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.
"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, 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,
3
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.
(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)
4
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");
(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
5
(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 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).
6
(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 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
7
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 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.
8
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
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
9
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 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.
10
(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 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;
11
(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 terms
of the
PSA, immediately become and be due and payable in full; and the Payee shall
have
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 affilate of Payee.
12
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 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.
13
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
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
14
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
I
obligations
thereunder. If any Indemnified Person makes any payment to any
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.
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
$76,000,000.00
FOR
VALUE
RECEIVED, the undersigned SAC Financial 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 Seventy-Six Million and
no/100th
Dollars
($76,000,000.00), 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 $76,000,000.00 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,
collectively, Twenty-Four SAC Self-Storage Partnership, a Nevada limited
partnership, Twenty-Five SAC Self-Storage Partnership, a Nevada limited
partnership, Twenty-Six SAC Self-Storage Partnership, a Nevada limited
partnership and Twenty-Seven SAC Self-Storage Partnership, a Nevada limited
partnership
"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.
3
"Sale":
shall
mean any direct or indirect sale, assignment, transfer, conveyance, 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
4
(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.
(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
5
refinancing
of the Real Property (any such event is hereinafter collectively referred
to as
a "Sale
or Financing");
(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
6
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 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
7
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 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
8
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 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;
9
(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
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 thereof to the Maker;
11
(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 terms
of the
PSA, immediately become and be due and payable in full; and the Payee
shall have
and may exercise any and all rights and remedies available at law or
in
equity.
12
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 affilate 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 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
13
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
NOT
REPRESENT TO ANY PERSON THAT THE MAKER AND THE PAYEE HEREOF ARE PARTNERS
OR
CO-VENTURERS.
14
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
FINANCIAL CORPORATION
a
Nevada
corporation
By:
__________________________________
Its:
___________________________________
16
PROMISSORY
NOTE
Up
to
$58,000,000.00
Phoenix,
Arizona
March
1,
2004
FOR
VALUE
RECEIVED, SAC Holding Corporation,
a Nevada
corporation (“Maker”),
promises to pay to the order of U-Haul International, Inc., a Nevada
corporation
(“Payee”),
in
lawful money of the United States, the principal sum of up to Fifty-Eight
Million and no/100ths Dollars ($58,000,000.00), together with interest
at the
times and at the rates specified in this Note.
1. Interest.
From
the
date hereof through and including the Maturity Date (as hereinafter
defined),
interest ("Basic
Interest")
shall
accrue on the principal balance of this Note outstanding from time
to time at
the rate of nine percent (9%) per annum ("Accrual
Rate").
Notwithstanding the foregoing, on the fifteenth calendar day of each
month
commencing on March 15, 2004 and through the Maturity Date (as hereinafter
defined), Maker shall pay to Payee interest on the unpaid principal
balance of
this Note from time to time at the rate of 2% per annum ("Pay
Rate Interest").
The
remainder of the Basic Interest ("Deferred
Interest")
shall
be deferred and shall bear interest at the Accrual Rate. At the election
of
Payee, Deferred Interest shall accrue either in cash or in Additional
Notes (as
hereinafter defined). Any accrued interest on the Deferred Interest
shall be
considered part of Deferred Interest. Interest
shall be calculated on the basis of a 360-day year and the actual number
of days
elapsed.
2. Payments.
Pay
Rate Interest shall be paid on the fifteenth calendar day of each month,
until
such time as the notes (the "Senior
Notes")
under
the Indenture with respect to 8.5% Senior Notes Due 2014 of SAC Holding
Corporation and SAC Holding II Corporation shall have been paid or
satisfied in
full. Upon the full repayment or satisfaction of the Senior Notes,
payments
hereunder shall continue to be made on the fifteenth calendar day of
each month
but shall consist of principal and Pay Rate Interest, and such principal
payments shall be on the basis of a twenty-five year amortization.
This Note
shall mature on the last day of the month that is the ten (10) year
anniversary
of the full repayment or satisfaction of the Senior Notes (the "Maturity
Date").
On
the Maturity Date, all outstanding principal and interest (including
Deferred
Interest) shall be due and payable.
3. Prepayment.
This
Note may be prepaid in whole or in part, without penalty or
premium.
4. Default
Interest.
During
the existence of a Default (as hereinafter defined), interest will
accrue on the
entire loan balance at the rate of fifteen percent (15%) per annum
commencing on
the date the payment was due and continuing until the delinquent payment
is
received by the Payee.
5. Default
and Remedies.
a. Default.
The
Maker will be in default under this Note if the Maker fails, following
the full
repayment or satisfaction of the Senior Notes, to make a payment
of
principal,
1
interest,
or other charge when due, which failure to pay is not cured within
five (5)
business days after the due date therefor.
b. Remedies.
Upon a
default as described in subparagraph 5.a ("Default"),
Payee
shall have the right to immediately accelerate the obligations under
this Note
and all sums owing with respect to this Note will immediately become
due and
payable.
6. Unsecured.
This
Note and the obligations hereunder are unsecured.
7. Waivers.
The
Maker, and any endorsers or guarantors of this Note, severally waive
diligence,
presentment, protest, demand and all rights of offset and also notice
of
protest, demand, dishonor, acceleration, intent to accelerate, offset
and
nonpayment of this Note, and expressly agree that this Note, or any
payment
under this Note, may be extended from time to time in the Payee’s sole
discretion without notice, and consent to the acceptance of further
security or
the release of any security for this Note, all without in any way affecting
the
liability of the Maker and any endorsers or guarantors of this Note.
No
extension of time for the payment of this Note, or any installment
hereof, made
by agreement by the Payee with any person now or hereafter liable for
the
payment of this Note, will affect the original liability of the Maker
under this
Note, even if that person is not a party to such agreement. The Payee
may waive
its rights to require performance of or compliance with any term, covenant
or
condition of this Note only by express written waiver.
8. Additional
Note.
At the
request of Payee, Maker shall deliver to Payee additional promissory
notes (the
"Additional
Note")
to
evidence Maker's indebtedness hereunder pursuant to the Deferred Interest.
In
such event, such Deferred Interest shall be evidenced by such Additional
Note
and not pursuant to the terms of this Note. Any such Additional Note
shall
contain economic terms akin to those set forth herein.
9. Maximum
Legal Rate of Interest.
All
agreements between the Payee and the Maker whether now existing or
hereafter
arising, are hereby limited so that in no event will the interest charged
under
this Note or agreed to be paid to the Payee exceed the maximum amount
permissible under applicable law. If interest otherwise payable to
the Payee
would exceed the maximum lawful amount, the interest payable will be
reduced to
the maximum amount permitted under applicable law.
11. Miscellaneous.
a. Costs.
The
Maker will pay all costs, including, without limitation, reasonable
attorneys’
fees, costs and expert fees incurred by the Payee in collecting the
sums due
under this Note.
b. Modification.
This
Note may be modified only by a written agreement executed by the person
against
whom the change, modification or waiver is to be enforced.
c. Law.
This
Note will be governed by Arizona law, without regard to the choice
of law
principles thereof.
2
d. Successors.
The
terms of this Note will inure to the benefit of and bind the Maker
and the Payee
and its heirs, legal representatives and successors and assigns.
e. Time.
Time is
of the essence with respect to all matters set forth in this Note.
f. Destroyed
Note.
If this
Note is destroyed, lost or stolen, the Maker will deliver a new Note
to the
Payee on the same terms and conditions as this Note with a notation
of the
unpaid principal and accrued and unpaid interest in substitution of
the prior
Note. The Payee will furnish to the Maker reasonable evidence that
the Note was
destroyed, lost or stolen and any security or indemnity that may be
reasonably
required by the Maker in connection with the replacement of this
Note.
IN
WITNESS WHEREOF, the Maker has duly executed and delivered this Note
to the
Payee as of the date and year first above written.
Maker:
SAC
Holding Corporation, a Nevada
corporation
By:
_________________________
President
3
THIS
AGREEMENT TO INDEMNIFY (this "Agreement") is dated as of March 15,
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
IN
WITNESS WHEREOF,
the undersigned executes this Agreement as of the date first set
forth
above.
AMERCO,
a
Nevada corporation
By:
_____________________________
Its:
_____________________________
PROMISSORY
NOTE
Maximum
principal amount of dated
as
of ___________________
$__________________.00
FOR
VALUE
RECEIVED, the undersigned [SAC Holding Corporation] [SAC Financial Corporation]
a Nevada corporation (the "Maker"
or the
"undersigned"),
promises to pay to the order of [AMERCO Entity] ("Payee"),
at
the principal office of the Payee at 2721 North Central Avenue, Phoenix,
Arizona
85004 or at such other place or places as the holder hereof may from time
to
time designate in writing, the principal sum of up to __________________________
($__________________.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 ______ percent (__.0%).
"Additional
Interest":
shall
mean and include both Cash Flow Contingent Interest and Capital Proceeds
Contingent Interest.
"Adjusted
Operating Expenses":
shall
mean Operating Expenses (i) to account for all actual or required Operating
Expenses as opposed to escrowed or estimated payments made pursuant to the
Senior Loans or otherwise and (ii) such other adjustments to Operating Expenses
to adjust for seasonal, extraordinary or non-customary expenses and costs
and
other abnormalities.
"Affiliate":
of any
specified Person shall mean (i) any other Person controlling or controlled
by or
under common control with such specified Person and (ii) any limited partner
of
such Person if such Person is a limited partnership, any shareholder of such
Person if such Person is a corporation, or any member of such Person if such
Person is a limited liability company. For the purposes of this definition,
"control," when used with respect to any specified Person, means the power
to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract, or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to
the
foregoing.
"Basic
Interest":
shall
have the meaning given it in Section
2(a)
and
2(b)
below.
“Borrowers”:
collectively, Twelve SAC Self-Storage Corporation, a Nevada corporation,
and
Thirteen SAC Self-Storage Corporation, a Nevada corporation.
"Capital Proceeds Contingent Interest":
shall
have the meaning given it in Section
2(h)(i) below.
1
"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).
"Debt
Papers":
is
defined in Section
14
below.
"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
Income":
shall
equal Gross Receipts for the applicable twelve (12) month period less (i)
sale
tax and other similar taxes, (ii) condemnation awards, (iii) casualty or
other
insurance proceeds, (iv) proceeds of any borrowing, (v) proceeds of any or
sale
of any Mortgaged Properties, (vi) proceeds of any sale of assets outside
the
ordinary course of business, (vii) revenues relating to equipment or vehicle
rentals and (vii) any revenue generated other than in connection with the
use of
the Mortgaged Properties.
"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
Borrower during such period arising from the ownership, rental, use, occupancy
or operation of the Project or any portion thereof. Gross Receipts shall
include, without limitation, all receipts from all tenants, licensees and
other
occupants and users of the Project or any portion thereof, including, without
limitation, rents, security deposits and the like, interest earned and paid
or
credited on all Maker's or the Borrowers’ deposit accounts related to the
Project, all proceeds of rent or business interruption insurance, and the
proceeds of all casualty insurance or eminent domain awards to the extent
not
(i) applied, or reserved and applied within six (6) months after the creation
of
such reserve, to the restoration of the Project in accordance with the Mortgage,
(ii) paid to Holder to reduce the principal amount of the Loan or (iii) paid
to
reduce the principal amount of the Senior Loans. Gross Receipts shall include
the net commission payable from U-Haul International, Inc. for the rental
of its
equipment (whether or not such equipment is owned by the Owner of the Mortgaged
Property) at any Mortgaged Property; provided however that such net 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 net commission. Gross Receipts shall
not
include any capital contributed to Maker, whether in the form of a loan or
equity, or any proceeds from any loan made to Maker. 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).
2
"Highest
Lawful Rate":
shall
mean the maximum rate of interest which the Holder 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.
"Holder":
shall
mean at any particular time, the Person that is then the holder of this
Note.
"Interest":
shall
mean Additional Interest, Basic Interest and Deferred Interest.
"Loan":
shall
mean the unsecured loan in the amount of up to $30,000,000.00 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.
"Loan
Year":
shall
mean a year commencing on the date of this Note, or an anniversary thereof,
and
ending 365 days (or 366 days in a leap year) thereafter.
"Management
Fee":
shall
mean the fee paid to the Project Manager pursuant to the Property Management
Agreement which fee shall in no event exceed six percent (6.0%) of Gross
Receipts.
"Material
Adverse Effect":
shall
mean the likely inability or reasonably anticipated inability of Maker to
pay
the Loan and perform its other obligations in compliance with the terms of
the
Debt Papers.
"Maturity
Date":
shall
mean the first to occur of the Stated Maturity Date and the earlier date
(if
any) on which the unpaid principal balance of, and unpaid Interest on, this
Note
shall become due and payable on account of acceleration by the Holder
hereof.
"Mortgage":
shall
mean collectively the Deeds of Trust (and Mortgages, and Deeds to Secure
Debt),
Assignment of Leases and Rents, Security Agreement and Financing Statement
securing the promissory note representing the Senior Loans, as the same may
be
amended, modified or restated from time to time and together with all
replacements and substitutions therefor. The Mortgage is more fully identified
in Section
14
below.
“Mortgaged
Properties”:
shall
mean the properties of the Borrowers identified on Schedule A hereto.
"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, Operating Expenses paid
for
and with respect to such period, and interest paid under and on account of
the
Senior Loans during such period; but Net Cash Flow for any period shall not
be
less than
3
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.
"Net
Operating Income":
shall
mean the "Gross Income" generated by the Project less Adjusted Operating
Expenses, adjusted to reflect a ninety-five (95%) percent occupancy on a
per
Mortgaged Property basis for of the Project.
"Note":
shall
mean this 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 or the Borrowers actually
paid (and properly payable) during such period for (i) payments into escrow
pursuant to the Debt Papers for real and personal property taxes; (ii) real
and
personal property taxes on the Project (except to the extent paid from escrowed
funds); (iii) premiums for liability, property and other insurance on the
Project; (iv) the Management Fee; (v) sales and rental taxes relating to
the
Project (except to the extent paid from the Tax and Insurance Escrow Account);
and (vi) normal, reasonable and customary operating expenses of the Project.
In
no event shall Operating Expenses include amounts distributed to the partners
or
shareholder's of Maker or the Borrowers, payments to Affiliates not permitted
under Section
7(c)
below,
any payments made on the Loan or any other loan obtained by Maker, amounts
paid
out of any funded reserve expressly approved by Holder, non-cash expenses
such
as depreciation, or any cost or expense related to the restoration of the
Project 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 the annual interest rate of two percent (2.0%).
"Pay
Rate Interest":
shall
mean for any period the amount of Basic Interest payable for such period
less
the amount of Deferred Interest which accrued during such period.
"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.
"Present
Value":
shall
have the meaning given such term in Section
4(c)
below.
"Project":
shall
mean the real estate, the improvements and the personal property identified
on
Schedule A hereto, taken together collectively.
"Project
Manager":
shall
have the meaning given it in Section
6(j)
below.
4
"Property
Management Agreement":
shall
have the meaning given such term in Section
6(j)
below.
"Requirements
of Law":
shall
mean, as to any Person, requirements as set out in the provisions of such
Person's Articles of Incorporation and Bylaws (in the case of a corporation)
partnership agreement and certificate or statement of partnership (in the
case
of a partnership) or other organizational or governing documents, or as set
out
in any law, treaty, rule or regulation, or final and binding determination
of an
arbitrator, or determination of a court or other federal, state or local
governmental agency, authority or subdivision applicable to or binding upon
such
Person or any of its property or to which such Person or any of its property
is
subject, or in any private covenant, condition or restriction applicable
to or
binding upon such Person or any of its property or to which such Person or
any
of its property is subject.
"Sale":
shall
mean any direct or indirect sale, assignment, transfer, conveyance, lease
(except for leases or licenses of terms not exceeding 1 year to tenants in
the
ordinary course of business complying with standards and in a form approved
by
Payee) or disposition of any kind whatsoever of the Project, or of any portion
thereof or interest (whether legal, beneficial or otherwise) of 25% or more
(in
the aggregate of all such sales, transfers, assignments, etc., made at any
time
or from time to time, taken together) of all equity interests in
Maker.
"Security
Documents":
shall
mean the documents and instruments included within the definition of the
term
"Security
Documents"
as
provided in Section
14
below.
"Senior
Loan Documents":
shall
mean and include, at any time, all promissory notes, mortgages and other
documents and instruments which create, evidence or secure all or any part
of
the Senior Loans.
"Senior
Lender"
shall
mean First Union National Bank or designee and/or such other Person who may
extend a senior loan with respect to the Project or any portion thereof,
as the
context may so require, in its capacity as the lender under the Senior
Loans.
"Senior
Loans":
shall
mean, collectively, (i) that certain loan in the amount of $16,113,000.00
made
by Senior Lender to the Twelve SAC Self Storage Corporation; (ii) that certain
loan in the amount of $14,887,000.00 made by Senior Lender to the Thirteen
SAC
Self Storage Corporation; and/or (viii) any other senior loan secured by
the
Project or any portion thereof.
"Stated Maturity Date":
shall
mean the earlier of January 1, 2021 and the date on which all of the Property
Management Agreements are terminated in accordance with Section 6 thereof,
or on
demand by Payee.
5
"Tax
and Insurance Escrow Account":
shall
mean any impound account established pursuant to the Senior Loans, or any
of
them, and may include without limitation, impounds for capital repairs and
replacements.
"Triggering
Event":
shall
have the meaning given it in Section
2(h)(ii)
below.
"Yield
Maintenance Premium":
shall
have the meaning given such term in Section
4(b)
below.
2.
Interest.
(a)
Basic
Interest Rate Prior to Maturity.
Prior
to the Maturity Date, interest ("Basic
Interest")
shall
accrue on the principal balance of the Note outstanding from time to time
at the
Accrual Rate. Such interest shall be paid as follows: quarterly in arrears,
on
the first business day of each calendar quarter. Maker shall pay to Holder
an
amount calculated by applying the Pay Rate to the principal balance outstanding
hereunder; and, the remainder of the Basic Interest accrued hereunder at
the
Accrual Rate during such quarter through the last day of such quarter
("Deferred
Interest")
shall
be deferred, shall be payable as and at the time provided in Section
2(d)
below,
and commencing on the day payment of Basic Interest at the Pay Rate is due
for
such quarter, interest shall accrue on such Deferred Interest at the Accrual
Rate (and any accrued interest thereon, shall be considered part of Deferred
Interest).
(b)
Post-Maturity
Basic Interest.
From
and after the Maturity Date interest ("Post
Maturity 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 Post Maturity
Basic 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:
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(i)
On each quarterly date for the payment of Basic Interest, Maker
shall pay
an amount (the "Catch-Up
Payment")
equal to the lesser of (i) the aggregate outstanding Deferred Interest
on
the last day of the quarter 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 quarter the sum of principal and interest
paid on the Senior Loans by the borrowers thereunder for such period
plus
an additional amount equal to twice the Pay Rate Interest for such
period;
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(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
|
6
interest
or payments
construed as interest, shall exceed the Highest Lawful Rate.
(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 Holder interest ("Cash
Flow Contingent Interest")
in an
amount equal to the amount (if any) by which ninety percent (90%) of the
result
of subtracting from Net Cash Flow Before Debt Service for that quarter the
sum
of principal and interest paid on the Senior Loans for such period plus an
additional amount equal to twice the Pay Rate Interest for such period each
calculated as of that date exceeds the Catch-Up Payment paid on that date
by
Maker to Holder. Additionally, at the time of the closing of any impound
accounts established pursuant to the Senior Loan Documents, deposits into
which
are considered Operating Expenses, Cash Flow Contingent Interest shall be
due to
the Holder on the balances in those accounts except to the extent such balances
are paid to the Senior Lender.
(f)
Quarterly
Statements; Adjustment of Payments.
On the
due date for each payment of Basic Interest, Maker shall deliver to Holder
a
certified statement of operations of the Project for the calendar quarter
or
other period with respect to which such Basic Interest is due, showing in
reasonable detail and in a format approved by Holder respective amounts of,
and
the method of calculating, the Gross Receipts, Gross Income, Operating Expenses,
Net Cash Flow, Catch-Up Amount and Cash Flow Contingent Interest for the
preceding calendar quarter, as well as (if requested by Holder) all data
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 calendar quarter to which they
relate. Holder shall have the right to inspect, copy and audit such books
of
account and records during reasonable business hours, and upon reasonable
notice
to Maker, for the purpose of verifying the accuracy of any payments made
on
account of Cash Flow Contingent Interest. The costs of any such audit will
be
paid by Holder, except that Maker shall pay all reasonable costs and expenses
of
any such audit which discloses that any amount properly payable by maker
to
Holder 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.
Cash
Flow Contingent Interest shall be equitably prorated on the basis of a
365-day
year for any partial calendar
quarter
in which the term of the Loan commences or in which the Note is paid in
full. If
the payment of Cash Flow Contingent Interest due on the Maturity Date is
made
before
the
delivery to Holder of the quarterly statement for the then current calendar
quarter, then Maker shall pay to Holder on Maturity Date an estimate of
such
amount. Maker
shall
subsequently deliver to Holder an operating statement as required by
Section
2(f)
for the
quarter in which the Maturity Date occurred, and an appropriate adjustment
of
the
estimated amount previously paid by Maker shall be made by the parties
within
ten (10) days after the operating statement for such final quarter is delivered
to Holder.
7
(h)
Capital
Proceeds Contingent Interest.
(i)
Capital
Proceeds Contingent Interest Defined.
Maker
shall pay to Holder, in addition to Basic 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.
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)
Project
Sale or Financing.
The
closing of any Sale of the Project (any such event is hereinafter collectively
referred to as a "Sale
or Financing");
(B)
Default
Occurrence.
The
occurrence of any Event of Default which is not fully cured within the period
of
time, if any, expressly provided for cure herein, 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 or the prepayment by Maker (if permitted
hereunder) of all principal and accrued Basic Interest (including, without
limitation, Deferred Interest) and Cash Flow Contingent Interest outstanding
on
the Loan (the "Maturity
Occurrence").
(iii)
Notice
of Triggering Event: Time for Payment of Capital Proceeds Contingent
Interest.
Maker
shall notify Holder of the occurrence of a Triggering Event, and shall pay
Holder 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
Holder written notice of any such Triggering Event not less than seventy
five
(75) days before the date such Triggering Event is to occur. Any Capital
Proceeds Contingent Interest due Holder on account of any Sale or Financing
or
the Maturity Occurrence shall be paid to Holder on the date 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.
Prior
to the occurrence of a Triggering Event (or, in the event of a Default
Occurrence, within a reasonable time
8
thereafter), the "Net
Capital Proceeds"
resulting from such 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) either (x) the Gross Capital Proceeds
(as
hereinafter defined) realized from the Project, or (y) the fair market value
of
the Project determined pursuant to Section
2(h)(v)
below,
if Holder in its discretion requires such a determination, 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 taxes, escrow fees and recording
charges, appraisal fees, reasonable attorneys' fees and costs, and sales
taxes
(if any), in each case actually paid or payable by Maker in connection with
the
Sale or Financing, plus (bb) all payments of principal and Deferred Interest
paid to Holder an account of this Note from the proceeds of such Sale or
Financing, plus (cc) an amount equal to all payments of principal and interest
on the Senior Loans made from the proceeds of such Sale or Financing, plus
(dd)
any amount paid as Yield Maintenance Premium as a result 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 Project
or any portion thereof following such Sale or Financing (but 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, as determined by an independent investment
banker designated by Holder).
(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 Project 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 plus Deferred
Interest on the Note plus (bb) the outstanding principal balance of, and
accrued
but unpaid interest on, the Senior Loans.
(v) Determination
of Fair Market Value.
The
fair market value of the Project shall be determined for purposes of this
Note
as follows:
(A)
Partial
Sale.
In the
event of a Sale of a portion of the Project, Holder shall select an experienced
and reputable appraiser to prepare a written appraisal report of the fair
market
value of the Project in accordance with clause (C) below, and the appraised
fair
market value submitted to Holder by such appraiser shall be conclusive
for
purposes of this Note.
9
(B)
Other
Occurrences.
In all
other circumstances the fair market value of the Project 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 Project 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 Project for the 3 immediately preceding fiscal years
of the
Project.
(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 Project 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 Project is located.
(vi)
Effect
on Holder's Approval Rights.
Nothing
contained in this Section
2(h)
shall be
deemed or construed to waive, restrict, impair, or in any manner affect Holder's
rights hereunder to consent (or withhold its consent) to: any prepayment
of the
Loan in whole or in part; sales or other transfers of all or any portion
of the
Project or any interest therein; sales or other transfers of any ownership
interests in Maker; any refinancing of all or any portion of the Loan; any
junior financing; or, any other matters which require Holder's
consent.
(vii)
Statement,
Books and Records.
With
each payment of Capital Proceeds Contingent Interest, Maker shall furnish
to
Holder a statement setting forth Maker's proposed 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 Holder's
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 Holder, except that Maker shall pay all reasonable costs
and
expenses of any such audit which discloses that any amount properly payable
by
Maker to Holder 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, Holder 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 Project or for any
10
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 Holder, but Holder 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.
(ix)
No
payment of Capital Proceeds Contingent Interest may, when added to all other
payments of interest or payments construed as interest, shall exceed the
Highest
Lawful Rate.
3. Usury
Savings Clause.
The
provisions of this Section
3
shall
govern and control over any irreconcilably inconsistent provision contained
in
this Note or in any other document evidencing or securing the indebtedness
evidenced hereby. The Holder 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 Holder 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 Holder 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 Holder shall refund to Maker the amount of such
excess
or credit the amount of such excess against the principal of this Note, and,
in
such event, the Holder 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 the Holder hereof Basic Interest, Deferred Interest
and
Additional Interest as, in kind with respect to, this Note shall be made
by the
Maker to the Holder hereof at its office the respective amounts, and at
the
respective times provided in Section
2
hereinabove. No principal payments shall be due hereunder except at the
Stated
Maturity Date or as otherwise provided herein in the event of default.
Each
payment of Basic Interest (including without limitation, Deferred Interest),
and
Additional Interest on, or any other amounts of any in Phoenix, Arizona
(or at
any other place which the Holder may hereafter designate for such purpose
in a
notice duly given to the 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 Holder on the next following business
day.
Whenever any payment to be made under this Note shall be
stated
11
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)
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 Holder within
five
business days after the date it first becomes due and payable, Maker shall
pay
to the Holder 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 secured hereby (other than the
principal payment due upon maturity of the Note, whether by acceleration
or
otherwise) is not made when due, Holder 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
would be a reasonable estimate of the expenses so incurred. Therefore, if
any
such payment is not received when due and payable, Maker pay to Holder to
cover
expenses incurred in handling the delinquent payment, an amount calculated
at
five percent (5%) of the amount of the delinquent payment.
(c)
No
Prepayment.
Maker
shall have the right to prepay this Note at any time, but only subject to
the
requirements and conditions set forth below. If under any circumstances
whatsoever (other than pursuant to Section 3 above) this Note is paid in
whole
or in part, whether voluntarily, following acceleration after the occurrence
of
an Event of Default, with the consent of Holder, by Holder's application
of any
condemnation or insurance proceeds to amounts due under the Note, by operation
of law or otherwise, and whether or not such payment prior to the Stated
Maturity Date results from the Holder's exercise of its rights to accelerate
the
indebtedness evidenced hereby, then Maker shall pay to the Holder the Yield
Maintenance Premium (defined hereinbelow) in addition to paying the entire
unpaid principal balance of this Note and all Interest which has accrued
but is
unpaid except with the written consent of the Holder.
A
Yield Maintenance Premium in an
amount equal to the grater of (A) one percent (1.0%) of the principal amount
being prepaid, and (B) the positive excess of (1) the present value ("PV")
of
all future installments of principal and interest due pursuant to Section
4(a)
of this
Note absent any such prepayment including the principal amount due at the
Stated
Maturity Date (collectively, "All Future Payments"), discounted at an interest
rate per annum equal to the sum of (a) the Treasury Constant Maturity Yield
Index published during the second full week preceding the date on which such
Yield Maintenance Premium is payable for instruments having a maturity
coterminous with the remaining term of this Note, and (b) One Hundred Forty
(140) basis points, over (2) the then outstanding principal balance hereof
immediately before such prepayment [(PV of All Future Payments) (Principal
balance at the time of prepayment) = Yield Maintenance Premium]. "Treasury
Constant Maturity Yield Index" shall mean the average yield for "This Week"
as
reported by the Federal Reserve Board in Federal Reserve Statistical Release
H.15 (519). If there is no Treasury Constant
12
Maturity Yield Index for instruments having a maturity coterminous with the
remaining term of this Note, then the index shall be equal to the weighted
average yield to maturity of the Treasury Constant Maturity Yield Indices
with
maturities next longer and shorter than such remaining average life to the
maturity, calculated by averaging (and rounding upward to the nearest 1/100
of
1% per annum, if the average is not such a multiple) the yields of the relevant
Treasury Constant Maturity Yield Indices (rounded, if necessary, to the nearest
1/100 of 1% with any figure of 1/200 of 1% or above rounded upward). In the
event that any Yield Maintenance Premium is due hereunder, Holder shall deliver
to Maker a statement setting forth the amount and determination of the Yield
Maintenance Premium and, provided that Holder shall have in good faith applied
the formula described above, Maker shall not have the right to challenge
the
calculation or the method of calculation set forth in any such statement
in the
absence of manifest error, which calculation may be made by Holder on any
day
during the thirty (30) day period preceding the date of such prepayment.
Holder
shall not be obligated or required to have actually reinvested the prepaid
principal balance at the Treasury Constant Maturity Yield Index or otherwise
as
a condition to receiving the Yield Maintenance Premium. No Yield Maintenance
Premium or premium shall be due or payable in connection with any prepayment
of
the indebtedness evidenced by this Note made on or after any date after January
1, 2008. In addition to the aforesaid Yield Maintenance Premium if, upon
any
such prepayment (whether prior to or after any date that is after January
1,
2008, the aforesaid prior written notice has not been received by Holder,
the
Yield Maintenance Premium shall be increased by an amount equal to the lesser
of
(i) thirty (30) days' unearned interest computed in the outstanding principal
balance of this Note, so prepaid and (ii) unearned interest computed on the
outstanding principal balance of this Note so prepaid for the period from,
and
including, the date of prepayment through the otherwise Stated Maturity Date
of
this Note.
Without
limiting the scope of the
foregoing provisions, the provisions of this paragraph shall constitute,
within
the meaning of any applicable state statute, both a
waiver
of
any right Maker may have to prepay the Note, in whole or in part, without
premium or charge, upon acceleration of the maturity of the Note, or otherwise,
and an
agreement
by Maker to pay the prepayment charge described in this Note, whether such
prepayment is voluntary or upon or following any acceleration of this Note,
or
otherwise,
and for such purpose Maker has separately initialed this provision in the
space
provided below, and Maker hereby declares that Holder's agreement to make
the
Loan
to
Maker at the interest rate and for the term set forth in the Note constitutes
adequate consideration, of individual weight, for this waiver and agreement
by
Maker.
Notwithstanding
the
foregoing, or anything else in this Note to the contrary, it is agreed
that in
the event this Note becomes due and payable as a result of the termination
of
all of the Property Management Agreements, Maker shall not be subject to
the
Yield Maintenance Premiums or other prepayment premiums contemplated herein
and
Maker shall only be required to repay the outstanding principal balance
of this
Note and accrued but unpaid Basic Interest and Deferred Interest through
the
date of such prepayment, it being agreed that in such event, Maker shall
not be
required to pay any Capital Proceeds Contingent Interest or
13
Cash
Flow Contingent Interest.
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 under the laws of the state of its organization,
with the authority to consummate the transactions contemplated
hereby;
(b)
No
Violation.
Maker's
execution, delivery and performance of its obligations under the Debt Papers
do
not and will not violate the articles of incorporation or by-laws of Maker
and
will not violate, conflict with or constitute a default under any agreement
to
which Maker is a party or by which the Project is bound or encumbered, or
violate any Requirements of Law to which Maker or the Project is
subject;
(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)
Compliance
with Laws.
Each
Mortgaged Property is in compliance in all material respects with all applicable
Requirements of Law;
(f)
Zoning
and Other Laws.
The
Project and the use thereof as a self-storage facility, separate and apart
from
any other properties, constitutes a legal and conforming use under applicable
zoning regulations and each such Project is in compliance in all material
respects with all applicable Requirements of Law;
(g)
Litigation.
