Exhibit 99(t)
EXECUTION COPY
SUBSCRIPTION AGREEMENT dated as of
May 30, 2001, between Berkshire Hathaway
Inc., a Delaware corporation (the
"PURCHASER"), TACK Acquisition Corp., a
Delaware corporation ("NEWCO"), and White
Mountains Insurance Group, Ltd., a company
existing under the laws of Bermuda ("WTM").
WHEREAS the Purchaser is a party to the Warrant Agreement (the
"WARRANT AGREEMENT"), dated as of May 30, 2001, pursuant to which the Purchaser
has agreed to purchase for an aggregate of $75 million Series A Warrants to
acquire 1,170,000 Common Shares of WTM and Series B Warrants to acquire 544,285
Common Shares of WTM (collectively, the "WARRANTS").
WHEREAS Newco desires to sell to the Purchaser, and the
Purchaser desires to purchase from Newco, 300,000 shares of Series A Preferred
Stock, no par value, of Newco (the "SERIES A PREFERRED STOCK" or "SECURITIES")
upon the terms and subject to the conditions set forth in this agreement (the
"AGREEMENT");
WHEREAS the Series A Preferred Stock shall have the voting
powers, preferences and relative, participating, optional and other special
rights and the qualifications, limitations and restrictions set forth in Exhibit
A to this Agreement; and
WHEREAS, pursuant to this Agreement and upon the terms and
subject to the conditions hereof, the parties desire to set forth certain rights
and obligations of the Purchaser with respect to the Securities acquired by the
Purchaser pursuant hereto, and Newco and the Purchaser wish to make various
additional agreements, all as expressly set forth below.
NOW, THEREFORE, in consideration of the premises and the
respective agreements hereinafter set forth, the parties hereto agree as
follows:
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ARTICLE I
DEFINITIONS
"AFFILIATE" of a specified Person means any Person that is a
direct or indirect wholly-owned subsidiary of such specified Person.
"BUSINESS DAY" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York or
Bermuda are authorized or obligated by law or executive order to close.
"CLOSING" shall have the meaning given to such term in Article
IV of this Agreement.
"CLOSING DATE" shall have the meaning given to such term in
Article IV of this Agreement.
"COMMITMENT LETTER" shall have the meaning assigned to such
term in Exhibit B to this Agreement.
"EXCLUDED LIENS" means Liens imposed by or arising from the
transfer restriction contained in Article IX of this Agreement or as a result of
any action by the Purchaser.
"LIENS" means liens, security interests, claims, pledges and
encumbrances of any kind.
"MATERIAL ADVERSE EFFECT" with respect to any person means a
material adverse effect on (a) the business, financial condition or results of
operations of such person and its subsidiaries, taken as a whole, or (b) the
ability of such person to perform its obligations under this Agreement.
"PERSON" means any individual, corporation, general or limited
partnership, limited liability company, joint venture, estate, trust, or other
entity.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"STOCK PURCHASE AGREEMENT" shall have the meaning assigned to
such term in Exhibit B to this Agreement.
"TRANSACTIONS" shall have the meaning assigned to such term in
Exhibit B to this Agreement.
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"WTM EQUITY TERMSHEET" shall have the meaning assigned to such
term in Exhibit B to this Agreement.
ARTICLE II
PURCHASE AND SALE
On the Closing Date, and upon the terms and subject to the
conditions herein set forth, Newco agrees to issue and sell to the Purchaser,
free and clear of all Liens other than any Excluded Liens, and the Purchaser
hereby agrees to purchase and accept from Newco, the Securities for a purchase
price of $225.0 million (the "PURCHASE PRICE"). Subject to the terms and
conditions of this Agreement and in reliance upon the representations,
warranties and agreements of the Purchaser hereunder, Newco shall deliver to the
Purchaser on the Closing Date (against payment of the Purchase Price)
certificates representing the Securities registered in the name of the Purchaser
or a designated wholly-owned subsidiary thereof.
ARTICLE III
PURCHASE PRICE
On the Closing Date, the Purchaser shall pay to Newco the
Purchase Price for the purchase of the Securities. The Purchase Price shall be
paid in immediately available funds by wire transfer to a bank account
designated by Newco.
