July
10,
2007
VIA
EDGAR
Securities
and Exchange Commission
450
Fifth
Street, N.W.
Washington,
DC 20549
Re: AMERCO
Definitive Proxy Statement
Ladies
and Gentlemen:
Pursuant
to Rule 14a-6(b), promulgated pursuant to the Securities Exchange Act of 1934,
as amended, I have attached for filing, on behalf of AMERCO, a Nevada
corporation (the “Company”), the definitive Proxy Statement relating to the
Company’s 2007 Annual Meeting of Stockholders to be held on August 20, 2007. The
Company intends to provide the Notice of the Internet Availability of the
Company’s Proxy Materials to stockholders on or after July 10,
2007.
If
you
have any questions, please contact me at (602) 263-6788.
Sincerely,
AMERCO
/s/
Jennifer M. Settles
Jennifer
M. Settles
Secretary
Enclosure
UNITED
STATES SECURITIES
AND
EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment
No. ______)
Filed
by
the Registrant ý
Filed
by
a Party other than the Registrant ¨
Check
the
appropriate box:
o
Preliminary Proxy Statement
o
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
ý
Definitive Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material Pursuant to §240.14a-12
AMERCO
(Name
of
Registrant as Specified in Its Charter)
(Name
of
Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
ý
No fee
required.
o
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
| 1. |
Title
of each class of securities to which transaction
applies:
|
| 2. |
Aggregate
number of securities to which transaction
applies:
|
| 3. |
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is
calculated and state how it was
determined):
|
| 4. |
Proposed
maximum aggregate value of
transaction:
|
| 5. |
Total
fee paid:
|
o
Fee paid
previously with preliminary materials:
o
Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the Form
or
Schedule and the date of its filing.
| 1. |
Amount
previously paid:
|
| 2. |
Form,
Schedule or Registration Statement
No.:
|
| 3. |
Filing
Party:
|
| 4. |
Date
Filed:
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INVITATION
TO THE 2007 ANNUAL MEETING OF STOCKHOLDERS OF AMERCO
DATE:
Thursday, August 20, 2007
TIME:
8
a.m. WDT/11 a.m. EDT
Please
register to participate
in
the
webcast at
amerco.com
Dear
Stockholders: July
10,
2007
We
are
excited to be one of the first companies to take advantage of the new Securities
and Exchange Commission rules allowing issuers to furnish proxy materials over
the Internet. We believe that this new process will allow more stockholder’s to
attend the meeting. We also expect to lower the costs of the meeting and reduce
its environmental impact. Should you need a paper copy of the proxy materials,
just print what you need.
During
the meeting, three matters will be presented for your consideration and
approval:
| 1. |
Election
of three Directors;
|
| 2. |
A
stockholder proposal;
|
| 3. |
Appointment
of BDO Seidman, LLP as the Company’s independent auditors for our fiscal
year ending March 31, 2008.
|
We
encourage you to read the proxy statement for more information.
In
addition to these formal items of business, we will review other business
developments and share our plans for the Company’s future. You will have the
opportunity to ask questions of and communicate with members of our management
team. Members of the AMERCO Board of Directors will also be
participating.
I
encourage stockholders to attend the Annual Meeting via the webcast so as to
promote the Company’s sustainability initiatives. I encourage you to vote.
Internet voting must be completed before midnight prior to the meeting. So,
you
can attend the Annual Meeting via the webcast but you should cast your vote
prior to the midnight deadline.
Prior
to
the meeting, I encourage you to visit the AMERCO Stockholder Forum at
amerco.com. This Forum has been created for AMERCO Stockholders to post and
exchange thoughts regarding this proxy solicitation.
This
is
an exciting way for more stockholders to communicate directly.
Sincerely
yours,
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1
PROXY
STATEMENT
2007
ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON MONDAY, AUGUST 20, 2007
This
Proxy Statement is furnished in connection with the solicitation of proxies
on
behalf of the Board of Directors of AMERCO, a Nevada corporation (the
“Company”), with respect to the election of directors and the ratification of
the appointment of BDO Seidman, LLP as the Company’s independent auditors, for
the 2007 Annual Meeting of Stockholders of AMERCO and at any adjournment or
adjournments thereof (the “Annual Meeting”).
Record
owners of AMERCO common stock as of the close of business on June 22, 2007
are
entitled to vote at the Annual Meeting, which will be held on August 20,
2007.
As a stockholder, you are requested to vote on the items of business described
in this proxy statement. This proxy statement describes the items presented
for
stockholder action at our Annual Meeting and includes information required
to be
disclosed to stockholders. The accompanying proxy card enables stockholders
to
vote on the matters without having to attend the Annual Meeting in
person.
Why
have I received a Notice of Internet Availability of Proxy
Materials?
In
accordance with electronic delivery rules recently adopted, we are permitted
to
furnish proxy materials to our stockholders on the Internet, in lieu of mailing
a printed copy of our proxy materials to each stockholder of record. You will
not receive a printed copy of our proxy materials, unless you request a printed
copy. The Notice instructs you as to how you may access and review on the
Internet all of the important information contained in the proxy materials.
The
Notice also instructs you as to how you may vote your proxy. If you received
a
Notice by mail and would like to receive a printed copy of our proxy materials,
you must follow the instructions for requesting such materials included in
the
Notice. Alternatively, you may download or print these materials, or any portion
thereof, from your own computer equipment. The proxy statement, including all
Exhibits hereto, consists of approximately 260 pages.
Who
can vote at the Annual Meeting?
You
may
vote if you were the record owner of AMERCO common stock as of the close of
business on June 22, 2007. As of June 22, 2007, there were 20,059,314 shares
of
common stock outstanding and entitled to vote.
How
do I attend the 2007 Annual Meeting of Stockholder of
AMERCO?
The
2007
Annual Meeting of Stockholder of AMERCO will be webcast live over the Internet
at 8:00 am (local time) on Monday, August 20, 2007, at http://www.amerco.com.
The
meeting will also be hosted at the U-Haul Technical Center, 11298 South Priest
Drive, Tempe, Arizona 85284 at 8:00 am on August 20, 2007. We encourage
stockholders to attend via the live webcast, so as to promote the Company’s
sustainability goals with respect to the environment. All stockholders who
attend the Annual Meeting in person will be required to present valid picture
identification. If your shares are held in street name (for instance, if your
shares are held through a brokerage firm, bank, dealer or other similar
organization), you will need to bring evidence of your stock ownership, such
as
your most recent brokerage statement.
What
am I voting on?
You
are
voting on:
Item
1: The
election of three directors;
|
Item
2:
|
The
ratification of the appointment of BDO Seidman, LLP as the Company’s
independent auditors for fiscal year 2008;
|
|
Item
3:
|
A
stockholder proposal to approve and affirm the actions taken by all
AMERCO
and its subsidiaries’ Boards of Directors, officers and employees in
entering into, and all resulting contracts with SAC and ratify all
SAC
transactions amended or entered into by AMERCO and any
|
2
of its subsidiaries between 1992 and March 31, 2007 (this item 3 is referred
to
as the “Stockholder Proposal”).
As
well
as any other business that may properly come before the meeting.
How
does the Board recommend that I vote my shares?
Unless
you give other instructions on your proxy card, the person named as proxy holder
on the proxy card will vote in accordance with the recommendations of the Board
of Directors. The Board recommendations are as follows:
Item
1: The
Board
recommends a vote “FOR” the Board’s proposal to elect the three nominated
Directors;
|
Item
2:
|
The
Board recommends a vote “FOR” the Board’s proposal to ratify the
appointment of BDO Seidman, LLP as the Company’s independent auditors for
fiscal year 2008;
|
Item
3: The
Board
makes no recommendation with respect to the Stockholder Proposal.
What
types of votes are permitted on each Item?
|
Item
1:
|
For
the election of directors, you may either vote "FOR" all the nominees
to
the Board of Directors, you may "WITHOLD" for all nominees, or you
may
"WITHOLD" your vote from any nominee you specify.
|
|
Item
2:
|
For
the ratification of the selection of BDO Seidman LLP as the Company's
independent auditors, you may vote "FOR", "AGAINST" or
"ABSTAIN".
|
Item
3: For
the
Stockholder Proposal, you may vote "FOR", "AGAINST" or "ABSTAIN".
If
you
vote "WITHOLD" (in the case of Item 1 above) or "ABSTAIN" (in the case of Items
2 or 3 above), your
vote
will not be counted towards the vote total for such Item.
How
many votes must be present to hold the meeting?
Your
shares are counted as present at the Annual Meeting if you attend the meeting
and vote in person or if you properly return a proxy by Internet, telephone
or
mail. In order for the meeting to proceed, holders of one-third of the
outstanding shares of common stock as of June 22, 2007 must be present in person
or by proxy at the meeting. This is referred to as a quorum. Abstentions and
broker non-votes will be counted for purposes of establishing a quorum at the
meeting.
What
are broker non-votes?
Broker
non-votes occur when a stockholder of record, such as a broker, holding shares
for a beneficial owner does not vote on a particular item because the
stockholder of record does not have discretionary voting power with respect
to
that item and has not received voting instructions from the beneficial owner.
Broker non-votes, as well as "ABSTAIN" votes will each be counted towards the
presence of a quorum but
will
not be counted towards the vote total for any item.
What
if my AMERCO shares are not registered directly in my name but are held in
street name?
If
at the
close of business on June 22, 2007 your shares were held in an account at a
brokerage firm, bank, dealer, or other similar organization, then you are the
beneficial owner of shares held in "street name" and the Notice or proxy
materials, as applicable, are being forwarded to you by that organization.
The
organization holding your account is considered the stockholder of record for
purposes of voting at the annual meeting. As a beneficial owner, you have the
right to direct that organization on how to vote the shares in your
account.
If
I am a stockholder of record of AMERCO shares, how do I cast my
vote?
If
you
are a stockholder of record, you may vote in person at the annual meeting;
or if
you do not wish to vote in person or if you will not be attending the Annual
Meeting, you may vote by proxy. You may vote over the Internet, over the
telephone, or by mail. The procedures for voting by proxy are as follows:
| · |
To
vote by proxy on the Internet, go to http://www.mobular.net/Mellon/uhal to
complete an electronic proxy card.
|
| · |
To
vote by proxy over the telephone, dial 1-866-540-5760 using a touch-tone
phone and follow the recorded
instructions.
|
3
| · |
To
vote by proxy using the enclosed proxy card (if you received a printed
copy of these proxy materials by mail or if you printed the proxy
card off
the Internet), complete, sign and date your proxy card and return
it
promptly in the envelope provided or mail it to PO Box 3510, South
Hackensack, NJ 07606-9210
|
If
you
vote by proxy over the Internet or telephone, your vote must be received by
11:59 p.m. Eastern Time on August 19, 2007 to be counted
How
do I vote If I hold my stock through the AMERCO Employee Stock Ownership Plan
(also known as the ESOP)?
If
you
hold your stock through the AMERCO Employee Stock Ownership Plan, you may vote
in the same manner as stockholders of record, as described immediately above.
If
I am a beneficial owner of AMERCO shares, how do I vote?
If
you
are a beneficial owner of shares held in street name and you received a printed
copy of these proxy materials by mail, you should have received a proxy card
and
voting instructions with these proxy materials from the organization that is
the
record owner of your shares rather than from us. If you are a beneficial owner
of shares held in street name and you received a Notice by mail, you should
have
received the Notice from the organization that is the record owner of your
shares rather than from us. Beneficial owners that received a printed
copy
of
these proxy materials by mail from the record owner may complete and mail that
proxy card or may vote by telephone or over the Internet as instructed by that
organization in the proxy card. Beneficial owners that received a Notice by
mail
from the record owner should follow the instructions included in the Notice
to
view the proxy statement and transmit their voting instructions. For a
beneficial owner to vote in person at the Annual Meeting, you must obtain a
valid proxy from the record owner. To request the requisite proxy form, follow
the instructions provided by your broker or contact your broker.
How
many votes are needed to approve each Item?
|
Item
1:
|
For
the election of directors, the three nominees receiving the most
"FOR"
votes will be elected. If you do not specify how your shares are
to be
voted, your proxy will be voted "FOR" Item
1.
|
|
Item
2:
|
For
the ratification of the selection of BDO Seidman LLP as the Company's
independent auditors for
fiscal year 2008,
there must be a "FOR" vote from the majority of the shares present
at the
Annual Meeting or represented by proxy. If you do not specify how
your
shares are to be voted, your proxy will be voted "FOR" Item
2.
|
|
Item
3:
|
For
the Stockholder Proposal,
there must be a "FOR" vote from a majority of the shares present
at the
Annual Meeting or represented by proxy. If you do not specify how
your
shares are to be voted, your proxy will be voted "ABSTAIN" with respect
to
Item 3.
|
How
many votes do I have?
On
each
matter to be voted upon, you have one vote for each share of our common stock
that you owned as of the close of business on June 22, 2007.
Who
counts the votes?
We
have
hired Mellon Investor Services, our transfer agent, to count the votes.
Employees of Mellon Investor Services will act as Inspector of
Election.
Could
other matters be decided at the annual meeting?
We
are
not aware of any other matters that will be considered at the Annual Meeting.
If
any other matters are properly brought before the meeting, the person named
in
your
proxy will vote in
accordance with his best judgment.
What
does it mean if I receive more than one Notice or proxy
card?
If
you
received more than one Notice or proxy card, your shares are registered in
more
than one name or are registered in different accounts. Please follow the voting
instructions included in each
Notice
and proxy card to ensure that all of your shares are voted.
How
do I know the results?
Preliminary
voting results will be announced at the Annual Meeting. Final results will
be
published in the Company's quarterly report on Form 10-Q for the second quarter
of fiscal 2008.
4
How
can I access the AMERCO proxy statement and annual report
electronically?
To
access
the AMERCO proxy statement and annual report electronically, please visit
http://www.mobular.net/Mellon/uhal
or the
Company’s Investor Relations web site, http://www.amerco.com
Why
is AMERCO encouraging webcast participation at the Annual Meeting and using
the
new electronic delivery rules with respect to the delivery of this proxy
statement?
AMERCO
and its subsidiaries are moving towards
leadership in sustainability. Our endeavors including encouraging webcast
participation at the Annual Meeting and electronic delivery of the Annual
Meeting materials will help to build a better and cleaner world for our
employees, customers, and society.
The
Company’s Board of Directors currently consists of eight directors. The
Company’s Restated Articles of Incorporation and Bylaws both provide for the
division of the Board of Directors into four classes, designated as Class I,
Class II, Class III, and Class IV. Subject to applicable law, each class
consists, as nearly as may be possible, of one-fourth of the total number of
directors constituting the entire Board of Directors. The term of each
directorship is four years and the terms of the four classes are staggered
in a
manner so that in most cases only one class is elected by the stockholders
annually.
At
the
Annual Meeting, two Class I directors will be elected to serve until the
2011 Annual Meeting of Stockholders and one Class IV director will be elected
to
fill the vacancy created by the resignation of William E. Carty on December
31,
2006 to serve until the 2010 annual meeting of stockholders of AMERCO. It is
the
intention of the individual named in the enclosed form of proxy to vote for
the
three director nominees named below unless instructed to the contrary. However,
if any nominee named herein becomes unavailable to serve at the time of election
(which is not anticipated), and, as a consequence, other nominees are
designated, the person named in the proxy or other substitutes shall have the
discretion or authority to vote or refrain from voting in accordance with his
or
her judgment with respect to other nominees.
Directors
are elected by a plurality of the shares represented at the meeting, in person
or by proxy, and entitled to vote at the Annual Meeting, provided that a quorum
is present. Votes may be cast “FOR” all nominees, “WITHHOLD” for all nominees,
or “WITHHOLD” as to specific nominees. The
two
Class I nominees and the one Class IV nominee who receive the greatest
number of votes cast FOR the election of such nominees shall be elected as
directors.
Nominees
For Election As Class I Directors
The
independent directors have approved the nomination of the following individuals
to serve until the 2011 Annual Meeting:
John
P. Brogan
Daniel
R. Mullen
JOHN
P. BROGAN,
63, has
served as a Director of the Company since August 1998. Mr. Brogan has served
as
the Chairman of Muench-Kreuzer Candle Company since 1980. He has also been
involved with various companies including a seven-year association with Alamo
Rent-A-Car that ended in 1986.
DANIEL
R. MULLEN,
66, has
served as a Director of the Company since February 2005. Mr. Mullen served
as a
member of the AMERCO Advisory Board from 2004 until his appointment to the
AMERCO Board and has served as a member of the board of directors of U-Haul
International, Inc. (“U-Haul”) and Oxford Life Insurance Company (“Oxford”),
each a direct subsidiary of the Company, since December 2004 and April 2005,
respectively. He has served as Director and President of
Continental
5
Leasing
Co. since 1970. He was Vice President and Treasurer of Talley Industries,
Inc.,
a multi-industry conglomerate from 1982 to 1998. Mr. Mullen was employed
by the
Company from 1968 until 1982.
Nominee
For Election As Class IV Director
The
independent directors have approved the nomination of the following individual
to serve until the 2010 Annual Meeting:
Michael
L. Gallagher
MICHAEL
L. GALLAGHER,
63, was
appointed to the AMERCO Board on March 30, 2007 to fill the vacancy created
by
the resignation of William E. Carty. Mr. Gallagher served on the AMERCO Advisory
Board from 2003 until his appointment to the AMERCO Board. Mr. Gallagher is
Chairman Emeritus of the law firm Gallagher & Kennedy. Mr. Gallagher is also
a director of Pinnacle West Capital Corporation.
Directors
Continuing In Office
|
Name
|
Term
Expires
|
|
|
Class
II
|
Edward
J. Shoen
|
2008
|
|
Class
II
|
M.
Frank Lyons
|
2008
|
|
Class
III
|
John
M. Dodds
|
2009
|
|
Class
III
|
James
P. Shoen
|
2009
|
|
Class
IV
|
Charles
J. Bayer
|
2010
|
EDWARD
J. SHOEN,
58, has
served as a Director and Chairman of the Board of the Company since 1986, and
as
Chairman of the board of directors of U-Haul since 1990. Mr. Shoen has been
associated with the Company since 1971. Mr. Shoen served as President of the
Company since 1987. He also served as President of U-Haul from 1991 until 2006.
M.
FRANK LYONS,
71, has
served as a Director of the Company since 2002. Mr. Lyons served in various
positions with the Company from 1959 until 1991, including 25 years as the
President of Warrington Manufacturing. From 1991 until his retirement in 2000
he
was President of Evergreen Realty, Inc.
JOHN
M. DODDS,
70, has
served as a Director of the Company since 1987 and Director of U-Haul since
1990. Mr. Dodds has been associated with the Company since 1963. He served
in
regional field operations until 1986 and served in national field operations
until 1994. Mr. Dodds retired from the Company in 1994.
JAMES
P. SHOEN,
47, has
served as a Director of the Company since 1986 and was Vice President of the
Company from 1989 to November 2000. Mr. Shoen has been associated with the
Company since 1976. He served from 1990 to November 2000 as Executive Vice
President of U-Haul. He is currently Vice President of U-Haul Business
Consultants, a subsidiary of the Company.
CHARLES
J. BAYER,
67, has
served as a Director of the Company since 1990 and has been associated with
the
Company since 1967. Mr. Bayer has served in various executive positions,
including as President of Amerco Real Estate Company (“AREC”) from September
1990 until his retirement in October 2000.
6
As
of
June 1, 2007, Edward J. Shoen, Chairman of the Board of Directors and President
of AMERCO, James P. Shoen, a director and executive officer of AMERCO, and
Mark
V. Shoen, an executive officer of AMERCO, collectively are the owners of
8,967,863 shares (approximately 44.5%) of the outstanding common stock of
AMERCO. On June 30, 2006, Edward J. Shoen, James P. Shoen, Mark V. Shoen,
Rosemarie T. Donovan (Trustee of the Shoen Irrevocable Trusts) and Southwest
Fiduciary, Inc. (Trustee of the Irrevocable “C” Trusts) (collectively, the
“Reporting Persons”) entered into a Stockholder Agreement in which the Reporting
Persons agreed to vote their AMERCO stock as one block in a manner consistent
with the Stockholder Agreement and in furtherance of their interests. As of
March 1, 2007, Adagio Trust Company replaced Southwest Fiduciary, Inc. as the
trustee of the Irrevocable “C” Trusts, and became a signatory to the Stockholder
Agreement. As of the Record Date, 10,642,586 shares (approximately 53.1% of
the
Company’s outstanding voting stock) are owned by the Reporting Persons and are
subject to the Stockholder Agreement. The Reporting Persons appointed James
P.
Shoen as proxy to vote their collective shares as provided in the Stockholder
Agreement. For additional information, see the Schedule 13Ds filed on July
13,
2006 and on March 9, 2007 with the Securities and Exchange Commission
(“SEC”).
As
a
result of their stock ownership and the Stockholder Agreement, Edward J. Shoen,
Mark V. Shoen and James P. Shoen are in a position to significantly influence
the business affairs and policies of the Company, including the approval of
significant transactions, the election of the members of the Board of Directors
and other matters submitted to Company stockholders. There can be no assurance
that the interests of the Reporting Persons will not conflict with the interest
of the other stockholders of the Company. Furthermore, as a result of the
Reporting Persons’ voting power, the Company is a “controlled company” as
defined in the Nasdaq Marketplace Rules and, therefore, may avail itself of
certain exemptions thereunder, including rules that require the Company to
have
(i) a majority of independent directors on the Board; (ii) a compensation
committee composed solely of independent directors; (iii) a nominating committee
composed solely of independent directors; (iv) compensation of executive
officers determined by a majority of the independent directors or a compensation
committee composed solely of independent directors; and (v) director nominees
selected, or recommended for the Board’s selection, either by a majority of the
independent directors or a nominating committee composed solely of independent
directors. The Company currently avails itself of the exemption to the Nasdaq
Marketplace Rule requiring that compensation of executive officers be determined
by a majority of the independent directors or the compensation committee.
However, the Company’s Compensation Committee evaluates the compensation of the
Company’s President at least annually to ensure that it is fair, reasonable and
aligned with the Company’s overall objectives.
Based
on
its evaluation, the Independent Governance Committee recommended to the Board
of
Directors that Daniel R. Mullen, M. Frank Lyons, John M. Dodds, Charles J.
Bayer, John P. Brogan, and Michael L. Gallagher be determined to be independent.
The full Board of Directors, in furtherance of the recommendation of the
Independent Governance Committee and based upon its own investigation, has
determined that the Directors listed in this paragraph are independent as
defined under applicable NASDAQ and SEC provisions.
The
full
Board of Directors of the Company met ten times during the fiscal year ended
March 31, 2007. During the last fiscal year each director attended at least
75%
of the meetings of the full Board of Directors and of the committees on which
he
served. The independent Directors met in executive session without management
present as part of each regularly scheduled Board meeting.
Directors
are encouraged to attend annual meetings of stockholders. This year, the Board
is encouraged to attend the Annual Meeting via webcast. All directors attended
our 2006 annual meeting, which was held on August 25, 2006.
7
The
Board
of Directors has established the following standing committees: Audit Committee,
Executive Finance Committee, Compensation Committee and Independent Governance
Committee. Additionally, the Board has authorized the formation of an Advisory
Board and a Special Committee for the evaluation of the Stockholder Proposal.
The Company does not have a nominating committee. Currently, the responsibility
for director nominations has been vested by the Company in the independent
members of the Board; however, as a “controlled company” the Company is not
required to do so under the Nasdaq Marketplace Rules, and the Company reserves
the right to cease having the responsibility for director nominations vested
in
the independent members of the Board. The Board does not believe that a
nominating committee is necessary because the independent directors participate
in the nominating process. The Board of Directors has adopted a resolution
addressing director nominations process and related matters; however, the Board
may, in the future, choose to change its director nomination policy, including
its policy related to stockholder nomination of directors. This process is
described below, under the heading “Director Nomination Process.”
The
annual fee for all services as a Director of the Company is $50,000.
Additionally, Audit Committee, Advisory Board and Independent Governance
Committee members receive a $50,000 annual fee and Executive Finance Committee
and Compensation Committee members receive a $20,000 annual fee. These amounts
are paid in equal monthly installments.
Listed
below are summaries of the Company’s committees and the Advisory Board, and the
memberships thereof.
Audit
Committee.
The
Audit Committee is comprised of John P. Brogan, Charles J. Bayer, John M. Dodds
and Daniel R. Mullen. The Audit Committee assists the Board of Directors in
fulfilling its oversight responsibilities as to financial reporting, audit
functions and risk management. The Audit Committee monitors the financial
information that is provided to stockholders and others, the independence and
performance of the Company’s independent auditors and internal audit department
and the systems of internal control established by management and the Board
of
Directors. The Audit Committee operates pursuant to a written charter approved
by the Board of Directors. Pursuant to its annual review and assessment of
its
charter, the Audit Committee recommended certain revisions to its charter and
the full Board of Directors approved the amended charter on February 7, 2007.
The Audit Committee charter is attached to this Proxy Statement as Exhibit B. Messrs. Brogan, Bayer, Dodds and Mullen are each
considered “independent” pursuant to the NASDAQ listing standards and the rules
of the SEC. The Board of Directors has determined that each member meets the
applicable requirements of audit committee members under NASDAQ listing
standards, and each member has been determined by the Board to meet the
qualifications of an “audit committee financial expert.” Mr. Brogan is
designated the Audit Committee “financial expert” as defined by the rules of the
SEC and the other similar financial sophistication rules under NASDAQ
regulations. Shareholders should understand that this designation is a
disclosure requirement of the SEC related to Mr. Brogan’s experience and
understanding with respect to certain accounting and auditing matters. The
designation does not impose on Mr. Brogan any duties, obligations or liability
that are greater than are generally imposed on him as a member of the Audit
Committee and the Board, and his designation as an audit committee financial
expert pursuant to these SEC and NASDAQ requirements does not affect the duties,
obligations or liability of any other member of the Audit Committee or the
Board. The Audit Committee met seven times during the fiscal year ended March
31, 2007.
Executive
Finance Committee.
The
Executive Finance Committee is comprised of Edward J. Shoen, John P. Brogan
and
Charles J. Bayer. The Executive Finance Committee is authorized to act on behalf
of the Board of Directors in approving any transaction involving the finances
of
the Company. The Committee has the authority to give final approval for the
borrowing of funds on behalf of the Company without further action or approval
of the Board of Directors. Although this committee did not meet in person during
the fiscal year ended March 31, 2007, it acted by unanimous written consent
on
approximately 20 occasions.
Compensation
Committee.
The
Compensation Committee is comprised of John P. Brogan and John M. Dodds. The
Compensation Committee reviews the Company’s executive compensation plans and
policies, including benefits and incentives, to ensure that they are consistent
with the goals and objectives
8
of
the
Company. The Committee reviews and makes recommendations to the Board of
Directors regarding management recommendations for changes in executive
compensation and monitors management plans and programs for the retention,
motivation and development of senior management. The Compensation Committee
operates pursuant to a written charter approved by the Board of Directors
in
fiscal 2007. The Compensation Committee charter is attached to this Proxy
Statement as Exhibit C. The Compensation Committee met
twice during the fiscal year ended March 31, 2007.
Independent
Governance Committee.
The
Independent Governance Committee is comprised of John P. Brogan, who is the
committee chair, Thomas W. Hayes, Paul A. Bible and Michael L. Gallagher.
Neither Mr. Hayes nor Mr. Bible is a member of the Company’s Board of Directors.
The Independent Governance Committee monitors and evaluates the Company’s
corporate governance principles and standards and proposes to the Board any
modifications which are deemed appropriate for sound corporate governance.
