<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 16, 1995
REGISTRATION NO. 33-57125
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMERCO
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEVADA 88-0106815
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
------------------------
1325 AIRMOTIVE WAY, SUITE 100
RENO, NEVADA 89502-3239
(702) 688-6300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JON S. COHEN, ESQ.
SNELL & WILMER
ONE ARIZONA CENTER
PHOENIX, ARIZONA 85004-0001
(602) 382-6247
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
MICHAEL M. FLEMING, ESQ. DEBRA K. WEINER, ESQ.
RYAN, SWANSON & CLEVELAND GROVER WICKERSHAM, P.C.
1201 THIRD AVENUE, SUITE 3400 430 CAMBRIDGE AVENUE, SUITE 100
SEATTLE, WASHINGTON 98101 PALO ALTO, CALIFORNIA 94306
(206) 464-4224 (415) 323-6400
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SECTION 8(A) MAY
DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED FEBRUARY 16, 1995
PROSPECTUS
500,000 SHARES
A M E R C O
COMMON STOCK
[LOGOS]
Paul F. Shoen ("Selling Stockholder") hereby offers 500,000 shares of
Common Stock (the "Securities") of AMERCO (the "Company"), a holding company for
U-Haul International, Inc., Ponderosa Holdings, Inc., and Amerco Real Estate
Company. The Company will not receive any portion of the proceeds from the sale
of the Securities offered hereby. The Company's Common Stock is quoted on Nasdaq
National Market ("Nasdaq") under the symbol "AMOO."
On February 14, 1995, the last reported sale price of the Common Stock
through Nasdaq was $21.50 per share.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND SELLING
PUBLIC COMMISSIONS(1) STOCKHOLDER(2)
- -----------------------------------------------------------------------------------------
Per Share................................ $ $ $
- -----------------------------------------------------------------------------------------
Total............................... $ $ $
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
(1) Excludes a nonaccountable expense allowance payable by Selling Stockholder
to Van Kasper & Company, the representative (the "Representative") of the
several Underwriters. The Company and the Selling Stockholder have agreed to
indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities
Act"). See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $123,125.
The Securities offered by this Prospectus are offered by the Underwriters
subject to prior sale when, as and if delivered to and accepted by the
Underwriters, and subject to their right to withdraw, cancel, or modify such
offer and to reject orders in whole or in part and to certain other conditions.
It is expected that delivery of the Securities will be made at the offices of
Van Kasper & Company, San Francisco, California on or about March , 1995.
VAN KASPER & COMPANY
MARCH , 1995
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements, and other information
filed by the Company may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at its regional offices located at 75 Park Place,
14th Floor, New York, New York 10007, and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Company has filed with the Commission a registration statement (the
"Registration Statement") with respect to the Securities offered hereby. This
Prospectus, which constitutes part of the Registration Statement, does not
contain all of the information contained in the Registration Statement and the
exhibits thereto. For further information with respect to the Company and the
Securities offered hereby, reference is made to the Registration Statement,
including the exhibits thereto, which may be examined without charge at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies of all or any part thereof may be
obtained from the Public Reference Section of the Commission at prescribed
rates. Statements contained in this Prospectus as to the contents of any
contract or any other document are not necessarily complete and, in each
instance, reference is made to the copy of such contract or document filed as an
exhibit to the Registration Statement, each statement being qualified in all
respects by such reference.
The Company's Series A 8 1/2% Preferred Stock is listed on the New York
Stock Exchange and the Company's Common Stock is listed on Nasdaq. Reports,
proxy statements, and other information filed by the Company may be inspected at
the New York Stock Exchange, 20 Broad Street, New York, New York 10005 and at
the National Association of Securities Dealers, 1735 K Street, N.W., Washington,
D.C. 20007.
INFORMATION INCORPORATED BY REFERENCE
The Annual Report of the Company on Form 10-K for the fiscal year ended
March 31, 1994, the Company's audited consolidated financial statements included
in the Company's Registration Statement on Form S-2, No. 33-54289 filed with the
Commission, which was effective November 3, 1994 (the "S-2 Registration
Statement"), the Quarterly Reports of the Company on Form 10-Q for the quarters
ended June 30, September 30, and December 31, 1994, and the Current Report on
Form 8-K filed with the Commission on October 13, 1994 are incorporated herein
by reference.
All reports filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference in this Prospectus and to be made a part hereof from
their respective dates of filing.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document that is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will cause to be furnished without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon the
written or oral request of such person, a copy of any documents described above,
other than certain exhibits to such documents. Requests should be addressed to:
AMERCO, Investor Relations, 1325 Airmotive Way, Suite 100, Reno, Nevada 89502;
telephone: (702) 688-6300.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements, including the notes thereto, appearing
elsewhere or incorporated by reference in this Prospectus. Investors should
carefully consider the information set forth under the heading "Risk Factors."
THE COMPANY
AMERCO, a Nevada corporation (the "Company"), is the holding company for
U-Haul International, Inc. ("U-Haul"), Ponderosa Holdings, Inc. ("Ponderosa"),
and Amerco Real Estate Company ("AREC"). Throughout this Prospectus, unless the
context otherwise requires, the term "Company" includes all of the Company's
subsidiaries.
Founded in 1945, U-Haul is primarily engaged, through subsidiaries, in the
rental of trucks, automobile-type trailers, and support rental items to the
do-it-yourself moving customer. The Company's do-it-yourself moving business
operates under the U-Haul name through an extensive and geographically diverse
distribution network of approximately 1,100 Company-owned U-Haul Centers and
approximately 12,400 independent dealers throughout the United States and
Canada. U-Haul's rental equipment fleet consists of approximately 79,000 trucks
and approximately 91,000 trailers. Additionally, U-Haul sells related products
and services and rents self-storage facilities and various kinds of equipment.
U-Haul entered the self-storage business in 1974 and offers for rent more than
13.0 million square feet of self-storage space through the management of
approximately 650 locations. AREC owns a majority of the real estate used in
connection with the foregoing businesses.
Ponderosa serves as the holding company for the Company's insurance
businesses. Ponderosa's two principal subsidiaries are Oxford Life Insurance
Company ("Oxford") and Republic Western Insurance Company ("RWIC"). Oxford
primarily reinsures life, health, and annuity type insurance products and
administers the Company's self-insured employee health plan. RWIC originates and
reinsures property and casualty type insurance products for various market
participants, including independent third parties, the Company's customers, and
the Company.
The Company's principal executive offices are located at 1325 Airmotive
Way, Suite 100, Reno, Nevada 89502, and the telephone number of the Company is
(702) 688-6300.
THE OFFERING
Securities Offered by the Selling
Stockholder......................... 500,000 shares of Common Stock
Securities Outstanding.............. 6,100,000 shares of Series A 8 1/2%
Preferred Stock, 32,901,568 shares of
Common Stock, and 5,762,495 shares of
Series A Common Stock
Use of Proceeds..................... The Company will receive no proceeds
from the sale of the Securities offered
hereby
Nasdaq Symbol....................... "AMOO"
3
<PAGE> 5
SUMMARY CONSOLIDATED FINANCIAL DATA
The following summary financial information, insofar as it relates to each
of the fiscal years ended March 31, 1992, 1993 and 1994, has been derived from
the Company's consolidated financial statements, audited by Price Waterhouse
LLP, independent accountants, included in the Company's S-2 Registration
Statement. The report of Price Waterhouse LLP included therein contains an
explanatory paragraph related to the uncertainty surrounding certain litigation
described in Notes 14 and 21 to such consolidated financial statements. The
summary financial information related to each of the fiscal years ended March
31, 1990 and 1991 has been derived from the Company's audited financial
statements. The summary financial information related to the nine months ended
December 31, 1993 and 1994 has been derived from the Company's unaudited
quarterly report on Form 10-Q for the quarter ended December 31, 1994, which is
incorporated by reference herein. Oxford and RWIC have been consolidated on the
basis of fiscal years ended December 31. To give effect to Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes," the
Company has restated its financial statements to April 1, 1988. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Other." The summaries for the nine months ended December 31 are
unaudited; however, in the opinion of management, all adjustments necessary for
a fair presentation of such financial information have been included. The
results of operations for the nine months ended December 31, 1994 may not be
indicative of the results to be expected for fiscal 1995 because, among other
reasons, the Company's U-Haul business is seasonal, with a majority of its
revenue and substantially all of its net earnings being generated in the first
and second quarters of each fiscal year.
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
FOR THE FISCAL YEAR ENDED MARCH 31, ENDED DECEMBER 31,
-------------------------------------------------------------- -----------------------
1990 1991 1992 1993 1994 1993 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS DATA:(1)
Rental, net sales, and other
revenues............................ $ 830,998 $ 860,044 $ 845,128 $ 901,446 $ 972,704 $ 762,844 $ 838,994
Premiums and net investment income.... 119,641 126,620 126,756 139,465 162,151 120,920 141,587
---------- ---------- ---------- ---------- ---------- ---------- ----------
950,639 986,664 971,884 1,040,911 1,134,855 883,764 980,581
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating expenses and cost of
sales............................... 627,396 668,149 661,229 697,700 735,841 553,353 589,202
Benefits, losses, and amortization of
deferred acquisition costs.......... 121,602 126,626 99,091 115,969 130,168 101,162 116,884
Depreciation.......................... 105,437 114,589 109,641 110,105 133,485 96,580 112,631
Interest expense...................... 74,657 80,815 76,189 67,958 68,859 52,530 50,871
---------- ---------- ---------- ---------- ---------- ---------- ----------
929,092 990,179 946,150 991,732 1,068,353 803,625 869,588
---------- ---------- ---------- ---------- ---------- ---------- ----------
Pretax earnings (loss) from
operations.......................... 21,547 (3,515) 25,734 49,179 66,502 80,139 110,993
Income tax expense.................... (3,516) (6,354) (4,940) (17,270) (19,853) (25,211) (39,602)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Earnings (loss) before cumulative
effect of change in accounting
principle and extraordinary item.... 18,031 (9,869) 20,794 31,909 46,649 54,928 71,391
Extraordinary loss on early
extinguishment of debt, net(2)...... -- -- -- -- (3,370) (1,897) --
Cumulative effect of change in
accounting principle, net(3)........ -- -- -- -- (3,095) (3,272) --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net earnings (loss)................... $ 18,031 $ (9,869) $ 20,794 $ 31,909 $ 40,184 $ 49,759 $ 71,391
========= ========= ========= ========= ========= ========= =========
Earnings (loss) from operations before
extraordinary loss on early
extinguishment of debt and
cumulative effect of change in
accounting principle per common
share............................... $ .46 $ (.25) $ .53 $ .83 $ 1.06 $ 1.41 $ 1.67
Net earnings (loss) per common
share(4)............................ .46 (.25) .53 .83 .89 1.27 1.67
Weighted average common shares
outstanding......................... 39,483,960 39,312,080 38,880,069 38,664,063 38,664,063 37,070,925 37,025,575
Cash dividends declared --
common shares... $ 2,575 $ 1,176 $ -- $ 1,994 $ 3,147 $ 3,147 $ --
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
-------------------------------------------------------------- -----------------------
1990 1991 1992 1993 1994 1993 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:(1)
Total property, plant, and equipment,
net................................. $ 975,675 $1,040,342 $ 987,095 $ 989,603 $1,174,236 $1,113,490 $1,262,853
Total assets.......................... 1,725,660 1,822,977 1,979,324 2,024,023 2,344,442 2,223,516 2,537,422
Notes and loans payable............... 749,113 804,826 733,322 697,121 723,764 666,063 827,592
Stockholders' equity.................. 446,294 435,180 451,888 479,958 651,787 666,211 705,577
</TABLE>
- ---------------
(1) See "Business -- Litigation" for a discussion of material uncertainties
relating to stockholder litigation. See also "Business -- Environmental
Matters."
(2) See "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Fiscal Year Ended March 31, 1994 versus Fiscal Year Ended
March 31, 1993 -- Extraordinary Loss on Extinguishment of Debt."
(3) See "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Other."
(4) For the fiscal year ended March 31, 1994, and the nine months ended December
31, 1993 and 1994, net earnings per common share amounts were computed after
giving effect to the dividend on the Company's Series A 8 1/2% Preferred
Stock. See "Description of Securities -- Dividends."
4
<PAGE> 6
RECENT DEVELOPMENTS
As more fully set forth in "Risk Factors -- Stockholder Litigation" and
"Business -- Litigation," significant litigation matters affect the Company.
Recent litigation developments include the following matters. On February 2,
1995, the trial judge in the Shoen v. Shoen case granted the defendants' motion
for a remittitur (reduction) in damages (a) from $1.48 billion to approximately
$461.8 million to be paid to the plaintiffs in exchange for their stock in the
Company and (b) from $70 million to $7 million as punitive damages against
Edward J. Shoen. On February 13, 1995, the plaintiffs consented to these reduced
damage amounts. Judgment has not yet been entered and the Company is unable to
predict the likelihood of any appeal. The Paul F. Shoen v. AMERCO case was
settled on February 9, 1995 and dismissed with prejudice on February 10, 1995.
As part of the settlement, the Company agreed, among other things, to place
Selling Stockholder on management's slate of directors for the 1994 (delayed)
Annual Meeting of Stockholders (the "1994 Deferred Annual Meeting of
Stockholders").
RISK FACTORS
THE PURCHASE OF THE SECURITIES OFFERED HEREBY INVOLVES SUBSTANTIAL RISK.
THE FOLLOWING MATTERS, INCLUDING THOSE MENTIONED ELSEWHERE, SHOULD BE CONSIDERED
CAREFULLY BY A PROSPECTIVE INVESTOR IN EVALUATING A PURCHASE OF THE SECURITIES.
EXISTING MANAGEMENT -- POTENTIAL CHANGE IN CONTROL
For the reasons set forth below, there can be no assurance that the
Company's current management or its current operating strategy will remain in
place.
At the date of this Prospectus, members of a stockholder group (the "Inside
Stockholder Group"), which includes the Trust (the "ESOP Trust") under the
AMERCO Employee Savings, Profit Sharing and Employee Stock Ownership Plan (the
"ESOP"), Oxford (acting as a trustee), Edward J. Shoen, Mark V. Shoen, and James
P. Shoen who are members of the Company's management, and Selling Stockholder
and Sophia M. Shoen vote approximately 45.7% of the Company's common stock
pursuant to a stockholder agreement. The ESOP Trust holds approximately 7.9% of
the Company's voting stock. Approximately 3.2% of the Company's outstanding
voting stock is allocated to participants' ESOP Trust accounts and voted by the
ESOP Trustees in accordance with the participants' direction ("pass-through
voting"), subject to the provisions of the Employee Retirement Income and
Security Act of 1974 ("ERISA") and the provisions of the Internal Revenue Code
of 1986, as amended (the "IRC"). The ESOP Trust votes approximately 4.7% of the
Company's voting stock in its discretion as part of the Inside Stockholder Group
("discretionary voting"). Oxford acts as trustee for various trusts that own
approximately 4.2% of the Company's voting stock. At the completion of the
offering of the Securities, the Inside Stockholder Group will vote approximately
44.4% of the Company's common stock. There exists a second stockholder group
(the "Outside Stockholder Group") controlling approximately 48.2% of the
Company's common stock that is currently opposed to existing Company management.
See "Principal Stockholders -- Outside Stockholder Group." The members of the
Outside Stockholder Group may be required to sell their shares to certain of the
Company's current and former directors pursuant to litigation described in
"Business -- Litigation."
Arbitration Proceedings. Sophia M. Shoen has claimed that the Company has
defaulted in its obligation to register her common stock under a Share
Repurchase and Registration Rights Agreement. The matter is the subject of an
arbitration proceeding described in "Business -- Litigation." The arbitration
panel concluded hearings in the matter on August 21, 1994 and is expected to
render a decision at any time. Sophia M. Shoen claims that as a result of such
alleged default, she has the right to give notice of termination of the Inside
Stockholder Group. The Company disagrees with those assertions. Sophia M. Shoen
gave such notice of termination on July 11, 1994. See "Principal
Stockholders -- Inside Stockholder Group."
Annual Meeting of Stockholders. The current members of the Inside
Stockholder Group control approximately 45.7% of the Company's common stock. The
terms of the following existing directors will expire at the 1994 Deferred
Annual Meeting of Stockholders: Edward J. Shoen, the Company's Chairman and
President, Mark V. Shoen, Executive Vice President of Product for U-Haul
International, Inc., both of whom have been instrumental in the Company's
performance since 1987, and Aubrey K. Johnson, one of three
5
<PAGE> 7
independent directors and the only director without a current or past employment
history with the Company. The Company's Deferred 1994 Annual Meeting of
Stockholders was delayed as a result of litigation initiated by the Selling
Stockholder. Such litigation was dismissed on February 10, 1995. Selling
Stockholder will be nominated on management's slate of candidates to replace
Edward J. Shoen or Mark V. Shoen. Sophia M. Shoen has nominated herself in
opposition to management's slate of candidates. The Outside Stockholder Group,
controlling 48.2% of the voting stock, also has competing candidates. As a
result of the foregoing, unless the Outside Stockholder Group ceases to exist or
to oppose current management before the 1994 Deferred Annual Meeting of
Stockholders, the management nominees may not be elected, particularly if Sophia
M. Shoen is successful in leaving the Inside Stockholder Group. Accordingly,
there can be no assurance that the Company's current management or its current
operating strategy will remain in place. In addition, the entire Board of
Directors can be removed without cause by stockholders holding two-thirds of the
Company's voting stock.
Credit Agreements. The Company's credit agreements contain provisions that
could result in a required prepayment upon a "change in control" of the Company.
There can be no assurance that a change in control will not occur, particularly
if Sophia M. Shoen is successful in leaving the Inside Stockholder Group. The
Company does not currently have available sources of financing to fund such
prepayments if they became payable in full. In addition, upon such a "change in
control," the Company might lose the ability to draw on approximately $310
million under unutilized lines of credit otherwise available at December 31,
1994. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources -- Credit Agreements."
STOCKHOLDER LITIGATION
As disclosed in "Business -- Litigation," certain members of the Company's
Board of Directors and Selling Stockholder, are defendants in an action in the
Superior Court of the State of Arizona in and for the County of Maricopa
initiated by certain members of the Outside Stockholder Group in 1988. Based on
the plaintiffs' theory of damages, the Court ruled that the plaintiffs elected
that their remedy in this case would be the sale of their stock to the
defendants at a price determined by the Court based on the value of their stock
in 1988. On October 7, 1994, the jury determined that such value was $81.12 per
share or approximately $1.48 billion. On February 2, 1995, the judge in this
case granted the defendants' motion for remittitur or a new trial on the issue
of damages. The judge determined that the value of the plaintiffs' stock in 1988
was $25.30 per share or approximately $461.8 million. On February 13, 1995, the
plaintiffs filed a statement accepting the remittitur. The jury also awarded the
plaintiffs $70 million in punitive damages against Edward J. Shoen. The judge
ruled that this punitive damage award is excessive and granted Edward J. Shoen's
motion for remittitur or a new trial on the issue of punitive damages. The judge
reduced the award of punitive damages against Edward J. Shoen to $7 million. On
February 13, 1995, the plaintiffs filed a statement accepting the remittitur
reducing the punitive damages to $7 million. Upon completion of this litigation,
including any appeals, and a final determination of the purchase price to be
paid to the plaintiffs, the Company believes that the Outside Stockholder Group
will cease to exist. The Company is unable to predict the likelihood, outcome,
or consequences of any appeal. The Company has agreed to indemnify the
defendants to the fullest extent permitted by law or the Company's Articles of
Incorporation or By-Laws, for all expenses and damages, if any, incurred by the
defendants in this proceeding, subject to certain exceptions. As of the date of
this Prospectus, the extent of the Company's indemnification obligations, if
any, cannot be reasonably estimated. No provision has been made in the Company's
financial statements for any possible indemnification claims. Before the Company
will have any indemnification obligations, a final judgment must be entered
against the defendants, the defendants must request indemnification from the
Company, and a determination must be made under Nevada law as to the validity of
the indemnification claims. If valid indemnification claims are made, the
Company believes that it has various means of financing any such indemnification
obligations consistent with its existing credit agreements, or, in the
alternative, the Company may seek the waiver or amendment of certain of the
provisions of one or more of its credit agreements when the indemnification
obligations are determined. The Company believes, but no assurance can be given,
that it can obtain any necessary waivers or amendments. The Company believes
that it will be able to satisfy its indemnification obligations, if any, unless
the amount to be paid to the plaintiffs for their stock is increased following
the completion of any appeals or
6
<PAGE> 8
any new trial on the issue of damages. The Company's By-Laws provide for a right
of first refusal in favor of the Company on the Company's common stock except
for Common Stock sold in bona fide sales pursuant to Rule 144 under the
Securities Act and Common Stock sold pursuant to bona fide underwritten public
offerings. No determination has been made by the Company as to whether the
Company will exercise its right of first refusal upon any attempted transfer of
Common Stock from the plaintiffs to the defendants. In the event any cash paid
by the Company for the plaintiffs' stock is in excess of the fair value of the
stock received by the Company, the Company will be required to record an expense
equal to that difference. See "Business -- Litigation."
The Company, certain officers of the Company, certain members of the
Company's Board of Directors, and others are defendants in actions currently
pending in United States District Court for the District of Nevada entitled
Sidney Wisotzky and Dorothy Wisotzky, et al. v. Edward J. Shoen, et al., No.
CV-N-94-771-HDM (filed October 28, 1994), Evan Julber v. Edward J. Shoen, et
al., No. CV-N-94-00811-HDM (filed November 16, 1994), and Anne Markin v. Edward
J. Shoen, et al., No. CV-N-94-00821-ECR (filed November 18, 1994). The
plaintiffs, in these cases who claim to have purchased the Company's Series A
8 1/2% Preferred Stock, are seeking class action certification and are defining
the class as all persons who purchased or otherwise acquired the Series A 8 1/2%
Preferred Stock of the Company from October 14, 1993 through October 18, 1994,
inclusive, and who sustained damage as a result of such purchases. The
plaintiffs allege among other things, that the defendants violated the federal
securities laws by inflating the price of the Series A 8 1/2% Preferred Stock
via false and misleading statements, concealing material adverse information,
and taking other manipulative actions, and that the Prospectus for the Series A
8 1/2% Preferred Stock, certain Form 10-K and Form 10-Q filings made by the
Company, and the Company's Notice and Proxy Statement dated July 8, 1994
contained false and misleading statements and omissions regarding the action
currently pending in the Superior Court of the State of Arizona in and for the
County of Maricopa entitled Samuel W. Shoen, M.D., et al. v. Edward J. Shoen, et
al., No. CV88-20139, instituted August 2, 1988 (the "Shoen Litigation")
discussed in the immediately preceding paragraph. In addition, certain officers
of the Company, certain members of the Company's Board of Directors, and an
employee of the Company are defendants in an action currently pending in United
States District Court for the District of Nevada entitled Bernard L. and Frieda
Goldwasser, et al. v. Edward J. Shoen, et al., No. CV-N-94-00810-ECR (filed
November 16, 1994). The plaintiffs in this case allege derivatively on behalf of
the Company, that the defendants breached their fiduciary duties to the Company
and its stockholders by causing the Company to violate the federal securities
laws, by concealing the financial responsibility of the Company for the claims
asserted in the Shoen Litigation, by subjecting the Company to adverse
publicity, and by misusing their corporate control for personal benefit. In
addition to unspecified damages, the plaintiffs are seeking equitable and/or
injunctive relief to prevent the defendants in this case from causing the
Company to indemnify the defendants in the Shoen Litigation against their
liability in that case. See "Business -- Litigation." The plaintiffs in these
cases are requesting unspecified compensatory damages as well as attorneys' fees
and costs. The Company and the individual defendants deny plaintiffs'
allegations of wrongdoing and intend to vigorously defend themselves in these
actions.
DEPENDENCE UPON KEY PERSONNEL
The success and growth of the Company since 1987 has been dependent upon
the performance of its senior management team, the loss of whose services could
have an adverse effect on the Company. There is no assurance that the senior
management will remain employed by the Company. The Company has not entered into
employment contracts with anyone on the senior management team and has not
granted restricted stock or stock option awards to any employee pursuant to the
Company's Stock Option and Incentive Plan. However, Edward J., Mark V., and
James P. Shoen are members of the Company's senior management and have
substantial common stock holdings in the Company. See "Risk Factors -- Existing
Management -- Potential Change in Control" and "Principal Stockholders."
OTHER SHARES OF COMMON STOCK -- MARKET OVERHANG
In addition to the Securities and the up to 665,000 shares of the Company's
Common Stock trading on Nasdaq, which includes up to 90,000 shares approved for
trading on Nasdaq pursuant to Rule 144 sales, the
7
<PAGE> 9
Company has 37,499,063 other shares of common stock outstanding. Those shares
and shares issued by the Company in the future could potentially be sold, which
could adversely affect the market price of the Securities.
In addition, (i) the Company plans to register 1,700,000 shares of Common
Stock for public sale from time to time by Mark V. Shoen, and (ii) the Company
plans to register approximately 40,000,000 unissued shares of Common Stock for
public sale by the Company from time to time to finance the expansion of its
core businesses and for other corporate purposes. Each of the above offerings
will be made pursuant to a prospectus.
ENVIRONMENTAL MATTERS
The Company owns properties that contained approximately 1,200 underground
storage tanks as of December 31, 1994 and has been named a "potentially
responsible party" with respect to the disposal of hazardous wastes at fifteen
federal or state superfund sites. See "Business -- Environmental Matters."
QUARTERLY FLUCTUATIONS -- SEASONALITY
The Company's results of operations have historically fluctuated from
period to period, including on a quarterly basis. In particular, the Company's
U-Haul business is seasonal and a majority of the Company's revenues and
substantially all of its net earnings from its U-Haul business are generated in
the first and second quarters of each fiscal year (April through September). In
addition, the Company's results of operations have in the past been, and will
continue to be, affected by a wide variety of factors, including natural
disasters and other events that are beyond the control of the Company. For
example, the results of operations of RWIC in fiscal 1992 and 1993 were
adversely affected due to losses related to Hurricane Andrew. Results of
operations in any period should not be considered indicative of the results to
be expected for any future periods, and fluctuations in operating results may
also result in fluctuations in the price of the Company's common stock. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
REGULATED INDUSTRIES
The Company's insurance operations are subject to regulation. See
"Business -- Insurance Operations -- Regulation."
ABILITY TO ISSUE SERIAL COMMON STOCK AND PREFERRED STOCK
The Board of Directors has the authority to issue up to 50,000,000 shares
of preferred stock and up to 150,000,000 shares of serial common stock and to
fix the rights, preferences, privileges, and restrictions, including voting
rights, of those shares without any further vote or action by the stockholders.
The rights of the holders of the Securities will be subject to, and may be
adversely affected by, the rights of the holders of any serial common stock and
preferred stock that may be issued in the future. The issuance of serial common
stock and preferred stock, while providing desired flexibility in connection
with possible acquisitions and other corporate purposes, could have the effect
of making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company, thereby delaying, deferring, or
preventing a change in control of the Company. Furthermore, holders of such
serial common stock or preferred stock may have other rights, including economic
rights senior to the Securities, and, as a result, the issuance thereof could
have a material adverse effect on the market value of the Securities. The
Company has in the past issued, and may from time to time in the future issue,
preferred stock for financing purposes with rights, preferences, or privileges
senior to the Securities offered hereby. Although, as of the date of this
Prospectus, the Company's Board of Directors has no present intention to issue
shares of either serial common stock or preferred stock with rights,
preferences, or privileges senior to the Securities, no assurance can be given
as to the Company's future plans in this regard. See "Description of
Securities."
8
<PAGE> 10
THE COMPANY
The following chart represents the corporate structure of the major
operating subsidiaries of the Company.
[CHART]
9
<PAGE> 11
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at December 31, 1994:
<TABLE>
<CAPTION>
DECEMBER 31, 1994
-----------------
(IN THOUSANDS)
<S> <C>
Long-term debt, less current maturities.............................. $ 690,233
=========
Stockholders' equity:
Serial preferred stock with or without par value, 50,000,000 shares
authorized; 6,100,000 shares issued without par value and
outstanding........................................................ --
Serial common stock, with or without par value, 150,000,000 shares
authorized......................................................... --
Series A Common Stock of $0.25 par value, authorized 10,000,000
shares, 5,762,495 shares issued and outstanding.................... 1,441
Common Stock of $0.25 par value, authorized 150,000,000 shares,
34,237,505 shares issued........................................... 8,559
Additional paid-in capital........................................... 165,677
Foreign currency translation......................................... (12,307)
Retained earnings.................................................... 572,475
Less:
Cost of common shares in treasury, 1,335,937 shares................ 10,461
Loan to leveraged employee stock ownership plan.................... 19,807
---------
Total stockholders' equity................................. $ 705,577
=========
</TABLE>
DIVIDENDS
The most recent cash dividends declared on the Company's common stock are
as follows:
<TABLE>
<CAPTION>
RECORD DATE CASH DIVIDEND PER COMMON SHARE
---------------------------------------------------------- ------------------------------
<S> <C>
August 4, 1992............................................ $ 0.0258
October 6, 1992........................................... $ 0.0258
August 3, 1993............................................ $ 0.0814
</TABLE>
The Company does not have a dividend policy with respect to the common
stock. The Company's Board of Directors periodically considers the advisability
of declaring and paying dividends in light of the existing circumstances. The
above dividends on common stock are not indicative of future dividends on common
stock. As of the date of this Prospectus no dividends on common stock are
currently declared and unpaid and there can be no assurance that dividends on
common stock will be declared in the future. The holders of the Series A 8 1/2%
Preferred Stock are entitled to receive cumulative dividends prior to and in
preference to the holders of common stock at a fixed annual rate. For a
description of restrictions on the Company's ability to pay dividends, see
"Description of Securities -- Dividends."
10
<PAGE> 12
SELECTED CONSOLIDATED FINANCIAL DATA
The following summary financial information, insofar as it relates to each
of the fiscal years ended March 31, 1992, 1993 and 1994, has been derived from
the Company's consolidated financial statements, audited by Price Waterhouse
LLP, independent accountants, included in the Company's S-2 Registration
Statement. The report of Price Waterhouse LLP included therein contains an
explanatory paragraph related to the uncertainty surrounding certain litigation
described in Notes 14 and 21 to such consolidated financial statements. The
summary financial information related to each of the fiscal years ended March
31, 1990 and 1991 has been derived from the Company's audited financial
statements. The summary financial information related to the nine months ended
December 31, 1993 and 1994 has been derived from the Company's unaudited
quarterly report on Form 10-Q for the quarter ended December 31, 1994, which is
incorporated by reference herein. Oxford and RWIC have been consolidated on the
basis of fiscal years ended December 31. To give effect to Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes," the
Company has restated its financial statements to April 1, 1988. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Other." The summaries for the nine months ended December 31, 1993
and 1994 are unaudited; however, in the opinion of management, all adjustments
necessary for a fair presentation of such financial information have been
included. The results of operations for the nine months ended December 31, 1994
may not be indicative of the results to be expected for fiscal 1995 because,
among other reasons, the Company's U-Haul business is seasonal, with a majority
of its revenue and substantially all of its net earnings being generated in the
first and second quarters of each fiscal year.
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
FOR THE FISCAL YEAR ENDED MARCH 31, ENDED DECEMBER 31,
-------------------------------------------------------------- -----------------------
1990 1991 1992 1993 1994 1993 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS DATA:(1)
Rental, net sales, and other
revenues........................... $ 830,998 $ 860,044 $ 845,128 $ 901,446 $ 972,704 $ 762,844 $ 838,994
Premiums and net investment income... 119,641 126,620 126,756 139,465 162,151 120,920 141,587
---------- ---------- ---------- ---------- ---------- ---------- ----------
950,639 986,664 971,884 1,040,911 1,134,855 883,764 980,581
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating expenses and cost of
sales.............................. 627,396 668,149 661,229 697,700 735,841 553,353 589,202
Benefits, losses, and amortization of
deferred acquisition costs......... 121,602 126,626 99,091 115,969 130,168 101,162 116,884
Depreciation......................... 105,437 114,589 109,641 110,105 133,485 96,580 112,631
Interest expense..................... 74,657 80,815 76,189 67,958 68,859 52,530 50,871
---------- ---------- ---------- ---------- ---------- ---------- ----------
929,092 990,179 946,150 991,732 1,068,353 803,625 869,588
---------- ---------- ---------- ---------- ---------- ---------- ----------
Pretax earnings (loss) from
operations......................... 21,547 (3,515) 25,734 49,179 66,502 80,139 110,993
Income tax expense................... (3,516) (6,354) (4,940) (17,270) (19,853) (25,211) (39,602)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Earnings (loss) before cumulative
effect of change in accounting
principle and extraordinary item... 18,031 (9,869) 20,794 31,909 46,649 54,928 71,391
Extraordinary loss on early
extinguishment of debt, net(2)..... -- -- -- -- (3,370) (1,897) --
Cumulative effect of change in
accounting principle, net(3)....... -- -- -- -- (3,095) (3,272) --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net earnings (loss).................. $ 18,031 $ (9,869) $ 20,794 $ 31,909 $ 40,184 $ 49,759 $ 71,391
========= ========= ========= ========= ========= ========= =========
Earnings (loss) from operations
before extraordinary loss on early
extinguishment of debt and
cumulative effect of change in
accounting principle per common
share.............................. $ .46 $ (.25) $ .53 $ .83 $ 1.06 $ 1.41 $ 1.67
Net earnings (loss) per common
share(4)........................... .46 (.25) .53 .83 .89 1.27 1.67
Weighted average common shares
outstanding........................ 39,483,960 39,312,080 38,880,069 38,664,063 38,664,063 37,070,925 37,025,575
Cash dividends declared -- common
shares............................. $ 2,575 $ 1,176 $ -- $ 1,994 $ 3,147 $ 3,147 $ --
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
-------------------------------------------------------------- -----------------------
1990 1991 1992 1993 1994 1993 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:(1)
Total property, plant, and equipment,
net................................ $ 975,675 $1,040,342 $ 987,095 $ 989,603 $1,174,236 $1,113,490 $1,262,853
Total assets......................... 1,725,660 1,822,977 1,979,324 2,024,023 2,344,442 2,223,516 2,537,422
Notes and loans payable.............. 749,113 804,826 733,322 697,121 723,764 666,063 827,592
Stockholders' equity................. 446,294 435,180 451,888 479,958 651,787 666,211 705,577
</TABLE>
- ---------------
(1) See "Business -- Litigation" for a discussion of material uncertainties
relating to stockholder litigation. See also "Business -- Environmental
Matters."
(2) See "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Fiscal Year Ended March 31, 1994 versus Fiscal Year Ended
March 31, 1993 -- Extraordinary Loss on Extinguishment of Debt."
(3) See "Management's Discussion and Analysis of Financial Condition and Results
of Operations -- Other."
(4) For the fiscal year ended March 31, 1994, and the nine months ended December
31, 1993 and 1994, net earnings per common share amounts were computed after
giving effect to the dividend on the Company's Series A 8 1/2% Preferred
Stock. See "Description of Securities -- Dividends."
11
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For financial statement preparation, the Company's insurance subsidiaries
report on a calendar year basis, while the Company reports on a fiscal year
basis ending March 31. Accordingly, with respect to the Company's insurance
subsidiaries, any reference to the years 1994, 1993, 1992, and 1991 corresponds
to the Company's fiscal years 1995, 1994, 1993, and 1992, respectively. There
have been no events as to such subsidiaries between January 1 and March 31 of
each of 1994, 1993, and 1992 that would materially affect the Company's
consolidated financial position or results of operations as of and for the
fiscal years ended March 31, 1994, 1993, and 1992, respectively.
The following discussion should be read in conjunction with Notes 1, 19,
and 20 of the Notes to Consolidated Financial Statements contained in the
Company's audited consolidated financial statements incorporated herein by
reference to the Company's Registration Statement, No. 33-54289 filed with the
Commission, which was effective November 3, 1994, which discuss the principles
of consolidation, condensed consolidated financial information, and industry
segment and geographic data, respectively. In consolidation, all intersegment
premiums are eliminated, and the benefits, losses, and expenses are retained by
the insurance companies.
