EXHIBIT 10.2
EXECUTION COPY
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of June 8, 2005, made by AMERCO REAL
ESTATE COMPANY, a Nevada corporation, AMERCO REAL ESTATE COMPANY OF TEXAS, INC.,
a Texas corporation, AMERCO REAL ESTATE COMPANY OF ALABAMA, INC., an Alabama
corporation, U-HAUL CO. OF FLORIDA, INC. , a Florida corporation, (each a
"Borrower", collectively the "Borrowers"), U-HAUL INTERNATIONAL, INC., a Nevada
corporation ("Guarantor"), and each of the entities listed on the signature
pages hereto as a Marketing Grantor (each, a "Marketing Grantor" and,
collectively, the "Marketing Grantors", and, together with the Borrowers, the
Guarantor and with each Person which may, from time to time, become party hereto
as a Grantor, collectively the "Grantors" and each a "Grantor"), in favor of
XXXXXXX XXXXX COMMERCIAL FINANCE CORP., as lender (the "Lender").
RECITALS
Pursuant to the Amended and Restated Credit Agreement, dated as of
June 8, 2005 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among the Borrowers, Guarantor, as guarantor, and the
Lender, the Lender has agreed to make loans to the Borrowers upon the terms and
subject to the conditions set forth therein. It is a condition precedent to the
obligation of the Lender to make its loans to the Borrower under the Credit
Agreement that each Grantor shall have executed and delivered this Security
Agreement to the Lender.
NOW, THEREFORE, in consideration of the premises and to induce the
Lender to enter into the Credit Agreement and make the loans to the Borrowers
under the Credit Agreement, each Grantor hereby agrees with the Lender as
follows:
1. Defined Terms.
(a) Unless otherwise defined herein, capitalized terms which are
defined in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement; the following terms which are defined in the
Uniform Commercial Code in effect in the State of New York on the date hereof
are used herein as so defined: Accounts, Certificated Security, Chattel Paper,
Documents, Equipment, Farm Products, General Intangibles, Instruments,
Inventory, Investment Property, Letter-of-Credit Rights, Proceeds, Security,
Securities Account and Supporting Obligations; and the following terms shall
have the following meanings:
"Account Control Agreement": with respect to any Pledged Deposit
Account, a control agreement in a form substantially identical to the Collection
Account Control Agreement or other form approved by the Lender, as amended,
supplemented or otherwise modified from time to time.
"CMBS Properties Excess Cash Flow Collateral": collectively, all
right, title and interest of any Grantor in and to any cash or right to receive
cash, or any Accounts, Chattel Paper, General Intangibles, Instruments,
Receivables, Securities, Securities Accounts, Security Entitlements, or other
property, comprising, evidencing or arising from, in whole or in part, any CMBS
Properties Excess Cash Flow, and all products and Proceeds thereof.
"CMBS Parties": any parties, other than the Grantors, to any CMBS
Document.
"Collateral": as defined in Section 2 of this Security Agreement.
"Deposit Account": a "deposit account" as defined in the Uniform
Commercial Code of any applicable jurisdiction and, in any event, including
without limitation any demand, time, savings, passbook or like account
maintained with any depositary institution.
"Excluded Assets": all Vehicles (but not the Grantor's interest in
truck and other vehicle rental revenue related to the Eligible Properties), and
any property of any Grantor to the extent not comprising any part of, or arising
or derived from, or otherwise related to, any of the Eligible Properties,
including, without limitation, the property listed on Schedule II.
"Pledged Deposit Accounts": the Collection Account and the
Collection Account Sub-Account.
"Pledged Revenue": all revenue (including, without limitation,
rental income, proceeds of sales of goods and commission income) comprising or
arising from any activity of a Grantor at or in respect of any Eligible
Property, including, without limitation, all amounts and property which would be
designated as self-storage rental revenue, retail revenue, rental equipment
commissions or other miscellaneous revenue, or other similar items, on an income
statement of such Grantor prepared on a cash accounting basis from time to time,
and whether or not consisting of cash or the like, rights to receive cash or the
like, Accounts, Chattel Paper, General Intangibles, Instruments, Receivables,
Securities, Securities Accounts or Security Entitlements, and all Proceeds and
products thereof.
"Pledged Revenue Obligations": all agreements, contracts or other
arrangements which give rise to any Pledged Revenue.
"Receivable": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument or
Chattel Paper and whether or not it has been earned by performance (including,
without limitation, any Account).
"Secured Obligations": the collective reference to (a) the
Obligations, and (b) all obligations and liabilities of each Grantor to the
Lender, whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of or in
connection with any Hedge Agreement entered into by any Grantor with any Lender
or any Affiliate thereof and any other document made, delivered or given in
connection therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without limitation,
all fees and disbursements of counsel to the Lender or such Affiliate that are
required to be paid by any Grantor pursuant to the terms of such Hedge Agreement
or other documents) or otherwise.
"Security Agreement": this Security Agreement, as amended,
supplemented or otherwise modified from time to time.
"UCC": the Uniform Commercial Code as from time to time in effect in
the State of New York.
"Vehicles": all cars, trucks, trailers, tow dollies, construction
and earth moving equipment and other vehicles covered by a certificate of title
law of any State and all tires and other appurtenances to any of the foregoing.