The
committee may review other matters as referred to it by the Board. The committee
has the authority and a budget from which to retain professionals. Each member
of the Independent Governance Committee is determined by the Board to be free
of
any relationship that would interfere with his or her exercise of independent
judgment as a member of this committee. The Independent Governance Committee
met
four times during the fiscal year ended March 31, 2007. Additionally, the
non-Board members of the Independent Governance Committee are encouraged to
attend all Board meetings of the Company.
Mr.
Hayes
was President of Metropolitan West Financial Inc, a diversified financial
management company with over $60 billion in managed funds. He has also served
as
the State Treasurer of California, California’s Director of Finance, and was
responsible for overseeing the successful restructuring of Orange County’s
investment pool, following that county’s Chapter 11 filing.
Mr.
Bible
is the president and a partner in the Reno-based law firm of Bible Mousel,
P.C.,
and currently serves as the Chairman of the Compliance Committee for H Group
Holding, Inc., the holding company of Hyatt Corporation. He also serves as
Chairman of the Compliance Committee for Jacobs Entertainment, Inc., the holding
company of Black Hawk Gaming & Development Company, Inc. He is the former
Chairman of the Board of Trustees of the University of Nevada, Reno Foundation,
and is the former Chairman of the Nevada Gaming Commission.
Special
Committee. In
June
2007, the Board established a Special Committee for the evaluation of the
Stockholder Proposal (the “Special Committee”). The Special Committee is
comprised of Daniel R. Mullen and Michael L. Gallagher. Mr. Hayes, Mr. Bible
and
Ms. Campbell are advisors to the Special Committee.
Advisory
Board Members.
In
addition to the committees described above, the Company has an Advisory Board.
Advisory Board members do not officially vote, but are given full and complete
access to the affairs of the Board, including all meetings and votes of the
Board and are treated in all other respects as a Board member. The Board has
authorized up to two advisory Board members who serve at the will of the Board.
In
2005,
the Board appointed Barbara Smith Campbell as a member of the Advisory Board.
Ms. Campbell is President and founder of Consensus, LLC. Prior to founding
Consensus, Ms. Campbell served as the Chairman of the Board for the State of
Nevada Tax Commission and Vice President of Finance for MGM Grand Resorts
Development. Ms. Campbell is also a Trustee for the Donald W. Reynolds
Foundation and previously served as Chairwoman of the Audit Committee for the
Federal Home Loan Bank of San Francisco.
In
2007,
the Board of Directors appointed Richard J. Herrera as a second Advisory Board
member. Mr. Herrera has a long history in the retail industry, most recently
as
Executive Vice President of Eastern Seaboard Packaging and Executive Vice
President of ABUS Lock USA. Mr. Herrera was employed as Marketing Vice
President/Retail Sales Manager for U-Haul from 1988-2001, and served on the
Company’s Board of Directors from 1993-2001 and the U-Haul Board from 1990-2001.
9
See
“Security Ownership of Certain Beneficial Owners and Management” and “Certain
Relationships and Related Transactions” for additional information relating to
the directors.
Director
Qualifications.
Persons
nominated to the Board should have personal integrity and high ethical
character. Candidates should not have any interests that would materially impair
his or her ability to exercise independent judgment or otherwise discharge
the
fiduciary duties owed by a director to the Company and its stockholders.
Candidates must be able to represent fairly and equally all stockholders of
the
Company without favoring any particular stockholder group or other constituency
of the Company and must be prepared to devote adequate time to the Board and
its
committees. In selecting nominees for director, the Board will assure
that:
· at
least
three of the directors satisfy the financial literacy requirements required
for
service on the Audit Committee; and
· at
least
one of the directors qualifies as an audit committee financial expert under
the
rules of the Securities and Exchange Commission.
Identifying
Director Candidates.
The
Board utilizes a variety of methods for identifying and evaluating nominees
to
serve as directors. The Board has a policy of re-nominating incumbent directors
who continue to satisfy the Board’s criteria for membership and whom the
independent directors believe continue to make important contributions to the
Board and who consent to continue their service on the Board.
In
filling vacancies of the Board, the independent directors will solicit
recommendations for nominees from the persons the independent directors believe
are likely to be familiar with (i) the needs of the Company and (ii) qualified
candidates. These persons may include members of the Board and management of
the
Company. The independent directors may also engage a professional search firm
to
assist in identifying qualified candidates.
In
evaluating potential nominees, the independent directors will oversee the
collection of information concerning the background and qualifications of the
candidate and determine whether the candidate satisfies the minimum
qualifications required by the Board for election as director and whether the
candidate possesses any of the specific skills or qualities that under the
Board’s policies must be possessed by one or more members of the Board.
The
independent directors may interview any proposed candidate and may solicit
the
views about the candidate’s qualifications and suitability from the Company’s
chief executive officer and other senior members of management.
The
independent directors will make their selections based on all the available
information and relevant considerations. The independent directors’ selection
will be based on who, in the view of the independent directors, will be best
suited for membership on the Board.
In
making
its selection, the independent directors will evaluate candidates proposed
by
stockholders under criteria similar to other candidates, except that the
independent directors may consider, as one of the factors in their evaluation,
the size and duration of the interest of the recommending stockholder in the
stock of the Company. The independent directors may also consider the extent
to
which the recommending stockholder intends to continue to hold its interest
in
the Company, including whether the recommending stockholder intends to continue
holding its interest at least through the time of the meeting at which the
candidate is to be elected.
Stockholder
Nominees.
The
policy of the Board of Directors is to consider properly submitted stockholder
recommendations for candidates for membership on the Board of Directors as
described below. The evaluation process for such nominations is overseen by
the
Company’s independent directors. In
10
evaluating
such nominations, the independent directors seek to achieve qualified directors
that can represent fairly and equally all stockholders of the Company and
based
on the membership qualifications and criteria described above. Any stockholder
nominations for consideration by the independent directors should be mailed
or
delivered to the Company’s Secretary at 2721 N. Central Avenue, Phoenix, Arizona
85004. The recommendation must be accompanied by the following information
about
the stockholder:
· the
stockholder’s name and address, including telephone number;
· the
number of shares of the Company’s stock owned by the recommending stockholder
and the time period for which such shares have been held;
· if
the
recommending stockholder is not a stockholder of record, a statement from the
record holder of the shares (usually a broker or bank) verifying the holdings
of
the stockholder and a statement from the recommending stockholder of the length
of time the that the shares have been held; and
· a
statement from the stockholder as to whether the stockholder has a good faith
intention to continue to hold the reported shares through the date of the next
annual meeting at which the candidate would be elected.
If
the
recommendation is submitted by a group of two or more stockholders, the above
information must be submitted with respect to each stockholder in the group.
The
recommendation must be received by the Company not later than 120 days prior
to
the first anniversary of the date of the proxy statement for the prior annual
meeting, except in the event that the date of the annual meeting for the current
year is moved more than 30 days from the anniversary date of the annual meeting
for the prior year, the submission will be considered timely if it is submitted
a reasonable time in advance of the mailing of the Company’s proxy statement for
the annual meeting for the current year. The recommendation must be accompanied
by a consent of the proposed nominee to be interviewed by the independent
directors and other Board members and to serve as director of the Company.
The
recommendation must also contain information about the proposed nominee,
including:
· the
proposed nominee’s name and address;
· the
information required by Items 401, 403 and 404 of SEC Regulation S-K (generally
providing for disclosure of arrangements or understandings regarding the
nomination, the business experience of the proposed nominee, legal proceedings
involving the proposed nominee, the proposed nominee’s ownership of securities
of the Company, and transactions and relationships between the proposed nominee
and the Company);
· a
description of all relationships between the proposed nominee and any of the
Company’s competitors, customers, suppliers, labor unions or other persons with
special interests regarding the Company;
· the
qualifications of the proposed nominee;
· a
statement from the recommending stockholder that in his or her view, the
nominee, if elected, would represent all the stockholders and not serve for
the
purpose of advancing or favoring any particular stockholder or other
constituency of the Company.
The
Secretary will forward all recommendations to the independent directors. The
acceptance of a recommendation from a stockholder does not imply that the
independent directors will recommend to the Board of Directors the nomination
of
the stockholder recommended candidate. In addition, the Company’s Bylaws permit
stockholders to nominate directors at an annual meeting and nothing in the
above
procedures is intended to conflict with the provisions of the Company’s Bylaws
governing nominations by stockholders.
11
This
information contained in this proxy statement about the Company’s nominations
process is just a summary. A complete copy of the policies and procedures with
respect to stockholder director nominations can be obtained from the Company,
free of charge, by writing to our Secretary at the address listed
above.
Interested
persons may communicate with the Board of Directors by writing to the Company
Secretary at 2721 N. Central Avenue, Phoenix, Arizona 85004. All such
communications, or summaries thereof, will be relayed to the Board.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS
AND
MANAGEMENT
To
the
best of the Company’s knowledge, the following table lists, as of June 1, 2007
the beneficial ownership of the Company’s Common Stock of (i) each director and
director nominee of the Company, (ii) (A) all persons serving as the Company’s
principal executive officer or as principal financial officer during the fiscal
year ending March 31, 2007 (“Fiscal 2007”); and (B) the three most highly paid
executive officers who were serving as executive officers at the end of Fiscal
2007 other than the principal executive officer and the principal financial
officer (the “Named Executive Officers”) and (iii) all directors and executive
officers of the Company as a group. The table also lists those persons who
beneficially own more than five percent (5%) of the Company’s Common Stock. The
percentages of class amounts set forth in the table below are based on
20,130,991 shares of the Company’s Common Stock outstanding on June 1,
2007.
|
Name
and Address of Beneficial Owner
|
Shares
of Common Stock Beneficially Owned
|
Percentage
of Common
Stock
Class
|
|
Directors:
|
||
|
Charles
J. Bayer
Director
|
2,261
|
**
|
|
John
P. Brogan
Director and Director Nominee
|
6,000
|
**
|
|
John
M. Dodds
Director
|
0
|
**
|
|
Michael
L. Gallagher
Director and Director Nominee
|
0
|
**
|
|
M.
Frank Lyons
Director
|
300
|
**
|
|
Daniel
R. Mullen
Director and Director Nominee
|
7,000
|
**
|
|
Named
Executive Officers:
|
||
|
Edward
J. Shoen (1)
Chairman and President of AMERCO and Chief Executive Officer and
Chairman
of U-Haul,
Director
|
10,642,586
|
52.9%
|
12
|
Name
and Address of Beneficial Owner
|
Shares
of Common Stock Beneficially Owned
|
Percentage
of Common
Stock
Class
|
|
Named
Executive Officers (continued):
|
||
|
James
P. Shoen (1) (2)
Vice President of U-Haul Business Consultants,
Director
|
10,642,586
|
52.9%
|
|
Mark
V. Shoen (1) (2)
Vice President of U-Haul Business Consultants
|
10,642,586
|
52.9%
|
|
John
C. Taylor
President of U-Haul International
|
1,728
|
**
|
|
Jason
A. Berg
Chief Accounting Officer of AMERCO
|
430
|
**
|
|
Executive
Officers and Directors as a group - 2020
persons.
(5)
|
10,677,738
|
53.0%
|
|
5%
Beneficial Owners:
|
||
|
Adagio
Trust Company (1)
as Trustee under the “C” Irrevocable Trusts dated
December 20, 1982
|
10,642,586
|
52.9%
|
|
Rosemarie
T. Donovan (1)
As Trustee of the Irrevocable Trust dated November
2, 1998
|
10,642,586
|
52.9%
|
|
The
AMERCO Employee Stock Ownership Plan (4)
|
1,898,673
|
9.4%
|
|
Atticus
Capital, L.L.C. (3)
152 West 57th
Street, 45th
Floor
New York, New York 100196
|
1,895,239
|
9.4%
|
|
Sophia
M. Shoen
5104 N. 32nd
Street
Phoenix, Arizona 85018
|
1,196,669
|
5.9%
|
|
**The
percentage of the referenced class beneficially owned is less than
one
percent.
|
||
|
(1)
This consists of 10,642,586 shares subject to a Stockholder Agreement
dated June 30, 2006, which includes shares beneficially owned by
Edward J.
Shoen (3,487,951); Mark V. Shoen (3,529,676); James P. Shoen (1,950,236);
Rosemarie T. Donovan, as Trustee of the Irrevocable Trusts dated
November
2, 1998 (250,250); and Adagio Trust Company, as Trustee under the
“C”
Irrevocable Trusts dated December 20, 1982 (1,424,473).
(2)
Mark V. Shoen and James P. Shoen also beneficially own 16,700 shares
(0.27
percent) and 25,545 shares (0.40 percent), respectively, of the Company’s
Series A 8½% Preferred Stock. The executive officers and directors as a
group beneficially own 41,245 shares (0.67 percent) of the Company’s
Series A 8½% Preferred Stock.
(3)
Share data based on information in Amendment No. 2 to Schedule 13G/A
filed
on February 14, 2007 with the SEC by Atticus Management LLC and Timothy
R.
Barakett. As of December 31, 2006, the Schedule 13G/A indicates that
the
reporting person had voting and dispositive power as to 1,895,239
shares.
(4)
The Trustee of the AMERCO Employee Stock Ownership Plan (the “ESOP”)
consists of three individuals without a past or present employment
history
or business relationship with the Company and is appointed by the
Company’s Board of Directors. Under the ESOP, each participant (or such
participant’s beneficiary) in the ESOP is entitled to direct the ESOP
Trustee with respect to the voting of all Common Stock allocated
to the
participant’s account. In the
|
13
| event such participant does not provide
such
direction to the ESOP Trustee, the ESOP Trustee votes such participant’s
shares in the ESOP Trustee’s discretion. In addition, all shares in the
ESOP not allocated to participants are voted by the ESOP Trustee in
the
ESOP Trustee’s discretion. As of June 1, 2007, of the 1,898,673 shares of
Common Stock held by the ESOP, 1,404,996 shares were allocated to
participants and 493,677 shares remained unallocated. The number of
shares
reported as beneficially owned by Edward J. Shoen, Mark V. Shoen, James
P.
Shoen, and Sophia M. Shoen include Common Stock held directly by those
individuals and 4,270; 3,995; 3,992; and 197 shares of Common Stock,
respectively, allocated by the ESOP to those individuals. Those shares
are
also included in the number of shares held by the ESOP.
(5)
The 10,677,738 shares
constitutes the shares beneficially owned by the directors and officers
of
the Company as a group, including the 10,642,586 shares subject to
the
Stockholder Agreement discussed in footnote 1
above.
|
To
the
best of the Company’s knowledge, there are no arrangements giving any
stockholder the right to acquire the beneficial ownership of any shares owned
by
any other stockholder.
Overview
The
purpose of this Compensation Discussion and Analysis (“CD&A”) is to provide
material information about the Company’s compensation philosophy, objectives and
other relevant policies and to explain and put into context the material
elements of the disclosure that follows in this proxy statement with respect
to
the compensation of our Named Executive Officers. For Fiscal 2007, the Company’s
Named Executive Officers were:
Edward
J.
Shoen, Chairman and President of AMERCO and Chief Executive Officer and Chairman
of U-Haul (the “President”);
Mark
V.
Shoen, Vice President of U-Haul Business Consultants;
James
P.
Shoen, Vice President of U-Haul Business Consultants;
John
C.
Taylor, President of U-Haul International; and
Jason
A.
Berg, Chief Accounting Officer of AMERCO.
Compensation
Philosophy and Objectives
The
objectives of the Company’s executive compensation program are to retain current
executive officers, to encourage existing personnel to self-develop and grow
into the job and to entice qualified executives to join the Company in executive
positions as they are created or vacated. The compensation program encourages
an
environment of teamwork, loyalty and fairness at all levels of the Company.
While
this CD&A focuses on the compensation of the Named Executive Officers, the
philosophy and objectives we discuss are generally applicable to all of the
Company’s senior officers.
Implementation
of Objectives
It
is the
duty of the Compensation Committee to review and determine the annual
compensation paid to the President and review the general compensation policies
for the Company’s other executive officers regularly. The Compensation Committee
and the President implement these policies while keeping in mind the Company’s
approach to overhead costs and such executive officer’s impact on the Company’s
objective of providing customers with an affordable product and service. The
Compensation Committee traditionally delegates significant responsibility to
the
President for establishing and reviewing the performance of the other Named
Executive Officers, appropriate levels and components of compensation, and
any
other items as the Compensation Committee may request.
The
Compensation Committee evaluates the compensation of the President at least
annually to ensure that it is fair, reasonable and aligned with the Company’s
overall objectives. The President performs this function for the remainder
of
the Named Executive Officers.
14
The
Compensation Committee did not utilize any benchmarking measure in Fiscal 2007
and traditionally has not tied compensation directly to a specific profitability
measurement, market value of the Company’s common stock or benchmark related to
any established peer or industry group. Rather, the Company generally seeks
to
compensate individual executives commensurate with historic pay levels for
such
position adjusted for time and tenure with the Company. Salary increases are
strongly correlated to the President’s assessment of each Named Executive
Officer’s performance and his recommendation on the appropriateness of any
increase. The Company also generally seeks to increase or decrease compensation,
as appropriate, based upon changes in an executive officer’s functional
responsibilities within the Company.
The
intention of the Company has been to compensate the Named Executive Officers
in
a manner that maximizes the Company’s ability to deduct such compensation
expenses for federal income tax purposes. However, the Compensation Committee
and the President have the discretion to provide compensation that is not
“performance-based” under Section 162(m) of the Internal Revenue Code when they
determine that such compensation is in the best interests of the Company and
its
stockholders. For Fiscal 2007 the Company expects to deduct all compensation
expenses paid to the Named Executive Officers.
Elements
Used to Achieve Compensation Objectives
The
principal components of the Company’s compensation program in Fiscal 2007
were:
| · |
Base
salary;
|
| · |
Discretionary
cash bonus;
|
| · |
Certain
long-term incentives; and
|
| · |
Other
benefits.
|
Base
Salary.
The
Company pays its Named Executive Officers base salaries commensurate with the
scope of their job responsibilities, individual experience, performance, and
the
period of time over which they have performed their duties. The base salary
is
typically reviewed annually with adjustments made based upon an analysis of
performance and the addition or removal of functional responsibilities. There
are no guarantees of base salary adjustments. The amount of base salary paid
to
each of the Named Executive Officers during Fiscal 2007 is shown in the Summary
Compensation Table (“SCT”).
Discretionary
Cash Bonus.
Discretionary cash bonuses are awarded on occasion to Named Executive Officers
based upon subjective criteria determined by the Compensation Committee. These
criteria may include such factors as level of responsibility, contributions
to
results, and retention considerations. The Company has not entered into any
agreements stipulating or guaranteeing bonuses for any of its Named Executive
Officers. The amount of discretionary cash bonuses paid to each of the Named
Executive Officers during Fiscal 2007 is shown in the SCT.
Certain
Long-Term Incentives.
The
Company did not grant in Fiscal 2007 equity interests to Named Executive
Officers other than through its Employee Stock Ownership Plan, which is
available to all employees of the Company. The Company has not implemented
any
specific policy requiring its Named Executive Officers or other officers and/or
employees to own the Company’s Common Stock.
Other
Benefits.
The
Named Executive Officers participate in employee benefits plans generally
available to all full-time employees of the Company on a non-discriminatory
basis including medical, dental, vision, and prescription drug insurance, life
insurance, accidental death and dismemberment insurance, disability insurance,
a
401(k) plan, vacation and sick pay, and postretirement benefits. The Company
does not provide other perquisites to its executive officers.
15
SUMMARY
COMPENSATION TABLE
|
Name
and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
(1)
|
All
Other Compensation
($)
(2)
|
Total
Compensation
($)
|
|
Edward
J. Shoen
Chairman
and President of AMERCO
and
U-Haul
|
2007
|
678,004
|
-
|
5,472
|
80,000
|
763,476
|
|
Mark
V. Shoen
Vice
President of U-Haul Business Consultants
|
2007
|
646,154
|
-
|
5,472
|
-
|
651,626
|
|
James
P. Shoen
Vice
President of U-Haul Business Consultants
|
2007
|
568,952
|
-
|
5,472
|
50,000
|
624,424
|
|
John
C. Taylor
President
of U-Haul
|
2007
|
271,637
|
100,000
|
5,472
|
10,000
|
387,109
|
|
Jason
A. Berg
Chief
Accounting Officer of AMERCO
|
2007
|
175,385
|
-
|
4,228
|
-
|
179,613
|
(1)
Amounts in this column represent the compensation cost recognized for financial
statement reporting purposes under SOP 93-6 for Fiscal 2007 with respect to
Common Stock allocated under the ESOP. Grant date fair value is the closing
price on date of grant for stock.
(2)
Amounts in this column represent annual fees paid to each Named Executive
Officer in his capacity as a Director of the Company or U-Haul or as a member
of
a committee of the AMERCO Board.
Director
Compensation
The
Company’s director compensation program is designed to fairly pay directors for
their time and efforts on behalf of AMERCO and its direct subsidiaries, as
the
case may be, in recognition of their fiduciary obligations to stockholders
and
for their liability exposure. Directors are primarily compensated in the form
of
a cash fee. The Company offers no stock options or grants to its directors.
Each
director of AMERCO is entitled to receive an annual cash fee of $50,000. The
Company compensates directors who provide additional services and make increased
time commitments by paying them additional fees. Audit Committee, Advisory
Board
and Independent Governance Committee members receive an additional $50,000
annual fee; and Executive Finance Committee and Compensation Committee members
receive an additional $20,000 annual fee. Members of the Special Committee
receive an additional $10,000 fee, and the Special Committee advisors receive
an
additional $5,000 fee. Additionally, the Company reimburses directors and the
non-director committee members for the incidental costs associated with their
attendance at Board and committee meetings. All cash fees to directors under
this program are paid in equal monthly installments.
16
DIRECTOR
COMPENSATION
|
Name
of Director
|
Year
|
Fees
Earned or Paid in Cash
($)
|
All
Other Compensation
($)
|
Total
Compensation
($)
|
|
Charles
J. Bayer (1), (2), (3)
|
2007
|
120,000
|
-
|
120,000
|
|
John
P. Brogan (1), (2), (3), (4), (5)
|
2007
|
165,000
|
-
|
165,000
|
|
William
E. Carty (1), (7), (9)
|
2007
|
45,000
|
-
|
45,000
|
|
John
M. Dodds (1), (2), (4), (7)
|
2007
|
160,000
|
-
|
160,000
|
|
Michael
L. Gallagher (1), (5)
|
2007
|
50,000
|
-
|
50,000
|
|
M.
Frank Lyons (1)
|
2007
|
50,000
|
-
|
50,000
|
|
Daniel
R. Mullen (1), (2), (7), (8)
|
2007
|
116,000
|
-
|
116,000
|
|
Paul
A. Bible (5)
|
2007
|
50,000
|
-
|
50,000
|
|
Barbara
Smith Campbell (6)
|
2007
|
50,000
|
-
|
50,000
|
|
Thomas
W. Hayes (5)
|
2007
|
50,000
|
-
|
50,000
|
|
Richard
J. Herrera (6), (10)
|
2007
|
0
|
-
|
0
|
|
(1)
AMERCO Director
|
(6)
Advisory Board Member
|
|
(2)
Audit Committee Member
|
(7)
U-Haul International Board Member
|
|
(3)
Executive Finance Committee Member
|
(8)
Oxford Board Member
|
|
(4)
Compensation Committee Member
|
(9)
William E. Carty resigned from the Boards of
|
|
(5)
Independent Governance Committee Member
|
AMERCO
and U-Haul effective December 31, 2006
|
|
(10)
Richard J. Herrera was appointed March 30,
2007
|
The
Compensation Committee has reviewed and discussed with management the
Compensation Discussion and Analysis prepared by management and included in
the
proxy statement for the 2007 Annual Meeting of Stockholders. In reliance on
these reviews and discussions with management, the Compensation Committee
recommended to the Board of Directors of AMERCO, and the Board of Directors
has
approved, that the Compensation Discussion and Analysis be included in the
Proxy
Statement for the 2007 Annual Meeting of Stockholders for filing with the
Securities and Exchange Commission.
This
report is submitted by the Compensation Committee.
John
P.
Brogan John
M.
Dodds
Pursuant
to Item 407(e)(5) of Regulation S-K this “Compensation Committee Report” shall
not be deemed to be filed with the SEC for purposes of the Securities Exchange
Act of 1934, as amended (“Exchange Act”), nor shall such report be deemed to be
incorporated by reference in any past or future filing by the Company under
the
Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”),
unless the intention to do so is expressly indicated.
17
The
Audit
Committee of the Board of Directors (“Audit Committee”) is comprised of four
independent directors and operates under a written charter recommended by the
Audit Committee and adopted by the Board of Directors. Each member of the Audit
Committee meets the independence requirements of NASDAQ and the SEC rules and
regulations.
Management
is responsible for the Company’s internal controls and the financial reporting
process. The independent registered public accounting firm is responsible for
performing an independent audit of the Company’s consolidated financial
statements in accordance with the standards of the Public Company Accounting
Oversight Board (United States) and to issue a report thereon. The Audit
Committee’s responsibility is to monitor and oversee these
processes.
In
this
context, Management represented to the Audit Committee that the Company’s
consolidated financial statements were prepared in accordance with generally
accepted accounting principles, and the Audit Committee has reviewed and
discussed the consolidated financial statements with management and the
independent registered public accounting firm. The Audit Committee reviewed
and
discussed with the independent registered public accounting firm the matters
required to be discussed by Statement on Auditing Standards No. 61 as amended
(Communication with Audit Committees) as adopted by the Public Company
Accounting Oversight Board.
The
Company’s independent registered public accounting firm also provided to the
Audit Committee the written disclosures and the letter required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees)
as adopted by the Public Company Accounting Oversight Board, and the Audit
Committee discussed with the independent registered public accounting firm
that
firm’s independence.
Based
on
the Audit Committee’s discussions with management and the independent registered
public accounting firm and its review of the representation of management and
the report of the independent registered public accounting firm to the Audit
Committee, the Audit Committee recommended that the Board of Directors include
the audited consolidated financial statements in the Company’s Annual Report on
Form 10-K for the year ended March 31, 2007 filed with the Securities and
Exchange Commission.
John
P.
Brogan Charles
J. Bayer John
M.
Dodds Daniel
R.
Mullen
Pursuant
to Instruction 1 to Item 407(d) of Regulation S-K, the information set forth
under “Audit Committee Report” shall not be deemed to be “soliciting material”
or to be “filed” with the SEC or subject to Regulation 14A or 14C, other than as
provided in Item 407 of Regulation S-K, or to the liabilities of Section 18
of
the Exchange Act, except to the extent that we specifically request that the
information be treated as soliciting material or specifically incorporate it
by
reference into a document filed under the Securities Act or the Exchange Act.
Such information will not be deemed incorporated by reference into any filing
under the Securities Act or the Exchange Act, except to the extent we
specifically incorporate it by reference.
