<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission Registrant, State of Incorporation I.R.S. Employer
File Number Address and Telephone Number Identification No.
_______________________________________________________________________
0-7862 AMERCO 88-0106815
(A Nevada Corporation)
1325 Airmotive Way, Ste. 100
Reno, Nevada 89502-3239
Telephone (702) 688-6300
2-38498 U-Haul International, Inc. 86-0663060
(A Nevada Corporation)
2727 N. Central Avenue
Phoenix, Arizona 85004
Telephone (602) 263-6645
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ].
20,364,087 shares of AMERCO Common Stock, $0.25 par value were
outstanding at October 31, 1996.
5,385 shares of U-Haul International, Inc. Common Stock, $0.01 par
value, were outstanding at October 31, 1996.August 11, 1995 U-Haul
International, Inc. meets the conditions set forth in General
Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this
form with the reduced disclosure format.
<PAGE> 2
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
a) Consolidated Balance Sheets as of September 30, 1996,
March 31, 1996 and September 30, 1995................ 4
b) Consolidated Statements of Earnings for the Six
Months ended September 30, 1996 and 1995............. 6
c) Consolidated Statements of Changes in Stockholders'
Equity for the Six Months ended September 30, 1996
and 1995............................................. 7
d) Consolidated Statements of Earnings for the
Quarters ended September 30, 1996 and 1995........... 9
e) Consolidated Statements of Cash Flows for the
Six Months ended September 30, 1996 and 1995......... 10
f) Notes to Consolidated Financial Statements -
September 30, 1996, March 31, 1996 and
September 30, 1995................................... 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................ 28
Item 6. Exhibits and Reports on Form 8-K......................... 29
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INTENTIONALLY BLANK
<PAGE> 4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Balance Sheets
September 30, March 31, September 30,
ASSETS 1996 1996 1995
----------------------------------
(unaudited) (audited) (unaudited)
(in thousands)
Cash and cash equivalents $ 32,380 31,168 33,283
Receivables 311,480 340,564 338,489
Inventories 54,718 45,891 51,402
Prepaid expenses 11,060 16,415 12,693
Investments, fixed maturities 879,699 879,702 800,481
Investments, other 162,697 126,587 139,713
Deferred policy acquisition costs 56,171 49,995 51,304
Other assets 56,508 20,941 18,725
---------------------------------
Property, plant and equipment, at
cost:
Land 214,853 212,593 210,928
Buildings and improvements 800,760 769,380 738,535
Furniture and equipment 191,826 188,734 184,189
Rental trailers and other rental
equipment 150,388 256,411 258,264
Rental trucks 950,209 968,131 933,013
General rental items 22,290 24,197 49,581
---------------------------------
2,330,326 2,419,446 2,374,510
Less accumulated depreciation 1,077,193 1,102,731 1,131,339
---------------------------------
Total property, plant and
equipment 1,253,133 1,316,715 1,243,171
---------------------------------
$ 2,817,846 2,827,978 2,689,261
================================
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE> 5
September 30, March 31, September 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1996 1995
---------------------------------------
(unaudited) (audited) (unaudited)
(in thousands)
Liabilities:
Accounts payable and accrued
liabilities $ 153,732 151,754 150,198
Notes and loans 940,282 998,220 796,738
Policy benefits and losses, claims
and loss expenses payable 485,932 483,561 475,220
Liabilities from premium deposits 435,789 410,787 374,407
Cash overdraft 22,740 32,159 23,450
Other policyholders' funds and
liabilities 31,711 25,713 25,843
Deferred income 36,694 2,926 9,533
Deferred income taxes 57,936 73,310 92,008
----------------------------------
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 as of September 30, 1996,
March 31, 1996 and September 30, 1995 - - -
Series B preferred stock, with no par
value, 100,000 shares authorized;
100,000 shares issued and
outstanding as of September 30, 1996,
none issued and outstanding as of
March 31, 1996 and September 30, 1995 - - -
Serial common stock, with or
without par value, 150,000,000
shares authorized, none issued
and outstanding - - -
Series A common stock of $0.25 par
value, 10,000,000 shares authorized,
5,762,495 shares issued as of
September 30, 1996, March 31, 1996,
and September 30, 1995 1,441 1,441 1,441
Common stock of $0.25 par value,
150,000,000 shares authorized,
34,237,505 shares issued as of
September 30, 1996, March 31, 1996,
and September 30, 1995 8,559 8,559 8,559
Additional paid-in capital 264,378 165,756 165,675
Foreign currency translation (12,451) (11,877) (10,609)
Unrealized gain(loss) on investments 315 11,097 6,771
Retained earnings 680,279 609,019 605,616
---------------------------------
942,521 783,995 777,453
Less:
Cost of common shares in treasury,
(15,599,609 shares as of September 30,
1996, 7,209,077 shares as of March 31,
1996, 1,380,937 shares as of
September 30, 1995) 266,315 111,118 11,457
Unearned employee stock
ownership plan shares 23,176 23,329 24,132
---------------------------------
Total stockholders' equity 653,030 649,548 741,864
Contingent liabilities and commitments
---------------------------------
$ 2,817,846 2,827,978 2,689,261
=================================
<PAGE> 6
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Earnings
Six Months ended September 30,
(Unaudited)
1996 1995
---------------------
(in thousands except
per share data)
Revenues
Rental and other revenue $ 555,055 504,429
Net sales 107,192 102,675
Premiums 72,749 71,385
Net investment income 25,140 23,287
---------------------
Total revenues 760,136 701,776
Costs and expenses
Operating expense 406,130 353,185
Advertising expense (see note 9) 16,014 24,061
Cost of sales 62,639 58,001
Benefits and losses 66,716 68,099
Amortization of deferred acquisition
costs 8,057 7,799
Depreciation 38,719 76,275
Interest expense 35,282 35,554
---------------------
Total costs and expenses 633,557 622,974
Pretax earnings from operations 126,579 78,802
Income tax expense (46,833) (28,293)
---------------------
Earnings from operations before
extraordinary loss on early
extinguishment of debt 79,746 50,509
Extraordinary loss on early
extinguishment of debt, net (2,004) -
---------------------
Net earnings $ 77,742 50,509
=====================
Earnings per common share:
Earnings from operations before
extraordinary loss on early
extinguishment of debt $ 2.43 1.16
Extraordinary loss on early
extinguishment of debt, net (.07) -
---------------------
Net earnings $ 2.36 1.16
=====================
Weighted average common shares outstanding 29,845,247 37,931,825
=====================
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 7
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
Six Months ended September 30,
(Unaudited)
1996 1995
-------------------
(in thousands)
Series A common stock of $0.25 par value:
10,000,000 shares authorized, 5,762,495
shares issued as of September 30, 1996,
March 31, 1996 and September 30, 1995
Beginning and end of period $ 1,441 1,441
------------------
Common stock of $0.25 par value:
150,000,000 shares authorized, 34,237,505
shares issued as of September 30, 1996,
March 31, 1996 and September 30, 1995
Beginning and end of period 8,559 8,559
-------------------
Additional paid-in capital:
Beginning of period 165,756 165,675
Issuance of preferred stock 98,622 -
-------------------
End of period 264,378 165,675
-------------------
Foreign currency translation:
Beginning of period (11,877) (12,435)
Change during period (574) 1,826
-------------------
End of period (12,451) (10,609)
-------------------
Unrealized gain (loss) on investments:
Beginning of period 11,097 (6,483)
Change during period (10,782) 13,254
-------------------
End of period 315 6,771
-------------------
Retained earnings:
Beginning of period 609,019 561,589
Net earnings 77,742 50,509
Dividends paid to stockholders:
Preferred stock: ($1.06 per share
for 1996 and 1995, respectively) (6,482) (6,482)
-------------------
End of period 680,279 605,616
-------------------
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 8
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
Six Months ended September 30,
(Unaudited)
1996 1995
-------------------
(in thousands)
Less Treasury stock:
Beginning of period 111,118 10,461
Net increase (8,390,532 shares in 1996
and 45,000 shares in 1995) 155,197 996
-----------------
End of period 266,315 11,457
-----------------
Less Unearned employee stock ownership
plan shares:
Beginning of period 23,329 14,953
Increase in loan - 3,168
Proceeds from loan (153) (137)
-----------------
End of period 23,176 24,132
-----------------
Total stockholders' equity $ 653,030 741,864
=================
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 9
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Earnings
Quarters ended September 30,
(Unaudited)
1996 1995
-----------------------
(in thousands except
per share data)
Revenues
Rental and other revenue $ 295,483 269,118
Net sales 51,213 49,559
Premiums 41,594 40,683
Net investment income 12,138 11,907
-----------------------
Total revenues 400,428 371,267
Costs and expenses
Operating expense 215,351 178,939
Advertising expense (see note 9) 7,868 7,192
Cost of sales 31,058 29,042
Benefits and losses 43,458 40,858
Amortization of deferred acquisition
costs 4,035 4,871
Depreciation 19,940 38,582
Interest expense 16,426 16,722
-----------------------
Total costs and expenses 338,136 316,206
Pretax earnings from operations 62,292 55,061
Income tax expense (22,551) (19,729)
-----------------------
Earnings from operations before
extraordinary loss on early
extinguishment of debt 39,741 35,332
Extraordinary loss on early
extinguishment of debt, net (2,004) -
-----------------------
Net earnings $ 37,737 35,332
=======================
Earnings per common share:
Earnings from operations before
extraordinary loss on early
extinguishment of debt $ 1.32 .85
Extraordinary loss on early
extinguishment of debt, net (.07) -
-----------------------
Net earnings $ 1.22 .85
=======================
Weighted average common shares outstanding 27,675,192 37,905,225
=======================
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE> 10
AMERCO AND CONSOLIDATED SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months ended September 30,
(Unaudited)
1996 1995
--------------------
(in thousands)
Cash flows from operating activities:
Net earnings $ 77,742 50,509
Depreciation and amortization 48,582 84,339
Provision for losses on accounts
receivable 1,841 2,819
Net (gain) loss on sale of real and
personal property (6,980) 581
Gain (loss) on sale of investments 50 (2,970)
Changes in policy liabilities and
accruals 6,887 1,146
Additions to deferred policy
acquisition costs (10,469) (11,954)
Net change in other operating assets
and liabilities (16,337) 27,389
--------------------
Net cash provided by operating activities 101,316 151,859
--------------------
Cash flows from investing activities:
Purchases of investments:
Property, plant and equipment (134,247) (143,082)
Fixed maturities (90,891) (162,081)
Real estate (767) (5,629)
Mortgage loans (8,944) (7,384)
Proceeds from sale of investments:
Property, plant and equipment 200,785 97,030
Fixed maturities 68,895 89,348
Real estate 389 570
Mortgage loans 12,943 17,573
Changes in other investments (40,510) 1,186
--------------------
Net cash provided (used) by investing
activities 7,653 (112,469)
--------------------
Cash flows from financing activities:
Net change in short-term borrowings (177,500) (163,500)
Proceeds from notes 337,500 140,184
Debt issuance costs (4,125) (636)
Loan to leveraged Employee Stock
Ownership Plan - (3,168)
Proceeds from leveraged Employee Stock
Ownership Plan 153 137
Principal payments on notes (217,938) (61,168)
Issuance of preferred stock 98,622 -
Net change in cash overdraft (9,419) (7,913)
Dividends paid (6,482) (6,482)
Treasury stock acquisitions (155,197) (996)
Investment contract deposits 54,554 101,667
Investment contract withdrawals (27,925) (39,518)
--------------------
Net cash used by
financing activities (107,757) (41,393)
--------------------
Increase (decrease)in cash and
cash equivalents 1,212 (2,003)
Cash and cash equivalents at
beginning of period 31,168 35,286
--------------------
Cash and cash equivalents at
end of period $ 32,380 33,283
--------------------
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 11
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1996, March 31, 1996 and September 30, 1995
(Unaudited)
1. PRINCIPLES OF CONSOLIDATION
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).
The consolidated financial statements include the accounts of
the parent corporation, AMERCO, and its subsidiaries, all of which
are wholly-owned. All material intercompany accounts and
transactions of AMERCO and its subsidiaries have been eliminated.
The consolidated balance sheets as of September 30, 1996 and
1995, and the related consolidated statements of earnings, changes
in stockholders' equity and cash flows for the six months ended
September 30, 1996 and 1995 are unaudited; in the opinion of
management, all adjustments necessary for a fair presentation of
such financial statements have been included. Such adjustments
consisted only of normal recurring items. Interim results are not
necessarily indicative of results for a full year.
The operating results and financial position of AMERCO's
consolidated insurance operations are determined on a one quarter
lag. There were no effects related to intervening events which
would significantly affect consolidated financial position or
results of operations for the financial statements presented
herein.
Based on an in-depth market analysis, the Company increased
the estimated salvage value of certain rental trucks during the
third and fourth quarters of fiscal year ended March 31, 1996.
The financial statements and notes are presented as permitted
by Form 10-Q and do not contain certain information included in the
Company's annual financial statements and notes.
Earnings per share are computed based on the weighted average
number of shares outstanding, excluding shares of the employee
stock ownership plan that have not been committed to be released.
Net income is reduced for preferred dividends for purposes of the
calculation.
Certain reclassifications have been made to the financial
statements for the quarter ended September 30, 1995 to conform with
the current year's presentation.
<PAGE> 12
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
2. INVESTMENTS
A comparison of amortized cost to market for fixed maturities
is as follows (in thousands, except for par value):
June 30, 1996 Par Value Gross Gross Estimated
- -----------------
Consolidated or number Amortized unrealized unrealized market
Held-to-Maturity of shares cost gains losses value
------------------------------------------------------
U.S. treasury
securities
and government
obligations $ 17,805 $ 17,713 1,163 - 18,876
U.S. government
agency mortgage
backed securities $ 57,843 57,434 520 (2,497) 55,457
Obligations of
states and
political
subdivisions $ 33,100 32,838 1,110 (227) 33,721
Corporate
securities $ 186,971 191,427 2,422 (3,614) 190,235
Mortgage-backed
securities $ 98,349 96,577 1,215 (2,912) 94,880
Redeemable preferred
stocks 221 6,471 251 (184) 6,538
----------------------------------------
402,460 6,681 (9,434) 399,707
----------------------------------------
June 30, 1996 Par Value Gross Gross Estimated
- ---------------
Consolidated or number Amortized unrealized unrealized market
Available-for-Sale of shares cost gains losses value
-----------------------------------------------------
U.S. treasury
securities and
government
obligations $ 11,685 11,780 905 - 12,685
U.S. government
agency mortgage
backed securities $ 26,252 25,736 143 (389) 25,490
States,
municipalities
and political
subdivisions $ 7,100 7,023 485 (34) 7,474
Corporate
securities $ 340,024 345,964 5,163 (6,798) 344,329
Mortgage-backed
securities $ 85,947 85,338 912 (1,595) 84,655
Redeemable preferred
stocks 106 2,596 22 (12) 2,606
----------------------------------------
478,437 7,630 (8,828) 477,239
----------------------------------------
Total $ 880,897 14,311 (18,262) 876,946
========================================
<PAGE> 13
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
3. SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF PONDEROSA
HOLDINGS, INC. AND ITS SUBSIDIARIES
A summary consolidated balance sheet (unaudited) for Ponderosa
Holdings, Inc. and its subsidiaries is presented below:
September 30,
1996 1995
----------------------
(in thousands)
Investments - fixed maturities $ 879,699 800,481
Other investments 98,910 117,972
Receivables 150,100 151,546
Deferred policy acquisition costs 56,171 51,304
Due from affiliate 36,947 22,603
Deferred federal income taxes 7,865 4,671
Other assets 14,977 8,067
----------------------
Total assets $ 1,244,669 1,156,644
======================
Policy liabilities and accruals $ 411,865 409,521
Unearned premiums 74,266 65,699
Premium deposits 435,789 374,407
Other policyholders' funds and
liabilities 32,706 28,263
----------------------
Total liabilities 954,626 877,890
Stockholder's equity 290,043 278,754
----------------------
Total liabilities and
stockholder's equity $ 1,244,669 1,156,644
======================
A summarized consolidated income statement (unaudited) for
Ponderosa Holdings, Inc. and its subsidiaries is presented below:
Six months ended September 30,
1996 1995
----------------------
(in thousands)
Premiums $ 79,056 76,442
Net investment income 24,542 23,395
Other income 1,178 4,592
---------------------
Total revenue 104,776 104,429
Benefits and losses 66,716 68,099
Amortization of deferred policy
acquisition costs 8,057 7,799
Other expenses 14,712 12,121
---------------------
Income from operations 15,291 16,410
Federal income tax expense (4,934) (4,617)
---------------------
Net income $ 10,357 11,793
=====================
The Company has engaged an investment banking firm to explore
various alternatives with regard to Oxford, its life insurance
subsidiary. Such alternatives may include strategic alliances with
other insurance companies or Oxford's possible sale.
<PAGE> 14
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
4. NOTES AND LOANS
On July 18, 1996, the Company extinguished debt of
approximately $76,250,000 by irrevocably placing cash into a trust
of U.S. Treasury securities to be used to satisfy scheduled
payments of principal and interest.
In August 1996, the Company extinguished $86,400,000 of its
long-term notes originally due in fiscal 1997 through fiscal 1999.
The above transactions resulted in an extraordinary loss of
$2,004,000 net of tax of $1,541,000 ($0.07 per share).
5. STOCKHOLDERS' EQUITY
On July 19, 1996, pursuant to the judgment in the Shoen
Litigation, the Company paid CEMAR, Inc. (Cemar) approximately
$15,857,000 to repurchase 2,331,984 shares of Common Stock held by
Cemar. On the same date the Company paid damages to Cecilia M.
Hanlon of approximately $43,139,000 and statutory post-judgment pre-
petition interest on the above amounts of approximately $129,000.
On August 6, 1996, the Company funded approximately $8,283,000 of
post-petition date interest by depositing the same into an escrow
account pending the outcome of a dispute involving the entitlement
of the plaintiffs in the Shoen Litigation to post-petition date
interest. The Common Stock held by Cemar was transferred into the
Company treasury. Cecilia M. Hanlon, the sole voting stockholder
of Cemar, is the sister of Edward J., Mark V., and James P. Shoen,
who are major stockholders and directors of the Company.
On August 30, 1996, the Company issued 100,000 shares of its
Series B Preferred Stock with no par value for $100,000,000.
Dividends are cumulative with the rate being reset quarterly and
have priority as to dividends over the Company's common stock. The
Series B Preferred will be convertible, in certain events, at the
holder's option, into either shares of the Company's Series B
Common Stock, $0.25 par value or all of the outstanding shares
of Picacho Peak Investment Co., a subsidiary of AMERCO.
On September 6, 1996, pursuant to the judgment in the Shoen
Litigation, the Company paid Katabasis International, Inc.
(Katabasis) approximately $27,485,000 to repurchase 4,041,924
shares of Common Stock held by Katabasis. The Company also paid
damages to Samuel W. Shoen of approximately $74,771,000 and
statutory post-judgment pre-petition interest on the above amounts
of approximately $224,000. The Company also funded approximately
$15,726,000 of post-petition date interest by depositing the same
into an escrow account pending the outcome of a dispute involving
the entitlement of the plaintiffs in the Shoen Litigation to post-
petition date interest. The Common Stock held by Katabasis was
transferred into the Company treasury. Samuel W. Shoen, the sole
voting stockholder of Katabasis, is the brother of Edward J., Mark
V., and James P. Shoen, who are major stockholders and directors of
the Company.
<PAGE> 15
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
5. STOCKHOLDERS' EQUITY, continued
On September 20, 1996, pursuant to the judgment in the Shoen
Litigation, the Company paid Kattydid, Inc. (Kattydid)
approximately $8,719,000 to repurchase 1,282,248 shares of Common
Stock held by Kattydid. The Company paid damages to Katrina (Shoen)
Carlson of approximately $37,305,000 and statutory post-judgment
pre-petition interest on the above amounts of approximately
$112,000. The Company also paid Katrina (Shoen) Carlson
approximately $4,994,000 to repurchase 734,376 shares of Common
Stock held by her and funded approximately $8,041,000 of post-
petition date interest by depositing the same into an escrow
account pending the outcome of a dispute involving the entitlement
of the plaintiffs in the Shoen Litigation to post-petition date
interest. The Common Stock held by Kattydid and Katrina (Shoen)
Carlson was transferred into the Company treasury. Katrina (Shoen)
Carlson, the sole voting stockholder of Kattydid, is the sister of
Edward J., Mark V., and James P. Shoen, who are major stockholders
and directors of the Company.
On October 1, 1996, pursuant to the judgment in the Shoen
Litigation, the Company paid Mickl, Inc. (Mickl) approximately
$27,444,000 to repurchase 4,035,924 shares of Common Stock held by
Mickl. On the same date the Company paid net damages to Michael L.
Shoen of approximately $73,158,000 and statutory post-judgment pre-
petition interest on the above amounts of approximately $224,000.
On the same date, the Company paid Michael L. Shoen approximately
$3,000 to repurchase 380 shares of Common Stock held by him and
funded approximately $16,400,000 of post-petition date interest by
depositing the same into an escrow account pending the outcome of a
dispute involving the entitlement of the plaintiffs in the Shoen
Litigation to post-petition date interest. The Common Stock held by
Mickl and Michael L. Shoen was transferred into the Company
treasury. Michael L. Shoen, the sole voting stockholder of Mickl,
is the brother of Edward J., Mark V., and James P. Shoen, who are
major stockholders and directors of the Company. See Part II. Item 1.
Legal Proceedings for more information on the Shoen Litigation.
