0
Xxxxxxx 0
XXXXXXXXX XXXXXXXX INC.
$440,000,000
1.00% Senior Exchangeable Notes Due December 2, 2001*
(Subject to Exchange into Shares of Common Stock,
par value $1.00 per share, of Salomon Inc)
Underwriting Agreement
New York, New York
November 26, 1996
Salomon Brothers Inc
Xxxxxxx, Xxxxx & Co.
Xxxxx Xxxxxx Inc.
as Representatives of the several Underwriters
c/o Salomon Brothers Inc
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Berkshire Hathaway Inc., a Delaware corporation ("Berkshire"),
proposes to sell to the underwriters named in Schedule I hereto (the
"Underwriters"), for whom you (the "Representatives") are acting as
representatives, $440,000,000 principal face amount of its 1.00% Senior
Exchangeable Notes Due December 2, 2001 (the "Underwritten Securities"), to be
issued under an indenture (the "Indenture") dated as of December 1, 1987 between
Berkshire and State Street Bank and Trust Company, as successor trustee to the
First National Bank of Boston (the "Trustee"), as amended to the date hereof by
the First Supplemental Indenture
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* Plus an option to purchase from Berkshire Hathaway Inc. up to
$60,000,000 principal face amount of additional 1.00% Senior
Exchangeable Notes Due December 2, 2001 to cover over-allotments.
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thereto dated as of December 2, 1996. In addition, the Underwriters will have
an option to purchase up to $60,000,000 principal face amount of such
securities (the "Option Securities" and, together with the Underwritten
Securities, the "Securities"). The Securities may be exchanged by Berkshire
under certain circumstances at maturity (including as a result of acceleration
or otherwise) or prior to maturity into shares of Common Stock, par value $1.00
per share (the "Salomon Common Stock"), of Salomon Inc, a Delaware corporation
("Salomon") (or, at Berkshire's option under the circumstances described in the
Final Berkshire Prospectus, cash with an equal value), at the rate specified in
the Final Berkshire Prospectus. The Securities may also, at the option of the
holders and subject to certain conditions, be exchanged into Salomon Common
Stock at such rate during certain periods.
In connection with the foregoing and pursuant to the Purchase
Agreement dated September 27, 1987 between Berkshire and Salomon, as amended
(the "Purchase Agreement") Salomon has filed with the Commission a registration
statement with respect to 7,766,000 shares (the "Underwritten Shares") of
Salomon Common Stock, in respect of the Underwritten Securities, plus an
additional 1,059,000 shares (the "Option Shares" and, together with the
Underwritten Shares, the "Shares") of Salomon Common Stock in respect of the
Option Securities, for sale by Berkshire as a selling stockholder (to the extent
Berkshire shall so elect to deliver to holders of the Securities, or holders of
the Securities shall so elect to receive during specified periods, Salomon
Common Stock pursuant to the terms of the Securities), which registration
statement is referred to in Section 2 of this Agreement, and Salomon , by action
of its Board of Directors, has waived its right of first refusal under Section
10(b)(iii) of the Purchase Agreement with respect to such a sale of the Shares
by Berkshire.
Certain terms used in this Agreement are defined in paragraph
(c) of Section 1 and paragraph (c) of Section 2.
1. Representations and Warranties of Berkshire. Berkshire
represents and warrants to, and agrees with, each Underwriter as set forth below
in this Section 1.
(a) Berkshire meets the requirements for use of Form S-3 under
the Securities Act of 1933, as amended (the "Act"), and has filed with the
Securities and Exchange Commission (the "Commission") a registration statement
(file number 33-30570) on Form S-3, including a basic prospectus, for the
registration under the Act of the offering and sale of the Securities. Berkshire
may have filed one or more amendments thereto, and may have used a Preliminary
Final Berkshire Prospectus, each of which has previously been furnished to you.
Such registration statement, as so amended, has become effective. Although the
Basic Berkshire Prospectus may not include all the information with respect to
the Securities and the offering thereof required by the Act and the rules
thereunder to be included in the Final Berkshire Prospectus, the Basic Berkshire
Prospectus includes all such information required by the Act and the rules
thereunder. Berkshire will next file with the Commission pursuant to Rules 415
and 424(b)(2) or (5) a final supplement to the form of prospectus included in
such registration statement relating to the Securities and the offering thereof.
As filed, such final prospectus supplement shall include all required
information with respect to the Securities and the offering thereof and, except
to the extent the Representatives shall agree in writing to a modification,
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shall be in all substantive respects in the form furnished to you prior to the
Execution Time or, to the extent not completed at the Execution Time, shall
contain only such specific additional information and other changes (beyond that
contained in the Basic Berkshire Prospectus and any Preliminary Final Berkshire
Prospectus) as Berkshire has advised you, prior to the Execution Time, will be
included or made therein.
(b) On the Berkshire Effective Date, the Berkshire
Registration Statement did or will, and when the Final Berkshire Prospectus is
first filed in accordance with Rule 424(b) and on the Closing Date, the Final
Berkshire Prospectus (and any supplements thereto) will, comply in all material
respects with the applicable requirements of the Act, the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and the respective rules
thereunder; on the Berkshire Effective Date, the Berkshire Registration
Statement did not or will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; on the Berkshire Effective
Date and on the Closing Date the Indenture did or will comply in all material
respects with the applicable requirements of the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act") and the rules thereunder; and, on the date
of any filing pursuant to Rule 424(b) and on the Closing Date, the Final
Prospectuses (together with any supplements thereto) will not include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that Berkshire makes no
representations or warranties as to (i) that part of the Berkshire Registration
Statement which shall constitute the Statement of Eligibility and Qualification
(Form T-1) under the Trust Indenture Act of the Trustee, (ii) the information
contained in or omitted from the Berkshire Registration Statement or any Final
Prospectuses (or any supplements thereto) in reliance upon and in conformity
with information furnished in writing to Berkshire or Salomon by or on behalf of
any Underwriter through the Representatives specifically for use in connection
with the Berkshire Registration Statement or any Final Prospectuses (or any
supplements thereto) or (iii) (A) the information contained in or omitted from
the Final Berkshire Prospectus under the headings "Salomon Inc" and "Price Range
of Salomon Common Stock and Dividend Policy" (other than the last paragraph
thereof) or (B) the information contained in or omitted from the Salomon
Prospectus, except that under the heading "Ownership of Company Securities by
Berkshire".
(c) The terms which follow, when used in this Agreement, shall
have the meanings indicated. The term "Berkshire Effective Date" shall mean each
date that the Berkshire Registration Statement and any post-effective amendment
or amendments thereto became or become effective. "Execution Time" shall mean
the date and time that this Agreement is executed and delivered by the parties
hereto. "Basic Berkshire Prospectus" shall mean the prospectus referred to in
paragraph (a) of this Section 1 contained in the Berkshire Registration
Statement at the Berkshire Effective Date. "Preliminary Final Berkshire
Prospectus" shall mean any preliminary prospectus supplement to the Basic
Berkshire Prospectus which describes the Securities and the offering thereof and
is used prior to filing the Final Berkshire Prospectus. "Final Berkshire
Prospectus" shall mean the prospectus supplement relating to the Securities that
is first filed pursuant to Rule 424(b) after the Execution Time together with
the Basic Berkshire Prospectus. The Final Berkshire Prospectus and the Salomon
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Prospectus (as defined in Section 2(c)) are referred to herein collectively as
the "Final Prospectuses". "Berkshire Registration Statement" shall mean the
registration statement referred to in paragraph (a) of this Section 1, including
incorporated documents, exhibits and financial statements, as amended at the
Execution Time and, in the event any post-effective amendment thereto becomes
effective prior to the Closing Date shall also mean such registration statement
as so amended. "Rule 415," "Rule 424" and "Regulation S-K" refer to such rules
or regulation under the Act. Any reference herein to the Berkshire Registration
Statement, the Basic Berkshire Prospectus, any Preliminary Final Berkshire
Prospectus or the Final Berkshire Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 which were filed under the Exchange Act on or before the Berkshire
Effective Date or the issue date of the Basic Berkshire Prospectus, any
Preliminary Final Berkshire Prospectus or the Final Berkshire Prospectus, as the
case may be; and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Berkshire Registration Statement, the Basic
Berkshire Prospectus, any Preliminary Final Berkshire Prospectus or the Final
Berkshire Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the Berkshire Effective Date, or the issue
date of the Basic Berkshire Prospectus, any Preliminary Final Berkshire
Prospectus or the Final Berkshire Prospectus, as the case may be, deemed to be
incorporated therein by reference.
