Exhibit 10.67
[XXXXXXX & XXXXXX, INC. LETTERHEAD]
May 22, 2003
Xxxxxx X. Xxxxx
Chairman and President
AMERCO
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Dear Xx. Xxxxx:
This letter confirms and sets forth the terms and conditions of the engagement
between Xxxxxxx & Marsal, Inc. ("A&M") and AMERCO (the "Company"), including the
scope of the services to be performed and the basis of compensation for those
services. Upon execution of this letter by each of the parties below and receipt
of the retainer described below, this letter will constitute an agreement
between the Company and A&M.
1. Description of Services
(a) A&M shall provide consulting services to the Company's
President and Board of Directors, and assist the Company
in its reorganization efforts including the restructuring
of its capital structure. It is anticipated that A&M's
activities shall include the following in connection with
the strategic advisory and potential corporate and debt
restructuring of the Company (the "Strategic Advisory and
Restructuring Assignment"):
(i) Undertake, in consultation with members of
management, a comprehensive study and analysis of the
business, operations, financial condition and
prospects of the Company;
(ii) Review with members of management the Company's
financial plans and analyze its strategic plans and
business alternatives;
(iii) Assist the Company in reviewing and assessing its
cash flow and income projections;
(iv) Analyze existing direct and contingent liabilities of
the Company (including debt obligations and other
liabilities) and debt structural
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issues (including the value, quality and
enforceability of the collaterals, if any);
(v) Advise the Company's management with respect to
available capital and financing alternatives,
including recommending specific courses of action;
(vi) Ascertain the debt servicing capability of the
Company under the current debt maturity structure and
any additional funding requirements, including
working capital, trade financing, equipment
acquisition, export financing and other financing
needs:
(vii) Determine overall enterprise value of the Company and
the Group to serve as the basis for a restructuring
or recapitalization plan;
(viii) Develop, together with the Company's President and
staff, a restructuring or recapitalization plan for
the Company;
(ix) Assist the Company with negotiating and structuring
financing including new capital in the form of DIP
facility and exit financing;
(x) Assist the Company in its presentations to the
creditors of its projections, valuations, and
restructuring plan;
(xi) Assist with pre and post bankruptcy strategy
planning;
(xii) Assist the Company in negotiations with its key
creditors;
(xiii) Provide financial advice and assistance to the
Company in developing and seeking approval of a
Restructuring (as defined below) plan (as the same
may be modified from time to time, a "Plan:), which
may be a plan of reorganization under chapter 11 of
title 11 of the United States Code, 11 U.S.C. section
101 et. Seq. (the "Bankruptcy Code");
(xiv) Participate in hearing before the bankruptcy court
having jurisdiction over the case or cases commenced
under the Bankruptcy Code. The Company acknowledges
the important role of its counsel in adequately
preparing A&M personnel for such testimony; and
(xv) Other activities as are approved by you or the Board
of Directors and agreed to by A&M.
You understand that the services to be rendered by
A&M may include the preparation of projections and
other forward-looking statements, and numerous
factors can affect the actual results of the
Company's operations, which may materially and
adversely differ from those projections. In addition,
A&M will be relying on information provided by the
Company in the preparation of those projections and
other forward-looking statements. A&M makes no
representation or guarantee that an appropriate
restructuring proposal can be formulated for the
Company, that restructuring is the best course of
action for the Company or, if formulated, that any
proposed restructuring plan will be accepted by the
Company's creditors, shareholders and other
constituents. Further,
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A&M assumes no responsibility for the implementation
or selection of any restructuring proposal which it
assists the Company in formulating.
In rendering its services to the Company, A&M will
report directly to the President, and through him,
the Board of Directors and will make recommendations
to and consult with the Board of Directors, President
and such other senior officers as directed.
(b) Xxxxxxx X. Xxxxxxxxxx, a Managing Director of A&M,
will be responsible for the overall engagement. He
will be assisted by other A&M personnel. A&M
personnel providing services to the Company may also
work with other A&M clients in conjunction with
unrelated matters.
2. Compensation
(a) In connection with the Strategic Advisory and
Restructuring Assignment, A&M will receive:
(i) Advisory Fee
A&M's engagement will be effective as of May 22,
2003. A&M will bill the Company for professional
services rendered on an hourly rate basis in
accordance with the schedule of rates below. The
basic hourly rates used in computing the Hourly
Billing Rate are reviewed and adjusted from time to
time and may increase over the course of A&M's
engagement, the "Hourly Billing Rate".