ARTICLE IV
THE CLOSING
SECTION 4.01. CLOSING DATE. Upon the terms and subject to the
conditions herein set forth, the purchase and sale provided for herein (the
"CLOSING") will take place (a) at the offices of Cravath, Swaine & Moore, 825
Eighth Avenue, New York, NY 10019, at 10:00 a.m., New York City time, on the
date on which the Transactions close (the "TRANSACTIONS CLOSING DATE"), or (b)
at such other time, date and place on or prior to the Transactions Closing Date
as shall be fixed by agreement among the parties hereto. The date and time of
Closing are herein referred to as the "CLOSING DATE".
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF NEWCO
Newco represents and warrants to the Purchaser as follows:
SECTION 5.01. AUTHORITY OF SELLER. Newco has been duly formed,
and is validly existing and in good standing, under the laws of Delaware. The
issuance, sale and delivery by Newco of the Securities has been duly authorized
by Newco. Upon issuance and delivery as contemplated by Article II of this
Agreement and upon payment therefor as contemplated by Article III of this
Agreement, the Securities will be duly authorized, validly issued, fully paid
and nonassessable. This Agreement has been duly and validly executed and
delivered by Newco and is the legal, valid and binding obligation of Newco
enforceable against Newco in accordance with its terms. No action, consent or
approval by, or filing with, any Federal, state, municipal, foreign or other
court or governmental or administrative body or agency, or any other regulatory
or self-regulatory body (a "GOVERNMENTAL AUTHORITY"), is required to be made by
Newco in connection with the execution and delivery by Newco of this Agreement
or the consummation by Newco of the transactions contemplated hereby, other than
(a) such consents, approvals or filings required in connection with the
acquisition of CGU Corporation, a Delaware corporation ("CGU"), by Newco and the
other Transactions, including the filing of pre-merger notification and report
forms under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR ACT"), (b) the filing of premerger notification and report forms under
the HSR Act in connection with Purchaser's exercise of any Warrants pursuant to
the Warrant Agreement and (c) the approval, filings and notices required under
the insurance laws of each jurisdiction in which Newco or its subsidiaries or
CGU or its subsidiaries conduct business, in each case in connection with the
Purchaser's investment in Newco and WTM as contemplated by this Agreement and
the Warrant Agreement, (d) those which may be required solely by reason of the
Purchaser's (as opposed to any other third party's) participation in the
Transactions or in the transaction contemplated hereby and (e) such other
consents, approvals and filings, the failure of which to obtain would not have a
Material Adverse Effect on Newco (after giving effect to the Transactions).
SECTION 5.02. NO CONFLICTS; NO VIOLATIONS. None of the
execution, delivery or performance of this Agreement by Newco will (a) result in
any violation of or be in
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conflict with or constitute a default under any term of the organizational
documents of Newco, (b) result in any material breach of any terms or provisions
of, or constitute a material default under, any material contract, agreement or
instrument to which Newco is a party or by which Newco or its property is bound
or (c) violate any judgment, order, decree, statute, law, rule or regulation
applicable to Newco except for, in the case of the foregoing clauses (b) and
(c), any violation, conflict, breach or default which would not have a Material
Adverse Effect on Newco (after giving effect to the Transactions).
SECTION 5.03. CAPITALIZATION. The authorized capital stock of
Newco consists of (a) 1,000 shares of common stock, par value $1.00 per share
("COMMON STOCK"), and (b) 300,000 shares of preferred stock, par value $1.00 per
share ("PREFERRED STOCK"). As of the date hereof, 1 share of Common Stock is
issued and outstanding and no shares of Preferred Stock are issued and
outstanding.
