\n 8.3 Amendment…………………………………………………………….. 45
\n 8.4 Extension; Waiver……………………………………………………… 45<\/p>\nARTICLE 9 GENERAL PROVISIONS…………………………………………………….. 45
\n 9.1 Nonsurvival of Representations and Warranties…………………………….. 45
\n 9.2 Notices 45
\n 9.3 Definitions…………………………………………………………… 46
\n 9.4 Interpretation………………………………………………………… 47
\n 9.5 Counterparts………………………………………………………….. 47
\n 9.6 Entire Agreement; No Third-Party Beneficiaries……………………………. 47
\n 9.7 Governing Law…………………………………………………………. 47
\n 9.8 Assignment……………………………………………………………. 47
\n 9.9 Enforcement…………………………………………………………… 48
\n 9.10 Severability………………………………………………………….. 48
\n<\/c><\/s><\/table>\n
EXHIBIT A Stock Option Agreement
\nEXHIBIT B Voting Agreement
\nEXHIBIT C Form of General Affiliate Letter
\nEXHIBIT D Definition of “Rulings”<\/p>\n
iv<\/p>\n
AGREEMENT AND PLAN OF MERGERS<\/p>\n
THIS AGREEMENT AND PLAN OF MERGERS (the “Agreement”) is entered into
\nas of June 19, 1998 by and between Berkshire Hathaway Inc., a Delaware
\ncorporation (“Berkshire”), and General Re Corporation, a Delaware corporation
\n(“General”).<\/p>\n
RECITALS<\/p>\n
WHEREAS, the Boards of Directors of Berkshire and General have each
\ndetermined that it is in the best interests of their respective companies and
\nstockholders to combine their businesses pursuant to the terms and conditions
\nset forth herein (the “Transactions”);<\/p>\n
WHEREAS, the Boards of Directors of Berkshire and General have further
\ndetermined that it is in the best interests of their respective companies and
\nstockholders to accomplish such combination by their respective stockholders
\nexchanging their shares for shares of a new holding company, and to accomplish
\nsuch exchanges by Berkshire and General merging into subsidiaries of such
\nholding company;<\/p>\n
WHEREAS, in furtherance of such determination, Berkshire and General
\nhave caused NBH, Inc., a Delaware corporation (“Holding Company”), to be formed
\nand Holding Company has formed two wholly owned subsidiaries, Wyllis Merger Sub
\nInc., a Delaware corporation (“Merger Sub A”), and Steven Merger Sub Inc., a
\nDelaware corporation (“Merger Sub B”);<\/p>\n
WHEREAS, the Board of Directors of each of Berkshire, General, and
\nHolding Company have approved, and deem it advisable, that Merger Sub A merge
\nwith and into Berkshire and Merger Sub B merge with and into General, pursuant
\nto the Merger Agreements (as defined below), with the result that Holding
\nCompany will acquire through mergers, upon the terms and subject to the
\nconditions set forth in this Agreement, (A) each share of Common Stock, par
\nvalue $0.50 per share, of General (“General Common Stock”) issued and
\noutstanding immediately prior to the Effective Time (as defined in Section
\n2.1(b)), and (B) each share of Class A Common Stock, $5.00 par value per share,
\nof Berkshire (“Berkshire Class A Common Stock”) and each share of Class B Common
\nStock, $0.1667 par value per share, of Berkshire (“Berkshire Class B Common
\nStock” and, together with Berkshire Class A Common Stock, “Berkshire Common
\nStock”) issued and outstanding immediately prior to the Effective Time;<\/p>\n
WHEREAS, the Transactions and this Agreement require the approval
\nthereof by a majority of the votes entitled to be cast thereon by holders of the
\noutstanding shares of General Common Stock and the Series A ESOP Convertible
\nPreferred Stock, no par value, of General (“General Preferred Stock” and,
\ntogether with General Common Stock, “General <\/p>\n
Stock”) entitled to vote thereon, voting together as a single class, for the
\napproval thereof (the “General Stockholder Approval”);<\/p>\n
WHEREAS, the Transactions and this Agreement require the approval
\nthereof by a majority of the votes entitled to be cast thereon by holders of the
\noutstanding shares of Berkshire Class A Common Stock and Berkshire Class B
\nCommon Stock entitled to vote thereon, voting together as a single class, for
\napproval thereof (the “Berkshire Stockholder Approval”);<\/p>\n
WHEREAS, in order to induce Berkshire to enter into this Agreement, as
\na condition to, and concurrently with the execution of, this Agreement,
\nBerkshire and General are entering into a stock option agreement (the “Stock
\nOption Agreement”) in the form attached hereto as Exhibit A;<\/p>\n
WHEREAS, in order to induce General to enter into this Agreement, as a
\ncondition to, and concurrently with the execution of, this Agreement, Warren E.
\nBuffett and Charles T. Munger, the beneficial owners of approximately 40% and
\n1.5%, respectively, of the voting power of Berkshire Common Stock, are entering
\ninto a voting agreement (the “Voting Agreement”) with General in the form
\nattached hereto as Exhibit B; and<\/p>\n
WHEREAS, for United States Federal income tax purposes, it is intended
\nthat the Transactions structured as described above will qualify as an exchange
\nunder Section 351 of the Internal Revenue Code of 1986, as amended (the “Code”).<\/p>\n
NOW, THEREFORE, in consideration of the representations, warranties,
\ncovenants and agreements contained in this Agreement, the parties agree as
\nfollows:<\/p>\n
ARTICLE 1<\/p>\n
FORMATION OF HOLDING COMPANY AND MERGER SUBSIDIARIES<\/p>\n
1.1 Holding Company. At the Effective Time, the Certificate of
\n —————
\nIncorporation and Bylaws of Holding Company shall be substantially in the form
\nof the Certificate of Incorporation and Bylaws of Berkshire as of the date of
\nthis Agreement, provided, that the Certificate of Incorporation of Holding
\n ——–
\nCompany will provide that the authorized capital stock of Holding Company shall
\nconsist initially of 1,650,000 shares of Class A common stock, $5.00 par value
\n(“Holding Company Class A Common Stock”), 55,000,000 shares of Class B common
\nstock, $0.1667 par value (“Holding Company Class B Common Stock” and, together
\nwith Holding Company Class A Common Stock, “Holding Company Common Stock”) and
\n1,000,000 shares of preferred stock, no par value.<\/p>\n
-2-<\/p>\n
1.2 Organization of Merger Subsidiaries. Merger Sub A and Merger Sub B
\n ———————————–
\nhave been organized for the sole purpose of effectuating the Berkshire Merger
\n(as defined in Section 2.1(a)) and the General Merger (as defined in Section
\n2.1(a)). The authorized capital stock of Merger Sub A initially consists of
\n1,000 shares of common stock, par value $.01 per share, which shall be issued to
\nHolding Company at a price of $1.00 per share. The authorized capital stock of
\nMerger Sub B initially consists of 1,000 shares of common stock, par value $.01
\nper share, which shall be issued to Holding Company at a price of $1.00 per
\nshare.<\/p>\n
1.3 Actions of Directors and Officers of the Merger Subsidiaries. As
\n ————————————————————
\npromptly as practicable following the execution of this Agreement, (a) Holding
\nCompany shall elect the directors of the Merger Subsidiaries, (b) the directors
\nof the Merger Subsidiaries shall elect their respective officers, (c) the
\ndirectors of Holding Company shall ratify and approve this Agreement and approve
\nthe forms of the Merger Agreements (as defined in Section 2.1), (d) the
\ndirectors and officers of the Merger Subsidiaries shall take such steps as may
\nbe necessary or appropriate to complete the organization of the Merger
\nSubsidiaries and to approve the Merger Agreements, and (e) the Merger Agreements
\nshall be executed on behalf of the parties thereto.<\/p>\n
1.4 Actions of Holding Company. As promptly as practicable following
\n ————————–
\nthe execution of this Agreement, Holding Company shall ratify and approve this
\nAgreement, and shall, as the sole shareholder of each of the Merger
\nSubsidiaries, adopt the Merger Agreements. The parties shall cause Holding
\nCompany and the Merger Subsidiaries to perform their respective obligations
\nunder this Agreement and the Merger Agreements.<\/p>\n
1.5 Board of Directors of Holding Company; Name of Holding Company.
\n ————————————————————–
\nImmediately after the Effective Time, Ronald E. Ferguson, Chairman and Chief
\nExecutive Officer of General, shall be duly appointed as a director of Holding
\nCompany, and the other directors of Holding Company shall be the directors of
\nBerkshire immediately prior to the Effective Time. Immediately after the
\nEffective Time, Holding Company shall change its name to “Berkshire Hathaway
\nInc.”<\/p>\n
ARTICLE 2<\/p>\n
THE MERGERS; DIRECTORS AND OFFICERS
\n OF THE MERGER SUBSIDIARIES; CLOSING<\/p>\n
2.1 The Mergers.
\n ———– <\/p>\n
(a) Pursuant to Plans of Merger, in forms to be mutually agreed upon
\nby Berkshire and General (sometimes hereinafter referred to individually as the
\n“Berkshire Merger Agreement” and the “General Merger Agreement”, respectively,
\nand collectively as the “Merger Agreements”), upon the terms and subject to the
\nconditions set forth in this Agreement and in the Merger Agreements and in
\naccordance with the Delaware General Corporation Law (the “DGCL”), at the
\nEffective Time:<\/p>\n
-3-<\/p>\n
(i) Merger Sub A shall be merged with and into Berkshire (the
\n “Berkshire Merger”) and Berkshire shall be the surviving corporation in the
\n Berkshire Merger and shall continue its corporate existence under the laws
\n of the State of Delaware. As a result of the Berkshire Merger, Berkshire
\n shall become a wholly owned subsidiary of Holding Company.<\/p>\n
(ii) Merger Sub B will be merged with and into General (the
\n “General Merger” and, together with the Berkshire Merger, the “Mergers”),
\n and General shall be the surviving corporation in the General Merger and
\n shall continue its corporate existence under the laws of the State of
\n Delaware. As a result of the General Merger, General shall become a wholly
\n owned subsidiary of Holding Company.<\/p>\n
(b) The term “Effective Time” shall mean the time and date which is
\n(i) the later of (A) the date and time of the filing of the certificate of
\nmerger relating to the Berkshire Merger with the Secretary of State of the State
\nof Delaware (or such other date and time as may be specified in such certificate
\nand permitted by law) and (B) the date and time of the filing of a certificate
\nof merger relating to the General Merger with the Secretary of State of the
\nState of Delaware (or such other date and time as may be specified in such
\ncertificate and permitted by law) or (ii) such other time and date as is
\npermissible in accordance with the DGCL and as Berkshire and General may agree;
\nprovided that, in any event, (I) the Effective Time shall not be prior to the
\n——–
\nClosing (as defined in Section 2.6) and shall be as soon as practicable
\nthereafter and (II) the parties shall use their best efforts to cause the
\nBerkshire Merger and the General Merger to occur contemporaneously or as close
\nthereto as is practicable.<\/p>\n
2.2 Effects of the Mergers. The Mergers shall have the effects set
\n ———————-
\nforth in the DGCL.<\/p>\n
2.3 Certificates of Incorporation; Bylaws.
\n ————————————- <\/p>\n
(a) The Certificate of Incorporation and Bylaws of Merger Sub A as in
\neffect immediately prior to the Effective Time shall be the Certificate of
\nIncorporation and Bylaws of the surviving corporation of the Berkshire Merger
\nuntil thereafter changed or amended as provided therein or by applicable law.<\/p>\n
(b) The Certificate of Incorporation and Bylaws of Merger Sub B as in
\neffect at the Effective Time shall be the Certificate of Incorporation and
\nBylaws of the surviving corporation of the General Merger until thereafter
\nchanged or amended as provided therein or by applicable law.<\/p>\n
2.4 Directors. The directors of Merger Sub A immediately prior to the
\n ———
\nEffective Time shall be the directors of the surviving corporation of the
\nBerkshire Merger as of the Effective Time until the earlier of their resignation
\nor removal or until their respective <\/p>\n
-4-<\/p>\n
successors are duly appointed or elected in accordance with applicable law. The
\ndirectors of Merger Sub B immediately prior to the Effective Time shall be the
\ndirectors of the surviving corporation of the General Merger as of the Effective
\nTime until the earlier of their resignation or removal or until their respective
\nsuccessors are duly appointed or elected in accordance with applicable law.<\/p>\n
2.5 Officers. The officers of Berkshire and General immediately prior
\n ——–
\nto the Effective Time shall be the officers of the surviving corporations of the
\nBerkshire Merger and the General Merger, respectively, as of the Effective Time
\nuntil the earlier of their resignation or removal or until their respective
\nsuccessors are duly appointed or elected in accordance with applicable law.<\/p>\n
2.6 Closing. Unless this Agreement shall have been terminated and the
\n ——-
\ntransactions herein contemplated shall have been abandoned pursuant to Section
\n8.1, and subject to the satisfaction or waiver of the conditions set forth in
\nArticle 7, the closing (the “Closing”) of the Transactions will take place at
\n10:00 a.m. local time on the second business day after satisfaction of the
\nconditions set forth in Section 7.1 (or, if not satisfied or waived at that
\ntime, as soon as practicable thereafter following satisfaction or waiver of the
\nconditions set forth in Sections 7.2 and 7.3) (the “Closing Date”), at the
\noffices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New
\nYork, unless another date, time or place is agreed to in writing by the parties
\nhereto.<\/p>\n
ARTICLE 3<\/p>\n
EFFECT OF THE MERGERS ON SECURITIES OF
\n BERKSHIRE, GENERAL, HOLDING COMPANY
\n AND THE MERGER SUBSIDIARIES<\/p>\n
3.1 Merger Subsidiary Stock. At the Effective Time, by virtue of the
\n ———————–
\nBerkshire Merger, each share of the common stock of Merger Sub A outstanding
\nimmediately prior to the Effective Time shall be converted into and shall become
\none share of common stock of the surviving corporation of the Berkshire Merger.
\nAt the Effective Time, by virtue of the General Merger, each share of the common
\nstock of Merger Sub B outstanding immediately prior to the Effective Time shall
\nbe converted into and shall become one share of common stock of the surviving
\ncorporation of the General Merger.<\/p>\n
3.2 Holding Company Capital Stock. At the Effective Time, each share of
\n —————————–
\nthe capital stock of Holding Company issued and outstanding immediately prior to
\nthe Effective Time shall be cancelled without payment therefor.<\/p>\n
-5-<\/p>\n
3.3 Effect on Berkshire Common Stock. At the Effective Time, by virtue
\n ——————————–
\nof the Berkshire Merger and without any action on the part of the holder of any
\nshares of Berkshire Common Stock:<\/p>\n
(a) Cancellation of Treasury Stock. Each share of Berkshire Common
\n ——————————
\nStock that is owned by Berkshire or any subsidiary of Berkshire shall
\nautomatically be cancelled and retired and shall cease to exist, and no cash,
\nHolding Company Common Stock or other consideration shall be delivered or
\ndeliverable in exchange therefor.<\/p>\n
(b) Conversion of Berkshire Common Stock. Except as provided in
\n ————————————
\nSection 3.3(a), each issued and outstanding share of Berkshire Common Stock
\nshall be converted into the following:<\/p>\n
(i) for each such share of Berkshire Class A Common Stock, one
\n fully paid and nonassessable share of Holding Company Class A Common Stock;
\n or<\/p>\n
(ii) for each such share of Berkshire Class B Common Stock, one
\n fully paid and nonassessable share of Holding Company Class B Common Stock.<\/p>\n
(c) Cancellation and Retirement of Berkshire Common Stock. (i) All
\n —————————————————–
\nshares of Berkshire Class A Common Stock issued and outstanding immediately
\nprior to the Effective Time shall no longer be outstanding and shall
\nautomatically be cancelled and retired and shall cease to exist, and each
\ncertificate theretofore representing any such shares shall, without any action
\non the part of the holder thereof, be deemed to represent an equivalent number
\nof shares of Holding Company Class A Common Stock and (ii) all shares of
\nBerkshire Class B Common Stock issued and outstanding immediately prior to the
\nEffective Time, shall no longer be outstanding and shall automatically be
\ncancelled and retired and shall cease to exist, and each such certificate
\ntheretofore representing any such shares shall, without any action on the part
\nof the holder thereof, be deemed to represent an equivalent number of shares of
\nHolding Company Class B Common Stock.<\/p>\n
(d) Stock Plans. Each outstanding option or right to purchase
\n ———–
\nshares of Berkshire Class B Common Stock (a “Berkshire Option”) shall, if agreed
\nby the holder of any such Berkshire Option to the extent such agreement is
\nrequired, be assumed by Holding Company in such manner that it is converted into
\nan option to purchase shares of Holding Company Class B Common Stock, with each
\nsuch Berkshire Option to otherwise be exercisable upon the same terms and
\nconditions as then are applicable to such Berkshire Option, including the number
\nof shares and exercise price provided thereby. Holding Company shall assume all
\nrights and obligations of Berkshire under Berkshire’s stock option plans as in
\neffect at the Effective Time and shall continue such plans in accordance with
\ntheir terms.<\/p>\n
-6-<\/p>\n
3.4 Effect on General Stock. At the Effective Time, by virtue of the
\n ———————–
\nGeneral Merger and without any action on the part of the holder of any shares of
\nGeneral Stock:<\/p>\n
(a) Cancellation of Treasury Stock and Berkshire-Owned General Stock.
