-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U6AC97amV6U/K9lQFPCyRkuKar4IlqZ2sr9YwBSKC68+Ei0vs228P5gb1bKdkH3c cifBf+b0behinc5hAebfXw== 0000004457-98-000004.txt : 19980217 0000004457-98-000004.hdr.sgml : 19980217 ACCESSION NUMBER: 0000004457-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980212 SROS: NASD SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERCO /NV/ CENTRAL INDEX KEY: 0000004457 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-AUTO RENTAL & LEASING (NO DRIVERS) [7510] IRS NUMBER: 880106815 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11255 FILM NUMBER: 98535354 BUSINESS ADDRESS: STREET 1: 1325 AIRMOTIVE WY STE 100 CITY: RENO STATE: NV ZIP: 89502 BUSINESS PHONE: 7026886300 MAIL ADDRESS: STREET 1: 1325 AIRMOTIVE WAY STREET 2: SUITE 100 CITY: RENO STATE: NV ZIP: 89502 FORMER COMPANY: FORMER CONFORMED NAME: AMERCO DATE OF NAME CHANGE: 19770926 10-Q 1 FORM 10-Q 12/31/97 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to __________________ Commission Registrant, State of Incorporation I.R.S. Employer File Number Address and Telephone Number Identification No. _______________________________________________________________________ 0-7862 AMERCO 88-0106815 (A Nevada Corporation) 1325 Airmotive Way, Ste. 100 Reno, Nevada 89502-3239 Telephone (702) 688-6300 2-38498 U-Haul International, Inc. 86-0663060 (A Nevada Corporation) 2727 N. Central Avenue Phoenix, Arizona 85004 Telephone (602) 263-6645 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]. 22,614,087 shares of AMERCO Common Stock, $0.25 par value, were outstanding at February 12, 1998. 5,385 shares of U-Haul International, Inc. Common Stock, $0.01 par value, were outstanding at February 12, 1998. U-Haul International, Inc. meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format. TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Item 1. Financial Statements. a) Consolidated Balance Sheets as of December 31, 1997, March 31, 1997 and December 31, 1996................... 4 b) Consolidated Statements of Earnings for the Nine months ended December 31, 1997 and 1996................ 6 c) Consolidated Statements of Changes in Stockholders' Equity for the Nine months ended December 31, 1997 and 1996............................................... 7 d) Consolidated Statements of Earnings for the Quarters ended December 31, 1997 and 1996.............. 8 e) Consolidated Statements of Cash Flows for the Nine months ended December 31, 1997 and 1996................ 9 f) Notes to Consolidated Financial Statements - December 31, 1997, March 31, 1997 and December 31, 1996...................................... 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................ 17 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K........................... 26 THIS PAGE LEFT INTENTIONALLY BLANK PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Balance Sheets December 31, March 31, December 31, ASSETS 1997 1997 1996 ------------------------------------ (unaudited) (audited) (unaudited) (in thousands) Cash and cash equivalents $ 31,822 41,752 20,873 Receivables 251,064 238,523 237,866 Inventories 78,242 65,794 54,857 Prepaid expenses 30,379 17,264 16,922 Investments, fixed maturities 864,321 859,694 885,865 Investments, other 147,545 127,306 117,684 Deferred policy acquisition costs 41,257 48,598 52,919 Other assets 73,355 72,997 68,240 ------------------------------------ Property, plant and equipment, at cost: Land 208,334 209,803 215,566 Buildings and improvements 830,747 814,744 811,008 Furniture and equipment 208,374 199,126 196,248 Rental trailers and other rental equipment 179,733 170,407 171,143 Rental trucks 1,041,591 947,911 940,701 ------------------------------------ 2,468,779 2,341,991 2,334,666 Less accumulated depreciation 1,128,819 1,094,925 1,088,618 ------------------------------------ Total property, plant and equipment 1,339,960 1,247,066 1,246,048 ------------------------------------ $ 2,857,945 2,718,994 2,701,274 ==================================== The accompanying notes are an integral part of these consolidated financial statements. December 31, March 31, December 31, LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1997 1996 ------------------------------------ (unaudited) (audited) (unaudited) (in thousands) Liabilities: Accounts payable and accrued liabilities $ 94,284 131,099 106,518 Notes and loans 1,074,409 983,550 933,410 Policy benefits and losses, claims and loss expenses payable 493,003 469,134 484,254 Liabilities from premium deposits 423,777 433,397 435,838 Cash overdraft 24,978 23,606 24,620 Other policyholders' funds and liabilities 26,695 30,966 31,663 Deferred income 42,803 35,247 33,991 Deferred income taxes 39,944 9,675 18,009 ------------------------------------ Stockholders' equity: Serial preferred stock, with or without par value, 50,000,000 shares authorized - Series A preferred stock, with no par value, 6,100,000 shares issued and outstanding as of December 31, 1997, March 31, 1997 and December 31, 1996 - - - Series B preferred stock, with no par value, 100,000 shares issued and outstanding as of December 31, 1997, March 31, 1997 and December 31, 1996 - - - Serial common stock, with or without par value, 150,000,000 shares authorized - Series A common stock of $0.25 par value, 10,000,000 shares authorized, 5,762,495 shares issued as of December 31, 1997, March 31, 1997, and December 31, 1996 1,441 1,441 1,441 Common stock of $0.25 par value, 150,000,000 shares authorized, 36,487,505 shares issued as of December 31, 1997, March 31, 1997 and December 31, 1996 9,122 9,122 9,122 Additional paid-in capital 337,444 337,933 338,528 Foreign currency translation adjustment (16,992) (14,133) (13,282) Unrealized gain on investments 7,749 4,411 1,614 Retained earnings 677,078 644,009 665,210 ------------------------------------ 1,015,842 982,783 1,002,633 Less: Cost of common shares in treasury, (19,635,913 shares as of December 31, 1997, March 31, 1997, and December 31, 1996) 359,723 359,723 348,923 Unearned employee stock ownership plan shares 18,067 20,740 20,739 ------------------------------------ Total stockholders' equity 638,052 602,320 632,971 Contingent liabilities and commitments $ 2,857,945 2,718,994 2,701,274 ==================================== AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Earnings Nine months ended December 31, (Unaudited) 1997 1996 ---------------------- (in thousands except per share data) Revenues Rental revenue $ 811,191 781,193 Net sales 143,866 141,728 Premiums 119,890 116,671 Net investment income 36,388 36,802 ---------------------- Total revenues 1,111,335 1,076,394 Costs and expenses Operating expense 683,240 673,728 Cost of sales 82,312 84,305 Benefits and losses 130,914 109,156 Amortization of deferred acquisition costs 10,679 12,404 Depreciation, net 59,880 51,186 ---------------------- Total costs and expenses 967,025 930,779 Earnings from operations 144,310 145,615 Interest expense, net of interest income of $10,307 and $21,402 in 1997 and 1996, respectively 49,301 35,060 ---------------------- Pretax earnings from operations 95,009 110,555 Income tax expense (32,169) (40,347) ---------------------- Earnings from operations before extraordinary loss on early extinguishment of debt 62,840 70,208 Extraordinary loss on early extinguishment of debt, net (13,984) (2,319) ---------------------- Net earnings $ 48,856 67,889 ====================== Earnings per common share: Earnings from operations before extraordinary loss on early extinguishment of debt $ 2.15 2.17 Extraordinary loss on early extinguishment of debt, net (.64) (.09) ---------------------- Net earnings $ 1.51 2.08 ====================== Weighted average common shares outstanding 21,890,250 26,683,455 ====================== The accompanying notes are an integral part of these consolidated financial statements. AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Changes in Stockholders' Equity Nine months ended December 31, (Unaudited) 1997 1996 ------------------- (in thousands) Series A common stock of $0.25 par value: 10,000,000 shares authorized, 5,762,495 shares issued as of December 31, 1997, March 31, 1997 and December 31, 1996 Beginning and end of period $ 1,441 1,441 ------------------ Common stock of $0.25 par value: 150,000,000 shares authorized, 36,487,505 shares issued as of December 31, 1997, March 31, 1997 and December 31, 1996 Beginning of period 9,122 8,559 Issuance of common stock - 563 ------------------ End of period 9,122 9,122 ------------------ Additional paid-in capital: Beginning of period 337,933 165,756 Issuance of common stock under ESOP 511 485 Issuance of common stock - 73,665 Issuance of preferred stock (1,000) 98,622 ------------------ End of period 337,444 338,528 ------------------ Foreign currency translation: Beginning of period (14,133) (11,877) Change during period (2,859) (1,405) ------------------ End of period (16,992) (13,282) ------------------ Unrealized gain (loss) on investments: Beginning of period 4,411 11,097 Change during period 3,338 (9,483) ------------------ End of period 7,749 1,614 ------------------ Retained earnings: Beginning of period 644,009 609,019 Net earnings 48,856 67,889 Dividends paid to stockholders: Preferred stock Series A ($1.59 per share) (9,723) (9,723) Preferred stock Series B($60.64 per share for 1997 and $19.75 per share for 1996) (6,064) (1,975) ------------------ End of period 677,078 665,210 ------------------ Less Treasury stock: Beginning of period 359,723 111,118 Net increase (12,426,836 shares in 1996) - 237,805 ------------------ End of period 359,723 348,923 ------------------ Less Unearned employee stock ownership plan shares: Beginning of period 20,740 23,329 Increase in loan 4 1 Proceeds from loan (2,677) (2,591) ------------------ End of period 18,067 20,739 ------------------ Total stockholders' equity $ 638,052 632,971 ================== The accompanying notes are an integral part of these consolidated financial statements. AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Earnings Quarters ended December 31, (Unaudited) 1997 1996 ------------------------- (in thousands except per share data) Revenues Rental revenue $ 234,345 226,772 Net sales 35,401 34,536 Premiums 40,045 43,922 Net investment income 12,752 11,662 ------------------------ Total revenues 322,543 316,892 Costs and expenses Operating expense 221,410 227,670 Cost of sales 20,658 21,666 Benefits and losses 48,881 42,440 Amortization of deferred acquisition costs 3,556 4,347 Depreciation, net 20,607 19,447 ------------------------ Total costs and expenses 315,112 315,570 Earnings from operations 7,431 1,322 Interest expense, net of interest income of $3,243 and $2,765 in 1997 and 1996, respectively 15,657 17,346 ------------------------ Pretax loss from operations (8,226) (16,024) Income tax expense 2,836 6,486 ------------------------ Loss from operations before extraordinary loss on early extinguishment of debt (5,390) (9,538) Extraordinary loss on early extinguishment of debt, net (9,846) (315) ------------------------ Net loss $ (15,236) (9,853) ======================== Loss per common share: Loss from operations before extraordinary loss on early extinguishment of debt $ (.49) (.72) Extraordinary loss on early extinguishment of debt, net (.45) (.02) ------------------------ Net loss $ (.94) (.74) ======================== Weighted average common shares outstanding 21,901,521 20,359,869 ======================== The accompanying notes are an integral part of these consolidated financial statements. AMERCO AND CONSOLIDATED SUBSIDIARIES Consolidated Statements of Cash Flows Nine months ended December 31, (Unaudited) 1997 1996 --------------------- (in thousands) Cash flows from operating activities: Net earnings $ 48,856 67,889 Depreciation and amortization 92,184 71,813 Provision for losses on accounts receivable 3,496 2,791 Net (gain) loss on sale of real and personal property (667) (6,461) Gain on sale of investments (315) (173) Changes in policy liabilities and accruals 37,431 24,146 Additions to deferred policy acquisition costs (4,890) (11,873) Net change in other operating assets and liabilities (48,252) (56,759) -------------------- Net cash provided by operating activities 127,843 91,373 -------------------- Cash flows from investing activities: Purchases of investments: Property, plant and equipment (317,189) (159,744) Fixed maturities (94,451) (132,855) Equity investments (24,500) - Mortgage loans (13,380) (18,939) Real estate - (767) Proceeds from sale of investments: Property, plant and equipment 163,503 214,411 Fixed maturities 95,562 106,564 Real estate 685 599 Mortgage loans 15,222 35,525 Changes in other investments 1,793 (931) -------------------- Net cash provided (used) by investing activities (172,755) 43,863 -------------------- Cash flows from financing activities: Net change in short-term borrowings 171,500 (328,000) Proceeds from notes 300,000 487,800 Debt issuance costs (1,936) (4,724) Loan to leveraged Employee Stock Ownership Plan (4) (1) Proceeds from leveraged Employee Stock Ownership Plan 2,677 2,591 Extraordinary loss on early extinguishment of debt, net (13,984) (2,319) Principal payments on notes (380,641) (224,610) Issuance of common stock - 74,228 Issuance of preferred stock (1,000) 98,622 Net change in cash overdraft 1,372 (7,539) Dividends paid (15,787) (11,698) Treasury stock acquisitions - (237,805) Investment contract deposits 17,990 51,162 Investment contract withdrawals (45,205) (43,238) -------------------- Net cash provided (used) by financing activities 34,982 (145,531) -------------------- Increase (decrease) in cash and cash equivalents (9,930) (10,295) Cash and cash equivalents at beginning of period 41,752 31,168 -------------------- Cash and cash equivalents at end of period $ 31,822 20,873 ==================== The accompanying notes are an integral part of these consolidated financial statements. AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 1997, March 31, 1997 and December 31, 1996 (Unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION AMERCO, a Nevada corporation (the Company), is the holding company for U-Haul International, Inc. (U-Haul), Amerco Real Estate Company (AREC), Republic Western Insurance Company (RWIC) and Oxford Life Insurance Company (Oxford). PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the parent corporation, AMERCO, and its subsidiaries, substantially all of which are wholly-owned. All material intercompany accounts and transactions of AMERCO and its subsidiaries have been eliminated. The consolidated balance sheets as of December 31, 1997 and 1996, and the related consolidated statements of earnings, changes in stockholders' equity and cash flows for the quarters ended December 31, 1997 and 1996 are unaudited; in the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments consisted only of normal recurring items. Interim results are not necessarily indicative of results for a full year. The operating results and financial position of AMERCO's consolidated insurance operations are determined on a one quarter lag. There were no effects related to intervening events which would significantly affect consolidated financial position or results of operations for the financial statements presented herein. The financial statements and notes are presented as permitted by Form 10-Q and do not contain certain information included in the Company's annual financial statements and notes. Property, plant and equipment are carried at cost and are depreciated on the straight-line and accelerated methods over the estimated useful lives of the assets. Maintenance is charged to operating expenses as incurred, while renewals and betterments are capitalized. Major overhaul costs are amortized over the estimated period benefited. Gains and losses on dispositions are netted against depreciation expense when realized. Basic earnings per share are computed by dividing net earnings after deduction of preferred stock dividends by the weighted average number of common shares outstanding, excluding shares of the employee stock ownership plan that have not been committed to be released. Preferred dividends include undeclared or unpaid dividends of the Company. The Company does not have any potential common stock that was not included in the calculation of diluted earnings per share because it is antidilutive in the current period. Certain reclassifications have been made to the financial statements for the nine months ended December 31, 1996 to conform with the current year's presentation. AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 2. INVESTMENTS A comparison of amortized cost to market for fixed maturities is as follows: September 30, 1997 - ------------------ Par Value Gross Gross Estimated Consolidated or number Amortized unrealized unrealized market Held-to-Maturity of shares cost gains losses value ------------------------------------------------------ (in thousands) U.S. treasury securities and government obligations $ 16,663 $ 16,499 1,154 (9) 17,644 U.S. government agency mortgage- backed securities $ 46,128 45,886 495 (1,174) 45,207 Obligations of states and political subdivisions $ 28,170 27,995 1,311 (2) 29,304 Corporate securities $ 162,740 166,435 4,136 (591) 169,980 Mortgage-backed securities $ 107,256 105,844 1,767 (757) 106,854 Redeemable preferred stocks 1,343 38,426 832 (75) 39,183 ---------------------------------------- 401,085 9,695 (2,608) 408,172 ---------------------------------------- September 30, 1997 - ------------------ Par Value Gross Gross Estimated Consolidated or number Amortized unrealized unrealized market Available-for-Sale of shares cost gains losses value ------------------------------------------------------ U.S. treasury securities and government obligations $ 11,685 11,757 900 - 12,657 U.S. government agency mortgage- backed securities $ 29,359 28,776 900 (4) 29,672 States, municipalities and political subdivisions $ 15,880 16,271 629 (54) 16,846 Corporate securities $ 299,952 302,766 9,910 (1,071) 311,605 Mortgage-backed securities $ 75,157 74,685 2,384 (128) 76,941 Redeemable preferred stocks 571 14,869 646 - 15,515 ---------------------------------------- 449,124 15,369 (1,257) 463,236 ---------------------------------------- Total $ 850,209 25,064 (3,865) 871,408 ======================================== In February 1997, the Company, through its insurance subsidiaries, invested in the equity of a limited partnership in a Texas-based self-storage corporation. RWIC invested $13,500,000 in exchange for a 27.3% limited partnership and Oxford invested $11,000,000 in exchange for a 22.2% limited partnership. U-Haul is a 50% owner of a corporation which is a general partner in the Texas-based self-storage corporation. The Company has a $10,000,000 note receivable from the corporation. AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 3. SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF INSURANCE SUBSIDIARIES A summary consolidated balance sheet for RWIC is presented below: September 30, --------------------- 1997 1996 --------------------- (in thousands) Investments - fixed maturities $ 413,196 395,365 Other investments 22,571 11,535 Receivables 119,367 130,285 Deferred policy acquisition costs 5,663 10,342 Due from affiliate 33,020 52,747 Deferred federal income taxes 17,531 17,573 Other assets 18,917 7,939 ------------------- Total assets $ 630,265 625,786 =================== Policy liabilities and accruals $ 361,146 339,542 Unearned premiums 50,586 66,433 Other policyholders' funds and liabilities 23,028 24,544 ------------------- Total liabilities 434,760 430,519 Stockholder's equity 195,505 195,267 ------------------- Total liabilities and stockholder's equity $ 630,265 625,786 =================== A summarized consolidated income statement for RWIC is presented below: Nine months ended September 30, ------------------------------- 1997 1996 ------------------------------- (in thousands) Premiums $ 118,753 108,432 Net investment income 23,222 22,742 ----------------------- Total revenue 141,975 131,174 Benefits and losses 113,749 92,330 Amortization of deferred policy acquisition costs 6,466 7,393 Other expenses 19,902 18,587 ----------------------- Income from operations 1,858 12,864 Federal income tax expense (35) (3,830) ----------------------- Net income $ 1,823 9,034 ======================= AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 3. SUMMARIZED CONSOLIDATED FINANCIAL INFORMATION OF INSURANCE SUBSIDIARIES, continued A summary consolidated balance sheet for Oxford is presented below: September 30, --------------------- 1997 1996 --------------------- (in thousands) Investments - fixed maturities $ 451,125 490,500 Other investments 102,467 84,839 Receivables 12,357 14,906 Deferred policy acquisition costs 35,594 42,577 Due from affiliate 260 112 Other assets 1,667 2,318 ------------------- Total assets $ 603,470 635,252 =================== Policy liabilities and accruals $ 81,271 78,478 Premium deposits 423,777 435,838 Other policyholders' funds and liabilities 5,524 10,758 Deferred taxes 10,457 9,751 ------------------- Total liabilities 521,029 534,825 Stockholder's equity 82,441 100,427 ------------------- Total liabilities and stockholder's equity $ 603,470 635,252 =================== A summarized consolidated income statement for Oxford is presented below: Nine months ended September 30, ------------------------------- 1997 1996 ------------------------------- (in thousands) Premiums $ 19,259 21,276 Net investment income 13,400 13,949 ----------------------- Total revenue 32,659 35,225 Benefits and losses 17,165 16,826 Amortization of deferred policy acquisition costs 4,213 5,011 Other expenses 4,063 4,618 ----------------------- Income from operations 7,218 8,770 Federal income tax expense (2,036) (3,094) ----------------------- Net income $ 5,182 5,676 ======================= On November 18, 1997, Oxford purchased all of the issued and outstanding shares of Encore Financial, Inc. and its subsidiaries (Encore) for $11,569,000. Encore's primary subsidiary is North American Insurance Company (NAI). NAI is an insurance company domiciled in the state of Wisconsin whose premium volume is primarily derived from the sale of credit life and disability products. On November 24, 1997 Oxford purchased all of the issued and outstanding shares of Safe Mate Life Insurance Company for $2,243,000, domiciled in the state of Texas, whose premium volume is derived from the sale of credit life and disability products. These purchases greatly increase Oxford's distribution channels and enhance administrative capabilities in these markets. AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 4. NOTES AND LOANS During the second quarter of fiscal 1998, the Company extinguished $76.0 million of 10.27% interest-bearing notes originally due in fiscal 1999 through fiscal 2002. This resulted in an extraordinary loss of $4.1 million, net of tax of $2.3 million ($0.19 per share). In October 1997, the Company issued $300.0 million of Bond Back Asset Trust Certificates (BATs). The net proceeds were used to initially prepay floating rate indebtedness of the Company under revolving credit agreements. Subsequent to the funding of the BATs, the Company extinguished $256.0 million of 6.61% to 8.13% interest-bearing notes originally due in fiscal 1999 through fiscal 2010. This resulted in an extraordinary loss of $9.8 million, net of tax of $5.4 million ($0.45 per share). During the second quarter of fiscal 1997, the Company extinguished $76.3 million of debt and $86.2 million of long-term notes originally due in fiscal 1997 through fiscal 1999. This resulted in an extraordinary loss of $2.3 million, net of tax of $1.4 million ($0.09 per share). 