received such papers and information
as they may reasonably request to enable them to pass upon such matters;

(c) Ehrenreich Eilenberg Krause & Zivian LLP, counsel for the Company,
shall have furnished to you their written opinion, dated such Time of
Delivery, in form and substance satisfactory to you, to the effect set
forth in Annex II hereto;

18
<PAGE>

(d) Weil, Gotshal & Manges LLP, counsel for the Company, shall have
furnished to you their written opinion, dated such Time of Delivery, in
form and substance satisfactory to you, to the effect set forth in Annex
III hereto;

(e) O'Melveny & Myers LLP, counsel for the Selling Stockholder, shall
have furnished to you their written opinion with respect to the Selling
Stockholder, dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:

(i) A Power-of-Attorney and a Custody Agreement have been duly
executed and delivered by such Selling Stockholder and constitute valid and
binding agreements of such Selling Stockholder in accordance with their terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or affecting creditors' rights generally (including
without limitation, fraudulent conveyance laws) and by general principles of
equity, including without limitation, concepts of materiality, reasonableness,
good faith and fair dealing and the possible unavailability of specific
performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law;

(ii) This Agreement and the International Underwriting Agreement
have been duly executed and delivered by or on behalf of such Selling
Stockholder; and the sale of the Shares to be sold by such Selling Stockholder
hereunder and under the International Underwriting Agreement and the compliance
by such Selling Stockholder with its obligations under this Agreement, the
International Underwriting Agreement, the Power-of-Attorney and the Custody
Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of any
terms or provisions of, or constitute a default under, (A) any statute, or (B)
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which such Selling Stockholder is a party or by which such Selling
Stockholder is bound or to which any of the property or assets of such Selling
Stockholder is subject that has been identified as being material to such
Selling Stockholder on a certificate provided to such counsel by such Selling
Stockholder, nor will such action result in any violation of the provisions of
[name governing instrument of Colburn Foundation] or any order, rule or
regulation of any California, New York, Delaware or federal court or
governmental agency or body having jurisdiction over such Selling Stockholder or
the property of such Selling Stockholder that has been identified by such
Selling Stockholder on a certificate provided to such counsel;

(iii) No consent, approval, authorization or order of any
California, New York, Delaware or federal governmental authority that such
counsel has, in the exercise of customary professional diligence, recognized as
applicable to the Selling Stockholder or transactions of the type contemplated
by this Agreement, the International Underwriting Agreement, the Custody
Agreement and the Power of Attorney is required for the consummation of the
transactions contemplated by this Agreement or the International Underwriting
Agreement in connection with the Shares to be sold by such Selling Stockholder
hereunder, except such as have been obtained under the Act and such as may be
required under state securities or Blue Sky laws or securities laws of
jurisdictions outside the United States in connection with the purchase and
distribution of such Shares by the Underwriters and the International
Underwriters; and

19
<PAGE>

(iv) Assuming that the Underwriters and International
Underwriters purchased the Shares without notice of any adverse claim, the
Underwriters and the International Underwriters will acquire such Shares free
and clear of any adverse claim.

In rendering the opinion in paragraph (iv), such counsel may rely upon a
certificate of such Selling Stockholder in respect of matters of fact as to
ownership of, and liens, encumbrances, equities or claims on, the Shares sold by
such Selling Stockholder, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such certificate;

(f) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of
any post-effective amendment to the Registration Statement filed subsequent
to the date of this Agreement and also at each Time of Delivery, each
accounting firm whose report is included or incorporated by reference in
the Prospectus shall have furnished to you a letter or letters, dated the
respective dates of delivery thereof, in form and substance satisfactory to
you, to the effect set forth in Annex I hereto;

(g) (i) Neither the Company nor any of the Subsidiaries shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, which would be material to
the Company and the Subsidiaries taken as a whole otherwise than as set
forth or contemplated in the Prospectus or reserved for as disclosed in the
Company's financial statements or financial statements of certain
Subsidiaries included in the Prospectus, and (ii) since the respective
dates as of which information is given in the Prospectus there shall not
have been any change in the capital stock or long-term debt (other than
accretion thereof and other than borrowings in the ordinary course of
business under the Credit Facility with respect to working capital
requirements for the ongoing operation of the Company and the Subsidiaries)
of the Company and the Subsidiaries taken as a whole or any change, or any
development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity or results
of operations of the Company and the Subsidiaries taken as a whole,
otherwise than as set forth or contemplated in the Prospectus, the effect
of which, in any such case described in Clause (i) or (ii), is in the
judgment of Goldman, Sachs & Co. so material and adverse as to make it
impracticable or inadvisable to proceed with the offering or the delivery
of the Shares being delivered at such Time of Delivery on the terms and in
the manner contemplated in this Agreement and the International
Underwriting Agreement and in the Prospectus;

(h) On or after the date hereof (i) no downgrading shall have occurred
in the rating accorded the Company's debt securities by any "nationally
recognized statistical rating organization", as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such
organization shall have publicly announced that it

20
<PAGE>

has under surveillance or review, with possible negative implications, its
rating of any of the Company's debt securities;