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Security Agreement shall refer to this Security
Agreement as a whole and not to any particular provision of this Security
Agreement, and Section, Schedule. Annex, and Exhibit references are
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to this Security Agreement unless otherwise specified. The meanings given to
terms defined herein shall be equally applicable to both the singular and plural
forms of such terms.
2. Grant of Security Interest. As collateral security for the prompt
and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Secured Obligations, each Grantor hereby
grants to the Lender a security interest in all of the following property now
owned or at any time hereafter acquired by such Grantor or in which such Grantor
now has or at any time in the future may acquire any right, title or interest
(collectively, the "Collateral"):
(i) all Pledged Revenue;
(ii) all Pledged Revenue Obligations;
(iii) all Pledged Deposit Accounts;
(iv) all CMBS Properties Excess Cash Flow Collateral;
(v) all books and records pertaining to the Collateral; and
(vi) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing, all Supporting
Obligations in respect of any of the foregoing, and all
collateral security and guarantees given by any Person
with respect to any of the foregoing;
provided, that, in any event, the Collateral shall not include the Excluded
Assets.
3. Certain Matters Respecting Pledged Revenue Obligations, CMBS
Properties Excess Cash Flow Collateral; Tracing.
(a) Grantors Remain Liable under Pledged Revenue Obligations and
CMBS Documents. Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Pledged Revenue Obligations and CMBS
Documents to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with and pursuant to
the terms and provisions of each such Pledged Revenue Obligation or CMBS
Document. The Lender shall have no obligation nor liability under any Pledged
Revenue Obligations or CMBS Document by reason of or arising out of this
Security Agreement or the receipt by the Lender of any payment relating to any
Pledged Revenue or CMBS Properties Excess Cash Flow Collateral pursuant hereto,
nor shall the Lender be obligated in any manner to perform any of the
obligations of any Grantor under or pursuant to any Pledged Revenue Obligation
or CMBS Document, to make any payment, to make any inquiry as to the nature or
the sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Pledged Revenue Obligation or CMBS Document,
to present or file any claim, to take any action to enforce any performance or
to collect the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
(b) Analysis of Pledged Revenue and CMBS Properties Excess Cash
Flow. The Lender may in its own name or in the name of others communicate with
(i) if an Event of Default shall have occurred and be continuing, the parties to
any Pledged Revenue Obligations or (ii) the CMBS Parties to verify with them to
its satisfaction the existence, amount and terms of any Pledged Revenue or CMBS
Properties Excess Cash Flow, or Pledged Revenue Obligations or CMBS Documents.
(c) Collections on Pledged Revenue. The Lender hereby authorizes
each Grantor to collect the Pledged Revenue and the Lender may curtail or
terminate said authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the Lender at any time when
an Event of Default shall have occurred and be continuing, any payments of
Pledged Revenue, when collected by any Grantor, shall be forthwith (and, in any
event, within two Business Days) deposited by such Grantor (or, in the case of
credit card receipts, if required by the Lender at any time an
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Event of Default has occurred and is continuing, by a substitute servicer
appointed by the Lender to service such credit card receipts), in the Collection
Account pursuant to Section 6.10 of the Credit Agreement, and, until so
deposited, shall be held by such Grantor in trust for the Lender, segregated
from other funds of the Grantors. All Proceeds constituting collections of
Pledged Revenue while held in the Concentration Account (or by any Grantor (or
servicer) in trust for the Lender) shall continue to be collateral security for
all of the Secured Obligations and shall not constitute payment thereof until
applied as hereinafter provided.
(d) Tracing of Collateral; Information Systems. All amounts held in
any Local Account or the Concentration Account shall be identified by the
applicable Grantor by source in a manner sufficient to trace all such amounts
and to identify amounts constituting Collateral and amounts not constituting
Collateral. Such tracing and identification shall include, without limitation,
whether any amounts held in any Local Account or Concentration Account: (i)
constitutes Collateral or does not constitute Collateral, (ii) derives from
U-Move Income, Storage Income or Sales Income, (iii) whether such amounts derive
from operations at Eligible Properties, or locations not constituting Eligible
Properties, and (iv) whether such amounts derive from amounts paid pursuant to
the CMBS Documents and whether the same constitute CMBS Properties Excess Cash
Flow. The Grantors represent and warrant that the Grantors' information systems
in existence as of the Closing Date have adequate capability to perform such
tracing and identification, and the Lender hereby confirms its satisfaction with
such existing information systems. The Grantors shall maintain all such
information systems in good working order, and shall not discontinue such
tracing and identification at any time. No material modification of the
Grantors' information systems shall be made unless such modification would not
result in any diminution in the ability of the Grantors to accurately so trace
and identify the amounts in the Local Accounts and Concentration Account by
source. The Grantors shall promptly provide to the Lender notice of any material
modification to such information systems, and shall provide to the Lender such
information with respect to such modification as the Lender may reasonably
request.
4. Representations and Warranties. Each Grantor hereby represents
and warrants that:
(a) Title; No Other Liens. Except for the Liens granted to the
Lender pursuant to this Security Agreement, and the other Liens permitted to
exist on the Collateral pursuant to the Credit Agreement, each Grantor owns each
item of the Collateral free and clear of any and all Liens or claims of others.