5. CONTINGENT LIABILITIES AND COMMITMENTS During the nine months ended December 31, 1997, a subsidiary of U-Haul entered into eighteen transactions, whereby the Company sold rental trucks and subsequently leased back. The Company has guaranteed $25,884,000 of residual values for these assets at the end of the respective lease terms. U-Haul also entered into two transactions, whereby the Company sold and subsequently leased back computer equipment. Following are the lease commitments for the leases executed during the nine months ended December 31, 1997, which have a term of more than one year (in thousands): Year ended Lease March 31, Commitments ------------------------------ 1998 $ (5,330) 1999 (5,735) 2000 (5,735) 2001 4,262 2002 11,766 Thereafter 39,007 -------- $ 38,235 ======== During the nine months ended December 31, 1997, the Company has reduced future lease commitments by $83,713,000 through early termination of certain leases. Residual value guarantees were also reduced by $14,301,000 in connection with the terminations. In the normal course of business, the Company is a defendant in a number of suits and claims. The Company is also a party to several administrative proceedings arising from state and local provisions that regulate the removal and/or clean-up of underground fuel storage tanks. It is the opinion of management that none of such suits, claims or proceedings involving the Company, individually or in the aggregate, are expected to result in a material loss. AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 6. SUPPLEMENTAL CASH FLOWS INFORMATION The (increase) decrease in receivables, inventories and accounts payable and accrued liabilities net of other operating and investing activities follows: Nine months ended December 31, 1997 1996 --------------------- (in thousands) Receivables $ (12,262) 86,194 ===================== Inventories $ (12,448) (8,966) ===================== Accounts payable and accrued liabilities $ (38,065) (82,175) ===================== Income taxes paid in cash amounted to $1,367,000 and $4,780,000 for the nine months ended December 31, 1997 and 1996, respectively. Interest paid in cash amounted to $59,009,000 and $55,631,000 for the nine months ended December 31, 1997 and 1996, respectively. 7. EARNINGS PER SHARE Basic earnings per share are computed based on the weighted average number of shares outstanding for the year and quarterly periods, excluding shares of the employee stock ownership plan that have not been committed to be released. Preferred dividends include undeclared or unpaid dividends of the Company. Net income is reduced for preferred dividends for purposes of the calculation. The Company does not have any potential common stock that was not included in the calculation of diluted earnings per share because it is antidilutive in the current period. The following table reflects the calculation of the earnings per share (in thousands except per share data): Nine months ended Quarters ended December 31, December 31, 1997 1996 1997 1996 ---------------------- ---------------------- Earnings from operations before extraordinary loss on early extinguishment of debt $ 62,840 70,208 (5,390) (9,538) Less dividends on preferred shares 15,863 12,321 5,292 5,203 ---------------------- ---------------------- 46,977 57,887 (10,682) (14,741) Extraordinary loss on early extinguishment of debt (13,984) (2,319) (9,846) (315) ---------------------- ---------------------- Net earnings for per share calculation $ 32,993 55,568 (20,528) (15,056) ====================== ====================== Net earnings for per share: Earnings from operations before extraordinary loss on early extinguishment of debt $ 2.15 2.17 (.49) (.72) Extraordinary loss on early extinguishment of debt, net (.64) (.09) (.45) (.02) ---------------------- ---------------------- Net earnings $ 1.51 2.08 (.94) (.74) ====================== ====================== Weighted average common shares outstanding 21,890,250 26,683,455 21,901,521 20,359,869 ====================== ====================== AMERCO AND CONSOLIDATED SUBSIDIARIES Notes to Consolidated Financial Statements, Continued (Unaudited) 8. RELATED PARTIES During the nine months ended December 31, 1997, a subsidiary held various senior and junior notes with SAC Holding Corporation and its subsidiaries (SAC Holdings). The voting common stock of SAC Holdings is held by Mark V. Shoen, a major stockholder of the Company. The Company's subsidiary received principal payments of $3,725,000 and interest payments of $5,014,000 from SAC Holdings during the period. The Company currently manages the properties owned by SAC Holdings pursuant to a management agreement, under which the Company receives a management fee equal to 6% of the gross receipts from the properties. The Company received management fees of $1,387,000 during the nine months ended December 31, 1997. The management fee percentage is consistent with the fees received by the Company for other properties managed by the Company. 9. NEW ACCOUNTING STANDARDS On April 1, 1995, the Company implemented Statement of Position 93-7, "Reporting on Advertising Costs", issued by the Accounting Standards Executive Committee in December 1993. This statement of position provides guidance on financial reporting on advertising costs in annual financial statements. The Company is currently reviewing its implementation procedures. Other pronouncements issued by the Financial Standards Board with future effective dates are either not applicable or not material to the consolidated financial statements of the Company. 10. SUBSEQUENT EVENTS In January 1998, the Company redeemed 25,000 shares of its Series B Preferred Stock for $25,000,000. The shares were convertible under certain circumstances into 1,000,000 shares, subject to the Company's prior right to redeem the Series B Preferred Stock, of AMERCO's Common Stock. On February 3, 1998, the Company declared a cash dividend of $3,241,000 ($0.53125 per preferred share) to preferred stockholders of record as of February 13, 1998. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS The following table shows industry segment data from the Company's three primary industry segments: Moving and Storage Operations, Property and Casualty Insurance and Life Insurance. Moving and Storage Operations is composed of the operations of U-Haul, which consists of the rental of trucks, automobile-type trailers and self-storage space and sales of related products and services and AREC. Property and Casualty Insurance is composed of the operations of RWIC, which operates in various property and casualty lines. Life Insurance is composed of the operations of Oxford, which operates in various life, accident and health and annuity lines. The Company's U-Haul Moving and Storage Operations are seasonal and proportionately more of the Company's revenues and net earnings are generated in the first and second quarters of each fiscal year (April through September). Moving and Property and Adjustments Storage Casualty Life and Operations Insurance Insurance Eliminations Consolidated ----------------------------------------------------------- (in thousands) Nine months ended December 31, 1997 Revenues: Outside $ 954,823 124,771 31,741 - 1,111,335 Intersegment - 17,204 918 (18,122) - ---------------------------------------------------------- Total revenues 954,823 141,975 32,659 (18,122) 1,111,335 ========================================================== Operating profit $ 135,234 1,858 7,218 - 144,310 ============================================ Interest expense 49,301 -------- Pretax earnings from operations $ 95,009 ======== Identifiable assets $1,952,967 630,265 603,470 (328,757) 2,857,945 ========================================================== Moving and Property and Adjustments Storage Casualty Life and Operations Insurance Insurance Eliminations Consolidated ----------------------------------------------------------- (in thousands) Nine months ended December 31, 1996 Revenues: Outside $ 923,032 118,883 34,479 - 1,076,394 Intersegment - 12,291 746 (13,037) - ---------------------------------------------------------- Total revenues 923,032 131,174 35,225 (13,037) 1,076,394 ========================================================== Operating profit $ 123,981 12,864 8,770 - 145,615 ============================================ Interest expense 35,060 -------- Pretax earnings from operations $ 110,555 ======== Identifiable assets $1,769,568 625,786 635,252 (329,332) 2,701,274 ========================================================== NINE MONTHS ENDED DECEMBER 31, 1997 VERSUS NINE MONTHS ENDED DECEMBER 31, 1996 Moving and Storage Operations Revenues consist of rental revenues and net sales. Rental revenues increased by $30.0 million, approximately 3.8%, to $811.2 million in the first nine months of fiscal 1998. This increase primarily reflects the growth in truck rental revenues which benefited from transactional growth and higher average revenue per transaction. Net sales revenues were $143.9 million in the first nine months of fiscal 1998, which represents an increase of approximately 1.6% from the first nine months of fiscal 1997 net sales of $141.7 million. Revenue growth from the sale of moving support items (i.e. boxes, etc.) and propane resulted in a $4.8 million increase during the first nine months of fiscal 1998, which was partially offset by a net decrease in revenue from other sales categories. Cost of sales was $82.3 million in the first nine months of fiscal 1998, which represents a decrease of approximately 2.4% from $84.3 million for the same period in fiscal 1997. Lower material costs associated with the sale of gasoline which corresponds to a $1.2 million decline in gasoline sales was primarily responsible for the decline. Operating expenses increased to $677.4 million in the first nine months of fiscal 1998 from $663.6 million in the first nine months of fiscal 1997, an increase of approximately 2.1%. The change from the prior year primarily reflects a $7.9 million increase in insurance costs due to increased cost of risk and higher rental activity and a $4.7 million increase in lease expense due to new leasing activity within the rental fleet and with storage facilities. Collectively, all other operating expense categories increased by $1.2 million, approximately 0.2%, to $540.5 million. Net depreciation expense for the first nine months of fiscal 1998 was $59.9 million, as compared to $51.2 million in the same period of the prior year. Property and Casualty RWIC's gross premium writings for the nine months ended September 30, 1997 were $129.8 million, as compared to $133.0 million in the nine months ended September 30, 1996. This represents a decrease of $3.2 million, or 2.4%. As in prior periods, the rental industry market accounts for a significant share of total premiums, approximately 53.9% and 47.9% in the nine months ended September 30, 1997 and 1996, respectively. These writings include U-Haul customers, fleetowners and U-Haul as well as other rental industry insureds with similar characteristics. RWIC continues underwriting professional reinsurance via broker markets. Premiums in this area decreased during the nine months ended 1997 to 27.6% of total gross premiums, from comparable 1996 figures of 27.9%, due to the timing of premium recognition. RWIC continues its direct multiple peril coverage of various commercial properties and businesses in 1997. These premiums accounted for 13.2% of the total gross premiums for the nine months ended September 30, 1997 as compared to 9.5% for the same period in 1996. The increase is the result of planned business expansion. Premium writings in selected general agency lines were 5.3% of total gross premium writings for the period ended September 30, 1997 as compared to 14.7% in the same period of 1996. This decrease resulted from the cancellation of a general agency agreement in November 1996. Net earned premiums increased $10.4 million, or 9.6%, to $118.8 million for the nine months ended September 30, 1997, compared with premiums of $108.4 million for the period ended September 30, 1996. The increase was primarily due to planned business expansion in the rental industry and direct multiple peril markets, offset by a decrease of $4.8 million in general agency and assumed treaty reinsurance segments. The rental industry markets increased to $69.6 million or 58.6% over comparable 1996 figures of $57.0 million or 52.6% of total net earned premiums. The expansion of the direct multiple peril line resulted in an increase of $2.5 million over 1996's net earned premiums of $9.9 million for the period. The 1997 decrease of $3.0 million in the general agency lines resulted from the cancellation of an agency agreement in November 1996. Net investment income was $23.2 million for the period ended September 30, 1997, an increase of 2.2% over 1996 net investment income of $22.7 million. The marginal increase resulted from an increase in the amount of preferred stock in RWIC's portfolio. Underwriting expenses incurred were $140.1 million for the nine months ended September 30, 1997, an increase of $21.8 million, or 18.4% over 1996. Comparable underwriting expenses incurred for the first nine months of 1996 were $118.3 million. The increase is attributed to increased commission expense and losses incurred. Increased commission expense on the rental industry and direct multiple peril markets resulted from the planned increase in premium writings and represents $1.8 million of the increase. Losses incurred increased $19.8 million in the rental industry, general agency lines, and assumed treaty reinsurance segments, offset by a decrease in the direct multiple peril markets. Approximately $18.2 million of the increase in losses incurred is attributable to all programs and result from an increase in liabilities for unpaid claims due to estimated future losses on current and prior business, a component of losses incurred. Increased net paid losses in the general agency, assumed treaty reinsurance and rental industry lines, were offset by a decrease in the direct multiple peril segment. All other underwriting expenses increased in the aggregate by $2.0 million. RWIC completed the nine months ended September 30, 1997 with income before tax expense of $1.9 million as compared to $12.9 million for the same period ended September 30, 1996. This represents a decrease of $11.0 million, or 85.3% over 1996. Increased premium earnings and marginal investment income were offset by increased underwriting expenses as discussed above. Life Insurance Premiums from Oxford's reinsurance lines before intercompany eliminations were $13.1 million for the nine months ended September 30, 1997, a decrease of $2.5 million, or approximately 16.0% over 1996, and accounted for 68.0% of Oxford's premiums for the nine months ended September 30, 1997. These premiums are primarily from term life insurance and deferred annuity reinsurance agreements. Decreases in premiums are primarily from the aging of these reinsurance agreements. Premiums from Oxford's direct lines before intercompany eliminations were $6.2 million premiums for the nine months ended September 30, 1997, an increase of $0.5 million or 8.8% from the same period of 1996. This increase in direct premium is primarily attributable to the Company's disability and group life business. Oxford's direct business related to group life and disability coverage issued to employees of the Company for the nine months ended September 30, 1997 accounted for approximately 9.8% of premiums. Other direct lines, including credit life and health business, accounted for approximately 22.2% of Oxford's premiums for the nine months ended September 30, 1997. Net investment income before intercompany eliminations was $13.4 million and $13.9 million for the nine months ended September 30, 1997 and 1996, respectively. This decrease is due to a lower asset base resulting from a dividend paid to Oxford's parent. Benefits and expenses incurred were $25.4 million for the nine months ended September 30, 1997 and $26.5 million for the nine months ended September 30, 1996. Operating profit before tax and before intercompany elimination decreased by $1.6 million, or approximately 18.2%, in 1997 to $7.2 million, primarily due to the decrease in premium income and lower asset base attributable to the dividend paid to Oxford's parent. Interest Expense, net Interest expense net of interest income increased by $14.2 million to $49.3 million for the nine months ended December 31, 1997, as compared to $35.1 million for the nine months ended December 31, 1996. The increase is attributed to lower levels of interest income in the current fiscal year. Extraordinary Loss on Extinguishment of Debt During the second quarter of fiscal 1998, the Company extinguished $76.0 million of 10.27% interest-bearing notes originally due in fiscal 1999 through fiscal 2002. This resulted in an extraordinary loss of $4.1 million, net of tax of $2.3 million ($0.19 per share). During the third quarter of fiscal 1998, the Company extinguished $256.0 million of 6.61% to 8.13% interest-bearing notes originally due in fiscal 1999 through fiscal 2010. This resulted in an extraordinary loss of $9.8 million, net of tax of $5.4 million ($0.45 per share). During the second quarter of fiscal 1997, the Company extinguished $76.3 million of debt and $86.2 million of long-term notes originally due in fiscal 1997 through fiscal 1999. This resulted in an extraordinary loss of $2.3 million, net of tax of $1.4 million ($0.09 per share). Consolidated Group As a result of the foregoing, pretax earnings of $95.0 million were realized in the nine months ended December 31, 1997, as compared to $110.6 million for the same period in 1996. After providing for income taxes, earnings from operations were $62.8 million as compared to $70.2 million. Following deductions for an extraordinary loss from the early extinguishment of debt, net earnings for the nine months ended December 31, 1997 were $48.9 million, as compared to $67.9 million for the same period of the prior year. QUARTERLY RESULTS The following table presents unaudited quarterly results for the eleven quarters in the period beginning April 1, 1995 and ending December 31, 1997. The Company believes that all necessary adjustments have been included in the amounts stated below to present fairly, and in accordance with generally accepted accounting principles, the selected quarterly information when read in conjunction with the consolidated financial statements of the Company. The Company's U-Haul rental operations are seasonal and proportionally more of the Company's revenues and net earnings from its U-Haul rental operations are generated in the first and second quarters of each fiscal year (April through September). The operating results for the periods presented are not necessarily indicative of results for any future period (in thousands except for per share data). Quarter Ended ------------------------------------ Jun 30 Sep 30 Dec 31 1997 1997 1997 ------------------------------------ Total revenues $ 372,021 416,771 322,543 Earnings from operations before extraordinary loss on early extinguishment of debt (4)(5) 29,198 39,032 (5,390) Net earnings (loss) 29,198 34,894 (15,236) Weighted average common shares outstanding 21,879,156 21,890,072 21,901,521 Earnings from operations before extraordinary loss on early extinguishment of debt per common share 1.09 1.54 (.49) Net earnings (loss) per common share (1)(4)(5) 1.09 1.35 (.94) Quarter Ended --------------------------------------------- Jun 30 Sep 30 Dec 31 Mar 31 1996 1996 1996 1997 --------------------------------------------- Total revenues $ 361,053 398,449 316,892 308,105 Earnings from operations before extraordinary loss on early extinguishment of debt (3) 40,005 39,741 (9,538) (16,024) Net earnings (loss) 40,005 37,737 (9,853) (16,024) Weighted average common shares outstanding (2) 32,015,301 27,675,192 20,359,869 21,868,241 Earnings from operations before extraordinary loss on early extinguishment of debt per common share (3) 1.15 1.29 (0.72) (0.97) Net earnings (loss) per common share (1) (2) (3) 1.15 1.22 (0.74) (0.97) Quarter Ended --------------------------------------------- Jun 30 Sep 30 Dec 31 Mar 31 1995 1995 1995 1996 --------------------------------------------- Total revenues $ 340,331 381,746 305,105 298,656 Net earnings (loss) 15,177 35,332 7,701 2,184 Weighted average common shares outstanding (2) 37,958,426 37,931,825 36,796,961 32,554,458 Net earnings (loss) per common share (1) (2) 0.31 0.85 0.13 (0.04) ________________ (1)Net earnings (loss) per common share amounts were computed after giving effect to the dividends on the Company's Preferred Stock. (2)Reflects the acquisition of treasury shares acquired pursuant to the Shoen Litigation as discussed in Note 14 of Notes to Consolidated Financial Statements in Item 8 of the Company's Form 10-K for the year ended March 31, 1997. (3)During the second quarter of fiscal 1997, the Company extinguished $76.3 million of debt and $86.2 million of long- term notes originally due in fiscal 1997 through fiscal 1999. This resulted in an extraordinary loss of $2.3 million, net of tax of $1.4 million ($0.09 per share). (4)During the second quarter of fiscal 1998, the Company extinguished $76.0 million of 10.27% interest-bearing notes originally due in fiscal 1999 through fiscal 2002. This resulted in an extraordinary loss of $4.1 million, net of tax of $2.3 million ($0.19 per share). (5)During the third quarter of fiscal 1998, the Company extinguished $256.0 million of 6.61% to 8.13% interest-bearing notes originally due in fiscal 1999 through fiscal 2010. This resulted in an extraordinary loss of $9.8 million, net of tax of $5.4 million ($0.45 per share). QUARTER ENDED