(i) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the Exchange or on the National Association of
Securities Dealers Automated Quotation System; (ii) a suspension or
material limitation in trading in the Company's securities on the Exchange;
(iii) a general moratorium on commercial banking activities declared by
either Federal or New York State authorities; or (iv) the outbreak or
escalation of hostilities involving the United States or the declaration by
the United States of a national emergency or war, if the effect of any such
event specified in this clause (iv) in the judgment of Goldman, Sachs & Co.
makes it impracticable or inadvisable to proceed with the offering or the
delivery of the Shares on the terms and in the manner contemplated in the
Prospectus;

(j) The Shares at such Time of Delivery shall have been, subject to
official notice of issuance, duly listed on the Exchange;

(k) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement; and

(l) The Company and the Selling Stockholder shall have furnished or
caused to be furnished to you at such Time of Delivery certificates of
officers of the Company and of the Selling Stockholder, respectively,
satisfactory to you as to the accuracy of the representations and
warranties of the Company and the Selling Stockholder, respectively, herein
at and as of such Time of Delivery, as to the performance by the Company
and the Selling Stockholder of all of their respective obligations
hereunder to be performed at or prior to such Time of Delivery, and as to
such other matters as you may reasonably request, and the Company shall
have furnished or caused to be furnished certificates as to the matters set
forth in subsections (a) and (g) of this Section.

8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in

21
<PAGE>

conformity with written information furnished to the Company by any Underwriter
through Goldman, Sachs & Co. expressly for use therein.

(b) The Selling Stockholder and Richard D. Colburn, jointly and
severally, will indemnify and hold harmless each Underwriter against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement, or the Prospectus, or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Selling
Stockholder expressly for use therein; and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim as such
expenses are incurred. Notwithstanding anything herein to the contrary, the
aggregate liability of the Selling Stockholder and Richard D. Colburn
pursuant to this Section will be limited to an amount equal to the total
proceeds (before deducting underwriting discounts and commissions) received
by such Selling Stockholder pursuant to this Agreement and the
International Underwriting Agreement.

(c) Each Underwriter will indemnify and hold harmless the Company, the
Selling Stockholder and Richard D. Colburn against any losses, claims,
damages or liabilities to which the Company, such Selling Stockholder or
Richard D. Colburn may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through
Goldman, Sachs & Co. expressly for use therein; and will reimburse the
Company and the Selling Stockholder for any legal or other expenses
reasonably incurred by the Company or such Selling Stockholder in
connection with investigating or defending any such action or claim as such
expenses are incurred.

(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify

22
<PAGE>

the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party otherwise than under
such subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses,
in each case subsequently incurred by such indemnified party, in connection
with the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry of
any judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to
such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act,
by or on behalf of any indemnified party. An indemnifying party shall not
be required to indemnify an indemnified party hereunder with respect to any
settlement or compromise of, or consent to entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder if (i) such
settlement, compromise or consent is entered into or made or given by the
indemnified party without the consent of the indemnifying party; and (ii)
the indemnifying party has not unreasonably withheld or delayed any such
consent.

(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages
or liabilities (or actions in respect thereof) referred to therein, then
each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received, in case of the
Company, the Selling Stockholder and Richard D. Colburn, by the Company and
the Selling Stockholder on the one hand and, in the case of the
Underwriters, the Underwriters on the other from the offering of the
Shares. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the indemnified party
failed to give the notice required under subsection (d) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of, in the case of the
Company, the Selling Stockholder and Richard D. Colburn, the Company and
the Selling Stockholder on the one hand and, in the case of the
Underwriters, the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof),

23
<PAGE>

as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Stockholder on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Stockholder bear to the
total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover page of the Prospectus.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company, the Selling Stockholder or Richard D.
Colburn on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Selling
Stockholder, Richard D. Colburn and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this subsection (e)
were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to above in this subsection (e). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities
(or actions in respect thereof) referred to above in this subsection (e)
shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this subsection
(e), no Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Shares underwritten by it
and distributed to the public were offered to the public exceeds the amount
of any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (e) to contribute are several
in proportion to their respective underwriting obligations and not joint.

(f) The obligations of the Company, the Selling Stockholder and
Richard D. Colburn under this Section 8 shall be in addition to any
liability which the Company, the Selling Stockholder and Richard D. Colburn
may otherwise have and shall extend, upon the same terms and conditions, to
each person, if any, who controls any Underwriter within the meaning of the
Act; and the obligations of the Underwriters under this Section 8 shall be
in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to
each officer and director of the Company and the Selling Stockholder and to
each person, if any, who controls the Company or the Selling Stockholder
within the meaning of the Act. The Company, the Selling Stockholder and
Richard D. Colburn have and may enter into other agreements amongst
themselves with respect to the indemnity obligations hereunder.