\n —————————————————————-
\nEach share of General Common Stock, together with the rights (the “Rights”)
\nattached thereto to purchase Series A Junior Participating Preferred Stock of
\nGeneral (the “General Junior Preferred Stock”) issued pursuant to the Rights
\nAgreement (the “Rights Agreement”) dated as of September 11, 1991 between
\nGeneral and Bank of New York, as Rights Agent (as it may be amended), that is
\nowned by General or any subsidiary of General and each share of General Common
\nStock (with the associated Rights) that is owned by Berkshire or any subsidiary
\nof Berkshire shall automatically be cancelled and retired and shall cease to
\nexist, and no cash, Holding Company Common Stock or other consideration shall be
\ndelivered or deliverable in exchange therefor.<\/p>\n
(b) Conversion of General Stock. Except as otherwise provided
\n —————————
\nherein and subject to Sections 3.5, 3.7 and 3.8, each issued and outstanding
\nshare of General Common Stock (with the associated Rights) shall be converted
\ninto either (i) the right to receive from the Holding Company 0.0035 of a fully
\npaid and nonassessable share of Holding Company Class A Common Stock or (ii) the
\nright to receive from the Holding Company 0.105 of a fully paid and
\nnonassessable share of Holding Company Class B Common Stock, as determined
\npursuant to the election procedures set forth in Section 3.5(b) (the “Merger
\nConsideration”). In the event that, between the date of this Agreement and the
\nEffective Time, the issued and outstanding shares of Berkshire Common Stock
\nshall have been changed into a different number or class of shares as a result
\nof a stock split, reverse stock split, stock dividend, spin-off, extraordinary
\ndividend, recapitalization, reclassification or other similar transaction with a
\nrecord date within such period, the Merger Consideration shall be appropriately
\nadjusted.<\/p>\n
(c) Cancellation and Retirement of General Stock. All shares of
\n ——————————————–
\nGeneral Common Stock (with the associated Rights), other than shares referred to
\nin Section 3.4(a), issued and outstanding immediately prior to the Effective
\nTime shall no longer be outstanding and shall automatically be cancelled and
\nretired and shall cease to exist, and each holder of a certificate representing
\nany such shares of General Common Stock (with the associated Rights) shall cease
\nto have any rights with respect thereto, except the right to receive the Merger
\nConsideration in accordance with Section 3.4(b) and any cash in lieu of
\nfractional shares of Holding Company Class B Common Stock to be issued or paid
\nin consideration therefor upon surrender of such certificate in accordance with
\nSection 3.5.<\/p>\n
(d) Stock Plans. Prior to the mailing of the Proxy
\n ———–
\nStatement\/Prospectus (as defined in Section 6.1(a)) to General’s or Berkshire’s
\nstockholders, the Board of Directors of General (or, if appropriate, any
\ncommittee administering the Stock Plans (as defined below)) shall adopt such
\nresolutions or take such other actions as may be required to effect the
\nfollowing:<\/p>\n
-7-<\/p>\n
(i) Adjust the terms of all outstanding employee stock options
\n to purchase shares of General Common Stock (“General Stock Options”)
\n granted under any of General’s 1995 Long Term Compensation Plan, Long Term
\n Compensation Plan, 1996 Employee Stock Award Plan or 1989 Long Term
\n Compensation Plan (collectively, the “Option Plans”), to provide that, at
\n the Effective Time, each General Stock Option outstanding immediately prior
\n to the Effective Time shall (except to the extent that Berkshire and the
\n holder of a General Stock Option otherwise agree in writing prior to the
\n Effective Time) be deemed to constitute an option to acquire, on the same
\n terms and conditions as were applicable under such General Stock Option,
\n the number of shares of Holding Company Class B Common Stock equal to the
\n product of (1) the number of shares of General Common Stock issuable upon
\n exercise of such General Stock Option and (2) 0.105, provided that any
\n fractional shares of Holding Company Class B Stock resulting from such
\n multiplication shall be rounded up or down to the nearest one one-hundredth
\n of a share (provided that, notwithstanding the foregoing, the terms of such
\n ——–
\n General Stock Option shall provide for the payment of cash in lieu of any
\n fractional share of Holding Company Class B Common Stock upon exercise
\n thereof in an amount equal to such fraction multiplied by the last sale
\n price of Holding Company Class B Common Stock as reported on the New York
\n Stock Exchange (“NYSE”) Composite Tape on the date of exercise), at a price
\n per share equal to (x) the exercise price for the shares of General Common
\n Stock otherwise purchasable pursuant to such General Stock Option divided
\n by (y) 0.105, provided, that such exercise price shall be rounded up or
\n ——–
\n down to the nearest cent.<\/p>\n
(ii) Except as provided in Section 6.13 or as otherwise agreed
\n to in writing by the parties, (A) the Option Plans, the 1998 Employee Stock
\n Purchase Plan and the Stock Unit Plan for Directors, the Employee Stock
\n Savings and Ownership Plan, Cologne Reinsurance Company 401K Profit Sharing
\n Plan and the Retirement Plan for Directors, and any other plan, program or
\n arrangement providing for the issuance or grant of any interest in respect
\n of the capital stock of General or any subsidiary (collectively, the “Stock
\n Plans”) shall terminate as of the Effective Time, and (B) General shall
\n ensure that following the Effective Time no holder of a General Stock
\n Option nor any participant in any of the Stock Plans shall have any right
\n thereunder to acquire equity securities of General or the Holding Company.<\/p>\n
3.5 Exchange of General Certificates.
\n ——————————– <\/p>\n
(a) Exchange Agent. Prior to the mailing of the Proxy Statement\/
\n ————–
\nProspectus to General’s stockholders and Berkshire’s stockholders, Berkshire
\nshall designate and appoint a bank or trust company reasonably satisfactory to
\nGeneral to act as exchange agent (the “Exchange Agent”) for the payment of the
\nMerger Consideration. As soon as reasonably practicable as of or after the
\nEffective Time, Holding Company shall deposit the Merger Consideration with the
\nExchange Agent for the benefit of the holders of shares of General Stock, for
\nexchange in accordance with this Article 3.<\/p>\n
-8-<\/p>\n
(b) Exchange Procedures. As soon as practicable after the
\n ——————-
\nEffective Time, the Exchange Agent shall mail to each holder of an outstanding
\ncertificate or certificates which prior thereto represented shares of General
\nCommon Stock (i) a letter of transmittal (which shall specify that delivery
\nshall be effected, and risk of loss and title to such certificate shall pass,
\nonly upon delivery of such certificates to such Exchange Agent), and (ii)
\ninstructions for use in effecting the surrender of the certificates for the
\nMerger Consideration. The letter of transmittal shall permit each such holder
\nto elect (a “Class A Election”) the aggregate number of shares of General Common
\nStock represented by the certificate(s) surrendered therewith to be converted
\ninto shares of Holding Company Class A Common Stock pursuant to Section
\n3.4(b)(i) or Section 3.7(c)(i), as the case may be, and shall provide that all
\nshares of General Common Stock represented thereby with respect to which a Class
\nA Election has not been made shall be converted into Holding Company Class B
\nCommon Stock pursuant to Section 3.4(b)(ii) or Section 3.7(c)(ii), as the case
\nmay be. Notwithstanding the foregoing, the aggregate number of shares of
\nGeneral Common Stock of any holder with respect to which a Class A Election has
\nbeen made shall be reduced, and the number of shares to be converted into
\nHolding Company Class B Common Stock shall be increased, by a number of shares
\n(including fractions thereof) equal to the quotient (rounded to four decimal
\nplaces) obtained by dividing (x) an amount equal to (1) the product of the
\nexchange ratio set forth in Section 3.4 (b)(i) or Section 3.7(c)(i)(A), as the
\ncase may be, and the aggregate number of shares with respect to which such
\nholder has made a Class A Election minus (2) an amount equal to the product
\nobtained in the preceding clause (1) rounded down to the nearest whole number,
\nby (y) the exchange ratio referred to in such clause (1). Upon proper surrender
\nto the Exchange Agent of such certificates for cancellation, the holder of such
\ncertificates shall after the Effective Time be entitled only to a certificate or
\ncertificates representing the number of full shares of Holding Company Common
\nStock into which the aggregate number of shares of General Common Stock
\npreviously represented by such certificate or certificates surrendered shall
\nhave been converted pursuant to this Agreement and any cash constituting Merger
\nConsideration, cash in lieu of fractional shares and cash dividends or
\ndistributions to which such holder is entitled. The Exchange Agent shall accept
\nsuch certificates upon compliance with such reasonable terms and conditions as
\nthe Exchange Agent may impose to effect an orderly exchange thereof in
\naccordance with normal exchange practices. After the Effective Time, there
\nshall be no further transfer on the records of General or its transfer agent of
\ncertificates representing shares of General Common Stock and if such
\ncertificates are presented to General for transfer, they shall be cancelled
\nagainst delivery of certificates for Holding Company Common Stock and cash in
\nlieu of fractional shares as provided herein. If any certificate for such
\nHolding Company Common Stock is to be issued in, or if cash is to be remitted
\nto, a name other than that in which the certificate for General Common Stock
\nsurrendered for exchange is registered, it shall be a condition of such exchange
\nthat the certificate so surrendered shall be properly endorsed, with signature
\nguaranteed, or otherwise in proper form for transfer and that the person
\nrequesting such exchange shall pay to Holding Company or its transfer agent any
\ntransfer or other taxes required by reason of the issuance of certificates for
\nsuch Holding Company Common Stock in a name other than that of the registered
\nholder of the certificate surrendered, or establish to the satisfaction of
\nHolding <\/p>\n
-9-<\/p>\n
Company or its transfer agent that such tax has been paid or is not applicable.
\nUntil surrendered as contemplated by this Section 3.5(b), each certificate for
\nshares of General Common Stock shall be deemed at any time after the Effective
\nTime to represent only the right to receive upon such surrender the Merger
\nConsideration and any cash payable hereunder. No interest will be paid or will
\naccrue on the Merger Consideration, any dividends or distributions or any cash
\npayable in lieu of any fractional shares of Holding Company Common Stock.<\/p>\n
(c) Distributions with Respect to Unexchanged Shares. No dividends
\n ————————————————
\nor other distributions with respect to Holding Company Common Stock with a
\nrecord date after the Effective Time shall be paid to the holder of any
\nunsurrendered certificate for shares of General Common Stock with respect to the
\nshares of Holding Company Common Stock represented thereby and no cash payment
\nas Merger Consideration, for dividends or distributions on Holding Company Stock
\nwith a record date on or following the Effective Time or in lieu of fractional
\nshares shall be paid to any such holder pursuant to Section 3.5(e) until the
\nsurrender of such certificate in accordance with this Section 3.5. Subject to
\nthe effect of applicable laws, following surrender of any such certificate,
\nthere shall be paid to the holder of the certificate representing whole shares
\nof Holding Company Common Stock issued in exchange therefor, without interest,
\n(i) at the time of such surrender the amount of any cash payable in lieu of a
\nfractional share of Holding Company Class B Common Stock to which such holder is
\nentitled hereunder and the amount of dividends or other distributions with a
\nrecord date after the Effective Time theretofore paid with respect to such whole
\nshares of Holding Company Common Stock, and (ii) at the appropriate payment
\ndate, the amount of dividends or other distributions with a record date after
\nthe Effective Time but prior to such surrender and a payment date subsequent to
\nsuch surrender payable with respect to such whole shares of Holding Company
\nCommon Stock.<\/p>\n
(d) No Further Ownership Rights in General Common Stock. All
\n —————————————————
\nshares of Holding Company Common Stock issued and cash paid pursuant to Section
\n3.5(e) upon the surrender for exchange of certificates representing shares of
\nGeneral Common Stock in accordance with the terms of this Article 3 shall be
\ndeemed to have been issued and paid in full satisfaction of all rights
\npertaining to the shares of General Common Stock (and the associated Rights)
\ntheretofore represented by such certificates.<\/p>\n
(e) No Fractional Shares. No certificates or scrip representing
\n ——————–
\nfractional shares of Holding Company Class B Common Stock shall be issued upon
\nthe surrender for exchange of certificates representing shares of General Common
\nStock, and such fractional share interests will not entitle the owner thereof to
\nvote or to any rights of a stockholder of Holding Company. Notwithstanding any
\nother provision of this Agreement, (A) each holder of shares of General Common
\nStock exchanged pursuant to the General Merger who would have otherwise been
\nentitled to receive a fraction of a share of Holding Company Class B Common
\nStock shall receive, in lieu thereof, a cash payment (without interest) equal to
\nthe product of (x) such fraction and (y) the Average Trading Price for one share
\nof Berkshire Class B Common Stock. For purposes of this Agreement, “Average
\nTrading Price” shall mean the <\/p>\n
-10-<\/p>\n
average of the high and low trading prices of Berkshire Class A Common Stock or
\nBentwood Class B Common Stock, as the case may be, as reported on the NYSE
\nComposite Tape for each of the five consecutive trading days ending on the last
\nfull trading day immediately prior to the date on which the Effective Time
\noccurs.<\/p>\n
(f) Termination of Exchange Fund. Any portion of the Merger
\n —————————-
\nConsideration deposited with the Exchange Agent pursuant to this Section 3.5
\n(the “Exchange Fund”) which remains undistributed to the holders of the
\ncertificates representing shares of General Common Stock for nine months after
\nthe Effective Time shall be delivered to Holding Company, upon demand, and any
\nholders of shares of General Common Stock who have not theretofore complied with
\nthis Article 3 shall thereafter look only to Holding Company and only as general
\ncreditors thereof for payment of their claim for Merger Consideration, any cash
\nin lieu of fractional shares of Holding Company Class B Common Stock and any
\ndividends or distributions with respect to whole shares of Holding Company
\nCommon Stock to which such holders may be entitled.<\/p>\n
(g) No Liability. None of Holding Company, Berkshire, General or
\n ————
\nthe Exchange Agent shall be liable to any person in respect of any shares of
\nHolding Company Common Stock (or dividends or distributions with respect
\nthereto) or cash from the Exchange Fund delivered to a public official pursuant
\nto any applicable abandoned property, escheat or similar law. If any
\ncertificates representing shares of General Common Stock shall not have been
\nsurrendered prior to five years after the Effective Time (or immediately prior
\nto such earlier date on which any shares of Holding Company Common Stock, any
\ncash payable as Merger Consideration or in lieu of fractional shares of Holding
\nCompany Class B Common Stock or any dividends or distributions with respect to
\nHolding Company Common Stock in respect of such certificate would otherwise
\nescheat to or become the property of any Governmental Entity (as defined in
\nSection 4.1(d)), any such shares, cash, dividends or distributions in respect of