(d) Immediately prior to any delivery of Shares pursuant to
the Securities, Berkshire or one of its subsidiaries will be the lawful owner of
such Shares and will convey good and marketable title to such Shares upon such
delivery, free and clear of all liens, encumbrances, equities and claims
whatsoever.
(e) Berkshire has no reason to believe that the
representations and warranties of Salomon contained in Section 2 hereof are not
true and correct, is familiar with the Salomon Registration Statement and has no
knowledge of any material fact, condition or information not disclosed in the
Salomon Prospectus or any supplement thereto which has adversely affected or may
adversely affect the business of Salomon or any of its subsidiaries.
(f) Berkshire has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result, under the Exchange Act or otherwise,
in stabilization or manipulation of the price of any security of Salomon to
facilitate the sale or resale of the Securities or the Shares, and has not
effected any sales of Salomon Common Stock which, if effected by the issuer,
would be required to be disclosed in response to Item 701 of Regulation S-K.
2. Representations and Warranties of Salomon. Salomon
represents and warrants to, and agrees with, each Underwriter and, with respect
to Section 2(f) only, Berkshire as set forth below in this Section 2.
(a) Salomon meets the requirements for use of Form S-3 under
the Act and has filed with the Commission a registration statement (file number
333-11881) on such Form, including a related preliminary prospectus, for the
registration under the Act of the offering and sale of the Shares in connection
with the offering and sale of the Securities. Salomon may have
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filed one or more amendments thereto, including the related preliminary
prospectus, and may have used a preliminary prospectus supplement, each of which
has previously been furnished to you. Salomon will next file with the Commission
one of the following: (i) prior to effectiveness of such registration statement,
a further amendment to such registration statement, including the form of final
prospectus, (ii) a final prospectus in accordance with Rules 430A and 424(b)(1)
or (4), or (iii) a final prospectus in accordance with Rules 415 and 424(b)(2)
or (5). In the case of clause (ii), Salomon has included in such registration
statement, as amended at the Salomon Effective Date, all information (other than
Rule 430A Information) required by the Act and the rules thereunder to be
included in the Salomon Prospectus with respect to the Shares and the offering
thereof. As filed, such amendment and form of final prospectus, or such final
prospectus, shall contain all Rule 430A Information, together with all other
such required information, with respect to the Shares and the offering thereof
and, except to the extent the Representatives shall agree in writing to a
modification, shall be in all substantive respects in the form furnished to you
prior to the Execution Time, shall contain only such specific additional
information and other changes (beyond that contained in the latest Preliminary
Salomon Prospectus) as Salomon has advised you, prior to the Execution Time,
will be included or made therein.
(b) On the Salomon Effective Date, the Salomon Registration
Statement did or will, and when the Salomon Prospectus is first filed (if
required) in accordance with Rule 424(b) and on the Closing Date, the Salomon
Prospectus (and any supplement thereto) will, comply in all material respects
with the applicable requirements of the Act, the Exchange Act and the respective
rules thereunder; on the Salomon Effective Date, the Salomon Registration
Statement did not or will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; on the Salomon Effective
Date the Salomon Prospectus, if not filed pursuant to Rule 424(b), did not or
will not, and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date, the Final Prospectuses (together with any supplements thereto)
will not, include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
that Salomon makes no representation or warranty as to (i) the information
contained in or omitted from the Salomon Registration Statement or any Final
Prospectuses (or any supplements thereto) in reliance upon and in conformity
with information furnished in writing to Salomon or Berkshire by or on behalf of
any Underwriter through the Representatives or (ii) (A) the information
contained in or omitted from the Salomon Prospectus under the heading "Ownership
of Company Securities by Berkshire" in the prospectus supplement and in the
first, fourth and fifth paragraphs under the heading "Ownership of Company
Securities by Berkshire" in the base prospectus or (B) the information contained
in or omitted from the Berkshire Prospectus, except that under the headings
"Salomon Inc" and "Price Range of Salomon Common Stock and Dividend Policy"
(other than the last paragraph thereto).
(c) The terms which follow, when used in this Agreement, shall
have the meanings indicated. The term "Salomon Effective Date" shall mean each
date that the Salomon Registration Statement and any post-effective amendment or
amendments thereto became or become effective. "Preliminary Salomon Prospectus"
shall mean any preliminary prospectus and
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any preliminary prospectus supplement referred to in paragraph (a) of this
Section 2 and any preliminary prospectus and any preliminary prospectus
supplement included in the Salomon Registration Statement at the Salomon
Effective Date that omits Rule 430A Information. "Salomon Prospectus" shall mean
the prospectus relating to the Shares that is used in connection with the
offering and sale of the Securities, that is attached as Appendix A to the Final
Berkshire Prospectus and that is first filed pursuant to Rule 424(b) after the
Execution Time or, if no filing pursuant to Rule 424(b) is required, shall mean
the form of final prospectus relating to the Shares included in the Salomon
Registration Statement at the Salomon Effective Date. "Salomon Registration
Statement" shall mean the registration statement referred to in paragraph (a) of
this Section 2 including incorporated documents, exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto becomes effective prior to the
Closing Date, shall also mean such registration statement as so amended. Such
term shall include any Rule 430A Information deemed to be included therein at
the Salomon Effective Date as provided by Rule 430A. "Rule 430A" refers to such
rule under the Act. "Rule 430A Information" means information with respect to
the Securities (or the Shares) and the offering thereof permitted to be omitted
from the Berkshire Registration Statement (or the Salomon Registration
Statement) when it becomes effective pursuant to Rule 430A. Any reference herein
to the Salomon Registration Statement, Preliminary Salomon Prospectus or the
Salomon Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which were
filed under the Exchange Act on or before the Salomon Effective Date or the
issue date of a Preliminary Salomon Prospectus or the Salomon Prospectus, as the
case may be; and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Salomon Registration Statement, any Preliminary
Salomon Prospectus or the Salomon Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the Salomon
Effective Date, or the issue date of any Preliminary Salomon Prospectus or the
Salomon Prospectus, as the case may be, deemed to be incorporated therein by
reference.
(d) Except as disclosed in the Salomon Prospectus, there is no
pending or, to the best knowledge of Salomon, threatened action, suit or
proceeding before any court or governmental agency, authority or body or any
arbitrator to which Salomon or any of its subsidiaries is a party or of which
any property of Salomon or any of its subsidiaries is the subject that would
reasonably be expected, individually or in the aggregate, to have a material
adverse effect on the business or financial position of Salomon and its
subsidiaries taken as a whole.
