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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) November 26, 1996
Berkshire Hathaway Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-10125 04-2254452
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
1440 Kiewit Plaza, Omaha, Nebraska 68131
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (402) 346-1400
Not Applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events.
Berkshire Hathaway Inc. ("Berkshire") has registered
$500,000,000 face amount of its 1.00% Senior Exchangeable Notes due December 2,
2001 (the "Notes") pursuant to Registration Statement 33-30570 on Form S-3 and
a related Registration Statement filed pursuant to Rule 462(b) promulgated
under the Securities Act of 1933, as amended. Filed as part of this Form 8-K
are the final Underwriting Agreement dated November 26, 1996 and the First
Supplemental Indenture dated as of December 2, 1996 related to the Notes.
Item 7. Financial Statements and Exhibits.
(c) The following exhibits are filed with this report:
Exhibit Number Description
1 Underwriting Agreement by and among Berkshire Hathaway
Inc., Salomon Inc, Salomon Brothers Inc, Goldman,
Sachs & Co. and Smith Barney Inc. dated November 26,
1996
4 First Supplemental Indenture by and between Berkshire
Hathaway Inc. and State Street Bank and Trust Company,
Trustee, dated as of December 2, 1996
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 hereunto duly authorized.
BERKSHIRE HATHAWAY INC.
By: /s/ MARC D. HAMBURG
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Name: Marc D. Hamburg
Title: Vice President and
Chief Financial Officer
Dated: November 27, 1996
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EXHIBIT INDEX
Exhibit Number Description
1 Underwriting Agreement by and among Berkshire Hathaway
Inc., Salomon Inc, Salomon Brothers Inc, Goldman,
Sachs & Co. and Smith Barney Inc. dated November 26,
1996
4 First Supplemental Indenture by and between Berkshire
Hathaway Inc. and State Street Bank and Trust Company,
Trustee, dated as of December 2, 1996
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Exhibit 1
BERKSHIRE HATHAWAY INC.
$440,000,000
1.00% Senior Exchangeable Notes Due December 2, 2001*
(Subject to Exchange into Shares of Common Stock,
par value $1.00 per share, of Salomon Inc)
Underwriting Agreement
New York, New York
November 26, 1996
Salomon Brothers Inc
Goldman, Sachs & Co.
Smith Barney Inc.
as Representatives of the several Underwriters
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Berkshire Hathaway Inc., a Delaware corporation ("Berkshire"),
proposes to sell to the underwriters named in Schedule I hereto (the
"Underwriters"), for whom you (the "Representatives") are acting as
representatives, $440,000,000 principal face amount of its 1.00% Senior
Exchangeable Notes Due December 2, 2001 (the "Underwritten Securities"), to be
issued under an indenture (the "Indenture") dated as of December 1, 1987 between
Berkshire and State Street Bank and Trust Company, as successor trustee to the
First National Bank of Boston (the "Trustee"), as amended to the date hereof by
the First Supplemental Indenture
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* Plus an option to purchase from Berkshire Hathaway Inc. up to
$60,000,000 principal face amount of additional 1.00% Senior
Exchangeable Notes Due December 2, 2001 to cover over-allotments.
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thereto dated as of December 2, 1996. In addition, the Underwriters will have
an option to purchase up to $60,000,000 principal face amount of such
securities (the "Option Securities" and, together with the Underwritten
Securities, the "Securities"). The Securities may be exchanged by Berkshire
under certain circumstances at maturity (including as a result of acceleration
or otherwise) or prior to maturity into shares of Common Stock, par value $1.00
per share (the "Salomon Common Stock"), of Salomon Inc, a Delaware corporation
("Salomon") (or, at Berkshire's option under the circumstances described in the
Final Berkshire Prospectus, cash with an equal value), at the rate specified in
the Final Berkshire Prospectus. The Securities may also, at the option of the
holders and subject to certain conditions, be exchanged into Salomon Common
Stock at such rate during certain periods.
In connection with the foregoing and pursuant to the Purchase
Agreement dated September 27, 1987 between Berkshire and Salomon, as amended
(the "Purchase Agreement") Salomon has filed with the Commission a registration
statement with respect to 7,766,000 shares (the "Underwritten Shares") of
Salomon Common Stock, in respect of the Underwritten Securities, plus an
additional 1,059,000 shares (the "Option Shares" and, together with the
Underwritten Shares, the "Shares") of Salomon Common Stock in respect of the
Option Securities, for sale by Berkshire as a selling stockholder (to the extent
Berkshire shall so elect to deliver to holders of the Securities, or holders of
the Securities shall so elect to receive during specified periods, Salomon
Common Stock pursuant to the terms of the Securities), which registration
statement is referred to in Section 2 of this Agreement, and Salomon , by action
of its Board of Directors, has waived its right of first refusal under Section
10(b)(iii) of the Purchase Agreement with respect to such a sale of the Shares
by Berkshire.
Certain terms used in this Agreement are defined in paragraph
(c) of Section 1 and paragraph (c) of Section 2.
1. Representations and Warranties of Berkshire. Berkshire
represents and warrants to, and agrees with, each Underwriter as set forth below
in this Section 1.
(a) Berkshire meets the requirements for use of Form S-3 under
the Securities Act of 1933, as amended (the "Act"), and has filed with the
Securities and Exchange Commission (the "Commission") a registration statement
(file number 33-30570) on Form S-3, including a basic prospectus, for the
registration under the Act of the offering and sale of the Securities. Berkshire
may have filed one or more amendments thereto, and may have used a Preliminary
Final Berkshire Prospectus, each of which has previously been furnished to you.
Such registration statement, as so amended, has become effective. Although the
Basic Berkshire Prospectus may not include all the information with respect to
the Securities and the offering thereof required by the Act and the rules
thereunder to be included in the Final Berkshire Prospectus, the Basic Berkshire
Prospectus includes all such information required by the Act and the rules
thereunder. Berkshire will next file with the Commission pursuant to Rules 415
and 424(b)(2) or (5) a final supplement to the form of prospectus included in
such registration statement relating to the Securities and the offering thereof.
As filed, such final prospectus supplement shall include all required
information with respect to the Securities and the offering thereof and, except
to the extent the Representatives shall agree in writing to a modification,
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shall be in all substantive respects in the form furnished to you prior to the
Execution Time or, to the extent not completed at the Execution Time, shall
contain only such specific additional information and other changes (beyond that
contained in the Basic Berkshire Prospectus and any Preliminary Final Berkshire
Prospectus) as Berkshire has advised you, prior to the Execution Time, will be
included or made therein.
(b) On the Berkshire Effective Date, the Berkshire
Registration Statement did or will, and when the Final Berkshire Prospectus is
first filed in accordance with Rule 424(b) and on the Closing Date, the Final
Berkshire Prospectus (and any supplements thereto) will, comply in all material
respects with the applicable requirements of the Act, the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and the respective rules
thereunder; on the Berkshire Effective Date, the Berkshire Registration
Statement did not or will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; on the Berkshire Effective
Date and on the Closing Date the Indenture did or will comply in all material
respects with the applicable requirements of the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act") and the rules thereunder; and, on the date
of any filing pursuant to Rule 424(b) and on the Closing Date, the Final
Prospectuses (together with any supplements thereto) will not include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that Berkshire makes no
representations or warranties as to (i) that part of the Berkshire Registration
Statement which shall constitute the Statement of Eligibility and Qualification
(Form T-1) under the Trust Indenture Act of the Trustee, (ii) the information
contained in or omitted from the Berkshire Registration Statement or any Final
Prospectuses (or any supplements thereto) in reliance upon and in conformity
with information furnished in writing to Berkshire or Salomon by or on behalf of
any Underwriter through the Representatives specifically for use in connection
with the Berkshire Registration Statement or any Final Prospectuses (or any
supplements thereto) or (iii) (A) the information contained in or omitted from
the Final Berkshire Prospectus under the headings "Salomon Inc" and "Price Range
of Salomon Common Stock and Dividend Policy" (other than the last paragraph
thereof) or (B) the information contained in or omitted from the Salomon
Prospectus, except that under the heading "Ownership of Company Securities by
Berkshire".
(c) The terms which follow, when used in this Agreement, shall
have the meanings indicated. The term "Berkshire Effective Date" shall mean each
date that the Berkshire Registration Statement and any post-effective amendment
or amendments thereto became or become effective. "Execution Time" shall mean
the date and time that this Agreement is executed and delivered by the parties
hereto. "Basic Berkshire Prospectus" shall mean the prospectus referred to in
paragraph (a) of this Section 1 contained in the Berkshire Registration
Statement at the Berkshire Effective Date. "Preliminary Final Berkshire
Prospectus" shall mean any preliminary prospectus supplement to the Basic
Berkshire Prospectus which describes the Securities and the offering thereof and
is used prior to filing the Final Berkshire Prospectus. "Final Berkshire
Prospectus" shall mean the prospectus supplement relating to the Securities that
is first filed pursuant to Rule 424(b) after the Execution Time together with
the Basic Berkshire Prospectus. The Final Berkshire Prospectus and the Salomon
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Prospectus (as defined in Section 2(c)) are referred to herein collectively as
the "Final Prospectuses". "Berkshire Registration Statement" shall mean the
registration statement referred to in paragraph (a) of this Section 1, including
incorporated documents, exhibits and financial statements, as amended at the
Execution Time and, in the event any post-effective amendment thereto becomes
effective prior to the Closing Date shall also mean such registration statement
as so amended. "Rule 415," "Rule 424" and "Regulation S-K" refer to such rules
or regulation under the Act. Any reference herein to the Berkshire Registration
Statement, the Basic Berkshire Prospectus, any Preliminary Final Berkshire
Prospectus or the Final Berkshire Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 which were filed under the Exchange Act on or before the Berkshire
Effective Date or the issue date of the Basic Berkshire Prospectus, any
Preliminary Final Berkshire Prospectus or the Final Berkshire Prospectus, as the
case may be; and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Berkshire Registration Statement, the Basic
Berkshire Prospectus, any Preliminary Final Berkshire Prospectus or the Final
Berkshire Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the Berkshire Effective Date, or the issue
date of the Basic Berkshire Prospectus, any Preliminary Final Berkshire
Prospectus or the Final Berkshire Prospectus, as the case may be, deemed to be
incorporated therein by reference.
(d) Immediately prior to any delivery of Shares pursuant to
the Securities, Berkshire or one of its subsidiaries will be the lawful owner of
such Shares and will convey good and marketable title to such Shares upon such
delivery, free and clear of all liens, encumbrances, equities and claims
whatsoever.
(e) Berkshire has no reason to believe that the
representations and warranties of Salomon contained in Section 2 hereof are not
true and correct, is familiar with the Salomon Registration Statement and has no
knowledge of any material fact, condition or information not disclosed in the
Salomon Prospectus or any supplement thereto which has adversely affected or may
adversely affect the business of Salomon or any of its subsidiaries.
(f) Berkshire has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result, under the Exchange Act or otherwise,
in stabilization or manipulation of the price of any security of Salomon to
facilitate the sale or resale of the Securities or the Shares, and has not
effected any sales of Salomon Common Stock which, if effected by the issuer,
would be required to be disclosed in response to Item 701 of Regulation S-K.
2. Representations and Warranties of Salomon. Salomon
represents and warrants to, and agrees with, each Underwriter and, with respect
to Section 2(f) only, Berkshire as set forth below in this Section 2.
(a) Salomon meets the requirements for use of Form S-3 under
the Act and has filed with the Commission a registration statement (file number
333-11881) on such Form, including a related preliminary prospectus, for the
registration under the Act of the offering and sale of the Shares in connection
with the offering and sale of the Securities. Salomon may have
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filed one or more amendments thereto, including the related preliminary
prospectus, and may have used a preliminary prospectus supplement, each of which
has previously been furnished to you. Salomon will next file with the Commission
one of the following: (i) prior to effectiveness of such registration statement,
a further amendment to such registration statement, including the form of final
prospectus, (ii) a final prospectus in accordance with Rules 430A and 424(b)(1)
or (4), or (iii) a final prospectus in accordance with Rules 415 and 424(b)(2)
or (5). In the case of clause (ii), Salomon has included in such registration
statement, as amended at the Salomon Effective Date, all information (other than
Rule 430A Information) required by the Act and the rules thereunder to be
included in the Salomon Prospectus with respect to the Shares and the offering
thereof. As filed, such amendment and form of final prospectus, or such final
prospectus, shall contain all Rule 430A Information, together with all other
such required information, with respect to the Shares and the offering thereof
and, except to the extent the Representatives shall agree in writing to a
modification, shall be in all substantive respects in the form furnished to you
prior to the Execution Time, shall contain only such specific additional
information and other changes (beyond that contained in the latest Preliminary
Salomon Prospectus) as Salomon has advised you, prior to the Execution Time,
will be included or made therein.
(b) On the Salomon Effective Date, the Salomon Registration
Statement did or will, and when the Salomon Prospectus is first filed (if
required) in accordance with Rule 424(b) and on the Closing Date, the Salomon
Prospectus (and any supplement thereto) will, comply in all material respects
with the applicable requirements of the Act, the Exchange Act and the respective
rules thereunder; on the Salomon Effective Date, the Salomon Registration
Statement did not or will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; on the Salomon Effective
Date the Salomon Prospectus, if not filed pursuant to Rule 424(b), did not or
will not, and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date, the Final Prospectuses (together with any supplements thereto)
will not, include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that Salomon makes no representation or warranty as to (i) the information
contained in or omitted from the Salomon Registration Statement or any Final
Prospectuses (or any supplements thereto) in reliance upon and in conformity
with information furnished in writing to Salomon or Berkshire by or on behalf of
any Underwriter through the Representatives or (ii) (A) the information
contained in or omitted from the Salomon Prospectus under the heading "Ownership
of Company Securities by Berkshire" in the prospectus supplement and in the
first, fourth and fifth paragraphs under the heading "Ownership of Company
Securities by Berkshire" in the base prospectus or (B) the information contained
in or omitted from the Berkshire Prospectus, except that under the headings
"Salomon Inc" and "Price Range of Salomon Common Stock and Dividend Policy"
(other than the last paragraph thereto).