\nsuch certificate shall, to the extent permitted by applicable law, become the
\nproperty of Holding Company, free and clear of all claims or interest of any
\nperson previously entitled thereto.<\/p>\n
(h) Investment of Exchange Fund. The Exchange Agent shall invest
\n —————————
\nany cash included in the Exchange Fund, as directed by Berkshire (or Holding
\nCompany after the Effective Time), on a daily basis. Any interest and other
\nincome resulting from such investments shall be paid to Berkshire (or Holding
\nCompany after the Effective Time).<\/p>\n
3.6 General Preferred Stock. General agrees to take all actions
\n ———————–
\nnecessary to call for redemption, and to redeem, all of the shares of General
\nPreferred Stock as of immediately prior to the Effective Time pursuant to the
\nterms thereof.<\/p>\n
-11-<\/p>\n
3.7 Partial Cash Election.
\n ——————— <\/p>\n
(a) Subject only to Berkshire’s compliance in all material respects
\nwith Section 6.14, Berkshire shall be permitted to elect (the “Partial Cash
\nElection”), but may decline to elect, to pay a portion of the Merger
\nConsideration in cash as provided under Section 3.7(c). Berkshire may make the
\nPartial Cash Election by giving written notice to General indicating that it is
\nmaking the Partial Cash Election within ten business days following the earlier
\nof (x) Berkshire being informed by the Internal Revenue Service of the United
\nStates (“IRS”) that it will not grant the 351(e) Ruling (as defined in Section
\n6.14) (and, if the IRS will not grant the 351(e) Ruling as a result of the
\nUnited States Treasury Department (the “Treasury Department”) withdrawing or
\nannouncing its intention to withdraw Proposed Treasury Regulation Sections
\n1.351-1(c)(1)(ii)(d) and 1.368-4 (the “Proposed Regulations”), Berkshire also
\nbeing informed by the IRS that it will not grant the 368(c) Ruling (as defined
\nin Section 6.14)), or (y) February 19, 1999. Notwithstanding the prior
\nsentence, Berkshire may not make the Partial Cash Election if Berkshire has
\nreceived written notice of the issuance of either (I) the 351(e) Ruling and the
\nNo Gain or Loss Ruling or (II), if the Treasury Department has withdrawn the
\nProposed Regulations, the No Gain or Loss Ruling or the 368(c) Ruling by the IRS
\non or prior to the date Berkshire makes the election. In the event Berkshire is
\nentitled to make the Partial Cash Election and does not give any written notice
\ndeclining to make the Partial Cash Election to General, as of the expiration of
\nsuch ten business days, Berkshire shall be deemed to have made the Partial Cash
\nElection. Berkshire shall not be permitted to make the Partial Cash Election
\nexcept to the extent provided in this Section 3.7. Notwithstanding any
\nprovision to the contrary contained in this Agreement, none of the failure to
\nreceive one or more of the Rulings, the making of the Partial Cash Election or
\nthe effects of any of the foregoing shall be deemed a material adverse effect to
\nany party hereunder or constitute a basis for any party not to consummate the
\ntransactions contemplated hereby.<\/p>\n
(b) If the Partial Cash Election has been made, then, notwithstanding
\nany other provision of this Agreement, at the Effective Time: (i) the Berkshire
\nMerger shall not be consummated, (ii) the outstanding Holding Company Stock
\nshall not be cancelled nor will any additional Holding Company stock be issued,
\n(iii) the Transactions will have no effect on Berkshire Common Stock or any
\nBerkshire Option, the Berkshire Certificate of Incorporation and Bylaws, or the
\nBerkshire Board of Directors and officers, except that Ronald E. Ferguson,
\nChairman and Chief Executive Officer of General, shall be duly appointed as a
\ndirector of Berkshire (rather than Holding Company) immediately after the
\nEffective Time, (iv) all of the rights and obligations of Holding Company shall
\nenure to, or be obligations of, Berkshire, (v) as appropriate, references herein
\nto Holding Company Class A Common Stock and Holding Company Class B Common Stock
\nshall instead refer to Berkshire Class A Common Stock and Berkshire Class B
\nCommon Stock, respectively, and (vi) Berkshire shall take any action required so
\nthat Merger Sub B is a direct subsidiary of a direct subsidiary of Berkshire.<\/p>\n
(c) If the Partial Cash Election has been made, then, notwithstanding
\nSection 3.4(b), for each issued and outstanding share of General Common Stock
\n(with the <\/p>\n
-12-<\/p>\n
associated Rights), the Merger Consideration shall consist of either (i) the
\nright to receive from Berkshire (A) 0.003395 of a fully paid and nonassessable
\nshare of Berkshire Class A Common Stock and (B) an amount in cash equal to the
\nproduct of .000105 and the Average Trading Price of one share of Berkshire Class
\nA Common Stock, or (ii) the right to receive from Berkshire (x) 0.10185 of a
\nfully paid and nonassessable share of Berkshire Class B Common Stock and (y) an
\namount in cash equal to the product of .00315 and the Average Trading Price of
\none share of Berkshire Class B Common Stock, as determined pursuant to the
\nelection procedures set forth in Section 3.5(b).<\/p>\n
(d) As promptly as practicable after the date hereof, and in any
\nevent prior to the filing of the Ruling Request (as defined in Section 6.14(a)),
\nBerkshire shall issue to General shares of a new class of non-voting, non-
\nparticipating cumulative preferred stock of Berkshire, which shares shall have
\nan aggregate face amount of $1,000,000, shall pay dividends at a market rate and
\nshall be redeemable for their aggregate face amount (plus accrued but unpaid
\ndividends) at Berkshire’s option after five years from the date of issuance, and
\nin exchange General shall issue to Berkshire an equal number of shares of a new
\nclass of preferred stock of General having equivalent value and substantially
\nidentical terms. The preferred stock issued pursuant to this Section 3.7(d)
\nshall not be converted in the Berkshire Merger or the General Merger and shall
\nremain outstanding following the Effective Time.<\/p>\n
3.8 Dissenting Shares. Notwithstanding anything in this Agreement to
\n —————–
\nthe contrary, General Common Stock outstanding immediately prior to the
\nEffective Time and held by a holder who has delivered a written demand for
\nappraisal of such shares in accordance with Section 262 of the DGCL, if such
\nSection 262 provides for appraisal rights for such General Common Stock in the
\nGeneral Merger (“Dissenting Shares”), shall not be converted as provided in
\nSection 3.7(c) hereof, unless and until such holder fails to perfect or
\neffectively withdraws or otherwise loses his right to appraisal and payment
\nunder the DGCL. If, after the Effective Time, any such holder fails to perfect
\nor effectively withdraws or loses his right to appraisal, such Dissenting Shares
\nshall thereupon be treated as if they had been converted as of the Effective
\nTime into the right to receive the Merger Consideration as provided in Section
\n3.4(b) or Section 3.7(c) hereof, as appropriate, together with any dividends or
\ndistributions payable thereon or cash in lieu of fractional shares, and to which
\nsuch holder is entitled, without interest thereon. General shall give Berkshire
\nprompt notice of any demands received by General for appraisal of General Common
\nStock, and, prior to the Effective Time, Berkshire shall have the right to
\nparticipate in all negotiations and proceedings with respect to such demands.
\nPrior to the Effective Time, General shall not, except with the prior written
\nconsent of Berkshire, make any payment with respect to, or offer to settle, any
\nsuch demands.<\/p>\n
-13-<\/p>\n
ARTICLE 4<\/p>\n
REPRESENTATIONS AND WARRANTIES<\/p>\n
4.1 Disclosure Schedules. On or prior to the date hereof, General has
\n ——————–
\ndelivered to Berkshire and Berkshire has delivered to General a schedule (each,
\na “Disclosure Schedule” and respectively the “General Disclosure Schedule” and
\nthe “Berkshire Disclosure Schedule”) setting forth, among other things, items
\nthe disclosure of which is necessary or appropriate either in response to an
\nexpress disclosure requirement contained in a provision hereof or as an
\nexception to one or more representations or warranties contained in Section 4.2
\nor 4.3, respectively, or to one or more of its covenants contained herein;
\nprovided, that the mere inclusion of an item in a Disclosure Schedule as an
\n——–
\nexception to a representation or warranty shall not be deemed an admission by a
\nparty that such item represents a material exception or fact, event or
\ncircumstance or that such item is reasonably likely to result in a material
\nadverse effect with respect to any party hereto. For purposes of this
\nAgreement, “Previously Disclosed” by a party shall mean information set forth in
\nsuch party’s Disclosure Schedule and specifically designated as information
\n“Previously Disclosed” pursuant to this Agreement.<\/p>\n
4.2 Representations and Warranties of General. General represents and
\n —————————————–
\nwarrants to Berkshire, except as otherwise Previously Disclosed, as follows:<\/p>\n
(a) Organization, Standing and Corporate Power. Each of General
\n ——————————————
\nand each of its subsidiaries (as defined in Section 9.3) is duly organized,
\nvalidly existing and in good standing under the laws of the jurisdiction in
\nwhich it is incorporated and has the requisite corporate power and authority to
\ncarry on its business as now being conducted. Each of General and each of its
\nsubsidiaries is duly qualified or licensed to do business and is in good
\nstanding in each jurisdiction in which the nature of its business or the
\nownership or leasing of its properties makes such qualification or licensing
\nnecessary, other than in such jurisdictions where the failure to be so qualified
\nor licensed (individually or in the aggregate) would not have a material adverse
\neffect (as defined in Section 9.3) with respect to General. General has
\nPreviously Disclosed complete and correct copies of the Certificate of
\nIncorporation and Bylaws of General.<\/p>\n
(b) Subsidiaries. The only direct or indirect subsidiaries of
\n ————
\nGeneral and other ownership interests held by General in any other person are
\nthose listed in Section 4.2(b) of the Disclosure Schedule or in Exhibit 21 to
\nGeneral’s Annual Report on Form 10-K for the fiscal year ended December 31,
\n1997. Except as set forth in Section 4.2(b) of the Disclosure Schedule or such
\nExhibit 21, all the outstanding shares of capital stock or other ownership
\ninterests of each such subsidiary have been validly issued and are fully paid
\nand nonassessable and are owned (of record and beneficially) by General, by
\nanother subsidiary (wholly owned) of General or by General and another such
\nsubsidiary (wholly owned), free and clear of all pledges, claims, liens,
\ncharges, encumbrances and security interests of any kind or nature whatsoever
\n(collectively, “Liens”).<\/p>\n
-14-<\/p>\n
(c) Capital Structure. The authorized capital stock of General
\n —————–
\nconsists of 250,000,000 shares of General Common Stock and 20,000,000 shares of
\npreferred stock, of which 1,754,386 shares have been designated as General
\nPreferred Stock. Subject to any Permitted Changes (as defined in Section
\n5.1(b)) following the date of this Agreement, there are approximately (i)
\n75,750,000 shares of General Common Stock issued and outstanding, (ii) 1,700,000
\nshares of General Preferred Stock issued and outstanding, (iii) 27,150,000
\nshares of General Common Stock and 60,000 shares of General Preferred Stock held
\nin the treasury of General or held by any subsidiary of General; (iv) 1,000,000
\nshares of General Common Stock reserved for issuance upon exercise of authorized
\nbut unissued General Stock Options pursuant to the Option Plans; and (v)
\n5,500,000 shares of General Common Stock issuable upon exercise of outstanding
\nGeneral Stock Options. As of the date hereof there were no amounts withheld
\nfrom General’s employees’ salaries to purchase shares of General Common Stock
\npursuant to and issuable under the Stock Purchase Plan. Except as set forth in
\nthis Section 4.2(c), no shares of capital stock or other equity securities of
\nGeneral are issued, reserved for issuance or outstanding. All outstanding
\nshares of capital stock of General are, and all shares which may be issued
\npursuant to the Stock Plans will be when issued, duly authorized, validly
\nissued, fully paid and nonassessable and not subject to preemptive rights.
\nExcept as set forth in this Section 4.2(c) or in the Stock Option Agreement,
\nthere are no outstanding bonds, debentures, notes or other indebtedness or other
\nsecurities of General having the right to vote (or convertible into, or
\nexchangeable for, securities having the right to vote) on any matters on which
\nstockholders of General may vote. Except as set forth in this Section 4.2(c) or
\nin the Stock Option Agreement, there are no outstanding securities, options,
\nwarrants, calls, rights, commitments, agreements, arrangements or undertakings
\nof any kind to which General or any of its subsidiaries is a party or by which
\nany of them is bound obligating General or any of its subsidiaries to issue,
\ndeliver or sell, or cause to be issued, delivered or sold, additional shares of
\ncapital stock or other equity or voting securities of General or of any of its
\nsubsidiaries or obligating General or any of its subsidiaries to issue, grant,
\nextend or enter into any such security, option, warrant, call, right,
\ncommitment, agreement, arrangement or undertaking. Other than General Stock
\nOptions and the Stock Option Agreement, (i) there are no outstanding contractual
\nobligations, commitments, understandings or arrangements of General or any of
\nits subsidiaries to repurchase, redeem or otherwise acquire or make any payment
\nin respect of or measured or determined based on the value or market price of
\nany shares of capital stock of General or any of its subsidiaries and (ii) to
\nthe knowledge of General, there are no irrevocable proxies with respect to
\nshares of capital stock of General or any subsidiary of General. Other than
\npursuant to the Stock Option Agreement, there are no agreements or arrangements
\npursuant to which General is or could be required to register shares of General
\nStock or other securities under the Securities Act of 1933, as amended (the
\n“Securities Act”).<\/p>\n
(d) Authority; Noncontravention. General has the requisite
\n —————————
\ncorporate power and authority to enter into this Agreement and the Stock Option
\nAgreement and, subject to General Stockholder Approval with respect to the
\nconsummation of the Transactions and the General Merger, to consummate the
\ntransactions contemplated hereby and thereby. The <\/p>\n
-15-<\/p>\n
execution and delivery of this Agreement and the Stock Option Agreement by
\nGeneral and the consummation by General of the transactions contemplated hereby
\nand thereby have been duly authorized by all necessary corporate action on the
\npart of General, subject, in the case of the Transactions and the General
\nMerger, to General Stockholder Approval. This Agreement and the Stock Option
\nAgreement have been duly executed and delivered by General and each constitutes
\na valid and binding obligation of General, enforceable against General in
\naccordance with its terms. Except as disclosed in Section 4.2(d) of the
\nDisclosure Schedule, the execution and delivery of this Agreement or the Stock
\nOption Agreement does not, and the consummation of the transactions contemplated
\nhereby and thereby and compliance with the provisions hereof and thereof will
\nnot, conflict with, or result in any breach or violation of, or default (with or
\nwithout notice or lapse of time, or both) under, or give rise to a right of
\ntermination, cancellation or acceleration of or “put” right with respect to any
\nobligation or to loss of a material benefit under, or result in the creation of
\nany Lien upon any of the properties or assets of General or any of its
\nsubsidiaries under, (i) the Certificate of Incorporation or Bylaws of General or
\nthe comparable charter or organizational documents of any of its subsidiaries,
\n(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease,
\ncontract or other agreement, instrument, permit, concession, franchise or
\nlicense applicable to General or any of its subsidiaries or their respective
\nproperties or assets or (iii) subject to the governmental filings and other
\nmatters referred to in the following sentence, any judgment, order, decree,
\nstatute, law, ordinance, rule, regulation or arbitration award applicable to
\nGeneral or any of its subsidiaries or their respective properties or assets,
\nother than, in the case of clauses (ii) and (iii), any such conflicts, breaches,
\nviolations, defaults, rights, losses or Liens that individually or in the
\naggregate could not have a material adverse effect with respect to General or
\ncould not prevent, hinder or materially delay the ability of General to
\nconsummate the transactions contemplated by this Agreement or the Stock Option
\nAgreement. No consent, approval, order or authorization of, or registration,
\ndeclaration or filing with, or notice to, any Federal, state or local government
\nor any court, administrative agency or commission or other governmental
\nauthority or agency, domestic or foreign (a “Governmental Entity”), is required
\nby or with respect to General or any of its subsidiaries in connection with the
\nexecution and delivery of this Agreement or the Stock Option Agreement by
\nGeneral or the consummation by General of the transactions contemplated hereby
\nand thereby, except for (i) the filing of a premerger notification and report
\nform by General under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
\nas amended (the “HSR Act”), (ii) the filing with the Securities and Exchange
\nCommission (the “SEC”) of (y) the Proxy Statement\/Prospectus, and (z) such
\nreports or schedules under the Exchange Act as may be required in connection
\nwith this Agreement or the Stock Option Agreement and the transactions
\ncontemplated by this Agreement and the Stock Option Agreement, (iii) the filing
\nof the Certificates of Merger for the Mergers with the Secretary of State of the
\nState of Delaware, and appropriate documents with the relevant authorities of
\nother states in which General is qualified to do business, (iv) the filing of
\nappropriate documents with, and approval of, the respective commissioners of
\ninsurance of the states of Delaware, Ohio, Connecticut and North Dakota, and of
\nsuch notices as may be required under the insurance laws of other jurisdictions
\nin which General or any of its subsidiaries is domiciled or does business or is
\nlicensed or authorized as an insurance<\/p>\n
-16-<\/p>\n
company, and (v) such other consents, approvals, orders, authorizations,
\nregistrations, declarations, filings or notices as are set forth in Section
\n4.2(d) of the Disclosure Schedule.<\/p>\n
(e) SEC Documents; Undisclosed Liabilities. General has filed all
\n ————————————–
\nrequired reports, schedules, forms, statements and other documents with the SEC
\nsince January 1, 1996 (collectively, and in each case including all exhibits and
\nschedules thereto and documents incorporated by reference therein, the “General
\nSEC Documents”). As of their respective dates, General SEC Documents complied
\nin all material respects with the requirements of the Securities Act or the
\nExchange Act, as the case may be, and the rules and regulations of the SEC
\npromulgated thereunder applicable to such General SEC Documents, and none of
\nGeneral SEC Documents (including any and all financial statements included
\ntherein) as of such dates contained any untrue statement of a material fact or
\nomitted to state a material fact required to be stated therein or necessary in
\norder to make the statements therein, in light of the circumstances under which
\nthey were made, not misleading. The consolidated financial statements of
\nGeneral included in General SEC Documents (the “General SEC Financial
\nStatements”) comply as to form in all material respects with applicable
\naccounting requirements and the published rules and regulations of the SEC with
\nrespect thereto, have been prepared in accordance with generally accepted
\naccounting principles (except, in the case of unaudited consolidated quarterly
\nstatements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
\nduring the periods involved (except as may be indicated in the notes thereto)
\nand fairly present the consolidated financial position of General and its
\nconsolidated subsidiaries as of the dates thereof and the consolidated results
\nof their operations and cash flows for the periods then ended (subject, in the
\ncase of unaudited quarterly statements, to normal year-end audit adjustments).
\nSince December 31, 1997, neither General nor any of its subsidiaries has
\nincurred any liabilities or obligations of any nature (whether accrued,
\nabsolute, contingent or otherwise) except (i) as and to the extent set forth on
\nthe audited balance sheet of General and its subsidiaries as of December 31,
\n1997 (including the notes thereto), (ii) as incurred in connection with the
\ntransactions contemplated by this Agreement or the Stock Option Agreement, (iii)
\nas incurred after December 31, 1997 in the ordinary course of business and
\nconsistent with past practice, (iv) as described in General SEC Documents filed
\nsince December 31, 1997 (the “Recent General SEC Documents”), or (v) as would
\nnot, individually or in the aggregate, have a material adverse effect with
\nrespect to General.<\/p>\n
(f) Information Supplied. None of the information supplied or to
\n ——————–
\nbe supplied by General for inclusion or incorporation by reference in (i) the
\nregistration statement on Form S-4 to be filed with the SEC by Holding Company
\nin connection with the issuance of Holding Company Common Stock in the
\nTransactions (the “Form S-4”) will, at the time the Form S-4 is filed with the
\nSEC, and at any time it is amended or supplemented or at the time it becomes
\neffective under the Securities Act, contain any untrue statement of a material
\nfact or omit to state any material fact required to be stated therein or
\nnecessary to make the statements therein not misleading, and (ii) the Proxy
\nStatement\/Prospectus will, at the date it is first mailed to General’s
\nstockholders and the Berkshire’s stockholders or at the time of General
\nStockholders Meeting (as defined in Section 6.1(b)) and the Berkshire
\nStockholders Meeting <\/p>\n
-17-<\/p>\n
(as defined in Section 6.1(c)), contain any untrue statement of a material fact
\nor omit to state any material fact required to be stated therein or necessary in
\norder to make the statements therein, in light of the circumstances under which
\nthey are made, not misleading. The Proxy Statement\/Prospectus will comply as to
\nform in all material respects with the requirements of the Exchange Act and the
\nrules and regulations promulgated thereunder, except that no representation is
\nmade by General with respect to statements made or incorporated by reference
\ntherein based on information supplied by Berkshire or Holding Company for
\ninclusion or incorporation by reference therein.<\/p>\n
(g) Absence of Certain Changes or Events. Except as disclosed in
\n ————————————
\nthe Recent General SEC Documents or in Section 4.2(g) of the Disclosure
\nSchedule, since December 31, 1997, General has conducted its business only in
\nthe ordinary course consistent with past practice, and there is not and has not
\nbeen: (i) any material adverse change with respect to General; (ii) any
\ncondition, event or occurrence which, individually or in the aggregate, could
\nreasonably be expected to have a material adverse effect or give rise to a
\nmaterial adverse change with respect to General; (iii) any event which, if it
\nhad taken place following the execution of this Agreement, would not have been
\npermitted by Section 5.1 without the prior consent of Berkshire; or (iv) any
\ncondition, event or occurrence which would prevent, hinder or materially delay
\nthe ability of General to consummate the transactions contemplated by this
\nAgreement or the Stock Option Agreement.<\/p>\n
(h) Litigation; Labor Matters; Compliance with Laws.
