AGREEMENT
This Agreement ("Agreement") is made and entered into this
17th day of October, 1995, by and between AMERCO, a Nevada
corporation ("AMERCO"), XXXXXX X. XXXXX ("X. Xxxxx"), XXXXX X.
XXXXX ("X. Xxxxx"), XXXXXX X. XXXXXXX ("Xxxxxxx"), XXXX X. XXXXX
("Xxxxx"), and XXXXXXX X. XXXXX ("Xxxxx") (X. Xxxxx, J. Shoen,
Johnson, Xxxxx and Xxxxx are sometimes collectively referred to
hereinafter as the "Directors").
RECITALS:
A. On or about August 2, 1988, the following individual
plaintiffs instituted an action in the Maricopa County Superior
Court, as Cause No. CV 88-20139 (the "Litigation"), against the
Directors and Xxxx X. Xxxxx ("X. Xxxxx"): Xxxxxxx X. Xxxxx,
Xxxxxx X. Xxxxx, M.D., Xxxx Xxxx Xxxxx-Xxxxx, Xxxxxxx X. Xxxxx
Xxxxxx, Xxxxxxx X. Xxxxx-Xxxxxxx, Xxxxxxx Xxxxxx and Xxxxxxx X.
Xxxxx. At a subsequent time, the following corporate plaintiffs
joined the Litigation: Samwill, Inc., Cemar, Inc. Kattydid,
Inc., Thermar, Inc., LSS Inc., Mickl, Inc., and Maran, Inc.
(Collectively, the individual plaintiffs and the corporate
plaintiffs are referred to herein as the "Share Case
Plaintiffs.")
B. The Share Case Plaintiffs alleged in the Litigation
various damages caused by certain actions of the Directors and X.
Xxxxx in their capacity as Directors of AMERCO.
C. On or about February 6, 1989, consistent with its
Bylaws, AMERCO entered into Indemnification Agreements with each
of the Directors, pursuant to which AMERCO agreed to indemnify
the Directors to the fullest extent authorized by the laws of the
State of Nevada (the "Indemnity Agreement").
D. On or about October 7, 1994, the jury in the Litigation
returned its verdict and a damages award against the Directors
and X. Xxxxx in the amount of approximately $1,480,000,000.00
(the "Jury Award"). The jury also returned a verdict of
$70,000,000.00 in punitive damages against X. Xxxxx.
E. On February 2, 1995, Maricopa County Superior Court
Judge Xxxxxx Xxxxxxxx, III ("Judge Xxxxxxxx") ruled on various
post-trial motions in the Litigation and thereafter ordered a new
trial unless the Share Case Plaintiffs accepted a remittitur of
the Jury Award and the original punitive damages award. After
acceptance of the remittitur by Plaintiffs, Judge Xxxxxxxx
entered judgment (the "Judgment") against the Directors and X.
Xxxxx, jointly and severally, in the aggregate of $461,838,000.00
(the "Damage Award") and against X. Xxxxx, individually, for
punitive damages in the amount of $7,000,000.00 (the "Punitive
Damage Award"). Pursuant to the Judgment, those Share Case
Plaintiffs who own stock in AMERCO (the Shareholder Plaintiffs)
are required to transfer to the Directors or their designee all
AMERCO common stock held or owned by them ("Plaintiffs' AMERCO
Stock"). Six of the Plaintiffs are not shareholders of AMERCO.
F. Pursuant to AMERCO's corporate bylaws, AMERCO has
certain rights of first refusal with respect to the common shares
of the corporation. The Directors' rights to acquire the
Shareholder Plaintiffs' AMERCO Stock pursuant to the Judgment are
subject to these existing rights of first refusal.
G. On or about February 21, 1995, each of the Directors
filed a voluntary petition pursuant to Chapter 11 of the
Bankruptcy Code in the United States Bankruptcy Court for the
District of Arizona, which petition commenced their jointly
administered reorganization cases (the "Reorganization Cases").
H. The Directors have filed plans of reorganization in the
Reorganization Cases (collectively, including all amendments,
modifications, and restatements, the "Plans"). The Bankruptcy
Court set October 2, 1995 as the deadline to accept or reject the
Plans and November 6, 1995 as the date when hearings will
commence regarding confirmation of the Plans. The Directors
participation in this agreement is subject to approval of the
Bankruptcy Court in connection with the confirmation of the
Plans.
I. On or about March 27, 1995, X. Xxxxx filed a notice of
appeal in the Arizona Court of Appeals regarding the Punitive
Damage Award. Except as otherwise set forth herein, this
Agreement does not settle the respective rights and obligations
of X. Xxxxx and AMERCO regarding the Punitive Damage Award.