DECEMBER 31, 1997 VERSUS QUARTER ENDED DECEMBER 31, 1996 Moving and Storage Operations Revenues consist of rental revenues and net sales. Rental revenues increased by $7.6 million, approximately 3.3%, to $234.3 million in the third quarter of fiscal 1998. This increase reflects an $8.2 million increase in revenues from the rental of moving related equipment reflecting higher In-Townr transaction levels and an increase in the average revenue per transaction. Net sales revenues were $35.4 million in the third quarter of fiscal 1998, which represented an increase of approximately 2.6% from the third quarter of fiscal 1997 net sales of $34.5 million. Revenue growth from the sale of moving support items (i.e. boxes, etc.) and propane resulted in a $1.3 million increase during the quarter, which was offset by a $0.2 million net decrease in gasoline sales and other sales. Cost of sales was $20.7 million in the third quarter of fiscal 1998, which represents an decrease of 4.6% from $21.7 million for the same period in fiscal 1997. Lower material cost associated with the reduction of gasoline sales and a reduction in propane costs attributed to the decrease. Operating expenses decreased to $213.3 million in the third quarter of fiscal 1998 from $227.7 million in the third quarter of fiscal 1997, a decrease of approximately 6.3%. The decrease from the prior year resulted from management's increased focus on cost containment during off-peak rental periods. Net depreciation expense for the third quarter of fiscal 1998 was $20.8 million, as compared to $18.9 million in the same period of the prior year. Property and Casualty RWIC's gross premium writing for the quarter ended September 30, 1997 were $41.9 million as compared to $43.6 million in the third quarter of 1996. The rental industry market accounts for a significant share of total premiums, approximately 60.2% and 52.5% in the third quarters of 1997 and 1996, respectively. These writings include U-Haul, U-Haul customers and fleetowners as well as other rental industry insureds with similar characteristics. RWIC continues underwriting professional reinsurance via broker markets. Premiums in this area decreased during the third quarter of 1997 to 12.8% of total gross premiums, from comparable 1996 figures of 18.9%, due to the timing of premium recognition. RWIC continues its direct multiple peril coverage of various commercial properties and businesses in 1997. These premiums accounted for 15.6% of total gross premiums during third quarter 1997, as compared to 12.1% in 1996. This increase is the result of planned business expansion. Premiums in selected general agency lines accounted for an 11.4% share of written premiums in 1997 as compared to 16.5% share in 1996. This decrease resulted from the cancellation of a general agency agreement in November 1996. Net earned premiums decreased to $39.8 million for the quarter ended September 30, 1997, compared with $43.7 million for the quarter ended September 30, 1996. The premium decrease resulted from decreases in general agency, assumed treaty reinsurance and rental industry segments, partially offset by an increase in the direct multiple peril market. The cancellation of a general agency agreement in November 1996 resulted in a $1.7 million decrease from $2.4 million for the same period in 1996. The elimination of the premium accrual on the reinsurance program contributed $0.9 million to the decrease from 1996. Net earned premiums in the rental industry markets decreased $2.6 million from $27.1 million for the quarter ended September 1996. Partially offsetting this decrease was an increase of $1.3 million in net earned premiums on the direct multiple peril line due to planned business expansion. Net investment income was $7.9 million for the quarter ended September 30, 1997, an increase of 3.9% over 1996 net investment income of $7.6 million. The increase over 1996 resulted from increased cash flow from operations. Underwriting expenses incurred were $51.7 million for the quarter ended September 30, 1997, an increase of $3.6 million, or 7.5% over 1996. This change is attributable to increased losses incurred for the rental industry and direct multiple peril markets, offset by a decrease in commission expense on the assumed treaty reinsurance segment. Paid losses, a component of losses incurred, represented $4.2 million of the increase over 1996. The remaining losses incurred increase, $2.5 million, resulted from an increase in liabilities for unpaid claims due to estimated future losses for current and prior policies. The increases were partially offset by a $1.9 million decrease in commission expense resulting primarily from the elimination of the accrual for premiums and corresponding commissions on the assumed treaty reinsurance segment, as mentioned earlier. All other underwriting expenses decreased in the aggregate by $1.2 million. RWIC completed the third quarter of 1997 with income before tax expense of $(4.0) million as compared to $3.2 million for the comparable period ended September 30, 1996. This represents a decrease of $7.1 million, or 225.4% under 1996. Decreased earned premiums for the quarter and increased underwriting expenses were the primary cause. Life Insurance Premiums from Oxford's reinsurance lines before intercompany eliminations were $4.4 million for the quarter ended September 30, 1997, a decrease of $0.6 million or approximately 12.0% over 1996 and accounted for 66.7% of Oxford's premiums in 1997. These premiums are primarily from term life insurance and deferred annuity reinsurance agreements. Decreases in premiums are primarily from the aging of these reinsurance agreements. Premiums from Oxford's direct lines before intercompany eliminations were $2.2 million for the quarter ended September 30, 1997, an increase of $0.2 million or 10.0% from the prior year. This increase in direct premium is primarily attributable to group life and disability coverage issued to employees of the Company, which accounted for approximately 10.6% of premiums. Other direct lines, including credit life and health business, accounted for approximately 22.7% of Oxford's premiums for the quarter ended September 30, 1997. Net investment income before intercompany eliminations was $4.6 million and $4.5 million for the quarters ended September 30, 1997 and 1996, respectively. Benefits and expenses incurred were $7.7 million for the quarter ended September 30, 1997, a decrease of 10.5% under 1996. Comparable benefits and expenses incurred for the quarter ended September 30, 1996 were $8.6 million. This decrease is primarily due to decreases in death benefits, reserves and deferred acquisition cost amortization partially offset by increases in commissions and annuity benefits. Operating profit before tax and intercompany eliminations increased by $0.3 million or approximately 9.4% for the quarter ended September 30, 1997 to $3.5 million, primarily due to an increase in premium income and a decrease in death benefits. Interest Expense, net Interest expense, net of interest income, was $15.7 million for the quarter ended December 31, 1997 versus $17.3 million in the prior year's third quarter. This decrease was derived from a reduction in the average cost of borrowings due to the Company's debt restructuring program. Extraordinary Loss on Extinguishment of Debt During the third quarter of fiscal 1998, the Company extinguished $256.0 million of 6.61% to 8.13% interest-bearing notes originally due in fiscal 1999 through fiscal 2010. This resulted in an extraordinary loss of $9.8 million, net of tax of $5.4 million ($0.45 per share). Consolidated Group As a result of the foregoing, a pretax loss of $8.2 million was incurred for the quarter ended December 31, 1997, as compared to a pretax loss of $16.0 million for the same period in 1996. After providing for income taxes, a loss of $5.4 million was incurred during the third quarter of fiscal 1998 as compared to a loss of $9.6 million in the prior year. After providing for extraordinary losses from the early extinguishment of debt, a net loss of $15.2 million was incurred for the current quarter, as compared to a net loss of $9.9 million for the same period of the prior year. LIQUIDITY AND CAPITAL RESOURCES Moving and Storage Operations To meet the needs of its customers, U-Haul must maintain a large inventory of fixed asset rental items. At December 31, 1997, net property, plant, and equipment represented approximately 68.6% of total U-Haul assets and approximately 46.9% of consolidated assets. In the first nine months of fiscal 1998, gross capital expenditures for property, plant and equipment were $317.2 million, as compared to $159.7 million in the first nine months of fiscal 1997. These expenditures primarily reflect expansion of the rental truck fleet, purchase of trucks previously leased and real property acquisitions. The capital needs required to fund these acquisitions were funded with internally generated funds from operations, debt and lease financings. Cash flows from operating activities were $95.9 million during the nine months ended December 31, 1997, as compared to $76.1 million during the nine months ended December 31, 1996. The increase results from increased revenues offset by a slight increase in operating expenses. At December 31, 1997, total notes and loans outstanding were $1,074.4 million as compared to $983.6 million at March 31, 1997 and $933.4 million at December 31, 1996. Property and Casualty Cash flows from operating activities were $7.9 million and $(19.0) million for the nine months ended September 30, 1997 and September 30, 1996, respectively. The change resulted from decreased due from affiliates and paid losses recoverable, offset by increases in accounts receivable and other assets and decreases in other liabilities and federal income tax payable. Also contributing are increased loss and expense reserves and a smaller unearned premium decrease than for the quarter ended September 30, 1996. The short-term investment portfolio was $1.5 million at September 30, 1997. This balance reflects funds in transition from maturity proceeds to long-term investments. The structure of the long-term portfolio is designed to match future liability cash needs. Capital and operating budgets allow RWIC to schedule cash needs in accordance with investment and underwriting proceeds. RWIC maintains a diversified securities investment portfolio, primarily in bonds at varying maturity levels. Approximately 95.0% of the portfolio is comprised of investment grade securities. The maturity distribution is designed to provide sufficient liquidity to meet future cash needs. Current liquidity remains strong, with RWIC having 0.2% more invested assets than total liabilities. Stockholder's equity increased $3.2 million from $192.3 million at December 31, 1996 to $195.5 at September 30, 1997. RWIC considers current shareholder's equity to be adequate to support future growth and absorb unforeseen risk events. RWIC does not use debt or equity issues to increase capital and, therefore, has no exposure to capital market conditions. Life Insurance Oxford's primary sources of cash are premiums, deferred annuity sales and investment income. The primary uses of cash are operating costs and benefit payments to policyholders. Matching the investment portfolio to the cash flow demands of the types of insurance being written is an important consideration. Benefit and claim statistics are continually monitored to provide projections of future cash requirements. Cash flows from operating activities were $6.4 million and $13.7 million for the nine months ended September 30, 1997 and 1996, respectively. In 1997, cash flows provided(used) by financing activities were approximately $(9.5) million compared to $22.2 million for the nine months ended September 30, 1996. Cash flows from deferred annuity sales are a component of financing activities and result in the purchase of fixed maturities, which are a component of investing activities. In addition to cash flows from operating and financing activities, a substantial amount of liquid funds is available through Oxford's short-term portfolio. At September 30, 1997 and 1996, short-term investments amounted to $6.1 million and $12.5 million, respectively. Management believes that the overall sources of liquidity will continue to meet foreseeable cash needs. Stockholder's equity of Oxford decreased to $82.4 million in 1997 from $100.4 million in 1996 as the result of cash dividends of $33.9 million paid to its parent on December 31, 1996. On November 18, 1997, Oxford purchased all of the issued and outstanding shares of Encore Financial, Inc. and its subsidiaries (Encore). Encore's primary subsidiary is North American Insurance Company (NAI). NAI is an insurance company domiciled in the state of Wisconsin whose premium volume is primarily derived from the sale of credit life and disability products. On November 24, 1997 Oxford purchased all of the issued and outstanding shares of Safe Mate Life Insurance Company, domiciled in the state of Texas, whose premium volume is derived from the sale of credit life and disability products. These purchases greatly increase Oxford's distribution channels and enhance administrative capabilities in these markets. Applicable laws and regulations of the State of Arizona require the Company's insurance subsidiaries to maintain minimum capital and surplus determined in accordance with statutory accounting practices in the amount of $600,000. In addition, the amount of dividends that can be paid to shareholders by insurance companies domiciled in the State of Arizona is limited. Any dividend in excess of the limit requires prior regulatory approval. Statutory surplus which can be distributed as dividends without regulatory approval is zero at September 30, 1997. These restrictions are not expected to have a material adverse effect on the ability of the Company to meet its cash obligations. Consolidated Group During each of the fiscal years ending March 31, 1998, 1999 and 2000, U-Haul estimates gross capital expenditures will average approximately $250-$300 million as a result of the expansion of the rental truck fleet and self-storage locations. This level of capital expenditures, combined with an average of approximately $75 million in annual long-term debt maturities during this same period, are expected to create annual average funding needs of approximately $325-$375 million. Management estimates that U-Haul will fund between 75% and 88% of these requirements with internally generated funds, including proceeds from the disposition of older trucks and other asset sales. The remainder of the anticipated capital expenditures are expected to be financed through existing credit facilities, new debt placements, lease fundings and equity offerings. Credit Agreements The Company's operations are funded by various credit and financing arrangements, including unsecured long-term borrowings, unsecured medium-term notes and revolving lines of credit with domestic and foreign banks. Principally to finance its fleet of trucks and trailers, the Company routinely enters into sale and leaseback transactions. As of December 31, 1997, the Company had $1,074.4 million in total notes and loans outstanding and unutilized committed lines of credit of approximately $180.0 million. In October 1997, the Company issued $300.0 million of Bond Back Asset Trust Certificates (BATs). The net proceeds were initially used to prepay floating rate indebtedness of the Company under revolving credit agreements. Subsequent to the funding of the BATs, the Company extinguished $256.0 million of 6.61% to 8.13% in interest-bearing notes originally due in fiscal 1999 through fiscal 2010. Certain of the Company's credit agreements contain restrictive financial and other covenants, including, among others, covenants with respect to incurring additional indebtedness, maintaining certain financial ratios and placing certain additional liens on its properties and assets. At December 31, 1997, the Company was in compliance with these covenants. The Company is further restricted in the issuance of certain types of preferred stock. The Company is prohibited from issuing shares of preferred stock that provide for any mandatory redemption, sinking fund payment, or mandatory prepayment, or that allow the holders thereof to require the Company or any subsidiary of the Company to repurchase such preferred stock at the option of such holders or upon the occurrence of any event or events without the consent of its lenders. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. a. Exhibits 3.1 Restated Articles of Incorporation (1) 3.2 Restated By-Laws of AMERCO as of August 27, 1996 (2) 4.1 AMERCO and Citibank, N.A. Trustee Second Supplemental Indenture Dated as of October 22, 1997 4.2 Calculation Agency Agreement 4.3 6.65%-AMERCO Series 1997 A Bond Backed Asset Trust Certificates ("BATs") Due October 15, 1999 27 Financial Data Schedule b. Reports on Form 8-K. No report on Form 8-K was filed for the quarter ended December 31, 1997. _____________________________________ (1) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1992, file no. 0-7862. (2) Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1996, file no. 0-7862. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERCO ___________________________________ (Registrant) Dated: February 12, 1998 By: /S/ GARY B. HORTON ___________________________________ Gary B. Horton, Treasurer (Principal Financial Officer) EX-4.1 2 AMERCO/CITIBANK SECOND SUPPLEMENTAL INDENTURE ______________________________________________________________________________ AMERCO TO CITIBANK, N.A., TRUSTEE ________________ SECOND SUPPLEMENTAL INDENTURE DATED AS OF OCTOBER 22, 1997 TO INDENTURE DATED AS OF MAY 1, 1996 ________________ 6.65% SENIOR NOTES, SERIES 1997-A DUE 2029 6.89% SENIOR NOTES, SERIES 1997-B DUE 2010 7.135% SENIOR NOTES, SERIES 1997-C DUE 2032 ______________________________________________________________________________ SECOND SUPPLEMENTAL INDENTURE, dated as of the 22nd day of October 1997 (the "SUPPLEMENTAL INDENTURE"), between AMERCO, a corporation duly organized and existing under the laws of the State of Nevada (herein called the "COMPANY"), having its principal office at 1325 Airmotive Way, Suite 100, Reno, Nevada 89502-3239, and CITIBANK, N.A., a national banking association, existing under the laws of the United States of America, as Trustee (herein called the "TRUSTEE") under the Indenture dated as of May 1, 1996 (the "DEBT SECURITIES INDENTURE"), between the Company and the Trustee. RECITALS OF THE COMPANY The Company has executed and delivered the Debt Securities Indenture to the Trustee to provide for the issuance of its unsecured debentures, notes or other evidences of indebtedness, to be issued from time to time in one or more series as determined by the Company in accordance with the terms of the Debt Securities Indenture, in an unlimited aggregate principal amount which may be authenticated and delivered thereunder as provided in the Debt Securities Indenture. Pursuant to the terms of the Debt Securities Indenture, the Company desires to provide for the establishment of three new series of notes to be known as its 6.65% Senior Notes, Series 1997-A due October 15, 2029 (the "SERIES A NOTES"), its 6.89% Senior Notes, Series 1997-B due October 15, 2010 (the "SERIES B NOTES") and its 7.135% Senior Notes, Series 1997-C due October 15, 2032 (the "SERIES C NOTES" and, together with the Series A Notes and Series B Notes, the "NOTES"), the form and substance of such Notes and the terms, provisions and conditions thereof to be set forth as provided in the Debt Securities Indenture and this Supplemental Indenture. All things necessary to make this Supplemental Indenture a valid agreement of the Company, in accordance with its terms, have been done. NOW THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Notes by the Holders thereof (as defined below), it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Notes as follows: ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF SPECIAL APPLICATION SECTION 101. Definitions. For all purposes of this Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) terms used herein and not otherwise defined herein shall have the respective meanings assigned thereto in the Debt Securities Indenture, whether by cross-reference or otherwise; (2) the words "herein", "hereof" and "hereunder" and other words of similar import, when used in this Supplemental Indenture, refer to this Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision thereof; and (3) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular, as follows: "ATTRIBUTABLE DEBT" means indebtedness for money borrowed deemed to be incurred in respect of a Sale and Leaseback Transaction and shall be, at the date of determination, the present value (discounted at the actual rate of interest implicit in such transaction, compounded annually), of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction. "CAPITAL STOCK" means, with respect to any person, any and all shares or other equivalents (however designated) of corporate stock, partnership interests, or any other participation, right, warrant, option, or other interest in the nature of an equity interest in such person, but excluding debt securities convertible or exchangeable into such equity interest. "CAPITALIZED LEASE" means any lease the obligation for Rentals with respect to which is required to be capitalized on a consolidated balance sheet of the lessee and its subsidiaries in accordance with GAAP. "CONSOLIDATED NET TANGIBLE ASSETS" means, as of the date of any determination thereof, the total amount of all assets of the Company and its Consolidated Subsidiaries (less depreciation, depletion and other properly deductible valuation reserves) after deducting Intangibles. "CONSOLIDATED SUBSIDIARY" means any Subsidiary of the Company or of any Consolidated Subsidiary which is consolidated with the Company for financial reporting purposes in accordance with GAAP. "DEBT" of the Company or any Subsidiary thereof means, collectively, (i) any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company or any Subsidiary (excluding any indebtedness for money borrowed by the Company from any Affiliate thereof) or (ii) any mortgage, indenture or instrument (including the Debt Securities Indenture) under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company (excluding any indebtedness for money borrowed by the Company from any Affiliate thereof) or any Subsidiary (excluding any indebtedness for money borrowed by any Subsidiary from any Affiliate thereof), whether such indebtedness now exists or shall hereafter be created. "DEFAULT" means an event which, with the giving of notice or the lapse of time, or both, would constitute an Event of Default. "DOLLARS" means the lawful currency of the United States of America. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "GAAP" means United States generally accepted accounting principles as in effect as of the date of determination, unless otherwise stated. "GOOD FAITH CONTEST" means, with respect to any tax, assessment, Lien, obligation, claim, liability, judgment, injunction, award, decree, order, law, regulation, statute or similar item, any challenge or contest thereof by appropriate proceedings timely initiated in good faith by the Person subject thereto for which adequate reserves therefor have been taken in accordance with GAAP. "INDEBTEDNESS FOR MONEY BORROWED", when used with respect to the Company or any Subsidiary, means any obligation of, or any obligation guaranteed by, the Company or any Subsidiary for the repayment of borrowed money, whether or not evidenced by bonds, debentures, notes or other written instruments, and any deferred obligation of, or any such obligation guaranteed by, the Company for the payment of the purchase price of property or assets. "INTANGIBLES" means all Intellectual Properties and all goodwill, patents, trade names, trademarks, copyrights, franchises, experimental expense, organization expense, unamortized debt discount and expense, deferred assets (other than prepaid insurance, prepaid taxes, prepaid advertising, prepaid licensing and other similar expenses prepaid in the ordinary course of business), amounts invested in or advanced to or equity in the Company's Subsidiaries other than Consolidated Subsidiaries less any writedowns thereof, the excess of cost of shares acquired over book value of related assets, any increase in the value of a fixed asset arising from a reappraisal, revaluation or write-up thereof, and such other assets as are properly classified as "intangible assets" in accordance with GAAP. "INTELLECTUAL PROPERTIES" means all material patents, patent applications, copyrights, copyright applications, trade secrets, trade names and trademarks, technologies, methods, processes or other proprietary properties or information which are used by the Company and its Consolidated Subsidiaries in the conduct of their business and are either owned by them or are used, employed or practiced by them under valid and existing licenses, grants, "shop rights", or other rights. "ISSUE DATE" means the date of initial issuance of the Notes under this Supplemental Indenture and the Debt Securities Indenture. "LIEN" means any interest in property securing an obligation owed to, or a claim by, a person other than the owner of the property, whether such interest is based on the common law, statute or contract, and including but not limited to the security interest or lien arising from a mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. The term "LIEN" shall include reservations, exceptions, encroachments, easements, rights-of- way, covenants, conditions, restrictions, bankers' liens, setoff and similar arrangements, leases and other title exceptions and encumbrances (including, with respect to stock, stockholder agreements, voting trust agreements, buy-back agreements and all similar arrangements) affecting property. For the purposes hereunder, the Company or a Consolidated Subsidiary shall be deemed to be the owner of any property which it has acquired or holds subject to a conditional sale agreement, Capitalized Lease or other arrangement pursuant to which title to the property has been retained by or vested in some other person for security purposes and such retention or vesting shall constitute a Lien. "PRIORITY DEBT" means (i) indebtedness for money borrowed of any Consolidated Subsidiary, except indebtedness for money borrowed issued to and held by the Company or a Wholly-Owned Consolidated Subsidiary, and (but without duplication) (ii) Secured Indebtedness. "RENTALS" means and includes, as of the date of any determination thereof, all fixed payments (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the property) payable by the Company or a Consolidated Subsidiary, as lessee or sublessee under a lease of real or personal property, but shall be exclusive of any amounts required to be paid by the Company or a Consolidated Subsidiary (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes and similar charges. Fixed rents under any so-called "percentage leases" shall be computed solely on the basis of the minimum rents, if any, required to be paid by the lessee regardless of sales volume or gross revenues. "SALE AND LEASEBACK TRANSACTION" has the meaning specified in Section 602 hereof. "SECURED INDEBTEDNESS" means any indebtedness for money borrowed, whether of the Company or any Consolidated Subsidiary, secured by any Lien on any property of the Company or any Consolidated Subsidiary. "SUBSIDIARY" means a person more than 50% of the outstanding Voting Stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. "VOTING STOCK" of a person means all classes of Capital Stock of such person then outstanding and normally entitled to vote in the election of directors (or persons performing similar functions) or to direct the business and affairs of the issuer of such Capital Stock in the absence of contingencies. "WHOLLY-OWNED CONSOLIDATED SUBSIDIARY" means any Consolidated Subsidiary all of the outstanding Capital Stock of which (except for directors' qualifying shares to the extent required by applicable law) is owned by the Company and/or its Wholly-Owned Consolidated Subsidiaries. SECTION 102. Debt Securities Indenture. The Debt Securities Indenture, as supplemented by this Supplemental Indenture, is in all respects ratified and confirmed, and this Supplemental Indenture shall be deemed part of the Indenture in the manner and to the extent herein and therein provided. SECTION 103. Counterparts. This Supplemental Indenture may be executed in any number of counterparts each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. ARTICLE TWO FORM OF THE NOTES SECTION 201. Form of the Face of the Notes. The face of the Notes is to be substantially in the following form: [To be included on the face of any Note that is a Global Security: This Note is a Global Security within the meaning of the Supplemental Indenture hereinafter referred to and is registered in the name of a Depository or a nominee of a Depository or a successor depository. This Note is not exchangeable for Notes registered in the name of a Person other than the Depository or its nominee except in the limited circumstances described in the Debt Securities Indenture hereinafter referred to, and no transfer of this Note (other than a transfer of this Note as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository) may be registered except in the limited circumstances described in the Supplemental Indenture.] [To be included on the face of any Note that is a Global Security where DTC is the Depository: Unless this Note is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Company (as defined below) or its agent for registration of transfer, exchange or payment, and any certificate issued is registered int he name of Cede & Co. or in such other name as is requested by an authorized representative of DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.] AMERCO ___% Senior Notes, Series 1997-[A][B][C] Due [2029][2010][2032] No.__________ $__________ CUSIP No. __________ AMERCO, a corporation duly organized and existing under the laws of Nevada (herein called the "COMPANY", which terms includes any successor Person under the Debt Securities Indenture hereinafter referred to), for value received, hereby promises to pay to ________________ or registered assigns, the principal sum of __________ _____________ on October 15, [2029][2010][2032] and to pay interest thereon from October 22, 1997 or from the most recent Interest Payment Date on which interest has been paid or duly provided for, semi-annually on April 15 and October 15 of each year (each an "INTEREST PAYMENT DATE") commencing April 15, 1998, at the rate of ___% per annum (subject to reset, effective as of the Interest Reset Effective Date (as defined herein), pursuant to the Calculation Agency Agreement referred to herein, as set forth in more detail on the reverse hereof), until the principal hereof is paid or made available for payment, and (to the extent that the payment of such interest shall be legally enforceable) at a rate per annum equal to 2% plus the rate per annum at which interest otherwise accrues hereunder on any overdue principal (and premium, if any) and on any overdue installment of interest. All capitalized terms used herein shall have the respective meanings assigned thereto in the Supplemental Indenture dated as of October 22, 1997 (the "SUPPLEMENTAL INDENTURE") between the Company and Citibank, N.A., as Trustee (the "TRUSTEE", which term includes any successor trustee under the Debt Securities Indenture referred to below), whether by cross-reference or otherwise. The Supplemental Indenture is one of the supplemental indentures referred to in and executed in accordance with the terms of the Debt Securities Indenture dated as of May 1, 1996 between the Company and the Trustee. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Debt Securities Indenture and the Supplemental Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Note) is registered at the close of business on the Regular Record Date for such interest, which shall be April 1 or October 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner, all as more fully provided in said Debt Securities Indenture and Supplemental Indenture. Payment of the principal of (and premium, if any) and any such interest on this Note will be made in the manner set forth in the Supplemental Indenture, in immediately available funds in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, provided that the Company may at its option pay interest by check in the case of a Note that is not a Global Security. In the event that the Maturity or Interest Payment Date is not a Business Day, then payment of interest payable on such Maturity or Interest Payment Date, as the case may be, shall be made on the next succeeding Business Day (and without any interest or other payment in respect of any such delay), in each case with the same force and effect as if made on such Maturity or Interest Payment Date. Reference is hereby made to the further provisions of this Note set forth on the reverse hereof and of the Supplemental Indenture and the Debt Securities Indenture, which further provisions shall for all purposes have the same effect as if set forth at this place. In the event of any conflict between this Note on one hand and the Supplemental Indenture and the Debt Securities Indenture, on the other, the terms of the Supplemental Indenture and the Debt Securities Indenture shall govern. Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Note shall not be entitled to any benefit under the Debt Securities Indenture or the Supplemental Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: _______________ AMERCO By________________________ Title: ATTEST: By_____________________ Title: SECTION 202. Form of the Reverse of the Notes. The Reverse of the Notes is to be substantially in the following form: This Note is one of a duly authorized issue of securities of the Company (the "NOTES") issued under the Debt Securities Indenture and the Supplemental Indenture, to which Debt Securities Indenture and Supplemental Indenture reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is one of the series designated on the face hereof, limited in aggregate principal amount to $100,000,000. In the event that a Note is purchased in part only, a new Note or Notes of like tenor for the unpurchased portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof, provided that each new note issued shall be in a principal amount in denominations of $100,000 and integral multiples thereof. The rate of interest on the Notes is subject to reset as provided in the Calculation Agency Agreement dated as of October 22, 1997 (as modified and supplemented and in effect from time to time, the "CALCULATION AGENCY AGREEMENT"), between the Company and Citicorp Securities, Inc., as calculation agent (in such capacity, together with its successors in such capacity, the "CALCULATION AGENT"). As provided in Section 401 of the Supplemental Indenture, upon receipt by the Company of notice from the Calculation Agent of its calculation of the rate of interest (the "RESET RATE") at which interest is to accrue in respect of the Notes (other than in respect of overdue amounts), effective from and including October 15, [1999] 1 [2000] 2 [2002] 3 (or, if _______________________________ 1Include in Series A Note. 2Include in Series B Note. 3Include in Series C Note. such date is not a Business Day, from and including the next succeeding Business Day) (the "INTEREST RESET EFFECTIVE DATE"), the Company is required, by delivery of an Officers' Certificate to the Trustee on or prior to the Interest Reset Effective Date, to notify the Trustee of such Reset Rate (whereupon the Trustee is required to give notice of such Reset Rate to each Holder of record on such Interest Reset Effective Date). Any such change in the rate at which interest is to accrue in respect of the Notes shall be effective for the period from and including the Interest Reset Effective Date to but excluding Maturity, subject to receipt by the Company from the Calculation Agent of notice of such Reset Rate. The Notes shall not be subject to any sinking fund. If (a) the Call Options (as defined below) are not exercised at or prior to 4:00 p.m. New York City time on October [__], [1999] 4 [2000] 5 [2002] 6 (or, if such date is not a Business Day, on the next preceding Business Day) (the "CALL EXERCISE DATE"), or (b) following any such exercise, the Callholders (as defined below) fail to make payment in full when due for the purchase of the Notes in accordance with the Call Options (either such event, a "PURCHASE TRIGGER EVENT"), then any Holder of a Note may, by irrevocable written notice to the Company (which shall promptly notify the Trustee) given not later than two Business Days after the Purchase Trigger Event, require that the Company, not earlier than the Interest Reset Effective Date and not later than the date one Business Day after the date of such notice, purchase such Note at a purchase price (paid through the Trustee) equal to (i) the unpaid principal amount of such Note plus (ii) all unpaid interest on the unpaid principal amount of such Note accrued to but excluding the Interest Reset Effective Date plus (iii) interest (calculated at the rate applicable to payments of overdue principal of such Note prior to the Interest Reset Effective Date) on the unpaid principal amount of such Note, and on any accrued and unpaid interest, accrued from and including the Interest Reset Effective Date to but excluding the date of payment of such purchase price. As used herein, (A) "CALL OPTIONS" means each of (i) the call option, dated as of October 22, 1997, pursuant to which Citibank, N.A. (or a successor Callholder) has the right, but not the obligation, to purchase Notes on the Call Exercise Date at the purchase price specified therein and (ii) the call option, dated as October 22, 1997, pursuant to which NationsBank, N.A. (or a successor Callholder) has the right, but not the obligation, to purchase Notes on the Call Exercise Date at the purchase price specified therein, in each case, subject to and in accordance with the ISDA Master Agreement entered into between the Callholder party thereto and the initial Holder of the Notes; and (B) "CALLHOLDERS" means, with respect to the first Call Option, Citibank, N.A. and, with respect to the second Call Option, NationsBank, N.A., in each case, together with their respective transferees and successors. In the event that a Holder elects to require the Company to purchase a Note pursuant to the immediately preceding paragraph, the Company may, in lieu of purchasing the relevant Note, with notice to the Trustee, identify a third party who will agree to purchase the Note on the purchase date under the same terms and conditions as if the Notes were purchased by the Company. The Company will not _______________________________ 4Include in Series A Note. 5Include in Series B Note. 6Include in Series C Note. be relieved of its obligations to purchase a Note on any purchase date specified above if such third party fails to purchase such Note. The Notes shall be general unsecured obligations of the Company. The Notes shall rank pari passu in right of payment with all senior indebtedness of the Company and senior in right of payment to any subordinated indebtedness of the Company. If an Event of Default with respect to the Notes shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Debt Securities Indenture and the Supplemental Indenture. The Debt Securities Indenture and the Supplemental Indenture permit, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes to be effected at any time by the Company and the Trustee with the consent of the Holders of a majority of aggregate principal amount or at least two- thirds of the aggregate principal amount, as applicable, of the Notes at the time Outstanding. The Debt Securities Indenture and the Supplemental Indenture also contain provisions permitting the Holders of specified percentages in principal amount of the Notes at the time Outstanding, on behalf of the Holders of all Notes, to waive compliance by the Company with certain provisions of the Debt Securities Indenture and the Supplemental Indenture and certain past defaults under the Debt Securities Indenture and the Supplemental Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. No reference herein to the Debt Securities Indenture and the Supplemental Indenture and no provision of this Note or of the Debt Securities Indenture or the Supplemental Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Debt Securities Indenture and the Supplemental Indenture, and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Note are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Debt Securities Indenture and the Supplemental Indenture contain provisions for defeasance at any time after the Interest Reset Effective Date of (a) the entire amount of the Notes and (b) certain restrictive covenants and related Events of Default, in each case, upon compliance with certain conditions set forth therein. The Notes are issuable only in registered form without coupons in denominations of $100,000 and any integral multiple thereof. As provided in the Debt Securities Indenture and the Supplemental Indenture and subject to certain limitations therein set forth, Notes are exchangeable for a like aggregate principal amount of Notes of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. This Note shall be governed by and construed in accordance with the laws of the State of New York. TRANSFER NOTICE FOR VALUE RECEIVED, the undersigned registered Holder hereby sell(s), assign(s) and transfer(s) unto Insert Taxpayer Identification Number: __________________________________________ Please print or type name and address, including the zip code of the assignee: ___________________________________________ the attached Note and all rights thereunder, hereby irrevocably constituting and appointing ___________________________________________ as attorney to transfer said Note on the books of the Company with full power and substitution in the premises. Date:_____________________ ___________________________________ NOTE: The signature to this assignment must correspond with the name as written upon the face of the attached Note in every particular, without alteration or change whatsoever. SECTION 203. Form of the Certificate of Authentication. The Trustee's Certificate of Authentication to be endorsed on the Notes is to be substantially in the following form: CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated therein referred to in the within-mentioned Debt Securities Indenture. CITIBANK, N.A., as Trustee By:__________________________ Authorized Signatory ARTICLE THREE GENERAL TERMS AND CONDITIONS OF THE NOTES SECTION 301. Designation of Securities and Amounts Thereof. There shall be and is hereby authorized three series of securities designated the "6.65% Senior Notes, Series 1997-A due October 15, 2029", the "6.89% Senior Notes, Series 1997-B due October 15, 2010" and the "7.135% Senior Notes, Series 1997-C due October 15, 2032", each series being limited in aggregate principal amount to $100,000,000. SECTION 302. Payment of Principal and Interest. The Series A Notes, the Series B Notes and the Series C Notes shall mature and the principal thereof shall be due and payable in Dollars to the Holders thereof (subject to Section 304 hereof), together with all accrued and unpaid interest thereon, on October 15, 2029, October 15, 2010 and October 15, 2032, respectively (the "MATURITY" for the purposes of the Notes under this Supplemental Indenture). Subject to the next succeeding paragraph, the Series A Notes, the Series B Notes and the Series C Notes shall bear interest at 6.65%, 6.89% and 7.135% per annum, respectively, subject to the provisions of the following paragraph, from and including October 22, 1997 or from the most recent Interest Payment Date (defined below) on which interest has been paid or provided for until the principal thereof becomes due and payable, and on any overdue principal and (to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the same rate per annum. Interest on the Notes shall be payable semiannually in arrears in Dollars on April 15 and October 15 of each year, commencing on April 15, 1998 (each such date, an "INTEREST PAYMENT DATE" for the purposes of the Notes under this Supplemental Indenture). Payments of interest shall be made to the Person in whose name a Note (or predecessor Note) is registered (which shall initially be the Depository, as set forth in Section 304 hereof) at the close of business on the April 1 or October 1, as the case may be, next preceding such Interest Payment Date (each such date, a "REGULAR RECORD DATE" for the purposes of the Notes under this Supplemental Indenture). The rate of interest on the Notes is subject to reset as provided in the Calculation Agency Agreement dated as of October 22, 1997 (as modified and supplemented and in effect from time to time, the "CALCULATION AGENCY AGREEMENT"), between the Company and Citicorp Securities, Inc., as calculation agent (in such capacity, together with its successors in such capacity, the "CALCULATION AGENT"). Upon receipt by the Company of notice from the Calculation Agent of its calculation of the rate