Document:

Settlement Agreement Pricewaterhouse Coopers LLP

Settlement And Release Agreement

 

I.    PRELIMINARY STATEMENT.

 

	 	A.	Parties. The Parties to this Confidential Settlement and Release Agreement (“Agreement”) are PwC (as defined in Section I.B,), on the one hand, and AMERCO and the SAC Entities (as defined in Section I.B.), on the other hand (collectively the “Parties”). 

 

	 	B.	Definitions. 

 

	 	1.	“AMERCO” shall be defined herein to include AMERCO, U-Haul International, Inc., AMERCO Real Estate Company, Republic Western Insurance Company, Oxford Life Insurance Company, Edward J. Shoen, Sylvia Shoen, Mark V. Shoen, Charlene J. Shoen, James P. Shoen, Mary K. Shoen, Charles J. Bayer, Sally Bayer, John P. Brogan, Margaret Brogan, John M. Dodds, Barbara Edstrom, James J. Grogan, Mary Joe Grogan, M. Frank Lyons, William Carty, Mary Carty, Richard Herrera, Gary Horton, Richard Amoroso, and any of their predecessors, parents, co-parties, subsidiaries, affiliates and alter egos, and each of their respective officers, employees, directors, partners, agents, attorneys, insurers, accountants, heirs, executors, administrators, conservators, successors and assigns. 

 

	 	2.	“SAC Entities” shall be defined to include SAC Holdings Corporation, SAC Holdings II Corporation, SAC Self Storage Corporation, Two SAC Self Storage Corporation, Three SAC Self Storage Corporation, Four SAC Self Storage Corporation, Five SAC Self Storage Corporation, Six SAC Self Storage Corporation, Seven SAC Self Storage Corporation, Eight SAC Self Storage Corporation, Nine SAC Self Storage Corporation, Ten SAC Self Storage Corporation, Eleven SAC Self Storage Corporation, Twelve SAC Self Storage Corporation, Thirteen SAC Self Storage Corporation, Fourteen SAC Self Storage Corporation, Fifteen SAC Self Storage Corporation, Sixteen SAC Self Storage Corporation, Seventeen SAC Self Storage Corporation, Eighteen SAC Self Storage Corporation, Nineteen SAC Self Storage Corporation, Twenty SAC Self Storage Corporation, Twenty One SAC Self Storage Corporation, Twenty Two SAC Self Storage Corporation, Twenty Three SAC Self Storage Corporation, Twenty Four SAC Self Storage Corporation, Twenty Five SAC Self Storage Corporation, Twenty Six SAC Self Storage Corporation, Twenty Seven SAC Self Storage Corporation, Blackwater Investments, Mark V. Shoen, and any of their predecessors, parents, co-parties, subsidiaries, affiliates and alter egos, and each of their respective officers, employees, directors, partners, agents, attorneys, insurers, accountants, heirs, executors, administrators, conservators, and successors and assigns. 

 

	 	3.	“PwC” shall be defined to include PricewaterhouseCoopers LLP (“PwC LLP”), Michael O. Gagnon, Joseph A. Gross, Carol L. Brosgart, M.D., Terri M. Hulse, Gary R. Hulse, Randal S. Vallen, and Juli Vallen, and any of their predecessors, parents, co-parties, subsidiaries, affiliates and alter egos, and each of their respective officers, employees, directors, partners, agents, attorneys, insurers, accountants, heirs, executors, administrators, conservators, and successors and assigns.

 

	 	C.	Actions Resolved. This Agreement shall cover and mutually release any and all acts that occurred during the entire historical relationship between AMERCO and the SAC Entities on the one hand and PwC on the other hand, including the lawsuits by and against the Parties currently pending in the Superior Court of the State of Arizona, Maricopa County bearing case captions: AMERCO et al. v. PricewaterhouseCoopers LLP et al., No. CV 2003-011032 (“AMERCO v. PwC”) and PricewaterhouseCoopers LLP et al. v. Shoen et al., No. CV 2004-013075 (“PwC v. Shoen”). 

 

	 	D.	Recitals. This Agreement is entered into with respect to the following facts:

 

	 	1.	PwC LLP and its predecessor Price Waterhouse LLP served as AMERCO's independent public accountant and performed accounting and audit functions for AMERCO and its subsidiaries, including Republic Western Insurance Company and Oxford Life Insurance Company, and related entities from 1978 through January 2003.

 

	 	2.	PwC LLP also performed accounting and audit functions for and related to certain SAC entities.

 

	 	3.	In or about June 2003, AMERCO filed the AMERCO v. PwC lawsuit, alleging multiple acts of negligent and intentional misconduct by PwC and its personnel, allegedly occurring between 1993 and 2003.

 

	 	4.	In or about December 2003, PwC filed the PwC v. Shoen lawsuit, alleging multiple acts of intentional misconduct against Edward J. Shoen, Sylvia Shoen, Mark V. Shoen, Charlene J. Shoen, SAC Self-Storage Corporation, Two SAC Self-Storage Corporation, Three SAC Self-Storage Corporation, Six SAC Self-Storage Corporation, SAC Holding Corporation, and SAC Holding II Corporation, James P. Shoen, Mary K. Shoen, Charles J. Bayer, Sally Bayer, John P. Brogan, John M. Dodds, Barbara Edstrom, James J. Grogan, Mary Joe Grogan, and M. Frank Lyons. 

 

	 	5.	In or about November 2003, an amended consolidated class action complaint was filed by AMERCO shareholders against AMERCO and PwC, captioned In Re AMERCO Securities Class Action, CV-N-03-0050-ECR (RAM) (“Shareholder Action”). 

 

	 	6.	To avoid the expense, inconvenience, and distraction of further litigation, and without any acknowledgment of any liability, the Parties have agreed to compromise and settle their claims as specified in this Agreement.

 

II.    SETTLEMENT OF CLAIMS.

 

In consideration of the promises and obligations set forth in this Agreement: 

 

	 	A.	The effective date of this Agreement (the "Effective Date") shall be the date on which the last of the signatories listed on the signature pages hereto has executed this Agreement. 