9. (a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at a Time of
Delivery, you may in your discretion arrange for you or another party or
other parties to purchase such Shares on the terms

24
<PAGE>

contained herein. If within thirty-six hours after such default by any
Underwriter you do not arrange for the purchase of such Shares, then the
Company and the Selling Stockholder shall be entitled to a further period
of thirty-six hours within which to procure another party or other parties
satisfactory to you to purchase such Shares on such terms. In the event
that, within the respective prescribed periods, you notify the Company and
the Selling Stockholder that you have so arranged for the purchase of such
Shares, or the Company and the Selling Stockholder notify you that they
have so arranged for the purchase of such Shares, you or the Company and
the Selling Stockholder shall have the right to postpone such Time of
Delivery for a period of not more than seven days, in order to effect
whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other documents or arrangements, and
the Company agrees to file promptly any amendments to the Registration
Statement or the Prospectus which in your opinion may thereby be made
necessary. The term "Underwriter" as used in this Agreement and the
International Underwriting Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement or the International Underwriting Agreement with
respect to such Shares.

(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the
Company and the Selling Stockholder as provided in subsection (a) above,
the aggregate number of such Shares which remains unpurchased does not
exceed one-eleventh of the aggregate number of all the Shares to be
purchased at such Time of Delivery, then the Company and the Selling
Stockholder shall have the right to require each non-defaulting Underwriter
to purchase the number of Shares which such Underwriter agreed to purchase
hereunder and under the International Underwriting Agreement at such Time
of Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder and under the International
Underwriting Agreement) of the Shares of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing
herein shall relieve a defaulting Underwriter from liability for its
default.

(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the
Company and the Selling Stockholder as provided in subsection (a) above,
the aggregate number of such Shares which remains unpurchased exceeds one-
eleventh of the aggregate number of all of the Shares to be purchased at
such Time of Delivery, or if the Company and the Selling Stockholder shall
not exercise the right described in subsection (b) above to require non-
defaulting Underwriters to purchase Shares of a defaulting Underwriter or
Underwriters, then this Agreement and the International Underwriting
Agreement (or, with respect to the Second Time of Delivery, the obligations
of the Underwriters to purchase and of the Company and the Selling
Stockholder to sell the Optional Shares) shall thereupon terminate, without
liability on the part of any non-defaulting Underwriter or the Company or
the Selling Stockholder, except for the expenses to be borne by the Company
and the Selling Stockholder and the Underwriters as provided in Section 6
hereof and the indemnity and

25
<PAGE>

contribution agreements in Section 8 hereof; but nothing herein shall
relieve a defaulting Underwriter from liability for its default.

10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Selling Stockholder, Ayr, Richard D.
Colburn and the several Underwriters, as set forth in this Agreement or made by
or on behalf of them, respectively, pursuant to this Agreement, shall remain in
full force and effect, regardless of any investigation (or any statement as to
the results thereof) made by or on behalf of any Underwriter or any controlling
person of any Underwriter, or the Company, or the Selling Stockholder, Ayr or
Richard D. Colburn or any officer or director or controlling person of the
Company, the Selling Stockholder or Ayr and shall survive delivery of and
payment for the Shares.

11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor the Selling Stockholder shall then be under any
liability to any Underwriter except as provided in Sections 6 and 8 hereof; but,
if for any other reason any Shares are not delivered by or on behalf of the
Company and the Selling Stockholder as provided herein, the Company and the
Selling Stockholder pro rata (based on the number of Shares to be sold by the
Company and such Selling Stockholder hereunder), will reimburse the Underwriters
through you for all out-of-pocket expenses approved in writing by you, including
fees and disbursements of counsel, reasonably incurred by the Underwriters in
making preparations for the purchase, sale and delivery of the Shares not so
delivered, but the Company and the Selling Stockholder shall then be under no
further liability to any Underwriter in respect of the Shares not so delivered
except as provided in Sections 6 and 8 hereof.

12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you; and in all
dealings with the Selling Stockholder hereunder and under the International
Underwriting Agreement, you and the Company shall be entitled to act and rely
upon any statement, request, notice or agreement on behalf of such Selling
Stockholder made or given by any or all of the Attorneys-in-Fact for such
Selling Stockholder.

All statements, requests, notices and agreements hereunder and under the
International Underwriting Agreement shall be in writing, and if to the
Underwriters shall be delivered or sent by mail, telex or facsimile transmission
to you in care of Goldman, Sachs & Co., 32 Old Slip, 9/9th/ Floor, New York, New
York 10005, Attention: Registration Department; if to the Selling Stockholder
shall be delivered or sent by mail, telex or facsimile transmission to counsel
for such Selling Stockholder at its address set forth in Schedule II hereto; and
if to the Company shall be delivered or sent by mail, telex or facsimile
transmission to the address of the Company set forth in the Registration
Statement, Attention: Secretary, with a copy to Oscar D. Folger, 521 Fifth
Avenue, 24th Floor, New York, New York 10175; provided, however, that any notice
to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire or telex constituting such
Questionnaire, which address will be supplied to the Company or the Selling
Stockholder by you on request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.