(c) The terms which follow, when used in this Agreement, shall
have the meanings indicated. The term "Salomon Effective Date" shall mean each
date that the Salomon Registration Statement and any post-effective amendment or
amendments thereto became or become effective. "Preliminary Salomon Prospectus"
shall mean any preliminary prospectus and
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any preliminary prospectus supplement referred to in paragraph (a) of this
Section 2 and any preliminary prospectus and any preliminary prospectus
supplement included in the Salomon Registration Statement at the Salomon
Effective Date that omits Rule 430A Information. "Salomon Prospectus" shall mean
the prospectus relating to the Shares that is used in connection with the
offering and sale of the Securities, that is attached as Appendix A to the Final
Berkshire Prospectus and that is first filed pursuant to Rule 424(b) after the
Execution Time or, if no filing pursuant to Rule 424(b) is required, shall mean
the form of final prospectus relating to the Shares included in the Salomon
Registration Statement at the Salomon Effective Date. "Salomon Registration
Statement" shall mean the registration statement referred to in paragraph (a) of
this Section 2 including incorporated documents, exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto becomes effective prior to the
Closing Date, shall also mean such registration statement as so amended. Such
term shall include any Rule 430A Information deemed to be included therein at
the Salomon Effective Date as provided by Rule 430A. "Rule 430A" refers to such
rule under the Act. "Rule 430A Information" means information with respect to
the Securities (or the Shares) and the offering thereof permitted to be omitted
from the Berkshire Registration Statement (or the Salomon Registration
Statement) when it becomes effective pursuant to Rule 430A. Any reference herein
to the Salomon Registration Statement, Preliminary Salomon Prospectus or the
Salomon Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which were
filed under the Exchange Act on or before the Salomon Effective Date or the
issue date of a Preliminary Salomon Prospectus or the Salomon Prospectus, as the
case may be; and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Salomon Registration Statement, any Preliminary
Salomon Prospectus or the Salomon Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the Salomon
Effective Date, or the issue date of any Preliminary Salomon Prospectus or the
Salomon Prospectus, as the case may be, deemed to be incorporated therein by
reference.
(d) Except as disclosed in the Salomon Prospectus, there is no
pending or, to the best knowledge of Salomon, threatened action, suit or
proceeding before any court or governmental agency, authority or body or any
arbitrator to which Salomon or any of its subsidiaries is a party or of which
any property of Salomon or any of its subsidiaries is the subject that would
reasonably be expected, individually or in the aggregate, to have a material
adverse effect on the business or financial position of Salomon and its
subsidiaries taken as a whole.
(e) Salomon and its subsidiaries are (i) in compliance with
any and all applicable federal, state and local and foreign laws and regulations
applicable to any of them, (ii) have accomplished all registrations and received
all permits, licenses or other approvals required of them under applicable laws
and regulations to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such registration, permit,
license or approval, except as described in the Salomon Prospectus or where such
noncompliance, failure to accomplish required registrations or receive required
permits, licenses or other approvals or failure to comply with the terms and
conditions of such registrations, permits, licenses or
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approvals would not, singly or in the aggregate, have a material adverse effect
on the business or financial position of Salomon and its subsidiaries taken as a
whole.
(f) Pursuant to the Purchase Agreement, at any time when
Berkshire is an affiliate of Salomon within the meaning of the Act and
registration of the Shares deliverable upon exchange of the Securities at the
option of the holders of Securities is required under the Act, Salomon shall use
its reasonable efforts to cause a registration statement to be effective under
the Act during each Exchange Period (as defined in the Final Berkshire
Prospectus) in order to permit a prospectus to be usable by Berkshire in
connection with any exchange of Securities, pursuant to the terms thereof, at
the option of the holders thereof. It is understood and agreed that Salomon may
delay the effectiveness of any registration statement or the delivery of any
Salomon prospectus if Salomon determines in good faith and for valid business
reasons that delivery of a Salomon prospectus would not be in the best interest
of Salomon or is prohibited by applicable law. Salomon shall notify Berkshire of
any delay pursuant to the immediately preceding sentence and Berkshire shall not
use any Salomon prospectus previously furnished to it during the period of such
delay.
3. Purchase and Sale. (a) Subject to the terms and conditions
and in reliance upon the representations and warranties herein set forth,
Berkshire agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from Berkshire, at a purchase price of
89.417% of the principal face amount thereof, plus amortization of original
issue discount, if any, on the Securities from December 2, 1996 to the Closing
Date, the principal face amount of the Securities set forth opposite such
Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, Berkshire hereby grants an
option to the several Underwriters to purchase, severally and not jointly, up to
$60,000,000 principal face amount of the Option Securities at the same purchase
price as the Underwriters shall pay for the Underwritten Securities. Said option
may be exercised only to cover over-allotments in the sale of the Underwritten
Securities by the Underwriters. Said option may be exercised in whole or in part
at any time (but not more than once) on or before the 30th day after the date of
the Final Berkshire Prospectus upon written or telegraphic notice by the
Representatives to Berkshire setting forth the number of the Option Securities
as to which the several Underwriters are exercising the option and the
settlement date. Delivery of certificates for the Option Securities, and payment
therefor, shall be made as provided in Section 4 hereof. The principal amount of
Option Securities to be purchased by each Underwriter shall be the same
percentage of the total principal face amount of Option Securities to be
purchased by the several Underwriters as such Underwriter is purchasing of the
Underwritten Securities, subject to such adjustments as you in your absolute
discretion shall make to round the denominations of the Securities to integral
multiples of $1,000.
4. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 3(b) hereof shall have been exercised on or before the first business
day prior to the Closing Date) shall be made at
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10:00 AM, New York City time, on December 2, 1996, (or such later date not
later than five business days after such specified date as the Representatives
shall designate) which date and time may be postponed by agreement between the
Representatives and Berkshire or as provided in Section 11 hereof (such date and
time of delivery and payment for the Securities being herein called the "Closing
Date"). Delivery of the Securities shall be made to the Representatives for the
respective accounts of the several Underwriters against payment by the several
Underwriters through the Representatives of the purchase price thereof to or
upon the order of Berkshire either by certified or official bank check or checks
drawn on or by a New York Clearing House bank or by wire transfer to an account
designated in writing by Berkshire at least two business days in advance of the
Closing Date, and in either case payable in same-day funds. Delivery of the
Securities shall be made through the facilities of The Depository Trust Company.
Berkshire agrees to have the Securities available for
inspection and checking by the Representatives in New York, New York, not later
than 1:00 PM on the business day prior to the Closing Date.
If the option provided for in Section 3(b) hereof is exercised
after the first business day prior to the Closing Date, Berkshire will deliver
(at the expense of Berkshire) to the Representatives at Seven World Trade
Center, New York, New York, on the date specified by the Representatives (which
shall be within three business days after exercise of said option), certificates
for the Option Securities in such names and denominations as the Representatives
shall have requested against payment of the purchase price thereof to or upon
the order of Berkshire either by certified or official bank check or checks
drawn on or by a New York Clearing House bank or by wire transfer to an account
designated in writing by Berkshire at least two business days in advance of the
Closing Date, and in either case payable in same-day funds. If settlement for
the Option Securities occurs after the Closing Date, Berkshire and Salomon will
deliver to the Representatives on the settlement date for the Option Securities,
and the obligation of the Underwriters to purchase the Option Securities shall
be conditioned upon receipt of, supplemental opinions and certificates
confirming as of such date certain of the opinions and certificates, as
requested by the Underwriters, delivered on the Closing Date pursuant to Section
7 hereof.
5. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Final Berkshire Prospectus.
6. Agreements of Berkshire. Berkshire agrees with the several
Underwriters that:
(a) Berkshire will use its best efforts to cause the Berkshire
Registration Statement, if not effective at the Execution Time, and any
amendment thereto to become effective. Prior to the termination of the offering
of the Securities, Berkshire will not file any amendment of the Berkshire
Registration Statement or supplement (including the Final Berkshire Prospectus
or any Preliminary Final Berkshire Prospectus) to the Basic Berkshire Prospectus
unless Berkshire has furnished you a copy for your review prior to filing and
will not file any such proposed amendment or supplement to which you reasonably
object. Subject to the foregoing sentence, Berkshire will cause the Final
Berkshire Prospectus, properly completed, and
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any supplement thereto to be filed with the Commission, if required, pursuant to
the applicable paragraph of Rule 424(b) within the time period prescribed and
will provide evidence satisfactory to the Representatives of such timely filing.
Berkshire will promptly advise the Representatives (i) when the Berkshire
Registration Statement, if not effective at the Execution Time, and any
amendment thereto, shall have become effective, (ii) when the Final Berkshire
Prospectus, and any supplement thereto, shall have been filed with the
Commission pursuant to Rule 424(b), (iii) when, prior to termination of the
offering of the Securities, any amendment to the Berkshire Registration
Statement shall have been filed or become effective, (iv) of any request by the
Commission for any amendment of the Berkshire Registration Statement or
supplement to the Final Berkshire Prospectus or for any additional information,
(v) of the issuance by the Commission of any stop order suspending the
effectiveness of the Berkshire Registration Statement or the institution or
threatening of any proceeding for that purpose and (vi) of the receipt by
Berkshire of any notification with respect to the suspension of the
qualification of the Securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose. Berkshire will use its best
efforts to prevent the issuance of any such stop order and, if issued, to obtain
as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs as a
result of which the Final Berkshire Prospectus as then supplemented would
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, or if it shall be necessary to amend
the Berkshire Registration Statement or supplement the Final Berkshire
Prospectus to comply with the Act or the Exchange Act or the respective rules
thereunder, Berkshire promptly will prepare and file with the Commission,
subject to the second sentence of paragraph (a) of this Section 6, an amendment
or supplement which will correct such statement or omission or effect such
compliance.
(c) As soon as practicable, Berkshire will make generally
available to its security holders and to the Representatives an earnings
statement or statements of Berkshire and its subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) Berkshire will furnish to the Representatives and counsel
for the Underwriters, without charge, copies of the Berkshire Registration
Statement (including exhibits thereto), and to each other Underwriter a copy of
the Berkshire Registration Statement (without exhibits thereto) and so long as
delivery of a prospectus by an Underwriter or any dealer may be required by the
Act, as many copies of each Preliminary Final Berkshire Prospectus and the Final
Berkshire Prospectus and any supplement thereto as the Representatives may
reasonably request.
(e) Berkshire will arrange for the qualification of the
Securities and the Shares for sale under the laws of such jurisdictions as the
Representatives may designate and will maintain such qualifications in effect so
long as required for the distribution of the Securities and the Shares;
provided, however, that in connection therewith, Berkshire shall not be required
to qualify as a foreign corporation or to file a general consent to service of
process in any
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jurisdiction. Berkshire will pay the fee of the National Association of
Securities Dealers, Inc. in connection with any review of the offering by it.
(f) Until the 90th business day following the Execution Time,
Berkshire will not, without the prior written consent of Salomon Brothers Inc,
offer, sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of, any shares of Salomon Common Stock, or
any securities convertible into or exchangeable for, shares of Salomon Common
Stock; provided, however, that the foregoing shall not restrict the ability of
Berkshire or its subsidiaries to take any such actions in connection with the
offer and sale of shares of Salomon Common Stock in connection with the offering
of the Securities or any exchange or redemption of the Securities in accordance
with their terms.
7. Agreements of Salomon. Salomon agrees with the several
Underwriters that:
(a) Salomon will use its best efforts to cause the Salomon
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the offering
of the Securities, Salomon will not file any amendment of the Salomon
Registration Statement or supplement to the Salomon Prospectus unless Salomon
has furnished you a copy for your review prior to filing and will not file any
such proposed amendment or supplement to which you reasonably object. Subject to
the foregoing sentence, if the Salomon Registration Statement has become or
becomes effective pursuant to Rule 430A, or filing of the Salomon Prospectus is
otherwise required under Rule 424(b), Salomon will cause the Salomon Prospectus,
properly completed, and any supplement thereto to be filed with the Commission
pursuant to the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the Representatives of such
timely filing. Salomon will promptly advise the Representatives (i) when the
Salomon Registration Statement, if not effective at the Execution Time, and any
amendment thereto, shall have become effective, (ii) when the Salomon
Prospectus, and any supplement thereto, shall have been filed (if required) with
the Commission pursuant to Rule 424(b), (iii) when, prior to termination of the
offering of the Shares, any amendment to the Salomon Registration Statement
shall have been filed or become effective, (iv) of any request by the Commission
for any amendment of the Salomon Registration Statement or supplement to the
Salomon Prospectus or for any additional information, (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the Salomon
Registration Statement or the institution or threatening of any proceeding for
that purpose and (vi) of the receipt by Salomon of any notification with respect
to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. Salomon will use its best efforts to prevent the issuance of any such
stop order and, if issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Shares
is required to be delivered under the Act in connection with the distribution of
the Securities, any event occurs as a result of which the Salomon Prospectus as
then supplemented would include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein in the light
of the circumstances under which they were made not misleading, or if it shall
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<PAGE> 11
be necessary to amend the Salomon Registration Statement or supplement the
Salomon Prospectus to comply with the Act or the Exchange Act or the respective
rules thereunder, Salomon promptly will notify the Representatives and prepare
and file with the Commission, subject to the second sentence of paragraph (a) of
this Section 7, an amendment or supplement which will correct such statement or
omission or effect such compliance.
(c) As soon as practicable, Salomon will make generally
available to its security holders and to the Representatives an earnings
statement or statements of Salomon and its subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) Salomon will furnish to the Representatives and counsel
for the Underwriters, without charge, signed copies of the Salomon Registration
Statement (including exhibits thereto), and to each other Underwriter a copy of
the Salomon Registration Statement (without exhibits thereto) and so long as
delivery of a prospectus by an Underwriter or any dealer may be required by the
Act, as many copies of each Preliminary Salomon Prospectus and the Salomon
Prospectus and any supplement thereto as the Representatives may reasonably
request.