\n ———————————————– <\/p>\n
(i) Except as disclosed in the Recent General SEC Documents,
\n there is no suit, action or proceeding or investigation pending or, to the
\n knowledge of General, threatened against or affecting General or any of its
\n subsidiaries or any basis for any such suit, action, proceeding or
\n investigation that, individually or in the aggregate, could reasonably be
\n expected to have a material adverse effect with respect to General or
\n prevent, hinder or materially delay the ability of General to consummate
\n the transactions contemplated by this Agreement or the Stock Option
\n Agreement, nor is there any judgment, decree, injunction, rule or order of
\n any Governmental Entity or arbitrator outstanding against General or any of
\n its subsidiaries having, or which, insofar as reasonably could be foreseen
\n by General, in the future could have, any such effect.<\/p>\n
(ii) Neither General nor any of its subsidiaries is a party to,
\n or bound by, any collective bargaining agreement, contract or other
\n agreement or understanding with a labor union or labor organization, nor is
\n it or any of its subsidiaries the subject of any proceeding asserting that
\n it or any subsidiary has committed an unfair labor practice or seeking to
\n compel it to bargain with any labor organization as to wages or conditions
\n of employment nor is there any strike, work stoppage or other labor dispute
\n involving it or any of its subsidiaries pending or, to its <\/p>\n
-18-<\/p>\n
knowledge, threatened, any of which could have a material adverse effect
\n with respect to General.<\/p>\n
(iii) The conduct of the business of each of General and each of
\n its subsidiaries complies with all statutes, laws, regulations, ordinances,
\n rules, judgments, orders, decrees or arbitration awards applicable thereto,
\n except for violations or failures so to comply, if any, that, individually
\n or in the aggregate, could not reasonably be expected to have a material
\n adverse effect with respect to General.<\/p>\n
(i) Employee Matters. General has delivered or made available to
\n —————-
\nBerkshire full and complete copies or descriptions of each material employment,
\nseverance, bonus, profit sharing, compensation, termination, stock option, stock
\nappreciation right, restricted stock, phantom stock, performance unit, pension,
\nretirement, deferred compensation, welfare or other employee benefit agreement,
\ntrust fund or other arrangement and any union, guild or collective bargaining
\nagreement maintained or contributed to or required to be contributed to by
\nGeneral or any of its ERISA Affiliates, for the benefit or welfare of any
\ndirector, officer, employee or former employee of General or any of its ERISA
\nAffiliates (such plans and arrangements being collectively the “General Benefit
\nPlans”). Each of General Benefit Plans is in material compliance with all
\napplicable laws including ERISA and the Code. The Internal Revenue Service has
\ndetermined that each General Benefit Plan that is intended to be a qualified
\nplan under Section 401(a) of the Code is so qualified and General is aware of no
\nevent occurring after the date of such determination that would adversely affect
\nsuch determination. The liabilities accrued under each such plan are reflected
\non the latest balance sheet of General included in the Recent SEC Reports in
\naccordance with generally accepted accounting principles applied on a consistent
\nbasis. No condition exists that is reasonably likely to subject General or any
\nof its subsidiaries to any direct or indirect liability under Title IV of ERISA
\nor to a civil penalty under Section 502(j) of ERISA or liability under Section
\n4069 of ERISA or 4975, 4976, or 4980B of the Code or the loss of a federal tax
\ndeduction under Section 280G of the Code or other liability with respect to
\nGeneral Benefit Plans that would have a material adverse effect on General and
\nthat is not reflected on such balance sheet. No General Benefit Plan (other
\nthan any General Benefit Plan that is a “multiemployer plan” as such term is
\ndefined in Section 4001(a)(3) of ERISA) is subject to Title IV of ERISA. There
\nare no pending, threatened, or anticipated claims (other than routine claims for
\nbenefits or immaterial claims) by, on behalf of or against any of General
\nBenefit Plans or any trusts related thereto. “ERISA Affiliate” means, with
\nrespect to any person, any trade or business, whether or not incorporated, that
\ntogether with such person would be deemed a “single employer” within the meaning
\nof Section 4001(a)(15) of the Employee Retirement Income Security Act of 1974,
\nas amended (“ERISA”).<\/p>\n
(j) Tax Returns and Tax Payments. General and each of its
\n —————————-
\nsubsidiaries has timely filed (or, as to subsidiaries, General has filed on its
\nbehalf) all Tax Returns (as defined below) required to be filed by it, has paid
\n(or, as to subsidiaries, General has paid on its behalf) all Taxes (as defined
\nbelow) shown thereon to be due and has provided (or, as to <\/p>\n
-19-<\/p>\n
subsidiaries, General has made provision on its behalf of) reserves in
\naccordance with generally accepted accounting principles in its financial
\nstatements for any Taxes that have not been paid, whether or not shown as being
\ndue on any Tax Returns. Except as set forth in Section 4.2(j) of the Disclosure
\nSchedule: (i) no material claim for unpaid Taxes has been asserted against
\nGeneral or any of its subsidiaries in writing by a Tax authority or has become a
\nlien (except for liens for Taxes not yet due and payable or for Taxes that are
\nbeing disputed in good faith by appropriate proceedings and that have been
\nreserved against in accordance with generally accepted accounting principles)
\nagainst the property of General or any of its subsidiaries, (ii) no audit of any
\nTax Return of General or any of its subsidiaries is being conducted by a Tax
\nauthority, and (iii) no extension of the statute of limitations on the
\nassessment of any Taxes has been granted by General or any of its subsidiaries
\nand is currently in effect. Neither General nor any of its Subsidiaries is or
\nhas been a member of any consolidated, combined, unitary or aggregate group for
\nTax purposes except such a group consisting only of General and its
\nsubsidiaries. As used herein, “Taxes” shall mean all taxes of any kind,
\nincluding, without limitation, those on or measured by or referred to as income,
\ngross receipts, sales, use, ad valorem, franchise, profits, license,
\nwithholding, payroll, employment, excise, severance, stamp, occupation, premium,
\nvalue added, property or windfall profits taxes, customs, duties or similar
\nfees, assessments or charges of any kind whatsoever, together with any interest
\nand any penalties, additions to tax or additional amounts imposed by any
\ngovernmental authority, domestic or foreign. As used herein, “Tax Return” shall
\nmean any return, report or statement required to be filed with any governmental
\nauthority with respect to Taxes.<\/p>\n
(k) State Antitakeover Laws Not Applicable; No Other Restrictions.
\n ————————————————————-
\nThe Board of Directors of General has approved this Agreement and the Stock
\nOption Agreement and the transactions contemplated hereby and thereby and such
\napproval constitutes approval of the Transactions and the General Merger and the
\nStock Option Agreement and the other transactions contemplated hereby and
\nthereby by the Board of Directors of General under the provisions of Section 203
\nof the DGCL and Article VIII of General’s Certificate of Incorporation such that
\nSection 203 of the DGCL and such Article VIII do not apply to this Agreement or
\nthe Stock Option Agreement or the transactions contemplated hereby or thereby.
\nNo other state takeover statute or similar statute or regulation of the State of
\nDelaware (or, to the knowledge of General after due inquiry, of any other state
\nor jurisdiction) applies or purports to apply to this Agreement or the Stock
\nOption Agreement or the transactions contemplated hereby or thereby. No
\nprovision of the Certificate of Incorporation, Bylaws or other governing
\ninstruments of General or any of its subsidiaries or the terms of any rights
\nplan or agreement of General (including the Rights Agreement) would, directly or
\nindirectly, restrict or impair (i) the ability of Berkshire or Holding Company
\nto vote, or otherwise to exercise the rights of a stockholder with respect to,
\nsecurities of General and its subsidiaries that may be acquired or controlled by
\nBerkshire or Holding Company by virtue of this Agreement or the Stock Option
\nAgreement, the transactions contemplated hereby or thereby or (ii) the rights
\ngranted hereunder and thereunder, including without limitation, the right to
\ncause General to repurchase options or equity securities pursuant to the Stock
\nOption Agreement, or <\/p>\n
-20-<\/p>\n
permit any stockholder to acquire securities of General, Berkshire or Holding
\nCompany, or any of their respective subsidiaries on a basis not available to
\nBerkshire or Holding Company in the event that Berkshire or Holding Company were
\nto acquire securities of General.<\/p>\n
(l) Environmental Matters. There are no legal, administrative,
\n ———————
\narbitral or other proceedings, claims, actions, causes of action, private
\nenvironmental investigations or remediation activities or governmental
\ninvestigations of any nature seeking to impose, or that reasonably could be
\nexpected to result in the imposition, on General or any of its subsidiaries of
\nany liability or obligations arising under common law standards relating to
\nenvironmental protection, human health or safety, or under any local, state,
\nfederal, national or supernational environmental statute, regulation or
\nordinance, including the Comprehensive Environmental Response, Compensation and
\nLiability Act of 1980, as amended (collectively, “Environmental Laws”), pending
\nor, to the knowledge of General, threatened, against General or any of its
\nsubsidiaries, which liability or obligation would have or would reasonably be
\nexpected to have a material adverse effect on General or any of its
\nsubsidiaries. To the knowledge of General or any of its subsidiaries, there is
\nno reasonable basis for any such proceeding, claim, action or governmental
\ninvestigation that would impose any liability or obligation that would have or
\nwould reasonably be expected to have a material adverse effect on General or any
\nof its subsidiaries. To the knowledge of General, during or prior to the period
\nof (i) its or any of its subsidiaries’ ownership or operation of any of their
\nrespective current properties, (ii) its or any of its subsidiaries’
\nparticipation in the management of any property, or (iii) its or any of its
\nsubsidiaries’ holding of a security interest or other interest in any property,
\nthere was no release or threatened release of hazardous, toxic, radioactive or
\ndangerous materials or other materials regulated under Environmental Laws in,
\non, under or affecting any such property which would reasonably be expected to
\nhave a material adverse effect on General or any of its subsidiaries. Neither
\nGeneral nor any of its subsidiaries is subject to any agreement, order,
\njudgment, decree, letter or memorandum by or with any court, governmental
\nauthority, regulatory agency or third party imposing any material liability or
\nobligations pursuant to or under any Environmental Law that would have or would
\nreasonably be expected to have a material adverse effect on General or any of
\nits subsidiaries.<\/p>\n
(m) Properties. Except as disclosed in the Recent General SEC
\n ———-
\nDocuments, each of General and its subsidiaries (i) has good, clear and
\nmarketable title to all the properties and assets reflected in the latest
\naudited balance sheet included in such Recent General SEC Documents as being
\nowned by General or one of its subsidiaries or acquired after the date thereof
\nwhich are, individually or in the aggregate, material to General’s business on a
\nconsolidated basis (except properties and assets sold or otherwise disposed of
\nsince the date thereof in the ordinary course of business), free and clear of
\n(A) all Liens except (1) statutory liens securing payments not yet due and (2)
\nsuch imperfections or irregularities of title or other Liens (other than real
\nproperty mortgages or deeds of trust) as do not materially affect the use of the
\nproperties or assets subject thereto or affected thereby or otherwise materially
\nimpair business operations at such properties, and (B) all real property
\nmortgages and deeds of trust and (ii) is the lessee of all leasehold estates
\nreflected in the latest audited financial statements <\/p>\n
-21-<\/p>\n
included in such Recent General SEC Documents or acquired after the date thereof
\nwhich are material to its business on a consolidated basis and is in possession
\nof the properties purported to be leased thereunder, and each such lease is
\nvalid without default thereunder by the lessee or, to General’s knowledge, the
\nlessor.<\/p>\n
(n) Insurance Matters.
\n —————– <\/p>\n
(i) Except as otherwise would not, individually or in the
\n aggregate, be reasonably likely to have a material adverse effect, all
\n policies, binders, slips, certificates, annuity contracts and participation
\n agreements and other agreements of insurance, whether individual or group,
\n in effect as of the date hereof (including all applications, supplements,
\n endorsements, riders and ancillary agreements in connection therewith) that
\n are issued by General or its subsidiaries (the “General Insurance
\n Contracts”) and any and all marketing materials, are, to the extent
\n required under applicable law, on forms approved by applicable insurance
\n regulatory authorities or which have been filed and not objected to by such
\n authorities within the period provided for objection, and such forms comply
\n in all material respects with the insurance statutes, regulations and rules
\n applicable thereto and, as to premium rates established by General or any
\n subsidiary which are required to be filed with or approved by insurance
\n regulatory authorities, the rates have been so filed or approved, the
\n premiums charged conform thereto in all material respects, and such
\n premiums comply in all material respects with the insurance statutes,
\n regulations and rules applicable thereto.<\/p>\n
(ii) All reinsurance and coinsurance treaties or agreements,
\n including retrocessional agreements, to which General or any of its
\n subsidiaries is a party or under which General or any of its subsidiaries
\n has any existing rights, obligations or liabilities are in full force and
\n effect except for such treaties or agreements the failure to be in full
\n force and effect as individually or in the aggregate are not reasonably
\n likely to have a material adverse effect.<\/p>\n
(iii) As of the date hereof, General has no reason to believe
\n that any rating presently held by General or any of its subsidiaries is
\n likely to be modified, qualified, lowered or placed under surveillance for
\n a possible downgrade for any reason other than as a result of the
\n transactions contemplated hereby.<\/p>\n
(o) Liabilities and Reserves.
\n ———————— <\/p>\n
(i) The reserves carried on General statutory accounting
\n statements of each of General and its subsidiaries for the year ended
\n December 31, 1997 for losses, claims and similar purposes (including claims
\n litigation) are in compliance in all material respects with the
\n requirements for reserves established by the insurance departments of the
\n state of domicile of General or such subsidiary, as <\/p>\n
-22-<\/p>\n
appropriate, were determined in all material respects in accordance with
\n generally accepted actuarial standards and principles consistently applied,
\n and are fairly stated in all material respects in accordance with sound
\n actuarial and statutory accounting principles. Such reserves were adequate
\n in the aggregate to cover the total amount of all reasonably anticipated
\n liabilities of General and each of its Subsidiaries under all outstanding
\n insurance, reinsurance and other applicable agreements as of the respective
\n dates of such General statutory accounting statements. The admitted assets
\n of General and each of its subsidiaries as determined under applicable laws
\n are in an amount at least equal to the minimum amounts required by
\n applicable laws.<\/p>\n
(ii) Except for regular periodic assessments in the ordinary
\n course of business or assessments based on developments which are publicly
\n known within the insurance industry, to the knowledge of General, no claim
\n or assessment is pending or threatened against any subsidiary which is
\n peculiar or unique to such subsidiary by any state insurance guaranty
\n associations in connection with such association’s fund relating to
\n insolvent insurers which if determined adversely, would, individually or in
\n the aggregate, be reasonably likely to have a material adverse effect.<\/p>\n
(p) Investment Advisory and Investment Company Matters.