No
litigation, investigation or proceeding or notice thereof before any arbitrator
or governmental authority, agency or subdivision is pending or, to Maker's
best
knowledge, threatened, against Maker or the Project;
(h)
Utilities;
Licenses.
All
utilities required by Requirements of Law or by the normal and intended
use of
the Project are installed to the property line and connected by valid permits
and the Maker possesses, or will possess as and when necessary, all patents,
patent rights or licenses, trademarks, trade names, trade name right, service
marks, copyrights, licenses, permits and consents (or rights thereto) which
are
required to conduct its business as it is now conducted or as it is presently
proposed to be conducted, or which are required by any governmental entity
or
agency;
14
(i)
Intentionally omitted; and
(j)
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 repay certain indebtedness presently outstanding
against
the Project and held by Payee or to capitalize the Borrowers.
(b)
Financial
Statements.
Deliver
or cause to be delivered to Holder:
(i)
As
soon as available and in any event within 90 days after the end of each calendar
year, annual financial reports on the Project showing all income and expenses
certified to be accurate and complete by an officer of the Maker;
and
(ii)
As
soon as available and in any event within 45 days after the end of each of
the
first three calendar quarters of each year, (1) a detailed comparative earnings
statement for such quarter and for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, and (2) financial
reports on the Project showing all income and expenses, certified to be accurate
and complete by an officer of the managing general partner of Maker (or,
if
Maker is a corporation, of Maker); and
(iii)
Promptly, such additional financial and other information (including, without
limitation, information regarding the Project) as Holder may from time to
time
reasonably request.
(c)
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 and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities and, upon reasonable
notice, permit representatives of Holder 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 Holder 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. In addition, on the last
day
of each calendar month on which an Interest payment is due, Maker shall furnish
to Holder a certified statement of operations of the Project for the calendar
month in which such Interest payment is due, showing in reasonable detail
and in
a format approved by Holder the Gross Receipts, Operating Expenses, and Net
Cash
Flow, as well as (if required by Holder) all data 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
15
books and records shall be available for at least five (5) years after the
end of the relevant calendar month. Holder shall have the right to inspect,
copy
and audit such books of account and records at Holder'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 Holder, except that Maker shall pay all reasonable
costs
and expenses of any such audit which discloses that any amount properly payable
by Maker to Holder hereunder exceeded by five percent (5%) or more the amount
actually paid and initially reported by Maker as being payable with respect
thereto.
(d)
Notices.
Give
prompt written notice to Holder of (a) 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 Project which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect
(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), or (b) any proposal
by any
public authority to acquire the Project or any portion thereof.
(e)
Expenses.
Pay all
reasonable out-of-pocket expenses (including fees and disbursements of counsel,
including special local counsel) of Holder, incident to any amendments, waivers
and renewals of this Note.
16
(f)
Debt
Papers.
Comply
with and observe all terms and conditions of the Debt Papers to which it
is
subject.
(g) INDEMNIFICATION.
INDEMNIFY AND HOLD HARMLESS HOLDER AND ITS DIRECTORS, OFFICERS, EMPLOYEES,
ATTORNEYS AND AGENTS (THE "INDEMNIFIED
PARTIES")
FROM AND AGAINST ALL DAMAGES AND LIABILITIES (COLLECTIVELY AND SEVERALLY,
"LOSSES")
ASSESSED AGAINST ANY OF THEM RESULTING FROM THE CLAIMS OF ANY PARTY RELATING
TO
OR ARISING OUT OF THE TRANSACTIONS CONTEMPLATED HEREBY, EXCEPT FOR LOSSES
CAUSED
BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY,
AND
REIMBURSE EACH INDEMNIFIED PARTY FOR ANY EXPENSES (INCLUDING THE FEES AND
DISBURSEMENTS OF LEGAL COUNSEL) REASONABLY INCURRED IN CONNECTION WITH THE
INVESTIGATION OF, PREPARATION FOR OR DEFENSE OF ANY ACTUAL OR THREATENED
CLAIM,
ACTION OR PROCEEDING ARISING THEREFROM (INCLUDING ANY SUCH COSTS OF RESPONDING
TO DISCOVERY REQUEST OR SUBPOENAS), REGARDLESS OF WHETHER HOLDER OR SUCH
OTHER
INDEMNIFIED PERSON IS A PARTY THERETO. WITHOUT DEROGATING THE PROVISIONS
OF
SECTION
20 BELOW,
IT IS ACKNOWLEDGED AND AGREED BY MAKER THAT THE INDEMNIFICATION RIGHTS OF
THE
INDEMNIFIED PARTIES HEREUNDER ARE IN ADDITION TO AND CUMULATIVE WITH ALL
OTHER
RIGHTS OF THE INDEMNIFIED PARTIES. WITH REFERENCE TO THE PROVISIONS SET FORTH
ABOVE IN THIS SECTION
6(g)
FOR PAYMENT BY MAKER OF ATTORNEYS' FEES INCURRED BY THE INDEMNIFIED PARTIES
IN
ANY ACTION OR CLAIM BROUGHT BY A THIRD PARTY, MAKER SHALL, IF IT ADMITS
LIABILITY HEREUNDER TO ANY INDEMNIFIED PARTY, DILIGENTLY DEFEND SUCH INDEMNIFIED
PARTY AND DILIGENTLY CONDUCT THE DEFENSE. IF HOLDER OR ANY OTHER SUCH
INDEMNIFIED PARTY DESIRES TO ENGAGE SEPARATE COUNSEL, IT MAY DO SO AT ITS
OWN
EXPENSE; PROVIDED, HOWEVER, THAT SUCH LIMITATION ON THE OBLIGATION OF MAKER
TO
PAY THE FEES OF SEPARATE COUNSEL FOR SUCH INDEMNIFIED PARTY SHALL NOT APPLY
IF
SUCH INDEMNIFIED PARTY HAS RETAINED SAID SEPARATE COUNSEL BECAUSE OF A
REASONABLE BELIEF THAT MAKER IS NOT DILIGENTLY DEFENDING IT AND/OR NOT
DILIGENTLY CONDUCTING THE DEFENSE AND SO NOTIFIES MAKER. THE OBLIGATIONS
OF
MAKER UNDER THIS SECTION
6(g)
SHALL SURVIVE REPAYMENT IN FULL OF THE INDEBTEDNESS EVIDENCED HEREBY. EXCEPT
AS
OTHERWISE PROVIDED, IT IS THE INTENT OF THIS SECTION
6(g)
THAT THE MAKER SHALL INDEMNIFY AND HOLD HARMLESS THE INDEMNIFIED PARTIES
FROM
LOSSES OCCASIONED BY THE ACTS OR OMISSIONS, INCLUDING, WITHOUT LIMITATION,
NEGLIGENCE, OF THE INDEMNIFIED PARTIES.
17
(g)
Co-operation.
Execute
and deliver to Holder 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 Holder to effectuate the provisions and purposes
of
this Note.
(h)
Requirements
of Law.
Comply
at all times with all Requirements of Law.
(i)
Management
Agreement.
Cause
or permit the Project to be initially 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 "Project
Manager")
approved by the Holder, which Project Manager shall be employed pursuant
to an
agreement (the "Property
Management Agreement")
approved by the Holder. In no event shall the fees paid (or required to be
paid)
to the Project Manager exceed six percent (6%) of Gross Receipts for any
time
period. The Maker agrees, upon request of the Holder, to exercise its right
to
terminate any Project Manager upon the occurrence and continuance of (i)
an
Event of Default, (ii) a Sale of U-Haul International, Inc. or such Project
Manager, (iii) a breach by such Project Manager of its respective Property
Management Agreement, or (iv) the Net Cash Flow prior to subtracting Interest
shall fall twenty percent (20%) or more for one complete Loan Year.
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 Loan; (ii) Maker’s
contingent obligations under the Senior Loans; (iii) non-delinquent taxes;
(iv)
unsecured debt incurred in the ordinary course of business and (v) other
indebtedness owed to Payee and its affiliates.
(b)
Consolidation
and Merger.
Liquidate or dissolve or enter into any consolidation, merger, partnership,
joint venture, syndicate or other combination (except for a merger or
consolidation for the purpose of, and having the effect of changing Maker's
jurisdiction of organization).
(c)
Transactions
with Affiliates.
Purchase, acquire or lease any property from, or sell, transfer or lease
any
property to, or lend or advance any money to, or borrow any money from, or
guarantee any obligation of, or acquire any stock, obligations or securities
of,
or enter into any merger or consolidation agreement, or any management or
similar agreement with, any Affiliate, or enter into any other transaction
or
arrangement or make any payment to (including, without limitation, on account
of
any management fees, service fees, office charges, consulting fees, technical
services charges or tax sharing charges) or otherwise deal with, in the ordinary
course of business or otherwise, any Affiliate on terms which are unreasonably
burdensome or unfair, except (i) transactions relating to the sharing of
overhead expenses, including, without limitation, managerial, payroll and
accounting and legal expenses, for which charges assessed against Maker are
not
greater than would be
18
incurred by Maker in similar transactions with non-Affiliates, or (ii)
fair and
reasonable transactions between Maker and U-Haul International, Inc. and
its
related companies.
(d)
Sale
of Interests in the Project or in the Maker.
Without
obtaining the prior written consent of Holder (which Holder may withhold
or
condition in its sole and absolute discretion), cause, permit or acquiesce
in
any Sale or Financing.
(e)
Distributions.
Notwithstanding anything to the contrary contained in this Note or the Debt
Papers, Maker shall not make any distributions to any of its partners, except
for distributions of amounts not in excess of (i) the Catch-Up Amount for
any
quarter, (ii) any Net Cash Flow for any quarter remaining after the payment
to
Holder of all Interest and the Catch-Up Amount payable for and with respect
to
such quarter, and (iii) upon the Sale or Financing any Net Sale or Financing
proceeds remaining after payment to Holder of the amounts to which Holder
is
entitled hereunder in connection therewith.
(f)
Business.
Engage,
directly or indirectly, in any business other than that arising out of the
issuance of this Note, entering into the Debt Papers, taking the actions
required to be performed under the Debt Papers and operating the Mortgaged
Properties.
(g)
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.
(h)
No
Joint Venture.
Engage
in a joint venture or become a partner with any other Person.
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, Interest or
Yield
Maintenance Premium 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 notice thereof to the Maker;
(b)
The
failure by the Maker to deposit in any account established and maintained
pursuant to any collection account agreement any amount required to be deposited
in such account within 2 days of when required pursuant to the terms of such
collection account agreement;
(c)
Any
representation, warranty or certification made by Maker under any Debt Paper
or
in any report, certificate or financial statement delivered to the Holder
under
or in connection with any Debt Paper is materially inaccurate or incomplete
as
of the date made; provided, however, that such inaccurate or incomplete
representation, warranty or
19
certification is material and cannot be cured without material prejudice
to the
Holder within 30 days written notice thereof to the Maker;
(d)
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;
(e)
The
occurrence of any Default under the Debt Papers;
(f)
(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 Holder'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;
(g)
One or
more judgments or decrees in an aggregate amount exceeding $1,000,000.00
shall
be entered against Maker and all such judgments or decrees shall not have
been
vacated, discharged, stayed, satisfied, or bonded to Holder's satisfaction
pending appeal within 60 days from the first entry thereof; or
(h)
The
occurrence of a Event of Default under the promissory notes evidencing the
Senior Loans.
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
together with the Yield Maintenance Premium, if any, and other charges payable
pursuant to the Debt Papers shall, at the option of the Holder hereof and
without demand or notice of any kind to the undersigned or any other person,
immediately become and be due and payable in full (except that such acceleration
shall
20
occur
automatically upon the occurrence of any Event of Default described in the
preceding clause (e) of this Section 8, without further action or decision
by
Holder); and the Holder shall have and may exercise any and all rights and
remedies available at law or in equity and also any and all rights and remedies
provided in the Mortgage and any of the other Security Documents.
9. Offset.
In
addition to (and not in limitation of) any rights of offset that the Holder
hereof may have under applicable law, upon the occurrence of any Event of
Default hereunder the Holder 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 Holder hereof.
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 Holder hereof may be allocated
by
the Holder to principal, Interest or other charges or amounts as the Holder
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 and all
guarantors and endorsers, 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 or in the Security Documents) 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 Holder 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 Holder hereof
promptly after the occurrence of any Event of Default hereunder to exercise
its
right to declare the indebtedness remaining
21
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 occurrence of any Event
of
Default under this Note, the undersigned will pay to the Holder hereof, on
demand, all costs of collection or enforcement of every kind, including (but
not
limited to) all attorneys' fees, court costs, and other costs and expenses
of
every kind incurred by the Holder hereof, on demand, all costs of collection
or
enforcement of every kind, including (but not limited to) all attorneys'
fees,
court costs, and other costs and expenses of every kind incurred by the Holder
hereof in connection with the protection or realization of any or all of
the
security for this Note, whether or not any lawsuit is ever filed with respect
thereto.
14.
The
Debt Papers.
This
Note is unsecured. The Senior Loans are secured by, inter alia,
certain
Deeds of Trust (and Mortgages, and Deeds to Secure Debt), Assignment of Leases
and Rents, Security Agreement and Financing Statement, made and granted by
subsidiaries of Maker to or for the benefit of the Senior Holders, respectively,
which create liens on real estate in the Project and which also creates a
security interest in personal property located thereat or utilized in connection
therewith, and each and every additional document or instrument which may
at any
time be delivered to the Senior Holders as security under the Senior Loans,
as
any of the same may at any time or from time to time be amended, modified
or
restated, and together with all substitutions and replacements therefor,
are
sometimes referred to collectively herein as the "Security
Documents").
Reference should be made to the Security Documents for a description of the
property encumbered thereby and the nature and extent of the security thereof.
The Security Documents and all other documents executed in connection with
the
Senior Loans are sometimes referred to herein collectively herein as the
"Debt
Papers".
Notwithstanding anything to the contrary set forth or implied herein,
this
Note is not indebtedness of the Borrowers or any of them, and is not secured,
whether directly or indirectly, by the Project or any collateral or property
owned or operated by the Borrowers, or any of them.
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] [SAC Financial Corporation]
715
South
Country Club Drive
Mesa,
AZ
85210
Attention:
President
If
to the
Holder: c/o
U-Haul International, Inc.
2721
North Central Avenue
22
Phoenix,
Arizona 85004
Attention:
Treasurer
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 or under the other Debt
Papers, 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
the
Holder'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. HOLDER
NOT PARTNER OF MAKER.
UNDER NO CIRCUMSTANCES WHATSOEVER SHALL THE HOLDER OF THIS NOTE BE DEEMED
TO BE
A PARTNER OR A CO-VENTURER WITH MAKER OR WITH ANY OTHER PERSON. MAKER SHALL
NOT
REPRESENT TO ANY PERSON THAT THE MAKER AND THE HOLDER HEREOF ARE PARTNERS
OR
CO-VENTURERS. ANY AND ALL ACTIONS BY THE HOLDER HEREOF IN EXERCISING ANY
RIGHTS,
REMEDIES OR PRIVILEGES HEREOF OR IN ENFORCING THIS NOTE OR THE OTHER DEBT
PAPERS
WILL BE EXERCISED BY THE HOLDER SOLELY IN FURTHERANCE OF ITS ROLE AS A SECURED
LENDER.
20.
Intentionally
omitted.
21. 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 ANY DEBT PAPERS
TO
WHICH IT IS A PARTY, 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
OR ANY DEBT PAPERS, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED
BEFORE A COURT AND NOT BEFORE A JURY.
23
22.
Entire
Agreement.
This
Note and the other Security Documents constitute 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 or the Security
Documents.
[THIS
SPACE INTENTIONALLY LEFT BLANK]
24
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] [SAC FINANCIAL CORPORATION]
a
Nevada
corporation
By:
__________________________________
Its:
___________________________________
25
Schedule
A
Description
of the Project
Number Name Street
Address
City State
26
PROPERTY
MANAGEMENT AGREEMENT
THIS
PROPERTY MANAGEMENT AGREEMENT (this “Agreement”) is entered into as of
______________________ among [SAC Entity], with its principal place of business
at 715 South Country Club Drive, Mesa, AZ 85210 (“Owner”), and the property
managers identified on Exhibit
A
attached
hereto and incorporated herein by reference (each such property manager is
respectively referred to herein as "U-Haul").
RECITALS
A.
Owner
owns the real property and self-storage related improvements thereon located
at
the street addresses identified on Exhibit A hereto (hereinafter, collectively
the “Property”).
B.
Owner
intends that the Property be rented on a space-by-space retail basis to
corporations, partnerships, individuals and/or other entities for use as
self-storage facilities.
C.
Owner
desires that U-Haul manage the Property and U-Haul desires to act as the
property manager for the Property, all in accordance with the terms and
conditions of this Agreement and as more specifically designated on Exhibit
A
hereto.
NOW,
THEREFORE, in consideration of the mutual covenants herein contained, Owner
and
U-Haul hereby agree as follows.
1.
Employment.
(a)
Owner
hereby retains U-Haul, and U-Haul agrees to act as manager of the Property
upon
the terms and conditions hereinafter set forth.
(b)
Owner
acknowledges that U-Haul, and/or U-Haul affiliates, is in the business of
managing self-storage facilities, both for its own account and for the account
of others. It is hereby expressly agreed that notwithstanding this Agreement,
U-Haul and such affiliates may continue to engage in such activities, may
manage
facilities other than those presently managed by U-Haul and its affiliates
(whether or not such other facilities may be in direct or indirect competition
with Owner) and may in the future engage in other business which may compete
directly or indirectly with activities of Owner.
(c)
In
the performance of their respective duties under this Agreement, each U-Haul
property manager shall occupy the position of an independent contractor with
respect to Owner. Nothing contained herein shall be construed as making the
parties hereto (or any of them) partners or joint venturors, nor (except
as
expressly otherwise provided for herein) construed as making U-Haul an agent
or
employee of Owner or of any other U-Haul property manager
hereunder.
2.
Duties
and Authority of U-Haul.
(a)
General Duties and Authority.
Subject
only to the restrictions and limitations provided in paragraphs (o) and (p)
of
this Section 2 and the right of Owner to terminate this Agreement as provided
in
Section 6 hereof, U-Haul shall have the sole and exclusive authority to fully
manage the Property and supervise and direct the business and affairs associated
or related to the daily operation thereof, and, to that end on behalf of
Owner,
to execute such documents and instruments as, in the sole judgment of U-Haul,
are reasonably necessary or advisable under the circumstances in order to
fulfill U-Haul’s duties hereunder. Such duties and authority shall include,
without limitation, those set forth below.
(b)
Renting of the Property.
U-Haul
shall establish policies and procedures for the marketing activities for
the
Property, and may advertise the Property through such media as U-Haul deems
advisable, including, without limitation, advertising with the Yellow Pages.
U-Haul shall have the sole discretion, which discretion shall be exercised
in
good faith, to establish the terms and conditions of occupancy by the tenants
of
the Property, and U-Haul is hereby authorized to enter into rental agreements
on
behalf and for the account of Owner with such tenants and to collect rent
from
such tenants. U-Haul may jointly advertise the Property with other properties
owned or managed by U-Haul, and in that event, U-Haul shall reasonably allocate
the cost of such advertising among such properties.
(c)
Repair,
Maintenance and Improvements.
U-Haul
shall make, execute, supervise and have control over the making and executing
of
all decisions concerning the acquisition of furniture, fixtures and supplies
for
the Property, and may purchase, lease or otherwise acquire the same on behalf
of
Owner. U-Haul shall make and execute, or supervise and have control over
the
making and executing of all decisions concerning the maintenance, repair,
and
landscaping of the Property. U-Haul shall, on behalf of Owner, negotiate
and
contract for and supervise the installation of all capital improvements related
to the Property; provided, however, that U-Haul agrees to secure the prior
written approval of Owner on all such expenditures in excess of $5,000.00
for
any one item, except monthly or recurring operating charges and/or emergency
repairs if in the opinion of U-Haul such emergency-related expenditures are
necessary to protect the Property from damage or to maintain services to
the
tenants as called for in their respective leases.
(d)
Personnel.
U-Haul
shall select all vendors, suppliers, contractors, subcontractors and employees
with respect to the Property and shall hire, discharge and supervise all
labor
and employees required for the operation and maintenance of the Property.
Any
employees so hired shall be employees of U-Haul, and shall be carried on
the
payroll of U-Haul. Employees may include, but will not be limited to, on-site
resident managers, on-site assistant managers, and relief managers located,
rendering services, or performing activities on the Property in connection
with
its operation
and
management. The cost of employing such persons shall not exceed prevailing
rates
for comparable persons performing the same or similar services with respect
to
real estate similar to the Property.
(e) Agreements.
U-Haul
shall negotiate and execute on behalf of Owner such agreements which U-Haul
deems necessary or advisable for the furnishing of utilities, services,
concessions and supplies, for the maintenance, repair and operation of the
Property and such other agreements which may benefit the Property or be
incidental to the matters for which U-Haul is responsible
hereunder.
(f)
Other Decisions.
U-Haul
shall make all decisions in connection with the daily operation of the
Property.
(g)
Regulations and Permits.
U-Haul
shall comply in all material respects with any statute, ordinance, law, rule,
regulation or order of any governmental or regulatory body, having jurisdiction
over the Property, respecting the use of the Property or the maintenance
or
operation thereof. U-Haul shall apply for and attempt to obtain and maintain,
on
behalf of Owner, all licenses and permits required or advisable (in the sole
judgment of U-Haul) in connection with the management and operation of the
Property.
(h)
Records and Reports of Disbursements and Collections.
U-Haul
shall establish, supervise, direct and maintain the operation of a system
of
record keeping and bookkeeping with respect to all receipts and disbursements
in
connection with the management and operation of the Property. The books,
records
and accounts shall be maintained at the U-Haul office or at such other location
as U-Haul shall determine, and shall be available and open to examination
and
audit quarterly by Owner, its representatives, any mortgagee of the Property,
and such mortgagee's representative. On or before thirty (30) days after
the
close of each quarter, U-Haul shall cause to be prepared and delivered to
Owner,
a monthly statement of receipts, expenses and charges, together with a statement
of the disbursements made by U-Haul during such period on Owner’s
behalf.
(i)
[Reserved].
(j)
Collection.
U-Haul
shall be responsible for the billing and collection of all accounts receivable
and for payment of all accounts payable with respect to the Property and
shall
be responsible for establishing policies and procedures to minimize the amount
of bad debts.
(k) Legal
Actions.
U-Haul
shall cause to be instituted, on behalf and in the name of Owner, any and
all
legal actions or proceedings U-Haul deems necessary or advisable to collect
charges, rent or other income due to Owner with respect to the Property and
to
oust or dispossess tenants or other persons unlawfully in possession under
any
lease,
license
concession agreement or otherwise, and to collect damages for breach thereof
or
default thereunder by such tenant, licensee, concessionaire or
occupant.
(l)
Insurance.
U-Haul
shall use its best efforts to assure that there is obtained and maintained
in
force, fire, comprehensive liability and other insurance policies in amounts
generally carried with respect to similar facilities. U-Haul may in its
discretion obtain employee theft or similar insurance in amounts and with
such
deductibles as U-Haul deems appropriate. U-Haul shall promptly provide Owner
with such certificates of insurance as Owner may reasonably request in writing,
evidencing such insurance coverage.
(m)
Taxes.
During
the term of this Agreement, U-Haul shall pay from Owner’s funds, prior to
delinquency, all real estate taxes, personal property taxes, and all other
taxes
assessed to, or levied upon, the Property. If required by the holder of any
note
secured by the Property, U-Haul will set aside, from Owner's funds, a reserve
from each month’s rent and other income collected, in an amount required by said
holder for purposes of payment of real property taxes.
(n)
[Reserved].
(o)
Limitations on U-Haul Authority.
Notwithstanding anything to the contrary set forth in this Section 2, U-Haul
shall not, without obtaining the prior written consent of Owner, (i) rent
storage space in the Property by written lease or agreement for a stated
term in
excess of one year, (ii) alter the building or other structures of the Property
in any material manner; (iii) make any other agreements which exceed a term
of
one year and are not terminable on thirty day’s notice at the will of Owner,
without penalty, payment or surcharge; (iv) act in violation of any law;
or (v)
act in violation of any duty or responsibility of Owner under any mortgage
loan
secured by the Property.
(p)
Shared
Expenses.
Owner
acknowledges that certain economies may be achieved with respect to certain
expenses to be incurred by U-Haul on behalf of Owner hereunder if materials,
supplies, insurance or services are purchased by U-Haul in quantity for use
not
only in connection with the Property but in connection with other properties
owned or managed by U-Haul or its affiliates. U-Haul shall have the right
to
purchase such materials, supplies, insurance and/or services in its own name
and
charge Owner a pro rata allocable share of the cost of the foregoing; provided,
however, that the pro rata cost of such purchase to Owner shall not result
in
expenses greater than would otherwise be incurred at competitive prices and
terms available in the area where the Property is located; and provided further,
U-Haul shall give Owner access to records so Owner may review any such expenses
incurred.
(q) Deposit
of Gross Revenues.
All
Gross Revenues (as hereinafter defined) shall be deposited into a bank account
maintained by U-Haul (or its parent company) as for the benefit of the Owner.
To
the extent that the Gross Revenues are deposited into a
collective account maintained by U-Haul (or its parent company) for the benefit
of multiple property owners, U-Haul (or its parent company) shall reconcile
such
account daily and maintain such records as shall clearly identify each day
the
respective interest of each owner in such collective account. Gross Revenues
of
the Owner shall be applied first to the repayment of Owner’s senior debt with
respect to the Property, and then to U-Haul in reimbursement of expenses
and for
management fees as provided under Section 4 below.
3.
Duties
of Owner.
Owner
hereby agrees to cooperate with U-Haul in the performance of U-Haul’s duties
under this Agreement and to that end, upon the request of U-Haul, to provide,
at
such rental charges, if any, as are deemed appropriate, reasonable office
space
for U-Haul employees on the premises of the Property and to give U-Haul access
to all files, books and records of Owner relevant to the Property. Owner
shall
not unreasonably withhold or delay any consent or authorization to U-Haul
required or appropriate under this Agreement.
4.
Compensation
of U-Haul.
(a) Management
Fee.
Owner
shall pay to U-Haul as the full amount due for the services herein provided
a
fee (the “Management Fee”) equal to six percent (6%) of the “Gross Revenue”
derived from or connected with the Property so managed by U-Haul hereunder.
The
term “Gross Revenue” shall mean all receipts (excluding security deposits unless
and until Owner recognizes the same as income) of Owner (whether or not received
by U-Haul on behalf or for the account of Owner) arising from the operation
of
the Property, including without limitation, rental payments of lessees of
space
in the Property, vending machine or concessionaire revenues, maintenance
charges, if any, paid by the tenants of the Property in addition to basic
rent,
parking fees, if any, and all monies whether or not otherwise described herein
paid for the use of the Property. “Gross Revenue” shall be determined on a cash
basis. The Management Fee shall be paid promptly at the end of each calendar
quarter and shall be calculated on the basis of the “Gross Revenue” of such
preceding quarter. The Management Fee shall be paid to each U-Haul property
manager herein identified based on the Gross Revenue of each respective Property
for which such property manager is responsible as set forth on Exhibit
A
hereto.
Each property manager agrees that its monthly Management Fee shall be
subordinate to that month's principal balance and interest payment on any
first
lien position mortgage loan on the Property.
It is understood and agreed that the Management Fee will not be reduced by
the
cost to Owner of those employees and independent contractors engaged by or
for
Owner, including but not limited to the categories of personnel specifically
referred to in Section 2(d). Except as provided in this Section 4, it is
further
understood and agreed that U
-Haul
shall not be entitled to additional compensation of any kind in connection
with
the performance by it of its duties under this Agreement.
(b) Reimbursement
of Expenses. In
addition to the Management Fee described above, U-Haul shall be entitled
to
reimbursement from Owner, on a quarterly basis, for all out-of-pocket expenses
incurred by U-Haul hereunder in connection with the management and operation
of
the Property, including, without limitation, taxes, insurance, operational
expenses, overhead, litigation and dispute resolution related expenses, capital
improvement expenses, and costs of sales.
5.
Use
of
Trademarks, Service Marks and Related Items.
Owner
acknowledges the significant value of the “U-Haul” name in the operations of
Owner's property and it is therefore understood and agreed that the name,
trademark and service mark, “U-Haul”, and related marks, slogans, caricatures,
designs and other trade or service items shall be utilized for the non-exclusive
benefit of Owner in the rental and operation of the Property, and in comparable
operations elsewhere. It is further understood and agreed that this name
and all
such marks, slogans, caricatures, designs and other trade or service items
shall
remain and be at all times the property of U-Haul and its affiliates, and
that,
except during the term hereof and as expressly provided herein, Owner shall
have
no right whatsoever therein. Owner agrees that during the term of this agreement
the sign faces at the property will have the name “U-Haul.” The U-Haul sign
faces will be paid for by Owner. Upon termination of this agreement at any
time
for any reason, all such use by and for the benefit of Owner of any such
name,
mark, slogan, caricature, design or other trade or service item in connection
with the Property shall, in any event, be terminated and any signs bearing
any
of the foregoing shall be removed from view and no longer used by Owner.
In
addition, upon termination of this Agreement at any time for any reason,
Owner
shall not enter into any new leases of Property using the U-Haul lease form
or
use other forms prepared by U-Haul. It is understood and agreed that U-Haul
will
use and shall be unrestricted in its use of such name, mark, slogan, caricature,
design or other trade or service item in the management and operation of
other
storage facilities both during and after the expiration or termination of
the
term of this Agreement.
6.
Termination.
Owner
or
U-Haul may terminate this Agreement with or without cause by giving not less
than thirty days’ written notice to the other party pursuant to Section 11
hereof. In addition, if Owner fails to pay U-Haul any amounts owed under
this
Agreement when due, U-Haul may terminate this Agreement by giving Owner not
less
than ten days written notice pursuant to Section 11 hereof. Notwithstanding
the
foregoing, however, U-Haul shall not resign as property manager of the Property
until a nationally recognized and reputable successor property manager is
available and prepared to assume property management responsibilities with
respect to the Property in question Upon termination
of
this
Agreement, U-Haul shall promptly return to Owner all monies, books, records
and
other materials held by U-Haul for or on behalf of Owner. In addition, if
U-Haul
has contracted to advertise the Property in the Yellow Pages, Owner shall,
at
the option of U-Haul, continue to be responsible for the cost of such
advertisement and shall either (i) pay U-Haul the remaining amount due under
such contract in a lump sum; or (ii) pay U-Haul monthly for the amount due
under
such contract.
7.
Indemnification.
U-Haul
hereby agrees to indemnify and hold Owner, all persons and companies affiliated
with Owner, and all officers, shareholders, directors, employees and agents
of
Owner and of any affiliated companies or persons (collectively, the “Indemnified
Persons”) harmless from any and all costs, expenses, attorneys’ fees, suits,
liabilities, judgments, damages, and claims in connection with the management
of
the Property and operations thereon (including the loss of use thereof following
any damage, injury or destruction), arising from any cause or matter whatsoever
except to the extent attributable to the willful misconduct or gross negligence
on the part of the Indemnified Persons.
8.
Assignment.
This
Agreement may be assigned by Owner in connection with any mortgage loan on
the
Property, whether pursuant to a conditional or unconditional, absolute
assignment. U-Haul shall have the right to assign this Agreement to an affiliate
or a wholly or majority owned subsidiary; provided, however, any such assignee
must assume all obligations of U-Haul hereunder, Owner’s rights hereunder will
be enforceable against any such assignee and U-Haul shall not be released
from
its liabilities hereunder unless Owner shall expressly agree thereto in
writing.
9.
Headings.
The
headings contained herein are for convenience of reference only and are not
intended to define, limit or describe the scope or intent of any provision
of
this Agreement.
10.
Governing
Law.
The
validity of this Agreement, the construction of its terms and the interpretation
of the rights and duties of the parties shall be governed by the internal
laws
of the State of Arizona.
11.
Notices.
Any
notice required or permitted herein shall be in writing and shall be personally
delivered
or
mailed
first class postage prepaid or delivered by an overnight delivery service
to the
respective addresses of the parties set forth below their signatures on the
signature page thereof, or to such other address as any party may give to
the
other in writing. Any notice required by this Agreement will be deemed to
have
been given when personally served or one day after delivery to an overnight
delivery service or five days after deposit in the first class
mail.