RESULTS OF OPERATIONS (UNAUDITED)
Nine Months Ended December 31, 1994 and 1993
The following table shows industry segment data from the Company's three
industry segments, rental operations, life insurance, and property and casualty
insurance, for the nine months ended December 31, 1994 and 1993. Rental
operations is composed of the operations of U-Haul and AREC. Life insurance is
composed of the operations of Oxford. Property and casualty insurance is
composed of the operations of RWIC. The Company's results of operations have
historically fluctuated from quarter to quarter. In particular, the Company's
U-Haul rental operations are seasonal and a majority of the Company's revenues
and substantially all of its earnings from its U-Haul rental operations are
generated in the first and second quarters of each fiscal year (April through
September).
<TABLE>
<CAPTION>
PROPERTY/ ADJUSTMENTS
RENTAL LIFE CASUALTY AND
OPERATIONS INSURANCE INSURANCE ELIMINATIONS CONSOLIDATED
---------- -------- -------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
NINE MONTHS ENDED DECEMBER 31, 1994
Revenues:
Outside............................ $ 835,593 $ 29,972 $115,016 $ -- $ 980,581
Intersegment....................... (41) 1,134 14,899 (15,992) --
---------- -------- -------- ------------ ------------
Total revenues................ $ 835,552 $ 31,106 $129,915 $ (15,992) $ 980,581
========= ======== ======== ========= =========
Operating profit................... $ 139,041 $ 8,016 $ 14,766 $ 41 $ 161,864
========= ======== ======== =========
Interest expense................... 50,871
------------
Pretax earnings from operations.... $ 110,993
=========
Identifiable assets at December 31.. $1,792,189 $452,699 $566,930 $ (274,396) $ 2,537,422
========= ======== ======== ========= =========
NINE MONTHS ENDED DECEMBER 31, 1993
Revenues:
Outside............................ $ 755,809 $ 25,400 $102,555 $ -- $ 883,764
Intersegment....................... 1,055 224 15,404 (16,683) --
---------- -------- -------- ------------ ------------
Total revenues................ $ 756,864 $ 25,624 $117,959 $ (16,683) $ 883,764
========= ======== ======== ========= =========
Operating profit................... $ 110,222 $ 8,531 $ 14,614 $ (698) $ 132,669
========= ======== ======== =========
Interest expense................... 52,530
------------
Pretax earnings from operations.... $ 80,139
=========
Identifiable assets at December 31.. $1,563,917 $460,558 $459,199 $ (260,158) $ 2,223,516
========= ======== ======== ========= =========
</TABLE>
12
<PAGE> 14
RESULTS OF OPERATIONS
Years Ended March 31, 1994, 1993, and 1992
The following table shows industry segment data from the Company's three
industry segments, rental operations, life insurance, and property and casualty
insurance, for the fiscal years ended March 31, 1994, 1993, and 1992. Rental
operations is composed of the operations of U-Haul and AREC. Life insurance is
composed of the operations of Oxford. Property and casualty insurance is
composed of the operations of RWIC.
<TABLE>
<CAPTION>
PROPERTY/ ADJUSTMENTS
RENTAL LIFE CASUALTY AND
OPERATIONS INSURANCE INSURANCE ELIMINATIONS CONSOLIDATED
---------- -------- -------- ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1994
Revenues:
Outside....................... $ 965,839 $ 31,357 $137,659 $ -- $1,134,855
Intersegment.................. (357) 2,834 18,862 (21,339) --
---------- -------- -------- ------------ ----------
Total revenues........ $ 965,482 $ 34,191 $156,521 $ (21,339) $1,134,855
========= ======== ======== ========= =========
Operating profit................ $ 106,248 $ 9,106 $ 20,705 $ (698) $ 135,361
========= ======== ======== =========
Interest expense................ 68,859
----------
Pretax earnings from
operations.................... $ 66,502
=========
Identifiable assets............. $1,593,044 $461,464 $550,795 $ (260,861) $2,344,442
========= ======== ======== ========= =========
1993
Revenues:
Outside....................... $ 891,599 $ 33,619 $115,693 $ -- $1,040,911
Intersegment.................. -- 2,630 18,402 (21,032) --
---------- -------- -------- ------------ ----------
Total revenues........ $ 891,599 $ 36,249 $134,095 $ (21,032) $1,040,911
========= ======== ======== ========= =========
Operating profit................ $ 88,581 $ 12,325 $ 16,231 $ -- $ 117,137
========= ======== ======== =========
Interest expense................ 67,958
----------
Pretax earnings from
operations.................... $ 49,179
=========
Identifiable assets............. $1,377,386 $472,669 $422,079 $ (248,111) $2,024,023
========= ======== ======== ========= =========
1992
Revenues:
Outside....................... $ 844,492 $ 31,391 $ 96,001 $ -- $ 971,884
Intersegment.................. -- 1,158 21,991 (23,149) --
---------- -------- -------- ------------ ----------
Total revenues........ $ 844,492 $ 32,549 $117,992 $ (23,149) $ 971,884
========= ======== ======== ========= =========
Operating profit................ $ 69,628 $ 11,056 $ 21,239 $ -- $ 101,923
========= ======== ======== =========
Interest expense................ 76,189
----------
Pretax earnings from
operations.................... $ 25,734
=========
Identifiable assets............. $1,354,758 $457,324 $402,190 $ (234,948) $1,979,324
========= ======== ======== ========= =========
</TABLE>
13
<PAGE> 15
NINE MONTHS ENDED DECEMBER 31, 1994 VERSUS NINE MONTHS ENDED DECEMBER 31, 1993
U-Haul Operations
U-Haul revenues consist of (i) total rental and other revenue and (ii) net
sales. Total rental and other revenue increased by $71.2 million, approximately
11.2%, to $704.5 million in the first nine months of fiscal 1995. The increase
in the first nine months of fiscal 1995 is primarily attributable to a $64.6
million increase in net revenues from the rental of moving related equipment,
which rose to $645.5 million as compared to $580.9 million in the first nine
months of fiscal 1994. Moving related revenues benefited from transactional
(volume) growth within the truck and trailer fleets reflecting both rental fleet
expansion and higher utilization. Revenues from the rental of self-storage
facilities increased by $8.3 million to $60.5 million in the first nine months
of fiscal 1995, an increase of approximately 15.9%. Storage revenues were
positively impacted by additional rentable square footage and higher average
rental rates.
Net sales revenues were $131.1 million in the first nine months of fiscal
1995, which represents an increase of approximately 6.1% from the first nine
months of fiscal 1994 net sales of $123.6 million. Revenue growth from the sale
of moving support items (i.e., boxes, etc.), hitches, and propane resulted in a
$9.0 million increase during the first nine month period, which was offset by a
$1.4 million decrease in revenue from gasoline sales consistent with the
Company's plan to remove underground storage tanks and gradually discontinue
gasoline sales.
Cost of sales was $72.6 million in the first nine months of fiscal 1995,
which represents a decrease of approximately 1.9% from $74.1 million for the
same period in fiscal 1994. The decrease in cost of sales primarily reflects a
reduction in the provision for obsolete inventory between the two periods due to
management's continued emphasis on disposing of such inventory, including the
complete liquidation of RV parts inventory during fiscal 1994. The decrease is
also reflective of improved margins on hitch sales. Increased material costs
from the sale of moving support items and propane, which can be primarily
attributed to higher sales levels, partially offset these decreases.
Operating expenses increased to $511.2 million in the first nine months of
fiscal 1995 from $476.0 million in the first nine months of fiscal 1994, an
increase of approximately 7.4%. The change from the prior year primarily
reflects a $25.7 million increase in rental equipment maintenance costs. An
increase in fleet size, higher transaction levels, and efforts to minimize
downtime are primarily responsible for the increase. Lease expense declined by
$18.1 million to $48.7 million reflecting lease terminations, lease
restructuring, and lower finance costs on new leases originated during the past
18 months. All other operating expense categories increased in the aggregate of
$27.6 million, approximately 9.9%, to $305.4 million. The increase in operating
expenses is consistent with the growth in rental revenue.
Depreciation expense for the nine month period was $112.6 million, as
compared to $96.6 million in the same period of the prior year, reflecting the
increase in fleet size, the acquisition of trucks that were previously leased
and real property acquisitions.
Oxford -- Life Insurance
Premiums from Oxford's reinsurance lines before intercompany eliminations
were $13.2 million for the nine months ended September 30, 1994, an increase of
$1.4 million, approximately 11.9% over 1993 and accounted for 75.9% of Oxford's
premiums in 1994. These premiums are primarily from term life insurance and
single and flexible premium deferred annuities. Increases in premiums are
primarily from the anticipated increase in annuitizations as a result of the
maturing of deferred annuities.
Premiums from Oxford's direct lines before intercompany eliminations were
$4.2 million for the nine months ended September 30, 1994, an increase of $2.6
million over the prior year. The increase in direct premium is primarily due to
Oxford's entrance into the credit life and credit accident and health business.
Oxford's direct lines are principally related to the underwriting of group life
and disability income and credit life and accident and health. Insurance on the
lives of the employees of AMERCO and its subsidiary companies accounted for
approximately 7.4% of Oxford's premiums in 1994. Other direct lines accounted
for approximately 16.7% of Oxford's premiums in 1994.
14
<PAGE> 16
Net investment income before intercompany eliminations was $11.1 million
and $9.4 million for the nine months ended September 30, 1994 and 1993,
respectively. This increase is primarily due to increasing margins on the
interest sensitive business. Gains on the disposition of fixed maturity
investments were $1.2 million and $1.5 million for the nine months ended
September 30, 1994 and 1993, respectively. Oxford had $1.4 million and $1.3
million of other income for the nine months ended September 30, 1994 and 1993,
respectively.
Benefits and expenses incurred were $23.1 million for the nine months ended
September 30, 1994, an increase of 35.1% over 1993. Comparable benefits and
expenses incurred for 1993 were $17.1 million. This increase is primarily due to
the increase in reserve caused by the increase in annuitizations and the credit
life and accident and health business discussed above. In addition, Oxford
increased its amortization of deferred acquisition costs.
Operating profit before intercompany eliminations decreased by $0.5
million, or approximately 5.9%, in 1994 to $8.0 million, primarily due to the
decrease in gain on sale of investments and increased amortization of deferred
acquisition costs. These decreases in operating profit were partially offset by
the increasing margins on the interest sensitive business.
RWIC -- Property and Casualty
RWIC gross premium writings continued to grow in the first nine months of
1994, to $141.4 million as compared to $131.5 million in the first nine months
of 1993. This represents an increase of $9.9 million, or 7.5%. RWIC continues
underwriting professional reinsurance via broker markets, and premiums in this
area increased in the first nine months of 1994 to $54.1 million, or 38.3% of
total premiums, from comparable 1993 figures of $44.6 million, or 33.9% of total
premiums. Growth is also occurring in selected general agency lines. These
premiums accounted for approximately 15.2% of gross written premiums for 1994,
compared to 14.0% in 1993. As in prior years, the rental industry market also
accounts for a significant share of total premiums, approximately 43.3% and
40.1% in the first nine months of 1994 and the first nine months of 1993,
respectively. These writings include U-Haul customers, fleetowners and U-Haul as
well as other rental industry insureds with similar characteristics.
Net earned premiums increased $12.8 million, or 13.6%, to $106.7 million
for the nine months ended September 30, 1994, compared with premiums of $93.9
million for the nine months ended September 30, 1993. The premium increase was
primarily due to planned increased writings in the assumed reinsurance and
general agency lines.
Underwriting expenses incurred were $115.1 million for the nine months
ended September 30, 1994, an increase of $11.8 million, or 11.4% over 1993.
Comparable underwriting expenses incurred for 1993 were $103.3 million. The
increase in underwriting expenses is due to the larger premium volume being
written in 1994, which increased acquisition costs and commensurate reserves.
The ratio of underwriting expenses to net earned premiums decreased from 1.10 in
the first nine months of 1993 to 1.08 in the first nine months of 1994. This
improvement is primarily attributable to improved loss experience combined with
continued market rate strength in the Company's assumed reinsurance area. Also
contributing to the improvement was better than expected loss ratios on the
Company's general agency lines.
Net investment income was $21.9 million for the nine months ended September
30, 1994, an increase of 5.8% over the nine months ended September 30, 1993 net
investment income of $20.7 million. The increase is due to an increased asset
base generated from larger premium volume.
RWIC completed the nine months ended September 30, 1994 with income before
tax expense of $14.8 million as compared to $14.6 million for the comparable
period ended September 30, 1993. This represents an increase of $0.2 million, or
1.1% over 1993. Improved underwriting results in the Company's assumed
reinsurance and general agency area were offset by declines in its worker's
compensation and rental industry liability lines.
Interest Expense
Interest expense decreased by $1.6 million to $50.9 million for the nine
months ended December 31, 1994, as compared to $52.5 million for the nine months
ended December 31, 1993. This decrease reflects a reduction in the costs of
funds.
15
<PAGE> 17
Extraordinary Loss on Extinguishment of Debt
During fiscal 1994, the Company extinguished $25.2 million of its medium
term notes originally due in fiscal 1995 through 2000. The weighted average rate
of the notes purchased is 9.34%. The purchase resulted in an extraordinary
charge of $1.9 million net of $1.0 million of tax benefit.
Consolidated Group
As a result of the foregoing, pretax earnings of $111.0 million were
realized in the nine months ended December 31, 1994, as compared to $80.1
million for the same period in 1993. After providing for income taxes, net
earnings for the nine months ended December 31, 1994 were $71.4 million, as
compared to $49.8 million for the same period of the prior year. The
consolidated results for the prior year reflect a cumulative effect adjustment
resulting from the adoption of Statement of Accounting Standards No. 106
"Accounting for Post-Retirement Benefits Other Than Pensions" and extraordinary
costs associated with the early retirement of debt.
THREE MONTHS ENDED DECEMBER 31, 1994 VERSUS THREE MONTHS ENDED DECEMBER 31, 1993
U-Haul
U-Haul revenues consist of (i) total rental and other revenue and (ii) net
sales. Total rental and other revenue increased by $22.6 million, approximately
12.0%, to $210.5 million in the three months ended December 1994. The increase
is primarily attributable to a $18.4 million increase in net revenues from the
rental of moving related equipment, which rose to $186.1 million, as compared to
$167.7 million for the three months ended December 31, 1994 and December 31,
1993, respectively. Moving related revenues benefited from transactional
(volume) growth within the truck and trailer fleets. Revenues from the rental of
self-storage facilities increased by $3.6 million to $21.1 million for the three
months ended December 1994, an increase of approximately 20.6%. Storage revenues
were positively impacted by additional rentable square footage and higher
average rental rates.
Net sales were $33.4 million for the three months ended December 31, 1994,
which represents an increase of approximately 8.4% from the three months ended
December 31, 1993 net sales of $30.8 million. Revenue growth from the sale of
hitches, moving support items (i.e., boxes, etc.), and propane resulted in a
$2.7 million increase during the three month period.
Cost of sales was $19.3 million for the three months ended December 31,
1994 compared to $19.0 million for the same period ended December 31, 1993.
Increased material costs corresponding to higher sales levels of moving support
items, propane and hitches were primarily responsible.
Operating expenses increased to $171.7 million for the three months ended
December 31, 1994 compared to $154.0 million for the three months ended December
1993, an increase of approximately 11.5%. The change from the prior year
primarily reflects increases in virtually all operating expense categories
reflecting higher transaction levels, an increase in fleet size and continuing
efforts to minimize rental equipment downtime, offset by a decline in lease
expense of $0.8 million to $17.2 million. The decline in lease expense reflects
the full benefits of last year's lease terminations.
Depreciation expense for the three month period was $37.8 million, as
compared to $34.3 million in the same period of the prior year, reflecting the
increase in fleet size, the acquisition of trucks that were previously leased
and real property acquisitions.
Oxford -- Life Insurance
Premiums from Oxford's reinsurance lines before intercompany eliminations
were $5.0 million for the quarter ended September 30, 1994, an increase of $0.8
million, approximately 19.0% over 1993 and accounted for 75.9% of Oxford's
premiums in 1994. These premiums are primarily from term life insurance and
single and flexible premium deferred annuities. Increases in premiums are
primarily from the anticipated increase in annuitizations as a result of the
maturing of deferred annuities.
Premiums from Oxford's direct lines before intercompany eliminations were
$1.9 million for the quarter ended September 30, 1994, an increase of $1.5
million over the prior year. Oxford's direct lines are principally
16
<PAGE> 18
related to the underwriting of group life and disability income insurance on the
lives of the employees of AMERCO and its subsidiary companies. Other direct
lines include the underwriting of credit life and credit accident and health
business and individual life insurance acquired from other insurers. The
increase in direct premium is primarily due to Oxford's entrance into the credit
life and accident and health business.
Net investment income before intercompany eliminations was $3.4 million and
$3.0 million for the quarters ended September 30, 1994 and 1993, respectively.
This increase is primarily due to increasing margins on the interest sensitive
business. Gains on the disposition of fixed maturity investments were $1.0
million during the quarter ended September 30, 1993. There were no gains on sale
of investments during the quarter ended September 30, 1994. Oxford had $0.4
million and $0.3 million of other income for the quarters ended September 30,
1994 and 1993, respectively.
Benefits and expenses incurred were $9.0 million for the quarter ended
September 30, 1994, an increase of 73.1% over 1993. Comparable benefits and
expenses incurred for 1993 were $5.2 million. This increase is primarily due to
the increase in reserve caused by the increase in annuitizations and Oxford's
entrance into credit life and credit accident and health business. In addition,
Oxford increased its amortization of deferred acquisition costs.
Operating income before intercompany eliminations decreased by $2.1
million, or approximately 55.3%, in 1994 to $1.7 million, primarily due to the
decrease in gains on sales of investments due to decreased trading activity.
These decreases in operating income were partially offset by the increasing
margins on the interest sensitive business.
RWIC -- Property and Casualty
RWIC gross premium writings for the quarter ended September 1994 were $47.8
million as compared to $50.2 million for the quarter ended September 1993. This
represents a decrease of $2.4 million, or 4.6%. As in prior years, the rental
industry market accounts for a significant share of total premiums,
approximately 48.8% and 42.0% for the quarter ended September 1994 and the
quarter ended September 1993, respectively. These writings include U-Haul
customers, fleetowners and U-Haul as well as other rental industry insureds with
similar characteristics.
Net earned premiums increased $3.9 million, or 10.7%, to $40.3 million for
the three months ended September 30, 1994, compared with premiums of $36.4
million for the three months ended September 30, 1993. The premium increase was
primarily due to increased writings in the general agency lines.
Underwriting expenses incurred were $44.5 million for the three months
ended September 30, 1994, an increase of $5.5 million, or 14.1% over 1993.
Comparable underwriting expenses incurred for 1993 were $39.0 million. The
increase in underwriting expenses is due to the larger premium volume being
written in 1994, which increased acquisition costs and commensurate reserves.
The ratio of underwriting expenses to net earned premiums increased from 1.07
for the three months ended September 30, 1993 to 1.10 for the three months ended
September 30, 1994.
Net investment income was $7.1 million during the quarters ended September
30, 1994 and 1993, respectively.
RWIC completed the three months ended September 30, 1994 with pretax
earnings of $3.2 million as compared to $6.3 million for the comparable period
ended September 1993. This represents a decrease of $3.1 million, or 49.2% over
1993. The decrease is due to poor underwriting results in the rental industry
liability lines.
Interest Expense
Interest expense increased by $0.3 million to $17.6 million for the three
months ended December 31, 1994, as compared to $17.2 million for the three
months ended December 31, 1993. This increase reflects increases in average debt
outstanding which was partially offset by a reduction in the average cost of
funds.
17
<PAGE> 19
Consolidated Group
As a result of the foregoing, pretax earnings of $2.3 million were realized
in the three months ended December 31, 1994, as compared to $4.5 million for the
same period in 1993. After providing for income taxes, net earnings for the
three months ended December 31, 1994 were $1.9 million, as compared to $1.8
million for the same period of the prior year.
FISCAL YEAR ENDED MARCH 31, 1994 VERSUS FISCAL YEAR ENDED MARCH 31, 1993
U-Haul Operations
U-Haul revenues consist of (i) total rental and other revenue and (ii) net
sales. Total rental and other revenue increased by $63.3 million, approximately
8.5%, to $809.4 million in fiscal 1994. The increase from fiscal 1993 is
primarily attributable to a $52.2 million increase in net revenues from the
rental of moving related equipment, which benefited from transactional growth
reflecting higher utilization and rental fleet expansion. Revenues from the
rental of self-storage facilities increased by $6.6 million to $70.5 million in
fiscal 1994, an increase of approximately 10.3%. Storage revenues were
positively impacted by additional rentable square footage, higher average
occupancy levels, and higher average rental rates. All other revenue categories
increased in the aggregate by $8.7 million during the current year, which
primarily reflects increases in gains on note sales of approximately $5.0
million and interest income.
Net Sales were $156.0 million in fiscal 1994, which represented an increase
of approximately 7.2% from fiscal 1993 net sales of $145.5 million. Revenue
growth from the sale of hitches, moving support items (i.e., boxes, etc.), and
propane net sales increased $10.7 million during fiscal 1994.
Cost of sales was $92.2 million in fiscal 1994, which represented a
decrease of approximately 1.0% from fiscal 1993. The reduction in fiscal 1994
reflects a combination of the absence of recreational vehicle sales, reduced
levels of outside repair and a reduction in inventory adjustments which fully
offset increased material costs corresponding to the increase in hitch, moving
support and propane sales.
Operating expenses increased to $633.6 million in fiscal 1994 from $599.8
million in fiscal 1993, an increase of approximately 5.6%. The change from the
prior year reflects increases in almost all major expense categories with the
exception of lease expense for equipment. Rental equipment maintenance costs
increased by $27.4 million reflecting fleet expansion, higher utilization, a
marginal increase in the age of the fleet and increased emphasis on maximizing
rental equipment available to rent by reducing downtime. Lease expense for
equipment declined from $117.6 million in fiscal 1993 to $82.9 million in fiscal
1994, a decrease of approximately 29.5%, reflecting lease terminations, lease
restructuring and lower finance costs on new leases originated during fiscal
1994. All other operating expense categories increased in the aggregate by $41.1
million, approximately 12.4%, to $373.0 million which is primarily attributable
to higher levels of rental and sales activity.
Depreciation expense during fiscal 1994 was $133.5 million as compared to
$110.1 million in the prior year, reflecting the addition of new trucks and
trailers and the acquisition of trucks that were previously leased.
Oxford -- Life Insurance
Premiums from Oxford's reinsurance lines before intercompany eliminations
were $15.8 million for the year ended December 31, 1993, an increase of $0.9
million, approximately 6.0% over 1992 and accounted for 88.7% of Oxford's
premiums in 1993. These premiums are primarily from term life insurance and
single and flexible premium deferred annuities. Increases in premiums are
primarily from the anticipated increase in annuitizations as a result of the
maturing of deferred annuities.
Premiums from Oxford's direct lines before intercompany eliminations were
$2.0 million in 1993, a decrease of $1.0 million (33%) from the prior year. The
decrease is primarily attributable to an experience refund incurred on the
Company's group life insurance business. Oxford's direct lines are principally
related to the underwriting of group life and disability income. Insurance on
the lives of the employees of AMERCO and its subsidiary companies accounted for
approximately 6.3% of Oxford's premiums in 1993. Other direct lines accounted
for approximately 5.0% of Oxford's premiums in 1993.
18
<PAGE> 20
Net investment income before intercompany eliminations was $12.6 million
and $11.5 million for the years ended December 31, 1993 and 1992, respectively.
The increase was primarily due to a decrease in interest credited to
policyholders because of the increase in annuitizations. Gains on the
disposition of fixed maturity investments were $2.1 million and $4.7 million for
the years ended December 31, 1993 and 1992, respectively. Oxford had $1.8
million and $2.2 million of other income, for 1993 and 1992, respectively.
Benefits and expenses incurred were $24.4 million for the year ended
December 31, 1993, an increase of 5.2% over 1992. Comparable benefits and
expenses incurred for 1992 were $23.2 million. This increase is primarily due to
the increase in annuitizations discussed above.
Operating profit after intercompany eliminations decreased by $3.4 million,
approximately 27.6%, in 1993 to $8.9 million, primarily due to the decrease in
gains on fixed maturity investments.
RWIC -- Property and Casualty
RWIC gross premium writings for the year ended December 31, 1993 were
$175.1 million, compared to $155.2 million in 1992, an increase of approximately
12.8%. The rental industry market accounted for a significant share of these
premiums, approximately 37% and 40% in 1993 and 1992, respectively. These
writings include U-Haul customers, fleetowners and U-Haul as well as other
rental industry insureds with similar characteristics. Selected general agency
lines, principally commercial multiple peril, surety and excess workers'
compensation and casualty accounted for 8.1%, 3.2% and 5.4%, respectively, of
gross premium writings in 1993, compared to approximately 15.4%, 2.8% and 11.9%,
respectively, in 1992. RWIC also underwrites reinsurance via broker markets, and
premiums in this area increased from $47.1 million in 1992 to $59.5 million in
1993 due to favorable market conditions.
Net earned premiums increased $24.3 million, approximately 24%, to $125.4
million for the year ended December 31, 1993. This compares with net earned
premiums of $101.1 million for the year ended December 31, 1992. The premium
increase was primarily due to increased writings in the reinsurance area, along
with growth in the excess workers' compensation line of RWIC's general agency
business. These planned increases are due to strong rates and reduced capacity
in the reinsurance market and increased marketing emphasis on the long standing
presence in the excess workers' compensation market.
Underwriting expenses incurred were $135.6 million for the year ended
December 31, 1993, an increase of $17.8 million, approximately 15.1% over 1992.
Comparable underwriting expenses incurred for 1992 were $117.8 million. Higher
underwriting expenses are due to larger premium volumes being written in 1993
which increased acquisition costs and commensurate reserves. The ratio of
underwriting expenses to net premiums improved from 1.17 in 1992 to 1.08 in
1993. This improvement was primarily attributable to improved loss experience in
the Company's assumed reinsurance area including the lack of catastrophic losses
such as those related to Hurricane Andrew in 1992, as well as the previously
mentioned strength in rates.
Net investment income was $27.4 million in 1993, a decrease of
approximately 6.5%, as compared to 1992 net investment income of $29.3 million.
This decrease is due primarily to lower rates available in the high quality
fixed income market. RWIC's net realized gain on the sale of investments was
$2.1 million and $0.7 million in 1993 and 1992, respectively, while other income
totaled $1.4 million and $2.9 million.
RWIC completed 1993 with net after tax income of $14.8 million as compared
to $11.8 million for the comparable period ended December 1992. This represents
an increase of $3.0 million, or 25.4% over 1992. The increase is due to a
combination of better underwriting results and unplanned gains on bond calls.
Net income at December 31, 1992 of $11.8 million includes the effect of adopting
SFAS 109 ("Accounting for Income Taxes"), previously reported December 31, 1992
net income was $12.8 million.
Interest Expense
Interest expense was $68.8 million in fiscal 1994, as compared to $68.0
million in fiscal 1993. The increase reflects higher average levels of debt
outstanding (see "Liquidity and Capital Resources"), a higher proportion of
fixed rate debt, and a lengthening of maturities offset by lower cost of funds.
19
<PAGE> 21
Extraordinary Loss on Extinguishment of Debt
During the first and third quarters of fiscal 1994, the Company
extinguished $25.2 million of its medium-term notes originally due in fiscal
1995 through 2000. The weighted average rate of the notes purchased is 9.34%.
The purchase resulted in an extraordinary charge of $1,897,000 net of $1,021,000
of tax benefit.
During the fourth quarter of fiscal 1994, the Company terminated swaps with
a notional value of $77 million originally due in fiscal 1995. The terminations
resulted in an extraordinary charge of $1,473,000 net of $793,000 of tax
benefit.
FISCAL YEAR ENDED MARCH 31, 1993 VERSUS FISCAL YEAR ENDED MARCH 31, 1992
U-Haul Operations
U-Haul revenues consist of (i) total rental and other revenue and (ii) net
sales. Total rental and other revenue increased by $57.6 million, approximately
8.4%, to $746.1 million in fiscal 1993. The increase from fiscal 1992 is
primarily attributable to a $54.7 million increase in net revenues from the
rental of moving related equipment, which rose to $684.1 million, as compared to
$629.4 million, in fiscal 1992. Improved utilization within the truck rental
fleet accounted for the majority of the revenue growth, with one-way rental
transactions increasing by 6.1% and in-town rental transactions increasing by
16.5%. Also contributing to the increased revenues was an increase in the number
of available rental trailers and trucks. Revenues from the rental of
self-storage facilities increased $5.3 million to $63.9 million in fiscal 1993,
an increase of approximately 9.2%. Storage revenues were positively impacted by
additional rentable square footage, higher average occupancy levels, and higher
average rental rates. The increases in revenues from the rental of
moving-related equipment and self-storage facilities were partially offset by an
aggregate decrease of $2.4 million in general rental item revenues, gains on the
sale of property, plant, and equipment, and other miscellaneous revenues.
Net sales were $145.5 million in fiscal 1993, which represented a decrease
of approximately 6.7% from fiscal 1992 net sales of $156.0 million. Moderate
revenue growth from the sale of hitches, moving support items (i.e., boxes,
etc.), and propane was offset by reduced sales of recreational vehicles due to
the liquidation of inventory as well as a reduction in outside repair income due
to a reduction in rental trucks owned by a third party, which were previously
under a managed equipment agreement.
Cost of sales was $93.1 million in fiscal 1993, which represented a
decrease of approximately 9.5% from fiscal 1992. The reduction in fiscal 1993
reflects reductions in recreational vehicle sales and outside repair income.
Operating expenses increased to $599.8 million in fiscal 1993 from $562.3
million in fiscal 1992, an increase of approximately 6.7%. The change from the
prior year primarily reflects increased rental equipment maintenance costs and
higher personnel costs. The higher maintenance costs reflect a slight increase
in the age of the truck fleet due to no new units being added in fiscal 1992 and
a relatively small number of new units being added in fiscal 1993. Also
contributing to higher maintenance costs were U-Haul's repurchase of rental
trucks owned by a third party, which were previously under a managed equipment
agreement, and higher utilization. Lease expense for the fleet replacement cycle
initiated in 1987 peaked in fiscal 1992 at $121.9 million and subsequently
declined to $117.6 million in fiscal 1993, a decrease of approximately 3.5%.
Oxford -- Life Insurance
Premiums from Oxford's reinsurance lines before intercompany eliminations
were $14.9 million for the year ended December 31, 1992, a decrease of $4.1
million, approximately 21.6% from 1991 and accounted for 83.3% of Oxford's
premiums in 1992. These premiums are primarily from term life insurance and
single and flexible premium deferred annuities. Reductions in premiums reflect
the anticipated decrease in renewal premiums as a result of normal attrition and
mortality, combined with the fact that during 1992 Oxford reduced its activities
in the reinsurance market compared to 1991 because of unfavorable market
conditions.
Premiums from Oxford's direct lines before intercompany eliminations were
$3.0 million in 1992, an increase of $1.5 million (100%) over the prior year.
The increase is primarily due to the issuance of a single premium immediate
annuity of $0.8 million. Oxford's other direct lines are principally related to
the
20
<PAGE> 22
underwriting of group life and disability income. Insurance on the lives of the
employees of AMERCO and its subsidiary companies accounted for approximately
10.8% of Oxford's premiums in 1992. Other direct lines accounted for
approximately 5.9% of Oxford's premiums in 1992.
Net investment income before intercompany eliminations was $11.5 million
and $10.2 million for the years ended December 31, 1992 and 1991, respectively.
The increase is due to increased margins on interest-sensitive business. Gains
on the disposition of fixed maturity investments were $4.7 million and $0.1
million. Oxford had $2.2 million and $1.6 million of other income, for 1992 and
1991, respectively. Other income consists of administration fees and income on
the surrender of annuities.
Benefits and expenses incurred were $23.2 million for the year ended
December 31, 1992, an increase of 7.9% over 1991. Comparable benefits and
expenses incurred for 1991 were $21.5 million. This increase is primarily due to
the increase in deferred acquisition cost amortization discussed below.
Operating profit increased by $1.3 million, approximately 11.5%, in 1992 to
$12.3 million, primarily due to increased margins on interest-sensitive business
and gains on disposition or prepayments of fixed maturity investments. As
required by generally accepted accounting principles, the amortization of
deferred policy acquisition costs was accelerated due to gains on the fixed
maturity investments associated with interest-sensitive products, resulting in a
charge of approximately $2.0 million.
RWIC -- Property and Casualty
RWIC gross premium writings for the year ended December 31, 1992 were
$155.2 million, compared to $133.7 million in 1991, an increase of approximately
16.1%. The rental industry market accounted for a significant share of these
premiums, approximately 40% and 53% in 1992 and 1991, respectively. These
writings include U-Haul customers, fleetowners, and U-Haul, as well as other
rental industry insureds with similar characteristics. Selected general agency
lines, principally commercial multiple peril, surety and excess workers
compensation and casualty accounted for approximately 15.4%, 2.8%, and 11.9%
respectively, of gross premium writings in 1992, compared to approximately
12.8%, 1.8%, and 14.8% respectively, in 1991. RWIC also underwrites reinsurance
via broker markets, and premiums in this area increased from $23.1 million in
1991 to $47.1 million in 1992 due to favorable market conditions.
Net earned premiums increased $12.3 million, approximately 13.9%, to $101.1
million for the year ended December 31, 1992. This compares with net earned
premiums of $88.8 million for the year ended December 31, 1991. The premium
increase was primarily due to increased writings in the reinsurance area, along
with growth in the commercial multiple peril lines of RWIC's general agency
business.
Underwriting expenses incurred were $117.8 million for the year ended
December 31, 1992, an increase of $21.1 million, approximately 21.8%, over 1991.
Comparable underwriting expenses incurred for 1991 were $96.7 million. The ratio
of underwriting expenses to net earned premiums increased from 1.09 in 1991 to
1.17 in 1992. This increase was primarily attributable to losses related to
Hurricane Andrew (approximately $12 million on a pre-tax basis). The majority of
these losses were experienced in the Company's assumed reinsurance area.
Net investment income was $29.3 million in 1992, a decrease of
approximately 0.7%, as compared to 1991 net investment income of $29.5 million.
The slight decrease in net investment income is due largely to the lower rates
available in the high quality fixed income market. RWIC's gain on the sale of
investments was $0.7 million and $0.6 million, and RWIC had $2.9 million of
other income for 1992 and other expense of $0.9 million for 1991.
RWIC's operating profit in 1992 decreased $5.0 million, approximately
23.6%, to $16.2 million from $21.2 million for the year ended December 31, 1991.
Interest Expense
Interest expense was $68.0 million in fiscal 1993, as compared to $76.2
million in fiscal 1992. The decline in interest expense reflects lower average
debt levels outstanding and favorable refinance costs on maturing debt.
21
<PAGE> 23
Result of Operations -- Consolidated Group
As a result of the foregoing, pre-tax earnings of $66.5 million were
realized in fiscal 1994 as compared to $49.2 million in fiscal 1993 and $25.7
million in fiscal 1992. After providing for income taxes, extraordinary costs
associated with the early retirement of debt and the cumulative effect of a
change in accounting principle, net earnings for fiscal 1994 were $40.2 million
as compared to $31.9 million in fiscal 1993 and $20.8 million in fiscal 1992.
Income tax as a percentage of pretax earnings from operations was 35.1% in 1993
compared to 19.2% in 1992, due to the Company's increased taxable earnings and
the relative impact of tax-exempt interest.
