<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 1, 1998
REGISTRATION NO. 333-
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________
NBH, INC. and BERKSHIRE HATHAWAY INC.
(Exact name of Registrants as specified in their charters: See Explanatory Note
following this facing page)
____________________
Delaware 04-2254452
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1440 Kiewit Plaza
OMAHA, NEBRASKA 68131
(402) 346-1400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
____________________
MARC D. HAMBURG
BERKSHIRE HATHAWAY INC.
1440 KIEWIT PLAZA
OMAHA, NEBRASKA 68131
(402) 346-1400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
______________________
COPY TO:
Mary Ann Lyman
MUNGER, TOLLES & OLSON LLP
355 SOUTH GRAND AVENUE
LOS ANGELES, CALIFORNIA 90071
(213) 683-9100
______________________
Approximate date of commencement of the proposed sale to public: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box [_]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.[X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the securities act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[_]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==============================================================================================================================
Proposed Maximum Proposed Maximum Amount of
Title of Shares Amount to be Offering Price Aggregate Registration
to be registered registered(1) Per Unit(2) Offering Price(2) Fee
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Common Stock, par value 700,000 shares $2,276 $1,157,796,274 $321,868
$.1667 per share
==============================================================================================================================
</TABLE>
(1) Pursuant to Rule 416 of the Securities Act of 1933, as amended, this
Registration Statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the Berkshire Hathaway Inc. 1998 Compensation
Plan (the "Plan") described herein.
(2) Pursuant to paragraphs (c) and (h) of Rule 457 under the Securities Act, the
registration fee with respect to these shares has been computed based upon
(i) in the case of options to be granted under the Plan, the stated exercise
price of such options, and (ii) in the case of shares being registered for
non-option awards under the Plan, the average of the high and low prices for
a share of Class B Common Stock of Berkshire Hathaway Inc. on the New York
Stock Exchange Composite Tape on November 30, 1998.
____________________
The Registrants hereby amend this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrants shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
EXPLANATORY NOTE
----------------
This registration statement on Form S-3 (the "Registration Statement") is filed
by both NBH, Inc. and Berkshire Hathaway Inc., as registrants, in order to take
into account the effect of a possible business combination pursuant to an
agreement and plan of mergers dated June 19, 1998 between Berkshire Hathaway
Inc. and General Re Corporation (the "General Re Merger Agreement"). The
General Re Merger agreement contemplates that Berkshire Hathaway Inc. and
General Re will each become a wholly owned subsidiary of NBH, Inc., a new
holding company. As a result, each outstanding share of Berkshire Hathaway
Inc., including those registered under this Registration Statement, will become
one identical outstanding share of NBH, Inc. NBH, Inc. will then take the name
"Berkshire Hathaway Inc." and will be the successor registrant of the shares
registered hereby. However, the General Re Merger Agreement also provides that,
under certain conditions, the business combination may be restructured (the
"Alternative Transaction"). In the Alternative Transaction, General Re will
merge with, and become, a wholly owned subsidiary of a subsidiary of Berkshire
Hathaway Inc. itself, rather than of NBH, Inc., and Berkshire Hathaway Inc.
itself will not become a subsidiary of NBH, Inc., but will remain the ultimate
parent company. In that event, Berkshire Hathaway Inc. will remain the
registrant of the shares registered hereby. Therefore, in order to account for
either possible event, this Registration Statement constitutes the Registration
Statement of NBH, Inc. and Berkshire Hathaway Inc.
<PAGE>
PROSPECTUS
BERKSHIRE HATHAWAY INC.
700,000 SHARES OF CLASS B COMMON STOCK ($.1667 PAR VALUE)
This Prospectus relates to the offer and sale of up to 700,000 shares (the
"Shares") of Class B Common Stock, par value $.1667 per share ("Class B Common
Stock") of Berkshire Hathaway Inc. (the "Company") pursuant to the Company's
1998 Compensation Plan (the "Plan"). The New York Stock Exchange lists the
Class B Common Stock, which trades under the symbol "BRK.B".
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is , 1998.
<PAGE>
BERKSHIRE HATHAWAY INC.
The Company and its subsidiaries are engaged in a number of diverse
business activities. The most important of these is the property and casualty
insurance business conducted nationwide on both a direct and reinsurance basis
through a number of subsidiaries. Included in this group of subsidiaries is
GEICO Corporation, the seventh largest auto insurer in the United States.
Investment portfolios of insurance subsidiaries include meaningful equity
ownership percentages of other publicly traded companies, including American
Express Company, The Coca-Cola Company, Federal Home Loan Mortgage Corporation,
The Gillette Company, The Washington Post Company, and Wells Fargo & Company.
Much information about these publicly owned companies is available, including
information released from time to time by the companies themselves.
Additionally, the Company publishes the Buffalo News, a daily and Sunday
newspaper in upstate New York. Other significant business activities conducted
by non-insurance subsidiaries include the manufacture and marketing of home
cleaning systems and related accessories (sold principally under the Kirby
name), manufacture and sale of boxed chocolates and other confectionery products
(See's Candies), retailing of home furnishings (Nebraska Furniture Mart, R.C.
Willey Home Furnishings and Star Furniture Company), manufacture, import and
distribution of footwear (H.H. Brown Shoe Company, Lowell Shoe, Inc. and Dexter
Shoe Company), retailing of fine jewelry (Borsheim's and Helzberg's Diamond
Shops), providing training to operators of aircraft and ships throughout the
world (FlightSafety International), licensing and servicing a system of
approximately 5,800 Dairy Queen Stores (Dairy Queen) and selling fractional
ownership interests in aircraft (Executive Jet, Inc.). The Company also owns a
number of other businesses engaged in a variety of activities.
Operating decisions for the various businesses are made by managers of the
business units. Investment decisions and all other capital allocation decisions
are made for the Company and its subsidiaries by Warren E. Buffett, in
consultation with Charles T. Munger. Mr. Buffett is Chairman and Mr. Munger is
Vice Chairman of the Company's Board of Directors.
The Company has entered into an Agreement and Plan of Mergers dated June
19, 1998 with General Re Corporation, one of the world's largest reinsurance
companies. Information regarding this transaction is provided in a joint proxy
statement/prospectus filed by the Company with the Securities and Exchange
Commission. See "Available Information."
The Company's executive offices are located at 1440 Kiewit Plaza, Omaha,
Nebraska 68131, and its telephone number at that location is (402) 346-1400.
CERTAIN INFORMATION ABOUT THE PLAN
This Prospectus gives a summary of the terms of the stock options, stock
appreciation rights, restricted stock and share units provided for by the Plan,
as of the date of this Prospectus. As a summary, this Prospectus does not
contain all of the terms and conditions of the official Plan documents.
Accordingly, the Plan documents will govern if the terms and conditions of the
Plan as described in this Prospectus are in conflict with the provisions of the
Plan documents. Please read this Prospectus carefully. You should not construe
the contents of this Prospectus as investment, tax or legal advice.
<PAGE>
1. WHAT IS THE PURPOSE OF THE PLAN?
The Plan is intended to facilitate the merger ("Merger") of the Company
with General Re Corporation, a Delaware corporation ("General Re"). The Plan
assumes awards made by General Re under its 1985 Long Term Compensation Plan,
1989 Long Term Compensation Plan, 1995 Long Term Compensation Plan, 1996
Employee Stock Award Plan, and Stock Unit Plan for Directors ("General Re
Plans") which are outstanding immediately prior to the Merger. Persons holding
an outstanding award under a General Re Plan will receive an equivalent award or
cash payment under the Plan to replace it.
The Plan permits the grant of (i) nonqualified stock options ("Options"),
(ii) stock appreciation rights ("SARs"), (iii) restricted stock, and (iv) share
units (collectively, "Awards"). The Plan also provides for other awards payable
in cash, which are not discussed herein. For information about such other
awards, please contact the General Re Human Resources Department at (203) 328-
5000.
2. HOW MANY SHARES OF CLASS B COMMON STOCK ARE AVAILABLE UNDER THE PLAN?
The Company may issue a maximum of 700,000 shares of Class B Common Stock
to eligible persons with respect to all Awards under the Plan. However, the
Company retains the right to make amendments to the Plan. In addition, the
total number of Shares available is subject to adjustment in the event of
certain specified changes in the capitalization of the Company, as described in
the Plan.
3. WHO IS RESPONSIBLE FOR ADMINISTERING THE PLAN?
The Plan is administered by a Committee (the "Committee") appointed by the
Company's Board of Directors (the "Board"). The Board may fill any Committee
vacancy and may remove any member of the Committee at any time, with or without
cause. If necessary to comply with Rule 16b-3 of the Securities Exchange Act of
1934, as amended (the "Securities Act"), Section 162(m) of the Internal Revenue
Code, as amended (the "Code"), or any other rule or regulation applicable to the
Plan, the Board may also take administrative actions under the Plan.
The Committee, in its discretion, may delegate certain of its authorities
and duties under the Plan to the Chief Executive Officer and/or other senior
officers of either the Company or General Re under such conditions and/or
subject to such limitations as the Committee may establish.
4. WHO IS ELIGIBLE TO RECEIVE AWARDS UNDER THE PLAN?
Employees (including officers, whether or not they are directors of the
Company), former employees and former directors of General Re who held
outstanding awards under a General Re Plan immediately prior to the Merger shall
be eligible to receive Awards under the Plan (each such person to whom an award
is made is referred to as a "Grantee").
5. WHAT IS AN OPTION?
An Option is the right to purchase a certain number of shares of Class B
Common Stock at a locked-in price (the "Exercise Price"), subject to the terms
of the Plan and the applicable Award Notice (as defined below). When an Option
is exercised, the Grantee who exercises the Option must pay the Exercise Price.
The shares of Class B Common Stock subject to the exercised Option are then
transferred to the Grantee who becomes the owner of such shares.
6. WHAT TYPES OF OPTIONS CAN BE GRANTED UNDER THE PLAN?
Three types of Options can be granted under the Plan: regular options,
replacement options and consolidated options. All of the Options granted under
the Plan are intended to be nonqualified stock options under the Code.
Generally, a nonqualified stock option is an option that does not meet the
requirements of Section 422 of the Code and therefore will not receive the tax
treatment allowed by that Section.
7. WHAT ARE REGULAR OPTIONS?
Regular options ("Regular Options") are Options that are granted to
substitute for stock options, restricted stock options, performance stock
options, and approved stock options outstanding under the General Re Plans.
These Options
<PAGE>
are granted on generally the same terms and conditions as the terms and
conditions of the stock options, restricted stock options, performance stock
options, and approved stock options of the General Re Plans, except for
modifications that were required because of the Merger. The Exercise Price of a
Regular Option is determined by the exercise price of the General Re option it
replaces and the conversion formula set forth in the Merger documents and the
Plan.
8. WHAT ARE REPLACEMENT OPTIONS?
Replacement options ("Replacement Options") are Options that are issued to
substitute for shares tendered in exercise of an original award of stock options
under a General Re Plan or an Option under the Plan. Replacement Options are
issued to encourage Grantees to exercise Options early and to retain their
profit in shares.
A Replacement Option will be issued if, when you exercise a Regular Option
whose terms permit a Replacement Option, you use shares of Class B Common Stock
which you have owned for at least six (6) months (which period includes the time
in which such shares were held as General Re stock) in full or partial payment
of the Exercise Price and/or any required withholding taxes due. After such an
exercise, you will automatically be granted a Replacement Option to purchase a
number of shares equal to the number of shares you used in payment. A
Replacement Option will become exercisable one year after its date of grant (the
"Grant Date"), provided that, as of such date, you still own all of the Profit
Shares (as defined below) you received upon exercise of the original Option. A
Replacement Option has the same Expiration Date as the Regular Option which was
exercised. The Exercise Price of such Replacement Option will be the Fair
Market Value of Class B Common Stock on the date of grant. "Fair Market Value"
is defined, on a per share basis, as the mean between the opening and closing
sales price of a share of Class B Common Stock on the Composite Tape for New
York Stock Exchange-listed stocks on the date the determination is being made,
or, if no sales are reported on such date, the mean as calculated on the next
preceding day for which there were sales reported.
A Replacement Option will also be granted if, immediately prior to the
Merger, you held an outstanding replacement option under a General Re Plan.
This Replacement Option will be generally on the same terms and conditions as
the replacement option granted under the General Re Plan. The Exercise Price of
such a Replacement Option will be determined by the Exercise Price of the
replacement option it replaces and the conversion formula set forth in the
Merger documents and the Plan.
No Replacement Options will be issued in substitution for shares tendered
in exercise of a Replacement Option.
9. WHAT ARE CONSOLIDATED OPTIONS?
Consolidated options ("Consolidated Options") are Options for whole shares
of Class B Common Stock which are granted to substitute for Regular or
Replacement Options for fractional shares of Class B Common Stock to which you
would otherwise have been entitled under the Plan at the time of Merger. The
Exercise Price of a Consolidated Option will be determined by taking a weighted
average of the Exercise Prices of the Options on fractional shares for which it
substitutes.
10. WHAT IS AN AWARD NOTICE?
An Award Notice is a written notice from the Committee to a Grantee that
establishes the terms, conditions, restrictions and/or limitations (if any)
applicable to the Award.
11. WHEN CAN AN OPTION BE EXERCISED?
Generally, each Option granted under the Plan will become exercisable in
whole or in part at such times and subject to such conditions as determined by
the Committee. No Option may be exercised after the date on which such Option
expires (the "Expiration Date"). Unless otherwise stated in an Award Notice,
Options must be exercised within ten (10) years of the original date on which
the Award was authorized or they will expire.