12.
Severability.
Should
any term or provision hereof be deemed invalid, void or unenforceable either
in
its entirety or in a particular application, the remainder of this Agreement
shall nonetheless remain in full force and effect and, if the subject term
or
provision is deemed to be invalid, void or unenforceable only with respect
to a
particular application, such term or provision shall remain in full force
and
effect with respect to all other applications.
13.
Successors.
This
Agreement shall be binding upon and inure to the benefit of the respective
parties hereto and their permitted assigns and successors in
interest.
14.
Attorneys’
Fees.
If
it
shall become necessary for any party hereto to engage attorneys to institute
legal action for the purpose of enforcing their respective rights hereunder
or
for the purpose of defending legal action brought by the other party hereto,
the
party or parties prevailing in such litigation shall be entitled to receive
all
costs, expenses and fees (including reasonable attorneys’ fees) incurred by it
in such litigation (including appeals).
15.
Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
16.
Scope
of Property Manager Responsibility.
The
duties, obligations and liability of each property manager identified herein
shall extend only so far as to relate to the Property for which such property
manager is managing located in the domicile state of such property manager,
as
more specifically described on Exhibit A hereto, and no individual property
manager hereunder shall be liable for the acts or omissions of any other
property manager hereunder. Each property manager shall use its best efforts
to
assist Owner in fulfilling Owner's obligations arising under any loan to
Owner
that is secured by the Property, including but not limited to preparing and
providing financial and accounting reports, and maintaining the Property.
Each
property manager agrees that it will perform its obligations hereunder according
to reasonable industry standards, in good faith, and in a commercially
reasonable manner. U-Haul agrees that, in discharging its duties hereunder,
it
will not have any relationship with any of its affiliates that would be less
favorable to Owner than would reasonably be available in a transaction with
an
unaffiliated party.
[Rest
of
page intentionally left blank]
IN
WITNESS WHEREOF, the parties hereto execute this Agreement as of the date
first
above written.
“Owner”
[SAC
Entity]
By:
_________________________________
Its:
__________________________________
[Signature
of U-Haul on next page]
"U-Haul"
[U-Haul
Entities]
By:
_________________________________
Its:
__________________________________
Exhibit
A
List
of
Properties and Managers
THIS
PROPERTY MANAGEMENT AGREEMENT (this "Agreement")
is
entered into as of _______________________ among [SAC Entity] ("Owner"),
and
the subsidiaries of U-Haul International, Inc. set forth on the signature
block
hereto ("Manager").
RECITALS
A. Owner
owns the real property and self-storage related improvements thereon located
at
the street addresses identified on Exhibit A hereto (hereinafter, collectively
the “Property”).
B. Owner
intends that the Property be rented on a space-by-space retail basis to
corporations, partnerships, individuals and/or other entities for use as
self-storage facilities.
C. Owner
desires that U-Haul manage the Property and U-Haul desires to act as the
property manager for the Property, all in accordance with the terms and
conditions of this Agreement and as more specifically designated on Exhibit
A
hereto.
NOW,
THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto hereby agree as follows.
| 1. |
Employment.
|
(a) Owner
hereby retains Manager, and Manager agrees to act as manager of the Property
upon the terms and conditions hereinafter set forth.
(b) Owner
acknowledges that Manager, and/or Manager affiliates, is in the business
of
managing self-storage facilities and businesses conducted thereat, including,
but not limited to, the sale of packing supplies and rental of trucks and
equipment, both for its own account and for the account of others. It is
hereby
expressly agreed that notwithstanding this Agreement, Manager and such
affiliates may continue to engage in such activities, may manage facilities
other than those presently managed by Manager and its affiliates (whether
or not
such other facilities may be in direct or indirect competition with Owner)
and
may in the future engage in other business which may compete directly or
indirectly with activities of Owner.
(c) In
the
performance of its duties under this Agreement, Manager shall occupy the
position of an independent contractor with respect to Owner. Nothing contained
herein shall be construed as making the parties hereto (or any of them) partners
or joint venturors, nor construed as making Manager an employee of
Owner.
| 2. |
Duties
and Authority of Manager.
|
Subject
to the terms and conditions of this Agreement:
(a) General
Duties and Authority.
Manager
shall have the sole and exclusive duty and authority to fully manage the
Property and supervise and direct the business and affairs associated or
related
to the daily operation thereof, to collect on behalf of Owner all
(b) Renting
of the Property.
Manager
shall establish policies and procedures for the marketing activities for
the
Property, and shall advertise the Property through such media as Manager
deems
advisable, including, without limitation, advertising with the Yellow Pages.
Manager's marketing activities for the Property shall be consistent with
the
scope and quality implemented by Manager and its affiliates at any other
properties managed by Manager or its affiliates. Manager shall have the sole
discretion, which discretion shall be exercised in good faith, to establish
the
terms and conditions of occupancy by the Owners of the Property, and Manager
is
hereby authorized to enter into rental agreements on behalf and for the account
of Owner with such Owners and to collect rent from such Owners on behalf
and for
the account of Owner. Manager may jointly advertise the Property with other
properties owned or managed by Manager or its Affiliates, and in that event,
Manager shall reasonably allocate the cost of such advertising among such
properties.
(c) Repair,
Maintenance and Improvements.
Manager
shall make, execute, supervise and have control over the making and executing
of
all decisions concerning the acquisition of furniture, fixtures and supplies
for
the Property, and may purchase, lease or otherwise acquire the same on behalf
of
Owner. Manager shall make and execute, or supervise and have control over
the
making and executing of all decisions concerning the maintenance, repair,
and
landscaping of the Property, provided, however, that such maintenance, repair
and landscaping shall be consistent with the maintenance, repair and landscaping
implemented by Manager and its affiliates at any other properties managed
by
Manager or its affiliates. Manager shall, on behalf of Owner, negotiate and
contract for and supervise the installation of all capital improvements related
to the Property; provided, however, that Manager agrees to secure the prior
written approval of Owner on all such expenditures in excess of any threshold
amounts set forth in any loan documents relating to the Property (collectively,
“Loan Documents”) for any one item, except monthly or recurring operating
charges and/or emergency repairs if in the opinion of Manager such
emergency-related expenditures are necessary to protect the Property from
damage
or to maintain services to the Owners or self-storage licensees as called
for in
their respective leases or self-storage agreements.
(d) Personnel.
Manager
shall select all vendors, suppliers, contractors, subcontractors and employees
with respect to the Property and shall hire, discharge and supervise all
labor
and employees required for the operation and maintenance of the Property.
Any
employees so hired shall be employees of Manager, and shall be carried on
the
payroll of Manager. Employees may include, but need not be limited to, on-site
resident managers, on-site assistant managers, and relief managers located,
rendering services, or performing activities on the Property in connection
with
its operation and management. The cost of employing such persons shall not
exceed prevailing rates for comparable persons performing the same or similar
services with respect to real estate similar to the Property in the general
vicinity of each
2
(e) Service
Agreements.
Manager
shall negotiate and execute on behalf of Owner such agreements which Manager
deems necessary or advisable for the furnishing of utilities, services,
concessions and supplies, for the maintenance, repair and operation of the
Property and such other agreements which may benefit the Property or be
incidental to the matters for which Manager is responsible
hereunder.
(f) Other
Decisions.
Manager
shall make the decisions in connection with the day-to-day operations of
the
Property.
(g) Regulations
and Permits.
Manager
shall comply in all respects with any statute, ordinance, law, rule, regulation
or order of any governmental or regulatory body, having jurisdiction over
the
Property (collectively, "Laws"), respecting the use of the Property or the
maintenance or operation thereof, the non-compliance with which could reasonably
be expected to have a material adverse effect on Owner or any Property. Manager
shall apply for and obtain and maintain, on behalf of Owner, all licenses
and
permits required or advisable (in the reasonable judgment of Manager) in
connection with the management and operation of the Property. Notwithstanding
the foregoing, Manager shall be permitted to contest any Applicable Laws
to the
extent and pursuant to the same conditions that Owner is permitted to contest
any Laws under the Loan Documents.
(h) Records
and Reports of Disbursements and Collections.
Manager
shall establish, supervise, direct and maintain the operation of a system
of
record keeping and bookkeeping with respect to all receipts and disbursements
in
connection with the management and operation of the Property. The books,
records
and accounts shall be maintained at the Manager's office or at Owner's office,
or at such other location as Manager and Owner shall determine, and shall
be
available and open to examination and audit quarterly by Owner, its
representatives, and, subject to the terms of the Loan Documents, any mortgagee
of the Property, and such mortgagee's representative. On or before sixty
(60)
days after the close of each quarter, Manager shall cause to be prepared
and
delivered to Owner a monthly statement on a per-Property basis, of receipts,
expenses and charges, together with a statement, on a per-Property basis,
of the
disbursements made by Manager during such period on Owner's behalf.
(i) Collection.
Manager
shall be responsible for the billing and collection of all accounts receivable
and for payment of all accounts payable with respect to the Property and
shall
be responsible for establishing policies and procedures to minimize the amount
of bad debts.
(j) Legal
Actions.
Manager
shall cause to be instituted, on behalf and in its name or in the name of
Owner
as appropriate, any and all legal actions or proceedings Manager deems necessary
or advisable to collect charges, rent or other income due to Owner with respect
to the Property and to oust or dispossess Owners or other persons unlawfully
in
possession under any lease, license, concession agreement or otherwise, and
to
collect damages for breach thereof or default thereunder by such Owner,
licensee, concessionaire or occupant.
3
(k) Insurance.
Manager
shall obtain and maintain (or cause to be obtained and maintained) in full
force
and effect the insurance with respect to the Property and the operation of
Owner's and Manager's business operations thereat, and Manager's employees,
as
required by the Loan Documents.
(l) Taxes.
During
the term of this Agreement, Manager shall pay on behalf of Owner, prior to
delinquency, all real estate taxes, personal property taxes, and all other
taxes
assessed to, or levied upon, the Property. If required by the holder of any
note
secured by the Property, Manager will set aside, from Owner's funds, a reserve
from each month's rent and other income collected, in an amount required
by said
holder for purposes of payment of real property taxes.
(m) Limitations
on Manager Authority.
Notwithstanding anything to the contrary set forth in this Section 2, Manager
shall not, without obtaining the prior written consent of Owner, (i) rent
storage space in the Property by written lease or agreement for a stated
term in
excess of one year unless such lease or agreement is terminable by the giving
of
not more than thirty (30) days written notice, (ii) alter the building or
other
structures of the Property in violation of the Loan Documents; (iii) make
any
other agreements which exceed a term of one year and are not terminable on
thirty day's notice at the will of Owner, without penalty, payment or surcharge;
(iv) act in violation of any Law, or (v) violate any term or condition of
the
Loan Documents.
(n) Shared
Expenses.
Owner
acknowledges that certain economies may be achieved with respect to certain
expenses to be incurred by Manager on behalf of Owner hereunder if materials,
supplies, insurance or services are purchased by Manager in quantity for
use not
only in connection with Owner's business at the Property but in connection
with
other properties owned or managed by Manager or its affiliates. Manager shall
have the right to purchase such materials, supplies, insurance and/or services
in its own name and charge Owner a pro rata allocable share of the cost of
the
foregoing; provided, however, that the pro rata cost of such purchase to
Owner
shall not result in expenses that are either inconsistent with the expenses
of
other "U-Haul branded" locations in the general vicinity of the applicable
Property or greater than would otherwise be incurred at competitive prices
and
terms available in the area where the Property is located; and provided further,
Manager shall give Owner access to records (at no cost to Owner) so Owner
may
review any such expenses incurred.
(o) Deposit
of Gross Revenues.
All
Gross Revenues (as hereinafter defined) shall be deposited into a bank account
maintained by U-Haul (or its parent company) as for the benefit of the Owner.
To
the extent that the Gross Revenues are deposited into a collective account
maintained by U-Haul (or its parent company) for the benefit of multiple
property owners, U-Haul (or its parent company) shall reconcile such account
daily and maintain such records as shall clearly identify each day the
respective interest of each owner in such collective account. Gross Revenues
of
the Owner shall be applied first to the repayment of Owner’s senior debt with
respect to the Property, and then to U-Haul in reimbursement of expenses
and for
management fees as provided under Section 4 below.
(p) Obligations
under Loan Documents and other Material Contracts.
Manager
shall take such actions as are necessary or appropriate under the circumstances
to
4
(q) Obligations
notwithstanding other Tenancy at the Property.
Manager
shall perform all of its obligations under this Agreement in a professional
manner consistent with the standards it employs at all of its managed locations.
| 3. |
Duties
of Owner.
|
Owner
shall cooperate with Manager in the performance of Manager's duties under
this
Agreement and to that end, upon the request of Manager, to provide, at such
rental charges, if any, as are deemed appropriate, reasonable office space
for
Manager employees on the premises of the Property (to the extent available)
and
to give Manager access to all files, books and records of Owner relevant
to the
Property. Owner shall not unreasonably withhold or delay any consent or
authorization to Manager required or appropriate under this Agreement.
| 4. |
Compensation
of Manager.
|
(a) Reimbursement
of Expenses.
Manager
shall be entitled to reimbursement, on a quarterly basis, for all out-of-pocket
reasonable and customary expenses actually incurred by Manager in the discharge
of its duties hereunder. Such reimbursement shall be the obligation of Owner,
whether or not Gross Revenues are sufficient to pay such amounts. If and
to the
extent Gross Revenue for any fiscal quarter shall be in excess of the amounts
necessary to pay current expenses (after payment of all obligations under
the
Loan Documents), at Owner's option the Manager shall hold all or a portion
of
such excess in an interest-bearing escrow account to be applied at Owner's
direction to cover future expenses. Any interest earned thereon shall be
added
to and treated as part of such account.
(b) Management
Fee.
Owner
shall pay to Manager as the full amount due for the services herein provided
a
quarterly fee (the "Management Fee") which shall be four percent (4%) of
the
Property's trailing twelve month Gross Revenue divided by four (4) ("Base
Fee"),
plus an annual incentive fee (the "Incentive Fee") based upon the performance
of
the Property as set forth on Exhibit B hereto. For purposes of this Agreement,
the term "Gross Revenue" shall mean all receipts (excluding security deposits
unless and until Owner recognizes the same as income) of Manager or Owner
(whether or not received by Manager on behalf or for the account of Owner)
arising from the operation of Owner's business at the Property, including
without limitation, rental payments of self-storage customers at the Property,
vending machine or concessionaire revenues, maintenance charges, if any,
paid by
the Owners of the Property in addition to basic rent and parking fees, if
any.
Gross Revenue shall be determined on a cash basis. Subject to the terms of
Sections 2(o), the Management Fee shall be paid promptly, in arrears, within
thirty (30) days of Owner's receipt of the invoice therefor, which invoice
shall
be sent from Manager to Owner following the end of each calendar quarter.
Such
invoice shall be itemized and shall include reasonable detail.
5
Except
as
provided in this Section 4, it is further understood and agreed that Manager
shall not be entitled to additional compensation of any kind in connection
with
the performance by it of its duties under this Agreement.
(c) Inspection
of Books and Records.
Owner
shall have the right, upon prior reasonable notice to Manager, to inspect
Manager's books and records with respect to the Property, to assure that
proper
fees and charges are assessed hereunder. Manager shall cooperate with any
such
inspection. Owner shall bear the cost of any such inspection; provided, however,
that if it is ascertained that Manager has overcharged Owner by more than
5% in
any given quarter, the cost of such inspection shall be borne by Manager.
Manager shall promptly reimburse Owner for any overpayment.
| 5. |
Use
of Trademarks, Service Marks and Related
Items.
|
Owner
acknowledges the significant value of the "U-Haul" name in the operations
of
Owner's property and it is therefore understood and agreed that the name,
trademark and service mark "U-Haul", and related marks, slogans, caricatures,
designs and other trade or service items (the "Manager
Trade Marks")
shall
be utilized for the non-exclusive benefit of Owner in the rental and operation
of the Property, and in comparable operations elsewhere. It is further
understood and agreed that this name and all such marks, slogans, caricatures,
designs and other trade or service items shall remain and be at all times
the
property of Manager and its affiliates, and that, except as expressly provided
in this Agreement, Owner shall have no right whatsoever therein. Owner agrees
that during the term of this agreement the sign faces at the property will
have
the name "U-Haul." The U-Haul sign faces will be paid for by Owner. Unless
Owner
has elected to continue to use the Manager Trade Marks as provided in Section
6
of this Agreement, upon termination of this agreement at any time for any
reason, all such use by and for the benefit of Owner of any such name, mark,
slogan, caricature, design or other trade or service item in connection with
the
Property shall be terminated and any signs bearing any of the foregoing shall
be
removed from view and no longer used by Owner. In addition, upon termination
of
this Agreement at any time for any reason, Owner shall not enter into any
new
leases of Property using the Manager lease form or use other forms prepared
by
Manager. It is understood and agreed that Manager will use and shall be
unrestricted in its use of such name, mark, slogan, caricature, design or
other
trade or service item in the management and operation of other storage
facilities both during and after the expiration or termination of the term
of
this Agreement.
| 6. |
Default;
Termination.
|
(a) Any
material failure by Manager or Owner (a "Defaulting
Party")
to
perform their respective duties or obligations hereunder (other than a default
by Owner under Section 4 of this Agreement), which material failure is not
cured
within thirty (30) calendar days after receipt of written notice of such
failure
from the non-defaulting party, shall constitute an event of default hereunder;
provided, however, the foregoing shall not constitute an event of default
hereunder in the event the Defaulting Party commences cure of such material
failure within such thirty (30) day period and diligently prosecutes the
cure of
such material failure thereafter but in no event shall such extended cure
period
exceed ninety (90) days from the date of receipt by the non-defaulting party
of
written notice of such material default; provided further, however, that
in the
event such material failure constitutes a default under the terms of the
Loan
6
Documents
and the cure period for such matter under the Loan Documents is shorter
than the
cure period specified herein, the cure period specified herein shall
automatically shorten such that it shall match the cure period for such
matter
as specified under the Loan Documents. In addition, following notice to
Manager
of the existence of any such material failure by Manager, Owner shall each
have
the right to cure any such material failure by Manager, and any sums so
expended
in curing shall be owed by Manager to such curing party and may be offset
against any sums owed to Manager under this Agreement.
(b) Any
material failure by Owner to perform its duties or obligations under Section
4,
which material failure is not cured within ten (10) calendar days after receipt
of written notice of such failure from Manager, shall constitute an event
of
default hereunder.
(c) Owner
shall have the right to terminate this Agreement, with or without cause,
by
giving not less than thirty (30) days' written notice to Manager pursuant
to
Section 14 hereof. Manager shall have the right to terminate this Agreement,
with or without cause, by giving not less than ninety (90) days' written
notice
to Owner pursuant to Section 14 hereof.
(d) Upon
termination of this Agreement, (x) Manager shall promptly return to Owner
all
monies, books, records and other materials held by Manager for or on behalf
of
Owner and shall otherwise cooperate with Owner to promote and ensure a smooth
transition to the new manager and (y) Manager shall be entitled to receive
its
Management Fee and reimbursement of expenses through the effective date of
such
termination, including the reimbursement of any prepaid expenses for periods
beyond the date of termination (such as Yellow Pages advertising).
| 7. |
Indemnification.
|
Manager
hereby agrees to indemnify, defend and hold Owner, all persons and companies
affiliated with Owner, and all officers, shareholders, directors, employees
and
agents of Owner and of any affiliated companies or persons (collectively,
the
"Indemnified Persons") harmless from any and all costs, expenses, attorneys'
fees, suits, liabilities, judgments, damages, and claims in connection with
the
management of the Property and operations thereon (including the loss of
use
thereof following any damage, injury or destruction), arising from any cause
or
matter whatsoever, including, without limitation, any environmental condition
or
matter, except to the extent attributable to the willful misconduct or gross
negligence on the part of the Indemnified Persons.
| 8. |
Assignment.
|
Manager
shall not assign this Agreement to any party without the consent of
Owner.
| 9. |
Standard
for Property Manager's
Responsibility.
|
Manager
agrees that it will perform its obligations hereunder according to industry
standards, in good faith, and in a commercially reasonable manner.
7
| 10. |
Estoppel
Certificate.
|
Each
of
Owner and Manager agree to execute and deliver to one another, from time
to
time, within ten (10) business days of the requesting party's written request,
a
statement in writing certifying, to the extent true, that this Agreement
is in
full force and effect, and acknowledging that there are not, to such parties
knowledge, any uncured defaults or specifying such defaults if they are claimed
and any such other matters as may be reasonably requested by such requesting
party.
| 11. |
Term;
Scope.
|
Subject
to the provisions hereof, this Agreement shall have an initial term (such
term,
as extended or renewed in accordance with the provisions hereof, being called
the "Term")
commencing on the date hereof (the "Commencement
Date")
and
ending on the last day of the one hundred and twentieth (120th) calendar
month
next following the date hereof (the "Expiration
Date"),
provided however, the Term shall expire with respect to any individual Property
as to which the Loan Documents have terminated in accordance with the terms
of
the Loan Documents (for instance due to a significant casualty or condemnation).
| 12. |
Headings.
|
The
headings contained herein are for convenience of reference only and are not
intended to define, limit or describe the scope or intent of any provision
of
this Agreement.
| 13. |
Governing
Law.
|
The
validity of this Agreement, the construction of its terms and the interpretation
of the rights and duties of the parties shall be governed by the internal
laws
of the State of Arizona.
| 14. |
Notices.
|
Any
notice required or permitted herein shall be in writing and shall be personally
delivered or mailed first class postage prepaid or delivered by an overnight
delivery service to the respective addresses of the parties set forth above
on
the first page of this Agreement, or to such other address as any party may
give
to the other in writing. Any notice required by this Agreement will be deemed
to
have been given when personally served or one day after delivery to an overnight
delivery service or five days after deposit in the first class mail. Any
notice
to Owner shall be to the attention of President, c/o Jones Vargas, 100 West
Liberty Street, 12th
Floor,
Reno, Nevada 89504. Any notice to Manager shall be to the attention of c/o
U-Haul International, Inc. Legal Dept, 2721 North Central Avenue, Phoenix,
AZ
85004, Attn: General Counsel.
| 15. |
Severability.
|
Should
any term or provision hereof be deemed invalid, void or unenforceable either
in
its entirety or in a particular application, the remainder of this Agreement
shall nonetheless remain in full force and effect and, if the subject term
or
provision is deemed to be invalid, void or unenforceable only with respect
to a
particular application, such term or provision shall remain in full force
and
effect with respect to all other applications.
8
| 16. |
Successors.
|
This
Agreement shall be binding upon and inure to the benefit of the respective
parties hereto and their permitted assigns and successors in
interest.
| 17. |
Attorneys'
Fees.
|
If
it
shall become necessary for any party hereto to engage attorneys to institute
legal action for the purpose of enforcing their respective rights hereunder
or
for the purpose of defending legal action brought by the other party hereto,
the
party or parties prevailing in such litigation shall be entitled to receive
all
costs, expenses and fees (including reasonable attorneys' fees) incurred
by it
in such litigation (including appeals).
18. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
9
IN
WITNESS WHEREOF, the undersigned execute this Agreement as of the date set
forth
above.
“Owner”
[SAC
Entity]
By:
__________________________________
Its:
__________________________________
“Manager”
[U-Haul
entities]
By:
_________________________________
Its:
_________________________________
10
Exhibit
A
List
of Properties
11
Exhibit
B
Management
Fee Incentives
The
following Incentive Fee shall be calculated and, if and to the extent earned,
paid, annually after the end of each fiscal year of Owner:
In
the
event that net operating income of the Property equals or exceeds 110% (but
less
than 120%) of principal and interest under the Loan Documents (“P&I”) for
the prior fiscal year being calculated, the Incentive Fee for such quarter
shall
be 1% of the Property's Gross Revenue for such fiscal year.
In
the
event that net operating income of the Property equals or exceeds 120% (but
less
than 130%) of P&I for the prior fiscal year being calculated, the Incentive
Fee for such quarter shall be 2% of the Property's Gross Revenue for such
fiscal
year.
In
the
event that net operating income of the Property equals or exceeds 130% (but
less
than 140%) of P&I for the prior fiscal year being calculated, the Incentive
Fee for such quarter shall be 3% of the Property's Gross Revenue for such
fiscal
year.
In
the
event that net operating income of the Property equals or exceeds 140% (but
less
than 150%) of P&I for the prior fiscal year being calculated, the Incentive
Fee for such quarter shall be 4% of the Property's Gross Revenue for such
fiscal
year.
In
the
event that net operating income of the Property equals or exceeds 150% of
P&I for the prior fiscal year being calculated, the Incentive Fee for such
quarter shall be 6% of the Property's Gross Revenue for such fiscal
year.
12
DEALERSHIP
CONTRACT
Month
Day
Year
THIS
AGREEMENT is between U-HAUL CO.
OF ("U-Haul")
located at the business mailing address set forth hereafter
and
("Dealer")
(Printe
Dealer's Name) (Dealer Code)
located
at the business mailing address set forth hereafter.
RECITALS
U-Haul
is
in the do-it-yourself moving business of renting trucks, trailers and support
rental equipment (the "Equipment"). U-Haul offers the Equipment, in part,
through a network of independent dealers that generally operate independent
businesses. Such dealers act as agents of U-Haul for purposes of renting
the
Equipment. Dealer operates an independent business at the site identified
hereafter (the
"Dealer
Location").
Dealer
desires to become a U-Haul dealer and further desires to benefit from the
programs generally offered by U-Haul to dealers, on the terms and conditions
set
forth herein.
AGREEMENT
1.
Dealership.
U-Haul
hereby appoints Dealer as an agent for the Equipment for and on behalf of
U-Haul. Dealer acknowledges
that the Equipment is consigned, and title to the Equipment shall
remain
in
U-Haul and/or
its
affiliates at all times. Dealer agrees to conduct the U-Haul dealership only
at
the Dealer Location.
2.
Commissions.
|
U-Haul
shall pay to Dealer commissions (the "Commissions") on the gross
revenue
from
the rental of the Equipment (the "Commissionable Fees"). Commissionable
Fees do not include
revenue from the collection of sales tax, deposits, distribution
fees,
Canadian duty fees, "SAFEMOVE" fees, "SAFETOW" fees, collection
or credit
fees. The Commissions shall be based on the following
schedule.
|
EQUIPMENT COMMISSION
PERCENTAGES
| 1. |
Trailers
and standard rental equipment
(except
auto transports,tow dollies and motor
vehicles)
30% (20% for ONE-WAY
RENTALS)
|
2. Motor
Vehicles
15%
3. Auto
transports
and tow dollies
20%
|
All
gross revenue from the rental of the Equipment shall be remitted
at least
weekly by Dealer to U-Haul as directed by U-Haul. Each month U-Haul
shall cause to
be
mailed to Dealer a check in the amount of the Commissions (as adjusted
for
applicable deductions, chargebacks and adjustments) earned by Dealer
for
the rental of the Equipment reported during the preceding month.
U-Haul
shalt pay to Dealer an additional commission incentive in the amount
set
forth below on all Commissionable Fees for every month in which
Dealer has
strictly complied with all requirements set forth in
paragraph 3.
|
|
Dealer
Class
|
ADDITIONAL
COMMISSIONS INCENTIVE
|
Percent
|
|
"AAA"
|
Attaining
"A" performance level, rental of trailers, and being open 7 days
a
week,
|
5%
|
|
"AA"
|
Attaining
"A" performance level, and either (i) rental of trailers, or
(ii) being open 7 days a week
|
4%
|
|
"A"
|
Rental
of all motor vehicles, auto transport, tow dollies and other
support rental items
|
3%
|
SELECT
DEALER CLASS: "AAA" "AA" "A"
Note:
Dealer
class
may
change automatically if Dealer qualifies for or
fails
to
meet a
particular classification as
described
above.
3.
Commission
Incentive Requirements. Dealer
shall mail postmarked Monday of every
week to U-Haul, as directed by U-Haul an accurate report of the
Dealer's
rental
transactions for the seven days preceding that Monday and a current inventory
of
the Equipment for that Monday (collectively such reports, the "Monday Report")
even if no rental transactions
have occurred. Dealer shall include with the Monday Report the
Dealer's check or money order
(and, for customer credit card transactions, the credit card transaction
documentation) for all
gross
revenue from all rental transactions and pre-paid reservation deposits for
the
prior seven days. Such payment of gross revenue shall not be in the form
of
cash, customer checks nor Dealer's personal or business credit cards (except
as
permitted above for customer credit card transactions). If Dealer fails to
include its check or money order, if it is dishonored
by Dealer's bank, if
the
payment is significantly inaccurate,
or if Dealer fails to sign the check, then Dealer shall remit future funds
by
certified check
for not
less than the next eight weeks. In addition Dealer must comply with the
reservation management policies, procedures and rates including but not limited
to notifying reservation management
daily of all dispatches, receives and paid reservation deposits, honoring
all
referral and remote
rental
requests, sharing equipment and complying with the EZ-FUELSM
policy
program.
4.
U-Haul Obligations to Dealer:
a. Equipment,
Supplies, Training,. Telephone and Yellow Pages.
U-Haul
shall make available Equipment,
supplies, basic signage, instructions, promotional and sales material, and
necessary training
and instructions for operating a U-Haul dealership. U-Haul shall determine,
in
its sole discretion, the amount and kind of Equipment, supplies, and
instructions for the Dealer Location. U-Haul shall, subject to Dealer's
obligations hereunder, install a U-Haul dedicated telephone line and establish
such listings in the yellow pages directory or directories selected by
U-Haul
in
its
sole discretion. U-Haul in its sole discretion shall refer to Dealer, from
time
to time customer
reservations that result from the U-Haul 1-800 telephone number.
| b. |
Hold
Harmless.
U-Haul shall hold Dealer harmless from any and all liability incurred
by
Dealer solely in its capacity as a U-Haul dealer for property damage
or
personal injury to third parties involving the Equipment and to
indemnify,
hold harmless and defend Dealer against any claims, actions or
suits
arising against Dealer solely in its capacity as a U-Haul dealer.
This
indemnification shall be effective only if the Equipment is being
rented
or used under a valid U-Haul Rental Contract, if Dealer has complied
with
U-Haul hookup procedures and other instructions, if Dealer has
collected
the
applicable rental and other fees prior to dispatching the Equipment,
if
Dealer has performed the
U-Haul receiving and dispatching procedures, and if Dealer has
issued the
appropriate User's Guide,
U-Haul Rental Contract and applicable addenda. This indemnification
shall
not apply to the
negligence or misconduct of Dealer, its employees, agents, affiliates,
subsidiaries
or
representatives,
or if Dealer rents the Equipment to itself or to any of its employees,
agents, related
entities or representatives of any
kind.
|
| c. |
Risk
of Loss. U-Haul
shall
assume all responsibility for loss due to theft, vandalism or damage
of
the
Equipment while in the custody of Dealer; provided, however, that
Dealer
and its agents shall
use reasonable care to preserve the Equipment and all other U-Haul
property In its custody.
|
| d. |
Limited
License.
U-Haul grants Dealer a nonexclusive, limited license to use
the
trademark and name "U-Haul" and certain other copyrighted
materials in connection with the dealership in
accordance with U-Haul policies, provided that The Dealer shall not
use the name "U-Haul" or the U-Haul logo or the copyrighted materials
in any promotion, telephone listing, internet
or other computer site, or otherwise without the prior written
consent of
U-Haul. This
limited license shall terminate immediately upon termination of
this
Agreement, and dealer agrees to pay to U-Haul all benefit's Dealer
may
receive from the name U-Haul thereafter. Upon termination of this
Dealership Contract, Dealer immediately shall discontinue all use
of the
name "U-Haul" surrender
to U-Haul all equipment, signs, documents and other
material bearing such trademark or name and make no further use
of any
signs, graphics and
materials.
|
e. Quick
Claim Settlement Commissions.
U-Haul
shall pay Dealer (monthly with Commissions) an amount equal to 35% of the
total
amount collected by Dealer from customers pursuant to the Quick Claim Settlement
(QCS) procedures.
5.
Dealer Obligations toU-Haul:
| a. |
Equipment
Promotion and Instruction Compliance.