 

	 	B.	Within nine (9) days of the Effective Date (and if such day is not a business day, on the immediately following business day): (i) the Parties shall simultaneously file stipulated dismissals, with prejudice, of the AMERCO v. PwC and PwC v. Shoen lawsuits, and (ii) immediately upon such filings, PwC LLP shall pay to AMERCO the total sum of ***************************************************************** comprised of $51,341,288.36 plus attorneys’ fees and costs (the “Settlement Amount”) by wire transfer in immediately available funds to the following account:

 

	 		Bank One of Arizona

	 		Phoenix, Arizona

	 		ABA # 122100024

	 		For the benefit of AMERCO

	 		Account No. 01740588

 

**** The amount has been omitted pursuant to a request for confidential treatment and the omitted information has been filed with the Securities and Exchange Commission separately.

 

	 	C.	AMERCO shall be responsible for ascertainment and payment of any and all taxes, fees, duties, levies, and other charges imposed with respect to the Settlement Amount. 

 

III.    RELEASES. 

 

Except as to the rights and obligations of the Parties pursuant to the provisions of this Agreement, and in further consideration for the execution of this Agreement:

 

	 	A.	AMERCO and the SAC Entities’ Release of All Claims Against PwC. AMERCO and the SAC Entities, on behalf of themselves, their officers, employees, directors, parents, subsidiaries, shareholders, alter egos, affiliates, partners, agents, attorneys, insurers, accountants, heirs, executors, administrators, conservators, successors, and assigns, hereby fully and forever release and discharge PwC and each of PwC’s respective officers, employees, directors, parents, subsidiaries, shareholders, alter egos, affiliates, partners, agents, attorneys, insurers, accountants, heirs, executors, administrators, conservators, successors, and assigns from any and all claims, rights, demands, causes of action, obligations, orders, damages, expenses, debts, costs, attorneys fees, judgments and liabilities of whatever kind or nature in law, equity or otherwise, whether now known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which have existed or may have existed, or which do exist or which hereafter can, shall or may exist, based on any facts, events, or omissions occurring from the beginning of time to the date of this Agreement.

 

	 	B.	PwC’s Release of All Claims Against AMERCO and the SAC Entities. PwC, on behalf of themselves, their officers, employees, directors, parents, subsidiaries, shareholders, alter egos, affiliates, partners, agents, attorneys, insurers, accountants, heirs, executors, administrators, conservators, successors, and assigns, hereby fully and forever release and discharge AMERCO and the SAC Entities and each of AMERCO’s and the SAC Entities’ respective officers, employees, directors, parents, subsidiaries, shareholders, alter egos, affiliates, partners, agents, attorneys, insurers, accountants, heirs, executors, administrators, conservators, successors, and assigns from any and all claims, rights, demands, causes of action, obligations, orders, damages, expenses, debts, costs, attorneys fees, judgments and liabilities of whatever kind or nature in law, equity or otherwise, whether now known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which have existed or may have existed, or which do exist or which hereafter can, shall or may exist, based on any facts, events, or omissions occurring from the beginning of time to the date of this Agreement.

 

	 	C.	Waiver of Other Claims. The Parties acknowledge that there is a possibility that after the execution of this Agreement, they may discover facts, claims or defenses which were unknown or unsuspected at the time this Agreement was executed, and which if known by them at that time may have materially affected their decision to execute this Agreement. The Parties each acknowledge and agree that by reason of this Agreement, and the releases contained in the preceding two paragraphs, they are assuming any risk of such unknown facts and such unknown and unsuspected claims. 

 

	 	D.	Shareholder Action. AMERCO and PwC have both been named as defendants in a consolidated putative class action lawsuit brought by AMERCO shareholders captioned In Re AMERCO Securities Class Action, CV-N-03-0050-ECR (RAM) (“Shareholder Action”). On October 8, 2004, the Shareholder Action was transferred to the United States District Court, District of Arizona. AMERCO and the SAC Entities on the one hand and PwC on the other hand, agree that they shall not assert against the other any right to indemnification, contribution, cross-claim, or counter claim arising out of the Shareholder Action in federal or state court. The Parties agree that nothing in this Agreement is intended to waive the ability of a Party to prove up its own proportionate fault under the Private Securities Litigation Reform Act (“PSLRA”) or under any other applicable law, or to assert any other defense provided by law. The Parties also agree to cooperate in the defense of the Shareholder Action. In furtherance of such cooperation, the Parties agree that no Party shall make any agreement with the Shareholder Action’s plaintiffs to assist them in any way in prosecuting the Shareholder Action except as required by law or court order. 

 

	 	E.	Derivative Action. AMERCO, the SAC Entities, and certain of their officers and directors have been named as defendants in a derivative action captioned Paul F. Shoen v. SAC Holding Corp. et al., CV02-05602, which was consolidated with Ron Belec v. William E. Carty et al., CV02-06331, M.S. Management Company, Inc. v. William E. Carty, et al., CV03-00386, and two additional derivative suits alleging substantially the same claims (collectively “Derivative Action”). The Parties agree that nothing in this Agreement is intended to waive the ability of the AMERCO defendants to assert any and all defenses available to them in law or equity, including, but not limited to, their ability to prove up their own proportionate fault. AMERCO and the SAC Entities on the one hand and PwC on the other hand agree that they shall not assert against the other any right to indemnification, contribution, cross-claim, or counter claim arising out of the Derivative Action.

 

	 	F.	Other Actions. AMERCO and the SAC Entities on the one hand and PwC on the other hand agree that they shall not assert against the other any right to indemnification, contribution, cross-claim, or counter claim in any other action arising out of any conduct related to AMERCO’s and PwC’s historic relationship in which a Party is named as a defendant. 