The Committee, in its discretion, may accelerate the exercisability of any
Option or waive any condition or restriction on the exercisability of any
Option, subject to the terms of the Plan. All unvested portions of an Option
vest at the death of the Grantee. In the event of a Grantee's disability or
retirement, all unvested portions of an Option may vest in the discretion of the
Committee.
<PAGE>
12. WHAT HAPPENS TO MY OPTIONS IF MY EMPLOYMENT IS TERMINATED?
If your employment is terminated for any reason, any Options you hold that
are not currently exercisable as of your termination date will expire on your
termination date unless the Committee, in its discretion, determines otherwise.
If you are holding any currently exercisable Options when you terminate
employment, the effect of your termination on the exercisability of the Options
will depend on the reason for your termination, as summarized below. In no
event, however, may an Option be exercised after its Expiration Date.
Death, Disability or Retirement
-------------------------------
If your employment terminates because of your death, disability or
retirement, the Options otherwise exercisable by you as of your termination date
must be exercised by the earlier of (i) the Expiration Date, and (ii) five (5)
years after your termination date. Any Option exercisable after your death may
be exercised by your legal representatives.
Resignation or Discharge without Cause
--------------------------------------
If your employment terminates because of your voluntary resignation, or an
involuntary discharge without cause, the Options otherwise exercisable by you as
of your termination date must be exercised by the earlier of (i) the Expiration
Date, and (ii) three (3) months after your termination date, provided, however,
that the Committee, in its sole discretion, may provide for a later date, and
provided further, that if such Options were granted in substitution for
restricted stock options under the General Re Plans, such Options must be
exercised by the earlier to occur of (x) the Expiration Date, and (y) the later
to occur of three (3) months from your termination date or five (5) years from
your original Grant Date.
Discharge for Cause
-------------------
If your employment terminates because you are discharged for cause, you
will forfeit all vested and unvested Options as of your termination date.
Parental Leave of Absence
-------------------------
If you do not return to active employment after a twelve-month parental
leave of absence, you will have until the earlier of (i) the Expiration Date, or
(ii) three (3) months following the end of such twelve-month period, to exercise
any Options otherwise exercisable, provided, however, that if such Options were
granted in substitution for restricted stock options under the General Re Plans,
such Options must be exercised by the earlier to occur of (x) the Expiration
Date, and (y) the later to occur of three (3) months following the end of such
twelve-month period or five (5) years from your original Grant Date.
13. WHAT MUST I DO TO EXERCISE AN OPTION?
If you want to exercise an Option, you must deliver a written notice to
General Re Corporation, 695 East Main Street, Stamford, Connecticut 06904-2351,
Attention: Senior Vice President of Human Resources. The notice must indicate
the number of shares of Class B Common Stock you want to purchase. You may
purchase some or all of the shares subject to the Option. You must deliver a
new notice each time you purchase shares of Class B Common Stock subject to an
Option.
Except as provided under "How Do I Pay the Exercise Price for an Option",
the notice must be accompanied by the full Exercise Price for the shares that
you wish to purchase.
14. HOW DO I PAY THE EXERCISE PRICE FOR AN OPTION?
Generally, the Exercise Price is payable in United States dollars in cash
or by certified check, bank draft or postal or express money order payable to
General Re. However, the Committee may, at the request of a Grantee:
(i) Accept payment of the Exercise Price from residents of a foreign
country in the currency of that country; however, in such event, the
amount payable may include currency exchange costs;
<PAGE>
(ii) Approve and comply with any procedures necessary to allow a broker to
sell and remit to the Company the sale proceeds of the portion of the
shares of Class B Common Stock to be acquired upon exercise with a
Fair Market Value equal to the sum of the Exercise Price and any tax
withholding required. (This method would allow you to exercise
Options and pay the Exercise Price and any required tax withholding
without any cash outlay on your part by selling part or all of the
shares of Class B Common Stock you acquire upon the exercise.)
(iii) Accept prior acquired shares of Class B Common Stock which you have
held for at least six (6) months (which period includes the time in
which such shares were held as General Re stock) in partial or full
payment of the Exercise Price (a "Stock-for-Stock Swap"). Class B
Common Stock so accepted will be valued at its Fair Market Value on
the date the Option is exercised.
15. WHAT IS A STOCK APPRECIATION RIGHT?
A stock appreciation right ("SAR") is the right to the appreciation in
value of Class B Common Stock between the Grant Date and the date of exercise.
The Committee may grant SARs in substitution for outstanding stock appreciation
rights awarded under a General Re Plan.
SARs granted in substitution for stock appreciation rights granted under a
General Re Plan shall be granted on the same terms and conditions as the terms
and conditions of the General Re grant. SARs may be granted as a separate Award
or in conjunction with any Option granted under the Plan. SARs related to
Options will be granted, if at all, at the time of the grant of the related
Option. Each related SAR is subject to the same terms and conditions as the
Option to which it relates, as well as any additional terms and conditions the
Committee may deem appropriate. Thus, related SARs are exercisable only to the
extent the related Option is at the time exercisable.
When you exercise all or a portion of a related SAR, all or such portion of
the Option related to the exercised SAR will terminate. Likewise, when you
exercise all or a portion of an Option, all or such portion of the related SAR
will terminate.
To exercise a SAR you must deliver notice to General Re or its designee at
such address and in such form as designated by the Committee. The notice must
indicate the number of shares for which you wish to exercise your SAR. The date
of the exercise of an SAR will be the date of General Re's, or its designee's,
receipt of a proper and complete exercise notice.
16. WHAT IS RESTRICTED STOCK?
Restricted stock ("Restricted Stock") means shares of Class B Common Stock
that are registered in your name as of the Grant Date, but are held by the
Company on your behalf until certain restrictions relating to the shares are
released or lapse. Upon an Award of Restricted Stock, you will become a
stockholder of the Company and have all the rights of a stockholder with respect
to such shares, including the right to vote and receive dividends or other
distributions made or paid with respect to such shares. The shares of
Restricted Stock, however, are subject to certain restrictions determined by the
Committee in its sole discretion. In addition, your shares of Restricted Stock
may not be sold, exchanged, transferred, pledged, hypothecated, or otherwise
disposed of until the restrictions on the shares are released. In order to
enforce these restrictions, the Committee may place a legend or legends on all
certificates of Restricted Stock making specific reference to the restrictions.
As the restrictions are released, you will receive a certificate, without the
legend, for the number of released shares.
17. WHAT IS A SHARE UNIT?
A share unit ("Share Unit") is an accounting entry maintained by the
Company for the purpose of reflecting the Company's unsecured and unfunded
promise to deliver one share of Class B Common Stock to the Grantee at the time
and under the conditions established by the Committee.
18. WHEN DOES A SHARE UNIT CONVERT AND BECOME PAYABLE AS A SHARE OF CLASS B
COMMON STOCK?
Share Units shall be converted into shares of Class B Common Stock on the
conversion date shown in your Award Notice or on such later date as is permitted
by the Committee. Notwithstanding any conversion and/or vesting date
<PAGE>
relating to your Share Units, your Share Units will automatically convert to
shares of Class B Common Stock and become payable if you terminate employment
with the Company because of (i) your disability, (ii) your death, or (iii) your
retirement on or after normal retirement age (subject to your prior election of
installment payments). Your Share Units may also convert automatically in
certain situations in the event of a Change in Control (as defined below).
At conversion, vested Share Units are payable in shares of Class B Common
Stock. Any fractional shares will be paid in cash based on the Fair Market
Value of a share of Class B Common Stock on the appropriate determination date.
19. WHAT HAPPENS IF THERE IS A RECAPITALIZATION OF THE COMPANY?
In the event that there is a change in the number of issued shares of Class
B Common Stock resulting from a subdivision or consolidation of shares, the
payment of a stock dividend on Class B Common Stock other than a stock dividend
that is a substitute for a cash dividend, or any other increase in the number of
shares for which the Company receives nothing in return for the increase, the
Committee will, subject to any required stockholder action, proportionately
adjust the aggregate number of shares of Class B Common Stock (including
Restricted Stock) issuable under the Plan, the number of shares of Class B
Common Stock subject to any Awards, the number of Share Units, and the Exercise
Price of any outstanding Options and SARs.
In addition, if there is a change in capitalization of the Company other
than those referred to above, the Committee may, but does not have to, make
adjustments in the number and class of shares of Restricted Stock that may
thereafter be granted, or in the number and class of shares of Restricted Stock
then outstanding to prevent dilution or enlargement of rights.
20. WHAT HAPPENS IF THERE IS A MERGER, CONSOLIDATION OR SIMILAR TRANSACTION
INVOLVING THE COMPANY?
In the event of (i) the dissolution, liquidation, merger or consolidation
of the Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation, or (iii) a merger or consolidation in which the Company
is the surviving corporation, but the holders of Class B Common Stock receive
securities of another corporation, then, subject to any required stockholder
action, any Award granted to you under the Plan will apply to the proportionate
amount of securities, cash or other property that is received by Company
stockholders in place of their Class B Common Stock. Any restrictions on your
shares of Restricted Stock will be carried over to any property you so receive
in exchange for your Restricted Stock.
In addition, prior to the event, the Committee may, in its discretion and
subject to any required stockholder action, either:
(i) Cancel your outstanding Awards which are then exercisable and pay you
in exchange an amount in cash equal to the difference between the Exercise
Price and the per share amount Company stockholders will receive for their
Class B Common Stock as a result of the event for each share of Class B
Common Stock which is then issuable pursuant to exercisable Awards. Any
Award that you hold that is not then currently exercisable would be
terminated without any payment to you; or
(ii) If holders of Class B Common Stock receive for their shares of Class B
Common Stock property other than cash as a result of the event, exchange
all or part of the then exercisable portion of your Award for an Option or
SAR on some or all of such property, as determined by the Committee. The
Committee would then make any applicable equitable adjustments to the
amount of shares of Class B Common Stock or other property subject to the
Award and the Exercise Price and, if appropriate, give you a cash payment
in partial consideration for the exchange if, for example, you lose out on
the exchange. Again, any Award you hold that is not then exercisable would
be terminated without any payment to you.
21. WHAT HAPPENS IF THERE IS A CHANGE IN CONTROL?
Upon a Change in Control, all Options will become immediately and fully
exercisable and, if the Grantee's employment is involuntarily terminated within
two (2) years after the Change in Control, restrictions on Restricted Stock and
all Share Units will lapse; provided, that the Committee may determine, in its
discretion, to vest all or some percentage of the Grantee's Restricted Stock
and/or Share Units at the time of the Change in Control.
<PAGE>
In general, a "Change in Control" will be deemed to occur on any day
subsequent to the Merger that (i) as a result of, or in connection with, any
cash tender offer, exchange offer, merger or other business combination, sale of
assets or contested election or combination of the foregoing, the persons who
were prior to the institution thereof directors of the Company cease to
constitute a majority of the Board; (ii) the Company or General Re sells or
otherwise disposes of all or substantially all of its assets; (iii) the Company
ceases to be an independent publicly owned corporation or General Re becomes an
independently publicly owned corporation; or (iv) any person (including a
"group" as defined in Section 13(d)(3) of the Exchange Act) other than Warren E.
Buffett, Susan T. Buffett or trusts of which Mr. Buffett is trustee, acquires
beneficial ownership of shares of the Company or of General Re with respect to
which 50% or more of the total number of votes for the election of the Company's
Board or General Re's board of directors may be cast. Notwithstanding the
above, there shall not be a Change in Control if the conditions described above
result from a transaction between General Re and another subsidiary of the
Company.
22. CAN I SELL MY AWARDS OR GIVE THEM AWAY?
No. Awards granted under the Plan are non-transferable. This means that
during your lifetime, no one else other than you can acquire a right to your
Awards and your Awards can only be exercised by you. However, you can pass your
Awards on to your beneficiaries in your will, or if you have no will, to your
heirs through the law of descent and distribution. If you die holding an
exercisable Award, your legal representatives can exercise your Award on behalf
of your estate.
23. WHAT RESTRICTIONS MAY THE COMMITTEE PLACE ON MY EXERCISE OF AN AWARD?
The Committee may, as a condition precedent to the exercise of any Award,
require the Grantee thereof (or, in the event of the Grantee's death, his legal
representatives, legatees or distributees) to enter into such agreement or to
make such representations as may be required to make lawful the transfer of
shares of Class B Common Stock to the Grantee upon exercise of an Option or
otherwise and the ultimate disposition of the shares so acquired.
SHARES OF CLASS B COMMON STOCK SUBJECT TO AWARDS UNDER THE PLAN MAY BE
SUBJECT TO RESTRICTIONS ON TRANSFER, AS DETERMINED BY THE COMMITTEE AND AS SET
FORTH IN YOUR AWARD NOTICE.
QUESTIONS 24 THROUGH 29 PROVIDE A GENERAL SUMMARY OF THE FEDERAL TAX
CONSEQUENCES RELATING TO PARTICIPATION IN THE PLAN. THIS INFORMATION IS NOT A
DEFINITIVE EXPLANATION OF THE TAX CONSEQUENCES OF SUCH PARTICIPATION. YOUR
INCOME TAX LIABILITY IS A PERSONAL MATTER BETWEEN YOU AND THE RELEVANT
GOVERNMENTAL TAX AUTHORITIES. THE COMPANY ASSUMES NO RESPONSIBILITY IN THESE
MATTERS FOR YOU. ACCORDINGLY, YOU SHOULD CONSULT WITH YOUR OWN TAX ADVISOR WITH
RESPECT TO THE FEDERAL, STATE, LOCAL AND, IF APPLICABLE, FOREIGN TAX
CONSEQUENCES ASSOCIATED WITH THE GRANT AND EXERCISE OF AWARDS UNDER THE PLAN AND
THE OWNERSHIP AND DISPOSITION OF THE UNDERLYING SECURITIES. THE TAX TREATMENT OF
AWARDS MAY DIFFER FROM COUNTRY TO COUNTRY. IF YOU ARE A RESIDENT OF A FOREIGN
COUNTRY, IT IS PARTICULARLY IMPORTANT THAT YOU CONSULT WITH A TAX ADVISOR
FAMILIAR WITH THE TAX LAWS OF THE COUNTRY IN WHICH YOU RESIDE.
