EXHIBIT 2(a)
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
AMONG
U.S. RENTALS, INC.,
UNITED RENTALS, INC.
AND
UR ACQUISITION CORPORATION
DATED AS OF JUNE 15, 1998
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER
Section 1.1 The Merger..................................................... 1
Section 1.2 Effective Time................................................. 2
Section 1.3 Closing of the Merger.......................................... 2
Section 1.4 Effects of the Merger.......................................... 2
Section 1.5 Certificate of Incorporation and By-laws....................... 2
Section 1.6 Directors...................................................... 2
Section 1.7 Officers....................................................... 2
Section 1.8 Conversion of Shares........................................... 2
Section 1.9 Exchange of Certificates....................................... 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF USR
Section 2.1 Organization and Qualification................................. 5
Section 2.2 Subsidiaries................................................... 6
Section 2.3 Capitalization................................................. 6
Section 2.4 Authority; Approvals; Noncontravention; Compliance............. 7
Section 2.5 Reports and Financial Statements............................... 9
Section 2.6 Absence of Certain Changes or Events; Liabilities.............. 9
Section 2.7 Litigation..................................................... 10
Section 2.8 Registration Statement and Proxy Statement..................... 10
Section 2.9 Tax Matters.................................................... 10
Section 2.10 Employee Matters; ERISA; Labor................................. 12
Section 2.11 Environmental Protection....................................... 14
Section 2.12 Material Contracts............................................. 16
Section 2.13 Opinion of Financial Advisor................................... 16
Section 2.14 Vote Required.................................................. 16
Section 2.15 Reorganization and Accounting Matters.......................... 16
Section 2.16 Brokers........................................................ 17
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF URI AND MERGER SUB
Section 3.1 Organization and Qualification................................. 17
Section 3.2 Subsidiaries................................................... 17
Section 3.3 Capitalization................................................. 18
Section 3.4 Authority; Approvals; Noncontravention; Compliance............. 19
Section 3.5 Reports and Financial Statements............................... 20
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Section 3.6 Absence of Certain Changes or Events; Liabilities............. 21
Section 3.7 Litigation.................................................... 21
Section 3.8 Registration Statement and Proxy Statement.................... 22
Section 3.9 Tax Matters................................................... 22
Section 3.10 Employee Matters; ERISA; Labor................................ 23
Section 3.11 Environmental Protection...................................... 25
Section 3.12 Material Contracts............................................ 26
Section 3.13 Opinion of Financial Advisor.................................. 26
Section 3.14 Vote Required................................................. 26
Section 3.15 Reorganization and Accounting Matters......................... 26
Section 3.16 Brokers....................................................... 27
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
Section 4.1 Covenants of the Parties...................................... 27
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Access to Information......................................... 30
Section 5.2 Joint Proxy Statement and Registration Statement;
Shareholders' Approval........................................ 31
Section 5.3 Regulatory Matters............................................ 32
Section 5.4 Directors' and Officers' Indemnification...................... 33
Section 5.5 Public Announcements.......................................... 34
Section 5.6 Affiliate Letters............................................. 34
Section 5.7 No Solicitations.............................................. 34
Section 5.8 Post-Merger Board of Directors................................ 36
Section 5.9 Post-Merger Officers; Employment Agreements................... 36
Section 5.10 Stock Option Plans............................................ 36
Section 5.11 Employee Benefit Plans........................................ 37
Section 5.12 Expenses...................................................... 37
Section 5.13 Reasonable Best Efforts; Further Assurances................... 38
Section 5.14 Cooperation with respect to Litigation........................ 38
Section 5.15 Subsidiaries.................................................. 38
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.... 38
Section 6.2 Conditions to Obligations of URI and
MERGER SUB to Effect the Merger............................... 39
Section 6.3 Conditions to Obligation of USR to Effect the Merger.......... 40
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination.................................................... 42
Section 7.2 Effect of Termination.......................................... 43
Section 7.3 Termination Fees; Expenses..................................... 43
Section 7.4 Amendment...................................................... 45
Section 7.5 Waiver......................................................... 45
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties................. 45
Section 8.2 Notices........................................................ 45
Section 8.3 Entire Agreement............................................... 47
Section 8.4 Governing Law.................................................. 47
Section 8.5 Interpretation................................................. 47
Section 8.6 Counterparts................................................... 47
Section 8.7 Binding Nature; Assignment..................................... 47
Section 8.8 WAIVER OF JURY TRIAL AND CERTAIN DAMAGES....................... 47
Section 8.9 Enforcement.................................................... 48
Exhibits
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Exhibit A - USR Voting Agreement
Exhibit B - URI Voting Agreement
Exhibit C - Form of USR Affiliate Letter
Exhibit D - Form of URI Affiliate Letter
Exhibit E - Forms of Employment Agreement
Exhibit F - Form of Registration Rights Agreement
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Index of Defined Terms
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Acquisition Proposal............................................. Section 5.7
Affiliates....................................................... Section 2.15
Agreement........................................................ Preamble
APB 16........................................................... Section 2.15
Bankruptcy and Equity Exception.................................. Section 2.4
Certificates..................................................... Section 1.9
Certificate of Merger............................................ Section 1.2
Closing; Closing Date............................................ Section 1.3
Code............................................................. Whereas clauses
Confidentiality Agreement........................................ Section 5.1
DGCL............................................................. Section 1.1
date hereof...................................................... Preamble
Effective Time................................................... Section 1.2
Environmental Claim.............................................. Section 2.11
Environmental Laws............................................... Section 2.11
Environmental Permits............................................ Section 2.11
ERISA............................................................ Section 2.10
Exchange Act..................................................... Section 2.4
Exchange Agent................................................... Section 1.9
Exchange Fund.................................................... Section 1.9
Exchange Ratio................................................... Section 1.8
GAAP............................................................. Section 2.5
Governmental Authority........................................... Section 2.4
Hazardous Materials.............................................. Section 2.11
HSR Act.......................................................... Section 2.4
Joint Proxy/Registration Statement............................... Section 5.2
Merger........................................................... Whereas clauses
person........................................................... Section 8.5
Proxy Statement.................................................. Section 2.8
Registration Statement........................................... Section 2.8
Release.......................................................... Section 2.11
Representatives.................................................. Section 5.1
SEC.............................................................. Section 2.5
Securities Act................................................... Section 2.4
Shares........................................................... Section 1.8
subsidiary....................................................... Section 2.1
Superior Proposal................................................ Section 5.7
Surviving Corporation............................................ Section 1.1
Taxes............................................................ Section 2.9
Tax Returns...................................................... Section 2.9
URI Common Stock................................................. Section 1.8
URI Disclosure Schedule.......................................... Section 3.2
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URI Material Adverse Effect...................................... Section 3.1
URI SEC Reports.................................................. Section 3.5
URI Shareholders' Approval....................................... Section 3.14
USR Benefit Plans................................................ Section 2.10
USR Common Stock................................................. Section 1.8
USR Disclosure Schedule.......................................... Section 2.2
USR Material Adverse Effect...................................... Section 2.1
USR SEC Reports.................................................. Section 2.5
USR Shareholders' Approval....................................... Section 2.14
USR Stock Option................................................. Section 5.10
USR Stock Plan................................................... Section 2.3
WARN............................................................. Section 2.10
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AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of June 15, 1998
(referred to herein as the "date hereof"), by and among U.S. RENTALS, INC., a
Delaware corporation ("USR"), UNITED RENTALS, INC., a Delaware corporation
("URI"), and UR ACQUISITION CORPORATION, a Delaware corporation and a direct
wholly-owned subsidiary of URI ("MERGER SUB").
WHEREAS, USR and URI have determined to engage in a business combination
whereby MERGER SUB will be merged with and into USR, with USR as the surviving
corporation of such merger and a direct wholly-owned subsidiary of URI (the
"Merger"); and
WHEREAS, in furtherance thereof, the respective boards of directors of USR,
URI and MERGER SUB have approved this Agreement and the Merger; and
WHEREAS, in order to induce URI to enter into this Agreement, certain stock
holders of USR have executed an agreement with URI in the form of Exhibit A
hereto; and
WHEREAS, in order to induce USR to enter into this Agreement, certain stock
holders of URI have executed an agreement with USR in the form of Exhibit B
hereto; and
WHEREAS, it is intended that the Merger shall be recorded for accounting
purposes as a pooling-of-interests; and
WHEREAS, for United States federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and this
Agreement is intended to be and is adopted as a plan of reorganization within
the meaning of Section 368 of the Code.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. At the Effective Time (as defined in Section
1.2 below) and upon the terms and subject to the conditions of this Agreement
and in accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), MERGER SUB shall be merged with and into USR. Following the Merger,
USR shall continue as the surviving corporation (the "Surviving Corporation")
and as a direct wholly-owned subsidiary of URI and the separate corporate
existence of MERGER SUB shall cease.
Section 1.2 Effective Time. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
an appropriate certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware in such form as required by, and
executed in accordance with, the relevant provisions of the DGCL, as soon as
practicable on or after the Closing Date (as defined in Section 1.3 below). The
Merger shall become effective upon such filing or at such time thereafter as is
provided in the Certificate of Merger (the "Effective Time").
Section 1.3 Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date to be specified by the
parties, which shall be no later than the second business day after satisfaction
or waiver of the conditions set forth in Article VI (other than those conditions
that by their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions) (the "Closing Date"), at the offices
of Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
unless another time, date or place is agreed to in writing by the parties
hereto.
Section 1.4 Effects of the Merger. The Merger shall have the effects
set forth in the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all properties, rights, privileges,
powers and franchises of USR and MERGER SUB shall vest in the Surviving
Corporation, and all debts, liabilities and duties of USR and MERGER SUB shall
become the debts, liabilities and duties of the Surviving Corporation.
Section 1.5 Certificate of Incorporation and By-laws. The certificate
of incorporation and by-laws of USR in effect at the Effective Time shall be the
certificate of incorporation and by-laws of the Surviving Corporation until
respectively amended in accordance with their terms and applicable law.
Section 1.6 Directors. The directors of MERGER SUB at the Effective
Time shall be the initial directors of the Surviving Corporation, each to hold
office in accordance with the certificate of incorporation and by-laws of the
Surviving Corporation until such director's successor is duly elected and
qualified.
Section 1.7 Officers. The persons listed on Schedule 1.7 hereto shall,
as of the Effective Time, be the initial officers of the Surviving Corporation,
each to hold the office set forth opposite his name on such Schedule in
accordance with the certificate of incorporation and by-laws of the Surviving
Corporation until such officer's successor is duly elected or appointed and
qualified.
Section 1.8 Conversion of Shares. (a) At the Effective Time, each
share of common stock, par value $0.01 per share, of USR ("USR Common Stock")
issued and
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outstanding immediately prior to the Effective Time (individually a
"Share" and collectively, the "Shares") (other than Shares held by URI, MERGER
SUB or any other subsidiary of URI) shall, by virtue of the Merger and without
any action on the part of USR, MERGER SUB or the holder thereof, be converted
into the right to receive 0.9625 (the "Exchange Ratio") fully paid and
nonassessable shares of common stock, par value $0.01 per share, of URI ("URI
Common Stock"). If between the date hereof and the Effective Time the
outstanding shares of URI Common Stock and/or USR Common Stock shall have been
changed into a different number of shares or a different class by reason of any
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the amount of shares of URI Common Stock
constituting the Exchange Ratio shall be correspondingly adjusted to reflect
such stock dividend, subdivision, reclassification, recapitalization, split,
combination, exchange of shares or other similar transaction.
(b) At the Effective Time, each outstanding share of common stock,
par value $0.01 per share, of MERGER SUB shall be converted into one share of
common stock, par value $0.01 per share, of the Surviving Corporation.
(c) At the Effective Time, each Share held by URI, MERGER SUB or any
other subsidiary of URI immediately prior to the Effective Time shall, by virtue
of the Merger and without any action on the part of USR, URI, MERGER SUB or the
holder thereof, be canceled, retired and cease to exist and no payment shall be
made with respect thereto.
(d) In accordance with Section 262 of the DGCL, no appraisal rights
shall be available to holders of Shares in connection with the Merger.
Section 1.9 Exchange of Certificates.
(a) As of the Effective Time, URI shall make available to American
Stock Transfer & Trust Company (the "Exchange Agent"), for the benefit of the
holders of Shares, for exchange in accordance with this Article I, through the
Exchange Agent: (i) certificates representing the appropriate number of shares
of URI Common Stock issuable pursuant to Section 1.8 and (ii) cash to be paid in
lieu of fractional shares of URI Common Stock pursuant to Section 1.9(f) (such
shares of URI Common Stock and such cash are hereinafter referred to as the
"Exchange Fund").
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates") whose Shares were converted into the
right to receive shares of URI Common Stock pursuant to Section 1.8: (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates
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to the Exchange Agent and shall be in such form and have such other provisions
as URI may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing shares
of URI Common Stock. Upon surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by URI,
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of URI Common Stock and, if applicable,
a check representing the cash consideration to which such holder may be entitled
pursuant to Section 1.9(c) or Section 1.9(f), which such holder has the right to
receive pursuant to the provisions of this Article I, and the Certificate so
surrendered shall forthwith be canceled. The stock transfer books of USR shall
be closed as of the Effective Time. In the event of a transfer of ownership of
Shares which is not registered in the transfer records of USR, a certificate
representing the proper number of shares of URI Common Stock may be issued to a
transferee if the Certificate representing such Shares is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid or are not applicable. Until surrendered as contemplated by this Section
1.9, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the certificate
representing shares of URI Common Stock and cash in lieu of any fractional
shares of URI Common Stock as contemplated by this Section 1.9.
(c) No dividends or other distributions declared or made after the
Effective Time with respect to URI Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of URI Common Stock issued with respect thereto pursuant
to Article I and no cash payment in lieu of fractional shares shall be paid to
any such holder pursuant to Section 1.9(f) until the holder of record of such
Certificate shall surrender such Certificate. Subject to the effect of
applicable laws, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole shares of URI
Common Stock issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of any cash payable in lieu of a fractional share of
URI Common Stock to which such holder is entitled pursuant to Section 1.9(f) and
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of URI Common
Stock, and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole shares of URI Common Stock.
(d) In the event that any Certificate shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange therefor, upon the making
of an affidavit of that fact by the holder thereof, such shares of URI Common
Stock and cash in lieu of fractional shares, if any, as may be required pursuant
to this Agreement; provided, however, that URI may, at its discretion, require
the delivery of a suitable bond or indemnity.
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(e) All shares of URI Common Stock issued upon surrender of
Certificates in accordance with the terms hereof (together with any cash paid
pursuant to Section 1.9(c) or 1.9(f)) shall be deemed to have been issued in
full satisfaction of all rights pertaining to the Shares formerly represented
thereby and there shall be no further registration of transfers on the stock
transfer books of USR or the Surviving Corporation of the Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
(f) Notwithstanding Section 1.8 hereof, no fractions of a share of
URI Common Stock shall be issued in connection with the Merger, but in lieu
thereof each holder of Shares otherwise entitled to a fraction of a share of URI
Common Stock shall, upon surrender of his or her Certificate or Certificates, be
entitled to receive an amount of cash (without interest) determined by
multiplying the average of the last reported sales price per share of URI Common
Stock as reported by the New York Stock Exchange for the five trading days
immediately preceding the Effective Time by the fractional share interest to
which such holder would otherwise be entitled. The parties acknowledge that
payment of the cash consideration in lieu of issuing fractional shares was not
separately bargained for consideration but merely represents a mechanical
rounding-off for purposes of simplifying the corporate and accounting problems
which would otherwise be caused by the issuance of fractional shares.
(g) Any portion of the Exchange Fund which remains undistributed to
the former stockholders of USR for six months after the Effective Time shall be
delivered to URI, upon demand, and any former stockholders of USR who have not
theretofore complied with this Article I shall thereafter look only to URI for
payment of their claim for URI Common Stock, for any cash in lieu of fractional
shares of URI Common Stock and any dividends or distributions with respect to
URI Common Stock, as the case may be.
(h) None of URI, MERGER SUB or USR shall be liable to any person for
shares of URI Common Stock (or dividends or distributions with respect thereto)
or cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF USR
USR represents and warrants to URI and MERGER SUB as follows:
Section 2.1 Organization and Qualification. USR and each of its
subsidiaries (as defined below), is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its businesses as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority would not have a USR Material
Adverse Effect (as defined below). As used in this Agreement, the term (a)
"subsidiary" of a person shall mean any corporation or other entity (including
partnerships, limited liability companies, trusts and other business
associations) of which at least a majority of the voting power represented by
the outstanding capital stock or other voting securities or interests having
voting power under ordinary circumstances to elect directors or similar members
of the governing body of such corporation or entity shall at the time be held or
controlled, directly or indirectly, by such person; and (b) "USR Material
Adverse Effect" shall mean any change or effect (i) that is materially adverse
to the properties, business, results of operations or financial condition of USR
and its subsidiaries, taken as whole, other than any change or effect arising
out of general economic conditions or conditions generally affecting the
equipment rental industry or (ii) that would impair the ability of USR to
consummate the transactions contemplated by this Agreement.
Section 2.2 Subsidiaries. Section 2.2 of the Disclosure Schedule
previously delivered by USR to URI (the "USR Disclosure Schedule") sets forth a
list as of the date hereof of all of USR's subsidiaries. Except as set forth in
Section 2.2 of the USR Disclosure Schedule, (a) all of the issued and
outstanding shares of capital stock of each of USR's subsidiaries are validly
issued, fully paid, nonassessable and free of preemptive rights, and are owned,
directly or indirectly, by USR free and clear of any liens, claims,
encumbrances, security interests, charges and options of any nature whatsoever
(other than liens in favor of USR's senior creditors as disclosed in USR's SEC
Reports (as defined in Section 2.5)); (b) there are no outstanding
subscriptions, options, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating USR or any such subsidiary of USR to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of any such subsidiary, or
obligating it to grant, extend or enter into any such agreement or commitment;
and (c) there are no outstanding commitments or obligations of USR or any of its
subsidiaries to repurchase, redeem or otherwise acquire any outstanding shares
of capital stock or other ownership interests in any subsidiary of USR.
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Section 2.3 Capitalization. As of the date hereof, the authorized
capital stock of USR consists of 100,000,000 shares of USR Common Stock and
10,000,000 shares of preferred stock, $.01 par value ("USR Preferred Stock").
At the close of business on June 15, 1998, (a) 30,774,975 shares of USR Common
Stock were issued and outstanding, (b) not more than 4,600,000 shares of USR
Common Stock were reserved for issuance pursuant to USR's 1997 Performance Award
Plan (the "USR Stock Plan"), of which 4,138,387 shares of USR Common Stock were
reserved for issuance upon exercise of outstanding stock options, (c) no shares
of USR Common Stock were held by USR in its treasury or by its wholly owned
subsidiaries, and (d) no shares of USR Preferred Stock were issued and
outstanding. Except as set forth above or as set forth in Section 2.3 of the
USR Disclosure Schedule, as of the date hereof, there are outstanding (i) no
shares of capital stock or other voting securities of USR, (ii) no securities of
USR or any of its subsidiaries convertible into or exchangeable for shares of
capital stock or voting securities of USR, (iii) no options, warrants or other
rights to acquire from USR or any of its subsidiaries, and no commitments or
obligations of USR or any of its subsidiaries to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of USR, and (iv) no equity equivalents, interests in
the ownership or earnings of USR or its subsidiaries or other similar rights
(including stock appreciation rights) (collectively, "USR Securities"). There
are no outstanding obligations of USR or its subsidiaries to repurchase, redeem
or otherwise acquire any USR Securities. Except as set forth in Section 2.3 of
the USR Disclosure Schedule, there are no stockholder agreements, voting trusts
or other agreements or understandings to which USR is a party or to which it is
bound relating to the voting of any USR Securities.
Section 2.4 Authority; Approvals; Noncontravention; Compliance. (a)
USR has all necessary corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the board of
directors of USR (the "USR Board") and no other corporate proceedings on the
part of USR are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
USR Shareholders' Approval (as defined in Section 2.14 below)). This Agreement
has been duly and validly executed and delivered by USR and constitutes the
valid, legal and binding agreement of USR, enforceable against USR in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles (the "Bankruptcy
and Equity Exception"). The USR Board has, by unanimous vote, duly and validly
approved, and taken all corporate actions required to be taken by the USR Board
for the consummation of, the transactions, including the Merger, contemplated
hereby and resolved to recommend that the stockholders of USR adopt this
Agreement. The Board of Directors of USR has taken all actions necessary under
the DGCL, including approving the transactions contemplated by the Merger
Agreement, to ensure that the restrictions on
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Business Combinations (as defined in Section 203 of the DGCL) do not, and will
not, apply to the transactions contemplated hereby if consummated in accordance
with the terms hereof.
(b) Except for filings, permits, authorizations, consents and
approvals as may be required under, and other applicable requirements of, the
Securities Act of 1933, as amended (the "Securities Act"), Securities Exchange
Act of 1934, as amended (the "Exchange Act"), state securities or blue sky laws,
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the filing of the Certificate of Merger as required by the DGCL and as
otherwise set forth in Section 2.4(b) of the USR Disclosure Schedule, no filing
or registration with or notice to, and no permit, authorization, consent or
approval of, any United States or foreign federal, state, provincial or local
court or tribunal or administrative, governmental or regulatory body, agency,
commission or authority (each, a "Governmental Authority") is necessary for the
execution and delivery by USR of this Agreement or the consummation by USR of
the transactions contemplated hereby, except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings or give
such notice would not have a USR Material Adverse Effect.
(c) Except as set forth in Section 2.4(c) of the USR Disclosure
Schedule, neither the execution, delivery and performance of this Agreement by
USR nor the consummation by USR of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
certificate or articles of incorporation or by-laws (or similar governing
documents) of USR or any of its subsidiaries, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration, lien or other encumbrance) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which USR or any of its
subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound, or (iii) violate any order, writ, injunction,
decree, law, statute, rule or regulation applicable to USR or any of its
subsidiaries or any of their respective properties or assets, except, in the
case of clauses (ii) or (iii), for violations, breaches or defaults which would
not have a USR Material Adverse Effect.
(d) Except as set forth in Sections 2.4(d), 2.7, 2.10 and 2.11 of the
USR Disclosure Schedule, or as disclosed in the USR SEC Reports filed prior to
the date hereof, neither USR nor any of its subsidiaries is in violation of, or
is, to the knowledge of USR, under investigation with respect to any violation
of, or has been given notice or been charged with any violation of, any law,
statute, order, rule, regulation, ordinance, decree or judgment (including any
applicable environmental law, ordinance or regulation) of any Governmental
Authority, except for possible violations which individually or in the aggregate
would not have a USR Material Adverse Effect. Except as set forth in Section
2.4(d) of the USR Disclosure Schedule or as expressly disclosed in the USR SEC
Reports filed prior to the date hereof, USR and its subsidiaries have all
permits, licenses, franchises and other governmental
8
authorizations, consents and approvals necessary to conduct their businesses as
presently conducted which are material to the operation of their businesses.
Except as set forth in Section 2.4(d) of the USR Disclosure Schedule, USR and
each of its subsidiaries is not in breach or violation of or in default in the
performance or observance of any term or provision of, and no event has occurred
which, with lapse of time or action by a third party, could result in a default
by USR or any of its subsidiaries under (i) any contract, commitment, agreement,
indenture, mortgage, loan agreement, note, lease, bond, license, approval or
other instrument to which it is a party or by which it is bound or to which any
of its property or assets is subject, except for possible violations, breaches
or defaults which individually or in the aggregate would not have a USR Material
Adverse Effect, or (ii) its certificate of incorporation or by-laws (or similar
governing document).
Section 2.5 Reports and Financial Statements. The filings required to
be made by USR and its subsidiaries since March 1, 1997 under the Securities Act
and the Exchange Act have been filed with the Securities and Exchange Commission
(the "SEC"), including all forms, statements, reports, agreements, documents,
exhibits, amendments and supplements appertaining thereto, and complied, as of
their respective dates, in all material respects, with all applicable
requirements of the appropriate statutes and the rules and regulations
thereunder. USR has made available to URI a true and complete copy of each
report, schedule, registration statement and definitive proxy statement filed
with the SEC by USR and its subsidiaries pursuant to the requirements of the
Securities Act or Exchange Act since March 1, 1997, including all amendments
thereto (as such documents have since the time of their filing been amended, the
"USR SEC Reports"). As of their respective dates, the USR SEC Reports did not
contain any 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
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited interim financial
statements of USR, its predecessors and its subsidiaries included in the USR SEC
Reports have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis ("GAAP") (except as may be
indicated therein or in the notes thereto and except with respect to unaudited
statements as permitted by Form 10-Q of the SEC) and fairly present the
financial position of USR and its subsidiaries as of the dates thereof and the
results of their respective operations, cash flows and change in financial
position for the periods then ended, subject, in the case of the unaudited
interim financial statements, to normal, recurring audit adjustments. Since
December 31, 1997, except as set forth in the USR SEC Reports, there has not
been any change, or any application or request for any change, by USR or any of
its subsidiaries in accounting principles, methods or policies for financial
accounting or tax purposes. True, accurate and complete copies of the
certificate of incorporation and by-laws of USR, as in effect on the date
hereof, are included in the USR SEC Reports. USR has heretofore made available
to URI a complete and correct copy of any material amendments or modifications,
which have not yet been filed with the SEC, to agreements and other documents
which had
9
previously been filed by USR with the SEC pursuant to the Securities Act or the
Exchange Act.
Section 2.6 Absence of Certain Changes or Events; Liabilities. Except
as disclosed in the USR SEC Reports filed prior to the date hereof or as set
forth in Section 2.6 of the USR Disclosure Schedule, since December 31, 1997,
USR and each of its subsidiaries have conducted their business only, to USR's
knowledge, in the ordinary course of business consistent with past practice and
there has not been, and no fact or condition exists, and no events or changes
have occurred and no liabilities or obligations of any nature (whether or not
accrued, contingent or otherwise, and whether due or to become due or asserted
or unasserted) have been incurred, in each case, which would have or, insofar as
reasonably can be foreseen, could have, a USR Material Adverse Effect. Except
as and to the extent publicly disclosed in the USR SEC Reports filed prior to
the date hereof and except for liabilities incurred in connection with the
transactions contemplated by this Agreement, USR and its subsidiaries have no
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, and whether due or to become due or asserted or unasserted, which,
individually or in the aggregate, would have a USR Material Adverse Effect.
Section 2.7 Litigation. Except as disclosed in the USR SEC Reports
filed prior to the date hereof or as set forth in Sections 2.7, 2.10 and 2.11 of
the USR Disclosure Schedule, (a) there are no claims, suits, actions or
proceedings by any Governmental Authority or arbitrator pending or, to the
knowledge of USR, threatened, nor are there, to the knowledge of USR, any
investigations or reviews by any Governmental Authority or any arbitrator
pending or threatened against, relating to or affecting USR or any of its
subsidiaries which would have a USR Material Adverse Effect, (b) to USR's
knowledge, there have not been any significant developments since December 31,
1997 with respect to such disclosed claims, suits, actions, proceedings,
investigations or reviews that would have a USR Material Adverse Effect and (c)
there are no judgments, decrees, injunctions, rules or orders of any court,
governmental department, commission, agency, instrumentality or authority or any
arbitrator applicable to USR or any of its subsidiaries, except for such that
would not have a USR Material Adverse Effect.
Section 2.8 Registration Statement and Proxy Statement. None of the
information supplied or to be supplied by or on behalf of USR and included or
incorporated by reference in (a) the registration statement on Form S-4 to be
filed with the SEC by URI in connection with the issuance of shares of URI
Common Stock in connection with the Merger (the "Registration Statement") will,
at the time the Registration Statement becomes effective under the Securities
Act, 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 and (b) the joint proxy statement, in definitive form,
relating to the meetings of USR and URI stockholders to be held in connection
with the Merger (the "Proxy Statement") will, at the dates mailed to
stockholders and at the times of the meetings of stockholders to be
10
held in connection with the Merger, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Proxy Statement, insofar as it
relates to the meeting of USR's stockholders, will comply as to form in all
material respects with the applicable provisions of the Securities Act and the
Exchange Act and the rules and regulations thereunder.
Section 2.9 Tax Matters. Except as set forth in Section 2.9 of the USR
Disclosure Schedule: (a) USR and its subsidiaries, and each affiliated group
(within the meaning of Section 1504 of the Code) of which USR or any of its
subsidiaries is or has been a member, has timely filed all federal and all other
material Tax Returns (as defined below) required to be filed by them. All such
Tax Returns are true and correct in all material respects. All material Taxes
(as defined below) due and payable by USR and its subsidiaries have been timely
paid in full. The most recent consolidated financial statements contained in
the USR SEC Reports reflect an adequate reserve in accordance with GAAP for all
Taxes payable by USR and its subsidiaries for all taxable periods and portions
thereof through the date of such financial statements.