 

IV.    ADDITIONAL PROVISIONS.

 

	 	A.	Confidentiality. The Parties and their attorneys agree that the terms and conditions of this Agreement shall remain confidential and they shall not disclose such terms or conditions to any other person, other than such persons whose knowledge is necessary to carry out its provisions (and who shall be advised of its confidentiality and agree to be bound by this provision), and except: (1) to the extent such disclosure is required for its enforcement, or (2) as otherwise required by federal or state law, including pursuant to any discovery procedures authorized by such laws. 

 

	 		If disclosure of the settlement and Settlement Amount is required to be made in any filing by AMERCO with the United States Securities and Exchange Commission (the “SEC”), AMERCO shall only report the Settlement Amount net of attorneys’ fees and costs unless otherwise required by law. 

 

	 		Neither Party shall issue press releases regarding the settlement. If media inquiries are made of any Party to this Agreement regarding this Agreement and related settlement, such inquiries may be responded to with the following statement only: “The disputes between the parties have been resolved and the

	 		parties have agreed not to discuss the terms of the settlement and to keep

	 		them confidential. A description of the material terms of the settlement

	 		may be found in AMERCO's SEC filings.”

 

	 		

 

	  
	 	 	 
	

	 

Any other disclosure with respect to this Agreement shall be made only pursuant to a court order protecting the confidentiality of the Agreement, its terms, and its conditions, or following the denial of such an order, and only to such persons and/or agencies authorized to receive such information under such order.

 

	 	B.	Disclaimer Of Liability. While this Agreement resolves all issues between the Parties regarding the AMERCO v. PwC and PwC v. Shoen lawsuits, as well as any acts or omissions by either Party during their entire relationship, it does not constitute an admission by any Party of any of the matters alleged in any of the complaints filed, or of any liability or wrongdoing whatsoever. Nothing in this Agreement or any related document shall be construed or admissible in any proceeding as evidence of liability or wrongdoing by any of the Parties. The Parties hereto agree that this Agreement is the result of a compromise within the provisions of Rule 408 of the Arizona Rules of Evidence and Rule 408 of the Federal Rules of Evidence.

 

	 	C.	Additional Documentation And Cooperation With Further Proceedings. The Parties agree to execute whatever additional documentation and cooperate in further proceedings if necessary to effectuate the terms of this Agreement without charge or other consideration to any other Party. 

 

	 	D.	Integration and Representations.

 

	 	1.	This document constitutes the entire agreement and understanding between the Parties concerning the releases and dismissals described herein, and supersedes and replaces all prior negotiations, proposed agreements and agreements, written and oral, relating thereto. This is a fully integrated document. 

 

	 	2.	Each of the Parties hereto acknowledges that no other Party hereto, or any agent or attorney of any other Party hereto, has made any promise, representation or warranty whatever, express or implied, not contained herein concerning the subject matter hereof, to induce it to execute this document, and acknowledges that it has not executed this instrument in reliance on any such promise, representation, or warranty not contained herein. 

 

	 	3.	Each of the Parties hereto has read this Agreement and understands the contents thereof.

 

	 	4.	Each of the Parties hereto acknowledges that it has been represented by legal counsel of its own choice throughout all negotiations that preceded the execution of this document.

 

	 	5.	Each of the Parties hereto acknowledges and represents that it has not assigned or transferred any claim covered by this Agreement that any Party has, had, may have, or may have had against any other.

 

	 	E.	No Oral Modifications. This Agreement may not be altered, amended or modified in any respect whatsoever, except by a writing duly executed by authorized representatives of each of the Parties.

 

	 	F.	Authority to Sign. Each person signing this Agreement represents and warrants to each other Party that he or she has all requisite power and authority to execute this Agreement and that this Agreement when executed and delivered will be a binding obligation of, and enforceable against, such Party in accordance with its terms.

 

	 	G.	Predecessors, Successors, and Assigns. This Agreement shall bind and inure to the benefit of the Parties hereto and their respective successors and assigns (and their respective predecessors to the fullest extent permitted by law). Notwithstanding the foregoing, this Agreement is not intended to inure to the benefit of any third parties, except as such third parties are specifically identified herein and only to the extent specifically provided herein.

 

	 	H.	Headings. Section and paragraph headings contained in this Agreement are for convenience and shall not be considered for any purpose in construing this Agreement.

 

	 	I.	Execution By Facsimile and In Counterparts. This Agreement may be executed by facsimile and in any number of counterparts, which together shall constitute one instrument.

 

	 	J.	Severability. In the event that any provision of this Agreement is held to be invalid, void, unenforceable, or illegal by any court of competent jurisdiction, it shall be deemed severable from the remainder of the Agreement and shall in no way affect, impair, or invalidate any other provision of this Agreement, unless the severed portion was essential to the intended purpose of the Agreement.

 

	 	K.	Notices. Any required notices shall be delivered in writing, by facsimile, with a copy sent by United States Postal Service, first-class service to:

 

AMERCO:           Larry De Respino, Esq.

U-Haul International, Inc.

2721 North Central Avenue

Phoenix, Arizona 85004

Telephone: (602) 263-6977

 

PwC:     Joseph A. Gross, Esq.

PricewaterhouseCoopers LLP

555 California Street

San Francisco, California 94014

Telephone: (415) 393-8728

Facsimile: (415) 291-4012

 

	  
	 	 	 
	

	 

With a copy to:     Linda J. Smith, Esq.

O’Melveny & Myers LLP

1999 Avenue of the Stars, Ste. 700

Los Angeles, California 90067

Telephone: (310) 553-6700

Facsimile: (310) 246-6779

 

The SAC Entities:          Mark V. Shoen

715 S. Country Club Drive

Mesa, Arizona 85210

 

No notice will be deemed to have been duly given unless and until it is actually received by an individual at the intended recipient’s address (or delivery is refused by such person).

 

	 	L.	Dispute Resolution. Judge Mark A. Armstrong has agreed to retain jurisdiction over the Agreement. Accordingly, any controversy or claim arising out of or relating to this Agreement (whether sounding in contract, tort, or otherwise), or the breach thereof, shall be adjudicated by him. The Parties submit and agree that Judge Armstrong shall have exclusive and binding authority over this Agreement. In the event of any dispute arising out of this Agreement, each party shall, within twenty-four (24) hours thereof, present such dispute for final and binding resolution to Judge Armstrong.