6. CONTINGENT LIABILITIES AND COMMITMENTS
During the six months ended September 30, 1996, U-Haul Leasing
& Sales Co., a wholly-owned subsidiary of U-Haul International,
Inc., entered into ten transactions, whereby the Company sold
rental trucks or trailers and subsequently leased them back.
AMERCO has guaranteed $13,512,000 of residual values at September
30, 1996 on the rental trucks and trailers at the end of the lease
term. U-Haul entered into one transaction, whereby the Company
sold rental trailers and subsequently leased them back. Also, U-
Haul entered into three transactions, whereby the Company sold and
subsequently leased back computer equipment. Following are the
lease commitments for the leases executed during the six months
ended September 30, 1996, which have a term of more than one year
(in thousands):
Year ended Lease
March 31, Commitments
------------------------
1997 $ 17,331
1998 24,135
1999 24,135
2000 24,135
2001 23,153
Thereafter 112,690
-------
$ 225,579
=======
<PAGE> 16
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
6. CONTINGENT LIABILITIES AND COMMITMENTS, continued
In the normal course of business, the Company is a defendant
in a number of suits and claims. The Company is also a party to
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 a
material loss.
7. SUPPLEMENTAL CASH FLOWS INFORMATION
The (increase) decrease in receivables, inventories and
accounts payable and accrued liabilities net of other operating and
investing activities follows:
Six months ended September 30,
1996 1995
--------------------
(in thousands)
Receivables $ 22,396 (35,299)
=====================
Inventories $ (8,827) (1,065)
=====================
Accounts payable and
accrued liabilities $ 1,779 22,585
=====================
Income taxes paid in cash amounted to $1,694,000 and $143,000
for the quarters ended September 30, 1996 and 1995, respectively.
Interest paid in cash amounted to $36,173,000 and $36,755,000
for the quarters ended September 30, 1996 and 1995, respectively.
8. RELATED PARTIES
During the six months ended September 30, 1996, a subsidiary
of the Company received principal payments of $84,001,000, interest
payments of $3,839,000 and management fees of $745,000 from Three
SAC Self-Storage Corporation (Three SAC). Three SAC's voting common
stock is owned by SAC Holding Corporation (SAC Holding) and the non-
voting preferred stock is owned by SAC Non-Business Trust. The
voting common stock of SAC Holding is held by Mark V. Shoen, a
major stockholder, director and officer of the Company. Three SAC
properties are currently managed by the Company pursuant to a
management agreement, under which the Company receives a management
fee equal to 6% of the gross receipts from the properties. The
management fee percentage is consistent with the fee received by
the Company for other properties managed by the Company.
On June 27, 1996, a subsidiary of the Company sold Three SAC
notes of $86,000,000 to an outside party.
As of September 30, 1996, a subsidiary of the Company funded
the purchase of seventeen properties, with one additional property
funded subsequent to the quarter end, by Four SAC Self-Storage
Corporation (Four SAC) for an amount of approximately $15,487,000.
Four SAC is owned by SAC Holding. The voting common stock of SAC
Holding is held by Mark V. Shoen, a major stockholder, director,
and officer of the Company. Four SAC acquired three of the
properties from a subsidiary of the Company at a purchase price
equal to the Company's acquisition cost plus capitalized costs.
Such properties are currently managed by the Company for which the
Company will receive a management fee equal to 6% of the gross
receipts from the properties. The management fee percentage is
consistent with the fee received by the Company for other
properties managed by the Company.
<PAGE> 17
AMERCO AND CONSOLIDATED SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
(Unaudited)
9. NEW ACCOUNTING STANDARDS
On April 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121 - Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of.
Effective for fiscal years beginning after December 15, 1995 the
standard establishes accounting standards for the impairment of
long-lived assets, certain identifiable intangibles, and goodwill
related to those assets to be held and used and for long-lived
assets and certain identifiable intangibles to be disposed of. The
adoption of this statement had no impact on the financial condition
or results of operations of the Company.
On April 1, 1995, the Company implemented Statement of
Position 93-7, "Reporting on Advertising Costs", 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. Upon
implementation, the Company recognized additional advertising
expense of $8,647,000 for advertising costs not qualifying as
direct-response. The adoption had the effect of reducing net
income by $5,474,000 ($0.15 per share) for the six months ended
September 30, 1995.
Other pronouncements issued by the Financial Standards Board
with future effective dates are either not applicable or not
material to the consolidated financial statements of the Company.
<PAGE> 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
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 six months ended September 30,
1996 and 1995. Rental operations is composed of the operations of
U-Haul and Amerco Real Estate Company. Life insurance is composed of
the operations of Oxford Life Insurance Company (Oxford). Property and
casualty insurance is composed of the operations of Republic Western
Insurance Company (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 proportionately
more of the Company's revenues and net earnings are generated in the
first and second quarters each fiscal year (April through September).
Property/ Adjustments
Rental Life Casualty and
Operations Insurance Insurance Eliminations Consolidated
-----------------------------------------------------------
(in thousands)
Six months ended
September 30, 1996
Revenues:
Outside $ 661,958 23,740 74,438 - 760,136
Intersegment - 782 5,843 (6,625) -
-------------------------------------------------------
Total revenues 661,958 24,522 80,281 (6,625) 760,136
========================================================
Operating profit $ 146,570 5,590 9,701 - 161,861
===========================================
Interest expense 35,282
--------
Pretax earnings
from operations $ 126,579
========
Identifiable assets $1,908,032 621,686 622,983 (334,855) 2,817,846
=======================================================
Property/ Adjustments
Rental Life Casualty and
Operations Insurance Insurance Eliminations Consolidated
-----------------------------------------------------------
(in thousands)
Six months ended
September 30, 1995
Revenues:
Outside $ 602,687 24,265 74,824 - 701,776
Intersegment (270) 708 4,662 (5,100) -
-------------------------------------------------------
Total revenues 602,417 24,973 79,486 (5,100) 701 776
=======================================================
Operating profit $ 97,676 6,838 9,572 270 114,356
==========================================
Interest expense 35,554
--------
Pretax earnings
from operations $ 78,802
========
Identifiable assets $1,845,370 563,138 593,506 (312,753) 2,689,261
=======================================================
<PAGE> 19
SIX MONTHS ENDED SEPTEMBER 30, 1996 VERSUS SIX MONTHS ENDED
SEPTEMBER 30, 1995
U-Haul
U-Haul revenues consist of (i) total rental and other revenue
and (ii) net sales. Total rental and other revenue increased by
$54.0 million, approximately 10.8%, to $554.2 million in the first
six months of fiscal 1997. The increase reflects higher net
revenues from the rental of moving related equipment and
self-storage facilities which increased $27.3 million due to growth
(volume) in truck rental transactions, additional rentable square
footage, and an increase in management fees from storage facilities
managed for others. Other revenue increased $26.7 million.
Contributing to the increase is the recognition of increased net
gains on the sale of real and personal property of $7.6 million
over the comparable period for fiscal 1996.
Net sales revenues were $107.2 million in the first six months
of fiscal 1997, which represents an increase of approximately 4.4%
from the first six months of fiscal 1996 net sales of $102.7
million. Revenue growth from the sale of moving support items,
hitches, and propane resulted in a $5.0 million increase during the
six months, which was partially offset by a decrease in gasoline
sales consistent with the Company's ongoing efforts to remove
underground storage tanks and gradually discontinue gasoline sales.
Cost of sales was $62.6 million in the first six months of
fiscal 1997, which represents an increase of approximately 8.0%
from $58.0 million for the same period in fiscal 1996. This
increase in cost of sales reflects higher material costs from the
sale of moving support items, hitches and propane which can be
primarily attributed to higher sales levels and increased allowance
for inventory shrinkage.
Operating expenses increased to $398.0 million in the first
six months of fiscal 1997 from $346.460.7 million in the first six
months of fiscal 1996, an increase of15.6 approximately 14.97%.
Rental equipment maintenance costs increased $20.7 million due to
an increase in fleet size and transaction levels. Personnel expense
increased $13.7 million due to higher levels of business
activity. All other operating expense categories increased in the
aggregate by $17.2 million compared to the prior year.
Advertising expense decreased to $16.0 million in the first
six months of fiscal 1997 from $24.1 million in the first six
months of fiscal 1996. The decrease primarily reflects a one-time
expense of $8.7 million recognized during the first six months of
fiscal 1996, due to the adoption of Statement of Position 93-7
which requires immediate recognition of advertising costs not
qualifying as direct-response.
Depreciation expense for the first six months of fiscal 1997
was $38.7 million, as compared to $76.3 million during the same
period of the prior year. During the third and fourth quarters of
fiscal 1996, based on the Company's in-depth market analysis, the
Company increased the estimated salvage value of certain rental
trucks.
Oxford - Life Insurance
Premiums from Oxford's reinsurance lines before intercompany
eliminations were $10.6 million for the six months ended June 30,
1996, or 74.1% of total premiums for that period. This represents
an increase of $1.7 million over the same period in 1995 or an
increase of 19.1%. Reinsurance premiums are primarily from term
life insurance, deferred annuity contracts that have matured, and
credit insurance business. Increases in premiums are primarily from
the anticipated increase in annuitizations as a result of the
maturing of deferred annuities and from additional production in
the credit life and credit accident and health business.
Premiums from Oxford's direct lines before intercompany
eliminations were $3.7 million for the six months ended June 30,
1996, a decrease of $0.3 million. This decrease in direct premium
is primarily attributable to the credit insurance business.
Oxford's direct business related to group life and disability
coverage issued to employees of the Company for the six months
ended June 30, 1996 accounted for approximately 7.5% of premiums.
Other direct lines, including the credit insurance business,
accounted for approximately 18.4% of Oxford's premiums for the six
months ended June 30, 1996.
<PAGE> 20
Net investment income before intercompany eliminations was
$$9.4 million and $8.0 million for the six month periods ended June
30, 1996 and 1995, respectively. This increase is primarily due to
increases in deposit funds from additional production and
increasing margins on the interest sensitive business.
Other income is comprised of gains/(losses) on the disposition
of investments and income on the surrender of deferred annuity
products. Gains/(losses) on the disposition of investments were
($0.4) million and $2.9 million for the six months ended June 30,
1996 and 1995, respectively. Oxford had $1.2 million and $1.0
million of ssurrender charge income, for the six month period ended
June 30, 1996 and 1995, respectively.
Benefits and expenses incurred were $18.9 million for the six
months ended June 30, 1996, an increase of 4.4% from 1995.
Comparable benefits and expenses incurred for 1995 were $18.1
million. This increase is primarily due to the increase in
annuitizations discussed above.
Operating profit before intercompany eliminations decreased by
$1.2 million, or approximately 17.6%, in 1996 to $5.6 million,
primarily due to a decrease in gains on the disposition of fixed
maturity investments.
RWIC - Property and Casualty
RWIC gross premium writings for the six months ended June 30,
1996 were $89.4 million as compared to $81.4 million in the first
six months of 1995. This represents an increase of $8.0 million,
or 9.8%. As in prior years, the rental industry market accounts
for a significant share of total premiums, approximately 46.0% and
41.5% in the first six months of 1996 and 1995, respectively.
These writings include U-Haul customers, fleetowners and U-Haul as
well as other rental industry insureds with similar
characteristics. RWIC continues underwriting professional
reinsurance via broker markets. Premiums in this area increased
during the first six months of 1996 to $28.8 million, or 32.2% of
total gross premiums, from comparable 1995 figures of $27.9
million, or 34.3% of total premiums. Premium writings in selected
general agency lines are expected to remain consistent with prior
years. Premiums from selected general agency lines accounted for
13.5% of written premiums in the first six months of 1996 as
compared to 16.9% in the first six months of 1995. RWIC continued
its direct multiple peril coverage of various commercial properties
and businesses in 1996. These premiums accounted for 8.2% of the
total gross written premium during first six months of 1996, as
compared to 6.3% for the first six months of 1995.
Net earned premiums increased $1.3 million, or 2.1%, to $64.8
million for the six months ended June 30, 1996, compared with
premiums of $63.5 million for the six months ended June 30, 1995.
The premium increase was primarily due to improved processing.
Underwriting expenses incurred were $70.6 million for the six
months ended June 30, 1996, an increase of $0.7 million, or 1.0%
over 1995. Comparable underwriting expenses incurred for the first
six months of 1995 were $69.9 million. The increase is attributed
to increased commission expense offset by decreased loss and loss
adjusting expenses. The increased commission expense resulted from
a smaller adjustment to realize a margin on a canceled general
agency program, combined with increased acquisition expense on
assumed treaty reinsurance business. The reduction in loss and
loss adjusting expenses occurred in the rental industry liability
and assumed treaty reinsurance lines.
Net investment income was $15.2 million for the six months
ended June 30, 1996, a decrease of 0.7% from the six months ended
June 30, 1995 net investment income of $15.3 million.
RWIC completed the first six months of 1996 with income before
tax expense of $9.7 million as compared to $9.6 million for the
comparable period ended June 30, 1995. This represents an increase
of $0.1 million, or 1.0% over 1995. Increased premium earnings
were offset by increased underwriting expenses to produce this
minimal change.
Interest Expense
Interest expense decreased to $35.3 million for the six months
ended September 30, 1996, as compared to $35.6 million for the six
months ended September 30, 1995.
<PAGE> 21
Extraordinary Loss on Extinguishment of Debt
During the second quarter of fiscal 1997, the Company
extinguished debt of approximately $76.3 million by irrevocably
placing cash into a trust of U.S. Treasury securities to be used to
satisfy scheduled payments of principal and interest. The Company
also extinguished $86.4 million of its long-term notes originally
due in fiscal 1997 through fiscal 1999. These transactions resulted
in an extraordinary loss of $2.0 million net of tax of $1.5 million
($0.07 per share).
Consolidated Group
As a result of the foregoing, pretax earnings of $123.4
million were realized during the six months ended September 30,
1996, as compared to $78.8 million for the same period in 1995.
After providing for income taxes and extraordinary loss on the
extinguishment of debt, net earnings for the six months ended
September 30, 1996 were $75.720.9 million, as compared to $50.5
million for the same period of the prior year.
<PAGE> 22
QUARTERLY RESULTS
The following table presents unaudited quarterly results for
the ten quarters in the period beginning April 1, 1994 and ending
September 30, 1996. 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 U-Haul rental
operations are seasonal and proportionally more of the Company's
revenues and net earnings from its U-Haul rental operations 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 (in thousands except for per share data).
Quarter Ended
--------------------------
Jun 30, Sep 30,
1996 1996
--------------------------
Total revenues $ 359,708 400,428
Net earnings (loss) 40,005 37,737
Weighted average common
shares outstanding (4) 32,015,301 27,675,192
Net earnings (loss)
per common share (1) 1.15 1.22
Quarter Ended
------------------------------------------------
Jun 30, Sep 30, Dec 31, Mar 31,
1995 1995 1995 1996
------------------------------------------------
Total revenues $ 330,509 371,267 307,452 285,195
Net earnings (loss) (2) (3) 15,177 35,332 7,701 2,184
Weighted average common
shares outstanding (4) 37,958,426 37,905,225 36,796,961 32,554,458
Net earnings (loss)
per common share (1) 0.31 0.85 0.13 (0.04)
Quarter Ended
------------------------------------------------
Jun 30, Sep 30, Dec 31, Mar 31,
1994 1994 1994 1995
------------------------------------------------
Total revenues $ 322,333 359,520 294,858 259,521
Net earnings (loss) 29,413 40,071 1,907 (11,359)
Weighted average common
shares outstanding 37,107,536 37,053,707 37,025,575 38,072,543
Net earnings (loss)
per common share (1) 0.71 1.00 (0.04) (0.44)
________________
(1)Net earnings (loss) per common share amounts were computed
after giving effect to the dividend on the Company's Series A 8
1/2% Preferred Stock.
(2)Reflects the adoption of Statement of Position 93-7, "Reporting
on Advertising Costs."
(3)Reflects the change in estimated salvage value during the third
and fourth quarters of fiscal 1996.
(4)Reflects the acquisition of treasury shares acquired pursuant
to the Shoen Litigation as discussed in Part II. - Item 1.
Legal Proceedings.
<PAGE> 23
QUARTER ENDED SEPTEMBER 30, 1996 VERSUS QUARTER ENDED SEPTEMBER 30,
1995
U-Haul
U-Haul revenues consist of (i) total rental and other revenue
and (ii) net sales. Total rental and other revenue increased by
$28.2 million, approximately 10.6%, to $294.5 million in the second
quarter of fiscal 1997. The increase reflects higher net revenues
from the rental of moving related equipment and self-storage
facilities which increased by $12.2 million due to growth (volume)
in truck rental transactions, additional rentable square footage,
and an increase in management fees from storage facilities managed
for others. Other revenue accounted for the remaining increase,
including increased net gains on the sale of real and personal
property.
Net sales revenues were $51.2 million in the second quarter of
fiscal 1997, which represents an increase of approximately 3.3%
from the second quarter of fiscal 1996 net sales of $49.6 million.
Increased sales of moving support items, hitches, and propane
resulted in revenue growth of $2.1 million during the quarter.
Cost of sales was $31.1 million in the second quarter of
fiscal 1997, which represents an increase of approximately 6.9%
from $29.0 million for the same period in fiscal 1996. This
increase in cost of sales reflects higher allowances for inventory
shrinkage and higher material costs from the sale of hitches and
propane which can be primarily attributed to higher sales levels.
Operating expenses increased to $214.7 million in the second
quarter of fiscal 1997 from $177.960.7 million in the second
quarter of fiscal 1996, an increase of15.6 approximately 20.77%.
Rental equipment maintenance costs increased $7.0 million due to an
increase in fleet size and transaction levels. New leasing
activities increased lease expense by $5.5 million. Higher levels
of business activity increased personnel expense by approximately
$9.3 million. All other operating expense categories increased in
the aggregate by $15.0 million compared to the prior year.
Advertising expense increased to $7.9 million in the second
quarter of fiscal 1997 from $7.2 million in the second quarter of
fiscal 1996.
Depreciation expense for the quarter was $19.9 million, as
compared to $38.6 million during the same period of the prior year.
During the third and fourth quarters of fiscal 1996, based on the
Company's in-depth market analysis, the Company increased the
estimated salvage value of certain rental trucks.
Oxford - Life Insurance
Premiums from Oxford's reinsurance lines before intercompany
eliminations were $5.4 million for the quarter ended June 30, 1996,
or 75.0% of total premiums for that period. This represents an
increase of $0.5 million over the same period in 1995 or an
increase of 10.2%. Reinsurance premiums are primarily from term
life insurance, deferred annuity contracts that have matured, and
credit insurance business. Increases in premiums are primarily from
the anticipated increase in annuitizations as a result of the
maturing of deferred annuities and from additional production in
the credit life and credit accident and health business.
Premiums from Oxford's direct lines before intercompany
eliminations were $1.8 million for the quarter ended June 30, 1996,
a decrease of $0.2 million. This decrease in direct premium is
primarily attributable to the credit insurance business. Oxford's
direct business related to group life and disability coverage
issued to employees of the Company for the quarter ended June 30,
1996 accounted for approximately 7.2% of premiums. Other direct
lines, including the credit insurance business, accounted for
approximately 17.8% of Oxford's premiums for the quarter ended June
30, 1996.
<PAGE> 24
Net investment income before intercompany eliminations was
$4.5 million and $4.2 million for the quarters ended June 30, 1996
and 1995, respectively. This increase is primarily due to
increases in deposit funds from additional production and
increasing margins on the interest sensitive business.
Other income is comprised of gains on the disposition of
investments and income on the surrender of deferred annuity
products. Gains on the disposition of investments were $0.2
million and $2.8 million for the quarters ended June 31, 1996 and
1995, respectively. Oxford had $0.6 million and $0.5 million of
surrender charge income for the quarters ended June 30, 1996 and
1995, respectively.
Benefits and expenses incurred were $9.9 million for the
quarter ended June 30, 1996, a decrease of 2.0% from 1995.
Comparable benefits and expenses incurred for 1995 were $10.1
million. This decrease is primarily due to a decrease in the
amortization of deferred acquisition costs primarily as a result of
the decrease in realized capital gains on the disposition of fixed
maturities partially offset by the increase in annuitizations
discussed above.
Operating profit before intercompany eliminations decreased by
$1.6 million, or approximately 38.1%, in 1996 to $2.6 million,
primarily due to the decrease in gains on the disposition of fixed
maturity investments.
RWIC - Property and Casualty
RWIC gross premium writings for the quarter ended June 30,
1996 were $41.4 million as compared to $45.2 million in the second
quarter of 1995. The rental industry market accounts for a
significant share of total premiums, approximately 66.9% and 60.1%
in the second quarters of 1996 and 1995, respectively. These
writings include U-Haul customers, fleetowners and U-Haul as well
as other rental industry insureds with similar characteristics.
RWIC continues underwriting professional reinsurance via broker
markets. Premiums in this area decreased during the second quarter
of 1996 to $4.7 million, or 11.4% of total gross premiums, from
comparable 1995 figures of $7.7 million, or 17.1% of total
premiums. Premium writings in selected general agency lines are
expected to remain consistent with prior years. Premiums from
selected general agency lines accounted for 12.1% share of written
premiums in 1996 as compared to 16.5% share in 1995. RWIC
continued its direct multiple peril coverage of various commercial
properties and businesses in 1996. These premiums accounted for
9.5% of total gross written premium during second quarter 1996, as
compared to 6.3% in 1995. This increase is the result of improved
policy processing.
Net earned premiums remained at $39.5 million for the quarter
ended June 30, 1996, consistent with the same amount of premium for
the quarter ended June 30, 1995.