Dealer shall effectively promote all Equipment rentals at the Dealer
Location including, but not limited to, properly cleaning and displaying
the Equipment. Dealer shall (i) read and comply with all U-Haul
maintenance and hookup procedures, U-Haul
manuals, decals, bulletins, User's Guides and programs, and cause
all
personnel employed
at
the Dealer Location to be properly trained and to comply with all
U-Haul
instructions and procedures; (ii) cause the appropriate U-Haul
Rental
Contract and addenda to be properly completed, signed by the customer,
and
delivered to the customer;;
(iii) collect all rental fees prior to dispatching
the Equipment and issue the appropriate User's
Guide; (iv) instruct each customer in the
proper use and operation of the Equipment as outlined by the User's
Guide;
(v) attach or hook up the Equipment on or to the customer's vehicle
in a
safe and workmanlike manner, and in accordance with U-Haul written
procedures; and (vi) comply with all terms, procedures and programs
set forth in the U-Haul Dealer Operations Manual, including but
not
limited to
|
-2-
|
prominently
displaying the Equipment, distributing the Equipment, notifying
reservation management, sharing equipment,
dispatching and receiving the Equipment,
honoring customer referrals issued by U-Haul, scheduling the Equipment
using the scheduling log, performing authorized safety certifications,
completing Equipment Damage Reports (EDR), using QCS
procedures, and inspecting for the use of and
charging the customer for used, damaged and lost
dollies and pads. Dealer shall perform receiving and dispatching
procedures as explained by U-Haul, on each and every item of the
Equipment
upon receipt and dispatch of the Equipment, including but not limited
to
completing all relevant inspections, inquiries and paperwork, checking
and
correcting the tire pressure, fluid levels, non-functioning lights,
cleanliness, and visible damage.
Dealer shall perform repair work designated as "Minor Maintenance"
(as set
forth in the Dealer Operations
Manual) on the Equipment. All parts needed for such repair shall
be
furnished by or paid
for by U-Haul. Dealer shall report to U-Haul, within 24 hours,
all damaged
Equipment, Equipment requiring maintenance or repair, and missing
Equipment
|
| b. |
Telephone
and Yellow Pages.
Dealer shall pay, via a deduction from Commissions, the monthly
cost
of
a telephone line to be installed
and
maintained at the Dealer Location at the discretion of U-Haul.
The telephone line shall be in the name of U-Haul and Dealer shall
acquire
no interest therein. If U-Haul elects to install a telephone line,
U-Haul
shall pay the initial installation costs as well
as monthly charges of the telephone line until the Yellow Pages
directory
in which such number appears
is published. Dealer shall pay, via a deduction from Commissions,
the cost
of an in-column
listing in a Yellow Pages directory
selected by U-Haul if the Dealer does not have a U-Haul company
owned
phone. Dealer also shall be eligible for inclusion in Yellow Pages
display
advertising,
at the sole discretion of U-Haul, contingent upon Dealer obtaining
and
maintaining AAA status. Dealer also shall pay, via a deduction
from
Commissions, the amount of $5 for each one-way
rental that is the result of a reservation made through the U-Haul
1-800
telephone number.
|
| c. |
Record
Keeping.
Dealer shall account for all odometer mileage accumulated on the
Equipment, if relevant,
while in Dealer's
possession and allow U-Haul to deduct from Dealer's commission
$1
per
mile for any mileage not properly accounted for on a valid rental
contract. Dealer shall also allow U-Haul
to deduct $100 for any missing rental contract or reservation deposit
receipt and to deduct
the face value of any unreported contract. Dealer also agrees to
account
for all rental contract books and reservation deposit receipt books
issued
to Dealer. Dealer shall permit U-Haul representatives to enter
Dealer's
premises at any reasonable time to inspect or remove U-Haul accounting
records, equipment, supplies, electronic reporting and computer
equipment,
and other U-Haul property. Dealer shall properly maintain all U-Haul
accounting records, contracts, equipment, supplies and other property
in
Dealer's custody.
Dealer shall immediately return all such U-Haul property to
U-Haul
upon request.
|
| d. |
Equipment
Revenue and Taxes.
Dealer agrees to collect all gross revenues from the rental of
the
Equipment in Dealer's capacity as agent and fiduciary for U-Haul
and that
title and ownership of such
funds are vested at all times in U-Haul. Dealer shall collect from
the
customer any sales or use
tax applicable to the rental of the Equipment, and report and remit
such
taxes to U-Haul as appropriate, unless otherwise required by law.
Dealer
shall indemnify U-Haul for any liability incurred as a result of
the
breach of this provision.
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| e. |
Location
and Transferability.
Dealer agrees that any change in the Dealer Location shall require
prior
written
notice to and prior written approval by U-Haul. Dealer further
agrees that
it will give thirty (30)
days written notice of any intended sale or transfer of ownership
of the
business located at the Dealer
Location. The dealership and this Agreement are not transferable
without
the prior written
consent of U-Haul.
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| f. |
Goodwill.
Dealer acknowledges that any goodwill which may accrue as a result
of
Dealer acting as an agent of U-Haul shall be for the benefit of
U-Haul.
Dealer further agrees that any goodwill or other value that may
arise
from Dealer's use of the U-Haul name or, U-Haul intellectual property
will
belong exclusively to U-Haul
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| g. |
Noncompetition
Covenant.
Dealer represents, warrants and covenants that, during the term
of this
Agreement, Dealer, for itself, its heirs, assigns, successors,
shareholders, officers, directors, employees, principals, partners,
agents, managers and members, shall not engage in any rental business
at the Dealer Location or at any other place which offers the rental
of
equipment similar to
that offered by
U-Haul.
Upon termination of this Agreement for any reason, Dealer warrants,
covenants
and agrees that, at the Dealer Location and within the greater
of a three
(3) mile radius of the
Dealer Location or the geographical limits of the county of the
Dealer
Location, Dealer, its heirs,
assigns, successors, shareholders, officers, directors, employees,
principals, partners, agents, managers
and members shall not represent or render any service either on
its own
behalf or in any
capacity for any other person or entity engaged in any rental business
similar to that operated by U-Haul for the duration of the then-existing
or contracted-for telephone directory listing(s) for the
Dealer Location. In
the event any part of this paragraph is determined to be
unenforceable by a court of competent jurisdiction,
the remainder of this noncompetition covenant shall be construed
to be enforceable by
such court to the greatest extent
possible.
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-3-
| h. |
Compliance
with Laws.
Dealer shall operate the
U-Haul
dealership in compliance with all applicable
laws.
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| i. |
Agency
Relationship.
Dealer represents, warrants and agrees that the dealership created
under
this Agreement is an agency relationship and shall not under any
circumstances constitute a franchise under any law. Dealer hereby
disclaims and waives any rights that may arise under such franchise
laws
and agrees not to assert any rights based on franchise
law.
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6. Termination.
This
Agreement may be terminated by either party without cause on thirty (30)
days
written notice or
immediately by either party without notice upon breach of this Agreement
by the
other party. In addition,
the Agreement shall terminate immediately,
upon the
transfer of the Dealer Location or the Dealer's business, or the dissolution,
termination, death, insolvency or bankruptcy of Dealer. In any event, this
Agreement shall terminate at the later of three (3) years from the date
hereof or upon the expiration of the Yellow Pages advertising then
in
effect on such three (3) year anniversary date. Within ninety (90) days after
the termination of
this
Agreement, U-Haul shall render a final account of the dealership and each
party
shall promptly remit any sums' due to the other party.
7. Miscellaneous.
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In
the event suit or action is instituted under this Agreement, the
non-prevailing party agrees
to
pay to the party substantially prevailing therein, in addition
to the
costs allowed by statute, reasonable attorneys'
fees, and to pay all costs of collecting or attempting to collect
any
sums due.
This
Agreement may be
assigned by U-Haul to any affiliated U-Haul company upon written
notice to
Dealer. This Agreement may not
be assigned by Dealer. No alteration (handwritten or otherwise)
to this
Agreement shall be valid, even if initialed
by the parties. No amendment of this Agreement, or waiver of any
of its
provisions,
shall be binding upon
either party hereto unless the same be agreed to in writing by
the
president of the U-Haul Co. identified below
and a duly authorized representative of Dealer. All written
notices to be provided hereunder shall be
sent by mail to the business office addresses of the parties identified
at
the end of this Agreement. Each provision
of this Agreement is severable.
If
any provision herein is unenforceable
for
any reason whatsoever,
and
such unenforceability does not affect the remaining parts of this
Agreement,
then all such remaining parts
shall be.valid
and. enforceable. The headings contained in this Agreement are
inserted
for convenience
only and shall not
affect
the meaning or interpretation
of this
Agreement or any
provision
hereof.
This
Agreement
supersedes any
and all prior discussions and agreements between the parties (including
any previously
executed Dealership Contract) and
this Agreement
to the,
extent set forth herein contains the sole, final
and complete expression and understanding among the parties hereto
with
respect to the transactions contemplated hereby. No person other
than the
parties hereto shall have any rights or claims under this Agreement.
The
parties agree that adequate consideration has been given for this
Agreement. Dealer further acknowledges that U-Haul is engaged in
additional programs
related to the do-it-yourself moving business in which Dealer may
be
invited to participate,
from time to time, and that Dealer may be required to provide additional
consideration for the opportunity to participate in such
programs.
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DEALER:
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U-HAUL:
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U-HAUL
CO. OF
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(DEALERSHIP
BUSINESS NAME)
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(DEALERSHIP
STREET ADDRESS)
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(U-HAUL
STREET ADDRESS)
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(DEALERSHIP
CITY, STATE, ZIP CODE)
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(U-HAUL
CITY/STATE, ZIP CODE)
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DEALERSHIP
LOCATION ADDRESS, IF DIFFERENT)
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By:
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(U-HAUL
CO. PRESIDENT SIGNATURE)
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(ADDITIONAL
ADDRESS AT WHICH
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EQUIPMENT
IS STORED, IF APPLICABLE)
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Printed
Name:
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STATE
SALES TAX DEALERSHIP CODE
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Title:
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REGISTRATION
NUMBER NUMBER ASSIGNED
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Date:
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By:
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(AUTHORIZED
DEALER SIGNATURE)
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Printed
Name:
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Title:
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Date:
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-4-
EXECUTION
COPY
PURCHASE
AND SALE AGREEMENT
BY
AND BETWEEN
AMERCO
REAL ESTATE COMPANY,
a
Nevada corporation and
U-HAUL
INTERNATIONAL, INC.,
a
Nevada corporation
as
Seller
AND
UH
STORAGE (DE) LIMITED PARTNERSHIP
a
Delaware limited partnership
as
Purchaser
Dated
as
of February 20, 2004
TABLE
OF CONTENTS
Page
ARTICLE
1
THE PROPERTY
2
ARTICLE
2
PURCHASE PRICE; PAYMENT
3
2.1
Purchase Price 3
ARTICLE
3
TITLE DELIVERIES 3
3.1.
Title Commitment 3
3.2.
Searches
4
3.3.
Survey 4
3.4.
Zoning
4
3.5
Possession of Third Party Reports if Transaction Fails to Close 4
ARTICLE
4
REAL ESTATE DOCUMENTS; INSPECTION AND OBJECTIONS;
INVESTMENT
COMMITTEE
4
4.1.
Real
Estate Documents
4
4.2.
Inspection of Properties
5
4.3.
Financial Information
5
4.4.
Exclusivity
6
ARTICLE
5
PERMITTED EXCEPTIONS
6
5.1.
Permitted Exceptions
6
ARTICLE
6
OPERATION OF PROPERTY
6
6.1.
Interim Operation
6
ARTICLE
7
REPRESENTATIONS AND WARRANTIES
7
7.1.
Representations by Purchaser
7
7.2.
Representations by Seller
8
7.3.
Covenant Regarding Final Order
10
ARTICLE
8
CONDITIONS PRECEDENT TO THE CLOSING
10
8.1.
Conditions to Obligations of the Purchaser
10
(a) Seller's
Obligations
10
(b) Seller's
Representations and Warranties
11
(c) Title
Policy
11
(d) Required
Deliveries
11
(e) No
Injunction
11
(f) Consents
and Opinions
11
(g) Absences
of Material Adverse Change
11
(h) Approval
of
Due
Diligence
11
(i) Closing
of Bank of America Loan
11
(j) Satisfactory
Final Documentation
11
(k) Emergence
from Bankruptcy; Favorable Findings
12
8.2
Conditions to Seller's Obligations
12
(a) Purchaser's
Obligations 12
(b) Representations
and Warranties by the Purchaser 12
(c) Required
Deliveries
12
(d) No
Injunction
12
(e) Emergence
from Bankruptcy; Favorable Findings
12
-i-
(f)
Operating Lease Treatment
12
ARTICLE
9
CLOSING AND CLOSING DOCUMENTS
12
9.1.
Closing
12
9.2.
Seller's Deliveries 12
(a) Deed
13
(b) Bill
of
Sale 13
(c) Seller/Lessee
Certificates
13
(d) FMPTA
Affidavit 13
(e) Authority
Documents
13
(f) Title
Policy
13
(g) Closing
Certificate 13
(h) Plans
13
(i) Title
Affidavits
13
(j) Other
Documents
13
9.3.
SSI
Tenant Deliveries
13
(a) SSI
Lease
Agreement
13
(b) SSI
Memoranda of Lease 14
(c) SSI
Guaranty
14
(d) Management
Agreement 14
(e) Loan
Letter 14
(g)
Non-Compete Agreement : 14
(h)
Negative Pledge Agreement
14
(i)
Lock-Box Agreement
14
(j)
Assignment of Management Agreement and Consent of U-Haul
14
(k)
Other
Documents
14
9.4.
UHI
Tenant Deliveries
14
(a) U-Haul
Lease Agreement 14
(b) U-Haul
Memoranda of Lease
15
(c) U-Haul
Guaranty
15
(d) Loan
Letter
15
(e) Seller/Lessee
Certificates
15
(f) Collection
Agreement
15
(g) Dealer
Agreement
15
(g)
Assignment of Dealer Agreement and Consent of U-Haul
15
(h) Other
Documents
15
9.5.
Deliveries by Purchaser
15
(a) Purchase
Price 16
(b) Closing
Certificate
16
(c) Other
Documents
16
9.6
Concurrent Transactions
16
9.7.
Further Assurances 16
9.8.
No
Prorations
16
9.9.
Costs and Expenses 16
ARTICLE
10 CASUALTY AND CONDEMNATION
17
10.1.
Risk of Loss Notice
17
-ii-
10.2.
Termination Right 17
10.3.
Procedure for Closing
17
ARTICLE
11 DEFAULT AND REMEDIES
18
11.1.
Remedies Upon Default
18
11.2
Liquidated Damages Payable to Purchaser 18
11.3
Liquidated Damages Payable to Seller
19
ARTICLE
12 BROKERS
19
12.1.
No
Broker 19
12.2.
Indemnification by Seller 19
12.3.
Indemnification by Purchaser
19
ARTICLE
13 DEFINITIONS 20
13.1.
Definitions 20
ARTICLE
14 MISCELLANEOUS
22
14.1.
Notice
22
14.2.
Entire Agreement; Modifications and Waivers; Cumulative Remedies
23
14.3.
Schedules and Exhibits 23
14.4.
Successors and Assigns 23
14.5.
Headings and Numbers 24
14.6.
Governing Law
24
14.7.
Time Periods
24
14.8.
Counterparts
24
14.9.
Survival
24
14.10.
Further Acts
24
14.11.
Severability
24
14.12.
Attorneys' Fees 24
14.13
Joint and Several Liability
25
14.14
Indemnity 25
EXHIBITS
Exhibit
A-1 BOM Property List Exhibit
A-2
Citibank Property List
Exhibit
B SSI
Lease
Exhibit
C U-Haul
Lease
Schedule
7.2(g) Service Contracts
Schedule
7.2(1) Warranties
Schedule
7.2(j) Condemnations
-iii-
PURCHASE
AND SALE AGREEMENT
THIS
PURCHASE AND SALE AGREEMENT (this "Agreement")
is made
as of February 20, 2004, by and between AMERCO REAL ESTATE COMPANY, a Nevada
corporation ("AREC") and U-HAUL INTERNATIONAL, INC., a Nevada corporation
("UHI," and together with AREC jointly and severally, ("Seller")
and UH
STORAGE (DE) LIMITED PARTNERSHIP, a Delaware limited partnership ("Purchaser").
RECITALS:
WHEREAS,
UHI and AREC are the tenants of the real property listed on Exhibit A-1
attached
hereto (each a "BMO
Property"
and
collectively, the "BMO
Property"
or
"BMO Properties")
under
that certain Amended and Restated Master Lease and Open End Mortgage (the
"BMO
Lease")
dated as
of July 27, 1999 among UHI and AREC as the Lessee, the various Lessors
identified therein, and BMO Global Capital Solutions, Inc. ("BMO") as the
Agent
Lessor;
WHEREAS,
AREC is the tenant of the real property listed on Exhibit A-2 attached
hereto
(each a "Citicorp
Property"
and
collectively, the "Citicorp
Property"
or
"Citicorp Properties")
under
that certain Master Lease (the "Citicorp
Lease,"
and
together with the BMO Lease, the "Existing
Lease")
dated as
of September 24, 1999 between AREC as the Lessee and BMO as the
Lessor;
WHEREAS,
pursuant to the terms of the Existing Lease, Seller has the right to cause
BMO
to convey the BMO Properties and Citicorp Properties to any party designated
by
Seller;
WHEREAS,
Purchaser has agreed to purchase and Seller has agreed to cause BMO to
sell the
BMO Properties and Citicorp Properties in accordance with and subject to
the
terms and conditions of this Agreement;
WHEREAS,
immediately upon the purchase of the Properties, Purchaser shall lease
the
Properties pursuant to two leases (collectively, the "Leases"),
to wit:
(i) one lease to a single
purpose bankruptcy remote entity controlled by Mark Shoen (the "SSI
Tenant")
and
which
shall be
guaranteed by the corporate parent of the SSI Tenant and (ii) a second
lease to
a wholly owned subsidiary of UHI (the "UHI
Tenant",
and
collectively with SSI Tenant, the "Tenants"
) and
which shall be guaranteed by UHI. The organizational documents and structures
of
both Tenants shall be acceptable to Purchaser and Lender.
AGREEMENT:
NOW,
THEREFORE, for and in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE
1
THE
PROPERTY
1.1 As
used
in this Agreement, the term "Property"
or "Properties"
shall
mean and
refer to
the following collectively:
(a) The
parcels of land more particularly described on Exhibits
A-1
and A-2
attached hereto and made a part hereof (the "Land");
(b) The
buildings, together with the parking areas and other improvements presently
located upon the Land but excluding any and all billboards and cellular
tower
equipment not owned by Seller (the "Improvements");
(c) All
fixtures (collectively, the "FF&E")
of any
kind attached to, or located upon and used in connection with the ownership,
maintenance, use or operation of the Land or Improvements on the Closing
Date,
including, but not limited to, all fixtures, equipment, signs (other than
billboards); all heating, lighting, plumbing, drainage, electrical, air
conditioning, and other mechanical fixtures and equipment and systems;
all
elevators, escalators, and related motors and electrical equipment and
systems;
all hot water heaters, furnaces, heating controls, motors and boiler pressure
systems and equipment, all shelving and partitions, all ventilating equipment;
and all incinerating and disposal equipment required for the operation
of the
Improvements
but expressly excluding (i) any vehicles and/or equipment available for
rent in
the
ordinary
course of business at the Properties, (ii) any and all inventory at the
Properties including, without limitation, boxes, tape, packing material,
padlocks, and other retail items available for sale in the ordinary course
of
business at the Properties and (iii) any computer and office equipment,
furniture and furnishings and other items of personal property not affixed
to
the Properties;
(d) Any
and
all of the following that relate to or affect in any way, the design,
construction,
ownership, use, occupancy, leasing, maintenance, service, or operation
of the
Land,
the
Improvements and the FF&E to the extent assignable;
(i) Warranties,
guaranties, indemnities, and claims for the benefit of Seller relating
to the
Properties (collectively the "Warranties");
(ii) Licenses,
permits, certificates of occupancy, and similar documents issued by any
federal,
state, or municipal authority or by any private party (collectively the
"Licenses");
and
-2-
(iii) Plans,
drawings, specifications, surveys, soil reports, environmental reports,
engineering reports, inspection reports, and other technical descriptions
and
reports to the extent in Seller's possession or control (collectively,
the
"Plans
and Specs").
(e) All
rights, titles and interests of Seller and BMO (including all BMO's right,
title, and interest as principal and as agent on behalf of Citibank N.A.)
in any
real property (or interests therein) appurtenant to the Land and Improvements,
if any, including, but not limited to, (i) all easements, rights of way,
rights
of ingress and egress, tenements, hereditaments, privileges, and appurtenances
in any way belonging to the Land or Improvements, (ii) any land lying in
the bed
of any alley, highway, street, road or avenue, open or proposed, in front
of or
abutting or adjoining the Land, (iii) any strips or gores of real estate
adjacent to the Land, (iv) all leases of adjacent land or facilities used
in
connection with the operation of any of the Improvements, and (v) the use
of all
alleys, easements and rights-of-way, if any, abutting, adjacent, contiguous
to
or adjoining the Land;
(f) All
rights, titles and interests of Seller in and to any purchase options and
rights
of first refusal to purchase any land and improvements adjacent to any
of the
Land, if any; and
All
of
the property and rights constituting the Properties except for the Land
and
Improvements are hereinafter referred to as the "Personal
Property".
ARTICLE
2
PURCHASE
PRICE; PAYMENT
2.1 Purchase
Price.
The
purchase price for the Properties ("Purchase
Price")
shall be
$312,445.024.00. The Purchase Price consists of (i) $298,385,000.00 plus
(ii) an
acquisition fee (the "Acquisition
Fee")
payable
to W.P. Carey & Co. LLC in the amount of $14,060,024. No portion of the
Purchase Price shall be attributable or otherwise allocated to the Personal
Property.
ARTICLE
3
TITLE
DELIVERIES
3.1 Title
Commitment.
Purchaser has or shall obtain, at Seller's sole cost and expense, the
following:
(a) A
commitment for title insurance for the Property (the "Title Commitment")
issued
by First American Title Insurance Company of New York (the "Title Company"),
covering
the Land and Improvements, setting forth the current status of the title
to the
Land and Improvements, showing all liens, claims, encumbrances, easements,
rights of way, encroachments, reservations, restrictions, and any other
matters
affecting the Land and Improvements, and pursuant to which the Title Company
agrees to issue to Purchaser at Closing an owner's policy of title insurance
for
the Property and a lender's policy of title insurance for the
-3-
Property
(collectively, the "Title
Policy")
each on
an ALTA form reasonably acceptable to Purchaser and Lender; and
(b) A
true,
complete, legible and, where applicable, recorded copy of all documents
and
instruments referred to or identified in the Title Commitment, including,
but
not limited to, all deeds, lien instruments, leases, plats, surveys,
reservations, restrictions, and easements.
3.2 Searches.
Purchaser has or shall obtain, at Seller's sole cost and expense, current
written reports (the "Search")
(a) from
the office of each state's Secretary of State where any Property is located
and
the deed recording offices of each county where any Property is located
and the
Secretary of State of the states where the Seller and Tenant are incorporated,
reflecting the results of current searches of the Uniform Commercial Code
Records maintained by such offices, said Search to be made under the names
of
Seller and Tenant and the fee owners of the Properties, (b) of any judgment
or
tax liens against the Seller, Tenant, the fee owners of the Properties
or any of
the Properties, and (c) of any bankruptcy filing by or against the Seller,
Tenant or the fee owners of the Properties.
3.3 Survey.
Purchaser has or shall obtain, at Seller's sole cost and expense, updated
ALTAIACSM survey (the "Survey")
for the
Land and Improvements made on the ground and each
certified by a professional land surveyor licensed in the applicable state
where
such Property
is
located. The Survey shall be reasonably satisfactory to Purchaser.
3.4 Zoning.
Purchaser has or shall obtain at Seller's sole cost and expense, zoning
reports
from the Planning and Zoning Resource Corporation for each
Property.
3.5 Possession
of Third Party Reports if Transaction Fails to Close.
In the
event that
the
transactions contemplated in this Agreement do not close for any reason,
any
third party reports delivered to Purchaser but paid for by Seller shall
be
promptly provided to Seller.
ARTICLE
4
REAL
ESTATE DOCUMENTS; INSPECTION AND OBJECTIONS;
INVESTMENT
COMMITTEE
4.1Real
Estate Documents.
As soon
as practicable but in no event later than twenty (20) days after Purchaser's
request therefor (unless another time period is otherwise herein specified)
and
to the extent not previously delivered to Purchaser, but to the extent
reasonably available to Seller, Seller, at Seller's sole cost and expense,
will
deliver to Purchaser true, correct and complete copies (or where specifically
indicated, original counterparts) of the following together with all amendments,
modifications, renewals and extensions thereof:
(a) All
Warranties which are still in effect;
(b) All
Licenses;
-4-
(c) All
material agreements relating to the operation of the Improvements (including
all
leases of adjacent land or facilities);
(d) All
of
the Plans and Specs;
(e) All
agreements for real estate commissions, brokerage fees, finder's fees or
other
compensation payable by Seller in connection with the transaction contemplated
by this Agreement;
(g) All
notices received from governmental authorities in connection with the Property
that affect any individual Property or Tenant's business at any individual
Property in any material respect;
(h) Phase
I
environmental reports (the "Environmental
Reports")
prepared
by ATC Associates, Inc., which Environmental Reports shall be in form and
substance satisfactory to Purchaser; and
(1) All
books, records, financial data and records, tenant data, current and historical
operating statements, insurance policies and material correspondence and
other
additional information as reasonably requested by Purchaser and related
to the
Properties.
4.2 Inspection
of Property .
Seller
shall give the agents and representatives of Purchaser full, free access
to the
Properties prior to Closing, to inspect the Properties. Seller shall give
the
agents and representatives of Purchaser the right to physically inspect
the
Properties and to conduct soil tests and other inspections (the "Inspections")
(so long
as such Inspections do not unreasonably interfere with Seller's use or
occupancy
of any of the Properties). Purchaser shall give Seller telephonic notice
of any
proposed Inspection at least twenty-four (24) hours prior to the commencement
of
such Inspection. The Purchaser shall restore each Property to its respective
condition prior to the Inspections and shall indemnify and hold harmless
Seller
from and against any loss or damage occasioned by any such Inspection,
which
obligation and indemnity shall survive any termination of this Agreement.
Prior
to any entry onto any of the Properties, Purchaser shall name Seller as
an
additional insured on Purchaser's liability insurance policy and shall
provide
Seller with a certificate of insurance evidencing same or Purchaser shall
cause
any party conducting due diligence on its behalf at any of the Properties
to
carry and provide such evidence of coverage. Prior to the closing of the
transactions contemplated in this Agreement, Purchaser shall not discuss
the
details of the transactions contemplated by this Agreement with, or identify
Purchaser as the ultimate fee owner of the Properties to, any operating
personnel at any of the Properties without the prior written consent of
UHI.
4.3 Financial
Information.
Representatives of Purchaser shall have access to such financial and other
information reasonably available to Seller relating to UHI Tenant, Sellers
and
the Properties.
-5-
4.4 Exclusivity.
Neither
Seller nor any of its representatives or brokers shall market, otherwise
promote
or otherwise list or make any of the Properties available for any sale/leaseback
or financing transaction unless this Agreement is terminated by Purchaser
in
accordance with the terms of this Agreement; provided that, notwithstanding
the
foregoing, Purchaser acknowledges that any discussions or agreements by
and
among Seller and BMO and/or Citibank, N.A. disclosed to or filed with the
Bankruptcy Court (at the request or requirement of such court) with respect
to
the disposition of the Properties and made known to Purchaser prior to
the date
of this Agreement shall not be deemed to violate the first sentence of
this
Section 4.4.
ARTICLE
5
PERMITTED
EXCEPTIONS
5.1 Permitted
Exceptions.
Any
title exceptions to which the Purchaser does not object to and any
title
exceptions to which the Purchaser objects but that are cured to the satisfaction
of Purchaser shall be herein referred to as the "Permitted
Exceptions".
ARTICLE
6
OPERATION
OF PROPERTY
6.1 Interim
Operation.
Seller
hereby covenants and agrees with respect to the Property that between the
date
of this Agreement and the Closing Date, such Seller shall:
(a) Keep
and
maintain the Properties in a good state of repair and condition and consistent
with past practices;
(b) Perform
all its obligations under any contractual arrangements relating to each
Property the nonperformance of which would adversely effect the Seller
or the
Property in
any
material respect;
(c) Advise
Purchaser promptly of any litigation, arbitration, or administrative hearing
before any court or governmental agency concerning or affecting any Property
which is instituted or threatened after the date of this Agreement the
existence
of which would adversely effect Seller or a Property in any material respect
and
promptly advise Purchaser if any representation or warranty made by Seller
in
this Agreement shall become false;
(d) Not
take,
or omit to take, any action that would have the effect of violating any
of the
representations, warranties, covenants or agreements of Seller contained
in this
Agreement;
(e) Comply
with all federal, state, and municipal laws, ordinances, regulations,
and orders relating to each Property the noncompliance with which would
adversely
effect
Seller or such Property in any material respect;
-6-
(f) Not
sell
or assign, or enter into any agreement to sell or assign, or create or
permit to
exist any lien or encumbrance on any Property or any portion
thereof;
(g) Not
allow
any material permit, receipt, license, or right currently in existence
with respect to the operation, use, occupancy or maintenance of any Property
to
expire,
be
cancelled or otherwise terminated;
(h) Pay
or
cause to be paid all taxes, assessments and other impositions levied or
assessed
on the Property or any part thereof prior to the date on which the payment
thereof is due; and
(i) Maintain
or cause to be maintained in full force and effect the present policies
and
level of insurance with respect to each Property.
ARTICLE
7
REPRESENTATIONS
AND WARRANTIES; COVENANTS
7.1 Representations
by Purchaser.
Purchaser represents and warrants unto Seller that each and every one of
the
following statements are true, correct and complete as of the date hereof
and
will, be true, correct and complete as of the Closing Date:
(a) The
Purchaser is a Delaware limited partnership duly organized and validly
existing
and in good standing under the laws of the State of Delaware. Purchaser
has full
right, power and authority to enter into this Agreement and to assume and
perform all of its obligations under this Agreement and the execution and
delivery of this Agreement requires no further action or approval of any
other
individuals or entities in order to constitute a binding and enforceable
obligation of Purchaser. Purchaser has obtained each and every consent,
approval, permit or order of, and has made each and every filing with,
any
individual, partnership, corporation, trust or other entity, government
agency
or political subdivision required to be obtained or made in connection
with its
execution, delivery and performance of this Agreement and Purchaser has
obtained
an approval from the investment committee of Carey Asset Management Corp.
with
respect the transactions contemplated in this Agreement, provided, however,
that
Seller acknowledges that performance by Purchaser of its obligations hereunder,
including closing on the transactions contemplated herein are and remain
subject
to any requirements of the United States Securities and Exchange Commission.
This Agreement is the legal, valid and binding obligation of Purchaser,
enforceable in accordance with its terms, except as such enforceability
may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or similar laws affecting the enforcement thereof
or
relating to creditors' rights generally.
(b) Neither
the entry into nor the performance of, or compliance with, this Agreement
by the Purchaser will not result in any violation of, or default under,
or
result in the
acceleration of, any obligation under the Limited Partnership Agreement
of
Purchaser, or any
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existing
mortgage, indenture, lien agreement, note, contract, permit, judgment,
decree,
order,
restrictive covenant, statute, rule or regulation applicable to the
Purchaser.
7.2 Representations
by Seller.
Seller
hereby represents and warrants unto Purchaser that each and every one of
the
following statements are true, correct and complete as of the date hereof,
and
will be true, correct and complete as of the Closing:
(a) Each
Seller is a corporation duly organized and validly existing and in good
standing
under the laws of the State of Nevada. Each Seller has full right, power
and
authority to enter into this Agreement and to assume and perform all of
their
obligations under this Agreement; and the execution and delivery of this
Agreement and the performance by each Seller of their obligations under
this
Agreement require no further action or approval of any other individuals
or
entities in order to constitute this Agreement a binding and enforceable
obligation of each Seller. Each Seller has obtained each and every consent,
approval, permit or order of, and has made each and every filing with,
any
individual, partnership, corporation, trust or other entity, government
agency
or political subdivision required to be obtained or made in connection
with: (A)
its execution, delivery and performance of this Agreement and (B) its
consummation of the transactions contemplated hereby. This Agreement is
the
legal, valid and binding obligation of each Seller, enforceable in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or
similar laws affecting the enforcement thereof or relating to creditors'
rights
generally.