 

	 		The prevailing Party in any dispute under this Agreement may be entitled to an award of its reasonable costs, including attorneys’ fees, as determined by Judge Armstrong at his sole discretion.

 

	 		To the extent that Judge Armstrong is unable to fulfill this role, a nominee shall be designated by Judge Armstrong. Such nominee shall be subject to approval by both parties within twenty-four (24) hours, which approval shall not be unreasonably withheld.

 

	 	M.	Waiver of Terms. A waiver of any term or condition of this Agreement will not be deemed to be, and may not be construed as, a waiver of any other term or condition hereof.

 

	 	N.	Neutral Construction. This Agreement shall not be construed against the Party or Parties preparing it, but shall be construed as if all Parties jointly prepared it, and any uncertainty or ambiguity shall not be interpreted against any one Party.

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Effective Date.

 

DATED: November 23, 2004   EDWARD J. SHOEN

                    On Behalf of

                    AMERCO 

                    By: /s/ Edward J. Shoen________________

                Edward J. Shoen

 

DATED: November 23, 2004   EDWARD J. SHOEN

                    On Behalf of 

                    U-HAUL INTERNATIONAL, INC.

                    By: /s/ Edward J. Shoen__________________

                Edward J. Shoen

DATED: November 23, 2004   EDWARD J. SHOEN

                    On Behalf of Himself

                    By: /s/ Edward J. Shoen__________________

                Edward J. Shoen

 

DATED: November 19, 2004   MARK V. SHOEN

                    On Behalf of 

                    BLACKWATER INVESTMENTS AND 

                    THE SAC ENTITIES

                    By: /s/ Mark V. Shoen__________________

                Mark V. Shoen

 

DATED: November 19, 2004   MARK V. SHOEN

                    On Behalf of Himself

                    By: /s/ Mark V. Shoen__________________

                Mark V. Shoen

 

DATED: November 23, 2004   RICHARD M. AMOROSO

                    On Behalf of 

                    REPUBLIC WESTERN LIFE INSURANCE

                    By: /s/ Richard M. Amoroso______________

                Richard M. Amoroso

 

DATED: November 23, 2004   RICHARD M. AMOROSO

                    On Behalf of Himself

                    By: /s/ Richard M. Amoroso______________

                Richard M. Amoroso 

 

DATED: November 30, 2004    

                    By: /s/ Richard Herrera__________________

                Richard Herrera

 

DATED: November 23, 2004    

                    By: /s/ Sylvia Shoen____________________

                Sylvia Shoen

 

DATED: November 19, 2004    

                    By: /s/ Charlene J. Shoen_____________       

                Charlene J. Shoen

 

DATED: November 23, 2004    

                    By: /s/ James P. Shoen___________________

                James P. Shoen

 

DATED: November 23, 2004    

                    By: /s/ Mary K. Shoen_____________   ____

                Mary K. Shoen

 

DATED: November 19, 2004    

                    By: /s/ Charles J. Bayer______      _________

                Charles J. Bayer

 

DATED: November 19, 2004    

                    By: /s/ Sally Bayer____           ____________

                Sally Bayer

 

DATED: November __, 2004    

                    By: /s/ John P. Brogan____       ___________

                John P. Brogan

 

DATED: November __, 2004    

                    By: /s/ Margaret Brogan__________________

                Margaret Brogan

 

DATED: November 19, 2004    

                    By: /s/ John M. Dodds____________________

                John M. Dodds

 

DATED: November 19, 2004    

                    By: /s/Barbara Edstrom____________________

                Barbara Edstrom

 

DATED: November 19, 2004    

                    By: /s/ James J. Grog______________________

                James J. Grogan

 

DATED: November 19, 2004    

                    By: /s/ Mary Joe Grogan____________________

                Mary Joe Grogan

 

DATED: November 19, 2004    

                    By: /s/ M. Frank Lyons______________________

                M. Frank Lyons

 

DATED: November 19, 2004    

                    By: /s/ William E. Carty______________________

                William E. Carty

 

DATED: November 19, 2004    

                    By: /s/ Mary Carty__________________________

                Mary Carty

 

DATED: November __, 2004    

                    By: /s/ Gary B. Horton_____________________

                Gary B. Horton

 

DATED: November 24, 2004    PRICEWATERHOUSECOOPERS LLP

                    By:_/s/ Rodman W. Benedict___                           

                    Rodman W. Benedict, Deputy General Counsel

 

 

DATED: November 29, 2004    

                    By: /s/ Michael O. Gagnon__________________

                Michael O. Gagnon

 

DATED: November 23, 2004    

                    By: /s/ Joseph A. Gross______________________

                Joseph A. Gross

 

DATED: November 23, 2004    

                    By: /s/ Carol L. Brosgart, M.D.________________

                Carol L. Brosgart, M.D.

 

DATED: November 24, 2004    

                    By: /s/ Terri M. Hulse_______________________

                Terri M. Hulse

 

DATED: November 24, 2004    

                    By: /s/ Gary R. Hulse_______________________

                Gary R. Hulse

 

DATED: November __, 2004    

                    By: /s/ Randal S. Vallen_____________________

                Randal S. Vallen

 

DATED: November __, 2004    

                    By: /s/ Juli Vallen__________________________

                Juli VallenPMA Galaxy Two Property Management Agreement

PROPERTY MANAGEMENT AGREEMENT

 

THIS PROPERTY MANAGEMENT AGREEMENT (this "Agreement") is entered into as of November 16, 2004 among Galaxy Storage Two, L.P., a Nevada limited partnership ("Owner"), and the subsidiaries of U-Haul International, Inc. set forth on the signature block hereto ("Manager").

 

RECITALS

 

A.  Owner owns the real property and self-storage related improvements thereon located at the street addresses identified on Exhibit A hereto (hereinafter, collectively the “Property”).