(e) Salomon and its subsidiaries are (i) in compliance with
any and all applicable federal, state and local and foreign laws and regulations
applicable to any of them, (ii) have accomplished all registrations and received
all permits, licenses or other approvals required of them under applicable laws
and regulations to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such registration, permit,
license or approval, except as described in the Salomon Prospectus or where such
noncompliance, failure to accomplish required registrations or receive required
permits, licenses or other approvals or failure to comply with the terms and
conditions of such registrations, permits, licenses or
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approvals would not, singly or in the aggregate, have a material adverse effect
on the business or financial position of Salomon and its subsidiaries taken as a
whole.
(f) Pursuant to the Purchase Agreement, at any time when
Berkshire is an affiliate of Salomon within the meaning of the Act and
registration of the Shares deliverable upon exchange of the Securities at the
option of the holders of Securities is required under the Act, Salomon shall use
its reasonable efforts to cause a registration statement to be effective under
the Act during each Exchange Period (as defined in the Final Berkshire
Prospectus) in order to permit a prospectus to be usable by Berkshire in
connection with any exchange of Securities, pursuant to the terms thereof, at
the option of the holders thereof. It is understood and agreed that Salomon may
delay the effectiveness of any registration statement or the delivery of any
Salomon prospectus if Salomon determines in good faith and for valid business
reasons that delivery of a Salomon prospectus would not be in the best interest
of Salomon or is prohibited by applicable law. Salomon shall notify Berkshire of
any delay pursuant to the immediately preceding sentence and Berkshire shall not
use any Salomon prospectus previously furnished to it during the period of such
delay.
3. Purchase and Sale. (a) Subject to the terms and conditions
and in reliance upon the representations and warranties herein set forth,
Berkshire agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from Berkshire, at a purchase price of
89.417% of the principal face amount thereof, plus amortization of original
issue discount, if any, on the Securities from December 2, 1996 to the Closing
Date, the principal face amount of the Securities set forth opposite such
Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, Berkshire hereby grants an
option to the several Underwriters to purchase, severally and not jointly, up to
$60,000,000 principal face amount of the Option Securities at the same purchase
price as the Underwriters shall pay for the Underwritten Securities. Said option
may be exercised only to cover over-allotments in the sale of the Underwritten
Securities by the Underwriters. Said option may be exercised in whole or in part
at any time (but not more than once) on or before the 30th day after the date of
the Final Berkshire Prospectus upon written or telegraphic notice by the
Representatives to Berkshire setting forth the number of the Option Securities
as to which the several Underwriters are exercising the option and the
settlement date. Delivery of certificates for the Option Securities, and payment
therefor, shall be made as provided in Section 4 hereof. The principal amount of
Option Securities to be purchased by each Underwriter shall be the same
percentage of the total principal face amount of Option Securities to be
purchased by the several Underwriters as such Underwriter is purchasing of the
Underwritten Securities, subject to such adjustments as you in your absolute
discretion shall make to round the denominations of the Securities to integral
multiples of $1,000.
4. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 3(b) hereof shall have been exercised on or before the first business
day prior to the Closing Date) shall be made at
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10:00 AM, New York City time, on December 2, 1996, (or such later date not
later than five business days after such specified date as the Representatives
shall designate) which date and time may be postponed by agreement between the
Representatives and Berkshire or as provided in Section 11 hereof (such date and
time of delivery and payment for the Securities being herein called the "Closing
Date"). Delivery of the Securities shall be made to the Representatives for the
respective accounts of the several Underwriters against payment by the several
Underwriters through the Representatives of the purchase price thereof to or
upon the order of Berkshire either by certified or official bank check or checks
drawn on or by a New York Clearing House bank or by wire transfer to an account
designated in writing by Berkshire at least two business days in advance of the
Closing Date, and in either case payable in same-day funds. Delivery of the
Securities shall be made through the facilities of The Depository Trust Company.
Berkshire agrees to have the Securities available for
inspection and checking by the Representatives in New York, New York, not later
than 1:00 PM on the business day prior to the Closing Date.
If the option provided for in Section 3(b) hereof is exercised
after the first business day prior to the Closing Date, Berkshire will deliver
(at the expense of Berkshire) to the Representatives at Seven World Trade
Center, New York, New York, on the date specified by the Representatives (which
shall be within three business days after exercise of said option), certificates
for the Option Securities in such names and denominations as the Representatives
shall have requested against payment of the purchase price thereof to or upon
the order of Berkshire either by certified or official bank check or checks
drawn on or by a New York Clearing House bank or by wire transfer to an account
designated in writing by Berkshire at least two business days in advance of the
Closing Date, and in either case payable in same-day funds. If settlement for
the Option Securities occurs after the Closing Date, Berkshire and Salomon will
deliver to the Representatives on the settlement date for the Option Securities,
and the obligation of the Underwriters to purchase the Option Securities shall
be conditioned upon receipt of, supplemental opinions and certificates
confirming as of such date certain of the opinions and certificates, as
requested by the Underwriters, delivered on the Closing Date pursuant to Section
7 hereof.
5. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Final Berkshire Prospectus.
6. Agreements of Berkshire. Berkshire agrees with the several
Underwriters that:
(a) Berkshire will use its best efforts to cause the Berkshire
Registration Statement, if not effective at the Execution Time, and any
amendment thereto to become effective. Prior to the termination of the offering
of the Securities, Berkshire will not file any amendment of the Berkshire
Registration Statement or supplement (including the Final Berkshire Prospectus
or any Preliminary Final Berkshire Prospectus) to the Basic Berkshire Prospectus
unless Berkshire has furnished you a copy for your review prior to filing and
will not file any such proposed amendment or supplement to which you reasonably
object. Subject to the foregoing sentence, Berkshire will cause the Final
Berkshire Prospectus, properly completed, and
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any supplement thereto to be filed with the Commission, if required, pursuant to
the applicable paragraph of Rule 424(b) within the time period prescribed and
will provide evidence satisfactory to the Representatives of such timely filing.
Berkshire will promptly advise the Representatives (i) when the Berkshire
Registration Statement, if not effective at the Execution Time, and any
amendment thereto, shall have become effective, (ii) when the Final Berkshire
Prospectus, and any supplement thereto, shall have been filed with the
Commission pursuant to Rule 424(b), (iii) when, prior to termination of the
offering of the Securities, any amendment to the Berkshire Registration
Statement shall have been filed or become effective, (iv) of any request by the
Commission for any amendment of the Berkshire Registration Statement or
supplement to the Final Berkshire Prospectus or for any additional information,
(v) of the issuance by the Commission of any stop order suspending the
effectiveness of the Berkshire Registration Statement or the institution or
threatening of any proceeding for that purpose and (vi) of the receipt by
Berkshire of any notification with respect to the suspension of the
qualification of the Securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose. Berkshire will use its best
efforts to prevent the issuance of any such stop order and, if issued, to obtain
as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs as a
result of which the Final Berkshire Prospectus as then supplemented would
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, or if it shall be necessary to amend
the Berkshire Registration Statement or supplement the Final Berkshire
Prospectus to comply with the Act or the Exchange Act or the respective rules
thereunder, Berkshire promptly will prepare and file with the Commission,
subject to the second sentence of paragraph (a) of this Section 6, an amendment
or supplement which will correct such statement or omission or effect such
compliance.
(c) As soon as practicable, Berkshire will make generally
available to its security holders and to the Representatives an earnings
statement or statements of Berkshire and its subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) Berkshire will furnish to the Representatives and counsel
for the Underwriters, without charge, copies of the Berkshire Registration
Statement (including exhibits thereto), and to each other Underwriter a copy of
the Berkshire Registration Statement (without exhibits thereto) and so long as
delivery of a prospectus by an Underwriter or any dealer may be required by the
Act, as many copies of each Preliminary Final Berkshire Prospectus and the Final
Berkshire Prospectus and any supplement thereto as the Representatives may
reasonably request.