18
The
Company’s executive officers are:
|
Name
|
Age
*
|
Office
|
|
Edward
J. Shoen
|
58
|
Chairman
of the Board, President, and Director
|
|
Richard
M. Amoroso
|
48
|
President
of Republic Western Insurance Company
|
|
Jason
A. Berg
|
34
|
Principal
Accounting Officer of AMERCO
|
|
Laurence
J. DeRespino
|
46
|
General
Counsel
|
|
Ronald
C. Frank
|
66
|
Executive
Vice President of U-Haul field operations
|
|
Mark
A. Haydukovich
|
50
|
President
of Oxford Life Insurance Company
|
|
Gary
B. Horton
|
63
|
Treasurer
of AMERCO and U-Haul
|
|
Robert
T. Peterson
|
56
|
Controller
of U-Haul
|
|
James
P. Shoen
|
47
|
Vice
President of U-Haul Business Consultants, Director
|
|
Mark
V. Shoen
|
56
|
Vice
President of U-Haul Business Consultants
|
|
John
C. Taylor
|
49
|
President
and Director of U-Haul
|
|
Carlos
Vizcarra
|
60
|
President
of Amerco Real Estate Company
|
|
Rocky
D. Wardrip
|
49
|
Assistant
Treasurer of AMERCO and U-Haul
|
|
Robert
R. Willson
|
56
|
Executive
Vice President of U-Haul field operations
|
|
*
Ages are as of June 30, 2007.
|
||
See
“Election of Directors” for information regarding Edward J. Shoen and James P.
Shoen.
Richard
M. Amoroso has served as President of Republic Western Insurance Company
(“RepWest”), a subsidiary of the Company, since August 2000. He was Assistant
General Counsel of U-Haul from 1993 until February 2000. He served as Assistant
General Counsel of ON Semiconductor Corporation from February to August
2000.
Jason
A.
Berg, has served as Principal Accounting Officer of the Company since July
8,
2005. Prior to his appointment he served as Treasurer and Secretary of Oxford.
He has been with the Company since 1996.
Laurence
J. DeRespino has served as General Counsel for the Company since October 2005.
He has been an attorney for the Company since 2000.
Ronald
C.
Frank has served as Executive Vice President of U-Haul field operations since
1998. He has been associated with the Company since 1959.
Mark
A.
Haydukovich has served as President of Oxford since June 1997. From 1980 to
1997
he served as Vice President of Oxford.
Gary
B.
Horton has served as Treasurer of the Company since 1982. He has been associated
with the Company since 1969.
Robert
T.
Peterson has served as Controller of U-Haul since joining the Company in
November 2002. He has held a number of executive positions in the transportation
industry and is presently Chief Financial Officer of U-Haul.
Mark
V.
Shoen has served as a Director of the Company from 1990 until February 1997.
He
has served as a Director of U-Haul from 1990 until November 1997 and as
President, Phoenix Operations, from 1994 to 2007. He is currently Vice President
of U-Haul Business Consultants.
John
C.
Taylor has served as Director of U-Haul since 1990. He has been associated
with
the Company since 1981 and was named President of U-Haul in 2006.
19
Carlos
Vizcarra has served as President of Amerco Real Estate Company, a direct
subsidiary of AMERCO, since September 2000. He began his previous position
as
Vice President/Storage Product Group for U-Haul in 1988.
Rocky
D.
Wardrip has served as Assistant Treasurer of the Company since 1990. He has
been
associated with the Company since 1978 in various capacities within accounting
and treasury operations.
Robert
R.
Willson has served as Executive Vice President of field operations since 2006.
He has been employed by U-Haul since 1980 and has held various executive
positions, including Area District Vice President, Marketing Company President
and General Manager.
Edward
J., Mark V., and James P. Shoen are brothers. William E. Carty, who resigned
as
a director of the Company in December 2006, is the uncle of Edward J. and Mark
V. Shoen. M. Frank Lyons was married to William E. Carty’s sister and the aunt
of Edward J. and Mark V. Shoen until her death in 1992.
As
set
forth in the Audit Committee Charter attached as Exhibit
B, the Audit Committee reviews and approves all related-party transactions
which are required to be disclosed under SEC rules and regulations. Accordingly,
all such related-party transactions are submitted to the Audit Committee for
ongoing review, and the Audit Committee approves or disapproves such
related-party transactions. The Company’s internal processes ensure that the
Company’s legal and/or finance departments identify and monitor potential
related-party transactions which may require disclosure and Audit Committee
approval.
AMERCO
has engaged in related party transactions, and has continuing related party
interests, with certain major stockholders, directors and officers of the
consolidated group.
Samuel
J.
Shoen, the son of Edward J. Shoen, is employed by U-Haul as Vice President.
Mr.
Shoen was paid an aggregate salary and bonus of $136,345 for his services during
fiscal 2007.
SAC
Holding Corporation and SAC Holding II Corporation (collectively, “SAC
Holdings”) were established in order to acquire self-storage properties. These
properties are being managed by the Company pursuant to management agreements.
The sale of self-storage properties by the Company to SAC Holdings has in the
past provided significant cash flows to the Company and certain of the Company’s
outstanding loans to SAC Holdings entitle the Company to participate in SAC
Holdings’ excess cash flows (after senior debt service).
Management
believes that its past sales of self-storage properties to SAC Holdings has
provided a unique structure for the Company to earn moving equipment rental
revenues and property management fee revenues from the SAC Holdings self-storage
properties that the Company manages.
During
fiscal 2007, subsidiaries of the Company held various junior unsecured notes
of
SAC Holdings. Substantially all of the equity interest of SAC Holdings is
controlled by Blackwater, wholly-owned by Mark V. Shoen, a significant
stockholder and executive officer of AMERCO. The Company does not have an equity
ownership interest in SAC Holdings. The Company recorded interest income of
$19.2 million, $19.4 million and $22.0 million, and received cash interest
payments of $44.5 million, $11.2 million and $11.7 million, from SAC Holdings
during fiscal 2007, 2006 and 2005, respectively. The cash interest payments
for
fiscal 2007 included a payment to significantly reduce the outstanding interest
receivable from SAC Holdings. The largest aggregate amount of notes receivable
outstanding during fiscal 2007 and the aggregate notes receivable balance at
March 31, 2007 and March 31, 2006 was $203.7 million, of which $75.1 million
is
with SAC Holding II and has been eliminated in the consolidated financial
statements.
Interest
accrues on the outstanding principal balance of junior notes of SAC Holdings
that the Company holds at a rate of 9% per annum. A fixed portion of that basic
interest is paid on a monthly basis. Additional interest can be earned on notes
totaling $142.3 million of principal depending upon the amount of remaining
basic interest and the cash flow generated by the underlying property.
20
To
the
extent that this cash flow-based calculation exceeds the amount of remaining
basic interest, contingent interest is paid on the same monthly date as the
fixed portion of basic interest. To the extent that the cash flow-based
calculation is less than the amount of remaining basic interest, the additional
interest payable on the applicable monthly date is limited to the amount of
that
cash flow-based calculation. In such a case, the excess of the remaining basic
interest over the cash flow-based calculation is deferred. In addition, subject
to certain contingencies, the junior notes provide that the holder of the note
is entitled to receive a portion of the appreciation realized upon, among other
things, the sale of such property by SAC Holdings.
During
fiscal 2007, AMERCO and U-Haul held various junior notes from Private Mini
Storage Realty, L.P. or a subsidiary thereof (“Private Mini”). The equity
interests of Private Mini are ultimately controlled by Blackwater. The Company
recorded interest income of $5.0 million and $5.1 million, and received cash
interest payments of $5.0 million and $1.4 million, from Private Mini during
fiscal 2007 and 2006, respectively. The balance of notes receivable from Private
Mini at March 31, 2007 and 2006 was $70.1 million and $71.0 million,
respectively. The largest aggregate amount outstanding during fiscal 2007 was
$70.8 million.
The
Company currently manages the self-storage properties owned or leased by SAC
Holdings, Mercury, 4 SAC, 5 SAC, Galaxy, and Private Mini pursuant to a standard
form of management agreement, under which the Company receives a management
fee
of between 4% and 10% of the gross receipts plus reimbursement for certain
expenses. The Company received management fees, exclusive of reimbursed
expenses, of $23.5 million, $22.5 million and $14.4 million from the above
mentioned entities during fiscal 2007, 2006 and 2005, respectively. This
management fee is consistent with the fee received for other properties the
Company previously managed for third parties. SAC Holdings, 4 SAC, 5 SAC, Galaxy
and Private Mini are substantially controlled by Blackwater. Mercury is
substantially controlled by Mark V. Shoen. James P. Shoen, a significant
stockholder and director of AMERCO, has an interest in Mercury.
RepWest
and Oxford held a 46% limited partnership interest in Securespace Limited
Partnership (“Securespace”), a Nevada limited partnership. A SAC Holdings
subsidiary serves as the general partner of Securespace and owns a 1% interest.
Another SAC Holdings subsidiary owned the remaining 53% limited partnership
interest in Securespace. Securespace was formed by SAC Holdings to be the owner
of various Canadian self-storage properties. RepWest and Oxford’s investment in
Securespace was included in Related Party Assets and was accounted for using
the
equity method of accounting. On September 29, 2006, a subsidiary of SAC Holding
Corporation exercised its right under the partnership agreement to purchase
all
of the partnership interests held by RepWest and Oxford for a combined amount
of
$11.9 million.
The
Company leases space for marketing company offices, vehicle repair shops and
hitch installation centers from subsidiaries of SAC Holdings, 5 SAC and Galaxy.
Total lease payments pursuant to such leases were $2.7 million for fiscal 2007,
2006 and 2005, respectively. The terms of the leases are similar to the terms
of
leases for other properties owned by unrelated parties that are leased to the
Company.
At
March
31, 2007, subsidiaries of SAC Holdings, 4 SAC, 5 SAC, Galaxy and Private Mini
acted as U-Haul independent dealers. The financial and other terms of the
dealership contracts with the aforementioned companies and their subsidiaries
are substantially identical to the terms of those with the Company’s other
independent dealers whereby commissions are paid by the Company based upon
equipment rental revenue. During fiscal 2007, 2006 and 2005 the Company paid
the
above mentioned entities $36.6 million, $36.8 million and $33.1 million,
respectively in commissions pursuant to such dealership contracts.
These
agreements and notes with subsidiaries of SAC Holdings, 4 SAC, 5 SAC, Galaxy
and
Private Mini, excluding Dealer Agreements, provided revenue of $39.7 million,
expenses of $2.7 million and cash flows of $63.5 million during fiscal 2007.
Revenues and commission expenses related to the Dealer Agreements were $168.6
million and $36.6 million, respectively.
On
March
9, 2007, an exchange occurred between the Company and Edward J. Shoen. Mr.
Shoen, transferred 3,483,681 shares of AMERCO Series A Common Stock, $0.25
par
value, in exchange for 3,483,681 shares of AMERCO Common Stock, $0.25 par value.
Mr. Shoen is President and Chairman of
21
the
Board
and a significant stockholder of AMERCO. No gain or loss was recognized as
a
result of this transaction.
On
March
9, 2007, an exchange occurred between the Company and James P. Shoen. Mr. Shoen,
transferred 232,500 shares of AMERCO Series A Common Stock, $0.25 par value,
in
exchange for 232,500 shares of AMERCO Common Stock, $0.25 par value. Mr. Shoen
is a director and a significant stockholder of AMERCO. No gain or loss was
recognized as a result of this transaction.
In
prior
years, U-Haul sold various properties to SAC Holding Corporation at prices
in
excess of U-Haul’s carrying values resulting in gains which U-Haul deferred and
treated as additional paid-in capital. The transferred properties had
historically been stated at the original cost basis as the gains were eliminated
in consolidation. In March 2004, these deferred gains were recognized and
treated as contributions from a related party in the amount of $111.0 million
as
a result of the deconsolidation of SAC Holding Corporation.
In
July
2006, RepWest completed the sale of two properties to 5 SAC, for approximately
$0.9 million. RepWest received cash from these sales. These sales resulted
from
5 SAC exercising contractual purchase options they previously held with RepWest.
On
June
20, 2003, AMERCO filed a voluntary petition for relief under Chapter 11 of
the
United States Bankruptcy Code. Amerco Real Estate Company also filed a voluntary
petition for relief under Chapter 11 on August 13, 2003. The other subsidiaries
of AMERCO were not included in either of the filings. On March 15, 2004,
AMERCO
and Amerco Real Estate Company
emerged
from Chapter 11 (less than nine months from the
petition
date) with full payment to creditors while preserving the interests of
Company
stockholders.
The
disclosure in this section is required by the federal securities laws because
the plaintiff, Paul F. Shoen, is the brother of one or more directors, officers
and 5% stockholders.
On
September 24, 2002, Paul F. Shoen filed a derivative action in the Second
Judicial District Court of the State of Nevada, Washoe County, captioned Paul
F.
Shoen vs. SAC Holding Corporation et al., CV02-05602, seeking damages and
equitable relief on behalf of AMERCO from SAC Holdings and certain current
and
former members of the AMERCO Board of Directors, including Edward J. Shoen,
Mark
V. Shoen and James P. Shoen as defendants. AMERCO is named a nominal defendant
for purposes of the derivative action. The complaint alleges breach of fiduciary
duty, self-dealing, usurpation of corporate opportunities, wrongful interference
with prospective economic advantage and unjust enrichment and seeks the
unwinding of sales of self-storage properties by subsidiaries of AMERCO to
SAC
Holdings prior to the filing of the complaint. The complaint seeks a declaration
that such transfers are void as well as unspecified damages. On October 28,
2002, AMERCO, the Shoen directors, the non-Shoen directors and SAC Holdings
filed Motions to Dismiss the complaint. In addition, on October 28, 2002, Ron
Belec filed a derivative action in the Second Judicial District Court of the
State of Nevada, Washoe County, captioned Ron Belec vs. William E. Carty, et
al., CV 02-06331 and on January 16, 2003, M.S. Management Company, Inc. filed
a
derivative action in the Second Judicial District Court of the State of Nevada,
Washoe County, captioned M.S. Management Company, Inc. vs. William E. Carty,
et
al., CV 03-00386. Two additional derivative suits were also filed against these
parties. These additional suits are substantially similar to the Paul F. Shoen
derivative action. The five suits assert virtually identical claims. In fact,
three of the five plaintiffs are parties who are working closely together and
chose to file the same claims multiple times. These lawsuits alleged that the
AMERCO Board lacked independence. In reaching its decision to dismiss these
claims, the court determined that the AMERCO Board of Directors had the
requisite level of independence required in order to have these claims resolved
by the Board. The court consolidated all five complaints before dismissing
them
on May 28, 2003. Plaintiffs appealed and, on July 13, 2006, the Nevada Supreme
Court reviewed and remanded the claim to the trial court for proceedings
consistent with its
22
ruling,
allowing the plaintiffs to file an amended complaint and plead in addition
to
substantive claims, demand futility. On November 8, 2006, the nominal plaintiffs
filed an Amended Complaint. On December 22, 2006, the defendants filed Motions
to Dismiss. Briefing was concluded on February 21, 2007. On March 29, 2007,
the
Court denied AMERCO’s motion to dismiss regarding the issue of demand futility.
On March 30, 2007, the Court heard oral argument on the remainder of the
Defendants’ Motions to Dismiss and requested supplemental briefing. The
supplemental briefs were filed on May 14, 2007.
BDO
Seidman, LLP served as the Company’s principal independent registered public
accounting firm for the fiscal years ended March 31, 2007, 2006 and 2005 and
the
Audit Committee has selected BDO Seidman, LLP to audit AMERCO’s financial
statements for fiscal 2008. Representatives of BDO Seidman, LLP are expected
to
be present at the Meeting. The following table shows the fees that AMERCO and
its consolidated entities paid or accrued for the audit and other services
provided by BDO Seidman, LLP for fiscal 2007 and 2006.
|
March
31,
|
||||||||||
|
2007
|
2006
|
|||||||||
|
(in
thousands)
|
||||||||||
|
Audit
fees
|
4,130
|
4,139
|
||||||||
|
Audit-related
fees
|
55
|
54
|
||||||||
|
Tax
fees
|
375
|
-
|
||||||||
|
All
other fees
|
-
|
-
|
||||||||
|
Total
|
4,560
|
4,193
|
||||||||
Audit
Fees.
This
category includes the audit of AMERCO’s annual financial statements and the
effectiveness of internal control over financial reporting as of fiscal year
end, review of financial statements included in AMERCO’s Form 10-Q quarterly
reports, and services that are normally provided by the independent registered
public accounting firm in connection with statutory and regulatory filings
or
engagements for those fiscal years. This category also includes advice on
accounting matters that arose during, or as a result of, the audit or the review
of interim financial statements, statutory audits required by U.S. jurisdictions
and the preparation of an annual “management letter” on internal control
matters.
Audit-Related
Fees. This
category consists of assurance and related services provided by BDO Seidman,
LLP
that are reasonably related to the performance of the audit or review of
AMERCO’s financial statements and are not reported above under “Audit Fees.” The
services for the fees disclosed under this category include benefit plan audits.
Tax
Fees. This
category consists of tax related services provided by BDO Seidman, LLP The
services for the fees disclosed under this category in fiscal 2007 included
the
performance of a cost segregation study of the buildings and equipment owned
by
AMERCO.
Each
year, the Audit Committee approves the annual audit engagement in advance.
The
Audit Committee also has established procedures to pre-approve all non-audit
services provided by the independent registered public accounting firm. All
fiscal 2007 non-audit services listed above were pre-approved. The Audit
Committee has determined that the provision of services by BDO Seidman, LLP
described in the preceding paragraphs were compatible with maintaining BDO
Seidman, LLP’s independence as the Company’s principal independent registered
public accounting firm.
23
BDO
Seidman, LLP currently serves as the Company’s independent registered public
accounting firm, and has conducted the audit of the Company’s accounts since
2002. The audit committee has appointed BDO Seidman, LLP to serve as the
independent registered public accounting firm to conduct an audit of our
accounts for fiscal year 2008.
Selection
of the Company’s independent registered public accounting firm is not required
to be submitted to a vote of the stockholders for ratification. The
Sarbanes-Oxley Act of 2002 requires the audit committee to be directly
responsible for the appointment, compensation and oversight of the audit work
of
the independent registered public accounting firm. However, the Board of
Directors has elected to submit the selection of BDO Seidman, LLP as the
Company’s independent registered public accounting firm to stockholders for
ratification as a matter of good corporate practice. Even if stockholders vote
on an advisory basis in favor of the appointment, the audit committee may,
in
its discretion, direct the appointment of a different independent registered
public accounting firm at any time during the year if it determines that such
a
change would be in the best interests of the Company and our
stockholders.
Representatives
of BDO Seidman, LLP are expected to be present at the annual meeting. They
will
have the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
The
Company received the following stockholder proposal (the “Stockholder Proposal”)
from stockholders identified below. These individuals are employees of U-Haul.
| Aaron
Schafer
|
Dee
McDowell
|
Lara
Wesson
|
Richard
Baranski
|
| Alan
L. Weinstein
|
Dennis
O’Connor
|
Laura
Martins
|
Richard
Zabriskie
|
| Amy
Henning
|
Don
Cichon
|
Linda
Molina
|
Rodney
McDowell
|
| Artie
Tonan
|
Donald
Cerimeli
|
Lindsay
Pobieglo
|
Russ
E. Johnson
|
| Bernice
Owens
|
Francis
Nebo
|
Loretta
Wojtak
|
Salea
Kinealy
|
| Bob
Wesson
|
Greg
Foster
|
Marie
Barrows
|
Samuel
Celaya
|
| Brian
O'Loughlin
|
James
Cain
|
Marlene
Patton
|
Scott
Lee
|
| Bruce
Royer
|
Jean
Covington
|
Mary
Rivera
|
Scott
Willson
|
| Burton
Duy
|
Jeannie
Neff
|
Matt
Braccia
|
Sean
Kelly
|
| Butch
H Greer
|
Jeff
Jenkins
|
Michael
G. Colman
|
Shirley
Brown
|
| Carlos
Vizcarra
|
Joanne
Fried
|
Michael
Kinealy
|
Silvia
Hernandez
|
| Carol
Young
|
JoAnne
Sasser
|
Michael
Saur
|
Steve
Dudley
|
| Carolyn
Hyduke
|
Joe
Hemauer
|
Mike
Wiram
|
Steven
Berman
|
| Cilia
Mallatte
|
John
Homer
|
Mitzi
Pack
|
Thomas
Casey
|
| Cindy
Lycans
|
John
J. Sampson
|
Monica
Calvillo
|
Thomas
Dilgard
|
| Crystal
Clark
|
John
McCauley
|
Nobie
Sanders
|
Thomas
Prefling
|
| Dale
Harpster
|
John
Mikel
|
Olga
Sanchez
|
Tom
Coffee
|
| Danielle
D Lloyd
|
John
Ungerer
|
Pamela
Young
|
Tom
Kardys
|
| David
Coyle
|
Joseph
Cook
|
Pat
Fidazzo
|
Tom
L Stallings
|
| David
Rose
|
Joy
Hodge
|
Randy
Engen
|
Vicki
McAuliffe
|
| Dean
Cerimeli
|
Kelie
Budd-Hale
|
Renee
Colman
|
|
| Debi
Slater
|
Kenneth
Parker
|
Renee
Royer
|
24
|
Motion:
|
||||
|
That
the shareholders vote to approve and affirm the actions taken by
all
AMERCO and its subsidiaries’ Boards of Directors, officers and employees
in entering into, and all resulting contracts with SAC and ratify
all SAC
transactions amended or entered into by AMERCO and any of its subsidiaries
between 1992 and March 31, 2007.
|
||||
|
Reason
for Making the Proposal:
|
||||
|
Pending
litigation and to protect potential diminishment of shareholder
equity.
|
||||
|
Relevant
Notices:
|
||||
|
1)
We do not have any material interest in the subject matter of the
proposal.
|
||||
|
2)
We are not members of any partnership, limited partnership, syndicate
or
other group pursuant to any agreement, arrangement,
relationship, understanding, or otherwise, whether or not in writing,
organized in whole or in part for the purpose of acquiring, owning
or
voting shares of AMERCO stock.
|
||||
|
3)
The above shareholders have continuously held at least $2,000.00
in market
value of AMERCO shares and we intend to hold the stock through the
date of
the annual meeting.
|
||||
|
Attachments:
All relevant schedules and timelines associated with this
motion.
|
||||
The
Company makes no recommendation with respect to the Stockholder Proposal. To
help Company stockholders make an informed decision with respect to the
Stockholder Proposal, we have set forth below descriptions of specific material
contracts and transactions between the Company (including its affiliates) and
SAC Holding Corporation (and its affiliates). These descriptions are intended
to
provide a summary of the material contracts and transactions entered between
1992 and March 31, 2007. For additional information as to the terms and
conditions of these contracts and transactions, please see Exhibits F through
Z
attached hereto, as well as exhibits to the Company’s SEC filings from 1992
through the present. There is currently pending litigation against the Company
relating to the subject matter addressed in the Stockholder Proposal. See
Derivative
Action
discussed herein on page 22. A majority vote of stockholders in favor of the
Stockholder Proposal may have an effect on the disposition of such litigation.
Background
SAC
consists of SAC Holding Corporation (“SAC I”), and its affiliates SAC Holding II
Corporation (“SAC II”), Four SAC Self-Storage Corporation (“4 SAC”), Five SAC
Self-Storage Corporation (“5 SAC”), Mercury Partners, LP. (“Mercury”) and each
of their respective subsidiaries or affiliates including Private Mini and Galaxy
Investors, L.P. (“Galaxy”, and collectively with SAC I, SAC II, 4 SAC, 5 SAC,
Mercury, Private Mini and each of their respective subsidiaries, “SAC”). SAC was
established to own self-storage properties and to act as an independent U-Haul
dealer for the rental of U-Haul equipment. SAC is owned by Blackwater
Investments, Inc., which in turn is owned by Mark V. Shoen, a significant
stockholder and an executive officer of the Company. Mercury is substantially
controlled by Mark V. SHoen. James P. Shoen, a significant stockholder and
an
executive officer and director of the Company, has an equity interest in
Mercury. Mark V. Shoen is a director and officer of SAC.
SAC
was
established to help implement the Company’s strategic business plan of expanding
the self-storage portfolio operated under the U-Haul name and expanding the
number of U-Haul dealer outlets for the rental of U-Haul equipment. Many of
the
Company’s credit facilities that existed prior to 2004 contained restrictive
covenants that prohibited the Company from mortgaging its assets. As a result,
prior to 2004, the Company could not obtain any significant amount of mortgage
financing as a means to implement its strategic business plan. SAC, however,
was
not subject to such lender restrictions. Accordingly, the Company utilized
the
flexibility inherent in SAC as a means for achieving certain goals and
objectives. Over the course of several years, contractual relationships were
established between subsidiaries of the Company and SAC. The following
summarizes certain of the basic contracts:
25
| 1. |
Properties
owned by subsidiaries of the Company were sold to SAC, generally
in
geographically diverse “groupings” of stabilized properties. Upon the sale
of a property to SAC, such property ceased being an asset of the
Company;
similarly, the liabilities secured by the SAC-owned properties (the
“SAC
Properties”) are not liabilities of the Company. In total, the appraised
values of the properties sold by the Company to SAC were approximately
$615.9 million and selling prices were approximately $600.7 million.
|
| 2. |
Property
management agreements were entered between U-Haul subsidiaries and
SAC,
pursuant to which U-Haul subsidiaries were hired to act as property
managers for the SAC Properties. These agreements ensure that the
SAC
Properties are operated and maintained in accordance with U-Haul
standards, and provide subsidiaries of the Company with management
fee
revenue. Management fees for fiscal years 2007, 2006 and 2005 were
$23.5
million, $22.5 million and $14.4 million,
respectively.
|
| 3. |
U-Haul
independent dealer agreements were entered between subsidiaries of
the
Company and SAC, pursuant to which the SAC Properties act as U-Haul
independent dealers for the rental of U-Haul equipment. These agreements
have resulted in an expansion of the U-Haul dealer network.
|
| 4. |
Subsidiaries
of the Company loaned money to SAC to finance SAC’s purchase of the SAC
Properties, evidenced by promissory notes (the “SAC Notes”). Such SAC
Notes have generally accrued interest at a rate of 8% to 9% per annum
and
require minimum monthly cash interest payments.
|
Over
the
years, SAC has obtained loans from various third party lenders, which loans
are
secured by first mortgages on the majority of the SAC Properties. Such mortgage
loans have facilitated SAC’s purchase of the SAC Properties, which in turn has
enabled the Company to implement its business plan. Proceeds from such mortgage
loans (net of transaction expenses and customary mortgage loan hold-backs and
reserves) have been remitted by SAC to Company subsidiaries to pay for the
purchase of the SAC Properties and/or to pay down the SAC Notes.
Exclusive
of the properties in the Carey Portfolio, the Private Mini Portfolio and the
Securespace Portfolio, each as hereinafter defined, subsidiaries of the Company
sold 230 properties to SAC. Table
1
below
sets forth the appraised values, book values and sales prices of such 230
properties.
Table
1
|
Name
of SAC Entity
|
Appraised
Values
|
Book
Values
|
Sales
Prices
|
|||||
|
24-25-26-27
|
$134,940,000
|
$65,260,000
|
$140,406,000
|
|||||
|
20-21-22-23
|
91,940,000
|
45,842,000
|
93,679,000
|
|||||
|
18
|
44,805,000
|
29,743,000
|
43,782,000
|
|||||
|
12-13-14
|
119,185,000
|
38,479,000
|
110,741,000
|
|||||
|
6
|
91,270,000
|
40,421,000
|
99,686,000
|
|||||
|
4-5
|
66,595,000
|
55,940,000
|
57,422,000
|
|||||
|
1-2
|
67,200,000
|
54,425,000
|
54,955,000
|
|||||
|
Total
|
$615,935,000
|
$330,110,000
|
$600,671,000
|
26
The
SAC
Properties are located throughout the United States and Canada and consist
of
the 230 properties referenced above, the self-storage portion of the 78
properties in the Carey Portfolio, the 60 properties in the Private Mini
Portfolio, the 16 properties in the Securespace Portfolio, and 112 other
properties purchased by SAC from non-AMERCO entities. Substantially
all of the SAC Properties are developed and operate as U-Haul moving centers
and
self-storage facilities (“U-Haul Centers”).