QUARTERLY RESULTS
The following table presents unaudited quarterly results for the ten
quarters in the period beginning July 1, 1992 and ending December 31, 1994. The
Company believes that all necessary adjustments have been included in the
amounts stated below to present fairly, and in accordance with generally
accepted accounting principles, the selected quarterly information when read in
conjunction with the consolidated financial statements incorporated herein by
reference. The Company's results of operations have historically fluctuated from
period to period, including on a quarterly basis. In particular, the Company's
U-Haul business is seasonal and a majority of the Company's revenues and
substantially all of its net earnings from its U-Haul business are generated in
the first and second quarters of each fiscal year (April through September). The
operating results for the periods presented are not necessarily indicative of
results for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
----------------------------------------------------------------------------------------------------------------
SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1992 1992 1993 1993 1993 1993 1994 1994 1994 1994
--------- -------- --------- -------- --------- -------- --------- -------- --------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total
revenues..... $303,871 $242,921 $219,375 $291,348 $324,968 $267,448 $251,091 $323,578 $361,115 $295,888
Net earnings
(loss)....... 26,736 (6,843) (12,966 ) 17,359 30,601 1,799 (9,575 ) 29,413 40,071 1,907
Net earnings
(loss) per
common
share(1)..... .69 (.18) (.34 ) .47 .83 (.02) (.33 ) .71 1.00 (.04)
</TABLE>
- ---------------
(1) For the quarters ended December 31, 1993, March 31, June 30, September 30,
and December 31, 1994 net earnings per common share amounts were computed
after giving effect to the dividend on the Company's Series A 8 1/2%
Preferred Stock. See "Description of Capital Stock -- Dividends."
LIQUIDITY AND CAPITAL RESOURCES
U-Haul
To meet the needs of its customers, U-Haul must maintain a large inventory
of fixed asset rental items. At December 31, 1994, net property, plant and
equipment represented approximately 70.5% of total U-Haul assets and
approximately 49.8% of consolidated assets. In the first nine months of fiscal
1995, capital expenditures were $322.1 million, as compared to $395.2 million in
the first nine months of fiscal 1994, reflecting expansion of the rental fleet
in both periods, purchase of trucks previously leased, and increases in the
available square footage in the self-storage segment. The capital required to
fund these acquisitions were funded with internally generated funds from
operations and debt financings.
Cash flows from operations were $170.7 million in the first nine months of
fiscal 1995, as compared to $171.2 million in the first nine months of fiscal
1994. The decrease of $0.5 million is primarily due to an increase in net
earnings and depreciation and amortization, offset by a decrease in net change
of operating assets and liabilities, including receivables and deferred income
taxes.
Oxford -- Life Insurance
Oxford's primary sources of cash are premiums, receipts from
interest-sensitive products and investment income. The primary uses of cash are
operating costs and benefit payments to policyholders. Matching the investment
portfolio to the cash flow demands of the types of insurance being written is an
important consideration. Benefit and claim statistics are continually monitored
to provide projections of future cash requirements.
22
<PAGE> 24
Cash flows from operations were $14.4 million and $18.7 million for the
nine months ended September 30, 1994 and 1993, respectively. In addition to cash
flow from operations and financing activities, a substantial amount of liquid
funds is available through Oxford's short-term portfolio. At September 30, 1994
and 1993, short-term investments amounted to $9.5 million and $22.8 million,
respectively. Management believes that the overall sources of liquidity will
continue to meet foreseeable cash needs.
Stockholder's equity of Oxford, on September 30, 1994 was $87.9 million.
Stockholder's equity excluding investment in RWIC, was $86.3 million in 1993. On
June 30, 1994, Oxford dividended 100% of the common stock of RWIC to Ponderosa.
During 1994 and 1993, Oxford paid cash dividends of $4.9 million and $10.0
million, respectively, to Ponderosa. The decrease in dividends is primarily due
to the dividend of RWIC discussed above.
Applicable laws and regulations of the State of Arizona require the
Company's insurance subsidiaries to maintain minimum capital determined in
accordance with statutory accounting practices in the amount of $600,000. In
addition, the amount of dividends that can be paid to shareholders by insurance
companies domiciled in the State of Arizona is limited. Any dividend in excess
of the limit requires prior regulatory approval. As a result of the dividend of
RWIC stock on June 30, 1994, the State of Arizona must approve future dividends
made through June 30, 1995. These restrictions are not expected to have a
material adverse effect on the ability of the Company to meet its cash
obligations.
RWIC -- Property and Casualty
Cash flows from operations were $14.3 million and $7.5 million for the nine
months ended September 30, 1994 and 1993, respectively. The increase is
primarily attributed to increased premium writings and decreased reinsurance
receivable balances due to the timing of collection procedures. In addition to
cash flows from operations, a substantial amount of liquid assets and budgeted
cash flows is available to meet periodic needs.
RWIC's short-term investment portfolio was $6.3 million at September 30,
1994. The Company believes that this level of liquid assets, combined with
budgeted cash flow, is adequate to meet periodic needs. This balance also
reflects funds in transition from maturity proceeds to long-term investments.
The structure of the long-term portfolio is designed to match future cash needs.
Capital and operating budgets allow RWIC to schedule cash needs.
RWIC maintains a diversified investment portfolio, primarily in bonds at
varying maturity levels. Approximately 96.8% of the portfolio consists of
investment grade securities. The maturity distribution is designed to provide
sufficient liquidity to meet future cash needs. Current liquidity is adequate,
with current invested assets equal to 94.4% of total liabilities.
Shareholder equity increased 0.2% from $161.0 million at December 31, 1993
to $161.4 million at September 30, 1994. RWIC considers current shareholder's
equity to be adequate to support future growth and absorb unforseen risk events.
RWIC does not use debt or equity issues to increase capital and therefore has no
exposure to capital market conditions. RWIC paid shareholder dividends of $9.7
million during the nine months ended September 30, 1994.
Consolidated Group
At December 31, 1994, total notes and loans payable outstanding was $827.6
million as compared to $723.8 million at March 31, 1994 and $666.1 million at
December 31, 1993. The increase from 1993 reflects the expansion in the rental
fleet and self-storage segment.
During each of the fiscal years ending March 31, 1995, 1996, and 1997,
U-Haul estimates gross capital expenditures will average approximately $360
million as a result of the expansion of the rental fleet and self-storage
segment. This level of capital expenditures, combined with an average of
approximately $100 million in annual long-term debt maturities during this same
period, are expected to create annual average funding needs of approximately
$460 million. Management estimates that U-Haul will fund approximately 55% of
these requirements with internally generated funds, including proceeds from the
disposition of older trucks and other asset sales. The remainder of the required
capital expenditures are expected to be financed through existing credit
facilities, new debt placements, lease fundings, and/or equity offerings.
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Credit Agreements
The Company's subsdiary operations are funded by various credit and
financing arrangements, including unsecured long-term borrowings, unsecured
medium-term notes, and revolving lines of credit with domestic and foreign
banks. Principally to finance its fleet of trucks and trailers, the Company
routinely guarantees sale and leaseback transactions entered into by U-Haul. As
of December 31, 1994, the Company had $827.6 million in total notes and loans
payable outstanding and unutilized lines of credit of approximately $310.0
million.
Certain of the Company's credit agreements contain restrictive financial
and other covenants, including, among others, covenants with respect to
incurring additional indebtedness, maintaining certain financial ratios, and
placing certain additional liens on its properties and assets. At December 31,
1994, the Company was in compliance with these covenants. In addition, the
Company's credit agreements contain provisions that could result in a required
prepayment upon a "change in control" of the Company.
Under certain of the Company's credit agreements, a "change in control" is
deemed to occur if (a) any transfer of any shares of any class of capital stock
results in the Company's ESOP and members of the Shoen family owning in the
aggregate less than the amount of capital stock as may be necessary to enable
them to cast in excess of 50% of the votes for the election of directors of the
Company or (b) during any period for two consecutive years, persons who at the
beginning of such period constituted the Board of Directors of the Company
(including any director approved by a vote of not less than 66 2/3% of such
board) cease for any reason to constitute greater than 50% of the then acting
Board.
The Company is further restricted in the type and amount of dividends and
distributions that it may issue or pay, and in the issuance of certain types of
preferred stock. The Company is prohibited from issuing shares of preferred
stock that provide for any mandatory redemption, sinking fund payment, or
mandatory prepayment, or that allow the holders thereof to require the Company
or an subsidiary of the Company to repurchase such preferred stock at the option
of such holders or upon the occurrence of any event or events without the
consent of its lenders.
Stockholder Litigation
As disclosed in "Business -- Litigation," certain members of the Company's
Board of Directors and Selling Stockholder are defendants in an action initiated
by the Outside Stockholder Group. The Company has agreed to indemnify the
defendants to the fullest extent permitted by law or the Company's Articles of
Incorporation or By-Laws for all expenses and damages, if any, incurred by the
defendants in this proceeding, subject to certain exceptions. The extent of the
Company's indemnification obligation, if any, cannot be reasonably estimated.
Based on the plaintiffs' theory of damages, the Court ruled that the plaintiffs
elected that their remedy in this litigation would be the sale of their stock to
the defendants at a price determined by the Court based on the value of their
stock in 1988. The jury has determined that such value was $81.12 per share or
approximately $1.48 billion. On February 2, 1995, the judge in this case granted
the defendants' motion for remittitur or a new trial on the issue of damages.
The judge determined that the value of the plaintiffs' stock in 1988 was $25.30
per share or approximately $461.8 million. On February 13, 1995, the plaintiffs
filed a statement accepting the remittitur. The jury also awarded the plaintiffs
$70 million in punitive damages against Edward J. Shoen. The judge ruled that
this punitive damage award is excessive and granted Edward J. Shoen's motion for
remittitur or a new trial on the issue of punitive damages. The judge reduced
the award of punitive damages against Edward J. Shoen to $7 million. On February
13, 1995, the plaintiffs filed a statement accepting the remittitur reducing the
punitive damages to $7 million. No provision has been made in the Company's
financial statements for any possible indemnification claims. Before the Company
will have any indemnification obligations, a final judgment must be entered
against the defendants, the defendants must request indemnification from the
Company, and a determination must be made under Nevada law as to the validity of
the indemnification claims. If valid indemnification claims are made, the
Company believes that various means of financing the purchase of the plaintiffs'
stock would exist, including, but not limited to, the public sale of common
stock by the Company or by certain of the defendants. The Company believes, but
no assurance can be given, that it can obtain any necessary waivers or
amendments of any provisions of its credit agreements to permit the Company to
finance the purchase of the plaintiffs' stock. The Company believes, but no
assurance can be given, that it will be able to satisfy its indemnification
obligations, if any, unless the
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<PAGE> 26
amount to be paid to the plaintiffs for their stock is increased following the
completion of any appeals or any new trial on the issue of damages. The Company
is unable to predict the likelihood, outcome, or consequences of any appeal. In
the event any cash paid by the Company for the plaintiffs' stock is in excess of
the fair value of the stock received by the Company, the Company will be
required to record an expense equal to that difference.
OTHER
Statement of Financial Accounting Standards No. 106, "Employers Accounting
for Postretirement Benefits Other Than Pensions," was issued by the Financial
Accounting Standards Board in December 1990. The statement requires that the
expected costs of health care and life insurance provided to retired employees
be recognized as expense during the years employees render service. The Company
adopted the provisions of this statement effective April 1, 1993. The
accumulated postretirement benefit obligation recognized by the Company at April
1, 1993 was $5.0 million. Net of income taxes, the cumulative effect of adoption
at April 1, 1993 was $3.1 million.
Further, during the first quarter of fiscal 1994 the Company adopted the
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." This statement requires a change from the deferred to the liability
method of computing deferred income taxes. The adoption of the provisions of
this statement resulted in a $11.1 million net increase in deferred income taxes
payable. The Company adopted this change retroactively to April 1, 1988. For
additional information, see Note 7 of Notes to Consolidated Financial
Statements.
In November 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 112, "Employers Accounting for
Postemployment Benefits." The statement applies to employers who provide certain
benefits to former or inactive employees after employment but before retirement.
It requires that the cost of such benefits be recognized over the service period
of employees as these benefits vest or accumulate. The provisions of this
statement must be adopted for fiscal years beginning after December 15, 1993.
The impact of adoption of this statement is immaterial.
In December 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 113, "Accounting and Reporting for
Reinsurance of Short-Duration and Long-Duration Contracts." Effective January 1,
1993, the Company adopted the standard. The primary impact on the Company's
financial statements is the requirement to report assets and liabilities
relating to reinsured contracts gross of the effects of reinsurance. Previously,
such effects were reported on a net basis. As a result of adoption of the
standard, unpaid losses and loss expenses as of March 31, 1994 have been
increased by approximately $76 million to reflect the Company's policy
liabilities without regard to reinsurance. A corresponding amount due from
reinsurers on unpaid losses, including amounts related to claims incurred but
not reported, has also been reflected. Additionally, unearned premiums have been
increased by approximately $12 million for policy premiums ceded to reinsurers
for which the coverage period has not yet expired. Prepaid insurance premiums of
a corresponding amount have also been reflected in the consolidated balance
sheet. The consolidated balance sheet as of March 31, 1993 has not been restated
to reflect the adoption of the standard.
Statement of Financial Accounting Standards No. 114, "Accounting by
Creditors for Impairment of a Loan," was issued by the Financial Accounting
Standards Board in May 1993. This standard is effective for years beginning
after December 15, 1994. The standard requires that an impaired loan's fair
value be measured and compared to the recorded investment in the loan. If the
fair value of the loan is less than the recorded investment in the loan, a
valuation allowance is established. The Company has not completed an evaluation
of the effect of this standard.
Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," was issued by the Financial
Accounting Standards Board in May 1993. This standard requires classification of
debt securities into one of the following three categories based on management's
intention with regard to such securities: held-to-maturity, available-for-sale
and trading. Securities classified as held-to-maturity are recorded at cost
adjusted for the amortization of premiums or accretion of discounts
25
<PAGE> 27
while those classified as available-for-sale are recorded at fair value with
unrealized gains or losses reported on a net basis in a separate component of
stockholders' equity. Securities classified as trading are recorded at fair
value with unrealized gains or losses reported on a net basis in income.
Effective December 31, 1993, RWIC adopted the standard. RWIC does not currently
maintain a trading portfolio. U-Haul and Oxford have adopted this statement in
fiscal 1995. The effect of adopting this statement on the Company's results of
operations is immaterial.
Statement of Position 93-7, "Reporting on Advertising Costs," was issued by
the Accounting Standards Executive Committee in December 1993. This statement of
position provides guidance on financial reporting on advertising costs in annual
financial statements. The statement of position requires reporting advertising
costs as expenses when incurred or when the advertising takes place, reporting
the costs of direct-response advertising, and amortizing the amount of
direct-response advertising reported as assets. This statement of position is
effective for financial statements for years beginning after June 15, 1994. The
Company currently matches certain advertising costs with revenue generated in
future periods, and at March 31, 1994, $8.2 million in advertising costs are
deferred and included in prepaid expenses. The Company has completed an
evaluation of the effect of this statement of position but has not determined
the timing of adoption. However, the Company must adopt this statement of
position no later than fiscal 1996.
In December 1994, the Accounting Standards Executive Committee issued
Statement of Position 94-6, "Disclosure of Certain Significant Risks and
Uncertainties." This statement requires companies to disclose in their financial
statements information regarding the nature of their operations, the use of
estimates in the preparation of the financial statements and, in certain
instances, variability due to certain considerations. Adoption is required for
fiscal years ending after December 15, 1995. The Company is currently evaluating
the effects of this pronouncement.
In October 1994, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 119, "Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments." This statement
requires companies to include in their financial statements disclosures about
the amounts, nature and terms of derivative financial instruments. Adoption is
required for fiscal years ending after December 15, 1994. The Company is
currently evaluating the effects of this pronouncement.
IMPACT OF INFLATION
Inflation has had no material financial effect on the Company's results of
operations in the years discussed.
26
<PAGE> 28
BUSINESS
HISTORY
The Company was founded in 1945 under the name "U-Haul Trailer Rental
Company." From 1945 to 1975, the Company rented trailers and trucks on a one-way
and in-town round-trip basis through independent dealers (at that time
principally independent gasoline service stations). Since 1974, the Company has
developed a network of Company-owned rental centers ("U-Haul Centers") (through
which U-Haul rents its trucks and trailers and provides a number of other
related products and services) and has expanded the number and geographic
diversity of its independent dealers. At December 31, 1994, the Company's
distribution network included approximately 1,100 U-Haul Centers and
approximately 12,400 independent dealers.
In March 1974, in conjunction with the acquisition and construction of
U-Haul Centers, the Company entered the self-storage business. As of December
31, 1994, such self-storage facilities were located at or near approximately 67%
of the Company's U-Haul Centers. Beginning in 1974, the Company introduced the
sale and installation of hitches and towing systems, as well as the sale of
support items such as packing and moving aids. During 1983, the Company expanded
its range of do-it-yourself rental products to include tools and equipment for
the homeowner and small contractor and other general rental items.
In 1969, the Company acquired Oxford to provide employee health and life
insurance for the Company in a cost-effective manner. In 1973, the Company
formed RWIC to provide automobile liability insurance for the U-Haul truck and
trailer rental customers.
Commencing in 1987, the Company began the implementation of a strategic
plan designed to emphasize reinvestment in its core do-it-yourself rental,
moving, and storage business. The plan included a fleet renewal program (see
"Business -- U-Haul Operations -- Rental Equipment Fleet") and provided for the
discontinuation of certain unprofitable and unrelated operations. As part of its
plan, the Company discontinued the operation of its full-service moving van
lines, initiated the phase out of its recreational vehicle rental operations,
and began the disposition of its recreational vehicle rental fleet. The
disposition of the moving van lines' assets and the recreational vehicle rental
fleet were completed in 1988 and 1992, respectively. The Company also eliminated
various types of rental equipment and closed certain warehouses and repair
facilities. The Company believes that its refocused business strategy enabled
U-Haul to generate higher revenues and to achieve significant cost savings. This
plan has been and continues to be vigorously opposed by the Outside Stockholder
Group and would in all likelihood not be pursued in the event of a change in
control. See "Risk Factors -- Existing Management -- Potential Change in
Control."
Since 1987, the Company has sold surplus real estate assets with a book
value of approximately $39.2 million for total proceeds of approximately $79.2
million. At December 31, 1994, the book value of the Company's real estate
assets deemed to be surplus was approximately $16.9 million.
In 1990, the Company reorganized its operations into separate legal
entities, each with its own operating, financial, and investment strategies. The
reorganization separated the Company into three parts: U-Haul rental operations,
insurance, and real estate. The purpose of the reorganization was to increase
management accountability and to allow the allocation of capital based on
defined performance measurements.
BUSINESS STRATEGY
U-HAUL OPERATIONS
The Company's present business strategy remains focused on the
do-it-yourself moving customer. The objective of this strategy is to offer, in
an integrated manner over a diverse geographical area, a wide range of products
and services to the do-it-yourself moving customer.
Through its "Moving Made Easier(R)" program, the Company strives to offer
its customers a high quality, reliable, and convenient fleet of trucks and
trailers at reasonable prices while simultaneously offering other related
products and services, including moving accessories, self-storage facilities,
and other items often
27
<PAGE> 29
desired by the do-it-yourself mover. The rental trucks purchased in the fleet
renewal program have been designed with the do-it-yourself customer in mind to
include features such as low decks, air conditioning, power steering, automatic
transmissions, soft suspensions, AM/FM cassette stereo systems, and over-the-cab
storage. The Company has introduced certain insurance products, including
"Safemove(R)" and "Safestor(R)," to provide the do-it-yourself mover with
certain moving-related insurance coverage. In addition, the Company provides
rental customers the option of storing their possessions at either their points
of departure or destination.
The Company believes that customer access, in terms of truck or trailer
availability and proximity of rental location, is critical to its success. Since
1987, the Company has more than doubled the number of U-Haul rental locations,
with a net addition of approximately 6,900 independent dealers.
To effectively service the U-Haul customer at these additional rental
locations with equipment commensurate with the Company's commitment to product
excellence, the Company, as part of the fleet renewal program, purchased
approximately 71,000 new trucks between March 1987 and December 1994 and reduced
the overall average age of its truck fleet from approximately 11 years at March
1987 to approximately five years at December 1994. During this period,
approximately 62,000 trucks were retired or sold.
Since 1990, U-Haul has replaced approximately 52% of its trailer fleet with
new, more aerodynamically designed trailers better suited to the low height
profile of many newly manufactured automobiles. Given the mechanical simplicity
of a trailer relative to a truck and a trailer's longer useful life, the Company
expects to replace trailers only as necessary.
Beginning in 1983, the Company implemented a point-of-sale computer system
for all of its Company-owned locations. The system was designed primarily to
handle the Company's reservations, traffic, and reporting of rental
transactions. The Company believes that the implementation of the system has
been a significant factor in allowing the Company to increase its fleet
utilization. Since the initial implementation, the Company has added several
additional enhancements to the system, including full budgeting and financial
reporting systems.
INSURANCE OPERATIONS
Oxford's business strategy emphasizes long-term capital growth funded
through earnings from reinsurance and investment activities. In the past, Oxford
has selectively reinsured life, health, and annuity-type insurance products.
Oxford anticipates pursuing its growth strategy by providing reinsurance
facilities to well-managed insurance or reinsurance companies offering similar
type products who are desirous of additional capital either as a result of rapid
growth or regulatory demands or who are divesting non-core business lines.
RWIC's principal business strategy is to capitalize on its knowledge of
insurance products aimed at the moving and rental markets. RWIC believes that
providing U-Haul and U-Haul customers with property and casualty insurance
coverage has enabled it to develop expertise in the areas of rental vehicle
lessee insurance, self-storage property coverage, motor home insurance coverage,
and general rental equipment coverage. RWIC has used and plans to continue to
use this knowledge to expand its customer base by offering similar products to
customers other than U-Haul. In addition, RWIC plans to expand its involvement
in specialized areas by offering commercial multi-peril and surety coverage and
by assuming reinsurance business.
U-HAUL OPERATIONS
GENERAL
The Company's do-it-yourself moving business operates under the U-Haul name
through an extensive and geographically diverse distribution network of
Company-owned U-Haul Centers and independent dealers throughout the United
States and Canada.
Substantially all of the Company's rental revenue is derived from
do-it-yourself moving customers. The remaining business comes from
commercial/industrial customers. Moving rentals include: (i) in-town
(round-trip) rentals, where the equipment is returned to the originating U-Haul
Center or independent dealer
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and (ii) one-way rentals, where the equipment is returned to a U-Haul Center or
independent dealer in another city. Typically, the number of in-town rental
transactions in any given year is substantially greater than the number of
one-way rental transactions. However, total revenues generated by one-way
transactions in any given year typically exceed total revenues from in-town
rental transactions.
As part of the Company's integrated approach to the do-it-yourself moving
market, U-Haul has a variety of product offerings. U-Haul's "Moving Made
Easier(R)" program is designed to offer safe, well-equipped rental trucks and
trailers at a reasonable price and to provide support items such as furniture
pads, hand trucks, appliance and utility dollies, mirrors, tow bars, tow
dollies, and bumper hitches. The Company also sells boxes, tape, and packaging
materials and rents additional items such as floor polishers and carpet cleaning
equipment at its U-Haul Center locations. U-Haul Centers also install hitches
and sell propane, and some of them sell gasoline. U-Haul sells insurance
packages such as (i) "Safemove(R)," which provides moving customers with a
damage waiver, cargo protection, and medical and life coverage, and (ii)
"Safestor(R)," which provides self-storage rental customers with various
insurance coverages.
The U-Haul truck and trailer rental business tends to be seasonal with more
transactions and revenues generated in the spring and summer months than during
the balance of the year. The Company attributes this seasonality to the
preference of do-it-yourself movers to move during this time. Also, consistent
with do-it-yourself mover preferences, the number of rental transactions tends
to be higher on weekends than on weekdays.
RENTAL EQUIPMENT FLEET
As of December 31, 1994, U-Haul's rental equipment fleet consisted of
approximately 79,000 trucks and approximately 91,000 trailers. Rental trucks are
offered in five sizes and range in size from the ten-foot "Mini-Mover(R)" to the
twenty-six-foot "Super-Mover(R)." In addition, U-Haul offers pick-up trucks and
cargo vans at many of its locations. Trailers range between six feet and twelve
feet in length and are offered in both open and closed box configurations.
DISTRIBUTION NETWORK
The Company's U-Haul products and services are marketed across the United
States and Canada through, as of December 31, 1994, approximately 1,100
Company-owned U-Haul Centers and approximately 12,400 independent dealers. The
independent dealers, which include gasoline station operators, general equipment
rental operators, and others, rent U-Haul trucks and trailers in addition to
carrying on their principal lines of business. U-Haul Centers, however, are
dedicated to the U-Haul line of products and services and offer those and
related products and services. Independent dealers are commonly located in
suburban and rural markets, while U-Haul Centers are concentrated in urban and
suburban markets.
Independent dealers receive U-Haul equipment on a consignment basis and are
paid a commission on gross revenues generated from their rentals. Independent
dealers also may earn referral commissions on U-Haul products and services
provided at other U-Haul locations. The Company maintains contracts with its
independent dealers that can be cancelled upon thirty days' written notice by
either party.
In addition, the Company has sought to improve the productivity of its
rental locations by installing computerized reservations and network management
systems in each U-Haul Center and a limited number of independent dealers. The
Company believes that these systems have been a major factor in enabling the
Company to deploy equipment more effectively throughout its network of locations
and anticipates expanding these systems to cover additional independent dealers.
The Company's U-Haul Center and independent dealer network in the United
States and Canada is divided into 11 districts, each supervised by an area
district vice president. Within the districts, the Company has established local
marketing companies, each of which, guided by a marketing company president, is
responsible for retail marketing at all U-Haul Centers and independent dealers
within its respective geographic area.
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Although rental dealers are independent, U-Haul area field managers oversee
the dealer network by inspecting each independent dealer's facilities and
auditing their activities on a regular basis. In addition, the area field
managers recruit new independent dealers for expansion or replacement purposes.
U-Haul has instituted performance compensation programs that focus on
accomplishment and reward strong performers.
SELF-STORAGE BUSINESS
U-Haul entered the self-storage business in 1974 and since that time has
increased the rentable square footage of its storage locations through the
acquisition of existing facilities and new construction. In addition, the
Company has entered into management agreements to manage self-storage properties
owned by other companies and is expanding this type of operation as well as
expanding its ownership of self-storage facilities. The Company also provides
financing and management services for independent self-storage businesses.
Through approximately 650 Company-owned or Company-managed locations in the
United States and Canada, the Company offers for rent more than 13.0 million
square feet of self-storage space. The Company's self-storage facility locations
have an average of 20,000 square feet of storage space, with individual storage
spaces ranging in size from 16 square feet to 200 square feet.
Units are rented to individuals and businesses for temporary storage on a
monthly basis. In fiscal 1994, occupancy rates increased to approximately 91%
from approximately 85% in the prior year. During fiscal 1994 and fiscal 1993,
delinquent rentals as a percentage of total storage rentals were approximately
5% in each year, which rate the Company considers to be satisfactory.
EQUIPMENT DESIGN, MANUFACTURE AND MAINTENANCE
The Company designs and manufactures its truck van boxes, trailers, and
various other support rental equipment items. With the needs of the
do-it-yourself moving customer in mind, the Company's equipment is designed to
achieve high safety standards, simplicity of operation, reliability,
convenience, durability, and fuel economy. Truck chassis are manufactured to
Company specifications by both foreign and domestic truck manufacturers. These
chassis receive certain post-delivery modifications and are joined with van
boxes at seven Company-owned manufacturing and assembly facilities in the United
States.
The Company services and maintains its trucks and trailers through a
periodic maintenance program. Regular vehicle maintenance is generally performed
at Company-owned facilities located throughout the United States and Canada.
Major repairs are performed either by the chassis manufacturers' dealers or by
Company-owned repair shops. To the extent available, the Company takes advantage
of manufacturers' warranties.
Since the fleet renewal program began in fiscal 1987, the number of repair
locations has been reduced significantly. Maintenance costs declined from a high
of $163.0 million in fiscal 1987 to a low of $80.5 million in fiscal 1989.
However, due to a reduction both in new truck purchases and older truck
retirements in fiscal 1992 and fiscal 1993, maintenance expense increased to
$150.3 million in fiscal 1993 and $177.7 million in fiscal 1994. During fiscal
1994, the Company, as part of its fleet renewal program, resumed the purchase
and manufacture of new trucks with the objective of increasing the size of the
truck fleet.
COMPETITION
The do-it-yourself moving truck and trailer rental market is highly
competitive and dominated by national operators in both the in-town and one-way
markets. These competitors include the truck rental divisions of Ryder System,
Penske Truck Leasing, and Budget Rent-A-Car. Management believes that there are
two distinct users of rental trucks: commercial users and do-it-yourself users.
As noted above, the Company focuses on the do-it-yourself mover. The Company
believes that the principal competitive factors are price, convenience of rental
locations, and availability of quality rental equipment.
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<PAGE> 32
The self-storage industry is also highly competitive. In addition to the
Company, there are two other national firms, Public Storage and Shurgard, and
numerous regional and local operators. Efficient management of occupancy and
delinquency rates, as well as price and convenience, are key competitive
factors.
EMPLOYEES
For the period ending March 31, 1994, the Company's non-seasonal workforce
consisted of approximately 12,000 employees comprised of approximately 41%
part-time and 59% full-time employees. During the summer months, the Company
increases its workforce by approximately 400 employees. The percentage of
part-time employees was approximately 41% of the total workforce on December 31,
1994. The Company's employees are non-unionized, and management believes that
its relations with its employees are satisfactory.
INSURANCE OPERATIONS
OXFORD -- LIFE INSURANCE
Oxford underwrites life, health and annuity insurance, both as a direct
writer and as an assuming reinsurer. Oxford's direct lines are primarily related
to group life and disability coverage issued to employees of AMERCO and its
subsidiaries. For the year ended December 31, 1993, approximately 6.3% of
Oxford's premium revenues resulted from business with AMERCO and its
subsidiaries. Oxford's other direct writings include individual life insurance
acquired from other insurers and a small volume of individual annuity products
written through independent agents, which together accounted for approximately
5.0% of Oxford's premium revenues for the year ended December 31, 1993. Oxford
administers AMERCO's self-insured group health and dental plans.
Oxford's reinsurance assumed lines, which accounted for approximately 88.7%
of Oxford's premium revenues for the year ended December 31, 1993, include
individual life insurance coverage, annuity coverages, excess loss health
insurance coverage, and short-term travel accident coverage. These reinsurance
arrangements are entered into with unaffiliated insurers, except for travel
accident products reinsured from RWIC.
RWIC -- PROPERTY AND CASUALTY
RWIC's underwriting activities consist of three basic areas: U-Haul and
U-Haul-affiliated underwriting; direct underwriting; and assumed reinsurance
underwriting. U-Haul underwritings include coverage for U-Haul and U-Haul
employees, and U-Haul-affiliated underwritings consist primarily of coverage for
U-Haul customers. For the year ended December 31, 1993, approximately 38% of
RWIC's written premiums resulted from U-Haul and U-Haul-affiliated underwriting
activities. RWIC's direct underwriting is done through home office underwriters
and selected general agents. The products provided include liability coverage
for rental vehicle lessees and storage rental properties, and coverage for
commercial multiple peril, surety, and excess workers' compensation. RWIC's
assumed reinsurance underwriting is done via broker markets and includes, among
other things, reinsurance of municipal bond insurance written through MBIA, Inc.
RWIC provides a liability for unpaid losses that is based on the estimated
ultimate cost of settling claims reported prior to the end of the accounting
period, estimates received from ceding reinsurers and estimates for incurred but
unreported losses based on RWIC's historical experience supplemented by
insurance industry historical experience. Unpaid loss adjustment expenses are
based on historical ratios of loss adjustment expense paid to losses paid.
The liabilities are estimates necessary to settle all claims as of the date
of the stated reserves and all incurred but not reported claims. RWIC updates
the reserves as additional facts regarding claims become apparent. In addition,
court decisions, economic conditions and public attitudes impact the estimation
of reserves and also the ultimate cost of claims. In estimating reserves, no
attempt is made to isolate inflation from the combined effect of numerous
factors including inflation. Unpaid losses and unpaid loss expenses are not
discounted.
RWIC's unpaid loss and loss expenses are certified annually by an
independent actuarial consulting firm as required by state regulation.
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The following table is a reconciliation in summary form, for each of the
last three years, of the beginning and end of year unpaid loss and loss
expenses:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------
1993 1992 1991
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Unpaid loss and loss expenses, beginning of year........... $238,762 $236,019 $226,324
-------- -------- --------
Losses and loss adjustment expenses:
attributable to the current year......................... 91,044 96,451 74,510
Increase (Decrease) attributable to prior years.......... 12,688 (4,241) 3,124
-------- -------- --------
Total............................................ 103,732 92,210 77,634
-------- -------- --------
Payments:
Loss and loss adjustment expenses attributable to current
year.................................................. 20,200 23,936 12,810
Payments attributable to prior years..................... 83,923 65,531 55,129
-------- -------- --------
Total............................................ 104,123 89,467 67,939
-------- -------- --------
Increase due to adoption of SFAS 113....................... 76,111 -- --
-------- -------- --------
Unpaid loss and loss expenses, end of year................. $314,482 $238,762 $236,019
======== ======== ========
</TABLE>
Effective December 31, 1993, RWIC adopted Statement of Financial Accounting
Standards (SFAS) No. 113, "Accounting and Reporting for Reinsurance of
Short-Duration and Long-Duration Contracts." The primary impact of SFAS No. 113
is the requirement to report assets and liabilities relating to reinsured
contracts gross of the effects of reinsurance. Previously, RWIC reported such
effects on a net basis. As a result of adoption of SFAS No. 113, the liability
for unpaid losses and loss adjustment expenses as of December 31, 1993 has been
increased approximately $76 million to reflect policy liabilities without regard
to reinsurance. A corresponding amount due from reinsurers on unpaid losses,
including amounts related to claims incurred but not reported, has also been
reflected.
The operating results of the property and casualty insurance industry,
including RWIC, are subject to significant fluctuations due to numerous factors,
including premium rate competition, catastrophic and unpredictable events
(including man-made and natural disasters), general economic and social
conditions, interest rates, investment returns, changes in tax laws, regulatory
developments, and the ability to accurately estimate liabilities for unpaid
losses and loss expenses.
INVESTMENTS
Oxford's and RWIC's investments must comply with the insurance laws of the
State of Arizona where the companies are domiciled. These laws prescribe the
type, quality, and concentration of investments that may be made. In general,
these laws permit investments in federal, state, and municipal obligations,
corporate bonds, preferred and common stocks, real estate mortgages, and real
estate, within specified limits and subject to certain qualifications. Moreover,
in order to be considered an acceptable reinsurer by cedents and intermediaries,
a reinsurer must offer financial security. The quality and liquidity of invested
assets are important considerations in determining such security.
The investment philosophies of Oxford and RWIC emphasize protection of
principal through the purchase of investment grade fixed income securities.
Approximately 99% of their respective portfolios consist of investment grade
securities. The maturity distributions are designed to provide sufficient
liquidity to meet future cash needs.
REINSURANCE
The Company's insurance operations assume and cede insurance from and to
other insurers and members of various reinsurance pools and associations.
Reinsurance arrangements are utilized to provide greater
32
<PAGE> 34
diversification of risk and to minimize exposure on large risks. However, the
original insurer remains liable should the assuming insurer not be able to meet
its obligations under the reinsurance agreements.
REGULATION
The Company's insurance subsidiaries are subject to considerable regulation
and supervision in the states in which they transact business. The purpose of
such regulation and supervision is primarily to provide safeguards for
policyholders. As a result of federal legislation, the primary regulation of the
insurance industry is performed by the states. State regulation extends to such
matters as licensing companies; restricting the types or quality of investments;
regulating capital and surplus and actuarial reserve maintenance; setting
solvency standards; requiring triennial financial examinations, market conduct
surveys, and the filing of reports on financial condition; licensing agents;
regulating aspects of the insurance companies' relationship with their agents;
restricting expenses, commissions, and new business issued; imposing
requirements relating to policy contents; restricting use of some underwriting
criteria; regulating rates, forms, and advertising; limiting the grounds for
cancellations or non-renewal of policies; regulating solicitation and
replacement practices; and specifying what might constitute unfair practices.