(e) Berkshire will arrange for the qualification of the
Securities and the Shares for sale under the laws of such jurisdictions as the
Representatives may designate and will maintain such qualifications in effect so
long as required for the distribution of the Securities and the Shares;
provided, however, that in connection therewith, Berkshire shall not be required
to qualify as a foreign corporation or to file a general consent to service of
process in any
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jurisdiction. Berkshire will pay the fee of the National Association of
Securities Dealers, Inc. in connection with any review of the offering by it.
(f) Until the 90th business day following the Execution Time,
Berkshire will not, without the prior written consent of Salomon Brothers Inc,
offer, sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of, any shares of Salomon Common Stock, or
any securities convertible into or exchangeable for, shares of Salomon Common
Stock; provided, however, that the foregoing shall not restrict the ability of
Berkshire or its subsidiaries to take any such actions in connection with the
offer and sale of shares of Salomon Common Stock in connection with the offering
of the Securities or any exchange or redemption of the Securities in accordance
with their terms.
7. Agreements of Salomon. Salomon agrees with the several
Underwriters that:
(a) Salomon will use its best efforts to cause the Salomon
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the offering
of the Securities, Salomon will not file any amendment of the Salomon
Registration Statement or supplement to the Salomon Prospectus unless Salomon
has furnished you a copy for your review prior to filing and will not file any
such proposed amendment or supplement to which you reasonably object. Subject to
the foregoing sentence, if the Salomon Registration Statement has become or
becomes effective pursuant to Rule 430A, or filing of the Salomon Prospectus is
otherwise required under Rule 424(b), Salomon will cause the Salomon Prospectus,
properly completed, and any supplement thereto to be filed with the Commission
pursuant to the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the Representatives of such
timely filing. Salomon will promptly advise the Representatives (i) when the
Salomon Registration Statement, if not effective at the Execution Time, and any
amendment thereto, shall have become effective, (ii) when the Salomon
Prospectus, and any supplement thereto, shall have been filed (if required) with
the Commission pursuant to Rule 424(b), (iii) when, prior to termination of the
offering of the Shares, any amendment to the Salomon Registration Statement
shall have been filed or become effective, (iv) of any request by the Commission
for any amendment of the Salomon Registration Statement or supplement to the
Salomon Prospectus or for any additional information, (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the Salomon
Registration Statement or the institution or threatening of any proceeding for
that purpose and (vi) of the receipt by Salomon of any notification with respect
to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose. Salomon will use its best efforts to prevent the issuance of any such
stop order and, if issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Shares
is required to be delivered under the Act in connection with the distribution of
the Securities, any event occurs as a result of which the Salomon Prospectus as
then supplemented would include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein in the light
of the circumstances under which they were made not misleading, or if it shall
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be necessary to amend the Salomon Registration Statement or supplement the
Salomon Prospectus to comply with the Act or the Exchange Act or the respective
rules thereunder, Salomon promptly will notify the Representatives and prepare
and file with the Commission, subject to the second sentence of paragraph (a) of
this Section 7, an amendment or supplement which will correct such statement or
omission or effect such compliance.
(c) As soon as practicable, Salomon will make generally
available to its security holders and to the Representatives an earnings
statement or statements of Salomon and its subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) Salomon will furnish to the Representatives and counsel
for the Underwriters, without charge, signed copies of the Salomon Registration
Statement (including exhibits thereto), and to each other Underwriter a copy of
the Salomon Registration Statement (without exhibits thereto) and so long as
delivery of a prospectus by an Underwriter or any dealer may be required by the
Act, as many copies of each Preliminary Salomon Prospectus and the Salomon
Prospectus and any supplement thereto as the Representatives may reasonably
request.
(e) Salomon will arrange for the qualification of the Shares
for sale under the laws of such jurisdictions as the Representatives may
designate and will maintain such qualifications in effect so long as required
for the distribution of the Securities and the Shares; provided, however, that
in connection therewith, Salomon shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction.
(f) Until the 90th business day following the Execution Time,
Salomon will not without the prior written consent of Salomon Brothers Inc,
offer, sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of, any shares of Salomon Common Stock or
any securities convertible into, or exchangeable for, shares of Salomon Common
Stock (other than the Shares in connection with the offering by Berkshire of the
Securities); provided, however, that the foregoing shall not restrict the
ability of Salomon or its subsidiaries to take such actions in connection with
the offering by Berkshire of the Securities or any exchange or redemption of the
Securities in accordance with their terms; and provided, further, that Salomon
may sell or register shares of Salomon Common Stock or grant options to purchase
the same, in either case, pursuant to any employee or director stock option
plan, stock ownership plan or dividend reinvestment plan of Salomon in effect at
the Execution Time.
8. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of Berkshire and Salomon contained
herein as of the Execution Time, the Closing Date and any settlement date
pursuant to Section 4 hereof, to the accuracy of the statements of Berkshire and
Salomon made in any certificates pursuant to the provisions hereof, to the
performance by Berkshire and Salomon of their respective obligations hereunder
and to the following additional conditions:
(a) If the Berkshire Registration Statement or the Salomon
Registration Statement has not become effective prior to the Execution Time,
unless the Representatives agrees in
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writing to a later time, such Berkshire or Salomon Registration Statement will
become effective not later than (i) 6:00 PM, New York City time, on the date of
determination of the public offering price, if such determination occurred at or
prior to 3:00 PM, New York City time, on such date or (ii) 12:00 Noon, New York
City time, on the business day following the day on which the public offering
price was determined, if such determination occurred after 3:00 PM, New York
City time, on such date; if filing of the Final Berkshire Prospectus or the
Salomon Prospectus, or any supplements thereto, is required pursuant to Rule
424(b), such Final Berkshire Prospectus or Salomon Prospectus, and any such
supplements, will be filed in the manner and within the time period required by
Rule 424(b); and no stop order suspending the effectiveness of the Berkshire
Registration Statement or the Salomon Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or
threatened.