SAC
Holding Participation and Subordination Agreement in Connection with AMERCO
Restructuring
On
March
15, 2004, in connection with the Company’s court approved Chapter 11 bankruptcy
restructuring and the implementation of the Joint Plan of Reorganization of
AMERCO and Amerco Real Estate Company (collectively, the “Restructuring”), SAC
Holdings issued $200 million of 8.5% senior notes due 2014 (the “SAC Holdings
Senior Notes”) pursuant to an Indenture (“Indenture”) dated March 14, 2004 with
Law Debenture Trust Company of New York as Trustee (the “Trustee”), to the
Company’s unsecured creditors. In connection with the Indenture, the Company,
SAC Holdings, U-Haul and the Trustee entered a Participation and Subordination
Agreement (the “PSA”), pursuant to which, among other things, (i) the proceeds
from SAC’s indenture notes were used to repay $200 million in principal amount
of SAC Notes held by U-Haul and AREC; (ii) one SAC Note was restated in the
form
of a Fixed Rate Note; and (iii) the principal amount of three SAC Notes remained
unchanged, but such notes were restated in the form of the Amended and Restated
SAC Notes and were expressly made subordinate to the SAC Holdings Senior Notes.
See Exhibits F, G, H,
I
and J
attached hereto for copies of the PSA, Fixed Rate Note and Amended and Restated
SAC Notes. In August 2004, SAC Holdings redeemed approximately $43.2 million
of
the SAC Holdings Senior Notes. In June 2007, SAC Holdings completed a full
redemption of the SAC Holdings Senior Notes.
Pursuant
to the PSA, the Company reimbursed or paid on behalf of SAC Holdings the
reasonable attorneys’ fees incurred by SAC Holdings in connection with the
preparation, negotiation and implementation of the PSA and the issuance of
the
SAC Holdings Senior Notes, in an amount not exceeding $500,000. In addition,
the
Company has reimbursed, or paid on behalf of SAC Holding, SAC Holdings’
reasonable, direct out of pocket expenses (including reasonable attorneys’ and
accountants fees and trustee’s fees) incurred by SAC Holdings in connection with
its reporting or other compliance obligations under the Indenture and the PSA,
in an amount not exceeding $1 million for any twelve-month period.
Pursuant
to the PSA, AMERCO executed an Agreement to Indemnify (the “Indemnity”) in favor
of SAC Holdings and certain of its affiliates as specified therein (“the
“Indemnified Persons”). Under the Indemnity, AMERCO has agreed to indemnify,
defend and hold harmless the Indemnified Persons from and against, among other
things, liability under the PSA. See Exhibit K attached
hereto for a copy of the Indemnity. All of the transactions and agreements
in
connection with the Indenture, the PSA, the Fixed Rate Note, the Amended and
Restated SAC Notes and the Indemnity were expressly approved by the Bankruptcy
court presiding over the Restructuring.
Sale
of properties to Twenty Four SAC, Twenty Five SAC, Twenty Six SAC, and Twenty
Seven SAC
In
March
2002, subsidiaries of the Company sold 59 stabilized properties improved with
self-storage facilities (the “24-27 SAC Properties”) to SAC Holdings’
subsidiaries, Twenty-Four SAC Self-Storage Limited Partnership, Twenty-Five
SAC
Self-Storage Limited Partnership, Twenty-Six SAC Self-Storage Limited
Partnership and Twenty-Seven SAC Self-Storage Limited Partnership (collectively,
“24-27 SAC”) for an aggregate sale price of approximately $140,406,000. 24-27
SAC closed on a mortgage loan secured by the 24-27 SAC Properties simultaneously
or immediately after the closing of the sale of the properties to 24-27 SAC.
Net
mortgage loan proceeds, along with a note issued by SAC Holdings to U-Haul
contemporaneously with the sale (the “24-27 SAC Junior Note”) financed 24-27
SAC’s purchase of such properties. Independent appraisals commissioned by the
mortgage lender to 24-27 SAC were done on the 24-27 SAC Properties within
approximately two months prior to the date of the sale, which appraised
27
values,
in the aggregate, equaled approximately $134,940,000.
Upon
the
sale of the 24-27 SAC Properties to 24-27 SAC, the 24-27 SAC Properties became
subject to a Property Management Agreement with U-Haul, pursuant to which U-Haul
was hired to act as the property manager. At all times since the sale of the
24-27 SAC Properties, U-Haul has acted as the property manager at such
locations.
Upon
the
sale of the 24-27 SAC Properties to 24-27 SAC, 24-27 SAC became a U-Haul
independent dealer, pursuant to a standard form of U-Haul dealership agreement.
At all times since the sale of the 24-27 SAC Properties, 24-27 SAC has been
a
U-Haul dealer at such properties.
In
March
2004, the 24-27 SAC Junior Note was amended and restated and subordinated to
the
SAC Holdings Senior Notes.
Sale
of properties to Twenty SAC, Twenty One SAC, Twenty-Two SAC and Twenty Three
SAC
In
December 2001 and January 2002, subsidiaries of the Company sold 37 stabilized
properties improved with self-storage facilities (the “20-23 SAC Properties”) to
SAC Holdings’ subsidiaries, Twenty SAC Self-Storage Corporation, Twenty-One SAC
Self-Storage Corporation, Twenty-Two SAC Self-Storage Corporation and
Twenty-Three SAC Self-Storage Corporation (collectively, “20-23 SAC”) for an
aggregate sale price of approximately $93,679,000. 20-23 SAC closed on a
mortgage loan secured by the 20-23 SAC Properties simultaneously or immediately
after the closing of the sale of the properties from subsidiaries of the Company
to 20-23 SAC. Net mortgage loan proceeds, along with a note issued by SAC
Holdings to U-Haul contemporaneously with the sale (the “20-23 SAC Junior Note”)
financed 20-23 SAC’s purchase of such properties. Independent appraisals
commissions by the mortgage lender to 20-23 SAC were done on the 20-23 SAC
Properties two months prior to the date of the sale, which appraised values,
in
the aggregate, equaled approximately $91,940,000.
Upon
the
sale of the 20-23 SAC Properties to 20-23 SAC, the 20-23 SAC Properties became
subject to a Property Management Agreement with U-Haul, pursuant to which U-Haul
was hired to act as the property manager. At all times since the sale of the
20-23 SAC Properties, U-Haul has acted as the property manager at such
locations.
Upon
the
sale of the 20-23 SAC Properties to 20-23 SAC, 20-23 SAC became a U-Haul
independent dealer, pursuant to a standard form of U-Haul dealership agreement.
At all times since the sale of the 20-23 SAC Properties, 20-23 SAC has been
a
U-Haul dealer at such locations.
In
March
2004, the 20-23 SAC Junior Note was amended and restated and subordinated to
the
SAC Holdings Senior Notes.
Sale
of Properties to Eighteen SAC
In
December 2001, subsidiaries of the Company sold 14 stabilized properties
improved with self-storage facilities (the “Eighteen SAC Properties”) to SAC
Holdings’ subsidiary Eighteen SAC Self-Storage Corporation (“Eighteen SAC”) for
an aggregate sale price of approximately $43,782,000. Eighteen SAC closed on
a
mortgage loan secured by the Eighteen SAC Properties simultaneously or
immediately after the closing of the sale of the properties from subsidiaries
of
the Company to Eighteen SAC. Net mortgage loan proceeds, along with a note
issued by SAC Holdings to U-Haul contemporaneously with the sale (the “Eighteen
SAC Junior Note”) financed 18 SAC’s purchase of such properties. Independent
appraisals commissioned by the mortgage lender to 18 SAC were done on the
Eighteen SAC Properties approximately one month prior to the date of the sale,
which appraised values, in the aggregate, equaled approximately $44,805,000.
Upon
the
sale of the Eighteen SAC Properties to Eighteen SAC, the Eighteen SAC Properties
28
became
subject to a Property Management Agreement with U-Haul, pursuant to which
U-Haul
was hired to act as the property manager. At all times since the sale of
the
Eighteen SAC Properties, U-Haul has acted as the property manager at such
locations.
Upon
the
sale of the Eighteen SAC Properties to Eighteen SAC, Eighteen SAC became a
U-Haul independent dealer, pursuant to a standard form of U-Haul dealership
agreement. At all times since the sale of the Eighteen SAC Properties, Eighteen
SAC has been a U-Haul dealer at such locations.
In
March
2004, the Eighteen SAC Junior Note was amended and restated and subordinated
to
the SAC Holdings Senior Notes.
Sale
of properties to Twelve SAC, Thirteen SAC and Fourteen SAC
In
June
2000, subsidiaries of the Company sold 27 stabilized properties improved with
self-storage facilities (the “12-14 SAC Properties”) to SAC Holdings’
subsidiaries Twelve SAC Self-Storage Corporation, Thirteen SAC Self-Storage
Corporation and Fourteen SAC Self-Storage Corporation (collectively “12-14 SAC”)
for an aggregate sale price of approximately $110,741,000. SAC Holdings financed
the purchase of the 12-14 SAC Properties with the issuance of promissory notes
contemporaneously with the sale (the “Twelve/Thirteen SAC Junior Note” and the
“Fourteen/Seventeen SAC Junior Note”) to AREC for the full amount of the sale
price. As credit support for the Twelve/Thirteen SAC Junior Note and the
Fourteen SAC/Seventeen SAC Junior Note, SAC Holdings provided a letter of credit
in favor of U-Haul for 20% of the aggregate amount of the Twelve/Thirteen SAC
Junior Note and the Fourteen/Seventeen SAC Junior Note. Independent appraisals
commissioned by the mortgage lenders to 12-14 SAC were done on the 12-14 SAC
Properties at various dates within approximately one year after the sale, which
appraised values, in the aggregate, equaled approximately $119,185,000. Shortly
following their purchase of the properties, 12-14 SAC conveyed certain of their
properties to one of their affiliates, Seventeen SAC Self-Storage Corporation
(“Seventeen SAC”).
Upon
the
sale of the 12-14 SAC Properties to 12-14 SAC, the 12-14 SAC Properties became
subject to a Property Management Agreement with U-Haul, pursuant to which U-Haul
was hired to act as the property manager. At all times since the sale of the
12-14 SAC Properties, U-Haul has acted as the property manager for such
locations.
Upon
the
sale of the 12-14 SAC Properties to 12-14 SAC, 12-14 SAC became a U-Haul
independent dealer, pursuant to a standard form of U-Haul dealership agreement.
At all times since the sale of the 12-14 SAC Properties, 12-14 SAC has been
a
U-Haul dealer at such locations.
In
March
2001, Twelve SAC and Thirteen SAC closed on a mortgage loan on their properties.
The net proceeds of such mortgage loan were applied to reduce the
Twelve/Thirteen SAC Junior Note balance and the letter of credit referenced
above was terminated. In June 2001, Fourteen SAC and Seventeen SAC closed on
a
mortgage loan secured by their respective properties. The net proceeds of such
mortgage loan were applied to reduce the Fourteen/Seventeen SAC Junior Note
balance.
The
Twelve/Thirteen SAC Junior Note and the Fourteen/Seventeen SAC Junior Note
were
repaid and satisfied in full on March 15, 2004 with proceeds from the issuance
by SAC Holdings of the SAC Holdings Senior Notes.
Sale
Of Properties To Six SAC
In
December 1998, subsidiaries of the Company sold 26 stabilized properties
improved with self-storage facilities (the “Six SAC Properties”) to SAC
Holdings’ subsidiary Six SAC Self-Storage Corporation (“Six SAC”) for an
aggregate sale price of approximately $99,686,000. SAC Holdings financed the
purchase of the Six SAC Properties with the issuance of promissory notes (the
“Six SAC Note”) to U-Haul, AREC and Oxford for the full amount of the purchase
price. As credit support for the Six SAC Note, SAC Holdings provided a letter
of
credit in favor of U-Haul for 20% of the Six SAC Note
29
amount.
Net proceeds from subsequent mortgage loans secured by the Six SAC Properties
were used by SAC Holdings to pay down the Six SAC Note at various times.
Upon
the initial pay down of the Six SAC Note, the letter of credit was terminated.
Independent appraisals commissioned by the mortgage lenders to Six SAC and
affiliates were done on the Six SAC Properties at various dates up to
approximately fourteen months after the date of sale to Six SAC, which appraised
values, in the aggregate, equaled approximately $91,270,000. Approximately
one
year following its purchase of the properties, Six SAC conveyed certain of
its
properties to affiliate, Eight SAC Self-Storage Corporation, Nine SAC
Self-Storage Corporation and Ten SAC Self-Storage Corporation (“8-10 SAC”).
Upon
the
sale of the Six SAC Properties to Six SAC, such properties became subject to
a
Property Management Agreement with U-Haul, pursuant to which U-Haul was hired
to
act as the property manager. At all times since the sale of the Six SAC
Properties to Six SAC, U-Haul has acted as the property manager for such
locations.
Upon
the
sale of the Six SAC Properties to Six SAC, Six SAC became a U-Haul independent
dealer pursuant to a standard form of U-Haul dealership agreement. At all times
since the sale of the Six SAC Properties to Six SAC, Six SAC has been a U-Haul
dealer at such locations.
In
May
1999, 8-10 SAC closed on a mortgage loan on their properties. Net proceeds
of
such loan were used to pay down the Six SAC note balance. The Six SAC Note
was
repaid on March 15, 2004 with proceeds from the issuance by SAC Holdings of
the
SAC Holdings Senior Notes.
Sale
of properties to Four SAC and Five SAC
At
various times subsidiaries of the Company have sold properties to 4 SAC and
5
SAC (the “4-5 SAC Properties”). The aggregate sale price for the 4-5 SAC
Properties was approximately $57,422,000. Independent appraisals were done
on
the 4-5 SAC Properties at various dates on or after the time of the sale, which
appraised values, in the aggregate, equaled approximately $66,595,000.
Subsequent to their acquisition of the properties, 4 SAC and 5 SAC conveyed
certain of the 4-5 SAC Properties to an affiliate, Nineteen SAC Self-Storage
Limited Partnership, which later became known as Galaxy Investors, L.P.
Upon
the
sale of the 4-5 SAC Properties to 4 SAC and 5 SAC, as the case may be, the
4-5
SAC Properties constituting U-Haul Centers became subject to a Property
Management Agreement with U-Haul, pursuant to which U-Haul was hired to act
as
the property manager. U-Haul has acted as the property manager for all 4-5
SAC
Properties constituting U-Haul Centers.
Upon
the
sale of the 4-5 SAC Properties constituting U-Haul Centers to 4 SAC and 5 SAC,
4
SAC and 5 SAC became U-Haul independent dealers, pursuant to a standard form
of
U-Haul dealership agreement. At all times since the sale of the 4-5 SAC
Properties constituting U-Haul Centers to 4 SAC and 5 SAC, 4 SAC and 5 SAC
have
been U-Haul dealers at such locations.
4
SAC and
5 SAC financed the purchase of the 4-5 SAC Properties from junior and senior
loans from subsidiaries of the Company (collectively, the “Five SAC Note”). The
Five SAC Note was restated in March 2004 in the form of a fixed rate note (the
“Fixed Rate Note”), and was subordinated to the SAC Holdings Senior Notes.
Sale
of properties to One SAC and Two SAC
Between
October 1994 and June 1996, subsidiaries of the Company sold approximately
49
properties (the “Three SAC Properties”) to SAC Holdings’ subsidiaries One SAC
Self-Storage Corporation and Two SAC Self-Storage Corporation (which entities
later merged and became Three SAC Self-Storage Corporation (as so merged, “Three
SAC”)) for an aggregate sale price of approximately $54,955,000. SAC Holdings
financed the purchase of the Three SAC Properties with the issuance of a
promissory note or notes contemporaneously with the sale (the “Three SAC Note”)
to a subsidiary of the Company for the full amount of the Three SAC Properties’
purchase price. In 1997, Three SAC obtained a mortgage loan on the
30
Three
SAC
Properties. The net proceeds of such mortgage loan were used to pay down
the
Three SAC Note. Independent appraisals were done approximately six months
before
to six months after the sale of such properties to Three SAC, which appraised
values, in the aggregate, equaled approximately $67,200,000.
Upon
the
sale of the Three SAC Properties to Three SAC, such properties became subject to
a Property Management Agreement with U-Haul, pursuant to which U-Haul was hired
to act as the property manager. At all times since the sale of the Three SAC
Properties to Three SAC, U-Haul has acted as the property manager at such
locations.
Upon
the
sale of the properties to Three SAC, Three SAC became a U-Haul independent
dealer at all Three SAC Properties, pursuant to a standard form of U-Haul
dealership agreement. At all times since the sale of the Three SAC Properties
to
Three SAC, Three SAC has been a U-Haul dealer at such locations.
The
Three
SAC Note was repaid on March 15, 2004 with proceeds from the issuance by SAC
Holdings of the SAC Holdings Senior Notes. In June 2004, Three SAC refinanced
its mortgage loan on the Three SAC Properties and the net proceeds from such
refinancing were applied to partially redeem the SAC Holdings Senior Notes.
Junior
Loans from U-Haul and AREC to SAC Holdings
U-Haul
and AREC hold or have held various promissory notes from SAC (collectively,
“SAC
Notes”). As described in the paragraphs above, the SAC Notes evidence loans
extended from U-Haul and AREC, as the case may be, to SAC to finance SAC’s
purchase of properties from subsidiaries of the Company. See Exhibit L attached hereto for an exemplar SAC Note which
existed prior to March 2004. In addition, proceeds from SAC Notes have been
used
by SAC to purchase properties from third parties. The SAC Notes are unsecured,
structurally subordinate obligations of SAC.
Until
March 2004, the order of SAC Holdings’ debt payment was as follows: (i) payment
to third party secured lenders of the senior debt service obligations; (ii)
reimbursement to U-Haul, as property manager, for operating expenses; (iii)
payment to U-Haul of its property management fee; and (iv) payment to U-Haul
or
AREC, as the case may be, as holder of a SAC Note of interest due thereunder.
In
March 2004, and as approved by the Bankruptcy Court in connection with the
Restructuring, all SAC Notes held by AREC and certain SAC Notes held by U-Haul
were repaid, and the remaining SAC Notes held by U-Haul were subordinated to
the
SAC Holdings Senior Notes. In August 2004, SAC Holdings redeemed approximately
$43.2 million of the SAC Holdings Senior Notes. In June 2007, SAC Holdings
completed a full redemption of the SAC Holdings Senior Notes.
Property
Management of SAC Location
Subsidiaries
of U-Haul (“U-Haul Managers”) manage the self-storage properties owned or leased
by SAC pursuant to property management agreements, under which such U-Haul
Managers receive a management fee of between 4% and 10% of the gross receipts
plus reimbursement of operating expenses. The management fee, and the other
terms of the property management agreements are consistent with the fees and
other terms for other properties the Company has previously managed for third
parties. Pursuant to this relationship, subsidiaries of the Company manage
the
day-to-day affairs of the SAC Properties, and assist or have assisted SAC in,
among other things, the selection, purchase, development and financing of the
SAC Properties. SAC’s mortgage loan agreements place substantial restriction
upon terminating U-Haul as the property manager for the SAC properties. See
Exhibits M and N attached hereto
for exemplar property management agreements reflecting the two different pricing
structures charged by the Company for management of the SAC Properties.
The
following table identifies the amount of management fees, exclusive of
reimbursement of operating expenses, received by the U-Haul Managers from SAC
during the fiscal years as set forth in the table:
31
|
Fiscal
Year
|
Management
Fee Received
by U-Haul
|
|
|
1996
|
$1,113,000
|
|
|
1997
|
$1,632,000
|
|
|
1998
|
$1,860,000
|
|
|
1999
|
$2,483,000
|
|
|
2000
|
$4,482,000
|
|
|
2001
|
$6,243,000
|
|
|
2002
|
$8,340,000
|
|
|
2003
|
$12,300,000
|
|
|
2004
|
$12,700,000
|
|
|
2005
|
$14,400,000
|
|
|
2006
|
$22,500,000
|
|
|
2007
|
$23,500,000
|
U-Haul
Dealership At SAC Locations
SAC
acts
as a U-Haul independent dealer. The financial and other terms of the dealership
contracts with SAC are substantially identical to the terms of those with
U-Haul’s other independent dealers, whereby commissions are paid by U-Haul based
on equipment rental revenue. See Exhibit O attached
hereto for an exemplar of the U-Haul dealership contract.
The
following table identifies the amount of dealer commissions paid by U-Haul
to
SAC during the fiscal years as set forth in the table:
|
Fiscal
Year
|
Dealer
Commissions Paid
by U-Haul
|
|
2002
|
$13,695,441
|
|
2003
|
$27,700,000
|
|
2004
|
$29,100,000
|
|
2005
|
$33,100,000
|
|
2006
|
$36,800,000
|
|
2007
|
$36,600,000
|
WP
Carey Transaction
During
the 1990’s, the Company entered two lease facilities for the acquisition,
construction and expansion of self-storage properties, pursuant to which Company
subsidiaries were the lessees of the properties and held options to purchase
such properties. In April 2004, and as approved by the Bankruptcy Court in
connection with the Restructuring, the Company repaid all obligations under
the
lease agreements and sold the properties (the “Carey Portfolio”) to a subsidiary
of non-affiliated WP Carey (“Carey Lessor”). See Exhibit
P attached hereto for a copy of the sale contract with the Carey Lessor.
As
part
of the Court approved transaction, a subsidiary of the Company entered a lease
with the Carey Lessor with respect to the portion of the properties in the
Carey
Portfolio used in connection with U-Haul’s self-moving business (truck and
trailer rental and moving supply sales); and Mercury entered a lease with the
Carey Lessor with respect to the remaining portion of each property in the
Carey
Portfolio, consisting of the self-storage portion of such properties. The lease
between Mercury and the Carey Lessor is for a term of twenty years with a
renewal option in favor of Mercury for an additional ten years. Mercury has
an
option to purchase all of the properties in the Carey Portfolio at the tenth
and
twentieth
32
anniversaries
of the lease pursuant to certain formulas that are based upon fair market values
and the initial sale price subject to consumer price index adjustments. There
are 78 properties in the Carey Portfolio.
Loans
To Private Mini
In
February 1997, U-Haul, Oxford, RepWest and a non-affiliated third party formed
a
limited partnership known as Private Mini. Oxford invested $11.0 million and
ultimately obtained a 35.7% limited partner interest, RepWest invested $13.5
million and ultimately obtained a 43.8% limited partner interest, and U-Haul
obtained a 50% interest in the general partner of Private Mini. The
non-affiliated third party obtained the remaining 20% limited partner interest
and remaining 50% interest in the general partner. Private Mini was formed
to
own, develop, acquire and operate self-storage facilities (collectively, the
“Private Mini Portfolio”). Currently, the Private Mini Portfolio consists of 60
properties. In 1997, Private Mini entered a credit facility (the “Private Mini
Credit Facility”) which included, among other things, a credit support agreement
from the Company in favor of the lender, pursuant to which the Company agreed
to
purchase the notes or a portion thereof held by the lender under the Private
Mini Credit Facility upon the occurrence of specified conditions. From 1997
through 2003, the Private Mini Credit Facility was amended and the amount owed
thereunder was reduced at various times. In October 2002, conditions occurred
enabling the lender to exercise its rights under the Company’s credit support
agreement, and in December 2002, the lender exercised its option to require
the
Company to purchase the outstanding notes under the Private Mini Credit
Facility. In March 2004, and as approved by the Bankruptcy Court in connection
with the Restructuring, the Company purchased the $55.0 million of notes
outstanding under the Private Mini Credit Facility. In December 2005, Private
Mini executed a promissory note to the Company, in the original principal amount
of $59.4 million evidencing this indebtedness. See Exhibit
Q attached hereto for a copy of this promissory note.
In
1997,
U-Haul loaned Private Mini $10 million for use as operating capital, which
loan
was later assumed by a subsidiary of Private Mini. In December 2005, a
subsidiary of Private Mini executed a restated promissory note in favor of
U-Haul in the original principal amount of $11,700,000 evidencing this
indebtedness. See Exhibit R attached hereto for a copy
of this promissory note.
Private
Mini Exchange Transaction
In
June
2003, Oxford and RepWest conveyed all of their limited partner interests in
Private Mini to SAC, in exchange for real property owned by 4 SAC and 5 SAC
(the
“Private Mini Exchange Transaction”). Additionally, as part of this transaction,
the interest of U-Haul in the general partner of Private Mini was conveyed
to
SAC. The Private Mini Exchange Transaction was non-monetary and was recorded
on
the basis of the book values of the assets exchanged. Certain of the properties
received by Oxford and RepWest in the Private Mini Exchange Transaction were
leased back to subsidiaries of SAC Holdings. Additionally, in connection with
the Private Mini Exchange Transaction, Oxford and RepWest granted certain
subsidiaries of SAC Holdings options to repurchase such property at stated
values. See Exhibits S, T, U,
V,
W
and
X attached hereto for copies of the Private Mini
Exchange Transaction documents.
In
June
2005, U-Haul became the property manager of the properties owned by Private
Mini. Since its formation, Private Mini has been a U-Haul dealer, pursuant
to a
standard form of U-Haul dealership agreement.
Securespace
Transaction
In
June
2000, a subsidiary of the Company entered a purchase contract for the purchase
of 16 self-storage facilities throughout Canada (the “Securespace Portfolio”)
from a third party vendor. Upon the closing of the purchase of the Securespace
Portfolio, the Company obtained a short term bridge lease financing facility
with a lender for the purpose of financing the Company’s purchase of such
properties. Following the maturity of the foregoing lease financing facility,
a
partnership (“Securespace”) composed of Oxford, RepWest, and subsidiaries of SAC
Holdings acquired title to the Securespace Portfolio. Oxford and RepWest each
obtained a 23% limited partner interest in Securespace, with SAC Holdings
subsidiaries obtaining the general partner interest and the remaining limited
partner interests. Both the Company and
33
SAC
Holdings were granted options to purchase the Oxford and RepWest interests
in
Securespace at a specified price.
In
September 2006, pursuant to the terms of the Securespace agreement of limited
partnership, a subsidiary of SAC Holdings exercised its option to purchase
the
limited partner interests of Oxford and RepWest in Securespace. Such interests
were purchased by SAC Holdings for approximately $11.8 million, which
acquisition price was equivalent to the initial investments by Oxford and
RepWest in Securespace. See Exhibit Y attached hereto
for a copy of the purchase and sale agreement for the Securespace limited
partner interests.
Option
Exchange Transaction and Sale of Properties from Oxford and RepWest to SAC
In
2001
the Company contributed various parcels of real property (the “Property
Contributions”) to Oxford and RepWest. Certain of the contributed parcels were
first purchased by a Company subsidiary from SAC prior to contribution to Oxford
and RepWest. The Company purchased these properties from SAC for a purchase
price of approximately $35.1 million, which purchase price was equal to the
book
value of the properties at that time.
In
connection with the Property Contributions, Oxford and RepWest granted purchase
options to a SAC subsidiary with respect to the properties involved in the
contribution that had formerly been owned by SAC, and granted purchase options
to AREC, with respect to the remaining properties involved in the contribution
(all of such purchase options, together with the purchase options granted in
connection with the Private Mini Exchange Transaction described above, the
“Purchase Options”). Generally, the option exercise price pursuant to the
Purchase Options was equal to the book value of the respective property as
of
the date of the Property Contribution, along with an annualized return of 6%,
and repayment of certain transaction expenses and carrying costs.