Underwriting expenses incurred were $43.6 million for the
quarter ended June 30, 1996, an increase of $1.2 million, or 2.8%
over 1995. Comparable underwriting expenses incurred for the
second quarter of 1995 were $42.4 million. The increase resulted
from a smaller adjustment to realize a margin on a canceled general
agency program and an increase in acquisition expense on assumed
treaty reinsurance business.
Net investment income was $7.4 million for the quarter ended
June 30, 1996, a decrease of 3.9% over 1995 net investment income
of $7.7 million. The decrease is due to lower cash flow from
operations and a 1995 timing adjustment in mortgage interest
earned.
RWIC completed the second quarter of 1996 with income before
tax expense of $3.7 million as compared to $4.5 million for the
comparable period ended June 30, 1995. This represents a decrease
of $0.8 million, or 17.8% under 1995. The decrease resulted from
the combination of increased underwriting expenses and decreased
investment income, offset by realized gains and other income.
Interest Expense
Interest expense decreased to $16.4 million for the quarter
ended September 30, 1996, as compared to $16.7 million for the
quarter ended September 30, 1995.
Extraordinary Loss on Extinguishment of Debt
During the second quarter of fiscal year 1997, the Company
extinguished debt of approximately $76.3 million by irrevocably
placing cash into a trust of U.S. Treasury securities to be used to
satisfy scheduled payments of principal and interest. The Company
also extinguished $86.4 million of its long-term notes originally
due in fiscal 1997 through fiscal 1999. These transactions resulted
in an extraordinary loss of $2.0 million net of tax of $1.5 ($0.07
per share).
<PAGE> 25
Consolidated Group
As a result of the foregoing, pretax earnings of $59.1 million
were realized during the quarter ended September 30, 1996, as
compared to $55.1 million for the same period in 1995. After
providing for income taxes and extraordinary loss on the
extinguishment of debt, net earnings for quarter ended September
30, 1996 were $35.7 million, as compared to $35.3 million for the
same period of the prior year.
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 September 30,
1996, net property, plant and equipment represented approximately
65.7% of total U-Haul assets and approximately 44.5% of
consolidated assets. During the first six months of fiscal 1997,
capital expenditures were $134.2 million, as compared to $143.1
million during the first six months of fiscal 1996, reflecting
expansion of the rental truck fleet, and real property
acquisitions. These acquisitions were funded with internally
generated funds from operations, operating leases, equity
placement, and debt financings.
Cash flows from operations were $104.5 million during the
first six months of fiscal 1997, as compared to $145.9 million
during the first six months of fiscal 1996. The decrease of $41.4
million is primarily due to an increase in other assets offset
by increased earnings and the sale of mortgage note receivables.
Cash flows from investing activities were affected by the sale and
subsequent leaseback of rental trailers for net proceeds of $97.4
million.
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.
Cash provided by operating activities were $9.3 million and
$5.1 million for the six months ended June 30, 1996 and 1995,
respectively. Cash flows from financing activities were $22.7
million and $62.1 million for the six months ended June 30, 1996
and 1995, respectively. Cash flows from deferred annuity sales
increase investment contract deposits which are a component of
financing activities, as well as the purchase of fixed maturities
which are a component of investing activities. In addition to cash
flows from operating and financing activities, a substantial amount
of liquid funds is available through Oxford's short-term portfolio.
At June 30, 1996 and 1995, short-term investments amounted to $9.5
million and $18.0 million, respectively. Management believes that
the overall sources of liquidity will continue to meet foreseeable
cash needs.
Stockholder's equity of Oxford decreased to $97.3 million in
1996 from $99.6 million in 1995. During the six months ended June
30, 1996, Oxford paid dividends to Ponderosa of $3.9 million.
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 $400,000. In addition, the amount of
dividends that can be paid to stockholders by insurance companies
domiciled in the State of Arizona is limited. Any dividend in
excess of the limit requires prior regulatory approval. Statutory
surplus that can be distributed as dividends without prior
regulatory approval is $7,080,000. 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 operating activities decreased $12.5 million
during the six months ended June 30, 1996, as compared to an
increase of $0.1 million for the comparable period of 1995. The
change is due to temporary increases in accounts receivable and due
from affiliates.
RWIC's short-term investment portfolio was $4.5 million at
June 30, 1996. This level of liquid assets is adequate to meet
periodic needs as well as any near term shortfall. 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 accurately schedule cash needs.
<PAGE> 26
RWIC maintains a diversified investment portfolio.
Approximately 96.6% 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 94.9% of total
liabilities.
Stockholder's equity increased 2.4% from $188.2 million at
December 31, 1995 to $192.7 million at June 30, 1996. RWIC
considers current stockholder's equity to be adequate to support
future growth and absorb unforeseen risk events. RWIC does not use
debt or equity issues to increase capital and therefore has no
exposure to capital market conditions. RWIC paid no stockholder's
dividends during the six months ended June 30, 1996, however it did
declare a $6.7 million dividend to Ponderosa.
Consolidated Group
At September 30, 1996, total notes and loans payable
outstanding was $940.3 million as compared to $998.2 million at
March 31, 1996, and $866.1 million at September 30, 1995.
During each of the fiscal years ending March 31, 1997, 1998,
and 1999, U-Haul estimates gross capital expenditures will average
approximately $290 million as a result of the expansion of the
rental truck fleet and self-storage operation. 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 $390 million. Management estimates that U-Haul will
fund approximately 75% of these requirements with internally
generated funds, including proceeds from the disposition of older
trucks and other asset sales. The remainder of the anticipated
capital expenditures are expected to be financed through existing
credit facilities, new debt placements, lease fundings, and equity
offerings.
On August 30, 1996, the Company issued 100,000 shares of its
Series B Preferred Stock with no par value for $100,000,000.
Dividends are cumulative with the rate being reset quarterly and
have priority as to dividends over the Company's common stock. The
Series B Preferred will be convertible, at the holder's option,
into either shares of the Company's Series B Common Stock, $0.25
par value or all of the outstanding shares of Picacho Peak
Investment Co., a subsidiary of AMERCO.
On October 1, 1996, the Company paid the last portion of a
total of approximately $448.1 million to the plaintiffs (non-
management members of the Shoen family and their affiliates) in a
long-standing legal dispute involving the Shoen family and related
to control of the Company. As a result, the plaintiffs were
required to transfer all of their 18,256,976 shares of Common Stock
to the Company. The Company plans to deduct for income tax
purposes approximately $324.0 million of the payments made to the
plaintiffs, which will reduce the Company's income tax liability.
While the Company believes that such income tax deductions are
appropriate, there can be no assurance that such deductions
ultimately will be allowed in full.
Since the current management was put in place in 1987, the
Company has pursued a strategic plan that emphasizes its core do-it-
yourself rental, moving and storage business. Consistent with its
strategic plan, the Company has engaged an investment banking firm
to explore various alternatives with regard to Oxford, its life
insurance subsidiary. Such alternatives may include strategic
alliances with other insurance companies or Oxford's possible sale.
<PAGE> 27
Credit Agreements
The Company's 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 enters into sale and
leaseback transactions. As of September 30, 1996, the Company had
$940.3 million in total notes and loans payable outstanding and
unutilized committed lines of credit of approximately $382.0
million.
In May 1996, the Company issued $175.0 million of 7.85% Senior
Notes Due May 15, 2003. The Company has applied and will continue
to apply the net proceeds from the sale of the notes to pay down,
at maturity, a portion of the Company's long-term debt.
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 September 30, 1996, the Company was
in compliance with these covenants.
The Company is restricted 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 a 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.
<PAGE> 28
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
As disclosed in the Company's Form 10-K for the year ended
March 31, 1996, Edward J. Shoen, James P. Shoen, Aubrey K. Johnson,
John M. Dodds, and William E. Carty, who are current members of the
Board of Directors of the Company (the Director-Defendants), filed
for protection under Chapter 11 of the federal bankruptcy laws on
February 21, 1995, as a result of the judgment entered on that date
in the action entitled Samuel W. Shoen, M.D., et al. v. Edward J.
-------------------------------------------
Shoen, et al., No. CV88-20139 (the Shoen Litigation). The Director-
- -------------
Defendants, in cooperation with the Company, filed separate plans
of reorganization, all of which proposed the same funding and
treatment of the plaintiffs' claims resulting from the judgment in
the Shoen Litigation. The plans of reorganization are collectively
referred to as the "Plan." The Plan was confirmed by the
bankruptcy court on March 15, 1996.
Pursuant to the Plan, the Company, prior to July 1, 1996, paid
a total of approximately $133.2 million to six of the plaintiffs to
repurchase a total of 5,828,140 shares of Common Stock and satisfy
the damages judgment in the Shoen Litigation with respect to those
plaintiffs. In addition, on July 19, 1996, the Company paid Cemar,
Inc. (Cemar) approximately $15.9 million to repurchase 2,331,984
shares of Common Stock held by Cemar. On the same date, the
Company paid damages of approximately $43.1 million and statutory
post-judgment, pre-petition date interest of $129,000 to Cecilia M.
Hanlon. On August 6, 1996, the Company funded approximately $8.3
million of post-petition date interest by depositing such amount
into an escrow account (the Escrow Account) pending the outcome of
a dispute involving the entitlement of the plaintiffs in the Shoen
Litigation to post-petition date interest (discussed below). The
Common Stock held by Cemar was transferred into the Company
treasury. In addition, on September 6, 1996, the Company paid
Katabasis International, Inc. (Katabasis) approximately $27.5
million to repurchase 4,041,924 shares of Common Stock held by
Katabasis. On the same date, the Company paid damages of
approximately $74.8 million and statutory post-judgment, pre-
petition date interest of $224,000 to Samuel W. Shoen. The Company
also funded approximately $15.7 million of post-petition date
interest into the Escrow Account. On September 20, 1996, the
Company paid Kattydid, Inc. (Kattydid) approximately $8.7 million
to repurchase 1,282,248 shares of Common Stock held by Kattydid and
paid Katrina (Shoen) Carlson approximately $5.0 million to
repurchase 734,376 shares of Common Stock held by her. On the same
date, the Company paid damages of approximately $37.3 million and
statutory post-judgment, pre-petition date interest of $112,000 to
Katrina Shoen Carlson. The Company also funded approximately $8.0
million of post-petition date interest into the Escrow Account.
Finally, on October 1, 1996, the Company paid MICKL, Inc. (MICKL)
approximately $27.4 million to repurchase 4,035,924 shares of
Common Stock held by MICKL and paid Michael L. Shoen $2,600 to
repurchase 380 shares of Common Stock held by him. On the same
date, the Company paid damages of approximately $73.2 million and
statutory post-judgment, pre-petition date interest of $224,000 to
Michael L. Shoen. The Company also funded approximately $16.2
million of post-petition date interest into the Escrow Account. As
a result of the foregoing transactions, the balance of the judgment
in the Shoen Litigation has been satisfied in full. On October 1,
1996, the Director-Defendants emerged from bankruptcy upon the
filing of a Notice with the bankruptcy court that the effective
date of the reorganized debtors' confirmed Plans has occurred and
that the confirmed Plans have been performed and are substantially
consummated.
As of the date hereof, an issue remains regarding whether or
not the plaintiffs are entitled to statutory post-judgment interest
at the rate of ten percent (10%) per year from February 21, 1995
(the date the Director-Defendants filed for protection under
Chapter 11) until the judgment was satisfied. On July 19, 1996,
the bankruptcy court ruled that the plaintiffs are entitled to such
interest. The Director-Defendants and the Company have appealed
the court's decision. As discussed above, the Company has
deposited approximately $48.2 million into the Escrow Account to
secure payment of the disputed interest, pending the final
resolution of this issue (including all appeals by either side).
If the interest issue is decided adversely to the Company and the
Director-Defendants, the amount deposited into escrow will be
transferred to the plaintiffs. The ultimate outcome of this issue
will not have the effect of increasing or decreasing the Company's
net income, but could reduce shareholders' equity.
<PAGE> 29
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits
2.1 Order Confirming Plan (1)
2.2 Second Amended and Restated Debtor's Plan of
Reorganization Proposed by Edward J. Shoen (1)
3.1 Restated Articles of Incorporation (2)
3.2 Restated By-Laws of AMERCO as of August 27, 1996
4.1 Certificate of Designations, Preferences and
Rights of Series B Preferred Stock
4.2 Certificate of Designations, Preferences and
Rights of Series B Common Stock
10.1 Series B Preferred Stock Purchase Agreement, dated
as of August 30, 1996
10.2 Side Agreement, dated as of October 29, 1996
27 Financial Data Schedule
b. Reports on Form 8-K.
A report on Form 8-K was filed on September 6, 1996 in
connection with the Company's issuance of up to an
aggregate of $600,000,000 of Medium-Term Notes.
_____________________________________
(1) Incorporated by reference to the Company's Registration
Statement on Form S-3, Registration No. 333-1195.
(2) Incorporated by reference to the Company's Quarterly Report on
Form 10-Q for the quarter ended December 31, 1992, file no. 0-7862.
<PAGE> 30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
U-Haul International, Inc.
___________________________________
(Registrant)
Dated: October 31, 1996 By: /S/ DONALD W. MURNEY
___________________________________
Donald W. Murney, Treasurer
(Principal Financial Officer)
<PAGE>
RESTATED
BY-LAWS OF
AMERCO
A NEVADA CORPORATION
Date: As of August 27, 1996
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.
<PAGE>
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 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.
<PAGE>
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
<PAGE>
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 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
<PAGE>
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. 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
<PAGE>
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.
<PAGE>
SECTION 13. Action Without a Meeting:
------------------------
Shareholder action by written consent is prohibited.
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.
<PAGE>
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 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 Chairman of the Board or by any three (3) members of
the Board giving written notice thereof to the Chairman of the
Board, 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.
<PAGE>
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.
<PAGE>
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.
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
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
<PAGE>
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 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:
<PAGE>
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.
<PAGE>
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. The right of first
refusal set forth in this paragraph shall not apply to
shares of the Corporation's Series B Common Stock.
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.
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.
<PAGE>
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
<PAGE>
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.
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.
<PAGE>
CERTIFICATE
I, Gary V. Klinefelter, Secretary of AMERCO, a Nevada
corporation, do hereby certify that the foregoing is a true and
correct copy of the corporation's Restated By-Laws, and that such
Restated By-Laws are in full force and effect as of the date
hereof.
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed the seal of the corporation this 27th day of August,
1996.
/S/ GARY V. KLINEFELTER
___________________________________
Gary V. Klinefelter, Secretary
<PAGE>
CERTIFICATE OF DESIGNATION OF
PREFERENCES AND RIGHTS OF SERIES B PREFERRED STOCK OF
AMERCO
-----------------------------
Pursuant to Section 78.1955(1) of the
General Corporation Law of the State of Nevada
----------------------------
We, Edward J. Shoen and Gary V. Klinefelter, being the
President and the Secretary, respectively, of AMERCO, a Nevada
corporation (the "Corporation"), do hereby certify that, pursuant
to authority conferred upon the Board of Directors by Article 5
of the Corporation's Restated Articles of Incorporation, and in
accordance with the provisions of Section 78.1955(1) of the
General Corporation Law of the State of Nevada, the Board of
Directors has adopted the following resolutions creating and
providing for the issuance of a series of its preferred stock,
designated Series B Preferred Stock:
RESOLVED, that pursuant to the authority vested in
the Board of Directors of the Corporation by Article 5
of the Restated Articles of Incorporation, a series of
preferred stock is hereby established, the distinctive
designation of which shall be "Series B Preferred
Stock" (the "Series B Preferred") and the
qualifications, limitations, or restrictions thereof to
the extent not heretofore set forth in the Restated
Articles of Incorporation of the Corporation are as set
forth in EXHIBIT A to this resolution.
RESOLVED, that the officers of the Corporation
shall be, and each of them hereby is, authorized,
empowered and directed, for and on behalf of the
Corporation, to take all such actions as any such
officer deems necessary or appropriate in order to
effectuate fully the foregoing resolutions, including
the filing of an appropriate certificate relating to
the Series B Preferred with the Nevada Secretary of
State.
<PAGE>
IN WITNESS WHEREOF, we have hereunto set our hands and seals
as President and Secretary, respectively, of the Corporation this
28th day of August, 1996, and we hereby affirm that the foregoing
Certificate is our act and deed and the act and deed of the
Corporation and that the facts stated therein are true.
AMERCO, a Nevada corporation
/S/ EDWARD J. SHOEN
----------------------------------------
Edward J. Shoen,
President
/S/ GARY V. KLINEFELTER
----------------------------------------
Gary V. Klinefelter,
Secretary
<PAGE>
STATE OF ARIZONA )
)
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this
28th day of August, 1996, by Edward J. Shoen, the President of
AMERCO, a Nevada corporation, on behalf of the corporation.
/S/ BLANCHE I. PASSOLT
-----------------------------------
NOTARY PUBLIC
My Commission Expires:
11/20/97
- ----------------------
STATE OF ARIZONA )
)
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this
28th day of August, 1996, by Gary V. Klinefelter, the Secretary
of AMERCO, a Nevada corporation, on behalf of the corporation.
/S/ BLANCHE I. PASSOLT
-----------------------------------
NOTARY PUBLIC
My Commission Expires:
11/20/97
- ----------------------
<PAGE>
EXHIBIT A
AMERCO
SERIES B PREFERRED STOCK
The Series Designated as Series B Preferred Stock (the
"Series B Preferred"), will consist of 100,000 shares and will
have the designations, preferences, voting powers, relative,
participating, optional or other special rights and privileges,
and the qualifications, limitations and restrictions described
below. Shares of the Series B Preferred shall have liquidation
rights as provided in SECTION 2 and shall have no par value.
Certain capitalized terms used below have the meanings given in
SECTION 11.
1. DIVIDENDS AND DISTRIBUTIONS.
A. REGULAR DIVIDENDS. Subject to the prior rights of the
holders of Senior Shares, if any, the Holder, in preference to
the holders of Junior Shares, shall be entitled, in conjunction
with any provision then being made for the holders of Parity
Shares, to receive, when, as and if declared by the Board of
Directors, out of any funds of the Corporation lawfully available
for the payment of dividends, payable on the last day of each
Payment Period, cumulative cash dividends at, but not exceeding,
(i) the product of the Conversion Value times the Floating Rate,
plus (ii) any Additional Amounts, payable on the last day of each
Payment Period following the date of this Certificate. If the
stated dividends are not paid in full, the Series B Preferred and
all Parity Shares shall share ratably in the payment of
dividends, including accumulations thereof, if any, on such
shares in accordance with the sums that would be payable on such
shares if all dividends were paid in full.
B. NOTICE. The Holder will notify the Corporation of any
event occurring after the date of this Certificate which will
entitle the Holder to receive any Additional Amounts as promptly
as practicable after it obtains knowledge thereof but in any
event within thirty (30) days after it obtains knowledge thereof
and determines to request such compensation. Determinations and
allocations by the Holder for purposes hereof of the effect of
any Regulatory Change on its costs of purchasing or holding the
Series B Preferred or on amounts receivable by it in respect of
the Series B Preferred and of the additional amounts required to
compensate the Holder in respect of any Additional Amounts, shall
be prima facie valid provided that such determinations and
allocations are made on a reasonable basis.
C. PRIORITY. Any and all dividends payable on the Series
B Preferred shall be paid in preference and in priority to the
payment of dividends or distributions on any Junior Shares. So
long as any Series B Preferred shares are outstanding, no
dividends whatever shall be paid or declared, nor shall any
distribution be made, on any Junior Shares, other than a dividend
or distribution payable in Junior Shares, nor shall the
Corporation or any subsidiary of the Corporation purchase, redeem
or otherwise acquire for a consideration any Junior Shares,
unless full cumulative dividends have been or contemporaneously
are declared and paid, or declared and a sum sufficient for the
payment thereof set apart for such payment, on the Series B Preferred for
<PAGE>
all Payment Periods terminating on or prior to the date of
payment of such purchase, redemption or acquisition.
2. LIQUIDATION RIGHTS.
A. GENERALLY. In the event of any liquidation, dissolution
or winding up of the Corporation, whether voluntary or
involuntary, before any amount shall be paid to the holders of
any Junior Shares, the Holder of the Series B Preferred shall be
paid first out of the assets of the Corporation available for
distribution to holders of its capital stock an amount per share
equal to, but not exceeding, (i) the Conversion Value, as
appropriately adjusted to reflect any stock split, stock
dividend, combination, recapitalization and the like of the
Series B Preferred, plus (ii) all accrued but unpaid dividends
(including any interest accrued thereon calculated through the
date of liquidation (the "Liquidation Date")). If, upon the
occurrence of a liquidation, dissolution or winding up, the
assets and funds thus distributed to the Holder shall be
insufficient to permit the payment to the Holder of its full
liquidation preferences, then the entire assets and funds of the
Corporation legally available for distribution to the holders of
capital stock (other than Senior Shares) shall be distributed
ratably to the Holder and the holders of any Parity Shares.
B. EVENTS DEEMED A LIQUIDATION. For purposes of this
SECTION 2, the Holder may elect to have treated as a liquidation,
dissolution or winding up of the Corporation the consolidation or
merger of the Corporation with or into any other corporation or
the sale or other transfer in a single transaction or a series of
related transactions of all or substantially all of the assets of
the Corporation, or any other reorganization of the Corporation,
unless the stockholders of the Corporation immediately prior to
any such transaction are holders of a majority of the voting
securities of the surviving or acquiring corporation immediately
thereafter (and for purposes of this calculation equity
securities which any stockholder or the Corporation owned
immediately prior to such merger or consolidation as a
stockholder of another party to the transaction shall be
disregarded).