SECTION 5.04. BROKERS. No broker, investment banker, financial
advisor or other person other than Lehman Brothers Inc., the fees and expenses
of which will be paid by Newco, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
WTM or Newco.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to Newco as follows:
SECTION 6.01. AUTHORITY OF PURCHASER. The Purchaser has been
duly formed, and is validly existing and in good standing, under the laws of the
State of Delaware. The Purchaser has full right, power and authority to
consummate the transactions contemplated herein. This Agreement has been duly
and validly executed and delivered by the Purchaser and is the legal, valid and
binding obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms. No action, consent or approval by, or filing with,
any Governmental Authority is required to be made or obtained by the Purchaser
in connection with the execution and delivery by the Purchaser of this Agreement
or the consummation by the Purchaser of the transactions contemplated hereby
other than (a) the approvals, filings and notices required under the insurance
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laws of such jurisdictions in which Newco or its subsidiaries or CGU or its
subsidiaries conduct business, in each case in connection with the Purchaser's
investment in Newco and WTM as contemplated by this Agreement and the Warrant
Agreement, (b) the filing of premerger notification and report forms under the
HSR Act in connection with Purchaser's exercise of any Warrants pursuant to the
Warrant Agreement and (c) such other consents, approvals and filings, the
failure of which to obtain would not have a Material Adverse Effect on the
Purchaser.
SECTION 6.02. NO CONFLICTS; NO VIOLATIONS. None of the
execution, delivery or performance of this Agreement by the Purchaser will (a)
result in any violation of or be in conflict with or constitute a default under
any term of organizational documents of the Purchaser, (b) result in any
material breach of any terms or provisions of, or constitute a material default
under, any material contract, agreement or instrument to which the Purchaser is
a party or by which the Purchaser or its property is bound or (c) violate any
judgment, order, decree, statute, law, rule or regulation applicable to the
Purchaser, except for, in the case of the foregoing clauses (b) and (c), any
violation, conflict, breach or default which would not have a Material Adverse
Effect on the Purchaser.
SECTION 6.03. INVESTMENT INTENTION; NO RESALES. The Purchaser
is acquiring the Securities hereunder for investment, solely for its own account
and not with a view to, or for resale in connection with, the distribution
thereof. The Purchaser will not resell, transfer, assign or distribute the
Securities except in compliance with this Agreement and the registration
requirements of the Securities Act and applicable state securities laws or
pursuant to an available exemption therefrom.
SECTION 6.04. ACCREDITED INVESTOR; ABILITY TO BEAR RISK;
EVALUATION OF RISKS. The Purchaser is an "ACCREDITED INVESTOR" (as such term is
defined in Rule 501 of Regulation D promulgated under the Securities Act). The
financial situation of the Purchaser is such that it can afford to bear the
economic risk of holding the Securities. The Purchaser can afford to suffer the
complete loss of its investment in the Securities. The knowledge and experience
of the Purchaser in financial and business matters is such that it is capable of
evaluating the risks of the investment in the Securities. The Purchaser
acknowledges that no representations, express or implied, are being made with
respect to Newco, the Securities, or otherwise, other than those expressly set
forth herein or in the Warrant Agreement.
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SECTION 6.05. SECURITIES UNREGISTERED. The Purchaser has been
advised by Newco that (i) the offer and sale of the Securities have not been
registered under the Securities Act; (ii) the offering and sale of the
Securities is intended to be exempt from registration under the Securities Act
pursuant to Section 4(2) of the Securities Act; and (iii) there is no
established market for the Securities and it is not anticipated that there will
be any public market for the Securities in the foreseeable future.
SECTION 6.06. BROKERS. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Purchaser.
ARTICLE VII
CONDITIONS
SECTION 7.01. CONDITIONS TO OBLIGATIONS OF PURCHASER. The
obligations of the Purchaser to perform under this Agreement are subject to the
satisfaction or waiver by the Purchaser of each of the following conditions on
or prior to the Closing Date:
(a) concurrently with the Closing hereunder, the Transactions
shall have been consummated pursuant to the terms and conditions of the
Stock Purchase Agreement, the Commitment Letter, the WTM Equity Term
Sheet and the Warrant Agreement, which shall not have been amended and
the closing conditions therein waived in any material respect without
the Purchaser's prior written consent;
(b) after giving effect to the consummation of the
Transactions, the corporate and capital structure of WTM and its
subsidiaries shall be as set forth in Exhibit B except for such changes
as shall not adversely affect in any material respect the Purchaser;
(c) there shall not exist on the Closing Date any injunction
or other order, or statute, rule or regulation, of any Governmental
Authority preventing or prohibiting the consummation of the sale and
purchase of the Securities hereunder;
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(d) there shall have been received all necessary approvals
from state insurance regulators with respect to the sale and purchase
of the Securities;
(e) the acceptance of the filing with the Secretary of State
of Delaware of the certificate of designation for the Series A
Preferred Stock substantially in the form of Exhibit A;
(f) the representations and warranties of Newco set forth in
this Agreement that are qualified as to materiality shall be true and
correct and those not so qualified shall be true and correct in all
material respects as of the Closing Date as though made on the Closing
Date (except to the extent any such representation or warranty speaks
as of an earlier date, in which case such representations and
warranties qualified as to materiality shall be true and correct and
those not so qualified shall be true and correct in all material
respects on and as of such earlier date);
(g) Newco shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or
prior to the Closing Date; and
(h) Newco shall have delivered to the Purchaser a written
notice of the Closing three Business Days prior to the Closing Date,
and on the Closing Date, prior to the sale and purchase of the
Securities hereunder, an officer's certificate as to the satisfaction,
to such officer's knowledge, of all of the conditions to the
Purchaser's obligations hereunder (other than as to matters that have
been waived by, or are within the knowledge or control of, the
Purchaser).