(e) Salomon will arrange for the qualification of the Shares
for sale under the laws of such jurisdictions as the Representatives may
designate and will maintain such qualifications in effect so long as required
for the distribution of the Securities and the Shares; provided, however, that
in connection therewith, Salomon shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction.
(f) Until the 90th business day following the Execution Time,
Salomon will not without the prior written consent of Salomon Brothers Inc,
offer, sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of, any shares of Salomon Common Stock or
any securities convertible into, or exchangeable for, shares of Salomon Common
Stock (other than the Shares in connection with the offering by Berkshire of the
Securities); provided, however, that the foregoing shall not restrict the
ability of Salomon or its subsidiaries to take such actions in connection with
the offering by Berkshire of the Securities or any exchange or redemption of the
Securities in accordance with their terms; and provided, further, that Salomon
may sell or register shares of Salomon Common Stock or grant options to purchase
the same, in either case, pursuant to any employee or director stock option
plan, stock ownership plan or dividend reinvestment plan of Salomon in effect at
the Execution Time.
8. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of Berkshire and Salomon contained
herein as of the Execution Time, the Closing Date and any settlement date
pursuant to Section 4 hereof, to the accuracy of the statements of Berkshire and
Salomon made in any certificates pursuant to the provisions hereof, to the
performance by Berkshire and Salomon of their respective obligations hereunder
and to the following additional conditions:
(a) If the Berkshire Registration Statement or the Salomon
Registration Statement has not become effective prior to the Execution Time,
unless the Representatives agrees in
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<PAGE> 12
writing to a later time, such Berkshire or Salomon Registration Statement will
become effective not later than (i) 6:00 PM, New York City time, on the date of
determination of the public offering price, if such determination occurred at or
prior to 3:00 PM, New York City time, on such date or (ii) 12:00 Noon, New York
City time, on the business day following the day on which the public offering
price was determined, if such determination occurred after 3:00 PM, New York
City time, on such date; if filing of the Final Berkshire Prospectus or the
Salomon Prospectus, or any supplements thereto, is required pursuant to Rule
424(b), such Final Berkshire Prospectus or Salomon Prospectus, and any such
supplements, will be filed in the manner and within the time period required by
Rule 424(b); and no stop order suspending the effectiveness of the Berkshire
Registration Statement or the Salomon Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or
threatened.
(b) Berkshire shall have furnished to the Representatives the
opinion of Munger, Tolles & Olson, counsel for Berkshire, dated the Closing
Date, to the effect that:
(i) each of Berkshire and National Indemnity Company, Columbia
Insurance Company and Government Employees Insurance Company
(individually a "Subsidiary" and collectively the "Subsidiaries") has
been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own its
properties and conduct its business as described in the Final Berkshire
Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction
which requires such qualification where it owns or leases material
properties or conducts material business, except for any such
jurisdiction where the failure to be so qualified would not have a
material adverse effect on such Subsidiary; and Berkshire is not
required to register as an investment company under the Investment
Company Act of 1940;
(ii) all the outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in the
Final Berkshire Prospectus, all outstanding shares of capital stock of
the Subsidiaries are owned by Berkshire either directly or through
wholly owned subsidiaries free and clear of any perfected security
interest and such counsel is not aware of any other security interests,
claims, liens or encumbrances;
(iii) Berkshire's authorized equity capitalization is as set
forth in the Final Berkshire Prospectus; the Securities conform to the
description thereof contained in the Final Berkshire Prospectus; and
authorization has been given to list the Securities on the NYSE,
subject to official notice of issuance and evidence of satisfactory
distribution, or Berkshire has filed a preliminary listing application
and all required supporting documents with respect to the Securities
with the NYSE and such counsel has no reason to believe that the
Securities will not be authorized for listing, subject to official
notice of issuance and evidence of satisfactory distribution;
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<PAGE> 13
(iv) the Indenture has been duly authorized, executed and
delivered, has been duly qualified under the Trust Indenture Act and
constitutes a legal, valid and binding obligation enforceable against
Berkshire in accordance with its terms (subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally from
time to time in effect and equitable principles relating to the
granting of specific performance and other equitable remedies as a
matter of judicial discretion); and the Securities have been duly
authorized, executed and delivered by Berkshire and, when authenticated
by the Trustee in accordance with the provisions of the Indenture and
delivered to and paid for by the Underwriters pursuant to this
Agreement, will constitute legal, valid and binding obligations of
Berkshire entitled to the benefits of the Indenture;
(v) to the best knowledge of such counsel, there is no pending
or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving
Berkshire or any of its subsidiaries, of a character required to be
disclosed in the Berkshire Registration Statement which is not
adequately disclosed in the Final Berkshire Prospectus, and there is no
franchise, contract or other document of a character required to be
described in the Berkshire Registration Statement or Final Berkshire
Prospectus, or to be filed as an exhibit, which is not described or
filed as required;
(vi) the Berkshire Registration Statement has become effective
under the Act; any required filing of the Basic Berkshire Prospectus,
any Preliminary Final Berkshire Prospectus and the Final Berkshire
Prospectus, and any supplements thereto, pursuant to Rule 424(b) has
been made in the manner and within the time period required by Rule
424(b); to the best knowledge of such counsel, no stop order suspending
the effectiveness of the Berkshire Registration Statement has been
issued, no proceedings for that purpose have been instituted or
threatened, and the Berkshire Registration Statement and the Final
Berkshire Prospectus (other than the financial statements and other
financial and statistical information contained or incorporated therein
and the Salomon Prospectus, as to which such counsel need express no
opinion) comply as to form in all material respects with the applicable
requirements of the Act, the Exchange Act and the Trust Indenture Act
and the respective rules thereunder; and such counsel has no reason to
believe that at the Berkshire Effective Date the Berkshire Registration
Statement (other than the financial statements and other financial and
statistical information contained or incorporated therein and the
Salomon Prospectus, as to which such counsel need express no opinion)
contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Final Berkshire
Prospectus (other than the financial statements and other financial and
statistical information contained or incorporated therein and the
Salomon Prospectus, as to which such counsel need express no opinion)
includes any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
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<PAGE> 14
(vii) this Agreement has been duly authorized, executed and
delivered by Berkshire;
(viii) no consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body is required for the consummation of the transactions
contemplated herein, except such as have been obtained under the Act,
the Exchange Act and the Trust Indenture Act and such as may be
required under the state securities or blue sky laws in connection with
the purchase and distribution of the Securities and the Shares by the
Underwriters and such other approvals (specified in such opinion) as
have been obtained;
(ix) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach of, or constitute a default under the charter or by-laws of
Berkshire or the terms of any indenture or other agreement or
instrument known to such counsel and to which Berkshire or any of its
subsidiaries is a party or bound, or any order or regulation known to
such counsel to be applicable to Berkshire or any of its subsidiaries
of any court, regulatory body, administrative agency, governmental body
or arbitrator having jurisdiction over Berkshire or any of its
subsidiaries; and
(x) no holder of securities of Berkshire has rights to the
registration of such securities under the Berkshire Registration
Statement.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
States of California and Delaware (and as to Delaware, involving the application
of any law other than the Delaware General Corporation Law) or the United
States, to the extent deemed proper and specified in such opinion, upon the
opinion of other counsel of good standing believed to be reliable and who are
satisfactory to counsel for the Underwriters, (B) to the extent such opinion
relates to the law of the State of New York (which law the Indenture, this
Agreement and the Securities state to be the governing law thereof), assume that
the laws of the State of California are the same as those of the State of New
York and (C) as to matters of fact, to the extent deemed proper, on certificates
of responsible officers of Berkshire and public officials. References to the
Final Berkshire Prospectus in this paragraph (b) include any supplements thereto
at the Closing Date.
(c) Salomon shall have furnished to the Representatives the
opinion of Cravath, Swaine & Moore, counsel for Salomon, or Arnold S. Olshin,
Secretary for Salomon, dated the Closing Date, to the effect, in the aggregate,
that:
(i) each of Salomon and Salomon Brothers Inc. ("SBI") has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own its
properties and conduct its business as described in the Salomon
Prospectus;
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<PAGE> 15
(ii) Salomon's authorized equity capitalization is as set
forth in the Salomon Prospectus; the capital stock of Salomon conforms
to the description thereof contained in the Salomon Prospectus; the
outstanding shares of Salomon Common Stock have been duly and validly
authorized and issued and are fully paid and nonassessable; the shares
of Salomon Common Stock (the "Conversion Shares") issuable on
conversion of Salomon's 9% Series A Cumulative Convertible Preferred
Stock (the "Convertible Preferred Stock") shall upon conversion of the
Convertible Preferred Stock in accordance with its terms be duly
issued, fully paid and nonassessable; and no holders of securities of
Salomon are entitled to preemptive or other rights to subscribe for the
Conversion Shares;
(iii) to the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving
Salomon or any of its subsidiaries, of a character required to be
disclosed in the Salomon Registration Statement which is not adequately
disclosed in the Salomon Prospectus; and the statements included or
incorporated in the Salomon Prospectus describing any legal proceedings
relating to Salomon fairly summarize such matters;
(iv) the Salomon Registration Statement has become effective
under the Act; any required filing of any Salomon Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); to the best
knowledge of such counsel, no stop order suspending the effectiveness
of the Salomon Registration Statement has been issued, and no
proceedings for that purpose have been instituted or threatened; the
Salomon Registration Statement and the Salomon Prospectus (other than
the financial statements and other financial and statistical
information contained therein as to which such counsel need not express
any opinion) appeared on their face to be appropriately responsive in
all material respects with the requirements of the Act and the
respective rules and regulations thereunder; and such counsel has no
reason to believe that at the Salomon Effective Date, the Salomon
Registration Statement contained any untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or
that at the Closing Date, the Salomon Prospectus (other than the
financial statements and other financial and statistical information
contained therein) includes any untrue statement of a material fact or
omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(v) this Agreement has been duly authorized, executed and
delivered by Salomon;
(vi) no consent, approval, authorization or order of any
court or governmental body or agency is required for the consummation
by Salomon of the transactions contemplated herein, except such as have
been obtained under the Act (other than in connection with any exchange
of the Securities at the option of the holder thereof) and such as may
be required under the blue sky laws of any jurisdiction in connection
with
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<PAGE> 16
the sale of the Securities by the Underwriters and the distribution of
the Shares pursuant to the terms of the Securities and such other
approvals (specified in such opinion) as have been obtained;
(vii) neither the issue and sale of the Securities nor the
delivery of the Shares upon exchange of the Securities, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach of, or constitute a default under the charter or by-laws of
Salomon or the terms of any indenture or other agreement or instrument
known to such counsel and to which Salomon or any of its subsidiaries
is a party or bound, or any order or regulation known to such counsel
to be applicable to Salomon or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over Salomon or any of its subsidiaries; and
(viii) no holder of securities of Salomon, other than
Berkshire, has rights to the registration of such securities under the
Salomon Registration Statement.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
States of New York and Delaware or the United States, to the extent such counsel
deems proper and specified in such opinion, upon the opinion of other counsel of
good standing whom such counsel believes to be reliable and who are satisfactory
to counsel for the Underwriters and (B) as to matters of fact, to the extent
such counsel deems proper, on certificates of responsible officers of Salomon
and public officials. References to the Salomon Prospectus in this paragraph (c)
include any supplements thereto at the Closing Date.
(d) The Representatives shall have received from Cleary,
Gottlieb, Steen & Hamilton, counsel for the Underwriters, such opinion or
opinions, or letter or letters, dated the Closing Date, with respect to the
issuance and sale of the Securities, the Indenture, the Shares, the Salomon
Registration Statement, the Salomon Prospectus (together with any supplement
thereto), certain information contained in the Berkshire Registration Statement
and the Final Berkshire Prospectus (together with any supplement thereto) and
other related matters as the Representatives may reasonably require, and the
Representatives and Berkshire shall have received from Cravath, Swaine & Moore
such letter or letters, dated the Closing Date, with respect to certain
information contained in the Berkshire Registration Statement and the Final
Berkshire Prospectus (together with any supplement thereto) as the
Representatives may reasonably require.
(e) Berkshire shall have furnished to the Representatives a
certificate of Berkshire, signed by the Chairman or the Vice Chairman of the
Board and the principal financial or accounting officer of Berkshire, dated the
Closing Date, to the effect that the signers of such certificate have carefully
examined the Berkshire Registration Statement, the Final Berkshire Prospectus,
any supplement to the Final Berkshire Prospectus and this Agreement and that:
(i) the representations and warranties of Berkshire in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if
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<PAGE> 17
made on the Closing Date and Berkshire has complied with all the
agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Berkshire Registration Statement has been issued and no proceedings for
that purpose have been instituted or, to Berkshire's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in, or incorporated by reference in, the Final Berkshire
Prospectus (exclusive of any supplement thereto), there has been no
material adverse change in the condition (financial or other),
earnings, business or properties of Berkshire and its subsidiaries,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Final Berkshire
Prospectus (exclusive of any supplement thereto).
(f) Salomon shall have furnished to the Representatives and
Berkshire a certificate of Salomon, signed by the Senior Vice President and
Controller of Salomon, dated the Closing Date, to the effect that the signers of
such certificate have carefully examined the Salomon Registration Statement, the
Salomon Prospectus, any supplements to the Salomon Prospectus and this Agreement
and that:
(i) the representations and warranties of Salomon in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and Salomon has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the
Closing Date;
(ii) no stop order suspending the effectiveness of the
Salomon Registration Statement and no proceedings for that purpose have
been instituted or, to Salomon's knowledge, threatened; and
(iii) since the date of the most recent financial statements
included in, or incorporated by reference in, the Salomon Prospectus
(exclusive of any supplement thereto), there has been no material
adverse change in the condition (financial or other), earnings,
business or properties of Salomon and its subsidiaries, whether or not
arising from transactions in the ordinary course of business, except as
set forth in or contemplated in the Salomon Prospectus (exclusive of
any supplement thereto).