In
June
2006, AREC and SAC exchanged certain of their respective Purchase Options with
one another, thus allowing AREC and SAC to buy back properties from Oxford
and
RepWest located adjacent to existing AREC or SAC properties, as the case may
be.
The Purchase Options were exchanged for substantially equivalent value, as
determined based upon the differential between the fair market value of the
respective property as of June 2006 and the option exercise price for such
property. Following the exchange of options, SAC exercised its purchase right
and purchased two of such properties from RepWest. See Exhibit Z attached hereto for a copy of the option exchange
agreement.
This
completes the transaction
descriptions provided in connection with the Stockholder Proposal.
Section
16(a) of the Exchange Act requires the Company’s directors and executive
officers, and persons who own more than 10% of a registered class of the
Company’s equity securities, to file reports of ownership of, and transactions
in, the Company’s securities with the Securities and Exchange Commission. Such
directors, executive officers and 10% stockholders are also required to furnish
the Company with copies of all Section 16(a) forms they file.
Based
solely on a review of the copies of such forms received by it, the Company
believes that during fiscal 2007, all Section 16(a) filings applicable to its
directors, officers and 10% stockholders were filed on a timely basis, except
that the Form 3 for Richard J. Herrera in connection with his appointment to
the
Advisory Board on March 30, 2007 was filed late.
For
inclusion in the proxy statement and form of proxy relating to the 2008 annual
meeting of stockholders of AMERCO, a stockholder proposal intended for
presentation at that meeting must be submitted in accordance with the applicable
rules of the Commission and received by the Secretary of AMERCO, c/o U-Haul
International, Inc., 2721 North Central Avenue, Phoenix, Arizona 85004, on
or
before March 6, 2008. Proposals to be presented at the 2008 annual meeting
of
stockholders of AMERCO
34
that
are
not intended for inclusion in the proxy statement and form of proxy must
be
submitted by that date and in accordance with the applicable provisions of
the
Company’s Bylaws, a copy of which is available upon written request, delivered
to the Secretary of AMERCO at the address in the preceding sentence. The
Company
suggests that proponents submit their proposals to the Secretary of AMERCO
by
Certified Mail-Return Receipt Requested.
A
copy of
the Company’s Annual Report for the year ended March 31, 2007 may be viewed and
downloaded from http://www.mobular.net/Mellon/uhal,
from
the Company’s Investor Relations website at http://www.amerco.com,
may be
requested via e-mail through either such website, or may be requested
telephonically at 1-888-313-0164. The Annual Report is not to be regarded as
proxy solicitation material.
With
respect to Company stockholders’ meetings following the 2007 Annual Meeting, the
Company anticipates to continue furnishing proxy materials to stockholders
by
posting such materials on an Internet web site in accordance with applicable
laws, and providing stockholders with notice of Internet availability of such
materials. Paper copies of such materials will be available to stockholders
on
request, for a period of one year, at no cost, in accordance with applicable
laws.
UPON
REQUEST, THE COMPANY WILL PROVIDE BY FIRST CLASS US MAIL, TO EACH STOCKHOLDER
OF
RECORD ON THE RECORD DATE, WITHOUT CHARGE, A COPY OF THIS PROXY STATEMENT AND
ALL ATTACHMENTS HERETO, THE PROXY CARD, AND THE COMPANY’S ANNUAL REPORT ON FORM
10-K FOR THE FISCAL YEAR ENDED MARCH 31, 2007, INCLUDING THE REQUIRED FINANCIAL
STATEMENTS AND FINANCIAL STATEMENT SCHEDULES. WRITTEN REQUESTS FOR THIS
INFORMATION SHOULD BE DIRECTED TO: DIRECTOR, FINANCIAL REPORTING, U-HAUL
INTERNATIONAL, INC., P.O. BOX 21502, PHOENIX, ARIZONA 85036-1502.
35
AMERCO
2007 ANNUAL MEETING OF STOCKHOLDERS
August
20,
2007
Tempe,
Arizona
MEETING
PROCEDURES
In
fairness to all stockholders attending the 2007 Annual Meeting, and in the
interest of an orderly meeting,
we ask
you to honor the following:
A.
Admission
to the meeting is limited to stockholders of record or their proxies.
Stockholders of record voting by proxy will not be admitted to the meeting
unless their proxies are revoked, in which case the holders of the revoked
proxies will not be permitted to attend the meeting. The meeting will not
be
open to the public. The media will not be given access to the meeting through
the proxy process.
B. With
the
exception of cameras and recording devices provided by the Company, cameras
and
recording devices of all kinds (including stenographic) are prohibited in
the
meeting room.
| C. |
After
calling the meeting to order, the Chairman will require the registration
of all stockholders intending to vote in person, and the filing of
all
proxies with the teller. After the announced time for
such filing of proxies has ended, no further proxies or changes,
substitutions, or revocations of
proxies will be accepted. (Bylaws, Article II, Section
9)
|
| D. |
The
Chairman of the meeting has absolute authority to determine the order
of
business to be conducted
at the meeting and to establish rules for, and appoint personnel
to assist
in, preserving
the orderly conduct of the business of the meeting (including any
informal, or question-and-answer, portions thereof). (Bylaws, Article
II,
Section 9)
|
| E. |
When
an item is before the meeting for consideration, questions and comments
are to be confined to that item only.
|
| F. |
Pursuant
to Article II, Section 5 of the Company's Bylaws, only such business
(including director nominations) as shall have been properly brought
before the meeting shall be conducted.
|
Pursuant
to the Company's Bylaws, in order to be properly brought before the meeting,
such business must
have
either been (1) specified in the written notice of the meeting given to
stockholders on the record date for such meeting
by or
at
the
direction of the Board of Directors, (2) brought before the meeting at the
direction of the Board
of
Directors or the Chairman of the meeting, or (3) specified in a written notice
given by or
on
behalf
of a stockholder on the record date for such meeting entitled to vote thereat
or
a duly authorized proxy for such stockholder, in accordance with all of the
following requirements.
| a) |
Such
notice must have been delivered personally to, or mailed to and received
at, the principal
executive office of the corporation, addressed to the attention of
the
Secretary
no
later than March 16, 2007.
|
b) Such
notice must have set forth:
i. a
full
description of each such item of business proposed to be brought before
the
meeting and the reasons for conducting such business at such
meeting,
ii. the
name
and address of the person proposing to bring such business before the
meeting,
|
iii
|
the class and number of shares held of record, held beneficially,
and
represented by proxy by such person as of the record date for the
meeting,
|
| iv. |
if
any item of such business involves a nomination for director, all
information regarding each such nominee that would be required to
be set
forth in a definitive
proxy statement filed with the Securities and Exchange
Commission
("SEC") pursuant to Section 14 of the Exchange Act, as amended, or
any
successor thereto (the "Exchange Act"), and the written consent of
each
such nominee to serve if elected,
|
v.
any
material interest of such stockholder in the specified business,
| vi. |
whether
or not such stockholder is a member of any partnership, limited
partnership, syndicate, or other group pursuant to any agreement,
arrangement, relationship,
understanding, or otherwise, whether or not in writing, organized
in
whole or in part for the purpose of acquiring, owning, or voting
shares of
the corporation, and
|
| vii. |
all
other information that would be required to be filed with the SEC
if, with
respect to the business proposed to be brought before the meeting,
the
person proposing
such business was a participant in a solicitation subject to Section
14
of
the Exchange Act.
|
No
business shall be brought before any meeting of the Company's stockholders
otherwise than as provided
in this Section. The Chairman of the meeting may, if the facts warrant,
determine that any proposed item
of
business or nomination as director was not brought before the meeting in
accordance with the foregoing procedure, and if he should so determine, he
shall
so declare to the meeting and the improper item of business or nomination
shall
be disregarded.
| G. |
At
the appropriate time, any stockholder who wishes to address the meeting
should do so only upon
being recognized by the Chairman of the meeting. After such recognition,
please state your name,
whether you are a stockholder or a proxy for a stockholder, and,
if you
are a proxy, name
the stockholder you represent. All matters should be concisely
presented.
|
| H. |
A
person otherwise entitled to attend the meeting will cease to be
so
entitled if, in the judgment of the Chairman of the meeting, such
person
engages in disorderly conduct impeding the proper conduct of the
meeting
against the interests of all stockholders as a group. (Bylaws, Article
II,
Section 6)
|
| I. |
If
there are any questions remaining after the meeting is adjourned,
please
take them up with the representatives
of the Company at the Secretary's desk. Also, any matters of a personal
nature that
concern you as a stockholder should be referred to these representatives
after the meeting.
|
| J. |
The
views, constructive comments and criticisms from stockholders are
welcome.
However, it is requested that no matter be brought up that is irrelevant
to the business of the Company.
|
K.
It.
is
requested that common courtesy be observed at all times.
Our
objective is to encourage open communication and the free expression of ideas,
and to conduct an informative
and meaningful meeting in a fair and orderly manner. Your cooperation will
be
sincerely appreciated.
AMERCO
AUDIT COMMITTEE CHARTER
I.
PURPOSE
The
audit
committee is established by and among the Board of Directors of AMERCO (the
"Company")
for the
primary purpose of assisting the Board in:
· Overseeing
the integrity of the Company's financial statements;
· Overseeing
the independent auditor's qualifications and independence;
· Overseeing
the performance of the Company's independent auditor; and
|
· Overseeing
the
Company's systems of disclosure controls and procedures and internal
controls over financial reporting.
|
Consistent
with this function, the Audit Committee should encourage continuous improvement
of, and
should
foster adherence to, the Company's policies, procedures, and practices at
all
levels. The Audit Committee should also provide for open communication among
the
independent auditor, financial and senior management, the internal audit
department, and the Board of Directors.
The
Audit
Committee has the authority to obtain advice and assistance from outside
legal,
accounting,
and
other advisors as deemed appropriate to perform its duties and
responsibilities.
The
Company will provide appropriate funding, as determined by the Audit Committee,
for compensation
to the independent auditor, to any advisors that the Audit Committee chooses
to
engage, and for
payment of ordinary administrative expenses of the Audit Committee that are
necessary or appropriate
in
carrying out its duties.
The
Audit
Committee will primarily fulfill its responsibilities by carrying out the
activities enumerated in Section III of this charter.
II.
COMPOSITION AND MEETINGS
The
Audit
Committee will comprise three or more directors as determined by the Board.
Each
Audit Committee
member will be a person other than an officer or employee of the Company
or its
subsidiaries or
any
other individual having a relationship which, in the opinion of the Board,
would
interfere with the
exercise
of his or her independent judgment in carrying out the responsibilities of
a
director. All Audit Committee
members must be independent, including being free of disallowed compensation
agreements
under
all other applicable rules and regulations.
All
members of the Audit Committee must comply with all financial literacy
requirements of Nasdaq.
The
Board will determine whether at least one member of the committee
qualifies as an "audit committee financial expert" in compliance with the
criteria established by
the SEC.
The existence of such a member, including his or her name and whether or
not he
or she is independent, will be disclosed in periodic filings as required
by the
SEC. Committee members are encouraged to enhance their familiarity with finance
and accounting by participating in educational programs, including those
conducted by the Company or outside consultants.
The
members of the Audit Committee will be elected by the Board to serve until
their
successors are
elected.
III.
RESPONSIBILITIES AND DUTIES
To
fulfill its responsibilities and duties, the Audit Committee will:
Documents/Reports/Accounting
Information Review
1. Review
this charter periodically, at least annually, and recommend to the Board
of
Directors any necessary amendments.
2. Review
and discuss with management and the independent auditor the Company's annual
financial statements,
quarterly financial statement (prior to the Company's 10-Q filings or release
of
earnings) and all internal controls reports (or summaries
thereof).
3. Review
other relevant reports or financial information submitted by the Company
to any
governmental body or the public, including management certifications as required
by the Sarbanes-Oxley Act of 2002 and relevant reports rendered by the
independent auditor (or summaries thereof).
4. Recommend
to the Board whether the financial statements should be included in the annual
report on Form 10-K.
5. Review
the regular internal reports to management (or summaries thereof) prepared
by
the internal auditing department, as well as management's response.
Independent
Auditor
1. Appoint,
compensate, retain, and oversee the work performed by the independent auditor
for the purpose of preparing or issuing an audit report or related
work.
2. Review
the performance of the independent auditor and remove the independent auditor
if
circumstances warrant.
3. Oversee
the resolution of disagreements between management and the independent auditor
if they arise.
4. Consider
whether the auditor's performance of permissible non-audit services is
compatible with the auditor's independence.
5. Discuss
with the independent auditor the matters required to be discussed under
Statement on Auditing Standards (SAS) No. 61, as amended by SAS No. 84 and
SAS
No. 90.
6. Review
the independent auditor's attestation and report on management's internal
control report, and hold timely discussions with the independent auditor
regarding the following:
· critical accounting policies and practices;
| · |
alternative
treatments of financial information within generally accepted accounting
principles that have
been discussed with management, ramifications of the use of such
alternative disclosures and
treatments, and the treatment preferred by the independent auditor;
and
|
| · |
other
important written communications between the independent auditor
and
management, including,
but not limited to, the management letter and schedule of unadjusted
differences.
|
7.
At least
annually, obtain and review a report by the independent auditor
describing:
· the
firm's internal quality-control procedures;
| · |
any
material issues raised by the most recent internal quality-control
review
or peer review, or
by
any inquiry or investigation conducted by governmental or professional
authorities during the preceding
five years with respect to independent audits carried out by the
firm, and
any steps taken
to
deal with any such issues; and
|
| · |
the
matters set forth in Independence Standards Board Standard No.
1.
|
This
report should be used to evaluate the independent auditor's qualifications,
performance, and independence. Further, the Audit Committee will review the
experience and qualifications of the lead partner
and other senior members of the independent audit team each year and determine
that all partner
rotation
requirements as promulgated by applicable rules and regulations are
executed.
8. Actively
engage in dialogue with the independent auditor with respect to any disclosed
relationships or
services that may affect the independence and objectivity of the auditor
and
take, or recommend that the full
Board
take, appropriate actions to oversee the independence of the outside
auditor.
9. Review
and pre-approve (which may be pursuant to pre-approval policies and procedures)
both audit and
nonaudit services to be provided by the independent auditor. The authority
to
grant pre-approvals may
be
delegated to one or more designated members of the Audit Committee whose
decisions will be presented to the full
Audit
Committee at its next regularly scheduled meeting. Approval of nonaudit services
will
be
disclosed to investors in periodic reports required by Section 13(a) of the
Securities Exchange Act of 1934.
Financial
Reporting Processes, Accounting Policies, and Internal Control
Structure
1. In
consultation with the independent auditor and the internal audit department
review the integrity of the
Company's financial reporting processes (both internal and external), and
the
internal control structure
(including disclosure controls and procedures and internal control over
financial reporting).
2. Receive
and review any disclosure from the Company's CEO or CFO made in connection
with
the certification of the Company's quarterly and annual reports filed with
the
SEC of: a) all significant deficiencies and material weaknesses in the design
or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the Company's ability to record, process, summarize,
and report financial data; and b) any fraud, whether or not material, that
involves management or other employees who have a significant role in the
Company's internal controls.
3. In
conjunction with the Independent Governance Committee, review and approve
all
related-party transactions, defined as those transactions required to be
disclosed under Item 404 of Regulation S-K.
4. Establish
procedures for the receipt, retention, and treatment of complaints regarding
accounting, internal accounting controls, or auditing matters.
5. Establish
procedures for the confidential, anonymous submission by Company employees
regarding questionable accounting or auditing matters.
Internal
Audit
Review
activities,
organizational structure, and qualifications of the internal audit
department.
Other
Responsibilities
1. Review
with the independent auditor, the internal auditing department, and management
the extent to which changes or improvements in financial or accounting practices
have been implemented.
2. Prepare
the report that the SEC requires be included in the company's annual proxy
statement.
3. Perform
any other activities consistent with this charter the Company's bylaws, and
governing law, as the Board deems necessary or appropriate.
AMERCO
COMPENSATION COMMITTEE CHARTER
I. PURPOSE
The
Compensation Committee (the "Compensation Committee") of AMERCO (the
"Company")
was established by the Board of Directors (the "Board") for the primary purpose
of
assisting the Board in:
| · |
Reviewing
the Company's plans and policies with respect to executive compensation,
retention, motivation and
development;
|
· Discharging its duties related to determining the compensation of
the Company's executive officers;
| · |
Reviewing
and evaluating the performance of the Company's executive officers
in
light of the Company's goals, objectives, and financial performance;
and
|
| · |
Providing
the report of the Compensation Committee that is required by the
rules and
regulations
promulgated by the Securities and Exchange Commission (the "SEC")
to
be
included in
the
Company's annual proxy statement.
|
The
Compensation Committee has the authority to obtain advice and assistance from
outside legal, accounting and other advisors, including compensation
consultants, as deemed appropriate to perform its duties and responsibilities.
The Company will provide appropriate funding, as determined by the Compensation
Committee, to compensate any advisors that the Compensation Committee chooses
to
engage.
The
Compensation Committee will primarily fulfill its purpose by carrying out the
responsibilities and duties enumerated in Section IV of this
Charter.
II.
COMPOSITION
The
Compensation Committee shall be comprised of two or more members of the
Board as
determined by the Board. The members of the Compensation Committee will be
appointed or
replaced
by the Board, as appropriate. Unless a chairperson is elected by the full Board,
the members of the Compensation Committee may designate a chairperson
by
a
majority vote.
Each
Compensation Committee member must be (i) "independent" in accordance with
SEC
rules
and regulations and the rules and listing standards that govern companies listed
on the
NASDAQ
Stock Market ("Nasdaq"), all as in effect from time to time, and (ii) an
"outside director" within the meaning of Section 162(m) of the Internal Revenue
Code, as amended.
Notwithstanding
the foregoing, so long as the Company is a "controlled company" as defined
by
the rules and listing standards that govern companies listed on the NASDAQ
Stock
Market ("Nasdaq"), the members of the Compensation Committee need not be
"independent" under SEC rules and regulations or Nasdaq rules.
III.
MEETINGS
The
Compensation Committee shall meet periodically, as necessary, to carry out
its
responsibilities and duties and to act upon matters falling within its
responsibility. Minutes of each meeting of the Compensation Committee shall
be
kept and distributed to each member of the
Compensation Committee and be presented to the Board upon its request. Such
minutes shall
be
maintained in the office of the Secretary of the Company.
| IV. |
RESPONSIBILITIES
AND DUTIES
To
fulfill its responsibilities and duties, the Compensation Committee
will:
|
Compensation
Related Responsibilities
1.
Periodically review the Company's compensation plans and policies in light
of
the Company's business objectives, financial performance, success relative
to
competitors, regulatory compliance issues and other factors deemed relevant
by
the Compensation Committee.
2.
Review
and, if appropriate, recommend to the Board for its adoption all employee
(including executive officer and director) compensation plans, policies and
arrangements, including perquisites and fringe benefit
arrangements.
3. Oversee
and periodically review the operation of all Company employee (including
executive officer and director) benefit plans, and, if appropriate, recommend
to
the . Board changes to such plans.
4.
Regularly review the goals, objectives and general compensation policies
to be
considered
by the Company in determining the base salary and other compensation to be
paid
to
the
Company's executive officers, and to regularly evaluate the performance of
such
executive officers in light of such goals, objectives and other
factors.
5.
Review compensation to be paid to the Company's executive officers, including,
if and as applicable, their annual base salaries, incentive bonuses, and
any
other benefits or compensation-related arrangements. The Compensation Committee
shall evaluate the compensation of the President at least annually to ensure
that it is fair, reasonable and aligned with the Company's overall
objectives.
6.
Review the Company's compensation arrangements with its non-employee
directors to ensure their competitiveness and compliance with applicable
laws,
and recommend to the Board any
necessary
changes.
Charter
Review; Reports; Other Responsibilities
1.
Review and discuss with management the Company's Compensation Discussion
and Analysis ("CD&A"), determine whether to recommend to the Board that the
CD&A be included
in the Company's annual proxy statement, and provide the report of the
Compensation
Committee required to be included in the annual proxy statement.
2
2.
Periodically conduct an assessment of the purposes, responsibilities and duties
set forth in this Charter to determine whether the Compensation Committee is
functioning effectively.
3. Review
this Charter periodically and recommend to the Board any necessary
amendments.
4.
Obtain
such data and other resources as the Compensation Committee deems necessary
or
appropriate to perform its responsibilities and duties, including obtaining
external consultant reports or published salary surveys, and engaging
independent compensation consultants and other professionals to assist in the
design, analysis and implementation of compensation plans and programs for
the
Company's executive officers, directors and other employees.
5. Perform
any other activities consistent with this Charter, the Company's Bylaws, and
governing law, as the Board deems necessary or appropriate.
6.
Coordinate or consult with other committees of the Board with respect to matters
within the scope of its duties, if necessary or appropriate, except to the
extent doing so would be inconsistent with applicable rules or
regulations.
3
AMERCO
1325
AIRMOTIVE WAY, SUITE 100
RENO,
NEVADA 89502-3239
NOTICE
OF INTERNET AVAILABILITY OF PROXY MATERIALS
FOR
THE 2007 ANNUAL MEETING OF STOCKHOLDERS OF AMERCO
TO
BE HELD ON MONDAY, AUGUST 20, 2007*
Dear
Stockholder:.
The
2007
Annual Meeting of Stockholders of AMERCO (the "Company") will be held at the
U-Haul
Technical Center, 11298 South Priest Drive, Tempe Arizona 85284, on Monday,
August 20, 2007,
at 8:00
a.m. (local time).
Proposals
to be considered at the Annual Meeting:
| (1) |
to
elect two Class I Directors to serve until the 2011 annual meeting
of
stockholders of the Company
and one Class IV Director to serve until the 2010 annual meeting
of
stockholders of
the Company;
|
(2)
to
ratify
the appointment of BDO Seidman, LLP as the Company's independent
auditors;
| (3) |
to
vote on a stockholder proposal to approve and affirm the actions
taken by
AMERCO and its subsidiaries' Boards of Directors, officers and employees
in entering into, and all resulting contracts with S.A.C. and ratify
all
S.A.C. transactions amended or entered into by AMERCO and any of
its
subsidiaries between 1992 and March 31, 2007,
and
|
| (4) |
to
consider and act upon any other business that may properly come before
the
meeting or any adjournment(s)
thereof.
|
Management
recommends a vote "FOR"
Items 1
and 2.
Management
makes no
recommendation
with
respect to Item 3.
The
Board
of Directors has fixed the close of business on June 22, 2007 as the record
date
(the "Record
Date") for the determination of stockholders entitled to receive notice of
and
to vote at the Annual
Meeting
or any adjournment(s) thereof.
*Approximate
date of mailing to stockholders of this Notice of Internet Availability of
the
Company's Proxy Materials ("Notice"): July
10,
2007
|
You
may vote your proxy
when
you view the materials on the Internet
You
will be asked to enter this 11-digit control
number
|
Stockholders
of record as of the Record Date are encouraged and cordially invited to attend
the Annual Meeting. Directions to attend the meeting where you may vote in
person can be found on our website, www.amerco.com.
The
Annual Meeting will be hosted in person and via webcast at www.amerco.com.
We
encourage stockholders to attend via webcast so as to promote the Company's
sustainability goals with respect to the environment.
The
following Proxy Materials are available for you to review online at:
http://www.mobular.net/Mellon/uhal/
· Notice
of
Internet Availability of Proxy Materials;
· the
Company's 2007 Proxy Statement (including all attachments thereto);
· the
Proxy
Card;
| · |
the Company Annual
Report for
the year ended
March 31, 2007 (which
is
not deemed
to
be
part of
the
official proxy soliciting materials);
and
|
| · |
any amendments to the foregoing materials that are required to be
furnished to stockholders.
|
Important
Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting
to Be Held on Monday, August 20, 2007:
| · |
This
communication presents only an overview of the more complete proxy
materials that are available to you on the Internet. We encourage
you to
access and review all of the important information contained in the
proxy
materials before voting.
|
| · |
The
Company's Proxy Statement, Annual Report and other proxy materials
are
available at
http://www.mobular.net/Mellon/uhal.
|
| · |
If
you would like to receive a paper or e-mail copy of these documents,
you
must request them. Such documents will be provided to you at no charge,
via First Class Mail. Please make sure you request a copy as instructed
below on or before August 6, 2007 to facilitate a timely
delivery.
|
To
request a paper copy of the Proxy Materials, please call 1-888-313-0164, or
you
may request a paper
copy by email at shrrelations@mellon.com,
or
by logging onto http://www.mobular.net/Mellon/uhal.
ACCESSING
YOUR PROXY MATERIALS ONLINE
YOU
MUST REFERENCE YOUR 11-DIGIT CONTROL NUMBER WHEN YOU
REQUEST
A
PAPER COPY OF THE PROXY MATERIALS OR TO VOTE YOUR PROXY
ELECTRONICALLY.
The
Proxy
Materials for AMERCO are available to review at:
http://www.mobular.net/Mellon/uhal
|
Have
this notice available when you
request
a PAPER copy of the Proxy Materials,
when
you want to view your proxy materials online
OR
WHEN YOU WANT TO VOTE YOUR PROXY
ELECTRONICALLY.
|
EXECUTION
COPY
SAC
PARTICIPATION AND
SUBORDINATION
AGREEMENT
SAC
PARTICIPATION AND SUBORDINATION AGREEMENT (the “Agreement”),
dated
this 15th
day of
March, 2004, by and among SAC HOLDING CORPORATION, a Nevada corporation
(“SAC
I”),
SAC
HOLDING II CORPORATION, a Nevada corporation (“SAC
II,”
and
together with SAC I, collectively referred to as “SAC
HOLDING”),
AMERCO, a Nevada corporation (“AMERCO”),
U-HAUL INTERNATIONAL, INC., a Nevada corporation (“U-Haul”), and LAW DEBENTURE
TRUST COMPANY OF NEW YORK, as Trustee (the “SAC
Notes Trustee”)
under
that certain Indenture (the “SAC
Notes Indenture”)
with
respect to the 8.5% Senior Notes due 2014 of SAC Holding (the “SAC
Holding Senior Notes”).
AMERCO, SAC Holding, U-Haul and the SAC Notes Trustee are sometimes collectively
referred to herein as the “Parties” and individually as a “Party”.
RECITALS
WHEREAS,
on June 20, 2003, AMERCO filed a voluntary petition for relief (the
“AMERCO
Case”)
under
Chapter 11 of Title 11 of the United States Code (the “Bankruptcy
Code”),
and
on August 13, 2003, AMERCO Real Estate Company, a Nevada corporation
(“AREC”),
filed
a voluntary petition for relief under Chapter 11 of the Bankruptcy Code
(together with the AMERCO Case, the “Cases”).
WHEREAS,
on October 6, 2003, AMERCO, AREC and SAC Holding (the “Proponents”)
jointly filed a Joint Plan of Reorganization under Section 1121(a) of the
Bankruptcy Code (the “Plan”)
and a
related disclosure statement (the “Disclosure
Statement”)
pursuant to Section 1125 of the Bankruptcy Code.