(b) As
of the
Closing Date, neither the entry into nor the performance of, or compliance
with,
this Agreement by Seller will result in any violation of, or default under,
or
result in the acceleration of, any obligation under the partnership agreements
or articles of incorporation, as applicable, of Seller, or any existing
mortgage
indenture, lien agreement, note, contract, permit, judgment, decree, order,
restrictive covenant, statute, rule or regulation applicable to Seller
or any of
the Properties.
(c) To
the
best of each Seller's knowledge, no party other than Seller (pursuant to
the
Existing Lease) has any right or option to acquire the Property.
(d) Seller
(i) is not in liquidation or dissolution and (ii) has not made an assignment
for
the benefit of creditors or admitted in writing its inability to pay its
debts
as they mature.
(e) To
the
best of Seller's knowledge and belief, there are no pending arbitration
proceedings or unsatisfied arbitration awards, or judicial orders respecting
awards, with respect to any of Property.
(f) No
notice
has been received by Seller from the insurance company which has issued
the
policy for any of the Properties stating that any of such policies is not
in
full force and effect, will not be renewed or will be renewed only at a
higher
premium rate than is presently payable therefor.
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(g) Other
than service contracts terminable on thirty (30) days' notice, no service
contract will be binding upon Purchaser or any of the Properties, except
for
those contracts listed on Schedule 7.2(g).
(h) As
of the
Closing Date, all Fixtures included in the transaction contemplated by
this
Agreement have been fully paid for and will be conveyed to Purchaser free
and
clear of all liens and encumbrances other than the Permitted
Exceptions.
(i) All
Licenses are in full force and effect.
(j) Except
as
otherwise disclosed to Purchaser on Schedule 7.2(j), Seller has no knowledge
of
any pending or threatened condemnation affecting the Property or of any,
improvement liens or special assessments to be made against any of the
Properties by any governmental authority.
(k) Except
as
set forth in the Title Commitments, Seller has not received any notice
of any
violation from any governmental authority or with respect to any encumbrance
upon any Property which has not been corrected.
(1) The
only
Warranties in effect for any of the Properties are described on Schedule
7.2(1).
(m) For
the
purpose of this Section, the term "Hazardous
Substances"
shall
mean
substances defined as a "hazardous waste", "hazardous substance", "toxic
substance" or any
word of
similar import under any Environmental Laws, including, without limitation,
oil,
petroleum, or any petroleum derived substance or waste, asbestos or
asbestos-containing materials, PCBs,
explosives,
radioactive materials, dioxins, or urea formaldehyde insulation. As used
herein,
"Environmental
Laws"
shall
include, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. § 9601, et seq.,
the
Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et
seq.,
the
Clean Air Act, 42 U.S.C. § 7401, et
seq.,
the
Clean Water Act, 33 U.S.C. § 1251, et
seq.,
the
Toxic Substance Control Act, 15 U.S.C. § 2601, et
seq.,
and the
Occupational Safety and Health Act, 29 U.S.C. § 651, et
seq.,
as any
of the preceding have been amended prior to the date hereof, and any other
federal, state, or local law, ordinance, regulation, rule, order, decision
or
permit relating to the protection of the environment or of human health
from
environmental effects of Hazardous Substances and which are applicable
to any of
the Properties.
(n) To
the
knowledge of Seller, and except for those conditions specifically described
in
the Environmental Reports, and without independent investigation other
than the
Environmental Reports, (i) no Hazardous Substances have been spilled or
released
in, on or under any of the Properties so as to impose liability or require
remediation under any Environmental Law and (ii) no liability under or
violation
of any Environmental Laws or condition that could give rise to such liability
or
violation exists with respect to any of the
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Properties,
including without limitation liabilities relating to offsite disposal of
waste
in connection with any of the Properties.
(o) All
leasing commissions, if any, with respect to any leases or other occupancy
agreements with respect to any of the Properties have been paid in
full.
(p) All
(i)
information (other than financial projections) that has been or will hereafter
be made available to Purchaser or any of its representatives in connection
with
the transactions contemplated under this Agreement is and will be true,
complete
and correct in all material respects and shall not omit or fail to state
a
material fact necessary in order to make the statements contained therein
not
misleading in light of the circumstances in which such statements were
or are
made and (ii) financial projections, if any, that have been or will be
prepared
by or on behalf of the Seller or any of its representatives and made available
to Purchaser have been or will be prepared in good faith based upon assumptions
that are reasonable at the time the related financial projections are made
available to the Purchaser. If, at any time after the date hereof until
the
Closing Date any of the representations and warranties in the preceding
sentence
would be incorrect if the information or financial projections were being
furnished, and such representations and warranties were being made, at
such
time, then Seller shall promptly supplement the information and the financial
projections so that such representations and warranties will be correct
under
those circumstances.
Each
of
the foregoing representations and warranties shall be deemed remade at
and as of
the Closing and shall survive the Closing. Except as otherwise expressly
provided herein and in the Seller's Certificate (as hereinafter defined),
Seller
makes no representation or warranty whatsoever with respect to the Property,
whether as to habitability, fitness for a particular purpose, environmental
condition or otherwise.
7.3 Covenant
Regarding Final Order.
Seller
shall use good faith reasonable efforts to obtain the entry of the Final
Order
referenced in Sections 8.1(k) and 8.2(e) hereof.
ARTICLE
8
CONDITIONS
PRECEDENT TO THE CLOSING
In
addition to any other conditions set forth in this Agreement, the obligations
of
the Purchaser and Seller to consummate the Closing are subject to the timely
satisfaction of the respective conditions and requirements set forth in
this
Article 8, which shall be conditions precedent to the respective party's
obligations under this Agreement.
8.1 Conditions
to Obligations of the Purchaser.
(a) Seller's
Obligations.
Seller
shall have performed all of the obligations of Seller hereunder which are
to be
performed at or prior to Closing.
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(b) Seller's
Representations and Warranties.
The
representations and warranties
of Seller set forth in this Agreement shall be true and correct in all
material
respects as
if made
again on the Closing Date.
(c) Title
Policy.
Purchaser shall have received or have an irrevocable right to receive the
Title
Policy and such other endorsements as are customarily available in each
state
where the Properties are located issued by the Title Company insuring good
and
indefeasible fee simple title to the Property, subject only to the Permitted
Exceptions.
(d) Required
Deliveries.
The
Seller shall have made or caused to be made all required deliveries under
Section 9.2 and Purchaser shall have also received all of the required
deliveries under Sections 9.3 and 9.4
(e) No
Injunction.
There is
no injunction, judgment, order, action or proceeding which would prevent
or
limit the consummation of this transaction.
(f) Consents
and Opinions.
There
shall be delivered to the Purchaser, from Seller or Seller's counsel, such
consents and legal opinions as are reasonably and customarily required
by
counsel to the Purchaser with respect to matters such as due authorization,
no
conflict and enforceability. Those opinions relating to due authorization
and
execution of this Agreement may be issued by the Seller's in-house counsel
and
all other opinions required by counsel to Purchaser with respect to the
transactions contemplated by this Agreement, and the Leases shall be issued
by
outside counsel reasonably acceptable to Purchaser.
(g) Absence
of Material Adverse Change.
There
shall have been no material adverse change in the financial condition or
results
of operations of UHI or the Properties from the date of (x) the audited
consolidating financial statements of AMERCO dated September 30, 2003 or
(y) the
trailing 12 month unaudited income statements with respect to the Properties
for
the period ending December 31, 2003.
(h) Approval
of Due Diligence.
Purchaser shall have confirmed in writing on or before the Closing Date
that all
due diligence matters with respect to the Properties, Seller and Tenant,
including, but not limited to, matters related to financial condition and
prospects, physical condition (including environmental), title, survey,
and
zoning shall be satisfactory to Purchaser on the Closing Date in all respects.
Furthermore, Sarvis, King & Coleman, P.C. shall have prepared and Purchaser
shall have approved agreed upon procedures for property audits.
(i) Closing
of Bank of America Loan.
Bank of
America shall have funded to Purchaser a mortgage loan on the Closing Date
secured by the Properties and otherwise substantially in accordance with
the
terms of that Summary of Indicative Terms and Conditions from Bank of America
dated November 14, 2003.
(j) Satisfactory
Final Documentation.
Seller
shall have delivered to Purchaser on the Closing Date each of the delivery
items
required pursuant to Section 9.2, each in form and substance satisfactory
to
Purchaser in all respects.
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(k)
Emergence
from Bankruptcy; Favorable Findings.
AMERCO
and Amerco Real Estate Company shall have provided to Purchaser evidence
of a
Final Order confirming the plan of reorganization in their Bankruptcy Cases,
and
the Bankruptcy Court shall have entered a Final Order (in form and substance
reasonably acceptable to Purchaser) in the Bankruptcy Cases approving the
transactions contemplated by this Agreement and the Lease.
8.2 Conditions
to Seller's Obligations.
(a) Purchaser's
Obligations.
Purchaser shall have performed all of its material obligations hereunder
which
are to be performed at or prior to Closing.
(b) Representations
and Warranties by the Purchaser.
The
representations and warranties by the Purchaser set forth in this Agreement
shall be true and correct in all material respects as if made again on
the
Closing Date.
(c) Required
Deliveries.
The
Purchaser shall have made or caused to be made all required deliveries
under
Section 9.5.
(d) No
Injunction.
There is
no injunction, judgment, order, action or proceeding which would prevent
the
consummation of this transaction.
(e) Emergence
from Bankruptcy; Favorable Findings.
AMERCO
and Amerco Real Estate Company shall have provided to Purchaser evidence
of a
Final Order confirming the plan of reorganization in their Bankruptcy Cases,
and
the Bankruptcy Court shall have entered a Final Order (in form and substance
reasonably acceptable to Purchaser) in the Bankruptcy Cases approving the
transactions contemplated by this Agreement and the Lease.
(f) Operating
Lease Treatment.
Seller
shall be reasonably satisfied (based upon
the
advise of its accountants, attorneys and/or consultants) that the UHI Lease
is
in form
and
substance appropriate for treatment as an operating lease under generally
accepted accounting principles.
ARTICLE
9
CLOSING
AND CLOSING DOCUMENTS
9.1
Closing.
The
closing (the "Closing")
is
scheduled to occur at the offices of Reed Smith
LLP
in New York, New York no later than March 31, 2004 and the parties shall
endeavor
to close
on or about March 15, 2004 (such date, the "Closing
Date)
unless
such date is extended by mutual agreement among the parties hereto.
9.2
Seller's
Deliveries.
At the
Closing, Seller shall deliver or caused to be delivered
the
following to the Purchaser, each in form and substance reasonably acceptable
to
the Purchaser and each party thereto:
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(a) Deed.
Purchaser shall have received Special Warranty Deeds (or comparable
limited warranty deed in a form customarily used for similar transactions
in the
state)
for each
Property, duly executed and acknowledged, and subject only to the applicable
Permitted Exceptions.
(b) Bill
of Sale.
A Bill
of Sale from the Seller conveying the fixtures and any Personal
Property necessary for the operation of the Improvements as buildings to
Purchaser free
and
clear of any liens, claims and encumbrances.
(c) Seller
Certificate.
Certificate (the "Seller
Certificate")
duly
executed by each
Seller in favor of Purchaser containing representations and warranties
with
respect to Sellers
and the
Properties.
(d) FIRPTA
Affidavit.
An
affidavit from Seller in form and substance acceptable
to Purchaser and the Title Company, as required by Section 1445 of the
Internal
Revenue
Code;
Authority
Documents.
The
legal opinions referred to in Section 8.1(f); Title
Policy.
The
Title
(e) Policy;
(f)
(g)
Closing
Certificate.
A
certificate duly executed by Seller dated as of the Closing Date to the
effect
that all of the representations and warranties herein of Seller are true
and
correct as of the Closing;
(h) Plans.
All
Plans and Specs, and all Licenses;
(i) Title
Affidavits.
Any
affidavits as to judgments and other matters reasonably required by the
Title
Company in connection with the issuance of the Title Policy;
(j) Other
Documents.
Such
other documents, opinions, indemnities and estoppels as may be reasonably
required by Purchaser.
9.3 SSI
Tenant Deliveries.
At the
Closing, Purchaser shall receive the following, each in form and substance
reasonably acceptable to the Purchaser and each party thereto:
(a) SSI
Lease Agreement.
Lease
Agreement (the "SSI
Lease")
duly
executed by SSI Tenant, as tenant, and Purchaser, as landlord, with respect
to
the Properties substantially in the form of the SSI Lease attached hereto
as
Exhibit
"C"
together
with the reserves and security deposit due thereunder, provided, however,
that
the parties agree that the SSI Lease attached hereto as Exhibit
"C"
may be
further modified with respect to (i) tax and reporting treatment requirements
or
objectives of SSI Tenant, (ii) the completing or modification of any items
that
are blank or bracketed, (iii) SSI Tenant and Purchaser's responses to Lender
requirements, (iv) issues raised by the provisions set forth in any other
document listed in this Section 9.3 to which SSI Tenant is a party, and
(v) any
other reasonable changes.
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(b) SSI
Memoranda of Lease.
Memoranda of Lease (the "SSI
MOL")
duly
executed by SSI Tenant and Purchaser with respect to the SSI Lease.
(c) SSI
Guaranty.
Guaranty
agreement from the parent of the SSI Tenant with respect to the SSI Lease;
and
(d) Management
Agreement.
A duly
executed property management agreement ("Management
Agreement")
between
SSI Tenant and a subsidiary of UHI who shall
manage
the Properties ("Manager").
(e) Loan
Letter.
Letters
duly executed by SSI Tenant addressed to Purchaser confirming that neither
SSI
Tenant nor any affiliate of SSI Tenant shall purchase any mortgage encumbering
any of the Properties.
(f) Non-Compete
Agreement.
A duly
executed non-compete agreement given by Mark Shoen and the parent of SSI
Tenant
with respect to the ownership or operation of new self-storage facilities
within
a certain agreed radius of any of the Properties.
(g) Negative
Pledge Agreement.
A
Negative Pledge Agreement duly executed by each principal of SSI Tenant
that
shall provide that each principal shall not encumber the assets of Tenant
as
security for the obligations of any principal.
(h) Lock-Box
Agreement.
A
Lock-Box Agreement by and among each of SSI Tenant,
Purchaser and Lender that shall require that the gross receipts derived
from the
operation
of SSI
Tenant's and/or Manager's business at the Properties be deposited into
a
lock-box account controlled by Purchaser or Lender and from which the quarterly
installments of rent due under the SSI Lease shall be paid to Purchaser
prior to
any distribution to Tenant or the Manager and from which expense reimbursements
shall be paid to Manager prior to any distribution to SSI Tenant.
(i) Assignment
of Management Agreement and Consent of U-Haul
An
assignment of the Management Agreement in favor of Purchaser and its Lender
assigning the rights
of
SSI Tenant thereunder, which assignment shall be consented and agreed to
by
U-Haul.
(j) Other
Documents.
Such
other documents, opinions, indemnities and estoppels
as may be reasonably required by Purchaser and Subordination, Non-disturbance
and Attornment
Agreements, estoppels and any other agreements as may be required by
Purchaser's
Lender.
9.4 UHI
Tenant Deliveries.
At the
Closing, Purchaser shall receive the following,
each in
form and substance reasonably acceptable to the Purchaser and each party
thereto:
(a) U-Haul
Lease Agreement.
Lease
Agreement (the "U-Haul
Lease")
duly executed
by U-Haul Tenant, as tenant, and Purchaser, as landlord, with respect to
the
Properties
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substantially
in the form of the U-Haul Lease attached hereto as Exhibit
"B"
together
with the reserves and security deposits due thereunder, provided, however,
that
the parties agree that the U-Haul Lease attached hereto as Exhibit
"B"
may be
further modified with respect to (i) tax and reporting treatment requirements
or
objectives of U-Haul Tenant, (ii) the completing or modification of any
items
that are blank or bracketed, (iii) U-Haul Tenant and Purchaser's responses
to
Lender requirements, (iv) issues raised by the provisions set forth in
any other
document listed in this Section 9.4 to which U-Haul Tenant is a party,
and (v)
any other reasonable changes.
(b) U-Haul
Memoranda of Lease.
Memoranda of Lease (the "U-Haul
MOL";
collectively with the SSI MOL, the "MOLs")
duly
executed by U-Haul Tenant and Purchaser with respect to the U-Haul
Lease.
(c) U-Haul
Guaranty.
Guaranty
agreement from UHI with respect to the Management Agreement and U-Haul
Lease.
(d) Loan
Letter.
Letters
duly executed by U-Haul Tenant addressed to Purchaser confirming that neither
U-Haul Tenant nor any affiliate of U-Haul Tenant shall purchase any mortgage
encumbering any of the Properties.
(e) Lessee
Certificate.
Certificate (the "Lessee
Certificate")
duly
executed by U-Haul Tenant in favor of Purchaser containing representations
and
warranties with respect to the U-Haul Tenant and the Properties.
(f) Collection
Agreement.
A
Collection Agreement by and among each of U-Haul Tenant, Purchaser and
Lender
that shall require that the gross receipts derived from the operation of
U-Haul
Tenant's business at the Properties be deposited into a collection account
controlled by Purchaser or Lender and from which all gross receipts shall
be
promptly paid to U-Haul Tenant so long as no event of default is continuing
under the U-Haul Lease.
(g) Dealer
Agreement.
A duly
executed dealer agreement by and between U-Haul Tenant and U-Haul with
respect
to permitting Tenant to be a dealer for the rental of "U-Haul" branded
equipment
in form and substance acceptable to Purchaser.
(h) Assignment
of Dealer Agreement and Consent of U-Haul.
An
assignment of the Dealer Agreement in favor of Purchaser and its Lender
assigning the rights of U-Haul Tenant thereunder which assignment shall
be
consented and agreed to by U-Haul Manager.
(i) Other
Documents.
Such
other documents, opinions, indemnities and estoppels as maybe reasonably
required by Purchaser and Subordination, Non-disturbance and Attornment
Agreements, estoppels and any other agreements as may be required by Purchaser's
Lender.
9.5 Deliveries
by Purchaser.
At the
Closing, Purchaser shall deliver or cause to be delivered,
the following to Seller, each in form and substance reasonably acceptable
to the
Seller:
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(a) Purchase
Price.
The
Purchase Price in immediately available funds, subject to payment of the
acquisition fee to W.P. Carey Co. LLC and third party fees and expenses
as set
described in Section 2.1.
(b) Closing
Certificate.
A
certificate duly executed by Purchaser to the effect that all of the
representations and warranties herein of the Purchaser are true and correct
as
of the Closing.
(c) Other
Documents.
Such
other documents as maybe reasonably required by Seller and BMO.
9.6 Concurrent
Transactions.
All
documents or other deliveries required to be made by the Seller and the
Purchaser, at or prior to Closing, and all transactions required to be
consummated concurrently with Closing shall be deemed to have been delivered
and
to have been consummated simultaneously with all other transactions and
all
other deliveries, and no delivery shall be deemed to have been made, and
no
transaction shall be deemed to have been consummated, until all deliveries
required by the Seller and the Purchaser shall have been made, and all
concurrent or other transactions shall have been consummated.
9.7 Further
Assurances.
Each of
the Seller and Purchaser, at any time after Closing,
upon
request of either party, will execute (or cause any appropriate entity
to
execute and to use reasonable efforts to cause such parties to execute)
such
additional instruments, documents or certificates as either party deems
reasonably necessary in order to effect the transactions contemplated
hereby.
9.8 No
Prorations.
All real
estate taxes, personal property or use taxes and water and
sewer
rents, utility charges, fuels located at any of the Properties, or insurance
expenses that are due and payable at closing shall be paid at Closing.
In
recognition that the Lease will require each of the items listed in the
first
sentence of this Section 9.8 to be paid by Tenant, there shall be no proration
of any such items at Closing.
9.9 Costs
and Expenses.
Seller
shall pay all fees and expenses related to the transaction contemplated
herein,
the leasing of the Property and the Purchaser's initial mortgage loan,
including
but not limited to environmental and engineering assessment costs, appraisal
fees and expenses, title insurance, transfer and recording fees and taxes
and
reasonable legal fees and expenses of Purchaser and Purchaser's lender.
Seller
shall be obligated to pay the fees and expenses set forth in this Section
9.9
irrespective of whether the transactions contemplated herein, the leasing
of the
Property and/or the initial mortgage loan fail to close for any reason
whatsoever provided, however, that Seller shall not be obligated to pay
the fees
and expenses set forth
in
this Section 9.9 in the event that a representation of Purchaser contained
in
Section 7.1(a)
is found
to be untrue in any material respect as of the date of this Agreement and
the
transactions contemplated herein fail to close as a result of such
misrepresentation. Purchaser hereby acknowledges that Seller has previously
deposited with Purchaser the sum of $400,000 and with Purchaser's mortgage
lender the sum of $950,000 as expense deposits (collectively and
together
-16-
with
any
additional sums deposited by Seller, the "Expense
Deposits")
a
portion of which has previously been disbursed to pay fees and expenses.
Purchaser shall not be required to pay interest on the Expense Deposits.
Purchaser shall apply the Expense Deposits to pay expenses related to Purchaser
and/or its mortgage lender's due diligence (including but not limited to
legal
fees and expenses paid in connection with enforcement any of Purchaser's
rights
hereunder) as incurred by Purchaser and/or its mortgage lender from time
to time
until the Closing Date. In addition, from time to time until the Closing
Date,
Seller shall cause the Expense Deposits to be increased by an amount determined
by Purchaser to be sufficient to pay any then outstanding costs and expenses
and
any anticipated costs and expenses that may be incurred prior to the Closing
Date. In no event shall any short-fall in any Expense Deposit mitigate
Seller's
obligation to pay any and all fees and expenses incurred by Purchaser and/or
its
mortgage lender in connection with the transactions contemplated hereunder.
Upon
the earlier of the termination of this Agreement by Purchaser or the Closing
Date, the balance of any Expense Deposits shall be returned to Purchaser
after
deducting all costs and expenses actually incurred by Purchaser or its
mortgage
lender. The obligations set forth in this Section 9.9 shall expressly survive
the Closing or any termination of this Agreement.
ARTICLE
10
CASUALTY
AND CONDEMNATION
10.1 Risk
of Loss Notice.
In the
event that (a) any loss or damage to any of the Properties shall occur
prior to
the Closing Date as a result of fire or other casualty, or (b) Seller
or
any of
them receive notice that a governmental authority has initiated or threatened
to
initiate a
condemnation proceeding affecting any of the Property, Seller shall give
the
Purchaser immediate written notice of such loss, damage or condemnation
proceeding.
10.2 Termination
Right.
If,
prior to Closing and the delivery of possession of the Properties
in accordance with this Agreement, (a) any condemnation proceeding shall
be
pending
against
any portion of any of the Properties that, with respect to any such individual
Property, effects ten (10%) percent any structure, materially restricts
legal
access, effects more than ten (10%) percent of the land area, materially
impairs
or renders uneconomic the continued use of such Property for its intended
use,
or causes the remaining portion of any Property to be in non-compliance
with any
applicable law, including any parking requirements, or (b) there is any
loss or
damage to any Property where the cost to restore exceeds $250,000, either
party
shall have the option to terminate this Agreement with respect to such
Property
(and this Agreement shall continue in full force and effect with respect
to all
of the other Properties) provided it delivers written notice to the other
party
of its election so to terminate this Agreement with respect to such Property
within fifteen (15) days after the date Seller have delivered to Purchaser
written notice of any such loss, damage or condemnation. In the event this
Agreement is terminated with respect to five (5) or more Properties pursuant
to
this Section 10.2, Purchaser shall have the right to terminate this Agreement
in
its entirety.
10.3 Procedure
for Closing.
If,
after a loss or damage or condemnation giving rise to a termination right
pursuant to Section 10.2, Purchaser or Seller shall not timely elect (within
fifteen
(15) days after receipt of written notice of the occurrence of the damage)
to
terminate this
-17-
Agreement
with respect to the damaged Property, or if the loss or condemnation does
not
give rise to a termination right pursuant to Section 10.2, Seller agrees
to pay
to Purchaser at the Closing
all insurance proceeds or condemnation awards which Seller or any of them
has
received
as a
result of the same plus an amount equal to the insurance deductible, if
any, and
assign to Purchaser all insurance proceeds and condemnation awards payable
as a
result of the same in which event the Closing shall occur without Seller
or any
of them replacing or repairing such damage.
ARTICLE
11
DEFAULT
AND REMEDIES
11.1
Remedies
Upon Default.
In the
event Purchaser materially breaches or defaults under any of the terms
of this
Agreement prior to the Closing, which default is not cured within ten (10)
calendar days after receipt by Purchaser of written notice thereof from
Seller,
Seller shall have the right to terminate this Agreement and obtain reimbursement
from Purchaser of all out-of-pocket expenses incurred by Seller in reliance
on
this Agreement. In the event Seller materially breaches or defaults under
any of
the terms of this Agreement which default is not cured within ten (10)
calendar
days after receipt by Seller of written notice thereof from Purchaser,
Purchaser
shall have the right to (a) terminate this Agreement and obtain reimbursement
from Seller of all out-of-pocket expenses incurred by Purchaser in reliance
on
this
Agreement and (b) seek and obtain specific performance of this Agreement
(in
which event Purchaser may also recover all of its costs and reasonable
attorneys' fees in seeking such specific performance). Notwithstanding
any term
or provision of this Agreement, in the event the transactions contemplated
by
this Agreement do not close for any reason whatsoever, whether pursuant
to this
Section 11.1 or for other reasons, neither Purchaser, nor W.P. Carey & Co,
LLC nor any broker, agent, consultant or other party shall be entitled
to the
Acquisition Fee.
11.2
Liquidated
Damages Payable to Purchaser.
If
Seller materially breaches or defaults under the terms of this Agreement
(which
breach or default is not cured within the time periods set forth in Section
11.1), or if Purchaser is ready, willing and able to close this transaction
pursuant to the terms of this Agreement and Seller shall willfully fail
or
refuse to close, then, in addition to and not in lieu of any other remedies
Purchaser may have under Section
11.1 with respect to specific performance, Seller shall pay to Purchaser
upon
demand the
sum of
Three Million ($3,000,000) Dollars as liquidated damages hereunder. The
Seller
and Purchaser
each expressly acknowledge and agree that the actual damages which may
be
incurred by
Purchaser as a result of such breach or default by Seller are difficult
or
impossible to calculate
and that
the amount of Three Million ($3,000,000) Dollars as liquidated damages
represents a fair and reasonable estimate of such actual damages. UHI's
joint
and several obligation to pay any liquidated damages pursuant to this Section
11.2 shall not in any way be mitigated or modified in any respect if AREC
is
prevented from paying (or permitted not to pay) all or any portion of such
liquidated damages as a result of (i) any failure of AREC to obtain the
approval
of the bankruptcy court presiding over the Bankruptcy Cases with respect
to this
Agreement generally and/or this Section 11.2 specifically, or (ii) any
court
order with respect to the Bankruptcy Cases prohibiting AREC from paying
any
liquidated damages due hereunder.
-18-
11.3
Liquidated
Damages Payable to Seller.
If
Seller is ready, willing and able to close
this transaction pursuant to the terms of this Agreement and Purchaser
willfully
breaches or defaults its obligations to close this transaction under the
terms
of this Agreement (which breach or default is not cured within the time
periods
set forth in Section 11.1), then, in lieu of any other remedies Seller
may have
under Section 11.1 with respect to reimbursement from Purchaser of all
out-of-pocket expenses incurred by Seller in reliance on this Agreement,
Purchaser shall pay to Seller Purchaser upon demand the sum of Three Million
($3,000,000) Dollars as liquidated damages hereunder. The Seller and Purchaser
each expressly acknowledge and agree that the actual damages which maybe
incurred by Seller as a result of such breach or default by Purchaser are
difficult or impossible to calculate and that the amount of Three Million
($3,000,000) Dollars as liquidated damages represents a fair and reasonable
estimate of such actual damages.
ARTICLE
12
BROKERS
12.1
No
Broker.
The
parties hereto represent to each other that they dealt with no finder,
broker or
consultant in connection with this Agreement or the transactions contemplated
hereby other than Mr. Jeffrey Draxten whose fees shall be paid for by
Seller.
12.2
Indemnification
by Seller.
Seller
agrees to, and hereby does, indemnify and save harmless Purchaser and its
affiliates, and their respective successors and assigns against and from
any
loss, liability or expense, including reasonable attorneys fees, arising
out of
any claim or claims for commissions or other compensation for bringing
about
this Agreement or the transactions contemplated hereby made by any broker,
finder, consultant or like agent if such claim or claims made by any such
broker, finder, consultant or like agent are based in whole or in part
on any
agreements entered into with Seller or its representatives for a commission
or
other compensation. The obligations set forth in this Section 12.2 shall
expressly survive the Closing or any termination of this Agreement.
12.3
Indemnification
by Purchaser.
Purchaser agrees to, and hereby does, indemnify and save harmless Seller
and its
affiliates, and their respective successors and assigns against and from
any
loss, liability or expense, including reasonable attorneys' fees, arising
out of
any claim or claims for commissions or other compensation for bringing
about
this Agreement or the transactions contemplated hereby made by any broker,
finder, consultant or like agent if such claim
or
claims made by any such broker, finder, consultant or like agent are based
in
whole or in
part on
any agreements entered into with Purchaser or its representatives for a
commission or other compensation.
-19-
ARTICLE
13
DEFINITIONS
13.1
Definitions.
As used
herein, the following terms shall have the respective meanings indicated
below:
Acquisition
Fee.
As
defined in Section 2.1.
Agreement.
As
defined in the opening Paragraph.
AMERCO.
Shall
mean AMERCO, Inc.
Bankruptcy
Cases.
Shall
mean In
re
AMERCO, a Nevada corporation, et al., Case
Nos.
BK-03-52103-GWZ and BK-03-52790-GWZ, Jointly Administered under
NBK-03-52103-GWZ.
Bankruptcy
Court.
Shall
mean the United States Bankruptcy Court for the District
of
Nevada or other court in which the Bankruptcy Cases are pending.
BMO.
As
defined in the Recitals.
BMO
Lease.
As
defined in the Recitals.
BMO
Properties.
As
defined in the Recitals.
Citicorp
Lease.
As
defined in the Recitals.
Citicorp
Properties.
As
defined in the Recitals.
Closing.
As
defined in Section 9.1.
Closing
Date.
As
defined in Section 9.1.
Environmental
Report.
As
defined in Section 4.1.
Existing
Lease.
As
defined in the Recitals.
Expense
Deposits.
As
defined in Section 9.7
FF&E.
As
defined in Article 1.
Final
Order.
Shall
mean an order (or findings of act and conclusions of law), in form and
substance
satisfactory to the Purchaser, entered by the Bankruptcy Court or other
court of
competent jurisdiction that is: (i) in full force and effect; (ii) not
stayed;
and (iii) no longer subject to review, reversal, modification or amendments,
by
appeal, writ of certiorari or otherwise; provided, however,
the
possibility that a motion under Rule 60 of the Federal Rules of
Civil
Procedure, or any analogous rule, may be filed relating to such order or
judgment shall not cause such order or judgment not to be a Final
Order.
Hazardous
Substance.
As
defined in Section 7.2.
Improvements.
As
defined in Article 1.
-20-
Inspections.
As
defined in Section 4.2.
Land.
As
defined in Article 1.
Licenses.
As
defined in Article 1.
Management
Agreement.
As
defined in Section 9.2.
MOLs.
As
defined in Section 9.2
Permitted
Exceptions.
As
defined in Section 5.1.
Personal
Property.
As
defined in Article 1.
Plans
and Specs.
As
defined in Article 1.
Property.
As
defined in Article 1.
Purchaser.
As
defined in the opening paragraph.
Purchase
Price.
As
defined in Section 2.1.
Search.
As
defined in Section 3.2.
Seller.
As
defined in the opening paragraph.
Seller
Certificate.
As
defined in Section 9.2.
Survey.
As
defined in Section 3.3.
SSI
Lease.
As
defined in the Section 9.2.