of interest (the "RESET RATE") at which interest is to accrue in respect of each Series of Notes (other than in respect of overdue amounts), effective from and including October 15, 1999 7, 2000 8 or 2002 9 (or, if such date is not a Business Day, from and including the next succeeding Business Day) (the "INTEREST RESET EFFECTIVE DATE"), the Company shall, by delivery of an Officers' Certificate to the Trustee on or prior to the Interest Reset Effective Date for such Series, notify the Trustee of such Reset Rate (and the Trustee shall give notice of such Reset Rate to each Holder of record on such Interest Reset Effective Date). Any such change in the rate at which interest is to accrue in respect of any Series of Notes shall be effective for the period from and including the Interest Reset Effective Date to but excluding Maturity, subject to receipt by the Company from the Calculation Agent of notice of such Reset Rate. For so long as the Notes are represented by Global Securities, all payments of principal and interest shall be made by the Company in immediately available funds in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, provided that the Company may at its option pay interest by check in the case of a Note that is not a Global Security. In the event that the Maturity or any Interest Payment Date is not a Business Day, then payment of interest payable on such Maturity or Interest Payment Date, as the case may be, shall be made on the next succeeding Business Day (and without any interest or other payment in respect of any such delay), in each case with the same force and effect as if made on such Maturity or Interest Payment Date. For so long as and to the extent that the Notes are represented by a Global Security pursuant to Section 304 hereof, payments of principal and interest shall be made in accordance with said Section 304. All other payments of principal and interest shall be made to the registered Holders thereof by a Paying Agent that the Company shall maintain, in the event that definitive Notes shall have been issued, in The City of New York. The Notes shall not be subject to any sinking fund. Holders of the Notes will have the right under certain circumstances specified in Section 401 to require that the Company purchase the Notes. SECTION 303. Ranking. The Notes shall be general unsecured obligations of the Company. The Notes shall rank pari passu in right of payment with all senior indebtedness of the Company and senior in right of payment to any subordinated indebtedness of the Company. _______________________________ 7Series A Note. 8Series B Note. 9Series C Note. SECTION 304. Book-Entry System The Notes shall be represented by one or more permanent global notes (each, a "GLOBAL SECURITY") deposited with, or on behalf of, The Depositary Trust Company, as Depository under the Debt Securities Indenture and this Supplemental Indenture (the "DEPOSITORY"), and registered in the name of the Depository's nominee. Except as set forth in the following paragraph, (1) owners of beneficial interests in a Global Security shall not be entitled to have Notes represented by such Global Securities registered in their names, will not receive or be entitled to receive physical delivery of Notes in definitive form and shall not be considered the owners or Holders thereof under the Debt Securities Indenture and this Supplemental Indenture and (2) each Global Security may be transferred, in whole and not in part, only to another nominee of the Depository or to a successor of the Depository or its nominee. Accordingly, beneficial interests in the Notes shall be shown on, and transfers thereof shall be effected only through, records maintained by the Depository and its participants. Notwithstanding any provisions of Section 305 of the Debt Securities Indenture, no Note that is a Global Security shall be registered for transfer or exchange, or be authenticated and delivered, and owners of beneficial interests in any Global Security will not be entitled to receive Notes in definitive form and will not be considered Holders of Notes unless (1) the Depository notifies the Company that it is unwilling or unable to continue as Depository for such Global Security or if at any time the Depository ceases to be a clearing agency registered under the Exchange Act, (2) the Company executes and delivers to the Trustee a Company Order that such Global Security shall be so exchangeable or (3) there shall have occurred and be continuing a Default or an Event of Default. In such circumstances, upon surrender by the Depository or a successor depository of any Global Security, Notes in definitive form will be issued to each Person that the Depository or successor depository identifies as the beneficial owner of the related Notes. Upon such issuance, the Trustee is required to register such Notes in the name of, and cause such Notes to be delivered to, such Person or Persons (or nominees thereof). Such Notes would be issued in fully registered form without coupons, in denominations of $100,000 and integral multiples thereof. The Depository shall be permitted to take any action permitted to be taken by an owner or Holder of Notes only at the direction of one or more participants in the Depository, as it may from time to time determine. Principal and interest payments on Notes registered in the name of or held by the Depository or its nominee shall be made to the Depository or its nominee, as the case may be, as the registered owner of the Global Security representing such Notes. The Company and the Trustee shall treat the Persons in whose names the Notes are registered as the Holders of such Notes for the purpose of receiving payment of principal and interest on such Notes and for all other purposes whatsoever. Therefore, none of the Company, the Trustee or any Paying Agent has direct responsibility or liability for the payment of principal and interest on the Notes to owners of beneficial interests in any Global Security. Payments by direct and indirect participants in the Depository shall be the responsibility of such participants. The Notes shall trade in the Depository's Same-Day Funds Settlement System until Maturity (or until they are subject to purchase pursuant to Section 401 hereof or acceleration pursuant to Article Five of the Debt Securities Indenture), and secondary market trading activity in the Notes may be required by the Depository to settle in immediately available funds. ARTICLE FOUR PURCHASE AND DEFEASANCE SECTION 401. Purchase by the Company at the Election of the Holders The Company shall not be required to redeem or otherwise purchase Notes except as set forth in this Article Four. If (a) the Call Options (as defined below) are not exercised at or prior to 4:00 p.m. New York City time on October 12, 1999 10, October 11, 2000 11 or October 9, 2002 12 (or, if such date is not a Business Day, on the next preceding Business Day) (the "CALL EXERCISE DATE"), or (b) following any such exercise, the Callholders (as defined below) fail to make payment in full when due for the purchase of the Notes in accordance with the Call Options (either such event, a "PURCHASE TRIGGER EVENT"), then any Holder of a Note may, by irrevocable written notice to the Company (which shall promptly notify the Trustee) given not later than two Business Days after the Purchase Trigger Event, require that the Company, not earlier than the Interest Reset Effective Date and not later than the date one Business Day after the date of such notice, purchase such Note at a purchase price (paid through the Trustee) equal to (i) the unpaid principal amount of such Note plus (ii) all unpaid interest on the unpaid principal amount of such Note accrued to but excluding the Interest Reset Effective Date plus (iii) interest (calculated at the rate applicable to payments of overdue principal of such Note prior to the Interest Reset Effective Date) on the unpaid principal amount of such Note, and on any accrued and unpaid interest, accrued from and including the Interest Reset Effective Date to but excluding the date of payment of such purchase price. As used herein, (A) "CALL OPTIONS" means each of (i) the call option, dated as of October 22, 1997, pursuant to which Citibank, N.A. (or a successor Callholder) has the right, but not the obligation, to purchase Notes on the Call Exercise Date at the purchase price specified therein and (ii) the call option, dated as October 22, 1997, pursuant to which NationsBank, N.A. (or a successor Callholder) has the right, but not the obligation, to purchase Notes on the Call Exercise Date at the purchase price specified therein, in each case, subject to and in accordance with the ISDA Master Agreement entered into between the Callholder party thereto and the initial Holder of the Notes; and (B) "CALLHOLDERS" means, with respect to the first Call Option, Citibank, N.A. and, with respect to the second Call Option, NationsBank, N.A., in each case, together with their respective transferees and successors. In the event that a Holder elects to require the Company to purchase a Note pursuant to the immediately preceding paragraph, the Company may, in lieu of purchasing the relevant Note, with notice to the Trustee, identify a third party who will agree to purchase the Note on the purchase date under the same terms and conditions as if the Notes were purchased by the Company. The Company will not be relieved of its obligations to purchase a Note on any purchase date specified above if such third party fails to purchase such Note. _______________________________ 10Series A Note. 11Series B Note. 12Series C Note. SECTION 402. Defeasance of the Notes Each Series of Notes shall be subject to defeasance in accordance with the provisions of Section 403 of the Debt Securities Indenture, provided that no defeasance of any Series -------- of the Notes may be effected until after the Interest Reset Effective Date for such Series. ARTICLE FIVE REMEDIES SECTION 501. Events of Default For all purposes of the Debt Securities Indenture and this Supplemental Indenture relating to the Notes, the following shall be Events of Default in addition to the Events of Default enumerated in Section 501 of the Debt Securities Indenture: (a) a default (including a default with respect to debt Securities of any series other than the Notes) under any Debt of the Company or any Subsidiary thereof, which default shall have resulted (i) in a failure to pay an aggregate principal amount exceeding $10,000,000 of such Debt at the later of final maturity thereof or upon the expiration of any applicable period of grace with respect to such principal amount or (ii) in such Debt in an aggregate principal amount exceeding $10,000,000 becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such Debt having been discharged, or such acceleration having been rescinded or annulled, within a period of 15 days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Notes, a written notice specifying such default and requiring the Company to cause such Debt to be discharged or to cause such acceleration to be rescinded or annulled and stating that such notice is a "NOTICE OF DEFAULT" hereunder; provided, however, that the Trustee shall not be deemed to have knowledge of such default unless either (A) an officer in the Corporate Trust Department of the Trustee shall have actual knowledge of such default or (B) the Trustee shall have received written notice thereof from the Company, from any Holder, from the holder of any such Debt or from the trustee under any such mortgage, indenture or other instrument. ARTICLE SIX COVENANTS The Company covenants and agrees for the benefit of the Holders of the Notes that it will comply with all covenants contained in the Debt Securities Indenture and with such further covenants that are contained in this Article Six and in any other provisions of this Supplemental Indenture. SECTION 601. Limitation on Liens Securing Indebtedness. The Company may not, and may not permit any Consolidated Subsidiary to, create or incur, or suffer to be incurred or to exist, at any time, any Lien on its or their property, including after-acquired property, or upon any income or profits therefrom, to secure the payment of any indebtedness for money borrowed of the Company or of any Consolidated Subsidiary or of any other Person, unless all obligations of the Company on or in respect of the Notes are equally and ratably and validly secured by such Lien by proceedings and documents reasonably satisfactory to the Trustee, except that the provisions of this paragraph shall not prohibit the following: (a) Liens existing as of the Issue Date securing indebtedness for money borrowed of the Company and its Consolidated Subsidiaries outstanding on such date; (b) Liens (i) incurred after the Issue Date given (on or within 120 days of the date of acquisition, construction or improvement) to secure the payment of the purchase price or construction costs incurred by the Company or a Consolidated Subsidiary in connection with the acquisition, construction or improvement of real and personal property useful and intended to be used in carrying on the business of the Company or such Consolidated Subsidiary, or (ii) on fixed assets useful and intended to be used in carrying on the business of the Company or a Consolidated Subsidiary existing at the time of acquisition or construction thereof by the Company or such Consolidated Subsidiary or at the time of acquisition by the Company or a Consolidated Subsidiary of any business entity then owning such fixed assets, whether or not such existing Liens were given to secure the payment of the purchase price or construction costs of the fixed assets to which they attach, so long as Liens permitted by this clause (ii) were not incurred, extended or renewed in contemplation of such acquisition or construction, provided that any such Liens permitted by this clause (b) shall attach solely to the property acquired, constructed, improved or purchased; (c) Liens for taxes, assessments or other governmental levies or charges not yet due or which are subject to a Good Faith Contest; (d) Liens incidental to the conduct of the Company's and its Subsidiaries' businesses or their ownership of property and other assets not securing any indebtedness for money borrowed and not otherwise incurred in connection with the borrowing of money or obtaining of credit, and which do not in the aggregate materially diminish the value of the Company's or Subsidiaries' property or assets when taken as a whole, or materially impair the use thereof in the operation of their businesses; (e) Liens in respect of any interest or title of a lessor in any property subject to a Capitalized Lease permitted under Section 602 hereof; (f) Liens arising in respect of judgments against the Company, except for any judgment in an amount in excess of $1,000,000 which is not discharged or execution thereof stayed pending appeal within 45 days after entry thereof; (g) Liens in favor of the Company or any Consolidated Subsidiary of the Company; (h) Liens consisting of minor survey exceptions or minor encumbrances, easements or reservations, or rights of others for rights-of-way, utilities and other similar purposes, or zoning or other restrictions as to use of real property, that are necessary for the conduct of the operations of the Company and its Subsidiaries or that customarily exist on properties of corporations engaged in similar businesses and are similarly situated and that do not in any event materially impair their use in the operations of the Company and its Subsidiaries; and (i) Liens renewing, extending or refunding any Lien permitted by the preceding clauses of this paragraph; provided, however, that the principal amount of indebtedness for money borrowed secured by such Lien immediately prior thereto is not increased and such Lien is not extended to any other assets or property. Notwithstanding the foregoing, the Company or any Consolidated Subsidiary may create or assume Liens, in addition to those otherwise permitted by the preceding clauses of this Section 601, securing indebtedness for money borrowed of the Company or any Consolidated Subsidiary issued or incurred after the Issue Date, provided that at the time of such issuance or incurrence, the aggregate amount of all Secured Indebtedness and Attributable Debt would not exceed 15% of Consolidated Net Tangible Assets. In the event that any property of the Company or any Consolidated Subsidiary is subject to a Lien not otherwise permitted by this Section 601, the Company must make or cause to be made a provision whereby the Notes will be secured (together with other indebtedness for money borrowed then entitled thereto and equal in rank to the Notes), to the full extent permitted under applicable law, equally and ratably with all other obligations secured thereby, and in any case the Notes shall (but only in such event) have the benefit, to the full extent that the holders of the Notes may be entitled thereto under applicable law, of an equitable Lien on such property equally and ratably securing the Notes and such other obligations. SECTION 602. Limitation on Sale and Leaseback. The Company may not, and may not permit any Consolidated Subsidiary to, enter into any arrangement, directly or indirectly, whereby the Company or such Consolidated Subsidiary shall, in one transaction or a series of related transactions, (i) sell, transfer or otherwise dispose of any property owned by the Company or any Consolidated Subsidiary and (ii) more than 120 days after the later of the date of initial acquisition of such property or completion or occupancy thereof, as the case may be, by the Company or such Consolidated Subsidiary, rent or lease, as lessee, such property or substantially identical property or any material part thereof (a "SALE AND LEASEBACK TRANSACTION"), provided that the foregoing restriction shall not apply to any Sale and Leaseback Transaction if (a) immediately after the consummation of such Sale and Leaseback Transaction and after giving effect thereto, no Default or Event of Default shall exist and (b) any one of the following conditions is satisfied: (i) the lease concerned constitutes a Capitalized Lease and at the time of entering into such Sale and Leaseback Transaction and after giving effect thereto and to any Liens incurred pursuant to Section 601 hereof, the aggregate amount of all Secured Indebtedness and Attributable Debt would not exceed 15% of Consolidated Net Tangible Assets; or (ii) the lease has a term which in the aggregate would not exceed 36 months (including any extensions or renewals thereof at the option of the lessee); or (iii) the sale of such property is for cash consideration which equals or exceeds the fair market value thereof (as determined in good faith by the Company) and the net proceeds from such sale are applied, within 30 days of the date of the sale thereof, to the payment (other than payments due at maturity or in satisfaction of, or applied to, any mandatory or scheduled payment or prepayment obligation) of indebtedness for money borrowed of the Company which ranks, in right of payment, on a parity with or senior to the Notes. SECTION 603. Restrictive Agreements. The Company may not and may not permit any of its Consolidated Subsidiaries to enter into any indenture, agreement, instrument or other arrangement which, directly or indirectly, prohibits or restrains, or has the effect of prohibiting or restraining, or imposes materially adverse conditions upon, the ability of any Consolidated Subsidiary to make loans or advances to the Company or to declare and pay dividends or make distribution on shares of such Consolidated Subsidiary's capital stock (including capital stock issued in the future); provided, however, that any agreement to subordinate indebtedness for money borrowed owing from any Consolidated Subsidiary to the Company or owing between Consolidated Subsidiaries pursuant to any Priority Debt or to any guarantee of such indebtedness for money borrowed shall not be deemed to violate this paragraph so long as any such agreement to subordinate does not directly or indirectly prohibit or restrain the ability of any such Consolidated Subsidiary to make loans or advances to the Company or to declare and pay dividends or make distributions on shares of such Consolidated Subsidiary's capital stock (including capital stock issued in the future). SECTION 604. Corporate Existence. The Company is required to do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and material rights (charter and statutory) and material franchises of the Company, provided, however, that the Company shall not be required to preserve any such right or franchise if the Board of Directors shall determine that the preservation of such rights and franchises is no longer desirable in the conduct of the business of the Company and its Consolidated Subsidiaries considered as a whole, and that the loss thereof is not disadvantageous in any material respect to the holders of the Notes. SECTION 605. Defeasance of Certain Obligations. The Company may omit to comply with the covenants contained in Sections 601, 602 and 603 hereof, and violations of such covenants shall not be deemed to be an Event of Default hereunder, under the Debt Securities Indenture and under the Notes, to the extent that all of the conditions set forth in Section 1004 of the Debt Securities Indenture have been met. SECTION 606. Rule 144A Information. At any time when the Company is not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, upon the request of any Holder of any Notes, the Company shall promptly furnish or cause to be furnished to such Holder or to a prospective purchaser of a Note designated by such Holder, as the case may be, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act ("RULE 144A INFORMATION") in order to permit compliance by such Holder with Rule 144A in connection with the resale of such Note by such Holder. IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. AMERCO By:__________________________________ Gary V. Klinefelter Secretary Attest: __________________________________ John A. Lorentz Assistant Secretary CITIBANK, N.A., as Trustee By__________________________________ Name: Title: Attest: __________________________________ Name: Title: STATE OF ARIZONA ) COUNTY OF MARICOPA ) ss.: On the 22nd day of October 1997, before me personally came Gary V. Klinefelter, to me known, who, being by me duly sworn, did depose and say that he is Secretary of AMERCO, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to the said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. ___________________________ Name: Notary Public State of Arizona My Commission expires on: STATE OF NEW YORK ) COUNTY OF NEW YORK ) ss.: On the ___ day of October 1997, before me personally came _______________, to me known, who, being by me duly sworn, did depose and say that he is the _______________ of Citibank, N.A., one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to the said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. ___________________________ Name: Notary Public State of New York My Commission expires on: EX-4.2 3 CALCULATION AGENCY AGREEMENT CONFIDENTIAL AND PROPRIETARY CALCULATION AGENCY AGREEMENT dated as of October 22, 1997, between: AMERCO, a corporation organized under the laws of the State of Nevada (the "COMPANY"); and CITICORP SECURITIES, INC., a corporation organized under the laws of the State of Delaware, as calculation agent (in such capacity, together with its successors in such capacity, the "CALCULATION AGENT"). The Company proposes to issue and sell (a) $100,000,000 aggregate principal amount of its 6.65% Senior Notes, Series 1997- A due 2029 (the "SERIES A NOTES"), (b) $100,000,000 aggregate principal amount of its 6.89% Senior Notes, Series 1997-B due 2010 (the "SERIES B NOTES") and (c) $100,000,000 aggregate principal amount of its 7.135% Senior Notes, Series 1997-C due 2032 (the "SERIES C NOTES" and, collectively with the Series A Notes and the Series B Notes, the "NOTES"; and each, individually, a "SERIES" of Notes). Pursuant to an Indenture dated as of May 1, 1996 (as modified and supplemented and in effect from time to time, the "INDENTURE"), between the Company and Citibank, N.A., as trustee (in such capacity, together with its successors in such capacity, the "TRUSTEE"), notes may be issued under the Indenture in series as from time to time authorized by the Board of Directors of the Company. Each series of notes issued under the Indenture is required to be created by a supplemental indenture authorized by resolutions of the Executive Finance Committee of the Board of Directors of the Company. The Company has duly authorized the issuance of the Notes pursuant to resolutions adopted by the Board of Directors of the Company adopted on October 14, 1997 (the "RESOLUTIONS"). The Notes have been created by the Supplemental Indenture dated as of October 22, 1997 (the "SUPPLEMENTAL INDENTURE") entered into between the Company and the Trustee. Pursuant to the Resolutions and in accordance with the Supplemental Indenture, the rate at which interest accrues on each Series of Notes is to be reset effective as of the Effective Date (as defined below) for that Series, and the Company desires to appoint the Calculation Agent for the purpose of calculating the rate at which interest accruing on each Series of Notes is to be reset, all as provided in this Agreement. Accordingly, the Company and the Calculation Agent agree as follows: Section 1. Definitions. As used in this Agreement: ----------- "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "BUSINESS DAY" has the meaning given to such term in the Indenture. "CALLHOLDERS" means, with respect to each Series of Notes, any Person that has the right, but not the obligation, to purchase such Series of Notes under either related Call Option. "CALL OPTIONS" means, with respect to each Series of Notes, (a) the call option relating to such Series of Notes purchased by Citibank, N.A., as evidenced by the Confirmation with a Trade Date (as defined therein) of October 17, 1997 and (b) the call option relating to such Series of Notes purchased by NationsBank, N.A., as evidenced by the Confirmation with a Trade Date (as defined therein) of October 17, 1997, in each case, as modified and supplemented and in effect from time to time. "CAUSE" means the Calculation Agent: (a) fails to perform any of its obligations hereunder for any reason; (b) becomes insolvent or is generally unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (c) makes a general assignment, arrangement or composition with or for the benefit of its creditors; or (d) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors' rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition (i) results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation or (ii) is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof. "CHANGE OF CONTROL" means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Exchange Act and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof) of shares representing more than 50% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Identified Person or (b) if the Identified Person is not the Calculation Agent, the failure of the Identified Person to own, directly or indirectly, all of the issued and outstanding shares of common capital stock of the Calculation Agent (other than directors' qualifying shares, if any). "CSI" means Citicorp Securities, Inc., together with its successors and assigns. "CONSENT" includes a consent, approval, action, authorization, exemption, notice, filing or registration. "COUPON RESET REFERENCE SPREAD" means, with respect to each Series of Notes, the percentage set forth in the table in Annex 1 hereto opposite "Coupon Reset Reference Spread" in the column in such table for such Series. "DEALER" has the meaning given to such term in Section 3(a). "EFFECTIVE DATE" means, with respect to each Series of Notes, the date set forth in the table in Annex 1 hereto opposite "Effective Date" in the column in such table for such Series; provided that, if any such date would otherwise fall on a day - -------- that is not a Business Day, the relevant Effective Date will be the first following day that is a Business Day. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "FAILED RESET" means, with respect to any Series of Notes, no Dealer submits, at or prior to the deadline specified in Section 3(b), a Spread Bid for such Series to the Calculation Agent. "FIXED RESET PRICE" means, with respect to any Series of Notes, the sum of (a) the par value of the Notes of such Series plus (b) the excess, if any, of (i) the present value, ---- discounted (on the basis of a year of 360 days and twelve 30-day months) to the Effective Date for such Series at a discount rate per annum equal to the Spot Treasury Yield for such Series plus the Coupon Reset Reference Spread for such Series, of the Scheduled Note Payments with respect to such Series over (ii) the ---- par value of the Notes of such Series. "IDENTIFIED PERSON" means (a) Citicorp, a Delaware corporation, and (b) if CSI is no longer the Calculation Agent, (i) if the successor Calculation Agent is on the date on which it becomes the Calculation Agent hereunder a subsidiary of a holding company, such holding company and (ii) otherwise, the successor Calculation Agent. "LAW" includes any treaty, law, rule or regulation, and "lawful" and "unlawful" will be construed accordingly. "MATURITY DATE" means, with respect to each Series of Notes, the date set forth in the table in Annex 1 hereto opposite "Maturity Date" in the column in such table for such Series. "NMSI" means NationsBanc Montgomery Securities, Inc., together with its successors and assigns. "OFFERING CIRCULAR" means the Offering Circular dated October 17, 1997 prepared by the Company relating to the offering and issuance of the Notes. "QUALIFIED DEALER" means a dealer registered pursuant to Section 15 of the Exchange Act that in the aggregate owns and invests on a discretionary basis at least $100,000,000 of securities, the issuers of which securities are not Affiliates of such dealer; provided that in no event may a Qualified Dealer be -------- an Affiliate of the Company. "PERSON" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority or other entity. "RELEVANT MATURITY" means, with respect to each Series of Notes, the period of time set forth in the table in Annex 1 hereto opposite "Relevant Maturity" in the column in such table for such Series. "RESET DATE" means, with respect to each Series of Notes, the date set forth in the table in Annex 1 hereto opposite "Reset Date" in the column in such table for such Series; provided that, if any such date would otherwise fall on a day - -------- that is not a Business Day, the relevant Reset Date will be the first preceding day that is a Business Day. "RESET RATE" means, with respect to any Series of Notes, the interest rate on Notes of such Series (computed on the basis of a year of 360 days and twelve 30-day months and calculated by the Calculation Agent pursuant to Section 3(d)) that would, over the period from the Effective Date for such Series to the Maturity Date for such Series, amortize completely the excess of (a) the Fixed Reset Price for such Series over ---- (b) the par value of the Notes of such Series at the Yield to Maturity for such Series. "SCHEDULED NOTE PAYMENTS" means, with respect to any Series of Notes, each payment of principal and interest that would be paid on such Series of Notes during the period from but excluding the Effective Date for such Series to and including the Maturity Date for such Series, assuming for the purposes of this definition, that (a) the entire principal amount of such Notes is paid on the Maturity Date for such Series and (b) the rate per annum at which interest is stated to accrue on such Notes is equal to the Strike Yield plus the Coupon Reset Reference Spread for such Series. "SPOT TREASURY YIELD" means, with respect to any Series of Notes, the bid side yield-to-maturity of the current ("on-the- run") U.S. Treasury Note or Bond, as applicable, having a maturity of the Relevant Maturity that appears on Dow Jones Markets (Telerate) Page 500 at 12:00 noon, New York City time, on the Reset Date for such Series. If such rate does not appear on such Page, the Spot Treasury Yield for such Series will be determined by the Calculation Agent and will be a yield-to- maturity based on the arithmetic mean of the secondary market bid side prices as of approximately 12:00 noon, New York City time, on the Reset Date for such Series of three leading primary United States government securities dealers in the City of New York (from five such dealers and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)) for U.S. Treasury Notes or Bonds, as applicable, having a maturity of the Relevant Maturity and taking a simple average of the remaining three values. "SPREAD" means, with respect to any Series of Notes, the percentage that, when added to the Spot Treasury Yield for such Series, equals the Yield to Maturity for such Series. "SPREAD BID" means, with respect to any Series of Notes, an irrevocable written bid by a Dealer setting forth the Spread for such Series at which such Dealer would be willing to purchase, as provided in Section 3(e), the entire outstanding principal amount of the Notes of such Series on the Effective Date for such Series at a purchase price equal to the Fixed Reset Price for such Series. "STRIKE YIELD" means, with respect to each Series of Notes, the percentage set forth in the table in Annex 1 hereto opposite "Strike Yield" in the column in such table for such Series. "YIELD TO MATURITY" means, with respect to any Series of Notes, the sum of (a) the Spot Treasury Yield for such Series plus (b) the Selected Bid (as defined in Section 3(c)) for such Series. Section 2. Appointment of Calculation Agent. The -------------------------------- Company hereby appoints the Calculation Agent as its agent for the purpose of calculating the Reset Rate for each Series of Notes in accordance with this Agreement, and the Calculation Agent hereby accepts such appointment. Section 3. Determination of Reset Rate. --------------------------- (a) Identification of Dealers. The Company shall, by notice to the Calculation Agent given not later than 3:00 p.m. New York City time on the date five Business Days prior to the Reset Date for each Series of Notes, identify five Qualified Dealers (including, as to each Dealer, its address, its telephone number, its telecopier number and a contact name) from which the Calculation Agent is to obtain Spread Bids for such Series in order to calculate the Reset Rate for such Series as provided herein. Two of the Dealers so specified shall be CSI and NMSI. If the Company fails to identify five Qualified Dealers by such time or if any Dealer (other than CSI and NMSI) identified by the Company does not satisfy the criteria that the Calculation Agent applies generally at such time in deciding whether to offer or to make an extension of credit, then the Calculation Agent may, on behalf of the Company, identify one or more Qualified Dealers until five Qualified Dealers have been identified by the Company or the Calculation Agent on its behalf. Each Qualified Dealer so identified under this Section 3(a) is herein referred to as a "DEALER". (b) Obtaining Spread Bids. Not later than 3:00 p.m. --------------------- New York City time on the date four Business Days prior to the Reset Date for each Series of Notes, the Calculation Agent shall provide to each Dealer identified under Section 3(a) with respect to such Series (i) a copy of the Offering Circular, (ii) a copy of the form of Note of such Series and (iii) a written request that such Dealer submit, not later than 10:00 a.m. New York City time on the Reset Date for such Series, a Spread Bid to the Calculation Agent (which written request shall include the relevant pricing assumptions for providing a Spread Bid, including the method specified herein for calculating the Fixed Reset Price and the Reset Rate). The Company may, not later than the deadline specified in the foregoing clause (iii), submit a Spread Bid to the Calculation Agent (which, for all purposes of this Agreement other than Section 3(a), will be deemed to have been submitted by a Dealer). (c) Establishment of Fixed Reset Price. On the Reset ---------------------------------- Date for each Series of Notes, the Calculation Agent shall determine the Fixed Reset Price for such Series. Promptly following its determination of such Fixed Reset Price, the Calculation Agent shall give notice to the Company of (i) with respect to each Dealer from which the Calculation Agent received Spread Bids by the deadline specified in Section 3(b), the name of such Dealer and the Spread Bid submitted by it, (ii) the name of the Dealer (which may be the Company) that submitted the lowest such Spread Bid (the "SELECTED BID" for such Series) and (iii) the Fixed Reset Price for such Series; provided that, if two or more Spread Bids submitted by such deadline are equal and are the lowest of all such Spread Bids, then the Company may in its sole discretion select any of such equivalent Spread Bids (and the Spread Bid so selected by the Company will be the deemed to be the Selected Bid). (d) Calculation of Reset Rate. Promptly following its ------------------------- determination of the Fixed Reset Price for any Series of Notes, the Calculation Agent shall calculate the Reset Rate and give notice to the Company and the Dealer that submitted the Selected Bid of the Fixed Reset Price, the Yield to Maturity and the Reset Rate, in each case, for such Series. The Company shall, by delivery on or prior to the Effective Date for such Series of an officer's certificate to the Trustee pursuant to and in accordance with the Indenture, establish the Reset Rate for such Series as the rate of interest payable on the Notes of such Series for the period from and including the Effective Date for such Series to but excluding the Maturity Date for such Series. (e) Sale of Notes. On the Effective Date for each ------------- Series of Notes, if such Notes have been purchased by the related Callholders pursuant to an exercise of the related Call Options, such Callholders shall severally sell to the Dealer that submitted the Selected Bid, and such Dealer shall purchase from the Callholders, upon the tender thereof for sale, such Notes at a purchase price equal to the Fixed Reset Price for such Notes; provided that no such sale and purchase shall be effected in the event of a Failed Reset. Payment for such Notes will be made by such Dealer in Dollars and immediately available funds, by wire transfer to an account of the Callholder entitled thereto maintained with a commercial bank located in the United States of America and identified by such Callholder to such Dealer not less than one Business Day prior to the Effective Date for such Series. Section 4. Representations. Each party represents to --------------- the other party that: (a) it is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization or incorporation; (b) it has the power to execute, deliver and perform its obligations under this Agreement and has taken all necessary action to authorize such execution, delivery and performance; (c) this Agreement has been duly executed and delivered by it; (d) such execution, delivery and performance do not violate or conflict with any law applicable to it, any provision of its constitutional documents, any order or judgment of any court or other agency of government applicable to it or any of its assets or any material contractual restriction binding on or affecting it or any of its assets; (e) all governmental and other consents that are required to have been obtained by it with respect to this Agreement have been obtained and are in full force and effect and all conditions of any such consents have been complied with; (f) its obligations under this Agreement constitute its legal, valid and binding obligations, enforceable in accordance with their respective terms (subject to applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to equitable principles of general application (regardless of whether enforcement is sought in a proceeding in equity or at law)); and (g) there is not pending or, to its knowledge, threatened against it any action, suit or proceeding at law or in equity or before any court, tribunal, governmental body, agency or official or any arbitrator that is likely to affect the legality, validity or enforceability against it of this Agreement or its ability to perform its obligations under this Agreement. Section 5. Rights and Duties of the Calculation Agent. ------------------------------------------ (a) Limited Duties. The Calculation Agent shall not -------------- have any duties or obligations except those expressly set forth herein. Without limiting the generality of the foregoing, the Calculation Agent shall have no obligation to, or any trust, fiduciary, agency or other relationship with, the Trustee or any of the holders of the Notes or any other securities issued under the Indenture. The recitals contained herein and in the Indenture and the Notes shall be taken as the statements of the Company, and the Calculation Agent shall have no responsibility for their correctness. The Calculation Agent makes no representations as to, and shall have no responsibility for, the validity or sufficiency of the Indenture or the Notes or the performance or observance of any of the covenants, agreements or other terms or conditions set forth in the Indenture or the Notes. The Calculation Agent shall not be accountable for the use or application by the Company of the Notes or the proceeds thereof. (b) Reliance on Written Instruments, Officer's ------------------------------------------ Certificate and Legal Counsel. The Calculation Agent may rely - ----------------------------- and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Whenever in taking any action under this Agreement the Calculation Agent shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Calculation Agent may rely upon a certificate signed by the Chairman of the Board, the President, any Vice President, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company and delivered by the Company to the Calculation Agent. The Calculation Agent may consult with legal counsel (which includes counsel for the Company), and the written advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) No Duty of Inquiry. The Calculation Agent shall ------------------ not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or document, but the Calculation Agent, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. (d) Right to Own Notes, Etc.. Each of the Calculation ------------------------ Agent (in its individual or any other capacity) and its Affiliates may become the owner or pledgee of Notes and other securities issued by the Company and may otherwise deal with the Company with the same rights it would have if it were not Calculation Agent. (e) Indemnity. The Company shall indemnify each of --------- the Calculation Agent, its Affiliates and the respective directors, officers, employees, agents and advisors of the Calculation Agent and its Affiliates (each such Person being called an "INDEMNITEE") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities, whether joint or several, and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of the transactions contemplated hereby or (ii) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto and regardless of whether an Indemnitee has been actively or passively negligent; provided -------- that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or wilful misconduct of such Indemnitee. (f) Resignation or Removal of Calculation Agent. ------------------------------------------- Subject to the appointment and acceptance of a successor Calculation Agent as provided in this paragraph, the Calculation Agent (i) may resign at any time by notifying the Company, (ii) be removed for Cause at any time upon notice from the Company to the Calculation Agent specifying in reasonable detail the basis for such removal or (iii) be removed within 30 days following the occurrence of a Change of Control with respect to the Calculation Agent upon notice thereof from the Company to the Calculation Agent. Upon any such resignation or removal, the Company shall appoint a successor Calculation Agent; provided -------- that, if such removal results from a Change of Control, the retiring Calculation Agent shall appoint a successor Calculation Agent with the consent of the Company (such consent not to be unreasonably withheld). If no successor shall have been so appointed by the Company and shall have accepted such appointment within 30 days after the retiring Calculation Agent gives notice of its resignation or the Company gives notice of removal, then the retiring Calculation Agent may, on behalf of the Company, appoint a successor Calculation Agent which shall be a Qualified Dealer. Upon the acceptance of its appointment as Calculation Agent hereunder by a successor (and upon delivery to the other party or parties thereto of its written agreement to be bound by the obligations of the predecessor Calculation Agent under the letter agreement dated the date hereof originally between CSI and NMSI relating hereto, for the benefit of each, CSI, and if NMSI is not the successor Calculation