State laws also regulate transactions and dividends between an insurance company
and its parent or affiliates, and generally require prior approval or
notification for any change in control of the insurance subsidiary.
In the past few years, the insurance and reinsurance regulatory framework
has been subjected to increased scrutiny by the National Association of
Insurance Commissioners (the "NAIC"), state legislatures, insurance regulators,
and the United States Congress. State legislatures have considered or enacted
legislative proposals that alter, and in many cases increase, state authority to
regulate insurance companies and holding company systems. The NAIC and state
insurance regulators have been examining existing laws and regulations with an
emphasis on insurance company investment and solvency issues. Legislation has
been introduced in Congress that could result in the federal government assuming
some role in the regulation of the insurance industry. It is not possible to
predict the future impact of changing state and federal regulation on the
operations of Oxford and RWIC.
Beginning in 1993, the NAIC adopted and implemented minimum risk-based
capitalization requirements for life insurance companies, including Oxford. As
of the date of this Prospectus, Oxford is in compliance with these requirements.
The NAIC has adopted a model for establishing minimum risk-based capitalization
requirements for property and casualty insurance and reinsurance companies. The
NAIC's stated objective in developing such risk-based capital standards is to
improve solvency monitoring. RWIC will adopt the minimum risk-based
capitalization requirements in fiscal 1995. Adoption will have no material
effect on RWIC.
COMPETITION
The insurance industry is competitive. Competitors include a large number
of life insurance companies and property and casualty insurance companies, some
of which are owned by stockholders and others of which are owned by
policyholders (mutual). Many companies in competition with Oxford and RWIC have
been in business for a longer period of time or possess substantially greater
financial resources. Competition in the insurance business is based upon price,
product design, and services rendered to producers and policyholders.
AMERCO REAL ESTATE COMPANY
AREC owns and manages most of the Company's real estate assets, including
the Company's U-Haul Center locations. AREC has responsibility for acquiring and
developing properties suitable for new U-Haul Centers and self-storage locations
and managing environmental risks. In addition to the U-Haul operations, AREC
actively seeks to lease or dispose of surplus properties. See
"Business -- History."
LITIGATION
Certain members of the Company's Board of Directors and the Selling
Stockholder, are defendants in an action in the Superior Court of the State of
Arizona in and for the County of Maricopa entitled
33
<PAGE> 35
Samuel W. Shoen, M.D., et al. v. Edward J. Shoen, et al., No. CV88-20139,
instituted August 2, 1988. The Company was also a defendant in the action as
originally filed, but the Company was dismissed from the action on August 15,
1994, subject only to the right, to the extent that any exists, of the
plaintiffs to appeal such dismissal. The plaintiffs, who are all members of the
Outside Stockholder Group that is currently opposed to existing Company
management (see "Principal Stockholders"), have alleged, among other things,
that certain of the individual plaintiffs were wrongfully excluded from sitting
on the Company's Board of Directors in 1988 through the sale of Company common
stock to certain key employees. That sale allegedly prevented the Outside
Stockholder Group from gaining a majority position in the Company's voting stock
and control of the Company's Board of Directors. The plaintiffs alleged various
breaches of fiduciary duty and other unlawful conduct by the individual
defendants and sought equitable relief, compensatory damages, and punitive
damages. The Court dismissed all claims for equitable relief that would have
allowed the plaintiffs to sit on the Board of Directors, subject only to the
right, to the extent that any exists, of the plaintiffs to appeal such
dismissal. Based on the plaintiffs' theory of damages, the Court ruled that the
plaintiffs elected as their remedy in this lawsuit to sell their shares of stock
to the defendants. The price was to be determined based on the value of the
plaintiffs' stock in 1988. On October 7, 1994, the jury determined that (i) the
defendants breached their fiduciary duties, and (ii) such breach diminished the
value of the plaintiffs' stock. The jury also determined the value of the
plaintiffs' stock in 1988 to be $81.12 per share or approximately $1.48 billion.
On February 2, 1995, the judge in this case granted the defendants' motion for
remittitur or a new trial on the issue of damages. The judge determined that the
value of the plaintiffs' stock in 1988 was $25.30 per share or approximately
$461.8 million. On February 13, 1995, the plaintiffs filed a statement accepting
the remittitur. The jury also awarded the plaintiffs $70 million in punitive
damages against Edward J. Shoen. The judge ruled that this punitive damage award
is excessive and granted Edward J. Shoen's motion for remittitur or a new trial
on the issue of punitive damages. The judge reduced the award of punitive
damages against Edward J. Shoen to $7 million. On February 13, 1995, the
plaintiffs filed a statement accepting the remittitur reducing the punitive
damages to $7 million. The Company's By-Laws provide for a right of first
refusal in favor of the Company on the Company's Common Stock except for bona
fide sales pursuant to Rule 144 under the Securities Act and sales pursuant to a
bona fide underwritten public offering. No determination has been made by the
Company as to whether the Company will exercise its right of first refusal upon
any attempted transfer of Common Stock from the plaintiffs to the defendants.
The Company is unable to predict the likelihood, outcome, or consequences of any
appeal. In the event any cash paid by the Company for the plaintiffs' stock is
in excess of the fair value of the stock received by the Company, the Company
will be required to record an expense equal to that difference.
Pursuant to separate indemnification agreements, the Company has agreed to
advance litigation expenses to the defendants and has agreed to indemnify the
defendants to the fullest extent permitted by law or the Company's Articles of
Incorporation or By-Laws, for all expenses and damages, if any, incurred by the
defendants in this proceeding, subject to certain exceptions. The Company has no
indemnification obligation, other than to advance litigation expenses, until a
final judgment is entered or a settlement is reached. At this time, the extent
of the Company's indemnification obligation, if any, cannot be reasonably
estimated. No provision has been made in the Company's financial statements for
any possible indemnification claims. Before the Company will have any
indemnification obligations, a final judgment must be entered against the
defendants, the defendants must request indemnification from the Company, and a
determination must be made under Nevada law as to the validity of the
indemnification claims. If valid indemnification claims are made, the Company
believes that it has various means of financing any such indemnification
obligations consistent with its existing credit agreements, or, in the
alternative, the Company may seek the waiver or amendment of certain of the
provisions of one or more of its credit agreements when the indemnification
obligations are determined. The Company believes, but no assurance can be given,
that it can obtain any necessary waivers or amendments. The Company believes,
but no assurance can be given, that it will be able to satisfy its
indemnification obligations, if any, unless the amount to be paid to the
plaintiffs for their stock is increased following the completion of any appeals
or any new trial on the issue of damages.
Sophia M. Shoen, Selling Stockholder and the Company are parties to
separate Share Repurchase and Registration Rights Agreements which require all
disputes relating thereto to be resolved by arbitration. On April 8, 1994,
Sophia M. Shoen and Selling Stockholder commenced the dispute resolution
process. Private
34
<PAGE> 36
arbitration proceedings pursuant to these agreements were convened on June 19,
1994. All of the claims asserted by Selling Stockholder in the arbitration have
been dismissed pursuant to a settlement agreement described in the following
paragraph. In the arbitration, Sophia M. Shoen asserts that the Company has
breached its obligations to her by failing to timely register the sale of her
shares which were sold to the public in November 1994 and by failing to remove
the right of first refusal on all of the Company's common stock. Sophia M. Shoen
asserted that, as a consequence of this alleged breach, she was entitled to give
notice of termination of the Stockholder Agreement described under "Principal
Stockholders." The Company disagrees with the above assertions. Sophia M. Shoen
gave such notice of termination on July 11, 1994. The arbitration hearings
concluded on August 21, 1994 and the arbitration panel is expected to render a
decision at any time. See "Risk Factors -- Existing Management -- Potential
Change in Control." Mark V. Shoen, as a party to the Stockholder Agreement, has
filed a lawsuit against Sophia M. Shoen to which the Company is not a party,
seeking a declaratory judgment that the Stockholder Agreement has not been
terminated and remains in full force and effect.
The Company, the Company's Board of Directors, the ESOP, and the ESOP
Trustee were defendants in an action in United States District Court for the
District of Nevada entitled Paul F. Shoen v. AMERCO, et al., No.
CV-N-94-475-DWH, instituted July 19, 1994 and dismissed February 10, 1995. On
February 9, 1995, Selling Stockholder executed a settlement agreement with the
Company and the other defendants resolving all of his claims in this case and in
the arbitration described in the preceding paragraph. As part of the settlement,
the Company agreed, among other things, to work in good faith toward appointing
independent trustees for the ESOP and to place Selling Stockholder on
management's slate of directors for the 1994 Deferred Annual Meeting of
Stockholders which was delayed by judicial order at the request of Selling
Stockholder. In addition, under the terms of the settlement agreement, the
Company paid Selling Stockholder $925,000 and all defendants, including the
Company, received a full release of all claims by Selling Stockholder through
the settlement date, including but not limited to, claims for reimbursement of
attorneys' fees related to all matters to which Selling Stockholder is or was a
party. The terms of the settlement will not result in a material adverse effect
on the Company's financial condition or results of operations.
The Company, certain officers of the Company, certain members of the
Company's Board of Directors, and others are defendants in actions currently
pending in United States District Court for the District of Nevada entitled
Sidney Wisotzky and Dorothy Wisotzky, et al. v. Edward J. Shoen, et al., No.
CV-N-94-771-HDM (filed October 28, 1994), Evan Julber v. Edward J. Shoen, et
al., No. CV-N-94-00811-HDM (filed November 16, 1994), and Anne Markin v. Edward
J. Shoen, et al., No. CV-N-94-00821-ECR (filed November 18, 1994). The
plaintiffs in these cases, who claim to have purchased the Company's Series A
8 1/2% Preferred Stock, are seeking class action certification and are defining
the class as all persons who purchased or otherwise acquired the Series A 8 1/2%
Preferred Stock of AMERCO from October 14, 1993 through October 18, 1994,
inclusive, and who sustained damage as a result of such purchases. The
plaintiffs allege among other things, that the defendants violated the federal
securities laws by inflating the price of the Series A 8 1/2% Preferred Stock
via false and misleading statements, concealing material adverse information,
and taking other manipulative actions, and that the Prospectus for the Series A
8 1/2% Preferred Stock, certain Form 10-K and Form 10-Q filings made by the
Company, and the Company's Notice and Proxy Statement dated July 8, 1994
contained false and misleading statements and omissions regarding the Shoen
Litigation. In addition, certain officers of the Company, certain members of the
Company's Board of Directors, and an employee of the Company are defendants in
an action currently pending in United States District Court for the District of
Nevada entitled Bernard L. and Frieda Goldwasser, et al. v. Edward J. Shoen, et
al., No. CV-N-94-00810-ECR (filed November 16, 1994). The plaintiffs in this
case allege derivatively on behalf of the Company, that the defendants breached
their fiduciary duties to the Company and its stockholders by causing the
Company to violate the federal securities laws, by concealing the financial
responsibility of the Company for the claims asserted in the Shoen Litigation,
by subjecting the Company to adverse publicity, and by misusing their corporate
control for personal benefit. In addition to unspecified damages, the plaintiffs
are seeking equitable and/or injunctive relief to prevent the defendants in this
case from causing the Company to indemnify the defendants in the Shoen
Litigation against their liability in that case. The plaintiffs in these cases
are requesting unspecified compensatory damages as well as attorneys' fees and
costs. The Company and the individual defendants deny plaintiffs' allegations of
wrongdoing and intend to vigorously defend themselves in these actions.
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<PAGE> 37
The Company and its subsidiaries are defendants in a number of other suits
and claims incident to the type of business conducted and several administrative
proceedings arising from state and local provisions that regulate the removal
and/or clean up of underground fuel storage tanks. It is the opinion of
management that none of such suits, claims or proceedings involving the Company,
individually or in the aggregate, are expected to result in any material loss
and, accordingly, no provision has been made in the Company's financial
statements.
ENVIRONMENTAL MATTERS
UNDERGROUND STORAGE TANKS
The Company owns properties that, as of December 31, 1994, contained a
total of approximately 1,200 underground storage tanks ("USTs"). The USTs are
used to store various petroleum products, including gasoline, fuel oil, and
waste oil. The USTs are subject to various federal, state, and local laws and
regulations that require testing and removal of leaking USTs and remediation of
polluted soils and groundwater under certain circumstances. In addition, if
leakage from USTs has migrated, the Company may be subject to civil liability to
third parties. In fiscal years 1990 through December 31, 1994, the Company
incurred expenditures totaling approximately $19.5 million for removal and
remediation of approximately 1,527 USTs, a portion of which may be recovered
from insurance and certain states' funds for the removal of USTs. Expenditures
incurred through the end of fiscal 1994 may not be representative of future
experience. Although the Company believes that compliance with laws and
regulations, and cleanup and liability costs related to USTs will not have a
material adverse effect on the Company's financial condition or operating
results, there can be no assurance that this will be the case.
In fiscal 1989, the Company instituted a program to test its USTs for
leakage and to remove all but approximately 100 of the approximately 2,755 USTs
then existing by the year 2000. The approximately 100 USTs expected to remain at
the conclusion of the Company's testing and removal program are currently
anticipated to consist primarily of waste oil tanks not required to be removed
under current laws and regulations and gasoline tanks located at its remote
rental locations where their use is deemed necessary to service the Company's
moving customers. The Company currently budgets $3 million annually for UST
testing, removal, and remediation. The Company treats these costs as capital
costs to the extent that they improve the safety or efficiency of the associated
properties as compared to when the properties were originally acquired or if the
costs are incurred in preparing the properties for sale.
FEDERAL SUPERFUND SITES
The Company has been named as a "potentially responsible party" ("PRP")
with respect to the disposal of hazardous wastes at fifteen federal or state
superfund hazardous waste sites located in twelve states. Under applicable laws
and regulations the Company could be held jointly and severally liable for the
costs to clean-up these sites. Currently, the Company has entered into buyout
agreement settlements for seven of the sites and one site is under negotiation
for settlement. Four of the sites have been inactive for more than two years and
two of the sites have been disputed by the Company with no response for more
than two years. One site is under state clean-up direction. Based upon the
information currently available to the Company regarding these fifteen sites,
the current anticipated magnitude of the clean-up, the number of PRPs, and the
volumes of hazardous waste currently anticipated to be attributed to the Company
and other PRPs, the Company believes its share of the cost of investigation and
clean-up at the fifteen superfund sites will not have a material adverse effect
on the Company's financial condition or operating results. In addition, the
Company believes that insurance coverage may be available to cover all or some
of the cost with respect to these sites.
WASHINGTON STATE HAZARDOUS WASTE SITES
The Company owns property within two state hazardous waste sites in the
State of Washington. The Company owns a parcel of property in Yakima, Washington
that is believed to contain elevated levels of pesticide and other contaminant
residue as a result of onsite operations conducted by one or more former owners.
The State of Washington has designated the property as a state hazardous waste
site known as the "Yakima Valley Spray Site." The Company has been named by the
State of Washington as a "potentially liable party" ("PLP") under state law with
respect to this site. The Company, together with eight other
36
<PAGE> 38
companies and persons, has formed a committee that has retained an environmental
consultant. The process of site assessment on the Yakima Valley Spray Site is in
its early stages and, based upon the information currently available to the
Company regarding the volume and nature of wastes present, the Company is unable
to reasonably assess the potential investigation and clean-up costs, but the
costs could be substantial. Although the Company has entered into an agreement
with such other companies and persons under which the Company has assumed
responsibility for 20% of the costs to investigate the site, no agreement among
the parties with respect to clean-up costs has been entered into at the date of
this Prospectus.
In addition, the Company has been named by the State of Washington as a PLP
along with 12 other PLPs with respect to another state-listed hazardous waste
site known as the "Yakima Railroad Site." The Yakima Valley Spray Site is
located within the Yakima Railroad Site. The Company has been notified that the
Yakima Railroad Site involves potential groundwater contamination in an area of
approximately two square miles. The Company has contested its designation as a
PLP at this site, but, at the date of this Prospectus, no formal ruling has been
issued in this matter.
In February 1992, the State of Washington issued an enforcement order to
the Company and eight other parties requiring conduct of an interim remedial
action involving the provision of bottled water to households that obtain
drinking water from wells within the Yakima Railroad Site. Without conceding any
liability, the Company and several of the other PLPs have implemented the
bottled water program. The State of Washington has stated its intention to
expand the existing municipal water system to supply municipal water to those
households currently receiving bottled water, and it is estimated that the cost
thereof will be approximately $6 million, with such cost being allocated among
the PLPs.
In addition, there will be costs associated with remedial measures to
address the regional groundwater contamination issue. The process of site
assessment on the Yakima Railroad Site is in its early stages and, based upon
the information currently available to the Company regarding the volume and
nature of wastes present, the Company is unable to reasonably assess the
potential investigation and clean-up costs, but the costs could be substantial.
Moreover, the investigative and remedial costs incurred by the State can be
imposed upon the Company and any other PLP as a joint and several liability. At
the date of this Prospectus, other than the indication of the expansion of the
municipal water system, there has been no formal indication from the State of
Washington of its intentions regarding future cost recoveries at the Yakima
Railroad Site.
OTHER
The Company owns seven facilities that manufacture and assemble various
components of the Company's equipment. In addition, the Company owns various
facilities engaged in the maintenance and servicing of its equipment. Various
individual properties owned and operated by the Company are subject to various
state and local laws and regulations relating to the methods of disposal of
solvents, tires, batteries, antifreeze, waste oils and other materials.
Compliance with these requirements is monitored and enforced at the local level.
Based upon information currently available to the Company, compliance with these
local laws and regulations has not had, and is not expected to have, a material
adverse effect on the Company's financial condition or operating results.
The Company currently leases approximately 203 properties to various
businesses. The Company has a policy of leasing properties subject to an
environmental indemnification from the lessee for operations conducted by the
lessee. It should be recognized, however, that such indemnifications do not
cover pre-existing conditions and may be limited by the lessee's financial
capabilities. In any event, to the extent that any lessee does not perform any
of its obligations under applicable environmental laws and regulations, the
Company may remain potentially liable to governmental authorities and other
third parties for environmental conditions at the leased properties.
Furthermore, as between the Company and its lessees, disputes may arise as to
allocations of liability with respect to environmental conditions at the leased
properties.
Finally, it should be recognized that the Company's present and past
facilities have been in operation for many years and, over that time in the
course of those operations, some of the Company's facilities have generated,
used, stored, or disposed of substances or wastes that are or might be
considered hazardous. Therefore, it is possible that additional environmental
issues may arise in the future, the precise nature of which the Company cannot
now predict.
37
<PAGE> 39
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information about the current
directors and executive officers of the Company effective February 15, 1995.
<TABLE>
<CAPTION>
NAME AGE OFFICE
- ------------------------- --- -----------------------------------
<S> <C> <C>
Edward J. Shoen (1)(2) 45 Chairman of the Board and President
Mark V. Shoen 44 Director
James P. Shoen 35 Director and Vice President
William E. Carty (1) 67 Director
John M. Dodds 58 Director
Charles J. Bayer (2) 54 Director
Richard J. Herrera 41 Director
Aubrey K. Johnson (1)(2) 72 Director
Gary B. Horton 51 Treasurer
Gary V. Klinefelter 46 Secretary
John A. Lorentz 68 Assistant Secretary
Rocky D. Wardrip 37 Assistant Treasurer
George R. Olds 52 Assistant Secretary
</TABLE>
- ---------------
(1) Member of the Audit Committee
(2) Member of Executive Finance Committee
Edward J. Shoen has served as a Director and Chairman of the Board of the
Company since December 1986, as President since June 1987, as a Director of
U-Haul since June 1990, and as the President of U-Haul since March 1991. Mr.
Shoen has been associated with the Company since May 1971.
Mark V. Shoen has served as a Director of the Company since April 1990. He
is a Director of U-Haul, and served as President of U-Haul from June 1990 to
March 1991. From June to August 1987, he was Assistant to the President of the
Company with responsibilities relating to product. He served from August 1987 to
December 1990 as President of A&M Associates, Inc., a wholly-owned subsidiary of
U-Haul. He served from December 1990 to the present as Executive Vice President
of Product for U-Haul.
James P. Shoen, a Director of the Company since December 1986, Vice
President of the Company since May 1989, and a Director of U-Haul since June
1990, has been associated with the Company since July 1976. He was employed as a
Center General Manager with U-Haul Co. of San Francisco from 1981 to 1989. From
March 1989 to March 1990, he served as the Director of the U-Haul Technical
Center. He has served from April 1990 to the present as Executive Vice President
of U-Haul.
William E. Carty, a Director of the Company since May 1987 and a Director
of U-Haul since June 1990, has been associated with the Company since 1946. He
has served in various executive positions in all areas of the Company. He served
most recently as product director. Mr. Carty retired from the Company in
December 1987.
John M. Dodds, a Director of the Company since September 1987, Vice
President of U-Haul from June 1990 until July 1994, and Director of U-Haul since
June 1990, has been associated with the Company since 1963. He served in
regional field operations until December 1986. Mr. Dodds retired from the
Company in May 1994.
Charles J. Bayer has been associated with the Company since 1967. He has
served in various executive positions and has served as President of Amerco Real
Estate since September 1990. He also served as a Director of U-Haul from July
1988 until June 1990, Product Director for U-Haul from January 1988 to
38
<PAGE> 40
August 1990, the Director of Finance and Administration for the U-Haul Technical
Center from 1986 to 1988, and the Manager of Repair and Maintenance of the
Company from 1984 to 1986.
Richard J. Herrera, a Director of the Company since September 1991 and a
Director of U-Haul since June 1990, has been associated with the Company since
April 1988. He is presently the Vice President of Marketing, Retail Sales for
U-Haul.
Aubrey K. Johnson was a Director of the Company from 1987 until 1991. From
1991 until his re-election to the Board in August 1993, he served as a
consultant and advisor to various organizations and individuals.
Gary B. Horton has served as Treasurer since 1982. His previous positions
include Treasurer of U-Haul. He has been associated with the Company since
October 1969.
Gary V. Klinefelter, Secretary of the Company since July 1988, and
Secretary of U-Haul since June 1990, is licensed as an attorney in Arizona and
has served as General Counsel for the Company since June 1988.
John A. Lorentz, Assistant Secretary of the Company since July 1988, and
Assistant Secretary of U-Haul since June 1990, is licensed as an attorney in
Oregon and has been associated with the Company since September 1953. His
previous positions include Secretary of the Company and of U-Haul.
Rocky D. Wardrip, Assistant Treasurer of the Company since September 1990,
has been associated with the Company since 1978 in various capacities within
accounting and treasury operations. Mr. Wardrip was previously Assistant
Treasurer of U-Haul from 1988 to 1990.
George R. Olds, Assistant Secretary of the Company and U-Haul since
February 1993, has been associated with the Company since 1975 as a member of
the U-Haul legal department, specializing in taxation.
OTHER KEY EMPLOYEES
Donald W. Murney has been Treasurer of U-Haul since June 1990. He was
previously employed as the Senior Vice President and Chief Financial Officer of
Conry Financial Services.
Henry E. Martin joined the Company in 1973 and has served in various
capacities in the insurance subsidiaries since 1975. He is currently President
of Ponderosa.
The Company does not have a compensation committee. Compensation decisions
are made by the full Board of Directors. The Audit Committee makes
recommendations to the Board of Directors regarding the selection of independent
auditors, reviews the Company's financial statements for each interim period and
reviews and evaluates the Company's internal audit and control functions. The
Executive Finance Committee supervises the financial affairs of the Company and,
among other things, has the power to give final approval for the borrowing of
funds on behalf of the Company without further action or approval of the Board
of Directors.
39
<PAGE> 41
PRINCIPAL STOCKHOLDERS
INSIDE STOCKHOLDER GROUP
Three of the Company's eight directors, Edward J. Shoen, Mark V. Shoen, and
James P. Shoen, as well as Sophia M. Shoen, Selling Stockholder, Oxford (as
trustee) and the ESOP Trustee, are members of the Inside Stockholder Group that
on the date of this Prospectus votes approximately 45.7% of the Company's
outstanding voting stock. If Sophia M. Shoen is successful in leaving the Inside
Stockholder Group, then the other current members of the Inside Stockholder
Group would control approximately 41.4% of the Company's outstanding voting
stock. See "Risk Factors -- Existing Management -- Potential Change in Control."
The number of shares controlled by the Inside Stockholder Group includes
shares beneficially owned by Edward J. Shoen (3,483,681); Mark V. Shoen
(3,475,520); James P. Shoen (2,278,814); Selling Stockholder (3,369,058); Sophia
M. Shoen (1,638,472); certain Irrevocable Trusts for which Oxford Life Insurance
Company acts as trustee (1,605,340); and The ESOP Trust (1,805,110).
Term
The members of the Inside Stockholder Group are parties to a stockholder
agreement, dated as of May 1, 1992, as amended (the "Stockholder Agreement"),
that restricts the disposition of the parties' shares of common stock to certain
types of permitted dispositions. The Stockholder Agreement will expire on March
5, 1999, unless earlier terminated.
Voting of Shares
All of the shares subject to the Stockholder Agreement are voted as agreed
upon by the members holding a majority of the shares subject to the Stockholder
Agreement. As of the date of this Prospectus, Edward J. Shoen, Mark V. Shoen,
and James P. Shoen, each of whom is a director of the Company, collectively hold
a majority of the shares subject to the Stockholder Agreement and, therefore,
have the ability, if they so agree, to control the vote of the Company's common
stock that is subject to the Stockholder Agreement. However, one member of the
Inside Stockholder Group, the ESOP Trustee, is required to act as a member of
the Inside Stockholder Group only if the other members of the Inside Stockholder
Group provide the ESOP Trustee with an opinion of counsel satisfactory to the
ESOP Trustee that such act shall not result in a violation of ERISA or the IRC.
If the other members of the Inside Stockholder Group are unable to furnish such
an opinion, it is unclear whether or not the ESOP Trustee could vote other than
as part of the Inside Stockholder Group. The Inside Stockholder Group currently
controls approximately 41.0% of the Company's voting stock without counting
shares held by the ESOP Trustee. See "Risk Factors -- Existing
Management -- Potential Change in Control -- Replacement of ESOP Trustee" and
"Business -- Litigation."
ESOP
On March 16, 1973, the Company established the AMERCO Profit Sharing
Retirement Trust (the "Profit Sharing Plan") for certain of its employees. The
Profit Sharing Plan was subsequently amended from time to time. Effective April
1, 1984, the Company established the AMERCO Employee Savings and Protection Plan
(the "Savings Plan") to permit employee contributions to be made on a favorable
tax basis through utilization of the provisions of Section 401(k) of the
Internal Revenue Code. The Savings Plan was subsequently amended from time to
time. Effective January 1, 1988, the Profit Sharing Plan and the Savings Plan
were merged to form a single plan called the AMERCO Retirement Savings and
Profit Sharing Plan.
The AMERCO Retirement Savings and Profit Sharing Plan was amended and
restated in its entirety to form the ESOP, effective as of July 24, 1988, by
adding an "employee stock ownership plan" (as defined in Section 407(d)(6) of
ERISA and Section 4975(e)(7) of the IRC component, which component is designed
to invest primarily in "qualifying employer securities" of the Company. The ESOP
Trust holds shares of the Company's common stock. As of February 15, 1995,
shares of the Company's common stock held by the ESOP Trust were allocated to
6,350 Company employees and as of such date 6,708 Company employees were
eligible to participate in the ESOP. The Company makes periodic contributions to
the ESOP Trust, which
40
<PAGE> 42
contributions are used to purchase Company common stock. Under the terms of the
ESOP, the Company's common stock is appraised annually. The most recent such
appraisal, dated as of December 31, 1993, was conducted by American Appraisal
Associates. As of December 31, 1993, the Company's common stock was valued at
$20 per share and was discounted 15% because of a lack of marketability for a
value of $17 per share.
ESOP Trust; Release of Shares from Stockholder Agreement
Prior to the issuance of the Series A 8 1/2% Preferred Stock in October
1993, the ESOP Trustee had the power to vote all common stock held in the ESOP
Trust in its discretion (other than with respect to certain significant
corporate transactions such as mergers or consolidations, recapitalizations, and
sales of all or substantially all of the assets of the Company). Under the ESOP,
since the Company has outstanding a "registration-type class of securities,"
each participant (or such participant's beneficiary) in the ESOP may direct the
ESOP Trustee with respect to the voting of all common stock allocated to the
participant's account. All shares in the ESOP Trust not allocated to
participants continue to be voted by the ESOP Trustee in accordance with the
Stockholder Agreement. See "Principal Stockholders -- Inside Stockholders
Group -- Voting of Shares." As of January 31, 1995, of the 3,050,887 shares of
Company common stock held by the ESOP Trust, 1,245,777 shares were allocated to
participants and 1,805,110 shares remained unallocated. Of the 1,245,777
allocated shares, approximately 7,379 shares are allocated to members of the
Inside Stockholder Group, which shares shall be voted together with the
unallocated shares and the other shares held by the members of the Inside
Stockholder Group in accordance with the terms of the Stockholder Agreement.
Therefore, as of the date of this Prospectus, the Inside Stockholder Group
controls approximately 45.7% of the Company's outstanding common stock.
Additional shares of common stock not presently allocated to participants'
accounts in the ESOP Trust will be allocated as certain debt obligations of the
ESOP Trust are repaid, resulting in a further reduction in the number of common
shares subject to the Stockholder Agreement. As a result of the foregoing, there
can be no assurance that the Inside Stockholder Group will be able to continue
to elect directors acceptable to it to the Company's Board of Directors or that
the Company's current management will remain in place; however, the Company's
four-class Board of Directors may delay the effectiveness of any change in
management. See "Certain Provisions That May Limit Changes in Control."
Registration Rights; Release of Shares from Stockholder Agreement
Subject to certain limitations and restrictions, Selling Stockholder and
Sophia M. Shoen, who are currently members of the Inside Stockholder Group, may
elect to cause the Company to effect a registration under the Securities Act and
applicable state securities laws of all or a part (but not less than 100,000
shares) of the shares of common stock held by each of them pursuant to separate
Share Repurchase and Registration Rights Agreements. Sophia M. Shoen has sold
575,000 shares of Company's common stock to the public pursuant to such an
agreement. On September 1, 1994, Selling Stockholder demanded registration of
500,000 of his shares. Subject to certain limitations, the Company is required
to effect registration of those shares pursuant to this prospectus on or before
April 1, 1995, unless certain conditions specified in the Share Repurchase and
Registration Rights Agreement occur. No more than two such registrations may be
demanded by either Selling Stockholder or Sophia M. Shoen. The Stockholder
Agreement permits the disposition of any shares pursuant to a registered public
offering under the Securities Act. All registered shares, when sold, will be
released from the Stockholder Agreement. As of the date of this Prospectus, the
Inside Stockholder Group controls the vote of approximately 45.7% of the
Company's common stock. Assuming that Selling Stockholder and Sophia M. Shoen
sold all of their respective shares pursuant to this and future registration
requests, the Inside Stockholder Group would control the vote of approximately
32.7% of the Company's common stock. As a result, there can be no assurance that
the shares of common stock held by Selling Stockholder and Sophia M. Shoen will
remain subject to the Stockholder Agreement. For this reason, there can be no
assurance that the Company's current management will remain in place. See
"Business -- Litigation" for a description of arbitration proceedings whereby
Sophia M. Shoen has asserted claims, which are disputed by the Company, that the
Stockholder Agreement is terminated because of the Company's alleged failure to
timely register their shares of common stock.
41
<PAGE> 43
OUTSIDE STOCKHOLDER GROUP
Certain other stockholders are members of the Outside Stockholder Group
that votes approximately 48.2% of the Company's outstanding voting stock. The
following information is based upon certain Commission filings by the Outside
Stockholder Group and on other information furnished to the Company.
Members
The Outside Stockholder Group controls 18,254,596 shares of the Company's
common stock pursuant to the stockholder agreement described below and 367,188
shares of the Company's common stock pursuant to several trusts described below.
The number of shares controlled by the Outside Stockholder Group includes shares
beneficially owned by Samuel W. Shoen (4,041,924); Michael L. Shoen (4,035,924);
Mary Anna Shoen-Eaton (3,343,076); Cecilia M. Shoen-Hanlon (2,331,984); Katrina
M. Carlson (2,016,624); Theresa M. Shoen (1,651,644); and Leonard S. Shoen
(833,420).
Term
The members of the Outside Stockholder Group are parties to a fourth
amended stockholder agreement, dated June 20, 1994, that provides for the voting
of the subject shares. The original agreement was dated July 17, 1988. Unless
earlier terminated by a majority of the stockholders, the agreement will
terminate on January 1, 2001.
Voting of Shares
All of the shares subject to the agreement are voted at the direction of a
majority of the stockholders (on the basis of one vote per stockholder) party to
the agreement. Leonard S. Shoen, Michael L. Shoen, and Theresa M. Shoen have
each been granted a proxy to vote the shares as agreed upon by a majority of the
stockholders.
Control of Trust for Minor Child
The Company has been advised that four trusts for the benefit of Scott R.
Shoen are the record owners of an aggregate of 367,188 shares of the Company's
voting stock representing 0.9% of the Company's voting stock. Samuel W. Shoen
and Michael L. Shoen, who are members of the Outside Stockholder Group, are co-
trustees for the trusts and vote such shares in their discretion.
Director Nominations
The Outside Stockholder Group has nominated Samuel W. Shoen, Theresa M.
Shoen, and Ronald Belec to the Company's Board of Directors. The following
information about the director nominees is based upon information furnished to
the Company by such nominees.
Samuel W. Shoen, age 49, has been engaged in the occupation of private
investor since March 1, 1993 and served in the capacities of employee, officer,
and director of the Company at various times from 1973 to 1987.
Theresa M. Shoen, age 31, has been employed for the past five years as
manager, waitress, and general help at Baby Kay's restaurant in Scottsdale,
Arizona and served as a director of the Company from 1982 to 1984.
Ronald Belec, age 47, is currently employed by ABC, Inc., a courier service
in Seattle, Washington.
42
<PAGE> 44
CERTAIN PROVISIONS THAT MAY LIMIT CHANGES IN CONTROL
Certain provisions summarized below may have the effect of delaying,
deferring, or preventing a change in control of the Company.
The Articles of Incorporation of the Company (the "Articles") provide for
the Board of Directors to be divided into four classes of directors serving
staggered four-year terms. As a result, approximately one-fourth of the Board of
Directors will be elected each year. Moreover, under the Nevada General
Corporation Law, an affirmative vote of holders of two-thirds of the then
outstanding stock entitled to vote is required to remove a director. This
provision, when coupled with the provision of the Articles authorizing only the
Board of Directors to fill vacant directorships, may hinder the removal of
incumbent directors by stockholders entitled to vote and the simultaneous
election of new directors by such stockholders to fill the vacancies created by
such removal.
Moreover, (i) the Company's By-Laws grant the Company a right of first
refusal exercisable in connection with any sale of outstanding shares of the
Company's common stock, except any common stock sold, transferred, or otherwise
disposed of by the ESOP Trust or any common stock sold in a bona fide
underwritten public offering or in a bona fide public distribution pursuant to
Rule 144 under the Securities Act, (ii) the Articles require holders of
two-thirds of the then outstanding shares of common stock to amend certain
provisions of the Articles, including the classified board provision, to amend
the By-Laws, and to approve certain transactions with, among others, holders of
five percent of any class of voting stock of the Company, (iii) the Articles
prohibit stockholder action by written consent, and (iv) certain of the
Company's credit agreements contain provisions that could require the prepayment
of all monies outstanding thereunder upon a "change in control." See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Credit Agreements."
See "Risk Factors -- Ability to Issue Serial Common Stock and Preferred
Stock" regarding the potential anti-takeover effects of the Board of Directors'
ability to issue serial common stock and preferred stock and to fix the rights,
preferences, privileges and restrictions, including voting rights, of those
shares without any further vote or action by the stockholders.