(g) At the Execution Time and at the Closing Date, Deloitte
& Touche LLP shall have furnished to the Representatives a letter or letters
(which may refer to letters previously delivered to one or more of the
Representatives), dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the Representatives,
confirming that they are independent accountants within the meaning of the Act
and the Exchange Act and the respective applicable published rules and
regulations thereunder and stating in effect that:
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<PAGE> 18
(i) in their opinion the audited consolidated financial
statements and financial statement schedules included or incorporated
in the Berkshire Registration Statement and the Final Berkshire
Prospectus and reported on by them comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited
consolidated financial statements made available by Berkshire and its
subsidiaries; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing standards)
which would not necessarily reveal matters of significance with respect
to the comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors and audit committees of
Berkshire and the minutes of the meetings of the stockholders and
directors of the Subsidiaries; and inquiries of certain officials of
Berkshire who have responsibility for financial and accounting matters
of Berkshire and its subsidiaries as to transactions and events
subsequent to the date of the most recent audited financial statements
in or incorporated in the Final Berkshire Prospectus, nothing came to
their attention which caused them to believe that:
(1) any unaudited financial statements included or
incorporated in the Berkshire Registration Statement and the
Final Berkshire Prospectus do not comply as to form in all
material respects with applicable accounting requirements and
with the published rules and regulations of the Commission
with respect to financial statements included or incorporated
in quarterly reports on Form 10-Q under the Exchange Act; and
said unaudited financial statements are not in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included or incorporated in the Berkshire
Registration Statement and the Final Berkshire Prospectus; or
(2) with respect to the period subsequent to the date
of the most recent financial statements (other than any
capsule information), audited or unaudited, in or incorporated
in the Berkshire Registration Statement and the Final
Berkshire Prospectus, there were any increases, at a specified
date not more than three business days prior to the date of
the letter, in the borrowings under investment agreements and
other debt of Berkshire and its subsidiaries or decreases in
stockholders' equity of Berkshire, each as compared with the
amounts shown on the most recent consolidated balance sheet
included or incorporated in the Berkshire Registration
Statement and the Final Berkshire Prospectus, except in all
instances for changes set forth in such letter, in which case
the letter shall be accompanied by an explanation by Berkshire
as to the significance thereof unless said explanation is not
deemed necessary by the Representatives; and
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
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<PAGE> 19
general accounting records of Berkshire and is subsidiaries) set forth
in the Berkshire Registration Statement and the Final Berkshire
Prospectus and in Exhibit 12 to the Berkshire Registration Statement,
including the information set forth under the caption "Selected
Consolidated Financial Data of Berkshire" in the Final Berkshire
Prospectus, the information included or incorporated in Items 1, 6 and
7 of Berkshire's Annual Report on Form 10-K, incorporated in the
Berkshire Registration Statement and the Final Berkshire Prospectus,
and the information included in the "Management's Discussion and
Analysis of Berkshire Financial Condition and Results of Operations"
included or incorporated in Berkshire's Quarterly Reports on Form 10-Q,
incorporated in the Berkshire Registration Statement Registration
Statement and the Final Berkshire Prospectus, agrees with the
accounting records of Berkshire and its subsidiaries, excluding any
questions of legal interpretation.
References to the Final Berkshire Prospectus in this paragraph
(g) include any supplement thereto at the date of the letter.
(h) At the Execution Time, Arthur Andersen LLP shall have
furnished to the Representatives and Berkshire a letter or letters (which may
refer to letters previously delivered to the Representatives), dated as of the
Execution Time, in form and substance satisfactory to the Representatives,
confirming that they are independent accountants within the meaning of the Act
and the Exchange Act and the respective applicable published rules and
regulations thereunder and stating in effect that:
(i) in their opinion the audited financial statements and
schedules included or incorporated by reference in the Salomon
Registration Statement and the Salomon Prospectus comply as to form in
all material respects with the applicable accounting requirements of
the Act and the Exchange Act and the related published rules and
regulations thereunder;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by Salomon and its subsidiaries;
their limited review in accordance with standards established by the
American Institute of Certified Public Accountants of the unaudited
interim financial information as indicated in their reports
incorporated in the Salomon Registration Statement and the Salomon
Prospectus; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing standards)
which would not necessarily reveal matters of significance with respect
to the comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors and executive and audit
committees of Salomon and SBI; and inquiries of certain officials of
Salomon who have responsibility for financial and accounting matters of
Salomon and its subsidiaries as to transactions and events subsequent
to the date of the most recent audited financial statements in or
incorporated in the Salomon Prospectus, nothing came to their attention
which caused them to believe that:
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<PAGE> 20
(1) any unaudited financial statements included or
incorporated in the Salomon Registration Statement and the
Salomon Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the
Exchange Act and with the related published rules and
regulations with respect to financial statements included or
incorporated in quarterly reports on Form 10-Q under the
Exchange Act; and said unaudited financial statements are not
in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited financial statements included or incorporated in the
Salomon Registration Statement and the Salomon Prospectus; or
(2) with respect to the period subsequent to the date
of the most recent financial statements (other than any
capsule information), audited or unaudited, in or incorporated
in the Salomon Registration Statement and the Salomon
Prospectus, there were any changes, at a specified date not
more than three business days prior to the date of the letter,
in the consolidated long-term debt of Salomon and its
subsidiaries or decreases in the stockholders' equity of
Salomon and its subsidiaries as compared with the amounts
shown on the most recent consolidated balance sheet included
or incorporated in the Salomon Registration Statement and the
Salomon Prospectus, or for the period from the date of the
most recent financial statements included or incorporated in
the Salomon Registration Statement and the Salomon Prospectus
to such specified date there were any decreases, as compared
with the corresponding period in the preceding year, in net
revenues or income before taxes or in total or per share
amounts of net income of Salomon and its subsidiaries, except
in all instances for changes or decreases set forth in such
letter, in which case the letter shall be accompanied by an
explanation by Salomon as to the significance thereof unless
said explanation is not deemed necessary by the
Representatives; and
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of Salomon and is subsidiaries) set forth in
the Salomon Registration Statement and the Salomon Prospectus,
including the information included or incorporated in Items 1, 2, 6, 7
and 11 of Salomon's Annual Report on Form 10-K, incorporated in the
Salomon Registration Statement and the Salomon Prospectus, and the
information included in the "Management's Discussion and Analysis of
Salomon Financial Condition and Results of Operations" included or
incorporated in Salomon's Quarterly Reports on Form 10-Q, incorporated
in the Salomon Registration Statement and the Salomon Prospectus,
agrees with the accounting records of Salomon and its subsidiaries,
excluding any questions of legal interpretation.
References to the Salomon Prospectus in this paragraph (h)
include any supplement thereto at the date of the letter.
20
<PAGE> 21
In addition, at the Closing Date, Arthur Andersen LLP shall
have furnished to the Representatives and Berkshire a letter or letters, dated
as of the Closing Date, in form and substance satisfactory to the
Representatives, to the effect set forth above.
(i) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in each of the Berkshire Registration Statement
and the Salomon Registration Statement (exclusive of any amendment thereof) and
each of the Final Berkshire Prospectus and the Salomon Prospectus (exclusive of
any supplements thereto), there shall not have been (i) any change or decrease
specified in the letter or letters referred to in paragraphs (g) and (h) of this
Section 8 or (ii) any change, or any development involving a prospective change,
in or affecting the business or properties of either Berkshire or Salomon and
their respective subsidiaries, taken as a whole, the effect of which, in any
case referred to in clause (i) or (ii) above, is, in the judgment of the
Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Berkshire Registration Statement and the Salomon
Registration Statement (in either case, exclusive of any amendment thereof) and
the Final Berkshire Prospectus and the Salomon Prospectus (in either case,
exclusive of any supplement thereto).
(j) Subsequent to the Execution Time, there shall not have
been any decrease in the rating of any of Berkshire's or Salomon's debt
securities by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act).
(k) Prior to the Closing Date, each of Berkshire and Salomon
shall have furnished to the Representatives such further information,
certificates and documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 8 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the Underwriter hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to Berkshire and
Salomon in writing or by telephone or telegraph confirmed in writing.
9. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 8 hereof is not satisfied,
because of any termination pursuant to Section 12 hereof or because of any
refusal, inability or failure on the part of Berkshire or Salomon to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any Underwriter, Berkshire will reimburse the Underwriters severally
upon demand for all reasonable out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities; provided,
however, that if the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 8 that is to be satisfied by Salomon is not satisfied or
because of any refusal, inability or failure on the part of Salomon to perform
any agreement herein or comply with any provision hereof other than by reason
of a default by any Underwriter, Salomon shall reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
21
<PAGE> 22
10. Indemnification and Contribution. (a) Berkshire agrees to indemnify
and hold harmless each Underwriter, the directors, officers, employees and
agents of each Underwriter, each person who controls any Underwriter within the
meaning of either the Act or the Exchange Act, Salomon, each of Salomon's
directors, each of Salomon's officers who signs the Salomon Registration
Statement and each person who controls Salomon within the meaning of either the
Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
(i) the Berkshire Registration Statement as originally filed or in any amendment
thereof, or in the Basic Berkshire Prospectus, any Preliminary Final Berkshire
Prospectus or the Final Berkshire Prospectus, or in any amendment thereof or
supplement thereto, or (ii) the Salomon Registration Statement as originally
filed or in any amendment thereof, or in any Preliminary Salomon Prospectus or
the Salomon Prospectus, or in any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state in the
documents referred to in clause (i) or (ii) above a material fact required to be
stated in the documents referred to in clause (i) or (ii) above or necessary to
make the statements therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that Berkshire will not
be liable under the indemnity agreement in this paragraph (a) to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made in (A) the documents referred to in clause (i) or (ii) above in
reliance upon and in conformity with written information furnished to Berkshire
or Salomon by or on behalf of any Underwriter through the Representatives
specifically for inclusion therein, or (B) (1) the Berkshire Registration
Statement, any Preliminary Final Berkshire Prospectus or the Final Berkshire
Prospectus (or any amendment or supplement thereto) under the headings "Salomon
Inc" and "Price Range of Salomon Common Stock and Dividend Policy" (other than
the last paragraph thereof) or (2) the Salomon Registration Statement, any
Preliminary Salomon Prospectus or the Salomon Prospectus (or any amendment or
supplement thereto), except under the heading "Ownership of Company Securities
by Berkshire". This indemnity agreement will be in addition to any liability
which Berkshire may otherwise have.
(b) Salomon agrees to indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter, each person who
controls any Underwriter within the meaning of either the Act or the Exchange
Act, Berkshire, each of Berkshire's directors, each of Berkshire's officers who
signs the Berkshire Registration Statement, and each person who controls
Berkshire within the meaning of either the Act or the Exchange Act, against any
and all losses, claims, damages or liabilities, joint or several, to which they
or any of them may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in (i) the Salomon Registration Statement
as originally filed or in any amendment thereof, or in any Preliminary Salomon
22
<PAGE> 23
Prospectus or the Salomon Prospectus, or in any amendment thereof or supplement
thereto, or (ii) the Berkshire Registration Statement as originally filed or in
any amendment thereof, or in any Preliminary Final Berkshire Prospectus or the
Final Berkshire Prospectus, or in any amendment thereto or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state in
the documents referred to in clause (i) or (ii) above a material fact required
to be stated in the documents referred to in clause (i) or (ii) above or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that Salomon
will not be liable under the indemnity agreement in this paragraph (b) to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made in (A) the documents referred to in clause (i) or (ii)
above in reliance upon and in conformity with written information furnished to
Salomon or Berkshire by or on behalf of any Underwriter through the
Representatives specifically for inclusion therein or (B) (1) the information
contained in or omitted from the Salomon Registration Statement, any Preliminary
Salomon Prospectus or the Salomon Prospectus under the heading "Ownership of
Company Securities by Berkshire" in the prospectus supplement and in the first,
fourth and fifth paragraphs under the heading "Ownership of Company Securities
by Berkshire" in the base prospectus or (2) the Berkshire Registration
Statement, any Preliminary Final Berkshire Prospectus or the Final Berkshire
Prospectus (or any amendment or supplement thereto), except under the headings
"Salomon Inc" and "Price Range of Salomon Common Stock and Dividend Policy"
(other than the last paragraph thereof). This indemnity agreement will be in
addition to any liability which Salomon may otherwise have.
(c) Each Underwriter severally agrees to indemnify and hold
harmless Berkshire and Salomon, each of their respective directors, each of
their respective officers who signs the Berkshire Registration Statement or the
Salomon Registration Statement, respectively, and each person who controls
Berkshire or Salomon within the meaning of either the Act or the Exchange Act,
to the same extent as the foregoing indemnities in paragraph (a) from Berkshire
to each Underwriter or in paragraph (b) from Salomon to each Underwriter,
respectively, but only with reference to written information relating to such
Underwriter furnished to Berkshire by or on behalf of such Underwriter through
the Representatives specifically for inclusion in the Berkshire Registration
Statement as originally filed or in any amendment thereof, or in any Preliminary
Final Berkshire Prospectus or the Final Berkshire Prospectus, or in any
amendment thereof or supplement thereto, and to Salomon by or on behalf of any
Underwriter through the Representatives specifically for inclusion in the
Salomon Registration Statement as originally filed or in any amendment thereof,
or in any Preliminary Salomon Prospectus or the Salomon Prospectus, or in any
amendment thereof or supplement thereto. This indemnity agreement will be in
addition to any liability which any Underwriter may otherwise have. Berkshire
and Salomon acknowledge that the statements set forth in the last paragraph of
the cover page and under the heading "Plan of Distribution" in any Preliminary
Final Berkshire Prospectus or the Final Berkshire Prospectus and the statements
set forth under the heading "Plan of Distribution" in any Preliminary Salomon
Prospectus or the Salomon Prospectus constitute the only information furnished
in writing by or on behalf of any Underwriter for inclusion in the
23
<PAGE> 24
documents referred to in the foregoing indemnity, and you, as the
Representatives, confirm that such statements are correct.
