<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 13, 1996
REGISTRATION NO. 333-01645
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
MIDAMERICAN ENERGY HOLDINGS COMPANY
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
IOWA 4924 42-1451822
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
666 GRAND AVENUE
P.O. BOX 657
DES MOINES, IOWA 50303-0657
ATTN: PAUL J. LEIGHTON, CORPORATE SECRETARY
(515) 242-4300
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
PAUL J. LEIGHTON
VICE PRESIDENT AND CORPORATE SECRETARY
MIDAMERICAN ENERGY COMPANY
666 GRAND AVENUE
P.O. BOX 657
DES MOINES, IOWA 50303-0657
(515) 242-4300
(Names, Addresses, Including Zip Codes, and Telephone Numbers, Including Area
Codes, of Agents for Service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
R. Todd Vieregg, P.C. Douglas W. Hawes, Esq.
Sidley & Austin LeBoeuf, Lamb, Greene & MacRae, L.L.P.
One First National Plaza 125 West 55th Street
Chicago, Illinois 60603 New York, New York 10019
</TABLE>
------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the Share Exchange between MidAmerican Energy Company and the
Registrant pursuant to the Agreement and Plan of Exchange described in the Proxy
Statement/Prospectus forming a part of this Registration Statement, have been
satisfied or waived.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
MIDAMERICAN ENERGY HOLDINGS COMPANY
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
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FORM S-4 -- ITEM NO. AND CAPTION PROXY STATEMENT/PROSPECTUS
- ------------------------------------------------------------------------------- --------------------------------------
<C> <S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and Outside Front Cover Page of
Prospectus......................................................... Facing Page of Registration Statement;
Cross Reference Sheet; Cover Page of
Prospectus
2. Inside Front and Outside Back Cover Pages of Prospectus............. Available Information; Incorporation
by Reference; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges, and Other
Information........................................................ Summary of Holding Company Proposal;
Incorporation by Reference;
MidAmerican Common Stock Market
Prices and Dividends
4. Terms of the Transaction............................................ Summary of Holding Company Proposal;
The Holding Company Proposal; Annex I
5. PRO FORMA Financial Information..................................... Incorporation by Reference
6. Material Contacts With the Company Being Acquired................... The Holding Company Proposal
7. Additional Information Required for Reoffering by Persons and
Parties Deemed to be Underwriters.................................. Not Applicable
8. Interest of Named Experts and Counsel............................... The Holding Company Proposal; Legal
Matters; Experts
9. Disclosure of Commission Position on Indemnification For Securities
Act Liabilities.................................................... Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORM S-4 -- ITEM NO. AND CAPTION PROXY STATEMENT/PROSPECTUS
- ------------------------------------------------------------------------------- --------------------------------------
<C> <S> <C>
B. INFORMATION ABOUT THE REGISTRANT
10. Information With Respect to S-3 Registrants......................... Available Information; Incorporation
by Reference; The Holding Company
Proposal
11. Incorporation of Certain Information by Reference................... Available Information; Incorporation
by Reference; The Holding Company
Proposal
12. Information with Respect to S-2 or S-3 Registrants.................. Not Applicable
13. Incorporation of Certain Information by Reference................... Not Applicable
14. Information with Respect to Registrants Other Than S-3 or S-2
Registrants........................................................ Not Applicable
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information With Respect to S-3 Companies........................... Available Information; Incorporation
by Reference; The Holding Company
Proposal
16. Information With Respect to S-2 or S-3 Companies.................... Not Applicable
17. Information With Respect to Companies Other Than S-2 and S-3
Companies.......................................................... Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or Authorizations Are to be
Solicited.......................................................... Incorporation by Reference; Meetings,
Election of Directors; Summary of
Holding Company Proposal; The Holding
Company Proposal; 1997 Shareholder
Proposals
19. Information if Proxies, Consents or Authorizations Are Not to be
Solicited, or in an Exchange Offer................................. Not Applicable
</TABLE>
<PAGE>
MIDAMERICAN ENERGY COMPANY
666 GRAND AVENUE
P.O. BOX 657
DES MOINES, IA 50303-0657
Dear Shareholder:
You are cordially invited to attend the first Annual Meeting of Shareholders
of MidAmerican Energy Company ("Company") which will be held on Wednesday, April
24, 1996 at the Airport Holiday Inn, 6111 Fleur Drive, Des Moines, Iowa. The
meeting will start at 10:00 a.m., local time.
At this important meeting you will be asked to vote on the election of
directors for the ensuing year, to act on a proposed corporate restructuring
whereby the Company will become a subsidiary of a new holding company named
MidAmerican Energy Holdings Company ("Holdings") and to approve the 1995
Long-Term Incentive Plan. The Board of Directors of the Company recommends a
vote "FOR" the election of all nominees and each of the proposals.
The accompanying Proxy Statement/Prospectus discusses the reasons for and
the benefits of the proposed corporate restructuring. You are urged to read it
and the Annexes thereto carefully.
The Board of Directors believes that the holding company structure, similar
to that of Midwest Resources Inc. and Midwest Power Systems Inc. prior to their
July 1, 1995 merger with Iowa-Illinois Gas and Electric Company that created the
Company, will prove beneficial to the shareholders of MidAmerican. A holding
company structure is expected to provide a more flexible organization that is
better positioned to operate in the increasingly competitive energy market place
and to take advantage of new growth opportunities.
Holdings has been organized to implement this new structure. It is proposed
that outstanding shares of MidAmerican Common Stock be exchanged, on a
share-for-share basis, for shares of Holdings Common Stock. As a result, the
holders of MidAmerican Common Stock will become the holders of Holdings Common
Stock, and Holdings will become the owner of MidAmerican Common Stock.