\n ————————————————– <\/p>\n
(i) Neither General nor any of its subsidiaries conducts
\n activities of or is otherwise deemed under law to control an “investment
\n adviser,” as such term is defined in Section 2(a)(20) of the Investment
\n Company Act of 1940, as amended (the “Investment Company Act”), whether or
\n not registered under the Investment Advisers Act of 1940, as amended (the
\n “Investment Advisers Act”), of any person required to be registered as an
\n investment company under the Investment Company Act. Neither General nor
\n any of its subsidiaries is an “investment company” as defined in the
\n Investment Company Act, and neither General nor any of its subsidiaries is
\n a promoter (as such term is defined in Section 2(a)(30) of the Investment
\n Company Act) of any person that is such an investment company.<\/p>\n
(ii) Neither General nor any of its subsidiaries conduct
\n activities of, controls, owns more than a 20% interest in, or is deemed
\n under applicable law to control, any person that is an investment adviser
\n as defined in the Investment Advisers Act, whether or not registered under
\n such Act, other than such an investment adviser whose only clients are
\n “insurance companies” as defined in Section 2(a)(17) of the Investment
\n Company Act.<\/p>\n
(q) Brokers. No broker, investment banker, financial advisor or
\n ——-
\nother person, other than Goldman, Sachs & Co., the fees and expenses of which
\nwill be paid by General (pursuant to a fee agreement, a copy of which has been
\nprovided to Berkshire), is entitled to any broker’s, finder’s, financial
\nadvisor’s or other similar fee or commission in connection with the transactions
\ncontemplated by this Agreement based upon arrangements made by or on behalf of
\nGeneral.<\/p>\n
-23-<\/p>\n
(r) Opinion of Financial Advisor. General has received the opinion
\n —————————-
\nof Goldman, Sachs & Co., dated the date of this Agreement, to the effect that
\nthe Merger Consideration to be received in the Transactions by General’s
\nstockholders is fair to the holders of General Common Stock from a financial
\npoint of view, a signed copy of which opinion will be delivered to Berkshire.<\/p>\n
(s) Board Recommendation. The Board of Directors of General, at a
\n ——————–
\nmeeting duly called and held, has by unanimous vote of those directors present
\n(who constituted 100% of the directors then in office) (i) determined that this
\nAgreement and the Stock Option Agreement and the transactions contemplated
\nhereby and thereby, including the Transactions and the General Merger, are fair
\nto and in the best interests of the stockholders of General, and (ii) resolved
\nto recommend that the holders of General Stock approve this Agreement and the
\ntransactions contemplated herein, including the Transactions and the General
\nMerger.<\/p>\n
(t) Rights Agreement. General has taken all action required so
\n —————-
\nthat the entering into of this Agreement and the Stock Option Agreement and the
\nconsummation of the transactions contemplated hereby and thereby do not and will
\nnot enable or require the Rights to be separated from the shares of General
\nCommon Stock with which the Rights are associated, or to be distributed,
\nexercisable, exercised, or nonredeemable or result in the Rights associated with
\nany General Stock beneficially owned by Berkshire or any of its Affiliates or
\nAssociates (as defined in the Rights Agreement) to be void or voidable.<\/p>\n
(u) Required General Vote. General Stockholder Approval, being the
\n ———————
\naffirmative vote of a majority of the votes entitled to be cast by holders of
\nthe outstanding shares of General Common Stock and General Preferred Stock,
\nvoting together as a single class, is the only vote of the holders of any class
\nor series of General’s securities necessary to approve this Agreement, the
\nTransactions and the General Merger and the other transactions contemplated
\nhereby.<\/p>\n
4.3 Representations and Warranties of Berkshire. Berkshire represents
\n ——————————————-
\nand warrants to General, except as otherwise Previously Disclosed, as follows:<\/p>\n
(a) Organization, Standing and Corporate Power. Each of Berkshire,
\n ——————————————
\nHolding Company and the subsidiaries of Berkshire is duly organized, validly
\nexisting and in good standing under the laws of the jurisdiction in which it is
\nincorporated and has the requisite corporate power and authority to carry on its
\nbusiness as now being conducted. Each of Berkshire, Holding Company and the
\nother subsidiaries of Berkshire is duly qualified or licensed to do business and
\nis in good standing in each jurisdiction in which the nature of its business or
\nthe ownership or leasing of its properties makes such qualification or licensing
\nnecessary, other than in such jurisdictions where the failure to be so qualified
\nor licensed (individually or in the aggregate) would not have a material adverse
\neffect with respect to Berkshire.<\/p>\n
-24-<\/p>\n
(b) Subsidiaries. The only direct or indirect subsidiaries of
\n ————
\nBerkshire (other than Holding Company and the Merger Subsidiaries) are listed in
\nSection 4.3(b) of the Berkshire Disclosure Schedule or on Exhibit 21 to
\nBerkshire’s Annual Report on Form 10-K for the fiscal year ended December 31,
\n1997. All the outstanding shares of capital stock of each such listed
\nsubsidiary which is a corporation have been validly issued and are fully paid
\nand nonassessable and, except as set forth in Section 4.3(b) of the Berkshire
\nDisclosure Schedule or such Exhibit 21, are owned (of record and beneficially)
\nby Berkshire, by another subsidiary (wholly owned) or by Berkshire and another
\nsuch subsidiary (wholly owned), free and clear of all Liens.<\/p>\n
(c) Capital Structure. The authorized capital stock of Berkshire
\n —————–
\nconsists of 1,500,000 shares of Berkshire Class A Common Stock, 50,000,000
\nshares of Berkshire Class B Common Stock, and 1,000,000 shares of preferred
\nstock, no par value per share (“Berkshire Preferred Stock”). Subject to such
\nchanges as may occur after May 1, 1998, and subject in the case of clauses (i)
\nand (iii) to adjustment as a result of conversions of Berkshire Class A Common
\nStock into Berkshire Class B Common Stock, there were, as of May 1, 1998: (i)
\n1,192,905 shares of Berkshire Class A Common Stock, 1,448,918 shares of
\nBerkshire Class B Common Stock, and no shares of Berkshire Preferred Stock
\nissued and outstanding; (ii) 163,583 shares of Berkshire Class A Common Stock
\nheld by Berkshire in its treasury; (iii) 35,787,150 shares of Berkshire Class B
\nCommon Stock reserved for issuance upon conversion of Berkshire Class A Common
\nStock; (iv) no shares of Berkshire Class B Common Stock reserved for issuance
\nupon exercise of authorized but unissued options under Berkshire’s 1996 Stock
\nOption Plan; and (v) 15,669 shares of Berkshire Class B Common Stock issuable
\nupon exercise of outstanding options under Berkshire’s 1996 Stock Option Plan.
\nExcept as set forth in this Section 4.3(c), no shares of capital stock or other
\nequity securities of Berkshire are issued, reserved for issuance or outstanding.
\nAll outstanding shares of capital stock of Berkshire are, and all shares of
\nHolding Company Common Stock which may be issued pursuant to this Agreement will
\nbe when issued, duly authorized, validly issued, fully paid and nonassessable
\nand not subject to preemptive rights. All shares of Holding Company Common
\nStock issued pursuant to this Agreement will, when so issued, be registered
\nunder the Securities Act for such issuance and registered under the Exchange
\nAct, be registered or exempt from registration under any applicable state
\nsecurities laws, and be listed on the NYSE, subject to official notice of
\nissuance. Except as set forth in this Section 4.3(c), there are no outstanding
\nbonds, debentures, notes or other indebtedness or other securities of Berkshire
\nhaving the right to vote (or convertible into, or exchangeable for, securities
\nhaving the right to vote) on any matters on which stockholders of Berkshire may
\nvote. Except as set forth in this Section 4.3(c), and except as set forth in
\nthe Agreement with respect to Holding Company and the Merger Subsidiaries, there
\nare no outstanding securities, options, warrants, calls, or rights obligating
\nBerkshire or any of its subsidiaries to issue, deliver or sell, or cause to be
\nissued, delivered or sold, additional shares of capital stock or other equity
\nsecurities of Berkshire or any of its subsidiaries or obligating Berkshire or
\nany of its subsidiaries to issue, grant, extend or enter into any such security,
\noption, warrant, call, or right.<\/p>\n
-25-<\/p>\n
(d) Authority; Noncontravention. Berkshire has all requisite
\n —————————
\ncorporate power and authority to enter into this Agreement and the Stock Option
\nAgreement and, subject to the Berkshire Stockholder Approval with respect to the
\nconsummation of the Transactions and the Berkshire Merger, to consummate the
\ntransactions contemplated hereby and thereby. The execution and delivery of
\nthis Agreement and the Stock Option Agreement by Berkshire and the consummation
\nby Berkshire of the transactions contemplated hereby and thereby have been duly
\nauthorized by all necessary corporate action on the part of Berkshire subject,
\nin the case of the Transactions and the Berkshire Merger, to the Berkshire
\nStockholder Approval. This Agreement and the Stock Option Agreement have been
\nduly executed and delivered by, and each constitutes a valid and binding
\nobligation of, Berkshire, enforceable against it in accordance with its terms.
\nThe execution and delivery of this Agreement and the Stock Option Agreement do
\nnot, and the consummation of the transactions contemplated hereby and thereby
\nand compliance with the provisions hereof and thereof will not, conflict with,
\nor result in any breach or violation of, or default (with or without notice or
\nlapse of time, or both) under, or give rise to a right of termination,
\ncancellation or acceleration of or “put” right with respect to any obligation or
\nto loss of a material benefit under, or result in the creation of any Lien upon
\nany of the properties or assets of Berkshire or any of its subsidiaries under,
\n(i) the Certificate of Incorporation or Bylaws of Berkshire or the comparable
\ncharter or organizational documents of any subsidiary of Berkshire, (ii) any
\nloan or credit agreement, note, bond, mortgage, indenture, lease or other
\nagreement, instrument, permit, concession, franchise or license applicable to
\nBerkshire or any subsidiary of Berkshire or their respective properties or
\nassets or (iii) subject to the governmental filings and other matters referred
\nto in the following sentence, any judgment, order, decree, statute, law,
\nordinance, rule, regulation or arbitration award applicable to Berkshire or any
\nsubsidiary of Berkshire or their respective properties or assets, other than, in
\nthe case of clauses (ii) and (iii), any such conflicts, breaches, violations,
\ndefaults, rights, losses or Liens that individually or in the aggregate could
\nnot have a material adverse effect with respect to Berkshire or could not
\nprevent, hinder or materially delay the ability of Berkshire to consummate the
\ntransactions contemplated by this Agreement. No consent, approval, order or
\nauthorization of, or registration, declaration or filing with, or notice to, any
\nGovernmental Entity is required by or with respect to Berkshire or any
\nsubsidiary of Berkshire in connection with the execution and delivery of this
\nAgreement and the Stock Option Agreement by Berkshire or the consummation by
\nBerkshire of any of the transactions contemplated hereby and thereby, except for
\n(i) the filing of a premerger notification and report form under the HSR Act,
\n(ii) the filing with the SEC of (y) the Form S-4 and the Proxy
\nStatement\/Prospectus and (z) such reports or schedules under the Exchange Act as
\nmay be required in connection with this Agreement and the Stock Option Agreement
\nand the transactions contemplated hereby and thereby, (iii) the filing of the
\nCertificates of Merger for the Mergers with the Secretary of State of the State
\nof Delaware and appropriate documents with the relevant authorities of other
\nstates in which the Berkshire is qualified to do business, (iv) the filing of
\nappropriate documents with, and approval of, the respective commissioners of
\ninsurance of the states of Delaware, Ohio, Connecticut, and North Dakota, and of
\nsuch notices as may be required under the insurance laws of other jurisdictions
\nin which Berkshire or any of its subsidiaries is domiciled or does business or
\nis licensed or authorized as an insurance <\/p>\n
-26-<\/p>\n
company, and (v) such other consents, approvals, orders, authorizations,
\nregistrations, declarations, filings or notices as may be required under the
\n“takeover” or “blue sky” laws of various states.<\/p>\n
(e) SEC Documents; Undisclosed Liabilities. Berkshire has filed
\n ————————————–
\nall required reports, schedules, forms, statements and other documents with the
\nSEC since January 1, 1996 (collectively, and in each case, including all
\nexhibits and schedules thereto and documents incorporated by reference therein,
\nthe “Berkshire SEC Documents”). As of their respective dates, the Berkshire SEC
\nDocuments complied in all material respects with the requirements of the
\nSecurities Act or the Exchange Act, as the case may be, and the rules and
\nregulations of the SEC promulgated thereunder applicable to such Berkshire SEC
\nDocuments, and none of the Berkshire SEC Documents (including any and all
\nfinancial statements included therein) as of such date contained any untrue
\nstatement of a material fact or omitted to state a material fact required to be
\nstated therein or necessary in order to make the statements therein, in light of
\nthe circumstances under which they were made, not misleading. The consolidated
\nfinancial statements of Berkshire included in the Berkshire SEC Documents comply
\nas to form in all material respects with applicable accounting requirements and
\nthe published rules and regulations of the SEC with respect thereto, have been
\nprepared in accordance with generally accepted accounting principles (except, in
\nthe case of unaudited consolidated quarterly statements, as permitted by Form
\n10-Q of the SEC) applied on a consistent basis during the periods involved
\n(except as may be indicated in the notes thereto) and fairly present the
\nconsolidated financial position of Berkshire and its consolidated subsidiaries
\nas of the dates thereof and the consolidated results of operations and changes
\nin cash flows for the periods then ended (subject, in the case of unaudited
\nquarterly statements, to normal year-end audit adjustments). Since December 31,
\n1997, neither Berkshire nor any of its subsidiaries has incurred any liabilities
\nor obligations of any nature (whether accrued, absolute, contingent or
\notherwise) except (i) as and to the extent set forth on the audited balance
\nsheet of Berkshire and its subsidiaries as of December 31, 1997 (including the
\nnotes thereto), (ii) as incurred in connection with the transactions
\ncontemplated by this Agreement or the Stock Option Agreement, (iii) as incurred
\nafter December 31, 1997 in the ordinary course of business and consistent with
\npast practice, (iv) as described in the SEC Documents filed since December 31,
\n1997 (the “Recent Berkshire SEC Documents”), or (v) as would not, individually
\nor in the aggregate, have a material adverse effect with respect to Berkshire.<\/p>\n
(f) Information Supplied. None of the information supplied or to
\n ——————–
\nbe supplied by Berkshire or Holding Company for inclusion or incorporation by
\nreference in (i) the Form S-4 will, at the time the Form S-4 is filed with the
\nSEC, and at any time it is amended or supplemented or at the time it becomes
\neffective under the Securities Act, contain any untrue statement of a material
\nfact or omit to state any material fact required to be stated therein or
\nnecessary to make the statements therein not misleading, and (ii) the Proxy
\nStatement\/Prospectus will, at the date the Proxy Statement\/Prospectus is first
\nmailed to General’s stockholders and the Berkshire’s stockholders or at the time
\nof General Stockholders Meeting and the Berkshire Stockholders Meeting, contain
\nany untrue statement of a material <\/p>\n
-27-<\/p>\n
fact or omit to state any material fact required to be stated therein or
\nnecessary in order to make the statements therein, in light of the circumstances
\nunder which they are made, not misleading. The Form S-4 and Proxy
\nStatement\/Prospectus will comply as to form in all material respects with the
\nrequirements of the Securities Act and Exchange Act and the rules and
\nregulations promulgated thereunder, except that no representation or warranty is
\nmade by Berkshire or Holding Company with respect to statements made or
\nincorporated by reference therein based on information supplied by General for
\ninclusion or incorporation by reference therein.<\/p>\n
(g) Absence of Certain Changes or Events. Except as disclosed in
\n ————————————
\nthe Recent Berkshire SEC Documents, since December 31, 1997, Berkshire has
\nconducted its business only in the ordinary course consistent with past
\npractice, and there is not and has not been (i) any material adverse change with
\nrespect to Berkshire; (ii) any condition, event or occurrence which,
\nindividually or in the aggregate, could reasonably be expected to have a
\nmaterial adverse effect or give rise to a material adverse change with respect
\nto Berkshire; or (iii) any condition, event or occurrence which could reasonably
\nbe expected to prevent, hinder or materially delay the ability of Berkshire to
\nconsummate the transactions contemplated by this Agreement or the Stock Option
\nAgreement.<\/p>\n
(h) Compliance with Laws. The conduct of the business of each of
\n ——————–
\nBerkshire and each of its subsidiaries complies with all statutes, laws,
\nregulations, ordinances, rules, judgments, orders, decrees or arbitration awards
\napplicable thereto, except for violations or failures so to comply, if any,
\nthat, individually or in the aggregate, could not reasonably be expected to have
\na material adverse effect with respect to Berkshire.<\/p>\n
(i) State Antitakeover Laws Not Applicable; No Other Restrictions.