(b) No material deficiencies for any Taxes have been proposed,
asserted or assessed against USR or any of its subsidiaries that have not been
fully paid or adequately provided for in the appropriate financial statements of
USR and its subsidiaries, no requests for waivers of the time to assess any
Taxes are pending, and no power of attorney with respect to any Taxes has been
executed or filed with any taxing authority. No material issues relating to
Taxes have been raised in writing by any Governmental Authority during any
presently pending audit or examination. No claim has been made by any taxing
authority in a jurisdiction where USR or any of its subsidiaries does not file a
Tax Return, that it or any of its subsidiaries may be subject to any material
Tax in that jurisdiction.
(c) There are no material liens or encumbrances for Taxes on any of
the assets of USR or its subsidiaries (other than for current Taxes not yet due
and payable).
(d) USR and its subsidiaries have complied in all material respects
with all applicable laws, rules and regulations relating to the payment and
withholding of Taxes.
(e) None of USR or its subsidiaries has filed a consent under Section
341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply.
(f) None of USR or its subsidiaries has made any payments, nor is any
of them obligated to make any payments, and is not a party to any agreement that
could obligate it to make any payments that would not be deductible by reason of
Sections 280G or 162(m) of the Code.
11
(g) None of USR or its subsidiaries is a party to any tax allocation
agreement, tax sharing agreement, tax indemnity agreement or similar agreement,
arrangement or practice with respect to Taxes (including any advance pricing
agreement, closing agreement or other agreement relating to Taxes with any
taxing authority).
(h) No federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of USR or its subsidiaries and neither USR
nor any of its subsidiaries has received a written notice of any pending audit
or proceeding, in any such case involving a material issue with respect to
Taxes.
(i) Neither USR nor any of its subsidiaries has agreed to or is
required to make any material adjustment under Section 481(a) of the Code.
(j) No property owned by USR or any of its subsidiaries (i) is
property required to be treated as being owned by another person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately prior to the enactment of the Tax Reform Act of 1986;
(ii) constitutes "tax exempt use property" within the meaning of Section
168(h)(1) of the Code; or (iii) is tax exempt bond financed property within the
meaning of Section 168(g) of the Code.
(k) Neither USR nor any of its subsidiaries is or has ever been a
"personal holding company" as defined under Section 542 of the Code.
(l) For purposes of this Agreement, (i) the terms "Tax" or "Taxes"
shall mean all taxes, charges, fees, imposts, levies or other assessments,
including, without limitation, all net income, gross receipts, capital, sales,
use, ad valorem, value added, transfer, franchise, profits, inventory, capital
stock, license, withholding, payroll, employment, social security, unemployment,
excise, severance, stamp, occupation, property and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever, together with any
interest and any penalties, fines, additions to tax or additional amounts
imposed by any taxing authority (domestic or foreign) and shall include any
transferee liability in respect of Taxes, any liability in respect of Taxes
imposed by contract, tax sharing agreement, tax indemnity agreement or any
similar agreement, and (ii) the term "Tax Return" shall mean any report, return,
document, declaration or any other information or filing required to be supplied
to any taxing authority or jurisdiction (foreign or domestic) with respect to
Taxes, including, without limitation, information returns or any document with
respect to or accompanying payments or estimated Taxes, or with respect to or
accompanying requests for the extension of time in which to file any such
report, return document, declaration or other information.
12
Section 2.10 Employee Matters; ERISA; Labor. (a) With respect to all
the employee benefit plans (as that phrase is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
maintained for, or contributed to, the benefit of any current or former
employee, officer or director of USR or any of its subsidiaries ("USR ERISA
Plans") and any other benefit or compensation plan, program or arrangement
maintained for the benefit of any current or former employee, officer or
director of USR or any of its subsidiaries (the USR ERISA Plans and such plans
being collectively referred to as the "USR Benefit Plans"), except as set forth
in Section 2.10(a) of the USR Disclosure Schedule: (i) none of the USR ERISA
Plans is a "multiemployer plan" within the meaning of ERISA; (ii) none of the
USR Benefit Plans promises or provides retiree medical or life insurance
benefits to any person except as required by Section 601 of ERISA and Section
4980B of the Code; (iii) none of the USR Benefit Plans provides for payment of a
benefit, the increase of a benefit amount, the payment of a contingent benefit,
or the acceleration of the payment or vesting of a benefit by reason of the
execution of this Agreement or the consummation of the transactions contemplated
by this Agreement; (iv) neither USR nor any of its subsidiaries has an
obligation to adopt, or is considering the adoption of, any new USR Benefit Plan
or, except as required by law, the amendment of an existing USR Benefit Plan;
(v) each USR ERISA Plan intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service (the "IRS") that it is so qualified and, to the knowledge of USR,
nothing has occurred since the date of such letter that could reasonably be
expected to affect the qualified status of such USR ERISA Plan; (vi) each USR
Benefit Plan has been operated in all respects in accordance with its terms and
the requirements of all applicable law; (vii) neither USR nor any of its
subsidiaries or members of their "controlled group" has incurred any direct or
indirect liability under, arising out of or by operation of Title IV of ERISA in
connection with the termination of, or withdrawal from, any USR ERISA Plan or
other retirement plan or arrangement, and, to the knowledge of USR, no fact or
event exists that could reasonably be expected to give rise to any such
liability; (viii) the aggregate accumulated benefit obligations of each USR
ERISA Plan subject to Title IV of ERISA (as of the date of the most recent
actuarial valuation prepared for such USR ERISA Plan) does not exceed the fair
market value of the assets of such USR ERISA Plan (as of the date of such
valuation); and (ix) except for claims for benefits arising in the ordinary
operation of the USR Benefit Plans, USR is not aware of any claims relating to
the USR Benefit Plans; provided, however, that the failure of the
representations set forth in clauses (v), (vi), (vii), (viii) and (ix) to be
true and correct shall not be deemed to be a breach of any such representation
unless any such failure, individually or in the aggregate, is reasonably likely
to have a USR Material Adverse Effect.
(b) Except as set forth in Section 2.10(b) of the USR Disclosure
Schedule: (i) there are no labor or collective bargaining agreements which
pertain to employees of USR or any of its subsidiaries; (ii) there are no
pending strikes, work stoppages, slowdowns, lockouts, arbitrations or other
material labor disputes against USR or any of its subsidiaries;
13
(iii) there are no pending complaints, charges or claims against the USR or any
of its subsidiaries filed with any Governmental Authority based upon the
employment or termination of employment of any of their employees; and (iv) USR
and its subsidiaries are in compliance with all laws, regulations and orders
relating to the employment of labor, including all such laws, regulations and
orders relating to wages, hours, the Workers Adjustment and Retraining
Notification Act ("WARN"), collective bargaining, discrimination, civil rights,
safety and health, workers' compensation and the collection and payment of
withholding and/or social security Taxes and any similar Tax; provided, however,
that the failure of the representations set forth in clauses (iii) and (iv) to
be true and correct shall not be deemed to be a breach of any representation
unless any such failure, individually or in the aggregate, is reasonably likely
to have a USR Material Adverse Effect.
Section 2.11 Environmental Protection. (a) Except as set forth in
Section 2.11 of the USR Disclosure Schedule or in the USR SEC Reports filed
prior to the date hereof:
(i) USR and each of its subsidiaries is in compliance with
all applicable Environmental Laws (as defined below) except where the
failure to so comply would not have a USR Material Adverse Effect, and
neither USR nor any of its subsidiaries has received any communication
from any person or Governmental Authority that alleges that USR or any of
its subsidiaries is not in such compliance with applicable Environmental
Laws.
(ii) USR and each of its subsidiaries has obtained or has
applied for all environmental, health and safety permits and governmental
authorizations (collectively, the "Environmental Permits") necessary for
the construction of their facilities or the conduct of their operations
except where the failure to so obtain would not have a USR Material
Adverse Effect, and all such Environmental Permits are in good standing
or, where applicable, a renewal application has been timely filed and is
pending agency approval, and USR and its subsidiaries are in material
compliance with all terms and conditions of the Environmental Permits.
(iii) There is no Environmental Claim (as defined below)
pending or, to the best knowledge of USR, threatened (A) against USR or
any of its subsidiaries, (B) against any person or entity whose liability
for any Environmental Claim USR or any of its subsidiaries has or may have
retained or assumed either contractually or by operation of law, or (C)
against any real or personal property or operations which USR or any of
its subsidiaries owns, leases or manages, in whole or in part, which, in
any such case described in this clause (iii), would have a USR Material
Adverse Effect.
(iv) USR has no knowledge of any Releases (as defined
below) of any Hazardous Material that would be reasonably likely to form
the basis of any
14
Environmental Claim against USR or any of its subsidiaries, or against any
person or entity whose liability for any Environmental Claim USR or any of
its subsidiaries has retained or assumed either contractually or by
operation of law or which would result in USR incurring liability under
any Environmental Law, except for any Environmental Claim or liability
which would not have a USR Material Adverse Effect.
(v) USR has no knowledge, with respect to any predecessor
of USR or any of its subsidiaries or any real property formerly owned,
leased or operated by USR or any of its subsidiaries, of any Environmental
Claim which would have a USR Material Adverse Effect pending or
threatened, or of any Release of Hazardous Materials (as defined below)
that would be reasonably likely to form the basis of any Environmental
Claim which would have a USR Material Adverse Effect.
(b) USR has made available to URI true and complete copies of all
environmental audits, surveys, reports and assessments relating to real property
owned, leased or operated by USR or any of its subsidiaries.
(c) As used in this Agreement:
(i) "Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters,
directives, claims, liens, investigations, proceedings or notices of
noncompliance or violation (written or oral) by any person or entity
(including any Governmental Authority) alleging potential liability
(including potential responsibility for or liability for enforcement,
investigatory costs, cleanup costs, governmental response costs, removal
costs, remedial costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on or resulting from
(A) the presence, Release or threatened Release into the environment of
any Hazardous Materials at any location, whether or not owned, operated,
leased or managed by USR or any of its subsidiaries (for purposes of this
Section 2.11) or by URI or any of URI's subsidiaries (for purposes of
Section 3.11); or (B) circumstances forming the basis of any violation or
alleged violation of any Environmental Law or (C) any and all claims by
any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the presence or
Release of any Hazardous Materials.
(ii) "Environmental Laws" means all applicable federal, state and
local laws, rules and regulations relating to pollution, the environment
(including ambient air, surface water, groundwater, land surface or
subsurface strata), natural resources or protection of human health as it
relates to the environment including laws and regulations relating to
Releases or threatened Releases of Hazardous Materials, or
15
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials.
(iii) "Hazardous Materials" means (A) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation and transformers or
other equipment that contain dielectric fluid containing polychlorinated
biphenyls ("PCBs"); (B) any chemicals, materials or substances which are
now defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants," or
words of similar import under any Environmental Law and (C) any other
chemical, material, substance or waste, exposure to which is now
prohibited, limited or regulated under any Environmental Law in a
jurisdiction in which USR or any of its subsidiaries operates (for
purposes of this Section 2.11) or in which URI or any of URI's
subsidiaries operates (for purposes of Section 3.11).
(iv) "Release" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or migration
into the atmosphere, soil, surface water, groundwater or property.
Section 2.12 Material Contracts. USR has filed as an exhibit to an
Annual Report on Form 10-K or another document filed pursuant to the Securities
Act or the Exchange Act, or has delivered or otherwise made available to URI
true, correct and complete copies of all contracts and agreements to which USR
or any of its subsidiaries is a party (a) that are required to be filed in an
exhibit to an Annual Report on Form 10-K filed by USR with the SEC as of the
date of this Agreement, (b) that purport to limit, curtail or restrict the
ability of USR or any of its subsidiaries to operate or compete in any
geographic area or line of business or (c) that provide for any severance or
other agreement with any employee or consultant pursuant to which such person
would be entitled to receive any additional compensation or an accelerated
payment of compensation as a result of the consummation of the transactions
contemplated hereby (collectively, the "USR Contracts"). Each of the USR
Contracts is valid and enforceable in accordance with its terms (subject to the
Bankruptcy and Equity Exception), and there is no default under any USR Contract
so listed either by USR or any of its subsidiaries or, to the knowledge of USR,
by any other party thereto, and no event has occurred that with the lapse of
time or the giving of notice or both would constitute a default thereunder by
USR or any such subsidiary or, to the knowledge of USR, any other party, in any
such case in which such default or event would have a USR Material Adverse
Effect. No party to any USR Contract has given notice to USR of or made a claim
against USR with respect to any breach or default thereunder, in any such case
in which such breach or default would have a USR Material Adverse Effect.
16
Section 2.13 Opinion of Financial Advisor. USR has received the opinion
of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, dated the date hereof,
to the effect that, as of the date thereof, the Exchange Ratio is fair from a
financial point of view to the holders of USR Common Stock.
Section 2.14 Vote Required. The adoption of this Agreement by the
holders of a majority of the votes entitled to be cast by all holders of the
outstanding shares of USR Common Stock (the "USR Shareholders' Approval") is the
only vote of the holders of any class or series of the capital stock of USR or
any of its subsidiaries required to adopt this Agreement.
Section 2.15 Reorganization and Accounting Matters. Neither USR nor, to
USR's best knowledge, any of its Affiliates (as defined below) has taken or
agreed to take any action that would (a) prevent the Merger from constituting a
reorganization within the meaning of Section 368(a) of the Code or (b) prevent
URI and the Surviving Corporation from accounting for the transactions to be
effected pursuant to this Agreement as a pooling-of-interests in accordance with
GAAP, Opinion 16 of the Accounting Principles Board ("APB 16") and applicable
SEC regulations. USR has no reason to believe that the transaction contemplated
by this Agreement will not qualify as a pooling-of-interest transaction in
accordance with GAAP, APB 16 and applicable SEC regulations. As used in this
Agreement, the term "Affiliate," except where otherwise defined herein, shall
mean, as to any person, any other person which directly or indirectly controls,
or is under common control with, or is controlled by, such person and, as used
in this definition, "control" (and, with correlative meanings, "controlled by"
and "under common control with") shall mean possession, directly or indirectly,
of power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).
Section 2.16 Brokers. Except for ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation, whose fees have been disclosed to URI prior to the date hereof, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
USR.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF URI AND MERGER SUB
URI and MERGER SUB represent and warrant to USR as follows:
Section 3.1 Organization and Qualification. URI and each of its
subsidiaries (including MERGER SUB) is a corporation duly organized, validly
existing and in good
17
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its businesses as now being conducted, except where the failure
to be so organized, existing and in good standing or to have such power and
authority would not have a URI Material Adverse Effect (as defined below). As
used in this Agreement, the term "URI Material Adverse Effect" shall mean any
change or effect (i) that is materially adverse to the properties, business,
results of operations or financial condition of URI and its subsidiaries, taken
as whole, other than any change or effect arising out of general economic
conditions or conditions generally affecting the equipment rental industry or
(ii) that would impair the ability of URI and MERGER SUB to consummate the
transactions contemplated by this Agreement.
Section 3.2 Subsidiaries. Section 3.2 of the Disclosure Schedule
previously delivered by URI to USR (the "URI Disclosure Schedule") sets forth a
list as of the date hereof of all of URI's subsidiaries. Except as set forth in
Section 3.2 of the URI Disclosure Schedule, (a) all of the issued and
outstanding shares of capital stock of each of URI's subsidiaries (including
MERGER SUB) are validly issued, fully paid, nonassessable and free of preemptive
rights, and are owned, directly or indirectly, by URI free and clear of any
liens, claims, encumbrances, security interests, charges and options of any
nature whatsoever (other than liens in favor of URI's senior creditors as
disclosed in URI's SEC Reports (as defined in Section 3.5)); (b) there are no
outstanding subscriptions, options, calls, contracts, voting trusts, proxies or
other commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement, obligating URI or any such subsidiary
of URI to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of any such
subsidiary, or obligating it to grant, extend or enter into any such agreement
or commitment; and (c) there are no outstanding commitments or obligations of
URI or any of its subsidiaries to repurchase, redeem or otherwise acquire any
outstanding shares of capital stock or other ownership interests in any
subsidiary of URI.
Section 3.3 Capitalization. As of the date hereof, the authorized
capital stock of URI consists of 75,000,000 shares of URI Common Stock and
5,000,000 shares of preferred stock, $0.01 par value, of URI ("URI Preferred
Stock"). At the close of business on June 15, 1998, (a) 34,387,856 shares of
URI Common Stock were issued and outstanding, (b) not more than 5,000,000 shares
of URI Common Stock were reserved for issuance pursuant to URI's 1997 Stock
Option Plan of which 4,470,725 shares were reserved for issuance upon exercise
of outstanding stock options, not more than 6,519,058 shares of URI Common Stock
were reserved for issuance upon exercise of outstanding warrants and not more
than 16,942 shares of URI Common Stock were reserved for issuance upon
conversion of a convertible note of URI, (c) no shares of URI Common Stock were
held by URI in its treasury or by its wholly owned subsidiaries, and (d) no
shares of URI Preferred Stock were issued and outstanding. Except as set forth
above, as contemplated by this Agreement or as set forth in Section 3.3 of the
URI Disclosure Schedule, as of the date hereof, there are outstanding (i)
18
no shares of capital stock or other voting securities of URI, (ii) no securities
of URI or any of its subsidiaries convertible into or exchangeable for shares of
capital stock or voting securities of URI, (iii) no options, warrants or other
rights to acquire from URI or any of its subsidiaries, and no commitments or
obligations of URI or any of its subsidiaries to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of URI, and (iv) no equity equivalents, interests in
the ownership or earnings of URI or its subsidiaries or other similar rights
(including stock appreciation rights) (collectively, "URI Securities"). There
are no outstanding obligations of URI or its subsidiaries to repurchase, redeem
or otherwise acquire any URI Securities. Except as set forth in Section 3.3 of
the URI Disclosure Schedule or the URI SEC Reports, there are no stockholder
agreements, voting trusts or other agreements or understandings to which URI is
a party or to which it is bound relating to the voting of any URI Securities.
Section 3.4 Authority; Approvals; Noncontravention; Compliance. (a)
Each of URI and MERGER SUB has all necessary corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the board of directors of URI (the "URI Board") and the board of
directors of MERGER SUB and no other corporate proceedings on the part of URI or
MERGER SUB are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
URI Shareholders' Approval (as defined in Section 3.14 below)). This Agreement
has been duly and validly executed and delivered by URI and MERGER SUB and
constitutes the valid, legal and binding agreements of URI and MERGER SUB,
enforceable against them in accordance with its terms, subject to the Bankruptcy
and Equity Exception. The URI Board has, by unanimous vote, duly and validly
approved, and taken all corporate actions required to be taken by the URI Board
for the consummation of, the transactions, including the Merger, contemplated
hereby, and resolved to recommend that the stockholders of URI approve the
Charter Amendment and the Share Issuance (each as defined in Section 3.14
below). The Board of Directors of URI has taken all actions necessary under the
DGCL, including approving the transactions contemplated by the Merger Agreement,
to ensure that the restrictions on Business Combinations (as defined in Section
203 of the DGCL) do not, and will not, apply to the transactions contemplated
hereby if consummated in accordance with the terms hereof.
(b) Except for filings, permits, authorizations, consents and
approvals as may be required under, and other applicable requirements of, the
Securities Act (including the filing and effectiveness of the Registration
Statement in connection with the issuance of URI Common Stock pursuant to the
Merger), the Exchange Act, state securities or blue sky laws, the HSR Act, the
filing of the Certificate of Merger as required by the DGCL, required filings
with and approvals of the New York Stock Exchange and as otherwise set forth in
Section 3.4(b) of the URI Disclosure Schedule, no filing or registration with or
notice to, and
19
no permit, authorization, consent or approval of, any Governmental Authority is
necessary for the execution and delivery by URI and MERGER SUB of this Agreement
or the consummation by URI and MERGER SUB of the transactions contemplated
hereby, except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings or give such notice would not have
a URI Material Adverse Effect.
(c) Except as set forth in Section 3.4(c) of the URI Disclosure
Schedule, neither the execution, delivery and performance of this Agreement by
URI or MERGER SUB nor the consummation by URI or MERGER SUB of the transactions
contemplated hereby will (i) conflict with or result in any breach of any
provision of the respective certificate or articles of incorporation or by-laws
(or similar governing documents) of URI or any of its subsidiaries, (ii) result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration, lien or other encumbrance) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which URI or
any of its subsidiaries is a party or by which any of them or any of their
respective properties or assets may be bound, or (iii) violate any order, writ,
injunction, decree, law, statute, rule or regulation applicable to URI or any of
its subsidiaries or any of their respective properties or assets, except, in the
case of clauses (ii) or (iii), for violations, breaches or defaults which would
not have a URI Material Adverse Effect.
(d) Except as set forth in Sections 3.4(d), 3.7, 3.10 and 3.11 of the
URI Disclosure Schedule, or as disclosed in the URI SEC Reports filed prior to
the date hereof, neither URI nor any of its subsidiaries is in violation of, is,
to the knowledge of URI, under investigation with respect to any violation of,
or has been given notice or been charged with any violation of, any law,
statute, order, rule, regulation, ordinance, decree or judgment (including any
applicable environmental law, ordinance or regulation) of any Governmental
Authority, except for possible violations which individually or in the aggregate
would not have a URI Material Adverse Effect. Except as set forth in Section
3.4(d) of the URI Disclosure Schedule or as expressly disclosed in the URI SEC
Reports filed prior to the date hereof, URI and its subsidiaries have all
permits, licenses, franchises and other governmental authorizations, consents
and approvals necessary to conduct their businesses as presently conducted which
are material to the operation of their businesses. Except as set forth in
Section 3.4(d) of the URI Disclosure Schedule, URI and each of its subsidiaries
is not in breach or violation of or in default in the performance or observance
of any term or provision of, and no event has occurred which, with lapse of time
or action by a third party, could result in a default by URI or any of its
subsidiaries under (i) any contract, commitment, agreement, indenture, mortgage,
loan agreement, note, lease, bond, license, approval or other instrument to
which it is a party or by which it is bound or to which any of its property or
assets is subject, except for possible violations, breaches or defaults which
individually or
20
in the aggregate would not have a URI Material Adverse Effect, or (ii) its
certificate of incorporation or by-laws (or similar governing document).
Section 3.5 Reports and Financial Statements. The filings required to
be made by URI and its subsidiaries since December 31, 1997 under the Securities
Act and the Exchange Act have been filed with the SEC, including all forms,
statements, reports, agreements, documents, exhibits, amendments and supplements
appertaining thereto, and complied, as of their respective dates, in all
material respects, with all applicable requirements of the appropriate statutes
and the rules and regulations thereunder. URI has made available to USR a true
and complete copy of each report, schedule, registration statement and
definitive proxy statement filed with the SEC by URI and its subsidiaries
pursuant to the requirements of the Securities Act or Exchange Act since
December 31, 1997, including all amendments thereto (as such documents have
since the time of their filing been amended, the "URI SEC Reports"). As of
their respective dates, the URI SEC Reports did not contain any 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 light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial statements of
URI and its subsidiaries included in the URI SEC Reports have been prepared in
accordance with GAAP (except as may be indicated therein or in the notes thereto
and except with respect to unaudited statements as permitted by Form 10-Q of the
SEC) and fairly present the financial position of URI and its subsidiaries as of
the dates thereof and the results of their respective operations, cash flows and
change in financial position for the periods then ended, subject, in the case of
the unaudited interim financial statements, to normal, recurring audit
adjustments. Since December 31, 1997, except as set forth in the URI SEC
Reports, there has not been any change, or any application or request for any
change, by URI or any of its subsidiaries in accounting principles, methods or
policies for financial accounting or tax purposes. True, accurate and complete
copies of the certificate of incorporation and by-laws of URI, as in effect on
the date hereof, are included in the URI SEC Reports. URI has heretofore made
available to USR a complete and correct copy of any material amendments or
modifications, which have not yet been filed with the SEC, to agreements and
other documents which had previously been filed by URI with the SEC pursuant to
the Securities Act or the Exchange Act.
Section 3.6 Absence of Certain Changes or Events; Liabilities. Except
as disclosed in the URI SEC Reports filed prior to the date hereof or as set
forth in Section 3.6 of the URI Disclosure Schedule, since December 31, 1997,
URI and each of its subsidiaries have conducted their business only, to URI's
knowledge, in the ordinary course of business consistent with past practice and
there has not been, and no fact or condition exists, and no events or changes
have occurred and no liabilities or obligations of any nature (whether or not
accrued, contingent or otherwise, and whether due or to become due or asserted
or unasserted) have been incurred, in each case, which would have or, insofar as
reasonably can be foreseen, could have, a URI Material Adverse Effect. Except
as and to the extent publicly
21
disclosed in the URI SEC Reports filed prior to the date hereof and except for
liabilities incurred in connection with the transactions contemplated by this
Agreement, URI and its subsidiaries have no liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, and whether due or to
become due or asserted or unasserted, which, individually or in the aggregate,
would have a URI Material Adverse Effect.
Section 3.7 Litigation. Except as disclosed in the URI SEC Reports
filed prior to the date hereof or as set forth in Sections 3.7, 3.10 and 3.11 of
the URI Disclosure Schedule, (a) there are no claims, suits, actions or
proceedings by any Governmental Authority or any arbitrator pending or, to the
knowledge of URI, threatened, nor are there, to the knowledge of URI, any
investigations or reviews by any Governmental Authority or any arbitrator
pending or threatened against, relating to or affecting URI or any of its
subsidiaries which would have a URI Material Adverse Effect, (b) to URI's
knowledge, there have not been any significant developments since December 31,
1997, with respect to such disclosed claims, suits, actions, proceedings,
investigations or reviews that would have a URI Material Adverse Effect and (c)
there are no judgments, decrees, injunctions, rules or orders of any court,
governmental department, commission, agency, instrumentality or authority or any
arbitrator applicable to URI or any of its subsidiaries, except for such that
would not have a URI Material Adverse Effect.
Section 3.8 Registration Statement and Proxy Statement. None of the
information supplied or to be supplied by or on behalf of URI and included or
incorporated by reference in (a) the Registration Statement will, at the time
the Registration Statement becomes effective under the Securities Act, 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, and (b) the Proxy Statement will, at the dates mailed to
stockholders and at the times of the meetings of stockholders to be held in
connection with the Merger, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Registration Statement and the Proxy
Statement, insofar as it relates to the meeting of URI's stockholders, will
comply as to form in all material respects with the applicable provisions of the
Securities Act and the Exchange Act and the rules and regulations thereunder.
Section 3.9 Tax Matters. Except as set forth in Section 3.9 of the URI
Disclosure Schedule: (a) URI and its subsidiaries, and each affiliated group
(within the meaning of Section 1504 of the Code) of which URI or any of its
subsidiaries is or has been a member, has timely filed all federal and all other
material Tax Returns required to be filed by them. All such Tax Returns are true
and correct in all material respects. All material Taxes (as defined below) due
and payable by URI and its subsidiaries have been timely paid in full. The most
recent consolidated financial statements contained in the URI SEC Reports
reflect an adequate reserve in accordance with GAAP for all Taxes payable by URI
and its
22
subsidiaries for all taxable periods and portions thereof through the date of
such financial statements.
(b) No material deficiencies for any Taxes have been proposed,
asserted or assessed against URI or any of its subsidiaries that have not been
fully paid or adequately provided for in the appropriate financial statements of
URI and its subsidiaries, no requests for waivers of the time to assess any
Taxes are pending, and no power of attorney with respect to any Taxes has been
executed or filed with any taxing authority. No material issues relating to
Taxes have been raised in writing by any Governmental Authority during any
presently pending audit or examination. No claim has been made by any taxing
authority in a jurisdiction where URI or any of its subsidiaries does not file a
Tax Return, that it or any of its subsidiaries may be subject to any material
Tax in that jurisdiction.
(c) There are no material liens or encumbrances for Taxes on any of
the assets of URI or its subsidiaries (other than for current Taxes not yet due
and payable).
(d) URI and its subsidiaries have complied in all material respects
with all applicable laws, rules and regulations relating to the payment and
withholding of Taxes.
(e) None of URI or its subsidiaries has filed a consent under Section
341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply.
(f) None of URI or its subsidiaries has made any payments, nor is any
of them obligated to make any payments, and is not a party to any agreement that
could obligate it to make any payments that would not be deductible by reason of
Sections 280G or 162(m) of the Code.
(g) None of URI or its subsidiaries is a party to any tax allocation
agreement, tax sharing agreement, tax indemnity agreement or similar agreement,
arrangement or practice with respect to Taxes (including any advance pricing
agreement, closing agreement or other agreement relating to Taxes with any
taxing authority).
(h) No federal, state, local or foreign audits or other administrative
proceedings or court proceedings are presently pending with regard to any Taxes
or Tax Returns of URI or its subsidiaries and neither URI nor any of its
subsidiaries has received a written notice of any pending audit or proceeding,
in any such case involving a material issue with respect to Taxes.
(i) Neither URI nor any of its subsidiaries has agreed to or is
required to make any material adjustment under Section 481(a) of the Code.
23
(j) No property owned by URI or any of its subsidiaries (i) is
property required to be treated as being owned by another person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately prior to the enactment of the Tax Reform Act of 1986;
(ii) constitutes "tax exempt use property" within the meaning of Section
168(h)(1) of the Code; or (iii) is tax exempt bond financed property within the
meaning of Section 168(g) of the Code.