(d) Promptly after receipt by an indemnified party under this
Section 10 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 10, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from any liability under paragraphs (a), (b) or (c) above
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraphs (a), (b) or (c) above. The
indemnifying party shall be entitled to appoint counsel of indemnifying party's
choice at the indemnifying party's expense to represent the indemnified party in
any action for which indemnification is sought (in which case the indemnifying
party shall not thereafter be responsible for the fees and expenses of any
separate counsel retained by the indemnified party or parties except as set
forth below); provided, however, that such counsel shall be satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party in accordance with this
paragraph (d) within a reasonable time after notice of the institution of such
action or (iv) the indemnifying party shall authorize the indemnified party to
employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(e) In the event that the indemnity provided in paragraph (a),
(b) or (c) of this Section 10 is unavailable to or insufficient to hold harmless
an indemnified party for any reason, Berkshire, Salomon and the Underwriters
agree to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which Berkshire,
Salomon and one or more of the Underwriters may be subject in such proportion as
is appropriate to reflect the relative benefits received by Berkshire and
Salomon, on the one hand, and the Underwriters, on the other hand, from the
offering of the Securities; provided, however, that in no case shall any
24
<PAGE> 25
Underwriter (except as may be provided in any agreement among underwriters
relating to the offering of the Securities) be responsible for any amount in
excess of the underwriting discount or commission applicable to the Securities
purchased by such Underwriter hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, Berkshire and
Salomon, on the one hand, and the Underwriters, on the other hand, shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of Berkshire and Salomon, on the
one hand, and the Underwriters, on the other hand, in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. The relative benefits received by Berkshire
or Salomon on the one hand and the Underwriters on the other with respect to
such offering shall be deemed to be equal to the total net proceeds from the
offering (before deducting expenses) received by Berkshire, and the total
underwriting discounts and commissions, respectively, in each case as set forth
on the cover page of the Final Berkshire Prospectus. Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to information provided by Berkshire and Salomon, on the one hand, or
the Underwriters, on the other hand. Berkshire, Salomon and the Underwriters
agree that it would not be just and equitable if contribution were determined by
pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (e), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 10, each person who controls an
Underwriter within the meaning of either the Act or the Exchange Act and each
director, officer, employee and agent of such Underwriter shall have the same
rights to contribution as such Underwriter, and each person who controls
Berkshire or Salomon within the meaning of either the Act or the Exchange Act,
each officer of Berkshire or Salomon who shall have signed the Berkshire
Registration Statement or the Salomon Registration Statement and each director
of Berkshire or Salomon shall have the same rights to contribution as Berkshire
or Salomon, subject in each case to the applicable terms and conditions of this
paragraph (e).
11. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the principal amount of
Securities set forth opposite their names in Schedule I hereto bears to the
aggregate principal amount of Securities set forth opposite the names of all the
remaining Underwriters) the Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the event
that the aggregate principal amount of Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of
the aggregate amount of Securities set forth in Schedule I hereto, the remaining
Underwriters shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the Securities, and if such nondefaulting
Underwriters do not purchase all the Securities, this Agreement will terminate
without liability to any nondefaulting Underwriter, Berkshire or Salomon. In the
event of a default by any Underwriter as set forth in this Section 11, the
Closing Date shall be postponed for such period, not exceeding seven days, as
the Representatives shall
25
<PAGE> 26
determine in order that the required changes in the Berkshire Registration
Statement or Salomon Registration Statement and the Final Berkshire Prospectus
or Salomon Prospectus or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Underwriter of
its liability, if any, to Berkshire, Salomon and any nondefaulting Underwriter
for damages occasioned by its default hereunder.
12. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice given
to Berkshire and Salomon prior to delivery of and payment for the Securities, if
prior to such time (i) trading in Berkshire's or Salomon's Common Stock shall
have been suspended by the Commission, (ii) trading in the securities generally
on the NYSE shall have been suspended or limited or minimum prices shall have
been established on such Exchange, (iii) a banking moratorium shall have been
declared by either Federal or New York State authorities or (iv) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States of a national emergency or war or other calamity or crisis, the
effect of which on financial markets of the United States is such as to make it,
in the judgment of the Representatives, impracticable or inadvisable to proceed
with the offering or delivery of the Securities as contemplated by the Final
Berkshire Prospectus (exclusive of any supplement thereto).
13. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of
Berkshire and Salomon or their respective officers and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of the
Underwriters, Berkshire or Salomon or any of the officers, directors or
controlling persons referred to in Section 10 hereof, and will survive delivery
of and payment for the Securities. The provisions of Sections 9 and 10 hereof
shall survive the termination or cancellation of this Agreement.
14. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telegraphed and confirmed to them at Seven World Trade
Center, New York, New York 10048, attention of the Legal Department; if sent to
Berkshire, will be mailed, delivered or telegraphed and confirmed to it at 1440
Kiewit Plaza, Omaha, Nebraska 68131, attention of the Chief Executive Officer;
or if sent to Salomon, will be mailed, delivered, telegraphed and confirmed to
it at Seven World Trade Center, New York, New York 10048, attention of the
Secretary.
15. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 10 hereof,
and no other person will have any right or obligation hereunder.
26
<PAGE> 27
16. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among
Berkshire, Salomon and the several Underwriters.
Very truly yours,
Berkshire Hathaway Inc.
By: /s/ MARK D. HAMBURG
-------------------------
Name: Mark D. Hamburg
Title: Vice President
Salomon Inc
By: /s/ ROBERT E. DENHAM
-------------------------
Name: Robert E. Denham
Title: Chairman and CEO
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
Goldman, Sachs & Co.
Smith Barney Inc.
By: Salomon Brothers Inc
By: /s/ D. SCOTT MILLER
------------------------
Name: D. Scott Miller
Title: Director
For themselves and the other several
Underwriters named in Schedule I to
the foregoing Agreement.
27
<PAGE> 28
SCHEDULE I
<TABLE>
<CAPTION>
Underwriter Principal Face Amount of Underwritten Securities
- ----------- ------------------------------------------------
to be Purchased
---------------
<S> <C>
Salomon Brothers Inc......................... $ 146,666,668
Goldman, Sachs & Co.......................... 146,666,666
Smith Barney Inc............................. 146,666,666
-------------
Total................... $[440,000,000]
==============
</TABLE>
28
<PAGE> 1
================================================================================
EXHIBIT 4
FIRST SUPPLEMENTAL INDENTURE
Dated as of December 2, 1996
Supplementing and Amending the Indenture
Dated as of December 1, 1987
--------------
BERKSHIRE HATHAWAY INC.
TO
STATE STREET BANK AND TRUST COMPANY,
Trustee
--------------
1.00% Senior Exchangeable Notes Due December 2, 2001
--------------
================================================================================
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE dated as of December 2, 1996 (this
"Supplemental Indenture"), made and entered into by and between BERKSHIRE
HATHAWAY INC., a corporation organized and existing under the laws of the State
of Delaware having its principal office at 1440 Kiewit Plaza, Omaha, Nebraska
68131 (the "Company"), and STATE STREET BANK AND TRUST COMPANY, as successor
trustee (together with its successors, the "Trustee").
WHEREAS the Company entered into an Indenture dated as of December 1,
1987 (the "Basic Indenture") with The First National Bank of Boston, as the
initial Trustee, for the purposes of issuing its unsecured debentures, notes or
other evidences of indebtedness to be issued in one or more series (the "Debt
Securities"), in such principal amount or amounts as may from time to time be
authorized by or pursuant to the authority granted in one or more resolutions of
the Board of Directors of the Company;
WHEREAS the Company has requested the Trustee to join with it in the
execution and delivery of this First Supplemental Indenture in order to comply
with amendments to the Trust Indenture Act and to provide for a series of Debt
Securities denominated its "1.00% Senior Exchangeable Notes Due December 2,
2001" (such Debt Securities being referred to herein as the "Notes");
WHEREAS Section 901(6) and (8) of the Basic Indenture provides that
without the consent of the Holders of Debt Securities, the Company, when
authorized by a Board Resolution, and the Trustee may enter into one or more
indentures supplemental to the Basic Indenture, in form satisfactory to the
Trustee, (a) to establish the form or terms of Debt Securities of any series and
(b) to cure any ambiguity, to correct or supplement any provision therein which
may be defective or inconsistent with any other provision therein, or to make
any other provisions with respect to matters or questions arising under the
Basic Indenture which shall not be inconsistent with the provisions of the Basic
Indenture, provided such other provisions shall not adversely affect the
interest of the Holders of Debt Securities of any series in any material
respect;
WHEREAS the entry into this Supplemental Indenture by the parties
hereto is in all respects authorized by the provisions of the Basic Indenture;
and
WHEREAS all things necessary to make this Supplemental Indenture a
valid agreement of the Company in accordance with its terms have been done.
NOW, THEREFORE, and in consideration of the premises and purchase of
the Debt Securities by the Holders thereof, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders, without
preference, priority or distinction of any of the Debt Securities over any of
the others by reason of difference in series or priority in time of issuance,
negotiation or maturity thereof, or otherwise except as otherwise provided in
the Basic Indenture or this Supplemental Indenture, as follows:
<PAGE> 3
2
SECTION 1. The Basic Indenture is hereby amended to reflect certain
amendments to the Trust Indenture Act as follows:
(a) The definition of "Trust Indenture Act" in Section 101 is amended
to add to such definition the phrase ", as amended by the Trust Indenture Reform
Act of 1990," after the date "1939" in the first line of such definition.
(b) Section 102 of the Indenture is amended to add in the first line of
the second paragraph, after the word "Indenture", the following: "(other than
certificates provided pursuant to Section 1004)".
(c) Section 107 of the Indenture is amended to read in its entirety as
follows:
"If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act which is required under such Act
to be a part of and govern this Indenture, the latter provision shall
control. If any provision of this Indenture modifies or excludes any
provision of the Trust Indenture Act which may be so modified or
excluded, the latter provision shall be deemed to apply to this
Indenture as so modified or to be excluded, as the case may be."
(d) Section 608 of the Indenture is amended to read in its entirety as
follows:
"If the Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Trustee shall either
eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act
and this Indenture. To the extent permitted by such Act, the Trustee
shall not be deemed to have a conflicting interest by virtue of being a
trustee under this Indenture with respect to Securities of more than
one series."
(e) Section 609 of the Indenture is amended to read in its entirety as
follows:
"There shall at all times be one (and only one) Trustee
hereunder with respect to the Securities of each series, which may be
Trustee hereunder for Securities of one or more other series. Each
Trustee shall be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of
at least $50,000,000. If any such Person publishes reports of condition
at least annually, pursuant to law or to the requirements of its
supervising or examining authority, then for the purposes of this
Section and to the extent permitted by the Trust Indenture Act, the
combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee with respect to the
Securities of any series shall cease to be eligible in accordance with
the provisions of this Section, it shall resign immediately in the
manner and with the effect hereinafter specified in this Article."
<PAGE> 4
3
(e) Section 613 of the Indenture is amended to read in its entirety as
follows:
"If and when the Trustee shall be or become a creditor of the
Company (or any other obligor upon the Securities), the Trustee shall
be subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Company (or any such other obligor)."
(f) Section 703 of the Indenture is amended to read in its entirety as
follows:
"The Trustee shall transmit to Holders such reports concerning
the Trustee and its actions under this Indenture as may be required
pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant thereto.
A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock
exchange upon which any Debt Securities are listed, with the Commission
and with the Company. The Company will notify the Trustee when any Debt
Securities are listed on any stock exchange."
(g) Section 1004 of the Indenture is amended by denoting the current
paragraph in Section 1004 as paragraph (a) and by adding as a new paragraph (b)
the following:
"(b) The Company will deliver to the Trustee, within 120 days
after the end of each fiscal year of the Company ending after the date
hereof, a certificate of the principal executive officer, principal
financial officer or principal accounting officer of the Company
stating whether or not to the best knowledge of the signer thereof the
Company is in default in the performance and observance of any of the
terms, provisions and conditions of this Indenture (without regard to
any period of grace or requirement of notice provided hereunder) and,
if the Company shall be in default, specifying all such defaults and
the nature and status thereof of which such signer may have knowledge."
SECTION 2. The Basic Indenture is hereby amended by amending Section
301 of the Basic Indenture by (i) adding as a new subparagraph (15) the
following: "(15) the obligation, if any, of the Company to permit the conversion
or exchange of the Debt Securities of such series into other securities (whether
or not issued by, or the obligation of, the Company), and the terms and
conditions upon which such conversion or exchange shall be effected (including,
without limitation, the initial conversion or exchange price or rate, the
conversion or exchange period and any other provision in addition to or in lieu
of those set forth in this Indenture relative to such obligation); and"; and by
(ii) renumbering current subparagraphs (15) and (16) of Section 301 to new
subparagraphs (16) and (17), respectively.
SECTION 3. The Basic Indenture is hereby further amended, solely with
respect to a series of securities that consists of Notes, as follows:
<PAGE> 5
4
(a) By amending Section 101 to add new definitions thereto, in the
appropriate alphabetical sequence, as follows:
"Accreted Value" of a Note means the issue price of the Note plus
accrued OID thereon.
"Business Day" for purposes of the Notes means any day that is not a
Saturday, a Sunday or a day on which the NYSE, banking institutions or trust
companies in The City of New York are authorized or obligated by law or
executive order to close.
"Closing Price" of any security on any date of determination means the
closing sale price (or, if no closing price is reported, the last reported sale
price) of such security (regular way) on the NYSE on such date or, if such
security is not listed for trading on the NYSE on any such date, as reported in
the composite transactions for the principal United States securities exchange
on which such security is so listed, or if such security is not so listed on a
United States national or regional securities exchange, as reported by the
Nasdaq Stock Market, or, if such security is not so reported, the last quoted
bid price for such security in the over-the-counter market as reported by the
National Quotation Bureau or similar organization, or, if such bid price is not
available, the average of the mid-point of the last bid and ask prices for such
security from each of at least three nationally recognized investment banking
firms selected for such purpose by the Company, or if such quotes are not
available, the market value of such security on such date as determined by a
nationally recognized independent investment banking firm selected for this
purpose by the Company.
"Current Market Value" of Salomon Common Stock on any date of
determination means the greater of (1) the 10-Day Average Closing Price of
Salomon Common Stock as of such date and (2) the Closing Price of Salomon Common
Stock on the Trading Day immediately preceding such date (or, if determined
after the close of business on any Trading Day, the Closing Price of Salomon
Common Stock on such Trading Day).