No security agreement, financing statement or other public notice with respect
to all or any part of the Collateral is on file or of record in any public
office, except such as may have been filed in favor of the Lender, pursuant to
this Security Agreement or as may be permitted pursuant to the Credit Agreement.
(b) Perfected First Priority Liens. When financing statements have
been filed in the offices in the jurisdictions listed in Schedule 4.14(b) to the
Credit Agreement and the Collection Account Control Agreement and the Collection
Sub-Account Control Agreement have been executed and delivered, the Liens
granted pursuant to this Security Agreement will constitute perfected Liens in
favor of the Lender, in the Collateral as collateral security for the Secured
Obligations, which Liens are prior to all other Liens on the Collateral created
by the Grantors and in existence on the date hereof and which are enforceable as
such against all creditors of and purchasers from any Grantor.
(c) Pledged Revenue; Receivables. No Pledged Revenue is owned by any
Person other than a Grantor. No amount payable to any Grantor under or in
connection with any Pledged Revenue is evidenced by any Instrument or Chattel
Paper which has not been delivered to the Lender. The place where each Grantor
keeps its records concerning the Pledged Revenue is 0000 X. Xxxxxxx Xxxxxx,
Xxxxxxx, XX 00000. Receivables do not comprise more than 2.00% of the Pledged
Revenue.
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(d) CMBS Documents. No consent of any party (other than the
Grantors) to any CMBS Document is required, or purports to be required, in
connection with the execution, delivery and performance of this Security
Agreement. Each CMBS Document is in full force and effect and constitutes a
valid and legally enforceable obligation of the parties thereto, except as
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting the enforcement of
creditor's rights generally and general equitable principles (whether considered
in a proceeding in equity or at law). No consent or authorization of, filing
with or other act by or in respect of any Governmental Authority is required in
connection with the execution, delivery, performance, validity or enforceability
of any of the CMBS Documents by any party thereto other than those which have
been duly obtained, made or performed, are in full force and effect and do not
subject the scope of any such CMBS Document to any material adverse limitation,
either specific or general in nature. Neither any Grantor nor (to the best of
each Grantor's knowledge) any other party to any CMBS Document is in default or
is likely to become in default in the performance or observance or any of the
terms thereof in any manner that, in the aggregate, could reasonably be expected
to have a Material Adverse Effect. Each Grantor has fully performed all its
obligations under each CMBS Document. The right, title and interest of each
Grantor in, to and under the CMBS Properties Excess Cash Flow are not subject to
any defense, offset, counterclaim or claim which could reasonably be expected to
have a Material Adverse Effect, nor have any of the foregoing been asserted or
alleged against any Grantor. Each Grantor has delivered to the Lender a complete
and correct copy of each CMBS Document, including all amendments, supplements
and other modifications thereto. No amount payable to any Grantor under or in
connection with any CMBS Properties Excess Cash Flow is evidenced by any
Instrument or Chattel Paper which has not been delivered to the Lender.
(e) Chief Executive Office. Each Grantor's chief executive office
and chief place of business is, and for the four (4) months preceding the date
has been, located at the place specified for such Grantor on Schedule I.
(f) Jurisdiction of Organization. Each Grantor is a "registered
organization" as defined in the UCC, and is organized as the type of entity, and
under the laws of the jurisdiction, specified for such Grantor on Schedule I.
(g) Name. (i) The exact legal name of each Grantor is as specified
for such Grantor on Schedule I; and (ii) no Grantor has done business under a
previous name, assumed name or trade name.
(h) Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
(i) Insurance Policies. None of the Collateral constitutes an
interest or claim in or under any policy of insurance or contract for annuity,
except to the extent the same constitutes Proceeds.
(j) Governmental Obligors. None of the obligors on any Receivables
included in the Collateral, and none of the parties to any CMBS Documents, is a
Governmental Authority.
(k) Pledged Deposit Accounts. All Pledged Deposit Accounts are
listed on Schedule III, including the institution at which such account is
established, the purpose thereof, the name thereon, and the account number
thereof.
5. Covenants. Each Grantor covenants and agrees with the Lender
that, from and after the date of this Security Agreement until the Secured
Obligations are paid in full and the Commitment has expired or been terminated:
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(a) Maintenance of Perfected Security Interests; Further
Documentation; Pledge of Instruments and Chattel Paper. Each Grantor shall
maintain the security interest created by this Security Agreement as a perfected
security interest having at least the priority described in Section 4(b) hereof
and shall defend such security interest against the claims and demands of all
Persons whomsoever. At any time and from time to time, upon the written request
of the Lender, and at the sole expense of the Grantors, each Grantor will
promptly and duly execute and deliver such further instruments and documents and
take such further action as the Lender may reasonably request for the purpose of
obtaining or preserving the full benefits of this Security Agreement and of the
rights and powers herein granted, including, without limitation, (i) the filing
of any financing or continuation statements under the Uniform Commercial Code in
effect in any jurisdiction with respect to the Liens created hereby and (ii) in
the case of any Pledged Deposit Accounts and any other relevant Collateral,
taking any actions (including, without limitation, entering into, and using its
best efforts to cause any relevant third party to enter into, one or more
Account Control Agreements) necessary to enable the Lender to obtain "control"
(within the meaning of the applicable Uniform Commercial Code) with respect
thereto. Each Grantor also hereby authorizes the Lender to file any such
financing or continuation statement without the signature of such Grantor to the
extent permitted by applicable law. A carbon, photographic or other reproduction
of this Security Agreement shall be sufficient as a financing statement for
filing in any jurisdiction. If any amount payable under or in connection with
any of the Collateral shall be or become evidenced by any Instrument, Chattel
Paper or Certificated Security, such Instrument, Chattel Paper or Certificated
Security shall be immediately delivered to the Lender, duly endorsed in a manner
satisfactory to the Lender, to be held as Collateral pursuant to this Security
Agreement.