SSI
Tenant.
As
defined in the Recitals.
Tenant(s).
As
defined in the Recitals.
Title
Commitment.
As
defined in Section 3.1.
Title
Company.
As
defined in Section 3.1.
Title
Policy.
As
defined in Section 3.1.
U-Haul
Lease.
As
defined in the Section 9.2.
U-Haul
Tenant.
As
defined in the Recitals.
Warranties.
As
defined in Article 1.
W.
P.
Carey Group.
Shall
mean one or more of the following entities: Corporate Property Associates
16
Global Incorporated, Corporate Property Associates 15 Incorporated, Corporate
Property Associates 14 Incorporated, Corporate Property Associates 12
Incorporated, Carey Institutional Properties Incorporated, W. P. Carey
& Co.
LLC or any subsidiary thereof
-21-
and
any
other entity that is or may become subject to an advisory agreement with
W.P.
Carey &
Co.
LLC.
ARTICLE
14
MISCELLANEOUS
14.1
Notice.
Any
notice provided for by this Agreement and any other notice, demand or
communication which any party may wish to send to another shall be in writing
and either delivered in person or sent by registered or certified mail,
return
receipt requested, in a sealed
envelope, postage prepaid or overnight courier, and addressed to the party
for
which such
notice,
demand or communication is intended at such party's address as set forth
in this
Section. The address for Seller under this Agreement shall be the
following:
Amerco
Real Estate Company
2727
North Central Avenue
Phoenix,
AZ 85004
Attention: Treasurer
or Assistant Treasurer
U-Haul
International, Inc.
2727
North Central Avenue
Phoenix,
AZ 85004
Attention: Treasurer
or Assistant Treasurer
In
either
case with a copy to:
U-Haul
International, Inc.
Legal
Department
2727
North Central Avenue
Phoenix,
AZ 85004
Attention: General
Counsel or Assistant General Counsel
And
a
copy to SSI Tenant at:
Self
Storage International, Inc.
715
South
Country Club Drive
Mesa,
AZ
85210
Attention:
President
and
Self
Storage International, Inc.
P.O.
Box
70970
Reno,
NV
89570-0970
Attention:
President
-22-
The address for Purchaser under this Agreement shall be the
following:
c/o
W. P.
Carey & Co., LLC
50
Rockefeller Plaza
New
York,
New York 10020
Attention:
Anne R. Coolidge
with
a
copy to:
Reed
Smith LLP
599
Lexington Avenue, 29th Floor
New
York,
New York 10022
Attention:
Joseph M. Manger, Esq.
Any
address or name specified above may be changed by a notice given by the
addressee to the other party. Any notice, demand or other communication
shall be
deemed given and effective as of the date of delivery in person or receipt,-
set
forth on the return receipt. The inability to deliver because of changed
address
of which no notice was given, or rejection or other
refusal to accept any notice, demand or other communication, shall be deemed
to
be receipt of
notice, demand or other communication as of the date of such attempt to
deliver
or rejection or
refusal
to accept. Notices may be given by any party's counsel on behalf of such
party.
14.2
Entire
Agreement; Modifications and Waivers; Cumulative Remedies.
This
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supercedes any prior oral or written
agreements or understandings between the parties hereto with respect to
the
subject matter hereof, and may not be modified or amended except by instrument
in writing signed by the parties hereto, and no provisions or conditions
may be
waived other than by a writing signed by the party waiving such provisions
or
conditions. No delay or omission in the exercise of any right or remedy
accruing
to, Purchaser or Seller upon any breach under this Agreement shall impair
such
right or remedy or be construed as a waiver of any such breach theretofore
or
thereafter occurring. The waiver by, Purchaser or Seller of any breach
of any
term, covenant or condition herein stated shall not be deemed to be a waiver
of
any other breach, or of a subsequent breach of the same or any other term,
covenant or condition herein contained. All rights, powers, options or
remedies
afforded to Seller or Purchaser either hereunder or by law shall be cumulative
and not alternative, and the exercise of one right, power, option or remedy
shall not bar other rights, powers, options or remedies allowed herein
or by
law, unless expressly provided to the contrary herein.
14.3
Schedules
and Exhibits.
All
schedules and exhibits referred to in this Agreement and attached hereto
are
hereby incorporated in this Agreement by reference.
14.4
Successors
and Assigns.
This
Agreement shall be binding upon, and inure to the benefit of, Purchaser
and
Seller and their respective successors and assigns. Purchaser shall
have the right to assign its interests in this Agreement to any subsidiary
of
Purchaser and/or
any
entity or entities affiliated with any member of the W.P. Carey
Group.
-23-
14.5
Headings
and Numbers.
Article
and section headings and article and section numbers are inserted herein
only as
a matter of convenience and in no way define, limit or prescribe the scope
or
intent of this Agreement or any part thereof and shall not be considered
in
interpreting or construing this Agreement.
14.6
Governing
Law.
This
Agreement shall be construed and interpreted in accordance with the laws
of the
State of New York.
14.7
Time
Periods.
If the
final day of any time period or limitation set out in any provision of
this
Agreement falls on a Saturday, Sunday or legal holiday under the laws of
the
State
of New York or the Federal government, then and in such event the time
of such
period
shall be
extended to the next day which is not a Saturday, Sunday or legal
holiday.
14.8
Counterparts.
This
Agreement may be executed in any number of counterparts and by either party
hereto on a separate counterpart, each of which when so executed and delivered
shall be deemed an original and all of which taken together shall constitute
but
one and the same instrument.
14.9
Survival.
Except
as otherwise provided herein, all covenants and agreements contained in
the
Agreement which contemplate performance after the Closing Date and all
representations, warranties and indemnities contained in this Agreement
shall
expressly survive the Closing and shall not be deemed to merge into the
other
closing documents or be waived by Seller or Purchaser.
14.10
Further
Acts.
In
addition to the acts, deeds, instruments and agreements recited
herein and contemplated to be performed, executed and delivered by Purchaser
and
Seller
shall
perform, execute and deliver or cause to be performed, executed and delivered
at
the closing or after the Closing, any and all further acts, deeds, instruments
and agreements and provide such further assurances as the other party or
the
Title Company may reasonably require to consummate the transactions contemplated
hereunder.
14.11
Severability.
In case
any one or more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in
any
respect, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof, and this Agreement shall be construed as if such invalid, illegal
or
unenforceable provision had never been contained herein.
14.12
Attorneys'
Fees.
Should
either party employ an attorney or attorneys to enforce any of the provisions
hereof or to protect such party's interest in any manner arising under
this
Agreement, or to recover damages for breach of this Agreement, the nonprevailing
party in any action pursued in a court of competent jurisdiction (the finality
of which is not legally contested) agrees to pay to the prevailing party
all
reasonable costs, damages, and expenses, including attorneys' fees, expended
or
incurred in connection therewith.
-24-
14.13
Joint
and Several Liability.
The
obligations of each Seller hereunder shall be joint and several.
14.14
Indemnity.
Irrespective of whether this Agreement is terminated or the transactions
contemplated herein close, Seller shall indemnify and hold harmless Purchaser
and its affiliates, directors, officers, employees, attorneys and
representatives (each an "Indemnified Person") from and against all suits,
actions, proceedings, claims, damages, losses, liabilities and expenses
(including, but not limited to, attorneys' fees and disbursements and other
costs of investigation or defense, including those incurred upon any appeal),
that may be instituted or asserted
against or incurred by any such Indemnified Person in connection with,
or
arising out of,
this
Agreement or the transactions contemplated hereunder, the documentation
related
thereto, any
actions or failure to act in connection therewith, and any and all environmental
liabilities and
legal
costs and expenses arising out of or incurred in connection with any disputes
between or among
any
parties to any of the foregoing, and any investigation, litigation, or
proceeding related to
such
matters, whether or not such suit, action, proceeding, investigation or
litigation is brought
by
Seller, any of its equity holders or creditors, an Indemnified Person or
any
other person or entity, and whether or not an Indemnified Person is otherwise
a
party thereto. Notwithstanding the preceding sentence, Seller shall not
be
liable for any indemnification to an Indemnified Person to the extent that
any
such suit, action, proceeding, claim, damage, loss, liability or expense
results
solely from that Indemnified Person's gross negligence or willful misconduct.
Under no circumstances shall Purchaser or any of its affiliates be liable
to
Seller or any other person or entity for any punitive, exemplary, consequential
or indirect damages in connection with this Agreement regardless of whether
the
transactions contemplated herein close, provided, however, that nothing
in this
sentence shall be deemed to modify any obligation of Purchaser to pay liquidated
damages if required pursuant to Section 11.3 hereof. The obligations set
forth
in this Section 14.14 shall expressly survive the Closing or any termination
of
this Agreement.
-25-
IN
WITNESS WHEREOF, this Agreement has been entered into effective as of
the
day
and year first above written.
SELLER:
AMERCO
REAL ESTATE COMPANY, a Nevada
corporation
By:
/s/ Gary B. Horton
Gary B. Horton
Title:
Assistant
Treasurer
U-HAUL
INTERNATIONAL, INC., a Nevada corporation
By:
/s/ Gary B. Horton
Gary B. Horton
Title:
Assistant
Treasurer
PURCHASER:
UH
STORAGE (DE) LIMITED PARTNERSHIP, a
Delaware limited partnership
By:
UH
STORAGE GP
(DE) QRS 15-S0, INC. a Delaware corporation, its general partner
By:
/s/ Anne R. Coolidge
Anne R. Coolidge
Title:
President
EXHIBIT
A-1
Description
of BMO Properties
|
Prop
# Name
|
Address
|
City
|
State
|
|
BMO
721024 U-HAUL CENTER PRESCOTT
|
2222
HIGHWAY 69
|
PRESCOTT
|
AZ
|
|
BMO
721025
U-HAUL
CENTER CAVE CREEK
|
20618
N CAVE CREEK RD
|
PHOENIX
|
AZ
|
| BMO
721034
U-HAUL
CENTER ANTHEM RV
|
42102
NORTH VISION WAY
|
PHOENIX
|
AZ
|
| BMO
721045
U-HAUL
CENTER ANTHEM WAY & RV
|
42301
N 41ST DR
|
PHOENIX
|
AZ
|
| BMO
721046
U-HAUL
CENTER 1-17
&
DEER VLY
|
DEER
VALLEY COMMERCE CENTER
|
PHOENIX
|
AZ
|
| BMO
722036
U-HAUL
CTR CHAMBERS &I-70
|
3953
CHAMBERS RD
|
AURORA
|
CO
|
| BMO
729051
U-HAUL
CTR OF APPLE VALLEY
|
6895
151ST STREET NORTH
|
APPLE
VALLEY
|
MN
|
| BMO
734032
U-HAUL
CENTER OF LENEXA
|
9250
MARSHALL DR
|
LENEXA
|
KS
|
| BMO
736051
U-HAUL
CENTER ST PETERS
|
3990
NORTH SERVICE RD
|
ST
PETERS
|
MO
|
| BMO
736054
U-HAUL
CENTER 0 FALLON
|
2000
HIGHWAY K
|
O'FALLON
|
MO
|
| BMO
737028
U-HAUL
CTR CEN-TEX
|
3405
E CENTRAL TEXAS EXPRESSWAY
|
KILLEEN
|
TX
|
| BMO
741025
U-HAUL
CENTER WEST MCKINNEY
|
10061
W UNIVERSITY DR
|
MCKINNEY
|
TX
|
| BMO
746043
U-HAUL
CTR OF LEAGUE CITY
|
351
GULF FREEWAY SOUTH
|
LEAGUE
CITY
|
TX
|
| BMO
757026
U-HAUL
CENTER OF ALSIP
|
11855
S CICERO AVE
|
ALSIP
|
IL
|
| BMO
757031
U-HAUL
CENTER OF FOX VALLEY
|
SWC
RTE 59 & RTE 34 (OGDEN AVE)
|
AURORA
|
IL
|
| BMO
757053
U-HAUL
CENTER OF NAPERVILLE
|
11238
STATE RTE 59
|
NAPERVILLE
|
IL
|
| BMO
759051
U-HAUL
CENTER MERRILLVILLE
|
1650
W 81ST AVENUE
|
MERRILLVILLE
|
IN
|
| BMO
772057
U-HAUL
CTR OF COOL SPRINGS
|
MOORES
LANE AND MALLORY
|
BRENTWOOD
|
IN
|
| BMO
776055
U-HAUL
CENTER OF HIGHWAY 124
|
2040
SCENIC HWY
|
SNELLVILLE
|
GA
|
| BMO
777023
U-HAUL
CENTER S COBB & 1285
|
5285
S COBB PARKWAY
|
SMYRNA
|
GA
|
| BMO
777026
U-HAUL
CENTER KENNESAW
|
2085
COBB PARKWAY
|
KENNESSAW
|
GA
|
| BMO
784052
U-HAUL
CENTER OF MANDARIN
|
11490
SAN JOSE BLVD
|
JACKSONVILLE
|
GA
|
| BMO
785038
U-HAUL
CENTER HUNTERS CREEK
|
13301
S ORANGE BLOSSOM TRAIL
|
ORLANDO
|
GA
|
| BMO
785041
U-HAUL
CENTER OCOEE
|
11410
W COLONIAL DRIVE
|
OCOEE
|
GA
|
| BMO
786042
U-HAUL
CENTER GANDY BLVD
|
3939
W GANDY BLVD
|
TAMPA
|
GA
|
| BMO
795048
U-HAUL
DUMFRIES
|
10480
DUMFRIES RD
|
MANASSAS
|
VA
|
| BMO
795051
U-HAUL
CENTER NEWINGTON**
|
8207
TERMINAL RD
|
NEWINGTON
|
VA
|
| BMO
796036
U-HAUL
CENTER STOUGHTON
|
224-250
WASHINGTON ST
|
STROUGHTON
|
MA
|
| BMO
825025
U-HAUL
CENTER OF SOUTHPARK
|
804-830
ROSLYN RD
|
VA
|
|
| BMO
829054
U-HAUL
CENTER LAKE MARY
|
3851
S ORLANDO DR
|
SANFORD
|
FL
|
| BMO
829057
U-HAUL
CTR OF SEMORAN BLVD**
|
SEMORAN
BLVD AND CASSELTON DR
|
WINTER
PARK
|
FL
|
| BMO
834025
U-HAUL
CENTER BUCKLEY ROAD
|
750
SOUTH BUCKLEY RD
|
AURORA
|
CO
|
| BMO
834035
U-HAUL
HIGHLANDS RANCH
|
1750
E COUNTY LINE RD
|
LITTLETON
|
CO
|
| BMO
836023
U-HAUL
CENTER GRAPEVINE
|
3501
WILLIAM D TATE AVE
|
GRAPEVINE
|
TX
|
| BMO
838023
U-HAUL
CENTER WEST CRAIG RD
|
160
W CRAIG RD
|
NORTH
LAS VEGAS
|
NV
|
| BMO
838025
U-HAUL
CENTER NELLIS BLVD
|
333
N. NELLIS (AT STEWART)
|
LAS
VEGAS
|
NV
|
| BMO
838058
U-HAUL
HENDERSON
|
1098
STEPHANIE PLACE
|
HENDERSON
|
NV
|
| BMO
884024
U-HAUL
STORAGE HATTIESBURG
|
1303
W 7TH ST
|
HATTIESBURG
|
MS
|
| BMO
884056
U-HAUL
STORAGE DE SOTO
|
1245
S BECKLEY
|
DESOTO
|
TX
|
| BMO
884066
U-HAUL
STG KINGSLEY/JUPITER
|
11383
AMANDA LANE
|
DALLAS
|
TX
|
| BMO
884068
U-HAUL
STORAGE RAINBOW
|
2450
N. RAINBOW BLVD
|
LAS
VEGAS
|
NV
|
| BMO
884069
U-HAUL
STORAGE KEY LARGO
|
103530
OVERSEAS HIGHWAY
|
KEY
LARGO
|
FL
|
| BMO
884075
U-HAUL
STORAGE NORTHERN LIGHTS
|
3850
CLEVELAND AVE
|
COLUMBUS
|
OH
|
| BMO
884077
U-HAUL
STORAGE OXFORD
|
247
HIGHWAY 78 WEST
|
OXFORD
|
AL
|
| BMO
884080
U-HAUL
STORAGE COLONIAL BLVD
|
4457
KERNEL CIRCLE
|
FT
MYERS
|
FL
|
| BMO
884083
U-HAUL
STORAGE FOUNTAIN HILLS
|
9264
TECHNOLOGY DRIVE
|
FOUNTAIN
HILLS
|
AZ
|
| BMO
829053
U-HAUL
CENTER ORANGE CITY
|
2395
SOUTH VOLUSIA AVE
|
ORANGE
CITY
|
FL
|
EXHIBIT
A-2
Description
of the Citicorp Properties
|
Citibank
|
Prop#
721044
|
Name
GRAND
AVE & BELL RD MOVING CTR
|
ADDRESS
13440
W BELL RD
|
City
SURPRISE
|
St
AZ
|
|
Citibank
|
721047
|
U-HAUL
CENTER 87TH & BELL ROAD
|
8746
W BELL RD
|
PEORIA
|
AZ
|
|
Citibank
|
724024
|
U-HAUL
CTR & STG OF MONTANA
|
8450
MONTANA AVE
|
EL
PASO
|
TX
|
|
Citibank
|
724026
|
U-HAUL
CENTER RIO RANCHO
|
1401
RIO RANCHO BLVD
|
RIO
RANCHO
|
NM
|
|
Citibank
|
737023
|
U-HAUL
CENTER SLAUGHTER LANE
|
9000
S.
I
H35
|
AUSTIN
|
TX
|
|
Citibank
|
739050
|
UHC
OF CRYSTAL LAKE
|
4504
W. NORTHWEST HWY
|
CRYSTAL
LAKE
|
IL
|
|
Citibank
|
741027
|
U-HAUL
CENTER TOLLWAY
|
1501
N DALLAS PARKWAY
|
PLANO
|
TX
|
|
Citibank
|
741041
|
U-HAUL
CENTER OF LEWISVILLE
|
COLLEGE
PARKWAY &I-35
E
|
LEWISVILLE
|
TX
|
|
Citibank
|
745057
|
U-HAUL
CENTER 290 & FAIRBANKS
|
14225
NORTHWEST FREEWAY
|
HOUSTON
|
TX
|
|
Citibank
|
746028
|
U-HAUL
CENTER HIGHWAY 6 S
|
8501
HIGHWAY 6 SOUTH
|
HOUSTON
|
TX
|
|
Citibank
|
746044
|
U-HAUL
CENTER KATY
|
20435
KATY FREEWAY
|
HOUSTON
|
TX
|
|
Citibank
|
776026
|
U-HAUL
CTR PLEASANT HILL
|
1290
PLEASANT HILL RD
|
LAWRENCEVILLE
|
GA
|
|
Citibank
|
776034
|
U-HAUL
CENTER OF CONYER
|
1150
DOGWOOD DR
|
CONYER
|
GA
|
|
Citibank
|
777025
|
U-HAUL
CENTER HWY 85
|
7242
US HWY 85
|
RIVERDALE
|
GA
|
|
Citibank
|
780022
|
U-HAUL
CENTER OF GASTONIA
|
3919
E. FRANKLIN BLVD
|
GASTONIA
|
NC
|
|
Citibank
|
785027
|
U-HAUL
CENTER KIRKMAN ROAD
|
600
S KIRKMAN RD
|
ORLANDO
|
FL
|
|
Citibank
|
795038
|
U-HAUL
CENTER OF CHANTILLY
|
3995
WESTFAX
DR
|
FAIRFAX
|
VA
|
|
Citibank
|
795065
|
U-HAUL
CENTER POTOMAC MILLS
|
14523
TELEGRAPH RD
|
WOODBRIDGE
|
VA
|
|
Citibank
|
803034
|
U-HAUL
BRUCKNER & 138 STREET
|
780
E 138TH STREET
|
BRONX
|
NY
|
|
Citibank
|
818034
|
U-HAUL
CENTER OF CENTRAL AVE
|
8671
CENTRAL AVE
|
CAPITAL
HEIGHTS
|
MD
|
|
Citibank
|
836026
|
U-HAUL
CENTER JOHN T WHITE
|
1101
N LOOP 820
|
FORT
WORTH
|
TX
|
|
Citibank
|
838024
|
U-HAUL
CTR S LAS VEGAS BLVD
|
8620
S LAS VEGAS BLVD
|
LAS
VEGAS
|
NV
|
|
Citibank
|
882059
|
U-HAUL
STORAGE SOUTH 40TH ST
|
3425
S. 40TH STREET
|
PHOENIX
|
AZ
|
|
Citibank
|
883046
|
U-HAUL
STORAGE HYLTON ROAD
|
8505
CRESCENT BLVD
|
PENSAUKEN
|
NJ
|
|
Citibank
|
883064
|
U-HAUL
STORAGE MONTGOMERY ST
|
499
MONTGOMERY ST
|
CHICOPEE
|
MA
|
|
Citibank
|
884057
|
U-HAUL
STORAGE BARKSDALE
|
4100
BARKSDALE BLVD, SUITE 108
|
BOSSIER
CITY
|
LA
|
|
Citibank
|
884067
|
U-HAUL
STORAGE STILLWATER
|
5715
W
6TH ST
|
STILLWATER
|
OK
|
|
Citibank
|
884073
|
U-HAUL
STORAGE OF MAITLAND
|
7803
N ORANGE BLOSSOM TRAIL
|
ORLANDO
|
FL
|
|
Citibank
|
884078
|
U-HAUL
STG COLLINS STREET
|
2729
N COLLINS ST
|
ARLINGTON
|
TX
|
|
Citibank
|
884081
|
U-HAUL
STORAGE GOVERNMENT ST**
|
2505
GOVERNMENT
BLVD
|
MOBILE
|
AL
|
|
Citibank
|
884082
|
U-HAUL
CENTER GATORLAND
|
14500
S ORANGE BLOSSOM TRAIL
|
ORLANDO
|
FL
|
Promissory
Note
$59,423,706.00
December
1, 2005
FOR
VALUE
RECEIVED, Private Mini Storage Realty, L.P., a Texas limited partnership
(“Borrower”),
hereby promises to pay to the order of AMERCO, a Nevada corporation (together
with any and all of its successors and assigns and/or any other holder
of this
Note, “Lender”),
without offset, in immediately available funds in lawful money of the
United
States of America, at 2727 North Central Avenue, Phoenix, Arizona 85004,
the
principal sum of Fifty-Nine Million, Four Hundred and Twenty-Three Thousand,
Seven Hundred and Six and no/100ths Dollars ($59,423,706.00) (or the
unpaid
balance of all principal advanced against this Note, if that amount is
less),
together with interest on the unpaid principal balance of this Note from
day to
day outstanding as hereinafter provided.
Section
1 Payment
Schedule and Maturity Date.
This
Promissory Note shall mature on December 1, 2017 (the “Maturity
Date”).
From
the date hereof through July 31, 2010, Borrower shall make monthly payments
to
Lender of principal and interest hereunder. Interest shall accrue hereunder
at
the Stated Rate (as hereinafter defined). The principal hereunder, together
with
any Deferred Interest (as hereinafter defined) shall be amortized on
the basis
of a thirty-year amortization schedule.
From
August 1, 2010 through July 31, 2015, Borrower shall make monthly payments
to
Lender of interest only, at the Stated Rate. There shall be no amortization
payments due and payable from August 1, 2010 through July 31, 2015.
From
August 1, 2015 through the Maturity Date, amortization payments shall
resume,
and Borrower shall make monthly payments to Lender of principal and interest
hereunder. Such principal payments shall again be amortized on the basis
of a
thirty-year amortization schedule.
All
payments hereunder of principal and interest shall be in arrears and
shall be
made on the first day or each month, commencing on January 1, 2006 and
continuing on the 1st
day of
each succeeding month through and including the Maturity Date. The entire
principal balance of this Note then unpaid, together with all accrued
and unpaid
interest and Deferred Interest, if any, and all other amounts payable
hereunder,
shall be due and payable in full on the Maturity Date.
At
Borrower’s request and the approval by Lender in Lender’s sole discretion, the
Maturity Date may be extended to December 1, 2020.
Section
2 Interest
Rate; Deferral of Portion of Interest.
(a) The
unpaid principal balance of this Note from day to day outstanding, which
is not
past due, shall bear interest at a fixed rate of 7% per annum from December
1,
2005 through November 30, 2007; 7.5% per annum from December 1, 2007
through
November 30, 2009; 8% per annum from December 1, 2009 through the Maturity
Date
(as may be extended as
provided
herein) (collectively, as applicable, the “Stated
Rate”).
Interest shall be computed for the actual number of days which have elapsed,
on
the basis of a 365-day year.
(b) If
any
amount payable by Borrower hereunder is not paid when due (without regard
to any
applicable grace periods), such amount shall thereafter bear interest
at a fixed
rate of the then-applicable Stated Rate plus
two
percent (the “Past
Due Rate”)
per
annum, to the fullest extent permitted by applicable law.
(c) Notwithstanding
the foregoing or any other provision in this instrument to the contrary,
Borrower shall have the right to make a minimum payment of interest hereunder
for such month at a pay rate equal to two percent (2%) per annum of the
outstanding principal hereunder. In such event, the deferred amount (meaning
the
amount otherwise due pursuant to Section 1 above, less the amount actually
paid
pursuant to this Section 2(c)) shall be deferred, added to the principal
balance
hereunder, and shall accrue interest at the Stated Rate.
Section
3 Prepayment.
Borrower
may prepay the principal balance of this Note, in full at any time or
in part
from time to time, without fee, premium or penalty of any nature or kind
whatsoever.
Section
4 Certain
Provisions Regarding Payments.
All
payments made under this Note shall be applied, to the extent thereof
to accrued
but unpaid interest, to unpaid principal, and to any other sums due and
unpaid
to Lender under this Note in such manner and order as Lender may elect.
Remittances shall be made without offset, demand, counterclaim, deduction,
or
recoupment (each of which is hereby waived) and shall be accepted subject
to the
condition that any check or draft may be handled for collection in accordance
with the practice of the collecting bank or banks. Acceptance by Lender
of any
payment in an amount less than the amount then due on any indebtedness
shall be
deemed an acceptance on account only, notwithstanding any notation on
or
accompanying such partial payment to the contrary, and shall not in any
way (a)
waive or excuse the existence of an Event of Default, (b) waive, impair
or
extinguish any right or remedy available to Lender hereunder, or (c)
waive the
requirement of punctual payment and performance or constitute a novation
in any
respect. Whenever
any payment under this Note falls due on a day which is not a Business
Day, such
payment may be made on the next succeeding Business Day.
Section
5 Representations
and Warranties.
As of
the date hereof, Borrower hereby represents and warrants to Lender as
follows:
(a) The
Borrower is a Texas limited partnership, duly organized and qualified
to do
business under the laws of the State of Texas with the power and authority
to
enter into this Note and to conduct its business as currently conducted
and to
own its assets;
(b) The
execution and delivery of and performance by the Borrower of its obligations
under this Agreement are within the power and authority of the Borrower,
and
have been duly authorized by all necessary partnership action of the
Borrower;
and
(c) This
Note
is a legal, valid and binding agreement of the Borrower, enforceable
against the
Borrower in accordance with its terms, except as such enforceability
may be
limited by the Borrower’s bankruptcy, insolvency, reorganization, moratorium or
other laws or equitable principles relating to or limiting creditors’ rights
generally and except indemnifications to the extent unenforceable as
a matter of
public policy,
and
any
instrument or agreement required hereunder, when executed and delivered,
will be
similarly legal, valid, binding and enforceable.
Section
6 Events
of Default.
The
occurrence of any one or more of the following shall constitute an “Event
of Default”
under
this Note:
(a) Borrower
fails to pay when and as due and payable any amounts payable by Borrower
to
Lender under the terms of this Note and such failure continues for
one-
undred
and eighty (180) calendar days after Borrower’s receipt of written notice from
Lender of its failure to pay such amounts and Lender determines in its
sole
discretion that there is
no
reasonable likelihood that Borrower will cure such failure within a reasonable
period of time thereafter.
(b) Any
other
covenant, agreement or condition in this Note is not fully and timely
performed,
observed or kept, and such failure to perform, observe or keep
continues
for thirty (30) days after Borrower’s receipt of written notice from Lender of
its failure to so perform.
(c) The
Borrower files a bankruptcy petition, a bankruptcy petition is filed
against any
of the foregoing parties, or the Borrower makes a general assignment
for
the
benefit
of creditors.
(d) A
receiver or similar official is appointed for a substantial portion of
the
Borrower’s business, or the business is terminated, or, the Borrower is
liquidated or
dissolved.
Section
7 Remedies.
Upon
the occurrence of an Event of Default, Lender may at any time thereafter
exercise any one or more of the following rights, powers and
remedies:
(a) Lender
may accelerate the maturity date and declare the unpaid principal balance
and
accrued but unpaid interest on this Note, and all other amounts
payable
hereunder,
at once due and payable, and upon such declaration the same shall at
once be due
and payable.
(b) Lender
may set off the amount due against any and all accounts, credits, money,
securities or other property now or hereafter on deposit with, held by
or in
the
possession
of Lender to the credit or for the account of Borrower, without notice
to or the
consent of Borrower.
(c) Lender
may exercise any of its other rights, powers and remedies at law or in
equity.
Section
8 Remedies
Cumulative.
All of
the rights and remedies of Lender under this Note are cumulative of each
other
and of any and all other rights at law or in equity, and the exercise
by Lender
of any one or more of such rights and remedies shall not preclude the
simultaneous or later exercise by Lender of any or all such other rights
and
remedies. No single or partial exercise of any right or remedy shall
exhaust it
or preclude any other or further exercise thereof, and every right and
remedy
may be exercised at any time and from time to time. No failure by Lender
to
exercise, nor delay in exercising, any right or remedy shall operate
as a waiver
of such right or remedy or as a waiver of any Event of Default.
Section
9 Costs
and Expenses of Enforcement.
Borrower agrees to pay to Lender on demand all costs and expenses incurred
by
Lender in seeking to collect this Note, including court costs and reasonable
out-of-
Section
10 Heirs,
Successors and Assigns.
The
terms of this Note shall bind and inure to the benefit of the representatives,
successors and assigns of the parties.
Section
11 General
Provisions.
Time is
of the essence with respect to Borrower’s obligations under this Note. Borrower
hereby (a) waives demand, presentment for payment, notice of dishonor
and of
nonpayment, protest, notice of protest, notice of intent to accelerate,
notice
of acceleration and all other notices (except any notices which are specifically
required by this Note) or filing of suit and diligence in collecting
this Note,
consent to any extensions or postponements of time of payment of this
Note for
any period or periods of time and to any partial payments, before or
after
maturity, and to any other indulgences with respect hereto, without notice
thereof to any of them; (b) submits (and waives all rights to object)
to
non-exclusive personal jurisdiction of any state or federal court sitting
in the
state and county in which payment of this Note is to be made for the
enforcement
of any and all obligations under this Note; and (c) waive the benefit
of all
homestead and similar exemptions as to this Note. A determination that
any
provision of this Note is unenforceable or invalid shall not affect the
enforceability or validity of any other provision and the determination
that the
application of any provision of this Note to any person or circumstance
is
illegal or unenforceable shall not affect the enforceability or validity
of such
provision as it may apply to other persons or circumstances. This Note
may not
be amended except in a writing specifically intended for such purpose
and
executed by the party against whom enforcement of the amendment is sought.
Captions and headings in this Note are for convenience only and shall
be
disregarded in construing it. This Note and its validity, enforcement
and
interpretation shall be governed by the laws of the state in which payment
of
this Note is to be made (without regard to any principles of conflicts
of laws)
and applicable United States federal law. Whenever a time of day is referred
to
herein, unless otherwise specified such time shall be the local time
of the
place where payment of this Note is to be made. The term “Business Day” shall
mean a day on which U.S. banks are open for the conduct of substantially
all of
their banking business in the city in which this Note is payable (excluding
Saturdays and Sundays). The words “include” and “including” shall be interpreted
as if followed by the words “without limitation.”
Section
12 Notices.
Any
notice, request, or demand to or upon Borrower or Lender shall be deemed
to have
been properly given or made when delivered in
writing to the intended recipient at the address specified below or,
as to any
party hereto, at such other address as shall be designated by such party
in a
notice to each other party hereto. Except as otherwise provided in this
Notice,
all such communications shall be deemed to have been duly given when
transmitted
by telecopier or personally delivered or, in the case of a mailed notice,
upon
receipt.
