Exhibit 6
---------
[United Rentals Letterhead]
December 29, 2000
Special Committee of the Board of Directors
Neff Corp.
3750 N.W. 87th Avenue, Suite 400
Miami, FL 33178
Dear Sirs:
United Rentals, Inc. ("United Rentals") is pleased to submit this
non-binding expression of interest to pursue a transaction in which all shares
of the common stock of Neff Corp. ("Neff") not held by General Electric Capital
Corporation ("GE Capital") or Santos Fund I, L.P. ("Santos") would be acquired
by United Rentals in a merger transaction in accordance with the terms set forth
in the attached term sheet (the "Term Sheet"). The proposed transaction is
supported by GE Capital, Jorge Mas and certain members of his family (the "Mas
Family"), and Santos, all of whom are principal stockholders of Neff.
As set forth in the Term Sheet, each of the approximately 6.6 million
shares of Neff Class A common stock currently owned by public stockholders would
be exchanged for 0.18 (the "Exchange Ratio") of a share of newly issued United
Rentals common stock. The approximately 8.6 million shares of Neff Class A
common stock currently owned by the Mas Family would be exchanged for shares of
newly issued United Rentals Series C Perpetual Convertible Preferred Stock
("Series C Preferred Stock") (which would be convertible into United Rentals
common stock at $22 per share, as explained below) with an aggregate liquidation
preference equal to the value of approximately 1,548,000 shares of United
Rentals common stock (based upon the product of the Exchange Ratio and 8.6
million). The 900,000 shares of Neff Class A common stock currently owned by
Santos would be exchanged for 900,000 shares of Neff Class B common stock. After
the closing, GE Capital and Santos would own 6 million shares of Neff Class B
common stock, subject to the right of GE Capital and Santos to sell all or a
portion of these shares to United Rentals for an aggregate consideration of $96
million in 2010, and the right of United Rentals to buy all or a portion of
these shares for an aggregate consideration of $96 million commencing in 2002.
These periods may be accelerated under certain conditions.
<PAGE>
Special Committee of the Board of Directors
December 29, 2000
Page 2
If the proposed transaction is completed, an investor group including
GE Capital would purchase $90 million of newly issued shares of Series C
Preferred Stock.
Each share of Series C Preferred Stock, face value $1,000 per share,
would be convertible into shares of United Rentals common stock at $22.00 per
share. The Series C Preferred Stock does not accrue dividends, and would be
entitled to dividends only if United Rentals declares dividends on its common
stock.
In addition, under the proposed transaction, United Rentals would offer
to exchange its newly issued 10.25% Senior Subordinated Notes due 2008 (the "New
Notes") for Neff's 10.25% Senior Subordinated Notes due 2008 (the "Old Notes").
The exchange offer would be at an exchange ratio of $750 principal amount of New
Notes (which, based on current market rates, would represent a value of
approximately $600) for each $1,000 principal amount of Old Notes.
The proposed transaction is contingent, among other things, upon the
approval of the Neff Special Committee, the Boards of Directors of United
Rentals and Neff, United Rentals' senior lenders, Neff stockholders, and
appropriate regulatory agencies. The proposed transaction is also contingent on
completion of satisfactory due diligence (including branch due diligence after
receiving full access and cooperation by Neff), the signing of a definitive
merger agreement and the satisfaction of its terms and conditions, confirmation
prior to the signing of a definitive merger agreement that the proposed
transaction would not negatively change United Rentals' current credit ratings,
and acceptance of United Rentals' exchange offer by holders of at least 95% of
the Old Notes. There can be no assurance that these conditions will be met or
that this transaction will take place. We believe that if we are given full
access and cooperation, we can complete our due diligence and execute a
definitive merger agreement by January 19, 2001. We will deliver a draft merger
agreement prepared by our counsel shortly.
This letter, including the attached Term Sheet, constitutes a
non-binding indication of interest regarding a transaction on the general terms
and conditions outlined in this letter and in the Term Sheet. This letter and
the Term Sheet do not purport to summarize all of the terms and conditions upon
which any transaction would be based, which terms and conditions would be
contained fully only in any final documentation, and indicate only the principal
terms and conditions under which an overall transaction would be considered. We
may for whatever reason or for no reason change the terms of this indication of
2
<PAGE>
Special Committee of the Board of Directors
December 29, 2000
Page 3
interest, or cease further consideration of any transaction, at any time without
liability to any party, and no party shall have any claim that any other party
did not act in good faith.