"Electing Holder" has the meaning specified in Section 1402.
"Exchange Date" means the last Trading Day of each January, April, July
and October, from and including January 1997 through and including July 2001.
"Exchange Notice" has the meaning specified in Section 1402.
"Exchange Period" means the period from the opening of business on the
Business Day immediately prior to an Exchange Date until the close of business
on such Exchange Date.
"Exchange Price" of a Note on any date means (1) the Accreted Value of
such Note on such date divided by (2) the Exchange Rate in effect on such date.
<PAGE> 6
5
"Exchange Rate" means initially 17.65 shares of Salomon Common Stock
per Note, as the same may be adjusted in certain instances as provided in
Section 1405 hereof.
"Exchange Securities" has the meaning specified in Section 1405.
"Extraordinary Cash Dividend" has the meaning specified in Section 1405.
"Maturity Date" means December 2, 2001.
"New Exchange Date" has the meaning specified in Section 1402.
"NYSE" means the New York Stock Exchange.
"OID" with respect to the Notes means original issue discount
calculated on a constant yield basis using $1,000 principal amount due at
Maturity based on the excess of the principal amount due at Maturity over the
issue price of the Notes.
"Reorganization Event" has the meaning specified in Section 1405.
"Salomon" means Salomon Inc.
"Salomon Common Stock" means the common stock, par value $1.00 per
share of Salomon.
"Salomon Prospectus" means the prospectus supplement and prospectus of
Salomon covering the shares of Salomon Common Stock which may be received by a
Holder of Notes upon an exchange of Notes pursuant to Section 1402.
"Salomon Successor" has the meaning specified in Section 1405.
"Spin-Off" has the meaning specified in Section 1405.
"10-Day Average Closing Price" of Salomon Common Stock as of any date
of determination means the average Closing Price of Salomon Common Stock on the
10 Trading Days immediately prior to such date (or, if determined after the
close of business on any Trading Day, the average Closing Price of Salomon
Common Stock on such Trading Day and the nine Trading Days immediately prior to
such date).
"Trading Day" means any day on which the security the Closing Price of
which is being determined (1) is not suspended from trading on any national or
regional securities exchange or association or over-the-counter market at the
close of business and (2) has traded at least once on the national or regional
securities exchange or association or over-the-counter market that is the
primary market for the trading of such security.
<PAGE> 7
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"Transaction Value" means (1) for any cash received in any
Reorganization Event, the amount of cash received per share of Salomon Common
Stock, (2) for any Reported Exchange Securities received in any Reorganization
Event, an amount equal to the average Closing Price per security of such
Reported Exchange Securities on the 10 Trading Days immediately prior to
Maturity or the date on which notice of redemption or exchange is given pursuant
to Section 1403, as applicable, multiplied by the number of such Reported
Exchange Securities received for each share of Salomon Common Stock, and (3) for
any property received in any Reorganization Event other than cash or such
Reported Exchange Securities, an amount equal to the fair market value of the
property received per share of Salomon Common Stock on the date such property is
received, as determined by a nationally recognized investment banking firm
selected for this purpose by the Company; provided however, that in the case of
clause (2), (A) with respect to securities that are Reported Exchange Securities
by virtue of only clause (i)(d) of the definition of Reported Exchange
Securities, Transaction Value with respect to any such Reported Exchange
Security means the average of the mid-point of the last bid and ask prices for
such Reported Exchange Security as of Maturity or such notice date, as
applicable, from each of at least three nationally recognized investment banking
firms selected for such purpose by the Company multiplied by the number of such
Reported Exchange Securities received for each share of Salomon Common Stock and
(B) with respect to all other Reported Exchange Securities, if there are not 10
Trading Days for any particular Reported Exchange Security occurring after the
60th calendar day immediately prior to, but not including, the date of Maturity
or such notice date, as applicable, Transaction Value with respect to such
Reported Exchange Security means the market value per security of such Reported
Exchange Security as of Maturity or such notice date, as applicable, as
determined by a nationally recognized investment banking firm selected for such
purpose by the Company multiplied by the number of such Reported Exchange
Securities received for each share of Salomon Common Stock.
(b) By amending Section 902 of the Basic Indenture by adding to the end
of paragraph (1) thereof the following: "change the terms under which the Notes
are exchangeable as set forth in Article Fourteen, or".
(c) By amending Section 1301 of the Basic Indenture to read in its
entirety as follows:
"The provisions of this Article shall not be applicable to the Notes."
(d) By adding the following Article Fourteen:
"ARTICLE FOURTEEN
EXCHANGE OF NOTES
<PAGE> 8
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SECTION 1401. Payment or Exchange at Maturity.
(a) At Maturity, if both (1) the 10-Day Average Closing Price of
Salomon Common Stock and (2) the Closing Price of Salomon Common Stock on the
last Trading Day prior to Maturity are equal to or greater than the Exchange
Price then in effect, each Note will be exchanged by the Company into shares of
Salomon Common Stock at the Exchange Rate, or the Company may, at its option,
deliver cash, in lieu of delivering shares of Salomon Common Stock, in an amount
equal to the product obtained by multiplying the Exchange Rate by the Current
Market Value of Salomon Common Stock at Maturity. In all other circumstances,
the Company will pay at Maturity, in cash, a price per Note equal to the
principal amount due at Maturity (or, in the event the Notes mature prior to the
Maturity Date, the Accreted Value thereof). In all events, accrued and unpaid
interest to Maturity shall be payable by the Company in cash on all Notes
outstanding at Maturity. The Exchange Rate or exchange consideration will be
subject to adjustment as provided in Section 1405.
(b) Not later than 15 days prior to Maturity, the Company will notify
the Depositary and the Trustee and will publish a notice in a daily newspaper of
national circulation stating whether the Company (1) will exchange the Notes for
shares of Salomon Common Stock or (2) will deliver cash equal to the product
obtained by multiplying the Exchange Rate by the Current Market Value of Salomon
Common Stock at Maturity, if at Maturity both (A) the 10-Day Average Closing
Price of Salomon Common Stock and (B) the Closing Price of Salomon Common Stock
on the last Trading Day prior to Maturity are equal to or greater than the
Exchange Price then in effect. The Salomon Common Stock, if any, to which a
Holder is entitled upon any exchange at Maturity will be delivered or made
available by the Company as soon as practicable and, in any event, not later
than the close of business on the fifth Business Day after Maturity. If the
Company delivers shares of Salomon Common Stock at Maturity, Holders of the
Notes will be responsible for the payment of any brokerage costs incurred upon
any subsequent sale of such stock.
SECTION 1402. Exchange at Option of Holder.
(a) On each Exchange Date, any Notes (other than Notes with respect to
which a notice of exchange for Salomon Common Stock has been delivered by the
Company prior to such Exchange Date) will be exchangeable, at the option of the
Holder, for shares of Salomon Common Stock at the Exchange Rate then in effect,
provided that the Closing Price of Salomon Common Stock on the Exchange Date
exceeds the Exchange Price then in effect, and subject to certain additional
conditions described below.
(b) To exchange a Note for Salomon Common Stock, a Holder must, at any
time during the relevant Exchange Period, (1) deliver to the Trustee (or such
office or agency that may be established by the Company for such purpose) a
completed and manually signed exchange notice (the "Exchange Notice") on the
back of such Note (or a facsimile thereof),
<PAGE> 9
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(2) surrender or arrange for book entry transfer of such Note to the Trustee,
(3) if required, furnish appropriate endorsements and transfer documents and (4)
if required, pay all transfer or similar taxes. Any Exchange Notice may be
withdrawn by the Holder by a written notice of withdrawal delivered to the
Trustee prior to the close of business on the Exchange Date. The notice of
withdrawal shall state the principal amount due at Maturity and any certificate
number(s) of the Notes as to which the withdrawal notice relates and the
principal amount due at Maturity, if any, which remains subject to the Exchange
Notice, each of which must be $1,000 or an integral multiple thereof.
(c) In the event that a Salomon Prospectus is required to be delivered
under the Securities Act of 1933 upon an exchange of Notes and is not made
available by Salomon to the Company for use during any Exchange Period, the
Company shall, on or prior to the applicable Exchange Date, upon written notice
to each Holder that has complied with the procedures for exchange of Notes
described herein (an "Electing Holder"), postpone such Exchange Date from time
to time until such later Business Day (the "New Exchange Date") as the Company
is able to deliver a Salomon Prospectus or is no longer required to do so. In
the event that the Company postpones any Exchange Date, (1) no additional Notes
may be delivered to the Trustee by any Holder for exchange into Salomon Common
Stock at any time during the period from the original Exchange Date through and
including the New Exchange Date, (2) each Electing Holder shall have the right,
at any time until the New Exchange Date, to irrevocably withdraw any Notes
delivered to the Trustee on or prior to the original Exchange Date, and (3) any
Notes that have not been withdrawn by an Electing Holder prior to the New
Exchange Date shall be exchanged for shares of Salomon Common Stock on the New
Exchange Date, provided that the Closing Price of Salomon Common Stock on the
New Exchange Date exceeds the Exchange Price then in effect.
(d) If a Reorganization Event shall have occurred, the Notes shall not
be exchangeable at the option of the Holder for any Exchange Securities during
any Exchange Period if a prospectus covering such Exchange Securities is
required to be delivered by the Company under the Securities Act and is not
available to the Company for use during such Exchange Period.
(e) Upon any exchange of Notes at the option of the Holder, no payment
will be made in respect of accrued but unpaid interest, unless such exchange is
made concurrently with or after acceleration of the Notes following an event of
default hereunder. The Salomon Common Stock to which a Holder is entitled upon
any exchange will be delivered or made available by the Company as soon as
practicable and, in any event, not later than the close of business on the fifth
Business Day after the applicable Exchange Date.
SECTION 1403. Redemption or Exchange at Option of the Company.
<PAGE> 10
9
(a) The Notes will not be redeemable or exchangeable at the option of
the Company prior to December 2, 1999. Thereafter, (1) at any time when both
(A) the 10-Day Average Closing Price of Salomon Common Stock on the date on
which the applicable notice of redemption is given and (B) the Closing Price of
Salomon Common Stock on the last Trading Day prior to such date are equal to or
greater than the Exchange Price then in effect, the Company may, at its option,
either (i) exchange the Notes, in whole or in part, for shares of Salomon Common
Stock at the Exchange Rate then in effect or (ii) redeem the Notes, in whole or
in part, in cash at a price per Note equal to the product of the Exchange Rate
then in effect and the Current Market Value of Salomon Common Stock on the date
on which the applicable notice of redemption is given, and (2) at any other
time, the Company may, at its option redeem the Notes, in whole or in part, in
cash at a price per Note equal to the Accreted Value of the Notes on the date of
redemption. However, the Company may not give any notice of redemption for cash
(x) during the period from the beginning of any Exchange Period until the close
of business on the applicable Exchange Date or New Exchange Date or (y) prior to
the beginning of any Exchange Period if the Redemption Date would occur during
or after such Exchange Period. Upon any exchange or redemption described in
clause (1) above, the Holders of Notes will not receive any payment representing
accrued OID; such accrued OID will be deemed paid upon the receipt of Salomon
Common Stock or the cash equivalent received on such exchange or redemption.
(b) In connection with any redemption or exchange prior to Maturity of
the Notes, the Company will notify the Depositary and the Trustee and will
publish a notice in a daily newspaper of national circulation stating (1) the
Exchange Rate then in effect, (2) whether the Notes will be exchanged for shares
of Salomon Common Stock or redeemed for cash, (3) the redemption or Exchange
Date (which shall be at least 15 days but not more than 30 days after the date
of such notice) and (4) in the case of a redemption, the redemption price. On
the Exchange Date with respect to any exchange of Notes for Salomon Common
Stock, such Notes shall cease to be outstanding and shall be deemed to represent
solely the right to receive shares of Salomon Common Stock in accordance with
the terms of the Indenture. The Company will pay in cash the accrued and unpaid
interest on all Notes redeemed or exchanged to but excluding the date of
redemption or exchange. If the Company exchanges Notes for shares of Salomon
Common Stock, Holders of the Notes will be responsible for the payment of any
brokerage costs incurred upon the subsequent sale of such shares.
(c) If less than all the Notes then outstanding are to be redeemed or
exchanged prior to maturity of the Notes, the Trustee will select those to be
redeemed or exchanged as a whole or in part pro rata or by lot or by such method
as the Trustee shall deem fair and appropriate. Notice of redemption or exchange
will be given to Holders of the Notes to be redeemed or exchanged by first-class
mail, postage prepaid at their last address appearing on the Note registry
books.
SECTION 1404. No Fractional Shares.
<PAGE> 11
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No fractional shares of Salomon Common Stock will be issued if any
Notes are exchanged for shares of Salomon Common Stock at or prior to Maturity.
If more than one Note from the same Holder is exchanged for Salomon Common Stock
at one time, the number of full shares of Salomon Common Stock to be delivered
upon exchange shall be computed on the basis of the aggregate number of Notes
from such Holder so exchanged at that time. In lieu of any fractional share
otherwise issuable in respect of all Notes of any Holder that are exchanged at
or prior to Maturity, the Company, through the Paying Agent, shall make a cash
payment in respect of such fractional interest to such Holder in an amount equal
to the product of such fraction of a share and the Current Market Value of
Salomon Common Stock on the applicable Exchange Date (in the case of an exchange
at the option of the Holder), the date on which the related notice of exchange
is given (in the case of an exchange at the option of the Company) or at
Maturity, as applicable. The Company shall, upon exchange of any Notes, provide
cash to the Paying Agent in an amount equal to the cash payable with respect to
any fractional shares of Salomon Common Stock deliverable upon exchange of such
Notes, and the Company shall retain such fractional shares of Salomon Common
Stock.
SECTION 1405. Adjustment of Exchange Rate.