The Board of Directors has adopted a stockholder rights plan. Pursuant to
the plan, rights have been distributed to the holders of the common stock of the
Company that entitle such holders to purchase from the Company one one-hundredth
of a share of the Company's Series C Preferred Stock at an exercise price of
$15,000 per share (the price per share and the exercise price are subject to
adjustment). The rights become exercisable if any person or group of affiliated
or associated persons becomes the beneficial owner of fifty percent or more of
the Company's common stock without approval of a majority of the disinterested
members of the Board of Directors (as defined in the plan); such person being
defined as an "acquiring person." Upon the occurrence of an Affiliate Merger or
Triggering Event (certain transactions defined in the plan involving an
acquiring person), each right entitles its holder to purchase, for the exercise
price, that number of shares of common stock of the Company having a value equal
to twice the exercise price. Upon the occurrence of a Business Combination (as
defined in the plan), each right entitles its holder to purchase, for the
exercise price, that number of shares of common stock of the acquiring or
surviving company having a value equal to twice the exercise price. The rights
will expire on July 29, 1998, unless earlier redeemed by the Company pursuant to
authorization by a majority of the disinterested Board.
43
<PAGE> 45
SELLING SECURITY HOLDER
The common stock offered hereunder is held by Selling Stockholder. Selling
Stockholder currently owns 3,369,058 shares of common stock directly, 71,976
shares of common stock indirectly through Oxford Life Insurance Company, Trustee
under that certain Irrevocable Trust dated December 20, 1982 (Paul F. Shoen,
Grantor) (the "Irrevocable Trust"), and 779 shares of Common Stock which are
allocated to the Selling Stockholder's ESOP Trust account. Five hundred thousand
shares of common stock are offered hereunder. After the sale of the Securities,
Selling Stockholder will own 2,869,058 shares directly (7.42%), 71,976 shares
indirectly (0.19%), and 779 shares in the ESOP Trust.
In recent years, Selling Stockholder has been involved in several
transactions with the Company, both individually and through affiliates. A tow
dolly fleet owned by Samlo, a partnership in which Selling Stockholder is a
partner, generated net operating revenues from the Company of $65,000, $78,000,
and $109,000 for the years ended March 31, 1994, 1993, and 1992, respectively.
On April 2, 1993, the Company, Pafran, Inc., a corporation then-controlled
by Selling Stockholder, and P.F. Acquisition, Inc., a subsidiary of the Company
("P.A."), entered into an Agreement and Plan of Merger pursuant to which P.A.
merged into Pafran, Inc., and Pafran, Inc. became a wholly-owned subsidiary of
the Company. In exchange for Pafran, Inc.'s capital stock, the stockholders of
Pafran, Inc. (Selling Stockholder and the Irrevocable Trust) collectively
received 3,598,876 shares of common stock, the same number of shares of common
stock held by Pafran, Inc. Selling Stockholder received 3,526,900 of these
shares and the Irrevocable Trust received 71,976 of the shares.
The merger described in the preceding paragraph was effected in accordance
with the terms of a Merger Option Agreement, dated as of May 1, 1992, among
Selling Stockholder, Pafran, Inc., and the Company (the "Pafran Merger Option
Agreement"). The Pafran Merger Option Agreement required the Company to cause a
subsidiary of the Company to be merged with or into Pafran, Inc. at its request.
The Company, Selling Stockholder, and Pafran, Inc. also entered into an
agreement that, among other things, prohibits Selling Stockholder and Pafran,
Inc. directly or indirectly from offering, selling, pledging, or otherwise
disposing of any shares of common stock or securities convertible into or
exchangeable for common stock prior to March 1, 1999. This prohibition does not
apply, however, to sales of securities pursuant to a registered offering and
limited sales of securities that are designed not to disrupt a public offering
of securities by the Company, including sales pursuant to Rule 144.
Pursuant to a Share Repurchase and Registration Rights Agreement, dated as
of March 1, 1992 (the "Registration Rights Agreement"), among Selling
Stockholder, Pafran, Inc., and the Company, Selling Stockholder was given the
right to require the Company to repurchase, with certain limitations, up to
$3,000,000 of common stock owned by him. The Registration Rights Agreement
provides that the Company's obligations to repurchase any shares from Selling
Stockholder shall be satisfied if such shares are purchased by the ESOP Trust.
The Registration Rights Agreement restricts the disposition of common stock held
by Selling Stockholder. Pursuant to the Registration Rights Agreement (i) on May
15, 1992 Pafran, Inc. sold 23,148 shares of common stock to the ESOP Trust at
the then appraised value of $10.80 per share for an aggregate sales price of
approximately $250,000, (ii) on April 30, 1993, Selling Stockholder sold 48,387
shares of common stock to the ESOP Trust at the then appraised value of $15.50
per share for an aggregate sales price of approximately $750,000, (iii) on June
30, 1994, Selling Stockholder sold 58,825 shares of common stock to the ESOP
Trust at the most recent (December 31, 1993) appraised value of $17.00 per share
for an aggregate sales price of approximately $1,000,000, and (iv) on January
17, 1995, Selling Stockholder sold 50,632 shares of Common Stock to the ESOP
Trust at the most recent closing price for the Common Stock trading on Nasdaq of
$19.75 per share for an aggregate sales price of approximately $1,000,000.
Selling Stockholder, subject to certain limitations and restrictions, may elect
to cause the Company to effect a registration under the Securities Act and
applicable state securities laws of shares of common stock held by him. Selling
Stockholder gave notice of exercise of his registration right to register
500,000 of the shares of common stock registered hereunder in September 1994.
Pursuant to a Management Consulting Agreement, dated as of March 5, 1992,
Selling Stockholder agreed to provide management consulting services to the
Company on matters relating to the Company's
44
<PAGE> 46
business and the organization and management of the Company. In consideration
for these services, the Company has agreed to pay Selling Stockholder a yearly
fee of $200,000. The Management Consulting Agreement terminates on March 1,
1995.
On February 9, 1995, Selling Stockholder executed a settlement agreement
with the Company and others resolving all of his claims in the matters described
in "Business -- Litigation." As part of the settlement, the Company agreed,
among other things, to place Selling Stockholder on management's slate of
directors for the 1994 Deferred Annual Meeting of Stockholders. In addition,
under the terms of the settlement agreement, the Company paid Selling
Stockholder $925,000 and all defendants, including the Company received a full
release of all claims by Selling Stockholder through the settlement date
including, but not limited to, claims for reimbursement of attorneys' fees
related to all matters to which Selling Stockholder is or was a party. The terms
of the settlement will not result in a material adverse effect on the Company's
financial condition or results of operation.
In connection with the Shoen Litigation, the Company has paid or advanced
certain legal expenses of Selling Stockholder. See "Business -- Litigation."
DESCRIPTION OF SECURITIES
The Company's Restated Articles of Incorporation authorize the issuance of
150,000,000 shares of Common Stock with a par value of $0.25 per share,
150,000,000 shares of serial common stock, and 50,000,000 shares of preferred
stock. The Company's Board of Directors has the authority to fix the voting
powers, designations, preferences, privileges, limitations, restrictions, and
relative rights of the serial common stock and the preferred stock without any
further vote or action by the stockholders. The rights of the holders of the
Common Stock are subject to, and may be adversely affected by, the rights of the
holders of any serial common stock or preferred stock that is currently
outstanding or that may be issued in the future. The issuance of serial common
stock or preferred stock could have the effect of making it more difficult for a
third party to acquire a majority of the outstanding voting stock of the
Company, thereby delaying, deferring, or preventing a change in control of the
Company. Furthermore, holders of such serial common stock or preferred stock may
have other rights, including economic rights senior to the Common Stock. See
"Risk Factors -- Ability to Issue Serial Common Stock and Preferred Stock" for a
further discussion of the potential anti-takeover effects of the Board's ability
to issue serial common stock and preferred stock.
As of the date of this Prospectus, there are 32,901,568 issued and
outstanding shares of the Company's Common Stock and 5,762,495 issued and
outstanding shares of Series A Common Stock. All of the Series A Common Stock is
held by James P. Shoen, a Vice-President and director of the Company, and Edward
J. Shoen, Chairman of the Board and President of the Company. The Series A
Common Stock is not convertible into Common Stock but votes together as a single
class with the Common Stock on all matters.
Dividends
Holders of shares of the common stock are entitled to receive dividends
payable when, if, and as declared by the Board of Directors out of funds legally
available therefor. The Company does not have a formal dividend policy. The
Company's Board of Directors periodically considers the advisability of
declaring and paying dividends in light of existing circumstances. The holders
of the Series A 8 1/2% Preferred Stock are entitled to receive cumulative
dividends prior to and in preference to the holders of common stock at a fixed
annual rate. See "Dividends."
The Company is restricted in the amount of dividends that it may issue or
pay pursuant to covenants contained in its credit agreements. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Credit Agreements." At the date
of this Prospectus, the most restrictive of such covenants provides that the
Company may pay cash dividends on its capital stock only in an amount not
exceeding, in the aggregate, computed on a cumulative basis, the sum of (i) $15
million and (ii) 50% of consolidated net income computed on a cumulative basis
for the entire period subsequent to March 31, 1993 (or if such consolidated net
income is a deficit figure, then minus 100% of such
45
<PAGE> 47
deficit); provided such dividend is paid within 60 days of being declared. At
December 31, 1994, the aggregate amount available for dividends on common stock
after providing for dividends on the Series A 8 1/2% Preferred Stock was
approximately $53.2 million.
Voting
Each share of common stock entitles the holder to one vote in the election
of directors and other corporate matters. The Company's Board of Directors is
classified into four classes. Voting rights are non-cumulative. For a
description of articles of incorporation and bylaw provisions that would have
the effect of delaying, deferring or preventing a change in control of the
Company see "Certain Provisions that May Limit Changes in Control."
Right of First Refusal
The Company's By-Laws provide for a right of first refusal in favor of the
Company with respect to all of the Company's common stock except for any common
stock sold, transferred, or otherwise disposed of by the ESOP Trust or any
common stock sold in a bona fide underwritten public offering or in a bona fide
public distribution pursuant to Rule 144 under the Securities Act.
Transfer Agent
The transfer agent and registrar for the Securities is Chemical Trust
Company of California.
46
<PAGE> 48
UNDERWRITING
The Underwriters named below (the "Underwriters"), represented by Van
Kasper & Company (the "Representative"), have severally agreed, subject to the
terms and conditions contained in the Underwriting Agreement, to purchase from
the Selling Stockholder the number of shares of common stock indicated below
opposite their respective names at the offering price less the underwriting
discounts and commissions set forth on the cover of this Prospectus. The
Underwriting Agreement provides that the obligations of the Underwriters are
subject to certain conditions precedent and that the Underwriters shall purchase
the total number of shares of common stock shown above if any such shares are
purchased.
<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
--------------------------------------------------------------------------- ---------
<S> <C>
Van Kasper & Company.......................................................
---------
Total............................................................ 500,000
=======
</TABLE>
The Underwriting Agreement contains covenants of indemnity and contribution
among the Underwriters, the Company and the Selling Stockholder with respect to
certain civil liabilities, including liabilities under the Securities Act.
The Company and the Selling Stockholder have been advised by the
Representative that the Underwriters propose to offer the Securities directly to
the public at the offering price set forth on the cover of this Prospectus and
to certain dealers at such price, less a concession not in excess of $ per
share, and that the Underwriters such dealers, including any Underwriter, may
reallow a discount not in excess of $ per share. After the initial offering,
the public offering price, concessions, and reallowance to dealers may be
changed by the Representative as a result of market conditions or other factors.
The Representative has advised the Company that less than 1% of the Securities
will be sold on a discretionary basis.
The Underwriters will purchase the Securities from the Selling Stockholder
at a price per share representing a discount of % of the public offering
price. In addition, the Selling Stockholder has agreed to pay the Representative
a nonaccountable expense allowance of 2 3/8% of the aggregate public offering
price of the Securities. To the extent that the expenses of the Representative
are less than the nonaccountable expense allowance, the excess shall be deemed
to be compensation to the Representative.
Up to shares of the Common Stock offered hereby may be offered
and sold to non-U.S. persons in compliance with applicable foreign and U.S.
securities laws. In connection with such sales, Bailey & Company Inc. will be
paid a $ investment banking fee payable out of the total underwriting
discounts and commissions listed on the cover of this Prospectus.
47
<PAGE> 49
LEGAL OPINIONS
The validity of the Securities offered hereunder will be passed upon for
the Company by Lionel, Sawyer & Collins, 300 S. 4th Street, Suite 1700, Las
Vegas, Nevada 89101 in reliance with respect to matters of law of the State of
Arizona upon Snell & Wilmer, One Arizona Center, Phoenix, Arizona 85004. Certain
legal matters in connection with this offering will be passed upon for the
Underwriters by Grover Wickersham, P.C., 430 Cambridge Avenue, Suite 100, Palo
Alto, California 94306 and for Selling Stockholders by Ryan, Swanson &
Cleveland, 1201 Third Avenue, Suite 3400, Seattle, Washington 98101. Attorneys
in the firm of Grover Wickersham, P.C. own 2,300 shares of the Company's Common
Stock and 1,000 shares of the Company's Series A Preferred Stock.
EXPERTS
The consolidated financial statements of the Company as of March 31, 1994
and 1993 and for each of the years in the three-year period ended March 31, 1994
incorporated herein by reference to the Company's Registration Statement No.
33-54289, filed with the Commission, have been so incorporated in reliance on
the report (which contains an explanatory paragraph relating to certain
litigation described in Notes 14 and 21 to the consolidated financial
statements) of Price Waterhouse LLP, independent accountants, given upon the
authority of said firm as experts in auditing and accounting.
48
<PAGE> 50
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER, ANY OF THE
UNDERWRITERS, OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN
OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
PROSPECTUS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Information Incorporated by
Reference........................... 2
Prospectus Summary.................... 3
Recent Developments................... 5
Risk Factors.......................... 5
The Company........................... 9
Capitalization........................ 10
Dividends............................. 10
Selected Consolidated Financial
Data................................ 11
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 12
Business.............................. 27
Management............................ 38
Principal Stockholders................ 40
Certain Provisions that May Limit
Changes in Control.................. 43
Selling Security Holder............... 44
Description of Securities............. 45
Underwriting.......................... 46
Legal Opinions........................ 48
Experts............................... 48
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
500,000 SHARES
AMERCO
COMMON STOCK
[LOGOS]
------------------------
PROSPECTUS
------------------------
VAN KASPER & COMPANY
March , 1995
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 51
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee....................... $ 3,018
NASD Filing Fee........................................................... $ 1,750
Printing and Engraving Expenses........................................... $ 20,000
Listing Fees.............................................................. $ 10,000
Legal Fees and Expenses................................................... $ 50,000
Accounting Fees and Expenses.............................................. $ 25,000
Blue Sky Fees and Expenses................................................ $ 5,000
Transfer Agent Fees....................................................... $ 3,000
Underwriters' Nonaccountable Expense Allowance +.......................... $296,875
Other Expenses............................................................ $ 5,357
--------
Total Expenses.................................................. $420,000
========
</TABLE>
- ---------------
* Estimated.
+ To be paid by Selling Stockholder.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Nevada General Corporation Law requires the Company to indemnify
officers and directors for any expenses incurred by any officer or director in
connection with any actions or proceedings, whether civil, criminal,
administrative, or investigative, brought against such officer or director
because of his or her status as an officer or director, to the extent that the
director or officer has been successful on the merits or otherwise in defense of
the action or proceeding. The Nevada General Corporation Law permits a
corporation to indemnify an officer or director, even in the absence of an
agreement to do so, for expenses incurred in connection with any action or
proceeding if such officer or director acted in good faith and in a manner in
which he or she reasonably believed to be in or not opposed to the best
interests of the corporation and such indemnification is authorized by the
stockholders, by a quorum of disinterested directors, by independent legal
counsel in a written opinion authorized by a majority vote of a quorum of
directors consisting of disinterested directors, or by independent legal counsel
in a written opinion if a quorum of disinterested directors cannot be obtained.
The Company's Restated Articles of Incorporation eliminate personal liability of
directors and officers, to the Company or its stockholders, for damages for
breach of their fiduciary duties as directors or officers, except for liability
(i) for acts or omissions that involve intentional misconduct, fraud, or a
knowing violation of law, or (ii) for the unlawful payment of dividends. In
addition, the Company's By-Laws provide that the Company shall indemnify, to the
fullest extent authorized or permitted by law, any person made, or threatened to
be made, a defendant in any threatened, pending, or completed action, suit, or
proceeding by reason of the fact that he or she was a director or officer of the
Company. The Company has also executed Indemnification Agreements that provide
that certain of the Company's directors and officers shall be indemnified and
held harmless by the Company to the fullest extent permitted by applicable law
or the Restated Articles of Incorporation or By-Laws of the Company. The Company
has established a trust fund with Harris Trust and Savings Bank as trustee in
order to fund its obligations under the Indemnification Agreements. The Company
has agreed to maintain a minimum balance in the trust fund of $1,000,000. The
Nevada General Corporation Law prohibits indemnification of a director or
officer if a final adjudication establishes that the officer's or director's
acts or omissions involved intentional misconduct, fraud, or a knowing violation
of the law and were material to the cause of action. Despite the foregoing
limitations on indemnification, the Nevada General Corporation Law may permit an
officer or director to apply to the court for approval of indemnification even
if the officer or director is adjudged to have committed intentional misconduct,
fraud, or a knowing violation of the law. The Nevada General Corporation Law
also provides that indemnification of directors is not permitted for the
unlawful payment of distributions, except for those directors registering their
dissent to the payment of the distribution.
II-1
<PAGE> 52
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
_______ _______
<S> <C>
1 Proposed Form of Underwriting Agreement
4(a) Restated Articles of Incorporation(1)
4(b) Form of Stock Certificate
4(c) Restated By-Laws
5 Opinion re Legality
23(a) Consent of Independent Accountants
23(b) Consent of Lionel, Sawyer & Collins (included in Exhibit 5)
23(c) Consent of Snell & Wilmer (included in Exhibit 5)
24 Power of Attorney (included on signature page of Registration Statement, as filed
on December 29, 1994)
28 Information from Reports Furnished to State Insurance Regulatory Authorities(2)
</TABLE>
- ---------------
(1) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993, File No. 0-7862.
(2) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended March 31, 1994, File No. 0-7862.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(2) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(3) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-2
<PAGE> 53
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Phoenix, State of Arizona, on the 10th day of
February, 1995.
AMERCO
By: /s/ EDWARD J. SHOEN
--------------------------------------
Edward J. Shoen
Chairman of the Board and
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME AND SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------- ------------------
<S> <C> <C>
/s/ EDWARD J. SHOEN President and Chairman of February 10, 1995
- ------------------------------------------ the Board (Principal executive officer
Edward J. Shoen
* Treasurer (Principal February 10, 1995
- ------------------------------------------ financial and accounting officer)
Gary B. Horton
* Director February 10, 1995
- ------------------------------------------
Mark V. Shoen
* Director February 10, 1995
- ------------------------------------------
James P. Shoen
Director
- ------------------------------------------
William E. Carty
Director
- ------------------------------------------
John M. Dodds
* Director February 10, 1995
- ------------------------------------------
Charles J. Bayer
Director
- ------------------------------------------
Richard J. Herrera
* Director February 10, 1995
- ------------------------------------------
Aubrey K. Johnson
By: /s/ EDWARD J. SHOEN
- ------------------------------------------
* Edward J. Shoen
(Attorney-in-fact)
</TABLE>
II-3
<PAGE> 54
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER TITLE
_______ _____
<S> <C>
1 -- Proposed Form of Underwriting Agreement
4(a) -- Restated Articles of Incorporation(1)
4(b) -- Form of Stock Certificate
4(c) -- Restated By-Laws
5 -- Opinion re Legality
23(a) -- Consent of Independent Accountants
23(b) -- Consent of Lionel, Sawyer & Collins (included in Exhibit 5)
23(c) -- Consent of Snell & Wilmer (included in Exhibit 5)
24 -- Power of Attorney (included on signature page of Registration
Statement, as filed on December 29, 1994)
28 -- Information from Reports Furnished to State Insurance Regulatory
Authorities(2)
</TABLE>
- ---------------
(1) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993, File No. 0-7862.
(2) Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended March 31, 1994, File No. 0-7862.
<PAGE> 55
APPENDIX A
DESCRIPTION OF GRAPHIC MATERIAL
<TABLE>
<S> <C>
1. Location: Outside Front Cover and Outside Back Cover Pages of Prospectus
Item:
Logos
Description:
Logos of the three principal subsidiaries of Amerco; Ponderosa Holdings,
Inc., U-Haul International, Inc., and Amerco Real Estate Company situated
horizontally beside one another directly under the heading of the
Prospectus containing the name of the Company.
2. Location:
Page 10 of the Prospectus
Item:
Corporate Structure
Description:
A chart showing the corporate structure of the Company and its major
subsidiaries. The chart shows the Company on top, above its three
principal subsidiaries; Ponderosa Holdings, Inc., U-Haul International,
Inc., and Amerco Real Estate Company situated horizontally beside one
another. Directly below Ponderosa Holdings, Inc. are its subsidiaries,
Oxford Life Insurance Company and Republic Western Insurance Company,
situated horizontally beside one another.
</TABLE>
<PAGE> 1
EXHIBIT 1
AMERCO
(A NEVADA CORPORATION)
500,000 SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
DATED MARCH , 1995
<PAGE> 2
AMERCO
(A NEVADA CORPORATION)
500,000 SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
, 1995
Van Kasper & Company
As Representative of the several
Underwriters named in Schedule A hereto
600 California Street, 17th Floor
San Francisco, CA 94111
Ladies and Gentlemen:
AMERCO, a Nevada corporation (the "Company"), and Paul F. Shoen (the
"Selling Stockholder"), confirm their agreements with Van Kasper & Company, the
representative of the several underwriters named in Schedule A hereto
(collectively, the "Underwriters," which term shall also include any underwriter
substituted as hereinafter provided in Section 10), with respect to the sale by
the Selling Stockholder and the purchase by the Underwriters, acting severally
and not jointly, of the respective numbers of shares totaling 500,000 shares of
Common Stock, par value $.25 per share (the "Shares"), of the Company set forth
in said Schedule A.
You have advised us that each of you, acting severally and not jointly,
desire to purchase the Shares and that you have been authorized by the other
Underwriters to execute this Agreement on their behalf.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
33- ) covering the registration of the Shares under the Securities Act of
1933, as amended (the "1933 Act"), including the related preliminary prospectus,
and either (A) has prepared and proposes to file, prior to the effective date of
such registration statement, one or more amendments to such registration
statement, including a final prospectus, or (B) if the Company has elected to
rely upon Rule 430A ("Rule 430A") of the rules and regulations of the Commission
under the 1933 Act (the "1933 Act Regulations"), will prepare and file a
prospectus, in accordance with the provisions of Rule 430A and Rule 424(b)
("Rule 424(b)") of the 1933 Act Regulations, promptly after execution and
delivery of this Agreement. The information, if any, included in such prospectus
that was omitted from any prospectus included in such registration statement at
the time it becomes effective but that is deemed, pursuant to Rule 430A(b), to
be part of such registration statement at the time it becomes effective is
referred to herein as the "Rule 430A Information." Each form of prospectus used
before the time such registration statement becomes effective is herein called a
"preliminary prospectus." Such registration statement, including the exhibits
thereto, as amended at the time it becomes effective and including, if
applicable, the Rule 430A Information, is herein called the "Registration
Statement," and the form of prospectus included in the Registration Statement at
the time it becomes effective is herein called the "Prospectus" except that, if
the final Prospectus first furnished to the Underwriters after the execution of
this Agreement in connection with the offering of the Shares differs from the
prospectus included in the Registration Statement at the time it becomes
effective (whether or not such prospectus is required to be filed pursuant to
Rule 424(b)), the term "Prospectus," shall refer to the final Prospectus first
furnished to the Underwriters for such use. Any reference herein to the
Registration Statement, any preliminary prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act, as of the date thereof, and
any reference herein to the terms "amend," "amendment" or "supplement" with
respect to any preliminary prospectus or the Prospectus shall be deemed to refer
to and include any documents filed with the Commission after such date under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules and
regulations of the Commission promulgated thereunder (the "1934 Act
Regulations"), and so incorporated by reference (all such incorporated documents
being herein called the "Incorporated Documents").
<PAGE> 3
The Company and the Selling Stockholder understand that the Underwriters
propose to make a public offering of the Shares as soon as you deem advisable
after the Registration Statement becomes effective.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to and agrees with each of the
Underwriters that:
(i) The Registration Statement relating to the Shares, including such
amendments to such Registration Statement as may have been required to the date
of this Agreement, has been prepared by the Company under and in conformity with
the provisions of the 1933 Act and the 1933 Act Regulations thereunder, and has
been filed with the Commission. If such Registration Statement has not become
effective upon execution of this Agreement, a further amendment to such
Registration Statement, including a form of Prospectus, necessary to permit such
Registration Statement to become effective will promptly be filed by the Company
with the Commission. If such Registration Statement has become effective, a
Prospectus containing information permitted to be omitted at the time of
effectiveness by Rule 430A of the 1933 Act Regulations will promptly be filed by
the Company with the Commission in accordance with Rule 424 of the 1933 Act
Regulations (and in form and substance reasonably satisfactory to the counsel
for the Underwriters). When the Registration Statement and any further
amendments thereto shall become effective, (A) the Registration Statement and
any such amendments will comply in all material respects with the requirements
of the 1933 Act and the 1933 Act Regulations; (B) neither the Registration
Statement nor any such amendment will contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. Neither the Prospectus nor any
amendment or supplement thereto will, as of their respective issue dates or at
the Closing Date referred to below, include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, this representation and warranty does
not apply to statements or omissions from the Registration Statement or the
Prospectus or any amendments or supplements thereto made in reliance upon and in
conformity with information furnished or confirmed in writing to the Company by
or on behalf of the Selling Stockholder or any Underwriter expressly for use in
the Registration Statement or the Prospectus or any amendments or supplements
thereto.
(ii) No stop order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of the Prospectus has been issued
and no proceedings for that purpose are pending or threatened or, to the best
knowledge of the Company, contemplated by the Commission; no stop order
suspending the sale of the Shares in any jurisdiction has been issued and no
proceedings for that purpose are pending or, to the best knowledge of the
Company, threatened or are contemplated; and any request of the commission for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise) has been complied with.
(iii) The Incorporated Documents when they became effective or were filed
with the Commission, as the case may be, complied in all material respects with
the requirements of the 1933 Act, the 1933 Act Regulations, the 1934 Act or the
1934 Act Regulations, as applicable, and any documents so filed and incorporated
by reference subsequent to the date of the Prospectus shall, when they are filed
with the Commission, conform in all material respects to the requirements of the
1933 Act, 1933 Act Regulations, 1934 Act and the 1934 Act Regulations, as
applicable.
(iv) Price Waterhouse, who are reporting upon the audited consolidated
financial statements and schedules included in the Registration Statement, are
independent public accountants as required by the 1933 Act and the 1933 Act
Regulations. The Company and the Subsidiaries (as hereinafter defined) maintain
a system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general and specific authorizations; (ii) transactions are recorded as necessary
to permit preparations of financial statements in conformance with generally
accepted accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general or
specific authorizations; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
2
<PAGE> 4
(v) The Company has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement, and this Agreement has
been duly authorized, executed and delivered by the Company and constitutes the
valid and binding agreement of the Company, and is enforceable against the
Company in accordance with its terms.
(vi) The consolidated financial statements included in the Registration
Statement present fairly the financial position of the Company and the
Subsidiaries (as hereinafter defined) as of the dates indicated and the
consolidated statements of operations, stockholders' equity and cash flows of
the Company and the Subsidiaries for the periods specified. Such financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved. The
financial statement schedules, if any, included in the Registration Statement
present fairly the information required to be stated therein.
(vii) The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Nevada with corporate power
under such laws to own, lease and operate its properties and conduct its
business as described in the Prospectus; and the Company is duly qualified to
transact business as a foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases property of a nature, or transact
business of a type, that would make such qualification necessary, except to the
extent that the failure to so qualify or be in good standing would not have a
material adverse effect on the business, financial condition or results of
operations of the Company and the Subsidiaries (as hereinafter defined), taken
as a whole ("Material Adverse Effect").
(viii) The Company's only subsidiaries are listed on Exhibit A hereto
(collectively, the "Subsidiaries"). U-Haul International, Inc., Ponderosa
Holdings, Inc. (whose Significant Subsidiaries are Oxford Life Insurance Company
and Republic Western Insurance Company) and Amerco Real Estate Company are the
only subsidiaries that are "significant subsidiaries" of the Company as defined
in Section 1-02 of Regulation S-X under the Securities Act (collectively, the
"Significant Subsidiaries"). Each Significant Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation with corporate power under such laws to own,
lease and operate its properties and conduct its business as described in the
Prospectus; and each Subsidiary is duly qualified to transact business as a
foreign corporation and is in good standing in each other jurisdiction in which
it owns or leases property of a nature, or transacts business of a type, that
would make such qualification necessary, except to the extent that the failure
to so qualify or be in good standing would not have a Material Adverse Effect.
All of the outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued and are fully paid and non-assessable (except for
the shares of the capital stock of Oxford Life Insurance Company and Republic
Western Insurance Company that are further assessable to the extent of their
respective par values in accordance with Article 14, Section 11 of the
Constitution of the State of Arizona), and are owned by the Company, directly or
through one or more Subsidiaries, free and clear of any pledge, lien, security
interest, claim or encumbrance of any kind; none of the outstanding shares of
capital stock of the Subsidiaries was issued in violation of the preemptive or
similar rights of any stockholder of such corporation arising by operation of
law, under the charter or bylaws of any Subsidiary or under any agreement to
which the Company or any Subsidiary is a party.
(ix) The Company had at the date indicated a duly authorized and
outstanding capitalization as set forth in the Prospectus and the Shares conform
in all material respects to the description thereof contained in the Prospectus.
(x) The Shares to be sold by the Selling Stockholder pursuant to this
Agreement have been duly authorized and are validly issued, fully paid and
non-assessable; no holder thereof shall be subject to personal liability by
reason of being such holder; such Shares are not subject to the preemptive or
other similar rights of any stockholder of the Company arising by operation of
law, under the charter and bylaws of the Company or under any agreement to which
the Company is a party, except as have been waived.
(xi) Except as disclosed in the Prospectus, there are no outstanding
options, warrants or other rights calling for issuance of, and no commitments,
plans or arrangements to issue, any shares of capital stock of the Company or
any security convertible into, exercisable for, or exchangeable for capital
stock of the Company.
3
<PAGE> 5
There is outstanding no security or other instrument which by its terms is
convertible into or exchangeable for capital stock of the Company, except as
described in the Prospectus. Except as disclosed in the Prospectus, there is no
commitment, plan or arrangement to change or alter the rights, preferences or
privileges of any outstanding class or series of the capital stock of the
Company.
(xii) All of the outstanding shares of capital stock of the Company,
including the Shares, have been duly authorized and validly issued and are fully
paid and non-assessable; and none of the outstanding shares of Common Stock of
the Company was issued in violation of the preemptive or other similar rights of
any stockholder of the Company arising by operation of law, under the charter
and bylaws of the Company or under any agreement to which the Company or any
Subsidiary is a party.
(xiii) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated therein or
contemplated thereby, there has not been (A) any material adverse change in the
business, financial condition or results of operations of the Company and the
Subsidiaries, taken as a whole ("Material Adverse Change"), whether or not
arising in the ordinary course of business, (B) any transaction entered into by
the Company or any of the Subsidiaries, other than in the ordinary course of
business that is material to the Company and the Subsidiaries, taken as a whole,
(C) any changes in the capital stock or long-term debt of the Company or any
Subsidiaries, or (D) any dividend or distribution of any kind declared, paid or
made by the Company, on its capital stock, except for dividends declared and
paid on the Series A 8 1/2% Preferred Stock.
(xiv) Neither the Company nor any Significant Subsidiary is in violation of
its charter or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument to which it is a
party or by which it is bound or to which any of its properties or assets is
subject, except for such defaults that would not have a Material Adverse Effect.
The execution and delivery of this Agreement by the Company, the consummation by
the Company of the transactions contemplated in this Agreement and compliance by
the Company with the terms of this Agreement have been duly authorized by all
necessary corporate action on the part of the Company and do not and will not
result in any violation of the charter or bylaws of the Company or any
Subsidiary, and do not and will not conflict with, or result in a breach of any
of the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or the Subsidiaries under (A) any indenture, mortgage,
loan agreement, note, lease or other agreement or instrument to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries is bound or to which any of the Company's or any of the
Subsidiaries' properties or assets is subject (except for such conflicts,
violations, defaults or breaches as have been waived), or (B) any existing
applicable law, rule, regulation, judgment, order or decree of any government,
governmental instrumentality or court having jurisdiction over the Company or
any of the Subsidiaries or any of the Company's or any of the Subsidiaries'
properties or assets, in each case, except as disclosed in the Prospectus and
except for such conflicts, breaches, violations or defaults or liens, charges or
encumbrances that would not have a Material Adverse Effect.
(xv) The Company is not required to obtain any authorization, approval,
consent or license of any government, governmental instrumentality or court
(other than under the 1933 Act and the 1933 Act Regulations and the Securities
or blue sky laws of the various states) in connection with the due
authorization, execution, delivery and performance by the Company of this
Agreement and the valid sale and delivery of the Shares.
(xvi) Except as disclosed in the Prospectus, there is no action, suit, or
proceeding before or by any government, governmental instrumentality or court,
domestic or foreign, now pending or, to the knowledge of the Company, threatened
against or affecting the Company or any Subsidiary that is required to be
disclosed in the Prospectus or that could reasonably be expected to result in
any Material Adverse Change, or that could reasonably be expected to materially
and adversely affect the properties or assets of the Company and the
Subsidiaries, taken as a whole, or that could reasonably be expected to
materially and adversely affect the consummation of the transactions
contemplated in this Agreement.
4
<PAGE> 6
(xvii) There are no contracts or documents of a character required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described and filed as
required.
(xviii) Each of the Company and the Subsidiaries owns, or has valid rights
to use in the manner currently used or proposed to be used, all properties and
assets described in the Prospectus, except such as do not materially impair or
interfere with the current use made of such properties or could not reasonably
be expected to have a Material Adverse Effect.
(xix) Each of the Company and the Subsidiaries owns or possesses all
foreign and domestic governmental licenses, permits, certificates, consents,
orders, approvals and other authorizations (collectively, "Government Licenses")
necessary to own or lease, as the case may be, and to operate its properties and
to carry on its business as presently conducted, except where the failure to own
or possess such Governmental Licenses could reasonably be expected to not have a
Material Adverse Effect, and neither the Company nor any Subsidiary has received
any notice of proceedings relating to revocation or modification of any such
Governmental Licenses that, singly or in the aggregate, if the subject of an
unfavorable decision, rulings or findings, could reasonably be expected to have
a Material Adverse Effect.
(xx) Each of the Company and the Subsidiaries owns or possesses, or has the
right to use or can acquire on reasonable terms, trademarks, service marks and
trade names (collectively, "intellectual property") necessary to carry on their
business as presently operated by them, except where the failure to own or
possess or have the right to use or ability to acquire any such intellectual
property would not have a Material Adverse Effect, and neither the Company nor
any of the Subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any intellectual property or of
any facts which would render any intellectual property invalid or inadequate to
protect the interest of the Company or any of the Subsidiaries therein and which
infringement or conflict, singly or in the aggregate, if the subject of any
unfavorable decision, ruling or findings or invalidity or inadequacy, would have
a Material Adverse Effect.