24. WHAT ARE THE FEDERAL TAX CONSEQUENCES RELATING TO OPTIONS GRANTED UNDER THE
PLAN?
All Options granted under the Plan are nonqualified stock options. In
general, if you receive a nonqualified stock option, you will recognize no
income at the time of the grant of the Option. If payment of the Exercise Price
of an Option is made entirely in cash, you will recognize ordinary income
(treated as compensation) in the year you exercise the Option in an amount equal
to the excess of the Fair Market Value of the shares at the time of exercise
over the Exercise Price of the Option. If you use previously owned shares to
exercise an Option in whole or in part, ordinary income (treated as
compensation) will be recognized only on the additional shares of Class B Common
Stock acquired (the "Profit Shares") and will be equal to the Fair Market Value
of the shares on the date of exercise less any additional cash paid. The
Company will be entitled to a business expense deduction in the same amount and
at the same time as you recognize ordinary income.
<PAGE>
Upon the sale of any shares you acquired through the exercise of an Option,
you will have either short-term or long-term capital gain, depending upon
whether or not the shares are sold more than one year after you exercised the
Option, in an amount equal to the difference between the amount realized on such
sale and the tax basis of the shares sold.
25. WHAT IS THE TAX BASIS OF SHARES ACQUIRED THROUGH THE EXERCISE OF AN OPTION?
If payment of the Exercise Price is made entirely in cash, the tax basis of
the Class B Common Stock acquired will be its Fair Market Value on the date of
exercise, but will not be less than the Exercise Price. The holding period for
capital gains purposes will begin on the day after the tax basis of the shares
is so determined.
If you use the Stock-for-Stock Swap method to exercise an Option,
determining the tax basis of the Class B Common Stock you acquire is more
complicated. Generally, the Stock-for-Stock Swap will not be considered to be a
taxable disposition of the previously owned Class B Common Stock. Thus, no
capital gain or loss will be recognized with respect to the Class B Common Stock
used for payment. However, your tax basis and holding period of the previously
owned Class B Common Stock will be carried over to the equivalent number of
shares of Class B Common Stock received on exercise. The tax basis of the
Profit Shares will be the Fair Market Value of the Profit Shares on the date of
exercise (but not less than the amount of any cash used in payment) and the
holding period for capital gains purposes for the Profit Shares will begin on
the day after the tax basis of the Profit Shares is so determined.
26. ARE THERE ANY SPECIAL FEDERAL TAX RULES RELATING TO RESTRICTED STOCK?
Yes. Generally, you will not recognize ordinary income at the time of the
grant of Restricted Stock. However, in the year that the shares of Restricted
Stock you own are no longer subject to "a substantial risk of forfeiture,"
within the meaning of Section 83 of the Code, you will realize ordinary income
(treated as compensation) in an amount equal to the excess of the Fair Market
Value of the shares at the time the restrictions lapse over the amount you paid
for the shares, if any.
27. WHAT ARE THE FEDERAL TAX CONSEQUENCES RELATING TO SARS?
You will have ordinary income (treated as compensation) in the year you
exercise a SAR equal to the amount of cash and/or the Fair Market Value of the
shares of Class B Common Stock you receive upon exercise of the SAR. The
Company will be entitled to a business expense deduction in the same amount and
at the same time as you recognize ordinary income.
The tax basis of any shares of Class B Common Stock received upon the
exercise of a SAR is the Fair Market Value of the shares on the date of
exercise.
28. WHAT ARE THE FEDERAL TAX CONSEQUENCES RELATING TO SHARE UNITS?
Generally, you will not recognize ordinary income at the time of the
crediting to your account of a Share Unit. When shares of Class B Common Stock
corresponding to your Share Units are transferred to you upon conversion (or
become convertible), you will have ordinary income in that year (treated as
compensation) in an amount equal to the Fair Market Value, as of the date of
conversion and transfer, of the shares of Class B Common Stock you receive, plus
any cash payment you receive in lieu of fractional shares. The tax basis of the
shares you receive will be their Fair Market Value as of conversion and the date
of transfer.
The Company will be entitled to a business expense deduction in the same
amount and at the same time as you recognize ordinary income.
29. IS MY AWARD SUBJECT TO ANY WITHHOLDING OF TAXES?
Yes. No Award will be paid unless you have paid, or have made provisions
satisfactory to the Committee for payment of, federal, state and local income
taxes, or other taxes (other than stock transfer taxes) which the Company may be
obligated to collect as a result of the required payment, issuance, registration
or delivery. The current U.S. statutory federal withholding rate is 28 percent,
not including any applicable state withholding. Your recognized income will
also be subject to FICA tax withholding.
<PAGE>
If you request, the Committee may, in its sole discretion, permit you to
satisfy your withholding tax obligation, in whole or in part, by instructing the
Company or its designee to withhold up to that number of unrestricted shares
otherwise deliverable to you with a Fair Market Value equal to the amount of tax
to be withheld.
30. ARE THERE ANY OTHER FEDERAL TAX CONSEQUENCES I SHOULD KNOW ABOUT?
Certain other Federal tax consequences are described below.
Cash Out of Awards
------------------
If you surrender an Award for payment as a result of the dissolution or
liquidation of the Company, a merger or consolidation of the Company, a merger
or consolidation in which the Company is not the surviving corporation, or a
merger or consolidation in which the Company is the surviving corporation but
the holders of Class B Common Stock receive securities of another corporation,
then you will recognize ordinary income in an amount equal to the cash payment
you receive or the Fair Market Value of any shares of Class B Common Stock you
receive in return for your Award. The Company will be entitled to a business
deduction in the same amount.
Change in Control
-----------------
If an Option is accelerated or surrendered for payment in connection with a
Change in Control, all or a portion of the value of the Option at that time may
be a parachute payment for purposes of determining whether you must pay a non-
deductible 20% excise tax as the result of receipt of an excess parachute
payment determined pursuant to the rules applicable to Section 4999 of the Code.
The excise tax would only apply in cases where the amount of all payments you
are to receive contingent upon the Change in Control exceed certain thresholds
established under the rules. No deduction will be available to the Company in
connection with such excess parachute payments.
The information provided in Questions 24 through 30 is no more than a
summary of the United States Federal Income Tax provisions relating to the Plan.
Your individual circumstances may vary from these results. The U.S. Federal
Income Tax laws and regulations are frequently amended, and you should rely upon
------------------------
your own tax advisor concerning the federal income tax consequences of the Plan.
- -------------------------------------------------------------------------------
This Prospectus does not address the state, local or foreign income tax
consequences of participation in the Plan. The state, local or foreign tax
consequences of participation in the Plan may or may not be consistent with the
tax consequences discussed herein. You should rely on your own tax advisor for
-------------------------------------------
advice concerning the state, local or foreign income tax provisions applicable
- ------------------------------------------------------------------------------
to the Plan.
- -----------
31. HOW LONG WILL THE PLAN BE EFFECTIVE?
The Plan will remain in effect until the exercise, expiration or
termination or payment of all Options, SARs, Restricted Stock, Share Units and
other awards under the Plan.
32. CAN THE PLAN BE CHANGED?
Yes. The Board, the Committee or its delegate, has the power to amend the
Plan from time to time and, in the event of a Change in Control, suspend or
discontinue the Plan, or revise or end it in any respect whatsoever. However,
no amendment, revision, suspension or discontinuance shall in any manner affect
any Award that was previously granted without the consent of the Grantee.
33. HOW CAN I GET MORE INFORMATION ABOUT THE PLAN?
Requests for information about the Plan and its administrators should be
directed to General Re Corporation, 695 East Main Street, Stamford, Connecticut
06904-2351, Attention: Senior Vice President of Human Resources, telephone no.
(203) 328-5000.
<PAGE>
34. IS THE PLAN QUALIFIED UNDER SECTION 401(A) OF THE INTERNAL REVENUE CODE OR
SUBJECT TO ERISA?
The Plan is not qualified under Section 401(a) of the Internal Revenue Code
of 1986, as amended, and is not subject to any provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Shares
offered hereby for general corporate purposes.
PLAN OF DISTRIBUTION
The Shares covered by this Prospectus are being offered by the Company to
eligible persons under the Plan. Certain provisions of the Plan are described
above under "General Information about the Plan."
LEGAL MATTERS
The validity of the Shares has been passed upon by Munger, Tolles & Olson
LLP, Los Angeles, California, as counsel for the Company. Ronald L. Olson, a
partner of Munger, Tolles & Olson LLP, is a director of the Company. He and
other attorneys in such firm beneficially own an aggregate of less than 1% of
the outstanding common stock of the Company.
EXPERTS
The financial statements and related financial statement schedules
incorporated in this Prospectus by reference from the Company's Annual Report on
Form 10-K for the year ended December 31, 1997 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports which are
incorporated herein by reference, and have been so incorporated in reliance upon
the reports of such firm given upon their authority as experts in accounting and
auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
The Company is subject to the information requirements of the Exchange Act
and, in accordance therewith, files annual, quarterly and current reports, proxy
statements and other information with the Securities and Exchange Commission
(the "SEC"). Such reports, proxy statements and other information filed by the
Company can be read and copied at the Public Reference Room of the SEC located
at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the public reference facilities of the SEC's regional offices at Seven
World Trade Center, 13th Floor, New York, New York 10048, and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511. Information regarding the operation of the Public Reference Room may be
obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains a Web site at
http://www.sec.gov that contains the reports, proxy and information statements
and other information concerning the Company, which files electronically with
the SEC. The Class B Common Stock is quoted for trading on the New York Stock
Exchange, and, accordingly, reports, proxy statements and other information
concerning the Company may be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Company has filed with the SEC a registration statement on Form S-3
under the Securities Act of 1933, as amended (the "Securities Act") with respect
to the Shares offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. A copy of the Registration Statement may be inspected,
without charge, at the offices of the SEC in Washington, D.C. and copies of all
or any part of the Registration Statement may be obtained from the Public
Reference Room of the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of charges prescribed by the SEC.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows the Company to "incorporate by reference" certain
information into this Prospectus, which means that the Company may disclose
certain information to you by referring you to another document filed with the
SEC. The Company is incorporating by reference the following documents
previously filed with the SEC:
(i) the Company's Annual Report on Form 10-K for the year ended December
31, 1997;
(ii) the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1998;
(iii) the description of the Company's Class B Common Stock included in the
Registration Statement on Form 8-A dated April 1, 1996;
(iv) the Company's Current Report on Form 8-K filed on June 26, 1998;
(v) the information under the heading "Unaudited Pro Forma Combined
Condensed Financial Statements" at pages 59-63 of the Joint Proxy
Statement/Prospectus dated August 12, 1998 included in Amendment No.
1 to the Company's Registration Statement on Form S-4 dated August
12, 1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act following the date of this Prospectus and prior to the
termination of the offering made hereby shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement set forth in this Prospectus or in a document
incorporated or deemed to be incorporated by reference in this Prospectus shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained in any subsequently filed document which is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
information that has been incorporated by reference in the Prospectus but not
delivered with the Prospectus, except the exhibits to such information (unless
such exhibits are specifically incorporated by reference into such information).
Written requests for such copies should be directed to Forrest N. Krutter,
Berkshire Hathaway Inc., 1440 Kiewit Plaza, Omaha, Nebraska 68131. Telephone
requests for such copies should be directed to Forrest N. Krutter at (402) 346-
1400.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following expenses of this offering will be borne by the Company:*
<TABLE>
<S> <C>
SEC Registration Fee................................................ $321,868
Legal Fees and Expenses............................................. 3,500
Accounting Fees and Expenses........................................ 5,000
Miscellaneous....................................................... 632
--------
Total........................................................... $331,000
========
</TABLE>
- ------------------------------------------
* All amounts other than the SEC registration fee are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware empowers the Company to
indemnify, subject to the standards therein prescribed, any person in connection
with any action, suit or proceeding brought or threatened by reason of the fact
that such person is or was a director, officer, employee or agent of the Company
or is or was serving as such with respect to another corporation or other entity
at the request of the Company. Section 10 of the Company's By-Laws provides that
the Company shall, to the fullest extent permitted by Section 145 of the General
Corporation Law of Delaware, indemnify directors and officers of the Company
from and against any and all of the expenses, liabilities or other matters
referred to in or covered by said Section. Additionally, as permitted by said
Section and the Company's By-Laws, the Company has entered into indemnification
agreements with each of its directors and officers. The description of such
indemnification agreements under the caption "Summary of the Indemnification
Agreements" on page 9 of the Company's definitive proxy statement for its May
19, 1987 Annual Meeting of Stockholders, Commission File No. 0-7413, is
incorporated herein by reference.
As permitted by Section 102 of the General Corporation Law of Delaware, the
Company's Restated Certificate of Incorporation includes as Article Tenth
thereof a provision eliminating, to the extent permitted by Delaware law, the
personal liability of each director of the Company to the Company or any of its
shareholders for monetary damages resulting from breaches of such director's
fiduciary duty of care.
II-1
<PAGE>
ITEM 16. EXHIBITS.
Exhibit Number Description of Document
- --------------- -----------------------
2 Agreement and Plan of Mergers, dated as of June 19, 1998, by and
between Berkshire Hathaway Inc. and General Re Corporation
(incorporated by reference to Exhibit 1 to Berkshire's Current Report
on Form 8-K filed on June 26, 1998, File No. 1-10125).