If approved by the requisite vote of the shareholders and if all required
regulatory approvals are received, the exchange will occur in accordance with
the terms set forth in the Agreement and Plan of Exchange described in the Proxy
Statement/Prospectus and attached as Annex I thereto. It is anticipated that
this will occur during 1996. Iowa law provides that a majority of all of the
votes entitled to be cast by each class of shares included in the exchange is
required to approve the exchange. Therefore, approval of the Agreement and Plan
of Exchange will require the affirmative vote of the holders of shares of
MidAmerican Common Stock representing a majority of all votes entitled to be
cast by all holders of MidAmerican Common Stock.
If the new structure is effected, it will not be necessary for you to turn
in your MidAmerican Common Stock certificates in exchange for Holdings Common
Stock certificates. The certificates for MidAmerican Common Stock you now hold
will automatically represent shares of Holdings Common Stock. New certificates
bearing the name of Holdings will be issued in the future as certificates for
presently outstanding shares of MidAmerican Common Stock are presented for
transfer.
The restructuring will not affect the tax basis of your investment in
MidAmerican Common Stock. The MidAmerican preferred stock will remain
outstanding after the restructuring.
Holders of record of MidAmerican Common Stock at the close of business on
February 26, 1996 will be entitled to one vote for each share held. MidAmerican
has over 69,000 holders of its Common Stock.
Your vote is extremely important. Please make sure that your shares are
represented at the Annual Meeting whether or not you are personally able to
attend. You are encouraged to specify your choices by marking the appropriate
boxes on the enclosed proxy card. However, it is not necessary to mark any box
if you wish to vote in accordance with the Board of Directors' recommendations.
<PAGE>
Holders of MidAmerican Common Stock have the right to dissent from
consummation of the share exchange, and, upon compliance with the procedural
requirements of the Iowa Business Corporation Act, to receive the "fair value"
of their shares if the share exchange is effected. Reference is made to the
detailed information regarding dissenters' rights contained in the accompanying
Proxy Statement/Prospectus.
Please sign, date and return the proxy card in the enclosed postage paid
envelope.
Sincerely,
<TABLE>
<S> <C>
Russell E. Stanley J.
Christiansen Bright
CHAIRMAN PRESIDENT
</TABLE>
OFFICE OF THE CHIEF EXECUTIVE OFFICER
March 18, 1996
<PAGE>
MIDAMERICAN ENERGY COMPANY
666 GRAND AVENUE
P.O. BOX 657
DES MOINES, IA 50303-0657
TELEPHONE NUMBERS: (515) 242-4300 OR (800) 247-5211
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
---------------------
To the Shareholders of
MidAmerican Energy Company:
The Annual Meeting of Shareholders of MidAmerican Energy Company will be
held on Wednesday, April 24, 1996, at the Airport Holiday Inn, 6111 Fleur Drive,
Des Moines, Iowa, commencing at 10:00 a.m., local time, for the purpose of
acting on the following matters:
1. To elect seventeen members of the Board of Directors;
2. To consider and vote upon a proposal to approve an Agreement and Plan of
Exchange, dated as of January 24, 1996 between MidAmerican Energy Company
and MidAmerican Energy Holdings Company, which provides for the formation
of a holding company and whereby each issued and outstanding share of
common stock of the Company, no par value, will be exchanged, on a
share-for-share basis, for one share of common stock of Holdings, no par
value, except for those shareholders exercising dissenters' rights, all
as more fully described in the accompanying Proxy Statement/Prospectus;
and
3. To consider and vote upon a proposal to approve the MidAmerican Energy
Company 1995 Long-Term Incentive Plan.
Holders of MidAmerican Common Stock at the close of business on February 26,
1996 will be entitled to notice of and to vote at the meeting or at any
postponement or adjournment thereof. EVEN IF YOU NOW EXPECT TO ATTEND THE ANNUAL
MEETING, YOU ARE REQUESTED TO PLEASE MARK, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE PAID ENVELOPE. If you do attend you
may vote in person, if you wish, whether or not you have sent in your proxy.
Holders of MidAmerican Common Stock have the right to dissent from
consummation of the Share Exchange, and, upon compliance with the procedural
requirements of the Iowa Business Corporation Act, to receive the "fair value"
of their shares if the share exchange is effected. See "Holding Company Proposal
- -- Dissenters' Rights" in the Proxy Statement/Prospectus.
By Order of the Board of Directors
Paul J. Leighton
VICE PRESIDENT AND CORPORATE SECRETARY
March 18, 1996
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AND VOTED AT THE MEETING.
SHAREHOLDERS ARE URGED TO PROMPTLY MARK, SIGN, DATE AND RETURN THE PROXY IN THE
ENCLOSED POSTAGE PAID ENVELOPE.
<PAGE>
PROXY STATEMENT
FOR
MIDAMERICAN ENERGY COMPANY
---------------------
PROSPECTUS
FOR
MIDAMERICAN ENERGY HOLDINGS COMPANY
COMMON STOCK, NO PAR VALUE
This Proxy Statement/Prospectus has been prepared in connection with the
issuance of up to 100,751,713 shares of common stock, no par value ("Holdings
Common Stock"), of MidAmerican Energy Holdings Company, an Iowa corporation
("Holdings"), upon the consummation of the proposed share exchange between
MidAmerican Energy Company, an Iowa corporation ("MidAmerican" or "Company") and
Holdings.
At the effective time of such share exchange, each share of common stock, no
par value, of MidAmerican ("MidAmerican Common Stock") will, without action on
the part of the holder thereof, be automatically exchanged for one share of
Holdings Common Stock.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The executive offices of each MidAmerican and Holdings are located at 666
Grand Avenue, P.O. Box 657, Des Moines, Iowa 50303-0657, and the telephone
number at such address is (515) 242-4300.
The date of this Proxy Statement/Prospectus is March 18, 1996. This Proxy
Statement/Prospectus is first being mailed to the shareholders of MidAmerican on
or about March 18, 1996.