\n ————————————————————-
\nNo state takeover statute or similar statute or regulation of the State of
\nDelaware (or, to the knowledge of Berkshire after due inquiry, of any other
\nstate or jurisdiction) applies or purports to apply to this Agreement or the
\ntransactions contemplated hereby. No provision of the Certificate of
\nIncorporation, Bylaws or other governing instruments of Berkshire or any of its
\nsubsidiaries would, directly or indirectly, restrict or impair (i) the ability
\nof Holding Company to vote, or otherwise to exercise the rights of a stockholder
\nwith respect to, securities of Berkshire and its subsidiaries that may be
\nacquired or controlled by Holding Company by virtue of this Agreement or the
\ntransactions contemplated hereby or (ii) the rights granted hereunder, or permit
\nany stockholder to acquire securities of Berkshire or any of its subsidiaries on
\na basis not available to Holding Company in the event that Holding Company were
\nto acquire securities of Berkshire.<\/p>\n
(j) Interim Operations of Holding Company and the Merger
\n —————————————————–
\nSubsidiaries. Holding Company and the Merger Subsidiaries were formed on June
\n————
\n16, 1998 solely for the purposes of engaging in the transactions contemplated
\nhereby, have engaged in no other business activities and have conducted their
\nrespective operations only as contemplated hereby.<\/p>\n
-28-<\/p>\n
(k) Brokers. No broker, investment banker, financial advisor or
\n ——-
\nother person is entitled to or may be paid any broker’s, finder’s, financial
\nadvisor’s or other similar fee or commission in connection with the transactions
\ncontemplated by this Agreement based upon arrangements made by or on behalf of
\nBerkshire or Holding Company.<\/p>\n
(l) Board Recommendation. The Board of Directors of Berkshire, at
\n ——————–
\na meeting duly called and held, has by unanimous vote of those directors present
\n(who constituted a quorum) (i) determined that this Agreement and the
\ntransactions contemplated hereby, including the Transactions and the Berkshire
\nMerger, are fair to and in the best interests of the stockholders of Berkshire,
\nand (ii) resolved to recommend that the holders of the shares of Berkshire
\nCommon Stock approve this Agreement and the transactions contemplated herein,
\nincluding the Transactions and the Berkshire Merger.<\/p>\n
(m) Required Berkshire Vote. The Berkshire Stockholder Approval,
\n ———————–
\nbeing the affirmative vote of a majority of the votes entitled to be cast by
\nholders of the outstanding shares of Berkshire Common Stock, voting together as
\na single class, is the only vote of the holders of any class or series of
\nBerkshire’s securities necessary to approve this Agreement, the Transactions and
\nthe Berkshire Merger and the other transactions contemplated hereby.<\/p>\n
ARTICLE 5<\/p>\n
COVENANTS RELATING TO CONDUCT OF
\n BUSINESS PRIOR TO MERGER<\/p>\n
5.1 Conduct of Business of General. From the date of this Agreement to
\n ——————————
\nthe Effective Time (except as otherwise specifically required by the terms of
\nthis Agreement), General shall, and shall cause its subsidiaries to, act and
\ncarry on their respective businesses in the usual, regular and ordinary course
\nof business consistent with past practice and, to the extent consistent
\ntherewith, use its best efforts to preserve intact their current business
\norganizations, keep available the services of their current officers and
\nemployees and preserve their relationships with insureds, reinsurers, customers,
\nsuppliers, insurance brokers and agents, and others having business dealings
\nwith them to the end that their goodwill and ongoing businesses shall not be
\nimpaired in any material respect at the Effective Time. Without limiting the
\ngenerality of the foregoing, from the date of this Agreement to the Effective
\nTime and except as otherwise Previously Disclosed or expressly contemplated by
\nthis Agreement, General shall not, and shall not permit any of its subsidiaries
\nto, without the prior written consent of Berkshire:<\/p>\n
(a) (i) declare, set aside or pay any dividends on, or make any other
\ndistributions in respect of, any of its capital stock, other than (A) dividends
\nand distributions by a direct or indirect wholly owned subsidiary of General to
\nits parent, (B) regular quarterly cash dividends on General Common Stock not in
\nexcess of $0.59 per share, with usual record <\/p>\n
-29-<\/p>\n
and payment dates for such dividends in accordance with General’s past dividend
\npractice, and (C) regular annual cash dividends on General Preferred Stock not
\nin excess of $6.20 per share (or not in excess of the amount of the “Common
\nStock Equivalent Dividend” (as defined in Section 2(A) of the Certificate of
\nDesignations of General Preferred Stock (the “Certificate of Designations”)) if
\nGeneral is required to pay such amount pursuant to Section 2(A) of the
\nCertificate of Designations), with the usual record and payment date for such
\ndividends in accordance with the Certificate of Designations, (ii) split,
\ncombine or reclassify any of its capital stock or issue or authorize the
\nissuance of any other securities in respect of, in lieu of or in substitution
\nfor shares of its capital stock, or (iii) purchase, redeem or otherwise acquire
\nany shares of capital stock of General or any of its subsidiaries or any other
\nsecurities thereof or any rights, warrants or options to acquire any such shares
\nor other securities, except, in the case of clause (iii), for (x) the
\nacquisition of shares of General Common Stock from holders of General Stock
\nOptions in full or partial payment of the exercise price payable by such holder
\nor tax liability arising in connection therewith (including by way of exercise
\nof cash settlement rights pursuant to the terms of any General Stock Option),
\nupon exercise of General Stock Options outstanding on the date of this Agreement
\nin accordance with their present terms and (y) the redemption of General
\nPreferred Stock as contemplated by Section 3.6 hereof;<\/p>\n
(b) authorize for issuance, issue, deliver, sell, pledge or otherwise
\nencumber any shares of its capital stock or the capital stock of any of its
\nsubsidiaries, any other voting securities or any securities convertible into, or
\nany rights, warrants or options to acquire, any such shares, voting securities
\nor convertible securities or any other securities or equity equivalents
\n(including without limitation stock appreciation rights), or contractual
\nobligation valued or measured by the value or market price of General Common
\nStock (other than the issuance of General Common Stock upon the exercise of
\nGeneral Stock Options outstanding on the date of this Agreement and in
\naccordance with their present terms, such issuance, together with the
\nacquisitions of shares of General Common Stock permitted under clause (a) above,
\nbeing referred to herein as “Permitted Changes”);<\/p>\n
(c) amend its Certificate of Incorporation, Bylaws or other
\ncomparable charter or organizational documents;<\/p>\n
(d) acquire or agree to acquire by merging or consolidating with, or
\nby purchasing a substantial portion of the stock or assets of, or by any other
\nmanner, any business or any corporation, partnership, joint venture,
\nassociation, or other business organization or division thereof;<\/p>\n
(e) sell, lease, license, mortgage or otherwise encumber or subject
\nto any Lien or otherwise dispose of any of its properties or assets that are
\nmaterial, individually or in the aggregate, to General and its subsidiaries
\ntaken as a whole, except in the ordinary course of business consistent with past
\npractice;<\/p>\n
-30-<\/p>\n
(f) (i) incur any indebtedness for borrowed money or guarantee any
\nsuch indebtedness of another person, issue or sell any debt securities or
\nwarrants or other rights to acquire any debt securities of General or any of its
\nsubsidiaries, guarantee any debt securities of another person, enter into any
\n“keep well” or other agreement to maintain any financial statement condition of
\nanother person or enter into any arrangement having the economic effect of any
\nof the foregoing, except for short-term borrowings incurred in the ordinary
\ncourse of business consistent with past practice, or (ii) make any loans,
\nadvances or capital contributions to, or investments in, any other person, other
\nthan to General or any direct or indirect wholly owned subsidiary of General;<\/p>\n
(g) acquire or agree to acquire any assets that are material,
\nindividually or in the aggregate, to General and its subsidiaries taken as a
\nwhole, or make or agree to make any capital expenditures except in the ordinary
\ncourse of business consistent with past practice;<\/p>\n
(h) pay, discharge or satisfy any claims (including claims of
\nstockholders), liabilities or obligations (absolute, accrued, asserted or
\nunasserted, contingent or otherwise), except for the payment, discharge or
\nsatisfaction, of (i) liabilities or obligations in the ordinary course of
\nbusiness consistent with past practice or in accordance with their terms as in
\neffect on the date hereof, (ii) liabilities reflected or reserved against in, or
\ncontemplated by, the most recent consolidated audited financial statements (or
\nthe notes thereof) of General included in the Recent General SEC Documents, or
\nwaive, release, grant, or transfer any rights of material value or modify or
\nchange in any material respect any existing license, lease, contract or other
\ndocument, other than in the ordinary course of business consistent with past
\npractice;<\/p>\n
(i) adopt or amend in any material respect (except as may be required
\nby law or by this Agreement) any bonus, profit sharing, compensation, stock
\noption, pension, retirement, deferred compensation, employment or other employee
\nbenefit plan, agreement, trust, fund or other arrangement (including any General
\nBenefit Plan) for the benefit or welfare of any employee, director or former
\ndirector or employee or, other than increases for individuals in the ordinary
\ncourse of business consistent with past practice, increase the compensation or
\nfringe benefits of any director, employee or former director or employee; pay
\nany benefit not required by any existing plan, arrangement or agreement, grant
\nany new or modified severance or termination arrangement or increase or
\naccelerate any benefits payable under its severance or termination pay policies
\nin effect on the date hereof, other than any such increase or acceleration
\nprovided for under such policies as in effect on the date of this Agreement;<\/p>\n
(j) change any material accounting principle used by it, except for
\nsuch changes as may be required to be implemented following the date of this
\nAgreement pursuant to generally accepted accounting principles or rules and
\nregulations of the SEC promulgated following the date hereof;<\/p>\n
-31-<\/p>\n
(k) take any action that would, or is reasonably likely to, result in
\nany of its representations and warranties in this Agreement becoming untrue, or
\nin any of the conditions to the Mergers set forth in Article 7 not being
\nsatisfied;<\/p>\n
(l) except in the ordinary course of business and consistent with
\npast practice, make any material tax election or settle or compromise any
\nmaterial federal, state, local or foreign income tax liability; and<\/p>\n
(m) authorize any of, or commit or agree to take any of, the
\nforegoing actions.<\/p>\n
ARTICLE 6<\/p>\n
ADDITIONAL AGREEMENTS<\/p>\n
6.1 Preparation of Form S-4 and the Proxy Statement\/Prospectus;
\n ———————————————————–
\nStockholder Meetings.
\n——————–<\/p>\n
(a) Promptly following the date of this Agreement, Berkshire and
\nGeneral shall cooperate and prepare, and Berkshire shall cause Holding Company
\nto file with the SEC, the Form S-4, in which a proxy statement will be included
\nas a prospectus (the “Proxy Statement\/Prospectus”) and Berkshire and General
\nshall each file such Proxy Statement\/Prospectus as a proxy statement with the
\nSEC. Each of General and Berkshire shall use its reasonable best efforts to
\nhave the Form S-4 declared effective under the Securities Act as promptly as
\npracticable after such filing. Each of General and Berkshire will use its
\nrespective reasonable best efforts to cause the Proxy Statement\/Prospectus to be
\nmailed to their respective stockholders as promptly as practicable after the
\nForm S-4 is declared effective under the Securities Act. Berkshire shall also
\ncause Holding Company to take any action (other than qualifying to do business
\nin any jurisdiction in which it is not now so qualified) required to be taken
\nunder any applicable state securities laws in connection with the issuance of
\nHolding Company Common Stock in the Mergers, and General shall furnish all
\ninformation concerning General and the holders of General Common Stock and
\nrights to acquire General Common Stock pursuant to the Stock Plans as may be
\nreasonably requested in connection with any such action.<\/p>\n
(b) General will, as promptly as practicable following the date of
\nthis Agreement, duly call, give notice of, convene and hold a meeting of its
\nstockholders (the “General Stockholders Meeting”) for the purpose of approving
\nthis Agreement and the transactions contemplated by this Agreement. General
\nwill, through its Board of Directors, recommend to its stockholders approval of
\nthe foregoing matters, as set forth in Section 4.2(s). Such recommendation,
\ntogether with a copy of the opinion referred to in Section 4.2(r), shall <\/p>\n
-32-<\/p>\n
be included in the Proxy Statement\/Prospectus. General will use reasonable
\nefforts to hold such meeting as soon as practicable after the date hereof.<\/p>\n
(c) Berkshire will, as promptly as practicable following the date of
\nthis Agreement, duly call, give notice of, convene and hold a meeting of its
\nstockholders (the “Berkshire Stockholders Meeting”) for the purpose of approving
\nthis Agreement and the transactions contemplated by this Agreement. Berkshire
\nwill, through its Board of Directors, recommend to its stockholders approval of
\nthe foregoing matters, as set forth in Section 4.3(l). Such recommendation
\nshall be included in the Proxy Statement\/Prospectus. Berkshire will use
\nreasonable efforts to hold such meeting as soon as practicable after the date
\nhereof.<\/p>\n
(d) General will cause its transfer agent to make stock transfer
\nrecords relating to General available to the extent reasonably necessary to
\neffectuate the intent of this Agreement.<\/p>\n
6.2 Letter of General’s Accountants. General shall use its best efforts
\n ——————————-
\nto cause to be delivered to Berkshire and Holding Company a letter from Coopers
\n& Lybrand L.L.P., General’s independent public accountants, dated a date within
\ntwo business days before the date on which the Form S-4 shall become effective
\nand addressed to Berkshire and Holding Company, in form and substance reasonably
\nsatisfactory to Berkshire and customary in scope and substance for letters
\ndelivered by independent public accountants in connection with registration
\nstatements similar to the Form S-4.<\/p>\n
6.3 Berkshire Access to Information.
\n ——————————- <\/p>\n
(a) General shall, and shall cause its subsidiaries, officers,
\nemployees, counsel, financial advisors and other representatives to, afford to
\nBerkshire and its representatives reasonable access during normal business hours
\nduring the period prior to the Effective Time to its properties, books,
\ncontracts, commitments, personnel and records and, during such period, shall,
\nand shall cause its subsidiaries, officers, employees and representatives to,
\nfurnish promptly to Berkshire (i) a copy of each report, schedule, registration
\nstatement and other document filed by it during such period pursuant to the
\nrequirements of Federal or state securities laws and (ii) all other information
\nconcerning its business, properties, financial condition, operations and
\npersonnel as Berkshire may from time to time reasonably request. No
\ninvestigation pursuant to this Section 6.3 shall affect any representations or
\nwarranties of General herein or the conditions to the obligations of the parties
\nhereto.<\/p>\n
(b) General shall report on operational matters and promptly advise
\nBerkshire orally and in writing of any change or event having, or which, insofar
\nas can reasonably be foreseen, could have, a material adverse effect on General
\nand its subsidiaries taken as a whole.<\/p>\n
-33-<\/p>\n
6.4 Best Efforts. Each of the parties agrees to use its best efforts to
\n ————
\ntake, or cause to be taken, all actions, and to do, or cause to be done, and to
\nassist and cooperate with the other parties in doing, all things necessary,
\nproper or advisable to consummate and make effective, in the most expeditious
\nmanner practicable, the Transactions, the Mergers and the other transactions
\ncontemplated by this Agreement and the Stock Option Agreement. Berkshire and
\nGeneral will use their best efforts and cooperate with one another (i) in
\npromptly determining whether any filings are required to be made or consents,
\napprovals, waivers, permits or authorizations are required to be obtained under
\nany applicable law or regulation or from any governmental authorities or third
\nparties in connection with the transactions contemplated by this Agreement and
\nthe Stock Option Agreement and (ii) in promptly making any such filings, in
\nfurnishing information required in connection therewith and in timely seeking to
\nobtain any such consents, approvals, waivers, permits or authorizations.<\/p>\n
6.5 Indemnification.
\n ————— <\/p>\n
(a) General shall, and from and after the Effective Time Holding
\nCompany shall, indemnify, defend, protect and hold harmless each person who is
\nnow, or has been at any time prior to the date of this Agreement or who becomes
\nsuch prior to the Effective Time, an officer or director of General or any of
\nits subsidiaries (the “Indemnified Parties”) against (i) all losses, claims,
\ndamages, costs, expenses, liabilities or judgments or amounts that are paid in
\nsettlement with the approval of the indemnifying party (which approval shall not
\nbe unreasonably withheld) of or in connection with any claim, action, suit,
\nproceeding or investigation based in whole or in part on or arising in whole or
\nin part out of the fact that such person is or was a director or officer of
\nGeneral or any of its subsidiaries whether pertaining to any matter existing or
\noccurring at or prior to the Effective Time and whether asserted or claimed
\nprior to, or at or after, the Effective Time (“Indemnified Liabilities”), and
\n(ii) all Indemnified Liabilities based in whole or in part on, or arising in
\nwhole or in part out of, or pertaining to this Agreement, the Stock Option
\nAgreement or the transactions contemplated hereby and thereby; provided,
\n ——–
\nhowever, that, in the case of General, such indemnification shall only be to the
\n——-
\nfullest extent a corporation is permitted under the DGCL to indemnify its own
\ndirectors and officers, and in the case of Holding Company, such indemnification
\nshall not be limited by the DGCL but such indemnification shall not be
\napplicable to any claims made against any Indemnified Party if a judgment or
\nother final adjudication established that (A) his or her acts or omissions were
\ncommitted in bad faith or were the result of active and deliberate dishonesty
\nand were material to the cause of action so deliberated or (B) arising out of,
\nbased upon or attributable to the gaining in fact of any financial profit or
\nother advantage to which he or she was not legally entitled. General or Holding
\nCompany, as the case may be, will pay all expenses of each Indemnified Party in
\nadvance of the final disposition of any such action or proceeding, to the
\nfullest extent permitted by law upon receipt of any undertaking contemplated by
\nSection 145(e) of the DGCL. Without limiting the foregoing, in the event any
\nsuch claim, action, suit, proceeding or investigation is brought against any
\nIndemnified Party (whether arising before or after the Effective Time), (i) the
\nIndemnified Parties may retain counsel satisfactory to them and General (or
\nthem, General and Holding Company after the <\/p>\n
-34-<\/p>\n
Effective Time), (ii) General (or, after the Effective Time, the Holding
\nCompany) shall pay all reasonable fees and expenses of such counsel for the
\nIndemnified Parties promptly as statements therefor are received, and (iii)
\nGeneral (or, after the Effective Time, Holding Company) will use all reasonable
\nefforts to assist in the vigorous defense of any such matter, provided that
\nneither General nor Holding Company shall be liable for any settlement of any
\nclaim effected without its written consent, which consent, however, shall not be
\nunreasonably withheld. Any Indemnified Party wishing to claim indemnification
\nunder this Section 6.5, upon learning of any such claim, action, suit,
\nproceeding or investigation, shall notify General and Holding Company (but the
\nfailure so to notify an indemnifying party shall not relieve it from any
\nliability which it may have under this Section 6.5 except to the extent such
\nfailure prejudices such party), and shall deliver to General (or after the
\nEffective Time, Holding Company) the undertaking contemplated by Section 145(e)
\nof the DGCL. The Indemnified Parties as a group may retain only one law firm to
\nrepresent them with respect to each such matter unless there is, under
\napplicable standards of professional conduct, a conflict on any significant
\nissue between the positions of any two or more Indemnified Parties.<\/p>\n
(b) The provisions of this Section 6.5 are intended to be for the
\nbenefit of, and shall be enforceable by, each Indemnified Party, his or her
\nheirs and representatives.<\/p>\n
6.6 Expenses. Whether or not the Transactions is consummated, all costs
\n ——–
\nand expenses incurred in connection with this Agreement and the transactions
\ncontemplated hereby shall be paid by the party incurring such expenses, except
\nthat the expenses in connection with printing and mailing the Proxy
\nStatement\/Prospectus and the Form S-4, as well as all SEC filing fees relating
\nto the transactions contemplated herein, shall be shared equally between
\nBerkshire and General.<\/p>\n
6.7 Public Announcements. Berkshire and General will consult with each
\n ——————–
\nother before issuing, and provide each other the opportunity to review and
\ncomment upon, any press release or other public statements with respect to the
\ntransactions contemplated by this Agreement, including the Transactions and the
\nMergers, and shall not issue any such press release or make any such public
\nstatement prior to such consultation, except as may be required by applicable
\nlaw, court process or by obligations pursuant to any listing agreement with any
\nnational securities exchange or as are agreed upon in advance. The parties
\nagree that the initial press release or releases to be issued with respect to
\nthe transactions contemplated by this Agreement shall be mutually agreed upon
\nprior to the issuance thereof.<\/p>\n
6.8 Affiliates. Prior to the Closing Date, General shall deliver to
\n ———-
\nHolding Company a letter identifying all persons who are, at the time this
\nAgreement is submitted for approval to the stockholders of General, “affiliates”
\nof General for purposes of Rule 145 under the Securities Act. General shall use
\nits best efforts to cause each such person to deliver to Holding Company on or
\nprior to the Closing Date a written agreement substantially in the form attached
\nas Exhibit E hereto.<\/p>\n
-35-<\/p>\n
6.9 Stock Exchange Listing. Berkshire shall use its best efforts to
\n ———————-
\ncause the shares of Holding Company Common Stock to be issued in the
\nTransactions to be approved for listing on the NYSE, subject to notice of
\nissuance, prior to the Closing Date.<\/p>\n
6.10 Takeover Statutes. If any “fair price,” “moratorium,” “control
\n —————–
\nshare acquisition” or other form of antitakeover statute or regulation shall
\nbecome applicable to the transactions contemplated hereby, the parties hereto
\nand the members of their respective Boards of Directors shall grant such
\napprovals and take such actions as are reasonably necessary so that the
\ntransactions contemplated hereby may be consummated as promptly as practicable
\non the terms contemplated hereby and otherwise act to eliminate or minimize the
\neffects of such statute or regulation on the transactions contemplated hereby.<\/p>\n