(b) Indemnification. Each Grantor agrees, jointly and severally, to
pay, and to save the Lender harmless from, any and all liabilities, costs and
expenses (including, without limitation, legal fees and expenses) (i) with
respect to, or resulting from, any delay in paying, any and all excise, sales or
other taxes which may be payable or determined to be payable with respect to any
of the Collateral, (ii) with respect to, or resulting from, any delay in
complying with any Requirement of Law applicable to any of the Collateral or
(iii) in connection with any of the transactions contemplated by this Security
Agreement. In any suit, proceeding or action brought by the Lender under any
CMBS Document for any sum owing thereunder in respect of the CMBS Properties
Excess Cash Flow, or to enforce any provisions of any CMBS Document, each
Grantor will save, indemnify and keep the Lender harmless from and against all
expense, loss or damage suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction or liability whatsoever of the account debtor or obligor
thereunder, arising out of a breach by any Grantor of any obligation thereunder
or arising out of any other agreement, indebtedness or liability at any time
owing to or in favor of such account debtor or obligor or its successors from
any Grantor.
(c) Maintenance of Records. Each Grantor will keep and maintain at
its own cost and expense or cause to kept and maintained on its behalf by U-Haul
International satisfactory and complete records of the Collateral, including,
without limitation, a record of all payments received and all credits granted
with respect to the Collateral, and such records shall comply with the
requirements of Section 3(c) hereof. Each Grantor will xxxx its books and
records pertaining to the Collateral or will cause U-Haul International to xxxx
on its behalf its books and records to evidence this Security Agreement and the
security interests granted hereby. Upon the occurrence and during the
continuance of an Event of Default, each Grantor shall turn over or cause U-Haul
International to turn over, as the case may be, any books and records pertaining
to the Collateral to the Lender or to its representatives during normal business
hours at the request of the Lender.
(d) Right of Inspection. The Lender shall at all times have full and
free access during normal business hours to all the books, correspondence and
records of each Grantor, and the Lender or their respective representatives may
examine the same, take extracts therefrom and make
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photocopies thereof, and each Grantor agrees to render to the Lender at the
Grantors' cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto.
(e) Compliance with Laws, etc. Each Grantor will comply in all
material respects with all Requirements of Law applicable to the Collateral or
any part thereof or to the operation of such Grantor's business; provided,
however, that each Grantor may contest any Requirement of Law in any reasonable
manner which shall not, in the sole opinion of the Lender, adversely affect the
Lender's rights or the priority of its Liens on the Collateral.
(f) CMBS Documents. To the extent that any Grantor or any Subsidiary
thereof is a party to any CMBS Documents, such Grantor shall, or cause any such
Subsidiary to, perform and comply with its obligations under the CMBS Documents
to the extent that failure by such Grantor or such Subsidiary to so comply could
result in the failure to distribute any amount of, or reduce the distributable
amount of, CMBS Properties Excess Cash Flow.
(g) Payment of Obligations. Each Grantor will pay promptly when due
all taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor, materials
and supplies) against or with respect to the Collateral, except that no such
charge need be paid if (i) the validity thereof is being contested in good faith
by appropriate proceedings, (ii) such proceedings do not involve any material
danger of the sale, forfeiture or loss of any of the Collateral or any interest
therein and (iii) such charge is adequately reserved against on such Grantor's
books in accordance with GAAP.
(h) Limitation on Liens on Collateral, Certain other Property.
(i) No Grantor will create, incur or permit to exist, will defend
the Collateral against, and will take such other action as is necessary to
remove, any Lien or claim on or to the Collateral, other than the Liens
created hereby and Liens permitted under the Credit Agreement, and will
defend the right, title and interest of the Lender in and to any of the
Collateral against the claims and demands of all Persons whomsoever.
(ii) No Grantor shall create, incur, assume or suffer to exist any
Lien on or security interest in any Inventory located at, used in the
operation of, or otherwise related to, any of the Eligible Properties, or
any Pledged Revenue Obligations or other property giving rise to any
Pledged Revenue.
(iii) For the avoidance of doubt, nothing in this Section 5(h) shall
be construed as prohibiting the Grantors from creating, incurring or
permitting to exist any Liens on any Equipment or other fixed or capital
assets not constituting Collateral securing Indebtedness of any Grantor
incurred to finance the acquisition thereof, or any Liens on any property
of the Grantors not constituting Collateral and not covered by clause (ii)
of this Section 5(h).
(i) Limitations on Dispositions of Collateral. No Grantor will sell,
transfer, lease or otherwise dispose of any of the Collateral, or attempt, offer
or contract to do so except for sales, transfers and other dispositions of
Collateral to the extent permitted under the Credit Agreement.