C. PRIORITY. Any amounts payable on the Series B
Preferred in the event of any liquidation, dissolution or winding
up of the Corporation shall be paid in preference and in priority
to the payment of any amounts payable on Junior Shares.
3. CONVERSION. The Holder has conversion rights as follows
(the "Conversion Rights"):
A. RIGHT TO CONVERT. Upon each of the following to occur
from time to time: (i) August 31, 1997, and for 10 Business Days
thereafter; (ii) the first day of each fiscal quarter of the
Corporation occurring after August 31, 1997, and for 10 Business
Days after the first day of each such fiscal quarter; (iii) the
expiration of ten days after the occurrence of an Event of
Noncompliance under the Stock Purchase Agreement that is not then
cured, and at any time thereafter; (iv) any dividends on the
Series B Preferred becoming in arrears, and at any time
thereafter; (v) the Corporation no longer holding more than 50%
of the outstanding stock and assets of any of Ponderosa Holdings,
Inc., Oxford Life Insurance Company or Republic Western Insurance
Company, and at any time thereafter; or (vi) the Corporation or
any of its subsidiaries completing any Excess Equity Offering,
and at any time thereafter, then each share of Series B Preferred
shall be convertible, at the option of the Holder, into either:
<PAGE>
i. the number of fully paid and nonassessable shares
of Series B Common Stock that results from dividing the
Conversion Price per share in effect at the time of conversion
into the per share Conversion Value but no more than the maximum
amount authorized and available for issuance; or
ii. all of the shares of capital stock of Picacho then
outstanding.
Upon conversion, all accrued but unpaid dividends (including
interest accrued thereon calculated as of the Conversion Date) on
the Series B Preferred shall be paid in cash, to the extent
permitted by applicable law.
B. CONVERSION PRICE AND CONVERSION VALUE. The initial
Conversion Price of the Series B Preferred shall be $25.00 per
share, and the initial Conversion Value of the Series B Preferred
shall be $1,000.00 per share. The initial Conversion Price of
the Series B Preferred shall be subject to adjustment from time
to time as provided in SECTION 3(D).
C. MECHANICS OF CONVERSION. To convert any shares of
Series B Preferred, the Holder shall surrender the certificate or
certificates therefor, duly endorsed, at the principal office of
the Corporation, or notify the Corporation in writing that such
certificates have been lost, stolen or destroyed and agree to
indemnify the Corporation from any loss incurred by it in
connection with such certificates, and shall give written notice
(the "Conversion Notice") to the Corporation at such office that
the Holder elects to convert the same, specifying whether the
Series B Preferred shares are to be converted into Series B
Common Stock or shares of Picacho. As soon as practicable (but
not more than one Business Day) after such delivery, or after
such notification, the Corporation shall issue and deliver at
such office to the Holder, unless the Corporation shall elect
instead to redeem the Series B Preferred as provided in SECTION
5:
i. A certificate or certificates for the number of
shares of Series B Common Stock to which the Holder shall be enti
tled if the Holder has elected to convert the Series B Preferred
into Series B Common Stock; or
ii. A certificate or certificates for all of the
outstanding shares of Picacho, if the Holder has elected to
convert the Series B Preferred into Picacho stock;
and, in either case, a check payable to the Holder in the amount
of any accrued or declared but unpaid dividends payable pursuant
to SECTION 1, if any. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date
of such surrender of the shares of Series B Preferred to be
converted or of the notification of lost certificates and the
persons entitled to shares of Series B Common Stock or Picacho
stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares on such
date (the "Conversion Date"). In the event of a notice of
redemption of any shares of Series B Preferred pursuant to
SECTION 5, the Conversion Rights shall terminate at the close of
business on the Redemption Date, unless default is made in
payment of the redemption price, in which case the Conversion
Rights for such shares shall continue until such payment.
<PAGE>
D. ADJUSTMENTS TO CONVERSION PRICE.
i. ADJUSTMENT OF CONVERSION PRICE. The
Conversion Price of the Series B Preferred shall be adjusted if
the Corporation issues or is deemed to issue Additional Shares of
Common Stock for a consideration per share that is less than the
Conversion Price for the Series B Preferred in effect on the date
of, and immediately prior to, such issue or deemed issue.
ii. DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON
STOCK. If the Corporation at any time or from time to time after
the date of this Certificate issues any Options or Convertible
Securities or shall fix a record date for the determination of
holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of
shares (as set forth in the instrument relating thereto without
regard to any provisions contained therein for a subsequent
adjustment of such number) of Common Stock issuable upon the
exercise of such Options or, in the case of Convertible
Securities and Options therefor, the exercise of such Options and
conversion or exchange of such Convertible Securities, shall be
deemed to be Additional Shares of Common Stock issued as of the
time of such issue or, in case such a record date shall have been
fixed, as of the close of business on such record date, provided
that Additional Shares of Common Stock shall not be deemed to
have been issued unless the consideration per share (determined
pursuant to SECTION 3(D)(IV)) of such Additional Shares of Common
Stock would be less than the Conversion Price in effect on the
date of and immediately prior to such issue, or such record date,
as the case may be, and provided further that in any such case in
which Additional Shares of Common Stock are deemed to be issued:
(1) except as provided in SECTION 3(D)(II)(2), no
further adjustment in the Conversion Price shall be made upon the
subsequent issue of Convertible Securities or shares of Common
Stock upon the exercise of such Options or conversion or exchange
of such Convertible Securities;
(2) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for
any change in the consideration payable to the Corporation, or
change in the number of shares of Common Stock issuable, upon the
exercise, conversion or exchange thereof (other than under or by
reason of provisions designed to protect against dilution), the
Conversion Price computed upon the original issue thereof (or
upon the occurrence of a record date with respect thereto) and
any subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such Options or
the rights of conversion or exchange under such Convertible
Securities; and
(3) no readjustment pursuant to clause (2) above
shall have the effect of increasing the Conversion Price.
iii. ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE
OF ADDITIONAL SHARES OF COMMON STOCK. Except as provided by
SECTION 3(D)(II)(2), in the event the Corporation shall issue
Additional Shares of Common Stock (including Additional Shares of
Common Stock deemed to be issued pursuant to SECTION 3(D)(II))
without consideration or for a consideration per share less
<PAGE>
than the Conversion Price of the Series B Preferred in effect on
the date of and immediately prior to such issue, then and in each
such event the Conversion Price of the Series B Preferred shall
be reduced to the price (calculated to the nearest cent) at which
the Additional Shares of Common Stock are issued.
iv. DETERMINATION OF CONSIDERATION. For purposes
of this SECTION 3(D), the consideration received by the
Corporation for the issue of any Additional Shares of Common
Stock shall be determined after payment of all commissions paid
or discounts given in connection with the issuance or deemed
issuance of the shares and shall be computed as follows:
(1) CASH AND PROPERTY: Such consideration shall:
-----------------
(a) insofar as it consists of cash, be
computed at the aggregate amount of cash received by the
Corporation;
(b) insofar as it consists of property other
than cash, be computed at the fair value thereof at the time of
such issue, as determined by the Board of Directors in the good
faith exercise of its reasonable business judgment; and
(c) in the event Additional Shares of Common
Stock are issued together with other shares or securities or
other assets of the Corporation for consideration that covers
both, be the proportion of such consideration so received for the
Additional Shares of Common Stock, computed as provided in
clauses (a) and (b) above, as determined by the Board of
Directors in the good faith exercise of its reasonable business
judgment.
(2) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the Corporation for
Additional Shares of Common Stock deemed to have been issued
pursuant to SECTION 3(D)(II), relating to Options and Convertible
Securities, shall be determined by dividing:
(a) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of
such Options or Convertible Securities, plus the minimum
aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such
consideration) payable to the Corporation upon the exercise of
such Options or the conversion or exchange of such Convertible
Securities, or in the case of Options for Convertible Securities,
the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities, by
(b) the maximum number of shares of Common
Stock (as set forth in the instruments relating thereto, without
regard to any provision contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such
Options or the conversion or exchange of such Convertible
Securities.
v. OTHER ADJUSTMENTS.
<PAGE>
(a) SUBDIVISIONS, COMBINATIONS, OR
CONSOLIDATIONS OF SERIES B COMMON STOCK. In the event the
outstanding shares of Series B Common Stock shall be subdivided,
combined or consolidated, by stock split, stock dividend,
combination or like event, into a greater or lesser number of
shares of Series B Common Stock, the Conversion Price of the
Series B Preferred in effect immediately prior to such
subdivision, combination, consolidation or stock dividend shall,
concurrently with the effectiveness of such subdivision, combi
nation or consolidation, be proportionately adjusted to achieve
the result that, upon conversion of the Series B Preferred into
Series B Common Stock, the Holder shall receive, as nearly as
possible, the same percentage of the outstanding shares of
Series B Common Stock that it would have had the Series B
Preferred been converted immediately prior to such subdivision,
combination or consolidation.
(b) RECLASSIFICATIONS. In the case, at any
time after the date of this Certificate, of any capital
reorganization or any reclassification of the stock of the
Corporation (other than as a result of a subdivision, combination
or consolidation of shares), or the consolidation or merger of
the Corporation with or into another person (other than a
consolidation or merger (A) in which the Corporation is the
continuing entity and that does not result in any change in the
Common Stock or (B) that is treated as a liquidation pursuant to
SECTION 2(B)), the Conversion Price shall be adjusted so that the
shares of the Series B Preferred shall, after such
reorganization, reclassification, consolidation or merger, be
convertible into the kind and number of shares of stock or other
securities or property of the Corporation or otherwise to which
the Holder would have been entitled if immediately prior to such
reorganization, reclassification, consolidation or merger if the
Holder had converted the shares of the Series B Preferred into
Series B Common Stock. The provisions of this CLAUSE 3(D)(V)(B)
shall similarly apply to successive reorganizations,
reclassifications, consolidations or mergers.
E. NO ADJUSTMENTS TO CONVERSION VALUE. The Corporation
shall not effect any stock split, stock dividend, combination or
recapitalization of the Series B Preferred and, therefore, the
Conversion Value of the Series B Preferred will not be adjusted.
F. CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of
each adjustment or readjustment of the Conversion Price of the
Series B Preferred pursuant to this SECTION 3, the Corporation at
its expense shall promptly compute such adjustment or
readjustment in accordance with the terms of this Certificate and
furnish to the Holder a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon
the written request at any time of the Holder, furnish or cause
to be furnished to the Holder a like certificate setting forth
(i) such adjustments and readjustments, (ii) the Conversion Price
of the Series B Preferred at the time in effect, and (iii) the
number of shares of Series B Common Stock and the amount, if any,
of other property which at the time would be received upon the
conversion of the Series B Preferred.
G. STATUS OF CONVERTED STOCK. In case any shares of
Series B Preferred shall be converted pursuant to SECTION 3, the
shares so converted shall be canceled, shall not be reissuable
and shall cease to be a part of the outstanding capital stock of
the Corporation.
H. FRACTIONAL SHARES. In lieu of any fractional shares of
Series B
<PAGE>
Common Stock to which the Holder would otherwise be entitled
upon conversion, the Corporation shall pay cash equal to such
fraction multiplied by the fair market value of one share of
Series B Common Stock as determined by the Board of Directors in
the good faith exercise of its reasonable business judgment.
I. MISCELLANEOUS.
i. All calculations under this SECTION 3 shall be
made to the nearest cent or to the nearest one hundredth (1/100)
of a share, as the case may be.
ii. The Holder shall have the right to challenge any
determination by the Board of Directors of fair market value
pursuant to this SECTION 3, in which case such determination of
fair market value shall be made by an independent appraiser
selected jointly by the Board of Directors and the Holder, the
cost of such appraisal to be borne equally by the Corporation and
the Holder.
iii. No adjustment in the Conversion Price of the
Series B Preferred need be made if such adjustment would result
in a change in such Conversion Price of less than $0.01. Any
adjustment of less than $0.01 that is not made shall be carried
forward and shall be made at the time of and together with any
subsequent adjustment that, on a cumulative basis, amounts to an
adjustment of $0.01 or more in such Conversion Price.
J. RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Series B Common Stock,
solely for the purpose of effecting the conversion of the shares
of Series B Preferred, such number of its shares of Series B
Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of Series B Preferred.
If at any time the number of authorized but unissued shares of
Series B Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of Series B Preferred,
the Corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized
but unissued shares of Series B Common Stock to such number of
shares as shall be sufficient for such purpose.
4. VOTING RIGHTS.
A. Except as otherwise required by law and SUBSECTION
4(B), the Holder shall have no voting rights with respect to the
Series B Preferred.
B. So long as any of the shares of Series B Preferred are
outstanding, the written consent of the Holder shall be necessary
for authorizing, affecting or validating the amendment,
alteration, or repeal of any of the provisions of the Articles of
Incorporation of the Corporation or of any certificate amendatory
thereof or supplemental thereto (including any certificate of
amendment or any similar document relating to any series of
preferred stock) that would adversely affect the powers,
preferences, or special rights of the Series B Preferred,
including the creation or authorization of any class of Senior
Shares or Parity Shares. Any amendment or any resolution or
action of the Board of Directors that would create or
<PAGE>
issue any series of Junior Shares out of the authorized shares of
preferred stock, or that would authorize, create, or issue any
other Junior Shares (whether or not already authorized), shall
not be considered to affect adversely the powers, preferences, or
special rights of the outstanding shares of the Series B
Preferred.
5. REDEMPTION.
A. OPTIONAL REDEMPTION. If the Holder exercises its
Conversion Rights pursuant to SECTION 3, then instead of
effecting the conversion, the Corporation may, by giving written
notice to the Holder (a "Notice of Redemption") not later than
one Business Day after receiving the Conversion Notice, elect to
redeem all (but not less than all) of the Series B Preferred
outstanding on the Redemption Date.
B. REDEMPTION VALUE. Upon any redemption of the Series B
Preferred, the Corporation shall pay out of funds legally
available therefor in cash a sum per share equal to the
Conversion Value, together with (i) all accrued but unpaid
dividends (including any interest accrued thereon) calculated as
of the Redemption Date, (ii) if the Redemption Date is a date
other than the last day of a Payment Period, the Interim Payment;
and (iii) all other costs, fees, expenses, or amounts the
Corporation is required to pay Holder pursuant to the Stock
Purchase Agreement, regardless of the reason for such redemption
or such costs, fees, expenses, or amounts (collectively the
"Redemption Value").
C. NOTICE OF REDEMPTION. Any Notice of Redemption given
by the Corporation shall be delivered to the Holder, notifying
the Holder of the redemption to be effected. The Notice of
Redemption shall:
i. State that the Series B Preferred is to be
redeemed;
ii. Specify the date (the "Redemption Date") on which
the Series B Preferred is to be redeemed, which shall be not more
than ten Business Days following the date the Corporation
receives the Conversion Notice from the Holder;
iii. Request wire transfer or other instructions for
the payment of the Redemption Value.
D. TRANSFER INSTRUCTIONS. Not less than one Business Day
after delivery of the Notice of Redemption, the Holder shall
provide the Corporation with instructions for wire or other
transfer of the Redemption Value to the Holder.
E. COMPLETING THE REDEMPTION. On the Redemption Date:
i. The Holder shall surrender to the Corporation at
the principal offices of the Corporation the Holder's certificate
or certificates representing the shares to be redeemed or provide
a notice to the Corporation in writing that such certificates
have been lost, stolen or destroyed and that the Holder agrees to
indemnify the Corporation from any loss incurred by it in
connection with such certificates; and
<PAGE>
ii. The Corporation shall pay the Redemption Value to
the Holder by wire or other transfer acceptable to the Holder,
and thereupon each surrendered or lost certificate shall be
canceled.
F. LACK OF LEGALLY AVAILABLE FUNDS. If the funds of the
Corporation legally available for redemption of the Series B
Preferred are insufficient to redeem the total number of shares
of Series B Preferred required to be redeemed on the Redemption
Date, then, at the Holder's election in its sole discretion, the
Corporation either shall redeem that number of shares of Series B
Preferred for which the Corporation has funds legally available
or shall not redeem any of the Series B Preferred.
G. EFFECT OF REDEMPTION. From and after the payment of
the Redemption Value, all rights of the Holder shall cease with
respect to such shares, and such shares shall not thereafter be
transferred on the books of the Corporation or be deemed to be
outstanding for any purpose whatsoever.
6. NOTICES OF RECORD DATE. In the event of any taking by the
Corporation of a record of the holders of any class of securities
for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, any right
to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities or property, or to
receive any other right, the Corporation shall notify the Holder,
at least 10 days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for
the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right.
7. NOTICES. All notices and other communications provided for
in this Certificate shall be given or made in writing and
telecopied, mailed by certified mail return receipt requested or
delivered to the intended recipient at such address as shall be
designated by such person in a notice to each other relevant
person given in accordance with this Section, in addition to any
other notices that may be required by law. All such
communications shall be deemed to have been duly given when
transmitted by telecopy, subject to telephone confirmation of
receipt, or when personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as provided
herein.
8. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE CORPORATION HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE)
ARISING OUT OF OR RELATING TO THE SERIES B PREFERRED SHARES, THE
STOCK PURCHASE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY
OR THE ACTIONS OF THE HOLDER IN THE NEGOTIATION, ADMINISTRATION,
OR ENFORCEMENT THEREOF.
9. INTEREST. Any amounts required to be paid under this
Certificate that are not paid on the first day such payment may
be made and any dividends in
<PAGE>
arrears shall bear interest from that date at the lesser of (a)
the Maximum Rate or (b) the sum of four percent plus the rate per
annum publicly announced from time to time by NationsBank, N.A.
as its prime rate in effect at its principal office in Charlotte,
North Carolina.
10. MAXIMUM RATE. Notwithstanding anything to the contrary
contained herein, in the event the Series B Preferred shall be
deemed to be debt instead of equity, no provisions of this
Certificate shall require the payment or permit the collection of
interest in excess of the Maximum Rate. If any excess of
interest in such respect shall be adjudicated to be so provided
in this Certificate or otherwise in connection with the Series B
Preferred, the provisions of this paragraph shall govern and
prevail, and neither the Corporation nor the successors or
assigns of the Corporation shall be obligated to pay the excess
amount of such interest, or any other excess sum paid with
respect to the Series B Preferred. If, for any reason, interest
in excess of the Maximum Rate shall be deemed charged, required
or permitted by any court of competent jurisdiction, any such
excess shall be applied as a payment and reduction of the
principal of indebtedness deemed to be evidenced by the Series B
Preferred; and, if such principal has been paid in full, any
remaining excess shall forthwith be paid to the Corporation. In
determining whether or not the interest paid or payable exceed
the Maximum Rate, the Corporation and the Holder shall, to the
extent permitted by applicable law, (i) characterize any
nonprincipal payment as an expense, fee, or premium rather than
as interest, (ii) exclude voluntary prepayments and the effects
thereof and (iii) amortize, prorate, allocate, and spread in
equal or unequal parts the total amount of interest throughout
the entire term of the indebtedness deemed to be evidenced by the
Series B Preferred so that the interest for the entire period
does not exceed the Maximum Rate.
11. DEFINITIONS.
a. Capitalized terms used in this Certificate and not
otherwise defined have the meanings given to those terms in the
Series B Stock Purchase Agreement between the Corporation and
Blue Ridge Investments, LLC, dated August 30, 1996.
b. "Additional Amounts" means such amounts, if any, as are
necessary to compensate the Holder for any costs incurred by
Holder which the Holder determines are attributable, directly or
indirectly, to its purchase or holding of the Series B Preferred
or any reduction in any amount receivable by the Holder as a
holder of the Series B Preferred to the extent such costs and
reductions in amount are not reflected in any dividends, fees,
reimbursements or other amounts received by the Holder hereunder
or under the Stock Purchase Agreement, resulting from (i) an
increase (over the dividend rate paid hereunder) in the cost of
funding the purchase of the Series B Preferred, or (ii) any
Regulatory Change which:
(A) changes the basis of taxation of any amounts
payable generally to NationsBank under Eurodollar loans
(other than taxes imposed on the overall net income of
NationsBank or its applicable lending office for any of such
loans by the jurisdiction in which NationsBank has its
principal office or such applicable lending office);
(B) imposes or modifies any reserve, special deposit,
minimum capital, capital ratio, or similar requirement
relating to any extensions of credit or other assets of, or
any deposits with or other liabilities or commitments of,
NationsBank (including any of such loans or any deposits
referred to in the definition of "Floating Rate" herein); or
<PAGE>
(C) imposes any other condition generally affecting
loans by NationsBank or any of such extensions of credit or
liabilities or commitments.
c. "Additional Shares of Common Stock" means all shares of
Common Stock issued (or, pursuant to SECTION 3(D)(II), deemed to
be issued) by the Corporation after the date of this Certificate,
other than shares of Common Stock issued or issuable:
i. upon conversion of shares of Series B Preferred;
ii. as a dividend or distribution on Series B
Preferred;
iii. in a transaction described in SECTION 3(D)(V);
iv. by way of dividend or other distribution on shares
of Common Stock excluded from the definition of Additional Shares
of Common Stock.
d. "Affiliate" has the meaning given that term in Rule 405
promulgated by the Securities and Exchange Commission under the
Securities Act.
e. "Business Day" means (a) any day on which commercial
banks are not authorized or required to close in Charlotte, North
Carolina and (b) with respect to all payments, Conversions,
Payment Periods, and notices, any day which is a Business Day
described in clause (a) above and which is also a day on which
dealings in dollar deposits are carried out in the London
interbank market.
f. "Common Stock" means shares of the Corporation's common
stock, par value $0.25 per share, serial common stock, or other
securities entitled generally to vote in the election of
directors of the Corporation.
g. "Conversion Date" has the meaning given in SECTION
3(C).
h. "Conversion Notice" has the meaning given in SECTION
3(C).
i. "Conversion Price" has the meaning given in SECTION
3(B).
j. "Conversion Value" has the meaning given in SECTION
3(B).
k. "Convertible Securities" means any evidences of
indebtedness, shares or other securities convertible into or
exchangeable for Common Stock, except the Series B Preferred.
l. "Corporation" means AMERCO, a Nevada corporation.
m. "Excess Equity Offering" means any offer or sale of
equity securities of the Corporation or any of its subsidiaries,
whether public or private, after the date of this Certificate,
other than (i) the offer and sale of Series B Preferred issued to
Holder, (ii) the offer and sale by the
<PAGE>
Corporation of up to $125,000,000 of equity securities in a
single transaction occurring on or before March 1, 1997, and
(iii) issuances of equity securities to employees of the
Corporation or its subsidiaries pursuant to written employee
benefit plans existing on the date of this Certificate in the
maximum amount permitted under such plans or arrangements on the
date of this Certificate.
n. "Floating Rate" means, for any Payment Period, the rate
per annum that is the lesser of (x) the sum of (i) two and one-
quarter percent (2.25%), and (ii) the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) two Business Days prior to the first day
of such Payment Period for a term comparable to such Payment
Period, or if for any reason such rate is not available, the rate
per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) appearing on Reuters Screen LIBO Page (or any successor page)
as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such Payment Period for a term comparable to
such Payment Period; provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall
be the arithmetic mean of all such rates, or (y) the Maximum
Rate. Dividends shall be computed on the basis of a year of 360
days and the actual number of days elapsed (including the first
day but excluding the last day) during the Payment Period unless
such calculation would result in the dividends exceeding the
Maximum Rate, in which case dividends shall be calculated on the
basis of a year of 365 or 366 days, as the case may be.