No person is authorized to give any information or to make any
representation other than those contained or incorporated by reference in this
Proxy Statement/Prospectus, and, if given or made, such information or
representation should not be relied upon as having been authorized. This Proxy
Statement/Prospectus does not constitute an offer to sell, or a solicitation of
an offer to purchase, the securities offered by this Proxy Statement/Prospectus,
or the solicitation of a proxy, in any jurisdiction, to or from any person to
whom or from whom it is unlawful to make such offer, solicitation of an offer or
proxy solicitation in such jurisdiction. Neither the delivery of this Joint
Proxy Statement/ Prospectus nor any distribution of securities pursuant to this
Proxy Statement/Prospectus shall, under any circumstances, create an implication
that there has been no change in the information set forth herein since the date
of this Proxy Statement/Prospectus, or that the information contained herein, or
incorporated by reference, is correct as of any time subsequent to its date.
AVAILABLE INFORMATION
MidAmerican is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and accordingly files reports
and other information with the Securities and Exchange Commission ("SEC"). Such
reports, proxy statements and other information filed with the SEC are available
for inspection and copying at the public reference facilities maintained by the
SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the SEC's Regional Offices located at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and at Seven World
Trade Center, Suite 1300, New York, New York 10048. Copies of such documents may
also be obtained from the Public Reference Room of the SEC at
<PAGE>
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, any such material and other information can be inspected at
the New York Stock Exchange, Inc. ("NYSE"), 20 Broad Street, New York, New York
10005.
Holdings will become subject to the same informational requirements as
MidAmerican following the share exchange described in this Proxy
Statement/Prospectus, and will file reports, proxy statements and other
information with the SEC in accordance with the Exchange Act.
This Proxy Statement/Prospectus constitutes a part of a registration
statement, together with all amendments, schedules and exhibits thereto
("Registration Statement"), filed by Holdings with the SEC under the Securities
Act of 1933, as amended, ("Securities Act"). This Proxy Statement/Prospectus
does not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the SEC. The Registration Statement, including any amendments, schedules and
exhibits thereto, is available for inspection and copying as set forth above.
Reference is made to the copy of each contract or other document filed as an
exhibit to the Registration Statement or such other document.
INCORPORATION BY REFERENCE
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE
UPON REQUEST FROM PAUL J. LEIGHTON, VICE PRESIDENT AND CORPORATE SECRETARY, 666
GRAND AVENUE, P.O. BOX 657, DES MOINES, IOWA 50303-0657 (TELEPHONE:
515-242-4300). TO ENSURE TIMELY DELIVERY OF DOCUMENTS PRIOR TO THE ANNUAL
MEETING, A REQUEST FOR SUCH DOCUMENTS SHOULD BE MADE BY APRIL 4, 1996.
MidAmerican hereby undertakes to provide without charge to each person,
including any beneficial owner to whom a copy of this Proxy Statement/Prospectus
has been delivered, upon the written or oral request of such person, a copy
(without exhibits, except those specifically incorporated by reference) of any
and all of the documents referred to below which have been or may be
incorporated in this Proxy Statement/Prospectus by reference. Requests for such
documents should be directed to the person indicated above.
The following document, previously filed with the SEC pursuant to the
Exchange Act, is hereby incorporated by reference:
MidAmerican Annual Report on Form 10-K for the year ended December 31, 1995
(File No. 1-11505).
All documents filed by MidAmerican pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date hereof and prior to the date of the
Annual Meeting on April 24, 1996, and any adjournment thereof, shall be deemed
to be incorporated by reference herein and to be a part hereof from the
respective dates of filing of such documents (such documents, and the documents
enumerated above, being hereinafter referred to as "Incorporated Documents.")
Any statement contained in an Incorporated Document shall be deemed to be
modified or superseded for purposes of this Proxy Statement/Prospectus to the
extent that a statement contained herein or in any other subsequently filed
Incorporated Document modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Proxy Statement/Prospectus.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
AVAILABLE INFORMATION.................................................................................... Cover
INCORPORATION BY REFERENCE............................................................................... 2
SUMMARY OF HOLDING COMPANY PROPOSAL...................................................................... 4
GENERAL INFORMATION...................................................................................... 7
ELECTION OF DIRECTORS.................................................................................... 8
Information about Nominees for Directors............................................................... 8
Organization of the Board of Directors................................................................. 12
Directors' Compensation................................................................................ 13
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.................................................................................. 14
EXECUTIVE COMPENSATION................................................................................... 16
Compensation Committee Report on Executive Compensation................................................ 19
Shareholder Return Performance Graph................................................................... 22
Retirement Plans....................................................................................... 23
Employment Agreements.................................................................................. 24
HOLDING COMPANY PROPOSAL................................................................................. 26
General................................................................................................ 26
Corporate Organization................................................................................. 27
MidAmerican Utility Regulation......................................................................... 28
Reasons for the Holding Company Proposal............................................................... 28
Employment Agreements.................................................................................. 30
Agreement and Plan of Exchange......................................................................... 30
Required Shareholder Approval.......................................................................... 30
Required Regulatory Approvals.......................................................................... 31
Regulation of Holdings................................................................................. 31
Business of Holdings................................................................................... 32
Dividend Policy........................................................................................ 32
Treatment of Preferred Stock........................................................................... 33
Amendment or Termination............................................................................... 33
Dissenters' Rights..................................................................................... 33
Effective Date of the Share Exchange................................................................... 35
Exchange of Stock Certificates Not Required............................................................ 35
Certain Federal Income Tax Consequences................................................................ 35
Management............................................................................................. 37
Holdings Capital Stock................................................................................. 37
Stock Plans............................................................................................ 37
MidAmerican Common Stock Market Prices and Dividends................................................... 38
Experts................................................................................................ 38
Legal Matters.......................................................................................... 38
PROPOSAL TO APPROVE AND ADOPT THE MIDAMERICAN ENERGY COMPANY 1995 LONG-TERM INCENTIVE PLAN............... 38
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS......................................................... 44
1997 SHAREHOLDER PROPOSALS............................................................................... 44
OTHER MATTERS............................................................................................ 44
Annex I Agreement and Plan of Exchange................................................................. I-1
Annex II Restated Articles of Incorporation of Holdings................................................ II-1
Annex III Iowa Business Corporation Act-Dissenters' Rights Provisions................................... III-1
Annex IV MidAmerican Energy Company 1995 Long-Term Incentive Plan....................................... IV-1
</TABLE>
3
<PAGE>
SUMMARY OF HOLDING COMPANY PROPOSAL
DESCRIPTION OF HOLDING COMPANY PROPOSAL
The following is a summary of certain information regarding the holding
company proposal contained or incorporated by reference in this Proxy
Statement/Prospectus and the accompanying Annexes. Shareholders are urged to
read this Proxy Statement/Prospectus and the Annexes in their entirety.