B.  Owner intends that the Property be rented on a space-by-space retail basis to corporations, partnerships, individuals and/or other entities for use as self-storage facilities.

C.  Owner desires that U-Haul manage the Property and U-Haul desires to act as the property manager for the Property, all in accordance with the terms and conditions of this Agreement and as more specifically designated on Exhibit A hereto.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto hereby agree as follows.

	1.  	Employment.

 

(a) Owner hereby retains Manager, and Manager agrees to act as manager of the Property upon the terms and conditions hereinafter set forth.

 

(b) Owner acknowledges that Manager, and/or Manager affiliates, is in the business of managing self-storage facilities and businesses conducted thereat, including, but not limited to, the sale of packing supplies and rental of trucks and equipment, both for its own account and for the account of others. It is hereby expressly agreed that notwithstanding this Agreement, Manager and such affiliates may continue to engage in such activities, may manage facilities other than those presently managed by Manager and its affiliates (whether or not such other facilities may be in direct or indirect competition with Owner) and may in the future engage in other business which may compete directly or indirectly with activities of Owner. 

 

(c) In the performance of its duties under this Agreement, Manager shall occupy the position of an independent contractor with respect to Owner. Nothing contained herein shall be construed as making the parties hereto (or any of them) partners or joint venturors, nor construed as making Manager an employee of Owner.

 

	2.  	Duties and Authority of Manager.

 

Subject to the terms and conditions of this Agreement:

 

	  
	 	 	 
	

	 

 

(a) General Duties and Authority. Manager shall have the sole and exclusive duty and authority to fully manage the Property and supervise and direct the business and affairs associated or related to the daily operation thereof, to collect on behalf of Owner all revenues related to the Property, to pay on behalf of Owner all expenses of the Property (including payment of all debt service to the mortgage lender with respect to the Property) and to execute on behalf of Owner such documents and instruments as, in the sole judgment of Manager, are reasonably necessary or advisable under the circumstances in order to fulfill Manager's duties hereunder. Such duties and authority shall include, without limitation, those set forth below.

 

(b) Renting of the Property. Manager shall establish policies and procedures for the marketing activities for the Property, and shall advertise the Property through such media as Manager deems advisable, including, without limitation, advertising with the Yellow Pages. Manager's marketing activities for the Property shall be consistent with the scope and quality implemented by Manager and its affiliates at any other properties managed by Manager or its affiliates. Manager shall have the sole discretion, which discretion shall be exercised in good faith, to establish the terms and conditions of occupancy by the Owners of the Property, and Manager is hereby authorized to enter into rental agreements on behalf and for the account of Owner with such Owners and to collect rent from such Owners on behalf and for the account of Owner. Manager may jointly advertise the Property with other properties owned or managed by Manager or its Affiliates, and in that event, Manager shall reasonably allocate the cost of such advertising among such properties.

 

(c) Repair, Maintenance and Improvements. Manager shall make, execute, supervise and have control over the making and executing of all decisions concerning the acquisition of furniture, fixtures and supplies for the Property, and may purchase, lease or otherwise acquire the same on behalf of Owner. Manager shall make and execute, or supervise and have control over the making and executing of all decisions concerning the maintenance, repair, and landscaping of the Property, provided, however, that such maintenance, repair and landscaping shall be consistent with the maintenance, repair and landscaping implemented by Manager and its affiliates at any other properties managed by Manager or its affiliates. Manager shall, on behalf of Owner, negotiate and contract for and supervise the installation of all capital improvements related to the Property; provided, however, that Manager agrees to secure the prior written approval of Owner on all such expenditures in excess of any threshold amounts set forth in any loan documents relating to the Property (collectively, “Loan Documents”) for any one item, except monthly or recurring operating charges and/or emergency repairs if in the opinion of Manager such emergency-related expenditures are necessary to protect the Property from damage or to maintain services to the Owners or self-storage licensees as called for in their respective leases or self-storage agreements. 

 

(d) Personnel. Manager shall select all vendors, suppliers, contractors, subcontractors and employees with respect to the Property and shall hire, discharge and supervise all labor and employees required for the operation and maintenance of the Property. Any employees so hired shall be employees of Manager, and shall be carried on the payroll of Manager. Employees may include, but need not be limited to, on-site resident managers, on-site assistant managers, and relief managers located, rendering services, or performing activities on the Property in connection with its operation and management. The cost of employing such persons shall not exceed prevailing rates for comparable persons performing the same or similar services with respect to real estate similar to the Property in the general vicinity of each respective Property. Manager shall be responsible for all legal and insurance requirements relating to its employees.

 

(e) Service Agreements. Manager shall negotiate and execute on behalf of Owner such agreements which Manager deems necessary or advisable for the furnishing of utilities, services, concessions and supplies, for the maintenance, repair and operation of the Property and such other agreements which may benefit the Property or be incidental to the matters for which Manager is responsible hereunder.

 

(f) Other Decisions. Manager shall make the decisions in connection with the day-to-day operations of the Property.

 

(g) Regulations and Permits. Manager shall comply in all respects with any statute, ordinance, law, rule, regulation or order of any governmental or regulatory body, having jurisdiction over the Property (collectively, "Laws"), respecting the use of the Property or the maintenance or operation thereof, the non-compliance with which could reasonably be expected to have a material adverse effect on Owner or any Property. Manager shall apply for and obtain and maintain, on behalf of Owner, all licenses and permits required or advisable (in the reasonable judgment of Manager) in connection with the management and operation of the Property. Notwithstanding the foregoing, Manager shall be permitted to contest any Applicable Laws to the extent and pursuant to the same conditions that Owner is permitted to contest any Laws under the Loan Documents.