4 Berkshire Hathaway Inc. 1998 Compensation Plan.
5 Opinion of Munger, Tolles & Olson LLP.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Munger, Tolles & Olson LLP (contained in Exhibit 5).
24 Power of attorney (see page II-4).
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement;
iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
Provided, however, that clauses (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by such
clauses is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") that
are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof;
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering; and
(4) That, for purposes of determining any liability under the Securities Act,
each filing of the registrant's annual report pursuant to Section 13(a) or 15(d)
of the Exchange Act that is incorporated by reference in the registration
II-2
<PAGE>
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANTS
CERTIFY THAT THEY HAVE REASONABLE GROUNDS TO BELIEVE THAT THEY MEET ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAVE DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON THEIR BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF OMAHA, STATE OF NEBRASKA, ON DECEMBER 1, 1998.
BERKSHIRE HATHAWAY INC. NBH, INC.
By /s/ Marc D. Hamburg By /s/ Marc D. Hamburg
------------------------------------------- ------------------------------
Marc D. Hamburg Marc D. Hamburg
Vice President and Chief Financial Officer Vice President and Chief
Financial Officer
POWER OF ATTORNEY
Each of the undersigned hereby constitutes and appoints Warren E. Buffett,
Charles T. Munger and Marc D. Hamburg, or any one of them, each with full power
of substitution and resubstitution, such person's true and lawful attorney-in-
fact and agent, in such person's name and on such person's behalf, in any and
all capacities, to sign any and all amendments to this Registration Statement,
including any post-effective amendments, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Warren E. Buffett Chairman of the Board and Director (principal December 1, 1998
- ------------------------
Warren E. Buffett executive officer) of Berkshire Hathaway Inc.
and of NBH, Inc.
/s/ Marc D. Hamburg Vice President and Chief Financial Officer December 1, 1998
- ------------------------
Marc D. Hamburg (principal financial officer) of Berkshire
Hathaway Inc. and of NBH, Inc.
/s/ Daniel J. Jaksich Controller (principal accounting officer) of December 1, 1998
- ------------------------
Daniel J. Jaksich Berkshire Hathaway Inc. and of NBH, Inc.
/s/ Charles T. Munger Vice-Chairman of the Board and Director of December 1, 1998
- ------------------------
Charles T. Munger Berkshire Hathaway Inc. and of NBH, Inc.
/s/ Susan T. Buffett Director of Berkshire Hathaway Inc. and of December 1, 1998
- ------------------------
Susan T. Buffett NBH, Inc.
/s/ Malcolm G. Chace Director of Berkshire Hathaway Inc. and of December 1, 1998
- ------------------------
Malcolm G. Chace NBH, Inc.
/s/ Walter Scott, Jr. Director of Berkshire Hathaway Inc. and of December 1, 1998
- ------------------------
Walter Scott, Jr. NBH, Inc.
/s/ Howard G. Buffett Director of Berkshire Hathaway Inc. and of December 1, 1998
- ------------------------
Howard G. Buffett NBH, Inc.
/s/ Ronald L. Olson Director of Berkshire Hathaway Inc. and of December 1, 1998
- ------------------------
Ronald L. Olson NBH, Inc.
</TABLE>
II-4
<PAGE>
BERKSHIRE HATHAWAY INC.
1998 COMPENSATION PLAN
EFFECTIVE ____________, 1998
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
I. PURPOSE..................................... 1
II. DEFINITIONS................................. 1
A. "AWARD"................................ 1
B. "AWARD NOTICE"......................... 2
C. "AWARD PERIOD"......................... 2
D. "BOARD"................................ 2
E. "CHANGE IN CONTROL".................... 2
F. "CODE"................................. 2
G. "COMMITTEE"............................ 2
H. "COMMON STOCK"......................... 2
I. "COMPANY".............................. 3
J. "CONSOLIDATED STOCK OPTION"............ 3
K. "DISABLED" or "DISABILITY"............. 3
L. "EXCHANGE ACT"......................... 3
M. "EXERCISE PRICE"....................... 3
N. "EXPIRATION DATE"...................... 3
O. "FAIR MARKET VALUE".................... 3
P. "GRANT DATE"........................... 3
Q. "GRANTEE".............................. 3
R. "ORIGINAL AWARD"....................... 3
S. "ORIGINAL GRANT DATE".................. 4
T. "PARENTAL LEAVE OF ABSENCE"............ 4
U. "PERFORMANCE OBJECTIVE"................ 4
V. "PHANTOM SHARE UNIT"................... 4
W. "REPLACEMENT STOCK OPTION"............. 4
X. "REPORTING PERSON"..................... 4
Y. "RESTRICTED STOCK"..................... 4
Z. "SHARE UNIT"........................... 4
AA. "STOCK APPRECIATION RIGHT" ("SAR")..... 5
BB. "STOCK OPTION"......................... 5
CC. "SUBSIDIARY"........................... 5
DD. "TERMINATION OF EMPLOYMENT"............ 5
III. ADMINISTRATION.............................. 6
A. The Committee.......................... 6
B. Authority of the Committee............. 6
IV. ELIGIBILITY................................. 7
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
V. PARTICIPATION..................................................... 7
VI. STOCK SUBJECT TO THE PLAN......................................... 8
VII. STOCK OPTIONS..................................................... 8
A. Awards of Stock Options....................................... 8
B. Exercise Price................................................ 8
C. Number of Stock Options....................................... 9
D. Vesting....................................................... 9
E. Method of Exercise............................................ 9
F. Exercise by Reporting Person.................................. 10
G. Termination of Stock Options.................................. 10
VIII. REPLACEMENT STOCK OPTIONS......................................... 11
A. Awards of Replacement Stock Options........................... 11
B. Replacement Stock Options Awarded in Substitution
for an Original Award of Replacement Stock Options............ 11
C. Replacement Stock Options To Replace Shares Tendered
in Exercise of Stock Options Awarded under Section VII
of This Plan.................................................. 12
D. Other Terms and Conditions of Replacement Stock Options....... 13
IX. CONSOLIDATED STOCK OPTIONS........................................ 13
A. Awards of Consolidated Stock Options.......................... 13
B. Exercise Price................................................ 13
C. Number of Consolidated Stock Options.......................... 14
D. Fractional Shares............................................. 14
E. Date Exercisable.............................................. 14
F. Expiration Date............................................... 15
G. No Replacement Stock Options.................................. 15
H. Other Terms and Conditions of Consolidated Stock Options...... 15
X. STOCK APPRECIATION RIGHTS (SARs).................................. 15
A. Awards of SARs................................................ 15
B. SARs Awarded in Substitution for an Original Award of SARs.... 15
C. SARs Awarded Pursuant to a Deferral Election Not in
Substitution for an Original Award............................ 16
D. Payment of SARs............................................... 16
E. Form and Time of Payment of SARs.............................. 17
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
XI. RESTRICTED STOCK................................................... 17
A. Awards of Restricted Stock.................................... 17
B. Number of Shares of Restricted Stock.......................... 17
C. Restrictions on Restricted Stock.............................. 17
D. Legends on Restricted Stock................................... 18
E. Registration of Restricted Stock.............................. 18
F. Rights as a Stockholder....................................... 18
G. Release of Restrictions....................................... 18
H. Transfer of Restricted Stock.................................. 19
XII. SHARE UNITS........................................................ 19
A. Awards of Share Units......................................... 19
B. Number of Share Units......................................... 19
C. Vesting....................................................... 19
D. Conversion of Share Units..................................... 19
E. Dividends on Share Units...................................... 20
F. Share Units Granted in Substitution for an Original Award
of Share Units to Employees of Cologne Re..................... 20
G. Termination of Employment and Share Units Granted in
Substitution for an Original Award of Share Units and
Restricted Share Units........................................ 20
H. Delivery of Shares of Common Stock............................ 20
XIII. PHANTOM SHARE UNITS................................................ 20
A. Awards of Phantom Share Units................................. 20
B. Phantom Share Units under a Bonus Deferral.................... 20
C. Phantom Share Units to Reflect Cash Dividends................. 21
D. Unauthorized Use of Proprietary Information................... 21
E. Termination of Employment..................................... 21
F. Payment of Phantom Share Units under a Bonus
Deferral Election............................................. 21
G. Payment of Phantom Share Units to Reflect Cash Dividends...... 21
XIV. BONUS AWARDS....................................................... 22
A. Awards of Bonus Awards........................................ 22
B. Terms and Conditions of Bonuses............................... 22
C. Performance Objectives........................................ 22
D. Amount of Bonus............................................... 22
E. Crediting and Payment of Bonuses.............................. 23
F. Termination of Employment..................................... 23
G. Method of Payment............................................. 23
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
XV. RECAPITALIZATION, MERGER, CONSOLIDATION AND SIMILAR TRANSACTIONS.. 24
XVI. CHANGE IN CONTROL................................................. 25
XVII. TERM OF PLAN...................................................... 26
XVIII. NONTRANSFERABILITY OF AWARDS AND DESIGNATION OF BENEFICIARIES..... 27
XIX. REPORTING PERSONS................................................. 27
XX. WITHHOLDING OF TAXES.............................................. 28
XXI. AMENDMENT OF THE PLAN............................................. 28
XXII. APPLICATION OF FUNDS.............................................. 29
XXIII. NO RIGHT TO CONTINUED EMPLOYMENT OR AWARDS........................ 29
XXIV. NO OBLIGATION TO EXERCISE OPTIONS OR SARs......................... 29
XXV. RIGHTS OF A STOCKHOLDER; STATUS AS A GENERAL CREDITOR............. 29
XXVI. INDEMNIFICATION OF COMMITTEE...................................... 29
XXVII. COMPLIANCE WITH CERTAIN LAWS...................................... 30
XXVIII. GOVERNING LAW..................................................... 30
</TABLE>
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BERKSHIRE HATHAWAY INC.
1998 COMPENSATION PLAN
I. PURPOSE.
This Berkshire Hathaway Inc. 1998 Compensation Plan ("Plan") is intended to
facilitate the merger ("Merger") of Berkshire Hathaway Inc., a Delaware
corporation ("Berkshire"), with General Re Corporation, a Delaware corporation
("General"), a corporation that has attracted and retained highly qualified
personnel through the use of, among other things, bonuses, stock options,
restricted stock options, stock appreciation rights, restricted stock and share
units ("Original Awards").
This Plan is adopted by Berkshire in anticipation of the Merger. This Plan
provides for Awards to replace Original Awards made by General under its 1985
Long Term Compensation Plan, 1989 Long Term Compensation Plan, 1995 Long Term
Compensation Plan, U.K. Sub Plans, 1996 Employee Stock Award Plan, and the Stock
Unit Plan for Directors ("General Plans").
II. DEFINITIONS.
For the purposes of this Plan:
A. "AWARD" means any form of incentive or performance awards granted
under the Plan, whether singly or in combination, to a Grantee by the Committee
pursuant to such terms, conditions, restrictions and/or limitations (if any) as
the Committee may establish by the Award Notice or otherwise. Awards granted
under the Plan may consist of:
1. "Annual Incentive Bonuses," "Special Bonuses" or "Long-Term
Performance Bonuses" (collectively, "Bonuses") granted pursuant
to Section XIV;
2. "Restricted Stock" granted pursuant to Section XI;
3. "Share Units" granted pursuant to Section XII;
4. "Stock Appreciation Rights" granted pursuant to Section X;
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5. "Stock Options" granted pursuant to Sections VII, VIII and IX;
and/or
6. "Phantom Share Units" granted pursuant to Section XIII.
B. "AWARD NOTICE" means the written notice from the Committee to a Grantee
that establishes the terms, conditions, restrictions and/or limitations (if any)
applicable to an Award. Where appropriate, the Committee may adopt the award
notice of the Original Award.
C. "AWARD PERIOD" means the period(s) previously established under the
1989 and 1995 General Long Term Compensation Plans over which the attainment of
incentive or performance goals shall be measured.
D. "BOARD" means the Board of Directors of Berkshire.
E. "CHANGE IN CONTROL" occurs on any day subsequent to the Merger that (i)
as a result of, or in connection with, any cash tender offer, exchange offer,
merger or other business combination, sale of assets or contested election or
combination of the foregoing, the persons who were prior to the institution
thereof directors of Berkshire cease to constitute a majority of the Board; (ii)
Berkshire or General sells or otherwise disposes of all or substantially all of
its assets; (iii) Berkshire ceases to be an independent publicly owned
corporation or General becomes an independently publicly owned corporation; or
(iv) any person (including a "group" as defined in Section 13(d)(3) of the
Exchange Act) other than Warren E. Buffett, Susan T. Buffett or trusts of which
Mr. Buffett is trustee acquires beneficial ownership of shares of Berkshire or
of General with respect to which 50% or more of the total number of votes for
the election of Berkshire's Board or General's board of directors may be cast.
Notwithstanding the above, there shall not be a Change of Control if the
conditions described above result from a transaction between General and another
Subsidiary of the Company.
F. "CODE" means the Internal Revenue Code of 1986, as amended.
G. "COMMITTEE" means the committee appointed by the Chief Executive
Officer of Berkshire to administer and interpret the Plan, as described in
Section III hereof.
H. "COMMON STOCK" means the Class B common stock, $.1667 par value, of
Berkshire.
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I. "COMPANY" means Berkshire, any Subsidiary of Berkshire (including
General), and any successor corporation of Berkshire.
J. "CONSOLIDATED STOCK OPTION" is an Award granted pursuant to Section
IX. A Consolidated Stock Option is a form of Stock Option granted to a Grantee
in substitution for any fractional shares of Stock Options and Replacement Stock
Options to which he would otherwise have been entitled under this Plan.