(j) Limitations on Modifications of CMBS Documents; Exercise of
Rights; Notices. No Grantor will (i) amend, modify, terminate or waive any
provision of any CMBS Document except as permitted under the Credit Agreement,
(ii) fail to exercise promptly and diligently each and every material right
which it may have under each CMBS Document to ensure the timely payment of any
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CMBS Properties Excess Cash Flow or (iii) fail to deliver to the Lender a copy
of each material demand, notice or document received by it relating in any way
to any CMBS Document that questions the validity or enforceability of such CMBS
Document.
(k) Limitations on Discounts, Compromises, Extensions of Pledged
Revenue Obligations. Other than in the ordinary course of business consistent
with its past practice, no Grantor will (i) grant any extension of the time of
payment of any Pledged Revenue Obligation, (ii) compromise, compound or settle
any Pledged Revenue Obligation for less than the full amount thereof, (iii)
release, wholly or partially, any Person liable for the payment of any Pledged
Revenue, or (iv) allow any credit or discount whatsoever on any Pledged Revenue
Obligation.
(l) Further Identification of Collateral. Each Grantor will furnish
to the Lender from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Lender may reasonably request, all in reasonable detail.
(m) Notices. Each Grantor will advise the Lender promptly, in
reasonable detail, at its address set forth in the Credit Agreement, (i) of any
Lien (other than Liens created hereby or permitted under the Credit Agreement)
on, or claim asserted against, any of the Collateral and (ii) of the occurrence
of any other event which could reasonably be expected to have a material adverse
effect on the aggregate value of the Collateral or on the Liens created
hereunder.
(n) Changes in Locations, Name, etc. (i) Without thirty (30) days
prior written notice to the Lender, no Grantor will (A) change the location of
its jurisdiction of organization from that specified in Section 4(f), (B) remove
its books and records concerning the Pledged Revenue from the location specified
in Section 4(c) or (C) change its name; and (ii) no Grantor shall at any time
(A) cease to be a "registered organization", as defined in the Uniform
Commercial Code of any relevant jurisdiction, (ii) change its identity or
corporate structure or (iii) reorganize under the laws of another jurisdiction
or as a different type of entity.
6. Agent's Appointment as Attorney-in-Fact.
(a) Powers. Each Grantor hereby irrevocably constitutes and appoints
the Lender and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of each Grantor and in the name of each Grantor or in its
own name, from time to time in the Lender's discretion, for the purpose of
carrying out the terms of this Security Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Security
Agreement (any of which rights under the power of attorney provided for in this
Section the Lender agrees not to exercise unless an Event of Default has
occurred and is continuing), and, without limiting the generality of the
foregoing, each Grantor hereby gives the Lender the power and right, on behalf
of each Grantor, without notice to or assent by any Grantor, to do the
following:
(i) in the name of each Grantor or its own name, or otherwise, to
take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Account, Receivable, Instrument, Chattel Paper, General Intangible or CMBS
Document constituting Collateral and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Lender for the purpose of collecting any and all
such moneys due under any Account, Receivable, Instrument, Chattel Paper,
General Intangible or CMBS Document constituting Collateral herein, or
with respect to any other Collateral whenever payable;
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(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, to effect any repairs or any insurance
called for by the terms of this Security Agreement and to pay all or any
part of the premiums therefor and the costs thereof;
(iii) to execute, in connection with any sale provided for in
Section 9 hereof, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(iv) (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Lender or as the Lender shall direct; (B) to
ask or demand for, collect, receive payment of and receipt for, any and
all moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, notices and
other documents in connection with any of the Collateral; (D) to commence
and prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any thereof
and to enforce any other right in respect of any Collateral; (E) to defend
any suit, action or proceeding brought against any Grantor with respect to
any Collateral; (F) to settle, compromise or adjust any such suit, action
or proceeding and, in connection therewith, to give such discharges or
releases as the Lender may deem appropriate; and (G) generally, to sell,
transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Lender
were the absolute owner thereof for all purposes, and to do, at the
Lender's option and the Grantors' expense, at any time, or from time to
time, all acts and things which the Lender deems necessary to protect,
preserve or realize upon the Collateral and the Lender's, Liens thereon
and to effect the intent of this Security Agreement, all as fully and
effectively as the Grantors might do.
Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and is irrevocable.
(b) No Duty on Lender's Part. The powers conferred on the Lender
hereunder are solely to protect the Lender's interests in the Collateral and
shall not impose any duty upon Lender to exercise any such powers. The Lender
shall be accountable only for amounts that it actually receives as a result of
the exercise of such powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to any Grantor for any act
or failure to act hereunder, except for its own gross negligence or willful
misconduct.
7. Performance by Lender of Grantors' Obligations. If any Grantor
fails to perform or comply with any of its agreements contained herein, the
Lender, at its option, but without any obligation to do so, may itself perform
or comply, or otherwise cause performance or compliance, with such agreement.
The expenses of the Lender incurred in connection with such performance or
compliance, together with interest thereon at a rate per annum equal to the rate
specified in Section 3.1(b)(y) of the Credit Agreement, shall be payable,
jointly and severally, by the Grantors to the Lender on demand and shall
constitute Secured Obligations secured hereby.