(xxi) Except as disclosed in the Prospectus, the Company and the
Subsidiaries comply in all material respects with all Environmental Laws (as
defined below), except to the extent that failure to comply with such
Environmental Laws would not have a Material Adverse Effect. To the knowledge of
the Company, other than as disclosed in the Prospectus, none of the Company nor
the Subsidiaries (i) is the subject of any pending or threatened federal, state
or local investigation evaluating whether any remedial action by the Company or
any Subsidiary is needed to respond to a release of any Hazardous Materials (as
defined below) into the environment, resulting from the Company's or any of the
Subsidiaries' business operations or ownership or possession of any of their
properties or assets or (ii) is in contravention of any Environmental Law that,
in the case of (i) or (ii), could reasonably be expected to have a Material
Adverse Effect. Except as disclosed in the Prospectus, neither the Company nor
any Subsidiary has received any notice or claim, nor are there pending or, to
the knowledge of the Company, threatened lawsuits against them, with respect to
violations of an Environmental Law or in connection with any release of
Hazardous Material into the environment that, in the aggregate, if the subject
of any unfavorable decision, ruling or finding, could reasonably be expected to
have a Material Adverse Effect. As used herein, "Environmental Laws" means any
federal, state or local law or regulation applicable to the Company's or any of
the Subsidiaries' business operations or ownership or possession of any of their
properties or assets relating to environmental matters, and "Hazardous
Materials" means those substances that are regulated by or form the basis of
liability under any Environmental Laws.
(xxii) No labor dispute exists with the Company's or the Subsidiaries'
employees or, to the knowledge of the Company, is imminent that could reasonably
be expected to have a Material Adverse Effect; and neither the Company nor the
Subsidiaries are aware of any existing or imminent labor disturbance by the
employees of its principal suppliers, manufacturers or contractors which might
be expected to result in any Material Adverse Change. No collective bargaining
agreement exists with any of the Company's or any of the Subsidiaries' employees
and, to the best knowledge of the Company, no such agreement is imminent.
(xxiii) The Company has not taken, and shall not take, directly or
indirectly, any action designed to cause or result in or which has constituted
or which might reasonably be expected to cause or result in, under the 1934 Act,
the 1934 Act Regulations or otherwise, the stabilization or manipulation of the
price of any
5
<PAGE> 7
security of the Company to facilitate the sale or resale of the Shares. No bid
or purchase by the Company and, to the best knowledge of the Company, no bid or
purchase that could be attributed to the Company (as a result of bids or
purchases by an "affiliated purchaser" within the meaning of Rule 10b-6 under
the 1934 Act) for or of the Common Stock, any securities of the same class or
series as the Common Stock or any securities immediately convertible into or
exchangeable for or that represent any right to acquire the Common Stock, is now
pending or in progress or will have commenced at any time prior to the
completion of the distribution of the Shares.
(xxiv) Except as disclosed in the Prospectus, all United States federal
income tax returns of the Company and the Subsidiaries required by law to be
filed have been filed and all taxes shown by such returns or otherwise assessed,
which are due and payable, have been paid, except tax assessments, if any, as
are being contested in good faith and as to which adequate reserves have been
provided. To the best of the Company's knowledge, the charges, accruals and
reserves on the respective books of the Company and the Subsidiaries in respect
of any United States federal income tax liability for any years not finally
determined are adequate to meet any assessments or re-assessments for additional
United States federal income tax for any years not finally determined, except as
disclosed in the Prospectus and except to the extent of any inadequacy that
would not have a Material Adverse Effect.
(xxv) Except as disclosed in the Prospectus, there are no outstanding
loans, advances or guaranties of indebtedness by the Company to or for the
benefit of any of its "affiliates," as such term is defined in the 1933 Act
Regulations, or any of the officers or directors of any of the Subsidiaries, or
any of the members of the families of any of them.
(xxvi) There are no holders of securities (debt or equity) of the Company,
or holders of rights (including, without limitation, preemptive rights),
warrants or options to obtain securities of the Company or the Subsidiaries, who
have the right to request the Company to register securities held by them under
the 1933 Act, other than as disclosed in the Prospectus.
(xxvii) Each of the Company and the Subsidiaries is conducting its business
in compliance with all applicable local, state, federal and foreign laws, rules
and regulations of the jurisdictions in which it is conducting business except
to the extent that such failure to comply would not have a Material Adverse
Effect.
(xxviii) The Company is not an investment company within the meaning of the
Investment Company Act of 1940, as amended.
(xxix) The Shares are free from any Company-imposed restrictions preventing
or limiting their resale as contemplated hereby, including without limitation,
the restriction on transfer set forth in Article VII, Section 2 of the Company's
Restated By-Laws.
(xxx) Neither the Company nor any director, officer, agent, employee or
other person associated with or acting on behalf of the Company has, directly or
indirectly: used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity; made
any unlawful payment to foreign or domestic government officials or employees or
to foreign or domestic political parties or campaigns from corporate funds;
violated any provision of the Foreign Corrupt Practices Act of 1977, as amended;
or made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
(xxxi) Except as set forth in the Prospectus, no officer, director or
stockholder of the Company, or any "affiliate" or "associate" (as those terms
are defined in Rule 405 of the 1933 Act Regulations) of any of the foregoing
persons or entities has or has had, either directly or indirectly, (i) an
interest in any person or entity which (A) furnishes or sells services or
products that are furnished or sold or are proposed to be furnished or sold by
the Company, or (B) purchases from or sells or furnishes to the Company any
goods or services, or (ii) a beneficiary interest in a contract or agreement to
which the Company is a party or by which it may be bound or affected. Except as
set forth in the Prospectus, there are no existing agreements, arrangements,
understandings or transactions, between or among the Company and any officer,
director, stockholder in the Inside Stockholder Group or Outside Stockholder
Group, or any affiliate of any of the foregoing persons or entities.
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(xxxii) The Company has not incurred any liability for a fee, commission or
other compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement.
(xxxiii) Company is eligible to use Form S-3 for the registration of the
Shares.
(xxxiv) The Company has not distributed and will not distribute prior to
the Closing Date any prospectus or other offering material in connection with
the offering and sale of the Shares other than the Prospectus, the Registration
Statement and any other material that may be permitted by the 1933 Act and the
1933 Act Regulations.
(b) The Selling Stockholder represents and warrants to, and agrees with
each of the Underwriters as follows:
(i) The Selling Stockholder is not prompted to sell the Shares to be sold
by the Selling Stockholder by any information concerning the Company that is not
set forth in the Prospectus or other documents filed by the Company with the
Commission pursuant to the periodic reporting and other informational
requirements of the 1934 Act.
(ii) When the Registration Statement and any further amendments thereto
shall become effective, neither the Registration Statement nor any such
amendment will contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading to the extent that such statements or omissions were made
in reliance upon and in conformity with information furnished or confirmed in
writing to the Company by the Selling Stockholder expressly for use in the
Registration Statement or the Prospectus or any amendments or supplements
thereto. Without having undertaken to determine independently the accuracy or
completeness of either the representations and warranties of the Company
contained in Section l(a) hereof or the information contained in the
Registration Statement, including the Prospectus (and any amendment or
supplement thereto), the Selling Stockholder (A) does not have any actual
knowledge that the representations and warranties of the Company contained in
Section l(a) hereof are not true and correct, and (B) is familiar with the
Registration Statement and does not have any actual knowledge that the
Registration Statement contains any untrue statements of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading; except that the foregoing shall not
apply to statements in or omissions from any such document (A) made in reliance
upon, and in conformity with, written information furnished to the Company by
the Underwriters specifically for use in the preparation thereof or (B) to the
extent, if any, such statements or omissions are inconsistent with information
furnished in writing to the Company or the Underwriters by the Selling
Stockholder expressly for this purpose.
(iii) The Selling Stockholder has full right, power and authority to enter
into this Agreement, the Power of Attorney (as defined below) and the Custody
Agreement (as defined below) and to sell, transfer and deliver the Shares
pursuant to this Agreement; and this Agreement has been duly authorized,
executed and delivered by or on behalf of the Selling Stockholder.
(iv) Except as set forth in the Prospectus, there is no action, suit,
investigation (of which such Selling Stockholder has received written notice) or
proceeding before or by any government, governmental instrumentality or court,
domestic or foreign, or otherwise now pending or, to the knowledge of the
Selling Stockholder, threatened to which the Selling Stockholder is or would be
a party or of which the property of the Selling Stockholder is or may be
subject, that (i) seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge the sale of Shares by the Selling Stockholder or any of the
other transactions contemplated hereby or (ii) questions the legality or
validity of any such transactions or seeks to recover damages or obtain other
relief in connection with any such transactions.
(v) The Selling Stockholder has duly executed and delivered, in the form
heretofore furnished to the Representative a Selling Stockholder's Irrevocable
Power of Attorney (a "Power of Attorney") appointing Michael M. Fleming and
(the "Attorneys"), and each of them, as attorneys-in-fact with
authority to execute and deliver this Agreement and a Letter of Transmittal and
Custody Agreement (the "Custody Agreement") with The Chemical Trust Company of
California as custodian (the "Custodian") on
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behalf of such Selling Stockholder and to take certain other actions with
respect hereto and thereto; each of the Power of Attorney and the Custody
Agreement constitutes a valid and binding agreement of such Selling Stockholder,
enforceable in accordance with its terms, and each of such Attorneys, acting
alone, is authorized to execute and deliver this Agreement, the Custody
Agreement and the certificate contemplated by Section of this Agreement on
behalf of such Selling Stockholder, to determine the purchase price to be paid
by the several Underwriters to such Selling Stockholder as provided in this
Agreement, to authorize the delivery of the Shares to be sold by such Selling
Stockholder under this Agreement and to duly endorse (in blank or otherwise) the
certificate or certificates representing such Shares or a stock power or powers
with respect thereto, to accept payment therefor and otherwise to act on behalf
of such Selling Stockholder in connection with this Agreement.
(vi) No authorization, approval, consent or license of any government,
governmental instrumentality or court (other than under the 1933 Act and the
1933 Act Regulations and the securities or blue sky laws of the various states)
is required for the execution and delivery by the Selling Stockholder of the
Power of Attorney, Custody Agreement, the execution and delivery by or on behalf
of the Selling Stockholder of this Agreement and the valid sale and delivery of
the Shares to be sold by the Selling Stockholder hereunder.
(vii) This Agreement is a valid and binding agreement of the Selling
Stockholder, enforceable in accordance with its terms, and the execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated will not result in a breach by the Selling Stockholder of, or
constitute a default by the Selling Stockholder under, any indenture, deed of
trust, contract or other agreement or instrument or any decree, judgment or
order to which the Selling Stockholder is a party or by which the Selling
Stockholder may be bound or the properties of the Selling Stockholder may be
subject.
(viii) The Selling Stockholder will at the Closing Date (as hereinafter
defined) have good and valid title to the Shares to be sold by the Selling
Stockholder pursuant to this Agreement, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind; and, upon
delivery of such Shares and payment of the purchase price therefor as
contemplated in this Agreement, each of the Underwriters will receive good and
valid title to the Shares purchased by it from the Selling Stockholder, free and
clear of any pledge, lien, security interest, charge, claim, restriction or
transfer, equity or encumbrance of any kind.
(ix) Certificates for all of the Shares to be sold by the Selling
Stockholder pursuant to this Agreement, in suitable form for transfer by
delivery or accompanied by duly executed instruments of transfer or assignment
in blank with signatures guaranteed, have been placed in custody with the
Custodian with irrevocable conditional instructions to deliver the Shares to the
Underwriters pursuant to this Agreement.
(x) The Selling Stockholder has not taken, and shall not take, directly or
indirectly, any action designed to cause or result in or which has constituted
or which might reasonably be expected to cause or result in, under the 1934 Act,
the 1934 Act Regulations or otherwise, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares. No bid or purchase by the Selling Stockholder and, to the best knowledge
of the Selling Stockholder, no bid or purchase that could be attributed to the
Selling Stockholder (as a result of bids or purchases by an "affiliated
purchaser") for or of the Common Stock, any securities of the same class or
series as the Common Stock or any securities immediately convertible into or
exchangeable for or that represent any right to acquire the Common Stock, is now
pending or in progress or will have commenced at any time prior to the
completion of the distribution of the Shares by the Selling Stockholder.
(xi) Neither the Selling Stockholder nor any of his affiliates directly or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, or has any other association with (within the
meaning of Article I, Section 1(m) of the By-Laws of the National Association of
Securities Dealers, Inc.), any member firm of the National Association of
Securities Dealers, Inc.
(xii) The Company has not distributed and will not distribute prior to the
Closing Date any prospectus or other offering material in connection with the
offering and sale of the Shares other than the Prospectus, the Registration
Statement and any other material that may be permitted by the 1933 Act and the
1933 Act Regulations.
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<PAGE> 10
(xiii) The Selling Stockholder will review the Prospectus and comply with
all agreements and satisfy all conditions on his part to be complied with or
satisfied pursuant to this Agreement on or prior to the Closing Date and will
advise one of his Attorneys, prior to the Closing Date if any statement to be
made on behalf of such Selling Stockholder in the certificate contemplated by
Section 5(g) of this Agreement would be inaccurate if made as of the Closing
Date.
(xiv) The Selling Stockholder has not relied upon any representation by the
Underwriters with respect to any tax consequences (federal, state or local) of
the transactions contemplated hereby, or otherwise. The Selling Stockholder
acknowledges that any tax liability that might arise with respect to the Shares
to be sold by the Selling Stockholder shall be solely the responsibility of the
Selling Stockholder.
(c) Any certificate signed by any officer of the Company and delivered to
you or to Grover Wickersham, P.C., as counsel for the Underwriters pursuant to
this Agreement or at the Closing contemplated hereby shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby; and any certificate signed by or on behalf of the Selling
Stockholder and delivered to you or to counsel for the Underwriters at or prior
to any Closing Date pursuant to the terms of this Agreement or the transactions
contemplated hereby shall be deemed a representation and warranty by the Selling
Stockholder to each Underwriter as to matters covered thereby.
SECTION 2. SALE AND DELIVERY TO THE UNDERWRITERS; CLOSING.
(a) On the basis of the representations and warranties herein contained,
and subject to the terms and conditions herein set forth, the Selling
Stockholder agrees to sell to each Underwriter, severally and not jointly, and
each Underwriter agrees, severally and not jointly, to purchase from the Selling
Stockholder the number of Shares set forth in Schedule A opposite the name of
such Underwriter (plus such additional number of Shares that such Underwriter
may become obligated to purchase pursuant to Section 10 hereof).
The purchase price per Share to be paid by the Underwriters shall be
$ . The initial public offering price of the Shares shall be
$ per share.
(b) Certificates in negotiable form for the Shares to be sold by the
Selling Stockholder pursuant to this Agreement have been placed in custody, for
delivery under this Agreement, under the Custody Agreement with the Custodian.
The Selling Stockholder agrees that the Shares represented by the certificates
so held in custody are subject to the interests of the several Underwriters
under this Agreement, that the arrangements made by such Selling Stockholder for
such custody, including the Power of Attorney, are to that extent irrevocable
and that the obligations of such Selling Stockholder under this Agreement shall
not be terminated by the act of such Selling Stockholder or by operation of law,
whether by the death or incapacity of such Selling Stockholder or the occurrence
of any other event, except as specifically provided in this Agreement or in the
Custody Agreement. If the Selling Stockholder should die or become
incapacitated, or if any other such event should occur before the delivery of
the Shares hereunder, certificates for the Shares to be sold by such Selling
Stockholder shall, except as specifically provided in this Agreement or in the
Custody Agreement, be delivered by the Custodian in accordance with the terms
and conditions of this Agreement as if such death, incapacity or other event has
not occurred, regardless of whether the Custodian shall have received notice of
such death or other event.
(c) Payment (in a form acceptable to the Selling Stockholder) of the
purchase price (less the nonaccountable expense allowance provided for in
Section 4 of this Agreement) for, and delivery of certificates for the Shares
shall be made at the offices of Van Kasper & Company, 600 California Street, San
Francisco, California, or at such other place as shall be agreed upon by the
Company, the Selling Stockholder and you, at 6:30 a.m. Pacific Time either (i)
on the fifth full business day after the date of this Agreement, or (ii) at such
other time not more than seven full business days after such fifth business day
as you, the Company and the Selling Stockholder shall determine (the "Closing
Date"). As used in this Agreement, "business day" means a day on which the New
York Stock Exchange is open for trading and on which banks in New York are open
for business and not permitted by law or executive order to be closed. Payment
shall be made to the Selling Stockholder by wire transfer pursuant to
instructions of the Selling Stockholder, certified or official bank check or
checks in California Clearing House funds or similar next day funds payable to
the
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order of the Selling Stockholder against delivery to you for the respective
accounts of the several Underwriters of certificates for the Shares to be
purchased by them.
(d) Certificates for the Shares to be purchased by the Underwriters shall
be in such denominations and registered in such names as you may request in
writing at least two full business days before the applicable Closing Date. The
certificates for the Shares will be made available for examination and packaging
by you at the offices of Alex. Brown & Sons, New York, New York, not later than
one full business day prior to the Closing Date.
(e) It is understood that each Underwriter has authorized you, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Shares that it has agreed to purchase. You, individually, may
(but shall not be obligated to) make payment of the purchase price for the
Shares to be purchased by any Underwriter whose check or checks shall not have
been received by the applicable Closing Date.
(f) It is understood that the several Underwriters propose to offer the
Shares for sale to the public as soon as you, in your capacity as the
Representative, deem it advisable to do so. The Shares are to be initially
offered to the public at the public offering price set forth in the Prospectus.
The Representative may from time to time thereafter change the public offering
price and other selling terms.
(g) The information set forth in the last paragraph on the front cover page
(insofar as such information relates to the Underwriters), the legend respecting
stabilization set forth on the inside front cover page, the statements set forth
under the caption, "Underwriting" in any Preliminary Prospectus and in the
Prospectus constitute the only information furnished by the Underwriters to the
Company for inclusion in any Preliminary Prospectus, the Prospectus or the
Registration Statement.
SECTION 3. CERTAIN COVENANTS OF THE COMPANY.
The Company covenants with each Underwriter as follows:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective and, if the Company elects to rely upon Rule 430A
and subject to Section 3(b), will comply in all material respects with the
requirements of Rule 430A and will notify you promptly, (i) when the
Registration Statement, or any post-effective amendment to the Registration
Statement, shall have become effective, or any supplement to the Prospectus or
any amended Prospectus shall have been filed, (ii) of the receipt of any
comments from the Commission, (iii) of any request by the Commission to amend
the Registration Statement or amend or supplement any Prospectus or for
additional information and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, or of the institution or threatening of any proceedings for any of
such purposes. The Company will make every reasonable effort to prevent the
issuance of any such stop order or of any order preventing or suspending such
use and, if any such order is issued, to obtain the lifting thereof at the
earliest possible moment.
(b) The Company will not at any time file or make any amendment to the
Registration Statement, or any amendment or supplement (i) if the Company has
not elected to rely upon Rule 430A to the Prospectus or (ii) if the Company has
elected to rely upon Rule 430A, to either the prospectus included in the
Registration Statement at the time it becomes effective or to the Prospectus, of
which you shall not have previously been advised and furnished a copy or to
which you or Grover Wickersham, P.C., as counsel for the Underwriters shall have
promptly and reasonably objected in writing; provided that such objections shall
not prevent the filing of any amendment or supplement which, in the opinion of
counsel for the Company, is required by the 1933 Act or the 1933 Act
Regulations, in which case the Company shall make such changes in any such
document prior to the filing thereof as the Underwriters upon advice of counsel
may reasonably request.
(c) The Company has furnished or will furnish to you and your counsel,
without charge, two signed copies of the Registration Statement as originally
filed and of all amendments thereto, whether filed before or
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after the Registration Statement becomes effective, copies of all exhibits and
documents filed therewith and signed copies of all consents and certificates of
experts and has furnished or will furnish to you, for each other Underwriter,
one conformed copy of the Registration Statement as originally filed and each
amendment thereto (without exhibits). In addition, the Company has furnished or
will furnish to you and your counsel, without charge, such additional conformed
copies of the Registration Statement, any amendments or supplements thereto and
exhibits as shall be reasonably requested.
(d) The Company will deliver to each Underwriter, without charge, from time
to time until the effective date of the Registration Statement as many copies of
each preliminary prospectus as such Underwriter may reasonably request, and the
Company hereby consents to the use of such copies for purposes permitted by the
1933 Act. The Company will deliver to each Underwriter, without charge, as soon
as the Registration Statement shall have become effective and thereafter from
time to time as requested during the period when the Prospectus is required to
be delivered under the 1933 Act and prior to the expiration of ninety days after
the effective date of the Registration Statement such number of copies of the
Prospectus (as supplemented or amended) as such Underwriter may reasonably
request, and in case any Underwriter is required to deliver a prospectus in
connection with sales of any of the Shares at any time ninety days or more after
the effective date of the Registration Statement upon such Underwriter's request
through you, but at the expense of such Underwriter, the Company will prepare
and deliver to such Underwriter, as many copies as you may request of an amended
or supplemented Prospectus complying with Section 10(a)(3) of the 1933 Act.
(e) The Company will comply to the best of its ability with the 1933 Act
and the 1933 Act Regulations, and the 1934 Act, and the 1934 Act Regulations so
as to permit the completion of the distribution through the Underwriters of the
Shares as contemplated in this Agreement and in the Prospectus. If at any time
when a prospectus is required by the 1933 Act to be delivered in connection with
Sales by the Underwriters of the Shares any event shall occur or condition exist
as a result of which it is necessary, in the opinion of counsel for the
Underwriters or counsel for the Company, to amend the Registration Statement or
amend or supplement any Prospectus in order that the Prospectus will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of either such counsel, at any such time to
amend the Registration Statement or amend or supplement any Prospectus in order
to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such untrue
statement or omission or to make the Registration Statement or the Prospectus
comply with such requirements, provided that the Company shall make such changes
in any such document as the Underwriters upon advice of counsel may reasonably
request; provided, further, that the Company shall determine the final terms of
any such amendment or supplement.
(f) The Company will endeavor, in cooperation with the Underwriters, to
qualify the Shares for offering and sale under the applicable securities laws of
such states and other jurisdictions as you may designate and to maintain such
qualifications in effect for a period of not less than one year from the
effective date of the Registration Statement; provided, however, that neither
the Company nor any Subsidiary shall be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject. The Company will file such statements and reports
as may be required by the laws of each jurisdiction in which the Shares have
been qualified as above provided.
(g) The Company will make generally available (within the meaning of
Section 11(a) of the 1933 Act and the 1933 Act Regulations) to its security
holders as soon as practicable, but not later than 15 months after the date of
the Prospectus, an earnings statement of the Company (which need not be
certified by independent certified public accountants unless required by the
1933 Act or the 1933 Act Regulations, but which shall satisfy the provisions of
Section 11(a) of the 1933 Act Regulations), covering a period of 12 months
beginning after the effective date of the Registration Statement but beginning
not later than the first day of the Company's fiscal quarter next following such
effective date.
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(h) The Company will cause the Shares to be listed on the Nasdaq National
Market and comply with all applicable rules of the Nasdaq National Market in
connection with the transactions contemplated hereby.
(i) If the Company has elected to rely upon Rule 430A, it will take such
steps as it deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 424(b) was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus.
(j) The Company will furnish to you as early as practicable prior to the
Closing Date, but not less than two full business days prior thereto, a copy of
its latest available unaudited interim financial statements that have been read
by the Company's independent certified public accountants, as stated in their
letters to be furnished pursuant to Sections 5(h) and 5(i).
(k) The Company will comply with all registration, filing and reporting
requirements of the 1934 Act, which may from time to time be applicable to the
Company.
(l) The Company will comply with all provisions of all undertakings
contained in the Registration Statement.
(m) Prior to the Closing Date, the Company will issue no press release with
respect to the offering, without your prior written consent.
(n) The Company will file timely with the Commission and the National
Association of Securities Dealers, Inc. (the "NASD"), if required, a report on
Form 10-C in accordance with the 1934 Regulations.
(o) At the Closing Date, the Company will deliver to you true and correct
copies of the Articles of Incorporation and all amendments thereto of the
Company and the Significant Subsidiaries, all such copies to be certified as of
a recent date by the Secretary of State of the State of Nevada or the respective
state official of the state of incorporation of such Significant Subsidiaries;
true and correct copies of the bylaws of the Company and of the minutes of all
meetings of the directors and stockholders of the Company (or Actions by Written
Consent in Lieu of Meetings) held prior to such Closing Date which in any way
relate to the subject matter of this Agreement; and such other documents and
certificates as you or your counsel may reasonably request.
(p) The Company will use all reasonable efforts to comply or cause to be
complied with the conditions precedent to the several obligations of the
Underwriters in Section 5 hereof.
(q) The Company shall supply to your counsel and the Selling Stockholder's
counsel, at the Company's cost, unbound volumes for each such party each
containing material documents relating to the offering of the Shares within a
reasonable time after the Closing Date, not to exceed 90 days.
(r) During a period of five years commencing with the date of this
Agreement, the Company will promptly furnish to each of you, and to each
Underwriter who may so request in writing, copies of all periodic and special
reports furnished to stockholders of the Company, of all information, documents
and reports filed with the Commission, any securities exchange or the NASD and
of all press releases and material news items or articles in respect of the
Company (other than promotional and marketing materials disseminated solely to
customers and potential customers of the Company in the ordinary course of
business); and any additional information concerning the Company or its business
that you may reasonably request (which information, 180 days from the date of
this Agreement, shall not include confidential, non-public information).
(s) As soon as practicable, but not later than the 45th day following the
end of the fiscal quarter first ending after the first anniversary of the
Effective Date, the Company will make generally available to its securities
holders and furnish to you an earnings statement or statements in accordance
with Section 11(a) of the 1933 Act and Rule 158 thereunder.
(t) The Company shall conduct its business and affairs, at all times in the
future, in such a manner as to ensure that it will not become an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
and the rules and regulations promulgated thereunder.
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(u) Unless the Common Stock is listed on a national securities exchange,
the Company shall use its best efforts to cause the Common Stock (including the
Shares) to continue to be quoted on the Nasdaq National Market for a period of
at least five years and will comply with all registration, filing, reporting and
other requirements of the 1934 Act and the Nasdaq National Market that may, from
time to time, be applicable to the Company.
SECTION 4. PAYMENT OF EXPENSE.
The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including (a) the printing and filing of the
Registration Statement (including financial statements and exhibits), as
originally filed and as amended, the preliminary prospectus and the Prospectus
and any amendments or supplements thereto, and the cost of furnishing copies
thereof to the Underwriters, (b) the printing and distribution of the
certificates for the Shares, (c) the delivery of the certificates for the Shares
to the Underwriter, including any capital duties, stamp duties and stock
transfer taxes payable upon the sale of the Shares to the Underwriters, (d) the
fees and disbursements of the Company's counsel and accountants, (e) the filing
fees in connection with the filing of the Registration Statement, (f) the
qualification of the Shares under the applicable securities laws in accordance
with Section 3(f) and any filing for review of the offering with the Corporate
Financing Department of the NASD, including filing fees in connection therewith,
(g) filing fees and fees and disbursements of counsel for the Company in
connection with the Blue Sky Survey, (h) application and listing fees in
connection with the approval and inclusion of the Shares for quotation on the
Nasdaq National Market and (i) the reasonable fees and disbursements of the
Selling Stockholder's counsel. The Selling Stockholder will pay at the Closing
Date the Representative's nonaccountable expense allowance equal to 2.375% of
the aggregate gross proceeds from the sale of the Shares.
If this Agreement shall not be carried out by reason of any failure on the
part of the Company to perform any covenant or agreement or satisfy any
condition of this Agreement, or if this Agreement is terminated by you in
accordance with the provisions of Sections 5(a), 5(b), 5(c), 5(f), 5(h), 5(i),
5(j) (with respect to the Company), 5(k), or 9(b)(i), the Company shall
reimburse the Underwriters for all their out-of-pocket expenses, including the
reasonable fees and disbursements of Grover Wickersham, P.C., as counsel for the
Underwriters, as shall have been incurred in connection with this Agreement or
the proposed offer, sale and delivery of the Shares, and upon demand, the
Company agrees to pay promptly the full amount thereof to you. The Selling
Stockholder shall reimburse the Underwriters for such expenses if the Selling
Stockholder fails to satisfy the conditions set forth in Sections 5(d), 5(e)
(with respect to the opinion of the counsel for the Selling Stockholder), 5(g),
5(j) (with respect to the Selling Stockholder), Section 11 or any of the
representations and warranties of the Selling Stockholder set forth in Section
1(b).
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS.
The obligations of the several Underwriters to purchase and pay for the
Shares that they have respectively agreed to purchase hereunder are subject to
the accuracy of the representations and warranties of the Company and the
Selling Stockholder contained herein or in certificates of the Company's
officers delivered pursuant to the provisions hereof, to the performance by the
Company and the Selling Stockholder of their respective obligations hereunder,
and to the following further conditions:
(a) The Registration Statement shall have become effective no later than
6:00 p.m., Pacific Time, on the date of this Agreement or, with your consent, at
a later time and date not later, however, than 6:00 p.m. on the first business
day following the date hereof, or at such later time or on such later date as
you may agree to in writing with the approval of a majority in interest of the
several Underwriters; and at the Closing Date, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act and no proceedings for that purpose shall have been instituted or shall
be pending or, to your knowledge or the knowledge of the Company, shall have
been threatened by the Commission, and any request on the part of the Commission
for additional information shall have been complied with to the reasonable
satisfaction of Grover Wickersham, P.C., as counsel for the Underwriters. If the
Company has elected to rely upon Rule 430A, the Prospectus containing the Rule
430A Information shall have been filed with the Commission in accordance
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<PAGE> 15
with Rule 424(b) (or a post-effective amendment providing such information shall
have been filed and declared effective in accordance with the requirements of
Rule 430A).
(b) At the Closing Date, you shall have received signed opinions of Snell &
Wilmer and/or Lionel, Sawyer & Collins, counsel for the Company, dated as of
such Closing Date, together with reproduced copies of such opinions for each of
the other Underwriters, in form and substance reasonably satisfactory to the
Underwriters upon advice of counsel, to the effect that:
(i) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Nevada, with full power and
authority to own, lease, license and use its properties and assets and to
conduct its business in the manner described in the Prospectus. The Company is
duly qualified to do business and is in good standing in every jurisdiction in
which the failure to register and qualify would have a material adverse effect
on the business, financial condition or results of operations of the Company.
(ii) Each of the Company's Significant Subsidiaries incorporated in Nevada
or Arizona is a corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation, with full power and
authority to own, lease, license and use its properties and assets and to
conduct its business in the manner described in the Prospectus. Each Significant
Subsidiary is duly qualified to do business and is in good standing in every
jurisdiction in which the failure to register and qualify would have a material
adverse effect on the business, financial condition or results of operations of
such Significant Subsidiary.
(iii) The authorized, issued and outstanding capital stock of the Company
is as set forth under the caption "Capitalization" in the Prospectus as of the
date therein and there have been no changes in the authorized and outstanding
capital stock of the Company since the date of this Agreement. Each outstanding
share of capital stock (including all of the Shares) has been duly authorized,
validly issued, fully paid and nonassessable, with no personal liability
attaching to the ownership thereof.
(iv) The Shares are not subject to any preemptive right or, to such
counsel's knowledge, other rights to purchase shares of capital stock of the
Company (except contractual fights which have been waived).
(v) The statements made in the Prospectus under "Description of Capital
Stock," insofar as such section purports to constitute a summary of the terms of
the Company's capital stock, constitutes an accurate and fair summary thereof in
all material respects, and the form of certificate used to evidence the Common
Stock is in due and proper form and complies with all applicable requirements of
the General Corporation Law of Nevada.
(vi) The description in the Registration Statement and the Prospectus of
the charter and bylaws of the Company and of statutes and contracts are accurate
in all material respects and fairly present the information required to be
presented by the 1933 Act and the 1933 Act Regulations with respect to such
statutes and contracts.
(vii) The Company has the corporate power to enter into and perform its
obligations under this Agreement and this Agreement has been duly authorized,
executed and delivered by the Company and, assuming due authorization, execution
and delivery by the other parties hereto, is a valid and binding agreement of
the Company. Such counsel need not express an opinion with respect to the
limitations and exceptions to the enforceability of contracts and obligations in
general, including, without limitation: (a) the effect of bankruptcy,
insolvency, reorganization, arrangement, moratorium, fraudulent conveyance and
other similar laws relating to or affecting the rights of creditors generally;
(b) the effect of general principles of equity and similar principles,
including, without limitation, concepts of materiality, reasonableness,
unconscionability, good faith and fair dealing and the possible unavailability
of specific performance, injunctive relief or other equitable remedies,
regardless of whether considered in a proceeding in equity or at law, and the
effect of public policy; and (c) the enforceability of provisions relating to
indemnity or contribution for liabilities arising under the 1933 Act.
(viii) The Company is not required to obtain any authorization, approval,
consent or license of any government, governmental instrumentality or court
(other than under the 1933 Act and the 1933 Act
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<PAGE> 16
Regulations, and state securities laws) under federal or Nevada or Arizona law
for the sale and delivery of the Shares by the Selling Stockholder to the
Underwriters.
(ix) The execution and delivery of this Agreement by the Company, the
consummation by the Company of the transactions contemplated in this Agreement
and the compliance by the Company with the terms of this Agreement have been
duly authorized by all necessary corporate action on the part of the Company and
do not and will not result in any violation of the Restated Articles of
Incorporation, as amended (the "Articles of Incorporation"), or the Restated
By-Laws, as currently in effect (the "By-Laws"), of the Company or any of the
Significant Subsidiaries incorporated in Arizona or Nevada, and do not and will
not conflict with, or constitute a breach or violation of, any of the terms and
provisions of, or constitute a default under, or result in the creation or
imposition of any lien or encumbrance upon any property or assets of the Company
or any of the Significant Subsidiaries where such default would have a Material
Adverse Effect under (A) any indenture, mortgage, deed of trust, loan or credit
agreement, bond, debenture, note agreement or any other agreement or instrument
known to us to which the Company or any of its Subsidiaries incorporated in
Arizona or Nevada is a party or by which it is bound, (B) any existing
applicable federal or Nevada or Arizona corporate laws, rules or regulations,
and except to the extent that the indemnification provisions thereof may
conflict with any applicable law, rule or regulation or (C) to such counsel's
knowledge, any judgment, order, writ or decree of any government agency or body,
domestic or foreign, having jurisdiction over the Company, any of its
Subsidiaries incorporated in Arizona or Nevada or any of their properties or
operations. Such counsel need express no opinion, however, as to whether the
execution and delivery of, or the performance by the Company of its obligations
under this Agreement will constitute a violation of, or default under, any
financial covenant or financial ratios contained in any of the agreements
referred to in the preceding sentence.
(x) Such counsel has been advised by the Division of Corporation Finance of
the Commission that the Registration Statement has become effective under the
1933 Act, and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are pending or are
contemplated under the 1933 Act; any required filing of the Prospectus or any
supplement thereto pursuant to Rule 424(b) of the 1933 Act Regulations have been
made in the manner and within the time period required by Rule 424(b).
(xi) The Registration Statement (including the Rule 430a information, if
applicable), the Prospectus and each amendment or supplement to the Registration
Statement and Prospectus, as of their respective effective or issue dates (other
than the financial statements, notes or schedules thereto and other financial or
statistical data and supplemental schedules included therein or omitted
therefrom, as to which such counsel need express no opinion), complied as to
form in all material respects with the requirements of the 1933 Act and the 1933
Act Regulations.
(xii) The Company is not an investment company within the meaning of the
Investment Company Act of 1940, as amended.
(xiii) All descriptions in the Prospectus of contracts and other documents
filed as exhibits to the Registration Statement or incorporated by reference to
which the Company and the Subsidiaries are parties are accurate in all material
respects.
(xiv) To such counsel's knowledge, no holders of the Company's securities
have rights to the registration of shares of Common Stock or other securities in
connection with the Offering as a result of the filing of the Registration
Statement by the Company or the offering contemplated hereby, except for any
such rights which have been waived.