26
<PAGE>

13. This Agreement and the International Underwriting Agreement shall be
binding upon, and inure solely to the benefit of, the Underwriters, the Company
and the Selling Stockholder and, to the extent provided in Sections 8 and 10
hereof, the officers and directors of the Company and each person who controls
the Company, the Selling Stockholder or any Underwriter, and their respective
heirs, executors, administrators, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement and the
International Underwriting Agreement. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign by reason merely of such
purchase.

14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.

15. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.

16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.

If the foregoing is in accordance with your understanding, please sign and
return to us ten counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters, the Company
and the Selling Stockholder. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in a form of Agreement among Underwriters (U.S. Version), the form of
which shall be submitted to the Company and the Selling Stockholder for
examination, upon request, but without warranty on your part as to the authority
of the signers thereof.

27
<PAGE>

Any person executing and delivering this Agreement as Attorney-in-Fact for the
Selling Stockholder represents by so doing that he has been duly appointed as
Attorney-in-Fact by such Selling Stockholder pursuant to a validly existing and
binding Power-of-Attorney which authorizes such Attorney-in-Fact to take such
action.

Very truly yours,

UNITED RENTALS, INC.

By:
----------------------------
Name:
Title:

COLBURN FOUNDATION

By:
----------------------------
Name:
Title: Attorney-in-Fact

-------------------------------
Richard D. Colburn

AYR, INC.

By:____________________________
Name:
Title:

Accepted as of the date hereof:

Goldman, Sachs & Co.
Donaldson, Lufkin & Jenrette Securities Corporation

By:
----------------------------
(Goldman, Sachs & Co.)

On behalf of each of the Underwriters

28
<PAGE>

SCHEDULE I

Total Number of
Number of Optional
Firm Shares Shares to
to be be
Purchased Purchased
if
Maximum
Option Exercised
------------- ----------------
Underwriter
Goldman, Sachs & Co.

Donaldson, Lufkin & Jenrette Securities
Corporation

[Names of other Underwriters]

------------- ----------------
Total 6,400,000 960,000
- ----- ============= ================

29
<PAGE>

SCHEDULE II

Total Number of Optional
Number Shares to be
of Sold if
Firm Shares Maximum Option
to be Sold Exercised

-------------- ------------------
The Company................. 1,832,000 960,000

The Selling Stockholder(s): 4,568,000

Colburn Foundation (a)

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

Total....................... 6,400,000 960,000
============== ==================

- -------------
(a) This Selling Stockholder is represented by O'Melveny & Myers LLP and
has appointed Richard D. Colburn and Robert B. Egelston, and each of them, as
the Attorneys-in-Fact for such Selling Stockholder.

30
<PAGE>

ANNEX I

Pursuant to Section 7(f) of the Underwriting Agreement, the accountants shall
furnish letters to the Underwriters to the effect that:

i. We are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act
and the applicable published rules and regulations thereunder;

ii. In our opinion, the consolidated financial statements and
financial statement schedules audited by us and included in the
Prospectus or Registration Statement comply as to form in all
material respects with the applicable requirements of the Act and
the related published rules and regulations thereunder, and, if
applicable, we have made a review in accordance with standards
established by the American Institute of Certified Public Accoun-
tants of the unaudited, consolidated interim financial
statements, selected financial data, pro forma financial
information, financial forecasts and/or condensed financial
statements derived from audited financial statements of the
Company for the periods specified in such letter, as indicated in
their reports thereon, copies of which have been furnished to the
Underwriters hereto;

iii. We have made a review in accordance with standards established by
the American Institute of Certified Public Accountants of the
unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash
flows included in the Prospectus as indicated in their reports
thereon copies of which have been separately furnished to the
Underwriters and on the basis of specified procedures including
inquiries of officials of the Company who have responsibility for
financial and accounting matters regarding whether the unaudited
condensed consolidated financial statements referred to in
paragraph (vi)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Act
and the related published rules and regulations, nothing came to
our attention that caused us to believe that the unaudited
condensed consolidated financial statements do not comply as to
form in all material respects with the applicable accounting
requirements of the Act and the related published rules and
regulations;

iv. The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus agrees with the corresponding amounts (after
restatements where applicable) in the audited consolidated
financial statements for such five fiscal years;

I-1
<PAGE>

v. We have compared the information in the Prospectus under selected
captions with the disclosure requirements of Regulation S-K and
on the basis of limited procedures specified in such letter
nothing came to our attention as a result of the foregoing
procedures that caused them to believe that this information does
not conform in all material respects with the disclosure
requirements of Items 301, 302, 402 and 503(d), respectively, of
Regulation S-K;

vi. On the basis of limited procedures not constituting an audit in
accordance with generally accepted auditing standards, consisting
of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its
subsidiaries since the date of the latest audited financial
statements included in the Prospectus, inquiries of officials of
the Company and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as may
be specified in such letter, nothing came to our attention that
caused us to believe that:

(1) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus are not in conformity
with generally accepted accounting principles applied on the
basis substantially consistent with the basis for the
unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus;

(2) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and
any such unaudited data and items were not determined on a
basis substantially consistent with the basis for the
corresponding amounts in the audited consolidated financial
statements included in the Prospectus;