Agent, NMSI) such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Calculation Agent and the retiring Calculation Agent shall be discharged from its duties and obligations hereunder. After the Calculation Agent's resignation or removal hereunder, the provisions of this Section 5 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Calculation Agent. (g) Successor by Merger. Any corporation into which ------------------- the Calculation Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Calculation Agent shall be a party, or any corporation succeeding to all or substantially all the business of the Calculation Agent, shall be the successor of the Calculation Agent hereunder, without the execution or filing of any paper or any further act on the part of either party hereto. Section 6. Fees and Expenses. Each party hereto shall ----------------- bear its own expenses in connection with the negotiation, preparation, execution and delivery and of this Agreement. The Company agrees to pay, and to reimburse the Calculation Agent for paying, all reasonable out-of-pocket costs and expenses of the Calculation Agent (including, without limitation, the reasonable fees and expenses of legal counsel), in connection with (a) any amendment, modification or waiver of any of the terms of this Agreement; and (b) the enforcement and protection of its rights under this Agreement, including, but not limited to, costs of collection. Section 7. Transfer. Except as provided in Section 5 -------- with respect to the resignation, removal, merger, conversion or consolidation of the Calculation Agent, neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) by either party without the prior written consent of the other party. Section 8. Miscellaneous. ------------- (a) Entire Agreement. This Agreement constitutes the ---------------- entire agreement and understanding of the parties with respect to its subject matter and supersedes all oral communication and prior writings with respect thereto. (b) Amendments. No amendment, modification or waiver ---------- in respect of this Agreement will be effective unless in writing (including a writing evidenced by a facsimile transmission) and executed by each of the parties. (c) Survival of Obligations. The rights and benefits ----------------------- of the Calculation Agent under Section 5, and the obligations of the parties hereto under Sections 5(e) and 6, of this Agreement will survive the payment in full of the Notes, whether by repayment, redemption or otherwise. (d) Counterparts. This Agreement (and each amendment, ------------ modification and waiver in respect of it) may be executed and delivered in counterparts (including by facsimile transmission), each of which will be deemed an original. (e) Benefit of Agreement. This Agreement shall be -------------------- binding upon and inure to the benefit of the parties hereto and their respective successors and permitted transferees. No Person other than the parties hereto shall have any rights under or be entitled to rely upon this Agreement. (f) Headings. The headings used in this Agreement are -------- for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this Agreement. Section 9. Notices. Any notice or other communication ------- in respect of this Agreement shall be given in any manner set forth below to the address or number set forth beneath the signature of such party hereto and will be deemed effective as indicated: (i) if in writing and delivered in person or by courier, on the date it is delivered; (ii) if sent by facsimile transmission, on the date that transmission is received by a responsible employee of the recipient in legible form; or (iii) if sent by certified or registered mail (airmail, if overseas) or the equivalent (return receipt requested), on the date that mail is delivered or its delivery is attempted; unless the date of that delivery (or attempted delivery) or that receipt, as applicable, is not a Business Day or that communication is delivered (or attempted) or received, as applicable, after the close of business on a Business Day, in which case that communication shall be deemed given and effective on the first following day that is a Business Day. Either party may by notice to the other change the address or facsimile number at which notices or other communications are to be given to it. Section 10. Governing Law; Jurisdiction; Forum. ---------------------------------- (a) Governing Law. This Agreement will be governed by ------------- and construed in accordance with the law of the State of New York (without reference to choice of law doctrine, but without prejudice to Section 5-1401 of the New York General Obligations Law). (b) Jurisdiction and Forum. With respect to any suit, ---------------------- action or proceedings relating to this Agreement ("PROCEEDINGS"), each party irrevocably and unconditionally: (i) submits to the non-exclusive jurisdiction of the courts of the State of New York and the United States District Court located in the Borough of Manhattan in New York City; and (ii) waives any objection which it may have at any time to the laying of venue of any Proceedings brought in any such court, waives any claim that such Proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such Proceedings, that such court does not have any jurisdiction over such party. Nothing in this Agreement precludes either party from bringing Proceedings in any other jurisdiction, nor will the bringing of Proceedings in any one or more jurisdictions preclude the bringing of Proceedings in any other jurisdiction. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. AMERCO By____________________________ Title: Address for Notices: AMERCO 1325 Airmotive Way Suite 100 Reno, Nevada 89502-3239 Telecopy No.: 702-345-6046 Telephone No.: 702-688-6300 Attn: Mr. Rocky Wardrip CITICORP SECURITIES, INC. By____________________________ Title: Address for Notices: Citicorp Securities, Inc. 399 Park Avenue New York, New York 10043 Telecopy No.: 212-291-1279 Telephone No.: 212-291-0007 Attn: Mr. Gary Davis ANNEX I ========================================================================== Series A Notes Series B Notes Series C Notes ========================================================================== Coupon Reset 1.50% 1.25% 1.50% Reference Spread - --------------------------------------------------------------------------- Reset Date October 12, 1999 October 11, 2000 October 9, 2002 - --------------------------------------------------------------------------- Effective Date October 15, 1999 October 15, 2000 October 15, 2002 - --------------------------------------------------------------------------- Maturity Date October 15, 2029 October 15, 2010 October 15, 2032 - --------------------------------------------------------------------------- Relevant Maturity 30 years 10 years 30 years - --------------------------------------------------------------------------- Strike Yield 6.4525% 6.1700% 6.5900% =========================================================================== EX-4.3 4 A BOND BACKED ASSET TRUST CERTIFICATES NUMBER $100,000,000 R-001 CUSIP NO. 023589AA2 SEE REVERSE FOR CERTAIN DEFINITIONS THE CERTIFICATE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. BY ACQUISITION HEREOF, THE HOLDER OF THIS SECURITY AGREES THAT IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS ONE YEAR AFTER THE LATER OF THE DATE OF THE ACQUISITION OF THE CERTIFICATES FROM THE COMPANY OR ANY AFFILIATE OF THE COMPANY AND THE DATE OF ANY RESALE OF CERTIFICATES FOR THE ACCOUNT OF EITHER THE ACQUIROR OR ANY SUBSEQUENT HOLDER OF THE CERTIFICATES, EXCEPT (A) TO THE TRUST, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE CERTIFICATES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT UPON THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO THE TRUSTEE AND THE COMPANY, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT UPON THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO THE TRUSTEE AND THE COMPANY, SUBJECT IN EACH OF THE FOREGOING CASES, TO A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY BEING COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. THIS CERTIFICATE REPRESENTS A FRACTIONAL UNDIVIDED INTEREST IN THE TRUST AND DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT GUARANTEED BY AMERCO OR THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE TRUST ASSETS ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR ANY OTHER PERSON. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. AMERCO SERIES 1997-A BOND BACKED ASSET TRUST 6.65% AMERCO SERIES 1997-A BOND BACKED ASSET TRUST CERTIFICATES, ("BATs") DUE OCTOBER 15, 1999 ---- evidencing a fractional undivided beneficial ownership interest in the Trust, as defined below, the property of which consists principally of $100,000,000 aggregate principal amount of 6.65% Notes, Series 1997-A due October 15, 2032 (collectively, the "Notes") of AMERCO (the "Company"). The Notes have been ----- ------- purchased by the Trust from the Company with the proceeds of the sale of the Certificates and the Call Options (as defined herein). THIS CERTIFIES THAT CEDE & CO. is the registered owner of a nonassessable, fully-paid, fractional undivided interest in the AMERCO SERIES 1997-A BOND BACKED ASSET TRUST formed by the Company equal to a Certificate Principal Balance of $100,000,000. Under the Trust Agreement, there will be distributed on the 15th day of each April and October, or if such day is not a Business Day, the next succeeding Business Day, commencing April 15, 1998 through and including the Final Distribution Date (each a "Distribution Date"), to the extent of Available Funds (as ----------------- defined below), an amount equal to the interest collected on the Notes. On the Final Distribution Date, there will be distributed, to the extent of Available Funds, all distributions received from or in respect of the Trust Assets. The Trust was created pursuant to a Trust Agreement dated as of October 22, 1997 (the "Trust Agreement"), between the --------------- Company and IBJ Schroder Bank & Trust Company, not in its individual capacity but solely as Trustee (the "Trustee"). This ------- Certificate does not purport to summarize the Trust Agreement and reference is hereby made to the Trust Agreement for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby and the rights, duties and obligations of the Trustee with respect hereto. A copy of the Trust Agreement may be obtained from the Trustee by written request sent to the Corporate Trust Office. Capitalized terms used but not defined herein have the meanings assigned to them in the Trust Agreement. This Certificate is one of the duly authorized Certificates designated as 6.65% AMERCO Series 1997-A Bond Backed Asset Trust Certificates ("BATs") Due October 15, 1999 (herein ---- called the "Certificates"). Concurrently with the issuance of ------------ the Certificates, the Trustee will issue call options (the "Call ---- Options") to Citibank, N.A. and NationsBank, N.A. (the - ------- "Callholders") pursuant to which each Callholder has the right, ----------- but not the obligation, to purchase all, but not less than all, the Notes from the Trust on the Final Distribution Date at a purchase price equal to 100% of the outstanding principal amount thereof. If (i) the Call Options are not exercised at or prior to 4:00 p.m. New York City time on the date three Business Days prior to the Final Distribution Date, or (ii) following any such exercise, the Callholders fail to make payment in full when due for the purchase of the Notes, then the Trustee, on behalf of the Certificateholders, shall, immediately thereafter, give irrevocable written notice to the Company that it intends to exercise the Put Option on the Final Distribution Date in accordance with the terms of the Notes and the Indenture. Any such notice shall be irrevocable. This Certificate is issued under and is subject to the terms, provisions and conditions of the Trust Agreement, to which Trust Agreement the Holder of this Certificate by virtue of the acceptance hereof assents and by which such Holder is bound. The property of the Trust consists primarily of the Notes and all payments on or collections in respect of the Notes accrued on or after the Closing Date (not including any interest or other reinvestment income received with respect to the foregoing) and any proceeds from the sale of the Notes pursuant to the Put Option or the Call Options, as the case may be. Subject to the terms and conditions of the Trust Agreement and the Call Options (including the availability of funds for distributions) and until the obligation created by the Trust Agreement shall have terminated in accordance therewith, distributions will be made on each Distribution Date to the Person in whose name this Certificate is registered on the applicable Record Date, in an amount equal to such Certificateholder's fractional undivided interest in the amount required to be distributed to the Holders of the Certificates on such Distribution Date. If a payment with respect to the Notes is not made to the Trustee by 11:00 a.m. (New York City time) on the date such payment is due, or if such payment is not made on the due date, the Trustee will upon receipt of such funds make such distribution on the next Business Day (and no additional amounts of interest shall accrue on the Certificates or be owed to Certificateholders as a result of any such delay). Distributions made on this Certificate will be made as provided in the Trust Agreement by the Trustee by wire transfer in immediately available funds, without the presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Trust Agreement and notwithstanding the above, the Final Distribution on this Certificate will be made after due notice by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency maintained for that purpose by the Trustee in the Borough of Manhattan, the City of New York. Reference is hereby made to the further provisions of this Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee, by manual signature, this Certificate shall not entitle the holder hereof to any benefit under the Trust Agreement or be valid for any purpose. THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE HOLDER HEREOF SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. IN WITNESS WHEREOF, the Trust has caused this Certificate to be duly executed as of the date set forth below. AMERCO SERIES 1997-A BOND BACKED ASSET TRUST by IBJ Schroder Bank & Trust Company, not in its individual capacity but solely as Trustee By:__________________________ Authorized Officer Dated: October 22, 1997 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Certificates described in the Trust Agreement referred to herein. IBJ Schroder Bank & Trust Company, as Trustee By:_______________________________ Authorized Signatory (REVERSE OF TRUST CERTIFICATE) The Certificates are limited in right of distribution to certain payments and collections respecting the Trust Agreement, all as more specifically set forth herein and in the Trust Agreement. The registered Holder hereof, by its acceptance hereof, agrees that it will look solely to payments under the Notes, the Call Options and the Put Option (to the extent of its rights therein) for distributions hereunder. Subject to the next paragraph and to certain exceptions provided in the Trust Agreement and the Call Options, the Trust Agreement permits the amendment thereof and the modification of the rights and obligations of the Company and the Trustee and the rights of the Certificateholders under the Trust Agreement at any time by the Company and the Trustee with the consent of the Holders of Certificates evidencing more than 50% of the aggregate Voting Rights of Outstanding Certificates subject to certain provisions set forth in the Trust Agreement. Any such consent by the Holder of this Certificate (or any predecessor Certificate) shall be conclusive and binding on such Holder and upon all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Trust Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Holders of any of the Certificates. Under the terms of the Call Options and the Trust Agreement, Certificateholders will not be entitled to terminate the Trust or cause the sale or other disposition of the Notes. In addition, amendment of the Trust Agreement may require, and amendment of the Call Options generally will require, consent of the Callholders, all as provided in the Call Options and the Trust Agreement. The Certificates are issuable in fully registered form only in minimum original principal amounts of $100,000 and integral multiples thereof. As provided in the Trust Agreement and subject to certain limitations therein set forth, Certificates are exchangeable for new Certificates of the same principal amount, class, original issue date and maturity, in authorized denominations as requested by the Holder surrendering the same. As provided in the Trust Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies of the Certificate Registrar maintained by the Trustee in the Borough of Manhattan, the City of New York, duly endorsed by or accompanied by an assignment in the form below and by such other documents as required by the Trust Agreement, and thereupon one or more new Certificates of the same class in authorized denominations evidencing the same principal amount will be issued to the designated transferee or transferees. The Certificate Registrar appointed under the Trust Agreement is IBJ Schroder Bank & Trust Company. No service charge will be made for any registration of transfer or exchange, but the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Certificates. The Company and the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Company, the Trustee, nor any such agent shall be affected by any notice to the contrary. The Trust and the obligations of the Company and the Trustee created by the Trust Agreement with respect to the Certificates shall terminate upon the earliest to occur of (i) the distribution in full of all amounts due to Certificateholders on a sale of the Notes in accordance with the Call Options or repurchase by the Company of the Notes pursuant to the Put Option, (ii) the distribution of all proceeds received by the Trustee in connection with certain circumstances described in the Trust Agreement following an Event of Default and (iii) the expiration of 21 years from the death of the last survivor of the descendants of the youngest Executive Officer of the Company, measured as of the date of the Trust Agreement, living on the date hereof. ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto [PLEASE INSERT SOCIAL SECURITY OR TAXPAYER IDENTIFICATION OR OTHER IDENTIFYING NUMBER OF ASSIGNEE] _________________________________________________________________ (Please print or type name and address, including postal zip code, of assignee) _________________________________________________________________ the within Trust Certificate, and all rights thereunder, hereby irrevocably constituting and appointing _________________________________________________________________ Attorney to transfer said Trust Certificate on the books of the Certificate Registrar, with full power of substitution in the premises. Dated:_______________ _______________________________* Signature Guaranteed; _______________________________* * NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Trust Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Certificate Registrar, which requirements include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Certificate Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. NUMBER $100,000,000 R-001 CUSIP NO. 023589AB0 SEE REVERSE FOR CERTAIN DEFINITIONS THE CERTIFICATE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. BY ACQUISITION HEREOF, THE HOLDER OF THIS SECURITY AGREES THAT IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS ONE YEAR AFTER THE LATER OF THE DATE OF THE ACQUISITION OF THE CERTIFICATES FROM THE COMPANY OR ANY AFFILIATE OF THE COMPANY AND THE DATE OF ANY RESALE OF CERTIFICATES FOR THE ACCOUNT OF EITHER THE ACQUIROR OR ANY SUBSEQUENT HOLDER OF THE CERTIFICATES, EXCEPT (A) TO THE TRUST, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE CERTIFICATES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT UPON THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO THE TRUSTEE AND THE COMPANY, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT UPON THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO THE TRUSTEE AND THE COMPANY, SUBJECT IN EACH OF THE FOREGOING CASES, TO A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY BEING COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. THIS CERTIFICATE REPRESENTS A FRACTIONAL UNDIVIDED INTEREST IN THE TRUST AND DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT GUARANTEED BY AMERCO OR THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE TRUST ASSETS ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR ANY OTHER PERSON. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. AMERCO SERIES 1997-B BOND BACKED ASSET TRUST 6.89% AMERCO SERIES 1997-B BOND BACKED ASSET TRUST CERTIFICATES, ("BATs") DUE OCTOBER 15, 2000 ---- evidencing a fractional undivided beneficial ownership interest in the Trust, as defined below, the property of which consists principally of $100,000,000 aggregate principal amount of 6.89% Notes, Series 1997-B due October 15, 2010 (collectively, the "Notes") of AMERCO (the "Company"). The Notes have been ----- ------- purchased by the Trust from the Company with the proceeds of the sale of the Certificates and the Call Options (as defined herein). THIS CERTIFIES THAT CEDE & CO. is the registered owner of a nonassessable, fully-paid, fractional undivided interest in the AMERCO SERIES 1997-B BOND BACKED ASSET TRUST formed by the Company equal to a Certificate Principal Balance of $100,000,000. Under the Trust Agreement, there will be distributed on the 15th day of each April and October, or if such day is not a Business Day, the next succeeding Business Day, commencing April 15, 1998 through and including the Final Distribution Date (each a "Distribution Date"), to the extent of Available Funds (as ----------------- defined below), an amount equal to the interest collected on the Notes. On the Final Distribution Date, there will be distributed, to the extent of Available Funds, all distributions received from or in respect of the Trust Assets. The Trust was created pursuant to a Trust Agreement dated as of October 22, 1997 (the "Trust Agreement"), between the --------------- Company and IBJ Schroder Bank & Trust Company, not in its individual capacity but solely as Trustee (the "Trustee"). This ------- Certificate does not purport to summarize the Trust Agreement and reference is hereby made to the Trust Agreement for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby and the rights, duties and obligations of the Trustee with respect hereto. A copy of the Trust Agreement may be obtained from the Trustee by written request sent to the Corporate Trust Office. Capitalized terms used but not defined herein have the meanings assigned to them in the Trust Agreement. This Certificate is one of the duly authorized Certificates designated as 6.89% AMERCO Series 1997-B Bond Backed Asset Trust Certificates ("BATs") Due October 15, 2000 (herein ---- called the "Certificates"). Concurrently with the issuance of ------------ the Certificates, the Trustee will issue call options (the "Call ---- Options") to Citibank, N.A. and NationsBank, N.A. (the - ------- "Callholders") pursuant to which each Callholder has the right, ----------- but not the obligation, to purchase all, but not less than all, the Notes from the Trust on the Final Distribution Date at a purchase price equal to 100% of the outstanding principal amount thereof. If (i) the Call Options are not exercised at or prior to 4:00 p.m. New York City time on the date three Business Days prior to the Final Distribution Date, or (ii) following any such exercise, the Callholders fail to make payment in full when due for the purchase of the Notes, then the Trustee, on behalf of the Certificateholders, shall, immediately thereafter, give irrevocable written notice to the Company that it intends to exercise the Put Option on the Final Distribution Date in accordance with the terms of the Notes and the Indenture. Any such notice shall be irrevocable. This Certificate is issued under and is subject to the terms, provisions and conditions of the Trust Agreement, to which Trust Agreement the Holder of this Certificate by virtue of the acceptance hereof assents and by which such Holder is bound. The property of the Trust consists primarily of the Notes and all payments on or collections in respect of the Notes accrued on or after the Closing Date (not including any interest or other reinvestment income received with respect to the foregoing) and any proceeds from the sale of the Notes pursuant to the Put Option or the Call Options, as the case may be. Subject to the terms and conditions of the Trust Agreement and the Call Options (including the availability of funds for distributions) and until the obligation created by the Trust Agreement shall have terminated in accordance therewith, distributions will be made on each Distribution Date to the Person in whose name this Certificate is registered on the applicable Record Date, in an amount equal to such Certificateholder's fractional undivided interest in the amount required to be distributed to the Holders of the Certificates on such Distribution Date. If a payment with respect to the Notes is not made to the Trustee by 11:00 a.m. (New York City time) on the date such payment is due, or if such payment is not made on the due date, the Trustee will upon receipt of such funds make such distribution on the next Business Day (and no additional amounts of interest shall accrue on the Certificates or be owed to Certificateholders as a result of any such delay). Distributions made on this Certificate will be made as provided in the Trust Agreement by the Trustee by wire transfer in immediately available funds, without the presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Trust Agreement and notwithstanding the above, the Final Distribution on this Certificate will be made after due notice by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency maintained for that purpose by the Trustee in the Borough of Manhattan, the City of New York. Reference is hereby made to the further provisions of this Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee, by manual signature, this Certificate shall not entitle the holder hereof to any benefit under the Trust Agreement or be valid for any purpose. THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE HOLDER HEREOF SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. IN WITNESS WHEREOF, the Trust has caused this Certificate to be duly executed as of the date set forth below. AMERCO SERIES 1997-B BOND BACKED ASSET TRUST by IBJ Schroder Bank & Trust Company, not in its individual capacity but solely as Trustee By:__________________________ Authorized Officer Dated: October 22, 1997 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Certificates described in the Trust Agreement referred to herein. IBJ Schroder Bank & Trust Company, as Trustee By:_______________________________ Authorized Signatory (REVERSE OF TRUST CERTIFICATE) The Certificates are limited in right of distribution to certain payments and collections respecting the Trust Agreement, all as more specifically set forth herein and in the Trust Agreement. The registered Holder hereof, by its acceptance hereof, agrees that it will look solely to payments under the Notes, the Call Options and the Put Option (to the extent of its rights therein) for distributions hereunder. Subject to the next paragraph and to certain exceptions provided in the Trust Agreement and the Call Options, the Trust Agreement permits the amendment thereof and the modification of the rights and obligations of the Company and the Trustee and the rights of the Certificateholders under the Trust Agreement at any time by the Company and the Trustee with the consent of the Holders of Certificates evidencing more than 50% of the aggregate Voting Rights of Outstanding Certificates subject to certain provisions set forth in the Trust Agreement. Any such consent by the Holder of this Certificate (or any predecessor Certificate) shall be conclusive and binding on such Holder and upon all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Trust Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Holders of any of the Certificates. Under the terms of the Call Options and the Trust Agreement, Certificateholders will not be entitled to terminate the Trust or cause the sale or other disposition of the Notes. In addition, amendment of the Trust Agreement may require, and amendment of the Call Options generally will require, consent of the Callholders, all as provided in the Call Options and the Trust Agreement. The Certificates are issuable in fully registered form only in minimum original principal amounts of $100,000 and integral multiples thereof. As provided in the Trust Agreement and subject to certain limitations therein set forth, Certificates are exchangeable for new Certificates of the same principal amount, class, original issue date and maturity, in authorized denominations as requested by the Holder surrendering the same. As provided in the Trust Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies of the Certificate Registrar maintained by the Trustee in the Borough of Manhattan, the City of New York, duly endorsed by or accompanied by an assignment in the form below and by such other documents as required by the Trust Agreement, and thereupon one or more new Certificates of the same class in authorized denominations evidencing the same principal amount will be issued to the designated transferee or transferees. The Certificate Registrar appointed under the Trust Agreement is IBJ Schroder Bank & Trust Company. No service charge will be made for any registration of transfer or exchange, but the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Certificates. The Company and the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Company, the Trustee, nor any such agent shall be affected by any notice to the contrary. The Trust and the obligations of the Company and the Trustee created by the Trust Agreement with respect to the Certificates shall terminate upon the earliest to occur of (i) the distribution in full of all amounts due to Certificateholders on a sale of the Notes in accordance with the Call Options or repurchase by the Company of the Notes pursuant to the Put Option, (ii) the distribution of all proceeds received by the Trustee in connection with certain circumstances described in the Trust Agreement following an Event of Default and (iii) the expiration of 21 years from the death of the last survivor of the descendants of the youngest Executive Officer of the Company, measured as of the date of the Trust Agreement, living on the date hereof. ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto [PLEASE INSERT SOCIAL SECURITY OR TAXPAYER IDENTIFICATION OR OTHER IDENTIFYING NUMBER OF ASSIGNEE] _________________________________________________________________ (Please print or type name and address, including postal zip code, of assignee) _________________________________________________________________ the within Trust Certificate, and all rights thereunder, hereby irrevocably constituting and appointing _________________________________________________________________ Attorney to transfer said Trust Certificate on the books of the Certificate Registrar, with full power of substitution in the premises. Dated:_______________ _______________________________* Signature Guaranteed; _______________________________* * NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Trust Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Certificate Registrar, which requirements include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Certificate Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. NUMBER $100,000,000 R-001 CUSIP NO. 023589AC8 SEE REVERSE FOR CERTAIN DEFINITIONS THE CERTIFICATE (OR ITS PREDECESSOR) EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. BY ACQUISITION HEREOF, THE HOLDER OF THIS SECURITY AGREES THAT IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS ONE YEAR AFTER THE LATER OF THE DATE OF THE ACQUISITION OF THE CERTIFICATES FROM THE COMPANY OR ANY AFFILIATE OF THE COMPANY AND THE DATE OF ANY RESALE OF CERTIFICATES FOR THE ACCOUNT OF EITHER THE ACQUIROR OR ANY SUBSEQUENT HOLDER OF THE CERTIFICATES, EXCEPT (A) TO THE TRUST, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE CERTIFICATES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT UPON THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO THE TRUSTEE AND THE COMPANY, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT UPON THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO THE TRUSTEE AND THE COMPANY, SUBJECT IN EACH OF THE FOREGOING CASES, TO A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY BEING COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. THIS CERTIFICATE REPRESENTS A FRACTIONAL UNDIVIDED INTEREST IN THE TRUST AND DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT GUARANTEED BY AMERCO OR THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE TRUST ASSETS ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR ANY OTHER PERSON. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. AMERCO SERIES 1997-C BOND BACKED ASSET TRUST 7.135% AMERCO SERIES 1997-C BOND BACKED ASSET TRUST CERTIFICATES, ("BATs") DUE OCTOBER 15, 2002 ---- evidencing a fractional undivided beneficial ownership interest in the Trust, as defined below, the property of which consists principally of $100,000,000 aggregate principal amount of 7.135% Notes, Series 1997-C due October 15, 2032 (collectively, the "Notes") of AMERCO (the "Company"). The Notes have been ----- ------- purchased by the Trust from the Company with the proceeds of the sale of the Certificates and the Call Options (as defined herein). THIS CERTIFIES THAT CEDE & CO. is the registered owner of a nonassessable, fully-paid, fractional undivided interest in the AMERCO SERIES 1997-C BOND BACKED ASSET TRUST formed by the Company equal to a Certificate Principal Balance of $100,000,000. Under the Trust Agreement, there will be distributed on the 15th day of each April and October, or if such day is not a Business Day, the next succeeding Business Day, commencing April 15, 1998 through and including the Final Distribution Date (each a "Distribution Date"), to the extent of Available Funds (as ----------------- defined below), an amount equal to the interest collected on the Notes. On the Final Distribution Date, there will be distributed, to the extent of Available Funds, all distributions received from or in respect of the Trust Assets. The Trust was created pursuant to a Trust Agreement dated as of October 22, 1997 (the "Trust Agreement"), between the --------------- Company and IBJ Schroder Bank & Trust Company, not in its individual capacity but solely as Trustee (the "Trustee"). This ------- Certificate does not purport to summarize the Trust Agreement and reference is hereby made to the Trust Agreement for information with respect to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby and the rights, duties and obligations of the Trustee with respect hereto. A copy of the Trust Agreement may be obtained from the Trustee by written request sent to the Corporate Trust Office. Capitalized terms used but not defined herein have the meanings assigned to them in the Trust Agreement. This Certificate is one of the duly authorized Certificates designated as 7.135% AMERCO Series 1997-C Bond Backed Asset Trust Certificates ("BATs") Due October 15, 2002 ---- (herein called the "Certificates"). Concurrently with the ------------ issuance of the Certificates, the Trustee will issue call options (the "Call Options") to Citibank, N.A. and NationsBank, N.A. (the ------------ "Callholders") pursuant to which each Callholder has the right, ----------- but not the obligation, to purchase all, but not less than all, the Notes from the Trust on the Final Distribution Date at a purchase price equal to 100% of the outstanding principal amount thereof. If (i) the Call Options are not exercised at or prior to 4:00 p.m. New York City time on the date three Business Days prior to the Final Distribution Date, or (ii) following any such exercise, the Callholders fail to make payment in full when due for the purchase of the Notes, then the Trustee, on behalf of the Certificateholders, shall, immediately thereafter, give irrevocable written notice to the Company that it intends to exercise the Put Option on the Final Distribution Date in accordance with the terms of the Notes and the Indenture. Any such notice shall be irrevocable. This Certificate is issued under and is subject to the terms, provisions and conditions of the Trust Agreement, to which Trust Agreement the Holder of this Certificate by virtue of the acceptance hereof assents and by which such Holder is bound. The property of the Trust consists primarily of the Notes and all payments on or collections in respect of the Notes accrued on or after the Closing Date (not including any interest or other reinvestment income received with respect to the foregoing) and any proceeds from the sale of the Notes pursuant to the Put Option or the Call Options, as the case may be. Subject to the terms and conditions of the Trust Agreement and the Call Options (including the availability of funds for distributions) and until the obligation created by the Trust Agreement shall have terminated in accordance therewith, distributions will be made on each Distribution Date to the Person in whose name this Certificate is registered on the applicable Record Date, in an amount equal to such Certificateholder's fractional undivided interest in the amount required to be distributed to the Holders of the Certificates on such Distribution Date. If a payment with respect to the Notes is not made to the Trustee by 11:00 a.m. (New York City time) on the date such payment is due, or if such payment is not made on the due date, the Trustee will upon receipt of such funds make such distribution on the next Business Day (and no additional amounts of interest shall accrue on the Certificates or be owed to Certificateholders as a result of any such delay). Distributions made on this Certificate will be made as provided in the Trust Agreement by the Trustee by wire transfer in immediately available funds, without the presentation or surrender of this Certificate or the making of any notation hereon. Except as otherwise provided in the Trust Agreement and notwithstanding the above, the Final Distribution on this Certificate will be made after due notice by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency maintained for that purpose by the Trustee in the Borough of Manhattan, the City of New York. Reference is hereby made to the further provisions of this Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by or on behalf of the Trustee, by manual signature, this Certificate shall not entitle the holder hereof to any benefit under the Trust Agreement or be valid for any purpose. THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE HOLDER HEREOF SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. IN WITNESS WHEREOF, the Trust has caused this Certificate to be duly executed as of the date set forth below. AMERCO SERIES 1997-C BOND BACKED ASSET TRUST by IBJ Schroder Bank & Trust Company, not in its individual capacity but solely as Trustee By:__________________________ Authorized Officer Dated: October 22, 1997 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Certificates described in the Trust Agreement referred to herein. IBJ Schroder Bank & Trust Company, as Trustee By:_______________________________ Authorized Signatory (REVERSE OF TRUST CERTIFICATE) The Certificates are limited in right of distribution to certain payments and collections respecting the Trust Agreement, all as more specifically set forth herein and in the Trust Agreement. The registered Holder hereof, by its acceptance hereof, agrees that it will look solely to payments under the Notes, the Call Options and the Put Option (to the extent of its rights therein) for distributions hereunder. Subject to the next paragraph and to certain exceptions provided in the Trust Agreement and the Call Options, the Trust Agreement permits the amendment thereof and the modification of the rights and obligations of the Company and the Trustee and the rights of the Certificateholders under the Trust Agreement at any time by the Company and the Trustee with the consent of the Holders of Certificates evidencing more than 50% of the aggregate Voting Rights of Outstanding Certificates subject to certain provisions set forth in the Trust Agreement. Any such consent by the Holder of this Certificate (or any predecessor Certificate) shall be conclusive and binding on such Holder and upon all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent is made upon this Certificate. The Trust Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Holders of any of the Certificates. Under the terms of the Call Options and the Trust Agreement, Certificateholders will not be entitled to terminate the Trust or cause the sale or other disposition of the Notes. In addition, amendment of the Trust Agreement may require, and amendment of the Call Options generally will require, consent of the Callholders, all as provided in the Call Options and the Trust Agreement. The Certificates are issuable in fully registered form only in minimum original principal amounts of $100,000 and integral multiples thereof. As provided in the Trust Agreement and subject to certain limitations therein set forth, Certificates are exchangeable for new Certificates of the same principal amount, class, original issue date and maturity, in authorized denominations as requested by the Holder surrendering the same. As provided in the Trust Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registrable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies of the Certificate Registrar maintained by the Trustee in the Borough of Manhattan, the City of New York, duly endorsed by or accompanied by an assignment in the form below and by such other documents as required by the Trust Agreement, and thereupon one or more new Certificates of the same class in authorized denominations evidencing the same principal amount will be issued to the designated transferee or transferees. The Certificate Registrar appointed under the Trust Agreement is IBJ Schroder Bank & Trust Company. No service charge will be made for any registration of transfer or exchange, but the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Certificates. The Company and the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Certificate is registered as the owner hereof for all purposes, and neither the Company, the Trustee, nor any such agent shall be affected by any notice to the contrary. The Trust and the obligations of the Company and the Trustee created by the Trust Agreement with respect to the Certificates shall terminate upon the earliest to occur of (i) the distribution in full of all amounts due to Certificateholders on a sale of the Notes in accordance with the Call Options or repurchase by the Company of the Notes pursuant to the Put Option, (ii) the distribution of all proceeds received by the Trustee in connection with certain circumstances described in the Trust Agreement following an Event of Default and (iii) the expiration of 21 years from the death of the last survivor of the descendants of the youngest Executive Officer of the Company, measured as of the date of the Trust Agreement, living on the date hereof. ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto [PLEASE INSERT SOCIAL SECURITY OR TAXPAYER IDENTIFICATION OR OTHER IDENTIFYING NUMBER OF ASSIGNEE] _________________________________________________________________ (Please print or type name and address, including postal zip code, of assignee) _________________________________________________________________ the within Trust Certificate, and all rights thereunder, hereby irrevocably constituting and appointing _________________________________________________________________ Attorney to transfer said Trust Certificate on the books of the Certificate Registrar, with full power of substitution in the premises. Dated:_______________ _______________________________* Signature Guaranteed; _______________________________* * NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Trust Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Certificate Registrar, which requirements include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Certificate Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. EX-27 5 FDS DEC-31-1997
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS MAR-31-1998 DEC-31-1997 31,822 0 251,064 0 78,242 0 2,468,779 1,128,819 2,857,945 0 1,074,409 0 0 10,563 627,489 2,857,945 143,866 1,111,335 82,312 870,910 0 3,496 59,608 95,009 32,169 62,840 0 (13,984) 0 48,856 1.51 1.51 THE VALUE FOR RECEIVABLES REPRESENTS THEIR AMOUNT NET OF THEIR ALLOWANCES. AN UNCLASSIFIED BALANCE SHEET EXISTS IN THE REGISTRANT'S FINANCIAL STATEMENTS.
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