MidAmerican proposes to form a holding company (Holdings) which will own all
of the outstanding common stock of MidAmerican and its subsidiaries ("Holding
Company Proposal"). The Board of Directors and management of MidAmerican believe
that a holding company structure will provide a more flexible organization that
is better positioned to operate in the increasingly competitive energy market
place and to respond to new growth opportunities. The restructuring will be
accomplished through a share-for-share exchange ("Share Exchange") whereby
holders of MidAmerican Common Stock will receive one share of Holdings Common
Stock in exchange for each share of MidAmerican Common Stock as set forth in the
Agreement and Plan of Exchange dated as of January 24, 1996 between MidAmerican
and Holdings ("Agreement").
The Company has received an opinion of counsel that Holdings has a good
faith basis to claim an exemption from the provisions of the Public Utility
Holding Company Act of 1935, as amended ("Holding Company Act"). See "Holding
Company Proposal -- Regulation of Holdings."
PROPOSED SHARE EXCHANGE
Subject to shareholder and regulatory approvals, each share of MidAmerican
Common Stock will be exchanged for one share of Holdings Common Stock. It is
anticipated that such approvals shall be received and the Share Exchange will be
completed prior to the end of 1996. See "Holding Company Proposal -- Effective
Date of the Share Exchange." The Share Exchange will be effected in accordance
with a procedure for statutory share exchanges as allowed by the Iowa Business
Corporation Act ("IBCA"). If the Holding Company Proposal is approved by the
holders of MidAmerican Common Stock as specified in "Required Vote," below, upon
the effectiveness of the Share Exchange, each holder of outstanding shares of
MidAmerican Common Stock will be deemed to have exchanged such shares for shares
of Holdings Common Stock whether or not such holder voted in favor of the
Holding Company Proposal.
REASONS FOR THE HOLDING COMPANY PROPOSAL
The principal reason for the proposed restructuring of MidAmerican is to
create an organizational structure that will be better positioned to operate in
a more competitive environment. The utility industry in general is changing and
becoming increasingly competitive, in both the electric and gas sectors and on
both the wholesale and retail levels, due to a variety of regulatory, economic
and technological developments. MidAmerican believes that a holding company
structure will provide a greater degree of flexibility and an enhanced
capability to address the changes associated with operating in a more
competitive market place and to take advantage of new growth opportunities. The
holding company structure is commonly used in the utility industry as well as
others to conduct different lines of business and is expected to provide
MidAmerican a flexible framework within which to conduct its regulated and
nonregulated operations. See "Holding Company Proposal -- Reasons for the
Holding Company Proposal."
REGULATORY APPROVALS
Consummation of the Share Exchange is conditioned upon receiving certain
orders from the Illinois Commerce Commission ("ICC"), the Iowa Utilities Board
("IUB"), the Federal Energy Regulatory Commission ("FERC") and the Nuclear
Regulatory Commission ("NRC").
EFFECTIVENESS
The Share Exchange will be effective as soon as practicable after the
receipt of regulatory and shareholder approvals. See "Holding Company Proposal
- -- Effective Date of the Share Exchange."
4
<PAGE>
NO EXCHANGE OF CERTIFICATES
If the Share Exchange is effected, it will not be necessary for holders of
Common Stock to exchange their existing stock certificates for stock
certificates of Holdings. See "Holding Company Proposal -- Exchange of Stock
Certificates Not Required."
STOCK EXCHANGE LISTING
The MidAmerican Common Stock is currently listed on the NYSE. Holdings
intends to apply to list the Holdings Common Stock on the NYSE. It is expected
that such listing will become effective on the effective date of the Share
Exchange, subject to the rules of the NYSE. See "Holding Company Proposal --
Listing of Holdings Common Stock."
DIVIDEND POLICY
Dividends on Holdings Common Stock will depend primarily on the earnings,
financial condition and capital requirements of its subsidiaries, including
MidAmerican, and the subsidiaries' ability to pay dividends on their stock owned
by Holdings. Although MidAmerican and Holdings are currently unable to make any
assurances with regard to the payment of dividends, it is currently contemplated
that Holdings will initially pay quarterly dividends on Holdings Common Stock at
the rate most recently paid, and on the same schedule, as dividends have been
paid on MidAmerican Common Stock. See "Holding Company Proposal -- Dividend
Policy."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
It is intended that the exchange of MidAmerican Common Stock for Holdings
Common Stock in the Share Exchange will not be taxable under federal income tax
laws, and it is a condition for the Share Exchange to become effective that
MidAmerican receive either an opinion of counsel or a ruling from the Internal
Revenue Service satisfactory to the Company with respect to the federal income
tax consequences of the Share Exchange. See "Holding Company Proposal -- Certain
Federal Income Tax Consequences."
REQUIRED VOTE
Approval of the Holding Company Proposal will require the affirmative vote
of the holders of a majority of the outstanding shares of MidAmerican Common
Stock. Abstentions and "non-votes" (i.e., shares held by brokers, fiduciaries or
other nominees which are not permitted to vote on the Holding Company Proposal
due to the absence of instructions from beneficial owners) will have the same
effect as negative votes. THE FAILURE TO VOTE ON THE HOLDING COMPANY PROPOSAL
WILL HAVE THE SAME EFFECT AS A NEGATIVE VOTE. See "Holding Company Proposal --
Required Shareholder Approval."