6.11 No Solicitation.
\n ————— <\/p>\n
(a) General shall not, nor shall it permit any of its subsidiaries
\nto, nor shall it authorize or permit any of its directors, officers or employees
\nor any investment banker, financial advisor, attorney, accountant or other
\nrepresentative retained by it or any of its subsidiaries to, directly or
\nindirectly through another person, (i) solicit, initiate or encourage (including
\nby way of furnishing information), or take any other action designed to
\nfacilitate, any inquiries or the making of any proposal which constitutes a
\nGeneral Takeover Proposal (as defined in Section 6.11(e)) or (ii) participate in
\nany discussions or negotiations regarding any General Takeover Proposal;
\nprovided, however, that if the Board of Directors of General determines in good
\n——– ——-
\nfaith, after consultation with outside counsel, that it is necessary to do so in
\norder to act in a manner consistent with its fiduciary duties to General’s
\nstockholders under applicable law, General may, in response to any General
\nSuperior Proposal (as defined in Section 6.11(e)) made prior to the General
\nStockholder Approval, which proposal was not solicited by it and which did not
\notherwise result from a breach of this Section 6.11(a), and subject to providing
\nprior written notice of its decision to take such action to Berkshire and
\ncompliance with Section 6.11(c), (x) furnish information with respect to General
\nand its subsidiaries to any person making a General Superior Proposal pursuant
\nto a customary confidentiality agreement (as determined by General based on the
\nadvice of its outside counsel) and (y) participate in discussions or
\nnegotiations regarding such General Superior Proposal.<\/p>\n
(b) Except as expressly permitted by this Section 6.11, neither the
\nBoard of Directors of General nor any committee thereof shall (i) withdraw or
\nmodify, or propose publicly to withdraw or modify, in a manner adverse to
\nBerkshire, the approval or recommendation by such Board of Directors or such
\ncommittee of the Transactions or this Agreement, (ii) approve or recommend, or
\npropose publicly to approve or recommend, any General Takeover Proposal, or
\n(iii) cause General to enter into any General Acquisition Agreement (as defined
\nin Section 6.11(e)). Notwithstanding the foregoing, the Board of Directors of
\nGeneral, to the extent that it determines in good faith, after consultation with
\noutside counsel, that in light of a General Superior Proposal it is necessary to
\ndo so in order to act in a manner consistent with its fiduciary duties to
\nGeneral’s stockholders under applicable <\/p>\n
-36-<\/p>\n
law, may terminate this Agreement solely in order to concurrently enter into a
\nGeneral Acquisition Agreement with respect to any General Superior Proposal, but
\nonly at a time that is after the second business day following Berkshire’s
\nreceipt of written notice advising Berkshire that the Board of Directors of
\nGeneral is prepared to accept a General Superior Proposal, specifying the
\nmaterial terms and conditions of such General Superior Proposal and identifying
\nthe person making such General Superior Proposal, all of which information will
\nbe kept confidential by Berkshire.<\/p>\n
(c) In addition to the obligations of General set forth in paragraphs
\n(a) and (b) of this Section 6.11, General shall immediately advise Berkshire
\norally and in writing of any request for information or any General Takeover
\nProposal, the material terms and conditions of such request or General Takeover
\nProposal and the identity of the person making such request or General Takeover
\nProposal. General will keep Berkshire reasonably informed of the status and
\ndetails (including amendments or proposed amendments) of any such request or
\nGeneral Takeover Proposal.<\/p>\n
(d) Nothing contained in this Section 6.11 shall prohibit General
\nfrom taking and disclosing to its stockholders a position contemplated by Rule
\n14e-2(a) promulgated under the Exchange Act or from making any disclosure to
\nGeneral’s stockholders if, in the good faith judgment of the Board of Directors
\nof General, after consultation with outside counsel, failure so to disclose
\nwould be inconsistent with its obligations under applicable law; provided,
\n ——–
\nhowever, that, neither General nor its Board of Directors nor any committee
\n——-
\nthereof shall withdraw or modify, or propose publicly to withdraw or modify, its
\nposition with respect to this Agreement or the Transactions or approve or
\nrecommend, or propose publicly to approve or recommend, a General Takeover
\nProposal.<\/p>\n
(e) For purposes of this Agreement:<\/p>\n
(i) “General Takeover Proposal” means any inquiry, proposal or
\n offer from any person relating to any direct or indirect acquisition or
\n purchase of a business that constitutes 20%or more of the net revenues, net
\n income or assets of General and its subsidiaries, taken as a whole, or 20%
\n or more of any class of equity securities of General, any tender offer or
\n exchange offer that if consummated would result in any person beneficially
\n owning 20% or more of any class of any equity securities of General, or any
\n merger, consolidation, business combination, recapitalization,
\n reorganization, liquidation, dissolution or similar transaction involving
\n General (or any General subsidiary whose business constitutes 20% or more
\n of the net revenues, net income or assets of General and its subsidiaries,
\n taken as a whole), other than the transactions contemplated by this
\n Agreement or the Stock Option Agreement.<\/p>\n
(ii) “General Superior Proposal” means any proposal made by a
\n third party to acquire, directly or indirectly, including pursuant to a
\n tender offer, exchange offer, merger, consolidation, business combination,
\n recapitalization, reorganization, <\/p>\n
-37-<\/p>\n
liquidation, dissolution or similar transaction, for consideration to
\n General’s stockholders consisting of cash and\/or securities, all of the
\n shares of General’s capital stock then outstanding or all or substantially
\n all the assets of General, on terms which the Board of Directors of General
\n determines in its good faith judgment to be more favorable to General’s
\n stockholders than the Transactions and for which financing, to the extent
\n required, is then committed or which, in the good faith judgment of the
\n Board of Directors of General, is reasonably capable of being obtained by
\n such third party.<\/p>\n
(iii) “General Acquisition Agreement” means any letter of
\n intent, agreement in principle, acquisition agreement or other similar
\n agreement related to any General Takeover Proposal.<\/p>\n
6.12 Certain Agreements. Neither General nor any subsidiary of General
\n ——————
\nwill waive or fail to enforce any provision of any confidentiality or standstill
\nor similar agreement to which it is a party without the prior written consent of
\nBerkshire.<\/p>\n
6.13 Employee Benefits.
\n —————– <\/p>\n
(a) Except as Previously Disclosed, Berkshire and General agree that
\nGeneral Benefit Plans shall, to the extent practicable, remain in effect without
\nmaterial amendment until the Effective Time and that thereafter the Holding
\nCompany will maintain, subject to such changes and modifications as may be
\nnecessary or desirable to facilitate compliance by Holding Company and its
\nsubsidiaries with applicable statutory and regulatory requirements and the terms
\nthereof, substantially similar plans (other than the Stock Plans) for a period
\nof at least three years after the Effective Time; provided, that none of
\nBerkshire, Holding Company nor General shall be required to issue any shares of
\nits equity securities (other than pursuant to Stock Options assumed under
\nSection 3.4(d)(i) or as otherwise Previously Disclosed) in connection with such
\nplans.<\/p>\n
(b) Berkshire will and will cause the Holding Company to honor
\nwithout material modification for a period of at least three years after the
\nEffective Time all employee severance plans (or policies) and employment and
\nseverance agreements of General or any of its subsidiaries in existence on the
\ndate hereof.<\/p>\n
(c) Except as Previously Disclosed, Berkshire and General will use
\ntheir reasonable best efforts to agree on compensation plans for the officers
\nand employees of General after the Effective Time to provide them incentive
\ncompensation for a period of at least three years following the Effective Time
\nthat in the aggregate is reasonably comparable (without giving any effect to any
\npayments to them resulting from the Transactions) to that historically provided
\nby the Stock Plans, except that none of Berkshire, Holding Company nor General
\nshall be required to issue any shares of its equity securities (other than
\npursuant to <\/p>\n
-38-<\/p>\n
Stock Options assumed under Section 3.4(d)(i) or as otherwise Previously
\nDisclosed) in connection with such compensation plans.<\/p>\n
6.14 Tax Matters.
\n ———– <\/p>\n
(a) The parties hereto shall file as soon as practicable following
\nthe date hereof a private letter ruling request (the “Ruling Request”) with the
\nIRS seeking each of the three rulings set forth on Exhibit D hereto (the “351(e)
\nRuling,” the “No Gain or Loss Ruling,” and the “368(c) Ruling,” as further
\ndescribed on Exhibit D, collectively the “Rulings”), and agree to cooperate with
\neach other in seeking, and use reasonable best efforts to obtain, such Rulings
\nby the IRS as soon as practicable thereafter.<\/p>\n
(b) If the Partial Cash Election has not been made, the parties
\nhereto shall cooperate with each other to (i) cause the Mergers to be treated as
\ntransfers of property to Holding Company by the holders of Berkshire Common
\nStock and General Common Stock governed by Section 351(a) or 351(b) of the Code
\nand (ii) obtain the opinions of counsel required to be delivered pursuant to
\nSections 7.2(c)(i) and 7.3(c) hereof and the Rulings (other than a Ruling that
\nthe IRS has informed Berkshire it will not grant). If the Partial Cash Election
\nhas been made, the parties shall cooperate with each other to (i) cause the
\nGeneral Merger not to qualify as a reorganization within the meaning of Section
\n368 of the Code and (ii) obtain the opinions of counsel required to be delivered
\npursuant to Section 7.2(c)(ii). If the Partial Cash Election has been made and
\none or both of the opinions referred to in Section 7.2(c)(ii) are not delivered,
\nthe parties shall cooperate with each other to seek to restructure the
\ntransactions contemplated hereby in order to allow such opinions to be
\ndelivered; provided, however, that in no event shall the cash portion of the
\nmerger consideration for such restructured transaction exceed 3% of the total
\nmerger consideration. In connection with the foregoing opinions, each of
\nBerkshire, Holding Company, General and the Merger Subsidiaries, as appropriate,
\nshall (x) deliver to Munger, Tolles & Olson LLP and Wachtell, Lipton, Rosen & Katz, as appropriate, customary representation letters in form and substance
\nreasonably satisfactory to such counsel and (y) use its reasonable best efforts
\nto obtain representation letters from appropriate stockholders and deliver such
\nletters to such counsel.<\/p>\n
ARTICLE 7<\/p>\n
CONDITIONS PRECEDENT<\/p>\n
7.1 Conditions to Each Party’s Obligation To Effect the Transactions.
\n —————————————————————-
\nThe respective obligation of each party to effect the Transactions is subject to
\nthe satisfaction or waiver on or prior to the Closing Date of the following
\nconditions:<\/p>\n
(a) General Stockholder Approval. General Stockholder Approval
\n —————————-
\nshall have been obtained.<\/p>\n
-39-<\/p>\n
(b) Berkshire Stockholder Approval. The Berkshire Stockholder
\n ——————————
\nApproval shall have been obtained.<\/p>\n
(c) NYSE Listing. The shares of Holding Company Common Stock
\n ————
\nissuable to General’s and Berkshire’s stockholders pursuant to this Agreement
\nshall have been approved for listing on the NYSE, subject to notice of issuance.<\/p>\n
(d) HSR Act. The waiting period (and any extension thereof)
\n ——-
\napplicable to the Mergers under the HSR Act shall have been terminated or shall
\nhave expired.<\/p>\n
(e) No Injunctions or Restraints. No temporary restraining order,
\n —————————-
\npreliminary or permanent injunction or other order issued by any court of
\ncompetent jurisdiction or other legal restraint or prohibition preventing the
\nconsummation of the Transactions or any of the Mergers shall be in effect;
\nprovided, however, that the parties hereto shall use their best efforts to have
\n——– ——-
\nany such injunction, order, restraint or prohibition vacated.<\/p>\n
(f) Form S-4. The Form S-4 shall have become effective under the
\n ——–
\nSecurities Act and shall not be the subject of any stop order or proceedings
\nseeking a stop order, and any material “blue sky” and other state securities
\nlaws applicable to the issuance of the Holding Company Common Stock shall have
\nbeen complied with.<\/p>\n
(g) Rulings. One of the following shall have occurred: (i) Berkshire
\n ——-
\nshall have received written notice of the issuance of the 351(e) Ruling and the
\nNo Gain or Loss Ruling, or (ii) if the IRS will not grant the 351(e) Ruling as a
\nresult of the Treasury Department having withdrawn the Proposed Regulations,
\nBerkshire shall have received written notice of the issuance of the No Gain or
\nLoss Ruling or the 368(c) Ruling, or (iii) Berkshire shall have made or be
\ndeemed to have made the Partial Cash Election, or (iv) Berkshire shall have
\ndeclined to make the Partial Cash Election.<\/p>\n
(h) Consents, etc. Berkshire and General shall have received
\n ————-
\nevidence, in form and substance reasonably satisfactory to each, that such
\nlicenses, permits, consents, approvals, authorizations, qualifications and
\norders of governmental authorities and other third parties as are necessary in
\nconnection with the transactions contemplated hereby have been obtained, except
\nsuch licenses, permits, consents, approvals, authorizations, qualifications and
\norders which are not, individually or in the aggregate, material to Berkshire or
\nGeneral or the failure of which to have been received would not (as compared to
\nthe situation in which such license, permit, consent, approval, authorization,
\nqualification or order had been obtained) materially dilute the aggregate
\nbenefits to the parties of the Transactions.<\/p>\n
7.2 Conditions to Obligation of Berkshire. The obligation of Berkshire
\n ————————————-
\nto effect the Transactions is further subject to the following conditions:<\/p>\n
-40-<\/p>\n
(a) Representations and Warranties. The representations and
\n ——————————
\nwarranties of General set forth in this Agreement shall be true and correct, in
\neach case as of the date of this Agreement and as of the Closing Date as though
\nmade on and as of the Closing Date (except that representations and warranties
\nthat speak as of a specified date shall be true and correct as of such date);
\nprovided that for purposes of determining the satisfaction of the foregoing,
\n——–
\nsuch representations and warranties shall be deemed true and correct if the
\nfailure or failures of such representations and warranties to be so true and
\ncorrect (excluding the effect of any qualification set forth therein relating to
\n“materiality”, “material adverse change” or “material adverse effect”) have not
\nhad and could not reasonably be expected to have, individually or in the
\naggregate, a material adverse effect on General or on the ability of General to
\nconsummate the transactions herein contemplated or to perform its obligations
\nhereunder. Berkshire shall have received a certificate signed on behalf of
\nGeneral by the chief executive officer and the chief financial officer of
\nGeneral to such effect.<\/p>\n
(b) Performance of Obligations of General. General shall have
\n ————————————-
\nperformed the obligations required to be performed by it under this Agreement at
\nor prior to the Closing Date (except for such failures to perform as have not
\nhad or could not reasonably be expected, either individually or in the
\naggregate, to have a material adverse effect with respect to General or the
\nability of General to consummate the transactions herein contemplated or perform
\nits obligations hereunder), and Berkshire shall have received a certificate
\nsigned on behalf of General by the chief executive officer and the chief
\nfinancial officer of General to such effect.<\/p>\n
(c) Tax Matters.