Managing Directors $475 - 595
Directors $375 - 450
Associates $275 - 350
Analysts $175 - 250
Para-Professionals $ 50 - 75
A&M will provide monthly billing statements to the
Company setting forth the fees for each month at the
hourly billing rate ("Monthly Hourly Rate Amount"),
and the Company agrees to pay such statements
immediately upon receipt thereof. If the
Restructuring is to be implemented pursuant to a
Chapter 11 proceeding, as required under applicable
law, A&M must be paid all outstanding fees with
respect to the Hourly Billing Rate and costs as of
the day prior to any such filings. For each month
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during the term of this engagement, any amount of the
Monthly Hourly Rate Amount that exceeds $175,000,
including a pro-rated amount for the month of May
2003, will be credited, up to $1,500,000, against any
Restructuring Transaction Fee payable to A&M pursuant
to the Restructuring Transaction Fee paragraph below.
(ii) Restructuring Transaction Fee
If at any time during the term of this engagement, or
during the time period that the Company may be a
debtor under Chapter 11 of the Bankruptcy Code if the
Restructuring is to be implemented pursuant to such a
Chapter 11 proceeding (including the term of this
engagement, the "Fee Period"), (A) any Restructuring
is consummated, or (B)(l) an agreement in principle,
definitive agreement or Plan to effect a
Restructuring is entered into and (2) concurrently
therewith or at any time thereafter (including after
the expiration of the Fee Period), such Restructuring
is consummated, A&M will be entitled to receive a
transaction fee (a "Restructuring Transaction Fee"),
contingent upon the consummation of such
Restructuring and payable at the closing thereof,
equal to $4 million, provided further, that if either
(A) or (B) above occurs in connection with a plan of
reorganization which either (i) includes no
convertible debt as part of the treatment of
creditors or (ii) where convertible debt is included
but said convertible debt is redeemed within 12
months of the effective date of the plan, then A&M
will be entitled to receive the Restructuring
Transaction Fee, plus an additional $1 million.
(iii) Timing Incentive Fee
In addition to the Restructuring Transaction Fee
above, A&M will be entitled to a Timing Incentive Fee
based on the timing of the occurrence of either of
the events in (ii)(A) or (B) above (a "Timing Fee
Event"). The Timing Incentive Fee will be $2,400,000,
less the Timing Period Adjustment. The Timing Period
Adjustment will be $200,000 (or a prorated portion
thereof) for every 30 days (or prorated portion
thereof) from the date of filing of the Chapter 11
proceeding to the date of a Timing Fee Event.
(b) In addition, A&M will be reimbursed for its
reasonable out-of-pocket expenses incurred in
connection with this assignment, such as travel,
lodging, duplicating, computer research, messenger
and telephone charges. In addition, A&M shall be
reimbursed for the reasonable fees and expenses of
its counsel incurred in connection with the
enforcement of this Agreement. All fees and expenses
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will be billed and payable on a monthly basis or, at
A&M's discretion, more frequently.
(c) Upon execution of this Agreement, the Company will
provide us with a retainer in the amount of $500,000
(the "Retainer"). To the extent any invoices are
unpaid in whole or in part, such amounts will be
deemed to have been paid out of the Retainer. Upon
termination of this Agreement, the Retainer, or any
remaining portion thereof, will be credited against
our final invoice(s) and/or returned to the Company
once all obligations have been paid in full. To the
extent that the Company files for Chapter 11
protection and obtains terms of a DIP financing
facility, subject to a final order by the judge, that
contains a sufficient administrative expense carve
out for professional fees, we will refund $300,000
back to the company.
For purposes of this Agreement, the term "Restructuring" shall
mean any recapitalization Financing (as defined below) or
restructuring (including without limitation, through any
exchange, conversion, cancellation, forgiveness, retirement
and ore a material modification or amendment to the terms,
conditions or covenants thereof) of the Company's equity
and/or debt securities and /or other indebtedness, obligations
or liabilities (including without limitation, preferred stock,
partnership interests, lease obligations, trade credit
facilities and other contract or tort obligations), including
pursuant to a repurchase, refinancing or and exchange
transaction, a Plan of Reorganization or a solicitation of
consents, waivers, acceptances or authorization or any change
of control transactions, including a Sale (as defined below).
For Purposes of this Agreement, the term "Financing" shall
mean a public or private issuance, sale or placement of the
equity or debt securities, instruments or obligations of the
Company with one or more lenders and/or investors, or any loan
or other financing, including any rights offering.