8. Proceeds.
(a) In addition to the rights of the Lender specified in Section
3(c) with respect to payments of Pledged Revenue, it is agreed that all Proceeds
received by any Grantor consisting of cash, checks and other near-cash items
shall be held by the Grantors in trust for the Lender, and shall, forthwith upon
receipt by any Grantor, be deposited into a Local Account and, pursuant to
Section 6.10(b) of the
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Credit Agreement, be transferred into the Concentration Account, for further
application as provided in Section 6.10 of the Credit Agreement; provided that,
if any Event of Default has occurred and is continuing, such Proceeds shall be
turned over to the Lender in the exact form received by such Grantor (duly
endorsed by such Grantor to the Lender, if required), and deposited by the
Lender in the Collection Account for application as provided in Section 6.10 of
the Credit Agreement. Any and all such Proceeds held in the Concentration
Account, in the Collection Account, by the Lender or by any Grantor in trust for
the Lender shall continue to be held as collateral security for the Secured
Obligations and shall not constitute payment thereof until applied as provided
in this Section and the Credit Agreement.
(b) At such intervals as may be agreed upon between the Lender and
the Grantors or, if an Event of Default shall have occurred and be continuing,
at any time at the Lender's election, the Lender may apply all or any part of
the Proceeds constituting Collateral, whether or not held in any Pledged
Account, and any Proceeds of the Guarantee or any other Loan Document, or
otherwise received by the Lender, against the Secured Obligations (whether
matured or unmatured), in such order as provided in Section 6.10 of the Credit
Agreement. Any balance of such Proceeds remaining after the Secured Obligations
shall have been paid in full, and the Commitment shall have expired or been
terminated, shall be paid over to the Grantors or to whomsoever may be lawfully
entitled to receive the same in accordance with Section 6.10 of the Credit
Agreement.
9. Remedies. If an Event of Default shall occur and be continuing,
the Lender may exercise, in addition to all other rights and remedies granted to
it in this Security Agreement and in any other instrument or agreement securing,
evidencing or relating to the Secured Obligations, all rights and remedies of a
secured party under the UCC. Without limiting the generality of the foregoing,
the Lender, without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law referred
to below) to or upon any Grantor or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of the Lender or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. The Lender shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption in any
Grantor, which right or equity is hereby waived or released. Each Grantor
further agrees, at the Lender's request, to assemble the Collateral and make it
available to the Lender at places which the Lender shall reasonably select,
whether at any Grantor's premises or elsewhere. The Lender shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the Lender
arising out of the exercise by the Lender hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Secured Obligations, in such order as the Lender may
elect, and only after such application and after the payment by the Lender of
any other amount required by any provision of law, including, without
limitation, Section 9-615 of the UCC, need the Lender account for the surplus,
if any, to the Grantors. To the extent permitted by applicable law, each Grantor
waives all claims, damages and demands it may acquire against the Lender arising
out of the exercise by the Lender of any of its rights hereunder. If any notice
of a proposed sale or other disposition of Collateral shall be required by law,
such notice shall be deemed reasonable and proper if given at least 10 days
before such sale or other disposition. Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay the Secured Obligations and the fees and disbursements
of any attorneys employed by Lender to collect such deficiency.
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10. Limitation on Duties Regarding Presentation of Collateral. The
Lender's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the UCC
or otherwise, shall be to deal with it in the same manner as the Lender deals
with similar property for its own account. Neither the Lender nor any of its
respective directors, officers, employees, agents or advisors shall be liable
for failure to demand, collect or realize upon all or any part of the Collateral
or for any delay in doing so or shall be under any obligation to sell or
otherwise dispose of any Collateral upon the request of any Grantor or any other
Person or to take any other action whatsoever with regard to the Collateral or
any part thereof. The powers conferred on the Lender hereunder are solely to
protect the Lender's interests in the Collateral and shall not impose any duty
upon Lender to exercise any such powers. The Lender shall be accountable only
for amounts that they actually receive as a result of the exercise of such
powers, and neither they nor any of their officers, directors, employees, agents
or advisors shall be responsible to any Grantor for any act or failure to act
hereunder, except for their own gross negligence or willful misconduct.
11. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
12. Notices. Notices, requests and demands to or upon the Lender or
any Grantor hereunder shall be effected in the manner set forth in Section 9.2
of the Credit Agreement.
13. Severability. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
14. Paragraph Headings. The paragraph headings used in this Security
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
15. No Waiver; Cumulative Remedies. The Lender shall not, by any act
(except by a written instrument pursuant to Section 16 hereof), delay,
indulgence, omission or otherwise, be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Lender, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Lender of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Lender would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any rights or remedies provided by law.
16. Waivers and Amendments; Successors and Assigns; Governing Law.
None of the terms or provisions of this Security Agreement may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by each Grantor and the Lender, provided that any provision of this
Security Agreement may be waived by the Lender in a written instrument executed
by the Lender. This Security Agreement shall be binding upon the successors and
assigns of each Grantor and shall inure to the benefit of the Lender and its
respective successors and assigns. This Security Agreement shall be governed by,
and construed and interpreted in accordance with, the laws of the State of New
York.
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17. Marketing Entity Grantors.
(a) The Lender acknowledges and agrees that the Marketing Entity
Grantors have not guaranteed, assumed or otherwise become directly liable for
the Loans, and that the Lender's rights as against the Marketing Entity Grantors
hereunder are limited to the Collateral.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of Marketing Entity Grantor hereunder
shall in no event exceed the amount which can be guaranteed by such Marketing
Entity Grantor under applicable federal and state laws relating to the
insolvency of debtors.