(k) Neither URI nor any of its subsidiaries is or has ever been a
"personal holding company" as defined under Section 542 of the Code.
Section 3.10 Employee Matters; ERISA; Labor. (a) With respect to all
the employee benefit plans (as that phrase is defined in Section 3(3) of ERISA)
maintained for, or contributed to, the benefit of any current or former
employee, officer or director of URI or any of its subsidiaries ("URI ERISA
Plans") and any other benefit or compensation plan, program or arrangement
maintained for the benefit of any current or former employee, officer or
director of URI or any of its subsidiaries (the URI ERISA Plans and such plans
being collectively referred to as the "URI Benefit Plans"), except as set forth
in Section 3.10(a) of the URI Disclosure Schedule: (i) none of the URI ERISA
Plans is a "multiemployer plan" within the meaning of ERISA; (ii) none of the
URI Benefit Plans promises or provides retiree medical or life insurance
benefits to any person except as required by Section 601 of ERISA and Section
4908B of the Code; (iii) none of the URI Benefit Plans provides for payment of a
benefit, the increase of a benefit amount, the payment of a contingent benefit,
or the acceleration of the payment or vesting of a benefit by reason of the
execution of this Agreement or the consummation of the transactions contemplated
by this Agreement; (iv) neither URI nor any of its subsidiaries has an
obligation to adopt, or is considering the adoption of, any new URI Benefit Plan
or, except as required by law, the amendment of an existing URI Benefit Plan;
(v) each URI ERISA Plan intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the IRS that it is so
qualified and, to the knowledge of URI, nothing has occurred since the date of
such letter that could reasonably be expected to affect the qualified status of
such URI ERISA Plan; (vi) each URI Benefit Plan has been operated in all
respects in accordance with its terms and the requirements of all applicable
law; (vii) neither URI nor any of its subsidiaries or members of their
"controlled group" has incurred any direct or indirect liability under, arising
out of or by operation of Title IV of ERISA in connection with the termination
of, or withdrawal from, any URI ERISA Plan or other retirement plan or
arrangement, and, to the knowledge of URI, no fact or event exists that could
reasonably be expected to give rise to any such liability; (viii) the aggregate
accumulated benefit obligations of each URI ERISA Plan subject to Title IV of
ERISA (as of the date of the most recent actuarial valuation prepared for such
URI ERISA Plan) does not exceed the fair market value of the assets of such URI
ERISA Plan (as of the date of such valuation); and (ix) except for claims for
benefits arising in the ordinary operation of the URI Benefit Plans, URI is not
aware of any claims relating to the URI Benefit Plans; provided, however, that
the failure of
24
the representations set forth in clauses (v), (vi), (vii), (viii) and (ix) to be
true and correct shall not be deemed to be a breach of any such representation
unless any such failure, individually or in the aggregate, is reasonably likely
to have a URI Material Adverse Effect.
(b) Except as set forth in Section 3.10(b) of the URI Disclosure
Schedule: (i) there are no labor or collective bargaining agreements which
pertain to employees of URI or any of its subsidiaries; (ii) there are no
pending strikes, work stoppages, slowdowns, lockouts, arbitrations or other
material labor disputes against URI or any of its subsidiaries; (iii) there are
no pending complaints, charges or claims against the URI or any of its
subsidiaries filed with any Governmental Authority based upon the employment or
termination of employment of any of their employees; and (iv) URI and its
subsidiaries are in compliance with all laws, regulations and orders relating to
the employment of labor, including all such laws, regulations and orders
relating to wages, hours, WARN, collective bargaining, discrimination, civil
rights, safety and health, workers' compensation and the collection and payment
of withholding and/or social security Taxes and any similar Tax; provided,
however, that the failure of the representations set forth in clauses (iii) and
(iv) to be true and correct shall not be deemed a breach of any representation
unless any such failure, individually or in the aggregate, is reasonably likely
to have a URI Material Adverse Effect.
Section 3.11 Environmental Protection. (a) Except as set forth in Section
3.11 of the URI Disclosure Schedule or in the URI SEC Reports filed prior to the
date hereof:
(i) URI and each of its subsidiaries is in compliance with all
applicable Environmental Laws, except where the failure to so comply would
not have a URI Material Adverse Effect, and neither URI nor any of its
subsidiaries has received any communication from any person or Governmental
Authority that alleges that URI or any of its subsidiaries is not in such
compliance with applicable Environmental Laws.
(ii) URI and each of its subsidiaries has obtained or has
applied for all Environmental Permits necessary for the construction of
their facilities or the conduct of their operations except where the
failure to so obtain would not have a URI Material Adverse Effect, and all
such Environmental Permits are in good standing or, where applicable, a
renewal application has been timely filed and is pending agency approval,
and URI and its subsidiaries are in material compliance with all terms and
conditions of the Environmental Permits.
(iii) There is no Environmental Claim pending or, to the best
knowledge of URI, threatened (A) against URI or any of its subsidiaries,
(B) against any person or entity whose liability for any Environmental
Claim URI or any of its subsidiaries has or may have retained or assumed
either contractually or by operation
25
of law, or (C) against any real or personal property or operations which
URI or any of its subsidiaries owns, leases or manages, in whole or in
part, which, in any such case described in this clause (iii), would have a
URI Material Adverse Effect.
(iv) URI has no knowledge of any Releases of any Hazardous
Material that would be reasonably likely to form the basis of any
Environmental Claim against URI or any of its subsidiaries, or against any
person or entity whose liability for any Environmental Claim URI or any of
its subsidiaries has retained or assumed either contractually or by
operation of law or which would result in URI incurring liability under any
Environmental Law, except for any Environmental Claim or liability which
would not have a URI Material Adverse Effect.
(v) URI has no knowledge, with respect to any predecessor of URI
or any of its subsidiaries or any real property formerly owned, leased or
operated by URI or any of its subsidiaries, of any Environmental Claim
which would have a URI Material Adverse Effect pending or threatened, or of
any Release of Hazardous Materials that would be reasonably likely to form
the basis of any Environmental Claim which would have a URI Material
Adverse Effect.
(b) URI has made available to USR true and complete copies of all
environmental audits, surveys, reports and assessments relating to real property
owned, leased or operated by URI or any of its subsidiaries.
Section 3.12 Material Contracts. URI has filed as an exhibit to an
Annual Report on Form 10-K or another document filed pursuant to the Securities
Act or the Exchange Act, or has delivered or otherwise made available to USR
true, correct and complete copies of all contracts and agreements to which URI
or any of its subsidiaries is a party (a) that are required to be filed in an
exhibit to an Annual Report on Form 10-K filed by URI with the SEC as of the
date of this Agreement, (b) that purport to limit, curtail or restrict the
ability of URI or any of its subsidiaries to operate or compete in any
geographic area or line of business or (c) that provide for any severance or
other agreement with any employee or consultant pursuant to which such person
would be entitled to receive any additional compensation or an accelerated
payment of compensation as a result of the consummation of the transactions
contemplated hereby (collectively, the "URI Contracts"). Each of the URI
Contracts is valid and enforceable in accordance with its terms (subject to the
Bankruptcy and Enforceability Exception), and there is no default under any URI
Contract so listed either by URI or any of its subsidiaries or, to the knowledge
of URI, by any other party thereto, and no event has occurred that with the
lapse of time or the giving of notice or both would constitute a default
thereunder by URI or any such subsidiary or, to the knowledge of URI, any other
party, in any such case in which such default or event would have a URI Material
Adverse Effect. No party to any URI Contract has given notice to URI of or made
a claim
26
against URI with respect to any breach or default thereunder, in any such case
in which such breach or default would have a URI Material Adverse Effect.
Section 3.13 Opinion of Financial Advisor. URI has received the opinion
of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. ("Goldman"), dated the date hereof, to the effect that,
as of the date thereof, the Exchange Ratio to be exchanged by URI pursuant to
this Agreement is fair from a financial point of view to URI.
Section 3.14 Vote Required. The approval of (a) an amendment to the
certificate of incorporation of URI to the increase in the number of authorized
shares of URI Common Stock to 250,000,000 shares (the "Charter Amendment") by
the holders of a majority of the votes entitled to be cast by all holders of URI
Common Stock and (b) the issuance of URI Common Stock pursuant to the Merger
(the "Share Issuance") by the holders of a majority of all shares of URI Common
Stock casting votes in accordance with the rules of the New York Stock Exchange
(collectively, the "URI Shareholders' Approval") is the only vote of the holders
of any class or series of the capital stock of URI required to approve this
Agreement and the transactions contemplated hereby, including the Merger.
Section 3.15 Reorganization and Accounting Matters. Neither URI nor, to
URI's best knowledge, any of its Affiliates has taken or agreed to take any
action that would (a) prevent the Merger from constituting a reorganization
within the meaning of Section 368(a) of the Code or (b) prevent URI and the
Surviving Corporation from accounting for the transactions to be effected
pursuant to this Agreement as a pooling-of-interests in accordance with GAAP,
APB 16 and applicable SEC regulations. URI has no reason to believe that the
transaction contemplated by this Agreement will not qualify as a pooling-of-
interest transaction in accordance with GAAP, APB 16 and applicable SEC
regulations.
Section 3.16 Brokers. Except for Goldman, whose fees have been disclosed
to USR prior to the date hereof, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of URI.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
Section 4.1 Covenants of the Parties. After the date hereof and prior
to the Effective Time or earlier termination of this Agreement, USR and URI each
agree as follows, each as to itself and to each of its subsidiaries (which, in
the case of URI, includes MERGER SUB), as the case may be, except as expressly
contemplated or permitted in this Agreement, or to the extent the other parties
hereto shall otherwise consent in writing, which consent shall not be
unreasonably withheld or delayed:
27
(a) Ordinary Course of Business. Each party hereto shall, and shall
cause its subsidiaries to, carry on their respective businesses in the usual,
regular and ordinary course consistent with past custom and practice and use all
commercially reasonable efforts to preserve intact their present business
organizations and goodwill, preserve the goodwill and relationships with
customers, suppliers and others having business dealings with them and, subject
to prudent management of work force needs and ongoing programs currently in
force, keep available the services of their present officers and employees,
provided, however, that nothing shall prohibit or restrict either party or any
of its subsidiaries from (i) transferring operations to such party or any of its
wholly owned subsidiaries, (ii) agreeing to consummate or consummating
acquisitions of entities engaged in, or assets useful in, the equipment rental
business, (iii) incurring additional indebtedness or refinancing its outstanding
indebtedness, or (iv) issuing additional equity or debt securities, provided
that neither party shall issue any securities (or options, warrants or rights in
respect of the same) to any of their respective directors, officers or employees
except for, in the case of USR, issuances of shares of USR Common Stock pursuant
to outstanding USR Stock Options (as defined in Section 5.10 hereof) and options
to purchase not more than 100,000 shares of USR Common Stock pursuant to the USR
Stock Plan granted to employees other than directors and present officers,
provided that the vesting of such options shall not accelerate upon the Merger,
and in the case of URI, issuances of securities (including stock options at fair
market value) pursuant to URI's 1997 Stock Option Plan and issuances of URI
Common Stock pursuant to the exercise of outstanding options and warrants to
acquire URI Common Stock as disclosed pursuant to Section 3.3 hereof.
(b) Dividends. No party shall, nor shall any party permit any of its
subsidiaries to, (i) declare or pay any dividends on or make other distributions
in respect of any of their capital stock other than to such party or its wholly
owned subsidiaries and other than, in the case of URI, distributions of shares
of URI Common Stock to effect any stock split, (ii) combine or reclassify any of
their capital stock or issue or authorize or propose the issuance of any other
securities in lieu of or in substitution for shares of their capital stock or
(iii) redeem, repurchase or otherwise acquire any shares of its capital stock
except, in the case of URI, for repurchases of URI Common Stock (and warrants to
acquire the same) pursuant to the terms of agreements publicly disclosed in the
URI SEC Reports prior to the date hereof.
(c) Charter Documents. No party shall amend or propose to amend its
respective charter or by-laws, or similar governing documents, except as
contemplated herein and except, in the case of URI, for the Charter Amendment.
(d) No Dispositions. Except as set forth in Section 4.1(d) of the USR
Disclosure Schedule or 4.1(d) of the URI Disclosure Schedule, no party shall,
nor shall any party permit any of its subsidiaries to, sell or dispose of any of
its assets (including capital stock of subsidiaries) other than (i) dispositions
by a party or its subsidiaries of assets that,
28
individually or in the aggregate with all other assets disposed by such party
and its subsidiaries since the date hereof (other than assets disposed in
accordance with clause (ii) below), generated less than $10 million in gross
revenues during the 12 month period immediately preceding the date of
disposition or (ii) sales of equipment or merchandise inventory and dispositions
of assets in the ordinary course of business consistent with prior custom and
practice.
(e) Accounting. No party shall, nor shall any party permit any of its
subsidiaries to, make any changes in their accounting methods, except as
required by law, rule, regulation or GAAP.
(f) Pooling. No party shall, nor shall any party permit any of its
subsidiaries to, take any action which would, or would be reasonably likely to,
prevent URI and the Surviving Corporation from accounting for the transactions
to be effected pursuant to this Agreement as a pooling-of-interests in
accordance with GAAP, APB 16 and applicable SEC regulations, and each party
hereto shall use all commercially reasonable efforts to achieve such accounting
treatment (including taking such commercially reasonable actions as may be
necessary to cure any facts or circumstances that could prevent such
transactions from qualifying for pooling-of-interests accounting treatment).
(g) Cooperation, Notification. Each party shall (i) confer on a
regular and frequent basis with one or more representatives of the other party
to discuss, subject to applicable law, material operational matters and the
general status of its ongoing operations, (ii) promptly notify the other party
of any significant changes in its business, properties, assets, condition
(financial or other), results of operations or prospects, (iii) promptly advise
the other party of any material inaccuracy in any of its representations or
warranties herein or of change or event which has had or, insofar as reasonably
can be foreseen, is reasonably likely to result in, in the case of USR, a USR
Material Adverse Effect or, in the case of URI, a URI Material Adverse Effect
and (iv) promptly provide the other party with copies of all filings made by
such party or any of its subsidiaries with any Governmental Authority in
connection with this Agreement and the transactions contemplated hereby.
(h) Third-Party Consents. Each party hereto shall, and shall cause
its subsidiaries to, use all commercially reasonable efforts to obtain all
consents required in connection with the transactions contemplated by this
Agreement, and each party hereto shall promptly notify the other parties of any
failure or prospective failure to obtain any such consents and, if requested by
the other party, shall provide such other party with copies of all material
filings and correspondence in connection with, and evidence of, all consents
applied for or obtained.
29
(i) No Breach, Etc. No party shall, nor shall any party permit any of
its subsidiaries to, willfully take any action that would or is reasonably
likely to result in a material breach of any provision of this Agreement or in
any of its representations and warranties set forth in this Agreement being
untrue as of the Closing Date.
(j) Insurance. Each party shall, and shall cause its subsidiaries to,
maintain with financially responsible insurance companies insurance in such
amounts and against such risks and losses as are customary for companies of its
size engaged in the equipment rental industry; provided, however, that the
foregoing shall not apply to USR's self insurance arrangements as referenced in
Section 4.1(j) of the USR Disclosure Schedule so long as USR does not change
such arrangements.
(k) Permits. Each party shall, and shall cause its subsidiaries to,
use reasonable efforts to maintain in effect all existing governmental permits
which are material to the operations of such party or its subsidiaries.
(l) Compensation, Benefits. Except, in the case of USR, as set forth
in Section 4.1(l) of the USR Disclosure Schedule, and in the case of URI, as set
forth in Section 4.1(l) of the URI Disclosure Schedule, and in each case, except
as may be required by applicable law or as contemplated by this Agreement, no
party shall, nor shall any party permit any of its subsidiaries to, (i) enter
into, adopt or amend or increase the amount or accelerate the payment or vesting
of any benefit or amount payable under, any employee benefit plan or other
contract, agreement, commitment, arrangement, plan, trust, fund or policy
maintained by, contributed to or entered into by such party or any of its
subsidiaries or increase, or enter into any contract, agreement, commitment or
arrangement to increase in any manner, the compensation or fringe benefits, or
otherwise to extend, expand or enhance the engagement, employment or any related
rights, of any director, officer or other employee of such party or any of its
subsidiaries, except for normal extensions and increases for employees other
than officers or directors in the ordinary course of business consistent with
past practice that, in the aggregate, do not result in a material increase in
benefits or compensation expense to such party or any of its subsidiaries or in
connection with any acquisition permitted by Section 4.1(a) hereof; (ii) enter
into or amend any employment, severance or special pay arrangement with respect
to the termination of employment or other similar contract, agreement or
arrangement with any director or officer or other employee other than in the
ordinary course of business consistent with past practice; or (iii) deposit into
any trust (including any "rabbi trust") amounts in respect of any employee
benefit obligations or obligations to directors; provided that transfers into
any trust, other than a rabbi or other trust with respect to any non-qualified
deferred compensation, may be made in accordance with past practice.
ARTICLE V
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ADDITIONAL AGREEMENTS
Section 5.1 Access to Information. Upon reasonable notice and subject
to applicable law, each party shall, and shall cause its subsidiaries to, afford
to the officers, directors, employees, accountants, counsel, investment bankers,
financial advisors and other representatives of the other (collectively,
"Representatives") reasonable access, during normal business hours throughout
the period prior to the Effective Time, to all of its properties, books,
contracts, commitments and records (including Tax Returns) and, during such
period, each party shall, and shall cause its subsidiaries to, furnish promptly
to the other (i) access to each report, schedule and other document filed or
received by it or any of its subsidiaries pursuant to the requirements of
federal or state securities laws or filed with or sent to the SEC, the
Department of Justice, the Federal Trade Commission or any other Governmental
Authority and (ii) access to all information concerning themselves, their
subsidiaries, directors, officers and stockholders and such other matters as may
be reasonably requested by the other party in connection with any filings,
applications or approvals required or contemplated by this Agreement or for any
other reason related to the transactions contemplated by this Agreement;
provided, however, that information with respect to specific contemplated or
pending acquisitions will not be made available until the condition set forth in
Section 6.1(e) with respect to the HSR Act has been satisfied and the Joint
Proxy/Registration Statement contemplated by Section 5.2(a) has been mailed to
the respective stockholders of URI and USR. Each party shall, and shall cause
its subsidiaries and Representatives to, hold in strict confidence all documents
and information concerning the other furnished to it in connection with the
transactions contemplated by this Agreement in accordance with the
Confidentiality Agreements, dated March 26, 1998 and April 13, 1998, between USR
and URI, as they may be amended from time to time (the "Confidentiality
Agreement").
Section 5.2 Joint Proxy Statement and Registration Statement;
Shareholders' Approval.
(a) Preparation and Filing. The parties hereto shall prepare and
file with the SEC as soon as reasonably practicable after the date hereof the
Proxy Statement and, as soon as the parties are notified that the SEC has no
further comments on the Proxy Statement, URI will prepare and file with the SEC
the Registration Statement in which a prospectus, the Proxy Statement and form
of proxy will be included (collectively, the "Joint Proxy/Registration
Statement"). URI shall use its best efforts to cause the Registration Statement
to be declared effective under the Securities Act as promptly as practicable
after such filing, and URI shall also take such action as is required to cause
the shares of URI Common Stock issuable in connection with the Merger to be
registered or to obtain an exemption from registration under applicable state
"blue sky" or securities laws; provided, however, that URI shall not be required
to register or qualify as a foreign corporation or to take other action which
would subject it to service of process or general taxation in any
31
jurisdiction where URI and the Surviving Corporation will not be, following the
Merger, so subject. URI shall also use its best efforts to cause the shares of
URI Common Stock issuable in the Merger to be approved for listing on the New
York Stock Exchange subject to official notice of issuance. Each of the parties
hereto shall furnish all information concerning itself which is required or
customary for inclusion in the Joint Proxy/Registration Statement. The
information provided by any party hereto for use in the Joint Proxy/Registration
Statement shall be true and correct in all material respects without
misstatement of any material fact or omission of any material fact which is
necessary or required to make the statements therein, in light of the
circumstances under which they were made, not false or misleading and, in the
event any party becomes aware prior to the Effective Time of any information
that should be included in the Joint Proxy/Registration Statement such that the
Joint Proxy/Registration Statement shall not contain any misstatement of any
material fact or omission of any material fact which is necessary or required to
make the statements therein, in light of the circumstances under which they were
made, not false or misleading, such party shall promptly notify the other
parties thereof and, to the extent required by applicable law, an appropriate
amendment to the Joint Proxy/Registration Statement shall be promptly prepared,
filed with the SEC and disseminated to stockholders. No part of the Joint
Proxy/Registration Statement or any amendment or supplement thereto shall be
filed by any party with the SEC or mailed to stockholders without providing the
other parties a reasonable prior opportunity to review the same and comment
thereon. No representation, covenant or agreement is made by any party hereto
with respect to information supplied by any other party for inclusion in the
Joint Proxy/Registration Statement.
(b) Letter of USR's Accountants. USR shall use its reasonable best
efforts to cause to be delivered to URI a letter of Price Waterhouse LLP dated
the Closing Date stating that accounting for the Merger as a pooling-of-
interests under GAAP, APB 16 and applicable SEC rules is appropriate if the
Merger is consummated as contemplated by this Agreement.
(c) Letter of URI's Accountants. URI shall use its reasonable best
efforts to cause to be delivered to USR a letter of Ernst & Young LLP dated the
Closing Date regarding their concurrence with URI management's conclusions as to
the appropriateness of pooling-of-interests accounting for the Merger under APB
16 if the Merger is consummated as contemplated by this Agreement.
(d) Shareholders' Meetings. URI and USR shall each use their
respective reasonable best efforts to duly call, give notice of, convene and
hold meetings of their respective stockholders as soon as reasonably practicable
following the date hereof, but in any event following the date on which the
Registration Statement is declared effective by the SEC, such meetings shall, to
the extent practicable, be held on the same date, as URI and USR shall mutually
determine, or on such other dates as the parties may agree. URI and USR shall
distribute to their respective stockholders, in accordance with applicable
federal
32
and state law and their respective certificates of incorporation and by-
laws, the Proxy Statement for the purpose of securing the URI Shareholders'
Approval and USR Shareholders' Approval, respectively, at such meetings, and
unless, at any time after the 120th day following the date hereof, the Board of
Directors of a party shall conclude in good faith on the basis of advice of a
nationally recognized firm of outside counsel that withholding such a
recommendation may be necessary for such Board of Directors to act in a manner
consistent with its fiduciary duties under applicable law, recommend to their
respective stockholders the approval and adoption of the Merger and of this
Agreement in the case of USR, or the approval of the Charter Amendment and the
Share Issuance, in the case of URI, and cooperate and consult with the other
parties hereto with respect to each of the foregoing matters.
Section 5.3 Regulatory Matters. As soon as practicable following the
date hereof: (a) HSR Filings. Each party hereto shall file or cause to be
filed with the Federal Trade Commission and the Department of Justice any
notifications required to be filed by their respective "ultimate parent"
companies under the HSR Act and the rules and regulations promulgated thereunder
with respect to the transactions contemplated hereby. Such parties will use all
commercially reasonable efforts to make such filings promptly and to respond on
a timely basis to any requests for additional information made by either of such
agencies.
(b) Other Regulatory Approvals. Each party hereto shall
cooperate and use its best efforts to promptly prepare and file all necessary
documentation, to effect all necessary applications, notices, petitions, filings
and other documents, and to use all commercially reasonable efforts to obtain
all necessary permits, consents, approvals and authorizations of all
Governmental Authorities required, necessary or advisable of it in connection
with this Agreement and the transactions contemplated hereby.
Section 5.4 Directors' and Officers' Indemnification. (a)
Indemnification. From and after the Effective Time, URI shall, to the fullest
extent permitted by applicable law, indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date hereof, or who
becomes prior to the Effective Time, an officer or director of USR (each an
"Indemnified Party" and collectively, the "Indemnified Parties") against (i) all
losses, expenses (including reasonable attorney's fees and expenses), claims,
damages or liabilities or amounts paid in settlement, arising out of actions or
omissions occurring at or prior to the Effective Time (and whether asserted or
claimed prior to, at or after the Effective Time) that are, in whole or in part,
based on or arising out of the fact that such person is or was a director or
officer of such party (the "Indemnified Liabilities"), and (ii) all Indemnified
Liabilities to the extent they are based on or arise out of or pertain to the
transactions contemplated by this Agreement; provided, however, that URI shall
not be liable for any settlement effected without its written consent (which
consent shall not be unreasonably withheld or delayed). URI shall be entitled
to control the defense of all actions giving rise to such Indemnified
Liabilities with a firm of counsel selected by URI to represent all
33
Indemnified Parties as a group with respect to each such matter or group of
related matters; provided that if, under applicable standards of professional
conduct as expressed in an opinion of counsel reasonably satisfactory to URI, a
conflict with respect to any significant issue between positions of any
Indemnified Party and any other Indemnified Party or Indemnified Parties exists
in connection with such matter, URI shall not be required to retain more than
one separate firm of counsel (other than necessary local counsel) to represent
all of the Indemnified Parties to which such conflict relates.
(b) Insurance. For a period of six years after the Effective Time,
URI shall cause to be maintained in effect policies of directors' and officers'
liability insurance covering acts or omissions occurring prior to the Effective
Time for the benefit of directors and officers of USR who are currently covered
by such policies on terms no less favorable than the terms of such current
insurance coverage; provided, however, that URI shall not be required to expend
in any year an amount in excess of 150% of the annual aggregate premiums
currently paid by USR for such insurance; and provided, further, that if the
annual premiums of such insurance coverage exceed such amount, URI shall be
obligated to obtain a policy with the best coverage available, in the reasonable
judgment of the board of directors of URI, for a cost not exceeding such amount.
(c) Director and Officer Liability. URI will cause the Surviving
Corporaction, for a period of six years after the Effective Date to (i) maintain
in effect in its certificate of incorporation and by-laws the current provisions
regarding the elimination of liability of directors and indemnification of and
advancement of expenses to officers, directors, employees and agents currently
contained in the certificate of incorporation and by-laws of USR and (ii)
maintain the existing indemnification agreements covering such directors of USR,
copies of which have been provided to URI before the date of this Agreement.
(d) Successors. In the event URI or any of its successors or assigns
(i) consolidates with or merges into any other person or entity and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person or entity, then and in either such case, proper provisions shall
be made so that the successors and assigns of URI shall assume the obligations
set forth in this Section 5.4.
(e) Benefit. The provisions of this Section 5.4 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party, his or
her heirs and his or her representatives.
Section 5.5 Public Announcements. Subject to each party's disclosure
obligations imposed by applicable law and stock exchange rules, USR and URI will
coordinate with each other in the development and distribution of all news
releases and other public information disclosures with respect to this Agreement
or any of the transactions contemplated hereby.
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Section 5.6 Affiliate Letters. Section 5.6 of the USR Disclosure
Schedule identifies all persons who are, and all persons who to USR's best
knowledge will be at the Closing Date, "affiliates" of USR for purposes of Rule
145 under the Securities Act or for purposes of qualifying the Merger for
pooling-of-interests accounting treatment under APB 16 and applicable SEC rules,
and (b) Section 5.6 of the URI Disclosure Schedule identifies all persons who
are, and all persons who to URI's best knowledge will be at the Closing Date,
"affiliates" of URI for purposes of qualifying the Merger for pooling-of-
interests accounting treatment under APB 16 and applicable SEC rules. USR and
URI will each respectively cause such lists to be updated promptly through the
Closing Date. On the date hereof, USR shall cause its "affiliates" to deliver
to URI a written agreement substantially in the form attached as Exhibit C
(each, a "USR Affiliate Agreement"), and URI shall cause its "affiliates" to
deliver to USR a written agreement substantially in the form attached as Exhibit
D (each, a "URI Affiliate Agreement").