The parties will need to make appropriate public filings disclosing
this expression of interest in order to comply with their obligations under the
federal securities laws. We would respectfully request that the Special
Committee coordinate its public disclosures with United Rentals.
Please be advised that the expression of interest set forth in this
letter and the related Term Sheet will expire on January 19, 2001. While we
recognize the Special Committee's fiduciary responsibilities in the event
another proposal is received, we request that the Special Committee negotiate
with us exclusively until January 19, 2001 or, if earlier, until the Special
Committee gives us notice that negotiations with us have been terminated, and
not solicit or entertain other proposals until such time. In addition, we
request that the Special Committee notify us if it receives any other inquiries
or acquisition proposals while it negotiates with us.
We and our advisors are prepared to meet with the Special Committee and
its advisors in order to answer any questions about this letter or the attached
Term Sheet. I can be reached at (203) 622-3131. Questions of a legal nature
should be directed to our legal counsel, Richard Grossman of Skadden, Arps,
Slate, Meagher & Flom LLP at (212) 735-2116.
We look forward to hearing from you soon.
Very truly yours,
/s/ John Milne
John Milne
cc: Gerald Eppner
3
<PAGE>
SUMMARY OF TERMS FOR A POSSIBLE
TRANSACTION INVOLVING NEFF ("TERM SHEET")
-----------------------------------------
I. THE TRANSACTION
Merger: Acquisition of the majority of the shares of capital
stock of Neff Corp. ("Neff") by United Rentals, Inc.
("United Rentals"), in a one-step merger transaction
(the "Merger") in which a newly formed wholly-owned
subsidiary of United Rentals would merge with and
into Neff pursuant to which (A) each publicly held
share of Class A common stock of Neff (the "Class A
Common Stock") would be exchanged for 0.18 (the
"Exchange Ratio") of a share of United Rentals
common stock (the "United Rentals Common Stock");
(B) certain members of the Mas family (the "Mas
Family") would exchange pursuant to the Merger their
shares of Class A Common Stock for shares of a new
convertible preferred stock in United Rentals having
characteristics stated in Section II; (C) Santos
Fund I, L.P. ("Santos") would exchange its 0.9
million shares of Class A Common Stock in Neff for
an equal number of shares of Class B Common Stock of
Neff (the "Class B Common Stock"); and (D) General
Electric Capital Corporation ("GE Capital") would
maintain its 5.1 million shares of Class B Common
Stock in Neff and would be the holder of such shares
after giving effect to the Merger (with such Class B
Common Stock held by GE Capital and Santos having
reduced voting rights so that GE Capital and Santos
would have less than 20% of the Neff vote upon
consummation of the Merger). The Neff employee stock
options would roll-over into United Rentals options
based on the Exchange Ratio.
Variable Forward In connection with the transaction, GE Capital,
Contracts: Santos and United Rentals will enter into contracts
that set forth terms on which each of GE Capital and
Santos can, at their option, require United Rentals
to purchase from GE Capital and Santos or United
Rentals can, at its option, require GE Capital and
Santos to sell to United Rentals, as applicable, all
or a portion of the shares of Class B Common Stock
retained by GE Capital and received by Santos in the
Merger. A summary of the terms of these contracts is
set forth in Appendix 1.
Subordinated Note Exchange United Rentals would offer to exchange newly issued
Offer: 10.25% Senior Subordinated Notes due 2008 (the "New
Notes") for Neff's 10.25% Senior Subordinated Notes
due 2008 (the "Old Notes"). The exchange offer would
be at an exchange ratio of $750 principal amount of
New Notes (which, based on current market rates,
would represent a value of approximately $600) for
each $1,000 principal amount of Old Notes.
Voting Agreements: Irrevocable voting agreement by GE Capital, the Mas
Family and Santos to vote in favor of the Merger.
II. TERMS OF THE UNITED RENTALS SERIES C PERPETUAL
CONVERTIBLE PREFERRED STOCK ("SERIES C PREFERRED
STOCK")
<PAGE>
Issuance of Series C The 8.6 million shares of Class A Common Stock
Preferred Stock: currently owned by the Mas Family would be exchanged
for shares of Series C Preferred Stock with an
aggregate liquidation preference equal to the value
of a number of shares of United Rentals Common Stock
equal to the product of the Exchange Ratio and the
number of Class A Common Stock currently owned by
the Mas Family. The value of the shares of United
Rentals Common Stock will be the average closing
price of the United Rentals Common Stock on the NYSE
for the ten consecutive trading days ending on the
trading day prior to the occurrence of the closing
(the "10-day Average United Rentals Closing Price").