J. Each of the Directors retain unexpired appeal rights
with regard to the Damage Award (the "Appeal Rights"). If the
Directors exercise the Appeal Rights, the Damage Award may be
sustained and/or increased and AMERCO may be exposed to increased
liability to the Directors under existing agreements with each
Director, which liability includes the obligation to fund such an
appeal.
K. The Directors assert substantial claims against AMERCO
related to or arising from the litigation, including, but not
limited to, claims for financial losses, emotional distress, loss
of business and/or professional reputation, loss of credit
standing, breach of contract and other claims. The Directors
assert that these substantial claims arise from the Directors'
past and continuing service on the Board of Directors of AMERCO.
L. On the day of and at all times subsequent to the Jury
Award, the Directors made, and continue to make, demand that
AMERCO make them whole. On or about October 4, 1995, the
Directors (other than Xxxxx) made a written demand upon AMERCO to
make them whole. On October 6, Xxxxx made a written demand upon
AMERCO to make him whole.
M. On September 19, 1995, Xxxx Xxxx Xxxxx-Xxxxx ("Xxxx
Xxxx") and Maran, Inc. entered into a Settlement Agreement with
the Directors and AMERCO, subject to Bankruptcy Court approval
(the "Settlement Agreement"), under which the Directors or their
designee will pay Xxxx Xxxx the sum of $41,352,083.00 in
settlement and full satisfaction of all claims Xxxx Xxxx has
against the Directors, AMERCO and its affiliates. On October 10,
1995, the Bankruptcy Court approved the Directors participation
in the Settlement Agreement.
N. On September 19, 1995 Maran, Inc. and the Directors
entered into a Stock Purchase Agreement, (the "Stock Purchase
Agreement") under which the Directors or their designee agree to
pay the sum of $22,732,916.80 (the "Stock Purchase Amount") for
the purchase of 3,343,076 AMERCO shares owned by Maran, Inc. On
October 10, 1995, the Bankruptcy Court approved the Directors
participation in the Stock Purchase Agreement.
O. The Directors claim that the actions of the Directors
that are the basis of the Damage Award were actions within the
scope of Directors' duties as Directors of AMERCO, that such
actions were undertaken in good faith for the benefit of AMERCO
and that the claims asserted by the Directors to be made whole
are meritorious.
P. In recognition of the substantial risks to AMERCO
associated with a claim under the indemnification agreements or
an appeal of the Damage Award by the Directors, and to avoid the
uncertainty of litigation between AMERCO and the Directors
and the substantial expenses and costs associated therewith,
in order to terminate and settle potential controversies between
the parties arising from the Damage Award, in consideration of a
release of certain substantial claims by the Directors against
AMERCO, and in order to protect AMERCO's business relationship
with lenders, customers and valuable employees, the Directors of
AMERCO have authorized AMERCO to act as the funding source, as
disclosed in the Plans, have further endorsed and ratified
AMERCO's entering into and execution of the Settlement Agreement
with Xxxx Xxxx and the Directors and have directed and authorized
the officers of AMERCO to execute the AMERCO Release contemplated
by this Agreement.
Q. The Directors desire to resolve certain claims each has
asserted against AMERCO related to the Damage Award in
consideration for AMERCO undertaking the funding under Plans,
executing the AMERCO Release contemplated by this Agreement, and
undertaking the obligations set forth in the Settlement Agreement
with Xxxx Xxxx and similar obligations that may be agreed upon
between the Directors and the other Share Case Plaintiffs. As a
further inducement, the Directors have agreed to continue their
efforts to negotiate settlement agreements with the Share Case
Plaintiffs that will include releases of AMERCO and its officers
and agents from possible claims by the Share Case Plaintiffs,
which releases are intended to parallel the releases presently
secured by the Directors from Xxxx Xxxx, Xxxxxxx Xxxxx and Maran,
Inc. The Directors and AMERCO pledge their mutual cooperation in
obtaining such releases.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants hereinafter contained, the parties agree as
follows.
AGREEMENT:
Subject to the confirmation of the Plans by the Bankruptcy
Court and subject further to the Bankruptcy Courts approval of
the Directors participation in the agreements and subject further
to the execution by each Director of the Directors' Release,
which is attached hereto as Exhibit "A" and incorporated herein
by this reference, pursuant to and on the Effective Date of the
Plans (as such date is defined in the Plans):
1. AMERCO shall fund the Plans, which funding may take the
form of a payment of cash or property made directly to Plaintiffs
in the nature of a restoration payment for the resolution of the
Plaintiffs' claims of breach of fiduciary duty, as made in the
Litigation, and in settlement of the Share Case Plaintiffs'
claims for fiduciary liability, as alleged therein.