 

(h) Records and Reports of Disbursements and Collections. Manager shall establish, supervise, direct and maintain the operation of a system of record keeping and bookkeeping with respect to all receipts and disbursements in connection with the management and operation of the Property. The books, records and accounts shall be maintained at the Manager's office or at Owner's office, or at such other location as Manager and Owner shall determine, and shall be available and open to examination and audit quarterly by Owner, its representatives, and, subject to the terms of the Loan Documents, any mortgagee of the Property, and such mortgagee's representative. On or before sixty (60) days after the close of each quarter, Manager shall cause to be prepared and delivered to Owner a monthly statement on a per-Property basis, of receipts, expenses and charges, together with a statement, on a per-Property basis, of the disbursements made by Manager during such period on Owner's behalf.

 

(i) Collection. Manager shall be responsible for the billing and collection of all accounts receivable and for payment of all accounts payable with respect to the Property and shall be responsible for establishing policies and procedures to minimize the amount of bad debts.

 

(j) Legal Actions. Manager shall cause to be instituted, on behalf and in its name or in the name of Owner as appropriate, any and all legal actions or proceedings Manager deems necessary or advisable to collect charges, rent or other income due to Owner with respect to the Property and to oust or dispossess Owners or other persons unlawfully in possession under any lease, license, concession agreement or otherwise, and to collect damages for breach thereof or default thereunder by such Owner, licensee, concessionaire or occupant.

 

(k) Insurance. Manager shall obtain and maintain (or cause to be obtained and maintained) in full force and effect the insurance with respect to the Property and the operation of Owner's and Manager's business operations thereat, and Manager's employees, as required by the Loan Documents.

 

(l) Taxes. During the term of this Agreement, Manager shall pay on behalf of Owner, prior to delinquency, all real estate taxes, personal property taxes, and all other taxes assessed to, or levied upon, the Property. If required by the holder of any note secured by the Property, Manager will set aside, from Owner's funds, a reserve from each month's rent and other income collected, in an amount required by said holder for purposes of payment of real property taxes.

 

(m) Limitations on Manager Authority. Notwithstanding anything to the contrary set forth in this Section 2, Manager shall not, without obtaining the prior written consent of Owner, (i) rent storage space in the Property by written lease or agreement for a stated term in excess of one year unless such lease or agreement is terminable by the giving of not more than thirty (30) days written notice, (ii) alter the building or other structures of the Property in violation of the Loan Documents; (iii) make any other agreements which exceed a term of one year and are not terminable on thirty day's notice at the will of Owner, without penalty, payment or surcharge; (iv) act in violation of any Law, or (v) violate any term or condition of the Loan Documents.

 

(n) Shared Expenses. Owner acknowledges that certain economies may be achieved with respect to certain expenses to be incurred by Manager on behalf of Owner hereunder if materials, supplies, insurance or services are purchased by Manager in quantity for use not only in connection with Owner's business at the Property but in connection with other properties owned or managed by Manager or its affiliates. Manager shall have the right to purchase such materials, supplies, insurance and/or services in its own name and charge Owner a pro rata allocable share of the cost of the foregoing; provided, however, that the pro rata cost of such purchase to Owner shall not result in expenses that are either inconsistent with the expenses of other "U-Haul branded" locations in the general vicinity of the applicable Property or greater than would otherwise be incurred at competitive prices and terms available in the area where the Property is located; and provided further, Manager shall give Owner access to records (at no cost to Owner) so Owner may review any such expenses incurred.

 

(o) Deposit of Gross Revenues. All Gross Revenues (as hereinafter defined) shall be deposited into a bank account maintained by U-Haul (or its parent company) as for the benefit of the Owner. To the extent that the Gross Revenues are deposited into a collective account maintained by U-Haul (or its parent company) for the benefit of multiple property owners, U-Haul (or its parent company) shall reconcile such account daily and maintain such records as shall clearly identify each day the respective interest of each owner in such collective account. Gross Revenues of the Owner shall be applied first to the repayment of Owner’s senior debt with respect to the Property, and then to U-Haul in reimbursement of expenses and for management fees as provided under Section 4 below.

 

(p) Obligations under Loan Documents and other Material Contracts. Manager shall take such actions as are necessary or appropriate under the circumstances to ensure that Owner is in compliance with the terms of the Loan Documents and any other material agreement relating to the Property to which Owner is a party. Nothing herein contained shall be deemed to obligate Manager to fund from its own resources any payments owed by Owner under the Loan Documents or otherwise be deemed to make Manager a direct obligor under the Loan Documents, except as may otherwise be expressly provided therein.

 

(q) Obligations notwithstanding other Tenancy at the Property. Manager shall perform all of its obligations under this Agreement in a professional manner consistent with the standards it employs at all of its managed locations. 

 

	3.  	Duties of Owner. 

 

Owner shall cooperate with Manager in the performance of Manager's duties under this Agreement and to that end, upon the request of Manager, to provide, at such rental charges, if any, as are deemed appropriate, reasonable office space for Manager employees on the premises of the Property (to the extent available) and to give Manager access to all files, books and records of Owner relevant to the Property. Owner shall not unreasonably withhold or delay any consent or authorization to Manager required or appropriate under this Agreement. 

 

	4.  	Compensation of Manager.

 

(a) Reimbursement of Expenses. Manager shall be entitled to reimbursement, on a quarterly basis, for all out-of-pocket reasonable and customary expenses actually incurred by Manager in the discharge of its duties hereunder. Such reimbursement shall be the obligation of Owner, whether or not Gross Revenues are sufficient to pay such amounts. If and to the extent Gross Revenue for any fiscal quarter shall be in excess of the amounts necessary to pay current expenses (after payment of all obligations under the Loan Documents), at Owner's option the Manager shall hold all or a portion of such excess in an interest-bearing escrow account to be applied at Owner's direction to cover future expenses. Any interest earned thereon shall be added to and treated as part of such account. 