Notice
addresses for Lender and Borrower are as follows:
If
to
Lender:
U-Haul
International, Inc.
2727
N.
Central Avenue
Phoenix,
AZ 85004
Attn:
Jason Berg
If
to
Borrower:
Private
Mini Storage Realty, L.P.
c/o
Five
SAC Self-Storage Corporation
715
South
Country Club Drive
Mesa,
AZ
85210
Attn:
Bruce Brockhagen
Section
13 No
Usury.
It is
expressly stipulated and agreed to be the intent of Borrower and Lender
at all
times to comply with applicable state law or applicable United States
federal
law (to the extent that it permits Lender to contract for, charge, take,
reserve, or receive a greater amount of interest than under state law)
and that
this Section shall control every other covenant and agreement in this
Note. If
applicable state or federal law should at any time be judicially interpreted
so
as to render usurious any amount called for under this Note or contracted
for,
charged, taken, reserved, or received with respect to the Loan, or if
Lender’s
exercise of the option to accelerate the maturity date, or if any prepayment
by
Borrower results in Borrower having paid any interest in excess of that
permitted by applicable law, then it is Lender’s express intent that all excess
amounts theretofore collected by Lender shall be credited on the principal
balance of this Note and the provisions of this Note shall immediately
be deemed
reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new documents,
so as to
comply with the applicable law, but so as to permit the recovery of the
fullest
amount otherwise called for hereunder or thereunder. All sums paid or
agreed to
be paid to Lender for the use or forbearance of the Loan shall, to the
extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan.
Section
14 Security.
To
secure
Borrower’s obligations under this Note, Borrower hereby grants, pledges,
hypothecates, transfers and assigns to Lender a first priority and continuing
lien on and first priority security interest in all of Borrower’s right, title,
ownership, and equity interests in PM Preferred Jr. Mezz, LLC and PM
Partners
Jr. Mezz, LLC (“Pledged Collateral”). On or before the date hereof, Borrower
will execute and deliver to Lender for filing one or more financing statements
in connection with the Pledged Collateral in the form required to properly
perfect Lender’s security interest in the Pledged Collateral in all
jurisdictions deemed appropriate by Lender. Borrower shall also execute
such
security agreements as are required in connection with the foregoing
pledge.
Section
15. Renewal
and Extensions; Termination of Agreements.
This
Note is executed in renewal, extension and consolidation of certain indebtedness
created and evidenced by that certain (i) letter agreement dated as of
February
28, 2003 from AMERCO and U-Haul International, Inc. addressed to Private
Mini
Storage Realty, L.P. and agreed and accepted by Private Mini Storage
Realty,
L.P., GJR Master limited Partnership, GJR Management Holdings, L.P. and
Private
Mini Storage, Inc.; (ii) Support Party Agreement dated December 30, 1997
among
AMERCO, Private Mini Storage Realty, L.P., in favor of The Chase Manhattan
Bank
as Administrative Agent for the Lenders identified therein; and (iii)
Non-Exoneration Agreement dated as of March 3, 2003 made by AMERCO in
favor of
JP Morgan Chase Bank as Administrative Agent for the benefit of the lenders
identified therein (collectively, the “Support Loan Documents”). Lender and
Borrower agree that all of the Support Loan Documents are hereby consolidated
and merged into this Note, and are hereby terminated and extinguished
in their
entirety, and that this Note represents the entire agreement between
Lender and
Borrower with respect to all of the indebtedness evidenced hereby.
IN
WITNESS WHEREOF, Borrower has duly executed this Note as of the date
first above
written.
Borrower:
PRIVATE
MINI STORAGE REALTY, L.P.,
a
Texas
limited partnership
By:
Storage Realty L.L.C., a Texas limited liability company
By:
Name:
Title:
Promissory
Note
$11,700,000.00
December
1, 2005
FOR
VALUE
RECEIVED, PMSI Investors, LLC, a Texas limited liability company, (“Borrower”),
hereby promises to pay to the order of U-Haul International, Inc., a Nevada
corporation (together with any and all of its successors and assigns and/or
any
other holder of this Note, “Lender”),
without offset, in immediately available funds in lawful money of the United
States of America, at 2727 North Central Avenue, Phoenix, Arizona 85004,
the
principal sum of Eleven Million, Seven Hundred Thousand and no/100ths Dollars
($11,700,000.00) (or the unpaid balance of all principal advanced against
this
Note, if that amount is less), together with interest on the unpaid principal
balance of this Note from day to day outstanding as hereinafter
provided.
Section
1 Payment
Schedule and Maturity Date.
From
the
date hereof through December 1, 2020 (the “Maturity
Date”),
Borrower shall make quarterly payments to Lender of principal and interest
hereunder. Interest shall accrue hereunder at the Stated Rate (as hereinafter
defined). The principal hereunder, together with any Deferred Interest (as
hereinafter defined) shall be amortized on the basis of a twenty-year
amortization schedule. All payments hereunder of principal and interest shall
be
in arrears and shall be made on the first day or each quarter, commencing
on
January 1, 2006 and continuing on the 1st
day of
each succeeding quarter through and including the Maturity Date. The entire
principal balance of this Note then unpaid, together with all accrued and
unpaid
interest and Deferred Interest, if any, and all other amounts payable hereunder,
shall be due and payable in full on the Maturity Date.
Section
2 Interest
Rate; Deferral of Portion of Interest.
(a) The
unpaid principal balance of this Note from day to day outstanding, which
is not
past due, shall bear interest at a fixed rate of seven percent (7%) per annum
from December 1, 2005 through November 30, 2006; eight percent (8%) per annum
from December 1, 2006 through November 30, 2007; and nine percent (9%) per
annum
from December 1, 2007 through the Maturity Date (collectively, as applicable,
the “Stated
Rate”).
Interest shall be computed for the actual number of days which have elapsed,
on
the basis of a 365-day year.
(b) If
any
amount payable by Borrower hereunder is not paid when due (without regard
to any
applicable grace periods), such amount shall thereafter bear interest at
a fixed
rate of the then-applicable Stated Rate plus
two
percent (the “Past
Due Rate”)
per
annum, to the fullest extent permitted by applicable law.
(c) Notwithstanding
the foregoing or any other provision in this instrument to the contrary,
Borrower shall have the right to make a minimum payment of interest hereunder
for such quarter at a pay rate equal to two percent (2%) per annum of the
outstanding principal hereunder. In such event, the deferred amount (meaning
the
amount otherwise due pursuant to Section 1 above, less the amount actually
paid
pursuant to this Section 2(c)) shall be deferred, added to the principal
balance
hereunder, and shall accrue interest at the Stated Rate.
Section
3 Prepayment.
Borrower
may prepay the principal balance of this Note, in full at any time or in
part
from time to time, without fee, premium or penalty of any nature or kind
whatsoever.
Section
4 Certain
Provisions Regarding Payments.
All
payments made under this Note shall be applied, to the extent thereof to
accrued
but unpaid interest, to unpaid principal, and to any other sums due and unpaid
to Lender under this Note in such manner and order as Lender may elect.
Remittances shall be made without offset, demand, counterclaim, deduction,
or
recoupment (each of which is hereby waived) and shall be accepted subject
to the
condition that any check or draft may be handled for collection in accordance
with the practice of the collecting bank or banks. Acceptance by Lender of
any
payment in an amount less than the amount then due on any indebtedness shall
be
deemed an acceptance on account only, notwithstanding any notation on or
accompanying such partial payment to the contrary, and shall not in any way
(a)
waive or excuse the existence of an Event of Default, (b) waive, impair or
extinguish any right or remedy available to Lender hereunder, or (c) waive
the
requirement of punctual payment and performance or constitute a novation
in any
respect. Whenever
any payment under this Note falls due on a day which is not a Business Day,
such
payment may be made on the next succeeding Business Day.
Section
5 Representations
and Warranties.
As of
the date hereof, Borrower hereby represents and warrants to Lender as
follows:
(a) The
Borrower is a Texas limited liability company, duly organized and qualified
to
do business under the laws of the State of Texas with the power and authority
to
enter into this Note and to conduct its business as currently conducted and
to
own its assets;
(b) The
execution and delivery of and performance by the Borrower of its obligations
under this Agreement are within the power and authority of the Borrower,
and
have been duly authorized by all necessary limited liability company action
of
the Borrower; and
(c) This
Note
is a legal, valid and binding agreement of the Borrower, enforceable against
the
Borrower in accordance with its terms, except as such enforceability may
be
limited by the Borrower’s bankruptcy, insolvency, reorganization, moratorium or
other laws or equitable principles relating to or limiting creditors’ rights
generally and except indemnifications to the extent unenforceable as a matter
of
public policy, and any instrument or agreement required hereunder, when executed
and delivered, will be similarly legal, valid, binding and
enforceable.
Section
6 Events
of Default.
The
occurrence of any one or more of the following shall constitute an “Event
of Default”
under
this Note:
(a) Borrower
fails to pay when and as due and payable any amounts payable by Borrower
to
Lender under the terms of this Note and such failure continues for one-hundred
and eighty (180) calendar days after Borrower’s receipt of written notice from
Lender of its failure to pay such amounts and Lender determines in its sole
discretion that there is no reasonable likelihood that Borrower will cure
such
failure within a reasonable period of time thereafter.
(b) Any
other
covenant, agreement or condition in this Note is not fully and timely performed,
observed or kept, and such failure to perform, observe or keep continues
for
thirty (30) days after Borrower’s receipt of written notice from Lender of its
failure to so perform.
(c) The
Borrower files a bankruptcy petition, a bankruptcy petition is filed against
any
of the foregoing parties, or the Borrower makes a general assignment for
the
benefit of creditors.
(d) A
receiver or similar official is appointed for a substantial portion of the
Borrower’s business, or the business is terminated, or, the Borrower is
liquidated or dissolved.
Section
7 Remedies.
Upon
the occurrence of an Event of Default, Lender may at any time thereafter
exercise any one or more of the following rights, powers and
remedies:
(a) Lender
may accelerate the maturity date and declare the unpaid principal balance
and
accrued but unpaid interest on this Note, and all other amounts payable
hereunder, at once due and payable, and upon such declaration the same shall
at
once be due and payable.
(b) Lender
may set off the amount due against any and all accounts, credits, money,
securities or other property now or hereafter on deposit with, held by or
in the
possession of Lender to the credit or for the account of Borrower, without
notice to or the consent of Borrower.
(c) Lender
may exercise any of its other rights, powers and remedies at law or in
equity.
Section
8 Remedies
Cumulative.
All of
the rights and remedies of Lender under this Note are cumulative of each
other
and of any and all other rights at law or in equity, and the exercise by
Lender
of any one or more of such rights and remedies shall not preclude the
simultaneous or later exercise by Lender of any or all such other rights
and
remedies. No single or partial exercise of any right or remedy shall exhaust
it
or preclude any other or further exercise thereof, and every right and remedy
may be exercised at any time and from time to time. No failure by Lender
to
exercise, nor delay in exercising, any right or remedy shall operate as a
waiver
of such right or remedy or as a waiver of any Event of Default.
Section
9 Costs
and Expenses of Enforcement.
Borrower agrees to pay to Lender on demand all costs and expenses incurred
by
Lender in seeking to collect this Note, including court costs and reasonable
out-of-pocket attorneys’ fees and expenses, whether or not suit is filed hereon,
or whether in connection with bankruptcy, insolvency or appeal.
Section
10 Heirs,
Successors and Assigns.
The
terms of this Note shall bind and inure to the benefit of the representatives,
successors and assigns of the parties.
Section
11 General
Provisions.
Time is
of the essence with respect to Borrower’s obligations under this Note. Borrower
hereby (a) waives demand, presentment for payment, notice of dishonor and
of
nonpayment, protest, notice of protest, notice of intent to accelerate, notice
of acceleration and all other notices (except any notices which are specifically
required by this Note) or filing of suit and diligence in collecting this
Note,
consent to any extensions or postponements of time of payment of this Note
for
any period or periods of time and to any partial payments, before or after
maturity, and to any other indulgences with respect hereto, without notice
thereof to any of them; (b) submits (and waives all rights to object) to
non-exclusive personal jurisdiction of any state or
Section
12 Notices.
Any
notice, request, or demand to or upon Borrower or Lender shall be deemed
to have
been properly given or made when delivered in
writing to the intended recipient at the address specified below or, as to
any
party hereto, at such other address as shall be designated by such party
in a
notice to each other party hereto. Except as otherwise provided in this Notice,
all such communications shall be deemed to have been duly given when transmitted
by telecopier or personally delivered or, in the case of a mailed notice,
upon
receipt.
Notice
addresses for Lender and Borrower are as follows:
If
to
Lender:
U-Haul
International, Inc.
2727
N.
Central Avenue
Phoenix,
AZ 85004
Attn:
Jason Berg
If
to
Borrower:
PMSI
Investors, LLC
c/o
Five
SAC Self-Storage Corporation
715
South
Country Club Drive
Mesa,
AZ
85210
Attn:
Bruce Brockhagen
Section
13 No
Usury.
It is
expressly stipulated and agreed to be the intent of Borrower and Lender at
all
times to comply with applicable state law or applicable United States federal
law (to the extent that it permits Lender to contract for, charge, take,
reserve, or receive a greater amount of interest than under state law) and
that
this Section shall control every other covenant and agreement in this Note.
If
applicable state or federal law should at any time be judicially interpreted
so
as to render usurious any amount called for under this Note or contracted
for,
charged, taken, reserved, or received with respect to the Loan, or if Lender’s
exercise of the option to accelerate the maturity date, or if any prepayment
by
Borrower results in Borrower having paid any interest in excess of that
permitted by applicable law, then it is Lender’s express intent that all excess
amounts
Section
14 Renewal
and Extensions; Termination of Agreements.
This
Note is executed in renewal, extension and consolidation of certain indebtedness
created and evidenced by that certain (i) Promissory Note made by Private
Mini
Storage Realty, L.P. in favor of U-Haul International, Inc. dated as of February
12, 1997 and assumed by PMSI Investors, LLC as of November 30, 1999, as may
have
been amended from time to time and (ii) that certain Loan Agreement dated
as of
February 12, 1997 between U-Haul International, Inc. and Private Mini Storage
Realty, L.P., as may have been amended from time to time (collectively, the
“Prior Mezzanine Loan Documents”). Borrower and Lender hereby agree that the
Prior Mezzanine Loan Documents are hereby consolidated and merged into this
Note, and are hereby terminated and extinguished in their entirety, and that
this Note represents the entire agreement between Lender and Borrower with
respect to all of the indebtedness evidenced hereby.
IN
WITNESS WHEREOF, Borrower has duly executed this Note as of the date first
above
written.
Borrower:
PMSI
Investors, LLC
By:
Name:
Title:
AGREEMENT
OF EXCHANGE
THIS
AGREEMENT OF EXCHANGE ("Agreement") is dated as of June 30, 2003 and is between
Oxford Life Insurance Company, an Arizona corporation ("Oxford"), Five SAC
Self-Storage Corporation, a Nevada corporation ("Five SAC").
RECITALS
WHEREAS,
Oxford directly owns a 24.9% limited partner interest (the "Direct Oxford
Interest") in Private Mini Storage Realty, LP, a Texas limited partnership
("PMSR").
WHEREAS,
Oxford entered into a Put Option (the "Put") agreement (the "Put Agreement")
with AMERCO related to PMSR thereto identified on Exhibit B.
WHEREAS,
Oxford also indirectly owns a 10.8% limited partner interest in PMSR (the
"Indirect Oxford Interest," and together with the Direct Oxford Interest,
the
"Interest") by virtue of Oxford's 35.9 % interest in PMSI Investors, LLC,
a
Texas limited liability company ("PMSI"), which entity is a 30.0% limited
partner in PMSR.
WHEREAS,
Five SAC owns the real property and improvements thereon and appurtenances
thereto identified on Exhibit A hereto (the "Property").
WHEREAS,
upon the terms and conditions set forth herein, Five SAC desires to exchange
the
Property for the Interest and the Put, and Oxford desires to exchange the
Interest and the Put for the Property.
NOW,
THEREFORE, in consideration of the foregoing, and the
representations, warranties,
covenants and agreements set forth herein, the parties hereto agree as
follows:
1.
Exchange
of Property for Interest and Put.
Upon the
terms and conditions set
forth
herein, Oxford hereby transfers, exchanges, conveys and grants to Five
SAC. its
24.9%
interest in PMSR and its 35.9% interest in PMSI, and its interests in the
Put.
Any obligations of AMERCO to Oxford under the Put Agreement shall be deemed
to
have been satisfied in full, and neither AMERCO nor Oxford shall have any
rights
or obligations
with respect to each other thereunder. In exchange therefor, Five SAC
hereby
transfers, exchanges, conveys and grants to Oxford all of Five SAC's right,
title and interest
in and to the Property. The Property shall be transferred and conveyed to
Oxford
at its
book value.
To
the
extent the value of the Property exceeds the value of the Interest and the
Put,
as mutually determined by the parties in good faith, Oxford agrees that Five
SAC
or its affiliates shall have the right to offset such excess against any
debt
owed by Five SAC or its affiliates to Oxford or against any debt owned by
Five
SAC to a third party, including without limitation AMERCO or affiliates thereof,
or Oxford shall transfer assets to reduce the inequity.
2. Representations
and Warranties.
a. Oxford
hereby represents and warrants to Five SAC that (i) it is
duly
organized, validly existing and in good standing under its jurisdiction of
incorporation; (ii) as of the Closing (as hereinafter defined) it will be
duly
authorized to effectuate the transactions contemplated by this Agreement
and all
other agreements contemplated herein and will be duly authorized to sell,
convey
and grant the Interest and Put to Five SAC;
(iii) it owns the Interest free and clear of all claims, liens and encumbrances;
(iv) it has
conducted its own due diligence with respect to the Property and acknowledges
that it is
a
sophisticated investor of real report and is acquiring the Property on an
as-is/where-is
basis
without any representation or warranty whatsoever except as otherwise expressly
provided in this Agreement.
b. Five
SAC
hereby represents and warrants to Oxford that (i) it is duly organized, validly
existing and in good standing under its jurisdiction of incorporation;
(ii)
as
of the Closing it will be duly authorized to effectuate the transactions
contemplated
by this
Agreement and all other agreements contemplated herein and will
be
duly
authorized
to sell, convey and grant the Property to Oxford; (iii) it owns the Property
free and
clear
of all claims, liens and encumbrances, other than liens for taxes not yet
due
and payable
and typical easements and restrictions that do not materially adversely impact
the
Property; (iv) it has conducted its own due diligence with respect to the
Interest, including,
without limitation, review of the various financing agreements to which
PMSR
and its
affiliates are a party, as well as the properties and other assets owned
by
PMSR,
and
acknowledges that it is a sophisticated investor and is acquiring the Interest
on an as-is/where-is
basis without any representation or warranty whatsoever, except as
otherwise expressly
provided in this Agreement; and (v) it shall indemnify, defend and forever
hold Oxford
harmless of and from any environmental liability, cost or expense with respect
to
the
Properties arising prior to the date of the conveyance.
3.
Additional
Agreements.
The
parties hereto shall execute such documents and instruments, and enter such
additional agreements as are necessary or
appropriate
under
the
circumstances in order to achieve the objectives contemplated herein. Such
additional agreements may include, without limitation, an amendment to (or
an
amendment and restatement of) the Second Amended and Restated Agreement of
Limited Partnership of PMSR, as amended; and an amendment to (or amendment
and
restatement of) the limited liability company agreement of PMSI, as amended
(collectively, the "Operative Agreements").
4.
Consents.
All
rights and obligations under this Agreement are contingent upon
and
subject to receipt of all necessary approvals for the transactions
contemplated
herein,
including approval of the relevant insurance regulatory
authorities.
5.
Closing.
Upon
satisfaction of all conditions specified herein and the mutual agreement
of the
parties hereto, the closing of the transaction contemplated by this Agreement
("Closing") shall take place. The Closing shall take place on or
before
2
June
30,
2003. Upon the Closing, Five SAC shall deliver to Oxford special warranty
deeds
for the Property, together with such other instruments as are necessary or
appropriate
in connection with the conveyance of the Property to Oxford. In addition,
the Property
shall be leased back to U-Haul affiliates pursuant to a triple net lease
("Lease")
as
agreed to by the parties. At closing, such parties shall execute and deliver
to
one another the Lease. Upon the Closing, or as soon as possible thereafter,
Oxford shall deliver, or cause delivery of, such evidence as is necessary
or
appropriate to reflect the conveyance of the Interest and Put to Five SAC,
including, without limitation, an amendment
to the Operative Agreements reflecting that Five SAC is a limited partner
of PMSR
and
a member of PMSI, and that Oxford is no longer a limited partner of PMSR
or
member
of PMSI. In addition, at Closing the parties shall execute a purchase option
pursuant to which Five SAC shall have the option to purchase the Property,
in
cash, at book
value.
6. Access
to the Property.
At all
reasonable times prior to the Closing, Oxford
shall have full access to the Property for purposes of conducting the due
diligence Oxford
deems appropriate; provided however, in the event the Closing does not
occur,
Oxford
shall return the Property to the condition in which it existed prior to the
conducting of any such due diligence.
7. Successors
and Assigns.
The
provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors
and
assigns; provided that no party may assign, delegate or otherwise transfer
any
of its rights
or
obligations under this Agreement with out the written consent. of the other
party
hereto.
8. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Arizona, without regard to the conflicts of law rules of such
state.
9. Signature
Pages.
This
Agreement may be executed in one or more counterparts, and all of such
counterpart signature pages, when taken together, shall constitute one and
the
same Agreement.
3
IN
WITNESS WHEREOF, the undersigned execute this Agreement as of the
date
set
forth above.
"Oxford" "Five
SAC"
Oxford Life Insurance Company, Five
SAC
Self-Storage Corporation, a Nevada corporation
An
Arizona corporation
By: /s/
Jason
Berg By: /s/
Mark V. Shoen
Jason
Berg, Treasurer Mark
V. Shoen,
President
4
Exhibit
A
List
of
the Properties and Book Value
|
Entity
Number Name Address
|
City
|
State
|
Book
Value
|
|
|
786046
|
UHI
Center
Citrus Park 6111 W. Gunn Highway
|
Tampa
|
FL
|
$4,886,000
|
|
818057
|
UHI
Center Landover 3900
Whitetire Road
|
Landover
|
MD
|
$5,014,384
|
|
838056
|
UHI
Center College Dr 989 Boulder Highway
|
Henderson
|
NV
|
$7,548,000
|
5
Exhibit
B
Put
Option
All
of
Oxford's rights and obligations under that certain Put Option Agreement,
dated
October 6, 2000, among AMERCO, Republic Western Insurance Company and
Oxford.
6
Exhibit
A
List
of
the Properties and Book Value
|
Entity
Number Name Address
|
City
|
State
|
Book
Value
|
|
|
786046
|
UHI
Center Citrus
Park
8111 W. Gunn Highway
|
Tampa
|
FL
|
$4,790,000
|
|
818057
|
UHI
Center Landover 3900
Whitetire
Road
|
Landover
|
MD
|
$5,000,000
|
|
838056
|
UHI
Center College Dr 989
Boulder
Highway
|
Henderson
|
NV
|
$6,690,000
|
5
AGREEMENT
OF EXCHANGE
THIS
AGREEMENT OF EXCHANGE ("Agreement") is dated as of June 30,
2003 and
is between Republic Western Insurance Company, an Arizona corporation
("RepWest"), Five SAC Self-Storage Corporation, a Nevada corporation ("Five
SAC").
RECITALS
WHEREAS,
RepWest directly owns a 30.6% limited partner interest (the "Direct RepWest
Interest") in Private Mini Storage Realty, LP, a Texas limited partnership
("PMSR").
WHEREAS,
RepWest also indirectly owns a 13.2% limited partner interest in PMSR
(the
"Indirect RepWest Interest," and together with the Direct RepWest
Interest,
the
"Interest") by virtue of RepWest's 44.1% interest in PMSI Investors, LLC, a
Texas limited liability company ("PMSI"), which entity is a 30.0% limited
partner in
PMSR.
WHEREAS,
RepWest entered into a Put Option Agreement, dated October 6, 2000 (the "Put
Agreement"), among AMERCO, RepWest and Oxford Life Insurance Company
("Oxford"):
WHEREAS,
Five SAC owns the real property and improvements thereon and appurtenances
thereto identified on Exhibit A hereto (the "Property").
WHEREAS,
upon the terms and conditions set forth herein, Five SAC desires to exchange
the Property for the specified portion of the Interest, and RepWest desires
to
exchange
the specified portion of the Interest for the Property.
WHEREAS,
simultaneous herewith, RepWest is entering into an Agreement of Exchange with
Four SAC Self-Storage Corporation ("Four SAC") to exchange the remaining portion
of the Interest for certain real property owned by Four SAC.
NOW,
THEREFORE, in consideration of the foregoing, and the
representations,
warranties, covenants and agreements set forth herein, the parties hereto agree
as follows:
1.
Exchange
of Property for Interest.
Upon the
terms and conditions set forth herein, RepWest hereby transfers, exchanges,
conveys and grants to Five SAC a 26.7181%
interest in PMSR and a 38.5045% interest in PMSI, and assigns and
transfers
to Five
SAC an undivided interest, together with Four SAC, in all of RepWest's rights
and obligations under the Put Agreement. Any obligations of AMERCO to RepWest
under the Put Agreement shall be deemed to have been satisfied in full, and
neither AMERCO nor RepWest shall have any rights or obligations with respect
to
each other
thereunder.
In exchange for the transfer of the specified portion of the Interest and
RepWest's rights under the Put Agreement, Five SAC hereby transfers, exchanges,
conveys and grants to RepWest all of Five SAC's right, title and interest in
and
to the Property.
The Property shall be transferred and conveyed to RepWest at its book
value.
2. Representations
and Warranties.
a. RepWest
hereby represents and warrants to Five SAC that (i) it is duly organized,
validly existing and in good standing under its jurisdiction of
incorporation;
(ii) as
of the
Closing (as hereinafter defined) it will be duly authorized to effectuate the
transactions contemplated by this Agreement and all other agreements
contemplated herein and will be duly authorized to sell, convey and grant the
Interest to Five SAC;
(iii) it
owns
the Interest free and clear of all claims, liens and encumbrances; (iv) it
has
conducted
its own due diligence with respect to the Property and acknowledges that it
is a
sophisticated investor of real property and is acquiring the Property on an
as-is/where-is
basis
without any representation or warranty whatsoever except as otherwise expressly
provided in this Agreement; (v) PMSI's sole asset is its 30% limited partner
interest in PMSR.
b.
Five
SAC hereby represents and warrants to RepWest that (i) it is duly organized,
validly existing and in good standing under its jurisdiction of incorporation;
(ii) as of the Closing it will be duly authorized to effectuate the transactions
contemplated
by this Agreement and all other agreements contemplated herein and
will
be duly
authorized to sell, convey and grant the Property to RepWest; (iii) it owns
the
Property free and clear of all claims, liens and encumbrances, other than liens
for taxes not yet due and payable and typical easements and restrictions that
do
not materially adversely impact the Property; (iv) it has conducted its own
due
diligence with respect to
the
Interest, including, without limitation, review of the various financing
agreements
to which
PMSR and its affiliates are a party, as well as the properties and other assets
owned by PMSR, and acknowledges that it is a sophisticated investor and is
acquiring the Interest on an as-is/where-is basis without any representation
or
warranty whatsoever, except as otherwise expressly provided in this Agreement;
and (v) it shall indemnify, defend and forever hold RepWest harmless of and
from
any environmental liability, cost or expense with respect to the Properties
arising prior to the date of the conveyance.
3.
Additional
Agreements.
The
parties hereto shall execute such documents and instruments, and enter such
additional agreements as are necessary or appropriate under the circumstances
in
order to achieve the objectives contemplated herein. Such additional agreements
may include, without limitation, an amendment to (or
an
amendment and restatement of) the Second Amended and Restated Agreement
of
Limited
Partnership of PMSR, as amended; and an amendment to (or amendment
and
2
restatement
of) the limited liability company agreement of PMSI, as amended (collectively,
the "Operative Agreements").
4. Consents.
All
rights and obligations under this Agreement are contingent upon and subject
to
receipt of all necessary approvals for the transactions contemplated
herein, including approval of the relevant insurance regulatory
authorities.
5. Closing.
Upon
satisfaction of all conditions specified herein and the mutual agreement of
the
parties hereto, the closing of the transaction contemplated by this Agreement
("Closing") shall take place. The Closing shall take place on or before June
30,
2003. Upon the Closing, Five SAC shall deliver to RepWest special warranty
deeds
for the Property, together with such other instruments as are necessary or
appropriate
in connection with the conveyance of the Property to RepWest. In
addition,
the
Property shall be leased back to U-Haul affiliates pursuant to a triple net
lease ("Lease") as agreed to by the parties. At closing, such parties shall
execute and deliver to
one
another the Lease. Upon the Closing, or as soon as possible thereafter,
RepWest shall
deliver, or cause delivery of, such evidence as is necessary or appropriate
to
reflect
the
conveyance of the Interest to Five SAC, including, without limitation,
an
amendment
to the Operative Agreements reflecting that Five SAC is a limited partner
of
PMSR and
a
member
of
PMSI, and that RepWest is no longer a limited partner of PMSR or member of
PMSI.
In addition, at Closing the parties shall execute a purchase option pursuant
to
which Five SAC shall have the option to purchase the Property, in cash, at
book
value.
6. Access
to the Property.
At all
reasonable times prior to the Closing, RepWest shall have full access to the
Property for purposes of conducting the due diligence
RepWest deems appropriate; provided however, in the event the Closing
does not
occur, RepWest shall return the Property to the condition in which it existed
prior to
the
conducting of any such due diligence.
7. Successors
and Assigns.
The
provisions of this Agreement shall be binding upon and inure to the benefit
of
the parties hereto and their respective successors and assigns; provided that
no
party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement with out the written consent of the other
party
hereto.
8. Governing
Law.
This
Agreement shall be governed by and construed in accordance
with the laws of the State of Arizona, without regard to the conflicts of
law
rules of
such state.
3
9.
Signature
Pages.
This
Agreement may be executed in one or more counterparts, and all of such
counterpart signature pages, when taken together, shall constitute one and
the
same Agreement.
4
IN
WITNESS WHEREOF, the undersigned execute this Agreement as of the
date
set
forth above.
"RepWest" "Five
SAC"
Republic Western Insurance Company, Five
SAC
Self-Storage Corporation,
an
Arizona corporation a
Nevada
corporation
By: /s/Richard
Amoroso By: /s/
Mark
V. Shoen
Richard
Amoroso Mark
V.
Shoen
Its:President/CEO Its:President
5
Exhibit
A
List
of
the Properties and Book Value
| ENTITY
NAME
|
ADDRESS
|
CITY
|
ST
|
BV
(6/30/03)
|
| 723022
U-HAUL
CTR FRYE &
101
|
SEC
FRYE RD & SR 101
|
CHANDLER
|
AZ
|
$
1,836,052.00
|
| 737045
U-HAUL
CENTER BEN WHITE
|
336
EAST
BEN WHITE
|
AUSTIN
|
TX
|
$ 514,382.00
|
| 741037
U-HAUL
CTR COPPELL
|
HWY
121 & DENTON
TAP
RD
|
COPPELL
|
TX
|
$ 1,114,565.00
|
| 741043
MCKINNEY
TX ADJ TO
741025
(BMO)
|
HWY
380
|
MCKINNEY
|
TX
|
$ 138,234.00
|
| 780055
U-HAUL
CENTER PINEVILLE
|
315
NORTH
POLK
|
PINEVILLE
|
NC
|
$
1,829,425.0
|
| 782025
U-HAUL
CTR OF JACKSONVILLE
|
425
S MARINE
BLVD
|
JACKSONVILLE
|
NC
|
$
1,017,150.00
|
| 782062
U-HAUL
CENTER DOWNTOWN NORTH
|
810
CAPITL
BLVD
|
RALEIGH
|
NC
|
$ 469,488.00
|
| 816023
U-HAUL
CENTER PERRIS
|
1-215
& NUEVO
ROAD
|
PERRIS
|
CA
|
$ 606,515.00
|
| 818036
U-HAUL
CTR WALDORF
|
US
301 (CRAIN
HWY)
|
WALDORF
|
MD
|
$
1,417,268.00
|
| 820028
U-HAUL
CENTER OF FREDERICK
|
400-410
PROSPECT
BLVD
|
FREDERICK
|
MD
|
$
1,462,944.00
|
| 882050
U-HAUL
CENTER VERDE VALLEY
|
1650
EAST
CHERRY STREET
|
COTTONWOOD
|
AZ
|
$ 334,936.00
|
| 886015
U-HAUL
STORAGE DELTA
|
10158
NORDEL
CT
|
DELTA
|
B.C
|
$
3,236,515.00
|
| 758054
MUNDELEIN,
IL
|
23196
LAKE
AVENUE
|
MUNDELEIN
|
IL
|
$
1,468,872.00
|
| 795058
UH
CTR ROUTE 3-
FREDERICKSBURG
|
NEC
1-95
&
ROUTE
3
|
FREDERICKSBURG
|
VA
|
$ 704,958.00
|
| 884071
U-HAUL
STORAGE TRI-CITY
|
2340
E.