(c) Each Marketing Entity Grantor agrees that the Obligations may at
any time and from time to time exceed the amount of the liability of such
Marketing Entity Grantor hereunder without impairing this Security Agreement or
affecting the rights and remedies of the Lender hereunder.
(d) Each Marketing Entity Grantor hereby agrees that, to the extent
a Marketing Entity Grantor shall have paid more than its proportionate share of
any payment made hereunder or in respect of the Obligations, such Marketing
Entity Grantor shall be entitled to seek and receive contribution from and
against any other Grantor hereunder which has not paid its proportionate share
of such payment. The provisions of this Section 17(d) shall be subject to the
terms and conditions of Section 17(__). The provisions of this Section 17(d)
shall in no respect limit the obligations and liabilities of any Marketing
Entity Grantor to the Lender, and each Marketing Entity Grantor shall remain
liable to the Lender for the full amount of its obligations hereunder.
(e) Notwithstanding any payment or payments made by the Marketing
Entity Grantors hereunder or any set-off or application of funds of any
Marketing Entity Grantor by the Lender, no Marketing Entity Grantor shall be
entitled to be subrogated to any of the rights of the Lender against any
Borrower, U-Haul International or any other Marketing Entity Grantor or any
collateral security or guarantee or right of offset held by the Lender for the
payment of the Obligations, nor shall any Marketing Entity Grantor seek or be
entitled to seek any contribution or reimbursement from any Borrower, U-Haul
International or any other Marketing Entity Grantor in respect of payments made
by any Marketing Entity Grantor hereunder, until all amounts owing to the Lender
by the Borrowers on account of the Obligations are paid in full and the
Commitment is terminated. If any amount shall be paid to any Marketing Entity
Grantor on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall be held by such
Marketing Entity Grantor in trust for the Lender, segregated from other funds of
the Marketing Entity Grantors, and shall, forthwith upon receipt by such
Marketing Entity Grantor, be turned over to the Lender in the exact form
received by such Marketing Entity Grantor (duly indorsed by such Marketing
Entity Grantor to the Lender, if required), to be applied against the
Obligations, whether matured or unmatured, in such order as the Lender may
determine in accordance with the Loan Documents.
(f) Each Marketing Entity Grantor shall remain obligated hereunder
notwithstanding that, without any reservation of rights against such Marketing
Entity Grantor and without notice to or further assent by such Marketing Entity
Grantor, any demand for payment of any of the Obligations made by the Lender may
be rescinded by such party and any of the Obligations continued, and the
Obligations, or the liability of any other party upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Lender, and the Credit Agreement, the Notes and the other Loan Documents and
any other documents executed and delivered in connection therewith may be
amended, modified, supplemented or terminated, in whole or in part, as the
Lender may deem advisable from time to time, and any collateral security,
guarantee or
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right of offset at any time held by the Lender for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. The Lender
shall not have any obligation to protect, secure, perfect or insure any Lien at
any time held by it as security for the Obligations or any property subject
thereto. When making any demand hereunder against any Marketing Entity Grantor,
the Lender may, but shall be under no obligation to, make a similar demand on
any Borrower, the Guarantor or any other Marketing Entity Grantor, and any
failure by the Lender to make any such demand or to collect any payments from
any Borrower or the Guarantor or any such other Marketing Entity Grantor or any
release of any Borrower or the Guarantor or such other Marketing Entity Grantor
shall not relieve any Marketing Entity Grantor of its obligations or liabilities
hereunder, and shall not impair or affect the rights and remedies, express or
implied, or as a matter of law, of the Lender against such Marketing Entity
Grantor. For the purposes hereof "demand" shall include the commencement and
continuance of any legal proceedings.
(g) Each Marketing Entity Grantor waives any and all notice of the
creation, renewal, extension or accrual of any of the Obligations and notice of
or proof of reliance by the Lender upon this Security Agreement or acceptance of
this Security Agreement, the Obligations, and any of them, shall conclusively be
deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon this Security Agreement; and all dealings
between the Borrowers, the Guarantor and the Marketing Entity Grantors, on the
one hand, and the Lender, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon this Security
Agreement. Each Marketing Entity Grantor waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon any Borrower
or the Guarantor or any other Marketing Entity Grantor with respect to the
Obligations. Each Marketing Entity Grantor understands and agrees that this
Security Agreement shall be continuing, absolute and unconditional, without
regard to (i) the validity, regularity or enforceability of the Credit
Agreement, any Note or any other Loan Document, any of the Obligations or any
other collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Lender, (ii) any defense,
set-off or counterclaim (other than a defense of payment of performance) which
may at any time be available to or be asserted by any Borrower or the Guarantor
against the Lender, or (iii) any other circumstance whatsoever (with or without
notice to or knowledge of any Borrower or any Guarantor or any Marketing Entity
Grantor) which constitutes, or might be construed to constitute, an equitable or
legal discharge of any Borrower or any Guarantor for the Obligations, or of any
Marketing Entity Grantor under this Security Agreement, in bankruptcy or in any
other instance. When pursuing its rights and remedies hereunder against any
Marketing Entity Grantor, the Lender may, but shall be under no obligation to,
pursue such rights and remedies as it may have against any Borrower, the
Guarantor or any other Person or against any collateral security or guarantee
for the Obligations or any right of offset with respect thereto, and any failure
by the Lender to pursue such other rights or remedies or to collect any payments
from any Borrower, the Guarantor or any such other Person or to realize upon any
such collateral security or guarantee or to exercise any such right of offset,
or any release of any Borrower, the Guarantor or any such other Person or any
such collateral security, guarantee or right of offset, shall not relieve any
Marketing Entity Grantor of any liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of the Lender against any Marketing Entity Grantor. This Security
Agreement shall remain in full force and effect and be binding in accordance
with and to the extent of its terms upon each Marketing Entity Grantor and the
successors and assigns thereof, and shall inure to be benefit of the Lender, and
their respective successors, indorsees, transferees and assigns, until all the
Obligations and the obligations of each Marketing Entity Grantor under this
Security Agreement shall have been satisfied by payment in full and the
Commitment shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrowers may be free from any Obligations.