SECTION 7.02. CONDITIONS TO OBLIGATIONS OF NEWCO. The
obligations of Newco to perform under this Agreement are subject to the
satisfaction or waiver by Newco of each of the following conditions on or prior
to the Closing Date:
(a) concurrently with the Closing hereunder, the
Transactions shall have been consummated;
(b) there shall not exist on the Closing Date any injunction
or other order, or statute, rule or regulation, of any Governmental
Authority preventing or the prohibiting the consummation of the sale
and purchase of the Securities hereunder;
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(c) there shall have been received all necessary approvals
from state insurance regulators with respect to the sale and purchase
of the Securities;
(d) the representations and warranties of the Purchaser set
forth in this Agreement that are qualified as to materiality shall be
true and correct and those not so qualified shall be true and correct
in all material respects as of the Closing Date as though made on the
Closing Date (except to the extent any such representation or warranty
speaks as of an earlier date, in which case such representations and
warranties qualified as to materiality shall be true and correct and
those not so qualified shall be true and correct in all material
respects on and as of such earlier date),
(e) the Purchaser shall have performed in all material
respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date; and
(f) the Purchaser shall have delivered to Newco on the Closing
Date, prior to the sale and purchase of the Securities hereunder, an
officer's certificate as to the satisfaction, to such officer's
knowledge, of all of the conditions to Newco's obligations hereunder
(other than as to matters that have been waived by, or are within the
knowledge or control of, Newco).
ARTICLE VIII
MAKE WHOLE PROVISION
SECTION 8.01. MAKE WHOLE PROVISION. (a) If the dividends paid
or deemed paid to the Purchaser on the Securities do not qualify for the 70%
dividends-received deduction of Section 243 of the Internal Revenue Code of
1986, as amended, as a result of Newco's lack of available earnings and profits,
Newco shall reimburse the Purchaser an amount equal, on an after-tax basis, to
any additional taxes, interest and penalties paid by the Purchaser as a result
of such failure to qualify and as a result of such reimbursement payment by
Newco.
(b) If the dividends paid or deemed paid to the Purchaser on
the Securities are extraordinary dividends within the meaning of Section 1059 of
the Internal Revenue Code of 1986, as amended, Newco shall reimburse the
Purchaser an amount equal, on an after-tax basis, to any
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additional taxes, interest and penalties paid by the Purchaser (x) as a result
of such dividend being an extraordinary dividend, either with respect to receipt
of such extraordinary dividend or on the Purchaser's disposition of the
Securities, and (y) as a result of such reimbursement payment by Newco.
ARTICLE IX
RESTRICTION OF TRANSFER
SECTION 9.01. TRANSFER TO AFFILIATE. The Securities shall not
be transferable, except to one or more Affiliates of the Purchaser. The
Purchaser agrees, and each subsequent transferee pursuant to this Section 9.01
shall agree by written instrument reasonably satisfactory to Newco, that it will
not transfer any Securities except in compliance with this Agreement and the
registration requirements of the Securities Act and applicable state securities
laws or pursuant to an available exemption therefrom.