WHEREAS,
AMERCO, AREC, SAC Holding and the Official Committee of Unsecured Creditors
in
the Cases (the “Committee”)
entered into a Plan Support Agreement, dated November 12, 2003 (the
“Original
PSA”),
including the AMERCO Term Sheet attached thereto as Exhibit “A” and incorporated
by reference therein (the “Original
Term Sheet”),
concerning the restructuring (the “Restructuring”)
of
AMERCO and AREC (the “Debtors”)
and,
in particular, the treatment of holders of AMERCO Unsecured Claims (presently
identified as Class 7 Claims under the Plan).
WHEREAS,
pursuant to the Original PSA, on November 26, 2003, the Proponents filed
the
First Amended Joint Plan of Reorganization (the “First
Amended Plan”)
and
the Disclosure Statement Concerning the Debtors’ First Amended Joint Plan of
Reorganization (the “First
Amended Disclosure Statement”),
in
order to reflect the agreed terms for the Restructuring as provided in the
Original PSA and the Original Term Sheet.
WHEREAS,
the First Amended Disclosure Statement was approved by the United States
Bankruptcy Court for the District of Nevada (the “Bankruptcy
Court”)
on
December 12, 2003.
1
WHEREAS,
the Debtors, SAC Holding, the Committee and certain individual claimholders
signatory thereto entered into an Amended and Restated Plan Support Agreement,
dated as of January 15, 2004 (the “Amended
PSA”),
including the Amended and Restated Term Sheet attached thereto as Exhibit
“A”
and incorporated by reference therein (the “Amended
Term Sheet”),
in
order to modify the First Amended Plan pursuant to a plan confirmation order
to
be entered by the Bankruptcy Court incorporating the terms of the Amended
PSA
and the Amended Term Sheet.
WHEREAS,
the First Amended Plan requires the execution and delivery of this Agreement
as
a condition to the effectiveness thereof.
AGREEMENT
NOW,
THEREFORE, in consideration of the promises and the mutual covenants and
agreements set forth herein, and for other good and valuable consideration,
the
receipt and sufficiency of which are hereby acknowledged, the Parties agree
as
follows:
1. Certain
Defined Terms.
The
following terms shall have the meanings herein specified. Such definitions
shall
be equally applicable to the singular and plural forms of the terms defined.
All
terms used herein which are not defined herein are defined in the SAC Notes
Indenture and shall have the meanings therein stated. Unless otherwise stated,
any agreement, contract or document defined or referred to herein shall mean
such agreement, contract or document and all schedules, exhibits and attachments
thereto as in effect as of the date hereof, as the same may thereafter be
amended, supplemented or otherwise modified from time to time in accordance
with
the terms thereof and of the SAC Notes Indenture and including any agreement,
contract or document in substitution or replacement of any of the foregoing.
Any
reference to any Person shall include its permitted successors and assigns
in
the capacity in which such Person is referred to, and in the case of any
Governmental Authority, any Person or Persons succeeding to its functions
and
capacities.
“Agreement
to Indemnify”
means
an Agreement to Indemnify substantially in the form of Exhibit
D
hereto.
“Amended
and Restated Promissory Notes”
means
the Existing SAC Holding Notes which are modified and restated in the manner
provided in Section 3(b) hereof. References herein to the Amended and Restated
Promissory Notes, and to terms defined in the Amended and Restated Promissory
Notes, shall be deemed to be references to such Notes and terms as in effect
on
the Issue Date and without giving effect to any modifications or supplements
thereto after the Issue Date except: (i) modifications to cure any ambiguity,
defect or inconsistency that does not adversely affect the interests of the
Holders of SAC Holding Senior Notes (as confirmed by an Officer’s Certificate
and Opinion of Counsel, as such terms are defined in the SAC Notes Indenture),
and (ii) to the extent expressly agreed otherwise pursuant to a supplement
to
this Agreement executed in accordance with the requirements of Article IX
of the
SAC Notes Indenture.
2
“Discharge”
with
respect to an obligation means the payment in full in cash of the principal
of,
and interest and premium (if any) on, such obligation. “Discharged” shall have
the correlative meaning.
“Effective
Date”
as
defined in the First Amended Plan.
“Existing
SAC Holding Notes”
as
defined in the First Amended Plan.
“Oxford
Note”
means
that certain Promissory Note in the principal amount of $10,000,000, dated
May
7, 1999 from SAC Holding Corporation to Oxford Life Insurance
Company.
“SAC
Subsidiary Senior Debt”
means
any Indebtedness of a Subsidiary to the extent outstanding as of the Issue
Date,
secured by Real Property owned by such Subsidiary.
2. SAC
Holding Senior Notes.
On the
Effective Date, SAC Holding and the SAC Notes Trustee shall execute and deliver
the SAC Notes Indenture, which shall be in the form attached hereto as Exhibit
“A”. SAC Holding shall take all such actions and deliver all such documents
as
shall be necessary or appropriate to cause the SAC Holding Senior Notes,
in the
aggregate original principal amount of $200,000,000 (the “SAC
Notes Principal Amount”),
to be
issued on the Effective Date in accordance with the terms of the SAC Notes
Indenture and the First Amended Plan.
3. Modification
and Restatement of Existing SAC Holding Notes.
In
consideration of the issuance by SAC Holding of the SAC Holding Senior Notes,
the Parties agree that the Existing SAC Holding Notes shall be modified and
restated effective as of the Effective Date as follows:
(a) Reduction
of Principal.
The
aggregate principal amount of the Existing SAC Holding Notes shall be reduced
by
the SAC Notes Principal Amount, applied as follows:
(i) The
principal amounts of those Existing SAC Holding Notes identified on Schedule
3(a)(i) hereto shall be reduced to zero, and such Existing SAC Holding Notes
shall be cancelled and returned to SAC Holding;
(ii) The
principal amounts of the Existing SAC Holding Note identified on Schedule
3(a)(ii) hereto shall be reduced to the restated principal amount provided
on Schedule 3(a)(ii); and
(iii) The
principal amounts of the remaining Existing SAC Holding Notes, as identified
on
Schedule 3(a)(iii) hereto, shall remain unchanged.
3
(b) Modification
of Terms.
Each of
the Existing SAC Holding Notes (other than the Oxford Note) not cancelled
as
provided in Section 3(a)(i) above (the “Remaining
Existing SAC Notes”)
shall
be amended and restated as follows: (i) the Remaining Existing SAC Note
identified on Schedule 3(a)(ii) shall be amended and restated in the form
of the
Fixed Rate Note attached hereto as Exhibit “B-1”; and (ii) the Remaining
Existing SAC Notes identified on Schedule 3(a)(iii) shall be amended and
restated in the form of the Amended and Restated Promissory Note attached
hereto
as Exhibit “B-2” (as so amended and restated, the “Subordinated
Restated Notes”).
The
Remaining Existing SAC Notes shall be delivered to SAC Holding in exchange
for
Amended and Restated Promissory Notes in the applicable form and in the
same
principal amounts, taking into account any reduction in principal pursuant
to
Section 3(a)(ii) above.
(c) SAC
Subsidiary Senior Debt.
As of
the Effective Date, SAC Holding’s Subsidiaries will have outstanding obligations
under the SAC Subsidiary Senior Debt in the aggregate principal amount of
$429,227,945. The Amended PSA does not contemplate that such SAC Subsidiary
Senior Debt will be amended and restated and it will remain a secured, priority
obligation of such Subsidiaries.
4. Subordination
of Subordinated Obligations .
The
Parties, on their own behalf and on behalf of subsequent transferees of the
Subordinated Restated Notes, covenant and agree that the Indebtedness evidenced
by, and the payment of principal of and interest on, the Subordinated Restated
Notes, and the payment of any declared dividends or distributions to the
shareholder of SAC Holding (such Indebtedness, and dividends and distributions,
being herein collectively called “Subordinated
Obligations”),
shall
be expressly made subordinate and subordinated in right of payment, to the
extent and in the manner provided in this Section 4, to the prior Discharge
of
the SAC Holding Senior Notes (such principal, interest and premium, including
any interest accruing or arising after the date of any filing by SAC Holding
of
any petition in bankruptcy or the commencement of any bankruptcy, insolvency,
or
similar proceedings with respect to SAC Holding, whether or not such interest
is
allowable as a claim in any such proceeding, being herein collectively called
the “Senior
Obligations”),
provided that nothing herein shall prohibit payments in respect of the
Subordinated Obligations to the extent specifically permitted under this
Section 4.
(a) Liquidation,
Dissolution or Bankruptcy.
Upon
any payment or distribution of assets or securities of SAC Holding of any
kind
or character, whether in cash, property or securities, upon any dissolution
or
winding-up or total or partial liquidation or reorganization of SAC Holding,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership
or
other proceedings or upon an assignment for the benefit of creditors or any
other marshalling of the assets and liabilities of SAC Holding, all Senior
Obligations shall first be Discharged before any direct or indirect payments
or
distributions, including, without limitation, by exercise of set-off, of
any
cash, property or securities on account of principal of or interest on the
Subordinated Restated Notes, and including also any such payment or distribution
that may be payable or deliverable by reason of the payment of any other
indebtedness of SAC Holding being subordinated to the payment of the
Subordinated Obligations, and to that end the holders of the Senior Obligations
shall be entitled to receive (pro
rata
on the
basis of the respective
4
amounts
of the Senior Obligations held by them) directly, for application to the
payment
thereof (to the extent necessary to Discharge all Senior Obligations in full
after giving effect to any substantially concurrent payment or distribution
to
or provision for payment to the holders of the Senior Obligations), any payment
or distribution of any kind or character, whether in cash, property or
securities, to which the holders of the Subordinated Restated Notes would
be
entitled but for this Section 4.
(b) Payment
of Interest on Subordinated Restated Notes; Distributions to Shareholder
of SAC
Holding.
(i) For
so
long as not prohibited by Section 4(c) below, SAC Holding may continue to
make
all payments of Interest (as defined in the Subordinated Restated Notes)
required under the Subordinated Restated Notes; provided, however, that for
so
long as the Senior Obligations remain outstanding and have not been paid
in full
or discharged, (A) SAC Holding shall make no payments under the Subordinated
Restated Notes of Capital Proceeds Contingent Interest (as defined in the
Subordinated Restated Notes) or of amounts which constitute Redemption Event
Proceeds and (B) SAC Holding shall make no payments under the Amended and
Restated Promissory Notes unless SAC Holding has remitted sufficient funds
to
the SAC Notes Trustee to make the next quarterly interest payment on the
SAC
Holding Senior Notes.
(ii) For
so
long as not prohibited by Section 4(c) below, SAC Holding may continue to
make
dividends or distributions to its shareholder to the extent permitted under
Section 4.16 of the SAC Notes Indenture; provided, however, that for so long
as
the Senior Obligations remain outstanding and have not been paid in full
or
discharged, SAC Holding shall make no dividend or distribution to its
shareholder of any amounts which represent Net Capital Proceeds (as defined
in
the Subordinated Restated Notes) or of amounts which constitute Redemption
Event
Proceeds.
(c) Default
on SAC Holding Senior Notes.
SAC
Holding may not make any direct or indirect payment to any holder of the
Subordinated Obligations, upon acceleration or otherwise, if at the time
of such
payment there exists (i) a Default (as defined in the SAC Notes Indenture)
in
the payment of any amount owed under the Senior Obligations which has not
been
cured or waived in writing, (ii) an Event of Default (as defined in the SAC
Notes Indenture) which has not been cured or waived in writing, (iii) any
other
Default under the Senior Obligations that an officer of SAC Holding becomes
aware of and has not been cured or waived in writing within five days of
such
awareness, or (iv) the filing or commencement with a court of competent
jurisdiction of an involuntary case under any Bankruptcy Law (as defined
in the
SAC Notes Indenture) for relief against SAC Holding, which has not been
dismissed.
For
so
long as there exists any Default under the Senior Obligations, any Net Cash
Flow
Before Debt Service received by SAC Holding shall be delivered to the SAC
Notes
Trustee and applied to redeem the Senior Obligations pursuant to Section
3.08 of
the SAC Notes Indenture.
(d) Obligations
of the Holders of Subordinated Obligations.
In the
event that, notwithstanding the foregoing provisions of Section 4 prohibiting
such payment or distribution,
5
any
holder of Subordinated Obligations shall have received any payment or
distribution of any kind or character, whether in cash, property or securities,
by set-off or otherwise, at a time when such payment is prohibited, then
and in
such event, such payment or distribution shall be received and held in
trust by
such holders apart from their other assets and paid over or delivered to
the SAC
Notes Trustee, who will distribute such funds to holders of the SAC Holding
Senior Notes remaining unpaid to the extent necessary to pay in full in
cash
the
Senior Obligations in accordance with their terms.
(e) Subrogation.
Upon
the Discharge of all SAC Holding Senior Notes, the holders of the Subordinated
Restated Notes shall be subrogated to the rights of the SAC Holding Senior
Notes
to receive payments or distributions made to the holders of, or otherwise
applied to payment of, the SAC Holding Senior Notes pursuant to the provisions
of this Section 4 and to the rights of the holders of SAC Holding Senior
Notes
to receive payments or distributions of assets of SAC Holding made on the
SAC
Holding Senior Notes pursuant to the SAC Notes Indenture until the Subordinated
Restated Notes shall be Discharged. For the purposes of such subrogation,
no
payments or distributions to holders of SAC Holding Senior Notes of any cash,
property or securities to which holders of the Subordinated Restated Notes
would
be entitled except for the provisions of this Section 4, and no payment over
pursuant to the provisions of this Section 4 to holders of SAC Holding Senior
Notes by the holders of the Subordinated Restated Notes, shall, as between
SAC
Holding, its creditors other than holders of the SAC Holding Senior Notes
and
the holders of the Subordinated Restated Notes, be deemed to be payment by
SAC
Holding to or on account of the SAC Holding Senior Notes, it being understood
that the provisions of this Section 4 are solely for the purpose of defining
the
relative rights of the holders of the SAC Holding Senior Notes, on the one
hand,
and the holders of the Subordinated Restated Notes, on the other
hand.
If
following the Discharge of the Senior Obligations, any payment or distribution
to which the holders of the Senior Obligations would otherwise have been
entitled but for the provisions of this Section 4 shall have been applied,
pursuant to the provisions of this Section 4, to the payment of the Senior
Obligations, then and in each such case, the holders of the Senior Obligations
shall pay over and deliver any payments or distributions received by such
holders of the Senior Obligations in excess of the amount sufficient to pay
all
Senior Obligations in full to the holders of the Subordinated
Obligations.
(f) Obligations
of Company Under Subordinated Restated Notes Unconditional.
Nothing
contained in this Section 4 is intended to or shall impair, as between SAC
Holding and the holders of the Subordinated Restated Notes, the obligations
of
SAC Holding, which are absolute and unconditional, to pay to the holders
of the
Subordinated Restated Notes the principal of and interest on the Subordinated
Restated Notes as and when the same shall become due and payable in accordance
with their terms, or is intended to or shall affect the relative rights of
the
holders of the Subordinated Restated Notes and creditors of SAC Holding other
than the holders of the Senior Obligations.
6
(g) Reinstatement.
The
provisions of this Section 4 shall continue to be effective or be reinstated,
and the Senior Obligations shall not be deemed to be paid in full, as the
case
may be, if at any time any payment of any of the Senior Obligations is rescinded
or must otherwise be returned by the holder thereof upon the insolvency,
bankruptcy or reorganization of SAC Holding or otherwise, all as though such
payment had not been made.
(h) Reliance
by Holders of SAC Holding Senior Notes on Subordination
Provisions.
The
Parties acknowledge and agree that the foregoing subordination provisions
are,
and are intended to be, an inducement and a consideration to each current
and
future holder of any SAC Holding Senior Notes to acquire and continue to
hold,
or to continue to hold, such SAC Holding Senior Notes, and such holder of
SAC
Holding Senior Notes shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such SAC Holding Senior Notes.
(i) Limitation
on Remedies.
For so
long as the Senior Obligations remain outstanding and have not been Discharged,
the holders of the Subordinated Obligations shall not be entitled to (i)
initiate any proceeding for liquidation, dissolution or winding-up of SAC
Holding, or for receivership, insolvency, bankruptcy, reorganization or other
similar proceeding relative to SAC Holding or its property, (ii) accelerate
the
maturity of the Subordinated Obligations, or enforce any other rights or
remedies relating thereto (including, without limitation instituting suit
to
recover any Interest (as defined in the Amended and Restated Promissory Note)
not paid when due under the Amended and Restated Notes), unless the holders
of
the SAC Holding Senior Notes have first accelerated such Notes, or (iii)
pay or
prepay any principal of or interest on the Amended and Restated Promissory
Notes
prior to the respective dates provided for in the Amended and Restated
Promissory Notes; provided,
however,
that
this Section 4(i) will not be interpreted by the Parties hereto as prohibiting
the holders of the Subordinated Obligations from enforcing their rights and
remedies under this Agreement.
(j) Notice
by SAC Holding.
SAC
Holding shall give prompt written notice to the holders of the Subordinated
Restated Notes of any fact known to SAC Holding which would prohibit the
making
of any payment on or in respect of the Subordinated Restated Notes, but failure
to give such notice shall not affect the subordination of the Subordinated
Restated Notes to the SAC Holding Senior Notes provided in this Section 4.
Nothing contained in this Section 4(j) shall limit the right of the holders
of
SAC Holding Senior Notes to recover payments as contemplated by this Section
4.
(k) Proof
of Claims.
If the
holders of the Subordinated Obligations shall have failed to file claims
or
proofs of claim with respect to the Subordinated Obligations earlier than
30
days prior to the deadline for any such filing, the holders of the Subordinated
Obligations shall execute and deliver to the SAC Notes Trustee such powers
of
attorney, assignments or other instruments as the SAC Notes Trustee may
reasonably request to file such claims or proofs of claim.
(l) No
Waiver of Subordination Provisions.
No
right of the SAC Notes Trustee or any holder of Senior Obligations to enforce
subordination as herein provided shall at any time in any way be prejudiced
or
impaired by any act or failure to act on the part of SAC
7
Holding
or by any act or failure to act, in good faith, by the SAC Notes Trustee
or any
holder of Senior Obligations, or by any non-compliance by SAC Holding with
the
terms, provisions and covenants of this Agreement, regardless of any knowledge
thereof the SAC Notes Trustee or any holder of Senior Obligations may have
or be
otherwise charged with.
Without
in any way limiting the generality of the foregoing paragraph, the holders
of
Senior Obligations may, at any time and from time to time, without the consent
of or notice to the holders of the Subordinated Obligations, without incurring
responsibility to the holders of the Subordinated Obligations and without
impairing or releasing the subordination provided in this Section 4, do any
one or more of the following: (a) change the time, manner or place of
payment of Senior Obligations, or otherwise modify or supplement in any respect
any of the provisions of the SAC Note Indenture or any other instrument
evidencing or relating to any of the Senior Obligations; (b) sell,
exchange, release or otherwise deal with any property pledged, mortgaged
or
otherwise securing Senior Obligations, (c) release any Person liable in any
manner for the collection of Senior Obligations; and (d) exercise or
refrain from exercising any rights against the SAC Holding and any other
Person.
5. Payment
of Expenses.
In
consideration of SAC Holding becoming proponents of the Plan, entering into
this
Agreement and issuing the SAC Holding Senior Notes, AMERCO shall:
(a) reimburse
to, or pay on behalf of, SAC Holding, reasonable attorneys’ fees incurred by SAC
Holding in connection with the preparation, negotiation and implementation
of
this Agreement, not to exceed $500,000;
(b) reimburse
to, or pay on behalf of, SAC Holding, any and all reasonable, direct out
of
pocket expenses (including reasonable attorneys’ and accountants fees and
trustee’s fees, but excluding the payment of principal, premium, if any, and
interest in respect of the SAC Holding Senior Notes and any other amount
payable
by SAC Holding pursuant to the terms of the SAC Note Indenture) incurred
by SAC
Holding in connection with its reporting or other compliance obligations
under
the SAC Notes Indenture or this Agreement; provided,
however,
that
AMERCO shall not be obligated to reimburse or pay any such expenses over
and
above an aggregate amount of $1 million for any twelve-month period;
and
(c) enter
into the Agreement to Indemnify.
6. No
Amendment of Subordinated Notes.
SAC
Holding will not amend, nor agree to amend, the provisions of Section 2 of
the
Subordinated Restated Notes.
7. Shareholder
Consent.
On or
before the Effective Date, SAC Holding shall deliver or cause to be delivered
to
the other Parties hereto the SAC Shareholder Consent attached hereto as Exhibit
“C,” duly executed by the sole shareholder of SAC Holding.
8
8. (a)Delivery
of AMERCO Reports.
AMERCO
agrees to timely provide to SAC Holding all financial statements, reports
and
other information of AMERCO required to be provided by SAC Holding to the
SAC
Notes Trustee pursuant to Section 4.03 of the SAC Notes Indenture, including
any
inclusion of, or reference to, such financial statements, reports and
information as provided in Section 4.03(b)(i), 4.03(b)(ii) or 4.03(b)(iii)
in
the SAC Notes Indenture.
(b) Separate
Presentation.
AMERCO
agrees that so long as SAC Holding is part of a consolidated group with AMERCO,
to enable SAC Holding to meet its obligations under Section 4.14(b)(v) of
the
SAC Notes Indenture, AMERCO will comply with the applicable provisions of
Section 4.14(b)(v) of the SAC Notes Indenture.
9. Conditions.
The
obligations of the Parties hereunder are conditioned upon the satisfaction
or
waiver of the following conditions:
(a) Confirmation.
The
Bankruptcy Court shall have entered an order (the “Confirmation
Order”)
confirming the First Amended Plan on substantially the same terms as presently
contained therein, subject to modification as provided in the Amended PSA
and
Amended Term Sheet;
(b) Approval
of Agreement.
The
Confirmation Order shall contain an express approval by the Bankruptcy Court
of
this Agreement, supported by findings of fact and conclusions of law consistent,
in all material respects, with the following:
(i) that
SAC
Holding is solvent as the date of the issuance of the SAC Holding Senior
Notes
and will not be rendered insolvent as a result of the issuance of the SAC
Holding Senior Notes;
(ii) that
SAC
Holding has received, as part of the transactions contemplated by this
Agreement, reasonably equivalent value in exchange for the issuance of the
SAC
Holding Senior Notes;
(iii) that
SAC
Holding has acted in good faith and has entered into this Agreement without
any
actual intent to hinder, delay, or defraud its creditors;
(iv) that,
for
purposes of Section 1145(a) for the Bankruptcy Code only, SAC Holding is
an
affiliate of the Debtors; and
(v) that
the
issuance of the SAC Holding Senior Notes by SAC Holding is exempt from
registration under section 5 of the Securities Act of 1933 and any
state
9
or
local
law requiring registration for the offer or issuance of the SAC Holding
Senior
Notes pursuant to Section 1145(a) of the Bankruptcy Code.
(c) Effective
Date.
The
Effective Date shall have occurred on or before March 31, 2004.
10. Representations
and Warranties.
Each of
the Parties represents and warrants to each of the other Parties that the
following statements are true, correct and complete as of the date
hereof:
(a) It
has
all requisite power and authority to enter into this Agreement and to carry
out
the transactions contemplated by, and perform its respective obligations
under,
this Agreement.
(b) The
execution and delivery of this Agreement and the performance of its obligations
hereunder have been duly authorized by all necessary action on its
part;
and the
execution, delivery and performance of this Agreement do not require the
approval or consent of any shareholder or other owner or the holder or trustee
of any debt or other of its obligations which has not been obtained.
(c) This
Agreement constitutes the valid and binding obligation of it, enforceable
against it in accordance with the terms hereof.
(d) The
execution, delivery and performance by it of this Agreement do not and shall
not
(i) violate any provision of law, rule or regulation applicable to it or
any of
its subsidiaries or its certificate of incorporation or by-laws or those
of any
of its subsidiaries or (ii) conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any material
contractual obligation to which it or any of its subsidiaries is a party
or
under its certificate of incorporation or by-laws or other organizational
documents.
(e) The
execution, delivery and performance by it of this Agreement do not and shall
not
require any registration or filing with, consent or approval of, or notice
to,
or other action to, with or by, any Federal, state or other governmental
authority or regulatory body.
(f) SAC
Holding represents and warrants that the findings of fact listed in Section
9(b)
hereof are true and correct as of the date of this Agreement.
11. Effectiveness;
Amendments.
This
Agreement shall be effective and binding immediately upon execution by all
Parties hereto. This Agreement may not be amended except by a writing executed
by all Parties hereto. This Agreement shall survive the Effective Date
and
10
remain
in
effect for so long as the SAC Holding Senior Notes remain outstanding and
not
discharged in accordance with the terms of the SAC Notes Indenture.
12. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York, without regard to any conflicts of law provision
that would require the application of the law of any other
jurisdiction.
13. Specific
Performance.
The
Parties hereto acknowledge that the damages resulting to a Party by reason
of
the breach of this Agreement by any other Party would be extremely difficult
to
ascertain, that the non-breaching party would suffer irreparable damage as
a
result of such breach, and that the non-breaching Party would have no adequate
remedy at law for such breach. Accordingly, a non-breaching Party shall have
the
right to injunctive relief to require specific performance of this Agreement
by
any breaching Party.
14. Notices.
All
notices and consents hereunder shall be in writing and shall be deemed to
have
been duly given upon receipt if personally delivered by courier service,
messenger, telecopy, or by certified or registered mail, postage prepaid
return
receipt requested, to the following addresses, or such other addresses as
may be
furnished hereafter by notice in writing, to the following parties:
If
to
AMERCO:
AMERCO
1325
Airmotive Way, Suite 100
Reno,
NV
89502-3239
Facsimile
No.: (775) 688-6338
Attn:
Secretary
with
a
copy to:
Squire,
Sanders & Dempsey L.L.P.
Two
Renaissance Square
40
North
Central Avenue, Suite 2700
Facsimile
No.: (602) 253-8129
Attn:
Christopher D. Johnson
If
to SAC
Holding:
SAC
Holding Corporation
SAC
Holding II Corporation
715
South
Country Club Drive
Mesa,
Arizona 85210
Facsimile
No.: (480) 835-5478
Attn:
President
11
With
a
copy to:
Torys
LLP
237
Park
Avenue
New
York,
New York 10017
Facsimile
No.: (212) 682-0200
Attn:
Miroslav M. Fajt
If
to the
SAC Notes Trustee:
Law
Debenture Trust Company of New York
767
Third
Avenue, 31st Floor
New
York,
NY 10017, (212) 750-7464
Attn:
15. Representation
by Counsel.
Each
Party acknowledges that it has been represented by counsel in connection
with
this Agreement and the transactions contemplated by this Agreement. Accordingly,
any rule of law or any legal decision that would provide any Party with a
defense to the enforcement of the terms of this Agreement against such Party
based upon lack of legal counsel shall have no application and is expressly
waived.
16. Headings.
The
headings of the paragraphs and subparagraphs of this Agreement are inserted
for
convenience only and shall not affect the interpretation hereof.
17. Successors
and Assigns.
This
Agreement is intended to bind and inure to the benefit of the Parties and
their
respective permitted successors, assigns, heirs, executors, administrators
and
representatives.
18. Several,
Not Joint, Obligations.
The
agreements, representations and obligations of the Parties under this Agreement
are, in all respects, several and not joint.
19. Prior
Negotiations.
This
Agreement supersedes all prior negotiations with respect to the subject matter
hereof. To the extent any prior negotiations, including the Amended PSA,
are
inconsistent with this Agreement or the SAC Notes Indenture, the terms of
this
Agreement and the SAC Notes Indenture will control.
20. Counterparts.
This
Agreement (and any modifications, amendments, supplements or waivers in respect
hereof) may be executed in one or more counterparts by manual or facsimile
signature, each of which shall be deemed an original and all of which shall
constitute one and the same Agreement.