In addition, such opinion shall state that such counsel has participated in
the preparation of the Registration Statement and Prospectus and in conferences
with officers and other representatives of the Company, representatives of the
independent public accountants for the Company, and your representatives and
your counsel at which the contents of the Registration Statement, the Prospectus
and related matters were discussed and, although such counsel need not pass upon
or assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus and
although such counsel has not undertaken to verify independently the accuracy or
completeness of the
15
<PAGE> 17
statements in the Registration Statement and the Prospectus and, therefore,
would not necessarily have become aware of any material misstatement of fact or
omission to state a material fact, on the basis of and subject to the foregoing
and in reliance as to materiality upon the opinions of officers and other
representatives of the Company, no facts have come to such counsel's attention
which have caused such counsel to believe that either the Registration Statement
or the Prospectus (other than the financial statements, notes or schedules
thereto and other financial or statistical data and supplemental schedules
included therein or omitted therefrom, as to which such counsel need express no
opinion) contained as of its date or contains as of the date of such opinion any
untrue statement of a material fact or omitted as of its date or omits as of the
date of such opinion to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
In giving such opinion, such counsel may rely as to all matters governed by
laws of jurisdiction other than the State of Arizona, the General Corporation
Law of the State of Nevada or the federal law of the United States, on opinions
of other local counsel in such jurisdictions, who shall be counsel satisfactory
to Grover Wickersham, P.C., as counsel for the Underwriters, in which case the
opinion shall state that they believe you and they are entitled to so rely. Such
counsel may also state that, insofar as such opinions involve factual matters,
they have relied, to the extent they deem proper, upon certificates of officers
of the Company and the Subsidiaries and certificates of public officials.
(c) At the Closing Date, you shall have received a signed opinion of Gary
V. Klinefelter, General Counsel for the Company, dated as of such Closing Date,
together with reproduced copies of such opinion for each of the other
Underwriters, in form and substance reasonably satisfactory to the Underwriters
upon advice of counsel, to the effect that:
(i) Such counsel does not know of any pending or threatened legal or
governmental actions, suits or proceedings, required to be described in the
Prospectus that are not described as required; to the best knowledge of such
counsel, there are no agreements, contracts, licenses, leases or documents of a
character required by the 1933 Act or the 1933 Act Regulations to be described
or referred to in the Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not described or referred to in
the Prospectus or the Registration Statement or filed as exhibits to the
Registration Statement.
(ii) To the knowledge of such counsel, no default exists in the performance
or observance of any obligation, agreement, covenant or condition contained in
any contract, indenture, loan agreement, note, lease or other agreement or
instrument to which the Company or any of the Subsidiaries is party or to which
any of their respective properties are bound, except as disclosed in the
Registration Statement and except for such defaults that would not have a
material adverse effect on the Company and the Subsidiaries, taken as a whole.
(iii) The descriptions in the Prospectus of the statutes, regulations,
legal or governmental proceedings, contracts and other documents therein
described, to the extent that they constitute matters of law or legal
conclusion, have been reviewed by such counsel and fairly present the
information disclosed therein in all material respects.
(iv) To the best knowledge of such counsel, except as set forth in the
Registration Statement and Prospectus, and except for the Shares to be sold by
the Selling Stockholder thereunder, (a) no holder of common Stock or other
securities of the Company has registration rights with respect to securities of
the Company and (b) all holders of securities of the Company having rights to
registration of such securities, as a result of the filing of the Registration
Statement by the Company have, with respect to the offering provided for in this
Agreement, waived such rights or such rights have expired by reason of lapse of
time following notification of the Company's intention to file the Registration
Statement.
(v) The execution and delivery of this Agreement by the Company, the
consummation by the Company of the transactions contemplated in this Agreement
and compliance by the Company with the terms of this Agreement have been duly
authorized by all necessary corporate action on the part of the Company and do
not and will not result in any violation of the Articles of Incorporation or
By-Laws of the Company or any of the Subsidiaries, and do not and will not
conflict with, or constitute a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any lien
or encumbrance under any
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<PAGE> 18
property or assets of the Company or any of the Subsidiaries where such default
would have a Material Adverse Effect under (A) any indenture, mortgage, deed of
trust, loan or credit agreement, bond, debenture, note agreement or any other
agreement or instrument to which the Company or any of the Subsidiaries is a
party or by which any of their respective properties are bound, (B) any existing
applicable Arizona or Nevada laws, rules or regulations (other than securities
or blue sky laws of the various states, as to which such counsel-need express no
opinion, and except to the extent that the indemnification provisions thereof
may conflict with any applicable Arizona or Nevada law, rule or regulation), or
(C) to such counsel's knowledge, any judgment, order, writ or decree of any
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or any of the Subsidiaries or any of their respective properties or
operations.
(vi) Each of the Company and its Subsidiaries is duly qualified to do
business as a foreign corporation in good standing in all jurisdictions, if any,
where it owns or leases real properties and in which the failure so to qualify
when taken in the aggregate would have a Material Adverse Effect.
(vii) No authorization, approval, consent or license of any government,
governmental instrumentality or court (other than under the 1933 Act and the
1933 Act Regulations and the rules and regulations of the Commission thereunder,
and state securities law) is required to be made or obtained by the Company
under Arizona or Nevada law for the consummation by the Company of the
transactions contemplated in this Agreement.
(viii) The Company has taken all necessary and appropriate action to remove
the Company's fight of first refusal set forth in Article VII, Section 2 of the
By-Laws with respect to the Shares.
In addition, such opinion shall state that such counsel has participated in
the preparation of the Registration Statement and Prospectus and in conferences
with officers and other representatives of the Company, representatives of the
independent public accountants for the Company, and your representatives and
your counsel at which the contents of the Registration Statement, the Prospectus
and related matters were discussed and, although such counsel need not pass upon
or assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus and
although such counsel has not undertaken to verify independently the accuracy or
completeness of the statements in the Registration Statement and the Prospectus
and, therefore, would not necessarily have become aware of any material
misstatement of fact or omission to state a material fact, on the basis of and
subject to the foregoing, no facts have come to such counsel's attention which
have caused such counsel to believe that either the Registration Statement or
the Prospectus (other than the financial statements, notes or schedules thereto
and other financial or statistical data and supplemental schedules included
therein or omitted therefrom, as to which such counsel need express no opinion)
contained as of its date or contains as of the date of such opinion any untrue
statement of a material fact or omitted as off its date or omits as of the date
of such opinion to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
Such counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon certificates of
officers of the Company and the Subsidiaries and certificates of public
officials.
(d) At the Closing Date, you shall have received a signed opinion of Ryan,
Swanson & Cleveland, counsel for the Selling Stockholder, dated as of such
Closing Date, together with reproduced copies of such opinion for each of the
other Underwriters, in form and substance reasonably satisfactory to the
Underwriters upon advice of counsel, to the effect that:
(i) No authorization, approval, consent or license of any government,
governmental instrumentality or court (other than under the 1933 Act and the
1933 Act Regulations and the rules and regulations of the Commission thereunder,
and state securities law) is necessary for the valid sale and delivery of the
Shares or for the consummation by the Selling Stockholder of the transactions
contemplated in this Agreement.
(ii) The execution and delivery of this Agreement by the Selling
Stockholder, the delivery of the Shares sold by the Selling Stockholder to the
Underwriters, the consummation by the Selling Stockholder of the transactions
contemplated in this Agreement and the compliance by the Selling Stockholder
with the terms of
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<PAGE> 19
this Agreement do not and will not conflict with, or constitute a breach or
violation of, any of the terms and provisions of, or constitute a default under,
or result in the creation or imposition of any lien or encumbrance upon any
property or assets of the Selling Stockholder under (A) any indenture, mortgage,
deed of trust, loan or credit agreement, bond, debenture, note agreement or any
other agreement or instrument known to such counsel to which the Selling
Stockholder is a party or by which any of his respective properties are bound,
(B) except to the extent that the indemnification provisions thereof may
conflict with any applicable law, rule or regulation, any existing applicable
laws, rules or regulations, other than the securities or blue sky laws of the
various states, as to which such counsel need express no opinion, or (C) to such
counsel's knowledge, any judgment, order, writ or decree of any government
agency or body, domestic or foreign, having jurisdiction over the Selling
Stockholder or any of his properties or operations. Such counsel need express no
opinion, however, as to whether the execution and delivery of, or the
performance by the Selling Stockholder of his obligations under this Agreement
will constitute a violation of, or default under, any financial covenants or
financial ratios contained in any of the agreements referred to in the preceding
sentence.
(iii) The Custody Agreement has been duly authorized, executed and
delivered by the Selling Stockholder and constitutes the valid and binding
agreement of the Selling Stockholder enforceable against the Selling Stockholder
in accordance with its terms.
(iv) This Agreement has been duly executed and delivered by the Selling
Stockholder and constitutes the valid and binding obligation of the Selling
Stockholder enforceable against the Selling Stockholder in accordance with its
terms. Such counsel need not express an opinion with respect to the limitations
and exceptions to the enforceability of contracts and obligations in general,
including, without limitation: (a) the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent conveyance and other similar
laws relating to or affecting the rights of creditors generally; (b) the effect
of general principles of equity and similar principles, including, without
limitation, concepts of materiality, reasonableness, unconscionability, good
faith and fair dealing and the possible unavailability of specific performance,
injunctive relief or other equitable remedies, regardless of whether considered
in a proceeding in equity or at law, and the effect of public policy; and (c)
the enforceability of provisions relating to indemnity or contribution for
liabilities arising under the 1933 Act.
(v) The Selling Stockholder is the sole registered owner of the Shares to
be sold by the Selling Stockholder; upon completion and registration with the
transfer agent of the sale of the Shares pursuant to this Agreement, each of the
Underwriters will be the registered owner of the Shares purchased by it from the
Selling Stockholder and, assuming the Underwriters purchased the Shares in good
faith and without prior notice of any adverse claim, the Underwriters will have
acquired the Shares free of any adverse claim, any lien in favor of the Company;
the owner of the Shares, if other than the Selling Stockholder, is precluded
from asserting against the Underwriters the ineffectiveness of any unauthorized
endorsement; and the Selling Stockholder has the full right and power (A) to
enter into this Agreement and the Custody Agreement and (B) to sell, transfer
and deliver the Shares to be sold by the Selling Stockholder under this
Agreement.
In addition, such opinion shall state that such counsel has participated in
the preparation of the Registration Statement and Prospectus and in conferences
with officers and other representatives of the Company, representatives of the
independent public accountants for the Company, and your representatives and
your counsel at which the contents of the Registration Statement, the Prospectus
and related matters were discussed and, although such counsel need not pass upon
or assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus and
although such counsel has not undertaken to verify independently the accuracy or
completeness of the statements in the Registration Statement and the Prospectus
and, therefore, would not necessarily have become aware of any material
misstatement of fact or omission to state a material fact, on the basis of and
subject to the foregoing, no facts have come to such counsel's attention which
have caused such counsel to believe that either the Registration Statement or
the Prospectus (other than the financial statements, notes or schedules thereto
and other financial or statistical data and supplemental schedules included
therein or omitted therefrom, as to which such counsel need express no opinion)
contained as of its date or contains as of the date of such opinion any untrue
statement of a material fact or omitted as off its date or omits as of the
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<PAGE> 20
date of such opinion to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
Such opinion shall be to such further effect with respect to the legal
matters relating to this Agreement and the sale of the Shares pursuant to this
Agreement as counsel for the Underwriters may reasonably request. Such counsel
may also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Company and the Subsidiaries and certificates of public officials.
(e) At the Closing Date, you shall have received the favorable opinion of
Grover Wickersham, P.C. as counsel for the Underwriters, dated as of such
Closing Date, together with reproduced copies of such opinion for each of the
other Underwriters, to the effect that the opinions delivered pursuant to
Sections 5(b), (c) and (d) appear on their faces to be appropriately responsive
to the requirements of this Agreement except, specifying the same, to the extent
waived by you, and with respect to the legal existence of the Company, the
Shares, this Agreement, the Registration Statement, the Prospectus or such other
related matters as you may require. In giving such opinion, such counsel may
rely, as to all matters governed by the laws of jurisdictions other than the law
of the State of California and the federal law of the United States, upon the
opinions of counsel satisfactory to you. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and
certificates of public officials.
(f) At the Closing Date, (i) the Registration Statement and the Prospectus,
as they may then be amended or supplemented, shall conform in all material
respects to the requirements of the 1933 Act and the 1933 Act Regulations, the
Company shall have complied in all material respects with Rule 430A (if it shall
have elected to rely thereon), the Registration Statement, as it may then be
amended or supplemented, shall not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements in the Registration Statement not misleading, and the
Prospectus, as they may then be amended or supplemented, shall not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements in the Prospectus, in
light of the circumstances under which they were made, not misleading, (ii)
there shall not have been, since the date as of which information is given in
the Prospectus, any Material Adverse Change, whether or not arising in the
ordinary course of business, (iii) no action, suit or proceeding at law or in
equity shall be pending or, to the knowledge of the Company, threatened against
the Company or the Subsidiaries that would be required to be set forth in the
Prospectus other than as set forth therein and no proceedings shall be pending
or, to the knowledge of the Company, threatened against the Company or the
Subsidiaries or before or by any federal, state or other commission, board or
administrative agency that could reasonably be expected to have a Material
Adverse Effect, other than as set forth in the Prospectus, (iv) the Company
shall have complied in all material respects with all agreements and satisfied
in all material respects all conditions on its part to be performed or satisfied
at or prior to such Closing Date and (v) the other representations and
warranties of the Company set forth in Section 1(a) shall be accurate as though
expressly made at and as of such Closing Date and the condition set forth in
clause (j) of this Section shall have been satisfied. At the Closing Date, you
shall have received a certificate of the Chairman or the President and the chief
financial or chief accounting officer of the Company, dated as of such Closing
Date, to such effect. As used in Section 5(f)(ii) and (iii), the term
"Prospectus" means the Prospectus in the form first used to confirm sales of the
Shares.
(g) At the Closing Date, (i) the representations and warranties of the
Selling Stockholder set forth in Section 1(b) and in any certificates by or on
behalf of the Selling Stockholder delivered pursuant to the provisions hereof
shall be accurate as though expressly made at and as of such Closing Date, (ii)
the Selling Stockholder shall have performed his obligations under this
Agreement in all material respects and (iii) you shall have received a
certificate of the Selling Stockholder, dated as of such Closing Date, to the
effect set forth in subsections (i) and (ii) of this Section 5(g).
(h) At the time that this Agreement is executed by the Company, you shall
have received from Price Waterhouse, independent certified public accountants, a
letter, dated such date and addressed to you, in form
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<PAGE> 21
and substance satisfactory to you and your counsel, together with signed or
reproduced copies of such letter for each of the other Underwriters.
(i) At the Closing Date, you shall have received from Price Waterhouse,
independent certified public accountants, a letter, in form and substance
satisfactory to you and your counsel, and dated as of such Closing Date, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to Section 5(h).
(j) At the Closing Date, counsel for the Underwriters shall have been
furnished with all such documents, certificates and opinions as they may
reasonably request for the purpose of enabling them to pass upon the sale of the
Shares as contemplated in this Agreement and the matters referred to in Section
5(e) and in order to evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company and the Selling
Stockholder, the performance of any of the covenants of the Company and the
Selling Stockholder, or the fulfillment of any of the conditions herein
contained; and all proceedings taken by the Company and the Selling Stockholder
at or prior to such Closing Date in connection with the sale of the Shares as
contemplated in this Agreement shall be reasonably satisfactory in form and
substance to you upon advice of counsel.
(k) The Shares shall have been included for quotation on the Nasdaq
National Market.
(l) The NASD, upon review of the terms of the public offering of the
shares, shall not have objected to your participation in such offering.
If any of the conditions specified in this Section 5 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, this Agreement
may be terminated by you upon notice to the Company and the Selling Stockholder
at any time at or prior to the Closing Date, and such termination shall be
without liability of any party to any other party except as provided in Section
4 herein. Notwithstanding any such termination, the provisions of Sections 7 and
8 herein shall remain in effect.
SECTION 6. INDEMNIFICATION.
(a) Subject to the conditions set forth below, the Company and the Selling
Stockholder agree to indemnify and hold harmless the Underwriters, any member of
the selling group, and each of such entities' officers, directors, partners,
employees, agents, and counsel, and each person, if any, who controls any one of
the Underwriters or selling group members within the meaning of Section 15 of
the 1933 Act or Section 20(a) of the Exchange Act, against any and all loss,
liability, claim, damage (or actions in respect thereof), and expense whatsoever
(which shall include, for all purposes of this Section 6, but not be limited to,
attorneys' fees and any and all expense whatsoever incurred in investigations
preparing or defending against any litigation, commenced or threatened, or any
claim whatsoever and any and all amounts paid in settlement of any claim or
litigation) as and when incurred arising out of, based upon, or in connection
with (i) any untrue statement or alleged untrue statement of a material fact
contained (A) in any Preliminary Prospectus, the Registration Statement, or the
Prospectus (as from time-to-time amended and supplemented), or any amendment or
supplement thereto (including the 430A Information, if applicable), or (B) in
any application or other document or communication (in this Section 6,
collectively called an "application") in any jurisdiction in order to qualify
the Shares under the "blue sky" or securities laws thereof or filed with the
Commission or any securities exchange or national market system; or any omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (ii) any breach of
any representation, warranty, covenant or agreement of the Company or of the
Selling Stockholder contained in this Agreement. The foregoing agreement to
indemnify shall be in addition to any liability the Company and the Selling
Stockholder may otherwise have, including liabilities arising under this
Agreement. However, (i) the Company and the Selling Stockholder shall have no
liability under this Section 6 if such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company as stated in Section 6(b) with respect to the Underwriters by or on
behalf of the Underwriters expressly for inclusion in any Preliminary
Prospectus, the Registration Statement, or the Prospectus, or any amendment or
supplement thereto, or in any application, as the case may be, and (ii) the
Selling Stockholder shall be liable under this Section 6(a) only if such loss,
liability, claim, damage, or expense arises out of or is based upon the
representations and warranties of such Selling Stockholder
20
<PAGE> 22
contained in Section l(b) hereof. The foregoing notwithstanding, the indemnity
provided for in this Section 6(a) with respect to any preliminary prospectus
shall not inure to the benefit of any Underwriter or selling group member (or
any person controlling such Underwriter or selling group member) from whom the
person asserting such loss, claim, damage or liability purchased the Shares that
are the subject thereof if such person did not receive a copy of the Prospectus
(or the Prospectus, as amended or supplemented) at or prior to confirmation of
the sale of the Shares to such person in any case where such delivery is
required by the 1933 Act and the true statement or omission or alleged untrue
statement or omission of a material fact contained in such preliminary
prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented).
If any action is brought against the Underwriters, any members of the
selling group or any of their respective officers, directors, partners,
employees, agents, or counsel, or any controlling persons of an Underwriter or
selling group member (an "indemnified party") in respect of which indemnity may
be sought against the Company or the Selling Stockholder (the "indemnifying
party") pursuant to the foregoing paragraph, such indemnified party or parties
shall promptly notify the indemnifying party or parties in writing of the
institution of such action (but the failure so to notify shall not relieve the
indemnifying party or parties from any liability they may have other than
pursuant to this Section 6(a), and the indemnifying party or parties shall
promptly assume the defense of such action, including the employment of counsel
(satisfactory to such indemnified party or parties) and payment of expenses.
Such indemnified party or parties shall have the right to employ its or their
own counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of such indemnified party or parties unless the employment of
such counsel shall have been authorized in writing by the indemnifying party or
parties in connection with the defense of such action or the indemnifying party
or parties shall not have promptly employed counsel satisfactory to such
indemnified party or parties to have charge of the defense of such action or
such indemnified party or parties shall have reasonably concluded that there may
be one or more legal defenses available to it or them or to other indemnified
parties which are different from or additional to those available to the
indemnifying party or parties, in any of which events such fees and expenses
shall be borne by the indemnifying party or parties which shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties. Anything in this paragraph to the contrary notwithstanding, the
indemnifying party or parties shall not be liable for any settlement of any such
claim or action effected without its or their written consent; provided,
however, if a settlement is reached with such consent or if there is a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. The Company and the Selling Stockholder each agrees
promptly to notify the Underwriters and the Representative of the commencement
of any litigation or proceedings against the Company or the Selling Stockholder,
respectively, or against any of their officers or directors in connection
with the sale of the Shares, any Preliminary Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement thereto, or any
application. To the extent any provision of this Section 6(a) entities the
indemnified party to reimbursement of fees and expenses, such obligations may be
billed by the indemnified party monthly and shall be due and payable within 10
days of the date thereof.
(b) The Underwriters severally agree to indemnify and hold harmless the
Company, each director of the Company, each officer of the Company who shall
have signed the Registration Statement, each other person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act or Section 20(a) of
the Exchange Act, and the Selling Stockholder to the same extent as the
foregoing indemnity from the Company to the Underwriters in Section 6(a), but
only with respect to statements or omissions, if any, made in any Preliminary
Prospectus, the Registration Statement, or the Prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto, or in any
application, in reliance upon and in conformity with written information
furnished to the Company as stated in this Section 6(b) with respect to the
Underwriters by or on behalf of the Underwriters expressly for inclusion in any
Preliminary Prospectus, the Registration Statement, or the Prospectus, or any
amendment or supplement thereto, or in any application, as the case may be;
provided, however, that the obligation of the Underwriters to provide indemnity
under the provisions of this Section 6(b) shall be limited to the amount which
represents the product of the number of Shares sold hereunder and the initial
public offering price per Share set forth on the cover page of the Prospectus.
For all purposes of this Agreement, the amounts of the selling concession and
reallowance set
21
<PAGE> 23
forth in the Prospectus and the information under "UNDERWRITING" constitute the
only information furnished in writing by or on behalf of the Underwriters
expressly for inclusion in any Preliminary Prospectus, the Registration
Statement, or the Prospectus (as from time to time amended or supplemented), or
any amendment or supplement thereto, or in any application, as the case may be.
If any action shall be brought against the Company, the Selling Stockholder or
any other person so indemnified based on any Preliminary Prospectus, the
Registration Statement, or the Prospectus, or any amendment or supplement
thereto, or any application, and in respect of which indemnity may be sought
against the Underwriters pursuant to this Section 6(b), the Underwriters shall
have the rights and duties given to the Company, and the Company, the Selling
Stockholder and each other person so indemnified shall have the rights and
duties given to the indemnified parties, by the provisions of Section 6(a).
SECTION 7. CONTRIBUTION.
In order to provide for just and equitable contribution in circumstances in
which the indemnity agreement provided for in Section 6 is for any reason held
to be unavailable to the Underwriters, the Company or the Selling Stockholder,
then the Company and the Selling Stockholder shall contribute to the damages
paid by the several Underwriters, and the several Underwriters shall contribute
to the damages paid by the Company and the Selling Stockholder; provided,
however, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. In
determining the amount of contribution to which the respective parties are
entitled, there shall be considered the relative benefits received by each party
from the offering of the Shares (taking into account the portion of the proceeds
of the offering realized by each), the parties' relative knowledge and access to
information concerning the matter with respect to which the claim was asserted,
the opportunity to correct and prevent any statement or omission, and any other
equitable considerations appropriate in the circumstances. The Company, the
Selling Stockholder and the Underwriters agree that it would not be equitable if
the amount of such contribution were determined by pro rata or per capita
allocation (even if the Underwriters were treated as one entity for such
purpose). No Underwriter or person controlling such Underwriter shall be
obligated to make contribution hereunder which in the aggregate exceeds the
total public offering price of the Shares purchased by such Underwriter under
this Agreement, less the aggregate amount of any damages which such Underwriter
and its controlling persons have otherwise been required to pay in respect of
the same or any substantially similar claim. The Selling Stockholder shall not
be obligated to contribute any amount in excess of the amount by which the
product of the purchase price per share of Common stock, as set forth in Section
2 hereof, and the number of shares of common stock being sold by the Selling
Stockholder exceeds the amount of damages which the Selling Stockholder has
otherwise been required to pay in respect of the same or any substantially
similar claim. The Underwriters' obligations to contribute hereunder are several
in proportion to their respective underwriting obligations and not joint. For
purposes of this Section 7, each person, if any, who controls an Underwriter
within the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each officer
of the Company who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act, shall
have the same rights to contribution as the Company. Anything in this Section 7
contrary notwithstanding, no party shall be liable for contribution with respect
to the settlement of any claim or action entered without its written consent;
provided however, if a settlement is reached with such consent or if there is a
final judgment for the plaintiff, the party liable to make contribution agrees
to so contribute b), reason of such settlement or judgment to the extent
provided in this Section 7. This Section 7 is intended to supersede any right to
contribution under the 1933 Act, the 1934 Act, or otherwise.
SECTION 8. REPRESENTATION, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
The representations, warranties, indemnities, agreements and other
statements of the Company, its officers and the Selling Stockholder set forth in
or made pursuant to this Agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Company and
the Selling Stockholder or any Underwriter or controlling person and will
survive delivery of and payment for the Shares.
22
<PAGE> 24
SECTION 9. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION OF AGREEMENT.
(a) This Agreement shall become effective at 6:30 a.m. Pacific Time, on the
first full business day following the day on which the Registration Statement
becomes effective or at the time of the initial public offering of the Shares,
whichever is earlier. The time of the initial public offering shall mean the
time, after the Registration Statement becomes effective, of the release by you
for publication of the first newspaper advertisement which is subsequently
published relating to the Shares or the time, alter the Registration Statement
becomes effective, when the Shares are first released by you for offering by
dealers by letter or telegram, whichever shall first occur. You or the Company
may prevent this Agreement from becoming effective without liability of any
party to any other party, except as noted below in this Section 9, by giving the
notice indicated in Section 9(c) before the time this Agreement becomes
effective.
(b) You shall have the right to terminate this Agreement at any time prior
to the Closing Date by giving notice to the Company and the Selling Stockholder
(i) if there has been, since the date as of which the information is given in
the Prospectus, any Material Adverse Change, whether or not arising in the
ordinary course of business; (ii) if there has occurred any material adverse
change in the financial markets in the United States or internationally or any
outbreak of hostilities or escalation of existing hostilities or other calamity
or crisis the effect of which is such as to make it, in your reasonable
judgment, impracticable to market the Shares or enforce contracts for the sale
of the Shares; (iii) if trading in any securities of the Company has been
suspended by the Commission, or if trading generally on either the American
Stock Exchange or the New York Stock Exchange or in the over-the-counter market
has been suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by either of such
Exchanges or by order of the Commission, any other governmental authority or the
NASD; (iv) if a banking moratorium has been declared by either federal, Arizona,
Nevada or New York authorities; (v) if there has occurred any change or
development involving a prospective change in national or international
political financial or economic controls, which in your opinion is likely to
have a material adverse effect on the market for the Shares; or (vi) any event
occurs affecting the condition of the Company or the Significant Subsidiaries
which, in your judgment, renders the sale of the Shares provided for herein
undesirable, impractical, or inadvisable. As used in this Section 9(a), the term
"Prospectus" means the Prospectus in the form first used to confirm sales of the
Shares.
(c) If you elect to prevent this Agreement from becoming effective as
provided in this Section 9, or to terminate this Agreement, you shall notify the
Company and the Selling Stockholder, promptly by telephone, telex or telegram,
confirmed by letter. If, as so provided, the Company elects to prevent this
Agreement from becoming effective, the Company shall notify you and the Selling
Stockholder by telephone, telex or telegram, confirmed by letter.
(d) Notwithstanding any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out, the
provisions of Section 3(a), 4, 6, 7, 8 and 9 shall not be in any way affected by
such election or termination or failure to carry out the terms of this Agreement
or any part hereof.
(e) This Agreement may also terminate pursuant to the provisions of Section
2(c) and Section 5, with the effect stated in such Sections.
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS.
If for any reason one or more Underwriters shall fail or refuse (otherwise
than for a reason sufficient to justify the termination of this Agreement under
the provisions of Section 9 hereof to purchase and pay for the number of Shares
agreed to be purchased by such Underwriter, the Company or the Selling
Stockholder shall immediately give notice thereof to you, and the non-defaulting
Underwriters shall have the fight within 24 hours after the receipt by you of
such notice, to purchase or procure one or more other Underwriters to purchase,
in such proportions as may be agreed upon among you and such purchasing
Underwriter or Underwriters and upon the terms herein set forth, the Shares that
such defaulting Underwriter or Underwriters agreed to purchase. If the
non-defaulting Underwriters fail so to make such arrangements with respect to
all such shares, the number of Shares which each non-defaulting Underwriter is
otherwise obligated to purchase under the Agreement shall be automatically
increased pro rata to absorb the remaining Shares that
23
<PAGE> 25
the defaulting Underwriter or Underwriters agreed to purchase; provided,
however, that the non-defaulting Underwriters shall not be obligated to purchase
the Shares that the defaulting Underwriter or Underwriters agreed to purchase in
excess of 10% of the total number of Shares that such non-defaulting Underwriter
agreed to purchase hereunder, and provided, further, that the non-defaulting
Underwriters shall not be obligated to purchase any Shares that the defaulting
Underwriter or Underwriters agreed to purchase if such additional purchase would
cause the Underwriter to be in violation of the net capital rule of the
Commission or other applicable law. If the total number of Shares that the
defaulting Underwriter or Underwriters agreed to purchase shall not be purchased
or absorbed in accordance with the two preceding sentences, the Selling
Stockholder shall have the right, within 24 hours next succeeding the 24-hour
period above referred to, to make arrangements with other underwriters or
purchasers satisfactory to you for the purchase of such Shares on the terms
herein set forth. In any such case, either you or the Selling Stockholder shall
have the right to postpone each Closing for not more than seven business days
after the date originally fixed as such Closing in order that any necessary
changes in the Registration Statement, the Prospectus or any other documents or
arrangements may be made. As used herein, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 10. If neither the
non-defaulting Underwriters nor the Selling Stockholder shall make arrangements
within the 24-hour periods stated above for the purchase of all the Shares that
the defaulting Underwriter or Underwriters agreed to purchase hereunder, this
Agreement shall be terminated without further act or deed and without any
liability on the pan of the Company or the Selling Stockholder to any
non-defaulting Underwriter.
Nothing contained herein shall relieve any defaulting Underwriter of its
liability, if any, to the Selling Stockholder or to the remaining Underwriters
for damages occasioned by its default hereunder.
SECTION 11. DEFAULT BY THE SELLING STOCKHOLDER.
If the Selling Stockholder shall fail at either Closing Date to sell and
deliver the number of Shares that she is obligated to sell, then this Agreement
shall terminate without any liability on the part of any non-defaulting party
except to the extent provided in Section 4 and except that the provisions of
Sections 7 and 8 shall remain in effect. No action taken pursuant to this
Section shall relieve the Selling Stockholder from liability, if any, in respect
of such default.
SECTION 12. NOTICES.
All notices and other communications under this Agreement shall be in
writing and shall be deemed to have been duly given if delivered, mailed or
transmitted by any standard form of telecommunication (notices transmitted by
telecopier to be promptly confirmed in writing). Notices to you or the
Underwriters shall be directed to you at 600 California Street, San Francisco,
CA 94108, attention of F. Van Kasper, telecopier: (415) 397-2744; notices to the
Company shall be directed to the Company at 2727 North Central Avenue, Phoenix,
Arizona 85004, attention of Gary V. Klinefelter, telecopier: (602) 722-5017; and
notices to the Selling Stockholder shall be directed to the Selling Stockholder
at 188 Yellowjacket Road, Post Office 524, Glenbrook, NV 89413, telecopier:
(702) 749-5930.
SECTION 13. PARTIES.
This Agreement is made solely for the benefit of the several Underwriters,
the Selling Stockholder and the Company and, to the extent expressed, any person
controlling the Company, the Selling Stockholder or any of the Underwriters, and
directors of the Company, the Selling Stockholder, their officers who have
signed the Registration Statement, and their respective executors,
administrators, successors and assigns and, subject to the provisions of Section
10, no other person shall acquire or have any fight under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser, as
such purchaser, from any of the several Underwriters of the Shares. All of the
obligations of the Underwriters hereunder are several and not joint.
24
<PAGE> 26
SECTION 14. GOVERNING LAW AND TIME.
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA.
UNLESS OTHERWISE SPECIFIED, TIMES OF THE DAY REFER TO PACIFIC TIME.
SECTION 15. COUNTERPARTS.
This Agreement may be executed in one or more counterparts and, when the
counterpart has been executed by each party, all such counterparts taken
together shall constitute and the same agreement.
SECTION 16. INFORMATION FURNISHED BY UNDERWRITERS.
For purposes of this Agreement, the statements set forth in the last
paragraph on the cover page and under the caption "Underwriting" in any
preliminary prospectus and the Prospectus constitute the written information
furnished by or on behalf of any Underwriter.
SECTION 17. SHARE REPURCHASE AND REGISTRATION RIGHTS AGREEMENT.
Nothing in this Agreement shall alter in any way the rights and obligations
of the Company and the Selling Stockholder pursuant to Section 3.07 of the Share
Repurchase and Registration Rights Agreement, dated as of March 1, 1992, among
the Company and the Selling Stockholder.
25
<PAGE> 27
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument
will become a binding agreement among the Company, the Selling Stockholder and
the several Underwriters in accordance with its terms.
Very truly yours,
AMERCO
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
PAUL F. SHOEN
--------------------------------------
Confirmed and accepted as of
the date first above written:
VAN KASPER & COMPANY
By:
- --------------------------------------
Name:
- --------------------------------------
Title:
- --------------------------------------
26
<PAGE> 28
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ---------------------------------------------------------------------------------- ---------
<S> <C>
Van Kasper & Company..............................................................
---------
Total........................................................................ 500,000
========
</TABLE>
<PAGE> 29
EXHIBIT A
AMERCO SUBSIDIARIES
<PAGE> 1
[FORM OF FACE OF SPECIMAN CERTIFICATE]
COMMON STOCK COMMON STOCK
GK__________ AMERCO ____________
INCORPORATED UNDER THE LAWS SEE REVERSE FOR
OF THE STATE OF NEVADA CERTAIN DEFINITIONS
CUSIP 023586 10 0
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK, PAR VALUE $.25, OF,
AMERCO
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this certificate properly
endorsed. This certificate is not valid until countersigned and registered by
the Transfer Agent and Registrar.
WITNESS in the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
/s/ /s/
______________________ [CORPORATE SEAL] ______________________
SECRETARY PRESIDENT
Countersigned and Registered:
CHEMICAL TRUST COMPANY OF CALIFORNIA
Transfer Agent and Registrar
By:_____________________________
Authorized Signature
<PAGE> 2
[FORM OF REVERSE OF SPECIMAN CERTIFICATE]
The Corporation will furnish to any stockholder, upon request and without
charge, a statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights, so far as the same shall have been fixed, and of the
authority of the Board of Directors to designate and fix any preferences,
rights and limitations of any wholly unissued series. Any such request should
be addressed to the Secretary of the Corporation at 1325 Airmotive Way, Suite
100, Reno, Nevada 89502-3239.
The following abbreviations, when used in the Inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entiretles
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT - _____________Custodian ______________
(Cust) (Minor)
under Uniform Gifts to Minors
Act ________________________________
(State)
UNIF TRF MIN ACT - _________ Custodian (until age _____)
(Cust)
___________ under Uniform Transfers
(Minor)
to Minors Act _______________________
(State)
Additional abbreviations may also be used though not in the above list
FOR VALUE REVEIVED, ______________________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
<TABLE>
<S> <C>
___________________________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)
___________________________________________________________________________________________________
___________________________________________________________________________________________________
____________________________________________________________________________________________________Shares
of the common stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
_________________________________________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises.
Dated__________________________________
X________________________________________
X________________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed
By_________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO
SEC RULE 17AG-15.
</TABLE>
<PAGE> 1
EXHIBIT 4(C)
RESTATED
BY-LAWS OF
AMERCO
A NEVADA CORPORATION
ARTICLE I
SECTION 1. Offices:
The principal office and registered office of the corporation shall be
located in the State of Nevada at such locations as the Board of Directors may
from time to time authorize by resolutions. The corporation may have such other
offices either within or without the State of Nevada as the Board of Directors
may designate or as the business of the corporation may require from time to
time.