(b) Berkshire shall have furnished to the Representatives the
opinion of Xxxxxx, Xxxxxx & Xxxxx, counsel for Berkshire, dated the Closing
Date, to the effect that:
(i) each of Berkshire and National Indemnity Company, Columbia
Insurance Company and Government Employees Insurance Company
(individually a "Subsidiary" and collectively the "Subsidiaries") has
been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own its
properties and conduct its business as described in the Final Berkshire
Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction
which requires such qualification where it owns or leases material
properties or conducts material business, except for any such
jurisdiction where the failure to be so qualified would not have a
material adverse effect on such Subsidiary; and Berkshire is not
required to register as an investment company under the Investment
Company Act of 1940;
(ii) all the outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in the
Final Berkshire Prospectus, all outstanding shares of capital stock of
the Subsidiaries are owned by Berkshire either directly or through
wholly owned subsidiaries free and clear of any perfected security
interest and such counsel is not aware of any other security interests,
claims, liens or encumbrances;
(iii) Berkshire's authorized equity capitalization is as set
forth in the Final Berkshire Prospectus; the Securities conform to the
description thereof contained in the Final Berkshire Prospectus; and
authorization has been given to list the Securities on the NYSE,
subject to official notice of issuance and evidence of satisfactory
distribution, or Berkshire has filed a preliminary listing application
and all required supporting documents with respect to the Securities
with the NYSE and such counsel has no reason to believe that the
Securities will not be authorized for listing, subject to official
notice of issuance and evidence of satisfactory distribution;
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(iv) the Indenture has been duly authorized, executed and
delivered, has been duly qualified under the Trust Indenture Act and
constitutes a legal, valid and binding obligation enforceable against
Berkshire in accordance with its terms (subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally from
time to time in effect and equitable principles relating to the
granting of specific performance and other equitable remedies as a
matter of judicial discretion); and the Securities have been duly
authorized, executed and delivered by Berkshire and, when authenticated
by the Trustee in accordance with the provisions of the Indenture and
delivered to and paid for by the Underwriters pursuant to this
Agreement, will constitute legal, valid and binding obligations of
Berkshire entitled to the benefits of the Indenture;
(v) to the best knowledge of such counsel, there is no pending
or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving
Berkshire or any of its subsidiaries, of a character required to be
disclosed in the Berkshire Registration Statement which is not
adequately disclosed in the Final Berkshire Prospectus, and there is no
franchise, contract or other document of a character required to be
described in the Berkshire Registration Statement or Final Berkshire
Prospectus, or to be filed as an exhibit, which is not described or
filed as required;
(vi) the Berkshire Registration Statement has become effective
under the Act; any required filing of the Basic Berkshire Prospectus,
any Preliminary Final Berkshire Prospectus and the Final Berkshire
Prospectus, and any supplements thereto, pursuant to Rule 424(b) has
been made in the manner and within the time period required by Rule
424(b); to the best knowledge of such counsel, no stop order suspending
the effectiveness of the Berkshire Registration Statement has been
issued, no proceedings for that purpose have been instituted or
threatened, and the Berkshire Registration Statement and the Final
Berkshire Prospectus (other than the financial statements and other
financial and statistical information contained or incorporated therein
and the Salomon Prospectus, as to which such counsel need express no
opinion) comply as to form in all material respects with the applicable
requirements of the Act, the Exchange Act and the Trust Indenture Act
and the respective rules thereunder; and such counsel has no reason to
believe that at the Berkshire Effective Date the Berkshire Registration
Statement (other than the financial statements and other financial and
statistical information contained or incorporated therein and the
Salomon Prospectus, as to which such counsel need express no opinion)
contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Final Berkshire
Prospectus (other than the financial statements and other financial and
statistical information contained or incorporated therein and the
Salomon Prospectus, as to which such counsel need express no opinion)
includes any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
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(vii) this Agreement has been duly authorized, executed and
delivered by Berkshire;
(viii) no consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body is required for the consummation of the transactions
contemplated herein, except such as have been obtained under the Act,
the Exchange Act and the Trust Indenture Act and such as may be
required under the state securities or blue sky laws in connection with
the purchase and distribution of the Securities and the Shares by the
Underwriters and such other approvals (specified in such opinion) as
have been obtained;
(ix) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach of, or constitute a default under the charter or by-laws of
Berkshire or the terms of any indenture or other agreement or
instrument known to such counsel and to which Berkshire or any of its
subsidiaries is a party or bound, or any order or regulation known to
such counsel to be applicable to Berkshire or any of its subsidiaries
of any court, regulatory body, administrative agency, governmental body
or arbitrator having jurisdiction over Berkshire or any of its
subsidiaries; and
(x) no holder of securities of Berkshire has rights to the
registration of such securities under the Berkshire Registration
Statement.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
States of California and Delaware (and as to Delaware, involving the application
of any law other than the Delaware General Corporation Law) or the United
States, to the extent deemed proper and specified in such opinion, upon the
opinion of other counsel of good standing believed to be reliable and who are
satisfactory to counsel for the Underwriters, (B) to the extent such opinion
relates to the law of the State of New York (which law the Indenture, this
Agreement and the Securities state to be the governing law thereof), assume that
the laws of the State of California are the same as those of the State of New
York and (C) as to matters of fact, to the extent deemed proper, on certificates
of responsible officers of Berkshire and public officials. References to the
Final Berkshire Prospectus in this paragraph (b) include any supplements thereto
at the Closing Date.
(c) Salomon shall have furnished to the Representatives the
opinion of Cravath, Swaine & Xxxxx, counsel for Salomon, or Xxxxxx X. Xxxxxx,
Secretary for Salomon, dated the Closing Date, to the effect, in the aggregate,
that:
(i) each of Salomon and Salomon Brothers Inc. ("SBI") has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own its
properties and conduct its business as described in the Salomon
Prospectus;
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(ii) Salomon's authorized equity capitalization is as set
forth in the Salomon Prospectus; the capital stock of Salomon conforms
to the description thereof contained in the Salomon Prospectus; the
outstanding shares of Salomon Common Stock have been duly and validly
authorized and issued and are fully paid and nonassessable; the shares
of Salomon Common Stock (the "Conversion Shares") issuable on
conversion of Salomon's 9% Series A Cumulative Convertible Preferred
Stock (the "Convertible Preferred Stock") shall upon conversion of the
Convertible Preferred Stock in accordance with its terms be duly
issued, fully paid and nonassessable; and no holders of securities of
Salomon are entitled to preemptive or other rights to subscribe for the
Conversion Shares;
(iii) to the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving
Salomon or any of its subsidiaries, of a character required to be
disclosed in the Salomon Registration Statement which is not adequately
disclosed in the Salomon Prospectus; and the statements included or
incorporated in the Salomon Prospectus describing any legal proceedings
relating to Salomon fairly summarize such matters;
(iv) the Salomon Registration Statement has become effective
under the Act; any required filing of any Salomon Prospectus, and any
supplements thereto, pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); to the best
knowledge of such counsel, no stop order suspending the effectiveness
of the Salomon Registration Statement has been issued, and no
proceedings for that purpose have been instituted or threatened; the
Salomon Registration Statement and the Salomon Prospectus (other than
the financial statements and other financial and statistical
information contained therein as to which such counsel need not express
any opinion) appeared on their face to be appropriately responsive in
all material respects with the requirements of the Act and the
respective rules and regulations thereunder; and such counsel has no
reason to believe that at the Salomon Effective Date, the Salomon
Registration Statement contained any untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or
that at the Closing Date, the Salomon Prospectus (other than the
financial statements and other financial and statistical information
contained therein) includes any untrue statement of a material fact or
omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(v) this Agreement has been duly authorized, executed and
delivered by Salomon;
(vi) no consent, approval, authorization or order of any
court or governmental body or agency is required for the consummation
by Salomon of the transactions contemplated herein, except such as have
been obtained under the Act (other than in connection with any exchange
of the Securities at the option of the holder thereof) and such as may
be required under the blue sky laws of any jurisdiction in connection
with
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the sale of the Securities by the Underwriters and the distribution of
the Shares pursuant to the terms of the Securities and such other
approvals (specified in such opinion) as have been obtained;
(vii) neither the issue and sale of the Securities nor the
delivery of the Shares upon exchange of the Securities, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach of, or constitute a default under the charter or by-laws of
Salomon or the terms of any indenture or other agreement or instrument
known to such counsel and to which Salomon or any of its subsidiaries
is a party or bound, or any order or regulation known to such counsel
to be applicable to Salomon or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over Salomon or any of its subsidiaries; and
(viii) no holder of securities of Salomon, other than
Berkshire, has rights to the registration of such securities under the
Salomon Registration Statement.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
States of New York and Delaware or the United States, to the extent such counsel
deems proper and specified in such opinion, upon the opinion of other counsel of
good standing whom such counsel believes to be reliable and who are satisfactory
to counsel for the Underwriters and (B) as to matters of fact, to the extent
such counsel deems proper, on certificates of responsible officers of Salomon
and public officials. References to the Salomon Prospectus in this paragraph (c)
include any supplements thereto at the Closing Date.