Section 5.7 No Solicitations. From and after the date hereof, USR and
URI shall not, and shall not authorize or permit any of their respective
subsidiaries or Representatives to, directly or indirectly, solicit, initiate or
encourage (including by way of furnishing information) or take any other action
to facilitate knowingly any inquiries or the making of any proposal which
constitutes or may reasonably be expected to lead to an Acquisition Proposal (as
defined herein) from any person or entity, or engage in any discussion or
negotiations relating thereto or accept any Acquisition Proposal; provided,
however, that notwithstanding any other provision hereof, either party may (i)
comply with Rule 14e-2 promulgated under the Exchange Act with regard to a
tender or exchange offer; and (ii) at any time after the 120th day following the
date hereof and prior to the time USR stockholders shall have voted to adopt
this Agreement, (A) engage in discussions or negotiations with a third party who
(without any solicitation, initiation, encouragement, discussion or negotiation,
directly or indirectly, by or with the party or its Representatives after the
date hereof) seeks to initiate such discussions or negotiations, and may furnish
such third party information concerning the party and its business, properties
and assets if, and only to the extent that, (1)(w) the third party has first
made an Acquisition Proposal that the Board of Directors of such party believes
in good faith (after consultation with its financial advisor) is reasonably
capable of being completed, taking into account all relevant legal, financial,
regulatory and other aspects of the Acquisition Proposal and the source of its
financing, on the terms proposed and, believes in good faith (after consultation
with its financial advisor and after taking into account the strategic benefits
anticipated to be derived from the Merger and the long-term prospects of USR and
URI as a combined company), would, if consummated, result in a transaction more
favorable to the stockholders of USR or URI, as the case may be, from a
financial point of view, than the transactions contemplated by this Agreement
and believes in good faith (after consultation with its financial advisor) that
the person making such Acquisition Proposal has, or is reasonably likely to have
or obtain, any necessary funds or customary commitments to provide any funds
necessary to consummate such Acquisition Proposal (any such more favorable
Acquisition Proposal being referred in
35
this Agreement as a "Superior Proposal") and (x) the party's Board of Directors
shall conclude in good faith, after considering applicable provisions of state
law, on the basis of advice of a nationally recognized firm of outside counsel,
that such action may be necessary for the Board of Directors to act in a manner
consistent with its fiduciary duties under applicable law, and (2) prior to
furnishing such information to or entering into discussions or negotiations with
such person or entity, such party (y) provides prompt notice to the other party
to the effect that it is furnishing information to or entering into discussions
or negotiations with such person or entity and (z) receives from such person or
entity an executed confidentiality agreement in reasonably customary form on
terms not materially more favorable to such person or entity than the terms
contained in the Confidentiality Agreement, and/or (B) accept a Superior
Proposal from a third party, provided that the conditions set forth in clauses
(A)(1) and (A)(2) above have been satisfied and such party complies with and
terminates this Agreement pursuant to Section 7.1(e) or 7.1(f), as applicable.
Each party shall immediately cease and terminate any existing solicitation,
initiation, encouragement, activity, discussion or negotiation with any persons
or entities conducted heretofore by the party or its Representatives with
respect to the foregoing. Each party hereto shall notify the other party orally
and in writing of any such inquiries, offers or proposals (including the terms
and conditions of any such proposal and the identify of the person making it),
within 24 hours of the receipt thereof, and shall keep the other party informed
of the status and details of any such inquiry, offer or proposal. As used
herein, "Acquisition Proposal" shall mean a proposal or offer (other than by
another party hereto) for a tender or exchange offer for the securities of a
party hereto, or a merger, consolidation or other business combination involving
an acquisition of a party or any material subsidiary of a party or any proposal
to acquire in any manner a substantial equity interest in or a substantial
portion of the assets of a party or any material subsidiary of a party.
Section 5.8 Post-Merger Board of Directors. URI's Board of Directors
will take such action as may be necessary to cause the number of directors
comprising the full Board of Directors of URI at the Effective Time to be
increased by four persons, two of whom shall be as set forth on Schedule 5.8
hereto, one of whom shall be a current director of USR chosen by URI, and one of
whom shall be mutually agreed upon by the Chairman of each of USR and URI;
provided that if, prior to the Effective Time, any such designee shall decline
or be unable to serve, USR shall, subject to the written approval of URI,
designate another person to serve in such person's stead.
Section 5.9 Post-Merger Officers; Employment Agreements. (a) The Board
of Directors of URI shall take such action as is required to cause the
individuals listed on Schedule 5.9(a) hereto to be appointed, effective as of
the Effective Time, to the offices of URI set forth opposite their respective
names on such schedule.
36
(b) At the Effective Time, URI shall enter into employment agreements
with each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ in substantially the form of
Exhibits E-1 and E-2 hereto, respectively.
(c) USR shall use its best efforts to cause the persons identified in
writing to USR with reference to this Section to enter into employment
agreements with URI acceptable to URI.
Section 5.10 Stock Option Plans. (a) The Board of Directors of each of
USR and URI shall take all such actions as may be necessary such that, subject
to the provisions of Section 16 of the Exchange Act, as of the Effective Time
each option to purchase shares of USR Common Stock pursuant to the USR Stock
Plan (a "USR Stock Option") which is outstanding as of the Effective Time shall
be assumed by URI and converted into an option (or a new substitute option shall
be granted) to purchase the number of shares of URI Common Stock (rounded up to
the nearest whole share) equal to the number of shares of USR Common Stock
subject to such option multiplied by the Exchange Ratio, at an exercise price
per share of URI Common Stock (rounded down to the nearest ▇▇▇▇▇) equal to the
former exercise price per share of USR Common Stock under such option
immediately prior to the Effective Time divided by the Exchange Ratio; provided,
however, that in the case of any USR Stock Option to which Section 421 of the
Code applies by reason of its qualification under Section 422 of the Code, the
conversion formula shall be adjusted, if necessary, to comply with Section
424(a) of the Code. Except as provided above and in Section 5.10(b) below, the
substituted URI Stock Option shall be subject to the same terms and conditions
(including expiration date, vesting and exercise provisions) as were applicable
to the converted USR Stock Option immediately prior to the Effective Time. As
soon as practicable after the Effective Time, URI shall deliver to the holders
of USR Stock Options appropriate notices setting forth such holders' rights with
respect thereto. URI shall reserve a sufficient number of shares of URI Common
Stock for issuance upon exercise of converted USR Stock Options following the
Merger.
(b) URI shall use its best efforts to file or cause to be filed (i)
during each of URI's fiscal quarters ending March 31, 1999 and March 31, ▇▇▇▇
▇▇▇ or more registration statements on Form S-8 or Form S-3 (or other
appropriate forms) under the Securities Act (an "Option Plan Registration
Statement") in order to register for each holder thereof such number of Option
Shares (as defined below) as equals the Registration Amount (as defined below)
for such period and (ii) during URI's fiscal quarter ending March 31, 2001 one
or more such registration statements in order to register the balance of the
Option Shares. Except as set forth above, URI shall have no obligation to
register under the Securities Act or any state securities laws any shares of URI
Common Stock issuable upon exercise of converted USR Stock Options.
37
As used in this Agreement, (A) the term "Option Shares" means shares
of URI Common Stock issuable pursuant to outstanding USR Stock Options converted
pursuant to this Section 5.10 that were held by an employee of USR that entered
into an employment agreement with URI as of the Closing Date; and (B) the
"Registration Amount" for a holder for any period shall mean such number of
Option Shares as equals (x) one-third of the total number of Option Shares then
held by such holder, plus (y) any Option Shares not included in an Option Plan
Registration Statement pursuant to the foregoing clause (x) that are owned by a
holder that died, or was terminated without "good cause" or resigned for "good
reason" (as respectively defined in the Employment Agreements attached as
Exhibit E hereto) during the period commencing on the Closing Date and ending
prior to the date such registration statement is filed with the SEC; provided
that, in respect of the 1999 period, the Registration Amount shall equal the
greater of the amount set forth in clauses (x) and (y) or the number of Option
Shares which when sold at the market price prevailing on such date would yield
net proceeds to the holder equal to the excise tax payable by such holder in
respect of the vesting of the Option Shares on the date of this Agreement
pursuant to the Merger.
Section 5.11 Employee Benefit Plans. The consummation of the Merger
shall not be treated as a termination of employment for purposes of any USR
Benefit Plan; provided, however, that nothing herein shall not prohibit URI and
its subsidiaries from amending, terminating or otherwise modifying any USR
Benefit Plan in accordance with its terms and applicable law. Each participant
of any USR Benefit Plan shall receive credit for purposes of eligibility to
participate and vesting under any benefit plan of URI or any of its subsidiaries
that replaces a USR Benefit Plan.
Section 5.12 Expenses. Subject to Section 7.3, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, except that those
expenses incurred in connection with printing and mailing the Joint
Proxy/Registration Statement, as well as the filing fee relating thereto, shall
be shared equally by USR and URI.
Section 5.13 Reasonable Best Efforts; Further Assurances. Subject to
Section 5.7 hereof, each party will, and will cause its subsidiaries to, use
reasonable best efforts to (a) satisfy the conditions to Closing hereunder and
consummate the transactions contemplated hereby as promptly as reasonably
practicable, and (b) execute such further documents and instruments and take
such further actions as may reasonably be requested by any other party in order
to consummate the Merger in accordance with the terms hereof; provided that URI
shall not be required to (or be required to agree to) dispose of or hold
separate any material part of its or USR's business or operations (or a
combination of URI's and USR's business or operations), or agree not to operate
or compete in any geographic area or line of business, in order to satisfy the
foregoing.
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Section 5.14 Cooperation with respect to Litigation. USR and URI shall
cooperate in connection with, and shall each give the other a reasonable
opportunity to participate in the defense of, any litigation against USR or URI,
as applicable, relating to the transactions contemplated by this Agreement.
Section 5.15 Subsidiaries. USR will take all action necessary to ensure
that the subsidiaries listed on Schedule 2.2 of the USR Disclosure Schedule are
wholly-owned by USR on or before the Effective Time.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction on or prior to the Closing Date of the following conditions,
except, to the extent permitted by applicable law, that such conditions may be
waived in writing pursuant to Section 7.5 by the joint action of the parties
hereto:
(a) Shareholder Approvals. The URI Shareholders' Approval and the USR
Shareholders' Approval shall have been obtained and the Charter Amendment shall
have been filed and become effective.
(b) No Injunction. No temporary restraining order or preliminary or
permanent injunction or other order by any Governmental Authority preventing
consummation of the Merger shall have been issued and be continuing in effect,
and the Merger and the other transactions contemplated hereby shall not be
prohibited under any applicable federal or state law or regulation.
(c) Registration Statement. The Registration Statement shall have
become effective in accordance with the provisions of the Securities Act, and no
stop order suspending such effectiveness shall have been issued and remain in
effect.
(d) Listing of Shares. The shares of URI Common Stock issuable in
connection with the Merger pursuant to Article I shall have been approved for
listing on the New York Stock Exchange subject to official notice of issuance.
(e) Statutory Approvals. The waiting period (and any extension
thereof) under the HSR Act applicable to the Merger shall have been terminated
or shall have expired, and all other notices, filings, consents and approvals
required by law or any Governmental Authority in connection with the Merger on
the part of URI or USR the failure of which to
39
have been made or obtained would violate any applicable law or cause a URI
Material Adverse Effect or a USR Material Adverse Effect shall have been made
and obtained.
(f) Pooling. Each of USR and URI shall have received a letter of
its independent public accountants, dated the Closing Date, addressed to and in
form and substance reasonably satisfactory to USR and URI, respectively,
regarding such accountants' concurrence with the conclusions of management of
URI or USR, as the case may be, as to the appropriateness of pooling of
interests accounting for the Merger under APB 16 if consummated in accordance
with this Agreement.
(g) Registration Rights Agreement. URI shall have entered into a
Registration Rights Agreement in substantially the form of Exhibit F hereto with
the Holders (as defined therein).
Section 6.2 Conditions to Obligations of URI and MERGER SUB to Effect the
Merger. The obligations of URI and MERGER SUB to effect the Merger shall be
further subject to the satisfaction, on or prior to the Closing Date, of the
following conditions, except as may be waived by URI and MERGER SUB in writing
pursuant to Section 7.5:
(a) Performance of Obligations of USR. USR shall have performed in
all material respects its agreements and covenants contained in or contemplated
by this Agreement which are required to be performed by it at or prior to the
Effective Time.
(b) Representations and Warranties. The representations and
warranties of USR set forth in this Agreement shall be true and correct (i) on
and as of the date hereof and (ii) on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
the Closing Date (except for representations and warranties that expressly speak
only as of a specific date or time which need only be true and correct as of
such date or time) except in each of cases (i) and (ii) for such failures of
representations or warranties to be true and correct (without giving effect to
any materiality qualification or standard contained in any such representations
and warranties) which, individually or in the aggregate, do not and would not be
reasonably likely to result in a USR Material Adverse Effect.
(c) Closing Certificates. URI shall have received a certificate
signed by the chief executive officer and chief financial officer of USR, dated
the Closing Date, to the effect that, to the best of such officers' knowledge,
the conditions set forth in Section 6.2(a) and Section 6.2(b) have been
satisfied.
(d) USR Material Adverse Effect. No USR Material Adverse Effect
shall have occurred.
40
(e) Tax Opinion. URI shall have received an opinion from Weil,
Gotshal & ▇▇▇▇▇▇ LLP ("WGM"), counsel to URI, in form and substance reasonably
satisfactory to URI, dated as of the Closing Date, substantially to the effect
that (i) the Merger will constitute a reorganization for United States federal
income tax purposes within the meaning of Section 368(a) of the Code, (ii) USR,
URI and MERGER SUB will each be a party to the reorganization within the meaning
of Section 368(b) of the Code, and (iii) no gain or loss will be recognized by
USR, URI or MERGER SUB pursuant to the Merger. In rendering such opinion, WGM
may require and rely upon representations contained in certificates of officers
of USR, URI and MERGER SUB and others.
(f) Affiliate Agreements. URI shall have received the USR Affiliate
Agreements contemplated by Section 5.6 duly executed by each "affiliate" of
USR.
(g) Consents. URI shall have received the consents or waivers with
respect to the Merger and the transactions contemplated by this Agreement set
forth on Schedule 6.2(g) hereto.
(h) Employment Agreements. Each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ shall have executed the employment agreements with URI described in
Section 5.9(b).
Section 6.3 Conditions to Obligation of USR to Effect the Merger. The
obligation of USR to effect the Merger shall be further subject to the
satisfaction, on or prior to the Closing Date, of the following conditions,
except as may be waived by USR in writing pursuant to Section 7.5:
(a) Performance of Obligations of URI. URI and MERGER SUB shall have
performed in all material respects their agreements and covenants contained in
or contemplated by this Agreement which are required to be performed by them at
or prior to the Effective Time.
(b) Representations and Warranties. The representations and
warranties of URI and MERGER SUB set forth in this Agreement shall be true and
correct (i) on and as of the date hereof and (ii) on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of the Closing Date (except for representations and warranties that
expressly speak only as of a specific date or time which need only be true and
correct as of such date or time) except in each of cases (i) and (ii) for such
failures of representations or warranties to be true and correct (without giving
effect to any materiality qualification or standard contained in any such
representations and warranties) which, individually or in the aggregate, do not
and would not be reasonably likely to result in a URI Material Adverse Effect.
41
(c) Closing Certificates. USR shall have received a certificate
signed by the chief executive officer and chief financial officer of URI, dated
the Closing Date, to the effect that, to the best of such officers' knowledge,
the conditions set forth in Section 6.3(a) and Section 6.3(b) have been
satisfied.
(d) URI Material Adverse Effect. No URI Material Adverse Effect shall
have occurred.
(e) Tax Opinion. USR shall have received an opinion from O'Melveny &
▇▇▇▇▇ LLP, counsel to USR, in form and substance reasonably satisfactory to USR,
dated as of the Closing Date, substantially to the effect that (i) the Merger
will constitute a reorganization for United States federal income tax purposes
within the meaning of Section 368(a) of the Code, (ii) USR, URI and MERGER SUB
will each be a party to the reorganization within the meaning of Section 368(b)
of the Code, and (iii) no gain or loss will be recognized by stockholders of USR
as a result of the Merger (except to the extent that cash is received in lieu of
fractional share interests). In rendering such opinion, such counsel may
require and rely upon representations contained in certificates of officers of
USR, URI and MERGER SUB and others.
(f) Affiliate Agreements. USR shall have received the URI Affiliate
Agreements contemplated by Section 5.6 duly executed by each "affiliate" of URI.
(g) Employment Agreements. URI shall have (i) executed the employment
agreements with each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ described in
Section 5.9(b) and (ii) offered each employee of USR that is a holder of
outstanding USR Stock Options the opportunity to enter into an at-will
employment agreement with URI on terms comparable to those offered to similarly
situated employees of URI.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the USR Shareholders'
Approval and/or the URI Shareholders' Approval:
(a) by mutual written consent of the respective boards of directors
of USR, URI and MERGER SUB;
(b) by either URI or USR (i) if there has been any breach of any
representations, warranties, covenants or agreements on the part of the other
set forth in this Agreement, which breaches individually or in the aggregate
would result in a URI Material
42
Adverse Effect or a USR Material Adverse Effect, as the case may be, and which
breaches have not been cured or are incapable of being cured within 20 days
following receipt by the breaching party of notice of such breach or adequate
assurance of such cure shall not have been given by or on behalf of the
breaching party within such 20-day period, (ii) if the Board of Directors of the
other or any committee of the Board of Directors of the other (A) shall approve,
recommend or accept any Superior Proposal with respect to such party, or (B)
shall resolve to take any of the actions specified in clause (A), or (iii) if
any state or federal law, order, rule or regulation is adopted or issued which
has the effect, as supported by the written opinion of outside counsel for such
party, of prohibiting the Merger, or by any party hereto if any court of
competent jurisdiction in the United States or any state shall have issued an
order, judgment or decree permanently restraining, enjoining or otherwise
prohibiting the Merger, and such order, judgment or decree shall have become
final and nonappealable;
(c) by any party hereto, by written notice to the other parties, if
the Effective Time shall not have occurred, for any reason, on or before
December 31, 1998 (the "Walk-Away Date"); provided, however, that the right to
terminate this Agreement under this Section 7.1(c) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur on or
before such date; provided, further, that such party's right to terminate the
Agreement under this Section 7.1(c) shall be restored if such failure has been
cured, and the Walk-Away Date shall be deemed to be extended by the number of
days elapsed between such failure and its cure;
(d) by any party hereto, by written notice to the other parties, if
at a duly held meeting of URI shareholders convened for purposes of obtaining
the same, the URI Shareholders' Approval shall not have been obtained, including
any adjournments thereof, or if at a duly held meeting of USR shareholders
convened for purposes of obtaining the same, the USR Shareholders' Approval
shall not have been obtained, including any adjournments thereof;
(e) by USR, at any time after 120 days after the date hereof and
prior to obtaining the USR Shareholder's Approval, and on 72 hours prior notice
to URI (the "USR Notice") (i) if USR's Board of Directors withdraws or modifies,
or resolves to withdraw or modify, in any manner material to URI, its approval
or recommendation of this Agreement or the Merger pursuant to and in accordance
with Section 5.2(d) hereof or (ii) pursuant to Section 5.7(ii)(B) but only if
during the 72 hour period after the USR Notice, (A) USR shall have negotiated
with, and shall have caused its respective financial and legal advisors to
negotiate with, URI to attempt to make such commercially reasonable adjustments
in the terms and conditions of this Agreement as would enable USR to proceed
with the transactions contemplated herein and (B) the Board of Directors of USR
shall have concluded, after considering the results of such negotiations, that
any Superior Proposal giving rise to such USR Notice continues to be a Superior
Proposal as defined in Section 5.7. USR may not
43
effect such termination unless contemporaneously therewith USR pays to URI in
immediately available funds the fees required to be paid pursuant to Section
7.3(b).
(f) by URI, at any time after 120 days after the date hereof and
prior to obtaining the URI Shareholder's Approval and on 72 hours prior notice
to URI (the "URI Notice") (i) if URI's Board of Directors withdraws or
modifies, or resolves to withdraw or modify, in any manner material to USR, its
approval or recommendation of this Agreement or the Merger pursuant to and in
accordance with Section 5.2(d) hereof of (ii) pursuant to Section 5.7(ii)(B) but
only if during the 72 hour period after the URI Notice, (A) URI shall have
negotiated with, and shall have caused its respective financial and legal
advisors to, negotiate with USR to attempt to make such commercially reasonable
adjustments in the terms and conditions of this Agreement as would enable URI to
proceed with the transactions contemplated herein and (B) but only if the Board
of Directors of URI shall have concluded, after considering the results of such
negotiations, that any Superior Proposal giving rise to such URI Notice
continues to be a Superior Proposal as defined in Section 5.7. URI may not
effect such termination unless contemporaneously therewith URI pays to USR in
immediately available funds the fees required to be paid pursuant to Section
7.3(b).
Section 7.2 Effect of Termination. Except as provided in Section 7.3,
in the event of termination of this Agreement by either USR or URI pursuant to
Section 7.1 there shall be no liability on the part of either USR or URI or
their respective officers or directors hereunder, except that Section 5.12 and
Section 7.3, the agreement contained in the last sentence of Section 5.1, and
Article VIII shall survive any such termination.
Section 7.3 Termination Fees; Expenses. (a) Termination Fee upon
Breach. If this Agreement is terminated pursuant to Section 7.1(b)(i), then the
breaching party shall promptly (but not later than five business days after
receipt of notice from the non-breaching party) pay to the non-breaching party a
fee of $15 million in cash, minus any such amounts as may have been previously
paid by such breaching party pursuant to this Section 7.3; provided, however,
that, if this Agreement is terminated by a party as a result of a willful breach
by the other party, the breaching party shall pay to the non-breaching party a
fee of $30 million in cash, minus any amounts as may have been previously paid
by such breaching party pursuant to this Section 7.3. The fees and expenses set
forth in this Section 7.3 shall not be the exclusive remedy available against
any party that breaches this Agreement.
(b) Termination Fee Upon Certain Events. If this Agreement is
terminated (A) by USR pursuant to Section 7.1(e), (B) by URI pursuant to Section
7.1(f), (C) in the circumstances described in Section 7.1(b)(ii), or (D) by a
party as a result of the other party's breach of Section 5.2(d), then the party
whose action gave rise to the right to terminate shall pay to the other party a
fee of $30 million in cash minus any amounts as may have been previously paid by
such party pursuant to this Section 7.3.
44
(c) Additional Termination Fees. If this Agreement is terminated:
(i) following a failure of the shareholders of a party to
grant the necessary approval described in Section 2.14 or 3.14, as the case
may be; and
(ii) prior to the meeting of the shareholders of the party
whose shareholders failed to grant the necessary approval, there shall have
been an Acquisition Proposal involving such party or any of its Affiliates
(whether or not such Acquisition Proposal shall have been rejected or shall
have been withdrawn prior to the time of such termination or of the
shareholders' meeting); and
(iii) within 12 months of any such termination described in
clause (i) above, the party or its Affiliate which is the subject of the
Acquisition Proposal (the "Target Party") becomes a subsidiary of the
offeror of such Acquisition Proposal or an Affiliate thereof or accepts a
written offer to consummate or consummates an Acquisition Proposal with
such offeror or Affiliate thereof,
then such Target Party (jointly and severally with its Affiliates), upon the
signing of a definitive agreement relating to such an Acquisition Proposal, or,
if no such agreement is signed then at the closing (and as a condition to the
closing) of such Target Party becoming such a subsidiary or of such Acquisition
Proposal, shall pay to the other party a fee of $30 million in cash minus any
amounts as may have been previously paid by the Target Party pursuant to this
Section 7.3.
(d) Expenses. The parties agree that the agreements contained in
this Section 7.3 are an integral part of the transactions contemplated by this
Agreement. No termination by a party of this Agreement under Article VII hereof
shall be effective unless and until all fees required to be paid by such party
pursuant to Section 7.3 hereof shall have been received in immediately available
funds by the other party. Notwithstanding anything to the contrary contained in
this Section 7.3, if one party fails to promptly pay to the other any fee due
under Sections 7.3(a), (b) or (c), in addition to any amounts paid or payable
pursuant to such sections, the defaulting party shall pay the costs and expenses
(including legal fees and expenses) in connection with any action, including the
filing of any lawsuit or other legal action, taken to collect payment, together
with interest on the amount of any unpaid fee at the publicly announced prime
rate of Citibank, N.A. from the date such fee was required to be paid.
Section 7.4 Amendment. This Agreement may be amended by the Boards of
Directors of the parties hereto, at any time before or after the USR
Shareholders' Approval and/or the URI Shareholders' Approval and prior to the
Effective Time, but after such shareholder approvals no such amendment which by
law requires further approval by such
45
shareholders shall be made without such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 7.5 Waiver. At any time prior to the Effective Time, a party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) subject to Section 7.4 hereof, waive compliance with any
of the agreements or conditions contained herein, to the extent permitted by
applicable law. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to assert any of its
rights hereunder or otherwise shall not constitute a waiver of such rights.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1 Non-Survival of Representations and Warranties. No
representations or warranties in this Agreement shall survive the Effective
Time, except as otherwise provided in this Agreement. This Section 8.1 shall
not limit any covenant or agreement of the parties set forth herein which by its
terms contemplates performance or compliance after the Effective Time.
Section 8.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given (a) when delivered personally, (b)
when sent by reputable overnight courier service, or (c) when telecopied (with
answerback/confirmation of successful transmission received and which notice is
confirmed by copy sent within one business day by a reputable overnight courier
service) to the parties at the following addresses (or at such other address as
shall be specified by like notice):
46
(i) If to URI or MERGER SUB, to:
United Rentals, Inc.
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
with copies (which shall not constitute notice) to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
and
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
and, (ii) if to USR, to:
U.S. Rentals, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
O'Melveny & ▇▇▇▇▇ LLP
1999 Avenue of the Stars
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
47
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Section 8.3 Entire Agreement. This Agreement (including the Exhibits
hereto and the other documents and instruments referred to herein) and the
Confidentiality Agreement constitute the entire agreement and supersede all
other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.
Section 8.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts executed in and to be fully performed in such State, without giving
effect to its conflicts of law rules or principles.
Section 8.5 Interpretation. When a reference is made in this Agreement
to Sections or Exhibits, such reference shall be to a Section or Exhibit of this
Agreement, respectively, unless otherwise indicated. The table of contents and
section headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement. As
used in this Agreement, the term "person" includes any individual, corporation,
limited liability company, partnership, trust, unincorporated association,
Governmental Authority or other entity. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
Section 8.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 8.7 Binding Nature; Assignment. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and, except as set
forth in Sections 1.8, 1.9, 5.4 and 5.10, nothing in this Agreement, express or
implied, is intended to confer upon any other person (including any employees of
USR) any rights or remedies of any nature whatsoever under or by reason of this
Agreement. This Agreement (and the respective rights and obligations of the
parties hereunder) shall not be assigned (by operation of law or otherwise)
without the express prior written consent of all parties hereto and any
purported assignment without such consent shall be null and void.
Section 8.8 WAIVER OF JURY TRIAL AND CERTAIN DAMAGES. EACH PARTY TO
THIS AGREEMENT WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, (A)
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND (B) WITHOUT
LIMITATION OF SECTIONS
48
5.7 AND 7.3 HEREOF, ANY RIGHT IT MAY HAVE TO RECEIVE DAMAGES FROM ANY OTHER
PARTY BASED ON ANY THEORY OF LIABILITY FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL
(INCLUDING LOST PROFITS) OR PUNITIVE DAMAGES.
Section 8.9 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States or
any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
Section 8.10 Submission to Jurisdiction; Waivers. Each of the parties
hereto irrevocably agrees that any legal action or proceeding with respect to
this Agreement or for recognition and enforcement of any judgment in respect
hereof brought by the other party hereto or its successors or assigns shall be
brought and determined in any federal court located in the State of Delaware or
the Chancery or other courts of the State of Delaware, and each of the parties
hereto irrevocably submits with regard to any such action or proceeding for
itself and in respect to its property, generally and unconditionally, to the
exclusive jurisdiction of the aforesaid courts. Each of the parties hereto
irrevocably waives, and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any action or proceeding with respect to this
Agreement, (a) any claim that it is not personally subject to the jurisdiction
of the above-named courts for any reason other than the failure to serve process
in accordance with this Section 8.10, (b) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process commenced
in such courts (whether through service of notice, attachment before judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise),
and (c) to the fullest extent permitted by applicable law, that (i) the suit,
action or proceeding in any such court is brought in an inconvenient forum, (ii)
the venue of such suit, action or proceeding is improper or (iii) this
Agreement, or the subject matter hereof, may not be enforced in or by such
court. Each of the parties hereto further covenants and agrees that each such
party shall maintain a duly appointed agent for service of summonses and other
legal processes in the State of Delaware (a "Service Agent"), unless such party
is organized under the laws of the State of Delaware or qualified to do business
in the State of Delaware, and will notify the other parties hereto of the name
and address of such Service Agent.
[signature page follows]
49
IN WITNESS WHEREOF, USR, URI and MERGER SUB have caused this Agreement to
be signed by their respective officers thereunto duly authorized as of the date
first written above.