The vote of MidAmerican shareholders in favor of the Holding Company
Proposal will be deemed to be ratification by such shareholders of the
assumption by Holdings of the MidAmerican Energy Company 1995 Long-Term
Incentive Plan and other stock-related benefit plans upon effectiveness of the
Share Exchange. See "Holding Company Proposal -- Stock Plans."
RIGHTS OF DISSENTING SHAREHOLDERS
The holders of record of MidAmerican Common Stock have the right to dissent
from consummation of the Share Exchange and, upon compliance with the procedural
requirements of the IBCA, to receive the "fair value" of their shares if the
Share Exchange is effected. Any such holders electing to exercise their right of
dissent must deliver to MidAmerican before the vote is taken a written notice of
their intent to demand payment of the fair value of their shares if the Share
Exchange is consummated and not vote to approve the Agreement. See "Holding
Company Proposal -- Dissenters' Rights" and Annex III.
ELECTION OF DIRECTORS
The Directors of MidAmerican will become the Directors of Holdings upon the
effectiveness of the Share Exchange, and they will serve as the Directors of
Holdings until the first annual meeting of Holdings shareholders. See "Holding
Company Proposal -- Management."
5
<PAGE>
Each of Messrs. Russell E. Christiansen and Stanley J. Bright has entered
into an employment agreement with Holdings to become effective upon consummation
of the Share Exchange (together, the "Employment Agreements"). The Employment
Agreements are in all material respects identical to and will supersede
employment agreements entered into effective as of July 1, 1995 and currently in
effect between MidAmerican and Messrs. Bright and Christiansen. See "Executive
Compensation -- Employment Agreements."
THE MIDAMERICAN BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE AGREEMENT
AND THE SHARE EXCHANGE CONTEMPLATED THEREBY, AND RECOMMENDS THAT THE HOLDERS OF
MIDAMERICAN COMMON STOCK VOTE "FOR" APPROVAL OF THE AGREEMENT AND THE HOLDING
COMPANY PROPOSAL.
6
<PAGE>
GENERAL INFORMATION
This Proxy Statement/Prospectus is furnished in connection with the
solicitation of proxies of the shareholders of MidAmerican Energy Company
("Company") on behalf of the Board of Directors of the Company ("Board of
Directors") for use at the Annual Meeting of Shareholders to be held at the
Airport Holiday Inn, 6111 Fleur Drive, Des Moines, Iowa, on Wednesday, April 24,
1996, at 10:00 a.m., local time, and at all adjournments thereof, for the
purposes set forth in the preceding Notice of Annual Meeting of Shareholders.
This is the first annual meeting of the holders of MidAmerican Common Stock
since the July 1, 1995 merger of Midwest Resources Inc. ("Midwest Resources"),
Midwest Power Systems Inc. ("Midwest Power") and Iowa-Illinois Gas and Electric
Company ("Iowa-Illinois") with and into the Company (the "Merger"). Only
shareholders of record at the close of business on February 26, 1996 are
entitled to vote at the meeting. As of the record date, there were outstanding
100,751,713 shares of MidAmerican Common Stock. Each share of MidAmerican Common
Stock is entitled to one vote on all matters presented to the meeting.
With respect to Item 1 of this Proxy Statement/Prospectus, Election of
Directors, if a quorum is present, the affirmative vote of a majority of the
votes cast is required for the election of each director. For purposes of
determining the number of votes cast, all votes cast "for" or to "withhold
authority" to vote are included. "Non-votes," including "broker non-votes" which
occur when brokers are prohibited from exercising voting authority for
beneficial owners who have not provided voting instructions, are not counted for
the purpose of determining the number of votes cast with respect to the election
of directors.
Approval of the Agreement and the Holding Company Proposal, Item 2 of this
Proxy Statement/ Prospectus, if a quorum is present, requires the affirmative
vote of the holders of shares of MidAmerican Common Stock representing a
majority of all votes entitled to be cast by all holders of MidAmerican Common
Stock. For purposes of determining the number of votes cast with respect to this
proposal, all votes cast "for" or "against" are included. Abstentions will not
be counted as either "for" or "against" this proposal, however, abstentions will
have the practical effect of an "against" vote. "Non-votes," including "broker
non-votes," are not counted for the purpose of determining the number of votes
cast with respect to this proposal.
The affirmative vote of a majority of the votes cast, if a quorum is
present, with respect to the adoption of the 1995 Long-Term Incentive Plan, set
forth as Item 3 of this Proxy Statement/Prospectus, is required for approval.
For purposes of determining the number of votes cast with respect to this
proposal, all votes cast "for" or "against" are included. Abstentions will not
be counted as either "for" or "against" this proposal. "Non-votes," including
"broker non-votes," are not counted for the purpose of determining the number of
votes cast with respect to this proposal.
Any shareholder giving a proxy pursuant to this Proxy Statement/Prospectus
may revoke it at any time by filing with the Corporate Secretary of the Company
an instrument revoking it or a duly executed proxy bearing a later date, or if
the shareholder executing the proxy is present at the meeting, voting in person.
All shares represented by effective proxies will be voted at the meeting or
any adjournment thereof as specified therein by the person giving the proxy. If
no specification is made, the proxy will be voted in accordance with the Board
of Directors' recommendations.
If a shareholder is a participant in the Company's Shareholder Options Plan
or the Iowa Power Inc. Payroll-Based Employee Stock Ownership Plan, the proxy
card will represent the number of shares registered in the participant's name
and the number of whole shares credited or allocated to the participant's
account under these plans. For those shares held in the plans, the proxy card
will serve as a direction to the trustee or voting agent under the respective
plan as to how the shares in the accounts are to be voted. Fractional shares
will not be voted.