For Purposes of this Agreement, the term "Sale" shall mean the
disposition to one ore more third parties in one or more
transactions and whether in whole or part, a series of related
transactions of (a) substantially all or a significant portion
of the equity securities of the Company, or substantially all
or (b) a significant portion of the assets (including the
assignment of and executory contracts) or operations of the
Company or its subsidiaries, in either case, including through
a sale or exchange of capital stock, options or assets, a
lease of assets with or without a purchase option, a merger,
consolidation or other business combination, an exchange or
tender offer, a recapitalization, the formation of a joint
venture, partnership ore similar entity, or any similar
transaction.
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The Company acknowledges that A&M may, at its option and
expense and after announcement of the Restructuring place
announcements and advertisements or otherwise publicize the
Restructuring and A&M's role in it (which may include the
reproduction of XXXXXX's corporate logo). Furthermore, if
requested by A&M, the Company shall include a mutually
acceptable reference to A&M in any press release or other
public announcement made by the Company regarding the matters
described in this letter.
3. Term
The engagement will commence as of the date hereof and may be
terminated by either party without cause by giving 30 days'
written notice to the other party. In the event of any such
termination, any fees and expenses due to A&M shall be
remitted promptly (including fees and expenses that accrued
prior to but were invoiced subsequent to such termination). If
the Company terminates this engagement without Cause or if A&M
terminates this engagement for Good Reason, A&M shall also be
entitled to receive the Restructuring Transaction Fee upon the
occurrence of the event specified in Section 2(A)(ii) if such
event occurs within 12 months of the termination. The Company
may immediately terminate A&M's services hereunder at any time
for Cause by giving written notice to A&M. Upon any such
termination, the Company shall be relieved of all of its
payment obligations under this Agreement, except for the
payment of fees and expenses through the effective date of
termination (including fees and expenses that accrued prior to
but were invoiced subsequent to such termination) and its
obligations under paragraph 8. For purposes of this Agreement,
"Cause" shall mean if A&M breaches any of its material
obligations hereunder and does not cure such breach within 30
days of the Company having given written notice of such breach
to A&M describing in reasonable detail the nature of the
alleged breach. A&M shall be entitled to immediately terminate
its services hereunder for Good Reason. For purposes of this
Agreement, termination for "Good Reason" shall mean either its
resignation caused by a breach by the Company of any of its
material obligations under this Agreement that is not cured
within 30 days of A&M having given written notice of such
breach to the Company describing in reasonable detail the
nature of the alleged breach or a filing of a petition under
Chapter 11 of the United States Bankruptcy Code in respect of
the Company unless within 45 days thereafter (or, if sooner,
prior to the date on which a plan of reorganization is
confirmed or the case is converted to one under Chapter 7),
the Company has obtained judicial authorization to continue
the engagement on the terms herein pursuant to an order which
has become a final, nonappealable order.
4. Relationship of the Parties
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The parties intend that an independent contractor relationship
will be created by this engagement letter. Neither A&M nor any
of its personnel or subcontractors is to be considered an
employee or agent of the Company and the personnel and
subcontractors of A&M are not entitled to any of the benefits
that the Company provides for the Company employees. The
Company acknowledges that A&M's engagement shall not
constitute an audit, review or compilation, or any other type
of financial statement reporting engagement that is subject to
the rules of the AICPA, SEC or other state or national
professional or regulatory body.
5. No Third Party Beneficiary
The Company acknowledges that all advice (written or oral)
given by A&M to the Company in connection with this engagement
is intended solely for the benefit and use of the Company
(limited to its Board of Directors and management) in
considering the matters to which this engagement relates. The
Company agrees that no such advice shall be used for any other
purpose or reproduced, disseminated, quoted or referred to at
any time in any manner or for any purpose other than
accomplishing the tasks referred to herein without A&M's prior
approval (which shall not be unreasonably withheld), except as
required by law.
6. Conflicts
A&M is not currently aware of any relationship that would
create a conflict of interest with the Company or those
parties-in-interest of which you have made us aware, but we
note the following: certain members of the engagement team are
assisting the Unsecured Committee for Presidents Casino, in
which AIG is a member. Because A&M is a consulting firm that
serves clients on a national basis in numerous cases, both in
and out of court, it is possible that A&M may have rendered
services to or have business associations with other entities
or people which had or have or may have relationships with the
Company, including creditors of the Company. In the event you
accept the terms of this engagement, with the exception of AIG
as mentioned above, A&M will not represent, and A&M has not
represented, the interests of any such entities or people in
connection with this matter.