(d) The Representatives shall have received from Cleary,
Gottlieb, Xxxxx & Xxxxxxxx, counsel for the Underwriters, such opinion or
opinions, or letter or letters, dated the Closing Date, with respect to the
issuance and sale of the Securities, the Indenture, the Shares, the Salomon
Registration Statement, the Salomon Prospectus (together with any supplement
thereto), certain information contained in the Berkshire Registration Statement
and the Final Berkshire Prospectus (together with any supplement thereto) and
other related matters as the Representatives may reasonably require, and the
Representatives and Berkshire shall have received from Cravath, Swaine & Xxxxx
such letter or letters, dated the Closing Date, with respect to certain
information contained in the Berkshire Registration Statement and the Final
Berkshire Prospectus (together with any supplement thereto) as the
Representatives may reasonably require.
(e) Berkshire shall have furnished to the Representatives a
certificate of Berkshire, signed by the Chairman or the Vice Chairman of the
Board and the principal financial or accounting officer of Berkshire, dated the
Closing Date, to the effect that the signers of such certificate have carefully
examined the Berkshire Registration Statement, the Final Berkshire Prospectus,
any supplement to the Final Berkshire Prospectus and this Agreement and that:
(i) the representations and warranties of Berkshire in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if
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made on the Closing Date and Berkshire has complied with all the
agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Berkshire Registration Statement has been issued and no proceedings for
that purpose have been instituted or, to Berkshire's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in, or incorporated by reference in, the Final Berkshire
Prospectus (exclusive of any supplement thereto), there has been no
material adverse change in the condition (financial or other),
earnings, business or properties of Berkshire and its subsidiaries,
whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Final Berkshire
Prospectus (exclusive of any supplement thereto).
(f) Salomon shall have furnished to the Representatives and
Berkshire a certificate of Salomon, signed by the Senior Vice President and
Controller of Salomon, dated the Closing Date, to the effect that the signers of
such certificate have carefully examined the Salomon Registration Statement, the
Salomon Prospectus, any supplements to the Salomon Prospectus and this Agreement
and that:
(i) the representations and warranties of Salomon in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and Salomon has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the
Closing Date;
(ii) no stop order suspending the effectiveness of the
Salomon Registration Statement and no proceedings for that purpose have
been instituted or, to Salomon's knowledge, threatened; and
(iii) since the date of the most recent financial statements
included in, or incorporated by reference in, the Salomon Prospectus
(exclusive of any supplement thereto), there has been no material
adverse change in the condition (financial or other), earnings,
business or properties of Salomon and its subsidiaries, whether or not
arising from transactions in the ordinary course of business, except as
set forth in or contemplated in the Salomon Prospectus (exclusive of
any supplement thereto).
(g) At the Execution Time and at the Closing Date, Deloitte
& Touche LLP shall have furnished to the Representatives a letter or letters
(which may refer to letters previously delivered to one or more of the
Representatives), dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the Representatives,
confirming that they are independent accountants within the meaning of the Act
and the Exchange Act and the respective applicable published rules and
regulations thereunder and stating in effect that:
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(i) in their opinion the audited consolidated financial
statements and financial statement schedules included or incorporated
in the Berkshire Registration Statement and the Final Berkshire
Prospectus and reported on by them comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited
consolidated financial statements made available by Berkshire and its
subsidiaries; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing standards)
which would not necessarily reveal matters of significance with respect
to the comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors and audit committees of
Berkshire and the minutes of the meetings of the stockholders and
directors of the Subsidiaries; and inquiries of certain officials of
Berkshire who have responsibility for financial and accounting matters
of Berkshire and its subsidiaries as to transactions and events
subsequent to the date of the most recent audited financial statements
in or incorporated in the Final Berkshire Prospectus, nothing came to
their attention which caused them to believe that:
(1) any unaudited financial statements included or
incorporated in the Berkshire Registration Statement and the
Final Berkshire Prospectus do not comply as to form in all
material respects with applicable accounting requirements and
with the published rules and regulations of the Commission
with respect to financial statements included or incorporated
in quarterly reports on Form 10-Q under the Exchange Act; and
said unaudited financial statements are not in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included or incorporated in the Berkshire
Registration Statement and the Final Berkshire Prospectus; or
(2) with respect to the period subsequent to the date
of the most recent financial statements (other than any
capsule information), audited or unaudited, in or incorporated
in the Berkshire Registration Statement and the Final
Berkshire Prospectus, there were any increases, at a specified
date not more than three business days prior to the date of
the letter, in the borrowings under investment agreements and
other debt of Berkshire and its subsidiaries or decreases in
stockholders' equity of Berkshire, each as compared with the
amounts shown on the most recent consolidated balance sheet
included or incorporated in the Berkshire Registration
Statement and the Final Berkshire Prospectus, except in all
instances for changes set forth in such letter, in which case
the letter shall be accompanied by an explanation by Berkshire
as to the significance thereof unless said explanation is not
deemed necessary by the Representatives; and
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
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general accounting records of Berkshire and is subsidiaries) set forth
in the Berkshire Registration Statement and the Final Berkshire
Prospectus and in Exhibit 12 to the Berkshire Registration Statement,
including the information set forth under the caption "Selected
Consolidated Financial Data of Berkshire" in the Final Berkshire
Prospectus, the information included or incorporated in Items 1, 6 and
7 of Berkshire's Annual Report on Form 10-K, incorporated in the
Berkshire Registration Statement and the Final Berkshire Prospectus,
and the information included in the "Management's Discussion and
Analysis of Berkshire Financial Condition and Results of Operations"
included or incorporated in Berkshire's Quarterly Reports on Form 10-Q,
incorporated in the Berkshire Registration Statement Registration
Statement and the Final Berkshire Prospectus, agrees with the
accounting records of Berkshire and its subsidiaries, excluding any
questions of legal interpretation.
References to the Final Berkshire Prospectus in this paragraph
(g) include any supplement thereto at the date of the letter.
(h) At the Execution Time, Xxxxxx Xxxxxxxx LLP shall have
furnished to the Representatives and Berkshire a letter or letters (which may
refer to letters previously delivered to the Representatives), dated as of the
Execution Time, in form and substance satisfactory to the Representatives,
confirming that they are independent accountants within the meaning of the Act
and the Exchange Act and the respective applicable published rules and
regulations thereunder and stating in effect that:
(i) in their opinion the audited financial statements and
schedules included or incorporated by reference in the Salomon
Registration Statement and the Salomon Prospectus comply as to form in
all material respects with the applicable accounting requirements of
the Act and the Exchange Act and the related published rules and
regulations thereunder;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by Salomon and its subsidiaries;
their limited review in accordance with standards established by the
American Institute of Certified Public Accountants of the unaudited
interim financial information as indicated in their reports
incorporated in the Salomon Registration Statement and the Salomon
Prospectus; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing standards)
which would not necessarily reveal matters of significance with respect
to the comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors and executive and audit
committees of Salomon and SBI; and inquiries of certain officials of
Salomon who have responsibility for financial and accounting matters of
Salomon and its subsidiaries as to transactions and events subsequent
to the date of the most recent audited financial statements in or
incorporated in the Salomon Prospectus, nothing came to their attention
which caused them to believe that:
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(1) any unaudited financial statements included or
incorporated in the Salomon Registration Statement and the
Salomon Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the
Exchange Act and with the related published rules and
regulations with respect to financial statements included or
incorporated in quarterly reports on Form 10-Q under the
Exchange Act; and said unaudited financial statements are not
in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited financial statements included or incorporated in the
Salomon Registration Statement and the Salomon Prospectus; or
(2) with respect to the period subsequent to the date
of the most recent financial statements (other than any
capsule information), audited or unaudited, in or incorporated
in the Salomon Registration Statement and the Salomon
Prospectus, there were any changes, at a specified date not
more than three business days prior to the date of the letter,
in the consolidated long-term debt of Salomon and its
subsidiaries or decreases in the stockholders' equity of
Salomon and its subsidiaries as compared with the amounts
shown on the most recent consolidated balance sheet included
or incorporated in the Salomon Registration Statement and the
Salomon Prospectus, or for the period from the date of the
most recent financial statements included or incorporated in
the Salomon Registration Statement and the Salomon Prospectus
to such specified date there were any decreases, as compared
with the corresponding period in the preceding year, in net
revenues or income before taxes or in total or per share
amounts of net income of Salomon and its subsidiaries, except
in all instances for changes or decreases set forth in such
letter, in which case the letter shall be accompanied by an
explanation by Salomon as to the significance thereof unless
said explanation is not deemed necessary by the
Representatives; and
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of Salomon and is subsidiaries) set forth in
the Salomon Registration Statement and the Salomon Prospectus,
including the information included or incorporated in Items 1, 2, 6, 7
and 11 of Salomon's Annual Report on Form 10-K, incorporated in the
Salomon Registration Statement and the Salomon Prospectus, and the
information included in the "Management's Discussion and Analysis of
Salomon Financial Condition and Results of Operations" included or
incorporated in Salomon's Quarterly Reports on Form 10-Q, incorporated
in the Salomon Registration Statement and the Salomon Prospectus,
agrees with the accounting records of Salomon and its subsidiaries,
excluding any questions of legal interpretation.