Notwithstanding the first sentence of this paragraph, if at any
time the dividend is limited by the terms of this Certificate to
the Maximum Rate, then any subsequent reduction in the Floating
Rate shall not reduce the dividend below the Maximum Rate until
the aggregate amount of dividends accrued equals the aggregate
amount of dividends which would have accrued on the Series B
Preferred if the dividend specified in the first sentence of this
paragraph had at all times been in effect.
o. "Holder" means the holder or holders of record of the
Series B Preferred.
p. "Interim Payment" means such amount or amounts as shall
be sufficient to compensate the Holder for any loss, cost, or
expense incurred by the Holder as a result of any payment or
prepayment for any reason on a date other than the last day of a
Payment Period. Without limiting the effect of the preceding
sentence, such compensation shall include an amount equal to the
excess, if any, of (i) the amount of dividends which otherwise
would have accrued on the Conversion Value of the Series B
Preferred redeemed from the period from the date of such
redemption to the last day of the Payment Period at the
applicable rate of dividends for such Series B Preferred provided
for herein, over (ii) the interest component of the amount the
Holder would have bid in the London interbank market for dollar
deposits of leading banks in amounts comparable to the Conversion
Value of the Series B Preferred redeemed and with the maturities
comparable to the applicable Payment Period.
q. "Junior Shares" means all classes and series of shares
that, by the terms of the Corporation's Articles of
Incorporation, or by law, shall be subordinate to the Series B
Preferred with respect to the right of the holders thereof to
receive dividends and to participate in the assets of the
Corporation distributable to shareholders upon any liquidation,
dissolution or winding-up of the Corporation.
<PAGE>
r. "Liquidation Date" has the meaning given in SECTION
2(A).
s. "Maximum Rate" means the maximum rate of nonusurious
interest permitted from day to day by applicable law, and
calculated after taking into account any and all relevant fees,
payments, and other charges contracted for, charged or received
which are deemed to be interest under applicable law.
t. "NationsBank" means NationsBank Corporation, a Delaware
corporation.
u. "Options" means rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock
or Convertible Securities, other than the Series B Preferred.
v. "Parity Shares" means all classes and series of shares
that, by the terms of the Corporation's Articles of
Incorporation, or by law, shall be on parity with the Series B
Preferred with respect to the right of the holders thereof to
receive dividends and to participate in the assets of the
Corporation distributable to shareholders upon any liquidation,
dissolution or winding-up of the Corporation.
w. "Payment Period" means each period commencing on the
date any shares of Series B Preferred are first issued or, in the
case of each subsequent, successive Payment Period, the last day
of the next preceding Payment Period, and ending on the
numerically corresponding day in the first, second or third
calendar month thereafter, as the Holder may select by written
notice to the Corporation at least three days before the the
commencement of the applicable Payment Period, except that each
such Payment Period which commences on the last Business Day of a
calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent
calendar month. Notwithstanding the foregoing: (a) each Payment
Period which would otherwise end on a day which is not a Business
Day shall end on the next succeeding Business Day (or, if such
succeeding Business Day falls in the next succeeding calendar
month, on the next preceding Business Day); (b) any Payment
Period which would otherwise extend beyond a Conversion Date,
Redemption Date or Liquidation Date shall end on the Conversion
Date, Redemption Date or Liquidation Date, as appropriate; and
(c) no Payment Period shall have a duration of less than one (1)
month. If Holder shall fail to give the Corporation a notice of
the length of a Payment Period prior to the end of the then
current Payment Period, such Payment Period shall automatically
be continued on the last day thereof as Payment Period having a
term of one month.
x. "Picacho" means Picacho Peak Investment Co., a Nevada
corporation.
y. "Redemption Date" has the meaning given in SECTION
5(C).
z. "Regulatory Change" means any change after the date of
this Certificate in United States federal, state or foreign laws
or regulations (including Regulation D of the Board of Governors
of the Federal Reserve System as the same may be amended or
supplemented from time to time) or the
<PAGE>
adoption or making after such date of any interpretations,
directives or requests applying to a class of institutions
including NationsBank of or under any United States federal,
state or foreign laws or regulations (whether or not having the
force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
aa. "Senior Shares" means all classes and series of shares,
including the Corporation's Series A 8 1/2% Preferred Stock, that,
by the terms of the Corporation's Articles of Incorporation, or
by law, shall be senior to the Series B Preferred with respect to
the right of the holders thereof to receive dividends and to
participate in the assets of the Corporation distributable to
shareholders upon any liquidation, dissolution or winding-up of
the Corporation.
bb. "Series B Common Stock" means the Series B common
stock, $0.25 par value per share, of the Corporation.
cc. "Stock Purchase Agreement" means the Series B Stock
Purchase Agreement between the Corporation and Blue Ridge
Investments, LLC, dated August 30, 1996.
<PAGE>
CERTIFICATE OF DESIGNATION, PREFERENCE, AND RIGHTS OF
SERIES B COMMON STOCK
OF
AMERCO
- -----------------------------------------------------------------
Under Section 78.1955(1) of the Nevada General Corporation Law
- -----------------------------------------------------------------
We, Edward J. Shoen and Gary V. Klinefelter, being the
President and the Secretary, respectively, of AMERCO, a
corporation organized and existing under the laws of Nevada (the
"Corporation"), do hereby certify that, pursuant to authority
conferred upon the Board of Directors by the Corporation's
Restated Articles of Incorporation (the "Articles of
Incorporation") and the Nevada General Corporation Law, the Board
of Directors adopted, by unanimous written consent, the following
resolutions providing for the creation of a series of Serial
Common Stock pursuant to Article 5 of the Articles of
Incorporation:
RESOLVED, that pursuant to authority vested in the Board of
Directors of the Corporation by Article 5 of the Articles of
Incorporation, a series of common stock is hereby established,
the preferences and relative participating, optional, or other
special rights of such series of Serial Common Stock and the
qualifications, limitations, or restrictions thereof to the
extent not heretofore set forth in the Articles of Incorporation
as from time to time amended, are as follows:
(a) Designation. A series of Serial Common Stock (as
-----------
defined in the Articles of Incorporation) is hereby designated
"Series B Common Stock." The number of shares constituting the
Series B Common Stock is 10,000,000. Shares of the Series B
Common Stock shall have a par value of $0.25.
(b) Dividends and Distributions. Shares of the Series
---------------------------
B Common Stock shall be entitled to receive such dividends and
distributions as may be declared by the Board of Directors from
time to time on a pari passu basis with the Corporation's Common
Stock and Series A Common Stock and shall be payable, when and as
declared by the Board of Directors.
(c) Conversion. The holders of shares of the Series B
----------
Common Stock shall not have any rights to convert such shares
into or exchange such shares for shares of any other class or
classes or of any other series of any class or classes of stock
of the Corporation.
(d) Voting. The shares of the Series B Common Stock
------
shall be entitled to one-tenth (1/10) of one vote per share.
(e) Liquidation Rights. Upon the dissolution,
-------------------
liquidation, or winding up of the affairs of the Corporation,
whether voluntary or involuntary, the Series B Common Stock shall
be entitled to distribution of the assets of the Corporation on a
pari passu basis with the Corporation's Common Stock and Series A
Common Stock.
<PAGE>
IN WITNESS WHEREOF, we have hereunto set our hands and
seals as President and Secretary, respectively, of the
Corporation this 28th day of August, 1996 and we hereby affirm
that the foregoing Certificate is our act and deed and the act
and deed of the Corporation and that the facts stated therein are
true.
AMERCO, a Nevada corporation
/S/ EDWARD J. SHOEN
-----------------------------------
Edward J. Shoen
President
/S/ GARY V. KLINEFELTER
-----------------------------------
Gary V. Klinefelter
Secretary
<PAGE>
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this
28th day of August, 1996, by Edward J. Shoen, the President of
AMERCO, a Nevada corporation, on behalf of the corporation.
/S/ NANCY JO BEILEY
-----------------------------------
NOTARY PUBLIC
My Commission Expires:
5/22/99
- -------------------------
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this
28th day of August, 1996, by Gary V. Klinefelter, the Secretary
of AMERCO, a Nevada corporation, on behalf of the corporation.
/S/ NANCY JO BEILEY
-----------------------------------
NOTARY PUBLIC
My Commission Expires:
5/22/99
- ------------------------
<PAGE>
AMERCO
_________________________________________
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
August 30, 1996
___________________________________________
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE I.
DESCRIPTION OF TRANSACTION.................................1
--------------------------
1.1 Description of Securities........................1
-------------------------
1.2 Purchase of Series B Preferred...................1
------------------------------
1.3 Closing..........................................1
-------
ARTICLE II.
Representations and Warranties of the Corporation..........1
-------------------------------------------------
2.1 Corporate Existence..............................1
-------------------
2.2 Corporate Authority..............................2
-------------------
2.3 Financial Statements.............................2
--------------------
2.4 Corporate Action; No Breach......................2
---------------------------
2.5 Operation of Business............................2
---------------------
2.6 Litigation and Judgments.........................3
------------------------
2.7 Enforceability...................................3
--------------
2.8 Approvals........................................3
---------
2.9 Debt.............................................3
----
2.10 Rating...........................................3
------
2.11 Taxes............................................3
-----
2.12 Margin Securities................................4
-----------------
2.13 ERISA............................................4
-----
2.14 Disclosure.......................................4
----------
2.15 Capitalization...................................4
--------------
2.16 Agreements.......................................5
----------
2.17 Compliance with Laws.............................5
--------------------
2.18 Investment Company Act...........................5
----------------------
2.19 Public Utility Holding Company Act..............5
----------------------------------
2.20 Environmental Matters............................5
---------------------
2.21 Labor Disputes and Acts of God...................6
------------------------------
ARTICLE III.
Representations and Warranties of the Holder...............7
--------------------------------------------
3.1 Organization and Good Standing...................7
------------------------------
3.2 Authorization....................................7
-------------
3.3 Enforceability...................................7
--------------
3.4 Accredited Investor..............................7
-------------------
3.5 Investment.......................................7
---------
3.6 Access to Data...................................7
--------------
<PAGE>
ARTICLE IV.
Positive Covenants.........................................7
------------------
4.1 Existence; Business and Properties...............8
----------------------------------
4.2 Insurance........................................8
---------
4.3 Obligations and Taxes............................8
---------------------
4.4 Financial Statements, Reports, etc...............8
-----------------------------------
4.5 ERISA...........................................11
-----
4.6 Maintaining Records: Access to Properties and
-------------------------------------------------
Inspections.....................................12
-----------
4.7 Use of Proceeds.................................12
---------------
4.8 Ownership and Operation of Picacho..............12
----------------------------------
4.9 Further Assurances..............................12
------------------
4.10 Compliance with Other Instruments...............12
---------------------------------
4.11 Further Assurances Regarding Conversion.........13
---------------------------------------
ARTICLE V.
Conditions to Closing of Holder...........................13
------------------------------
5.1 Representations and Warranties Correct..........13
--------------------------------------
5.2 Covenants.......................................13
---------
5.3 Certificates of Designation.....................13
---------------------------
5.4 Delivery of Documents...........................13
---------------------
5.5 Closing of Loan Agreement.......................14
-------------------------
5.6 Legal Matters...................................14
-------------
ARTICLE VI.
Conditions to Closing of Corporation......................14
------------------------------------
6.1 Representations and Warranties Correct..........14
--------------------------------------
6.2 Covenants.......................................14
---------
6.3 Officers' Certificate...........................14
---------------------
6.4 Legal Matters...................................14
-------------
ARTICLE VII.
Registration Rights.......................................14
-------------------
7.1 Required Registrations..........................14
----------------------
7.2 Form S-3........................................15
--------
7.3 Procedure for Registration......................15
--------------------------
7.4 Indemnification.................................16
---------------
7.5 Rule 144 Requirements...........................17
---------------------
7.6 Obligations in a Registration...................17
-----------------------------
7.7 Limitations on Subsequent Registration Rights...17
---------------------------------------------
ARTICLE VIII.
Definitions...............................................18
-----------
8.1 Definitions.....................................18
-----------
<PAGE>
8.2 Other Definitional Provisions...................23
-----------------------------
8.3 Accounting Terms and Determinations.............24
-----------------------------------
ARTICLE IX.
Miscellaneous.............................................24
-------------
9.1 Expenses........................................24
--------
9.2 Indemnification.................................25
---------------
9.3 Limitation of Liability.........................25
-----------------------
9.4 No Duty.........................................26
-------
9.5 Equitable Relief................................26
----------------
9.6 No Waiver; Cumulative Remedies..................26
------------------------------
9.7 Successors and Assigns..........................26
----------------------
9.8 Survival........................................26
--------
9.9 ENTIRE AGREEMENT................................26
----------------
9.10 Notices.........................................27
-------
9.11 Governing Law; Submission to Jurisdiction; Service
--------------------------------------------------
of Process......................................27
----------
9.12 Counterparts....................................27
------------
9.13 Severability....................................27
------------
9.14 Headings........................................28
--------
9.15 Construction....................................28
------------
9.16 Independence of Covenants.......................28
-------------------------
9.17 WAIVER OF JURY TRIAL............................28
--------------------
List of Attachments:
- -------------------
Exhibit A - Certificate of Designation for Series B Preferred Stock
Exhibit B - Certificate of Designation for Series C Common Stock
Exhibit C - Form of Note
<PAGE>
AMERCO
SERIES B PREFERRED STOCK
PURCHASE AGREEMENT
AMERCO, a Nevada corporation (the "Corporation"), and Blue
Ridge Investments, LLC, a Delaware limited liability company,
enter into this Agreement dated as of August 30, 1996, relating
to the issuance by the Corporation of certain of its securities.
Certain capitalized terms used in this Agreement are defined in
Article 8.
ARTICLE I.
DESCRIPTION OF TRANSACTION
--------------------------
1.1 Description of Securities. The securities to be issued
-------------------------
pursuant to this Agreement are the Series B Preferred Stock, no par value
(the "Series B Preferred"), of the Corporation. The Series B
Preferred will be convertible, at the Holder's option, into
either shares of the Corporation's Series B Common Stock, $.25
par value per share (the "Series B Common Stock") or all of the
outstanding shares of Picacho, as provided in the Certificate of
Designation. Any securities of the Corporation issued or
issuable upon conversion of the Series B Preferred are referred
to as "Conversion Shares."
1.2 Purchase of Series B Preferred. The Corporation agrees
------------------------------
to issue to the Holder and the Holder agrees to purchase from the
Corporation, a total of 100,000 shares of its authorized but
unissued Series B Preferred for a total purchase price of
$100,000,000.
1.3 Closing. The closing (the "Closing") of the purchase
-------
and sale of the Series B Preferred will take place at 9:00 a.m.,
local time, on the date (the "Closing Date") of execution of this
Agreement, at the offices of Snell & Wilmer, One Arizona Center,
Phoenix, Arizona, or at such other date and place as agreed to by
the parties. At the Closing, the Corporation will deliver to the
Holder a certificate registered in the name of the Holder or its
nominee representing the Series B Preferred, upon delivery by the
Holder of (i) payment of $40,000,000 by wire or other transfer;
and (ii) a promissory note in the principal amount of $60,000,000
in the form attached as Exhibit C.
ARTICLE II.
Representations and Warranties of the Corporation
-------------------------------------------------
The Corporation represents and warrants to the Holder that:
2.1 Corporate Existence. The Corporation and each of its
-------------------
Subsidiaries (a) is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction
of its incorporation; (b) has all requisite corporate power and
<PAGE>
authority to own its assets and carry on its business as now
being or as proposed to be conducted; and (c) is qualified to do
business and in good standing in all jurisdictions in which the
nature of its business makes such qualification necessary.
2.2 Corporate Authority. The Corporation has the corporate
-------------------
power and authority and legal right to execute, deliver, and
perform its obligations under this Agreement and the other
Transaction Documents to which it is or may become a party.
2.3 Financial Statements. The Corporation has delivered to
--------------------
the Holder the Corporation's Form 10-K, which contains audited
consolidated financial statements of the Corporation and its
Subsidiaries as at and for the fiscal year ended March 31, 1996,
and has delivered to the Holder unaudited consolidated and
consolidating financial statements of the Corporation and its
Subsidiaries for the three-month period ended June 30, 1996.
Such financial statements are complete and correct, have been
prepared in accordance with GAAP, and fairly and accurately
present, on a consolidated and consolidating basis, the financial
condition of the Corporation and its Subsidiaries as of the
respective dates indicated therein and the results of operations
for the respective periods indicated therein subject, in the case
of the unaudited interim financial statements, to changes
resulting from normal year-end adjustments (none of which would,
either alone or in the aggregate, be materially adverse to the
financial condition or operating results of the Corporation).
Neither the Corporation nor any of its Subsidiaries has any
material contingent liabilities, liabilities for taxes, unusual
forward or long-term commitments, or unrealized or anticipated
losses from any unfavorable commitments except as referred to or
reflected in such financial statements. There has been no
material adverse change in the business, condition (financial or
otherwise), operations, prospects, or Properties of the
Corporation or any of its Subsidiaries since the date of the most
recent financial statements referred to in this Section.
2.4 Corporate Action; No Breach. The execution, delivery,
---------------------------
and performance by the Corporation of this Agreement and the
other Transaction Documents to which either the Corporation or
Picacho is or may become a party and compliance with the terms
and provisions hereof and thereof have been duly authorized by
all requisite corporate action on the part of the Corporation and
Picacho and do not and will not (a) violate or conflict with, or
result in a breach of, or require any consent under (i) the
articles of incorporation or bylaws of the Corporation or any of
the Subsidiaries, (ii) any applicable law, rule, or regulation or
any order, writ, injunction, or decree of any Governmental
Authority or arbitrator, or (iii) any agreement or instrument to
which the Corporation or any of the Subsidiaries is a party or by
which any of them or any of their Property is bound or subject,
or (b) constitute a default under any such agreement or
instrument, or result in the creation or imposition of any Lien
upon any of the revenues or Property of the Corporation or any
Subsidiary.
2.5 Operation of Business. The Corporation and each of its
---------------------
Subsidiaries possess all licenses, permits, franchises, patents,
copyrights, trademarks, and tradenames, or rights thereto,
necessary to conduct their respective businesses substantially as
now conducted and as presently proposed to be conducted, and the
Corporation and each of its Subsidiaries are not in violation of
any valid rights of others with respect to any of the foregoing.
<PAGE>
2.6 Litigation and Judgments. Except as disclosed in the
------------------------
Form 10-K, there is no action, suit, investigation, or
proceeding before or by any Governmental Authority or arbitrator
pending, or to the knowledge of the Corporation, threatened
against or affecting the Corporation or any Subsidiary, that
would, if adversely determined, have a Material Adverse Effect.
There are no outstanding judgments against the Corporation or any
Subsidiary.
2.7 Enforceability. This Agreement constitutes, and the
--------------
other Transaction Documents to which the Corporation is party,
when delivered, shall constitute the legal, valid, and binding
obligations of the Corporation, enforceable against the
Corporation in accordance with their respective terms, except as
limited by bankruptcy, insolvency, or other laws of general
application. The Series B Preferred, when issued in compliance
with the provisions of this Agreement, will be validly issued,
will be fully paid and nonassessable, and will have the rights,
preferences, and privileges described in Exhibit A. Series B
----------
Common Stock issuable upon conversion of the Series B Preferred
has been duly and validly reserved for issuance and, when issued
in compliance with the provisions of this Agreement and Exhibit
-------
A, will be validly issued, will be fully paid and nonassessable
- -
and will have the rights, preferences and privileges described in
EXHIBIT B; and the Series B Preferred and such shares of Series B
Common Stock will be free of any Liens, other than as set forth
in this Agreement, and any Liens created by or imposed upon the
holders as the result of the general application of federal or
state securities laws. The shares of Series B Common Stock
issuable upon conversion of the Series B Preferred are not
subject to any preemptive or similar rights or rights of first
refusal, except as set forth in this Agreement.