SECTION 9.02. LEGEND. Each certificate representing Securities
issued to the Purchaser or to a subsequent transferee pursuant to Section 9.01
(unless the legal opinion reasonably satisfactory to Newco is delivered in
connection therewith to the effect that the first paragraph of such legend is
not required in order to ensure compliance with the Securities Act) shall
include a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR TRANSFERRED
EXCEPT PURSUANT TO AN EXEMPTION FROM, OR OTHERWISE IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS.
IN ADDITION, THE SECURITIES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH
THE CONDITIONS SPECIFIED IN THE SUBSCRIPTION AGREEMENT DATED MAY 30,
2001, BETWEEN NEWCO AND THE INITIAL PURCHASER OF THE SECURITIES NAMED
THEREIN, A COMPLETE AND CORRECT COPY OF WHICH IS AVAILABLE FOR
INSPECTION AT 80 SOUTH MAIN STREET, HANOVER, NH 03755 AND WILL BE
FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.
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ARTICLE X
AGREEMENTS
SECTION 10.01. REASONABLE BEST EFFORTS; FURTHER ACTIONS. Each
of Newco and the Purchaser will use its reasonable best efforts to take or cause
to be taken all action and to do or cause to be done all things necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement. If, at any time after
the Closing Date, any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Purchaser with full title to the
Securities, the proper officers, directors, partners or duly authorized
representatives of each party to this Agreement shall take all such necessary
action.
SECTION 10.02. CONSENTS. Each of Newco and the Purchaser will
cooperate with each other, and use its reasonable best efforts, in filing any
necessary applications, reports or other documents with, giving any notices to,
and seeking any consents from, all regulatory bodies and all governmental
agencies and authorities (including the filing of any pre-merger notification
and report forms under the HSR Act) and all third parties (including any other
equityholders) as may be necessary or desirable in connection with the
consummation of the transactions contemplated by this Agreement.
SECTION 10.03. GUARANTEED INDEBTEDNESS. WTM covenants with
Newco and Purchaser that, to the extent Newco has guaranteed, whether jointly,
severally, fully or unconditionally, the payment of any indebtedness of WTM or
of any subsidiary of WTM that is intermediate between WTM and Newco, WTM shall
pay, to the extent WTM has financial resources sufficient to do so, any and all
amounts subject to any such guarantee by Newco (plus accrued interest and other
related charges) due to be paid in connection with any demand for payment with
respect to any such guarantee. WTM agrees to repay Newco (to the extent WTM has
financial resources sufficient to do so) any amounts paid by Newco on any
guarantee by Newco of any indebtedness of WTM or any subsidiary of WTM that is
intermediate between WTM and Newco.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01. AMENDMENT AND WAIVER. This Agreement may not be
amended or supplemented except by an instrument in writing signed by the
Purchaser and Newco. Any term or provision of this Agreement may be waived, but
only in writing by the party which is entitled to the benefit thereof. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any preceding or succeeding breach
and no failure by either party to exercise any right or privilege hereunder
shall be deemed a waiver of such party's rights or privileges hereunder or shall
be deemed a waiver of such party's rights to exercise the same at any subsequent
time or times hereunder.
SECTION 11.02. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one instrument. It shall not be necessary for
each party to sign each counterpart so long as every party has signed at least
one counterpart.
SECTION 11.03. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been given if
delivered personally or sent by registered or certified mail (return receipt
requested), postage prepaid, or by telecopy to the parties to this Agreement at
the following addresses or at such other address for a party as shall be
specified by like notice:
If to Newco, at:
c/o White Mountains Insurance Group, Ltd.
80 South Main Street
Hanover, NH 03755
Attention: Corporate Secretary
Telecopy: (603) 643-4562
with a copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Attention: Philip A. Gelston, Esq.
Telecopy: (212) 474-3700
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If to the Purchaser, at:
Berkshire Hathaway Inc.
1440 Kiewit Plaza
Omaha, NE 68131
Attention: Marc Hamburg
Telecopy: (402) 346-3375
with a copy to:
Munger, Tolles & Olson LLP
355 South Grand Avenue
35th Floor
Los Angeles, CA 90071
Attention: Robert E. Denham, Esq.
Telecopy: (213) 687-3702
All such notices and communications shall be deemed to have been received on the
date of delivery, on the date that the telecopy is confirmed as having been
received or on the third business day in New York after the mailing thereof, as
the case may be.