APACHE BLVD
|
TEMPE
|
AZ
|
$ 321,136.00
|
| 736056
U-HAUL
CENTER WEST COUNTY
|
14767
MANCHESTER
|
BALLWIN
|
MO
|
$
1,153,768.00
|
| 884084
U-HAUL
STORAGE
GOOD
HOPE
|
5555
W.
GOOD
HOPE RD
|
MILWAUKEE
|
WI
|
$ 310,872.00
|
6
AGREEMENT
OF EXCHANGE
THIS
AGREEMENT OF EXCHANGE ("Agreement") is dated as of June 30, 2003 and is between
Republic Western Insurance Company, an Arizona corporation ("RepWest"), Four
SAC
Self-Storage Corporation, a Nevada corporation ("Four SAC").
RECITALS
WHEREAS,
RepWest directly owns a 30.6% limited partner interest (the "Direct RepWest
Interest") in Private Mini Storage Realty, LP, a Texas limited partnership
("PMSR").
WHEREAS,
RepWest also indirectly owns a 13.2% limited partner interest in PMSR (the
"Indirect RepWest Interest," and together with the Direct RepWest Interest,
the
"Interest") by virtue of RepWest's 44.1% interest in PMSI Investors, LLC, a
Texas limited liability company ("PMSI"), which entity is a 30.0% limited
partner in PMSR.
WHEREAS,
RepWest entered into a Put Option Agreement, dated October 6, 2000 (the "Put
Agreement"), among AMERCO, RepWest and Oxford Life Insurance Company
("Oxford").
WHEREAS,
Four SAC owns the real property and improvements thereon and appurtenances
thereto identified on Exhibit A hereto (the "Property").
WHEREAS,
upon the terms and conditions set forth herein, Four SAC desires to exchange
the
Property for the specified portion of the Interest, and RepWest desires to
exchange the specified portion of the Interest for the Property.
WHEREAS,
simultaneous herewith, RepWest is entering into an Agreement of Exchange with
Five SAC Self-Storage Corporation ("Five SAC") to exchange the remaining portion
of the Interest for certain real property owned by Five SAC.
NOW,
THEREFORE, in consideration of the foregoing, and the representations,
warranties, covenants and agreements set forth herein, the parties hereto agree
as follows:
1.
Exchange
of Property for Interest.
Upon the
terms and conditions set forth herein, RepWest hereby transfers, exchanges,
conveys and grants to Four SAC a 3.8819% interest in PMSR and a 5.5955% interest
in PMSI, and assigns and transfers to Four SAC an undivided interest, together
with Five SAC, in all of RepWest's rights and obligations under the Put
Agreement. Any obligations of AMERCO to RepWest under the Put Agreement shall
be
deemed to have been satisfied in full, and neither AMERCO nor RepWest shall
have
any rights or obligations with respect to each other thereunder. In exchange
for
the transfer of the specified portion of the Interest and RepWest's rights
under
the Put Agreement, Four SAC hereby transfers, exchanges, conveys and grants
to
RepWest all of Four SAC's right, title and interest in and to the Property.
The
Property shall be transferred and conveyed to RepWest at its book
value.
2. Representations
and Warranties.
a. RepWest
hereby represents and warrants to Four SAC that (i) it is duly organized,
validly existing and in good standing under its jurisdiction of
incorporation;
(ii) as
of the
Closing (as hereinafter defined) it will be duly authorized to effectuate the
transactions contemplated by this Agreement and all other agreements
contemplated herein and will be duly authorized to sell, convey and grant the
Interest to Four SAC;
(iii) it
owns
the Interest free and clear of all claims, liens and encumbrances; (iv) it
has
conducted its own due diligence with respect to the Property and acknowledges
that it is a sophisticated investor of real property and is acquiring the
Property on an as-is/where-is basis without any representation or warranty
whatsoever except as otherwise expressly provided in this Agreement; (v) PMSI's
sole asset is its 30% limited partner interest in PMSR.
b.
Four
SAC hereby represents and warrants to RepWest that (i) it is duly organized,
validly existing and in good standing under its jurisdiction of incorporation;
(ii) as of the Closing it will be duly authorized to effectuate the transactions
contemplated by this Agreement and all other agreements contemplated herein
and
will be duly authorized to sell, convey and grant the Property to RepWest;
(iii)
it owns the Property free and clear of all claims, liens and encumbrances,
other
than liens for taxes not yet due and payable and typical easements and
restrictions that do not materially adversely impact the Property; (iv) it
has
conducted its own due diligence with respect to the Interest, including, without
limitation, review of the various financing agreements to which PMSR and its
affiliates are a party, as well as the properties and other assets owned by
PMSR, and acknowledges that it is a sophisticated investor and is acquiring
the
Interest on an as-is/where-is basis without any representation or warranty
whatsoever, except as otherwise expressly provided in this Agreement; and (v)
it
shall indemnify, defend and forever hold RepWest harmless of and from any
environmental liability, cost or expense with respect to the Properties arising
prior to the date of the conveyance.
3.
Additional
Agreements.
The
parties hereto shall execute such documents and instruments, and enter such
additional agreements as are necessary or appropriate under the circumstances
in
order to achieve the objectives contemplated herein. Such additional agreements
may include, without limitation, an amendment to (or an amendment and
restatement of) the Second Amended and Restated Agreement of Limited Partnership
of PMSR, as amended; and an amendment to (or amendment and restatement of)
the
limited liability company agreement of PMSI, as amended (collectively, the
"Operative Agreements").
4.
Consents.
All
rights and obligations under this Agreement are contingent upon and subject
to
receipt of all necessary approvals for the transactions contemplated herein,
including approval of the relevant insurance regulatory
authorities.
5. Closing.
Upon
satisfaction of all conditions specified herein and the mutual agreement of
the
parties hereto, the closing of the transaction contemplated by
2
this
Agreement ("Closing") shall take place. The Closing shall take place on or
before June 30, 2003. Upon the Closing, Four SAC shall deliver to RepWest
special warranty deeds for the Property, together with such other instruments
as
are necessary or appropriate in connection with the conveyance of the Property
to RepWest. In addition, the Property shall be leased back to U-Haul affiliates
pursuant to a triple net lease ("Lease")
as agreed to by the parties. At closing, such parties shall execute and deliver
to
one
another the Lease. Upon the Closing, or as soon as possible thereafter, RepWest
shall deliver, or cause delivery of, such evidence as is necessary or
appropriate to reflect the
conveyance of the Interest to Four SAC, including, without limitation, an
amendment to
the
Operative Agreements reflecting that Four SAC is a limited partner of PMSR
and
a
member
of PMSI, and that RepWest is no longer a limited partner of PMSR or member
of
PMSI. In addition, at Closing the parties shall execute a purchase option
pursuant to which Four SAC shall have the option to purchase the Property,
in
cash, at book value.
6. Access
to the Property.
At all
reasonable times prior to the Closing, RepWest shall have full access to the
Property for purposes of conducting the due diligence RepWest deems appropriate;
provided however, in the event the Closing does not occur, RepWest shall return
the Property to the condition in which it existed prior to the conducting of
any
such due diligence.
7. Successors
and Assigns.
The
provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors
and
assigns; provided that no party may assign, delegate or otherwise transfer
any
of its rights or obligations under this Agreement with out the written consent
of the other party hereto.
8. Governing
Law,.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Arizona, without regard to the conflicts of law rules of such
state.
9. Signature
Pages.
This
Agreement may be executed in one or more counterparts, and.
all of
such counterpart signature pages, when taken together, shall constitute one
and
the same Agreement.
3
IN
WITNESS WHEREOF, the undersigned execute this Agreement as of the
date
set
forth above.
"RepWest" "Four
SAC"
Republic Western Insurance Company, Four
SAC
Self-Storage Corporation,
an
Arizona corporation a
Nevada
corporation
By: /s/Richard
Amoroso By: /s/
Mark
V. Shoen
Richard
Amoroso Mark
V.
Shoen
Its:President/CEO Its:President
4
Exhibit
A
List
of
the Properties and Book Value
818029,
U-Haul Ctr. Capitol Hill, 26 K Street, Washington DC, $1,643,270
5
PURCHASE
OPTION
THIS
PURCHASE OPTION (this "Agreement") is entered into effective as of June 30,
2003
between Oxford Life Insurance Company, an Arizona corporation ("Oxford"),
and Five SAC Self-Storage Corporation, a Nevada corporation ("Five
SAC").
RECITALS
WHEREAS,
on the date hereof, Five SAC transferred and conveyed the properties set
forth
on Exhibit A hereto (the "Properties") to Oxford at the Properties'
respective book values set forth on Exhibit A hereto ("Book
Value").
WHEREAS,
in connection with such transfer and conveyance, Five SAC desires to have,
and
Oxford desires to grant to Five SAC, an option to purchase the Properties
or any
of them, at Book Value.
NOW,
THEREFORE, in consideration of the foregoing, and the mutual
covenants
and
agreements of the parties hereto, the parties hereby agree as
follows:
1.
Five SAC
shall have the right at any time to purchase the Properties or any Property,
in
cash, each at their respective Book
Value.
To
exercise such right, Five SAC shall provide Oxford with a notice, which notice
shall specify the following: (A) the Property or Properties to be purchased
and
(B) the date on which the purchase shall take place, which date shall be
not
less than 30 calendar days from the date of the notice. Oxford shall (A)
convey title to the Property or Properties as stated in such notice; and
(B)
grant extensions for the closing date as are reasonably requested.
2. Oxford
shall not sell, lease, convey, pledge, hypothecate, encumber or otherwise
dispose of in any manner any Property or the Properties without first providing
Five SAC with not less than 30 calendar days prior written notice of such
intended disposition.
3.
Upon
request of Five SAC, Exhibit A shall be further amended to provide legal
descriptions for the Properties, and Five SAC shall have the right to record
this Agreement.
4. This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Arizona.
IN
WITNESS WHEREOF, the parties execute this Agreement as of the date set forth
above.
Oxford Life Insurance Company, Five
SAC Self-Storage
Corporation,
an Arizona corporation
a
Nevada corporation
By: /s/
Jason Berg
By: /s/
Mark V.
Shoen
Jason
Berg Mark
V.
Shoen
Its: Treasurer Its: President
STATE
OF
ARIZONA )
)
COUNTY
OF
MARICOPA
)
This
instrument was acknowledged before me on June 30, 2003 by Jason Berg, Treasurer
of Oxford Life Insurance Company, an Arizona corporation, on behalf of
said
corporation.
/s/
Joanne Fried
NOTARY
PUBLIC
My
commission expires: June 27, 2005
STATE
OF
ARIZONA
)
)
COUNTY
OF
MARICOPA
)
This
instrument was acknowledged before me on June 30, 2003 by Mark V. Shoen,
President of Five SAC Self-Storage Corporation, a Nevada corporation, on
behalf
of said corporation.
/s/
Joanne Fried
NOTARY
PUBLIC
My
commission expires: June 27, 2005
Exhibit
A
List
of Properties and Book Values
|
ENTITY NAME
|
ADDRESS
|
CITY,
STATE
|
BOOK
VALUE
|
|
786046
U-Haul Center Citrus Park
|
6111
W. Gunn Highway
|
Tampa,
FL
|
$4,790,000
|
|
818057
U-Haul Center Landover
|
3900
Whitetire Road
|
Landover,
MD
|
$5,000,000
|
|
838056
U-Haul Center College Dr
|
989
Boulder Highway
|
Henderson,
NV
|
$6,690,000
|
PURCHASE
OPTION
THIS
PURCHASE OPTION (this "Agreement") is entered into effective as of June
30, 2003
between Republic Western Insurance Company, an Arizona corporation ("RepWest"),
and Five SAC Self-Storage Corporation, a Nevada corporation ("Five
SAC").
RECITALS
WHEREAS,
on the date hereof, Five SAC transferred and conveyed the properties set
forth
on Exhibit A hereto (the "Properties") to RepWest at the Properties' respective
book values set forth on Exhibit A hereto ("Book Value").
WHEREAS,
in connection with such transfer and conveyance, Five SAC desires to have,
and
RepWest desires to grant to Five SAC, an option to purchase the Properties
or
any of them, at Book Value.
NOW,
THEREFORE, in consideration of the foregoing, and the mutual
covenants
and
agreements of the parties hereto, the parties hereby agree as
follows:
1.
Five SAC
shall have the right at any time to purchase the Properties or any Property,
in
cash, each at their respective Book
Value.
To
exercise such right, Five SAC shall provide RepWest with a notice, which
notice
shall specify the following: (A) the Property or Properties to be purchased
and
(B) the date on which the purchase shall take place, which date shall be
not
less than 30 calendar days from the date of the notice. RepWest shall (A)
convey
title to the Property or Properties as stated in such notice; and (B) grant
extensions for the closing date as are reasonably requested.
2.
RepWest
shall not sell, lease, convey, pledge, hypothecate, encumber or otherwise
dispose of in any manner any Property or the Properties without first providing
Five SAC with not less than 30 calendar days prior written notice of such
intended disposition.
3.
Upon
request of Five SAC, Exhibit A shall be further amended to provide legal
descriptions for the Properties, and Five SAC shall have the right to record
this Agreement.
4. This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Arizona.
IN
WITNESS WHEREOF, the parties execute this Agreement as of the date set
forth
above.
Republic Western Insurance Company, Five
SAC Self-Storage
Corporation,
an Arizona corporation
a
Nevada corporation
By: /s/ Richard
Amoroso
By: /s/
Mark V.
Shoen
RichardAmoroso Mark
V.
Shoen
Its: President Its: President
STATE
OF
ARIZONA )
)
COUNTY
OF
MARICOPA
)
This
instrument was acknowledged before me on June 30, 2003 by Richard Amoroso,
President of Republic Western Insurance Company, an Arizona
corporation, on behalf of said corporation.
/s/
Joanne Fried
NOTARY
PUBLIC
My
commission expires: June 27, 2005
STATE
OF
ARIZONA
)
)
COUNTY
OF
MARICOPA
)
This
instrument was acknowledged before me on June 30, 2003 by Mark V. Shoen,
President of Five SAC Self-Storage Corporation, a Nevada corporation,
on behalf
of said corporation.
/s/
Joanne Fried
NOTARY
PUBLIC
My
commission expires: June 27, 2005
Exhibit
A
|
ENTITY NAME
|
ADDRESS
|
CITY
|
|
723022
U-HAUL CTR
FRYE
& 101
|
SEC
FRYE RD & SR 101
|
CHANDLER';
|
|
737045
U-HAUL CENTER BEN WHITE - EAST
|
336
EAST BEN WHITE
|
AUSTIN
|
|
741037
U-HAUL CTR COPPELL
|
HWY
121 & DENTON TAP RD
|
COPPELL
|
|
741043
MCKINNEY TX ADJ TO 741025 (BMO)
|
HWY
380
|
MCKINNEY
|
|
780055
0-HAUL CENTER PINEVILLE'
|
315
NORTH POLK STREET
|
PINEVILLE
|
|
782025
U-HAUL CTR OF
JACKSONVILLE
|
425
S MARINE BLVD
|
JACKSONVILLE
|
|
782062
U-HAUL CENTER DOWNTOWN NORTH
|
810
CAPITAL BLVD
|
RALEIGH
|
|
816023.
U-HAUL CENTER
FERRIS
|
1-215
& NUEVO ROAD
|
PERRIS
|
|
818029
U-Haul Ctr Capitol Hill
|
26
K Street N.E.
|
Washington*
|
|
818036
U-HAUL CTR WALDORF
|
US
301 (CRAIN HWY)
|
WALDORF
|
|
820028
U-HAUL CENTER OF FREDERICK
|
400-410
PROSPECT BLVD
|
FREDERICK
|
|
882050
U-HAUL CENTER VERDE VALLEY
|
1650
EAST CHERRY STREET
|
COTTONWO
|
|
886015
U-Haul Storage Delta
|
10158
Nordel Ct.
|
Delta
|
|
795058
UH CTR ROUTE 3 - FREDERICKSBURG
|
NEC
1-95 & ROUTE 3
|
FREDERICK:
|
|
758054
MUNDELEIN IL
|
23196
LAKE AVENUE
|
MUNDELEIN
|
|
884084
5555 West Good Hope Road
|
Milwaukee
|
|
|
736056
Ballwin MO UHI Center West County
|
||
|
884071
2340 East Apache
|
Tempe
|
|
STATE
|
Market
Value/Contract
Price/Proceeds
|
Transfer
Value
|
Rent
|
|
AZ
|
2,200,000
|
1,836,052
|
|
|
TX
|
600,000
|
514,382
|
|
|
TX
|
970,000
|
970,000
|
|
|
TX
|
160,000
|
138,234
|
|
|
NC
|
1,684,205
|
1,684,205
|
|
|
NC
|
1,200,000
|
1,017,150
|
5,086
|
|
NC
|
350,000
|
350,000
|
|
|
CA
|
696,236
|
606,515
|
|
|
DC
|
2,100,000
|
1,643,270
|
8,216
|
|
MD
|
1,500,000
|
1,417,268
|
|
|
MD
|
1,320,000
|
1,320,000
|
|
|
AZ
|
340,000
|
334,936
|
1,675
|
|
BC
|
3,750,000
|
3,236,515
|
16,183
|
|
VA
|
515,000
|
515,000
|
|
|
IL
|
1,220,000
|
1,220,000
|
|
|
WI
|
320,000
|
310,872
|
|
|
860,000
|
860,000
|
4,300
|
|
|
AZ
|
270,000
|
270,000
|
|
|
|
20,055,441
|
18,244,399
|
35,459
|
PURCHASE
OPTION
THIS
PURCHASE OPTION (this "Agreement") is entered into effective as of June 30,
2003
between Republic Western Insurance Company, an Arizona corporation ("RepWest"),
and Four SAC Self-Storage Corporation, a Nevada corporation ("Four
SAC").
RECITALS
WHEREAS,
on the date hereof, Four SAC transferred and conveyed the properties set
forth
on Exhibit A hereto (the "Properties") to RepWest at the Properties' respective
book values set forth on Exhibit A hereto ("Book Value").
WHEREAS,
in connection with such transfer and conveyance, Four SAC desires to have,
and
RepWest desires to grant to Four SAC, an option to purchase the Properties
or
any of them, at Book Value.
NOW,
THEREFORE, in consideration of the foregoing, and the mutual
covenants
and
agreements of the parties hereto, the parties hereby agree as
follows:
1.
Four SAC
shall have the right at any time to purchase the Properties or any Property,
in
cash, each at their respective BookValue.
To
exercise such right, Four SAC shall provide RepWest with a notice, which
notice
shall specify the following: (A) the Property or Properties to be purchased
and
(B) the date on which the purchase shall take place, which date shall be
not
less than 30 calendar days from the date of the notice. RepWest shall (A)
convey
title to the Property or Properties as stated in such notice; and (B) grant
extensions for the closing date as are reasonably requested.
2.
RepWest
shall not sell, lease, convey, pledge, hypothecate, encumber or otherwise
dispose of in any manner any Property or the Properties without first providing
Four SAC with not less than 30 calendar days prior written notice of such
intended disposition.
3.
Upon
request of Four SAC, Exhibit A shall be further amended to provide legal
descriptions for the Properties, and Four SAC shall have the right to record
this Agreement.
4. This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Arizona.
IN
WITNESS WHEREOF, the parties execute this Agreement as of the date
set forth
above.
Republic
Western Insurance Company, Four
SAC Self-Storage
Corporation,
an
Arizona corporation
a
Nevada corporation
By: /s/ Richard
Amoroso
By: /s/
Mark V.
Shoen
RichardAmoroso Mark
V.
Shoen
Its: President Its: President
STATE
OF
ARIZONA )
)
COUNTY
OF
MARICOPA
)
This
instrument was acknowledged before me on June 30, 2003 by Richard Amoroso,
President of Republic Western Insurance Company, an Arizona
corporation, on behalf of said corporation.
/s/
Joanne Fried
NOTARY
PUBLIC
My
commission expires: June 27, 2005
STATE
OF
ARIZONA
)
)
COUNTY
OF
MARICOPA
)
This
instrument was acknowledged before me on June 30, 2003 by Mark V. Shoen,
President of Four SAC Self-Storage Corporation, a Nevada corporation,
on behalf
of said corporation.
/s/
Joanne Fried
NOTARY
PUBLIC
My
commission expires: June 27, 2005
Exhibit
A
|
ENTITY NAME
|
ADDRESS
|
CITY
|
|
723022,
U-HAUL CTR
FRYE
& 101
|
SEC
FRYE RD & SR 101
|
CHANDLER
|
|
737045
U-HAUL CENTER BEN WHITE - EAST
|
336
EAST BEN WHITE
|
AUSTIN
|
|
741037
U-HAUL CTR COPPELL
|
HWY
121 & DENTON TAP RD
|
COPPELL
|
|
741043
MCKINNEY TX ADJ TO 741025 (BMO)
|
HWY
380
|
MCKINNEY
|
|
780055
0-HAUL CENTER PINEVILLE
|
315
NORTH POLK STREET
|
PINEVILLE
|
|
782025
U-HAUL CTR OF
JACKSONVILLE
|
425
S MARINE BLVD
|
JACKSONVILLE
|
|
782062
U-HAUL CENTER DOWNTOWN NORTH
|
810
CAPITAL BLVD
|
RALEIGH
|
|
816023.
U-HAUL CENTER
FERRIS
|
1-215
& NUEVO ROAD
|
PERRIS
|
|
818029
U-Haul Ctr Capitol Hill
|
26
K Street N.E.
|
Washington
|
|
818036
U-HAUL CTR WALDORF
|
US
301 (GRAIN HWY;
|
WALDORF
|
|
820028
U-HAUL CENTER OF FREDERICK
|
400-410
PROSPECT BLVD
|
FREDERICK
|
|
882050
U-HAUL CENTER VERDE VALLEY
|
1650
EAST CHERRY STREET
|
COTTONWO
|
|
886015
U-Haul Storage Delta
|
10158
Nordel Ct.
|
Delta
|
|
795058
UH CTR ROUTE 3 - FREDERICKSBURG
|
NEC
1-95 & ROUTE 3
|
FREDERICK:
|
|
758054
MUNDELEIN IL
|
23196
LAKE AVENUE
|
MUNDELEIN
|
|
884084
5555 West Good Hope Road
|
Milwaukee
|
|
|
736056
Ballwin MO UHI Center West County
|
||
|
884071
2340 East Apache
|
Tempe
|
|
STATE
|
Market
Value/Contract
Price/Proceeds
|
Transfer
Value
|
Rent
|
|
AZ
|
2,200,00
|
1,836,052
|
|
|
TX
|
600,000
|
514,382
|
|
|
TX
|
970,000
|
970,000
|
|
|
TX
|
160,000
|
138,234
|
|
|
NC
|
1,684,205
|
1,684,205
|
|
|
NC
|
1,200,000
|
1,017,150
|
5,086
|
|
NC
|
350,000
|
350,000
|
|
|
CA
|
696,236
|
606,515
|
|
|
DC
|
2,100,000
|
1,643,270
|
8,216
|
|
MD
|
1,500,000
|
1,417,268
|
|
|
MD
|
1,320,000
|
1,320,000
|
|
|
AZ
|
340,000
|
334,936
|
1,675
|
|
BC
|
3,750,000
|
3,236,515
|
16,183
|
|
VA
|
515,000
|
515,000
|
|
|
IL
|
1,220,000
|
1,220,000
|
|
|
WI
|
320,000
|
310,872
|
|
|
860,000
|
860,000
|
4,300
|
|
|
AZ
|
270,000
|
270,000
|
|
|
|
20,055,441
|
18,244,399
|
35,459
|
TRANSFER
OF LIMITED PARTNER INTEREST -
SECURESPACE
LIMITED PARTNERSHIP,
THIS
TRANSFER OF LIMITED PARTNER INTEREST - SECURESPACE LIMITED PARTNERSHIP (this
"Agreement") is made as of September 30, 2006 and is by and between Republic
Western Insurance Company, an Arizona corporation ("RepWest"), Oxford Life
Insurance Company, an Arizona corporation ("Oxford", and together with RepWest,
"Transferor") and On-Guard Self-Storage Corp., a Nevada corporation
("Transferee").
RECITALS
WHEREAS,
RepWest owns a 23% limited partner interest (the "RepWest
Interest") in Securespace Limited Partnership, a Nevada limited partnership
(the
"Partnership").
WHEREAS,
Oxford owns a 23% limited partner interest (the "Oxford Interest",
and
together with the RepWest Interest, the "Interest") in the
Partnership.
WHEREAS,
Transferee currently owns a 53% limited partner interest in
the Partnership.
WHEREAS,
upon the terms and provisions specified herein, pursuant to Section 11.7
of the
Agreement of Limited Partnership of Securespace Limited Partnership, RepWest
and
Oxford each desires to transfer, sell and convey, respectively, the RepWest
Interest and the Oxford Interest to Transferee, and Transferee desires to
purchase and acquire same from Transferor.
NOW,
THEREFORE, in consideration of the foregoing, and for other good and
valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereto hereby agree as follows:
1. Sale
of the Interest.
Transferor hereby transfers, sells and conveys the Interest to Transferee.
Transferee hereby purchases and acquires same.
2. Purchase
Price.
The
purchase price for the Interest shall be $5,937,737 with
respect to the RepWest Interest and $5,914,723 with respect to the Oxford
Interest.
The
purchase
price shall be paid simultaneously with the execution and delivery hereof.
The
purchase price shall be payable in cash or other immediately-available
funds.
3. Title
to the Interest.
Transferor hereby represents and warrants that it owns the Interest free
and
clear of any lien or other encumbrance.
4. Documentation
and Further Assurances.
The
parties hereto agree to cooperate
with one another and execute such documents and take such other actions
as
may be
necessary or appropriate to reflect the transaction contemplated by
this
Agreement,
including, without limitation, execution of an amendment to Exhibit B to
the
Agreement of Limited Partnership of Securespace Limited
Partnership.
5. Counterparts.
This
Agreement may be executed by the parties hereto in any number of separate
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same document. Delivery of an executed signature
page of this Agreement in pdf or facsimile transmission shall be effective
as
delivery of a manually executed original counterpart hereof.
6. Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of Nevada.
7. Location
of Document.
This
Agreement shall be kept and maintained together
with the original Agreement of Limited Partnership of Securespace
Limited
Partnership.
[Rest
of
page left blank]
IN
WITNESS WHEREOF, the undersigned execute this Agreement as of the
date
set
forth above.
Republic
Western Insurance Company, an Arizona
corporation
By:
/s/ Richard Amoroso
Richard Amoroso, President
Oxford
Life Insurance Company, an
Arizona
corporation
By:
/s/ Mark
Haydukovich
Mark Haydukovich, President
On-Guard
Self-Storage Corp., a Nevada corporation
By: /s/
Bruce
Brockhagen
Bruck Brockhagen, Secretary
APPROVED
AND ACCEPTED:
Securespace
Limited Partnership, a
Nevada
limited partnership
By:
Seven SAC Self-Storage Corporation,
Its
General Partner
By:
/s/
Bruce Brockhagen
Bruce
Brockhagen, Secretary
EXECUTION
COPY
OPTION
EXCHANGE AGREEMENT
THIS
OPTION EXCHANGE AGREEMENT (this "Agreement") is dated as of June
15,
2006 and is between Five SAC Self-Storage Corporation, a
Nevada
corporation
("Five
SAC") and Amerco Real Estate Company, a Nevada corporation
("AREC").
WHEREAS,
Five SAC holds the option to purchase the properties set forth on
Exhibit
A hereto ("Group 1").
WHEREAS,
AREC holds the option to purchase the properties set forth on Exhibit
B
hereto ("Group 2") (in addition to the option to purchase other properties
not
identified in this Agreement).
WHEREAS,
Five SAC and AREC desires to exchange their respective purchase options
with respect to Group 1 and Group 2, such that AREC shall become the holder
of
the
option with, respect to the Group 1 properties, and Five SAC shall become
the
holder of the option with respect to the Group 2 properties.
NOW
THEREFORE, in consideration of the foregoing and the other cash
consideration as set forth herein, the parties hereto agree as
follows:
Five
SAC
hereby transfers and conveys to AREC the option to purchase the Group 1
properties. AREC hereby transfers and conveys to Five SAC the option to purchase
the Group 2 properties. In addition, based on the current values of the Group
1
and Group 2 properties, as well as the respective option exercise prices
of the
foregoing properties, Five SAC shall pay cash consideration to AREC in the
amount of $14,164 simultaneously with the execution hereof.
IN
WITNESS WHEREOF, the undersigned execute this Agreement as of the
date
set
forth above.
Five
SAC
Self-Storage Corporation
Amerco
Real Estate Company
By:
/s/
Bruce Brockhagen By:
/s/
Carlos Vizcarra
Bruck
Brockhagen,
Carlos Vizcarra,
Secretary and Treasurer President
CONSENTED
TO BY:
Republic
Western
Insurance Company
By:
/s/
Richard Amoroso
Richard
Amoroso,
President
Five
SAC
is hereby transferring to AREC Five SAC's option to purchase the following
properties:
|
Option
exercise price
|
Current
value
|
||||
|
884071
|
2340
E. Apache Boulevard
|
Tempe
|
AZ
|
$247,763
|
$ 297,957
|
|
758054
|
26196
N. Highway 95
|
Mundelein
|
IL
|
$1,114,958
|
$ 1,346,325
|
|
820028
|
400-410
Prospect Boulevard
|
Frederick
|
MD
|
$1,210,814
|
$ 1,456,679
|
|
736056
|
14767
Manchester
|
Ballwin
|
MO
|
$773,598
|
$ 827,194
|
|
782062
|
810
Capital.
Boulevard
|
Raleigh
|
NC
|
$318,219
|
$ 386,241
|
|
737045
|
336EastBenWhiteHwy121 Denton Tap | Austin |
TX
|
$571,939
|
$662,127
|
|
741037
|
Road
|
Coppell
|
TX
|
$952,050
|
$ 1,070,439
|
|
741043
|
Highway
380
|
McKinney
|
TX
|
$150,100
|
$ 176,567
|
|
795058
|
NEC
1-95 & Route 3
|
Fredericksburg
|
VA
|
$474,184
|
$ 568,326
|
|
884084
|
5555
West Good Hope Road
|
Milwaukee
|
WI
|
$312,001
|
$ 353,134
|
|
Sub-total
|
$6,125,626
|
$7,144,989.
|
Current
value has been calculated based upon a 3% per year appreciation from the
most
recent MAI appraisal on the respective
property.
.
AREC
is
hereby transferring to Five SAC AREC's option to purchase the following
properties:|
Option
exercise price
|
Current
value
|
||||
|
616034
|
Los
Rios Blvd., east side, south
of 14th Street
|
Plano
|
TX
|
$286,344
|
$ 938,852
|
|
637002
|
NW
corner of Hayden & 84th Street
|
Scottsdale
|
AZ
|
$518,002
|
$ 899,022
|
|
637013
|
Manassas
Drive (parcel A) access
to Connor Rd.
|
Manassas
Park
|
VA
|
$387,489
|
$ 335,938
|
|
Grand-total
(5 SAC)
|
$1,191,835
|
$2,173,811
|
|||
Current
value has been calculated based upon a 3% per year appreciation from the
most
recent MAI appraisal on the respective
property.