K. "DISABLED" or "DISABILITY" means having a physical or mental condition
that renders the Grantee incapable of performing the work for which the Grantee
was employed (or similar work) and that qualifies the Grantee for benefits under
a Company-sponsored long-term disability plan.
L. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
M. "EXERCISE PRICE" means the price at which a Stock Option or SAR
granted under the Plan may be exercised.
N. "EXPIRATION DATE" means the last day of any period of time during
which a Stock Option or SAR may be exercised.
O. "FAIR MARKET VALUE" means, on a per share basis, the mean between the
opening and closing sales price of a share of Common Stock on the Composite Tape
for New York Stock Exchange-listed stocks on the date the determination is being
made, or, if no sales are reported on such date, the mean as calculated on the
next preceding day for which there were sales reported.
P. "GRANT DATE" means the date on which the Award is authorized by the
Committee, or such other date as the Committee may specify in the Award Notice.
Q. "GRANTEE" means any person to whom an Award has been made.
R. "ORIGINAL AWARD" means any award granted by General under the General
Plans, including an opportunity for a 1998 AIP Bonus or 1998 Special Bonus and
opportunities for Long Term Performance Bonus Awards, or an award by General of
an independent stock appreciation right.
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S. "ORIGINAL GRANT DATE" means the date on which an Original Award was
granted under the General Plans.
T. "PARENTAL LEAVE OF ABSENCE" means a leave of absence from active
employment due to the birth of Grantee's child, the placement of a child with
the Grantee in connection with adoption of such child by the Grantee, or the
care for a child immediately following such birth or placement for adoption. A
Parental Leave Absence does not include any period during which a Grantee is on
short-term disability due to pregnancy.
U. "PERFORMANCE OBJECTIVE" means a measure of the performance of the
Company or of a Subsidiary against which a Grantee's Bonus opportunity may be
measured.
V. "PHANTOM SHARE UNIT" is an Award granted pursuant to Section XIII. A
Phantom Share Unit means the accounting entry maintained by Berkshire for the
purpose of reflecting Berkshire's unsecured and unfunded promise to deliver the
equivalent of one share of Common Stock in cash to the Grantee at the time and
on the conditions set forth in Section XIII and in the applicable Award Notice.
W. "REPLACEMENT STOCK OPTION" is an Award granted pursuant to Section
VIII. A Replacement Stock Option is a form of Stock Option granted to a Grantee
in substitution for an Original Award of replacement stock options or a form of
Stock Option issued to a Grantee in replacement of shares tendered in payment of
the Exercise Price and required tax withholding upon exercise of a Stock Option
granted under this Plan.
X. "REPORTING PERSON" means a Grantee who is subject to the reporting
requirements of Section 16(a) of the Exchange Act.
Y. "RESTRICTED STOCK" is an Award granted pursuant to Section XI hereof.
Restricted Stock are shares of Common Stock that are registered in the Grantee's
name as of the Grant Date, but are held by the Company on behalf of the Grantee
until certain restrictions relating to the shares are released or lapse.
Z. "SHARE UNIT" is an Award granted pursuant to Section XII hereof. A
Share Unit means the accounting entry maintained by Berkshire for the purpose of
reflecting Berkshire's unsecured and unfunded promise to deliver one share of
Common Stock to the Grantee at the time and on the conditions set forth in
Section XII and in the applicable Award Notice.
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AA. "STOCK APPRECIATION RIGHT" ("SAR") is an Award granted pursuant to
Section X hereof. A SAR is the right to the appreciation in the Fair Market
Value of a share of Common Stock between the Grant Date and the date of exercise
of the SAR.
BB. "STOCK OPTION" (or "Option") is an Award granted pursuant to Section
VII hereof. Stock Options granted under the Plan are non-qualified stock
options, or options which are not intended to be "incentive stock options" under
Section 422 of the Code. A Stock Option is the right to purchase a certain
number of shares of Common Stock at a certain Exercise Price, subject to the
terms of the Plan and the applicable Award Notice. Replacement Stock Options
and Consolidated Stock Options are forms of Stock Options.
CC. "SUBSIDIARY" means any corporation (other than Berkshire) in an
unbroken chain of corporations beginning with Berkshire, if each of the
corporations (other than the last corporation) in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
DD. "TERMINATION OF EMPLOYMENT" means the earliest date on which a Grantee
is no longer employed by the Company, or the date on which a director of General
ceases to serve on the board of directors of General.
1. Whether an authorized leave of absence or an absence on military
or government service constitutes Termination of Employment shall be determined
by the Committee.
2. "Retirement" means any retirement by a Grantee pursuant to any
applicable Company pension plan.
3. A Parental Leave of Absence shall not constitute Termination of
Employment provided that the Grantee returns to active employment with the
Company within twelve (12) consecutive months after the date the Parental Leave
of Absence began, excluding the period of absence in which the Grantee is on
short-term disability due to pregnancy.
4. "Discharge for cause" means a Termination of Employment by the
Company which the Committee determines to be for cause, including but not
limited to any separation from employment by the Grantee from the Company which
is effected because of fraud, deceit, or other gross misconduct by the Grantee
performed within the scope of his employment.
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5. "Termination for good reason." For the purpose of the release of
restrictions on Restricted Stock, as defined in Section XI.G.4 or payment of
Bonus Awards, as provided in Section XIV.F, a termination for good reason" means
any separation from employment by the Grantee from the Company because of (a) an
involuntary assignment of the Grantee to duties materially different from those
to which he was assigned on September 18, 1998; (b) a reduction of the Grantee's
salary which is greater than ten percent of the Grantee's salary at the annual
rate in effect on September 18, 1998; or (c) the relocation of the Grantee's
regular work place as assigned on September 18, 1998 by more than twenty-five
(25) additional miles from the distance between his residence and work place on
September 18, 1998.
For the purpose of a Change in Control as defined in Section XVI,
"termination for good reason" means any separation from employment by the
Grantee from the Company because of (a) an involuntary assignment of the Grantee
to duties materially different from those to which he was assigned prior to the
Change in Control; (b) a reduction of the Grantee's salary which is greater than
ten percent of the Grantee's salary at the annual rate in effect as of the
Change in Control; or (c) the relocation of the Grantee's regular work place as
assigned as of the Change in Control by more than twenty-five (25) additional
miles from the distance as of the Change in Control between his residence and
work place.
III. ADMINISTRATION.
A. The Committee. The Plan shall be administered by the Committee, which
shall be appointed by and serve at the pleasure of the Chief Executive Officer
of Berkshire. The Committee shall be composed of individuals selected in a
manner that complies with Rule 16b-3 of the Exchange Act and with Code Section
162(m). Notwithstanding anything to the contrary herein, if necessary to comply
with Rule 16b-3 of the Exchange Act, Code Section 162(m), or any other rule or
regulation applicable to the Plan, the Board may also take administrative
actions under the Plan.
B. Authority of the Committee. The Committee, or as provided above, the
Board, shall have the authority to (1) interpret the Plan; (2) establish such
rules and regulations as it deems necessary for the proper operation and
administration of the Plan; (3) select employees, former employees, or former
directors of General to receive Awards under the Plan; (4) establish and
administer Performance Objectives in connection with Bonus Awards made under the
Plan and certify that such Performance Objectives have been met; (5) determine
the
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form of an Award, the number of shares of Common Stock, Share Units or Phantom
Share Units subject to the Award, all the terms, conditions, restrictions and/or
limitations, if any, of an Award, including the time and conditions of exercise
or vesting, and the terms of any Award Notice, which may include the waiver or
amendment of prior terms and conditions, acceleration, early vesting or payment
of an Award under certain circumstances determined by the Committee; (6)
determine whether Awards would be granted singly, in combination or in tandem;
(7) grant waivers of Plan terms, conditions, restrictions and limitations; (8)
accelerate the vesting, exercise or payment of an Award or the Award Period when
such action or actions would be in the best interest of the Company; (9) reduce
the amount of any Bonus Award based upon any additional corporate performance,
individual performance or other factors, circumstances or events which the
Committee deems relevant; (10) prescribe, amend and rescind rules and
regulations relating to the Plan; and (11) take any and all other actions it
deems necessary or advisable for the proper operation or administration of the
Plan. All determinations of the Committee shall be final and binding on all
persons, including the Company and the Grantees. The Committee may delegate its
authority and duties under the Plan to the Chief Executive Officer and/or to
other senior officers of General under such conditions and/or subject to such
limitations as the Committee may establish; provided, however, that only the
Committee or the Board may select, grant and certify Awards to Reporting
Persons.
IV. ELIGIBILITY.
Employees (including officers, whether or not they are directors of the
Company), former employees and former directors of General who held outstanding
awards under a General Plan at the time immediately before the Merger may
receive awards under this Plan.
V. PARTICIPATION.
The Committee shall select, from time to time, either upon recommendation
of the Chief Executive Officer of General or upon the Committee's own
initiative, Grantees from among those persons eligible under Section IV above
who, in the opinion of the Committee, further the Plan's purposes.
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VI. STOCK SUBJECT TO THE PLAN.
The total number of shares of Common Stock reserved and available for
issuance under the Plan shall be 700,000. Such shares may consist, in whole or
in part, of authorized and unissued shares or treasury shares.
For purposes of determining the number of shares of Common Stock remaining
available under the Plan, the exercise of a SAR related to a Stock Option shall
be equivalent to the exercise of the related Stock Option. An outstanding
related SAR, Bonuses, SARs granted separately from Stock Options, and Phantom
Share Units which are to be paid in cash shall not be taken into account in
determining the aggregate number of shares of Common Stock available under the
Plan.
Where shares of Common Stock are tendered in payment of the Exercise Price
of Stock Options by Grantees who are not Reporting Persons, only the new number
of shares of Common Stock actually issued shall be counted. Also, any shares of
Common Stock related to Awards which terminate by expiration, forfeiture,
cancellation or otherwise without issuance of shares, are settled in cash in
lieu of Common Stock or are exchanged in the Committee's discretion for Awards
not involving Common Stock shall again be available for grant as Replacement
Stock Options under the Plan to Grantees who are not Reporting Persons.
VII. STOCK OPTIONS.
A. Awards of Stock Options. The Committee may grant Stock Options under
the Plan to substitute for Original Awards of stock options, restricted stock
options, AApproved Stock Options" originally granted under General's U.K. Sub
Plans, or performance stock options which are outstanding immediately before the
time of the Merger. The terms and conditions of the Stock Options shall be the
same as the terms and conditions of the Original Awards, except as modifications
are made for Consolidated Stock Options and as a result of the Merger. The terms
and conditions shall be as set forth in the Award Notice and as follows:
B. Exercise Price . The Exercise Price of a Stock Option shall be equal
to the exercise price of the Original Award of stock options or restricted stock
options divided by 0.105 (zero point one zero five), provided that such Exercise
Price shall be rounded up or down to the nearest cent.
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C. Number of Stock Options. The number of shares of Common Stock eligible
to be subject to a Stock Option shall be equal to the product of the number of
shares of General stock issuable under the Original Award of stock options and
0.105 (zero point one zero five), where any fractional share of Common Stock
resulting from such multiplication shall be rounded up or down to the nearest
one one-hundredth of a share. The number of whole shares eligible to be subject
to a Stock Option shall be issued subject to the Stock Option. Any fractional
shares eligible to be issued as a Stock Option shall be eligible to be issued as
a Consolidated Stock Option.
D. Vesting. Stock Options shall vest and become exercisable as
determined by the Committee and set forth in the Award Notice. All Stock
Options granted in substitution for an Original Award of stock options granted
by General shall be immediately exercisable upon grant, except for those Stock
Options granted in substitution for an Original Award of stock options granted
by General on or after June 9, 1998 or Stock Options granted in substitution for
an Original Award of a performance-based stock option. The Stock Options
granted in substitution for an Original Award of stock options granted on or
after June 9, 1998, and Stock Options granted in substitution for an Original
Award of a performance-based stock option shall vest as set forth in the
applicable Award Notice. All unvested portions of a Stock Option shall vest at
the death of a Grantee. In the event of a Grantee's disability or retirement,
all unvested portions of a Stock Option may vest in the discretion of the
Committee.
E. Method of Exercise. The Exercise Price of an Option shall be payable in
United States dollars in cash or by certified check, bank draft or postal or
express money order. The Committee may, at the request of a Grantee:
1. accept payment of the Exercise Price from residents of a foreign
country in the currency of that country;
2. approve and comply with any procedures necessary to allow a
broker to sell and remit to the Company the sale proceeds of the
portion of the shares to be acquired upon exercise with a Fair
Market Value equal to the sum of the Exercise Price and any tax
withholding required; or
3. accept prior acquired shares of Common Stock which have been held
by the Grantee for at least six (6) months (which period shall
include the time in which such shares were held as General stock)
in partial or full payment of the Exercise Price.
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Common Stock so accepted shall be valued at its Fair Market Value
on the date the Stock Option is exercised.
F. Exercise by Reporting Person. No Stock Option held by a Grantee who
is a Reporting Person shall be exercisable during the first six (6) months from
its Original Grant Date.
G. Termination of Stock Options.
1. Expiration Date. The Expiration Date of a Stock Option shall be
as set forth in the Award Agreement, except that in no case may the Exercise
Date be later than ten (10) years from the earlier of the Original Grant Date or
the Grant Date.
2. Termination of Employment. To the extent not then exercisable in
accordance with this Section, unless the Committee shall determine otherwise,
the Stock Options of a Grantee who resigns or whose employment terminates shall,
except as set forth in this Paragraph or in Section XVI, terminate on the date
of his Termination of Employment.