2.8 Approvals. No authorization, approval, or consent of,
---------
and no filing or registration with, any Governmental Authority or
third party is or will be necessary for the execution, delivery,
or performance by the Corporation and Picacho of this Agreement
and the other Transaction Documents to which either the
Corporation or Picacho is or may become a party or for the
validity or enforceability thereof.
2.9 Debt. The Corporation and its Subsidiaries have no
----
Debt, except as reflected in the financial statements described
in Section 2.3 or incurred in the ordinary course of business
after the date of those financial statements.
2.10 Rating. The Company's senior unsecured debt is
------
rated BBB- or higher by Standard & Poor's Corporation.
2.11 Taxes. The Corporation and each Subsidiary have
-----
filed all tax returns (federal, state, and local) required to be
filed, including all income, franchise, employment, property, and
sales tax returns, and have paid all of their respective
liabilities for taxes, assessments, governmental charges, and
other levies that are due and payable. The Corporation knows of
no pending investigation of the Corporation or any Subsidiary by
any taxing authority or of any pending but unassessed tax
liability of the Corporation or any Subsidiary. The federal
income tax liability of the Corporation and its Subsidiaries has
been audited by the Internal Revenue Service and has been finally
determined and satisfied for all taxable years up to and
including the taxable year ended March 31, 1993.
<PAGE>
2.12 Margin Securities. Neither the Corporation nor
------------------
any Subsidiary is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of
Regulations G, T, U, or X of the Board of Governors of the
Federal Reserve System), and no part of the purchase price for
the Series B Preferred will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of
purchasing or carrying margin stock.
2.13 ERISA. The Corporation and each Subsidiary are in
-----
compliance in all material respects with all applicable
provisions of ERISA. Neither a Reportable Event nor a Prohibited
Transaction has occurred and is continuing with respect to any
Plan. No notice of intent to terminate a Plan has been filed,
nor has any Plan been terminated. No circumstances exist which
constitute grounds entitling the PBGC to institute proceedings to
terminate, or appoint a trustee to administer, a Plan, nor has
the PBGC instituted any such proceedings. Neither the
Corporation nor any ERISA Affiliate has completely or partially
withdrawn from a Multiemployer Plan. The Corporation and each
ERISA Affiliate have met their minimum funding requirements under
ERISA with respect to all of their Plans, and the present value
of all vested benefits under each Plan do not exceed the fair
market value of all Plan assets allocable to such benefits, as
determined on the most recent valuation date of the Plan and in
accordance with ERISA. Neither the Corporation nor any ERISA
Affiliate has incurred any liability to the PBGC under ERISA.
2.14 Disclosure. No statement, information, report,
----------
representation, or warranty made by the Corporation in this
Agreement in any other Transaction Document or any of the
Corporation's filings with the Securities and Exchange Commission
since March 31, 1996, or furnished to the Holder in connection
with this Agreement or any transaction contemplated hereby
contains any untrue statement of a material fact or omits to
state any material fact necessary to make the statements herein
or therein not misleading. There is no fact known to the
Corporation which has had a Material Adverse Effect, or which
might in the future have a Material Adverse Effect that has not
been disclosed to the Holder.
2.15 Capitalization.
--------------
(a) The authorized, issued and outstanding Capital
Stock of the Corporation is as described in the financial
statements of the Corporation delivered to the Holder pursuant to
Section 2.3.
(b) The Corporation has no material Subsidiaries other
than Picacho and those listed in Exhibit 21 to the Form 10-K,
which sets forth the jurisdiction of incorporation of each
Subsidiary and the ownership of the outstanding Capital Stock of
each Subsidiary. The Corporation or its Subsidiaries own all of
the outstanding shares of Capital Stock of each of the
Subsidiaries of record and beneficially, free and clear of all
Liens.
(c) All of the outstanding equity securities of the
Corporation and its Subsidiaries have been validly issued, are
fully paid, and are nonassessable (except for the shares of
capital stock of Oxford Life Insurance Company and Republic
Western Insurance Company that are further assessable to the
<PAGE>
extent of their respective par values, in accordance with Article
14, Section 11 of the Constitution of the State of Arizona) and
have not been issued in violation of any preemptive rights.
There are no outstanding subscriptions, options, warrants, calls,
or rights (including preemptive rights) to acquire, and no
outstanding securities or instruments convertible into, Capital
Stock of the Corporation or any of its Subsidiaries, except that
Paul F. Shoen and Sophia M. Shoen have certain limited rights to
exchange their shares of Common Stock for other classes of the
Corporation's stock pursuant to certain Share Repurchase and
Registration Rights Agreements dated as of March 1, 1992 and May
1, 1992, and except that the Holder has certain rights under the
Registration Rights Agreement dated the same date as this
Agreement.
2.16 Agreements. Neither the Corporation nor any
----------
Subsidiary is a party to any indenture, loan, or credit
agreement, or to any lease or other agreement or instrument, or
subject to any charter or corporate restriction that could have a
Material Adverse Effect. Neither the Corporation nor any
Subsidiary is in default in any respect in the performance,
observance, or fulfillment of any of the obligations, covenants,
or conditions contained in any agreement or instrument material
to its business to which it is a party.
2.17 Compliance with Laws. Neither the Corporation nor
--------------------
any Subsidiary is in violation in any material respect of any
law, rule, regulation, order, or decree of any Governmental
Authority or arbitrator.
2.18 Investment Company Act. Neither the Corporation
----------------------
nor any Subsidiary is an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
2.19 Public Utility Holding Company Act. Neither the
----------------------------------
Corporation nor any Subsidiary is a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of
a "holding company" or a "public utility" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
2.20 Environmental Matters.
---------------------
(a) Except as specifically disclosed in the Form 10-K
and except for instances of noncompliance with or exceptions to
the following that could not have, individually or in the
aggregate, a Material Adverse Effect:
(i) The Corporation, each Subsidiary, and all of
their respective Properties and operations are in full compliance
with all Environmental Laws. The Corporation is not aware of,
nor has the Corporation received notice of, any past, present, or
future conditions, events, activities, practices, or incidents
which may interfere with or prevent the compliance or continued
compliance of the Corporation and the Subsidiaries with all
Environmental Laws;
(ii) The Corporation and each Subsidiary have
obtained all permits, licenses, and authorizations that are
required under applicable Environmental Laws, and all such
<PAGE>
permits, licenses, and authorizations are in good standing and
the Corporation and its Subsidiaries are in compliance with all
of the terms and conditions thereof;
(iii) No Hazardous Materials exist on, about,
or within or have been used, generated, stored, transported,
disposed of on, or Released from any of the Properties of the
Corporation or any Subsidiary except in compliance with
applicable Environmental Laws. The use which the Corporation and
the Subsidiaries make and intend to make of their respective
Properties will not result in the use, generation, storage,
transportation, accumulation, disposal, or Release of any
Hazardous Material on, in, or from any of their Properties except
in compliance with applicable Environmental Laws;
(iv) Neither the Corporation nor any of its
Subsidiaries nor any of their respective currently or previously
owned or leased Properties or operations is subject to any
outstanding or, to the best of the Corporation's knowledge,
threatened order from or agreement with any Governmental
Authority or other Person or subject to any judicial or
administrative proceeding with respect to (i) failure to comply
with Environmental Laws, (ii) Remedial Action, or (iii) any
Environmental Liabilities;
(v) There are no conditions or circumstances
associated with the currently or previously owned or leased
Properties or operations of the Corporation or any of its
Subsidiaries that could reasonably be expected to give rise to
any Environmental Liabilities. Neither the Corporation nor any
of its Subsidiaries is subject to any Environmental Liabilities;
(vi) Neither the Corporation nor any of its
Subsidiaries is a treatment, storage, or disposal facility
requiring a permit under the Resource Conservation and Recovery
Act, 42 U.S.C. section 6901 et seq., regulations thereunder or any
------
comparable provision of state law. The Corporation and its
Subsidiaries are compliance with all applicable financial
responsibility requirements of all Environmental Laws; and
(vii) Neither the Corporation nor any of its
Subsidiaries has filed or failed to file any notice required
under applicable Environmental Law reporting a Release.
(b) No Lien arising under any Environmental Law has
attached to any Property or revenues of the Corporation or its
Subsidiaries.
2.21 Labor Disputes and Acts of God. Since March 31,
------------------------------
1996, neither the business nor the Properties of the Corporation
or any Subsidiary have been affected by any fire, explosion,
accident, strike, lockout, or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public
enemy, or other casualty (whether or not covered by insurance)
that is having or could have a Material Adverse Effect.
<PAGE>
ARTICLE III.
Representations and Warranties of the Holder
--------------------------------------------
The Holder hereby jointly represents and warrants to the
Corporation that the following are true and correct as of the
date hereof:
3.1 Organization and Good Standing. The Holder has all
------------------------------
requisite power and authority to execute and deliver this
Agreement and to carry out and perform its obligations hereunder.
3.2 Authorization. The execution, delivery and
-------------
performance of this Agreement have been duly authorized by all
necessary action on the part of the Holder.
3.3 Enforceability. This Agreement constitutes the
--------------
legal, valid and binding obligation of the Holder, enforceable
against the Holder in accordance with its terms, except as
limited by bankruptcy, insolvency or other laws of general
application.
3.4 Accredited Investor. (a) It is an accredited
--------------------
investor as defined under Regulation D under the Securities Act
and (b) by reason of its own business and financial experience
and that of those Persons, if any, retained by it to advise it
with respect to its investment, it together with such advisors
has such knowledge, sophistication and experience in business and
financial matters so that it is capable of evaluating the merits
and risks of its investment in the Corporation and has the
capacity to protect its own interests.
3.5 Investment. It is acquiring the Series B
----------
Preferred and the stock into which the Series B Preferred is
convertible for investment for its own account, not as a nominee
or agent, and not with the view to, or for resale in connection
with, any "distribution." It understands that the Series B
Preferred to be purchased, and the stock into which the Series B
Preferred is convertible, have not been registered under the
Securities Act or any state securities laws by reason of specific
exemptions from the registration provisions of the Securities Act
and any applicable state securities laws, the availability of
which depend upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Holder's
representations as expressed herein.
3.6 Access to Data. It has had an opportunity to
----------------
discuss the Corporation's business, management and financial
affairs with its management and the opportunity to review the
Corporation's facilities and business plan.
ARTICLE IV.
Positive Covenants
------------------
The Corporation covenants and agrees that, as long as the
Series B Preferred, or any of the shares obtained upon conversion
of the Series B Preferred, are held by the Holder, any Affiliate
<PAGE>
of the Holder or any Person to whom the Holder has assigned its
rights under this Agreement, the Corporation will, and will cause
each of its Subsidiaries to:
4.1 Existence; Business and Properties.
----------------------------------
(a) Do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal
existence and to prevent a Change of Control.
(b) Do or cause to be done all things necessary to
obtain, preserve, renew, extend and keep in full force and effect
the rights, licenses, permits, franchises, authorizations,
patents, copyrights, trademarks and trade names material to the
conduct of its business; maintain and operate such business in
substantially the manner in which it is presently conducted and
operated; comply in all material respects with all applicable
laws, rules, regulations and orders of any Governmental
Authority, whether now in effect or hereafter enacted; and at all
times maintain and preserve all Property material to the conduct
of such business and keep such Property in good repair, working
order and condition and from time to time make, or cause to be
made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the
business carried on in connection therewith may be properly
conducted at all times.
4.2 Insurance. Keep its insurable properties adequately
---------
insured at all times by financially sound and reputable insurers;
maintain such other insurance, to such extent and against such
risks, including fire and other risks insured against by extended
coverage, as is customary with companies in the same or similar
businesses, including public liability insurance against claims
for personal injury or death or property damage occurring upon,
in, about or in connection with the use of any Properties owned,
occupied or controlled by it; and maintain such other insurance
as may be required by law.
4.3 Obligations and Taxes. Pay its debts and other
-----------------------
obligations promptly and in accordance with their terms and pay
and discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon it or upon its income
or profits or in respect of its Property, before the same shall
become delinquent or in default, as well as all lawful claims for
labor, materials and supplies or otherwise which, if unpaid,
might give rise to a Lien upon such Properties or any part
thereof; provided, however, that such payment and discharge shall
-------- -------
not be required with respect to any such tax, assessment, charge,
levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings and the
Corporation or such Subsidiary of the Corporation shall have set
aside on its respective books adequate reserves with respect
thereto.
4.4 Financial Statements, Reports, etc. In the case of the
----------------------------------
Corporation, furnish to the Holder:
(a) (i) as soon as practicable and in any event
within 60 days after the end of each fiscal quarter, consolidated
balance sheets of the Corporation and its Subsidiaries, as at the
end of such period, and the related consolidated statements of
income, stockholders' equity and cash flows for such fiscal
quarter, setting forth in each case in comparative form the
consolidated figures for the corresponding periods of the
previous fiscal year, all in reasonable detail and certified by a
Financial Officer of the Corporation that they fairly present the
<PAGE>
financial condition of the Corporation and its Subsidiaries as at
the date indicated and the results of their operations and
changes in their financial position for the periods indicated,
subject to changes resulting from audit and normal year-end
adjustment;
(ii) as soon as practicable and in any event
within 60 days after the end of each fiscal quarter, balance
sheets of the Corporation and the Non-Insurance Subsidiaries and
balance sheets of the Insurance Subsidiaries, each as at the end
of such period, and the related statements of income,
stockholders' equity and cash flows for such fiscal quarter,
setting forth in each case in comparative form the figures for
the corresponding periods of the previous fiscal year, together
with the consolidating intercompany eliminations and adjustments,
all in reasonable detail, and certified by a Financial Officer of
the Corporation that they fairly present the financial condition
of the Corporation and the Non-Insurance Subsidiaries and the
Insurance Subsidiaries, respectively, as at the date indicated
and the results of their operations and changes in their
financial position for the periods indicated, subject to changes
resulting from audit and normal year-end adjustment;
(b) (i) as soon as practicable and in any event
within 120 days after the end of each fiscal year of the
Corporation, consolidated balance sheets of the Corporation and
its Subsidiaries, as at the end of such year, and the related
consolidated statements of income, stockholders' equity and cash
flows for such fiscal year, setting forth in each case, in
comparative form the consolidated figures for the previous year,
all in reasonable detail and accompanied by a report thereon of
Price Waterhouse LLP or other independent certified public
accountants of recognized national standing selected by the
Corporation and reasonably satisfactory to the Holder, which
report shall be unqualified as to going concern and scope of
audit and shall state that such consolidated financial statements
present fairly, in all material respects, the financial position
of the Corporation and its Subsidiaries; as at the dates
indicated, and the results of their operations and cash flows for
the periods indicated in conformity with GAAP (applied on a basis
consistent with prior years unless as otherwise stated therein)
and that the examination by such accountants in connection with
such consolidated financial statements has been made in
accordance with generally accepted auditing standards;
(ii) as soon as practicable and in any event
within 120 days after the end of each fiscal year of the
Corporation, balance sheets of the Corporation and the Non-
Insurance Subsidiaries and balance sheets of the Insurance
Subsidiaries, each as at the end of such year, and the related
statements of income, stockholders' equity and cash flows for
such fiscal year, setting forth in each case in comparative form
the figures for the previous year, together with the
consolidating intercompany eliminations and adjustments, all in
reasonable detail and accompanied by a report thereon of Price
Waterhouse LLP or other independent certified public accountants
of recognized national standing selected by the Corporation and
reasonably satisfactory to the Holder, which report shall state
that the balance sheets of the Corporation and the Non-Insurance
Subsidiaries and balance sheets of the Insurance Subsidiaries and
the related statements of income, stockholders' equity and cash
flows, together with consolidating intercompany eliminations and
adjustments, were subjected to the auditing procedures applied in
the examination of the consolidated financial statements referred
<PAGE>
to in Section 4.4(b)(i) and are fairly stated in all material
respects in relation to the consolidated financial statements
taken as a whole;
(c) together with each delivery of financial
statements of the Corporation and its Subsidiaries pursuant to
Sections 4.4(a) and (b) above, (i) a certificate of a Financial
Officer stating that the signer thereof has reviewed the terms of
this Agreement and the other Transaction Documents and has made,
or caused to be made under his supervision, a review in
reasonable detail of the transactions and condition of the
Corporation and its Subsidiaries during the accounting period
covered by such financial statements and that such review has not
disclosed the existence during or at the end of such accounting
period, and that the signer does not have knowledge of the
existence as at the date of such certificate, of any condition or
event which constitutes an Event of Noncompliance, or, if any
such condition or event existed or exists, specifying the nature
and period of existence thereof and what action the Corporation
has taken, is taking and proposes to take with respect thereto;
(d) promptly upon receipt thereof, copies of all
reports submitted to the Corporation by independent public
accountants in connection with each annual, interim or special
audit of the financial statements of the Corporation made by such
accountants, including any comment letter submitted by such
accountants to management in connection with their annual audit;
(e) promptly upon their becoming available, copies of
all (i) financial statements, reports, notices and proxy
statements sent or made available generally by the Corporation to
its security holders or by any of its Subsidiaries to its
security holders other than the Corporation or another of its
Subsidiaries, and (ii) regular and periodic reports and all
registration statements and prospectuses, if any, filed by the
Corporation or any of its Subsidiaries with any securities
exchange or with the Commission or any Governmental Authority
succeeding to any of its functions;
(f) promptly upon any officer of the Corporation
obtaining knowledge (i) of any condition or event which
constitutes an Event of Noncompliance, (ii) that any Person has
given any notice to the Corporation or any of its Subsidiaries or
taken any other action with respect to a claimed default or event
of default under or breach of any instrument reflecting a Debt of
the Corporation or any of its Subsidiaries in a principal amount
in excess of $10,000,000, or (iii) of any condition or event that
might have a Material Adverse Effect, a certificate of a
Financial Officer specifying the nature and period of existence
of any such condition or event, or specifying the notice given or
action taken by such holder or Person and the nature of such
claimed default, Event of Noncompliance, event or condition, and
what action the Corporation has taken, is taking and proposes to
take with respect thereto;
(g) promptly upon any officer of the Corporation
obtaining knowledge of (i) the institution of, or threat of any
action, suit, proceeding, governmental investigation or
arbitration against or affecting the Corporation or any of its
Subsidiaries or any property of the Corporation or any of its
Subsidiaries not previously disclosed by the Corporation to the
Holder, or (ii) any material development in any action, suit,
proceeding, governmental investigation or arbitration, which, in
either case, if adversely determined, might have a Material
Adverse Effect, the Corporation shall promptly give notice
<PAGE>
thereof to the Holder and provide such other information as may
be reasonably available to it to enable the Holder and its
counsel to evaluate such matters;
(h) promptly upon their becoming available, copies of
the annual, quarterly and other regular periodic reports which
each Insurance Subsidiary is required to submit to the insurance
commissioner of the State of Arizona or other Governmental
Authorities;
(i) with reasonable promptness after the execution
thereof, copies of all agreements (and in the case of commercial
paper, notes or medium-term notes issued by the Corporation, the
forms of such notes) evidencing any Debt of the Corporation or
any of its Subsidiaries in an amount of $10,000,000 or more and
of any amendments to or waivers under any such agreement;
(j) promptly upon the occurrence thereof, a written
notice, in reasonable detail, of any purchase by the Corporation
of (i) capital stock of the Corporation in an amount of
$5,000,000 or more in any one transaction or in an aggregate
amount of $7,500,000 or more in any one fiscal year or (ii) any
purchase or redemption of any preferred stock of the Corporation
in an aggregate amount of $7,500,000 or more in any one fiscal
year;
(k) with reasonable promptness, such other information
and data with respect to the Corporation or any of its
Subsidiaries as from time to time may be reasonably requested by
the Holder; and
(l) promptly upon the occurrence thereof, and in any
event within five days, notice of a Change of Control, and, as
promptly thereafter as possible, such information as may be
reasonably available to the Corporation to enable the Holder and
its counsel to evaluate such matter.
4.5 ERISA. (a) With regard to each Plan and Multiemployer
-----
Plan, comply in all material respects with the applicable
provisions of ERISA and the Code and (b) furnish to the Holder
(i) as soon as possible, and in any event within 30 days after
any officer of the Corporation or any ERISA Affiliate either
knows or has reason to know that any Reportable Event has
occurred that alone or together with any other Reportable Event
could reasonably be expected to result in liability of the
Corporation to the PBGC in an aggregate amount exceeding
$1,000,000, a statement of a Financial Officer setting forth
details as to such Reportable Event and the action proposed to be
taken with respect thereto, together with a copy of the notice,
if any, of such Reportable Event given to the PBGC, (ii) promptly
after receipt thereof, a copy of any notice the Corporation or
any ERISA Affiliate may receive from the PBGC relating to the
intention of the PBGC to terminate any Plan or Plans (other than
a Plan maintained by an ERISA Affiliate which is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Section
414 of the Code) or to appoint a trustee to administer any Plan
or Plans, (iii) within 10 days after the due date for filing with
the PBGC pursuant to Section 412(n) of the Code of a notice of
failure to make a required installment or other payment with
respect to a Plan, a statement of a Financial Officer setting
forth details as to such failure and the action proposed to be
taken with respect thereto, together with a copy of such notice
given to the PBGC and (iv) promptly and in any event within 30
days after receipt thereof by the Corporation or any ERISA
<PAGE>
Affiliate from the sponsor of a Multiemployer Plan, a copy of
each notice received by the Corporation or any ERISA Affiliate
concerning (A) the imposition of Withdrawal Liability or (B) a
determination that a Multiemployer Plan is, or is expected to be,
terminated or in reorganization, in each case within the meaning
of Title IV of ERISA.