U.S. RENTALS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
UNITED RENTALS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
UR ACQUISITION CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: President
50
SCHEDULE 5.8
Post-Merger Directors of URI
----------------------------
Name Term
---- ----
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2001
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 2000
51
SCHEDULE 5.9(a)
Post-Merger Executive Officers of URI
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ - Director and Chairman Emeritus
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ - Chairman and Chief Executive Officer
▇▇▇▇ ▇. ▇▇▇▇▇ - Vice Chairman and Chief Acquisition Officer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ - Vice Chairman and Chief Operating Officer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ - President
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ - Chief Financial Officer
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ - Vice President, Finance
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ - Vice President, Finance
52
EXHIBIT A
VOTING AGREEMENT
----------------
VOTING AGREEMENT, dated June 15, 1998 (this "Agreement"), by and among
United Rentals, Inc, a Delaware corporation ("URI"), AYR Inc., a California
corporation ("AYR"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual who is the sole
shareholder of AYR (the "Shareholder").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, concurrently herewith, URI, a subsidiary of URI, and U.S. Rentals,
Inc., a Delaware corporation (the "Company"), are entering into an Agreement and
Plan of Merger (as such agreement may hereafter be amended from time to time,
the "Merger Agreement"; capitalized terms used and not defined herein have the
respective meanings ascribed to them in the Merger Agreement) pursuant to which
MERGER SUB will be merged with and into the Company, with the Company as the
surviving corporation and wholly-owned subsidiary of URI (the "Merger");
WHEREAS, AYR owns, beneficially and of record, 20,603,105 shares (the
"Shares") of USR Common Stock and Shareholder owns, beneficially and of record,
all of the outstanding capital stock of AYR; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, URI has required that each of Shareholder and AYR agree, and
Shareholder and AYR have agreed, to enter into this Agreement; and further
Shareholder has agreed to enter into this Agreement strictly in his capacity as
a beneficial owner, through AYR, of the Shares and not in his capacity as a
director of the Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
1. Provisions Concerning the Shares. (a) Each of AYR and Shareholder
--------------------------------
hereby agree that during the period commencing on the date hereof and continuing
until this provision terminates pursuant to Section 5 hereof, at any meeting of
the holders of shares of USR Common Stock, however called, or in connection with
any written consent of the holders of shares of USR Common Stock, each of AYR
and Shareholder shall vote, (or cause to be voted) the Shares held of record or
Beneficially Owned (as defined below) by Shareholder, whether heretofore owned
or hereafter acquired, in favor of the Merger and the adoption of the Merger
Agreement and any actions required in furtherance thereof and hereof.
(b) Neither AYR nor Shareholder shall enter into any agreement or
understanding with any Person (as defined below) the effect of which would be
inconsistent or violative of the provisions of this Agreement.
(c) For purposes of this Agreement:
"Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing; without duplicative counting of the
same securities by the same holder, securities Beneficially Owned by a Person
shall include securities Beneficially Owned by all other Persons with whom such
Person would constitute a "group" within the meaning of Section 13(d)(3) of the
Exchange Act;
"Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
(d) In the event of a stock dividend or distribution, or any change
in the USR Common Stock by reason of any stock dividend, stock split,
recapitalization, reclassification, combination, exchange of shares, merger or
the like, the term "Shares" as used in this Agreement shall be deemed to refer
to and include the Shares as well as all such stock dividends and distributions
and any shares or other securities into which or for which any or all of the
Shares may be converted, changed or exchanged.
2. Representations and Warranties. Each of Shareholder and AYR hereby
------------------------------
represents and warrants to URI as follows:
(a) Ownership of Shares. Shareholder is the record and Beneficial
-------------------
Owner of all of the shares of AYR and AYR is the record and beneficial owner of
all of the Shares. On the date hereof, the Shares constitute all of the shares
of USR Common Stock owned of record or Beneficially Owned by AYR or Shareholder.
Shareholder and AYR have shared voting power and shared power to issue
instructions with respect to the matters set forth in Section 1 hereof, shared
power of disposition and shared power to agree to all of the matters set forth
in this Agreement, in each case with respect to all of the Shares, with no
limitations, qualifications or restrictions on such rights (subject to
applicable securities laws).
(b) Power; Binding Agreement. Shareholder has the legal capacity,
------------------------
power and authority, and AYR has the corporate power and authority, to enter
into and perform all of their respective obligations under this Agreement. This
Agreement has been duly and validly authorized, executed and delivered by each
of Shareholder and AYR and constitutes a valid and binding agreement of each of
Shareholder and AYR, enforceable against each of Shareholder and AYR in
accordance with its terms. There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which AYR or Shareholder is
settlor or trustee whose consent is required for the execution and
2
delivery of this Agreement or the consummation by AYR or Shareholder of the
transactions contemplated hereby.
(c) Organization. AYR (i) is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of California and (ii)
has all requisite corporate power and authority to own its properties and assets
and to carry on its business as it is now being conducted.
(d) No Conflicts. (i) Except for filings under the HSR Act, the
------------
Securities Act and Exchange Act, no filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by Shareholder and the
consummation by Shareholder of the transactions contemplated hereby and (ii)
none of the execution and delivery of this Agreement by Shareholder, the
consummation by Shareholder of the transactions contemplated hereby or
compliance by Shareholder with any of the provisions hereof will (A) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any declaration of trust, note, bond, mortgage,
indenture, security or pledge agreement, voting agreement, shareholders'
agreement or voting trust, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind to which
Shareholder is a party or by which Shareholder or any of Shareholder's
properties or assets may be bound, or (B) violate any order, writ, injunction,
decree, judgment, order, statute, rule or regulation applicable to Shareholder
or any of Shareholder's properties or assets.
(e) Reliance by URI. Shareholder and AYR understand and acknowledge
---------------
that URI is entering into the Merger Agreement in reliance upon execution and
delivery of this Agreement by Shareholder and AYR.
(f) Sophistication. Shareholder acknowledges that Shareholder is an
--------------
informed and sophisticated investor and, together with Shareholder's advisors,
has undertaken such investigation as they have deemed necessary, including the
review of the Merger Agreement and this Agreement, to enable Shareholder to make
an informed and intelligent decision with respect to the Merger Agreement and
this Agreement and the transactions contemplated thereby and hereby.
(g) No Broker. Except for fees payable by the Company and disclosed
---------
pursuant to Section 2.16 of the Merger Agreement, no broker, investment banker,
financial adviser or other Person is entitled to any commission, broker's fee,
finder's fee, adviser's fee or similar fee in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Shareholder or AYR.
3. No Solicitation. (a) From and after the date hereof and continuing
---------------
until this provision terminates pursuant to Section 5 hereof, neither AYR nor
Shareholder shall directly or indirectly, initiate, solicit or encourage
(including by way of furnishing non-
3
public information or assistance), or take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal with respect to the Company or
enter into or maintain or continue discussions or negotiate with any Person in
furtherance of such inquiries or to obtain such an Acquisition Proposal or agree
to or endorse any such Acquisition Proposal, and Shareholder shall promptly
notify URI orally (in all events within 24 hours) and in writing (as promptly
thereafter as practicable) of the material terms and status of all inquiries and
proposals which Shareholder or any agent of Shareholder may receive after the
date hereof relating to any of such matters and, if such inquiry or proposal is
in writing, Shareholder shall deliver to URI a copy of such inquiry or proposal
promptly; provided, however, that, notwithstanding any other provision of this
-------- -------
Agreement, Shareholder, as a member of the board of directors of the Company,
may take any action in his capacity as a director that the board of directors of
the Company would be permitted to take in accordance with Sections 5.7 and 7.1
of the Merger Agreement. Shareholder will immediately cease and cause to be
terminated any existing activities, discussions or negotiations, with any
parties conducted heretofore with respect to any of the foregoing.
(b) URI acknowledges that this Agreement is entered into by the
Shareholder in his capacity as a beneficial owner, through AYR, of the Shares,
and that nothing in this Agreement shall in any way restrict or limit the
Shareholder from taking any action in his capacity as a director or officer of
USR or otherwise fulfilling his fiduciary obligations as a director or officer
of USR, notwithstanding that any such action would be inconsistent with or
violative of his obligations under this Agreement if taken in his capacity as a
beneficial owner, through AYR, of the Shares.
4. Restriction on Transfer; Proxies; Non-Interference; Stop Transfers;
-------------------------------------------------------------------
etc.
---
(a) Neither AYR nor Shareholder shall directly or indirectly, during
the period commencing on the date hereof and continuing until this provision
terminates pursuant to Section 5 hereof: (i) except as contemplated by the
Merger Agreement or for transfers to charitable foundations before June 30,
1998, provided the transferee of the transferred shares takes such shares
subject to the provisions of this Agreement, offer for sale, sell, transfer,
tender, pledge, encumber, assign or otherwise dispose of, or grant or enter into
any contract, option or other arrangement or understanding with respect to or
consent to the offer for sale, sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, any or all of the Shares or any interest
therein (including any interest in AYR); (ii) except as contemplated by this
Agreement, grant any proxies or powers of attorney, deposit any Shares into a
voting trust or enter into a voting agreement with respect to any Shares; or
(iii) take any action that would make any of AYR's or Shareholder's
representations or warranties contained herein untrue or incorrect or have the
effect of preventing or disabling AYR or Shareholder from performing their
respective obligations under this Agreement; provided that the foregoing shall
not prevent AYR or Shareholder from pledging any of the Shares to a bank or
other financial institution or to prevent such bank or financial institution
from selling the Shares on foreclosure so long as AYR or Shareholder retain the
right to vote such Shares if the pledge has not been foreclosed upon.
4
(b) AYR agrees with, and covenants to, URI that AYR shall not, during
the period set forth in Section 4(a), request that the Company register the
transfer (book-entry or otherwise) of any certificate or uncertificated interest
representing the Shares, unless such transfer is made in compliance with this
Agreement. AYR shall promptly after the date hereof surrender to the Company all
certificates representing the Shares for purpose of placing the following legend
on such certificates:
5
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON TRANSFER AND VOTING AND
PURSUANT TO AN AGREEMENT BETWEEN THE HOLDER OF THIS
CERTIFICATE AND URI, A COPY OF WHICH MAY BE OBTAINED
FROM THE HOLDER HEREOF OR THE ISSUER OF THIS SECURITY.
The foregoing legend shall be removed from all certificates representing the
shares upon termination of the period set forth in Section 4(a).
5. Termination. Except as otherwise provided herein, the covenants and
-----------
agreements contained in Sections 1, 3 and 4 hereof shall terminate (i) in the
event the Merger Agreement is terminated in accordance with the terms thereof,
upon such termination, and (ii) in the event the Merger is consummated, upon the
Effective Time. Notwithstanding anything to the contrary herein, (A) the
provisions of Section 7 hereof shall survive any termination of this Agreement,
and (B) no termination of this Agreement shall relieve any party of liability
for a breach hereof prior to termination.
6. Further Assurances. From time to time, at the other party's request
------------------
and without further consideration, AYR, Shareholder and URI shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
7. Miscellaneous.
-------------
(a) Entire Agreement. This Agreement and the Merger Agreement
----------------
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) Certain Events. Each of AYR and Shareholder agree that this
--------------
Agreement and the obligations hereunder shall attach to the Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including, without
limitation, Shareholder's heirs, executors, guardians, administrators, trustees
or successors. Notwithstanding any transfer of Shares, the transferor shall
remain liable for the performance of all obligations under this Agreement of the
transferor.
(c) Assignment. This Agreement shall not be assigned by any party
----------
hereto, by operation of law or otherwise, without the prior written consent of
the other party, and any purported assignment without such consent shall be null
and void; provided, however, that URI may assign, in its sole discretion, its
rights and obligations hereunder to any direct or indirect wholly owned
subsidiary of URI without the consent of AYR or Shareholder.
6
(d) Amendments, Waivers, Etc. This Agreement may not be amended,
------------------------
changed, supplemented, waived or otherwise modified or terminated except upon
the execution and delivery of a written agreement executed by each of the
parties hereto.
(e) Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses: (i) if to URI, to its address set
forth in the Merger Agreement; and (ii) if to AYR or Shareholder, to: ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇. - ▇▇▇. ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, with a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; or, in each case, to such other address as the Person to whom
notice is given may have previously furnished to the others in writing in the
manner set forth above.
(f) Severability. Whenever possible, each provision or portion of any
------------
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) Specific Performance. All of the parties hereto recognizes and
--------------------
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies provided
-------------------
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any right,
---------
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms
7
hereof, shall not constitute a waiver by such party of its right to exercise any
such or other right, power or remedy or to demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended to
----------------------------
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
(l) Jurisdiction; Waiver of Jury Trial. All of the parties hereto
----------------------------------
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by any other party hereto or its successors or assigns shall be brought
and determined in any federal court located in the State of Delaware or the
Chancery or other courts of the State of Delaware, and each of the parties
hereto irrevocably submits with regard to any such action or proceeding for
itself and in respect to its property, generally and unconditionally, to the
exclusive jurisdiction of the aforesaid courts. Each of the parties hereto
irrevocably waives, and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any action or proceeding with respect to this
Agreement, (a) any claim that it is not personally subject to the jurisdiction
of the above-named courts for any reason, (b) that it or its property is exempt
or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment before
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise), and (c) to the fullest extent permitted by applicable law, that (i)
the suit, action or proceeding in any such court is brought in an inconvenient
forum, (ii) the venue of such suit, action or proceeding is improper or (iii)
this Agreement, or the subject matter hereof, may not be enforced in or by such
court.
(m) Descriptive Headings. The descriptive headings used herein are
--------------------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
(o) No Present Intent to Liquidate or Merge. URI has no current plan
---------------------------------------
or intention to liquidate USR; to merge USR with or into another corporation; to
sell, distribute or otherwise dispose of USR Common Stock acquired in the Merger
except for transfers or successive transfers of USR Common Stock to one or more
corporations controlled (within the meaning of Section 368(c) of the Code) in
each case by the transferor corporation; or to cause USR to sell or otherwise
dispose of any of its assets or any of the assets acquired from MERGER SUB,
except for dispositions made in the
8
ordinary course of business or transfers or successive transfers of assets to
one or more corporations controlled (within the meaning of Section 368(c) of the
Code) in each case by the transferor corporation.
[signature page follows]
9
IN WITNESS WHEREOF, URI, Shareholder and AYR have executed and delivered
this Agreement as of the day and year first above written.
UNITED RENTALS, INC.
By:_________________________________
Name:
Title:
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
AYR INC.
By: ________________________________
Name:
Title:
10
EXHIBIT B
VOTING AGREEMENT
----------------
VOTING AGREEMENT, dated June 15, 1998 (this "Agreement"), by and among U.S.
Rentals, Inc., a Delaware corporation ("USR"), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC, a Virginia
limited liability company, ("BJ LLC") and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (1997) LLC, a Virginia
limited liability company, ("BJ (1997) LLC" and together with BJ LLC, the
"LLC's"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual who owns all of the outstanding
limited liability company interests of the LLC's (the "Shareholder").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, concurrently herewith, United Rentals, Inc., a Delaware
corporation (the "Company"), a subsidiary of the Company, and USR are entering
into an Agreement and Plan of Merger (as such agreement may hereafter be amended
from time to time, the "Merger Agreement"; capitalized terms used and not
defined herein have the respective meanings ascribed to them in the Merger
Agreement) pursuant to which MERGER SUB will be merged with and into USR, with
USR as the surviving corporation and wholly-owned subsidiary of the Company (the
"Merger");
WHEREAS, BJ LLC owns, beneficially and of record, 4,938,200 shares of URI
Common Stock, BJ (1997) LLC owns, beneficially and of record, 1,625,000 Shares
of URI Common Stock (together, the "LLC Shares") and Shareholder owns (i)
beneficially and of record, 8,436,900 shares of URI Common Stock (the
"Shareholder Shares" and, together with the LLC Shares, the "Shares") and (ii)
beneficially and of record, all of the outstanding limited liability company
interests of the LLC's; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, USR has required that each of Shareholder and the LLC's agree, and
Shareholder and the LLC's have agreed, to enter into this Agreement; and further
Shareholder has agreed to enter into this Agreement strictly in his capacity as
a beneficial owner of the Shares and not in his capacity as a director of the
Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
1. Provisions Concerning the Shares. (a) Each of the LLC's and
--------------------------------
Shareholder hereby agree that during the period commencing on the date hereof
and
continuing until this provision terminates pursuant to Section 5 hereof, at any
meeting of the holders of shares of URI Common Stock, however called, or in
connection with any written consent of the holders of shares of URI Common
Stock, each of the LLC's and Shareholder shall vote, (or cause to be voted) the
Shares held of record or Beneficially Owned (as defined below) by the LLC's and
Shareholder, whether heretofore owned or hereafter acquired, in favor of the
Charter Amendment and the Share Issuance and any actions required in furtherance
thereof and hereof.
(b) Neither the LLC's nor Shareholder shall enter into any agreement
or understanding with any Person (as defined below) the effect of which would be
inconsistent or violative of the provisions of this Agreement.
(c) For purposes of this Agreement:
"Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing; without duplicative counting of the
same securities by the same holder, securities Beneficially Owned by a Person
shall include securities Beneficially Owned by all other Persons with whom such
Person would constitute a "group" within the meaning of Section 13(d)(3) of the
Exchange Act "Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity; and
"Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
(d) In the event of a stock dividend or distribution, or any change
in the URI Common Stock by reason of any stock dividend, stock split,
recapitalization, reclassification, combination, exchange of shares, merger or
the like, the term "Shares" as used in this Agreement shall be deemed to refer
to and include the Shares as well as all such stock dividends and distributions
and any shares or other securities into which or for which any or all of the
Shares may be converted, changed or exchanged.
2. Representations and Warranties. Each of Shareholder and the LLC's
------------------------------
hereby agrees, represents and warrants to USR as follows:
2
(a) Ownership of Shares. Shareholder is the record and Beneficial
-------------------
Owner of all of the limited liability company interests of the LLC's and the
LLC's and the Shareholder are jointly the record and beneficial owners of all of
the Shares. On the date hereof, the Shares constitute all of the shares of URI
Common Stock owned of record or Beneficially Owned by the LLC's and Shareholder.
Shareholder and the LLC's have shared voting power and shared power to issue
instructions with respect to the matters set forth in Section 1 hereof, shared
power of disposition and shared power to agree to all of the matters set forth
in this Agreement, in each case with respect to all of the Shares, with no
limitations, qualifications or restrictions on such rights (subject to
applicable securities laws).
(b) Power; Binding Agreement. Shareholder has the legal capacity,
------------------------
power and authority, and the LLC's have the power and authority as limited
liability companies, to enter into and perform all of their respective
obligations under this Agreement. This Agreement has been duly and validly
authorized, executed and delivered by each of Shareholder and the LLC's and
constitutes a valid and binding agreement of each of Shareholder and the LLC's,
enforceable against each of Shareholder and the LLC's in accordance with its
terms. There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which the LLC's or Shareholder is settlor or trustee
whose consent is required for the execution and delivery of this Agreement or
the consummation by the LLC's or Shareholder of the transactions contemplated
hereby.
(c) Organization. the LLC's (i) are limited liability companies duly
------------
formed, validly existing and in good standing as limited liability companies
under the laws of the State of Virginia and (ii) have all requisite power and
authority to own their properties and assets and to carry on their business as
it is now being conducted.
(d) No Conflicts. (i) Except for filings under the HSR Act, the
------------
Securities Act and Exchange Act, no filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by Shareholder and the
consummation by Shareholder of the transactions contemplated hereby and (ii)
none of the execution and delivery of this Agreement by Shareholder, the
consummation by Shareholder of the transactions contemplated hereby or
compliance by Shareholder with any of the provisions hereof will (A) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions
3
or provisions of any declaration of trust, note, bond, mortgage, indenture,
security or pledge agreement, voting agreement, shareholders' agreement or
voting trust, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which Shareholder is
a party or by which Shareholder or any of Shareholder's properties or assets may
be bound, or (B) violate any order, writ, injunction, decree, judgment, order,
statute, rule or regulation applicable to Shareholder or any of Shareholder's
properties or assets.
(e) Reliance by USR. Shareholder and the LLC's understand and
---------------
acknowledge that USR is entering into the Merger Agreement in reliance upon
execution and delivery of this Agreement by Shareholder and the LLC's.
(f) Sophistication. Shareholder acknowledges that Shareholder is an
--------------
informed and sophisticated investor and, together with Shareholder's advisors,
has undertaken such investigation as they have deemed necessary, including the
review of the Merger Agreement and this Agreement, to enable Shareholder to make
an informed and intelligent decision with respect to the Merger Agreement and
this Agreement and the transactions contemplated thereby and hereby.
(g) No Broker. Except for fees payable by the Company and disclosed
---------
pursuant to Section 3.16 of the Merger Agreement, no broker, investment banker,
financial adviser or other Person is entitled to any commission, broker's fee,
finder's fee, adviser's fee or similar fee in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Shareholder or the LLC's.
3. No Solicitation. (a) From and after the date hereof and continuing
---------------
until this provision terminates pursuant to Section 5 hereof, neither the LLC's
nor Shareholder shall directly or indirectly, initiate, solicit or encourage
(including by way of furnishing non-public information or assistance), or take
any other action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal
with respect to the Company or enter into or maintain or continue discussions or
negotiate with any Person in furtherance of such inquiries or to obtain such an
Acquisition Proposal or agree to or endorse any such Acquisition Proposal, and
Shareholder shall promptly notify USR orally (in all events within 24 hours) and
in writing (as promptly thereafter as practicable) of the material terms and
status of all inquiries and proposals which Shareholder or any agent of
Shareholder may receive after the date hereof relating to
4
any of such matters and, if such inquiry or proposal is in writing, Shareholder
shall deliver to USR a copy of such inquiry or proposal promptly; provided,
--------
however, that, notwithstanding any other provision of this Agreement,
-------
Shareholder, as a member of the board of directors of the Company, may take any
action in his capacity as a director that the board of directors of the Company
would be permitted to take in accordance with Sections 5.7 and 7.1 of the Merger
Agreement. Shareholder will immediately cease and cause to be terminated any
existing activities, discussions or negotiations, with any parties conducted
heretofore with respect to any of the foregoing.
(b) USR acknowledges that this Agreement is entered into by the
Shareholder in his capacity as a beneficial owner of the Shares, and that
nothing in this Agreement shall in any way restrict or limit the Shareholder
from taking any action in his capacity as a director or officer of the Company
or otherwise fulfilling his fiduciary obligations as a director or officer of
the Company, notwithstanding that any such action would be inconsistent with or
violative of his obligations under this Agreement if taken in his capacity as a
beneficial owner of the Shares.
4. Restriction on Transfer; Proxies; Non-Interference; Stop Transfers;
-------------------------------------------------------------------
etc.
---
(a) Neither the LLC's nor Shareholder shall directly or indirectly,
during the period commencing on the date hereof and continuing until this
provision terminates pursuant to Section 5 hereof: (i) except as contemplated by
the Merger Agreement, offer for sale, sell, transfer, tender, pledge, encumber,
assign or otherwise dispose of, or grant or enter into any contract, option or
other arrangement or understanding with respect to or consent to the offer for
sale, sale, transfer, tender, pledge, encumbrance, assignment or other
disposition of, any or all of the Shares or any interest therein (including any
interest in the LLC's); (ii) except as contemplated by this Agreement, grant any
proxies or powers of attorney, deposit any Shares into a voting trust or enter
into a voting agreement with respect to any Shares; or (iii) take any action
that would make any of the LLC's or Shareholder's representations or warranties
contained herein untrue or incorrect or have the effect of preventing or
disabling the LLC's or Shareholder from performing their respective obligations
under this Agreement; provided that the foregoing shall not prevent the LLC's or
Shareholder from pledging any of the Shares to a bank or other financial
institution or to prevent such bank or other financial institution from selling
the Shares on foreclosure so long as the LLC's and Shareholder retain the right
to vote such Shares if the pledge has not been foreclosed upon.
5
(b) Shareholder and the LLC's agree with, and covenant to, USR that
neither Shareholder nor the LLC's shall, during the period set forth in Section
4(a), request that the Company register the transfer (book-entry or otherwise)
of any certificate or uncertificated interest representing the Shares, unless
such transfer is made in compliance with this Agreement. Shareholder and the
LLC's shall promptly after the date hereof surrender to the Company all
certificates representing the Shares for purpose of placing the following legend
on such certificates:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON TRANSFER AND VOTING AND PURSUANT
TO AN AGREEMENT BETWEEN THE HOLDER OF THIS CERTIFICATE AND
USR, A COPY OF WHICH MAY BE OBTAINED FROM THE HOLDER HEREOF
OR THE ISSUER OF THIS SECURITY.
The foregoing legend shall be removed from all certificates representing the
shares upon termination of the period set forth in Section 4(a).
5. Termination. Except as otherwise provided herein, the covenants and
-----------
agreements contained in Sections 1, 3 and 4 hereof shall terminate (i) in the
event the Merger Agreement is terminated in accordance with the terms thereof,
upon such termination, and (ii) in the event the Merger is consummated, upon the
Effective Time. Notwithstanding anything to the contrary herein, (A) the
provisions of Section 7 hereof shall survive any termination of this Agreement,
and (B) no termination of this Agreement shall relieve any party of liability
for a breach hereof prior to termination.
6. Further Assurances. From time to time, at the other party's request
------------------
and without further consideration, the LLC's, Shareholder and USR shall execute
and deliver such additional documents and take all such further lawful action as
may be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
7. Miscellaneous.
-------------
(a) Entire Agreement. This Agreement and the Merger Agreement
----------------
constitute the entire agreement between the parties with respect to the subject
matter
6
hereof and supersede all other prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof.
(b) Certain Events. Each of the LLC's and Shareholder agree that
--------------
this Agreement and the obligations hereunder shall attach to the Shares and
shall be binding upon any person or entity to which legal or beneficial
ownership of such Shares shall pass, whether by operation of law or otherwise,
including, without limitation, Shareholder's heirs, executors, guardians,
administrators, trustees or successors. Notwithstanding any transfer of Shares,
the transferor shall remain liable for the performance of all obligations under
this Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by any party
----------
hereto, by operation of law or otherwise, without the prior written consent of
the other party, and any purported assignment without such consent shall be null
and void.
(d) Amendments, Waivers, Etc. This Agreement may not be amended,
------------------------
changed, supplemented, waived or otherwise modified or terminated except upon
the execution and delivery of a written agreement executed by each of the
parties hereto.
(e) Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses: (i) if to USR, to its address set
forth in the Merger Agreement; and (ii) if to the LLC's or Shareholder, to: ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, with a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Esq., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇; or, in each case, to such other
address as the Person to whom notice is given may have previously furnished to
the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of
------------
any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such
7
invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
(g) Specific Performance. All of the parties hereto recognizes and
--------------------
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies provided
-------------------
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any
---------
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended to
----------------------------
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
(l) Jurisdiction; Waiver of Jury Trial. All of the parties hereto
----------------------------------
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by any other party hereto or its successors or assigns shall be brought
and determined in any federal court located in the State of Delaware or the
Chancery or other courts of the
8
State of Delaware, and each of the parties hereto irrevocably submits with
regard to any such action or proceeding for itself and in respect to its
property, generally and unconditionally, to the exclusive jurisdiction of the
aforesaid courts. Each of the parties hereto irrevocably waives, and agrees not
to assert, by way of motion, as a defense, counterclaim or otherwise, in any
action or proceeding with respect to this Agreement, (a) any claim that it is
not personally subject to the jurisdiction of the above-named courts for any
reason, (b) that it or its property is exempt or immune from jurisdiction of any
such court or from any legal process commenced in such courts (whether through
service of notice, attachment before judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise), and (c) to the fullest extent
permitted by applicable law, that (i) the suit, action or proceeding in any such
court is brought in an inconvenient forum, (ii) the venue of such suit, action
or proceeding is improper or (iii) this Agreement, or the subject matter hereof,
may not be enforced in or by such court.
(m) Descriptive Headings. The descriptive headings used herein are
--------------------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
[signature page follows]
9
IN WITNESS WHEREOF, USR, Shareholder and the LLC's have executed and
delivered this Agreement as of the day and year first above written.
U.S. RENTALS, INC.
By:______________________
Name:
Title:
______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLC
By:___________________________
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (1997) LLC
By:___________________________
Name:
Title:
10
Exhibit C
June 15, 1998
United Rentals, Inc.
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
Reference is made to the provisions of the Agreement and Plan of Merger,
dated as of June 15, 1998 (together with any amendments thereto, the "Merger
Agreement"), among U.S. Rentals, Inc., a Delaware corporation (the "Company"),
United Rentals, Inc., a Delaware corporation ("Parent"), and UR Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent
("Merger Sub"), pursuant to which Merger Sub will be merged with and into the
Company, with the Company continuing as the surviving corporation (the
"Merger"). This letter constitutes the undertakings of the undersigned
contemplated by the Merger Agreement.
I understand that I may be deemed to be an "affiliate" of the Company, as
such term is defined for purposes of paragraphs (c) and (d) of Rule 145 ("Rule
145") promulgated under the Securities Act of 1933, as amended (the "Securities
Act"). Execution of this letter shall not be construed as an admission of
"affiliate" status nor as a waiver of any rights that I may have to object to
any claim that I am an "affiliate" on or after the date of this letter.
If in fact I were to be deemed an "affiliate" of the Company under
paragraphs (c) and (d) of Rule 145, my ability to sell, transfer or otherwise
dispose of any shares of the common stock, par value $.01 per share, of Parent
(the "Parent Shares") received by me in exchange for any shares of common stock,
par value $.01 per share, of the Company (the "Company Shares") pursuant to the
Merger may be restricted.
I hereby represent, warrant and covenant to Parent that:
(a) I will not sell, pledge, transfer or otherwise dispose of any of the Parent
Shares except (i) pursuant to an effective registration statement under the
Securities Act, or (ii) as permitted by, and in accordance with, Rule 145 or
another applicable exemption under the Securities Act and the rules and
regulations promulgated thereunder; and
(b) I will not (i) sell, pledge, transfer or otherwise dispose of any
Company Shares during the 30-day period prior to the Effective Time (as defined
in the Merger Agreement) or (ii) sell or otherwise reduce my risk (within the
meaning of the Securities and Exchange Commission's Financial Reporting Release
No. 1., "Codification of Financial Reporting Policies", Section 201.01 47 F.R.