7. Confidentiality / Non-Solicitation
A&M shall keep as confidential all non-public information
received from the Company in conjunction with this engagement,
except: (i) as
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requested by the Company or its legal counsel; (ii) as
required by legal proceedings or (iii) as reasonably required
in the performance of this engagement. All obligations as to
non-disclosure shall cease as to any part of such information
to the extent that such information is or becomes public other
than as a result of a breach of this provision. The Company
agrees not to solicit, recruit or hire any employees of A&M
effective from the date of this Agreement and continuing for a
period of two years subsequent to the termination of this
engagement. Should the Company extend offers of employment to
any A&M employee and should such an offer be accepted, A&M
will be entitled to a fee based upon such individual's hourly
rates multiplied by an assumed annual billing of 2,000 hours.
This fee would be payable at the time of the individual's
acceptance of employment from the Company.
8. Indemnification
The attached indemnification agreement is incorporated herein
by reference and shall be executed upon the acceptance of this
Agreement. Termination of this engagement shall not affect
these indemnification provisions, which shall remain in full
force and effect.
9. Miscellaneous
This engagement letter (together with the attached indemnity
provisions): (a) shall be governed and construed in accordance
with the laws of the State of New York, regardless of the laws
that might otherwise govern under applicable principles of
conflict of laws thereof; (b) incorporates the entire
understanding of the parties with respect to the subject
matter hereof; and (c) may not be amended or modified except
in writing executed by both parties hereto. The Company and
A&M agree to waive trial by jury in any action, proceeding or
counterclaim brought by or on behalf of the parties hereto
with respect to any matter relating to or arising out of the
engagement or the performance or non-performance of A&M
hereunder. In the event the Company files under Chapter 11,
the Company and A&M agree that the bankruptcy court having
jurisdiction over any and all matters arising under or in
connection with this engagement letter and the indemnity
provisions and in connection with the services rendered by A&M
hereunder.
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If the foregoing is acceptable to you, kindly sign the
enclosed copy to acknowledge your agreement with its terms.
Very truly yours,
Xxxxxxx & Marsal, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxxxx
Title: Managing Director
Accepted and agreed:
AMERCO
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Xxxxxx X. Xxxxx, President
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INDEMNIFICATION AGREEMENT
This indemnity is made part of an agreement, dated June 4, 2003 (which together
with any renewals, modifications or extensions thereof, is herein referred to as
the "Agreement") by and between Xxxxxxx & Marsal, Inc. ("A&M") and AMERCO (the
"Company"), for services to be rendered to the Company by A&M.
A. The Company agrees to indemnify and hold harmless each of A&M, its
shareholders, employees, agents, representatives and subcontractors (each, an
"Indemnified Party" and collectively, the "Indemnified Parties") against any and
all losses, claims, damages, liabilities, penalties, obligations and expenses,
including the costs for counsel or others (including employees of A&M, based on
their then current hourly billing rates) in investigating, preparing or
defending any action or claim, whether or not in connection with litigation in
which any Indemnified Party is a party, or enforcing the Agreement (including
these indemnity provisions), as and when incurred, caused by, relating to, based
upon or arising out of (directly or indirectly) the Indemnified Parties'
acceptance of or the performance or nonperformance of their obligations under
the Agreement; provided, however, such indemnity shall not apply to any such
loss, claim, damage, liability or expense to the extent it is found in a final
judgment by a court of competent jurisdiction (not subject to further appeal) to
have resulted primarily and directly from such Indemnified Party's gross
negligence or willful misconduct. The Company also agrees that no Indemnified
Party shall have any liability (whether direct or indirect, in contract or tort
or otherwise) to the Company for or in connection with the engagement of A&M,
except to the extent for any such liability for losses, claims, damages,
liabilities or expenses that are found in a final judgment by a court of
competent jurisdiction (not subject to further appeal) to have resulted
primarily and directly from such Indemnified Party's gross negligence or willful
misconduct. The Company further agrees that it will not, without the prior
consent of an Indemnified Party, settle or compromise or consent to the entry of
any judgment in any pending or threatened claim, action, suit or proceeding in
respect of which such Indemnified Party seeks indemnification hereunder (whether
or not such Indemnified Party is an actual party to such claim, action, suit or
proceedings) unless such settlement, compromise or consent includes an
unconditional release of such Indemnified Party from all liabilities arising out
of such claim, action, suit or proceeding.
B. These indemnification provisions shall be in addition to any liability
which the Company may otherwise have to the Indemnified Parties.