7
<PAGE>
The entire cost of solicitation of proxies will be borne by the Company. In
addition to the original solicitation by mail, some of the officers and regular
employees of the Company may solicit proxies by personal calls, telephone or
otherwise, but without compensation in addition to their regular salaries. The
Company will reimburse brokers and other custodians, nominees and fiduciaries
for reasonable expenses incurred in forwarding proxy material to beneficial
owners. In addition, the Company has retained D. F. King & Co., Inc., a proxy
solicitation firm, to assist in the forwarding of proxy materials to brokers and
other custodians, nominees and fiduciaries at an estimated cost of $6,500 plus
disbursements.
ITEM 1
ELECTION OF DIRECTORS
The seventeen persons named on the following pages have been nominated for
election as directors, to hold office until the next annual meeting of
shareholders and their successors are duly elected and qualified. Each has
consented to be a nominee and to serve if elected. Proxies cannot be voted for a
greater number of persons than the number of nominees named. In the event that
any nominees for directors should become unavailable, which is not anticipated,
the Board of Directors, in its discretion, may designate substitute nominees, in
which event proxies will be voted for such substitute nominees.
INFORMATION ABOUT NOMINEES FOR DIRECTORS
Certain information about each nominee, including age, principal occupation,
business experience, directorships, board committee assignments and the year in
which the nominee became a director of the Company or one of its predecessor
companies, is set forth in the following pages. All of the nominees listed are
now serving as directors of the Company.
<TABLE>
<C> <S>
PHOTO JOHN W. AALFS (55)
President of Aalfs Manufacturing, Inc. (clothing manufacturer), Sioux
City, Iowa, since 1979. Joined the Board in 1988. Chair of the Audit
Committee. Director of Morningside College, Norwest Bank Sioux City,
N.A. and Fox Valley Corporation; Member of the Iowa Group for Economic
Development and the Siouxland Foundation Executive Committee.
PHOTO BETTY T. ASHER (51)
President and Professor of Educational Psychology and Counseling at the
University of South Dakota, Vermillion, South Dakota, since 1989. Joined
the Board in 1994. Member of the Audit Committee. Director of Norwest
Bank of South Dakota, N.A., Children's Care Hospital and School
Foundation, Sioux Valley Hospital, University Physicians, Family
Practice Center and Karl E. Mundt Foundation.
</TABLE>
8
<PAGE>
<TABLE>
<C> <S>
PHOTO STANLEY J. BRIGHT (55)
President and President of the Office of the Chief Executive Officer of
the Company since 1995. Chairman, President and Chief Executive Officer
of Iowa-Illinois Gas and Electric Company from 1991 to 1995, President
and Chief Operating Officer from 1990 to 1991 and Vice President-Finance
and Chief Financial Officer from 1986 to 1990. Joined the Company in
1986 and the Board in 1987. Chair of the Strategy Committee, Vice Chair
of the Executive Committee and member of the Finance Committee. Director
of Association of Edison Illuminating Companies, Des Moines Development
Corporation, Edison Electric Institute, Genesis Medical Center, Illinois
Energy Association, Iowa College Foundation, Iowa Utility Association,
North Central Electric Association, Norwest Bank Iowa, N.A., St. Ambrose
University, Synergics, Inc., Utech Venture Capital Corporation and Utilx
Corporation; Member of the Board of Visitors of the University of Iowa
School of Business and Iowa Business Council.
PHOTO ROBERT A. BURNETT (68)
Retired Chairman of Meredith Corporation (media), Des Moines, Iowa,
since 1992, Chairman from 1989 to 1992 and President and Chief Executive
Officer from 1977 to 1989. Joined the Board in 1984. Member of the
Compensation and Finance Committees. Director of ITT Corporation, ITT
Hartford, ITT Industries, Meredith Corporation, Whirlpool Corporation
and Business Enterprise Trust; Past Director of Dayton Hudson
Corporation; Member of the Advisory Council of the World Agriculture
Development Foundation; Trustee of Grinnell College.
PHOTO ROSS D. CHRISTENSEN (55)
Orthodontist in private practice in Waterloo, Iowa, since 1968 and with
Drs. Christensen and Bigelow, P.C. since 1974. Partner in JoRo, Inc.
(real estate development) and Heartland Midwest Management, Inc. (real
estate management) since 1984. Joined the Board in 1983. Vice Chair of
the Nominating Committee and member of the Strategy Committee. Director
of EURAS USA, Inc., Waterloo Industrial Development Association, Inc.,
Community Foundation of Waterloo and Northeast Iowa and the Cedar Valley
Economic Development Corp.; President of Village Initiative; Chairman of
President's Resources Council, Wartburg College; Chairman, Board of
Trustees of Silos and Smokestacks; Trustee of R. J. McElroy Trust.
</TABLE>
9
<PAGE>
<TABLE>
<C> <S>
PHOTO RUSSELL E. CHRISTIANSEN (60)
Chairman and Chairman of the Office of the Chief Executive Officer of
the Company since 1995. Chairman and Chief Executive Officer of Midwest
Resources Inc. from 1992 to 1995, President from 1990 to 1995 and Vice
Chairman and Chief Operating Officer from 1990 to 1992. Chairman and
Chief Executive Officer of Midwest Energy Company from 1986 to 1990 and
President from 1985 to 1990. Joined the Company in 1959 and the Board in
1983. Chair of the Executive Committee and member of the Finance
Committee. Director of Greater Des Moines Committee, Greater Siouxland,
Inc., McLeod Inc., North Central Electric Association, Norwest Bank
Iowa, N.A. and Siouxland Foundation; Past Director of Des Moines
Development Corporation, Edison Electric Institute, Greater Des Moines
Chamber Federation, Iowa Association of Business and Industry and Iowa
Utility Association. Member of the Iowa Business Council; Trustee of
South Dakota State University Foundation and Iowa Nature Conservancy.