(h) In addition to any rights and remedies of the Lender provided by
law, the Lender shall have the right, without prior notice to the Marketing
Entity Grantors, any such notice being expressly waived by the Marketing Entity
Grantors to the extent permitted by applicable law, to set off
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and appropriate and apply against and on account of the obligations and
liabilities of the Marketing Entity Grantors to the Lender hereunder, upon any
amount becoming due and payable by the Marketing Entity Grantors hereunder
(whether at the stated maturity, by acceleration or otherwise), any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Lender or any branch or agency
thereof to or for the credit or the account of the Marketing Entity Grantor. The
Lender agrees promptly to notify the Marketing Entity Grantors after any such
set off and application made by the Lender, provided that the failure to give
such notice shall not affect the validity of such set off and application.
18. Additional Grantors. Each Subsidiary of a Grantor which becomes
a party to the Credit Agreement as a Borrower or a Guarantor shall be required
to become party to this Security Agreement and become a Grantor for all purposes
of this Security Agreement upon execution and delivery by such Subsidiary of a
Supplement in the form of Annex E hereto.
[SIGNATURE PAGE FOLLOWS]
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EXECUTION COPY
IN WITNESS WHEREOF, each Grantor has caused this Security Agreement
to be duly executed and delivered as of the date first above written.
AMERCO REAL ESTATE COMPANY,
AMERCO REAL ESTATE COMPANY OF TEXAS,
INC.,
AMERCO REAL ESTATE COMPANY OF
ALABAMA, INC.,
U-HAUL CO. OF FLORIDA, INC.,
U-HAUL INTERNATIONAL, INC.
By /s/ Xxxx X. Xxxxxx
--------------------------------
Name: Xxxx X. Xxxxxx
Title: Treasurer
U-HAUL CO. OF ALABAMA, INC.
U-HAUL CO. OF ALASKA
U-HAUL CO. OF ARIZONA
U-HAUL CO. OF CALIFORNIA
U-HAUL CO. OF COLORADO
U-HAUL CO. OF CONNECTICUT
U-HAUL CO. OF GEORGIA
U-HAUL CO. OF IDAHO, INC.
U-HAUL CO. OF ILLINOIS, INC.
U-HAUL CO. OF INDIANA, INC.
U-HAUL CO. OF IOWA, INC.
U-HAUL CO. OF KANSAS, INC.
U-HAUL CO. OF KENTUCKY
U-HAUL CO. OF LOUISIANA
U-HAUL CO. OF MAINE, INC.
U-HAUL CO. OF MARYLAND, INC.
U-HAUL CO. OF MASSACHUSETTS AND OHIO, INC.
U-HAUL CO. OF MICHIGAN
U-HAUL CO. OF MINNESOTA
U-HAUL CO. OF MISSISSIPPI
U-HAUL CO. OF MONTANA, INC.
U-HAUL CO. OF NEBRASKA
U-HAUL CO. OF NEVADA, INC.
U-HAUL CO. OF NEW HAMPSHIRE, INC.
U-HAUL CO. OF NEW JERSEY, INC.
U-HAUL CO. OF NEW MEXICO, INC.
U-HAUL CO. OF NEW YORK AND VERMONT, INC.
U-HAUL CO. OF NORTH CAROLINA
U-HAUL CO. OF NORTH DAKOTA
U-HAUL CO. OF OKLAHOMA, INC.
U-HAUL CO. OF OREGON
U-HAUL CO. OF PENNSYLVANIA
U-HAUL CO. OF RHODE ISLAND
U-HAUL CO. OF SOUTH CAROLINA, INC.
U-HAUL CO. OF SOUTH DAKOTA, INC.
U-HAUL CO. OF TENNESSEE
U-HAUL CO. OF TEXAS
U-HAUL CO. OF UTAH
U-HAUL CO. OF VIRGINIA
U-HAUL CO. OF WASHINGTON
U-HAUL CO. OF WEST VIRGINIA
U-HAUL CO. OF WISCONSIN, INC.
as Marketing Grantors
By /s/ Xxxx X. Xxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Treasurer
VII-2
ACCEPTED AND AGREED:
XXXXXXX XXXXX COMMERCIAL FINANCE CORP.
By: /s/ Xxxxxx X. Xxxxx
----------------------
Name: Xxxxxx X. Xxxxx
Title: Director
VII-3