If the proposed transaction is completed, an
investor group including GE Capital would purchase
$90 million of newly issued Series C Preferred
Stock.
Conversion Price: 15% above the 10-day Average United Rentals Closing
Price, but not less than $22 per share.
Anti-dilution: Anti-dilution adjustments, primarily on stock
splits, stock dividends, sales of stock to
affiliates at less than the Conversion Price (other
than in bona fide compensation arrangements), and on
certain mergers, in each case consistent with United
Rentals Series B Perpetual Convertible Preferred
Stock ("Series B Preferred Stock"). Must give notice
of these events to the holders.
Dividends: Series C Preferred Stock does not accrue dividends,
and is entitled to dividends on an as-converted
basis only if United Rentals declares dividends on
its common stock.
Other Preferreds: Parity stock can be issued, but not senior stock.
Liquidation $1,000 per share, but holders will in no event
Preference: receive less than the amount they would have
received in liquidation as a common stockholder
participating with other common stockholders had the
holders of the Preferred Stock converted their
Series C Preferred Stock prior to liquidation.
Ranking: Pari passu with United Rentals Series A Perpetual
Convertible Preferred Stock ("Series A Preferred
Stock") and Series B Preferred Stock.
Voting: Shares of Series C Preferred Stock vote together
with United Rentals common stock as one class on all
matters on an as-converted basis, unless required
otherwise by Delaware law. However, on matters which
require the consent of the holders of Series C
Preferred Stock, the holders of Series C Preferred
Stock will vote as one class with the holders of
Series A Preferred Stock and Series B Preferred
Stock, unless otherwise required by Delaware law.
Change of Control: On a change of control which is not a pooling, the
holders of Series C Preferred Stock can put their
Series C Preferred Stock to United Rentals at the
Liquidation Preference plus a premium equal to 6.25%
of the Liquidation Preference compounded annually
from the date of issuance to the date of change of
control (the "Put Price"). The Put Price is payable
in cash.
2
<PAGE>
On a change of control which is a pooling, Series C
Preferred Stock automatically converts into United
Rentals Common Stock. For this purpose, Series C
Preferred Stock will be valued at 109.5% of the Put
Price and Series C Preferred Stock will be converted
into a number of shares of United Rentals Common
Stock equal to (i) such adjusted value, divided by
(ii) the Conversion Price.
A change of control occurs when any outside group
(other than the holders of Series C Preferred Stock)
acquires control of more than 50% of the United
Rentals Common Stock, either directly or indirectly
by way of a merger.
Restrictions on Consent of Series C Preferred Stock required for
dividends, tender offers annual dividends in excess of 5% of market
and stock repurchases: capitalization. Repurchases of stock are limited on
an annual basis to 5%, 10% and 15% of market
capitalization for successive five-year periods
coinciding with the applicable five-year periods in
the Series B preferred stock; the restriction lapses
at the end of the third period. This restriction
shall allow for the existing stock repurchase
program and shall authorize United Rentals to
acquire an additional $200 million of its issued and
outstanding common stock.
Registration for Two Demands (plus one clean-up after third year),
underlying common subject to certain black-out periods; 45 days to
stock: file; United Rentals has certain piggybacks on
demand registration. Customary piggyback
registration rights, subject to cut-back. United
Rentals selects the underwriters.
Holders will lock-up for any United Rentals stock
offerings (30 days before and 90 days after) and for
any United Rentals pooling.
Reporting Copies of all SEC filings must be delivered to
requirements: holders within three business days; also promptly
deliver all materials distributed to shareholders.
Materials available on EDGAR will be delivered only
on request.
III. CLOSING CONDITIONS AND CERTAIN OTHER TERMS
A. CONDITIONS TO (1) The parties shall have entered into a definitive
CLOSING UNDER merger agreement which among other things sets forth
DEFINITIVE MERGER detailed pre-closing covenants regarding the
AGREEMENT operation of the business and the condition of the
assets at closing.
(2) No superior proposal shall have been accepted by
the Special Committee.
(3) The transaction shall have received HSR
approval.
(4) A group of investors including GE Capital shall
have purchased $90 million of newly issued Series C
Preferred Stock.
(5) Shareholders of Neff shall have approved the
Merger.
