EXHIBIT NO. (c)(1)
PROXY AGREEMENT
BERKSHIRE HATHAWAY, INC. ("Berkshire") hereby appoints SUBURBAN
TRUST COMPANY ("the Bank") as its proxy with respect to all matters for
which Berkshire or its subsidiary corporations, National Indemnity Company,
National Fire and Marine Insurance Company, Cornhusker Casualty Company and
Kerkling Reinsurance Corporation ("the subsidiaries"), have the right to
vote shares of the Convertible Preferred and Common Stock of Government
Employees Insurance Company ("GEICO") now or hereafter held by Berkshire or
the subsidiaries ("the shares"), with such proxy being applicable to each
such share of GEICO stock held by Berkshire or the subsidiaries as long as,
but only as long as, such share is held by Berkshire or the subsidiaries,
subject to the following terms and conditions:
1. Determination of Shares
The number of the shares subject to this proxy at the time of its
execution is 1,986,953 shares of Convertible Preferred Stock and 1,294,308
shares of Common Stock. Berkshire shall give the Bank notice of any change in
the number of the shares subject hereto as promptly as practicable and, in any
event, within 10 days of such a change.
2. Method of Voting
(a) In voting the shares on any matter presented to it, the Bank
shall be guided solely by its best judgment as to which decision will be in
the best interests of Berkshire as an investor and without regard to the
status of Berkshire or the subsidiaries as actual or potential competitors
of GEICO.
(b) In reaching its determination on any vote, the Bank shall not
discuss that determination with the employees, management, or members of
the Board of Directors of Berkshire or the subsidiaries, or with any other
proxy for GEICO stock designated by any other insurance company pursuant to
any agreement similar to this agreement; provided, that:
(i) This prohibition shall not prevent Berkshire, through its
investment or legal counsel, from communicating in writing to the Bank
such information as may be necessary or desirable to inform the Bank
from time-to-time as to Berkshire's general investment policies and
practices with respect to holdings in preferred and common stock, or
Berkshire's general policies and practices with respect to proposals
presented by outside shareholders of companies in which it
owns voting stock; provided further, however, that except for willful
default or bad faith, the Bank shall incur no liability to Berkshire
or to any other party in the event a vote it casts hereunder is deemed
not consistent with such policies and practices.
(ii) Berkshire shall retain the right to instruct the Bank in
writing not to vote the shares on a specific matter or to vote the
shares on a matter in the same proportion as the vote ultimately cast
by all other voting shareholders; provided further, however, that the
Bank shall in any event vote the shares whenever a failure to vote
would result in the absence of a quorum for the conduct of GEICO
corporate business.
(c) Berkshire shall give prompt notice of delivery of any written
communication under Paragraph 2(b) to the Superintendent of Insurance of
the District of Columbia and to the United States Department of Justice.
(d) Promptly following the date on which all votes of
shareholders on a given matter are tallied by GEICO, the Bank shall inform
Berkshire of all action taken by the Bank under this proxy by providing
written notice thereof to Berkshire.
3. Compensation
(a) As full and total compensation of the Bank for its services
hereunder, Berkshire shall pay to the Bank a fee of $2500, payable $1250
upon the execution of this agreement and $1250 by April 1, 1977; provided,
however, that in the event this proxy is terminated pursuant to Paragraph 8
hereof prior to the 1977 annual meeting of GEICO shareholders, the initial
payment shall be refunded to Berkshire upon termination; and provided
further, that in the event GEICO shareholders are requested during the
duration of this proxy to vote upon matters at a special meeting other than
the annual meeting of shareholders, Berkshire shall pay the Bank an
additional fee of $1000 for voting the stock at each such special meeting.
(b) In the event that during the duration of this proxy the Bank
shall be required to appear before any court or federal, state or local
commission, department or agency to testify or give evidence in its
capacity as proxy hereunder, Berkshire shall pay the Bank, in addition to
the compensation otherwise payable pursuant to Subparagraph 3(a), $50 for
each hour each officer, director or employee of the Bank is required to be
engaged in such activity, together with actual out-of-pocket expenses
incurred in connection therewith.
4. Application to Consents
This proxy shall operate with equal force and effect with respect
to all matters for which GEICO solicits the written consent of its
shareholders (including any consents required under its Certificate of
Incorporation with respect to its Convertible Preferred Stock); provided,
that in addition to the written communication permitted under Paragraph
2(b), Berkshire may instruct the Bank in writing as to the customary
procedures of Berkshire to be followed in deciding whether or not to grant
such consent, subject to satisfaction of the notification requirement of
Paragraph 2(c).
5. Notices and Material Correspondence
(a) Immediately upon the execution of this proxy, Berkshire shall
cause an executed copy thereof, certified by its Secretary or Assistant
Secretary, to be sent to the Secretary of GEICO, the Superintendent of
Insurance of the District of Columbia, and to the United States Department
of Justice. Berkshire shall request the Secretary of GEICO to send to the
Bank copies of all material relating to any GEICO meeting of shareholders
or to any request for written consent of shareholders. Berkshire shall,
from time-to-time, execute such other documents and perform such other
acts as shall be necessary to effect the purposes of this
proxy. In recognizing any vote, proxy, or written consent effected or
executed by the Bank on behalf of Berkshire, GEICO may assume full
compliance with the terms and conditions hereof unless its Secretary has
received, reasonably in advance of such recognition, written notice to the
contrary from an officer of Berkshire.
(b) All material correspondence between Berkshire or the
subsidiaries and the Bank shall be in writing. Such correspondence,
together with the communications provided for in Paragraphs 2(b) and 4,
shall be retained for a period of three years and shall be made available
for inspection by the Superintendent of Insurance of the District of
Columbia and the Department of Justice upon notice and request.