2. AMERCO shall execute the AMERCO Release attached
hereto as Exhibit "B" and incorporated herein by this reference,
and the Directors shall execute the Directors' Release attached
hereto as Exhibit "A," which releases shall become effective upon
the Effective Date of the Plans. Pursuant to the Directors'
Release, the Directors shall release AMERCO, its officers,
directors, employees, agents, representatives, accountants,
attorneys, predecessors, successors, assigns and insurers of and
from any and all actions, causes of action, suits, defenses,
debts, disputes, damages, claims, obligations, liabilities,
costs, expenses and demands of any kind or character whatsoever,
at law or in equity, in contract or in tort, whether matured or
unmatured, liquidated or unliquidated, vested or contingent,
xxxxxx or inchoate, known or unknown, suspected or unsuspected
that each has, or hereafter can, shall or may have for, upon, by
reason of any matter, cause or thing whatsoever, directly or
indirectly arising from or related to the Damage Award, except
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the matters described below as the "Reserved Claims." Notwith
standing anything contained in this Agreement and the Directors'
Release to the contrary, none of the Directors shall, by
execution of this Agreement or the Directors' Release, release or
waive any claim or right: (i) to indemnification from AMERCO as
set forth in its Bylaws or in any other written agreement between
AMERCO and any of the Directors except as related to the Damage
Award; (ii) to be reimbursed for any legal fees and related costs
or expenses incurred by the Directors in connection with the
Litigation or Reorganization Cases; (iii) to indemnification from
AMERCO for any adverse income tax consequences to any of the
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Directors as a result of the AMERCO funding of the Plans and/or
requisition of the Plaintiffs' AMERCO Stock; (iv) to require
AMERCO to satisfy any obligation that AMERCO has or may have
regarding the Punitive Damage Award; or (v) to require that
AMERCO satisfy any right a Director may have in, to or under any
employment agreement with AMERCO or in, to or under any employee
benefit plan sponsored or maintained by AMERCO which may be in
existence as of the date hereof or created in the future, or any
other benefits generally provided to AMERCO's officers or
employees (collectively, the "Reserved Claims").
Pursuant to the AMERCO Release, AMERCO shall release the
Directors, their employees, agents, representatives, accountants,
attorneys, heirs, successors, assigns and insurers of and from
any and all actions, causes of action, suits, defenses, debts,
disputes, damages, claims, obligations, liabilities, costs,
expenses and demands of any kind or character whatsoever, at law
or in equity, in contract or in tort, whether matured or
unmatured, liquidated or unliquidated, vested or contingent,
xxxxxx or inchoate, known or unknown, suspected or unsuspected
that any of them has, or hereafter can, shall or may have for,
upon, by reason of any matter, cause or thing whatsoever,
directly or indirectly arising from or related to the Litigation.
3. By execution of this Agreement, as of the Effective
Date of the Plans, the Directors hereby transfer, assign and
convey to AMERCO any and all right, title and interest the
Directors have or may have in, to or arising under the Damage
Award including, but not limited to, any and all rights of
contribution the Directors have, any and all claims any of the
Directors have or may have against any person or entity not a
party to this Agreement arising from or related to the Damage
Award. The Directors agree not to oppose AMERCO should AMERCO
elect, in its own best judgment, to exercise its by-law right of
first refusal on any of the Shareholder Plaintiffs' shares.
4. As of the Effective Date of the plans,the Directors
hereby agree to take any and all action necessary or required to
dismiss any pending appeals of the Damage Award and each of the
Directors expressly waives any and all Appeal Rights with respect
to the Damage Award and agrees no further appeal of the Damage
Award shall be instituted by or on behalf of the Directors.
5. AMERCO acknowledges that the Directors have relied upon
AMERCO regarding the tax consequences of this Agreement and the
method selected by AMERCO to fund the Plans. AMERCO agrees that
it is liable to the Directors for any adverse tax consequences of
this Agreement and/or the funding of the Plans as if such funding
arose as a payment made by AMERCO under the Indemnity Agreement.
6. The parties hereto agree to take such acts and to
execute such other and further documents as may be necessary or
appropriate to implement and accomplish the purposes of this
Agreement and the intent of the parties.
7. The parties hereto acknowledge and agree the laws of
the State of Nevada and, to the extent applicable, federal law
will govern and control this Agreement including, but not limited
to, any documents executed pursuant to this Agreement. The
parties further agree to submit any dispute involving the
interpretation or enforcement of this Agreement to the Bankruptcy
Court in the Reorganization Cases.
8. No provision of this Agreement may be waived, modified
or altered, except by a writing executed by all of the parties
hereto. Time and strict performance are the essence of this
Agreement.
9. This Agreement is personal to each of the Directors
and, without the prior written consent of AMERCO, which shall not
be unreasonably withheld, shall not be assignable by the
Directors, except by operation of law. Any unauthorized
assignment of the rights, obligations or duties of the Directors
hereunder shall be void. This Agreement shall inure to the
benefit of, and will be binding upon, all of the parties and
their respective heirs, assigns, representatives, and legal
successors in interest of any kind.