 

(b) Management Fee. Owner shall pay to Manager as the full amount due for the services herein provided a quarterly fee (the "Management Fee") which shall be four percent (4%) of the Property's trailing twelve month Gross Revenue divided by four (4) ("Base Fee"), plus an annual incentive fee (the "Incentive Fee") based upon the performance of the Property as set forth on Exhibit B hereto. For purposes of this Agreement, the term "Gross Revenue" shall mean all receipts (excluding security deposits unless and until Owner recognizes the same as income) of Manager or Owner (whether or not received by Manager on behalf or for the account of Owner) arising from the operation of Owner's business at the Property, including without limitation, rental payments of self-storage customers at the Property, vending machine or concessionaire revenues, maintenance charges, if any, paid by the Owners of the Property in addition to basic rent and parking fees, if any. Gross Revenue shall be determined on a cash basis. Subject to the terms of Sections 2(o), the Management Fee shall be paid promptly, in arrears, within thirty (30) days of Owner's receipt of the invoice therefor, which invoice shall be sent from Manager to Owner following the end of each calendar quarter. Such invoice shall be itemized and shall include reasonable detail.

 

Except as provided in this Section 4, it is further understood and agreed that Manager shall not be entitled to additional compensation of any kind in connection with the performance by it of its duties under this Agreement.

 

(c) Inspection of Books and Records. Owner shall have the right, upon prior reasonable notice to Manager, to inspect Manager's books and records with respect to the Property, to assure that proper fees and charges are assessed hereunder. Manager shall cooperate with any such inspection. Owner shall bear the cost of any such inspection; provided, however, that if it is ascertained that Manager has overcharged Owner by more than 5% in any given quarter, the cost of such inspection shall be borne by Manager. Manager shall promptly reimburse Owner for any overpayment.

 

	5.  	Use of Trademarks, Service Marks and Related Items.

 

Owner acknowledges the significant value of the "U-Haul" name in the operations of Owner's property and it is therefore understood and agreed that the name, trademark and service mark "U-Haul", and related marks, slogans, caricatures, designs and other trade or service items (the "Manager Trade Marks") shall be utilized for the non-exclusive benefit of Owner in the rental and operation of the Property, and in comparable operations elsewhere. It is further understood and agreed that this name and all such marks, slogans, caricatures, designs and other trade or service items shall remain and be at all times the property of Manager and its affiliates, and that, except as expressly provided in this Agreement, Owner shall have no right whatsoever therein. Owner agrees that during the term of this agreement the sign faces at the property will have the name "U-Haul." The U-Haul sign faces will be paid for by Owner. Unless Owner has elected to continue to use the Manager Trade Marks as provided in Section 6 of this Agreement, upon termination of this agreement at any time for any reason, all such use by and for the benefit of Owner of any such name, mark, slogan, caricature, design or other trade or service item in connection with the Property shall be terminated and any signs bearing any of the foregoing shall be removed from view and no longer used by Owner. In addition, upon termination of this Agreement at any time for any reason, Owner shall not enter into any new leases of Property using the Manager lease form or use other forms prepared by Manager. It is understood and agreed that Manager will use and shall be unrestricted in its use of such name, mark, slogan, caricature, design or other trade or service item in the management and operation of other storage facilities both during and after the expiration or termination of the term of this Agreement. 

 

	6.  	Default; Termination. 

 

(a) Any material failure by Manager or Owner (a "Defaulting Party") to perform their respective duties or obligations hereunder (other than a default by Owner under Section 4 of this Agreement), which material failure is not cured within thirty (30) calendar days after receipt of written notice of such failure from the non-defaulting party, shall constitute an event of default hereunder; provided, however, the foregoing shall not constitute an event of default hereunder in the event the Defaulting Party commences cure of such material failure within such thirty (30) day period and diligently prosecutes the cure of such material failure thereafter but in no event shall such extended cure period exceed ninety (90) days from the date of receipt by the non-defaulting party of written notice of such material default; provided further, however, that in the event such material failure constitutes a default under the terms of the Loan Documents and the cure period for such matter under the Loan Documents is shorter than the cure period specified herein, the cure period specified herein shall automatically shorten such that it shall match the cure period for such matter as specified under the Loan Documents. In addition, following notice to Manager of the existence of any such material failure by Manager, Owner shall each have the right to cure any such material failure by Manager, and any sums so expended in curing shall be owed by Manager to such curing party and may be offset against any sums owed to Manager under this Agreement.

 

(b) Any material failure by Owner to perform its duties or obligations under Section 4, which material failure is not cured within ten (10) calendar days after receipt of written notice of such failure from Manager, shall constitute an event of default hereunder. 

 

(c) Owner shall have the right to terminate this Agreement, with or without cause, by giving not less than thirty (30) days' written notice to Manager pursuant to Section 14 hereof. Manager shall have the right to terminate this Agreement, with or without cause, by giving not less than ninety (90) days' written notice to Owner pursuant to Section 14 hereof. 

 

(d) Upon termination of this Agreement, (x) Manager shall promptly return to Owner all monies, books, records and other materials held by Manager for or on behalf of Owner and shall otherwise cooperate with Owner to promote and ensure a smooth transition to the new manager and (y) Manager shall be entitled to receive its Management Fee and reimbursement of expenses through the effective date of such termination, including the reimbursement of any prepaid expenses for periods beyond the date of termination (such as Yellow Pages advertising). 

 

	7.  	Indemnification. 

 

Manager hereby agrees to indemnify, defend and hold Owner, all persons and companies affiliated with Owner, and all officers, shareholders, directors, employees and agents of Owner and of any affiliated companies or persons (collectively, the "Indemnified Persons") harmless from any and all costs, expenses, attorneys' fees, suits, liabilities, judgments, damages, and claims in connection with the management of the Property and operations thereon (including the loss of use thereof following any damage, injury or destruction), arising from any cause or matter whatsoever, including, without limitation, any environmental condition or matter, except to the extent attributable to the willful misconduct or gross negligence on the part of the Indemnified Persons. 

 

	8.  	Assignment. 

 

Manager shall not assign this Agreement to any party without the consent of Owner.

 

	9.  	Standard for Property Manager's Responsibility.

 

Manager agrees that it will perform its obligations hereunder according to industry standards, in good faith, and in a commercially reasonable manner. 