21028 (April 15, 1982)) relative to any Parent Shares until after such time as
consolidated financial results (including combined sales and net income)
covering at least 30 days of post-merger combined operations of Parent and the
Company have been published by Parent, except as permitted by Staff Accounting
Bulletin No. 76 issued by the Securities and Exchange Commission; and
June 15, 1998
Page 2
(c) I have not knowingly taken and will not knowingly take or agree to
take any action that would prevent the Merger from qualifying, or being
accounted for, as a pooling-of-interests.
I hereby acknowledge that, except as otherwise provided in the Merger
Agreement, Parent is under no obligation to register the sale, transfer, pledge
or other disposition of the Parent Shares or to take any other action necessary
for the purpose of making an exemption from registration available.
I understand that Parent will issue stop transfer instructions to its
transfer agents with respect to the Parent Shares and that a restrictive legend
will be placed on certificates delivered to me evidencing the Parent Shares in
substantially the following form:
"This certificate and the shares represented hereby have been issued
pursuant to a transaction governed by Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), and
may not be sold or otherwise disposed of unless registered under the
Securities Act pursuant to a Registration Statement in effect at the time
or unless the proposed sale or disposition can be made in compliance with
Rule 145 or without registration in reliance on another exemption
therefrom. Reference is made to that certain letter agreement, dated June
___, 1998, between the holder of this certificate and the issuer of this
security (a copy of which is on file in the principal office of such
issuer) which contains further restrictions on the transferability of the
shares represented hereby."
The term Parent Shares as used in this letter shall mean and include not
only the common stock of Parent as presently constituted, but also any other
stock which may be issued in exchange for, in lieu of, or in addition to, all or
any part of such Parent Shares.
I agree that, from time to time, at Parent's reasonable request and without
further consideration, I shall execute and deliver such additional documents and
shall use my reasonable best efforts to take all such further lawful action as
may be reasonably necessary or desirable to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by the
Merger Agreement.
I hereby acknowledge that Parent and its independent public accountants
will be relying upon this letter in connection with the determination that the
Merger will qualify and be accounted for as a pooling-or-interests, and that I
understand the requirements of this letter and the limitations imposed upon the
transfer, sale or other disposition of the Company Shares and the Parent Shares.
Very truly yours,
___________________________________
Name:
Exhibit D
June 15, 1998
U.S. Rentals, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
Reference is made to the provisions of the Agreement and Plan of Merger,
dated as of June 15, 1998 (together with any amendments thereto, the "Merger
Agreement"), among U.S. Rentals, Inc., a Delaware corporation (the "Company"),
United Rentals, Inc., a Delaware corporation ("Parent"), and UR Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent
("Merger Sub"), pursuant to which Merger Sub will be merged with and into the
Company, with the Company continuing as the surviving corporation (the
"Merger"). This letter constitutes the undertakings of the undersigned
contemplated by the Merger Agreement.
I hereby represent, warrant, and covenant to the Company that:
(a) I will not (i) sell, pledge, transfer or otherwise dispose of any
shares of common stock, par value $.01 per share, of the Company ("Company
Shares") during the 30-day period prior to the Effective Time (as defined in the
Merger Agreement) or (ii) sell or otherwise reduce my risk (within the meaning
of the Securities and Exchange Commission's Financial Reporting Release No. 1.,
"Codification of Financial Reporting Policies", Section 201.01 47 F.R. 21028
(April 15, 1982) relative to any shares of common stock, par value $.01 per
share, of Parent ("Parent Shares") until after such time as consolidated
financial results (including combined sales and net income) covering at least 30
days of post-merger combined operations of Parent and the Company have been
published by Parent, except as permitted by Staff Accounting Bulletin No. 76
issued by the Securities and Exchange Commission; and
(b) I have not knowingly taken and will not knowingly take or agree to
take any action that would prevent the Merger from qualifying, or being
accounted for, as a pooling-of-interests.
I agree that, from time to time, at the Company's reasonable request and
without further consideration, I shall execute and deliver such additional
documents and shall use my reasonable best efforts to take all such further
lawful action as may be reasonably necessary or desirable to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by the Merger Agreement.
The term Parent Shares as used in this letter shall mean and include not
only common stock of Parent as presently constituted, but also any other stock
which may be issued in exchange for, in lieu of, or in addition to, all or any
part of such Parent Shares.
I hereby acknowledge that the Company and its independent public
accountants will be relying upon this letter in connection with the
determination that the Merger will qualify and be accounted for as a pooling-of-
interests, and that I understand the requirements of this letter and the
limitations imposed upon the transfer, sale or other disposition of Parent
Shares.
Very truly yours,
[BLUE]
____________,1998
Page 2
_________________________________
Name:
EXHIBIT E-1
EMPLOYMENT AGREEMENT
--------------------
This AGREEMENT between United Rentals, Inc., a Delaware corporation
("URI"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Employee"), is hereby entered into as of
[CLOSING DATE OF THE MERGER].
Recitals:
--------
URI and its affiliates (collectively, the "Company") are engaged in the
business of acquiring and operating companies which rent, operate, maintain,
distribute, sell or otherwise deal in or with equipment or similar assets, and
may in the future engage in other businesses which the Company deems to be
related to the foregoing. All such businesses are collectively referred to
herein as the "Business."
Employee was heretofore the President and Chief Executive Officer of U.S.
Rentals, Inc. ("USR"). Pursuant to an Agreement and Plan of Merger dated June
15, 1998 (the "Merger Agreement"), (i) URI acquired USR and (ii) URI is offering
Employee employment with the Company on the terms set forth in this Agreement.
This Agreement replaces and supersedes in all respects Employee's existing
employment agreement with USR.
Pursuant to this Agreement, Employee will be employed by the Company in a
confidential relationship wherein Employee, in the course of his employment with
the Company, will become familiar with and aware of information as to the
specific manner of doing business and the potential acquisition candidates and
customers of the Company and its affiliates and future plans with respect
thereto, all of which will be established and maintained at great expense to the
Company; this information is a trade secret and constitutes the valuable
goodwill of the Company. Employee recognizes that the Company's business is
dependent upon a number of trade secrets, including the identity of customers
and potential acquisition candidates, the analysis of such candidates and
financial data of the Company. The protection of these trade secrets is of
critical importance to the Company. The Company will sustain great loss and
damage if, for whatever reason, Employee should violate the provisions of this
Agreement. Further, monetary damages for such losses would be extremely
difficult to measure.
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby agreed
as follows:
1. Employment and Duties. (a) Upon commencement of the term of this
---------------------
Agreement, the Company shall employ Employee as the President of URI on the
terms and conditions
herein set forth. Employee shall perform such duties, have such authority, and
report to such persons (including, without limitation, the Vice Chairman and
Chief Operating Officer of URI), as shall from time to time be designated by the
Board of Directors of URI (the "Board"). Employee shall accept this employment
upon the terms and conditions herein contained and agrees to devote his full
time, attention and efforts to promote and further the business and services of
the Company. Employee shall faithfully adhere to, execute and fulfill all
policies established by the Company.
(b) Employee shall perform such duties, assume such responsibilities
and devote such time, attention and energy to the business of the Company as the
Board shall from time to time require and shall not, during the term of his
employment hereunder, be engaged in any other business activity pursued for
gain, profit or other pecuniary advantage without the prior written consent of
the Board. However, the foregoing limitations shall not be construed as
prohibiting Employee from making personal investments in such form or manner as
will neither require his services in the operation or affairs of the companies
or enterprises in which such investments are made nor violate the terms of
Section 5.
(c) Employee will initially be based in the Company's offices in
Modesto, California, but shall relocate to the Connecticut area at a mutually
agreeable time.
2. Compensation and Other Benefits. For all services rendered by
-------------------------------
Employee to the Company, the Company shall compensate the Employee as follows:
(a) Base Salary and Bonus. The initial base salary payable to
---------------------
Employee during the term of this Agreement shall be $225,000 per year, payable
in accordance with URI's standard payroll practices. Minimum annual increases
in the base salary payable to Employee shall be determined by adding to
Employee's then current base salary the sum, if any, determined by multiplying
Employee's then current base salary by the percentage that the Consumer Price
Index for "Urban Wage Earners & Clerical Workers", as prepared by the Bureau of
Labor Statistics of the Department of Labor of the United States for the city in
which Employee's residence is located, for the most recently ended calendar year
has increased over the index from the previous calendar year; provided that
Employee's base salary shall not be increased on account of the foregoing cost
of living adjustments to an amount in excess of $270,000 per annum. In addition,
the Board may from time to time award bonuses to Employee based on such criteria
as the Board may establish in its discretion. The payment of salary and bonuses
shall be subject to all federal, state and withholding taxes, social security
deductions and other general obligations.
(b) Vacation. Employee shall be entitled to three (3) weeks of paid
--------
vacation during each 12-month period of his employment hereunder at times
mutually acceptable to Employee and the Company. Unused vacations can be
carried forward for 12 months, and shall thereupon lapse.
2
(c) Other Compensation and Benefits. During the term of this
-------------------------------
Agreement, Employee may be entitled to receive the additional payments from the
Company set forth below. Employee shall be entitled to participate upon
commencement of the term of this Agreement in URI's group health insurance plan
and any bonus, option or similar incentive compensation plan, 401(k) plan, group
life plan and automobile allowance program which is made available, from time to
time, to other senior executives of URI, on a basis consistent with such
participation.
(d) Reimbursement. The Company shall reimburse Employee for properly
-------------
documented expenses which are incurred by Employee on behalf of the Company in
the performance of his duties hereunder in accordance with Company policies in
effect from time to time. In addition, upon presentation by Employee to the
Company of expense reports and satisfactory supporting documentation evidencing
payment of such expenses, in such form as shall be requested by the Company, the
Company shall reimburse Employee, up to a maximum aggregate amount reimbursable
under this Section 2(d)(ii) of $100,000, for such expenses as the Board, in its
sole and absolute discretion, determines to be necessary and reasonable in
connection with the relocation of Employee, should Employee relocate his family
and their personal effects from California to Connecticut.
(e) Stock Options.
-------------
(i) The term "Options" as used herein means (A) all options to
purchase common stock of URI ("URI Common Stock") to which Employee became
entitled pursuant to Section 5.10 of the Merger Agreement in respect of options
to purchase USR common stock previously granted to Employee (the "Carry-Over
Options"), (B) the options to purchase URI Common Stock described in the stock
option award letters, dated the date hereof, attached hereto' and (C) any and
all options to purchase shares of URI Common Stock which are at any time
hereafter granted by URI to Employee, whether under URI's 1997 Stock Option Plan
or otherwise. All unvested Options shall automatically vest on a Change of
Control.
(ii) A "Change of Control" shall be deemed to have occurred if:
(A) any "person" is or becomes a "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the "Act")),
directly or
____________________
1. To reflect the award of (a) 200,000 options exercisable at a price per share
equal to the closing price per share of URI Common Stock on the NYSE on the
Closing Date (the "Market Price") and (b) 75,000 options exercisable at a price
per share equal to the greater of (i) 125% of the Market Price and (ii) $45. All
of such options shall vest over a three year term.
3
indirectly, of securities of URI representing 50% or more of the total voting
power represented by then outstanding voting securities of URI, or has the power
(whether as a result of stock ownership, revocable or irrevocable proxies,
contract or otherwise) or ability to elect or cause the election of directors
consisting at the time of such election of a majority of the Board. The term
"persons" is defined in Sections 13(d) and 14(d) of the Act, except that the
term "person" shall not include: (1) any person or an Affiliate (as defined
below) of such person who as of the date of this Agreement owns 10% or more of
the total voting power represented by the outstanding voting securities of URI;
and (2) a trustee or other fiduciary holding securities under any employee
benefit plan of the Company or a corporation which is owned directly or
indirectly by the stockholders of URI in substantially the same percentage as
their ownership in URI. An "Affiliate" of a person is a person that controls, is
controlled by, or is under common control with such person.
or
(B) the stockholders of URI approve a merger of URI, or a
plan of complete liquidation of URI, or an agreement for the sale or disposition
by URI of all or substantially all of its assets, or any other business
combination of URI with any other corporation, other than any such merger or
business combination which would result in the voting securities of URI
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 50% of the total voting power represented by the
voting securities of URI or such surviving entity outstanding immediately after
such merger or business combination.
(ii) URI shall use its best efforts to file or cause to be filed
and promptly to be declared effective during URI's fiscal quarter ending: (A)
March 31, 1999 one or more registration statements on Form S-8 or Form S-3 (or
other appropriate forms) under the Securities Act of 1933 in order to register
one-third of the shares of URI Common Stock issuable pursuant to the Carry-Over
Options or, if greater, that number of shares of URI Common Stock issuable
pursuant to Carry-Over Options which when sold at the market price prevailing on
such date would yield net proceeds to Employee equal to the excise tax payable
by Employee in respect of the vesting of the Carry-Over Options on the date of
this Agreement pursuant to the Merger; (B) March 31, ▇▇▇▇ ▇▇▇ or more such
registration statements in order to register another one-third of the shares of
URI Common Stock issuable pursuant to the Carry-Over Options (but not more than
half of the shares not registered under clause (A)), and (C) March 31, 2001 one
or more such registration statements in order to register the balance of the
shares of URI Common Stock issuable pursuant to the Carry-Over Options. Except
as set forth above, the Company shall have no obligation to register under the
Securities Act or any state securities laws any of Employee's Options or any of
the shares of URI Common Stock issuable upon exercise thereof.
4
(iv) Notwithstanding the forgoing, in the event the Employee dies, or
is terminated without good cause (as defined below), or resigns for good reason
(as defined below) prior to any March 31 referred to in paragraph (iii) above,
the registration to be filed on such March 31 shall cover all Carry-Over Options
then outstanding. As used in this paragraph, the term "good reason" means (A) a
material diminution in Employee's duties, responsibilities or title; (B) the
occurrence of a Change of Control or (C) URI's material breach of this Agreement
which is not cured within 30 days after notice.
3. Term; Termination; Rights of Termination.
----------------------------------------
(a) The term of this Agreement shall begin on the date hereof and
shall continue until the third anniversary of the date hereof or such earlier
date set forth below, provided that the term shall automatically renew at the
end of each month after the first year so that at no time shall the balance of
the term of Employee's employment be less than two years. This Agreement and
Employee's employment may terminate in any one of the following ways:
(i) The death of Employee shall terminate this Agreement;
(ii) A notice of resignation by the Employee presented to the
Board shall terminate this Agreement;
(iii) The Company may terminate this Agreement after ten (10)
days' written notice to Employee for "good cause", which is defined to mean:
(A) Employee's material breach of this Agreement,
including, without limitation, his insubordination.
(B) the material default of the Company in performing its
obligations under contracts with other persons or business entities if
directly caused by Employee, intentionally and without authorization;
(C) if, because of illness or physical or mental
disability or other incapacity which continues for a period in excess of
four months in any consecutive 16-month period, Employee is unable to
perform his duties under this Agreement;
(D) Employee's fraud or dishonesty with respect to the
business or affairs of the Company or if Employee is convicted of a crime
which in the reasonable opinion of the Board would negatively affect the
Company's business or reputation; or
5
(E) alcohol or drug abuse by Employee.
(iv) The Company may terminate this Agreement without cause at
any time, provided that in the event of a termination of this Agreement without
cause, Employee shall be entitled to receive from the Company his then current
monthly base salary over the balance of the term of his employment, in the same
installments and subject to the same withholding, as applied during his
employment. In addition, for the number of months remaining in the term of this
Agreement, the Company shall continue to be obligated to provide to Employee
with life, health, disability and accident insurance and benefits and all other
executive benefits (including without limitation, retirement benefits and
automobile and expense allowances) comparable to those provided to Employee
prior to his termination. To the extent that Employee is no longer lawfully
eligible for any aforementioned benefit because he is no longer employed by the
Company, the Company shall pay to Employee a lump sum cash payment equal to the
present value of the benefits which would have been provided to Employee had his
employment continued for the number of months remaining in the then term of this
Agreement.
(b) Upon termination of this Agreement or Employee's employment for
any reason whatsoever, Employee shall be entitled to receive all salary earned
under this Agreement to the date of termination. However, termination of this
Agreement shall not accelerate the payment date of any monies accrued or
accruing to the account of Employee as a result of any bonuses or other
compensation, nor shall termination vest in Employee any right in connection
therewith other than as expressly set forth herein.
(c) In the event of termination of this Agreement for any reason
provided in this Section or if Employee resigns prior to the expiration of the
term of this Agreement, all rights and obligations of the Company and Employee
under this Agreement shall cease immediately, except for those which by their
terms specifically apply to periods following the termination of this Agreement
(including, without limitation, Sections 3 through 11 hereof), and thereafter
Employee shall have no right to receive any compensation hereunder except as
otherwise expressly set forth above.
4. Confidentiality.
---------------
(a) During and at all times after Employee's employment:
(i) Employee shall not disclose to any person or entity,
without the Company's prior consent, any confidential or secret information,
whether prepared by him or others.
6
(ii) Employee shall not, except in furtherance of the business
of the Company, directly or indirectly use any such information other than as
directed by the Company.
(iii) Employee shall not, except in the furtherance of the
business of the Company, remove confidential or secret information from the
premises of the Company without the prior consent of the Company.
(iv) Upon termination of his employment for whatever reason,
with or without cause, Employee shall promptly deliver to the Company all
originals and copies (whether in note, memo or other document form or on video,
audio or computer tapes or discs or otherwise) of confidential or secret
information that is in his possession, custody or control, whether prepared by
him or others.
(b) Confidential information includes, but is not limited to:
(i) the name of any company or business all or any substantial
part of which is or at any time was a candidate for potential acquisition by the
Company, together with all analyses and other information which the Company has
generated, compiled or otherwise obtained with respect to such candidate,
business or potential acquisition, or with respect to the potential effect of
such acquisition on the Company's business, assets, financial results or
prospects;
(ii) business, pricing and management methods;
(ii) finances, strategies, systems, research, surveys, plans,
reports, recommendations and conclusions;
(iv) names, arrangements with, or other information relating to,
the Company's customers, suppliers, equipment manufacturers, financiers, owners
or operators, representatives and other persons who have business relationships
with the Company or who are prospects for business relationships with the
Company;
(v) technical information, work products and know-how; and
(vi) cost, operating, and other management information systems,
and other software and programming.
5. Non-Compete Provisions. The following covenants are made by Employee
----------------------
in partial consideration for the substantial economic investment made by the
Company in the hiring, education and training of Employee and the compensation
and other benefits
7
afforded by the Company to the Employee. Such covenants were material
inducements to the Company in hiring Employee.
(a) During his employment by the Company and for a period of 24 months
immediately following the termination of his employment for any reason
whatsoever, whether or not for cause:
(i) Employee shall not in any Restricted Area (as hereinafter
defined) directly or indirectly be employed or retained by any person or entity
who or which then competes with the Company to any extent, nor will Employee
directly or indirectly own any interest in any such person or entity or render
to it any consulting, brokerage, contracting, financial or other services.
Employee shall be deemed to be employed or retained in the Restricted Area if he
has an office in the Restricted Area or if he performs any duties or renders any
advice with respect to any facility or business activities in the Restricted
Area. A "Restricted Area" means each of:
(A) any state in the United States and any province in Canada
in which the Company conducts any equipment rental or other equipment-related
activity, it being agreed that each state and province is one unitary market for
purposes of the Company's business;
(B) regardless of state, the area within a 200-mile radius of
any office or facility of the Company in which or in relation to which Employee
shall have performed any duties for the Company during the one year period
preceding the termination of his employment.
(ii) Employee shall not anywhere in the United States or Canada
directly or indirectly be employed or retained by a Similar Entity (as
hereinafter defined) nor will Employee directly or indirectly own any interest
in any Similar Entity or render to it any consulting, brokerage, financing,
contracting, or other services; provided, however, that the Employee may own,
directly or indirectly, solely as an investment, securities of any business
traded on any national securities exchange or Nasdaq, provided the Employee is
not a controlling person of, or a member of a group which controls, such
business; and further provided that the Employee does not, directly or
indirectly, own 5% or more of any class of securities in such business. A
"Similar Entity" means each of:
(A) the entities listed in Exhibit A to this Agreement;
(B) any person or entity which anywhere in the United States
now or hereafter engages in any business in which the Company engages now or
hereafter during the term of Employee's employment;
8
(C) any entity which at any time during the term of Employee's
employment was a candidate for acquisition by or merger with the Company; and
(D) any entity which owns or owned any facility which was
acquired by the Company, or was a candidate for acquisition by the Company, at
any time during the term of Employee's employment.
(ii) Employee shall not anywhere directly or indirectly (whether
as an owner, partner, employee, consultant, broker, contractor or otherwise, and
whether personally or through other persons):
(A) solicit or accept the business of, or call upon, any person
or entity who or which is or was (1) a customer, supplier or manufacturer of
equipment which is sold, leased or rented out by the Company, finder or broker,
who had a business relationship with the Company at any time during the period
the period of his employment, or (2) an affiliate of any such person;
(B) approve, solicit or retain, or discuss the employment or
retention (whether as an employee, consultant or otherwise) of any person who
was an employee of the Company at any time during the one-year period preceding
the termination of his employment;
(C) solicit or encourage any person to leave the employ of
the Company;
(D) call upon or assist in the acquisition of any company which
was, during the term of his employment, either called upon by an employee of the
Company or by a broker or other third party, for possible acquisition by the
Company or for which an employee of the Company or other person made an
acquisition analysis for the Company; or
(E) own any interest in or be employed by or provide any
services to any person or entity which engages in any conduct which is
prohibited to Employee under this Section 5(a); provided, however, that the
Employee may own, directly or indirectly, solely as an investment, securities of
any business traded on any national securities exchange or NASDAQ, provided the
Employee is not a controlling person of, or a member of a group which controls,
such business and further provided that the Employee does not, directly or
indirectly, own 5% or more of any class of securities of such business.
(b) Before taking any position with any person or entity during the
24- month period following the termination of his employment for any reason,
with or without
9
cause, Employee will give prior written notice to the Chairman of the Board of
the name of such person or entity. The Company shall be entitled to advise each
such person or entity of the provisions of this Agreement, and to correspond and
otherwise deal with each such person or entity to ensure that the provisions of
this Agreement are enforced and duly discharged.
(c) All time periods in this Agreement shall be computed by excluding
from such computation any time during which Employee is in violation of any
provision of this Agreement and any time during which there is pending in any
court of competent jurisdiction any action (including any appeal from any final
judgment) brought by any person, whether or not a party to this Agreement, in
which action the Company seeks to enforce the agreements and covenants in this
Agreement or in which any person contests the validity of such agreements and
covenants or their enforceability or seeks to avoid their performance or
enforcement.
(d) Employee understands that the provisions of this Agreement have
been carefully designed to restrict his activities to the minimum extent which
is consistent with law and the Company's requirements. Employee has carefully
considered these restrictions, and Employee confirms that they will not unduly
restrict Employee's ability to obtain a livelihood. Before signing this
Agreement, Employee has had the opportunity to discuss this Agreement and all of
its terms with his attorney.
(e) Since monetary damages will be inadequate and the Company will be
irreparably damaged if the provisions of this Agreement are not specifically
enforced, the Company shall be entitled, among other remedies to an injunction
restraining any violation of this Agreement (without any bond or other security
being required) by Employee and by any person or entity to whom Employee
provides or proposes to provide any services in violation of this Agreement.
(f) If any provision contained in this Agreement is determined to be
void, illegal or unenforceable, in whole or in part, then the other provisions
contained herein shall remain in full force and effect as if the provision which
was determined to be void, illegal, or unenforceable had not been contained
herein.
(g) The courts enforcing this Agreement shall be entitled to modify
the duration and scope of any restriction contained herein to the extent such
restriction would otherwise be unenforceable, and such restriction as modified
shall be enforced.
6. Return of Company Property. All products, records, designs, patents,
--------------------------
plans, manuals, "field guides," memoranda, lists and other property delivered to
Employee by or on behalf of the Company or by its customers (including, but not
limited to, customers obtained for the Company by Employee), and all records
compiled by the Employee which
10
pertain to the business of the Company (whether or not confidential) shall be
and remain the property of the Company and be subject at all times to its
discretion and control. Likewise, all correspondence with customers or
representatives, reports, records, charts, advertising materials, and any data
collected by Employee, or by or on behalf of the Company or its representatives
(whether or not confidential) shall be delivered promptly to the Company without
request by it upon termination of Employee's employment.
7. Inventions. Employee shall disclose promptly to the Company any and
----------
all conceptions and ideas for inventions, improvements and valuable discoveries,
whether patentable or not, which are conceived or made by Employee solely or
jointly with another during the period of employment or within one (1) year
thereafter and which are related to the business or activities of the Company or
which Employee conceives as a result of his employment by the Company, and
Employee hereby assigns and agrees to assign all his interests therein to the
Company or its nominee. Whenever requested to do so by the Company, Employee
shall execute any and all applications, assignments or other instruments that
the Company shall deem necessary to apply for and obtain Letters Patent of the
United States or any foreign country or to otherwise protect the Company's
interest therein. These obligations shall continue beyond the termination of
employment with respect to inventions, improvements and valuable discoveries,
whether patentable or not, conceived, made or acquired by Employee during the
period of employment or within one (1) year thereafter and which are related to
the business or activities of the Company or which Employee conceives as a
result of his employment by the Company, and shall be binding upon Employee's
assigns, executors, administrators and other legal representatives.
8. Suits Against Company.
---------------------
(a) Both during and after the term of employment hereunder, Employee
covenants that Employee shall not bring suit or file counterclaims against the
Company for corporate misconduct (which for this purpose does not mean the mere
breach by the Company of this Agreement or any conduct which affects the rights
of the Employee), unless both of (i) and (ii) below shall have occurred, namely:
(i) Employee shall have first made written demand to the Board to investigate
and deal with such misconduct, and (ii) the Board shall have failed within 45
days after the date of receipt of such demand to establish a Special Litigation
Committee, consisting exclusively of outside directors, to investigate and deal
with such misconduct.
(b) Without limiting the generality and to further implement the
foregoing, Employee irrevocably and unconditionally consents at the option of
the Company to the entry of temporary restraining orders and temporary and
permanent injunctions (without posting bond or other security) against the
filing of any action or counterclaim which is prohibited hereunder.
11
(c) The opinion of the Board shall be binding and conclusive on the
determination of which directors constitute "outside directors," and the
determination of the Special Litigation Committee shall be binding and
conclusive on all matters relating to the actual or alleged misconduct which is
referred to it as aforesaid.
9. Cooperation in Proceedings. During and after the termination of
--------------------------
Employee's employment, Employee shall for reasonable compensation consistent
with his compensation from the Company cooperate fully and at reasonable times
with the Company and its subsidiaries in all litigations and regulatory
proceedings on which the Company or any subsidiary seeks Employee's assistance
and as to which Employee has any knowledge or involvement. Without limiting the
generality of the foregoing, Employee will be available upon reasonable notice
for periods of reasonable duration, considering his other responsibilities and
obligations, to testify at such litigations and other proceedings, and will
cooperate with counsel to the Company in preparing materials and offering advice
in such litigations and other proceedings. Except as required by law and then
only upon reasonable prior written notice to the Company, Employee shall not in
any way cooperate or assist any person or entity in any matter which is adverse
to the Company or to any person who was at any time an officer or director of
the Company.
10. No Derogation. Except as otherwise required by law (and then only
-------------
upon 10 days' prior written notice to the Company), Employee shall not from and
after the date hereof, whether during Employee's employment or at any time
thereafter, in any way or to any person, denigrate or derogate the Company or
any of its subsidiaries, or any person who was at any time an officer or
director of the Company, or any products, services or procedures of the Company,
whether or not such denigrating or derogatory statements shall be true and are
based on acts or omissions which were learned or are learned by Employee
heretofore or from and after the date hereof or on acts or omissions which
occurred at any time heretofore or which occur at any time from and after the
date hereof, or otherwise.
11. Miscellaneous.
-------------
(a) Complete Agreement. There are no oral representations,
------------------
understandings or agreements with the Company or any of its officers, directors
or representatives covering the same subject matter as this Agreement. This
written Agreement is the final, complete and exclusive statement and expression
of the agreement between the Company and Employee and of all the terms of this
Agreement, it cancels and replaces and supersedes all prior agreements with
respect to the subject matter hereof (including, without limitation, any
employment, deferred compensation, bonus or stock option agreements between
Employee and USR), and it cannot be varied, contradicted or supplemented by
evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a further writing signed
by the
12
Company and Employee, and no term of this Agreement may be waived except by
writing signed by the party waiving the benefit of such terms.
(b) No Waiver. No waiver by the parties hereto of any default or
---------
breach of any term, condition or covenant of this Agreement shall be deemed to
be a waiver of any subsequent default or breach of the same or any other term,
condition or covenant contained herein.
(c) Binding Effect. This Agreement shall be binding upon and inure to
--------------
the benefit of the parties thereto and their respective heirs, successors and
permitted assigns. The Company may assign this Agreement only to a person or
entity who or which directly or indirectly succeeds to all or any substantial
part of the Company's assets or business. This Agreement is personal to Employee
and may not be assigned or delegated by him and any such purported assignment or
delegation shall be null and void.