4.6 Maintaining Records: Access to Properties and
-----------------------------------------------------
Inspections. Maintain all financial records in accordance with
- -----------
GAAP and permit any representatives designated by the Holder to
visit and inspect the financial records and the properties of the
Corporation or any of its Subsidiaries at reasonable times and as
often as requested and to make extracts from and copies of such
financial records, and permit any representatives designated by
the Holder to discuss the affairs, finances and condition of the
Corporation or any of its Subsidiaries with the officers thereof
and independent accountants therefor.
4.7 Use of Proceeds. The Corporation will use the proceeds
---------------
from the sale of the Series B Preferred exclusively to capitalize
Picacho.
4.8 Ownership and Operation of Picacho. The Corporation
-----------------------------------
will:
(a) at all times own all of the outstanding shares,
and all interest in the revenues, income, assets and business, of
Picacho (except in the event of a conversion of the Series B
Preferred into the shares of Picacho);
(b) cause Picacho to engage in no business or
operations and incur no liabilities or obligations except as
permitted by Picacho's Articles of Incorporation;
(c) cause the Corporation at all times to have
sufficient funds legally available for redemption of all of the
Series B Preferred;
(d) cause Picacho at all times to invest its assets
with an investment manager satisfactory to the Holder;
(e) cause Picacho at all times to maintain a
stockholders' equity of at least $100,000,000; and
(f) cause Picacho to maintain its Articles of
Incorporation and Bylaws in effect as at the date of this
Agreement.
4.9 Further Assurances. Execute and deliver such further
------------------
agreements and instruments and take such further action as may be
requested by the Holder to carry out the provisions and purposes
of this Agreement and the other Transaction Documents and to
create, preserve, and perfect the rights of the Holder under the
Transaction Documents.
<PAGE>
4.10 Compliance with Other Instruments. At all times
---------------------------------
comply with all terms, covenants, conditions, agreements and
other obligations contained in any instrument evidencing or
governing a Debt of the Corporation or any of its Subsidiaries in
a principal amount in excess of $10,000,000.
4.11 Further Assurances Regarding Conversion. Take any
---------------------------------------
further action that may be required from time to time to assure
that number of shares of Series B Common Stock authorized and
reserved for issuance upon conversion of the Series B Preferred
is at all times sufficient to permit the conversion of all the
outstanding shares of the Series B Preferred after giving full
effect to all adjustments to the Conversion Price as provided in
Certificate of Designation. Execute and deliver such further
agreements and instruments and take such further action as may be
requested by the Holder to permit or facilitate the conversion of
the Series B Preferred, including filing and using its best
efforts to obtain approval of any listing or similar application
relating to the Series B Common Stock, and the filing and
completion of any notice required by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976.
ARTICLE V.
Conditions to Closing of Holder
-------------------------------
The Holder's obligations to purchase the Series B Preferred
at the Closing is, at the option of the Holder, subject to the
fulfillment as of the Closing Date of the following conditions:
5.1 Representations and Warranties Correct. The representa
--------------------------------------
tions and warranties made by the Corporation in Section 2 of this
Agreement shall be true and correct in all material respects at
and as of the Closing.
5.2 Covenants. All covenants, agreements and conditions
---------
contained in this Agreement to be performed by the Corporation on
or prior to the Closing Date shall have been performed or
complied with in all material respects.
5.3 Certificates of Designation. The Corporation shall
----------------------------
have filed the Certificates of Designation with the Secretary of
State of Nevada in the forms of Exhibit A and Exhibit B.
--------- ---------
5.4 Delivery of Documents. The Corporation shall have
-----------------------
delivered to the Holder all of the following, in form and
substance satisfactory to the Holder:
(a) Officers' Certificate. A certificate of the
----------------------
Corporation's President and Secretary to the effect that the
conditions referred to in Sections 5.1 through 5.3 have been
satisfied.
(b) Fees and Expenses. Evidence that the fees to
------------------
NationsBanc Capital Markets, Inc. and all other costs and
expenses (including attorneys' fees) referred to in Section 9.1,
to the extent incurred, shall have been paid in full by the
Corporation.
<PAGE>
5.5 Closing of Loan Agreement. The Letter Loan Agreement
-------------------------
dated the date of this Agreement between NationsBank Corporation
and the Holder shall have been executed and delivered.
5.6 Legal Matters. All material matters of a legal nature
-------------
which pertain to this Agreement and the transactions contemplated
hereby shall have been reasonably approved by counsel to the
Holder.
ARTICLE VI.
Conditions to Closing of Corporation
------------------------------------
The Corporation's obligation to sell and issue the Series B
Preferred to be issued at the Closing is, at the option of the
Corporation, subject to the fulfillment as of the Closing Date of
the following conditions:
6.1 Representations and Warranties Correct. The
--------------------------------------------
representations and warranties made by the Holder in Section 3 of
this Agreement shall be true and correct in all material respects
at and as of the Closing.
6.2 Covenants. All covenants, agreements and conditions
---------
contained in this Agreement to be performed by the Holder on or
prior to the Closing Date shall have been performed or complied
with in all material respects.
6.3 Officers' Certificate. The Holder shall have
----------------------
delivered to the Corporation a certificate of the Holder's Vice
President and Assistant Secretary to the effect that the
conditions referred to in Sections 6.1 through 6.3 have been
satisfied.
6.4 Legal Matters. All material matters of a legal nature
-------------
which pertain to this Agreement and the transactions contemplated
hereby shall have been reasonably approved by counsel to the
Corporation.
ARTICLE VII.
Registration Rights
-------------------
7.1 Required Registrations. At any time after (i) an
----------------------
Event of Noncompliance has occurred and is continuing or (ii) the
Series B Preferred has been converted, the Holder may notify the
Corporation in writing that the Holder intends to offer for
public sale any of the Registrable Securities. Upon delivery to
the Corporation of such notification, the Corporation shall use
its best efforts to cause the Registrable Securities as may be
requested by the Holder to be included in a registration
statement under the Securities Act. All expenses of any
registration pursuant to this Section and the reasonable fees and
expenses of one (1) independent counsel for the Holder will be
borne by the Corporation (excluding underwriting discounts,
selling commissions and stock transfer taxes applicable to the
securities registered by the Holder). This Section will not
apply to requests for registration on Form S-3 (or successor
<PAGE>
form) which will be governed by Section 7.2. The Corporation
shall not be obligated to file a registration statement under
this Section unless the Holder requests the registration of
Registrable Securities either (a) having a market value of at
least $5,000,000 or (b) constituting all of the Registrable
Securities then held by the Holder. The Corporation's
obligations under this Section shall continue for multiple
registrations so long as the Holder holds any Registrable
Securities.
7.2 Form S-3. The Corporation shall use its best
---------
efforts to continue to be eligible for use of Form S-3 or any
successor form. If at any time after (i) an Event of
Noncompliance has occurred and is continuing or (ii) the Series B
Preferred has been converted, the Corporation is eligible to
effect a registration of its securities under Form S-3 (or a
successor form), the Holder will have the right to request, and
the Corporation shall use its best efforts to effect,
registrations of shares of its Registrable Securities on Form S-3
(but no more than two such registrations during any one fiscal
year). The Corporation shall not be obligated to file a
registration statement under this Section unless the Holder
requests the registration of Registrable Securities either (a)
having a market value of at least $5,000,000 or (b) constituting
all of the Registrable Securities then held by the Holder. All
expenses incurred in connection with the registrations requested
pursuant to this Section 7.2, including the reasonable fees and
expenses of one (1) independent counsel for the Holder, will be
borne by the Corporation (excluding underwriting discounts,
selling commissions and stock transfer taxes applicable to the
securities registered by the Holder).
7.3 Procedure for Registration. Whenever the
-----------------------------
Corporation is required under this Agreement to register
Registrable Securities, it agrees to do the following:
(a) Use its best efforts promptly to prepare and file
with the Commission a registration statement and such amendments
and supplements to said registration statement and the prospectus
as may be necessary to declare or keep the registration statement
effective and to comply with the provisions of the Securities Act
for the period necessary to complete the proposed public
offering, but not more than 180 days; provided, however, that in
the case of any registration of Registrable Securities on Form S-
3 that are intended to be offered on a continuous or delayed
basis, such 180-day period shall be extended, if necessary, to
keep the registration statement effective until all such
Registrable Securities are sold;
(b) Furnish to the Holder such copies of each
preliminary and final prospectus and such other documents as the
Holder may reasonably request to facilitate the public offering
of its Registrable Securities;
(c) Enter into any underwriting agreement with
customary provisions;
(d) Use its best efforts to register or qualify the
Registrable Securities covered by the registration statement
under the securities or "blue-sky" laws of such jurisdictions as
the Holder may reasonably request, although the Corporation will
not have to register in any states that require it to qualify to
do business or subject itself to general service of process; and
<PAGE>
(e) The Corporation is not required to file a
registration statement within forty-five (45) days following the
effective date of any other registration statement initiated by
the Corporation. The Corporation may postpone the filing of any
registration statement required under Sections 7.1 or 7.2 for a
reasonable period of time, not to exceed forty-five (45) days, if
the Corporation has been advised by legal counsel that such
filing would require the disclosure of a material fact, and the
Corporation determines reasonably and in good faith that such
disclosure would have a Material Adverse Effect.
7.4 Indemnification.
---------------
(a) Subject to applicable law, the Corporation will
indemnify the Holder in connection with the inclusion of
Registrable Securities in the registration statement, and each
Person controlling the Holder, against all claims, losses,
damages and liabilities, including legal and other expenses
reasonably incurred, arising out of any untrue or allegedly
untrue statement of a material fact contained in the registration
statement, or any omission or alleged omission to state a
material fact required to be stated in the registration
statement or necessary to make the statements not misleading, or
arising out of any violation by the Corporation of the Securities
Act, any state securities or "blue-sky" laws or any applicable
rule or regulation and will promptly reimburse the Holder and any
such other Person for any costs or expenses incurred in suits,
claims, investigations or proceedings arising out of any such
registration statement. This indemnification will not apply to
any claims, losses, damages or liabilities to the extent they
arise out of or are based upon an untrue statement or omission
based upon information furnished in writing to the Corporation by
such Holder, or controlling Person, respectively, expressly for
use in the registration statement. With respect to such untrue
statement or omission in the information furnished in writing to
the Corporation by the Holder, the Holder will indemnify the
underwriters, the Corporation, its directors and officers, the
other Persons selling securities under the registration statement
and each Person controlling any of them against any losses,
claims, damages, expenses or liabilities to which any of them may
become subject as a result of such untrue statement or omission
(including those incurred in connection with investigating or
defending against such claims), up to the proceeds received by
the Holder in such offering.
(b) If the indemnification provided for in this
Section is unavailable or insufficient to hold harmless the
Holder, and each Person controlling the Holder, in respect of any
losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then the Corporation shall
contribute to the amount paid or payable by the Holder or such
other Person as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as
is appropriate to reflect the relative fault of the Corporation
and the Holder in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). If, however, the allocation
provided by the immediately preceding sentence is not permitted
by applicable law, then the Corporation shall contribute to such
amount paid or payable by the Holder in such proportion as is
appropriate to reflect not only such relative fault but also the
relative benefits received by the Corporation and the Holder from
the offering as well as any other relevant equitable
considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
<PAGE>
omission to state a material fact relates to information supplied
by the Corporation or the Holder and the parties' relative
intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Corporation
and the Holder agree that it would not be just and equitable if
contribution pursuant to this Section were determined by pro rata
allocation or by any other method of allocation that does not
take into account the equitable considerations referred to above
in this Section. The amount paid or payable by the Holder as a
result of the losses, claims, damages or liabilities (or actions
in respect thereof) referred to above shall be deemed to include
any legal or other expenses reasonably incurred by the Holder in
connection with investigating or defending any such action or
claim. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation. Notwithstanding any provision
in this Section to the contrary, the Holder shall not be liable
for any amount, in the aggregate, in excess of the net proceeds
to the Holder from the sale of the Holder's shares giving rise to
such losses, claims, damages or liabilities.
(c) The obligations of the Corporation under this
Section shall be in addition to any liability that the
Corporation may otherwise have and shall extend, upon the same
terms and conditions, to each Person, if any, who controls the
Holder within the meaning of the Securities Act.
7.5 Rule 144 Requirements. The Corporation will use
---------------------
all reasonable efforts to file with the Commission such
information as the Commission may require and will use all
reasonable efforts to make available Rule 144 under the
Securities Act (or any successor exemptive rule).
7.6 Obligations in a Registration. The Holder agrees
-----------------------------
to furnish such information regarding the Holder and the
securities sought to be registered as the Corporation may
reasonably request in connection with the registration,
qualification or compliance.
7.7 Limitations on Subsequent Registration Rights.
---------------------------------------------
After the date hereof, the Corporation will not, without
the prior written consent of the Holder, enter into any agreement
with any holder or prospective holder of any securities of the
Corporation that would allow such holder or prospective holder
(a) to make a demand registration which could result in such
registration statement being declared effective within ninety
(90) days of the effective date of any registration effective
pursuant to Sections 7.1 or 7.2, or (b) that would allow any such
holder or prospective holder to have greater rights than the
Holder under Section 7.1 or 7.2.
<PAGE>
ARTICLE VIII.
Definitions
-----------
8.1 Definitions. As used in this Agreement, the
-----------
following terms have the following meanings:
"Affiliate" means, when used with respect to a specified
Person, another Person that directly or indirectly through one or
more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.
"Business Day" means (a) any day on which commercial banks
are not authorized or required to close in Charlotte, North
Carolina and (b) with respect to all payments, conversions,
payment periods, and notices, any day which is a Business Day
described in clause (a) above and which is also a day on which
dealings in dollar deposits are carried out in the London
interbank market.
"Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under a
lease of (or other arrangement conveying the right to use) real
or personal property, or a combination thereof (including all
amounts which such Person is obligated to pay to another on
termination of the applicable lease or surrender of the
applicable property, but excluding any amounts required to be
paid by such Person (regardless of whether designated as rents or
additional rents) on account of maintenance, repairs, insurance,
taxes and similar charges), which obligations are required to be
classified and accounted for as capital leases on a balance sheet
of such Person under GAAP and, for the purposes of this
Agreement, the amount of such obligations at any time shall be
the capitalized amount thereof at such time determined in
accordance with GAAP.
"Capital Stock" means any and all shares, interests,
participations, rights or other equivalents (however designated)
of corporate stock.
"Certificate of Designation" means the Certificate of
Designation of Preferences and Rights of Series B Preferred
Stock filed as an amendment to the Corporation's Restated
Articles of Incorporation concurrently with the execution of this
Agreement and attached as Exhibit A.
"Change of Control" means (a) any transfer of any shares of
any class of capital stock that results in the Corporation's ESOP
and the Shoen Group 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 Corporation or (b) during any period of two consecutive
years, persons who at the beginning of such period constituted
the board of directors of the Corporation (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.
"Closing" has the meaning given in Section 1.3.
"Closing Date" has the meaning given in Section 1.3.
<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated and rulings issued thereunder.
"Commission" means the Securities and Exchange Commission.
"Control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting
securities, by contract or otherwise, and "Controlling" and
"Controlled" shall have meanings correlative thereto.
"Debt" means as to any Person at any time (without
duplication): (a) all obligations of such Person for borrowed
money, (b) all obligations of such Person evidenced by bonds,
notes, debentures, or other similar instruments, (c) all
obligations of such Person to pay the deferred purchase price of
Property or services, except trade accounts payable of such
Person arising in the ordinary course of business that are not
past due by more than ninety (90) days, (d) all Capital Lease
Obligations of such Person, (e) all Debt or other obligations of
others Guaranteed by such Person, (f) all obligations secured by
a Lien existing on Property owned by such Person, whether or not
the obligations secured thereby have been assumed by such Person
or are non-recourse to the credit of such Person, (g) all
reimbursement obligations of such Person (whether contingent or
otherwise) in respect of letters of credit, bankers' acceptances,
surety or other bonds and similar instruments, (h) all
obligations of such Person to redeem or retire shares of capital
stock of such Person; (i) all obligations and liabilities of such
Person under Interest Rate Protection Agreements, and (j) all
liabilities of such Person in respect of unfunded vested benefits
under any Plan.
"Environmental Laws" means any and all federal, state, and
local laws, regulations, and requirements pertaining to health,
safety, or the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. section 9601 et seq., the Resource Conservation
------
and Recovery Act of 1976, 42 U. S. C. section 6901 et seq., the
-------
Occupational Safety and Health Act, 29 U S.C. section 651 et seq., the
-------
Clean Air Act, 42 U.S.C. section 7401 et seq., the Clean Water Act, 33
------
U.S.C. section 1251 et seq., and the Toxic Substances Control Act, 15
------
U.S.C. section 2601 et seq., as such laws, regulations, and
--------
requirements may be amended or supplemented from time to time.
"Environmental Liabilities" means, as to any Person, all
liabilities, obligations, responsibilities, Remedial Actions,
losses, damages, punitive damages, consequential damages, treble
damages, costs, and expenses, (including, without limitation, all
reasonable fees, disbursements and expenses of counsel, expert
and consulting fees and costs of investigation and feasibility
studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, by any Person, whether based in
contract, tort, implied or express warranty, strict liability,
criminal or civil statute, including any Environmental Law,
permit, order or agreement with any Governmental Authority or
other Person, arising from environmental, health or safety
conditions or the Release or threatened Release of a Hazardous
Material into the environment.
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations and
published interpretations thereunder.
"ERISA Affiliate" means any corporation or trade or business
which is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Code) as the
Corporation or is under common control (within the meaning of
Section 414(c) of the Code) with the Corporation.
"Event of Noncompliance" means (i) any representation,
warranty or statement made or deemed to be made by the
Corporation to the Holder shall be false, misleading or erroneous
in any material respect when made or deemed to have been made; or
(ii) the Corporation shall at any time fail to comply or remain
in compliance with any obligation, covenant or agreement made or
owed by the Corporation to the Holder under any Transaction
Document.
"Financial Officer" of any corporation means the chief
financial officer, principal accounting officer, Treasurer or
Controller of such corporation.
"Form 10-K" means the Corporation's Annual Report on Form 10-
K for the year ended March 31, 1996, as filed with the
Commission.
"GAAP" means generally accepted accounting principles,
applied on a consistent basis, as set forth in Opinions of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and/or in statements of the
Financial Accounting Standards Board and/or their respective
successors and which are applicable in the circumstances as of
the date in question. Accounting principles are applied on a
"consistent basis" when the accounting principles applied in a
current period are comparable in all material respects to those
accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any
state or political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory, or administrative
functions of or pertaining to government.
"Guarantee" by any Person means any obligation, contingent
or otherwise, of such Person directly or indirectly guaranteeing
any Debt or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct
or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement conditions or otherwise) or
(b) entered into for the purpose of assuring in any other manner
the obligee of such Debt or other obligation of the payment
thereof or to protect the obligee against loss in respect thereof
(in whole or in part), provided that the term Guarantee shall not
include endorsements for collection or deposit in the ordinary
course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
<PAGE>
"Hazardous Material" means any substance, product, waste,
pollutant, material, chemical, contaminant, constituent, or other
material which is or becomes listed, regulated, or addressed
under any Environmental Law, including, without limitation,
asbestos, petroleum, and polychlorinated biphenyls.
"Holder" means Blue Ridge Investments, LLC, a Delaware
limited liability company, an Affiliate of that entity or any
Person to whom that entity or a subsequent Holder has assigned
its rights under this Agreement.
"Insurance Subsidiaries" shall mean Oxford Life Insurance
Company, an Arizona corporation, Ponderosa Holdings, Inc., a
Nevada corporation, Republic Western Insurance Company, an
Arizona corporation, Republic Claims Service Co., an Arizona
corporation, RWIC Investments, Inc., a Nevada corporation, and
Republic Western Syndicate, Inc., a New York corporation.
"Interest Rate Protection Agreements" means, with respect to
any Person, an interest rate swap, cap or collar agreement or
similar arrangement between such Person and one or more financial
institutions providing for the transfer or mitigation of interest
risks either generally or under specified contingencies.
"Lien" means any lien, mortgage, security interest, tax
lien, financing statement, pledge, charge, hypothecation,
assignment, preference, priority, limitation on voting, use or
ownership or other encumbrance of any kind or nature whatsoever
(including, without limitation, any conditional sale or title
retention agreement), whether arising by contract, operation of
law, or otherwise.
"Material Adverse Effect" means the occurrence of any event
or the existence of any condition that could have a material
adverse effect on (a) the Properties, prospects, business,
operations, condition (financial or otherwise), liabilities, or
capitalization of the Corporation and its Subsidiaries taken as a
whole, (b) the ability of the Corporation to pay and perform the
Obligations when due, or (c) the validity or enforceability of
any of the Transaction Documents or the rights and remedies of
the Holder thereunder.
"Multiemployer Plan" means a multiemployer plan defined as
such in Section 4001(a)(3) of ERISA to which the Corporation or
any ERISA Affiliate (other than one considered an ERISA Affiliate
only pursuant to subsection (m) or (o) of Section 414 of the
Code) is making or accruing an obligation to make contributions,
or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"Non-Insurance Subsidiaries" means the Corporation's
Subsidiaries other than the Insurance Subsidiaries.