(3) the unaudited financial statements which were not included
in the Prospectus but from which were derived any unaudited
condensed financial statements referred to in Clause (1) and
any unaudited income statement data and balance sheet items
included in the Prospectus and referred to in Clause (2)
were not determined on a basis substantially consistent with
the basis for the audited consolidated financial
statements included in the Prospectus;

I-2
<PAGE>

(4) any unaudited pro forma consolidated condensed financial
statement included in the Prospectus do not comply as to
form in all material respects with the applicable accounting
requirements or the pro forma adjustments have not been
properly applied to the historical amounts in the
compilation of those statements;

(5) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital
stock upon exercise of options and stock appreciation
rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which
were outstanding on the date of the latest financial
statements included in the Prospectus) or any increase in
the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current
assets or stockholders' equity or other items specified by
the Underwriters, or any increases in any items specified by
the Underwriters, in each case as compared with amounts
shown in the latest balance sheet included in the Prospectus
except in each case for changes, increases or decreases
which the Prospectus discloses have occurred or may occur or
which are described in such letter; and

(6) for the period from the date of the latest financial
statements included in the Prospectus to the specified date
referred to in Clause (5) there were any decreases in
consolidated net revenues or operating profit or the total
or per share amounts of consolidated net income or other
items specified by the Underwriters, or any in creases in
any items specified by the Underwriters, in each case as
compared with the comparable period of the preceding year
and with any other period of corresponding length specified
by the Underwriters, except in each case for decreases or
increases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and

vii. In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection
of minute books, inquiries and other procedures referred to in
paragraphs (iii) and (vi) above, they have carried out certain
specified procedures, not constituting an audit in accordance
with generally accepted auditing standards, with respect to
certain amounts, percentages and financial information specified
by the Underwriters, which are derived from the general
accounting records of the Company and its subsidiaries, which
appear in the Prospectus, and have

I-3
<PAGE>

compared certain of such amounts, percentages and financial
information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.

I-4
<PAGE>

ANNEX II

FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 7(c)

As to various questions of fact material to our opinion, we have relied
upon the certificates of officers and upon certificates of public officials.
With regard to the due incorporation of corporations (other than the Company)
and the good standing of corporations (other than the Company), we have (subject
to the next sentence) relied entirely upon certificates of public officials.
With regard to the tax good standing of certain corporations (other than the
Company), we have relied solely upon a certificate of an officer of such
corporation to the effect that the corporation has filed the most recent annual
report required by the law of such jurisdiction and that all franchise taxes
required to be paid under such law have been paid. We have also examined such
corporate documents and records and other certificates, and have made such
investigations of law, as we have deemed necessary in order to render the
opinion hereinafter set forth. We have assumed the authenticity of all
documents submitted to us as originals, the genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
documents submitted to us as copies. We have also assumed that all documents
examined by us have been duly and validly authorized, executed and delivered by
each of the parties thereto other than the Company.

i. The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of
Delaware.

ii. The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described
in the Prospectus and to enter into and perform its obligations
under the Underwriting Agreement and the International
Underwriting Agreement.

iii. The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing
would not result in a Material Adverse Effect.

iv. The Company has an authorized capitalization as set forth in the
Prospectus. As of the date hereof, there were [ ] shares of
common stock, par value $.01 per share (the "Common Stock")
outstanding. The shares of issued and outstanding common stock
of the Company have been duly authorized and validly issued and
are fully paid and non-assessable; and none of the outstanding
shares of capital stock of the Company was issued in violation of
any preemptive or other similar rights of any security holder of
the Company arising by statute or the Company's certificate of
incorporation or

II-1
<PAGE>

by-laws or, to the best of our knowledge (after due inquiry), any
other preemptive or other similar rights of any security holder
of the Company.

v. Each Significant Subsidiary is validly existing as a corporation
in good standing under the laws of the jurisdiction of its
incorporation and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing
would not result in a Material Adverse Effect.

vi. Each Significant Subsidiary has been duly incorporated and has
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Prospectus. Except as otherwise disclosed in the Prospectus, all
of the issued and outstanding capital stock of each Significant
Subsidiary has been duly authorized and validly issued and is
fully paid and non-assessable and, to the best of our knowledge,
is owned by the Company, directly or through Subsidiaries, free
and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity. None of the outstanding shares of
capital stock of any Significant Subsidiary was issued in
violation of the preemptive or similar rights of any security
holder of such Significant Subsidiary arising pursuant to statute
or such Subsidiary's certificate of incorporation or by-laws or,
to the best of our knowledge, any other preemptive or other
similar rights of any security holder of such Significant
Subsidiary.

vii. The Underwriting Agreement and the International Underwriting
Agreement have been duly authorized, executed and delivered by
the Company.

viii.If any documents are incorporated by reference in the
Registration Statement, such documents (other than the financial
statements and supporting schedules therein, as to which no
opinion need be rendered), when they were filed with the
Commission, complied as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations of
the Commission thereof.