(d) Notice. Whenever any notice is required hereunder, it shall be
------
given in writing addressed as follows: (i) if to the Company, to: URI, Four
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: Chairman of the
Board, with a copy (which shall not constitute notice) to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Esq., 24th Floor, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; and (ii) if to
Employee, to: _________________, with a copy (which shall not constitute notice)
to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., Heller, Ehrman, White & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Notice shall be deemed given
and effective (a) five business days after the deposit in the U.S. mail of a
writing addressed as above and sent first class mail, certified, return receipt
requested, (b) one (1) business day after delivered to a nationally recognized
air courier for next day delivery service, or (c) upon personal delivery. Either
party may change the address for notice by notifying the other party of such
change in accordance with this paragraph.
(e) Severability; Headings. If any portion of this Agreement is held
----------------------
invalid or inoperative, the other portions of this agreement shall be deemed
valid and operative, and so far as it is reasonable and possible, effect shall
be given to the intent manifested by the portion held invalid or inoperative.
The paragraph headings herein are for reference purposes only and are not
intended in any way to describe, interpret, define or limit the extent or intent
of this Agreement or any part hereof.
(f) Governing Law; Resolution of Disputes; Service of Process. This
---------------------------------------------------------
Agreement shall in all respects be construed according to the laws of the State
of Connecticut. All disputes relating to the interpretation and enforcement of
the provisions of this Agreement shall be resolved and determined exclusively by
arbitration in San Francisco, California under the rules of the American
Arbitration Association. Service of process shall be effective when given in the
manner provided for notices hereunder.
13
IN WITNESS WHEREOF the parties have signed and delivered this Agreement as
of the date first set forth above.
UNITED RENTALS, INC.
By:_________________________
Name:
Title:
____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
14
Exhibit A
Rental Service Corp.
▇▇▇▇
RentX
Hertz Equipment Rental Corporation
Prime Services
National Equipment Services
Falconite
Brambles
American Equipment
GE Capital - equipment leasing divisions
Brentwood Associates
▇▇▇▇▇▇ ▇▇▇▇▇
Caterpillar
Deere
Nationsrent
Ashstead
Rentokil and subsidiaries
Any company on the "RER 100" list
Any affiliate of any of the foregoing.
15
EXHIBIT E-2
EMPLOYMENT AGREEMENT
--------------------
This AGREEMENT between United Rentals, Inc., a Delaware corporation
("URI"), and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("Employee"), is hereby entered into as of
[CLOSING DATE OF THE MERGER].
Recitals:
--------
URI and its affiliates (collectively, the "Company") are engaged in the
business of acquiring and operating companies which rent, operate, maintain,
distribute, sell or otherwise deal in or with equipment or similar assets, and
may in the future engage in other businesses which the Company deems to be
related to the foregoing. All such businesses are collectively referred to
herein as the "Business."
Employee was heretofore the Chief Financial Officer of U.S. Rentals, Inc.
("USR"). Pursuant to an Agreement and Plan of Merger dated June 15, 1998 (the
"Merger Agreement"), (i) URI acquired USR and (ii) URI is offering Employee
employment with the Company on the terms set forth in this Agreement. This
Agreement replaces and supersedes in all respects Employee's existing employment
agreement with USR.
Pursuant to this Agreement, Employee will be employed by the Company in a
confidential relationship wherein Employee, in the course of his employment with
the Company, will become familiar with and aware of information as to the
specific manner of doing business and the potential acquisition candidates and
customers of the Company and its affiliates and future plans with respect
thereto, all of which will be established and maintained at great expense to the
Company; this information is a trade secret and constitutes the valuable
goodwill of the Company. Employee recognizes that the Company's business is
dependent upon a number of trade secrets, including the identity of customers
and potential acquisition candidates, the analysis of such candidates and
financial data of the Company. The protection of these trade secrets is of
critical importance to the Company. The Company will sustain great loss and
damage if, for whatever reason, Employee should violate the provisions of this
Agreement. Further, monetary damages for such losses would be extremely
difficult to measure.
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby agreed
as follows:
1. Employment and Duties. (a) Upon commencement of the term of this
---------------------
Agreement, the Company shall employ Employee as the Vice President-Finance of
URI on the terms and conditions herein set forth. Employee shall perform such
duties, have such authority,
and report to such persons (including, without limitation, the Vice Chairman and
Chief Operating Officer of URI), as shall from time to time be designated by the
Board of Directors of URI (the "Board"). Employee shall accept this employment
upon the terms and conditions herein contained and agrees to devote his full
time, attention and efforts to promote and further the business and services of
the Company. Employee shall faithfully adhere to, execute and fulfill all
policies established by the Company.
(b) Employee shall perform such duties, assume such responsibilities
and devote such time, attention and energy to the business of the Company as the
Board shall from time to time require and shall not, during the term of his
employment hereunder, be engaged in any other business activity pursued for
gain, profit or other pecuniary advantage without the prior written consent of
the Board. However, the foregoing limitations shall not be construed as
prohibiting Employee from making personal investments in such form or manner as
will neither require his services in the operation or affairs of the companies
or enterprises in which such investments are made nor violate the terms of
Section 5.
(c) Employee will be based in URI's offices in Modesto, California,
and shall not be required to relocate.
2. Compensation and Other Benefits. For all services rendered by Employee
-------------------------------
to the Company, the Company shall compensate the Employee as follows:
(a) Base Salary and Bonus. The initial base salary payable to
---------------------
Employee during the term of this Agreement shall be $175,000 per year, payable
in accordance with URI's standard payroll practices. Minimum annual increases
in the base salary payable to Employee shall be determined by adding to
Employee's then current base salary the sum, if any, determined by multiplying
Employee's then current base salary by the percentage that the Consumer Price
Index for "Urban Wage Earners & Clerical Workers", as prepared by the Bureau of
Labor Statistics of the Department of Labor of the United States for the city in
which Employee's residence is located, for the most recently ended calendar year
has increased over the index from the previous calendar year; provided that
Employee's base salary shall not be increased on account of the foregoing cost
of living adjustments to an amount in excess of $210,000 per annum. In
addition, the Board may from time to time award bonuses to Employee based on
such criteria as the Board may establish in its discretion. The payment of
salary and bonuses shall be subject to all federal, state and withholding taxes,
social security deductions and other general obligations.
(b) Vacation. Employee shall be entitled to three (3) weeks of paid
--------
vacation during each 12-month period of his employment hereunder at times
mutually acceptable to Employee and the Company. Unused vacations can be
carried forward for 12 months, and shall thereupon lapse.
2
(c) Other Compensation and Benefits. During the term of this
-------------------------------
Agreement, Employee may be entitled to receive the additional payments from the
Company set forth below. Employee shall be entitled to participate upon
commencement of the term of this Agreement in URI's group health insurance plan
and any bonus, option or similar incentive compensation plan, 401(k) plan, group
life plan and automobile allowance program which is made available, from time to
time, to other senior executives of URI, on a basis consistent with such
participation.
(d) Reimbursement. The Company shall reimburse Employee for properly
-------------
documented expenses which are incurred by Employee on behalf of the Company in
the performance of his duties hereunder in accordance with Company policies in
effect from time to time.
(e) Stock Options.
-------------
(i) The term "Options" as used herein means (A) all options to
purchase common stock of URI ("URI Common Stock") to which Employee became
entitled pursuant to Section 5.10 of the Merger Agreement in respect of options
to purchase USR common stock previously granted to Employee (the "Carry-Over
Options"), (B) the options to purchase URI Common Stock described in the stock
option award letters, dated the date hereof, attached hereto and (C) any and all
options to purchase shares of URI Common Stock which are at any time hereafter
granted by URI to Employee, whether under URI's 1997 Stock Option Plan or
otherwise. All unvested Options shall automatically vest on a Change of
Control.
(ii) A "Change of Control" shall be deemed to have occurred if:
__________________
1. To reflect the award of (a) 100,000 options exercisable at a price per share
equal to the closing price per share of URI Common Stock on the NYSE on the
Closing Date (the "Market Price") and (b) 37,500 options exercisable at a price
per share equal to the greater of (i) 125% of the Market Price and (ii) $45.
All of such options shall vest over a three year term.
▇▇. ▇▇▇▇▇▇▇▇'▇ option grant letters will provide that (a) all options
scheduled to vest in a given period will vest in full on the first day of such
period if he is employed by the Company on such date, and (b) all shares of URI
Common Stock which are acquired by ▇▇. ▇▇▇▇▇▇▇▇ upon exercise of vested options
that are covered by an effective Registration Statement on Form S-8 may be
resold by him in accordance with the grant letters upon exercise.
3
(A) any "person" is or becomes a "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the "Act")),
directly or indirectly, of securities of URI representing 50% or more of the
total voting power represented by then outstanding voting securities of URI, or
has the power (whether as a result of stock ownership, revocable or irrevocable
proxies, contract or otherwise) or ability to elect or cause the election of
directors consisting at the time of such election of a majority of the Board.
The term "persons" is defined in Sections 13(d) and 14(d) of the Act, except
that the term "person" shall not include: (1) any person or an Affiliate (as
defined below) of such person who as of the date of this Agreement owns 10% or
more of the total voting power represented by the outstanding voting securities
of URI; and (2) a trustee or other fiduciary holding securities under any
employee benefit plan of the Company or a corporation which is owned directly or
indirectly by the stockholders of URI in substantially the same percentage as
their ownership in URI. An "Affiliate" of a person is a person that controls, is
controlled by, or is under common control with such person.
or
(B) the stockholders of URI approve a merger of URI, or a
plan of complete liquidation of URI, or an agreement for the sale or disposition
by URI of all or substantially all of its assets, or any other business
combination of URI with any other corporation, other than any such merger or
business combination which would result in the voting securities of URI
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 50% of the total voting power represented by the
voting securities of URI or such surviving entity outstanding immediately after
such merger or business combination.
(iii) URI shall use its best efforts to file or cause to be filed
and promptly to be declared effective during URI's fiscal quarter ending: (A)
March 31, 1999 one or more registration statements on Form S-8 or Form S-3 (or
other appropriate forms) under the Securities Act of 1933 in order to register
one-third of the shares of URI Common Stock issuable pursuant to the Carry-Over
Options or, if greater, that number of shares of URI Common Stock issuable
pursuant to Carry-Over Options which when sold at the market price prevailing on
such date would yield net proceeds to Employee equal to the excise tax payable
by Employee in respect of the vesting of the Carry-Over Options on the date of
this Agreement pursuant to the Merger; (B) March 31, ▇▇▇▇ ▇▇▇ or more such
registration statements in order to register another one-third of the shares of
URI Common Stock issuable pursuant to the Carry-Over Options (but not more than
half of the shares not registered under clause (A)), and (C) March 31, 2001 one
or more such registration statements in order to register the balance of the
shares of URI Common Stock issuable pursuant to the Carry-Over Options. Except
as set forth above, the Company shall have no
4
obligation to register under the Securities Act or any state securities laws any
of Employee's Options or any of the shares of URI Common Stock issuable upon
exercise thereof.
(iv) Notwithstanding the forgoing, in the event the Employee
dies, or is terminated without good cause (as defined below), or resigns for
good reason (as defined below) prior to any March 31 referred to in paragraph
(iii) above, the registration to be filed on such March 31 shall cover all
Carry-Over Options then outstanding. As used in this paragraph, the term "good
reason" means (A) a material diminution in Employee's duties, responsibilities
or title; (B) the occurrence of a Change of Control or (C) URI's material breach
of this Agreement which is not cured within 30 days after notice.
3. Term; Termination; Rights of Termination.
----------------------------------------
(a) The term of this Agreement shall begin on the date hereof and
shall continue until the third anniversary of the date hereof or such earlier
date set forth below, provided that the term shall automatically renew at the
end of each month after the first year so that at no time shall the balance of
the term of Employee's employment be less than two years. This Agreement and
Employee's employment may terminate in any one of the following ways:
(i) The death of Employee shall terminate this Agreement;
(ii) A notice of resignation by the Employee presented to the
Board shall terminate this Agreement;
(iii) The Company may terminate this Agreement after ten (10)
days' written notice to Employee for "good cause", which is defined to mean:
(A) Employee's material breach of this Agreement,
including, without limitation, his insubordination.
(B) the material default of the Company in performing its
obligations under contracts with other persons or business entities if
directly caused by Employee, intentionally and without authorization;
(C) if, because of illness or physical or mental
disability or other incapacity which continues for a period in excess of
four months in any consecutive 16-month period, Employee is unable to
perform his duties under this Agreement;
(D) Employee's fraud or dishonesty with respect to the
business or affairs of the Company or if Employee is convicted of a crime
which in
5
the reasonable opinion of the Board would negatively affect the Company's
business or reputation; or
(E) alcohol or drug abuse by Employee.
(iv) The Company may terminate this Agreement without cause at
any time, provided that in the event of a termination of this Agreement without
cause, Employee shall be entitled to receive from the Company his then current
monthly base salary over the balance of the term of his employment, in the same
installments and subject to the same withholding, as applied during his
employment. In addition, for the number of months remaining in the term of this
Agreement, the Company shall continue to be obligated to provide to Employee
with life, health, disability and accident insurance and benefits and all other
executive benefits (including without limitation, retirement benefits and
automobile and expense allowances) comparable to those provided to Employee
prior to his termination. To the extent that Employee is no longer lawfully
eligible for any aforementioned benefit because he is no longer employed by the
Company, the Company shall pay to Employee a lump sum cash payment equal to the
present value of the benefits which would have been provided to Employee had his
employment continued for the number of months remaining in the then term of this
Agreement.
(b) Upon termination of this Agreement or Employee's employment for
any reason whatsoever, Employee shall be entitled to receive all salary earned
under this Agreement to the date of termination. However, termination of this
Agreement shall not accelerate the payment date of any monies accrued or
accruing to the account of Employee as a result of any bonuses or other
compensation, nor shall termination vest in Employee any right in connection
therewith other than as expressly set forth herein.
(c) In the event of termination of this Agreement for any reason
provided in this Section or if Employee resigns prior to the expiration of the
term of this Agreement, all rights and obligations of the Company and Employee
under this Agreement shall cease immediately, except for those which by their
terms specifically apply to periods following the termination of this Agreement
(including, without limitation, Sections 3 through 11 hereof), and thereafter
Employee shall have no right to receive any compensation hereunder except as
otherwise expressly set forth above.
4. Confidentiality.
---------------
(a) During and at all times after Employee's employment:
(i) Employee shall not disclose to any person or entity, without
the Company's prior consent, any confidential or secret information, whether
prepared by him or others.
6
(ii) Employee shall not, except in furtherance of the business
of the Company, directly or indirectly use any such information other than as
directed by the Company.
(iii) Employee shall not, except in the furtherance of the
business of the Company, remove confidential or secret information from the
premises of the Company without the prior consent of the Company.
(iv) Upon termination of his employment for whatever reason,
with or without cause, Employee shall promptly deliver to the Company all
originals and copies (whether in note, memo or other document form or on video,
audio or computer tapes or discs or otherwise) of confidential or secret
information that is in his possession, custody or control, whether prepared by
him or others.
(b) Confidential information includes, but is not limited to:
(i) the name of any company or business all or any substantial
part of which is or at any time was a candidate for potential acquisition by the
Company, together with all analyses and other information which the Company has
generated, compiled or otherwise obtained with respect to such candidate,
business or potential acquisition, or with respect to the potential effect of
such acquisition on the Company's business, assets, financial results or
prospects;
(ii) business, pricing and management methods;
(iii) finances, strategies, systems, research, surveys, plans,
reports, recommendations and conclusions;
(iv) names, arrangements with, or other information relating to,
the Company's customers, suppliers, equipment manufacturers, financiers, owners
or operators, representatives and other persons who have business relationships
with the Company or who are prospects for business relationships with the
Company;
(v) technical information, work products and know-how; and
(vi) cost, operating, and other management information systems,
and other software and programming.
5. Non-Compete Provisions. The following covenants are made by Employee
----------------------
in partial consideration for the substantial economic investment made by the
Company in the hiring, education and training of Employee and the compensation
and other benefits
7
afforded by the Company to the Employee. Such covenants were material
inducements to the Company in hiring Employee.
(a) During his employment by the Company and for a period of 24
months immediately following the termination of his employment for any reason
whatsoever, whether or not for cause:
(i) Employee shall not in any Restricted Area (as hereinafter
defined) directly or indirectly be employed or retained by any person or entity
who or which then competes with the Company to any extent, nor will Employee
directly or indirectly own any interest in any such person or entity or render
to it any consulting, brokerage, contracting, financial or other services.
Employee shall be deemed to be employed or retained in the Restricted Area if he
has an office in the Restricted Area or if he performs any duties or renders any
advice with respect to any facility or business activities in the Restricted
Area. A "Restricted Area" means each of:
(A) any state in the United States and any province in
Canada in which the Company conducts any equipment rental or other equipment-
related activity, it being agreed that each state and province is one unitary
market for purposes of the Company's business;
(B) regardless of state, the area within a 200-mile radius
of any office or facility of the Company in which or in relation to which
Employee shall have performed any duties for the Company during the one year
period preceding the termination of his employment.
(ii) Employee shall not anywhere in the United States or Canada
directly or indirectly be employed or retained by a Similar Entity (as
hereinafter defined) nor will Employee directly or indirectly own any interest
in any Similar Entity or render to it any consulting, brokerage, financing,
contracting, or other services; provided, however, that the Employee may own,
directly or indirectly, solely as an investment, securities of any business
traded on any national securities exchange or Nasdaq, provided the Employee is
not a controlling person of, or a member of a group which controls, such
business; and further provided that the Employee does not, directly or
indirectly, own 5% or more of any class of securities in such business. A
"Similar Entity" means each of:
(A) the entities listed in Exhibit A to this Agreement;
(B) any person or entity which anywhere in the United
States now or hereafter engages in any business in which the Company engages now
or hereafter during the term of Employee's employment;
8
(C) any entity which at any time during the term of
Employee's employment was a candidate for acquisition by or merger with the
Company; and
(D) any entity which owns or owned any facility which was
acquired by the Company, or was a candidate for acquisition by the Company, at
any time during the term of Employee's employment.
(iii) Employee shall not anywhere directly or indirectly (whether
as an owner, partner, employee, consultant, broker, contractor or otherwise, and
whether personally or through other persons):
(A) solicit or accept the business of, or call upon, any
person or entity who or which is or was (1) a customer, supplier or manufacturer
of equipment which is sold, leased or rented out by the Company, finder or
broker, who had a business relationship with the Company at any time during the
period the period of his employment, or (2) an affiliate of any such person;
(B) approve, solicit or retain, or discuss the employment
or retention (whether as an employee, consultant or otherwise) of any person who
was an employee of the Company at any time during the one-year period preceding
the termination of his employment;
(C) solicit or encourage any person to leave the employ of
the Company;
(D) call upon or assist in the acquisition of any company
which was, during the term of his employment, either called upon by an employee
of the Company or by a broker or other third party, for possible acquisition by
the Company or for which an employee of the Company or other person made an
acquisition analysis for the Company; or
(E) own any interest in or be employed by or provide any
services to any person or entity which engages in any conduct which is
prohibited to Employee under this Section 5(a); provided, however, that the
Employee may own, directly or indirectly, solely as an investment, securities of
any business traded on any national securities exchange or NASDAQ, provided the
Employee is not a controlling person of, or a member of a group which controls,
such business and further provided that the Employee does not, directly or
indirectly, own 5% or more of any class of securities of such business.
(b) Before taking any position with any person or entity during the
24- month period following the termination of his employment for any reason,
with or without
9
cause, Employee will give prior written notice to the Chairman of the Board of
the name of such person or entity. The Company shall be entitled to advise each
such person or entity of the provisions of this Agreement, and to correspond and
otherwise deal with each such person or entity to ensure that the provisions of
this Agreement are enforced and duly discharged.
(c) All time periods in this Agreement shall be computed by excluding
from such computation any time during which Employee is in violation of any
provision of this Agreement and any time during which there is pending in any
court of competent jurisdiction any action (including any appeal from any final
judgment) brought by any person, whether or not a party to this Agreement, in
which action the Company seeks to enforce the agreements and covenants in this
Agreement or in which any person contests the validity of such agreements and
covenants or their enforceability or seeks to avoid their performance or
enforcement.
(d) Employee understands that the provisions of this Agreement have
been carefully designed to restrict his activities to the minimum extent which
is consistent with law and the Company's requirements. Employee has carefully
considered these restrictions, and Employee confirms that they will not unduly
restrict Employee's ability to obtain a livelihood. Before signing this
Agreement, Employee has had the opportunity to discuss this Agreement and all of
its terms with his attorney.
(e) Since monetary damages will be inadequate and the Company will be
irreparably damaged if the provisions of this Agreement are not specifically
enforced, the Company shall be entitled, among other remedies to an injunction
restraining any violation of this Agreement (without any bond or other security
being required) by Employee and by any person or entity to whom Employee
provides or proposes to provide any services in violation of this Agreement.
(f) If any provision contained in this Agreement is determined to be
void, illegal or unenforceable, in whole or in part, then the other provisions
contained herein shall remain in full force and effect as if the provision which
was determined to be void, illegal, or unenforceable had not been contained
herein.
(g) The courts enforcing this Agreement shall be entitled to modify
the duration and scope of any restriction contained herein to the extent such
restriction would otherwise be unenforceable, and such restriction as modified
shall be enforced.
6. Return of Company Property. All products, records, designs, patents,
--------------------------
plans, manuals, "field guides," memoranda, lists and other property delivered to
Employee by or on behalf of the Company or by its customers (including, but not
limited to, customers obtained for the Company by Employee), and all records
compiled by the Employee which
10
pertain to the business of the Company (whether or not confidential) shall be
and remain the property of the Company and be subject at all times to its
discretion and control. Likewise, all correspondence with customers or
representatives, reports, records, charts, advertising materials, and any data
collected by Employee, or by or on behalf of the Company or its representatives
(whether or not confidential) shall be delivered promptly to the Company without
request by it upon termination of Employee's employment.
7. Inventions. Employee shall disclose promptly to the Company any and
----------
all conceptions and ideas for inventions, improvements and valuable discoveries,
whether patentable or not, which are conceived or made by Employee solely or
jointly with another during the period of employment or within one (1) year
thereafter and which are related to the business or activities of the Company or
which Employee conceives as a result of his employment by the Company, and
Employee hereby assigns and agrees to assign all his interests therein to the
Company or its nominee. Whenever requested to do so by the Company, Employee
shall execute any and all applications, assignments or other instruments that
the Company shall deem necessary to apply for and obtain Letters Patent of the
United States or any foreign country or to otherwise protect the Company's
interest therein. These obligations shall continue beyond the termination of
employment with respect to inventions, improvements and valuable discoveries,
whether patentable or not, conceived, made or acquired by Employee during the
period of employment or within one (1) year thereafter and which are related to
the business or activities of the Company or which Employee conceives as a
result of his employment by the Company, and shall be binding upon Employee's
assigns, executors, administrators and other legal representatives.
8. Suits Against Company.
---------------------
(a) Both during and after the term of employment hereunder, Employee
covenants that Employee shall not bring suit or file counterclaims against the
Company for corporate misconduct (which for this purpose does not mean the mere
breach by the Company of this Agreement or any conduct which affects the rights
of the Employee), unless both of (i) and (ii) below shall have occurred, namely:
(i) Employee shall have first made written demand to the Board to investigate
and deal with such misconduct, and (ii) the Board shall have failed within 45
days after the date of receipt of such demand to establish a Special Litigation
Committee, consisting exclusively of outside directors, to investigate and deal
with such misconduct.
(b) Without limiting the generality and to further implement the
foregoing, Employee irrevocably and unconditionally consents at the option of
the Company to the entry of temporary restraining orders and temporary and
permanent injunctions (without posting bond or other security) against the
filing of any action or counterclaim which is prohibited hereunder.
11
(c) The opinion of the Board shall be binding and conclusive on the
determination of which directors constitute "outside directors," and the
determination of the Special Litigation Committee shall be binding and
conclusive on all matters relating to the actual or alleged misconduct which is
referred to it as aforesaid.
9. Cooperation in Proceedings. During and after the termination of
--------------------------
Employee's employment, Employee shall for reasonable compensation consistent
with his compensation from the Company cooperate fully and at reasonable times
with the Company and its subsidiaries in all litigations and regulatory
proceedings on which the Company or any subsidiary seeks Employee's assistance
and as to which Employee has any knowledge or involvement. Without limiting the
generality of the foregoing, Employee will be available upon reasonable notice
for periods of reasonable duration, considering his other responsibilities and
obligations, to testify at such litigations and other proceedings, and will
cooperate with counsel to the Company in preparing materials and offering advice
in such litigations and other proceedings. Except as required by law and then
only upon reasonable prior written notice to the Company, Employee shall not in
any way cooperate or assist any person or entity in any matter which is adverse
to the Company or to any person who was at any time an officer or director of
the Company.
10. No Derogation. Except as otherwise required by law (and then only
-------------
upon 10 days' prior written notice to the Company), Employee shall not from and
after the date hereof, whether during Employee's employment or at any time
thereafter, in any way or to any person, denigrate or derogate the Company or
any of its subsidiaries, or any person who was at any time an officer or
director of the Company, or any products, services or procedures of the Company,
whether or not such denigrating or derogatory statements shall be true and are
based on acts or omissions which were learned or are learned by Employee
heretofore or from and after the date hereof or on acts or omissions which
occurred at any time heretofore or which occur at any time from and after the
date hereof, or otherwise.
11. Miscellaneous.
-------------
(a) Complete Agreement. There are no oral representations,
------------------
understandings or agreements with the Company or any of its officers, directors
or representatives covering the same subject matter as this Agreement. This
written Agreement is the final, complete and exclusive statement and expression
of the agreement between the Company and Employee and of all the terms of this
Agreement, it cancels and replaces and supersedes all prior agreements with
respect to the subject matter hereof (including, without limitation, any
employment, deferred compensation, bonus or stock option agreements between
Employee and USR), and it cannot be varied, contradicted or supplemented by
evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a further writing signed
by the
12
Company and Employee, and no term of this Agreement may be waived except by
writing signed by the party waiving the benefit of such terms.
(b) No Waiver. No waiver by the parties hereto of any default or
---------
breach of any term, condition or covenant of this Agreement shall be deemed to
be a waiver of any subsequent default or breach of the same or any other term,
condition or covenant contained herein.
(c) Binding Effect. This Agreement shall be binding upon and inure to
--------------
the benefit of the parties thereto and their respective heirs, successors and
permitted assigns. The Company may assign this Agreement only to a person or
entity who or which directly or indirectly succeeds to all or any substantial
part of the Company's assets or business. This Agreement is personal to
Employee and may not be assigned or delegated by him and any such purported
assignment or delegation shall be null and void.
(d) Notice. Whenever any notice is required hereunder, it shall be
------
given in writing addressed as follows: (i) if to the Company, to: URI, Four
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: Chairman of the
Board, with a copy (which shall not constitute notice) to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
Esq., 24th Floor, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; and (ii) if to
Employee, to: _________________, with a copy (which shall not constitute notice)
to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., Heller, Ehrman, White & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Notice shall be deemed given
and effective (a) five business days after the deposit in the U.S. mail of a
writing addressed as above and sent first class mail, certified, return receipt
requested, (b) one (1) business day after delivered to a nationally recognized
air courier for next day delivery service, or (c) upon personal delivery.
Either party may change the address for notice by notifying the other party of
such change in accordance with this paragraph.
(e) Severability; Headings. If any portion of this Agreement is held
----------------------
invalid or inoperative, the other portions of this agreement shall be deemed
valid and operative, and so far as it is reasonable and possible, effect shall
be given to the intent manifested by the portion held invalid or inoperative.
The paragraph headings herein are for reference purposes only and are not
intended in any way to describe, interpret, define or limit the extent or intent
of this Agreement or any part hereof.
(f) Governing Law; Resolution of Disputes; Service of Process. This
---------------------------------------------------------
Agreement shall in all respects be construed according to the laws of the State
of Connecticut. All disputes relating to the interpretation and enforcement of
the provisions of this Agreement shall be resolved and determined exclusively by
arbitration in San Francisco, California under the rules of the American
Arbitration Association. Service of process shall be effective when given in
the manner provided for notices hereunder.
13
IN WITNESS WHEREOF the parties have signed and delivered this Agreement as
of the date first set forth above.
UNITED RENTALS, INC.
By:__________________________
Name:
Title:
_____________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
14
Exhibit A
Rental Service Corp.
▇▇▇▇
RentX
Hertz Equipment Rental Corporation
Prime Services
National Equipment Services
Falconite
Brambles
American Equipment
GE Capital - equipment leasing divisions
Brentwood Associates
▇▇▇▇▇▇ ▇▇▇▇▇
Caterpillar
Deere
Nationsrent
Ashstead
Rentokil and subsidiaries
Any company on the "RER 100" list
Any affiliate of any of the foregoing.