12
21. Third-Party
Beneficiaries.
This
Agreement shall be solely for the benefit of the Parties and holders of
the SAC
Holding Senior Notes, and no other person or entity shall be a third party
beneficiary hereof.
[Signature
Pages Follow]
13
IN
WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed
and delivered by its duly authorized officer as of the date first above
written.
AMERCO,
a
Nevada corporation
By:
_____________________________________
Its
President
SAC
HOLDING CORPORATION, a Nevada corporation
By:
_____________________________________
Its
President
SAC
HOLDING II CORPORATION, a Nevada corporation
By:
_____________________________________
Its
President
U-HAUL
INTERNATIONAL, INC., a Nevada corporation
By:
______________________________________
Its
President
LAW
DEBENTURE TRUST COMPANY OF NEW YORK, as Trustee for the Benefit of the Holders
of the SAC Holding Senior Notes
By:
_____________________________________
Its
Authorized Officer
14
Schedule
3(a)(i)
Promissory
Note dated as of February 1, 1998 by SAC Holding Corporation to the order
of
Nationwide Commercial Co. in the original principal amount of $100,000, as
amended (relating to real property owned by SAC Holding
Corporation)
Promissory
Note dated as of August 1, 2001 by SAC Holding Corporation to the order of
Nationwide Commercial Co. in the original principal amount of $110,000 (relating
to real property owned by SAC Holding Corporation).
Promissory
Note dated as of August 1, 2001 by SAC Holding Corporation to the order of
Nationwide Commercial Co. in the original principal amount of $430,000 (relating
to real property owned by SAC Holding Corporation).
Promissory
Note dated as of February 1, 1998 by SAC Holding Corporation to the order
of
Nationwide Commercial Co. in the original principal amount of $400,000 (relating
to real property owned by SAC Holding Corporation).
Promissory
Note dated as of February 27, 1997 by SAC Holding Corporation to the order
of
Nationwide Commercial Co. in the original principal amount of $14, 271, 115.19
and subsequently increased to $17,000,000, as amended (relating to the real
property owned by Three SAC Self-Storage Corporation).
Restated
Consolidated Promissory Note dated as of June 30, 2003 by SAC Holding
Corporation to the order of Nationwide Commercial Co. in the original principal
amount of $3,103,687.15 (relating to the property owned by Four SAC Self-Storage
Corporation).
Promissory
Note dated as of May 7, 1999 by SAC Holding Corporation to the order of
Nationwide Commercial Co. in the original principal amount of $50,000,000,
as
amended (relating to real property owned by Six SAC Self-Storage Corporation,
Eight SAC Self-Storage Corporation, Nine SAC Self-Storage Corporation, Ten
SAC
Self-Storage Corporation and Eleven SAC Self-Storage Corporation).
Promissory
Note dated as of May 7, 1999 by SAC Holding Corporation to the order of U-Haul
International, Inc. in the original principal amount of $30,000,000, as amended
(relating to real property owned by Six SAC Self-Storage Corporation, Eight
SAC
Self-Storage Corporation, Nine SAC Self-Storage Corporation, Ten SAC
Self-Storage Corporation and Eleven SAC Self-Storage Corporation).
Promissory
Note dated as of August 20, 2000 by SAC Holding Corporation to the order
of
U-Haul International, Inc. in the original principal amount of $5,000,000,
as
amended (relating to the real property owned in fee by CST Nominee, Inc.
and
beneficially by Securespace Limited Partnership).
Promissory
Note dated as of March 22, 2001 by SAC
Holding Corporation to the order of Nationwide Commercial Co. in the original
principal amount of $30,000,000, as amended
15
(relating
to the real property owned by Twelve SAC Self-Storage Corporation and Thirteen
SAC Self-Storage Corporation).
Promissory
Note dated as of June 8, 2001 by SAC Holding Corporation to the order of
Nationwide Commercial Co. in the original principal amount of $25,000,000,
as
amended (relating to the real property owned by Fourteen SAC Self-Storage
Corporation and Seventeen SAC Self-Storage corporation).
Promissory
Note dated as of January 29, 2001 by SAC Holding Corporation to the order
of
U-Haul International, Inc. in the original principal amount of $10,500,000,
as
amended (relating to the real property owned by Fifteen SAC Self-Storage
Corporation and Sixteen SAC Self-Storage corporation).
Promissory
Note dated as of June 30, 2003 by SAC Holding Corporation to the order of
Nationwide Commercial Co. in the original principal amount of $58,000,000
(relating to the real property owned by Nineteen SAC SAC Self-Storage Limited
Partnership).
16
Schedule
3(a)(ii)
Restated
Consolidated Promissory Note dated as of June 30, 2003 by SAC Holding
Corporation to the order of Nationwide Commercial Co. in the original principal
amount of $80,000,000 (relating to the property owned by Five SAC Self-Storage
Corporation)
This
Note
shall be amended and restated in the form of the Fixed Rate Note set forth
on
Exhibit B-1 of the SAC Participation and Subordination Agreement, and shall
be
issued to U-Haul International, Inc. and reduced to the restated principal
amount of up to $58,000,000.
17
Schedule
3(a)(iii)
Promissory
Note dated as of December 20, 2001 by SAC Holding Corporation to the order
of
U-Haul International, Inc. in the original principal amount of $21,000,000
(relating to the real property owned by Eighteen SAC Self-Storage
Corporation)
Promissory
Note dated as of January 11, 2002 by SAC Holding Corporation to the order
of
U-Haul International, Inc. in the original principal amount of $47,500,000
(relating to the real property owned by Twenty SAC Self-Storage Corporation,
Twenty-One SAC Self-Storage Corporation, Twenty-Two SAC Self-Storage Corporation
and Twenty-Three SAC Self-Storage Corporation)
Promissory
Note dated as of March 7, 2002 by SAC Financial Corporation to the order
of
U-Haul International, Inc. in the original principal amount of $152,305,252
(relating to the real property owned by Twenty-Four SAC Self-Storage Limited
Partnership, Twenty-Five SAC Self-Storage Limited Partnership, Twenty-Six
SAC
Self-Storage Limited Partnership and Twenty-Seven SAC Self-Storage Limited
Partnership) and shall be reduced to the restated principal amount of up
to
$76,000,000.
18
EXHIBIT
“A”
SAC
NOTES
INDENTURE
19
EXHIBIT
“B-1”
FORM
OF
FIXED RATE NOTE
20
EXHIBIT
“B-2”
FORM
OF
SUBORDINATED RESTATED NOTES
21
EXHIBIT
“C”
SAC
SHAREHOLDER CONSENT
For
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned, pursuant to that certain SAC Participation
and
Subordination Agreement dated March 15, 2004 (the “Agreement”), by and among SAC
Holding, AMERCO, U-Haul International, Inc. and the SAC Notes Trustee, the
undersigned (the sole shareholder of SAC Holding) hereby consents to the
execution delivery and performance of the Agreement by SAC Holding in accordance
with its terms, and expressly consents to and agrees to be bound by the
provisions of Section 4 of the Agreement which limit or prohibit the payment
of
dividends or distributions to the shareholder of SAC Holding, as amended
from
time to time in accordance with the Agreement, to the full extent as though
the
undersigned was a party thereto.
The
undersigned acknowledges that the Parties to the Agreement are expressly
and
reasonably relying upon this Consent in entering into and performing their
obligations under the Agreement.
Capitalized
terms used but not defined herein shall have the meanings provided for such
terms in the Agreement.
22
IN
WITNESS WHEREOF, the undersigned has executed and delivered this Consent
as of
the 15th
day of
March, 2004.
BLACKWATER
INVESTMENTS, INC., a Nevada corporation
By:
_____________________________________
Its:
_____________________________________
23
EXHIBIT
D
THIS
AGREEMENT TO INDEMNIFY (this "Agreement") is dated as of March ___, 2004
and is
by AMERCO, a Nevada corporation ("Indemnitor") in favor of the Indemnified
Persons (as defined below).
WHEREAS,
as consideration for SAC Holding Corporation and SAC Holding II Corporation
being proponents of the Amended Joint Plan of Reorganization of AMERCO and
Amerco Real Estate Company, as the same may be amended from time to time
(the
"Plan"), and the undertaking by such entities of the transactions required
or
contemplated thereby, Indemnitor desires to indemnify the Indemnified Persons
as
provided herein, and the Indemnified Persons require such indemnification
from
AMERCO.
NOW
THEREFORE, it is agreed that Indemnitor shall pay, indemnify, defend, and
hold
SAC Holding Corporation, a Nevada corporation, SAC Holding II Corporation,
a
Nevada corporation, Mark V. Shoen and Charlene Shoen, husband and wife,
individuals, and each of their respective officers, directors, employees,
agents, and attorneys-in-fact (if any) (each, an “Indemnified
Person”
and
collectively, the "Indemnified
Persons")
harmless (to the fullest extent permitted by law) from and against any and
all
claims, demands, suits, actions, investigations, proceedings, and damages,
and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred
and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them (a) in connection with or as a result of
or related to the execution, delivery, enforcement or performance of any
agreement required or contemplated by the Plan (including, without limitation,
the SAC Holdings Senior Notes Indenture (as defined in the Plan), the SAC
Holdings Participation and Subordination Agreement (as defined in the Plan)
and
the Amended and Restated SAC Holding Notes (as defined in the SAC Holdings
Senior Notes Indenture)) and (b) with respect to any investigation, litigation,
or proceeding related to any agreement required or contemplated by the Plan
(including, without limitation, the SAC Holdings Senior Notes Indenture,
the SAC
Holdings Participation and Subordination Agreement and the Amended and Restated
SAC Holding Notes), or the use of the proceeds under any of the foregoing
(irrespective of whether any Indemnified Person is a party thereto), or any
act,
omission, event, or circumstance in any manner related thereto (all the
foregoing, collectively, the “Indemnified
Liabilities”).
The
foregoing to the contrary notwithstanding, Indemnitor shall have no obligation
to any Indemnified Person under this Agreement with respect to any otherwise
Indemnified Liability (i) arising out of or in connection with any payment
default or other default under the SAC Holdings Participation and Subordination
Agreement, the Amended and Restated SAC Holding Notes and the SAC Holdings
Senior Note Indenture, other than any default resulting primarily from the
failure of the Indemnitor to comply with any contractual obligation to which
it
is subject, or (ii) that a court of competent jurisdiction finally determines
to
have resulted from the gross negligence or willful misconduct of such
Indemnified Person. This Agreement shall survive the termination of all
agreements required or contemplated under the Plan (including, without
limitation, the SAC Holdings Senior Notes Indenture, the SAC Holdings
Participation and Subordination Agreement and the Amended and Restated SAC
Holding Notes), and the repayment of the obligations thereunder. If any
Indemnified Person makes any payment to any
24
other
Indemnified Person with respect to an Indemnified Liability as to which
Indemnitor was required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Indemnitor with respect thereto.
IN
WITNESS WHEREOF, the undersigned executes this Agreement as of the date first
set forth above.
AMERCO,
a
Nevada corporation
By:
_____________________________
Its:
_____________________________
25
This
instrument is subject to that certain SAC Participation and Subordination
Agreement ( the "PSA") dated as of March 15, 2004 among SAC Holding Corporation,
SAC Holding II Corporation (collectively, "SAC Holding"), AMERCO, U-Haul
International, Inc., and Law Debenture Trust Company of New York, Inc., as
Trustee under that certain Indenture with respect to the 8.5% Senior Notes
due
2014 of SAC Holding
AMENDED
AND RESTATED PROMISSORY NOTE
Maximum
principal amount of up to Dated
as
of March 1, 2004
$21,000,000.00
FOR
VALUE
RECEIVED, the undersigned SAC Holding Corporation, a Nevada corporation (the
"Maker"
or the
"undersigned"),
promises to pay to the order of U-Haul International, Inc. a Nevada corporation,
("Payee"),
at
the principal office of the Payee at 2721 North Central Avenue, Phoenix,
Arizona
85004 or at such other place or places as Payee may from time to time designate
in writing, the principal sum of up to Twenty-One Million and no/100th
Dollars
($21,000,000.00), or, if less, the aggregate unpaid principal amount of the
Loan
made by Payee to Maker, with Interest on the principal balance outstanding
from
time to time, all as hereinafter set forth.
1. Definitions.
As used
in this Note, each of the following terms shall have the following meanings,
respectively:
"Accrual
Rate":
shall
mean the annual interest rate of nine percent (9%).
"Additional
Interest":
shall
mean and include both Cash Flow Contingent Interest and Capital Proceeds
Contingent Interest.
"Basic
Interest":
shall
have the meaning given it in Section
2(a)
below.
"Capital
Proceeds Contingent Interest":
shall
have the meaning given it in Section
2(h)(i)
below.
"Cash
Flow Contingent Interest":
shall
have the meaning given it in Section
2(e)
below.
"Catch-Up
Payment":
shall
have the meaning given it in Section
2(d).
"Deferred
Interest":
shall
have the meaning given it in Section
2(a).
"GAAP":
shall
mean generally accepted accounting principles as used and understood in the
United States of America from time to time.
"Gross
Receipts":
shall
mean, for any period all gross receipts, revenues and income of any and every
kind collected or received by or for the benefit or account of Maker and
the
Property Owner during such period arising from the ownership, rental, use,
occupancy or operation
1
of
the
Real Property. Gross Receipts shall include, without limitation, all receipts
from all tenants, licensees, customers and other occupants and users of the
Real
Property, including, without limitation, rents, security deposits and the
like,
interest earned and paid or credited on all Maker's or the Property Owner's
deposit accounts related to the Real Property, all proceeds of rent or business
interruption insurance, and the proceeds of all casualty insurance and eminent
domain awards to the extent not applied, or reserved and applied within six
(6)
months after the creation of such reserve, to the restoration of the Real
Property. Gross Receipts shall include the dealer commission payable from
U-Haul
International, Inc. (or affiliate thereof) to Maker (or affiliate thereof)
for
the rental of U-Haul equipment at the Real Property; provided however that
such
dealer commissions payable shall not be included in Gross Receipts until
the
15th day of the month following the month in which such rental occurred,
all in
accordance with the customary procedure for the payment of dealer commissions.
Gross Receipts shall not include any capital contributed to Maker or proceeds
from any loan made to Maker or proceeds from the sale of any Real Property.
Any
receipt included within Gross Receipts in one period shall not be included
within Gross Receipts for any other period (i.e.,
no item
of revenue or receipts shall be counted twice).
"Highest
Lawful Rate":
shall
mean the maximum rate of interest which the Payee is allowed to contract
for,
charge, take, reserve, or receive under applicable law after taking into
account, to the extent required by applicable law, any and all relevant payments
or charges hereunder.
"Interest":
shall
mean Basic Interest and Additional Interest.
"Loan":
shall
mean the unsecured loan in the amount of up to $21,000,000.00 made by Payee
to
Maker and evidenced by this Note, or up to such amount as may have been advanced
by Payee to Maker from time to time.
"Management
Fee":
shall
mean the fee paid to the Property Manager pursuant to the Property Management
Agreement.
"Maturity
Date":
shall
mean the first to occur of: (i) the Stated Maturity Date; (ii) the date on
which
the unpaid principal balance of, and unpaid Interest on, this Note shall
become
due and payable on account of acceleration by Payee and (iii) the date on
which
a Triggering Event occurs.
"Net
Capital Proceeds":
shall
have the meaning given it in Section
2(h)(iv)
below.
"Net
Cash Flow":
shall
mean, for any period, the amount by which the Gross Receipts for such period
exceed the sum of Interest paid during such period and Operating Expenses
paid
for and with respect to such period; but Net Cash Flow for any period shall
not
be less than zero.
"Net
Cash Flow Before Debt Service":
shall
mean, for any period, the amount by which the Gross Receipts for such period
exceed the Operating Expenses for and with respect to such period.
2
"Note":
shall
mean this Amended and Restated Promissory Note as it may be amended, modified,
extended or restated from time to time, together with all substitutions and
replacements therefor.
"Operating
Expenses":
shall
mean, for any period, all cash expenditures of Maker and the Property Owner
actually paid (and properly payable) during such period for (i) real and
personal property taxes on the Real Property; (ii) principal and interest
on the
secured Real Property debt; (iii) premiums for liability, property and other
insurance on the Real Property; (iv) the Management Fee; (v) sales and rental
taxes relating to the Real Property; and (vi) normal, reasonable and customary
operating expenses of the Real Property. In no event shall Operating Expenses
include amounts distributed to the partners or shareholder's of Maker or
the
Property Owner, any payments made on the Loan or any other loan obtained
by
Maker, amounts paid out of any funded reserve expressly approved by Payee,
if
any, non-cash expenses such as depreciation, or any cost or expense related
to
the restoration of the Property in the event of a casualty or eminent domain
taking paid for from the proceeds of insurance or an eminent domain award
or any
reserve funded by insurance proceeds or eminent domain awards.
"Pay
Rate":
shall
mean a rate per annum equal of two percent (2.0%).
"Pay
Rate Interest":
shall
mean the interest on the unpaid principal balance of this Note from time
to time
outstanding at the Pay Rate.
"Person":
shall
mean any corporation, natural person, firm, joint venture, general partnership,
limited partnership, limited liability company, trust, unincorporated
organization, government or any department or agency of any
government.
"Property
Manager":
shall
have the meaning given it in Section
6(f)
below.
"Property
Management Agreement":
shall
have the meaning given such term in Section
6(f)
below.
"Property
Owner"
means
Eighteen SAC Self-Storage Corporation, a Nevada corporation.
"Real
Property"
means
the real property owned by Property Owner from time to time.
"SAC
Holding Senior Notes":
shall
mean the 8.5% Senior Notes due 2014 of SAC Holding Corporation and SAC Holding
II Corporation.
"SAC
Notes Indenture":
shall
mean that certain Indenture with respect to the SAC Holding Senior Notes.
"Sale":
shall
mean any direct or indirect sale, assignment, transfer,
conveyance,
3
lease
or disposition of any kind whatsoever of (i) the Real Property or any portion
thereof (excluding leases and licenses in the ordinary course of business,
the
granting of easements, servitudes, rights-of-way, dedications and like interests
in the ordinary course of business and conveyances pursuant to condemnations
or
eminent domain) or (ii) 25% or more (in the aggregate of all such sales,
assignments, transfers, conveyances or dispositions made at any time or from
time to time, taken together) of the equity interests in Property
Owner.
"Stated
Maturity Date":
shall
mean the earlier of (i) January 1, 2022 and (ii) from and after April 1,
2014,
on demand by Payee.
"Triggering
Event":
shall
have the meaning given it in Section
2(h)(ii)
below.
2.
Interest.
(a)
Basic
Interest Rate Prior to Maturity.
From
the date hereof through and including the Maturity Date, interest ("Basic
Interest")
shall
accrue on the principal balance of this Note outstanding from time to time
at
the Accrual Rate. Notwithstanding the foregoing, on the first business day
of
each month commencing on March 1, 2004 and through the Maturity Date, Maker
shall pay to Payee Pay Rate Interest on the unpaid principal balance of this
Note. The remainder of the Basic Interest ("Deferred
Interest")
shall
be deferred and shall bear interest at the Accrual Rate, and shall be payable
as
and at the time provided in Section
2(d)
below.
Any accrued interest on the Deferred Interest shall be considered part of
Deferred Interest.
All
interest hereunder shall be payable monthly in arrears, on the first business
day of each month.
(b)
Post-Maturity
Basic Interest.
From
and after the Maturity Date, Basic Interest shall accrue and be payable on
the
outstanding principal balance hereof until paid in full at an annual rate
equal
to fifteen percent (15%) and such interest shall be payable upon
demand.
(c)
Computations.
All
computations of interest and fees payable hereunder shall be based upon a
year
of 360 days for the actual number of days elapsed.
(d)
Deferred
Interest.
Deferred Interest shall be paid as follows:
(i)
On
each monthly date for the payment of Basic Interest, Maker shall pay an amount,
if any (the "Catch-Up
Payment"),
equal
to the lesser of (i) the aggregate outstanding Deferred Interest on the last
day
of the month for which such payment is being made and (ii) ninety percent
(90%)
of the result of subtracting from Net Cash Flow Before Debt Service for that
month an amount equal to twice the Pay Rate Interest for such period;
(ii)
All
unpaid Deferred Interest shall be paid on the Maturity Date; and
(iii)
No
payment of Deferred Interest may, when added to all other payments of Interest
or payments construed as interest, shall exceed the Highest Lawful
Rate.
4
(e)
Cash
Flow Contingent Interest.
In
addition to Basic Interest and Deferred Interest, on each date on which Basic
Interest is payable hereunder, Maker shall pay to Payee interest ("Cash
Flow Contingent Interest")
in an
amount equal to the amount (if any) by which (i) ninety percent (90%) of
the
result of subtracting from Net Cash Flow Before Debt Service for that month
an
amount equal to twice the Pay Rate Interest for such period (each calculated
as
of that date) exceeds (ii) the Catch-Up Payment paid on that date by Maker
to
Payee.
(f)
Statements;
Adjustment of Payments.
Within
thirty (30) days following the due date for each payment of Basic Interest,
Maker shall, upon the request of Payee, deliver to Payee a statement of
operations of the Real Property for the month or other period with respect
to
which such Basic Interest is due, showing in reasonable detail and in a format
approved by Payee the respective amounts of, and the method of calculating
Gross
Receipts, Operating Expenses, Net Cash Flow, Catch-Up Payment and Cash Flow
Contingent Interest for the preceding month, as well as (if requested by
Payee)
all data reasonably necessary for the calculation of any such amounts. Maker
shall keep and maintain at all times full and accurate books of account and
records adequate to correctly reflect all such amounts. Such books and records
shall be available for at least five years after the end of the month to
which
they relate. Payee shall have the right to inspect, copy and audit such books
of
account and records during reasonable business hours, and upon prior reasonable
notice to Maker, for the purpose of verifying the accuracy of any payments
made
on account of any interest payments made hereunder. The costs of any such
audit
will be paid by Payee, except that Maker shall pay all reasonable costs and
expenses of any such audit which discloses that any amount properly payable
by
Maker to Payee hereunder exceeded by five percent (5%) or more the amount
actually paid and initially reported by Maker as being payable with respect
thereto.
(g)
Prorations
of Cash Flow Contingent Interest.
All
interest shall be equitably prorated on the basis of a 360-day year for any
partial month in which the term of the Loan commences or in which the Note
is
paid in full.
(h)
Capital
Proceeds Contingent Interest.
(i)
Capital
Proceeds Contingent Interest Defined.
Subject
to Section 2(i) hereof, Maker shall pay to Payee, in addition to Pay Rate
Interest, Deferred Interest and Cash Flow Contingent Interest, at the time
or
times and in the manner hereinafter described, an amount equal to ninety
percent
(90%) of the Net Capital Proceeds resulting from, or determined at the time
of,
any of the Triggering Events described below (collectively, "Capital
Proceeds Contingent Interest").
(ii)
Events
Triggering Payment of Net Capital Proceeds.
Subject
to Section 2(i) hereof, Capital Proceeds Contingent Interest shall be due
and
payable concurrently with the occurrence of each and every one of the following
events (collectively "Triggering
Events",
and
individually, a "Triggering
Event"):
(A)
Property
Sale or Financing.
The
closing of any Sale or refinancing of the Real Property (any such event is
hereinafter collectively referred to as a "Sale
or Financing");
5
(B)
Default
Occurrence.
The
occurrence of any Event of Default and the acceleration of the maturity of
the
Loan on account thereof (hereinafter collectively referred to as a "Default
Occurrence");
and
(C)
Maturity
Occurrence.
The
occurrence of the Maturity Date (the "Maturity
Occurrence").
(iii)
Notice
of Triggering Event: Time for Payment of Capital Proceeds Contingent
Interest.
Maker
shall notify Payee of the occurrence of a Triggering Event, and shall pay
Payee
the full amount of any applicable Capital Proceeds Contingent Interest which
is
payable in connection therewith, as follows:
(A)
In
the case of any Sale or Financing or the Maturity Occurrence, Maker shall
give
Payee written notice of any such Triggering Event not less than forty-five
(45)
days before the date such Triggering Event is to occur. Any Capital Proceeds
Contingent Interest due Payee on account of any Sale or Financing or the
Maturity Occurrence shall be due and payable to Payee within ninety (90)
days of
the date on which such Triggering Event occurs.
(B)
In
the case of a Default Occurrence, no notice of such a Triggering Event need
be
given by Maker. In such event, payment of any and all Capital Proceeds
Contingent Interest on account of the Default Occurrence shall be immediately
due and payable upon acceleration of the maturity of the Loan.
(iv)
Determination
of Net Capital Proceeds.
Net
Capital Proceeds resulting from a Triggering Event shall be determined as
follows:
(A)
Net
Capital Proceeds From Sale or Financing.
Except
as provided in Section
2(h)(iv)(B)
below,
in the event of a Sale or Financing, "Net
Capital Proceeds"
shall
be the amount which is equal to: (i) the Gross Capital Proceeds (as hereinafter
defined) realized from the Real Property minus
(ii) the
sum of: (aa) reasonable brokerage commissions (excluding any payments to
any
affiliate of Maker to the extent such payments exceed those which would have
been due as commissions to a non-affiliate broker rendering identical services),
title insurance premiums, documentary transfer or stamp taxes, mortgage taxes,
environmental report fees, escrow fees and recording charges, appraisal fees,
reasonable attorneys' fees and costs, and sales taxes, in each case actually
paid or payable by Maker (or Property Owner) in connection with the Sale
or
Financing, (bb) all payments of principal, Basic Interest and Cash Flow
Contingent Interest payable to Payee on account of this Note from the proceeds
of such Sale or Financing, and (cc) an amount equal to all payments of
principal, interest and yield maintenance and/or defeasance fees and expenses
due and payable on any senior loans, if any (including, without limitation
the
SAC Holding Senior Notes), made from the proceeds of such Sale or Financing.
For
purposes of this Section
2(h),
"Gross
Capital Proceeds"
shall
mean the gross proceeds of whatever form or nature payable directly or
indirectly to or for the benefit or account of Maker in connection with such
Sale or Financing, including, without limitation: cash, the outstanding balance
of any financing which will remain as a lien or encumbrance against the Real
Property or any portion thereof following such Sale or Financing (but
6
only
in
the case of a Sale, and not in the case of an encumbrance), and the cash
equivalent of the fair market value of any non-cash consideration, including
the
present value of any promissory note received as part of the proceeds of
such
Sale or Financing (valued at a market rate of
interest).
(B)
Net
Capital Proceeds In Connection With a Default or Maturity
Occurrence.
In the
event of a Default Occurrence or the Maturity Occurrence when no Sale or
Financing has occurred, the "Net
Capital Proceeds"
shall
equal: (i) the fair market value of the Real Property determined as of the
date
of such Triggering Event in accordance with Section
2(h)(v)
below,
minus (ii) the sum of (aa) the outstanding principal balance, together with
accrued but unpaid Basic Interest on this Note and (bb) the outstanding
principal balance of, and accrued but unpaid interest on, the secured Real
Property debt.
(v)
Determination
of Fair Market Value.
The
fair market value of the Real Property shall be determined for purposes of
this
Note as follows:
(A)
Partial
Sale.
In the
event of a Sale of a portion of the Real Property, Payee shall select an
experienced and reputable appraiser to prepare a written appraisal report
of the
fair market value of the Real Property in accordance with clause (C) below,
and
the appraised fair market value submitted to Payee by such appraiser shall
be
conclusive for purposes of this Note.