SECTION 11.04. ASSIGNMENT. Neither this Agreement nor any
right, remedy, obligation or liability arising hereunder or by reason hereof
shall be assignable by any party to this Agreement without the prior written
consent of the other parties, and any attempt to assign any right, remedy,
obligation or liability arising hereunder without such consent shall be void,
except Purchaser may assign any or all of its rights hereunder to one or more of
its Affiliates following the Closing.
SECTION 11.05. ENTIRE AGREEMENT. This Agreement constitutes
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all prior agreements and undertakings, written and oral.
SECTION 11.06. BINDING EFFECT; PARTIES IN INTEREST. This
Agreement shall be binding upon and inure to the benefit of the parties to this
Agreement and their respective successors and permitted assigns, and nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other person any rights, benefits or remedies of any nature whatsoever under or
by reason of this Agreement.
SECTION 11.07. EXPENSES; INDEMNIFICATION. (a) Whether or not
the purchase and sale of the Securities is consummated, each party hereto shall
pay its own fees and expenses incident to preparing for, entering into and
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carrying out this Agreement and the consummation of the transactions
contemplated hereby.
(b) A party in material breach of this Agreement shall, on
demand, indemnify and hold harmless the other party for and against all
reasonable out-of-pocket expenses, including legal fees, incurred by the other
party by reason of the enforcement and protection of its rights under this
Agreement. The payment of such expenses is in addition to any other relief to
which such other party may be entitled.
SECTION 11.08. APPLICABLE LAW AND JURISDICTION; SERVICE OF
PROCESS; WAIVER OF JURY TRIAL.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to any
applicable principles of conflict of laws to the extent that the application
of the laws of another jurisdiction would be required thereby. Any and all
suits, legal actions or proceedings against any party hereto arising out of
this Agreement shall be brought in the United States Federal court sitting in
the Southern District of New York, or, if such court shall not have
jurisdiction, in the Supreme Court of the State of New York sitting in the
County of New York, and each party hereby submits to and accepts the
exclusive jurisdiction of such courts for the purpose of such suits, legal
action or proceedings. Each party hereto hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any
such suit, legal action or proceeding in any such court and hereby further
waives any claim that any suit, legal action or proceeding brought in any
such court has been brought in an inconvenient forum. The parties hereto
agree that service of process in connection with any suit, legal action or
proceeding brought hereunder or in connection herewith may be made in
accordance with the provisions of this Section 11.08 in addition to any other
means of service of process permitted by law.
(b) Each party waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect of any
litigation arising out of or relating to this Agreement. Each party (i)
certifies that no representative, agent or attorney of another party has
represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges
that it has been induced to enter into this Agreement by, among other things,
the mutual waivers and certifications set forth in this Section 11.08.
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SECTION 11.09. ARTICLE AND SECTION HEADINGS. The article,
section and other headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
SECTION 11.10. TERMINATION; EFFECT OF TERMINATION. (a) This
Agreement may be terminated at any time prior to the Closing (i) by the mutual
consent of the Purchaser and Newco, (ii) by Newco or the Purchaser if the Stock
Purchase Agreement (as such term is defined in Exhibit B hereto) is terminated
and (iii) by Newco or Purchaser, if the Closing has not occurred on or prior to
March 31, 2001 (the "DROP-DEAD DATE"); PROVIDED, HOWEVER, that the Drop-Dead
Date may be extended by Newco to the date to which the Termination Date (as
defined in the Stock Purchase Agreement) is extended pursuant to the terms of
Section 10.1(b) of the Stock Purchase Agreement.
(b) This Agreement may be terminated at any time prior to the
Closing by the Purchaser, upon written notice to Newco, if (i) any of the
conditions to Purchaser's obligation hereunder set forth in Section 7.01 shall
have become incapable of fulfillment prior to June 30, 2001, and shall not have
been waived by the Purchaser, or (ii) there shall be any order, injunction or
decree of any Governmental Entity which prohibits consummation of Purchaser's
purchase of the Securities and such order, injunction or decree shall have
become final and nonappealable.