6. Indemnification
Berkshire shall indemnify, defend and hold harmless the Bank from
and against any and all claims, losses, liabilities, damages or
deficiencies (including, without limitation, reasonable attorneys' fees)
arising out of actions of the Bank hereunder. Promptly after receipt by the
Bank of any claim or notice of the commencement of any action or proceeding
subject to this indemnification, the Bank shall provide written notice
thereof to Berkshire.
7. Duration
This proxy shall take effect as of the date of its execution and,
unless earlier terminated in the manner indicated in Paragraph 8, shall be
applicable to all matters presented to GEICO shareholders from such date up
to but not including the second annual meeting of GEICO shareholders to
take place after such date. During the period of its duration, the proxy
shall apply to all of the shares held by Berkshire or by the subsidiaries,
but shall not apply to the shares after they have been sold by Berkshire or
by the subsidiaries.
8. Termination
(a) Berkshire and the Bank recognize that, as between them, this
proxy is revocable at the pleasure of Berkshire, but Berkshire will
exercise such right of revocation only upon the occurrence of one or more
of the following events:
(i) Berkshire determines, in its sole discretion, that the Bank
is no longer acting in accordance with the procedures set forth in
Paragraph 2 above; or
(ii) Any officer or director of the Bank holds a position of
director or officer of GEICO; or
(iii) The Superintendent of Insurance of the District of Columbia
determines that the Bank, or any person authorized to act on its
behalf for the purpose of this proxy:
(A) Owns, controls, or holds with power to vote, whether
directly or indirectly, five percent or more of the outstanding
voting securities of Berkshire;
(B) Has outstanding voting securities five percent or more
of which are directly or indirectly owned, controlled, or held
with power to vote by Berkshire;
(C) Is directly or indirectly in control of, controlled by,
or under common control with Berkshire;
(D) Is an officer, director, partner, co-partner, or
employee of Berkshire;
(E) Is a member of the immediate family of any natural
person who comes within any of the categories set forth in
clauses (A) through (D) above;
(F) Is a person, or a partner or employee of any person, who
at any time since the beginning of the last two fiscal years of
Xxxxxxxxx has acted as legal counsel for Berkshire; or
(G) Has had, at any time since the beginning of the last two
fiscal years of Berkshire, such a material business or
professional relationship with Berkshire or its principal
executive officer as to make it reasonably unlikely that the Bank
will be able to act in accordance with the procedures set forth
under Paragraph 2.
For the purpose of enabling the Superintendent to make the
determinations referred to in this Subparagraph (iii), Berkshire and
the Bank agree to provide such information as to their respective
managements, stock ownership, and business affiliates as the
Superintendent may reasonably request. No determination shall be made
by the Superintendent under clause (G) until Berkshire and the Bank
have been given reasonable notice of the pendency of that
determination and an opportunity to respond in writing within a
reasonable period of time.
(iv) Any governmental agency or department determines that this
proxy or its exercise is not
permitted, either by any law over which that agency or department has
jurisdiction and to which Berkshire or the subsidiaries are subject,
or by any regulation, rule or order thereunder; or
(v) The Superintendent of Insurance of the District of Columbia,
upon application of Berkshire, determines the proxy is to be revoked.
(b) No termination pursuant to Subparagraphs (i), (ii) and (iv)
above shall become effective without the prior approval of the
Superintendent of Insurance of the District of Columbia and the United
States Department of Justice.
(c) The Bank shall have the right to terminate this proxy at any
time upon the giving of not less than 30 days notice in writing to
Berkshire, the Superintendent of Insurance of the District of Columbia, and
the United States Department of Justice.
9. Addresses
All notices or other communications hereunder to be addressed to
Berkshire shall be sent to:
Berkshire Hathaway, Inc.
0000 Xxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
All notices and other communications hereunder to be addressed to the Bank
shall be sent to:
Suburban Trust Company
0000 Xxxxxxxxxx Xxxx. West
Wheaton, Maryland 20902
Attention: Xxxxxx X. Xxxxxx
All notices and other communications hereunder to be addressed to the
Department of Justice shall be sent to:
United States Department of Justice
Antitrust Division
Washington, D. C. 20530
Attention: Assistant Attorney
General, Antitrust Division
AGREED TO this 24th day of February , 1977.
Berkshire Hathaway, Inc.
Attest:
----------------------------- By: --------------------------
Secretary Its Chairman
Suburban Trust Company
Attest:
----------------------------- By: --------------------------
Assistant Secretary Its Senior Trust Officer
P R O X Y
The undersigned, as record owner of common and preferred
shares of Government Employee Insurance Company owned beneficially by
Berkshire Hathaway Inc. and subsidiaries thereof (National Indemnity
Company, National Fire and Marine Insurance Company, Cornhusker
Casualty Company and Central Fire and Casualty Company, formerly
Kerkling Reinsurance Corporation), pursuant to instructions from
Berkshire Hathaway Inc., appoints Suburban Trust Company of Maryland
its proxy with respect to all common and preferred shares of
Government Employees Insurance Company held in its name for which
Berkshire Hathaway Inc. or any of its above-named subsidiaries is the
beneficial owner, such proxy to be of the same duration as the Proxy
Agreement between Berkshire Hathaway Inc. and Suburban Trust Company
(attached hereto as an Exhibit) and to be subject to and governed by
all the terms and conditions of that Proxy Agreement.
January 16, 1979.
NIFCO, A Nominee Partnership
By --------------------------
Xxxxxx X. Xxxxxxxxx,
a General Partner