SECTION 2. References:
Any reference herein made to law will be deemed to refer to the law of the
State of Nevada, including any applicable provisions of Chapter 78 of Title 7,
Nevada Revised Statutes (or its successor), as at any given time in effect. Any
reference herein made to the Articles will be deemed to refer to the applicable
provision or provisions of the Articles of Incorporation of the corporation, and
all amendments thereto, as at any given time on file with the office of the
clerk of Washoe County, Nevada.
SECTION 3. Shareholders of Record:
The word "shareholder" as used herein shall mean one who is a holder of
record of shares in the corporation.
ARTICLE II
SHAREHOLDERS
SECTION 1. Annual Meeting:
An annual meeting of the shareholders for the election of directors to
succeed those whose terms expire and for the transaction of such other business
as may properly come before the meeting shall be held, within a reasonable
interval after the close of the fiscal year so that the information in the
annual report is relatively timely, on a date and at a time of day and place as
determined by the Board of Directors.
SECTION 2. Special Meetings:
a. Special meetings of the shareholders may be held whenever and
wherever called by the Chairman of the Board, a majority of the Board of
Directors, or upon the delivery of proper written request of the holders of
not less than fifty percent (50%) of all the shares outstanding and
entitled to vote at such meeting. The business which may be conducted at
any such special meeting will be confined to the purpose stated in the
notice thereof, and to such additional matters as the Chairman of such
meeting may rule to be germane to such purposes.
b. For purposes of this Section, proper written request for the call
of a special meeting shall be made by a written request specifying the
purposes for any special meeting requested and providing the information
required by Section 5 hereof. Such written request must be delivered either
in person or by registered or certified mail, return receipt requested, to
the Chairman of the Board, or such other person as may be specifically
authorized by law to receive such request. Within thirty (30) days after
receipt of proper written request, a special meeting shall be called and
notice given in the manner required by these
1
<PAGE> 2
By-Laws and the meeting shall be held at a time and place selected by the
Board of Directors, but not later than ninety (90) days after receipt of
such proper written request. The shareholder(s) who request a special
meeting of shareholders must pay the corporation the corporation's
reasonably estimated cost of preparing and mailing a notice of a meeting of
shareholders before such notice is prepared and mailed.
SECTION 3. Notice:
Notice of any meeting of the shareholders will be given by the corporation
as provided by law to each shareholder entitled to vote at such meeting. Any
such notice may be waived as provided by law.
SECTION 4. Right to Vote:
For each meeting of the shareholders, the Board of Directors will fix in
advance a record date as contemplated by law, and the shares of stock and the
shareholders "entitled to vote" (as that or any similar term is herein used) at
any meeting of the shareholders will be determined as of the applicable record
date. The Secretary (or in his or her absence an Assistant Secretary) will see
to the making and production of any record of shareholders entitled to vote that
is required by law. Any such entitlement may be exercised through proxy, or in
such other manner as is specifically provided by law. No proxy shall be valid
after eleven (11) months from the date of its execution unless otherwise
provided by the proxy. In the event of contest, the burden of proving the
validity of any undated, irrevocable, or otherwise contested proxy will rest
with the person seeking to exercise the same. A telegram, cablegram, or
facsimile appearing to have been transmitted by a shareholder (or by his duly
authorized attorney-in-fact) may, in the discretion of the tellers, if any, be
accepted as a sufficiently written and executed proxy.
SECTION 5. Manner of Bringing Business Before the Meeting:
At any annual or special meeting of shareholders only such business
(including nomination as a director) shall be conducted as shall have been
properly brought before the meeting. In order to be properly brought before the
meeting, such business must be a proper subject for stockholder action under
Nevada law and must have either been (A) specified in the written notice of the
meeting (or any supplement thereto) given to shareholders on the record date for
such meeting by or at the direction of the Board of Directors, (B) brought
before the meeting at the direction of the Board of Directors or the Chairman of
the meeting, selected as provided in Section 9 of this Article II, or (C)
specified in a written notice given by or on behalf of a shareholder on the
record date for such meeting entitled to vote thereat or a duly authorized proxy
for such shareholder, in accordance with the following requirements. A notice
referred to in clause (C) hereof must be delivered personally to, or mailed to
and received at, the principal executive office of the corporation, addressed to
the attention of the Secretary, not more than ten (10) days after the date of
the initial notice referred to in clause (A) hereof, in the case of business to
be brought before a special meeting of shareholders, and not less than one
hundred and twenty (120) days prior to the anniversary date of the initial
notice referred to in clause (A) hereof with respect to the previous year's
annual meeting, in the case of business to be brought before an annual meeting
of shareholders. Such notice referred to in clause (C) hereof shall 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, if such date has been made publicly available, or as of a date not
later than thirty (30) days prior to the delivery of the initial notice referred
to in clause (A) hereof, if the record date has not been made publicly
available, (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 pursuant to Section 14 of the Securities Exchange Act of 1934, as
amended, or any successor thereto, and the written consent of each such nominee
to serve if elected, (v) any material interest of such shareholder in the
specified business, (vi) whether or not such shareholder 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
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corporation, and (vii) all other information that would be required to be filed
with the Securities and Exchange Commission 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 Securities
Exchange Act of 1934, as amended, or any successor thereto. No business shall be
brought before any meeting of the shareholders of the corporation otherwise than
as provided in this Section.
Notwithstanding compliance with the foregoing provisions, the Board of
Directors shall not be obligated to include information as to any shareholder
nominee for director or any other shareholder proposal in any proxy statements
or other communication sent to shareholders.
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.
SECTION 6. Right to Attend:
Except only to the extent of persons designated by the Board of Directors
or the Chairman of the meeting to assist in the conduct of the meeting, and
except as otherwise permitted by the Board or such Chairman, the persons
entitled to attend any meeting of shareholders may be confined to (i)
shareholders entitled to vote thereat and (ii) the persons upon whom proxies
valid for purposes of the meeting have been conferred or their duly appointed
substitutes (if the related proxies confer a power of substitution); provided,
however, that the Board of Directors or the Chairman of the meeting may
establish rules limiting the number of persons referred to in clause (ii) as
being entitled to attend on behalf of any shareholder so as to preclude such an
excessively large representation of such shareholder at the meeting as, in the
judgment of the Board or such Chairman, would be unfair to other shareholders
represented at the meeting or be unduly disruptive to the orderly conduct of
business at such meeting (whether such representation would result from
fragmentation of the aggregate number of shares held by such shareholder for the
purpose of conferring proxies, from the naming of an excessively large proxy
delegation by such shareholder, or from employment of any other device). A
person otherwise entitled to attend any such meeting will cease to be so
entitled if, in the judgment of the Chairman of the meeting, such person engages
thereat in disorderly conduct impeding the proper conduct of the meeting in the
interests of all shareholders as a group.
SECTION 7. Quorum Requirements:
One-third of the outstanding shares of the corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of the
shareholders. If less than one-third of the outstanding shares are represented
at a meeting, the majority of the shares so represented may adjourn the meeting
without further notice. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting originally called.
SECTION 8. Tellers:
The Board of Directors, in advance of any shareholders meeting may appoint
one or more tellers to act at such meeting (and any adjournment thereof), and
may appoint one or more alternate tellers to serve (in the order designated) in
the absence of any teller or tellers so appointed. If any person appointed as a
teller or alternate teller fails to appear or to act, a substitute may be
appointed by the Chairman of the meeting. The tellers (acting through a majority
of them on any disputed matter) will determine the number of shares outstanding,
the authenticity, validity and effect of proxies, the credentials of persons
purporting to be shareholders or persons named or referred to in proxies, and
the number of shares represented at the meeting in person and by proxy; they
will receive and count votes, ballots, and consents and announce the results
thereof; they will hear and determine all challenges and questions pertaining to
proxies and voting; and, in general, they will perform such acts as may be
proper to conduct elections and voting with complete fairness to all
shareholders.
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No such teller need be a shareholder of the corporation. Unless otherwise
provided in the Articles of Incorporation or other governing instrument, each
shareholder shall be entitled to one vote for each share of stock held by him or
her, and, in the event a shareholder holds a fraction of a share or a full share
plus a fraction, any such fractional share shall be entitled to a proportionate
fraction of one vote or such other votes,
if any, as is provided in the Articles of Incorporation or other governing
instrument.
SECTION 9. Organization and Conduct of Business:
Each shareholders meeting will be called to order and thereafter chaired by
the Chairman of the Board if there then is one; or, if not, or if the Chairman
of the Board is absent or so requests, then by the President; or if both the
Chairman of the Board and the President are unavailable, then by such other
officer of the corporation or such shareholder as may be appointed by the Board
of Directors. The Secretary (or in his or her absence an Assistant Secretary) of
the corporation will act as secretary of each shareholders meeting; if neither
the Secretary nor an Assistant Secretary is in attendance, the Chairman of the
meeting may appoint any person (whether a shareholder or not) to act as
secretary thereat. After calling a meeting to order, the Chairman thereof may
require the registration of all shareholders intending to vote in person, and
the filing of all proxies, with the teller or tellers, if one or more have been
appointed (or, if not, with the secretary of the meeting). After the announced
time for such filing of proxies has ended, no further proxies or changes,
substitutions, or revocations of proxies will be accepted. The Chairman of a
meeting will, among other things, have absolute authority to determine the order
of business to be conducted at such 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). Any informational or other informal session of shareholders conducted
under the auspices of the corporation after the conclusion of or otherwise in
conjunction with any formal business meeting of the shareholders will be chaired
by the same person who chairs the formal meeting, and the foregoing authority on
his or her part will extend to the conduct of such informal session.
SECTION 10. Voting:
The number of shares voted on any matter submitted to the shareholders
which is required to constitute their action thereon or approval thereof will be
determined in accordance with applicable law, the Articles, and these By-Laws,
if applicable. Voting will be by ballot on any matter as to which a ballot vote
is demanded, prior to the time the voting begins, by any person entitled to vote
on such matter; otherwise, a voice vote will suffice. No ballot or change of
vote will be accepted after the polls have been declared closed following the
ending of the announced time for voting.
SECTION 11. Shareholder Approval or Ratification:
The Board of Directors may submit any contract or act for approval or
ratification at any duly constituted meeting of the shareholders, the notice of
which either includes mention of the proposed submittal or is waived as provided
by law. If any contract or act so submitted is approved or ratified by a
majority of the votes cast thereon at such meeting, the same will be valid and
as binding upon the corporation and all of its shareholders as it would be if
approved and ratified by each and every shareholder of the corporation.
SECTION 12. Informalities and Irregularities:
All informalities or irregularities in any call or notice of a meeting, or
in the areas of credentials, proxies, quorums, voting, and similar matters, will
be deemed waived if no objection is made at the meeting.
SECTION 13. Action Without a Meeting:
Shareholder action by written consent is prohibited.
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SECTION 14. Application of Nevada Revised Statutes Sections 78.378 to 78.3793,
inclusive:
The provisions of Sections 78.378 to 78.3793, inclusive, of the Nevada
Revised Statutes shall not apply to the exchange of shares of the corporation's
Series A Common Stock, 0.25 par value, for shares of the corporation's Common
Stock, $0.25 par value, held by Mark V. Shoen, James P. Shoen and Edward J.
Shoen or to any exchange of shares of the corporation's Common Stock, $0.25 par
value for shares of the corporation's Series A Common Stock, $0.25 par value
held by Mark V. Shoen, James P. Shoen and Edward J. Shoen.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. Number and Term of Directors:
The Board of Directors shall consist of not less than 4 nor more than 8
directors, the exact number of directors to be determined from time to time
solely by a resolution adopted by an affirmative vote of a majority of the
entire Board of Directors. The directors shall be divided into four classes,
designated Class I, Class II, Class III and Class IV. Subject to applicable law,
each class shall consist, as nearly as may be possible, of one-fourth of the
total number of directors constituting the entire Board of Directors. At the
1990 Annual Meeting of Shareholders, Class I directors shall be elected for a
one-year term, Class II directors for a two-year term, Class III directors for a
three-year term, and Class IV directors for a four-year term. At each succeeding
annual meeting of shareholders, commencing in 1991, successors to the class of
directors whose term expires at the annual meeting shall be elected or reelected
for a four-year term.
If the number of directors is changed, any increase or decrease shall be
apportioned among the classes of directors so as to maintain the number of
directors in each class as nearly equal as possible, but in no case will a
decrease in the number of directors shorten the term of any incumbent director.
When the number of directors is increased by the Board of Directors and any
newly created directorships are filled by the Board, there shall be no
classification of the additional directors until the next annual meeting of
shareholders.
A director shall hold office until the meeting for the year in which his or
her term expires and until his or her successor shall be elected and shall
qualify, subject, however, to prior death, resignation, retirement,
disqualification or removal from office.
SECTION 2. Vacancies:
Newly created directorships resulting from an increase in the number of the
directors and any vacancy on the Board of Directors shall be filled by an
affirmative vote of a majority of the Board of Directors then in office. A
director elected by the Board of Directors to fill a vacancy shall hold office
until the next meeting of shareholders called for the election of directors and
until his or her successor shall be elected and shall qualify; provided,
however, that if a vacancy on the Board of Directors occurs or is filled after
the date by which a shareholder, acting in accordance with Article II, Section
5(C) of these By-Laws, may present a director nomination before the next meeting
of shareholders called for the election of directors, the director elected by
the Board of Directors to fill such vacancy shall hold office until the next
meeting of shareholders called for the election of directors at which a
shareholder, acting in accordance with Article II, Section 5(C) of these
By-Laws, may present a director nomination. This Section shall not apply to any
vacancies in the office of any "Preferred Stock Director," as defined in section
(e)(ii) of the Certificate of Designation, Preference, and Rights of Series A
Preferred Stock of AMERCO dated October 14, 1993, such vacancies shall be filled
pursuant to the terms of said section (e)(ii).
SECTION 3. Regular Meetings:
After the adjournment of the annual meeting of the shareholders of the
corporation, the newly elected Directors shall meet for the purpose of
organization, the election of officers, and the transaction of such other
business as may come before said meeting. No notice shall be required for such
meeting. The meeting may be
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held within or without the State of Nevada. Regular meetings, other than the
annual ones, may be held at regular intervals at such times and places as the
Board of Directors may provide.
SECTION 4. Special Meetings:
Special meetings of the Board of Directors may be called at any time by the
President or by any one member of the Board giving written notice thereof to the
President of said corporation, or said special meeting may be called without
notice by unanimous consent of all the members by the presence of all the
members of said board at any such meeting. The special meetings of the Board of
Directors may be held within or without the State of Nevada.
SECTION 5. Notice:
No notice need be given of regular meetings of the Board of Directors.
Notice of the time and place (but not necessarily the purpose or all of the
purposes) of any special meeting will be given to each director in person or by
telephone, or via mail or telegram addressed in the manner then appearing on the
corporation's records. Notice to any director of any such special meeting will
be deemed given sufficiently in advance when (i), if given by mail, the same is
deposited in the United States mail at least four days before the meeting date,
with postage thereon prepaid, (ii) if given by telegram, the same is delivered
to the telegraph office for fast transmittal at least 48 hours prior to the
convening of the meeting, (iii) if given by facsimile transmission, the same is
received by the director or an adult member of his or her office staff or
household, at least 24 hours prior to the convening of the meeting, or (iv) if
personally delivered or given by telephone, the same is handed, or the substance
thereof is communicated over the telephone, to the director or to an adult
member of his or her office staff or household, at least 24 hours prior to the
convening of the meeting. Any such notice may be waived as provided by law. No
call or notice of a meeting of directors will be necessary if each of them
waives the same in writing or by attendance. Any meeting, once properly called
and noticed (or as to which call and notice have been waived as aforesaid) and
at which a quorum is formed, may be adjourned to another time and place by a
majority of those in attendance.
SECTION 6. Quorum:
A majority of the Board of Directors shall constitute a quorum for the
transaction of business, except where otherwise provided by law or by these
By-Laws, but if at any meeting of the Board less than a quorum is present, a
majority of those present may adjourn the meeting from time to time until a
quorum is obtained.
SECTION 7. Action by Telephone or Consent:
Any meeting of the Board or any committee thereof may be held by conference
telephone or similar communications equipment as permitted by law in which case
any required notice of such meeting may generally describe the arrangements
(rather than the place) for the holding thereof, and all other provisions herein
contained or referred to will apply to such meeting as though it were physically
held at a single place. Action may also be taken by the Board or any committee
thereof without a meeting if the members thereof consent in writing thereto as
contemplated by law.
SECTION 8. Order of Business:
The Board of Directors may, from time to time, determine the order of
business at their meeting. The usual order of business at such meetings shall be
as follows:
1st Roll Call; a quorum being present.
2nd Reading of minutes of the preceding meeting and action thereon.
3rd Consideration of communications of the Board of Directors.
4th Reports of officials and committees.
5th Unfinished business.
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6th Miscellaneous business.
7th New business.
8th Adjournment.
SECTION 9. Voting:
Any matter submitted to a vote of the directors will be resolved by a
majority of the votes cast thereon. If during the course of any annual, regular
or special meeting of the Board of Directors, at which all the members of said
board are present and vote, there is a vote taken and the vote is evenly divided
between equal numbers of directors, then, and only then, the Chairman of the
Board of Directors shall break the deadlock by casting a second and deciding
vote. This power may be exercised by the Chairman of the Board as to any and
every issue that properly comes to the board for a vote, including, but not
limited to the election of officers.
ARTICLE IV
POWER OF DIRECTORS
SECTION 1. Generally:
The Government in control of the corporation shall be vested in the Board
of Directors.
SECTION 2. Special Powers:
The Board of Directors shall have, in addition to its other powers, the
express right to exercise the following powers:
1. To purchase, lease, and acquire, in any lawful manner any and all
real or personal property including franchises, stocks, bonds and
debentures of other companies, business and goodwill, patents, trademarks
in contracts, and interests thereunder, and other rights and properties
which in their judgment may beneficial for the purpose of this corporation,
and to issue shares of stock of this corporation in payment of such
property, and in payment for services rendered to this corporation when
they deem it advisable.
2. To fix and determine and to vary, from time to time, the amount or
amounts to be set aside or retained as reserve funds or as working capital
of this corporation.
3. To issue notes and other obligations or evidence of the debt of
this corporation, and to secure the same, if deemed advisable, and endorse
and guarantee the notes, bonds, stocks, and other obligations of other
corporations with or without compensation for so doing, and from time to
time to sell, assign, transfer or otherwise dispose of any of the property
of this corporation, subject, however, to the laws of the State of Nevada,
governing the disposition of the entire assets and business of the
corporation as a going concern.
4. To declare and pay dividends, both in the form of money and stock,
but only from the surplus or from the net profit arising from the business
of this corporation, after deducting therefrom the amounts, at the time
when any dividend is declared which shall have been set aside by the
Directors as a reserve fund or as a working fund.
5. To adopt, modify and amend the By-Laws of this corporation.
6. To periodically determine by Resolution of the Board the amount of
compensation to be paid to members of the Board of Directors in accordance
with Article 6, Section B, Sub-section viii of the Articles of
Incorporation.
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ARTICLE V
SECTION 1. Committees:
From time to time the Board of Directors, by affirmative vote of a majority
of the whole Board may appoint any committee or committees for any purpose or
purposes, and such committee or committees shall have and may exercise such
powers as shall be conferred or authorized by the resolution of appointment.
Provided, however, that such committee or committees shall at no time have more
power than that authorized by law.
ARTICLE VI
OFFICERS
SECTION 1. Officers:
The officers of the corporation shall consist of the Chairman of the Board,
a President, one or more Vice-Presidents, Secretary, Assistant Secretaries,
Treasurer, Assistant Treasurer, a resident agent and such other officers as
shall from time to time be provided for by the Board of Directors. Such officers
shall be elected by ballot or unanimous acclamation at the meeting of the Board
of Directors after the annual election of Directors. In order to hold any
election there must be quorum present, and any officer receiving a majority vote
shall be declared elected and shall hold office for one year and until his or
her respective successor shall have been duly elected and qualified; provided,
however, that all officers, agents and employees of the corporation shall be
subject to removal from office pre-emptorily by vote of the Board of Directors
at any meeting.
SECTION 2. Powers and Duties of Chairman of the Board:
The Chairman of the Board of Directors will serve as a general executive
officer, but not necessarily as a full-time employee, of the corporation. He or
she shall preside at all meetings of the shareholders and of the Board of
Directors, shall have the powers and duties set forth in these By-Laws, and
shall do and perform such other duties as from time to time may be assigned by
the Board of Directors.
SECTION 3. Powers and Duties of President:
The President shall at all times be subject to the control of the Board of
Directors. He shall have general charge of the affairs of the corporation. He
shall supervise over and direct all officers and employees of the corporation
and see that their duties are properly performed. The President, in conjunction
with the Secretary, shall sign and execute all contracts, notes, mortgages, and
all other obligations in the name of the corporation, and with the Secretary or
Assistant Secretary shall sign all certificates of the shares of the capital
stock of the corporation.
The President shall each year present an annual report of the preceding
year's business to the Board of Directors at a meeting to be held immediately
preceding the annual meeting of the shareholders, which report shall be read at
the annual meeting of the shareholders. The President shall do and perform such
other duties as from time to time may be assigned by the Board of Directors to
him.
Notwithstanding any provision to the contrary contained in the By-Laws of
the corporation, the Board may at any time and from time to time direct the
manner in which any person or persons by whom any particular contract, document,
note or instrument in writing of the corporation may or shall be signed by and
may authorize any officer or officers of the corporation to sign such contracts,
documents, notes or instruments.
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SECTION 4. Powers and Duties of Vice-President:
The Vice-President shall have such powers and perform such duties as may be
assigned to him by the Board of Directors of the corporation and in the absence
or inability of the President, the Vice-President shall perform the duties of
the President.
SECTION 5. Powers and Duties of the Secretary and Assistant Secretary:
The Secretary of said corporation shall keep the minutes of all meetings of
the Board of Directors and the minutes of all meetings of the shareholders, and
also when requested by a committee, the minutes of such committee, in books
provided for the purpose. He shall attend to the giving and serving of notice of
the corporation. It shall be the duty of the Secretary to sign with the
President, in the name of the corporation, all contracts, notes, mortgages, and
other instruments and other obligations authorized by the Board of Directors,
and when so ordered by the Board of Directors, he shall affix the Seal of
corporation thereto. The Secretary shall have charge of all books, documents,
and papers properly belonging to his office, and of such other books and papers
as the Board of Directors may direct. In the absence or inability of the
Secretary, the Assistant Secretary shall perform the duties of the Secretary.
Execution of Instruments:
In addition to the provisions of any previous By-Laws respecting the
execution of instruments of the corporation, the Board of Directors may from
time to time direct the manner in which any officer or officers or by whom any
particular deed, transfer, assignment, contract, obligation, certificate,
promissory note, guarantee and other instrument or instruments may be signed on
behalf of the corporation and any acts of the Board of Directors subsequent to
the 1st day of December, 1978 in accordance with the provision of this By-Law
are hereby adopted, ratified and confirmed as actions binding upon and
enforceable against the corporation.
SECTION 6. Powers and Duties of Treasurer and Assistant Treasurer:
The Treasurer shall have the care and custody of all funds and securities
of the corporation, and deposit the same in the name of the corporation in such
bank or banks or other depository as the Directors may select. He shall sign
checks, drafts, notices, and orders for the payment of money, and he shall pay
out and dispose of the same under the direction of the Board of Directors, but
checks may be signed as directed by the Board by resolution. The Treasurer shall
generally perform the duties of and act as the financial agent for the
corporation for the receipts and disbursements of its funds. He shall give such
bond for the faithful performance of his duties as the Board of Directors may
determine. The office of the Treasurer of said corporation may be held by the
same person holding the President, Vice-President or Secretary's office,
provided the Board of Directors indicates the combination of these offices. In
the absence or inability of the Treasurer, the Assistant Treasurer shall perform
the duties of the Treasurer.
SECTION 7. Indemnification:
The corporation shall indemnify, to the fullest extent authorized or
permitted by law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than such law permitted
the corporation to provide prior to such amendment), any person made, or
threatened to be made, a defendant or witness to any threatened, pending or
completed action, suit, or proceeding (whether civil, criminal, administrative,
investigative or otherwise) by reason of the fact that he or she, or his or her
testator or intestate, is or was a director or officer of the corporation or by
reason of the fact that such director or officer, at the request of the
corporation, is or was serving any other corporation, partnership, joint
venture, trust, employee benefit plan, or other enterprise. Nothing contained
herein shall diminish any rights to indemnification to which employees or agents
other than directors or officers may be entitled by law, and the corporation may
indemnify such employees and agents to the fullest extent and in the manner
permitted by law. The rights to indemnification set forth in this Article VI,
Section 7 shall not be exclusive of any other rights to which any
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person may be entitled under any statute, provision of the Articles of
Incorporation, bylaw, agreement, contract, vote of shareholders or disinterested
directors, or otherwise.
In furtherance and not in limitation of the powers conferred by statute:
1. The corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
corporation, or is serving in any capacity, at the request of the
corporation, any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against any liability or expense
incurred by him or her in any such capacity, or arising out of his or her
status as such, whether or not the corporation would have the power to
indemnify him or her against such liability or expense under the provisions
of law; and
2. The corporation may create a trust fund, grant a security interest
or lien on any assets of the corporation and/or use other means (including,
without limitation, letters of credit, guaranties, surety bonds and/or
other similar arrangements), and enter into contracts providing
indemnification to the full extent authorized or permitted by law and
including as part thereof provisions with respect to any or all of the
foregoing to ensure the payment of such amounts as may become necessary to
effect indemnification as provided therein, or elsewhere.
ARTICLE VII
STOCK AND CERTIFICATES AND TRANSFERS
SECTION 1. Stock and Certificates and Transfers:
All certificates for the shares of the capital stock of the corporation
shall be signed by the President or Vice-President, and Secretary or Assistant
Secretary. Each certificate shall show upon its face that the corporation is
organized under the laws of Nevada, the number and par value, if any, of each
share represented by it, and the name of the person owning the shares
represented thereby, with the number of each share and the date of issue. The
transfer of any share or shares of stock in the corporation may be made by
surrender of the certificate issued therefor, and the written assignment thereof
by the owner or his duly authorized Attorney in Fact. Upon such surrender and
assignment, a new certificate shall be issued to the Assignee as he may be
entitled, but without such surrender and assignment no transfer of stock shall
be recognized by the corporation. The Board of Directors shall have the power
concerning the issue, transfer and registration of certificates for agents and
registrars of transfer, and may require all stock certificates to bear
signatures of either or both. The stock transfer books shall be closed ten days
before each meeting of the shareholders and during such period no stock shall be
transferred.
SECTION 2. Right of First Refusal on Its Common Stock, $0.25 par value:
a. In case any holder of shares of the corporation's common stock,
$0.25 par value, and Series A Common Stock, $0.25 par value (collectively,
the "Common Stock") shall wish to make any sale, transfer or other
disposition of all or any part of the Common Stock held by him, he shall
first notify the Secretary of the corporation in writing designating the
number of shares of Common Stock which he desires to dispose of, the
name(s) of the person(s) to whom such shares are to be disposed of, and the
bona fide cash price at which such shares are to be disposed of.
b. The corporation shall have a period of 30 calendar days following
the date of its receipt of such notice to determine whether it wishes to
purchase such shares at the price stated therein. Such determination shall
be made by the corporation by its delivery to such holder of a written
acceptance of such offer within such 30-day period. Such written acceptance
shall specify the date (to be not later than the tenth calendar day
following the date on which such 30-day period expired), time and place at
which such holder shall deliver to the corporation the certificate(s) for
the shares of Common Stock to be so sold against the delivery by the
corporation of a certified or bank cashier's check in the amount of the
purchase price therefor.
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c. If the corporation shall not so accept such offer within such
30-day period, then such holder shall be entitled, for a period of 90 days
commencing on the first day after the date on which such 30-day period
expires, to dispose of all or any part of the shares of Common Stock
designated in such notice to the corporation at the price set forth therein
to the prospective named transferee(s) and such transferee(s) shall be
entitled to have such shares transferred upon the books of the corporation
upon its acquisition thereof at such price. If such holder shall not
dispose of all or any part of such shares within such 90-day period (or, in
the event of a sale of part thereof, the shares remaining untransferred),
such shares shall continue to be subject in all respects to the provision
of this Article VII, Sec. 2.
d. All certificates for shares of Common Stock shall, so long as the
provisions of this Article VII, Sec. 2 shall be in effect, bear the
following legend:
"The transfer of the shares represented by this certificate is
subject to a right of first refusal by the corporation as provided in
its By-Laws, and no transfer of this certificate or the shares
represented hereby shall be valid or effective unless and until such
provision of the By-Laws shall have been met. A copy of the By-Laws
of the corporation is available for inspection at the principal
office of the corporation."
e. The provisions of this Article VII, Sec. 2 may be terminated or
modified at any time by the affirmative vote of not less than a majority of
the then number of directors of the corporation. Each holder of shares of
Common Stock shall be notified of any such termination and shall have the
right to exchange his outstanding certificate for such shares for a
certificate without the aforesaid legend.
f. The provisions of this Article VII, Sec. 2 may be extended to other
classes or series of the corporation's stock prior to the issuance thereof
upon the affirmative vote of not less than a majority of the then number of
directors of the corporation.
g. The provisions of Section 2 of Article VII shall not apply to
shares of the corporation's Common Stock (i) sold, transferred, or
otherwise disposed of by the Trust under the AMERCO Employee Savings,
Profit Sharing and Employee Stock Ownership Plan, (ii) sold in a bona fide
underwritten public offering or in a bona fide public distribution pursuant
to Rule 144 under the Securities Act of 1933 (provided however that if such
public distribution is pursuant to Rule 144(k) then, notwithstanding the
provisions of Rule 144(k), such distribution shall comply with the "manner
of sale" requirements of Rule 144(f) and (g)), or (iii) sold, transferred,
or otherwise disposed of by a member of the public who acquired such Common
Stock in a transaction permitted by this Paragraph g.
SECTION 3. Lost Certificates:
In the event of the loss, theft or destruction of any certificate
representing shares of stock of this corporation, the corporation may issue (or,
in the case of any such stock as to which a transfer agent and/or registrar have
been appointed, may direct such transfer agent and/or register to countersign,
register and issue) a replacement certificate in lieu of that alleged to be
lost, stolen or destroyed, and cause the same to be delivered to the owner of
the stock represented thereby, provided that the owner shall have submitted such
evidence showing the circumstances of the alleged loss, theft or destruction,
and his or her ownership of the certificate as the corporation considers
satisfactory, together with any other facts which the corporation considers
pertinent, and further provided that an indemnity agreement and/or indemnity
bond shall have been provided in form and amount satisfactory to the corporation
and to its transfer agents and/or registrars, if applicable.
ARTICLE VIII
FISCAL YEAR
SECTION 1. Fiscal Year:
The fiscal year of the corporation shall be fixed by resolution of the
Board of Directors.
11
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ARTICLE IX
AMENDMENT OF BY-LAWS
SECTION 1. Amendment of By-Laws by the Board of Directors:
The By-Laws may be amended by a majority vote of the Board of Directors of
this corporation at any meeting of the Board of Directors.
SECTION 2. Shareholder Amendment of By-Laws:
The By-Laws may be amended by an affirmative vote of shares possessing
two-thirds or more of the votes that are generally (not just as the result of
the occurrence of a contingency) entitled to vote for the election of the
members of the Board of Directors of this corporation. Such vote must be by
ballot at a duly constituted meeting of the shareholders, the notice of which
meeting must include the proposed amendment.
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EXHIBIT 5
February 16, 1995
AMERCO
1325 Airmotive Way, Suite 100
Reno, Nevada 89502
RE: Registration Statement on Form S-3, Registration No. 33-57125
Gentlemen:
You have requested our opinion as special Nevada counsel for AMERCO, a
Nevada corporation ("AMERCO"), in connection with the registration of 500,000
shares of Common Stock currently held by Paul F. Shoen ("Paul F. Shoen Common
Stock"). The Paul F. Shoen Common Stock is the subject of a Registration
Statement on Form S-3, Registration No. 33-57125 (the "Registration Statement").
In connection with this opinion, we have examined:
1. Registration Statement;
2. the Articles of Incorporation of AMERCO, as amended, certified by
the Nevada Secretary of State;
3. the By-Laws of AMERCO certified by the Secretary of AMERCO;
4. resolutions heretofore adopted by the Board of Directors of AMERCO
authorizing the issuance of the Paul F. Shoen Common Stock;
5. a copy of the stock certificate representing the Paul F. Shoen
Common Stock; and
6. opinion of Snell & Wilmer, in the form attached hereto as Exhibit
A.
We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of natural
persons and the conformity to originals of all copies of all documents submitted
to us. We have relied upon the certificates of all public officials and
corporate officers with respect to the accuracy of all matters contained
therein. We have relied upon the opinion of Snell & Wilmer as to matters
contained therein.
In rendering the opinion set forth herein, we have further assumed the
Registration Statement being declared effective by the Securities and Exchange
Commission (the "Commission").
Based upon the foregoing, we are of the opinion that:
1. The shares of Paul F. Shoen Common Stock issued by AMERCO to Paul
F. Shoen are validly issued, fully paid and nonassessable.
2. Under the laws of the State of Nevada, no personal liability will
attach to the holders of any of the Paul F. Shoen Common Stock by reason of
their ownership thereof.
We disclaim liability as an expert under the securities laws of the United
States or any other jurisdiction.
Nothing herein shall be deemed an opinion as to the laws of any
jurisdiction other than the State of Nevada.
This opinion is intended solely for the use of AMERCO in connection with
the registration of the Paul F. Shoen Common Stock. It may not be relied upon by
any other person or for any other purpose, or reproduced or filed publicly by
any person, without the written consent of this firm; provided, however, we
hereby consent to the filing of this opinion as Exhibit 5 to the Registration
Statement and to the references to this firm contained in the Registration
Statement.
Very truly yours,
LIONEL SAWYER & COLLINS
<PAGE> 2
EXHIBIT A
February 16, 1995
AMERCO
1325 Airmotive Way
Suite 100
Reno, Nevada 89502-3239
Gentlemen:
We are familiar with the pleadings and rulings in the action pending in the
Superior Court of Arizona in and for the county of Maricopa entitled Samuel W.
Shoen, M.D., et al. v. Edward J. Shoen, et al. (No. CV88-20139) (the
"Shareholder Litigation") and with the contested issues in the private
arbitration proceedings commenced by Sophia M. Shoen and Paul F. Shoen (the
"Arbitration"). Based upon our familiarity with the foregoing, it is our opinion
that as of the date of this opinion nothing in the Shareholder Litigation or the
Arbitration impairs the right, power, and authority of AMERCO, acting through
its current officers and directors, to authorize, execute, and file with the
Securities and Exchange Commission the Registration Statement on Form S-3
registering 500,000 shares of Common Stock held by Paul F. Shoen.
Nothing herein shall be deemed an opinion as to the laws of any
jurisdiction other than the State of Arizona.
We hereby consent to the filing of this opinion as an exhibit to Exhibit 5
to the Registration Statement on Form S-3, Registration No. 33-57125, filed by
AMERCO with the Securities and Exchange Commission and to the references to this
firm contained in such Registration Statement.
Very truly yours,
SNELL & WILMER
<PAGE> 1
EXHIBIT 23(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
June 24, 1994, except as to Notes 14 and 21, which are as of August 15, 1994 and
October 13, 1994, respectively, appearing on page F-2 of AMERCO's Registration
Statement No. 33-54289, filed with the Securities and Exchange Commission, for
the year ended March 31, 1994. Such report includes an explanatory paragraph
related to the uncertainty surrounding certain litigation. We also consent to
the references to us under the headings "Summary Consolidated Financial Data",
"Selected Consolidated Financial Data" and "Experts" in such Prospectus.
However, it should be noted that Price Waterhouse LLP has not prepared or
certified such "Summary Consolidated Financial Data" or "Selected Consolidated
Financial Data."
PRICE WATERHOUSE LLP
February 15, 1995
Phoenix, Arizona