ix. To the best of our knowledge, there is not pending or threatened
any action, suit, proceeding, inquiry or investigation, to which
the Company or any Subsidiary is a party, or to which the
property or assets of the Company or any Subsidiary thereof is
subject, before or brought by any court or governmental agency or
body, domestic or foreign, which might reasonably be expected to
result in a Material Adverse Effect, or which might reason ably
be expected to materially and adversely affect the consummation
of the

II-2
<PAGE>

transactions contemplated in the Underwriting Agreement and the
International Underwriting Agreement or the performance by the
Company of its obligations thereunder or the transactions
contemplated by the Prospectus;

x. The information in the Prospectus under "Business--Environmental
Regulation," to the extent that it constitutes summaries of
matters of law, has been reviewed by us and is correct in all
material respects. The statements set forth in the Prospectus
under the caption "Description of Capital Stock," insofar as they
purport to constitute a summary of the terms of the Stock, are
accurate summaries in all respects of such terms.

xi. To the best of our knowledge (after due inquiry), neither the
Company nor any Subsidiary is in violation of its charter or by-
laws.

xii. To the best of our knowledge, neither the Company nor any
Subsidiary thereof is in default in the due performance or
observance of, or is in violation of, any material obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other
agreement or instrument that is described or referred to in the
Prospectus or incorporated by reference therein which violations
or defaults are required to be described in the Prospectus and
are not so described or would, individually or in the aggregate,
be reasonably likely to have a Material Adverse Effect or effect
the validity of the Shares.

xiii.No filing, authorization, approval, consent or order of any court
or governmental authority or agency (other than such as may be
required under the applicable securities laws of the various
jurisdictions in which the Shares will be offered or sold, as to
which we need express no opinion) is required by the Company in
connection with the due authorization, execution and delivery of
the Underwriting Agreement or the International Underwriting
Agreement or in connection with the offering, issuance, sale or
delivery of the Shares and to the Underwriters and the
International Underwriters or the resale thereof by the
Underwriters and the International Underwriters in accordance
with the Underwriting Agreement and the International
Underwriting Agreement, except for filings and other actions
required under or pursuant to the Act, the Exchange Act, and
other federal or state securities or "blue sky" laws and the
rules of the New York Stock Exchange, as to which we express no
opinion.

xiv. The execution, delivery and performance of the Underwriting
Agreement and the International Underwriting Agreement, and the
consummation of the transactions contemplated in the Underwriting
Agreement and the International Underwriting Agreement and in
the Prospectus and compliance by the

II-3
<PAGE>

Company with its obligations under the Underwriting Agreement and
the International Underwriting Agreement, (A) after reasonable
investigation, do not and will not (subject to the next
sentence), whether with or without the giving of notice or lapse
of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined in Section 1(xv) of the
Underwriting Agreement) under or result in the creation or
imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any Subsidiary thereof pursuant to
any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or any other agreement or instrument,
known to us, to which the Company or any of its Subsidiaries is a
party or by which it or any of them may be bound, or to which any
of the property or assets of the Company or any Subsidiary is a
party or by which it or any of them may be bound, or to which any
of the property or assets of the Company or any Subsidiary is
subject (except for such conflicts, breaches or defaults,
Repayment Events or liens, charges or encumbrances that would not
have a Material Adverse Effect), (B) result in any violation of
the provisions of the charter or by-laws of the Company or any
Subsidiary, or (C) to the best of our knowledge (after due
inquiry), result in any violation of the provisions of any
applicable law, statute, rule or regulation of the United States
of America or included in the Delaware General Corporate Law
(except we express no opinion as to "blue sky" laws), judgment,
order, writ or decree, known to us, of any government, government
instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or any of their
respective properties, assets or operations. No opinion is
rendered pursuant to clause (A) of the preceding sentence with
respect to the Credit Agreement, the Term Loan Agreement, the
Participation Agreement, dated as of December 31, 1998, among
U.S. Rentals, Inc., the Company, United Rentals (North America),
Inc. and Deutsche Bank AG and certain of its affiliates ( the
"Participation Agreement"), the Indenture governing the Company's
9 1/2% Senior Subordinated Notes due 2008 (the "9 1/2% Notes
Indenture"), the Indenture governing the Company's 8.80% Senior
Subordinated Notes due 2008 (the "8.80% Notes Indenture") or the
Indenture governing the 9.25% Senior Subordinated Notes due 2009
(the "9.25% Notes Indenture") (or any agreement or instrument
entered into or executed by the Company or any Subsidiary
pursuant to the Credit Agreement, the Term Loan Agreement, the
Participation Agreement, the 9 1/2% Notes Indenture, the 8.80%
Notes Indenture or the 8.25% Notes Indenture, or as contemplated
thereby).

xv. The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are
defined in the 1940 Act.

xvi. No person or entity has the legal right by contract or otherwise
to require registration under the Act of shares of capital stock
or other securities convertible into capital stock of the Company
solely because of the filing or effectiveness of the Registration
Statement and the consummation of the

II-4
<PAGE>

transactions contemplated by the Underwriting Agreement and the
International Underwriting Agreement.

xvii. The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to
such Time of Delivery (other than the financial statements and
related schedules therein, as to which such counsel need express
no opinion) comply as to form in all material respects with the
requirements of the Act and the rules and regulations
thereunder.