"Obligations" means all obligations and liabilities of the
Corporation to the Holder, arising pursuant to any of the
Transaction Documents, now existing or hereafter arising, whether
direct, indirect, related, unrelated, fixed, contingent,
liquidated, unliquidated, joint, several, or joint and several,
including, without limitation, the obligation of the Corporation
to pay dividends on the Series B Preferred, interest on the
<PAGE>
dividends and all fees, costs, and expenses (including attorneys'
fees) provided for in the Transaction Documents.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
"Person" means any individual, corporation, business trust,
association, Corporation, partnership, joint venture,
Governmental Authority, or other entity.
"Picacho" means Picacho Peak Investment Co., a newly formed
Nevada corporation.
"Plan" means any employee benefit or other plan established
or maintained by the Corporation or any ERISA Affiliate and which
is covered by Title IV of ERISA.
"Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Code.
"Property" means property of all kinds, real, personal or
mixed, tangible or intangible (including, without limitation, all
rights relating thereto), whether owned or acquired on or after
the date of this Agreement.
"Registrable Securities" means any shares of Series B
Preferred, Series B Common Stock or other securities issuable
upon conversion of Series B Preferred, and any other securities
distributable on, with respect to, or in substitution for such
Registrable Securities, except for those that have been sold or
transferred pursuant to an effective registration statement or
pursuant to Rule 144 under the Securities Act.
"Regulatory Change" means any change after the date of this
Agreement in United States federal, state or foreign laws or
regulations (including Regulation D of the Board of Governors of
the Federal Reserve System as the same may be amended or
supplemented from time to time) or the adoption or making after
such date of any interpretations, directives or requests applying
to a class of institutions including NationsBank Corporation of
or under any United States federal, state or foreign laws or
regulations (whether or not having the force of law) by any court
or governmental or monetary authority charged with the
interpretation or administration thereof.
"Release" means, as to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal,
disbursement, leaching, or migration of Hazardous Materials into
the indoor or outdoor environment or into or out of Property
owned by such Person, including, without limitation, the movement
of Hazardous Materials through or in the air, soil, surface
water, ground water, or Property.
"Remedial Action" means all actions required to (a) cleanup,
remove, treat, or otherwise address Hazardous Materials in the
indoor or outdoor environment, (b) prevent the Release or threat
of Release or minimize the further Release of Hazardous Materials
<PAGE>
so that they do not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment, or
(c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
"Reportable Event" means any reportable event as defined in
Section 4043(b) of ERISA or the regulations issued thereunder
with respect to a Plan (other than a Plan maintained by an ERISA
Affiliate which is considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Section 414 of the Code).
"Securities Act" means the Securities Act of 1933, as
amended, or any successor statute.
"Series B Common Stock" has the meaning given in
Section 1.1.
"Series B Preferred" has the meaning given in Section 1.1.
"Shoen Group" means (a) L.S. Shoen and the spouse and lineal
descendants of said individual, the spouses of said lineal
descendants and the lineal descendants of said spouses, (b) any
trusts for the benefit of or the executor or administrator of the
estate of or other legal representative of any of the individuals
referred to in the immediately preceding clause (a) and (c) any
corporation with respect to which all the voting stock thereof
is, directly or indirectly, owned by any of the individuals
referred to in the preceding clause (a).
"Subsidiary" means, with respect to any Person, any
corporation, partnership, association or other business entity
(a) of which securities or other ownership interests representing
more than 50% of the equity or more than 50% of the ordinary
voting power or more than 50% of the general partnership
interests are, at the time any determination is being made,
owned, controlled or held, or (b) which is, at the time any
determination is made, otherwise Controlled by such Person or one
or more Subsidiaries of such Person or by such Person and one or
more Subsidiaries of such Person and, with respect to the
Corporation, Picacho.
"Transaction Documents" means this Agreement, the
Certificate of Designation, and all other instruments, documents,
and agreements executed and delivered pursuant to or in
connection with this Agreement or the Holder's purchase or
holding of the Series B Preferred, the Series B Common Stock or
Registrable Securities, as such instruments, documents, and
agreements may be amended, modified, renewed, extended, or
supplemented from time to time.
"Withdrawal Liability" shall mean liability to a
Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.
8.2 Other Definitional Provisions. All definitions
------------------------------
contained in this Agreement are equally applicable to the
singular and plural forms of the terms defined. The words
"hereof", "herein", and "hereunder" and words of similar import
referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless
otherwise specified, all Article and Section references pertain
to this Agreement.
<PAGE>
8.3 Accounting Terms and Determinations. Except as
-----------------------------------
otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be
delivered to the Holder hereunder shall be prepared, in
accordance with GAAP, on a basis consistent with those used in
the preparation of the financial statements referred to in
Section 2.3 hereof. All calculations made for the purposes of
determining compliance with the provisions of this Agreement
shall be made by application of GAAP, on a basis consistent with
those used in the preparation of the financial statements
referred to in Section 2.3 hereof. To enable the ready and
consistent determination of compliance by the Corporation with
its obligations under this Agreement, the Corporation will not
change the last day of its fiscal year from March 31, or the last
days of the first three fiscal quarters of the Corporation in
each of its fiscal years from June 30, September 30 and
December 31, respectively.
ARTICLE IX.
Miscellaneous
-------------
9.1 Expenses.
--------
(a) The Corporation hereby agrees to pay on demand:
(i) all costs and expenses of the Holder in connection with
the preparation, negotiation, execution, and delivery of
this Agreement and the other Transaction Documents and any
and all amendments, modifications, renewals, extensions, and
supplements thereof and thereto, including, without
limitation, the fees and expenses of legal counsel for the
Holder, (ii) all costs and expenses of the Holder in
connection with any Event of Noncompliance and the
enforcement of this Agreement or any other Transaction
Document, including, without limitation, the fees and
expenses of legal counsel for the Holder, (iii) all
transfer, stamp, documentary, or other similar taxes,
assessments, or charges levied by any Governmental Authority
in respect of this Agreement or any of the other Transaction
Documents, (iv) all costs, expenses, assessments, and other
charges incurred in connection with any conversion,
redemption or registration of the Series B Preferred or any
other action contemplated by this Agreement or any other
Transaction Document, (v) the fees of NationsBanc Capital
Markets, Inc. under the terms of that certain letter dated
August 30, 1996 from NationsBanc Capital Markets, Inc. to
the Corporation; and (vi) all other costs and expenses
incurred by the Holder in connection with this Agreement or
any other Transaction Document.
(b) Without limiting paragraph (a) of this Section, if
after the date hereof, the Holder shall have determined that
the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any other Regulatory Change
relating thereto or compliance by the Holder (or its parent)
with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the
Holder's (or its parent's) capital as a consequence of its
obligations hereunder or the transactions contemplated
hereby to a level below that which the Holder (or its
<PAGE>
parent) could have achieved but for such adoption, change or
compliance (taking into consideration the Holder's parent's
policies with respect to capital adequacy and all other
fees, commissions, increases in dividends or other charges
received by the Holder under the Transaction Documents) by
an amount deemed by the Holder to be material, then from
time to time, within ten (10) Business Days after demand by
the Holder, the Corporation shall pay to the Holder such
additional amount or amounts as will compensate the Holder
(or its parent) for such reduction. A certificate of the
Holder claiming compensation under this paragraph and
setting forth the additional amount or amounts to be paid to
it hereunder shall be (a) prima facie valid, provided that
the determination thereof is made on a reasonable basis and
(b) delivered to the Corporation by the Holder within thirty
(30) days after (i) the Holder obtains knowledge of the
occurrence of the Regulatory Change giving rise to the
amount claimed hereunder and (ii) determines to demand
compensation under this paragraph for such amount. In
determining the amount or amounts claimed under this
paragraph, the Holder may use any reasonable averaging and
attribution methods.
9.2 Indemnification. The Corporation shall indemnify the
---------------
Holder and each Affiliate thereof and their respective officers,
directors, employees, attorneys, and agents from, hold each of
them harmless against, and promptly reimburse any of them for any
and all losses, liabilities, claims, damages, penalties,
judgments, disbursements, costs, and expenses (including fees and
expenses of counsel selected by the Holder) to which any of them
may become subject that directly or indirectly arise from or
relate to (a) the negotiation, execution, delivery, performance,
administration, or enforcement of any of the Transaction
Documents, (b) any of the transactions contemplated by the
Transaction Documents, (c) any breach by the Corporation of any
representation, warranty, covenant, or other agreement contained
in any of the Transaction Documents, (d) the presence, Release,
threatened Release, disposal, removal, or cleanup of any
Hazardous Material located on, about, within, or affecting any of
the Properties of the Corporation or any Subsidiary, or (e) any
investigation, litigation, or other proceeding, including,
without limitation, any threatened investigation, litigation, or
other proceeding relating to any of the foregoing. WITHOUT
LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER
TRANSACTION DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES
HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION
SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL
LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES)
ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY
NEGLIGENCE OF SUCH PERSON.
9.3 Limitation of Liability. None of the Holder, or any
-----------------------
Affiliate, officer, director, employee, attorney, or agent
thereof shall have any liability with respect to, and the
Corporation hereby waives, releases, and agrees not to sue any of
them upon, any claim for any special, indirect, incidental, or
consequential damages suffered or incurred by the Corporation in
connection with, arising out of, or in any way related to, this
Agreement or any of the other Transaction Documents, or any of
the transactions contemplated by this Agreement or any of the
other Transaction Documents. The Corporation hereby waives,
releases, and agrees not to sue the Holder or any of its
respective Affiliates, officers, directors, employees, attorneys,
or agents for exemplary or punitive damages in respect of any
<PAGE>
claim in connection with, arising out of, or in any way related
to, this Agreement or any of the other Transaction Documents, or
any of the transactions contemplated by this Agreement or any of
the other Transaction Documents.
9.4 No Duty. All attorneys, accountants, appraisers, and
-------
other professional Persons and consultants retained by the Holder
shall have the right to act exclusively in the interest of the
Holder and shall have no duty of disclosure, duty of loyalty,
duty of care, or other duty or obligation of any type or nature
whatsoever to the Corporation or any of the Corporation's
shareholders or any other Person.
9.5 Equitable Relief. The Corporation recognizes that in
----------------
the event the Corporation fails to perform, observe, or discharge
any or all of its obligations under the Transaction Documents,
any remedy at law may prove to be inadequate relief to the
Holder. The Corporation therefore agrees that the Holder, if the
Holder so requests, shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of
proving actual damages.
9.6 No Waiver; Cumulative Remedies. No failure on the part
------------------------------
of the Holder to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power, or privilege
under this Agreement or any other Transaction Document shall
operate as a waiver thereof, nor shall any single or partial
exercise of any right, power, or privilege under this Agreement
or any other Transaction Document preclude any other or further
exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in this
Agreement and the other Transaction Documents are cumulative and
not exclusive of any rights and remedies provided by law.
9.7 Successors and Assigns. This Agreement shall be binding
----------------------
upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Neither the Corporation nor
the Holder may assign or transfer any of its rights or
obligations hereunder, without the prior written consent of the
other party; provided, however, the Corporation (a) acknowledges
that the Holder has pledged its rights in the Series B Preferred
and its rights under this Agreement to NationsBank Corporation
and (b) agrees that NationsBank Corporation may exercise the
rights of the Holder hereunder and is entitled to the benefits
hereof.
9.8 Survival. All representations and warranties made or
--------
deemed made in this Agreement or any other Transaction Document
or in any document, statement, or certificate furnished in
connection with this Agreement shall survive the execution and
delivery of this Agreement and the other Transaction Documents,
and no investigation by the Holder or any closing shall affect
the representations and warranties or the right of the Holder to
rely upon them. Without prejudice to the survival of any other
obligation of the Corporation hereunder, the obligations of the
Corporation under Article 7 and Article 10 shall survive
termination of this Agreement.
9.9 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER
-----------------
TRANSACTION DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE
AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
<PAGE>
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT
MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES HERETO. THE PROVISIONS OF THIS
AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS MAY BE AMENDED OR
WAIVED ONLY BY AN AGREEMENT IN WRITING SIGNED BY THE PARTIES
HERETO.
9.10 Notices. All notices and other communications
-------
provided for in this Agreement and the other Transaction
Documents shall be given or made in writing and telecopied,
mailed by certified mail return receipt requested, or delivered
to the intended recipient at the "Address for Notices" specified
below its name on the signature pages hereof; or at such other
address as shall be designated by such party in a notice to each
other party given in accordance with this Section. All such
communications shall be deemed to have been duly given when
transmitted by telecopy, subject to telephone confirmation of
receipt, or when personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as provided
herein.
9.11 Governing Law; Submission to Jurisdiction; Service
--------------------------------------------------
of Process. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
- -----------
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NORTH CAROLINA AND
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THE CORPORATION
HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA
AND OF ANY NORTH CAROLINA STATE COURT SETTING IN CHARLOTTE, NORTH
CAROLINA, FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT
OF OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT,
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE
CORPORATION IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL
PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
OF SUCH PROCESS TO THE CORPORATION AT ITS ADDRESS SET FORTH
UNDERNEATH ITS SIGNATURE HERETO. THE CORPORATION IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORM.
9.12 Counterparts. This Agreement may be executed in
------------
one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same agreement.
9.13 Severability. Any provision of this Agreement
------------
held by a court of competent jurisdiction to be invalid or
unenforceable shall not impair or invalidate the remainder of
this Agreement and the effect thereof shall be confined to the
provision held to be invalid or illegal.
<PAGE>
9.14 Headings. The headings, captions, and
--------
arrangements used in this Agreement are for convenience only and
shall not affect the interpretation of this Agreement.
9.15 Construction. The Corporation and the Holder
------------
acknowledge that each of them has had the benefit of legal
counsel of its own choice and has been afforded an opportunity to
review this Agreement and the other Transaction Documents with
its legal counsel and that this Agreement and the other
Transaction Documents shall be construed as if jointly drafted by
the parties hereto.
9.16 Independence of Covenants. All covenants
----------------------------
hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of an Event of Noncompliance if
such action is taken or such condition exists.
9.17 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT
----------------------
PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN
ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY
OF THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY OR THE ACTIONS OF THE HOLDER IN THE NEGOTIATION,
ADMINISTRATION, OR ENFORCEMENT THEREOF.
<PAGE>
The foregoing agreement is hereby executed as of the date
first above written.
CORPORATION:
AMERCO
By: /S/ GARY B. HORTON
-----------------------
Name: GARY B. HORTON
-----------------------
Title: TREASURER
-----------------------
Address for Notices:
AMERCO
-----------------------------
1325 AIRMOTIVE WAY, STE 100
-----------------------------
RENO, NEVADA 89502
-----------------------------
Fax No.: (702) 688-6338
Telephone No.: (702) 688-6300
Attention: GARY B. HORTON
HOLDER:
BLUE RIDGE INVESTMENTS, LLC
By: /S/ GEORGE C. CARP
-----------------------
Name: George C. Carp
Title: Vice President-Finance
Address for Notices:
NationsBank Corporate Center
100 Tryon Street, 20th Floor
Charlotte, North Carolina 28255
Fax No.: (704) 386-6453
Telephone No.: (704) 386-4225
Attention: Vic Warnement
<PAGE>
EXHIBIT A
TO
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
CERTIFICATE OF DESIGNATION OF PREFERENCES
AND RIGHTS OF SERIES B PREFERRED STOCK
<PAGE>
EXHIBIT B
TO
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
CERTIFICATE OF DESIGNATION OF PREFERENCES
AND RIGHTS OF SERIES B COMMON STOCK
<PAGE>
EXHIBIT C
TO
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
<PAGE>
FORM OF NOTE
SIDE AGREEMENT
--------------
This Side Agreement (the "Agreement") is entered into
as of the 29th day of October, 1996, by and among AMERCO, a
Nevada corporation ("AMERCO"), Blue Ridge Investments,
L.L.C., a Delaware limited liability company ("Blue Ridge"),
and NationsBank Corporation, a Delaware corporation
("NationsBank").
WHEREAS, AMERCO, Blue Ridge, and NationsBank have
entered into certain agreements and transactions on August
30, 1996 and October 1, 1996 (the "Transaction");
WHEREAS, pursuant to the Transaction, Blue Ridge
purchased 100,000 shares of AMERCO's Series B Preferred
Stock (herein so called);
WHEREAS, Blue Ridge (or any subsequent holder of the
Series B Preferred Stock) has the right to convert, upon the
occurrence of certain events described in the Certificate of
Designation of Preferences and Rights of Series B Preferred
Stock of AMERCO (the "Certificate of Designation"), all of
the Series B Preferred Stock into 4,000,000 shares (subject
to adjustment) of AMERCO's Series B Common Stock or all of
the shares of capital stock of Picacho Peak Investment Co.,
a Nevada corporation ("Picacho");
WHEREAS, Blue Ridge (or any subsequent holder of the
Series B Preferred Stock) also has the right to convert the
Series B Preferred Stock as described above on August 31,
1997 and during the first ten business days of each fiscal
quarter beginning after August 31, 1997;
WHEREAS, AMERCO is planning a public offering of its
Common Stock;
WHEREAS, AMERCO has advised Blue Ridge and NationsBank
that the provisions of the Certificate of Designation
permitting conversion of the Series B Preferred Stock into
capital stock of Picacho on August 31, 1997 and during the
first ten business days of each fiscal quarter beginning
after August 31, 1997 would result in an adverse accounting
treatment of the Transaction and hinder AMERCO's ability to
successfully complete the public offering;
WHEREAS, Blue Ridge and NationsBank desire to
facilitate the public offering by entering into this
Agreement:
NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. Blue Ridge and NationsBank agree, that
notwithstanding the provisions of Section 3(a) of the
Certificate of Designation, neither party shall convert,
pursuant to Section 3(a)(i) or Section 3(a)(ii) of the
Certificate of Designation, the Series B Preferred Stock
into any or all of the capital stock of Picacho. Nothing in
this Agreement shall limit Blue Ridge's or NationsBank's
<PAGE>
ability to convert the Series B Preferred Stock into shares
of AMERCO's Series B Common Stock or their ability to
convert the Series B Preferred Stock into any or all of the
capital stock of Picacho under any provision other than
Section 3(a)(i) or Section 3(a)(ii) of the Certificate of
Designation.
2. AMERCO, Blue Ridge and NationsBank agree, that in
addition to the provisions of Section 3(a) of the
Certificate of Designation, Blue Ridge and NationsBank shall
have the right to convert the Series B Preferred Stock into
shares of AMERCO's Series B Common Stock on (i) May 1, 1997,
and for 10 Business Days thereafter; and on (ii) the first
day of each fiscal quarter of the Corporation occurring
after May 1, 1997, and for 10 Business Days after the first
day of each such fiscal quarter.
3. AMERCO, Blue Ridge and NationsBank agree that the
provisions of the Summary of Indicative Terms and
Conditions, attached to that certain letter from NationsBank
of Texas, N.A. to AMERCO, creating any obligation of the
Arranger (as defined therein) to rebate any portion of its
fees are hereby deleted, voided and rendered unenforceable.
4. Blue Ridge and NationsBank agree that, as a
condition of any transfer of the Series B Preferred Stock to
a third party, such third party shall agree to be bound by
the terms of this Agreement. Blue Ridge and NationsBank
agree to the placement of the following legend on the stock
certificate representing the Series B Preferred Stock:
"The securities evidenced hereby are subject to
the terms of that certain Side Agreement, dated October 29,
1996, which limits the ability of the holder of the
securities to convert the securities into the capital stock
of Picacho Peak Investment Co., a Nevada corporation."
5. Blue Ridge and NationsBank agree to execute and
deliver such further agreements and instruments, and take
such further action as may be requested by AMERCO to carry
out the provisions and purposes of this Agreement and to
cause all subsequent holders of the Series B Preferred Stock
to be bound by the terms of this Agreement.
<PAGE>
The foregoing Agreement is hereby executed as of the date
first above written.
AMERCO
By: \s\ Edward J. Shoen
----------------------
Name: Edward J. Shoen
----------------------
Title:President
----------------------
BLUE RIDGE INVESTMENTS, L.L.C.
By: \s\ George C. Carp
----------------------
Name: George C. Carp
----------------------
Title:Vice President-Finance
----------------------
NATIONSBANK CORPORATION
By: \s\ Frank M. Johnson
----------------------
Name: Frank M. Johnson
----------------------
Title:Senior Vice President
----------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FORM 10-Q SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<CASH> 32,380
<SECURITIES> 0
<RECEIVABLES> 311,480<F1>
<ALLOWANCES> 0
<INVENTORY> 54,713
<CURRENT-ASSETS> 0<F2>
<PP&E> 2,330,326
<DEPRECIATION> 1,077,193
<TOTAL-ASSETS> 2,817,846
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 940,282
0
0
<COMMON> 10,000
<OTHER-SE> 653,030
<TOTAL-LIABILITY-AND-EQUITY> 2,817,846
<SALES> 107,192
<TOTAL-REVENUES> 760,136
<CGS> 62,639
<TOTAL-COSTS> 533,795
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,841
<INTEREST-EXPENSE> 35,282
<INCOME-PRETAX> 126,579
<INCOME-TAX> 46,833
<INCOME-CONTINUING> 79,746
<DISCONTINUED> 0
<EXTRAORDINARY> ( 2,004 )
<CHANGES> 0
<NET-INCOME> 77,742
<EPS-PRIMARY> 2.36
<EPS-DILUTED> 2.36
<FN>
<F1>THE VALUE FOR RECEIVABLES REPRESENTS THEIR AMOUNTS NET OF THEIR ALLOWANCES.
<F2>AN UNCLASSIFIED BALANCE SHEET EXISTS IN THE REGISTRANT'S FINANCIAL STATEMENTS.
</FN>
</TABLE>