3. Death, Disability, or Retirement. If a Grantee's employment
terminates on account of death, Disability or retirement, the Stock Options
otherwise exercisable by the Grantee through the date of such termination may be
exercised within five years of the date of Termination of Employment; provided,
however, that no Stock Option may be exercised after the Expiration Date
thereof. Any Stock Option exercisable after death may be exercised by the
decedent's legal representatives.
4. Resignation or Discharge Not for Cause. If a Grantee's employment
terminates on account of resignation or discharge not for cause, the Stock
Options otherwise exercisable by the Grantee through the date of such
termination may be exercised by the Grantee no later than three (3) months from
the date of Termination of Employment, or such later date as may be determined
by the Committee; provided, that any Stock Option granted in substitution for an
Original Award of a restricted stock option shall terminate at the later to
occur of three (3) months from the date of Termination or five (5) years from
the Original Grant Date; and, provided further, that no Stock Option may be
exercised after the Expiration Date thereof.
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5. Discharge for Cause. If a Grantee's employment terminates on
account of discharge for cause, the Grantee shall forfeit all outstanding Stock
Options as of the date of termination.
6. Parental Leave of Absence. In the event that a Grantee does not
return to active employment on or before the twelve (12) month anniversary date
of the date the Parental Leave of Absence began, the Grantee shall have three
(3) months following the anniversary date of the Parental Leave of Absence
within which to exercise all Stock Options that are exercisable through the
Grantee's date of termination, provided however, that any Stock Option
granted in substitution for an Original Award of a restricted stock option shall
terminate at the later to occur of three (3) months from such twelve month
anniversary date or five (5) years from the Original Grant Date; and, provided
further, that no Stock Option may be exercised after the Expiration Date
thereof.
VIII. REPLACEMENT STOCK OPTIONS.
A. Awards of Replacement Stock Options. Replacement Stock Options may be
granted (1) to substitute for an Original Award of replacement stock options
still outstanding immediately before the time of the Merger or (2) to replace
shares tendered in exercise of a Stock Option granted under this Plan, as
provided in this Section VIII. The terms and conditions of the Replacement Stock
Option shall be set forth in a written Award Notice.
B. Replacement Stock Options Awarded in Substitution for an Original
Award of Replacement Stock Options.
1. Exercise Price. The Exercise Price of a Replacement Stock Option
awarded in substitution for an Original Award of Replacement Stock Options shall
be equal to the exercise price of the replacement stock option under the
Original Award divided by 0.105 (zero point one zero five), provided that such
Exercise Price shall be rounded up or down to the nearest cent.
2. Number of Replacement Stock Options. The number of shares of
Common Stock eligible to be subject to a Replacement Stock Option shall be equal
to the product of the number of shares of General stock issuable under the
Original Award of replacement stock options and 0.105 (zero point one zero
five), where any fractional share of Common Stock resulting from such
multiplication shall be rounded up or down to the nearest one one-hundredth of a
share. The number of whole shares eligible to be subject to a Replacement Stock
Option shall be issued subject to the Replacement Stock Option. Any fractional
shares eligible
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to be issued as a Replacement Stock Option shall be eligible to be issued as a
Consolidated Stock Option.
3. Date Exercisable. Notwithstanding any provision of this Plan to
the contrary, such Replacement Stock Options shall be immediately exercisable
upon grant, except for those Replacement Stock Options granted in substitution
for a replacement stock option granted by General on or after June 9, 1998.
Replacement Stock Options granted in substitution for General replacement stock
options granted on or after June 9, 1998 shall first become exercisable one year
after the Original Grant Date.
4. Conditions of Exercise. The Replacement Stock Options shall be
exercisable only if, as of the exercise date, the Grantee owns shares of Common
Stock acquired in the Merger in substitution for shares of General stock
acquired as a result of the exercise of the Original Award equal to the excess
of the shares received on exercise of the Original Award less the sum of the
Exercise Price of the Original Award plus any income or FICA tax withheld as a
result of the exercise of the Original Award.
5. Expiration Date. Replacement Stock Options shall expire on the
same date that the Original Award (with respect to which the replacement stock
option was granted under the General Plans) would have expired by its terms.
C. Replacement Stock Options To Replace Shares Tendered in Exercise of
Stock Options Awarded under Section VII of This Plan.
1. Awards of Replacement Stock Options. If Grantee's Original Award
of a stock option provided for the opportunity of an award of a replacement
stock option under a General Plan, then under this Plan a Replacement Stock
Option will be issued to replace shares tendered in exercise of a Stock Option
granted under this Plan when a Grantee exercises the Stock Option by using
shares of Common Stock which the Grantee has owned for at least six (6) months
(which period shall include the time in which such shares were held as General
stock) in partial or full payment of the Exercise Price of the Stock Option.
2. Exercise Price. The Exercise Price of a Replacement Stock Option
awarded to replace shares tendered in exercise of a Stock Option awarded under
Section VII of this Plan shall be equal to the Fair Market Value of a share of
Common Stock on the Grant Date of the Replacement Stock Option.
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3. Number of Replacement Stock Options. The Grantee shall
automatically be granted a Replacement Stock Option to purchase a number of
shares of Common Stock equal to the number of shares of Common Stock used in
payment of the Exercise Price and required tax withholding obligations of the
Stock Option. Replacement Stock Options shall be granted with respect to only
the number of shares of Common Stock issuable under the original Stock Option.
4. Date Exercisable. Notwithstanding any provision of this Plan to
the contrary, such Replacement Stock Option shall first become exercisable one
year after the Grant Date thereof.
5. Conditions of Exercise. Replacement Stock Options shall be
exercisable only if, as of the date of exercise, the Grantee owns shares of
Common Stock acquired as a result of the exercise of the original Stock Option
equal to the excess of the shares received on exercise of the original Stock
Option less the sum of the Exercise Price of the original Stock Option plus any
income tax due as a result of the exercise of the original Stock Option.
6. Expiration Date. Replacement Stock Options shall expire on the
same date that the original Stock Option (with respect to which the Replacement
Stock Option was granted) would have expired by its terms.
D. Other Terms and Conditions of Replacement Stock Options. All other
provisions of this Plan pertaining to Stock Options shall also apply to
Replacement Stock Options, except that no Replacement Stock Option may be issued
for shares tendered in exercise of a Replacement Stock Option granted under this
Plan.
IX. CONSOLIDATED STOCK OPTIONS
A. Awards of Consolidated Stock Options. Consolidated Stock Options may
be granted to those Grantees who would otherwise be entitled to Stock Options or
Replacement Stock Options covering fractional shares of Common Stock. Such
fractional shares shall be combined as set forth below, and a Consolidated Stock
Option will be granted whenever the sum of such fractional shares, in
combination, is greater than a whole share of Common Stock. The terms and
conditions of a Consolidated Stock Option shall be determined as set forth below
and as set out in a written Award Notice.
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B. Exercise Price. The Exercise Price of a share of Common Stock
subject to a Consolidated Stock Option shall be equal to an average of the
Weighted Exercise Prices of the Combined Shares, as defined and calculated
below.
1. Each fraction corresponding to a share of Common Stock eligible
to be subject to a Grantee's Stock Option or Replacement Stock Option shall be
multiplied by the Exercise Price to which that share would have been subject
under Sections VII.B or VIII.B.1 ("Weighted Exercise Price").
2. The Weighted Exercise Price for each fractional share eligible to
be subject to a Grantee's Stock Option or Replacement Stock Option is summed
(Aggregate Weighted Exercise Price).
3. The fractional shares are combined by adding together the value
of each fraction corresponding to the fractional share eligible to be subject to
a Stock Option or Replacement Stock Option ("Combined Shares").
4. The Aggregate Weighted Exercise Price is divided by the number of
the Combined Shares to determine the Exercise Price of the Consolidated Stock
Options.
C. Number of Consolidated Stock Options. The number of shares of Common
Stock eligible to be subject to a Grantee's Consolidated Stock Option shall be
the sum of (1) any fractional shares otherwise eligible to be issued as a Stock
Option and (2) any fractional shares otherwise eligible to be issued as a
Replacement Stock Option. The number of shares of Common Stock issued subject to
the Consolidated Stock Option shall be this sum, rounded to the next lowest
whole number of shares.
D. Fractional Shares. Any fractional share remaining after a Consolidated
Stock Option is issued shall be paid in cash as soon as practicable after the
Merger, where the amount paid shall equal the product of such fraction and the
difference between the Fair Market Value of a share of Common Stock on the day
after the Merger and the Exercise Price of such share as determined in Section
IX.B above.
E. Date Exercisable. All Consolidated Stock Options shall be immediately
exercisable.
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F. Expiration Date. The Expiration Date of the Consolidated Stock Option
shall be determined as follows.
1. The number of days remaining before the Expiration Date of each
fractional share eligible to be subject to a Consolidated Option is calculated
("Days Remaining").
2. The Days Remaining is multiplied by the value of the fraction
corresponding to that share ("Weighted Days Remaining").
3. The Weighted Days Remaining are summed for all fractional shares
("Aggregate Weighted Days Remaining").
4. The Aggregate Weighted Days Remaining is divided by the number of
Combined Shares to determine the Expiration Date.
G. No Replacement Stock Options. No Replacement Stock Options shall be
granted in substitution for shares tendered in exercise of Consolidated Stock
Options.
H. Other Terms and Conditions of Consolidated Stock Options. Except as
provided in this Section, Consolidated Stock Options shall be subject to all
other terms and conditions of Stock Options.
X. STOCK APPRECIATION RIGHTS (SARs).
A. Awards of SARs. The Committee may award SARs (1) in substitution for an
Original Award of stock appreciation rights not yet exercised as of a time
immediately before the Merger or (2) pursuant to a Grantee's deferral election
under a Bonus Award. The terms and conditions of each SAR shall be set forth in
an Award Notice. Except as provided by this Section, or as determined by the
Committee, a SAR shall be subject to the same terms and conditions as a Stock
Option.
B. SARs Awarded in Substitution for an Original Award of SARs. The
Committee shall determine the terms and conditions for any SAR awarded in
substitution for an Original Award of SARs. As provided in an Original Award, a
SAR may be awarded independently or at the same time and in tandem with a grant
of Stock Options.
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1. Independent SARs. Independent SARs shall be subject to the same
terms and conditions as Stock Options, except that no Replacement Stock Options
will be issued in substitution for any shares tendered in exercise of an
independent SAR.
2. Related SARs. Each related SAR shall be subject to the same terms
and conditions as the Stock Option to which it relates and to any such
additional terms and conditions as the Committee may deem appropriate, except
that no Replacement Stock Options will be issued to replace any shares tendered
in the exercise of SARs. Upon exercise of all or a portion of a related SAR, all
or such portion of the Stock Option related to the SAR which has been exercised
shall terminate. On the exercise of all or a portion of a Stock Option which is
related to a SAR, all or such portion of the SAR which is related to the Stock
Option which has been exercised shall terminate. The Exercise Price of a SAR
related to a Stock Option shall be the same as the Exercise Price of the Stock
Option.
C. SARs Awarded Pursuant to a Deferral Election Not in Substitution for an
Original Award. The Committee shall determine the terms and conditions of a SAR
awarded pursuant to a Grantee's deferral election under a Bonus Award. Except as
provided below, such SARs shall be subject to the same terms and conditions as
Stock Options.
1. Exercise Price. The Exercise Price of a SAR shall be the Fair
Market Value of a share of Common Stock on the Grant Date.
2. Number of SARs. The number of SARs granted pursuant to a Grantee's
deferral election shall be determined based on seventy-five percent (75%) of the
Fair Market Value of a share of Common Stock on the Grant Date.
3. Deferral Period. Unless determined otherwise by the Committee, a SAR
shall be subject to a minimum five (5) year deferral period before exercise.
This deferral period shall be waived if the Grantee terminates his employment
with the Company on account of death, Disability, or retirement.
4. Replacement SARs. Replacement SARs shall be issued when a Grantee
exercises a SAR granted pursuant to this Section X(C). The terms and conditions
of such Replacement SAR will be determined by the Committee.
D. Payment of SARs. Upon exercise of a SAR, the Grantee shall be entitled
to receive an amount equal to the product of:
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(x) the amount by which the Fair Market Value of Common Stock on the
date of exercise of the SAR exceeds the Exercise Price specified
in the SAR, multiplied by
(y) the number of shares of Common Stock in respect of which the SAR
has been exercised.
Any fractional SAR shall be paid upon Grantee's first exercise of the SAR.
E. Form and Time of Payment of SARs. The amount to which a Grantee is
entitled on exercise of a SAR may be satisfied in Common Stock, in cash or in a
combination of both, as determined by the Committee. If all or part of the
amount due is to be paid in Common Stock, the number of shares of Common Stock
to which the Grantee is entitled shall be the largest whole number obtained by
dividing the dollar amount to be satisfied in Common Stock by the Fair Market
Value on the date of exercise. In the event that a Grantee would otherwise be
entitled to a fractional share of Common Stock, the Grantee shall receive
instead a cash payment equal to the product of such fraction and the Fair Market
Value of a share of Common Stock on the exercise date.
XI. RESTRICTED STOCK.
A. Awards of Restricted Stock. The Committee may award Restricted Stock
in substitution for an Original Award of restricted stock whose restrictions are
still in force immediately before the Merger. The terms and conditions of the
Restricted Stock shall be the same as the terms and conditions of the Original
Awards of restricted stock, except as modifications are required because of the
Merger and as set forth below. Such terms and conditions shall be set forth in a
written Award Notice.