In addition, we have participated in conferences with officers and
representatives of the Company, counsel to the Underwriters, representatives of
the independent accountants for the Company and the Underwriters at which the
contents of the Registration Statement and related matters were discussed.
Although we have not undertaken, except as otherwise indicated in this opinion,
to investigate or verify independently, and do not assume responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or Prospectus, except for those referred to in Clause (x)
above, on the basis of the information that we gained in the course of the
performance of such services and our representation of the Company, we confirm
to you that nothing that came to our attention in the course of such review or
representation has caused us to believe that (i) as of the effective date, the
Registration Statement or any further amendment thereto made by the Company
prior to such Time of Delivery (except for financial statements and schedules
and other financial data included or incorporated by reference therein, if any,
as to which we make no statement), contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that as of its date
or the date hereof, the Prospectus or any amendment or supplement thereto
(except for financial statements and schedules and other financial data included
or incorporated by reference therein, if any, as to which such counsel need make
no statement), at the time the Prospectus was issued, at the time any such
amended or supplemented Prospectus was issued or at the Time of Delivery,
included or includes an untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading or
(ii) that there are any franchise agreements, indentures, mortgages, loan
agreements, notes, leases or other contracts or instruments required to be
described or referred to in the Prospectus that are not described or referred to
in the Prospectus or that any descriptions of or references to any of the
foregoing are not correct in all material respects.

In rendering such opinion, such counsel may rely, as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991). Such counsel may in addition rely, as to all
matters governed by the laws of jurisdictions other than the law of the State of
New York, the federal law of the United States and the General Corporation

II-5
<PAGE>

Law of the State of Delaware, upon the opinions of counsel reasonably
satisfactory to counsel to the Underwriters.

II-6
<PAGE>

ANNEX III

FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 7(d)

i. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, and
has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as described
in the Prospectus and to enter into and perform its obligations
under the Underwriting Agreement and the International
Underwriting Agreement.

ii. The Company has an authorized capitalization as set forth in the
Prospectus, and the Shares being delivered at such Time of
Delivery have been duly authorized and, when issued and delivered
as contemplated by the Underwriting Agreement and the
International Underwriting Agreement against payment of the
consideration therefor set forth in the Underwriting Agreement
and the International Underwriting Agreement, will be validly
issued, fully paid and non-assessable; and the Shares conform to
the description of the Stock contained in the Prospectus;

iii. The execution, delivery and performance of the Underwriting
Agreement and the International Underwriting Agreement by the
Company have been duly authorized by all necessary corporate
action on the part of the Company. The Underwriting Agreement
and the International Underwriting Agreement have been duly and
validly executed and delivered by the Company.

iv. The statements contained in the Prospectus under the captions
"Management's Discussion and Analysis of Financial Condition and
Results of Operations - Certain Information Concerning the Credit
Facility and Other Indebtedness" and "Description of Capital
Stock" insofar as they purport to describe provisions of the
Common Stock, the Shares or matters of federal or New York or
Delaware corporate law, constitute a fair and accurate summary
thereof in all material respects.

v. No consent, approval, waiver, license or authorization or other
action by or filing with any New York, Delaware corporate or
federal governmental authority is required in connection with the
execution and delivery by the Company of the Underwriting
Agreement and the International Underwriting Agreement or the
consummation by the Company of the transactions contemplated
thereby, except for filings and other actions required under or
pursuant to the Act, the Exchange Act, and other federal or state
securities

III-1
<PAGE>

or "blue sky" laws and the rules of the New York Stock Exchange,
as to which we express no opinion.

vi. The Company is not an "investment company" nor an entity
"controlled" by an "investment company ," as such terms are
defined in the 1940 Act.

vii. The execution and delivery of the Company of the Underwriting
Agreement and the International Underwriting Agreement, the
consummation of the transactions contemplated thereby and by the
Prospectus and compliance by the Company with its obligations
under the Underwriting Agreement and the International
Underwriting Agreement do not and will not, whether with or
without the giving of notice or lapse of time or both, conflict
with or constitute a breach of, or a default or Repayment Event
(as defined in Section 1(xv) of the Underwriting Agreement)
under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company
or any of its Subsidiaries pursuant to, the Financing Documents
(as defined below), except for such conflicts, breaches,
defaults, Repayment Events, liens, charges or encumbrances that
would not reasonably be expected to have a Material Adverse
Effect. As used above, the term "Financing Documents" means,
collectively: (a) the Credit Agreement, dated as of September
29, 1998, among the Company, United Rentals (North America), Inc.
("URNA"), United Rentals of Canada, Inc., various financial
institutions, Bank of America National Trust and Savings
Association ("BofA"), as U.S. agent, and Bank of America Canada,
as Canadian agent; (b) the Term Loan Agreement, dated as of July
10, 1998 and as amended as of September 29, 1998, among the
Company, URNA, various financial institutions, and BofA, as
agent; (c) the Participation Agreement, dated as of December 31,
1998, among U.S. Rentals, Inc., the Company, URNA and Deutsche
Bank AG and certain of its affiliates; (d) the Indenture, dated
as of May 22, 1998, among URNA, its subsidiaries party thereto,
and State Street Bank and Trust Company (the "Trustee") relating
to URNA's 9.5% senior subordinated notes due 2008; (e) the
Indenture, dated as of August 12, 1998, among URNA, its
subsidiaries party thereto, and the Trustee relating to URNA's
8.8% senior subordinated notes due 2008; (f) the Indenture, dated
as of December 15, 1998, among URNA, its subsidiaries party
thereto, and the Trustee relating to URNA's 9.25% senior
subordinated notes due 2009 and (g) any agreement or instrument
which was entered into or executed by the Company or any such
Subsidiary as required under or contemplated by any Financing
Document.