PHOTO JOHN W. COLLOTON (65)
Vice President for Statewide Health Services, University of Iowa (health
care administration), Iowa City, Iowa, since 1993. Director and Chief
Executive Officer of the University of Iowa Hospitals and Clinics from
1971 to 1993. Joined the Board in 1992. Member of the Compensation and
Nominating Committees. Director of Baxter International Inc., Iowa State
Bank and Trust Company, OncorMed, Inc., Premier Oncology Networks of
America, and Blue Cross & Blue Shield of Iowa and South Dakota; Trustee
of University of Pennsylvania Medical Center.
PHOTO FRANK S. COTTRELL (53)
Vice President of Deere & Company (manufacturing), Moline, Illinois,
since 1993, General Counsel since 1991 and Secretary since 1987. Joined
the Board in 1992. Member of the Audit and Strategy Committees. Director
of Homelite, Inc. and William Butterworth Memorial Trust.
PHOTO JACK W. EUGSTER (50)
Chairman and Chief Executive Officer of Musicland Stores Corp.
(specialty retailer), Minneapolis, Minnesota, since 1986 and President
since 1981. Joined the Board in 1987. Chair of the Compensation
Committee and member of the Executive Committee. Director of Damark,
Inc., Donaldson Company, Inc., Josten's, Inc., ShopKo Stores, Inc.,
Minnesota Business Partnership, Children's Home Society of Minnesota and
Walker Art Center; Trustee of Carleton College; Member of the Board of
Overseers of the University of Minnesota Carlson School of Management.
</TABLE>
10
<PAGE>
<TABLE>
<C> <S>
PHOTO MEL FOSTER, JR. (68)
Chairman of Mel Foster Co. Inc. (real estate and insurance), Davenport,
Iowa, since 1970. Joined the Board in 1972. Chair of the Nominating
Committee and member of the Compensation and Executive Committees.
Director of Norwest Bank Iowa, N.A., Quad Cities Community Board and
Downtown Davenport Development Corporation.
PHOTO NOLDEN GENTRY (58)
Partner in the law firm of Brick, Gentry, Bowers, Swartz, Stoltze,
Schuling & Levis, P.C., Des Moines, Iowa, since 1983. Joined the Board
in 1988. Vice Chair of the Strategy Committee. Director of Delta Dental
Plan of Iowa, Firstar Bank Iowa, N.A., Greater Des Moines Community
Foundation, Mid-Iowa Health Foundation, Morris Scholarship Fund,
National "I" Club and Orchard Place.
PHOTO JAMES M. HOAK, JR. (52)
Chairman of Heritage Media Corporation (broadcasting and advertising),
Dallas, Texas, since 1987, Chairman of Hoak Capital Corporation (private
investment company) since 1991, Chairman and President of James M. Hoak
& Co. (investment banking) and Hoak Securities Corp. (securities
broker-dealer) since 1995. Chairman and Chief Executive Officer of Crown
Media, Inc. (cable television), Dallas, Texas from 1991 to 1995. Joined
the Board in 1983. Vice Chair of the Finance Committee. Director of
Airgas, Inc., Pier 1 Imports, Inc. and Texas Industries, Inc.; Vice
Chairman of the American Business Conference.
PHOTO RICHARD L. LAWSON (66)
President and Chief Executive Officer of the National Mining Association
(all minable resources), Washington, D. C., since 1995. President of the
National Coal Association and member of its Board of Directors and
Executive Committee from 1987 to 1995. Joined the Board in 1989. Member
of the Audit Committee. President of the American Coal Foundation;
Director of World Energy Council, Atlantic Council and National Energy
Foundation; Member of the Washington Institute of Foreign Affairs.
Retired from the United States Air Force in 1986 as a four star general.
Formerly Deputy Commander and Chief of the U. S. European Command and
Chief of Staff, Supreme Headquarters Allied Powers, Europe.
PHOTO ROBERT L. PETERSON (63)
Chairman and Chief Executive Officer of IBP, inc. (meat processor),
Dakota City, Nebraska, since 1980, President since 1977 and Director
since 1976. Joined the Board in 1990. Member of the Executive and
Nominating Committees. Director of the Omaha branch of the Federal
Reserve Bank of Kansas City; Member of the Iowa Business Council.
</TABLE>
11
<PAGE>
<TABLE>
<C> <S>
PHOTO NANCY L. SEIFERT (66)
Executive Vice President of James F. Seifert & Sons L.L.C. (retail),
Cedar Rapids, Iowa, since 1993. Retired as a merchandise executive with
Seifert's Inc. in 1990. Joined the Board in 1985. Vice Chair of the
Compensation Committee and member of the Strategy Committee. Trustee of
Mt. Mercy College and University of North Dakota Foundation.
PHOTO W. SCOTT TINSMAN (63)
Co-Founder and Vice President of Twin-State Engineering and Chemical
Company (engineering services and chemical manufacturing), Davenport,
Iowa, since 1958. Joined the Board in 1988. Chair of the Finance
Committee and member of the Audit Committee. Director of Genesis Health
System and Genesis Medical Center.
PHOTO LEONARD L. WOODRUFF (67)
President of Woodruff Construction Company (contractor), Fort Dodge,
Iowa, since 1979. Joined the Board in 1972. Member of the Executive and
Finance Committees. Director of Calhoun County Economic Development,
Fort Dodge Betterment Foundation, Fort Dodge YMCA Foundation and Webster
County Economic Development.
</TABLE>
ORGANIZATION OF THE BOARD OF DIRECTORS
The Board of Directors has established the following committees to perform
various delegated functions. The number of meetings shown for each committee are
those held after July 1, 1995, the effective date of the Merger creating the
Company.