(6) United Rentals shall have received any required
consents from the banks under its existing credit
facilities to consummate the transaction
contemplated by this Term Sheet.
3
<PAGE>
(7) United Rentals and GE Capital shall have entered
into a shareholders' agreement under which:
GE Capital and Santos consent to (i) purchases and
sales of assets between United Rentals or affiliates
of United Rentals and Neff at fair market value,
provided that any purchase or related series of
purchases in excess of $25 million would either
require the consent of GE Capital or a fairness
opinion acceptable to the parties; (ii)
administrative and other transactions between Neff
and United Rentals or its affiliates that are no
less favorable to Neff than United Rentals' policies
for such transactions with its other subsidiaries,
provided that payment for services may be made only
for services actually rendered; (iii) the
determination by Neff's board not to make cash or
other distributions; provided, that, if there are
cash or other distributions, GE Capital and Santos
would receive their pro rata share; (iv) the
guarantee by Neff of all debt obligations of United
Rentals and its subsidiaries and the pledge by Neff
of its assets as collateral for such obligations;
and (v) the waiver by Neff, GE Capital and Santos of
any rights they might otherwise have under doctrines
of corporate or business opportunity as against URI,
its affiliates, officers, directors, agents or
representatives (acting in such capacity). Except as
aforesaid, GE Capital and Santos shall retain all
other rights as stockholders of Neff which they
would otherwise have under law, and, in addition,
the consent of GE Capital and Santos shall be
required for the following extraordinary actions:
amendment of Neff's charter and by-laws; selection
of accountants if other than one of the Big Five;
and issuances of equity securities. GE Capital and
Santos shall also receive customary and
proportionate tag-along rights in the event of a
sale of shares of Neff by United Rentals to
unaffiliated third parties.
(8) Neff shall not have indebtedness for money
borrowed (other than its subordinated notes) in
excess of $160 million.
(9) United Rentals' note exchange offer shall have
been accepted by holders of at least 95% of the Old
Notes.
(10) Other customary conditions, including receipt
of a tax opinion by Neff's counsel that the Merger
is more likely than not to qualify as a tax-free
reorganization and the consideration to be received
in the Merger is more likely than not to be tax-free
to the Neff public stockholders and the Mas Family.
B. CERTAIN OTHER
MATTERS
Credit Ratings Not United Rentals shall not enter into a definitive
Impacted: merger agreement until it receives confirmation that
the proposed transaction would not negatively change
United Rentals' current credit ratings.
4
<PAGE>
Nortrax Litigation: Neff currently is engaged in litigation and
arbitration proceedings (the "Nortrax Litigation")
against Nortrax Equipment Company. Should Neff after
the closing recover any amount from Nortrax in the
Nortrax Litigation, Neff will pay to GE Capital 50%
of any net proceeds after deducting all attorneys'
and other fees and disbursements, court costs, and
all settlement, damage, award and other costs
incurred from and after the closing with respect to
the Nortrax Litigation ("Costs"). In the event such
net recovery does not occur, or should Neff
otherwise incur any Costs for which it has not been
made whole by payments from Nortrax, GE Capital and
United Rentals would share on a 50/50 basis the
first $10 million (the "Shared Portion") of such
Costs, and GE Capital will indemnify and hold
harmless United Rentals, or Neff as a subsidiary of
United Rentals, for any Costs incurred by United
Rentals or Neff in excess of the Shared Portion. In
addition, to the extent United Rentals incurs any
liability or costs in connection with the sharing of
the Shared Portion, GE Capital on a quarterly basis
(subject to a de minimus exception) will purchase
additional shares of Series C Preferred Stock (at a
conversion price equal to the greater of $22 or 15%
above the United Rentals Common Stock market price
at the time of issuance) for a purchase price and
with a face amount equal to the Costs incurred by
United Rentals. United Rentals will have the right
to control the prosecution and defense of the
Nortrax Litigation.
Indemnification Matters: Without limiting any rights under the officer and
director liability insurance policy or any
indemnification claim for matters not covered by the
following sentence, GE Capital, Santos and the Mas
Family (and their representatives) will not bring
any direct action or lawsuit against Neff relating
to events occurring prior to the closing. GE
Capital, Santos and the Mas Family (and their
representatives) shall not be indemnified or
advanced expenses by Neff or United Rentals in
connection with shareholder claims or lawsuits
arising in connection with the transaction or any
prior proposals or offers made to acquire Neff,
except to the extent such indemnification or expense
advancement is covered by amounts available under an
existing officer and director liability policy of
Neff, with Neff responsible for any
retention/deductible under such policy up to
$150,000 in the aggregate.