B. Number of Shares of Restricted Stock. The Committee may award 0.105
(zero point one zero five) of a share of Restricted Stock for each share of
General stock subject to the Grantee's Original Award of restricted stock. In
the event that a Grantee would otherwise be entitled to a fractional share of
Common Stock, the Grantee shall receive instead a cash payment equal to the
product of such fraction and the Fair Market Value of a share of Common Stock on
the day after the Merger.
C. Restrictions on Restricted Stock. In addition to such other
restrictions that the Committee may deem advisable, no shares of Restricted
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Stock held by a Grantee may be sold, exchanged, transferred, pledged,
hypothecated, or otherwise disposed of by the Grantee until their release as
provided below in Paragraph G. These restrictions shall also apply to any new,
additional or different securities, cash or other property which the Grantee may
become entitled to receive with respect to such Restricted Stock by virtue of
the events described in Section XV.
D. Legends on Restricted Stock. In order to enforce the restrictions on
Restricted Stock, the Committee shall cause a legend or legends to be placed on
all certificates for Restricted Stock making specific reference to such
restrictions.
E. Registration of Restricted Stock. As soon as practicable following the
date on which the Award is authorized by the Committee, a certificate or
certificates for all shares of Restricted Stock granted to a Grantee by the
Committee shall be registered in the name of the Grantee and held for the
Grantee by the Company.
F. Rights as a Stockholder. Upon registration in Grantee's name, the
Grantee shall be a stockholder and have all the rights of a stockholder with
respect to such shares, including the right to vote and receive all dividends or
other distributions made or paid with respect to such shares.
G. Release of Restrictions. Restrictions on Restricted Stock may be
released as provided below.
1. Committee Discretionary Release. Restrictions on shares of
Restricted Stock shall be released with respect to the percentage of shares as
of such date (or such dates) as determined by the Committee.
2. Disability or Retirement. In the event of a Grantee's Termination
of Employment with the Company due to Disability or retirement on or after
attainment of age sixty-five (65), all restrictions on Grantee's shares of
Restricted stock shall lapse.
3. Death. In the event of Grantee's death, all restrictions on
Grantee's shares of Restricted Stock shall lapse, and such shares shall be
delivered to the Grantee's beneficiary.
4. In the event Grantee's employment with the Company terminates
before September 18, 2000 due to voluntary termination by the
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Grantee for good reason, all restrictions on Grantee's shares of Restricted
Stock shall lapse.
5. Termination of Employment for other Reasons. In the event of a
Termination of Employment in circumstances other than those stated in
subparagraphs 2, 3, and 4 above and Section XVI, the Grantee shall forfeit all
shares of Restricted Stock on which restrictions still apply; provided, however,
that the Committee may determine as to the Grantee the degree to which
restrictions on shares of Restricted Stock held by the Grantee shall lapse.
H. Transfer of Restricted Stock. As the restrictions on Restricted Stock
are released, a certificate (without the legend mentioned above) for the number
of shares with respect to which restrictions have been released will be
delivered to the Grantee as soon as practicable.
XII. SHARE UNITS.
A. Awards of Share Units. The Committee shall award Share Units in
substitution for Original Awards of restricted share units, director share
units, and stand alone share units granted to employees of Cologne Re still
outstanding immediately before the Merger. The terms and conditions of the Share
Units shall be the same terms and conditions as the Original Award, except for
modifications required by the Merger. Such terms and conditions shall be set
forth in a written Award Notice.
B. Number of Share Units. The Committee shall grant 0.105 (zero point one
zero five) of a Share Unit for each share of General stock subject to an
Original Award.
C. Vesting. All Share Units except for Share Units granted in substitution
for an Original Award of stand alone share units granted to employees of Cologne
Re are immediately vested.
D. Conversion of Share Units. Share Units shall be converted into shares of
Common Stock on the conversion date shown on the applicable Award Notice or on
such later date as permitted by the Committee. In the event that a Share Unit
which represents a fraction of a share of Common Stock is to be converted, the
Grantee shall receive instead a cash payment equal to the product of such
fraction and the Fair Market Value of a share of Common Stock on the conversion
date.
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E. Dividends on Share Units. Any cash dividends on Share Units shall be
credited to the Grantee as associated Phantom Share Units, as determined by the
Committee.
F. Share Units Granted in Substitution for an Original Award of Share
Units to Employees of Cologne Re shall be subject to the same restrictions as
Restricted Stock in Section XI.C. These restrictions may be released as provided
in Section XI.G.
G. Termination of Employment and Share Units Granted in Substitution for
an Original Award of Director Share Units and Restricted Share Units. In the
event of a Grantee's Termination of Employment for reasons other than for
retirement, all such Grantee's Share Units shall immediately convert and become
payable as soon as practicable. In the event of Grantee's retirement, Grantee's
Share Units and associated Phantom Share Units shall convert and become payable
in accordance with the dates established in the Award Notice, as in effect at
the time of Grantee's retirement.
H. Delivery of Shares of Common Stock. Shares of Common Stock shall be
delivered to the Grantee as soon as practical after conversion. Any Share Unit
which represents a fraction of a share of Common Stock will paid in a cash
payment equal to the product of such fraction and the Fair Market Value of a
share of Common Stock on the conversion date.
XIII. PHANTOM SHARE UNITS.
A. Awards of Phantom Share Units. The Committee shall award Phantom Share
Units to those Grantees who elected to receive Phantom Share Units as part of a
Bonus deferral election prior to the Merger and to those Grantees with Share
Unit accounts to which cash dividends are credited. The terms and conditions of
an Award of Phantom Share Units shall be set forth in a written Award Notice.
B. Phantom Share Units under a Bonus Deferral. A Grantee holding an
Original Award of phantom share units shall be granted the same number of
Phantom Share Units under this Plan. The number of Phantom Share Units awarded
to the Grantee after the Merger as part of a Bonus deferral election shall be
determined by the Committee based on 75% of the Fair Market Value of a share of
Common Stock on the Grant Date.
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C. Phantom Share Units to Reflect Cash Dividends. Additional Phantom
Share Units may be credited to the Grantee's account to reflect cash dividends,
as determined by the Committee. The number of Phantom Share Units credited to
the Grantee in lieu of cash dividends shall be based on the Fair Market Value of
a share of Common Stock on the dividend date. Any Phantom Share Units credited
with respect to an original grant of Phantom Share Units shall be treated as if
credited on the original Grant Date.
D. Unauthorized Use of Proprietary Information. If, prior to the
payment date of a Phantom Share Unit, a Grantee engages in the unauthorized use
of proprietary information as determined by the Committee, then the Grantee
shall forfeit all outstanding Phantom Share Units.
E. Termination of Employment. If, prior to the payment date, the Grantee's
employment is terminated for cause, as determined by the Committee, then the
Grantee shall forfeit all outstanding Phantom Share Units. In the event of the
Grantee's Termination of Employment with the Company other than for cause or
upon retirement or death, the Grantee's Phantom Share Units shall be immediately
payable, but no earlier than five (5) years from the Grant Date or Original
Grant Date, as applicable. In the event of the Grantee's Termination of
Employment with the Company due to retirement, Phantom Share Units shall be
immediately payable in accordance with the Award Notice in effect at the time of
Grantee's retirement. If a Grantee dies, Phantom Share Units shall be
immediately payable.
F. Payment of Phantom Share Units under a Bonus Deferral Election.
Phantom Share Units shall be payable in cash, based on the Fair Market Value of
a share of Common Stock on the payment date. Phantom Share Units shall be paid
no earlier than the payment date determined by the Committee, and as soon as
practicable following the dates in Grantee's Award Notice (in the event of a
Grantee's retirement), the date of Grantee's death, Disability, a Change in
Control, or as otherwise determined by the Committee.
G. Payment of Phantom Share Units to Reflect Cash Dividends. Any Phantom
Share Units credited to Share Unit accounts in lieu of cash dividends shall be
paid at the same time as the conversion of the associated Share Units.
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XIV. BONUS AWARDS.
A. Awards of Bonus Awards. The Committee may grant a Bonus Award in
substitution for an Original Award of a bonus not yet paid at a time immediately
before the Merger. Such Bonus Award shall be on the same terms and conditions as
the terms and conditions of the Grantee's Original Award.
B. Terms and Conditions of Bonuses. The terms and conditions of the
Bonuses shall be the same as the terms and conditions of the Original Awards of
bonus opportunities under the General 1998 Annual Incentive Award, the 1998
Special Awards and the General Long-Term Performance Awards for the Award
Periods of 1994-1998, 1995-1999, and 1996-2000.
C. Performance Objectives. The Committee shall determine Performance
Objectives for each Grantee. Such Performance Objectives shall be substantially
similar to the performance objectives defined under the Original Awards.
1. Performance Objectives for the 1998 Annual Incentive Bonus and 1998
Special Award. Performance Objectives applicable to an Annual Incentive Bonus
may be measured by General's statutory underwriting combined ratio, a targeted
improvement in General's statutory underwriting combined ratio, General's
statutory underwriting combined ratio relative to the cumulative statutory
underwriting combined ratio of the companies reporting to the Reinsurance
Association of America (excluding the General companies), the total return on
various company investment portfolios and other measures the Committee deems
appropriate.
2. Performance Objectives for Long-Term Performance Bonuses. The
Performance Objective for Long-Term Performance Bonuses shall be based on the
relative total return to shareholders of General stock before the Merger and of
Berkshire Common Stock after the Merger.
3. Adjustments to Performance Objectives. Notwithstanding the foregoing,
in the event of an adjustment in the accounting standards applicable to a
Performance Objective, such Performance Objective may be revised by the
Committee in a manner consistent with such adjustment.
D. Amount of Bonus. The amount of Bonus shall be determined as set forth
under the Original Award of such Bonus. Notwithstanding the amount of any Bonus
granted hereunder, the Committee retains the discretion to award a Bonus that is
less than the amount otherwise payable for the Award Period.
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E. Crediting and Payment of Bonuses. The Committee shall determine to
credit, award or pay Bonuses in cash, SARs, Phantom Share Units or some
combination thereof.
F. Termination of Employment. If a Grantee's employment with the Company
terminates for any of the reasons stated below prior to the end of an Award
Period for which he was eligible for an Annual Incentive Bonus or for which he
was awarded a Long-Term Performance Bonus opportunity, the amount of his Bonus
shall be determined as follows:
1. If a Grantee retires, dies, is Disabled, terminates for good reason
or his employment is terminated in such other circumstances as the Committee may
determine, such Grantee shall receive the proportion of his Bonus (upon
determination by the Committee of the degree of success in achieving the
Performance Objective) which the number of full months of active service of the
Grantee during the Award Period bears to the total number of months in such
Award Period.
2. If a Grantee resigns (other than termination for good reason) or is
discharged (whether or not for cause) he will forfeit his Bonus, provided,
however, that if said Grantee's employment terminates during a Long-Term
Performance Bonus Award Period, such Grantee shall receive whatever portion of
his Long-Term Performance Bonus as the Committee may determine.
G. Method of Payment. The terms and conditions of any SAR and/or Phantom
Share Unit granted as a result of a deferral election will be determined in the
discretion of the Committee. Bonus Awards shall be paid in cash, except that the
Committee may offer a Grantee the opportunity to defer payment of some or all of
the Bonus Awards into Phantom Share Units and/or SARs. Only those Grantees who
elected to defer such payment before January 1, 1998, for the 1998 Annual
Incentive Award and 1998 Special Award, and before the last year of the Award
Period of the Long-Term Performance Award for the Long-Term Performance Awards,
and who did not receive an immediate cash payment upon the shareholder vote
approving the Merger on September 18, 1998, are eligible to defer some or all
payment of Bonus Awards into Phantom Share Units and/or SARs.
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XV. RECAPITALIZATION, MERGER, CONSOLIDATION AND SIMILAR TRANSACTIONS.
Subject to any required action by stockholders, the aggregate number of
shares of Common Stock and Restricted Stock issuable under the Plan, the
Exercise Price of any Stock Option or SAR, and the number of Share Units or
Phantom Share Units credited to a Grantee's account or otherwise granted shall
be proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a subdivision or consolidation of shares,
or the payment of a stock dividend on Common Stock other than a stock dividend
that is a substitute for a cash dividend or any other increase in the number of
such shares effected without receipt of consideration by Berkshire. However, no
such adjustment in Exercise Price may reduce the Exercise Price to an amount per
share which is less than the par value of such share.
Subject to any required action by stockholders, in the event of the
dissolution or liquidation of Berkshire, a merger or consolidation of Berkshire,
a merger or consolidation in which Berkshire is not the surviving corporation,
or a merger or consolidation in which Berkshire is the surviving corporation but
the holders of Common Stock receive securities of another corporation; the
following shall apply.
A. Any Award granted hereunder shall apply to the securities, cash or
other property (subject to adjustment by cash payment in lieu of fractional
interests) to which a holder of the number of shares of Common Stock equal to
the number of shares held by the Grantee would have been entitled; and
B. The Committee shall have the power, prior to such event, (1) to cancel
any or all Awards which are then exercisable and, in consideration of such
cancellation, pay to each Grantee an amount in cash with respect to each share
of Common Stock as to which an Award is then exercisable equal to the difference
between the value per share of the consideration, as determined by the
Committee, received by holders of Common Stock as a result of such dissolution,
liquidation, merger or consolidation and the Exercise Price, and to terminate
without consideration all Awards not then exercisable; or (2) if the holders of
Common Stock receive property other than cash as a result of such dissolution,
liquidation, merger or consolidation, to provide for the exchange of an Award
which is then exercisable for a Stock Option or SAR on some or all of such
property and, incident thereto, make an equitable adjustment, as determined by
the Committee, in the Exercise Price of each affected Award, the number of
shares or other property subject to the Award and, if appropriate, provide for a
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cash payment to the Grantees in partial consideration for the exchange for their
Award and to terminate without consideration all Awards not then exercisable.