(B)
Other
Occurrences.
In all
other circumstances the fair market value of the Real Property shall be deemed
to equal the result of dividing the Net Cash Flow Before Debt Service for
the
immediately preceding fiscal year by ten percent (10%). However, if the Net
Cash
Flow Before Debt Service for the immediately preceding fiscal year has been
lowered because of unusually high Operating Expenses during such fiscal year
the
fair market value of the Real Property may, at the option of the Maker be
determined by dividing by ten percent (10%) the mean average of the Net Cash
Flow Before Debt Service of the Real Property for the three immediately
preceding fiscal years of the Real Property.
(C)
Appraisal
Standards and Assumptions.
In
making any determination by appraisal of fair market value, the appraiser(s)
shall assume that the improvements then located on the Real Property constitute
the highest and best use of the property. If the Triggering Event is a Sale
or
Financing, the appraiser(s) shall take the sales price into account, although
such sales price shall not be determinative of fair market value. Each appraiser
selected hereunder shall be an independent MAI-designated appraiser with
not
less than ten years' experience in commercial real estate appraisal in the
general geographical area where the Real Property is located.
(vi)
Statement,
Books and Records.
With
each payment of Capital Proceeds Contingent Interest, Maker shall furnish
to
Payee a statement setting forth Maker's calculation of Net Capital Proceeds
and
Capital Proceeds Contingent Interest and shall provide a detailed breakdown
of
all items necessary for such calculation. For a period of five years after
each
payment of Capital Proceeds Contingent Interest, Maker shall keep and maintain
full and accurate books and records adequate to correctly reflect each such
item. Said books and records shall be available for Payee's
7
inspection,
copying and audit during reasonable business hours following reasonable
notice
for the purpose of verifying the accuracy of the payments made on account
of
Capital Proceeds Contingent Interest. The costs of any such audit will
be paid
by Payee, except that Maker shall pay all reasonable costs and expenses
of any
such audit which discloses that any amount properly payable by Maker to
Payee
hereunder exceeded by five percent (5%) or more the amount actually paid
and
initially reported by maker as being payable with respect
thereto.
(viii)
Negative
Capital Proceeds Contingent Interest.
Notwithstanding any other provision of this Agreement, Payee shall not be
responsible or liable in any respect to Maker or any other Person for any
reduction in the fair market value of the Real Property or for any contingency,
condition or occurrence that might result in a negative number for Capital
Proceeds Contingent Interest. If at any time it is calculated, Capital Proceeds
Contingent Interest shall be a negative amount, no Capital Proceeds Contingent
Interest shall at that time be payable to Payee, but Payee shall in no way
be
liable for any such negative amount and there shall be no deduction or offset
for such negative amount at any time when Capital Proceeds Contingent Interest
shall be subsequently calculated.
(i) Limitation
on Capital Proceeds Contingent Interest while SAC Holding Senior Notes Remain
Outstanding.
Notwithstanding anything to the contrary herein, in the event a Triggering
Event
takes place at any time while all or any portion of the SAC Holding Senior
Notes
is outstanding, the payment of any Capital Proceeds Contingent Interest on
account of such occurrence shall be deferred as hereinafter provided, and
any
amounts constituting Excess Sale Proceeds or Excess Refinancing Proceeds
under
the SAC Notes Indenture related to such occurrence shall be applied to redeem
or
repurchase the SAC Holding Senior Notes, in accordance with the terms of
the SAC
Notes Indenture, it being agreed that payment of Capital Proceeds Contingent
Interest is subordinate to the payment in full of the SAC Holding Senior
Notes.
Subject to the terms of the SAC Notes Indenture and the PSA, Capital Proceeds
Contingent Interest shall be paid within five years of the occurrence of
such
Triggering Event.
3. Usury
Savings Clause.
The
provisions of this Section
3
shall
govern and control over any inconsistent provision contained in this Note.
The
Payee hereof shall never be entitled to receive, collect, or apply as interest
hereon (for purposes of this Section
3,
the
word "interest" shall be deemed to include Basic Interest, Additional Interest
and any other sums treated as interest under applicable law governing matters
of
usury and unlawful interest), any amount in excess of the Highest Lawful
Rate
(hereinafter defined) and, in the event the Payee ever receives, collects,
or
applies as interest any such excess, such amount which would be excessive
interest shall be deemed a partial prepayment of principal and shall be treated
hereunder as such; and, if the principal of this Note is paid in full, any
remaining excess shall forthwith be paid to Maker. In determining whether
or not
the interest paid or payable, under any specific contingency, exceeds the
Highest Lawful Rate, Maker and the Payee shall, to the maximum extent permitted
under applicable law, (i) characterize any nonprincipal payment as an expense,
fee, or premium rather than as interest, (ii) exclude voluntary prepayments
and
the effects thereof, and (iii) spread the total amount of interest throughout
the entire contemplated term of this Note; provided, that if this Note is
paid
and performed in full prior to the end of the full contemplated term hereof,
and
if the interest received for the actual period of existence hereof exceeds
the
Highest Lawful Rate, the Payee shall refund to
8
Maker
the
amount of such excess or credit the amount of such excess against the principal
of this Note, and, in such event, the Payee shall not be subject to any
penalties provided by any laws for contracting for, charging, or receiving
interest in excess of the Highest Lawful Rate.
4.
Payments.
(a) Interest.
Maker
promises to pay to Payee Basic Interest and Additional Interest the respective
amounts, and at the respective times provided in Section
2
hereinabove. No principal payments shall be due hereunder except as required
at
the Maturity Date. Each payment of Basic Interest (including without limitation,
Deferred Interest) and Additional Interest shall be payable in Phoenix, Arizona
(or at any other place which Payee may hereafter designate from time to time
for
such purpose in a notice duly given to Maker hereunder), not later than noon,
Pacific Standard Time, on the date due thereof; and funds received after
that
hour shall be deemed to have been received by the Payee on the next following
business day. Whenever any payment to be made under this Note shall be stated
to
be due on a date which is not a business day, the due date thereof shall
be
extended to the next succeeding business day, and interest shall be payable
at
the applicable rate during such extension.
(b) Principal.
The
principal amount of this Note, together with all accrued but unpaid Interest,
shall be due and payable upon the Maturity Date.
(c) Late
Payment Charges.
If any
amount of Interest, principal or any other charge or amount which becomes
due
and payable under this Note is not paid and received by the Payee within
five
business days after the date it first becomes due and payable, Maker shall
pay
to the Payee hereof a late payment charge in an amount equal to five percent
(5%) of the full amount of such late payment, whether such late payment is
received prior to or after the expiration of the ten-day cure period set
forth
in Section
8(a).
Maker
recognizes that in the event any payment hereunder (other than the principal
payment due upon Maturity Date, whether by acceleration or otherwise) is
not
made when due, Payee will incur extra expenses in handling the delinquent
payment, the exact amount of which is impossible to ascertain, but that a
charge
of five percent (5%) of the amount of the delinquent payment is a reasonable
estimate of the expenses reasonably anticipated to be so incurred.
(d)
Prepayment.
Maker
shall have the right to prepay this Note, without penalty, in whole or in
part,
at any time in Maker's discretion.
5. Representations
and Warranties of Maker.
Maker
represents and warrants to Payee, as of the date hereof, that:
(a) Due
Authorization.
Maker
is a corporation duly organized and validly existing under the laws of the
state
of its organization, and has the power and authority to execute and deliver
this
Note and consummate the transactions contemplated hereby;
(b) No
Violation.
Maker's
execution, delivery and performance of its obligations under this Note do
not
and will not violate the articles of incorporation or by-laws of Maker and
will
9
not
violate, conflict with or constitute a default under any agreement to which
Maker is a party;
(c) Consents.
No
consents, approvals, filings, or notices of, with or to any Person are required
on the part of Maker in connection with Maker's execution, delivery and
performance of its obligations hereunder that have not been duly obtained,
made
or given, as the case may be;
(d) Enforceability.
The
Note is valid, binding and enforceable in accordance with its terms, except
as
the enforceability hereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws relating to or affecting the enforcement of
creditors' rights generally.
(e) Place
of Business.
Maker’s
principal place of business is located at 715 South Country Club Drive, Mesa,
AZ
85210.
6. Affirmative
Covenants.
Maker
hereby covenants and agrees that, so long as any indebtedness under the Note
remains unpaid, Maker shall:
(a) Use
of
Proceeds.
Use the
proceeds of the Loan to capitalize the Property Owner and/or for other lawful
corporate purposes.
(b) Inspection
of Property; Books and Records; Discussions.
Keep
proper books of record and account in which full, true and correct entries
in
conformity with GAAP shall be made of all dealings and transactions in relation
to its business and activities and, upon reasonable notice, permit
representatives of Payee to examine and make abstracts from any of its books
and
records at any reasonable time and as often as may reasonably be desired
by
Payee and to discuss the business, operations, properties and financial and
other conditions of Maker with officers and employees of Maker and with its
independent certified public accountants. Such books and records shall be
available for at least five (5) years after the end of the relevant calendar
month. Payee shall have the right to inspect, copy and audit such books of
account and records at Payee's expense, during reasonable business hours,
and
upon reasonable notice to Maker, for the purpose of verifying the accuracy
of
any principal payments made. The costs of any such audit will be paid by
Payee,
except that Maker shall pay all reasonable costs and expenses of any such
audit
which discloses that any amount properly payable by Maker to Payee hereunder
exceeded by five percent (5%) or more the amount actually paid and initially
reported by Maker as being payable with respect thereto.
(c) Notices.
Give prompt written notice to Payee of (i) any claims, proceedings or disputes
(whether or not purportedly on behalf of Maker) against, or to Maker's
knowledge, threatened or affecting Maker or the Real Property which, if
adversely determined, could reasonably be expected to have a material adverse
effect on Maker (without in any way limiting the foregoing, claims, proceedings,
or disputes involving in the aggregate monetary amounts in excess of $500,000
not fully covered by insurance shall be deemed to be material). Additionally,
Maker shall give prompt written notice to Payee of any fact known to Maker
which
would prohibit the making of any payment on or in respect of this Note, but
failure to give such notice shall not affect any
10
subordination
of this Note to the SAC Holding Senior Notes as provided in Section 2(i)
hereof
or otherwise.
(d) Expenses.
Pay all
reasonable out-of-pocket expenses (including fees and disbursements of counsel,
including special local counsel) of Payee, incident to any amendments, waivers
and renewals of this Note.
(e) Co-operation.
Execute
and deliver to Payee any and all instruments, documents and agreements, and
do
or cause to be done from time to time any and all other acts, reasonably
deemed
necessary or desirable by Payee to effectuate the provisions and purposes
of
this Note.
(f) Management
Agreement.
Cause
or permit the Real Property to be managed by subsidiaries of U-Haul
International, Inc. or to be at all times managed by a nationally recognized
self-storage property management company (the "Property
Manager")
approved by the Payee, which Property Manager shall be employed pursuant
to an
agreement (the "Property
Management Agreement")
approved by the Payee. In no event shall the fees paid (or required to be
paid)
to the Property Manager exceed six percent (6%) of Gross Receipts for any
time
period.
7. Negative
Covenants.
Maker
hereby agrees that, as long as any indebtedness under the Note remains unpaid,
Maker shall not, directly or indirectly:
(a) Indebtedness.
Create,
incur or assume any Indebtedness except for: (i) the SAC Holding Senior Notes;
(ii) the Loan; (iii) Maker’s contingent obligations under the secured Real
Property debt (as the same may be amended, extended or refinanced from time
to
time by mortgage loan, sale leaseback transaction or otherwise) and the other
senior mortgage loans extended to subsidiaries or other affiliates of Maker
(as
the same may be amended, extended or refinanced from time to time by mortgage
loan, sale leaseback transaction or otherwise); (iv) non-delinquent taxes;
(v)
unsecured debt incurred in the ordinary course of business and (vi) other
indebtedness owed to Payee and its affiliates; provided, however, that for
so
long as the SAC Holding Senior Notes are outstanding, Maker shall not incur
any
Indebtedness prohibited by the terms of the SAC Notes Indenture.
(b) No
Bankruptcy Filing.
To the
extent permitted by law, without the unanimous consent of the Board of Directors
of the Maker (for these purposes such Board of Directors will not include
any
committee thereof) voluntarily file any petition for bankruptcy, reorganization,
assignment for the benefit of creditors or similar proceeding.
8. Event
of Default; Remedies.
Any one
of the following occurrences shall constitute an Event of Default under this
Note:
(a) The
failure by the undersigned to make any payment of principal or Interest upon
this Note as and when the same becomes due and payable in accordance with
the
provisions hereof, and the continuation of such failure for a period of ten
(10)
days after receipt of notice
11
thereof
to the Maker;
(b) Any
representation, warranty or certification made by Maker herein or in any
report
delivered to the Payee under or in connection with this Note is materially
inaccurate or incomplete as of the date made; provided, however, that such
inaccurate or incomplete representation, warranty or certification is material
and cannot be cured without material prejudice to the Payee within 30 days
written notice thereof to Maker;
(c) The
failure by Maker to perform any obligation under, or the occurrence of any
other
default with respect to any provision of, this Note other than as described
in
any of the other clauses of this Section 8, and the continuation of such
default
for a period of 30 days after written notice thereof to the Maker;
(d)
(i)
Maker
shall file, institute or commence any case, proceeding or other action (A)
under
any existing or future law of any jurisdiction, domestic or foreign, relating
to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have
an
order for relief entered with respect to it, or seeking to adjudicate it
a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
assets, or Maker shall make a general assignment for the benefit of its
creditors; or (ii) there shall be filed, instituted or commenced against
Maker
any case, proceeding or other action of a nature referred to in clause (i)
above
which (A) results in the entry of any order for relief or any such adjudication
or appointment, or (B) remains undismissed undischarged for a period of 60
days;
or (iii) there shall be commenced against Maker any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint
or
similar process against all or substantially all of its assets which results
in
the entry of an order for any such relief which shall not have been vacated,
discharged, stayed, satisfied, or bonded to Payee's satisfaction pending
appeal,
within 60 days from the first entry thereof; or (iv) Maker shall take any
action
in furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts described in any of the preceding clauses (i), (ii) or
(iii); or (v) Maker shall not, or shall be unable to, or shall admit in writing
its inability to, pay its debts as they become due, or shall in writing admit
that it is insolvent; or
(f)
one
or
more final judgments
or orders that exceed $80 million in the aggregate (net of amounts bonded, covered
by insurance or covered
by
a binding
agreement for indemnification from a third party)
for the
payment of money have been entered by a court or courts of competent
jurisdiction against Maker and such judgment or judgments have not been
satisfied, stayed, annulled or rescinded within 60 days of being
entered or,
in
the event such judgments have been bonded to the extent required pending
appeal,
after the date such judgments become non-appealable.
Upon
the occurrence
of any Event of Default hereunder, the entire unpaid principal balance of,
and
any unpaid Basic Interest and Additional Interest then accrued on, this Note
at
the option of the Payee and without demand or notice of any kind to the
undersigned or any other person, shall, subject to the PSA, immediately become
and be due and payable in full; and the Payee shall have
12
and
may exercise any and all rights and remedies available at law or in
equity.
9. Offset.
In
addition to (and not in limitation of) any rights of offset that the Payee
hereof may have under applicable law, upon the occurrence of any Event of
Default hereunder the Payee hereof shall have the right, immediately and
without
notice, to appropriate and apply to the payment of this Note any and all
balances, credits, deposits, accounts or moneys of the Maker then or thereafter
with or held by the Payee or an affiliate of Payee.
10. Allocation
of Balances or of Payments.
At any
and all times until this Note and all amounts hereunder (including principal,
Interest, and other charges and amounts, if any) are paid in full, all payments
(whether of principal, Interest or other amounts) made by the undersigned
or any
other person (including any guarantor) to the Payee hereof may be allocated
by
the Payee to principal, Interest or other charges or amounts as the Payee
may
determine in its sole, exclusive and unreviewable discretion (and without
notice
to or the consent of any person).
11. Captions.
Any
headings or captions in this Note are inserted for convenience of reference
only, and they shall not be deemed to constitute a part hereof, nor shall
they
be used to construe or interpret the provisions of this Note.
12. Waiver.
(a) Maker,
for itself and for its successors, transferees and assigns, hereby waives
diligence, presentment and demand for payment, protest, notice of protest
and
nonpayment, dishonor and notice of dishonor, notice of the intention to
accelerate, notice of acceleration, and all other demands or notices of any
and
every kind whatsoever (except only for any notice of default expressly provided
for in Section
8
of this
Note) and the undersigned agrees that this Note and any or all payments coming
due hereunder may be extended from time to time in the sole discretion of
the
Payee hereof without in any way affecting or diminishing their liability
hereunder.
(b) No
extension of the time for the payment of this Note or any payment becoming
due
or payable hereunder, which may be made by agreement with any Person now
or
hereafter liable for the payment of this Note, shall operate to release,
discharge, modify, change or affect the original liability under this Note,
either in whole or in part, of the Maker if it is not a party to such
agreement.
(c) No
delay
in the exercise of any right or remedy hereunder shall be deemed a waiver
of
such right or remedy, nor shall the exercise of any right or remedy be deemed
an
election of remedies or a waiver of any other right or remedy. Without limiting
the generality of the foregoing, the failure of the Payee hereof promptly
after
the occurrence of any Event of Default hereunder to exercise its right to
declare the indebtedness remaining unmatured hereunder to be immediately
due and
payable shall not constitute a waiver of such right while such Event of Default
continues nor a waiver of such right in connection with any future Event
of
Default on the part of the undersigned.
13. Payment
of Costs.
The
undersigned hereby expressly agrees that upon the
13
occurrence
of any Event of Default under this Note, the undersigned will pay to the
Payee
hereof, on demand, all reasonable costs of collection or enforcement, including
(but not limited to) all attorneys' fees, court costs, and other costs and
reasonable expenses incurred by the Payee hereof, on demand, all reasonable
costs of collection or enforcement, including (but not limited to) all
attorneys' fees, court costs, and other reasonable costs and expenses incurred
by the Payee hereof in connection with the protection of this Note, whether
or
not any lawsuit is ever filed with respect thereto.
14. Unsecured
Note.
This
Note is unsecured.
15. Notices.
All
notices, demands and other communications hereunder to either party shall
be
made in writing and shall be deemed to have been given when actually received
or, if mailed, on the first to occur of actual receipt or the third business
day
after the deposit thereof in the United States mails, by registered or certified
mail, postage prepaid, addressed as follows:
If
to the
Maker: SAC
Holding Corporation
715
South Country Club Drive
Mesa,
AZ 85210
Attention:
President
Fax
No.: 480-835-5478
If
to Payee
:
U-Haul
International, Inc.
2721
North Central Avenue
Phoenix,
Arizona 85004
Attention:
President
or
to
either party at such other address as such party may designate as its address
for the receipt of notices hereunder in a written notice duly given to the
other
party.
16. Time
of the Essence.
Time is
hereby declared to be of the essence of this Note and of every part hereof.
17. Governing
Law.
This
Note shall be governed by and construed in accordance with the internal laws
of
the State of Arizona.
18. Jurisdiction.
In any
controversy, dispute or question arising hereunder, the Maker consents to
the
exercise of jurisdiction over its person and property by any court of competent
jurisdiction situated in the State of Arizona (whether it be a court of the
State of Arizona, or a court of the United States of America situated in
the
State of Arizona), and in connection therewith, agrees to submit to, and
be
bound by, the jurisdiction of such court upon Payee's mailing of process
by
registered or certified mail, return receipt requested, postage prepaid,
within
or without the State of Arizona, to the Maker at its address for receipt
of
notices under this Note.
19. PAYEE
NOT PARTNER OF MAKER.
UNDER NO CIRCUMSTANCES WHATSOEVER SHALL THE PAYEE OF THIS NOTE BE DEEMED
TO BE A
PARTNER OR A CO-VENTURER WITH MAKER OR MAKER'S SUBSIDIARIES. MAKER
SHALL
14
NOT
REPRESENT TO ANY PERSON THAT THE MAKER AND THE PAYEE HEREOF ARE PARTNERS
OR
CO-VENTURERS.
20. JURY
TRIAL.
THE MAKER HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS NOTE, OR UNDER ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS NOTE, AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
21. Entire
Agreement.
This
Note constitutes the entire agreement between Maker and Payee. No
representations, warranties, undertakings, or promises whether written or
oral,
expressed or implied have been made by the Payee or its agent unless expressly
stated in this Note.
15
IN
WITNESS WHEREOF, the undersigned has executed and delivered this Note, pursuant
to proper authority duly granted, as of the date and year first above
written.
SAC
HOLDING CORPORATION
a
Nevada
corporation
By:
__________________________________
Its:
___________________________________
16
EXHIBIT
H
This
instrument is subject to that certain SAC Participation and Subordination
Agreement (the "PSA") dated as of March 15, 2004 among SAC Holding Corporation,
SAC Holding II Corporation (collectively, "SAC Holding"), AMERCO, U-Haul
International, Inc., and Law Debenture Trust Company of New York, Inc.,
as
Trustee under that certain Indenture with respect to the 8.5% Senior Notes
due
2014 of SAC Holding
AMENDED
AND RESTATED PROMISSORY NOTE
Maximum
principal amount of up to Dated
as
of March 1, 2004
$47,500,000.00
FOR
VALUE
RECEIVED, the undersigned SAC Holding Corporation, a Nevada corporation
(the
"Maker"
or the
"undersigned"),
promises to pay to the order of U-Haul International, Inc. a Nevada corporation,
("Payee"),
at
the principal office of the Payee at 2721 North Central Avenue, Phoenix,
Arizona
85004 or at such other place or places as Payee may from time to time designate
in writing, the principal sum of up to Forty-Seven Million Five Hundred
Thousand
and no/100th
Dollars
($47,500,000.00), or, if less, the aggregate unpaid principal amount of
the Loan
made by Payee to Maker, with Interest on the principal balance outstanding
from
time to time, all as hereinafter set forth.
1. Definitions.
As used
in this Note, each of the following terms shall have the following meanings,
respectively:
"Accrual
Rate":
shall
mean the annual interest rate of nine percent (9%).
"Additional
Interest":
shall
mean and include both Cash Flow Contingent Interest and Capital Proceeds
Contingent Interest.
"Basic
Interest":
shall
have the meaning given it in Section
2(a)
below.
"Capital
Proceeds Contingent Interest":
shall
have the meaning given it in Section
2(h)(i)
below.
"Cash
Flow Contingent Interest":
shall
have the meaning given it in Section
2(e)
below.
"Catch-Up
Payment":
shall
have the meaning given it in Section
2(d).
"Deferred
Interest":
shall
have the meaning given it in Section
2(a).
"GAAP":
shall
mean generally accepted accounting principles as used and understood in
the
United States of America from time to time.
"Gross Receipts":
shall
mean, for any period all gross receipts, revenues and income of any and
every
kind collected or received by or for the benefit or account of Maker and
the
Property Owner during such period arising from the ownership, rental, use,
occupancy or operation of the Real Property. Gross Receipts shall include,
without limitation, all receipts from all tenants,
1
licensees,
customers and other occupants and users of the Real Property, including,
without
limitation, rents, security deposits and the like, interest earned and
paid or
credited on all
Maker's
or the Property Owner's deposit accounts related to the Real Property,
all
proceeds of rent or business interruption insurance, and the proceeds of
all
casualty insurance and
minent
domain awards to the extent not applied, or reserved and applied within
six (6)
months after the creation of such reserve, to the restoration of the Real
Property. Gross Receipts
shall
include the dealer commission payable from U-Haul International, Inc. (or
affiliate thereof) to Maker (or affiliate thereof) for the rental of U-Haul
equipment at the Real Property;
provided
however that such dealer commissions payable shall not be included in Gross
Receipts until the 15th day of the month following the month in which such
rental occurred, all
in
accordance with the customary procedure for the payment of dealer commissions.
Gross Receipts shall not include any capital contributed to Maker or proceeds
from any loan made
to
Maker
or proceeds from the sale of any Real Property. Any receipt included within
Gross Receipts in one period shall not be included within Gross Receipts
for any
other period (i.e.,
no item
of revenue or receipts shall be counted twice).
"Highest
Lawful Rate":
shall
mean the maximum rate of interest which the Payee is allowed to contract
for,
charge, take, reserve, or receive under applicable law after taking into
account, to the extent required by applicable law, any and all relevant
payments
or charges hereunder.
"Interest":
shall
mean Basic Interest and Additional Interest.
"Loan":
shall
mean the unsecured loan in the amount of up to $47,500,000.00 made by Payee
to
Maker and evidenced by this Note, or up to such amount as may have been
advanced
by Payee to Maker from time to time.
"Management
Fee":
shall
mean the fee paid to the Property Manager pursuant to the Property Management
Agreement.
"Maturity
Date":
shall
mean the first to occur of: (i) the Stated Maturity Date; (ii) the date
on which
the unpaid principal balance of, and unpaid Interest on, this Note shall
become
due and payable on account of acceleration by Payee and (iii) the date
on which
a Triggering Event occurs.
"Net
Capital Proceeds":
shall
have the meaning given it in Section
2(h)(iv)
below.
"Net
Cash Flow":
shall
mean, for any period, the amount by which the Gross Receipts for such period
exceed the sum of Interest paid during such period and Operating Expenses
paid
for and with respect to such period; but Net Cash Flow for any period shall
not
be less than zero.
"Net
Cash Flow Before Debt Service":
shall
mean, for any period, the amount by which the Gross Receipts for such period
exceed the Operating Expenses for and with respect to such period.
"Note":
shall
mean this Amended and Restated Promissory Note as it may be amended, modified,
extended or restated from time to time, together with all substitutions
and
replacements therefor.
2
"Operating
Expenses":
shall
mean, for any period, all cash expenditures of Maker and the Property Owner
actually paid (and properly payable) during such period for (i) real and
personal property taxes on the Real Property; (ii) principal and interest
on the
secured Real Property debt; (iii) premiums for liability, property and
other
insurance on the Real Property; (iv) the Management Fee; (v) sales and
rental
taxes relating to the Real Property; and (vi) normal, reasonable and customary
operating expenses of the Real Property. In no event shall Operating Expenses
include amounts distributed to the partners or shareholder's of Maker or
the
Property Owner, any payments made on the Loan or any other loan obtained
by
Maker, amounts paid out of any funded reserve expressly approved by Payee,
if
any, non-cash expenses such as depreciation, or any cost or expense related
to
the restoration of the Property in the event of a casualty or eminent domain
taking paid for from the proceeds of insurance or an eminent domain award
or any
reserve funded by insurance proceeds or eminent domain awards.
"Pay
Rate":
shall
mean a rate per annum equal of two percent (2.0%).
"Pay
Rate Interest":
shall
mean the interest on the unpaid principal balance of this Note from time
to time
outstanding at the Pay Rate.
"Person":
shall
mean any corporation, natural person, firm, joint venture, general partnership,
limited partnership, limited liability company, trust, unincorporated
organization, government or any department or agency of any
government.
"Property
Manager":
shall
have the meaning given it in Section
6(f)
below.
"Property
Management Agreement":
shall
have the meaning given such term in Section
6(f)
below.
"Property
Owner"
means,
collectively, Twenty SAC Self-Storage Corporation, a Nevada corporation,
Twenty-One SAC Self-Storage Corporation, a Nevada corporation, Twenty-Two
SAC
Self-Storage Corporation, a Nevada corporation and Twenty-Three SAC Self-Storage
Corporation, a Nevada corporation.
"Real
Property"
means
the real property owned by Property Owner from time to time.