15
EXHIBIT F
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), is entered into as
of [CLOSING DATE], 1998, between United Rentals, Inc., a Delaware corporation
(the "COMPANY"), the Persons listed on Schedule A hereto (each a "HOLDER" and
collectively, the "HOLDERS"). /1/ The parties agree as follows.
RECITALS
--------
A. Holders were holders of shares of common stock, par value $.01 per
share ("USR STOCK") of U.S. Rentals, Inc., a Delaware corporation ("USR").
B. Pursuant to an Agreement and Plan of Merger, dated as of June 15,
1998, among the Company, UR Acquisition Corporation, a Delaware corporation
and wholly-owned subsidiary of the Company ("MERGER SUB"), and USR, Merger
Sub was merged with and into USR, with USR as the surviving corporation and
wholly-owned subsidiary of the Company (the "MERGER").
C. Pursuant to the Merger, each share of USR Stock was converted into the
right to receive .9625 of a share of common stock, par value $.01 per
share, of the Company ("COMMON STOCK").
D. Pursuant to the Merger, Holders received shares of Common Stock (the
"SHARES") in respect of the USR Stock theretofore owned by the Holder which
will be subject to the provisions of Rule 145 under the Securities Act of
1933, as amended.
E. Holders and the Company desire to set forth herein their agreement
with respect to the registration rights, and certain other covenants,
applicable to the Shares.
1. Certain Definitions.
-------------------
As used in this Agreement:
"AFFILIATE" of a Person means any other Person directly or indirectly
controlling, controlled by or under direct or indirect common control with the
first mentioned Person. Without limiting the generality of the foregoing, for
purposes of this Agreement, each of the following shall be deemed Affiliates of
a Person: (i) such Person's
______________________
1. Persons will be all persons signing "Affiliate" letters.
spouse, lineal descendants and the respective spouses of such descendants; (ii)
any trust the majority of the beneficiaries of which are such Person and/or
Persons described in clause (i) and/or any Affiliates of such Person or Persons;
(iii) any trust of which such Person and/or its Affiliates is grantor or settlor
and (iv) any charitable, educational or political foundation or fund established
or endowed by any of the foregoing Persons or any of their Affiliates.
"BUSINESS DAY" means any day that commercial banks are not authorized
or required to close in Los Angeles, California.
"COMMISSION" means the Securities and Exchange Commission or any other
similar or successor agency of the United States government administering the
Securities Act.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and any
similar or successor federal statute, and the rules and regulations of the
Commission thereunder, as in effect at the time.
"NYSE" means the New York Stock Exchange.
"OFFERING" means the registration of the Company's securities under
the Securities Act, whether underwritten or not, for sale to the public.
"PERMITTED TRANSFEREE" means
(a) any entity all of the equity of which is directly or indirectly
owned by the transferor or any person who owns an equity interest
in the transferor;
(b) in the case of a transferor who is an individual, (i) such
transferor's spouse and lineal descendants, (ii) such
transferor's successors, personal representatives and heirs,
(iii) any trustee of any trust created primarily for the benefit
of any, some or all of such spouse and lineal descendants (but
that may include beneficiaries that are charities) or of any
revocable trust created by such transferor, (iv) following the
death of such transferor, all beneficiaries under either such
trust, (v) the transferor, in the case of a transfer from any
Permitted Transferee back to its transferor and (vi) any entity
all of the equity of which is directly or indirectly owned by any
of the foregoing;
(c) any charitable or educational organization that is exempt from
federal income taxes; or
2
(d) in the case of a transferor who is a trustee of a trust which
would be a Permitted Transferee, any beneficiary of such trust.
"PERSON" means a corporation, an association, a trust, a partnership,
a limited liability company, a joint venture, an organization, a business, an
individual, a government or political subdivision thereof, or a governmental
body.
"PROSPECTUS" means the prospectus included in any Registration
Statement, together with and including any amendment or supplement to such
prospectus, covering the Offering of any portion of the Registrable Securities
covered by a Registration Statement, and all material incorporated by reference
in such Prospectus.
"REGISTRABLE SECURITIES" means the Shares and any securities issued or
issuable with respect to the Shares by way of a stock dividend or stock split or
in connection with a combination of shares, recapitalization, merger,
consolidation, reclassification or other reorganization. A security will cease
to be a Registrable Security when it (a) has been effectively registered under
the Securities Act and disposed of in accordance with the Registration Statement
covering it, (b) is distributed to the public pursuant to Rule 144 (or any
similar rule then in force) under the Securities Act or (c) has otherwise been
transferred and a new certificate not bearing a restrictive legend and not
subject to any stop transfer order lawfully has been delivered by or on behalf
of the Company and no other restriction on transfer exists.
"REGISTRATION STATEMENT" means a registration statement filed by the
Company with the Commission covering Registrable Securities.
"REQUIRED HOLDERS" means, at any time, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or any
person or persons whom he so designates by notice to the Company.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal statute, together with the rules and regulations of the
Commission promulgated thereunder, as in effect at the time.
2. Registration Rights.
-------------------
2.1 Demand Registration. Commencing on such date as consolidated
-------------------
financial results (including combined sales and net income) covering at least 30
days of post-Merger combined operations of the Company and USR have been
published by the Company (the "RESTRICTION TERMINATION DATE"), the Required
Holders may, by written notice to the Company (the "DEMAND NOTICE"), demand that
the Company file, and, subject to Section 2.3 below, the Company shall file, a
Registration Statement for an underwritten public offering covering an Offering
of such number of Registrable Securities equal to the
3
lesser of (a) one-third (1/3) of the aggregate number of Registrable Securities
------
then owned by the Holders and (b) such number of Registrable Securities as would
generate anticipated gross proceeds (based on the then current trading price of
the Common Stock as reported by the NYSE) in such Offering of not more than
$200,000,000. In addition, the Required Holders will be entitled at any time
after _____, 1999 [date which is 11 1/2 months after Effective Time of Merger]
or, if earlier, such date as ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ has received $250,000,000 in gross
proceeds from the sale of Common Stock to demand that the Company file and cause
to be declared effective a Registration Statement (collectively with the
Registration Statement referred to in the preceding sentence, "DEMAND
REGISTRATION STATEMENTS") covering all or any part of the Registrable
Securities; provided that the Holders shall not be entitled to more than (x) one
such demand (other than the demand provided in the first sentence of this
Section 2.1) during any 12 month period and (y) three such demands in the
aggregate. Subject to Section 2.3 below, such Demand Registration Statements
shall be filed on an appropriate form under the Securities Act, as soon as
practicable after the Company receives the Demand Notice, the Company will use
its best efforts to cause any Demand Registration Statement to be declared
effective on the date requested by the managing underwriter for the Offering (no
earlier than 60 days from the date of the Demand Notice), or, if such Offering
is not underwritten, as soon as practicable after filing with the Commission and
(3) the Company will keep such Demand Registration Statement effective until the
related Offering is completed (but not more than 60 days from the effective date
of the Demand Registration Statement).
2.2 Company Participation. The Company can elect to register equity
---------------------
securities of the Company in a Demand Registration Statement or to participate
in the Offering, by including any of its equity securities in the Demand
Registration Statement, subject to the following:
(a) Notice. The Company must give notice of such election to the
------
Holders within 10 days after the Demand Notice was given to it, including
the number of Shares proposed to be sold by the Company in the Offering
(the "OTHER SHARES");
(b) Conditions. The Company must agree to sell such Other Shares
----------
on the same basis provided in the underwriting arrangements approved by the
Holders and the Company (including standard indemnification provisions) and
to timely complete and execute all questionnaires, powers of attorney,
indemnities, holdback agreements, underwriting agreements and other
documents reasonably required by such underwriting arrangements, by the
Commission, or by any state securities regulatory body; and
(c) Limitation On Amount. The number of Other Shares that may be
--------------------
sold by the Company will be limited if the managing underwriter decides
that
4
market conditions require a limitation. In such event, the number of shares
of Common Stock that may be sold in the Offering will be allocated first to
the Holders, second, to the extent available, to the Company, and, third,
to the extent available, to any other Person exercising registration rights
with respect to the Common Stock.
2.3 Delay. Except for a Demand Notice made within 60 days after the
-----
end of the Restriction Termination Date, the Company may delay the filing of any
Demand Registration Statement if upon receipt of the Demand Notice (a) the
Company notifies the Holders that it is contemplating filing a registration
statement for a primary offering within 120 days of such demand, (b) the Company
notifies the Holders that a material event has occurred or is likely to occur
that has not been publicly disclosed that, if disclosed, would have a material
adverse effect on the Company, or (c) the Company decides that the registration
and offering could interfere with, or would require the Company to accelerate
public disclosure of, any material financing, acquisition, disposition,
corporate reorganization or other material transaction involving the Company or
its subsidiaries. In the case of clause (a) of this subsection, the Company
will use its best efforts, as soon as practicable, upon the earlier of the
Company's abandonment of its contemplated registration statement or the
expiration of 90 days after the consummation of the contemplated Offering,
unless such Demand Notice is withdrawn by the Holders. In the case of clause
(b) or clause (c), the Company may not delay the filing of the Demand
Registration Statement for more than 90 days from the date of the Demand Notice
unless such Demand Notice is withdrawn by the Holders. The Company cannot
exercise the rights of postponement (i) described in clause (a) more than one
time in any 12-month period and (ii) described in clauses (b) and (c) more than
two times in any 12-month period and may not postpone a Demand Registration
Statement for more than 180 consecutive days. If there is a postponement under
any clause above, the Demand Notice may be withdrawn by the Holders by notice to
the Company. In such case, no Demand Notice will have been delivered for the
purposes of Section 2.1.
2.4 Selection Of Underwriters. The managing underwriter of any
-------------------------
Offering shall be designated by the Company, subject to the reasonable approval
of the Requisite Holders.
3. Registration Procedures. Subject to the terms of this Agreement, the
-----------------------
Company will use its best efforts to effect any registration under Section 2 in
a manner that permits the sale of the Registrable Securities covered thereby in
accordance with the intended method or methods of disposition. The Company
will, as promptly as practicable, do the following.
3.1 Copies; Review. At least five (5) Business Days before filing a
--------------
Registration Statement or Prospectus or any amendment or supplement thereto
(whether
5
before or after effectiveness), the Company will furnish to the Holders
participating in such Registration Statement (the "REGISTERING HOLDERS") and the
underwriters, if any, copies of all such documents proposed to be filed. Such
documents will be subject to the review of the Registering Holders and such
underwriters (and their respective counsel). The Company will not file any
Registration Statement or any Prospectus or any amendment or supplement thereto
(whether before or after effectiveness) to which the Registering Holders or the
underwriters, if any, reasonably object.
3.2 Amendments. The Company will (a) prepare and file with the
----------
Commission such amendments and post-effective amendments to the Registration
Statement as may be necessary to keep the Registration Statement effective for
the applicable time period required herein, (b) cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Securities Act, and (c) comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable period
in accordance with the intended methods of disposition by the Registering
Holders set forth in such Registration Statement or Prospectus supplement.
3.3 Notification. The Company will promptly notify the Registering
------------
Holders and the managing underwriters, and (if requested by any such Person)
confirm such notification in writing, (a) when the Prospectus has been filed,
and, with respect to the Registration Statement, when it has become effective,
(b) of any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information, (c) of
the issuance of any stop order suspending the effectiveness of the Registration
Statement, or the refusal or suspension of qualification of registration of
Registrable Securities, or the initiation of any proceedings for that purpose,
(d) if at any time the representations and warranties of the Company
contemplated by Section 8 cease to be true and correct, and (e) of any event
that makes any material statement made in the Registration Statement, the
Prospectus or any document incorporated therein by reference untrue or that
requires the making of any changes in the Registration Statement, the Prospectus
or any document incorporated therein by reference in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading in any material respect. The Company will make every reasonable
effort to obtain the withdrawal of any order suspending the effectiveness of the
Registration Statement at the earliest possible moment. If any event
contemplated by clause (e) occurs, the Company will promptly prepare a
supplement or post-effective amendment to the Registration Statement or the
Prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of the
Registrable Securities, the Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Upon receipt of any notice from the Company that any event of
the kind described in clause (e) has happened, each
6
Registering Holder will discontinue offering the Registrable Securities until
the Registering Holder receives the copies of the supplemented or amended
Prospectus contemplated by the previous sentence, or until it is advised in
writing by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings that are incorporated
by reference in the Prospectus. The period during which distribution of the
Shares is suspended will not be counted toward completion of the required period
of effectiveness for any Registration Statement.
3.4 Information Included. If requested by the managing underwriters
or the Registering Holders, the Company will as soon as practicable incorporate
in a Prospectus supplement or post-effective amendment such information as the
managing underwriters and the Registering Holders agree should be included
therein relating to the sale of the Registrable Securities, including, but not
limited to, information with respect to the number of Registrable Securities
being sold to such underwriters or other Persons, the purchase price being paid
therefor by such underwriters or other Persons and any other terms of the
distribution of the Registrable Securities to be sold in such Offering. Such
information will include, if applicable, any required disclosure of arrangements
with underwriters. The Company will make all required filings of such Prospectus
supplement or post-effective amendment as promptly as practicable after being
notified of the matters to be incorporated in such Prospectus supplement or
post-effective amendment.
3.5 Copies. The Company will (a) promptly furnish to the Registering
------
Holders and each managing underwriter without charge, at least one signed copy
of the Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits (including those incorporated by reference), and
(b) promptly deliver to the Registering Holders and the underwriters without
charge, as many copies of the Prospectus (including each preliminary Prospectus)
and any amendment or supplement thereto as such Persons may reasonably request.
The Company consents to the use of the Prospectus or any amendment or supplement
thereto by the Registering Holders and the underwriters in connection with the
Offering and sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto.
3.6 Blue Sky Registration. Prior to any Offering of Registrable
---------------------
Securities covered by a Registration Statement under Section 2, the Company will
register or qualify or cooperate with the Registering Holders, the underwriters
and their respective counsel in connection with the registration or
qualification of such Registrable Securities under the securities or blue sky
laws of such jurisdictions as the Registering Holders or underwriter reasonably
request in writing, and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of such Registrable
Securities. The Company will not be required to take any actions under this
subsection if such actions would require it to submit to the general taxation of
such jurisdiction or to file therein any general consent to
7
service of process, unless this limitation means that the Registrable Securities
would not be qualified (or exempt from qualification) for offer and sale in at
least 20 states.
3.7 Other Registrations. The Company will use its best efforts to
-------------------
cause the Registrable Securities covered by the Registration Statement to be
registered with or approved by such governmental agencies or authorities other
than the Commission and state securities regulatory bodies as may be necessary
to enable the Registering Holders or the underwriters to consummate the
disposition of such Registrable Securities.
3.8 Certificates. The Company will cooperate with the Registering
------------
Holders and the managing underwriter to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold that do
not bear any restrictive legends. Such certificates will be in such
denominations and registered in such names as the managing underwriter requests
at least two business days prior to any sale of Registrable Securities to the
underwriters.
3.9 Other Actions. In addition, the Company will (a) make such
-------------
representations and warranties to the Registering Holders and the underwriters
as are customarily made by issuers to underwriters in primary underwritten
offerings (or as may be reasonably requested by the underwriters), (b) obtain
opinions of counsel to the Company and updates (which counsel and opinions must
be reasonably satisfactory to the Registering Holders), (c) obtain customary
"cold comfort" letters and updates from the Company's independent certified
public accountants addressed to the underwriters, and use its best efforts to
obtain such a letter for the Registering Holders or to obtain a letter from such
accountants authorizing the Registering Holders to rely on such "cold comfort"
letter, (d) if an underwriting agreement is entered into, ensure that it sets
forth customary indemnification provisions and procedures with respect to the
Company and the Registering Holders similar to those set forth in Section 4
hereof, and (e) deliver such documents and certificates as may be requested by
the Registering Holders and the managing underwriter to evidence compliance with
clause (a) and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company with the Registering
Holders. The above will be done in connection with each closing under such
underwriting or similar agreement or as and to the extent required thereunder.
3.10 Due Diligence. The Company will make available for inspection
-------------
by the Registering Holders, any underwriter participating in any, and any
attorney or accountant retained by the Registering Holders or managing
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to be available to discuss and to supply all information reasonably
requested by any such Person in connection with the Registration Statement. If
reasonably requested by the managing underwriter, the Company will make
8
suitable officers available to participate in a customary "road show." All such
records, information or documents will be subject to standard confidentiality
arrangements.
3.11 Section 11(a) Notice. The Company will make generally available
--------------------
to its stockholders earnings statements satisfying the provisions of Section
11(a) of the Securities Act.
3.12 Expenses. Except as set forth in the next to last sentence of
--------
this Section 3.12, all expenses incident to the Company's performance of or
compliance with this Agreement, including, but not limited to, all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger expenses, telephone and delivery expenses,
and fees and disbursements of Company counsel and of independent certified
public accountants of the Company (including the expenses of any special audit
required by or incident to such performance), will be borne by the Company. The
Company will also pay its internal expenses (including travel), the expense of
any annual audit and the fees and expenses of any Person retained by the
Company. In addition, the Company will pay all reasonable fees and disbursements
of counsel to the Holders, such fees not to exceed $30,000. All such expenses
are referred to as "REGISTRATION EXPENSES." All underwriting fees and
commissions with respect to an underwritten Offering and transfer taxes, if any,
will be borne by the Holders in proportion to the number of Registrable
Securities sold by them.
4. Indemnification.
---------------
4.1 Indemnification By The Company. The Company will indemnify and
------------------------------
hold harmless the Holder, its officers, directors, agents (including, but not
limited to counsel) and employees and each Person who controls the Holder
(within the meaning of Section 15 of the Securities Act) (each, a "CONTROLLING
PERSON") (all of the foregoing are "INDEMNIFIED PERSONS") from and against any
and all losses, claims, damages and liabilities (including any investigation,
legal or other expenses ("LOSSES") reasonably incurred in connection with, and
any amount paid in settlement of, any action, suit or proceeding or any claim
asserted) to which the Indemnified Person may become subject under the
Securities Act, the Exchange Act or other federal or state securities law or
regulation, at common law or otherwise, insofar as such Losses arise out of or
are based upon (a) any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or preliminary
prospectus or any amendment or supplement thereto or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or (b) any violation by the Company of the
Securities Act or the Exchange Act, or other federal or state securities law
applicable to the Company and relating to any action or inaction required of the
Company in connection with such registration. In addition, the Company will
reimburse the Indemnified Person for any
9
reasonable investigation, legal or other expenses incurred by such Indemnified
Person in connection with investigating or defending any such Loss.
Notwithstanding anything herein to the contrary, the Company will not be liable
with respect to the portion of any such Loss that (i) arises out of or is based
upon any alleged untrue statement or alleged omission made in such Registration
Statement, preliminary Prospectus, Prospectus, or amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by the Indemnified Person specifically for use therein or (ii)
attributable to an Indemnified Person's (A) use of a Prospectus after being
notified by the Company to suspend use thereof pursuant to Section 3.3 above or
(B) failure to deliver a final Prospectus to the Person asserting any losses,
claims, damages and liabilities and judgments caused by any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if such material misstatement or omission or alleged
material misstatement or omission was cured in an amended or supplemented
Prospectus prepared by the Company and delivered to the Holder and the
underwriters at or prior to the time written confirmation of sale to such Person
was required to be made. The foregoing indemnity will remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person, and will survive the transfer of such securities by the Indemnified
Person. The Company will also indemnify underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, their officers and directors and each Person who controls such
Persons (within the meaning of Section 15 of the Securities Act) to the same
extent customarily requested by such Persons in similar circumstances.
4.2 Indemnification By Holders Of Registrable Securities. If a
----------------------------------------------------
Holder sells Registrable Securities under a Prospectus that is part of a
Registration Statement, the Holder will indemnify and hold harmless the Company,
its directors and each officer who signed such Registration Statement and each
Person who controls the Company (within the meaning of Section 15 of the
Securities Act) under the same circumstances as the foregoing indemnity from the
Company to the Holders but only to the extent that such Losses arise out of or
are based upon any untrue or allegedly untrue statement of a material fact or
omission or alleged omission of a material fact that was made in the Prospectus,
the Registration Statement, or any amendment or supplement thereto, in reliance
upon and in conformity with written information relating to a Holder furnished
to the Company by a Holder expressly for use therein. In no event will the
aggregate liability of a Holder exceed the amount of the net proceeds received
by the Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation. Such indemnity will remain in full force and effect
regardless of any investigation made by or on behalf of the Company or such
officer, director, employee or Controlling Person, and will survive the transfer
of such securities by the Holder. The Company and the Holders will be entitled
to receive indemnities from underwriters, selling brokers, dealer managers and
similar securities
10
industry professionals participating in the distribution, to the same extent as
customarily furnished by such Persons in similar circumstances.
4.3 Contribution. If the indemnification provided for in the
------------
foregoing Sections is unavailable to an indemnified party or is insufficient to
hold such indemnified party harmless for any Losses in respect of which the
foregoing Sections would otherwise apply by their terms (other than by reason of
exceptions provided in the foregoing Sections), then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, will have a
joint and several obligation to contribute to the amount paid or payable by such
indemnified party as a result of such Losses. Such contribution will be in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party, on the one hand, and such indemnified party, on the other hand, in
connection with the actions, statements or omissions that resulted in such
Losses, as well as any other relevant equitable considerations. The relative
fault of such indemnifying party, on the one hand, and indemnified party, on the
other hand, will be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
taken or made by, or relates to information supplied by, such indemnifying party
or indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such action, statement or
omission. The amount paid or payable by a party as a result of any such Losses
will be deemed to include any investigation, legal or other fees or expenses
incurred by such party in connection with any investigation or proceeding, to
the extent such party would have been indemnified for such expenses if the
indemnification provided for in the foregoing Sections was available to such
party.
4.4 Conduct Of Indemnification Proceedings. Any Person entitled to
--------------------------------------
indemnification hereunder will (a) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification, and (b) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that the failure to give such
notice shall not relieve an indemnifying party of liability except to the extent
it has been prejudiced as a result. Any Person entitled to indemnification
hereunder will have the right to employ separate counsel and to participate in
(but not control) the defense of such claim, but the fees and expenses of such
counsel will be at the expense of such Person and not of the indemnifying party
unless (x) the indemnifying party has agreed to pay such fees or expenses, (y)
the indemnifying party has failed to assume the defense of such claim and employ
counsel reasonably satisfactory to such Person within a reasonable period of
time pursuant to this Agreement, or (z) in the opinion of counsel of the Person
to be indemnified, a conflict of interest exists between such Person and the
indemnifying party with respect to such claims that would make such separate
representation required under applicable ethical rules. In the case of (z) if
the Person notifies the indemnifying party in writing that such Person elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party
11
will not have the right to assume the defense of such claim on behalf of such
Person. If such defense is not assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld). No
indemnified party will be required to consent to entry of any judgment or enter
into any settlement that does not include as an unconditional term the giving of
a release, by all claimants or plaintiffs, to such indemnified party from all
liability in respect to such claim or litigation. Any indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel (other than
required local counsel) for all parties indemnified by such indemnifying party
with respect to such claim.
5. Other Agreements.
----------------
5.1 Restrictions On Public Sale By The Holders. If requested by the
------------------------------------------
managing underwriter of an underwritten Offering, the Holders will not effect
any public sale or distribution of securities of the same class (or securities
exchangeable or exercisable for or convertible into securities of the same
class) as the securities included in the Offering (including, but not limited
to, a sale pursuant to Rule 144 of the Securities Act) during the 10-day period
prior to and the 90-day period (or shorter period requested by the underwriter)
beginning on the effective date of, such Offering.
5.2 Rule 144.
--------
(a) The Holders hereby irrevocably and unconditionally
acknowledge and agree on behalf of themselves, their present and future
Affiliates and Permitted Transferees that, for so long as each Holder together
with its Affiliates and Permitted Transferees beneficially owns (within the
meaning of Rule 13d under the Exchange Act) in the aggregate 10% or more of the
outstanding shares of Common Stock, each of such Persons shall be deemed
"affiliates" of the Company (within the meaning and for purposes of Rule 144
under the Securities Act) and shall be subject to the provisions of Rule
144(e)(1) under the Securities Act with respect to transactions in the Company's
securities.
(b) The Company will file, on a timely basis, all reports
required to be filed by it under the Securities Act and the Exchange Act, and
will take such further action and provide such documents as the Holders may
reasonably request, all to the extent required from time to time to enable the
Holders to sell Registrable Securities without registration under the Securities
Act within the limitation of the conditions provided by (i) Rule 144 under the
Securities Act, as such rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the Commission. Upon the request
of a Holder, the Company will deliver to the Holder a statement verifying that
it has complied with such information and requirements.
12
(c) The provisions of Section 5.2(a) shall expire on January 15,
2000.
5.3 Representations And Warranties.
------------------------------
5.3.1 Validity. The Company represents and warrants to the
--------
Holder that this Agreement has been duly and validly executed and delivered by
the Company and constitutes a legally valid and binding agreement of the Company
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization and other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally and
except that the remedy of specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought and except as
rights to indemnity and contribution hereunder may be limited by federal or
state securities laws.
5.3.2 No Inconsistent Agreements. The Company represents and
--------------------------
warrants that it has not previously entered into, and will not on or after the
date of this Agreement enter into, any agreement with respect to its securities
that is inconsistent with the terms of this Agreement, including any agreement
that impairs or limits the registration rights granted to the Holder or that
otherwise conflicts with the provisions hereof or would preclude the Company
from discharging its obligations under this Agreement.
5.3.3 Furnish Information. The Company will promptly deliver to
-------------------
the Holder copies of all financial statements, reports and proxy statements that
the Company is required to send to its stockholders generally.
5.4 Assignment. This Agreement and the rights hereunder are
----------
assignable by the Holder only to Permitted Transferees in connection with the
transfer of Registrable Securities in accordance with this Section 5.4. As a
condition to the effectiveness of any such assignment the Company shall have
received (a) written notice of such assignment, the number of Registrable
Securities to be transferred and the name and address of the transferee, and (b)
a written agreement in form and substance reasonably acceptable to the Company
whereby each such Permitted Transferee agrees to be bound by the terms of this
Agreement; whereupon such Permitted Transferee will become a "HOLDER" under this
Agreement. Further, no rights under this Agreement may be assigned without the
concurrent assignment of the related Shares. Other than as set forth above, this
Agreement is not assignable by a Holder and any purported assignment not in
accordance with the foregoing shall be null and of no effect. No Person other
than the Holders and their
13
Permitted Transferees shall be entitled to any of the registration rights
provided by this Agreement.
6. Miscellaneous Provisions.
------------------------
6.1 Amendments; Waivers. Amendments, waivers, demands, consents and
-------------------
approvals under this Agreement must be in writing and designated as such. No
failure or delay in exercising any right will be deemed a waiver of such right.
6.2 Integration. This Agreement is the entire agreement between the
-----------
parties pertaining to its subject matter, and supersedes and replaces all prior
agreements and understandings of the parties (or their respective predecessors)
in connection with such subject matter.
6.3 Interpretation; Governing Law. This Agreement is to be construed
-----------------------------
as a whole and in accordance with its fair meaning. This Agreement is to be
interpreted in accordance with the laws of the State of Delaware.
6.4 Headings. Headings of Sections and subsections are for
--------
convenience only and are not a part of this Agreement.
6.5 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which constitute one agreement.
6.6 Successors And Assigns. This Agreement is binding upon and
----------------------
inures to the benefit of each party and such party's respective heirs, personal
representatives, successors and permitted assigns (including any Permitted
Transferees). Nothing in this Agreement, express or implied, is intended to
confer any rights or remedies upon any other person.
6.7 Expenses; Legal Fees. Each party will pay its own expenses in
--------------------
the negotiation, preparation and performance of this Agreement. The prevailing
party in any action relating to this Agreement will be entitled to recover, in
addition to other appropriate relief, reasonable legal fees, costs and expenses
incurred in such action.
6.8 Representation By Counsel; Interpretation. Each party
-----------------------------------------
acknowledges that it has been represented by counsel in connection with this
Agreement. Any rule of law, including, but not limited to, Section 1654 of the
California Civil Code, or any legal decision that would require interpretation
of any claimed ambiguities in this Agreement against the party that drafted it,
has no application and is expressly waived.
14
6.9 Specific Performance. In view of the uniqueness of the matters
--------------------
contemplated by this Agreement, the parties would not have an adequate remedy at
law for money damages if this Agreement is not being performed in accordance
with its terms. The Company therefore agrees that the Holders will be entitled
to specific enforcement of the terms hereof in addition to any other remedy to
which the Holders may be entitled.
6.10 Time is of the Essence. Time is of the essence in the
----------------------
performance of each and every term, provision and covenant in this Agreement.
6.11 Notices. Any notice to be given hereunder must be in writing
-------
and delivered as follows (or to another address as either shall designate in
writing):
If to the Company to:
United Rentals, Inc.
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
If to the Holders to:
IN WITNESS WHEREOF, this Registration Rights Agreement has been signed as
of the date first set forth above.
UNITED RENTALS, INC.
By:_________________________________
Its:
AYR, INC.
By:_________________________________
Its:
[OTHER HOLDERS]
15