C. If any action, proceeding or investigation is commenced to which any
Indemnified Party proposes to demand indemnification hereunder, such Indemnified
Party will notify the Company with reasonable promptness; provided, however,
that any failure by such Indemnified Party to notify the Company will not
relieve the Company from its obligations hereunder, except to the extent that
such failure shall have actually prejudiced the defense of such action. The
Company shall promptly pay expenses reasonably incurred by any Indemnified Party
in defending, participating in, or settling any action, proceeding or
investigation in which such Indemnified
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Party is a party or is threatened to be made a party or otherwise is
participating in by reason of the engagement under the Agreement, upon
submission of invoices therefor, whether in advance of the final disposition of
such action, proceeding, or investigation or otherwise. Each Indemnified Party
hereby undertakes, and the Company hereby accepts its undertaking, to repay any
and all such amounts so advanced if it shall ultimately be determined that such
Indemnified Party is not entitled to be indemnified therefor. If any such
action, proceeding or investigation in which an Indemnified Party is a party is
also against the Company, the Company may, in lieu of advancing the expenses of
separate counsel for such Indemnified Party, provide such Indemnified Party with
legal representation by the same counsel who represents the Company, provided
such counsel is reasonably satisfactory to such Indemnified Party, at no cost to
such Indemnified Party; provided, however, that if such counsel or counsel to
the Indemnified Party shall determine that due to the existence of actual or
potential conflicts of interest between such Indemnified Party and the Company
such counsel is unable to represent both the Indemnified Party and the Company,
then the Indemnified Party shall be entitled to use separate counsel of its own
choice, and the Company shall promptly advance its reasonable expenses of such
separate counsel upon submission of invoices therefor. Nothing herein shall
prevent an Indemnified Party from using separate counsel of its own choice at
its own expense. The Company will be liable for any settlement of any claim
against an Indemnified Party made with the Company's written consent, which
consent shall not be unreasonably withheld.
D. In order to provide for just and equitable contribution if a claim for
indemnification pursuant to these indemnification provisions is made but it is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) that such indemnification may not be enforced in such case, even
though the express provisions hereof provide for indemnification, then the
relative fault of the Company, on the one hand, and the Indemnified Parties, on
the other hand, in connection with the statements, acts or omissions which
resulted in the losses, claims, damages, liabilities and costs giving rise to
the indemnification claim and other relevant equitable considerations shall be
considered; and further provided that in no event will the Indemnified Parties'
aggregate contribution for all losses, claims, damages, liabilities and expenses
with respect to which contribution is available hereunder exceed the amount of
fees actually received by the Indemnified Parties pursuant to the Agreement. No
person found liable for a fraudulent misrepresentation shall be entitled to
contribution hereunder from any person who is not also found liable for such
fraudulent misrepresentation.
E. In the event the Company and A&M seek judicial approval for the
assumption of the Agreement or authorization to enter into a new engagement
agreement pursuant to either of which A&M would continue to be engaged by the
Company, the Company shall promptly pay expenses reasonably incurred by the
Indemnified Parties, including attorneys' fees and expenses, in connection with
any motion, action or claim made either in support of or in opposition to any
such retention or authorization, whether in advance of or following any judicial
disposition of such motion, action or claim, promptly upon submission of
invoices therefor and regardless of whether such retention or authorization is
approved by any court. The Company will also promptly pay the Indemnified
Parties for any expenses reasonable incurred by them, including attorneys' fees
and expenses, in seeking payment of all amounts owed it under the Agreement (or
any new engagement agreement) whether through submission of a fee application or
in any other
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manner, without offset, recoupment or counterclaim, whether as a secured claim,
an administrative expense claim, an unsecured claim, a prepetition claim or a
postpetition claim.
X. Xxxxxxx termination of the Agreement nor termination of A&M's
engagement nor the filing of a petition under Chapter 7 or 11 of the United
States Bankruptcy Code (nor the conversion of an existing case to one under a
different chapter) shall affect these indemnification provisions, which shall
hereafter remain operative and in full force and effect.
G. The rights provided herein shall not be deemed exclusive of any other
rights to which the Indemnified Parties may be entitled under the certificate of
incorporation or bylaws of the Debtors, any other agreements, any vote of
stockholders or disinterested directors of the Debtors, any applicable law or
otherwise.
AMERCO ALVAREZ & XXXXXX, INC.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Xxxxxx X. Xxxxx Xxxxxxx X. Xxxxxxxxxx
Chairman and President Managing Director
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