10. This Agreement contains the complete understanding and
agreement of the parties hereto in and with respect to all
matters referred to herein, and all prior representations,
negotiations and understandings are superseded hereby and merged
into this Agreement. No party shall be liable or bound to any
other party hereto in any manner by any agreement, warranty,
representation or guaranty except as specifically set forth
herein.
11. In the event any party hereto finds it necessary to
employ legal counsel or to bring an action at law or other
proceeding against any other party to enforce or interpret any
term or provision of this Agreement, the prevailing party in any
such action or other proceeding shall be entitled to recover from
the other party or parties thereto all costs incurred, including
reasonable attorneys' fees, which shall be determined by the
Bankruptcy Court, and shall be included in any such judgment.
12. This Agreement is an integrated document and each
covenant and condition herein represents material consideration
for the other covenants and conditions herein. The invalidity of
any provision of this Agreement would materially impair and alter
the respective rights and obligations of the parties hereunder.
If any provision of this Agreement is determined to be invalid,
the remaining provisions of this Agreement shall be construed to
preserve the intent and purpose of this Agreement and the parties
shall negotiate in good faith to modify the provisions held to be
invalid to preserve each party's anticipated benefit.
13. AMERCO shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to
substantially all of the business and/or assets of AMERCO
expressly to assume and agree to perform this Agreement in the
same manner and to the same extent that AMERCO would have been
required to perform, if no such succession had taken place. As
used in this Agreement, "AMERCO" shall mean both AMERCO as
defined herein and any successor that assumes and agrees to
perform this Agreement, by operation of law or otherwise.
14. All notices and other communications under this
Agreement shall be in writing and shall be given by hand-delivery
to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed: (1) if to the
Directors or any single Director, the address for such Directors
or Director then on record with AMERCO; and (2) if to AMERCO,
0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000, Attention:
General Counsel. For purposes of this Agreement, notices
hereunder shall be deemed effective upon receipt if hand-
delivered and three (3) days after deposit in the U.S. mail, if
given by registered or certified mail.
15. The failure to insist upon strict compliance with any
of the provisions hereof, or to assert any right under this
Agreement, shall not be deemed to be a waiver of such provisions
or right or of any other provision or right under this Agreement.
16. The rights and benefits of the Directors under this
Agreement may not be anticipated, assigned, alienated or subject
to attachment, garnishment, levy, execution or other legal or
equitable process except as required by law. Any attempt by the
Directors to anticipate, alienate, assign, sell, transfer,
pledge, encumber or charge the same shall be void.
17. The language of this Agreement has been freely and
voluntarily negotiated between the parties, each of whom has been
represented by competent and effective counsel. The parties have
been fully advised as to the legal effect of this Agreement and
have read this Agreement in its entirety or have had it read to
them. By execution of this Agreement, the parties represent and
warrant to each other that each of them understands the contents
of this Agreement. This Agreement is intended to be enforceable
according to its written terms, and there are no promises, oral
agreements or expectation of the parties to the contrary.
18. The parties agree that this Agreement may be executed
in multiple counterparts, each of which shall be deemed an
original document, and when all of the parties hereto have
executed one or more counterparts, all such counterparts, taken
together, shall constitute a single agreement.
19. The parties acknowledge the accuracy of the Recitals,
which hereby are incorporated into the operative provisions of
this Agreement.
20. This Agreement, and the rights, obligations, covenants
and conditions set forth herein, shall not be effective until
such time as this Agreement has been executed by each and every
party hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
AMERCO, a Nevada corporation
By /S/ Xxxx X. Xxxxxxxxxxx /S/ Xxxxxx X. Xxxxxxx
_____________________________ ___________________________________
Its Secretary XXXXXX X. XXXXXXX
/S/ Xxxxxx X. Xxxxx /S/ Xxxx X. Xxxxx
________________________________ ___________________________________
XXXXXX X. XXXXX XXXX X. XXXXX
/S/ Xxxxx X. Xxxxx /S/ Xxxxxxx X. Xxxxx
________________________________ ___________________________________
XXXXX X. XXXXX XXXXXXX X. XXXXX
EXHIBIT "A"
DIRECTORS' RELEASE
INCORPORATED BY REFERENCE
TO EXHIBIT 10.9
FILED WITH THE COMPANY'S
QUARTERLY REPORT OF FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1995,
FILE NO. 0-7862.
EXHIBIT "B"
AMERCO RELEASE
INCORPORATED BY REFERENCE
TO EXHIBIT 10.10
FILED WITH THE COMPANY'S
QUARTERLY REPORT OF FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1995,
FILE NO. 0-7862.