\n ———– <\/p>\n
(i) If there has been no Partial Cash Election, (I) Treasury
\n Regulation Section 1.351-1(c) as in effect on the date hereof (or as may be
\n amended prior to the Closing Date either (x) in a manner effecting only the
\n diversification test of Treasury Regulation Section 1.351-1(c)(1)(i) and
\n not the test of Treasury Regulation Section 1.351-1(c)(1)(ii) or (y) solely
\n to conform the Final Regulations to the amendments made to Section
\n 351(e)(1) of the Code by the Taxpayer Relief Act of 1997) (the “Final
\n Regulations”) shall be in effect, (II) either (A) Berkshire shall have
\n received the 351(e) Ruling and the No Gain or Loss Ruling or (B) the
\n Proposed Regulations shall have been withdrawn and Berkshire shall have
\n received either the No Gain or Loss Ruling or the 368(c) Ruling, and (III)
\n Berkshire shall have received the opinion of Munger, Tolles & Olson LLP,
\n counsel to Berkshire, based upon reasonably requested representation
\n letters and dated the Closing Date, to the effect that the Berkshire Merger
\n will be treated as a transfer of property to Holding Company by the holders
\n of Berkshire Common Stock governed by Section 351(a) or 351(b) of the Code.<\/p>\n
(ii) If there has been a Partial Cash Election, Berkshire shall
\n have received the opinions of Munger, Tolles & Olson LLP, counsel to
\n Berkshire, and Wachtell, Lipton Rosen & Katz, counsel to General, based
\n upon reasonably requested representation letters and dated the Closing
\n Date, that the transactions will not qualify <\/p>\n
-41-<\/p>\n
as a reorganization within the meaning of Section 368 of the Code, the
\n Merger Consideration will be taxable to the stockholders of General, and
\n the Transactions will not be a taxable transaction to either Berkshire or
\n its stockholders.<\/p>\n
(d) Redemption of General Preferred Stock. All shares of General
\n ————————————-
\nPreferred Stock shall have been redeemed in accordance with the terms of the
\nCertificate of Designations, the DGCL and applicable state and federal
\nsecurities laws.<\/p>\n
7.3 Conditions to Obligation of General. The obligation of General to
\n ———————————–
\neffect the Transactions is further subjected to the following conditions:<\/p>\n
(a) Representations and Warranties. The representations and
\n ——————————
\nwarranties of Berkshire set forth in this Agreement shall be true and correct,
\nin each case as of the date of this Agreement and as of the Closing Date as
\nthough made on and as of the Closing Date (except that representations and
\nwarranties that speak as of a specified date shall be true and correct as of
\nsuch date); provided that for purposes of determining the satisfaction of the
\n ——–
\nforegoing, such representations and warranties shall be deemed true and correct
\nif the failure or failures of such representations and warranties to be so true
\nare correct (excluding the effect of any qualification set forth therein
\nrelating to “materiality”, “material adverse change” or “material adverse
\neffect”) have not had and could not reasonably be expected to have, individually
\nor in the aggregate, a material adverse effect on Berkshire or on the ability of
\nBerkshire to consummate the transaction herein contemplated or to perform its
\nobligations hereunder. General shall have received a certificate signed on
\nbehalf of Berkshire by the chief executive officer and the chief financial
\nofficer of Berkshire to such effect.<\/p>\n
(b) Performance of Obligations of Berkshire. Berkshire shall have
\n —————————————
\nperformed the obligations required to be performed by it under this Agreement at
\nor prior to the Closing Date (except for such failures to perform as have not
\nhad or could not reasonably be expected, either individually or in the
\naggregate, to have a material adverse effect with respect to Berkshire or the
\nability of Berkshire to consummate the transactions herein contemplated or
\nperform its obligations hereunder), and General shall have received a
\ncertificate signed on behalf of Berkshire by the chief executive officer and the
\nchief financial officer of Berkshire to such effect.<\/p>\n
(c) Tax Opinion. If there has been no Partial Cash Election and
\n ———–
\nBerkshire shall have received any of the Rulings, General shall have received
\nthe opinion of Wachtell, Lipton, Rosen & Katz, counsel to General, based upon
\nreasonably requested representation letters and dated the Closing Date, to the
\neffect that the General Merger will be treated as a transfer of property to
\nHolding Company by the holders of General Common Stock governed by Section
\n351(a) or 351(b) of the Code.<\/p>\n
-42-<\/p>\n
ARTICLE 8<\/p>\n
TERMINATION, AMENDMENT AND WAIVER<\/p>\n
8.1 Termination. This Agreement may be terminated and abandoned at any
\n ———–
\ntime prior to the Effective Time, whether before or after approval of the
\nTransactions by the stockholders of General and Berkshire:<\/p>\n
(a) by mutual written consent of Berkshire and General; or<\/p>\n
(b) by either Berkshire or General if any Governmental Entity shall
\nhave issued an order, decree or ruling or taken any other action permanently
\nenjoining, restraining or otherwise prohibiting one or both of the Mergers or
\nthe Transactions and such order, decree, ruling or other action shall have
\nbecome final and nonappealable; or<\/p>\n
(c) by either Berkshire or General if the Transactions shall not have
\nbeen consummated on or before June 1, 1999 (other than due to the failure of the
\nparty seeking to terminate this Agreement to perform its obligations under this
\nAgreement required to be performed at or prior to the Effective Time); or<\/p>\n
(d) by either Berkshire or General, if any required approval of the
\nstockholders of General shall not have been obtained by reason of the failure to
\nobtain the required vote upon a vote held at a duly held meeting of stockholders
\nor at any adjournment thereof; or<\/p>\n
(e) by either General or Berkshire, if any required approval of the
\nstockholders of Berkshire shall not have been obtained by reason of the failure
\nto obtain the required vote upon a vote held at a duly held meeting of
\nstockholders or at any adjournment thereof; or<\/p>\n
(f) by Berkshire, (i) if General shall have (A) withdrawn, modified
\nor amended in any respect adverse to Berkshire or Holding Company its approval
\nor recommendation of this Agreement or the Transactions, (B) failed as soon as
\npracticable to mail the Proxy Statement to its stockholders or failed to include
\nin such statement such recommendation, (C) recommended any General Takeover
\nProposal from a person other than Berkshire or (D) resolved to do any of the
\nforegoing, or (ii) if (A) General shall have exercised a right specified in the
\nproviso to Section 6.11(a) with respect to any General Superior Proposal and
\nshall, directly or through agents or representatives, continue discussions with
\nany third party concerning such General Superior Proposal for more than 10
\nbusiness days after the date of receipt of such General Superior Proposal, or
\n(B) (x) a General Takeover Proposal that is publicly disclosed shall have been
\ncommenced, publicly proposed or communicated to General which contains a
\nproposal as to price (without regard to whether such proposal specifies a
\nspecific price or a range of potential prices) and (y) General shall not have
\nrejected <\/p>\n
-43-<\/p>\n
such proposal within 10 business days of its receipt or, if sooner, the date its
\nexistence first becomes publicly disclosed; or<\/p>\n
(g) by General, if General exercises the right of termination
\nspecified in Section 6.11(b) with respect to a General Superior Proposal; or<\/p>\n
(h) by Berkshire, if General fails to perform any of its material
\nobligations under this Agreement and such failure has not been cured within
\nthirty days after receipt by General of written notice of such failure from
\nBerkshire; or<\/p>\n
(i) by General, if Berkshire fails to perform any of its material
\nobligations under this Agreement and such failure has not been cured within
\nthirty days after receipt by Berkshire of written notice of such failure from
\nGeneral.<\/p>\n
8.2 Effect of Termination.
\n ——————— <\/p>\n
(a) In the event of termination of this Agreement by either General
\nor Berkshire as provided in Section 8.1, this Agreement shall forthwith become
\nvoid and have no effect, without any liability or obligation on the part of
\nBerkshire or General, other than pursuant to the provisions of Section 6.6 and
\nthis Section 8.2. Nothing contained in this Section shall, however, relieve any
\nparty for any breach of the representations, warranties, covenants or agreements
\nset forth in this Agreement prior to any such termination.<\/p>\n
(b) In the event that this Agreement is terminated by General
\npursuant to Section 8.1(g) or, after the date hereof but prior to any
\ntermination of this Agreement, General or General’s Board of Directors or any
\ncommittee thereof shall have taken any action to make the Rights Agreement
\ninapplicable (through termination or otherwise) to any person other than
\nBerkshire or Holding Company, then, concurrently with any such termination or
\naction, General shall pay Berkshire a fee equal to $400 million by wire transfer
\nof same day funds, and General shall reimburse Berkshire its out-of-pocket
\nexpenses related to this Agreement and the transactions contemplated hereby
\npromptly upon request therefor.<\/p>\n
(c) In the event that (A) this Agreement is terminated by Berkshire
\npursuant to Section 8.1(f) or (B) a General Takeover Proposal shall have been
\nmade to General or any of its subsidiaries or stockholders or any person shall
\nhave publicly announced an intention (whether or not conditional) to make a
\nGeneral Takeover Proposal and thereafter this Agreement is terminated by either
\nBerkshire or General pursuant to Section 8.1(d), and, in the case of either
\nclause (A) or clause (B), within 18 months after the date of such termination
\nGeneral enters into any General Acquisition Agreement relating to any General
\nTakeover Proposal, then General shall promptly, but in no event later than two
\nbusiness days after the date such is entered into, pay Berkshire a fee equal to
\n$400 million by wire transfer of same day funds, and General shall reimburse
\nBerkshire its out-of-pocket expenses related to this Agreement and the
\ntransactions contemplated hereby promptly upon request therefor.<\/p>\n
-44-<\/p>\n
(d) General acknowledges that the agreements contained in Section
\n8.2(b) and (c) are an integral part of the transactions contemplated by this
\nAgreement, and that the amounts to be paid pursuant to Section 8.2(b) and (c)
\nconstitute liquidated damages and not a penalty.<\/p>\n
8.3 Amendment. This Agreement may be amended by the parties at any time
\n ———
\nbefore or after required approval of the Transactions by the stockholders of
\nGeneral and of Berkshire; provided, however, that after such approvals, there
\n ——– ——-
\nshall be made no amendment that by law requires further approval by such
\nstockholders without the further approval of such stockholders. This Agreement
\nmay not be amended except by an instrument in writing signed on behalf of each
\nof the parties.<\/p>\n
8.4 Extension; Waiver. At any time prior to the Effective Time, the
\n —————–
\nparties may (a) extend the time for the performance of any of the obligations or
\nother acts of the other parties, (b) waive any inaccuracies in the
\nrepresentations and warranties contained in this Agreement or in any document
\ndelivered pursuant to this Agreement or (c) subject to the proviso of Section
\n8.3, waive compliance with any of the agreements or conditions contained in this
\nAgreement. Any agreement on the part of a party to any such extension or waiver
\nshall be valid only if set forth in an instrument in writing signed on behalf of
\nsuch party. The failure of any party to this Agreement to assert any of its
\nrights under this Agreement or otherwise shall not constitute a waiver of such
\nrights.<\/p>\n
ARTICLE 9<\/p>\n
GENERAL PROVISIONS<\/p>\n
9.1 Nonsurvival of Representations and Warranties. None of the
\n ———————————————
\nrepresentations and warranties in this Agreement or in any instrument delivered
\npursuant to this Agreement shall survive the Effective Time. This Section 9.1
\nshall not limit any covenant or agreement of the parties which by its terms
\ncontemplates performance after the Effective Time.<\/p>\n
9.2 Notices. All notices, requests, claims, demands and other
\n ——-
\ncommunications under this Agreement shall be in writing and shall be deemed
\ngiven if delivered personally or sent by overnight courier (providing proof of
\ndelivery) to the parties at the following addresses (or at such other address
\nfor a party as shall be specified by like notice):<\/p>\n
-45-<\/p>\n
(a) if to Berkshire, to:<\/p>\n
Berkshire Hathaway Inc.
\n 1440 Kiewit Plaza
\n Omaha, NE 68131
\n Attn: Warren E. Buffett<\/p>\n
with a copy to:<\/p>\n
Munger, Tolles & Olson LLP
\n 355 South Grand Avenue, 35th Floor
\n Los Angeles, California 90071-1560
\n Attn: R. Gregory Morgan<\/p>\n
(b) if to General, to:<\/p>\n
General Re Corporation
\n 695 East Main Street
\n Stamford, CT 06904
\n Attn: Charles F. Barr, General Counsel<\/p>\n
with a copy to:<\/p>\n
Wachtell, Lipton, Rosen & Katz
\n 51 West 52nd Street
\n New York, New York 10019
\n Attn: Edward D. Herlihy<\/p>\n
9.3 Definitions. For purposes of this Agreement:
\n ———– <\/p>\n
(a) an “affiliate” of any person means another person that directly
\nor indirectly, through one or more intermediaries, controls, is controlled by,
\nor is under common control with, such first person;<\/p>\n
(b) “material adverse change” or “material adverse effect” means,
\nwhen used in connection with General or Berkshire, any change or effect that
\neither individually or in the aggregate with all other such changes or effects
\nis materially adverse to the business, assets, properties, condition (financial
\nor otherwise) or results of operations of such party and its subsidiaries taken
\nas a whole; provided, however, that, (i) a decline in general economic
\n ——– ——-
\nconditions affecting General or Berkshire or events or conditions, including
\nproperty catastrophe losses, generally affecting the industry in which General
\nor Berkshire operate shall not be deemed to be a “material adverse change” or to
\nhave a “material adverse effect” with respect to either such party or its
\nsubsidiaries; and (ii) in no event shall changes in the market <\/p>\n
-46-<\/p>\n
prices of portfolio securities owned by Berkshire or its subsidiaries or General
\nor its subsidiaries be deemed to be a “material adverse change” or to have a
\n“material adverse effect” with respect to Berkshire or its subsidiaries or
\nGeneral or its subsidiaries, respectively;<\/p>\n
(c) “person” means an individual, corporation, partnership, joint
\nventure, association, trust, unincorporated organization or other entity; and<\/p>\n
(d) a “subsidiary” of any person means another person, an amount of
\nthe voting securities, other voting ownership or voting partnership interests of
\nwhich is sufficient to elect at least a majority of its board of directors or
\nother governing body (or, if there are no such voting interests, 50% or more of
\nthe equity interest of which) is owned directly or indirectly by such first
\nperson; provided that General’s Employee Stock Savings and Ownership Plan, shall
\n ——–
\nnot be considered a subsidiary of General for purposes of this Agreement.<\/p>\n
9.4 Interpretation. A reference made in this Agreement to an Article,
\n ————–
\nSection, Exhibit or Schedule, shall be to an Article or Section of, or an
\nExhibit or Schedule to, this Agreement unless otherwise indicated. The table of
\ncontents and headings contained in this Agreement are for reference purposes
\nonly and shall not affect the meaning or interpretation of this Agreement.
\nWhenever the words “include,” “includes” or “including” are used in this
\nAgreement, they shall be deemed to be followed by the words “without
\nlimitation.”<\/p>\n
9.5 Counterparts. This Agreement may be executed in one or more
\n ————
\ncounterparts, all of which shall be considered one and the same agreement and
\nshall become effective when one or more counterparts have been signed by each of
\nthe parties and delivered to the other parties.<\/p>\n
9.6 Entire Agreement; No Third-Party Beneficiaries. This Agreement and
\n ———————————————-
\nthe Stock Option Agreement together constitute the entire agreement between the
\nparties, and supersede all prior agreements and understandings, both written and
\noral, between the parties with respect to the subject matter of such agreements.
\nExcept as provided in Section 6.5, this Agreement is not intended to confer upon
\nany person other than the parties any rights or remedies.<\/p>\n
9.7 Governing Law. This Agreement shall be governed by, and construed
\n ————-
\nin accordance with, the laws of the State of Delaware regardless of the laws
\nthat might otherwise govern under applicable principles of conflicts of laws
\nthereof.<\/p>\n
9.8 Assignment. Except as stated herein with respect to Holding Company
\n ———-
\nand the Merger Subsidiaries, neither this Agreement nor any of the rights,
\ninterests or obligations under this Agreement shall be assigned, in whole or in
\npart, by operation of law or otherwise, by any of the parties without the prior
\nwritten consent of the other parties; provided, however, that the rights and
\nobligations of Holding Company may be assigned under this agreement to <\/p>\n
-47-<\/p>\n
any direct wholly owned subsidiary of Berkshire. Any assignment in violation of
\nthe preceding sentence shall be void. Subject to the preceding two sentences,
\nthis Agreement will be binding upon, inure to the benefit of, and be enforceable
\nby, the parties and their respective successors and assigns.<\/p>\n
9.9 Enforcement. The parties agree that irreparable damage would occur
\n ———–
\nin the event that any of the provisions of this Agreement or the Stock Option
\nAgreement were not performed in accordance with their specific terms or were
\notherwise breached. It is accordingly agreed that the parties shall be entitled
\nto an injunction or injunctions to prevent breaches of this Agreement and the
\nStock Option Agreement and to enforce specifically the terms and provisions of
\nthis Agreement or the Stock Option Agreement in any court of the State of
\nDelaware or of the United States located in the State of Delaware in the event
\nany dispute arises out of this Agreement or the Stock Option Agreement or any of
\nthe transactions contemplated by this Agreement or the Stock Option Agreement,
\nand each party agrees (a) it will not attempt to deny or defeat personal
\njurisdiction or venue in any such court by motion or other request for leave
\nfrom any such court and (b) it will not bring any action relating to this
\nAgreement or the Stock Option Agreement or any of the transactions contemplated
\nby this Agreement or the Stock Option Agreement in any court other than any such
\ncourt.<\/p>\n
9.10 Severability. Whenever possible, each provision or portion of any
\n ————
\nprovision of this Agreement will be interpreted in such manner as to be
\neffective and valid under applicable law but if any provision or portion of any
\nprovision of this Agreement is held to be invalid, illegal or unenforceable in
\nany respect under any applicable law or rule in any jurisdiction, such
\ninvalidity, illegality or unenforceability will not affect any other provision
\nor portion of any provision in such jurisdiction, and this Agreement will be
\nreformed, construed and enforced in such jurisdiction as if such invalid,
\nillegal or unenforceable provision or portion of any provision had never been
\ncontained herein, so long as the economic and legal substance of the
\ntransactions contemplated hereby are not affected in a manner materially adverse
\nto any party hereto.<\/p>\n
-48-<\/p>\n
IN WITNESS WHEREOF, Berkshire and General have caused this Agreement
\nto be signed by their respective officers thereunto duly authorized, all as of
\nthe date first written above.<\/p>\n
BERKSHIRE HATHAWAY INC.<\/p>\n
By: \/s\/ Warren E. Buffett
\n ————————————–
\n Warren E. Buffett
\n Its: Chairman and Chief Executive Officer<\/p>\n
GENERAL RE CORPORATION<\/p>\n
By: \/s\/ Ronald E. Ferguson
\n ————————————–
\n Ronald E. Ferguson
\n Its: Chairman and Chief Executive Officer<\/p>\n
-49-<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6889],"corporate_contracts_industries":[9446],"corporate_contracts_types":[9622,9626],"class_list":["post-43166","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-berkshire-hathaway-inc","corporate_contracts_industries-insurance__property","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43166","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43166"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43166"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43166"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43166"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}