(a) Adjustment for Distributions, Reclassification, etc. The Exchange
Rate shall be subject to adjustment from time to time as follows:
(1) If Salomon shall:
(A) pay a dividend or make a distribution with
respect to the Salomon Common Stock in shares of such stock;
(B) subdivide or split the outstanding shares of
Salomon Common Stock into a greater number of shares;
(C) combine the outstanding shares of Salomon Common
Stock into a smaller number of shares; or
(D) issue by reclassification of shares of Salomon
Common Stock any shares of common stock of Salomon;
then, in any such event, the Exchange Rate in effect immediately prior
to such event shall be adjusted so that the Holder of any Note shall
thereafter be entitled to receive, upon exchange of such Holder's Note
by the Company at Maturity or upon redemption, the number of shares of
Salomon Common Stock that such Holder would have owned or been
entitled to receive immediately following such event had such Note
been exchanged immediately prior to such event or any record date with
respect thereto. Each such adjustment shall become effective at the
opening of business on
<PAGE> 12
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the Business Day next following the record date for determination of
holders of Salomon Common Stock entitled to receive such dividend or
distribution in the case of a dividend or distribution and shall
become effective immediately after the effective date in the case of a
subdivision, split, combination or reclassification. Each such
adjustment shall be made successively.
(2) If Salomon shall issue rights or warrants to all holders
of Salomon Common Stock entitling them to subscribe for or purchase
shares of Salomon Common Stock (other than rights to purchase Salomon
Common Stock pursuant to (A) a plan for the reinvestment of dividends
or interest or (B) pursuant to a shareholders rights plan or
agreement, unless a triggering event shall have occurred thereunder)
at a price per share less than the current market price of Salomon
Common Stock (determined for purposes of this clause (2) as the
Closing Price per share of Salomon Common Stock on the record date
fixed for the determination of stockholders entitled to receive such
rights or warrants), then in each case the Exchange Rate shall be
adjusted by multiplying the Exchange Rate in effect immediately prior
to such record date, by a fraction, of which (x) the numerator shall
be the number of shares of Salomon Common Stock outstanding at the
close of business on such record date, plus the number of additional
shares of Salomon Common Stock offered for subscription or purchase
pursuant to such rights or warrants, and (y) the denominator shall be
the number of shares of Salomon Common Stock outstanding at the close
of business on such record date, plus the number of additional shares
of Salomon Common Stock that the aggregate offering price of the total
number of shares of Salomon Common Stock so offered for subscription
or purchase pursuant to such rights or warrants would purchase at such
current market price (calculated at the Closing Price per share of
Salomon Common Stock on such record date), which shall be determined
by multiplying such total numbers of shares offered by the exercise
price of such rights or warrants and dividing the product so obtained
by such current market price. Such adjustment shall become effective
at the opening of business on the Business Day next following the
record date for the determination of stockholders entitled to receive
such rights or warrants. To the extent that shares of Salomon Common
Stock are not delivered after the expiration of such rights or
warrants, the Exchange Rate shall be readjusted to the Exchange Rate
which would then be in effect had such adjustments for the issuance of
such rights or warrants been made upon the basis of delivery of only
the number of shares of Salomon Common Stock actually delivered. Each
such adjustment shall be made successively.
(3) If Salomon shall pay a dividend or make a distribution to
all holders of Salomon Common Stock of any class of its capital stock,
evidences of its indebtedness or other assets (in each case excluding
any dividends or distributions referred to in paragraph (1) above or
any ordinary periodic cash dividends that do not constitute
Extraordinary Cash Dividends (as defined below)) or shall issue to all
<PAGE> 13
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holders of Salomon Common Stock rights or warrants to subscribe for or
purchase any of its securities (other than those referred to in
paragraph (2) above), then in each such case, the Exchange Rate shall
be adjusted by multiplying the Exchange Rate in effect on the record
date mentioned below by a fraction of which (A) the numerator shall be
the current market price per share of the Salomon Common Stock on the
record date for the determination of stockholders entitled to receive
such dividend or distribution (such current market price being
determined for purposes of this paragraph as the Closing Price per
share of Salomon Common Stock on such record date) and (B) the
denominator shall be such current market price per share of Salomon
Common Stock less the fair market value (as determined by the Board of
Directors of the Company, whose determination shall be conclusive, and
described in a resolution adopted with respect thereto) as of such
record date of the portion of the capital stock, evidences of
indebtedness or other assets so distributed or of such subscription
rights or warrants applicable to one share of Salomon Common Stock;
provided, however, that in the event of a distribution of shares of
capital stock of a subsidiary of Salomon (a "Spin-Off") made to
holders of shares of Salomon Common Stock, the numerator of such
fraction shall be the sum of (i) the Closing Price of Salomon Common
Stock as of the 35th Trading Day after the effective date of such
Spin-Off and (ii) the Closing Price of the number of shares (or the
fraction of a share) of capital stock of such subsidiary of Salomon on
such 35th Trading Day which is distributed in such Spin-Off in respect
of one share of Salomon Common Stock as of such 35th Trading Day and
the denominator of which shall be the Closing Price of Salomon Common
Stock as of such 35th Trading Day. Each such adjustment shall become
effective on the opening of business on the Business Day next
following the record date for the determination of stockholders
entitled to receive such dividend or distribution (or, in the case of
an adjustment pursuant to the proviso of the immediately preceding
sentence, on the Business Day next following the 35th Trading Day
after the effective date of the Spin-Off). Each such adjustment shall
be made successively.
(4) Any shares of Salomon Common Stock issuable in payment of
a dividend shall be deemed to have been issued immediately prior to
the close of business on the record date for such dividend for
purposes of calculating the number of outstanding shares of Salomon
Common Stock under paragraph (2) above.
(5) All adjustments to the Exchange Rate shall be calculated
to the nearest 1/10,000th of a share of Salomon Common Stock (or if
there is not a nearest 1/10,000th of a share to the next lower
1/10,000th of a share). No adjustment in the Exchange Rate shall be
required unless such adjustment would require an increase or decrease
of at least one percent therein; provided, however, that any
adjustments which by reason of this paragraph are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment.
<PAGE> 14
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(6) For purposes of the foregoing, the term "Extraordinary
Cash Dividend" shall mean, with respect to any consecutive 365-day
period, any cash dividend with respect to Salomon Common Stock the
amount of which, together with the aggregate amount of all other such
cash dividends on the Salomon Common Stock occurring in such 365-day
period, exceeds on a per share basis 10% of the average Closing Price
per share of the Salomon Common Stock over such 365-day period, and
for purposes of applying the formula set forth in paragraph (3) above,
the fair market value of such dividends being calculated pursuant to
such paragraph (3) shall be equal to (A) the aggregate amount of such
cash dividend together with the amounts of such other cash dividends
occurring in such period minus (B) the aggregate amount of such other
cash dividends occurring in such period for which a prior adjustment
in the Exchange Rate was previously made as described in this
subsection. In making the determinations required by the foregoing
sentence, the amount of cash dividends paid on a per share basis shall
be appropriately adjusted to reflect the occurrence during such period
of any event described in this subsection.
(b) Adjustment of Exchange Consideration for Consolidation, Merger or
Other Reorganization Event.
(1) In the event of (A) any consolidation or merger of Salomon, or any
surviving entity or subsequent surviving entity of Salomon (a "Salomon
Successor"), with or into another entity (other than a merger or consolidation
in which Salomon is the continuing corporation and in which the Salomon Common
Stock outstanding immediately prior to the merger or consolidation is not
exchanged for cash, securities ("Exchange Securities") or other property of
Salomon or another corporation), (B) any statutory exchange of securities of
Salomon or any Salomon Successor with another corporation (other than in
connection with a merger or acquisition) or (C) any liquidation, dissolution or
winding up of Salomon or any Salomon Successor (any such event, a
"Reorganization Event"), if the Company shall have the right to deliver either
cash or Salomon Common Stock at Maturity or upon redemption or exchange of the
Notes, then, at the option of the Company, each Holder of Notes will receive at
Maturity or upon such redemption or exchange, in lieu of Salomon Common Stock,
cash in an amount equal to the Exchange Rate multiplied by the Transaction
Value. Notwithstanding the foregoing, with respect to any securities received in
a Reorganization Event that (i) are (a) listed on a United States national
securities exchange, (b) reported on a United States national securities system
subject to last sale reporting, (c) traded in the over-the-counter market and
reported on the National Quotation Bureau or similar organization or (d) for
which bid and ask prices are available from at least three nationally recognized
investment banking firms and (ii) are either (x) perpetual equity securities or
(y) non-perpetual equity or debt securities with a stated maturity after the
Maturity Date ("Reported Exchange Securities"), the Company may, at its option,
in lieu of delivering the amount of cash deliverable in respect of Reported
Exchange Securities received in a Reorganization Event, as determined in
accordance with the previous sentence, deliver a number of such Reported
Exchange Securities with a value equal to such cash
<PAGE> 15
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amount, as determined in accordance with clause (2) of the definition of
Transaction Value, as applicable; provided, however, that (i) if such option is
exercised, the Company shall deliver Reported Exchange Securities in respect of
all, but not less than all, cash amounts that would otherwise be deliverable in
respect of Reported Exchange Securities received in a Reorganization Event, (ii)
the Company may not exercise such option if the Company has elected to deliver
cash in lieu of Salomon Common Stock deliverable at Maturity or upon redemption
and (iii) the Company must exercise such option if the Company does not elect to
deliver cash in lieu of Salomon Common Stock deliverable at Maturity or upon
redemption. If the Company elects to deliver Reported Exchange Securities, each
Holder of Notes will be responsible for the payment of any and all brokerage and
other transaction costs upon the sale of such Reported Exchange Securities. If,
following any Reorganization Event, any Reported Exchange Security ceases to
qualify as a Reported Exchange Security, then (x) the Company may no longer
elect to deliver such Reported Exchange Security in lieu of an equivalent amount
of cash and (y) notwithstanding clause (2) of the definition of Transaction
Value, the Transaction Value of such Reported Exchange Security shall mean the
fair market value of such Reported Exchange Security on the date such security
ceases to qualify as a Reported Exchange Security, as determined by a nationally
recognized investment banking firm selected for this purpose by the Company.
(2) If a Reorganization Event shall occur, subject to the conditions
described in Section 1402(d), upon exchange of any Notes at the option of the
Holder, each Holder of a Note will have the right to receive the kind and amount
of cash, Exchange Securities or other property receivable upon such
Reorganization Event by a holder of the number of shares of Salomon Common Stock
for which such Note might have been exchanged immediately prior to such
Reorganization Event (assuming that such Holder failed to exercise his rights of
election, if any, as to the kind or amount of cash, Exchange Securities, and
other property receivable in such Reorganization Event). If a Holder elects to
exchange any Notes for Exchange Securities following a Reorganization Event,
such Holder will be responsible for the payment of any and all brokerage and
other transaction costs upon the sale of such Exchange Securities.
(3) The kind and amount of securities into which the Notes shall be
exchangeable by the Company after consummation of any Reorganization Event shall
be subject to adjustment as described in paragraph (a) above following the date
of consummation of such transaction.
SECTION 1406. Notice of Adjustments and Certain Other Events.
(a) Whenever the Exchange Rate or the consideration receivable upon
exchange is adjusted as herein provided, the Company shall:
(1) forthwith compute the adjusted Exchange Rate in accordance
with Section 1405 and prepare an Officers' Certificate setting forth
the adjusted Exchange Rate or
<PAGE> 16
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exchange consideration, the method of calculation thereof in
reasonable detail, and the facts requiring such adjustment and upon
which such adjustment is based, which certificate shall be conclusive,
final and binding evidence of the correctness of the adjustment, and
file such certificate forthwith with the Trustee; and
(2) within 10 Business Days following the occurrence of an
event that permits or requires an adjustment to the Exchange Rate or
exchange consideration pursuant to Section 1405 (or if the Company is
not aware of such occurrence, as soon as practicable after becoming so
aware), provide an Officers' Certificate to the Trustee and written
notice to the Holders of the Outstanding Notes of the occurrence of
such event and a statement in reasonable detail setting forth the
method by which the adjustment to the Exchange Rate or exchange
consideration was determined and setting forth the revised Exchange
Rate or exchange consideration per Note.
The Trustee shall not be deemed to know of any adjustment in the Exchange Rate
or the consideration receivable upon exchange, or of any facts requiring such an
adjustment, unless and until it shall have received, at its Corporate Trust
Office, an Officers' Certificate to such effect.
(b) In case at any time while any of the Notes are outstanding the
Company receives notice that:
(1) Salomon has declared a dividend (or any other
distribution) on or in respect of the Salomon Common Stock to which
Section 1405(a)(1) or (2) shall apply (other than any cash dividends
and distributions, if any, paid from time to time by Salomon that do
not constitute Extraordinary Cash Dividends);
(2) Salomon has authorized the issuance to all holders of
Salomon Common Stock of rights or warrants to subscribe for or
purchase shares of Salomon Common Stock or of any other subscription
rights or warrants;
(3) there shall be proposed any conversion or reclassification
of Salomon Common Stock (other than a subdivision or combination of
outstanding shares of such Salomon Common Stock) or any consolidation,
merger or reorganization to which Salomon is a party and for which
approval of any stockholders of Salomon is required; or
(4) there shall be proposed the voluntary or involuntary
dissolution, liquidation or winding up of Salomon;
then the Company shall promptly cause to be delivered to the Trustee and filed
at the office or agency maintained for the purpose of exchange of Notes in the
Borough of Manhattan, in The City of New York by the Trustee, and shall promptly
cause to be mailed to the Holders
<PAGE> 17
16
of the Notes at their last addresses as they shall appear upon the registration
books of the Securities Registrar, at least 10 days before the date hereinafter
specified (or the earlier of the dates hereinafter specified, in the event that
more than one is specified), a notice stating (i) the date on which a record is
to be taken for the purpose of such dividend, distribution or grant of rights or
warrants, or, if a record is not to be taken, the date as of which the holders
of Salomon Common Stock to be entitled to such dividend, distribution or grant
of rights or warrants are to be determined, or (ii) the date, if known by the
Company, on which such reclassification, consolidation, merger, dissolution,
liquidation or winding up is expected to become effective. The Trustee shall not
be deemed to know of any declaration, issuance or proposal unless and until it
shall have received, at its Corporate Trust Office, an Officers' Certificate to
such effect.