We have participated in conferences with directors, officers and other
representatives of the Company, representatives of the Underwriters and its
counsel and representatives of the independent public accountants for the
Company in connection with the preparation of the

III-2
<PAGE>

Registration Statement and although we have not independently verified and are
not passing upon and assume no responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus (except to the extent specified in paragraph iv above) no facts have
come to our attention which lead us to believe that the Registration Statement,
as of its effective date, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus, at any time
from the date thereof through such Time of Delivery, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading (it being
understood that we express no view with respect to the financial statements and
related notes and the other financial and accounting data included or
incorporated by reference in the Registration Statement or the Prospectus).

The opinions expressed herein are limited to the laws of the State of New
York, the corporate laws of the State of Delaware and the federal laws of the
United States, and we express no opinion as to the effect on the matters covered
by this letter of the laws of any other jurisdiction.

III-3

<PAGE>

EXHIBIT 23(b)

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in Amendment
No. 2 to the Registration Statement (Form S-3 No. 333-71775) filed on March 2,
1999 pursuant to Rule 462(b) under the Securities Act of 1933 and related
Prospectus for registering shares of its Common Stock, and to the inclusion
herein or the incorporation by reference herein of our report dated February 17,
1999, except for Note 17, as to which the date is February 26, 1999, with
respect to the consolidated financial statements of United Rentals, Inc. as of
December 31, 1998 and 1997 and for each of the three years in the period ended
December 31, 1998; and 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; and our report dated June
24, 1998, with respect to the financial statements of Power Rental Co., Inc.
included in the Company's Current Report on Form 8-K/A dated July 21, 1998 and
in the Company's Current Report on Form 8-K dated December 24, 1998 filed with
the Securities and Exchange Commission.

ERNST & YOUNG LLP

MetroPark, New Jersey
February 26, 1999

<PAGE>

Exhibit 23(c)

CONSENT OF INDEPENDENT OF ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 (No. 333-71775) of
United Rentals, Inc., of our reports dated March 6, 1998 and October 28, 1998,
on our audits of the financial statements of McClinch Equipment Services, Inc.
as of December 31, 1997 and August 31, 1998 and for the year ended December 31,
1997 and of our reports dated March 25, 1998 and October 28, 1998 on our audits
of the consolidated financial statements of McClinch, Inc., and Subsidiaries as
of January 31, 1998 and August 31, 1998 and for the year ended January 31, 1998
which reports appear in the Form 8-K of United Rentals, Inc. dated December 24,
1998. We also consent to the reference to our firm under the caption "Experts"
in the Registration Statement.

PricewaterhouseCoopers LLP
Stamford, Connecticut
March 1, 1999

<PAGE>

Exhibit 23(d)

CONSENT OF INDEPENDENT AUDITORS

BOARD OF DIRECTORS
THE BNR GROUP OF COMPANIES:

We consent to the incorporation by reference in the Registration Statement for
the registration of up to 8,000,000 shares of its common stock on Form S-3
(No. 333-71775) dated March 1, 1999 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 which report appears in the Form 8-
K/A of United Rentals, Inc. dated February 4, 1998.

KPMG LLP
Waterloo, Canada
March 1, 1999

<PAGE>

Exhibit 23(e)

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' CONSENT

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 (No. 333-71775) and the related Prospectus of
United Rentals, Inc. (the Company) for the registration of up to 8,000,000
shares of its common stock 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. We also consent to the incorporation by
reference of such report into any related Registration Statement filed pursuant
to Rule 462(b) under the Securities Act of 1933 in order to increase the number
of shares being offered pursuant to the offering contemplated by such
Prospectus.

Battaglia, Andrews & Moag, P.C.

Batavia, New York
March 1, 1999

<PAGE>

Exhibit 23(f)

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. 333-71775) 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 Report on Form 8-K dated July
21, 1998 and December 24, 1998. We also consent to the incorporation by
reference of such report into any related Registration Statement filed pursuant
to Rule 462(b) under the Securities Act of 1933 in order to increase the number
of shares being offered pursuant to the offering contemplated by such
Prospectus. We also consent to the reference to us under the caption "Experts"
in the Prospectus.

BDO Seidman LLP
Philadelphia, Pennsylvania
March 1, 1999