References to the Salomon Prospectus in this paragraph (h)
include any supplement thereto at the date of the letter.
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In addition, at the Closing Date, Xxxxxx Xxxxxxxx LLP shall
have furnished to the Representatives and Berkshire a letter or letters, dated
as of the Closing Date, in form and substance satisfactory to the
Representatives, to the effect set forth above.
(i) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in each of the Berkshire Registration Statement
and the Salomon Registration Statement (exclusive of any amendment thereof) and
each of the Final Berkshire Prospectus and the Salomon Prospectus (exclusive of
any supplements thereto), there shall not have been (i) any change or decrease
specified in the letter or letters referred to in paragraphs (g) and (h) of this
Section 8 or (ii) any change, or any development involving a prospective change,
in or affecting the business or properties of either Berkshire or Salomon and
their respective subsidiaries, taken as a whole, the effect of which, in any
case referred to in clause (i) or (ii) above, is, in the judgment of the
Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Berkshire Registration Statement and the Salomon
Registration Statement (in either case, exclusive of any amendment thereof) and
the Final Berkshire Prospectus and the Salomon Prospectus (in either case,
exclusive of any supplement thereto).
(j) Subsequent to the Execution Time, there shall not have
been any decrease in the rating of any of Berkshire's or Salomon's debt
securities by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act).
(k) Prior to the Closing Date, each of Berkshire and Salomon
shall have furnished to the Representatives such further information,
certificates and documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 8 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the Underwriter hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to Berkshire and
Salomon in writing or by telephone or telegraph confirmed in writing.
9. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 8 hereof is not satisfied,
because of any termination pursuant to Section 12 hereof or because of any
refusal, inability or failure on the part of Berkshire or Salomon to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any Underwriter, Berkshire will reimburse the Underwriters severally
upon demand for all reasonable out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities; provided,
however, that if the sale of the Securities provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 8 that is to be satisfied by Salomon is not satisfied or
because of any refusal, inability or failure on the part of Salomon to perform
any agreement herein or comply with any provision hereof other than by reason
of a default by any Underwriter, Salomon shall reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
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10. Indemnification and Contribution. (a) Berkshire agrees to indemnify
and hold harmless each Underwriter, the directors, officers, employees and
agents of each Underwriter, each person who controls any Underwriter within the
meaning of either the Act or the Exchange Act, Salomon, each of Salomon's
directors, each of Salomon's officers who signs the Salomon Registration
Statement and each person who controls Salomon within the meaning of either the
Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
(i) the Berkshire Registration Statement as originally filed or in any amendment
thereof, or in the Basic Berkshire Prospectus, any Preliminary Final Berkshire
Prospectus or the Final Berkshire Prospectus, or in any amendment thereof or
supplement thereto, or (ii) the Salomon Registration Statement as originally
filed or in any amendment thereof, or in any Preliminary Salomon Prospectus or
the Salomon Prospectus, or in any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state in the
documents referred to in clause (i) or (ii) above a material fact required to be
stated in the documents referred to in clause (i) or (ii) above or necessary to
make the statements therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that Berkshire will not
be liable under the indemnity agreement in this paragraph (a) to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
such untrue statement or alleged untrue statement or omission or alleged
omission made in (A) the documents referred to in clause (i) or (ii) above in
reliance upon and in conformity with written information furnished to Berkshire
or Salomon by or on behalf of any Underwriter through the Representatives
specifically for inclusion therein, or (B) (1) the Berkshire Registration
Statement, any Preliminary Final Berkshire Prospectus or the Final Berkshire
Prospectus (or any amendment or supplement thereto) under the headings "Salomon
Inc" and "Price Range of Salomon Common Stock and Dividend Policy" (other than
the last paragraph thereof) or (2) the Salomon Registration Statement, any
Preliminary Salomon Prospectus or the Salomon Prospectus (or any amendment or
supplement thereto), except under the heading "Ownership of Company Securities
by Berkshire". This indemnity agreement will be in addition to any liability
which Berkshire may otherwise have.
(b) Salomon agrees to indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter, each person who
controls any Underwriter within the meaning of either the Act or the Exchange
Act, Berkshire, each of Berkshire's directors, each of Berkshire's officers who
signs the Berkshire Registration Statement, and each person who controls
Berkshire within the meaning of either the Act or the Exchange Act, against any
and all losses, claims, damages or liabilities, joint or several, to which they
or any of them may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in (i) the Salomon Registration Statement
as originally filed or in any amendment thereof, or in any Preliminary Salomon
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Prospectus or the Salomon Prospectus, or in any amendment thereof or supplement
thereto, or (ii) the Berkshire Registration Statement as originally filed or in
any amendment thereof, or in any Preliminary Final Berkshire Prospectus or the
Final Berkshire Prospectus, or in any amendment thereto or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state in
the documents referred to in clause (i) or (ii) above a material fact required
to be stated in the documents referred to in clause (i) or (ii) above or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that Salomon
will not be liable under the indemnity agreement in this paragraph (b) to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made in (A) the documents referred to in clause (i) or (ii)
above in reliance upon and in conformity with written information furnished to
Salomon or Berkshire by or on behalf of any Underwriter through the
Representatives specifically for inclusion therein or (B) (1) the information
contained in or omitted from the Salomon Registration Statement, any Preliminary
Salomon Prospectus or the Salomon Prospectus under the heading "Ownership of
Company Securities by Berkshire" in the prospectus supplement and in the first,
fourth and fifth paragraphs under the heading "Ownership of Company Securities
by Berkshire" in the base prospectus or (2) the Berkshire Registration
Statement, any Preliminary Final Berkshire Prospectus or the Final Berkshire
Prospectus (or any amendment or supplement thereto), except under the headings
"Salomon Inc" and "Price Range of Salomon Common Stock and Dividend Policy"
(other than the last paragraph thereof). This indemnity agreement will be in
addition to any liability which Salomon may otherwise have.