SECTION 1407. Taxes.
(a) The Company will pay any and all documentary, stamp, transfer or
similar taxes that may be payable in respect of the transfer and delivery of
Salomon Common Stock pursuant hereto; provided, however, that the Company shall
not be required to pay any such tax which may be payable in respect of any
transfer involved in the delivery of Salomon Common Stock in a name other than
that in which the Notes so exchanged were registered, and no such transfer or
delivery shall be made unless and until the Person requesting such transfer has
paid to the Company the amount of any such tax, or has established, to the
satisfaction of the Company, that such tax has been paid.
(b) The Company and, by its purchase of a Note hereby, each Holder of
a Note agree to treat, for U.S. federal income tax purposes, each Note as a
contingent payment debt instrument subject to the U.S. Treasury regulations
under the Internal Revenue Code of 1986, as amended, governing such instruments
(Treas. Reg. Section 1.1275-4) and to report all income (or loss) with respect
to the Notes in accordance with those regulations.
SECTION 1408. Shares Free and Clear.
The Company hereby warrants that upon exchange of any Note for Salomon
Common Stock pursuant to this Indenture, the Holder of such Note shall receive
all rights held by the Company in the Salomon Common Stock for which such Note
is at such time exchangeable pursuant to this Indenture, free and clear of any
and all liens, claims, charges and encumbrances other than any liens, claims,
charges and encumbrances which may have been placed on any Salomon Common Stock
by the prior owner thereof, prior to the time such Salomon Common Stock was
acquired by the Company. Except as provided in Section 1407, the Company will
pay all taxes and charges with respect to the delivery of Salomon Common Stock
delivered in exchange for Notes hereunder. In addition, the Company further
warrants that any Salomon Common Stock so delivered in exchange for Notes
<PAGE> 18
17
hereunder shall be free of any transfer restrictions (other than such as are
solely attributable to any Holder's status as an affiliate of Salomon).
SECTION 1409. Cancellation of Debt Security.
Upon receipt by the Trustee of Notes delivered to it for exchange
under this Article Fourteen, the Trustee shall cancel and dispose of the same as
provided in Section 309."
(e) By amending the table of contents of the Basic Indenture to
reflect the additions described in subsections (a) and (d) of this Section 3.
SECTION 4. The form of Notes attached hereto as Exhibit A is hereby
adopted, pursuant to Section 202 of the Indenture, as a form of Debt Securities
of a series that consists of Notes.
SECTION 5. The Basic Indenture, as supplemented and amended by this
Supplemental Indenture and all other indentures thereto, is in all respects
ratified and confirmed, and the Basic Indenture, this Supplemental Indenture and
all indentures supplemental thereto shall be read, taken and construed as one
and the same instrument.
SECTION 6. If any provision hereof limits, qualifies or conflicts with
another provision hereof which is required to be included in this Supplemental
Indenture by any of the provisions of the Trust Indenture Act, such required
provision shall control.
SECTION 7. All covenants and agreements in this Supplemental Indenture
by the Company shall bind its successors and assigns, whether so expressed or
not.
SECTION 8. In case any provision in this Supplemental Indenture or in
the Debt Securities of any series shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions (or of the
other series of Debt Securities) shall not in any way be affected or impaired
thereby. If the Company elects to deliver cash in lieu of Salomon Common Stock
at Maturity, the Company will be obligated to deliver cash with respect to all,
but not less than all, of the shares of Salomon Common Stock that would
otherwise be deliverable; provided, however, that the Company will deliver
Salomon Common Stock to any Holder if in the Company's determination the
delivery of cash to such Holder may violate applicable law.
SECTION 9. Nothing in this Supplemental Indenture, expressed or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, and the Holders of each series of Debt Securities any
benefit or any legal or equitable right, remedy or claim under this Supplemental
Indenture.
<PAGE> 19
18
SECTION 10. This Supplemental Indenture and each Debt Security of any
series shall be deemed to be a contract made under the laws of the State of New
York and this Supplemental Indenture and each such Debt Security shall be
governed by and construed in accordance with the laws of the State of New York.
SECTION 11. All capitalized terms used in this Supplemental Indenture
and not otherwise defined herein that are defined in the Basic Indenture shall
have the meanings set forth therein.
SECTION 12. 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.
SECTION 13. The recitals contained herein and in the Debt Securities,
except the certificate of authentication of the Trustee thereon, shall be taken
as statements of the Company, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of the Basic Indenture, this Supplemental Indenture or of the Debt
Securities and shall not be accountable for the use or application by the
Company of the Debt Securities or the proceeds thereof.
<PAGE> 20
19
IN WITNESS WHEREOF, the parties hereto have caused this 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.
BERKSHIRE HATHAWAY INC.
By...............................
Attest:
...................................
STATE STREET BANK AND TRUST
COMPANY, Trustee
By...............................
Attest:
...................................
<PAGE> 21
20
STATE OF NEBRASKA )
) ss.:
COUNTY OF DOUGLAS )
On the .... day of ________, 1996, before me personally came
..........................., to me known, who, being by me duly sworn, did
depose and say that he/she is .................... of Berkshire Hathaway Inc.,
one of the corporations described in and which executed the foregoing
instrument; that he/she knows the seal of said corporation; that the seal
affixed to 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.
..................................
STATE OF ________ )
) ss.:
COUNTY OF ________ )
On the .... day of ________, 1996, before me personally came
..........................., to me known, who, being by me duly sworn, did
depose and say that he/she is .................... of State Street Bank and
Trust Company, a Massachusetts trust company described in and which executed the
foregoing instrument; that he/she knows the seal of said trust company; that the
seal affixed to 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.
.................................
<PAGE> 22
Exhibit A
GLOBAL NOTE
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF CEDE & CO., THE NOMINEE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"). UNLESS THIS
SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE COMPANY 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 IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY 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 THEREIN.
BERKSHIRE HATHAWAY INC.
1.00% Senior Exchangeable Notes Due December 2, 2001
No. ......... $ ........
Berkshire Hathaway Inc., a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of ________________ Dollars ($[___________]) on December 2,
2001, and to pay interest thereon from December 2, 1996 or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, semi-annually on June 2 and December 2 in each year, commencing
June 2, 1997 at the rate of 1.00% per annum, until the principal hereof
is paid or made available for payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest, which shall be the May 15 and
November 15 (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 Security (or
one or more Predecessor Securities) 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 Securities of this
series not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities of this series may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
<PAGE> 23
At Maturity, if both (1) the 10-Day Average Closing Price of Salomon
Common Stock and (2) the Closing Price of Salomon Common Stock on the last
Trading Day prior to Maturity are equal to or greater than the Exchange Price
then in effect, each Note will be exchanged by the Company into shares of
Salomon Common Stock at the Exchange Rate, or the Company may, at its option,
deliver cash, in lieu of delivering shares of Salomon Common Stock, in an amount
equal to the product obtained by multiplying the Exchange Rate by the Current
Market Price of Salomon Common Stock at Maturity. In all other circumstances,
the Company will pay at Maturity, in cash, a price per Note equal to the
principal amount due at Maturity (or, in the event the Notes mature prior to the
Maturity Date, the Accreted Value thereof). In all events, accrued and unpaid
interest to Maturity shall be payable by the Company in cash on all Notes
outstanding at Maturity. The Exchange Rate or exchange consideration will be
subject to adjustment as provided in the Indenture.
Payment of the principal of (and premium, if any) and interest on this
Security will be made on each Interest Payment Date or at Maturity by the
Trustee as Paying Agent by wire transfer of immediately available funds to a
separate account of the Depositary or its nominee at the Federal Reserve Bank of
New York, provided that, in the case of payments made at Maturity of this
Security, this Security is presented to the Trustee in time for the Trustee to
make such payments in accordance with its normal procedures.
Reference is hereby made to the further provisions of this Security
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
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
A-2
<PAGE> 24
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: December 2, 1996
BERKSHIRE HATHAWAY INC.
By............................
Attest:
...............................
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the Series designated herein referred
to in the within-mentioned Indenture.
STATE STREET BANK AND TRUST
COMPANY, Trustee
By............................
A-3
<PAGE> 25
REVERSE OF SECURITY
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of December 1, 1987, between the Company and
State Street Bank and Trust Company, as successor Trustee thereunder (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), as supplemented by a First Supplemental Indenture, dated as of
December 2, 1996, between the Company and the Trustee (herein collectively
called the "Indenture"), and reference is hereby made to the Indenture for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Securities and of
the terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the face hereof,
limited in aggregate principal amount to FIVE HUNDRED MILLION DOLLARS
($500,000,000).
Subject to and upon compliance with the provisions of the Indenture,
on the last Trading Day of each January, April, July and October, from and
including January 1997 through and including July 2001, any Notes (other than
Notes with respect to which a notice of exchange for Salomon Common Stock has
been delivered by the Company prior to such Exchange Date) will be exchangeable,
at the option of the Holder, for shares of Salomon Common Stock at the Exchange
Rate of 17.65 shares of Salomon Common Stock per Note (or at the current
adjusted Exchange Rate if an adjustment has been made as provided in the
Indenture), provided that the Closing Price of Salomon Common Stock on the
Exchange Date exceeds the Exchange Price then in effect, and subject to certain
additional conditions described below. In the event that a prospectus supplement
and prospectus of Salomon covering the shares of Salomon Common Stock which may
be received by a Holder of Notes upon an exchange is required to be delivered
under the Securities Act of 1933 and is not made available by Salomon to the
Company for use during any Exchange Period, the Company shall, on or prior to
the applicable Exchange Date, upon written notice to each Holder that has
complied with the procedures for exchange of Notes described herein (an
"Electing Holder"), postpone such Exchange Date from time to time until such
later Business Day (the "New Exchange Date") as the Company is able to deliver a
Salomon Prospectus or is no longer required to do so. In the event that the
Company postpones any Exchange Date, (1) no additional Notes may be delivered to
the Trustee by any Holder for exchange into Salomon Common Stock at any time
during the period from the original Exchange Date through and including the New
Exchange Date, (2) each Electing Holder shall have the right, until the New
Exchange Date, to irrevocably withdraw any Notes delivered to the Trustee on or
prior to the original Exchange Date, and (3) any Notes that have not been
withdrawn by an Electing Holder prior to the New Exchange Date shall be
exchanged for shares of Salomon Common Stock on the New Exchange Date, provided
that the Closing Price of Salomon Common Stock on the New Exchange Date exceeds
the Exchange Price then in effect. In addition, if a Reorganization Event shall
have occurred, the Notes shall not be exchangeable at the option of the Holder
for any Exchange Securities during any Exchange Period if a prospectus covering
such Exchange Securities is required to be delivered by the Company under the
Securities Act and is not available to the Company for use during such Exchange
Period.
A-4
<PAGE> 26
The Notes will not be redeemable or exchangeable at the option of the
Company prior to December 2, 1999. Thereafter, (1) at any time when both (A)
the 10-Day Average Closing Price of the Salomon Common Stock on the date on
which the applicable notice of redemption is given and (B) the Closing Price of
Salomon Common Stock on the last Trading Day prior to such date are equal to or
greater than the Exchange Price then in effect, the Company may, at its option,
either (i) exchange the Notes, in whole or in part, for shares of Salomon Common
Stock at the Exchange Rate then in effect or (ii) redeem the Notes, in whole or
in part, in cash at a price per Note equal to the product of the Exchange Rate
then in effect and the Current Market Value of Salomon Common Stock on the date
on which the applicable notice of redemption is given, and (2) at any other
time, the Company may, at its option redeem the Notes, in whole or in part, in
cash at a price per Note equal to the Accreted Value of the Notes on the date of
redemption. However, the Company may not give any notice of redemption for cash
(x) during the period from the beginning of any Exchange Period until the close
of business on the applicable Exchange Date or New Exchange Date or (y) prior to
the beginning of any Exchange Period if the Redemption Date would occur during
or after such Exchange Period. Upon any exchange or redemption described in
clause (1) above, the Holders of Notes will not receive any payment representing
accrued OID; such accrued OID will be deemed paid upon the receipt of Salomon
Common Stock or the cash equivalent received on such exchange or redemption.
In connection with any redemption or exchange prior to Maturity of the
Notes, the Company will notify the Depositary and the Trustee and will publish a
notice in a daily newspaper of national circulation stating (1) the Exchange
Rate then in effect, (2) whether the Notes will be exchanged for shares of
Salomon Common Stock or redeemed for cash and (3) the redemption or Exchange
Date (which shall be at least 15 days but not more than 30 days after the date
of such notice). On the Exchange Date with respect to any exchange of Notes for
Salomon Common Stock, such Notes shall cease to be outstanding and shall be
deemed to represent solely the right to receive shares of Salomon Common Stock
in accordance with the terms of the Indenture. The Company will pay in cash the
accrued and unpaid interest on all Notes redeemed or exchanged to but excluding
the date of redemption or exchange.
In any exchange of Notes for shares of Salomon Common Stock at or
prior to Maturity of the Notes, no fractional shares of Salomon Common Stock
will be issued, as provided in the Indenture. If the Company exchanges Notes for
shares of Salomon Common Stock, Holders of the Notes will be responsible for the
payment of any brokerage costs incurred upon the subsequent sale of such shares.
If less than all the Notes then outstanding are to be redeemed or
exchanged prior to maturity of the Notes, the Trustee will select those to be
redeemed or exchanged as a whole or in part pro rata or by lot or by such method
as the Trustee shall deem fair and appropriate. Notice of redemption or exchange
will be given to holders of the Notes to be redeemed or exchanged by first-class
mail, postage prepaid at their last address appearing on the Note registry
books.
A-5
<PAGE> 27
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the Accreted Value of the Securities of this series may
be declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, 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 Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of 66 2/3% in principal amount of the Securities at the
time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security 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 Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the 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 Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security 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 Security 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 Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
A-6
<PAGE> 28
The Securities of this series are issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and 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 Security 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 Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
A-7