(c) If this Agreement is terminated and the transactions
contemplated herein are abandoned as described in this Section 11.10, this
Agreement shall become null and void and of no further force and effect, without
any liability on the part of any party, other than this Article XI, which
provisions shall survive termination and except to the extent that such
termination results from the breach by any party of any representation, warranty
or covenant set forth in this Agreement. Nothing in this Section 11.10(c) shall
be deemed to release any party from any liability for any breach by such party
of the terms and provisions of this Agreement.
SECTION 11.11. SPECIFIC ENFORCEMENT. Each of the parties
hereto acknowledges and agrees that in the event of any breach of this
Agreement, the non-breaching party would be irreparably harmed and could not be
made whole by monetary damages. It is accordingly agreed that the parties hereto
will waive the defense in any action for specific performance that a remedy at
law would be adequate and that the parties hereto, in addition to any other
remedy to which they may be entitled at law or in equity, shall be entitled
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to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof without
the necessity of proving actual damage or securing or posting any bond or
providing prior notice.
17
IN WITNESS WHEREOF, each party hereto has executed this
Agreement as of the day and year first above written.
TACK ACQUISITION CORP.,
by
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Name: John J. Byrne
Title: President
BERKSHIRE HATHAWAY INC.,
by
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Name:
Title:
WHITE MOUNTAINS INSURANCE
GROUP, LTD.,
by
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Name: John J. Byrne
Title: Chairman and Chief
Executive Officer
EXHIBIT B
Transactions: WTM is proposing to acquire the outstanding capital stock of
CGU Corporation, a Delaware corporation ("CGU") and an
indirect wholly owned subsidiary of CGNU plc, for
approximately $2.17 billion of which approximately $1.96
billion is payable in cash and $210 million is payable with
a seller's note (see below). In addition, at the time of the
acquisition, an approximately $500 million note between CGU
and CGNU plc will be outstanding, after the reduction of the
note by the proceeds from the sale of Pilot, CGU's life
insurance subsidiaries and certain other assets to CGNU plc,
as described below.
WTM has formed TACK Holding Corp., a Delaware corporation
("HOLDCO"), to hold all the equity interests in TACK
Acquisition Corp., a Delaware corporation ("NEWCO"), which
was formed by WTM to acquire CGU. At the closing, the
following transactions (the "TRANSACTIONS") shall occur:
o Newco will acquire CGU on substantially the terms of the
Stock Purchase Agreement in the form attached hereto as
Exhibit B (the "STOCK PURCHASE AGREEMENT");
o CGU will sell Pilot to CGNU for approximately $285
million;
o CGU will sell CGU Life Insurance of America and CGU
Annuity Service Corporation to CGNU for approximately
$128 million;
o CGU will sell all the shares of Societe Generale and
Munich Re held by it to CGNU for approximately $253
million;
o CGU will sell certain other assets to CGNU for
approximately $3.8 million;
2
o Newco will issue Newco common stock to Holdco, and
Holdco will issue Holdco common stock to WTM, for $725
million in cash contributed by WTM to Holdco and by
Holdco to Newco;
o WTM will issue not less than $300 million face
amount of WTM convertible preferred stock on
substantially the terms set forth in Exhibit C (the "WTM
EQUITY TERM SHEET");
o Newco will issue Newco common stock to Holdco, and Holdco
will issue Holdco common stock to WTM, for approximately
$725 million in net tangible assets (FolksAmerica,
Peninsula, Main Street America, American Centennial
Insurance Company and British Insurance Company of
Cayman) contributed by WTM to Holdco and by Holdco to
Newco; these assets then will be contributed by Newco to
CGU;
o Newco will borrow $1 billion pursuant to the terms and
conditions of a commitment letter (the "COMMITMENT
LETTER") from Lehman Brothers Inc. substantially in the
form attached hereto as Exhibit C (the "FINANCING");
o Holdco will issue a seller's note for $210 million (the
"SELLER'S NOTE") on the terms set forth in the term sheet
attached hereto as Exhibit D to be repaid in cash or in
WTM Common Stock, at Holdco's option, six months after
closing; if repaid in WTM Common Stock, the stock will be
priced at $174.50 per share; and
3
o In exchange for a purchase price of $225 million,
Berkshire Hathaway, Inc. will purchase Newco preferred
stock; in addition, for a purchase price of $75 million
Berkshire Hathaway Inc. will purchase a warrant to
purchase WTM common stock.