 

	10.  	Estoppel Certificate. 

 

Each of Owner and Manager agree to execute and deliver to one another, from time to time, within ten (10) business days of the requesting party's written request, a statement in writing certifying, to the extent true, that this Agreement is in full force and effect, and acknowledging that there are not, to such parties knowledge, any uncured defaults or specifying such defaults if they are claimed and any such other matters as may be reasonably requested by such requesting party.

 

	11.  	Term; Scope.

 

Subject to the provisions hereof, this Agreement shall have an initial term (such term, as extended or renewed in accordance with the provisions hereof, being called the "Term") commencing on the date hereof (the "Commencement Date") and ending on the last day of the one hundred and twentieth (120th) calendar month next following the date hereof (the "Expiration Date"), provided however, the Term shall expire with respect to any individual Property as to which the Loan Documents have terminated in accordance with the terms of the Loan Documents (for instance due to a significant casualty or condemnation). 

 

	12.  	Headings.

 

The headings contained herein are for convenience of reference only and are not intended to define, limit or describe the scope or intent of any provision of this Agreement.

 

	13.  	Governing Law.

 

The validity of this Agreement, the construction of its terms and the interpretation of the rights and duties of the parties shall be governed by the internal laws of the State of Arizona.

 

	14.  	Notices.

 

Any notice required or permitted herein shall be in writing and shall be personally delivered or mailed first class postage prepaid or delivered by an overnight delivery service to the respective addresses of the parties set forth above on the first page of this Agreement, or to such other address as any party may give to the other in writing. Any notice required by this Agreement will be deemed to have been given when personally served or one day after delivery to an overnight delivery service or five days after deposit in the first class mail. Any notice to Owner shall be to the attention of President, c/o Jones Vargas, 100 West Liberty Street, 12th Floor, Reno, Nevada 89504. Any notice to Manager shall be to the attention of c/o U-Haul International, Inc. Legal Dept, 2721 North Central Avenue, Phoenix, AZ 85004, Attn: General Counsel.

 

	15.  	Severability.

 

Should any term or provision hereof be deemed invalid, void or unenforceable either in its entirety or in a particular application, the remainder of this Agreement shall nonetheless remain in full force and effect and, if the subject term or provision is deemed to be invalid, void or unenforceable only with respect to a particular application, such term or provision shall remain in full force and effect with respect to all other applications.

 

	16.  	Successors.

 

This Agreement shall be binding upon and inure to the benefit of the respective parties hereto and their permitted assigns and successors in interest.

 

	17.  	Attorneys' Fees.

 

If it shall become necessary for any party hereto to engage attorneys to institute legal action for the purpose of enforcing their respective rights hereunder or for the purpose of defending legal action brought by the other party hereto, the party or parties prevailing in such litigation shall be entitled to receive all costs, expenses and fees (including reasonable attorneys' fees) incurred by it in such litigation (including appeals).

 

	18.  	Counterparts.

 

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

	  
	 	 	 
	

	 

 

IN WITNESS WHEREOF, the undersigned execute this Agreement as of the date set forth above.

 

 

Owner:

 

Galaxy Storage Two, L.P.

 

By: Galaxy Storage Two GP Corporation

 

 

By: /s/ Mark V. Shoen__________________

Mark V. Shoen, President

 

 

Manager:

 

U-Haul Co. of Arizona, Inc.

 

By: /s/ Jennifer M. Settles_______________

Secretary

 

 

U-Haul Co. of Rhode Island, Inc.

 

By: /s/ Jennifer M. Settles_______________

Secretary

 

U-Haul Co. of Missouri, Inc.

 

By: /s/ Jennifer M. Settles_______________

Secretary

 

U-Haul Co. of Florida, Inc.

 

By: /s/ Jennifer M. Settles_______________

Secretary

 

 

 

 

	  
	 	 	 
	

	 

Exhibit A

 

 

	
882058
	
U-HAUL STORAGE SUNSPLASH 
	
125 WEST HAMPTON AVENUE 
	
MESA 
	
Arizona 
	
85210

	
796049
	
U-HAUL CENTER PAWTUCKET 
	
EXIT 26 I-95/LONSDALE AVE 
	
PAWTUCKET 
	
Rhode Island 
	
2860

	
884086
	
U-HAUL STORAGE MEXICO ROAD 
	
7440 MEXICO ROAD 
	
SAINT PETERS 
	
Missouri 
	
63376

	
882067
	
U-HAUL STORAGE E 32ND STREET
	
1175 E 32ND STREET
	
YUMA
	
Arizona 
	
85365

	
786055
	
U-HAUL CENTER WESTCHASE 
	
11401 WEST HILLSBOROUGH AVENUE
	
TAMPA 
	
Florida 
	
33635

 

 

	  
	 	 	 
	

	 

Exhibit B

 

Management Fee Incentives

 

The following Incentive Fee shall be calculated and, if and to the extent earned, paid, annually after the end of each fiscal year of Owner:

 

In the event that net operating income of the Property equals or exceeds 110% (but less than 120%) of principal and interest under the Loan Documents (“P&I”) for the prior fiscal year being calculated, the Incentive Fee for such quarter shall be 1% of the Property's Gross Revenue for such fiscal year.

 

In the event that net operating income of the Property equals or exceeds 120% (but less than 130%) of P&I for the prior fiscal year being calculated, the Incentive Fee for such quarter shall be 2% of the Property's Gross Revenue for such fiscal year.

 

In the event that net operating income of the Property equals or exceeds 130% (but less than 140%) of P&I for the prior fiscal year being calculated, the Incentive Fee for such quarter shall be 3% of the Property's Gross Revenue for such fiscal year.

 

In the event that net operating income of the Property equals or exceeds 140% (but less than 150%) of P&I for the prior fiscal year being calculated, the Incentive Fee for such quarter shall be 4% of the Property's Gross Revenue for such fiscal year.

 

In the event that net operating income of the Property equals or exceeds 150% of P&I for the prior fiscal year being calculated, the Incentive Fee for such quarter shall be 6% of the Property's Gross Revenue for such fiscal year.

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