(c) Each Underwriter severally agrees to indemnify and hold
harmless Berkshire and Salomon, each of their respective directors, each of
their respective officers who signs the Berkshire Registration Statement or the
Salomon Registration Statement, respectively, and each person who controls
Berkshire or Salomon within the meaning of either the Act or the Exchange Act,
to the same extent as the foregoing indemnities in paragraph (a) from Berkshire
to each Underwriter or in paragraph (b) from Salomon to each Underwriter,
respectively, but only with reference to written information relating to such
Underwriter furnished to Berkshire by or on behalf of such Underwriter through
the Representatives specifically for inclusion in the Berkshire Registration
Statement as originally filed or in any amendment thereof, or in any Preliminary
Final Berkshire Prospectus or the Final Berkshire Prospectus, or in any
amendment thereof or supplement thereto, and to Salomon by or on behalf of any
Underwriter through the Representatives specifically for inclusion in the
Salomon Registration Statement as originally filed or in any amendment thereof,
or in any Preliminary Salomon Prospectus or the Salomon Prospectus, or in any
amendment thereof or supplement thereto. This indemnity agreement will be in
addition to any liability which any Underwriter may otherwise have. Berkshire
and Salomon acknowledge that the statements set forth in the last paragraph of
the cover page and under the heading "Plan of Distribution" in any Preliminary
Final Berkshire Prospectus or the Final Berkshire Prospectus and the statements
set forth under the heading "Plan of Distribution" in any Preliminary Salomon
Prospectus or the Salomon Prospectus constitute the only information furnished
in writing by or on behalf of any Underwriter for inclusion in the
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documents referred to in the foregoing indemnity, and you, as the
Representatives, confirm that such statements are correct.
(d) Promptly after receipt by an indemnified party under this
Section 10 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 10, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from any liability under paragraphs (a), (b) or (c) above
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraphs (a), (b) or (c) above. The
indemnifying party shall be entitled to appoint counsel of indemnifying party's
choice at the indemnifying party's expense to represent the indemnified party in
any action for which indemnification is sought (in which case the indemnifying
party shall not thereafter be responsible for the fees and expenses of any
separate counsel retained by the indemnified party or parties except as set
forth below); provided, however, that such counsel shall be satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party in accordance with this
paragraph (d) within a reasonable time after notice of the institution of such
action or (iv) the indemnifying party shall authorize the indemnified party to
employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(e) In the event that the indemnity provided in paragraph (a),
(b) or (c) of this Section 10 is unavailable to or insufficient to hold harmless
an indemnified party for any reason, Berkshire, Salomon and the Underwriters
agree to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which Berkshire,
Salomon and one or more of the Underwriters may be subject in such proportion as
is appropriate to reflect the relative benefits received by Berkshire and
Salomon, on the one hand, and the Underwriters, on the other hand, from the
offering of the Securities; provided, however, that in no case shall any
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Underwriter (except as may be provided in any agreement among underwriters
relating to the offering of the Securities) be responsible for any amount in
excess of the underwriting discount or commission applicable to the Securities
purchased by such Underwriter hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, Berkshire and
Salomon, on the one hand, and the Underwriters, on the other hand, shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of Berkshire and Salomon, on the
one hand, and the Underwriters, on the other hand, in connection with the
statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. The relative benefits received by Berkshire
or Salomon on the one hand and the Underwriters on the other with respect to
such offering shall be deemed to be equal to the total net proceeds from the
offering (before deducting expenses) received by Berkshire, and the total
underwriting discounts and commissions, respectively, in each case as set forth
on the cover page of the Final Berkshire Prospectus. Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to information provided by Berkshire and Salomon, on the one hand, or
the Underwriters, on the other hand. Berkshire, Salomon and the Underwriters
agree that it would not be just and equitable if contribution were determined by
pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (e), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 10, each person who controls an
Underwriter within the meaning of either the Act or the Exchange Act and each
director, officer, employee and agent of such Underwriter shall have the same
rights to contribution as such Underwriter, and each person who controls
Berkshire or Salomon within the meaning of either the Act or the Exchange Act,
each officer of Berkshire or Salomon who shall have signed the Berkshire
Registration Statement or the Salomon Registration Statement and each director
of Berkshire or Salomon shall have the same rights to contribution as Berkshire
or Salomon, subject in each case to the applicable terms and conditions of this
paragraph (e).
11. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the principal amount of
Securities set forth opposite their names in Schedule I hereto bears to the
aggregate principal amount of Securities set forth opposite the names of all the
remaining Underwriters) the Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the event
that the aggregate principal amount of Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of
the aggregate amount of Securities set forth in Schedule I hereto, the remaining
Underwriters shall have the right to purchase all, but shall not be under any
obligation to purchase any, of the Securities, and if such nondefaulting
Underwriters do not purchase all the Securities, this Agreement will terminate
without liability to any nondefaulting Underwriter, Berkshire or Salomon. In the
event of a default by any Underwriter as set forth in this Section 11, the
Closing Date shall be postponed for such period, not exceeding seven days, as
the Representatives shall
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determine in order that the required changes in the Berkshire Registration
Statement or Salomon Registration Statement and the Final Berkshire Prospectus
or Salomon Prospectus or in any other documents or arrangements may be effected.
Nothing contained in this Agreement shall relieve any defaulting Underwriter of
its liability, if any, to Berkshire, Salomon and any nondefaulting Underwriter
for damages occasioned by its default hereunder.
12. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice given
to Berkshire and Salomon prior to delivery of and payment for the Securities, if
prior to such time (i) trading in Berkshire's or Salomon's Common Stock shall
have been suspended by the Commission, (ii) trading in the securities generally
on the NYSE shall have been suspended or limited or minimum prices shall have
been established on such Exchange, (iii) a banking moratorium shall have been
declared by either Federal or New York State authorities or (iv) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States of a national emergency or war or other calamity or crisis, the
effect of which on financial markets of the United States is such as to make it,
in the judgment of the Representatives, impracticable or inadvisable to proceed
with the offering or delivery of the Securities as contemplated by the Final
Berkshire Prospectus (exclusive of any supplement thereto).
13. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of
Berkshire and Salomon or their respective officers and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of the
Underwriters, Berkshire or Salomon or any of the officers, directors or
controlling persons referred to in Section 10 hereof, and will survive delivery
of and payment for the Securities. The provisions of Sections 9 and 10 hereof
shall survive the termination or cancellation of this Agreement.
14. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representatives, will be
mailed, delivered or telegraphed and confirmed to them at Seven Xxxxx Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention of the Legal Department; if sent to
Berkshire, will be mailed, delivered or telegraphed and confirmed to it at 0000
Xxxxxx Xxxxx, Xxxxx, Xxxxxxxx 00000, attention of the Chief Executive Officer;
or if sent to Salomon, will be mailed, delivered, telegraphed and confirmed to
it at Seven Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention of the
Secretary.
15. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 10 hereof,
and no other person will have any right or obligation hereunder.
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16. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among
Berkshire, Salomon and the several Underwriters.
Very truly yours,
Berkshire Hathaway Inc.
By: /s/ XXXX X. HAMBURG
-------------------------
Name: Xxxx X. Hamburg
Title: Vice President
Salomon Inc
By: /s/ XXXXXX X. XXXXXX
-------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman and CEO
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
Xxxxxxx, Xxxxx & Co.
Xxxxx Xxxxxx Inc.
By: Salomon Brothers Inc
By: /s/ D. XXXXX XXXXXX
------------------------
Name: D. Xxxxx Xxxxxx
Title: Director
For themselves and the other several
Underwriters named in Schedule I to
the foregoing Agreement.
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SCHEDULE I
Underwriter Principal Face Amount of Underwritten Securities
----------- ------------------------------------------------
to be Purchased
---------------
Salomon Brothers Inc......................... $ 146,666,668
Xxxxxxx, Xxxxx & Co.......................... 146,666,666
Xxxxx Xxxxxx Inc............................. 146,666,666
-------------
Total................... $[440,000,000]
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