5
<PAGE>
APPENDIX 1
VARIABLE FORWARD CONTRACTS AND ELECTIONS OF THE
PARTIES THEREUNDER
Variable Forward United Rentals and each of GE Capital and Santos
Contracts Between will enter into a variable forward contract (each, a
United Rentals and Each "Variable Forward Contract") with respect to the
of GE Capital and Class B Common Stock held by each of GE Capital and
Santos: Santos after the Merger. As more fully described
below, the Variable Forward Contracts will provide
for terms on which parties can elect for the
acquisition of all or a portion of such shares by
United Rentals from GE Capital and Santos.
Settlement Date: The GE Capital Variable Forward Contract will be
settled on the earliest of (i) if GE Capital elects,
the ninth anniversary of the date of the Variable
Forward Contract (the "Latest Settlement Date"),
(ii) if GE Capital elects, for 30 days after any
consecutive period of 20 trading days in which
United Rentals Common Stock closes above $45 per
share, (iii) if GE Capital elects, the bankruptcy of
United Rentals, (iv) if United Rentals elects, at
any time commencing on the second anniversary of the
date of the Variable Forward Contract through the
Latest Settlement Date, and (v) if either GE Capital
or United Rentals elects, a Change-in-Control Event
(as defined). Change-in-Control Event means, at any
time (a) United Rentals shall cease to beneficially
own and control more than 50% on a fully diluted
basis of the economic and voting interests in the
voting stock of Neff, (b) Neff shall liquidate or
dissolve, (c) Neff shall sell all or substantially
all of its assets to a third party or (d) Neff shall
enter into a merger transaction in which United
Rentals shall cease to own a majority of the voting
stock of Neff after such merger. The Santos Variable
Forward Contract will have corresponding Settlement
Date provisions.
Termination: If there shall not previously have occurred a
Settlement Date, the Variable Forward Contract will
terminate on the first day after the Latest
Settlement Date.
Determination of Neff At the Settlement Date of the GE Capital Variable
Shares Delivered: Forward Contract, the number of shares of Class B
Common Stock to be delivered by GE Capital to United
Rentals will be the excess of 5.1 million over the
Retained Appreciation Amount (as defined). The
Retained Appreciation Amount will be that number of
such shares equal in value, determined for this
purpose using the value of the Class B Common Stock
as of the Settlement Date, to the lesser of (i) the
excess, if any, of the aggregate value, at the
Settlement Date, of the 5.1 million shares of such
stock, over the Reference Value, and (ii) 20% of the
Reference Value. The Santos Variable Forward
Contract will have corresponding Settlement Date
Provisions. Notwithstanding the foregoing, in the
event that the Settlement Date occurs in the first
five years after the Closing pursuant to clause (ii)
or (v) of the Settlement Date paragraph, there will
be no Retained Appreciation Amount and the full 5.1
million shares (or 900,000 shares in the case of
Santos) will be delivered on the Settlement Date to
satisfy the GE Capital Variable Forward Contract (or
the Santos Variable Forward Contract, as
applicable).
<PAGE>
Forward Sales Price: On any Settlement Date that is triggered by an
election referred to in the Settlement Date
paragraph, United Rentals will pay to GE Capital
$81,600,000 with respect to the GE Capital Variable
Forward Contract. On any Settlement Date that is
triggered by an election referred to in the
Settlement Date paragraph, United Rentals will pay
to Santos $14,400,000 with respect to the Santos
Variable Forward Contract. Payment at the Settlement
Date shall be made in cash or, at United Rentals'
election in the case of a Settlement Date described
in clause (ii) of the Settlement Date paragraph, in
freely tradable United Rentals Common Stock.
Reference Value: Reference Value will equal $11,475,000 in the case
of the GE Capital Variable Forward Contract.
Reference Value will equal $2,025,000 in the case of
the Santos Variable Forward Contract.
Settlement Date Value: The parties will establish a mechanism for valuation
of Class B Common Stock as of the Settlement Date
based on the net worth of Neff.
Right to Buy Remaining United Rentals will have the right to purchase at
Class B Shares: then fair market value any shares of Class B Common
Stock held by GE Capital or Santos after the
Settlement Date.
2