The foregoing adjustment shall be made by the Committee, whose determination in
that respect shall be final, binding and conclusive.
If changes in the capitalization of Berkshire other than those referred to
above occur, the Committee may, but need not, make such adjustments in the
numbers and classes of shares of Restricted Stock that are then outstanding or
that may thereafter be granted as the Committee may consider appropriate to
prevent dilution or enlargement of rights.
Except as provided herein, the Grantee shall have no rights by reason of
any subdivision or consolidation of shares of stock of any class, the payment of
any stock dividend or any other increase or decrease in the number of shares of
stock of any class, any dissolution, liquidation, merger, consolidation or
Change in Control, or any issue by Berkshire of shares of stock of any class, or
securities convertible into shares of stock of any class, and no adjustment by
reason thereof shall be made with respect to the Exercise Price or number of
shares of Common Stock subject to an Award.
XVI. CHANGE IN CONTROL.
Notwithstanding any other provision to the contrary, the following shall
occur upon a Change in Control.
A. All Stock Options shall become immediately and fully exercisable.
B. All Bonuses shall become immediately payable or creditable, where
applicable, based upon the assumption that the Performance Objectives have been
fully achieved; but in no event for an amount greater than the proportion of the
Bonus which the number of months served during the Award Period prior to such
occurrence bears to the total number of months in the Award Period, and all
amounts deferred pursuant to Section XIV.E, if any, shall be immediately payable
in a lump sum payment in cash.
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C. Share Units and Phantom Share Units credited pursuant to Sections XI
and XII shall become fully vested and payable.
D. The Committee may determine that all or some percentage of the
restrictions shall lapse as to the shares of such Restricted Stock held by the
Grantee.
E. Notwithstanding anything else in this Section, where the Grantee's
employment with the Company terminates within two years after a Change in
Control for reasons other than death, Disability, retirement, termination for
cause, or voluntary termination by the Grantee except for good reason, all
restrictions on all shares of Restricted Stock (or cash, securities or other
property), Share Units, and Phantom Share Units held by the Grantee under the
Plan shall lapse.
F. The provisions of this Section shall also apply to a Grantee whose
employment with the Company has been terminated under the following conditions.
1. The shareholders approve an agreement pursuant to which
Berkshire would cease to be an independent publicly traded corporation, General
would become an independently publicly traded corporation, or all or
substantially all of the assets of Berkshire or General would be sold or
otherwise disposed in a transaction with entities outside the Company;
2. The agreement subsequently cannot be consummated and the
Committee determines that a Change in Control will not occur pursuant to that
agreement; and
3. The Grantee's employment with the Company has been terminated
between the time of the shareholder approval and the Committee determination for
reasons other than death, Disability, retirement, termination for cause, or
voluntary termination by the Grantee except for good reason.
XVII. TERM OF PLAN.
The Plan shall be effective as of the effective date of the Merger. The
Plan shall remain in effect until the exercise, expiration, termination, or
payment of all Stock Options, Restricted Stock, Replacement Stock Options, SARs,
Bonuses, Share Units and Phantom Share Units under the Plan.
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XVIII. NONTRANSFERABILITY OF AWARDS AND DESIGNATION OF BENEFICIARIES.
No Awards under the Plan shall be subject in any manner to alienation,
anticipation, sale, assignment, pledge, encumbrance or transfer, other than by
will or by the laws of descent or distribution, by the Grantee, or pursuant to a
qualified domestic relations order as defined by Section 414(p) of the Code or
Section 206(d) of the Employee Retirement Income Security Act of 1974, as
amended, by the Grantee, and no other persons shall otherwise acquire any rights
therein. During the lifetime of a Grantee, Stock Options and SARs shall be
exercisable only by the Grantee and shall not be assignable or transferable
except as provided above.
A Grantee may name one or more beneficiaries to receive any payment of an
Award to which the Grantee may be entitled under the Plan in the event of the
Grantee's death, on a form to be provided by the Committee. A Grantee may
change the Grantee's beneficiary designation from time to time in the same
manner. The last such designation received by the Committee shall be
controlling; provided, however, that no designation, or change or revocation
thereof, shall be effective unless received by the Committee prior to the
Grantee's death, and in no event shall it be effective as of a date prior to
such receipt.
If no designated beneficiary is living on the date on which any payment
becomes payable to a Grantee's beneficiary, such payment shall be payable to the
person or persons in the first of the following classes of successive
preference:
(a) widow or widower, if then living,
(b) surviving children, equally,
(c) surviving parents, equally,
(d) surviving brothers and sisters, equally,
(e) executors and administrators.
The term "beneficiary" as used in the Plan shall include such person or persons.
XIX. REPORTING PERSONS.
With respect to all Awards granted to Reporting Persons, the Award Notice
shall provide that:
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A. Awards requiring exercise shall not be exercisable until at least six
months after the earlier of the Original Grant Date or the Grant Date of the
Award, except in the case of the death or Disability of the Grantee; and
B. Shares of Common Stock issued pursuant to any Award may not be sold by
the Grantee for at least six months after acquisition, except in the case of the
death or Disability of the Grantee; provided, however, that (unless an Award
Notice provides otherwise) the limitation of this Section XIX shall apply only
if or to the extent required by Rule 16b-3 under the Exchange Act. Award
Notices for Awards to Reporting Persons shall also comply with any future
restrictions imposed by such Rule 16b-3.
XX. WITHHOLDING OF TAXES.
No Award may be exercised or paid unless the Grantee has paid, or has made
provisions satisfactory to the Committee for the payment of, federal, state and
local income taxes, or other taxes (other than stock transfer taxes) which the
Company may be obligated to collect as a result of such payment, issuance,
registration or delivery.
The Committee may permit a Grantee to satisfy his withholding tax
obligation, in whole or in part, by instructing the Company to withhold up to
that number of unrestricted shares otherwise deliverable to him, with a Fair
Market Value equal to the amount of tax to be withheld.
XXI. AMENDMENT OF THE PLAN.
The Board, the Committee or their delegates may from time to time and in
the event of a Change in Control suspend or discontinue the Plan or revise or
end it in any respect whatsoever, except that no such suspension,
discontinuance, revision or amendment shall in any manner affect any Award
theretofore granted without the consent of the Grantee or the transferee of the
Award. No amendment to the Plan shall be made, however. without securing an
approval by shareholders as may be required under Rule 16b-3, Code Section
162(m), the New York Stock Exchange, or any other rules or regulations
applicable to this Plan.
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XXII. APPLICATION OF FUNDS.
Any cash proceeds received by the Company from the issuance of Common
Stock pursuant to exercised Stock Options will be used for general corporate
purposes.
XXIII. NO RIGHT TO CONTINUED EMPLOYMENT OR AWARDS.
Eligibility for, or participation in, the Plan shall not give any Grantee
any right to remain in the employ of the Company. Further, the adoption of this
Plan shall not be deemed to give any person any right to be selected as a
Grantee or to be granted an Award.
XXIV. NO OBLIGATION TO EXERCISE OPTIONS OR SARs.
The grant of a Stock Option or SAR shall impose no obligation upon the
Grantee to exercise such Option or SAR.
XXV. RIGHTS OF A STOCKHOLDER; STATUS AS A GENERAL CREDITOR.
Unless and until such time as Common Stock is deliverable to the Grantee
under the terms of the Plan, a Grantee or a transferee shall have no rights as a
stockholder with respect to any shares covered by his or her Award, but only the
rights of a general creditor of the Company. Except as herein provided, no
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or any other distributions for which the
record date is prior to the date as of which such Stock is issued.
XXVI. INDEMNIFICATION OF COMMITTEE.
No member of the Board or the Committee, nor any officer or employee of
the Company acting on behalf of the Board or the Committee shall be personally
liable for any actions, determinations or interpretations taken or made in good
faith with respect to the Plan.
The Company shall indemnify, to the full extent permitted by law, each
person made or threatened to be made a party to any civil or criminal action or
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proceeding by reason of the fact that he, or his testator or intestate, is or
was a member of the Committee.
XXVII. COMPLIANCE WITH CERTAIN LAWS.
A. Berkshire intends that issuances and exercise of Stock Options and
SARs under the Plan to persons subject to Section 16(b) of the Exchange Act or
162(m) of the Code comply with the requirements of Rule 16b-3 under the Exchange
Act and Section 162(m) during the term of the Plan. Should any provision of the
Plan not be necessary to so comply with the requirements of Rule 16b-3 or
Section 162(m), or should any additional provision be necessary for the Plan and
grants and exercises thereunder to so comply, the Board or Committee may amend
the Plan to add or modify provisions of the Plan accordingly.
B. Notwithstanding anything contained in the Plan to the contrary,
Berkshire shall have no obligation to issue or deliver shares of Common Stock in
respect of any Award prior to (1) the obtaining of any approval or the
satisfaction of any waiting period or other condition of any governmental agency
which the Committee shall determine to be necessary or advisable, (2) the
admission of such shares to listing on the stock exchange on which the Common
Stock may be listed, and (3) the completion of any registration or other
qualification of said shares under any state or federal law or ruling of any
governmental body which the Committee shall determine to be necessary or
advisable.
C. The Committee may, as a condition precedent to the exercise of any
Award, require the Grantee thereof (or, in the event of the Grantee's death, his
legal representatives, legatees or distributees) to enter into such agreement or
to make such representations as may be required to make lawful the transfer of
shares of Common Stock to the Grantee upon exercise of a Stock Option or
otherwise and the ultimate disposition of the shares so acquired.
XXVIII. GOVERNING LAW.
The Plan shall be governed by the internal laws of the state of Delaware
(and not its choice of law provisions) to the extent not superseded by
applicable Federal law.
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[ MUNGER, TOLLES & OLSON LLP LETTERHEAD ]
EXHIBIT 5
December 1, 1998
Berkshire Hathaway Inc.
NBH, Inc.
1440 Kiewit Plaza
Omaha, Nebraska 68131
Re: Registration Statement on Form S-3
----------------------------------
Gentlemen:
We have acted as counsel to Berkshire Hathaway Inc., a Delaware corporation
and NBH, Inc., a Delaware corporation (as applicable, the "Company"), in
connection with the preparation of the Registration Statement on Form S-3 (the
"Registration Statement") filed by each of them with the Securities and Exchange
Commission (the "Commission").
The Registration Statement relates to the registration of 700,000 shares of
Class B Common Stock, par value $.1667 per share (the "Shares") that may be
issued from time to time under the Berkshire Hathaway Inc. 1998 Compensation
Plan (the "Plan") by either (i) Berkshire Hathaway Inc., or, alternatively, (ii)
NBH, Inc. as the successor corporation to Berkshire Hathaway Inc. in the event
of the mergers of (a) Berkshire Hathaway Inc. with Wyllis Merger Sub Inc., a
Delaware corporation and a wholly owned subsidiary of NBH, Inc. and (b) General
Re Corporation, a Delaware corporation, with Steven Merger Sub Inc., a Delaware
corporation and a wholly owned subsidiary of NBH, Inc., pursuant to that certain
Agreement and Plan of Mergers, dated as of June 9, 1998, by and between
Berkshire Hathaway Inc. and General Re Corporation, as described in the
Registration Statement.
We are familiar with the proceedings taken and to be taken by Berkshire
Hathaway Inc. and NBH, Inc. in connection with the issuance of the Shares under
the Plan and the authorization of such issuance thereunder and have also
examined and are familiar with originals or copies of such documents, corporate
records, and other instruments as we have deemed necessary or appropriate in
connection with this opinion, including, without limitation, (i) the
Registration Statement, (ii) the Plan, (iii) the Restated Certificate of
Incorporation of Berkshire Hathaway Inc., (iv) the Restated Certificate of
Incorporation of NBH, Inc., (v) the By-Laws of Berkshire Hathaway Inc., (vi) the
By-Laws of NBH, Inc., and (vii) resolutions adopted to the date hereof by the
Board of Directors of Berkshire Hathaway Inc. relating to, among other things,
the Plan. This opinion is delivered in accordance with the requirement of Item
601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (the
"Securities Act").
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed, or photocopies, and the
authenticity of the originals of such latter documents. As to any facts
material to the opinions expressed herein, other than those assumed, we have
relied without independent verification upon the documents referred to above,
the accuracy of factual
<PAGE>
MUNGER, TOLLES & OLSON LLP
Berkshire Hathaway Inc.
NBH, Inc.
December 1, 1998
Page 2
matters contained therein, and oral or written statements and representations of
officers and other representatives of the Company and others, including public
officials.
We are members of the Bar of the State of California. This opinion is
limited to the General Corporation Law of the State of Delaware and the laws of
the United States. We do not express any opinion as to the laws of any other
jurisdiction or as to any other laws of the State of Delaware.
Based upon and subject to the foregoing, we are of the opinion that upon
the issuance and sale of the Shares in the manner contemplated by the Plan, and
subject to the Company completing all actions and proceedings required on its
part to be taken prior to the issuance of the Shares pursuant to the Plan, such
Shares will be legally issued, fully paid, and nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement. In giving such consent, we do not admit that we come within the
category of persons whose consent is required under Section 7 of the Securities
Act or the rules or regulations of the Commission promulgated thereunder.
Very truly yours,
/s/ Munger, Tolles & Olson LLP
MUNGER, TOLLES & OLSON LLP
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Berkshire Hathaway Inc. and NBH, Inc. on Form S-3 of our reports dated March 6,
1998, appearing in the Annual Report on Form 10-K of Berkshire Hathaway Inc.
for the year ended December 31, 1997 and to the reference to us under the
heading "Experts" in the Prospectus which is part of this Registration
Statement.
Deloitte & Touche LLP
Omaha, Nebraska
November 30, 1998