The Audit Committee considers matters pertaining to financial reporting and
internal accounting controls and held one meeting. The Executive Committee
exercises certain authority of the Board of Directors on behalf of the entire
Board and held two meetings. The Finance Committee considers matters pertaining
to the Company's financing plans, its nonregulated businesses and pension, trust
and other investment activities and held two meetings. The Compensation
Committee considers matters pertaining to compensation of officers and directors
and management succession and administers certain executive officer and director
compensation plans and held three meetings. The Strategy Committee advises the
Board of Directors on strategic matters pertaining to the Company and its
operations and held one meeting.
The Nominating Committee recommends candidates for annual election to the
Board of Directors and to fill vacancies on the Board of Directors that may
arise from time to time. The Nominating Committee held one meeting. Candidates
will be selected without regard to race, creed, color, sex or national origin
and must be a citizen of the United States and have demonstrated outstanding
business and civic accomplishments. The Nominating Committee will consider all
candidates recommended by shareholders in accordance with the procedure
established in the Company's Restated Bylaws which requires recommendations to
be submitted in writing ninety days in advance of the annual meeting of
shareholders. Such recommendations should include the name and address of the
shareholder and the candidate pursuant to which the recommendation is being
made, such other
12
<PAGE>
information about the candidate as is required to be included in the Company's
proxy statement and the consent of the candidate to serve as a director if
elected. Recommendations should be sent to the Corporate Secretary, MidAmerican
Energy Company, P.O. Box 657, Des Moines, Iowa 50303-0657.
The Board of Directors of the Company held five meetings during 1995
subsequent to the Merger. All directors attended at least 75% of the aggregate
number of meetings of the Board of Directors and the Board Committees on which
they served, except for General Lawson who attended 71%.
DIRECTORS' COMPENSATION
The Board of Directors believes it is important that its members have an
equity interest in the Company. As a result, the Board of Directors has adopted
a policy that each director must own at least 1,000 shares of MidAmerican Common
Stock at the time the director becomes a member of the Board of Directors. In
addition, a portion of each non-employee director's compensation for service as
a director of the Company will be paid in restricted shares of MidAmerican
Common Stock. The MidAmerica Energy Company 1995 Long-Term Incentive Plan, which
is subject to the approval of the shareholders as described in Item 3 of this
Proxy Statement/Prospectus, sets forth the provisions of this restricted stock
plan for non-employee directors. In summary, the plan provides that upon the
initial election of each non-employee director to the Board of Directors,
whether at an annual election or to fill a vacancy, 800 restricted shares of
MidAmerican Common Stock will be granted to each such director. Additional
grants of 800 restricted shares of MidAmerican Common Stock will be made
annually on May 1 to each director who continues on the Board of Directors.
Non-employee directors are restricted from disposing of such restricted shares
of MidAmerican Common Stock until such time as the director ceases to be a
director of the Company. Each director who is not an employee of the Company
received 800 restricted shares of MidAmerican Common Stock in July 1995. Until
the plan is approved by the shareholders, however, such shares are deemed to be
in the form of share equivalent units which will be credited with dividends at
the same rate as that paid on the MidAmerican Common Stock and will be
distributed in cash at the current market value of the MidAmerican Common Stock
at the time the director ceases to be a director of the Company. In the event
the plan is not approved by the shareholders, future grants will continue in the
form of share equivalent units as described above.
In addition to the restricted stock component of director compensation
described in the foregoing paragraph, directors each receive an annual retainer
fee of $12,000. Directors who are not also employees of the Company each receive
a fee of $750 for attendance at each regular or special meeting of the Board of
Directors and each meeting of a Committee of the Board of Directors.
The Board of Directors has elected not to adopt a retirement plan for
directors, although a predecessor company maintained a nonqualified retirement
plan for its directors. The predecessor company entered into agreements with
those directors continuing as directors of the Company (Messrs. Aalfs, Burnett,
Christensen, Christiansen, Eugster, Gentry, Hoak, Lawson and Peterson and Dr.
Asher) whereby the Company agreed to vest accrued benefits for each such
director as of June 30, 1995. The accrued benefit for each such director was
determined by multiplying the number of months of service as a director by
one-twelfth of the then current annual retainer ($15,000). The maximum total
benefit is based on 120 months of service as a director and the minimum service
requirement was waived. The accrued benefit is payable quarterly in cash when
the respective director ceases to be a director of the Company in accordance
with the terms of such retirement plan. Benefits will be paid out of general
corporate funds.
Directors have the opportunity to make an election prior to the commencement
of any year to defer a portion or all of their cash compensation received for
service as a director of the Company pursuant to the MidAmerican Energy Company
Directors Deferred Compensation Plan. Amounts previously deferred or earned
under predecessor companies' deferred compensation plans will be distributed in
accordance with each such plan's respective provisions upon termination of a
director's service as a director.
13
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the beneficial ownership, reported to the Company
as of February 26, 1996, of the MidAmerican Common Stock of each director and
nominee, the two individuals comprising the office of the chief executive
officer and the four other most highly compensated executive officers and, as a
group, directors, nominees and executive officers. No member of the group owned
any of the Company's preferred stock. To the Company's knowledge, no single
entity owns of record or beneficially more than five percent of any class of the
outstanding voting securities of the Company.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP PERCENT OF
NAME OF BENEFICIAL OWNER (1) CLASS
- ---------------------------------------------------------- ---------------------- -------------
<S> <C> <C>
John W. Aalfs............................................. 3,880 *
Betty T. Asher............................................ 1,839(2) *
Stanley J. Bright......................................... 7,839(3) *
Robert A. Burnett......................................... 9,541(4) *
Ross D. Christensen....................................... 9,496(5) *
Russell E. Christiansen................................... 16,268(6) *
John W. Colloton.......................................... 1,535 *
Frank S. Cottrell......................................... 2,270 *
Jack W. Eugster........................................... 3,880 *
Mel Foster, Jr............................................ 30,790(7) *
Nolden Gentry............................................. 2,721(8) *
James M. Hoak, Jr......................................... 5,810 *
Richard L. Lawson......................................... 2,300(9) *
Robert L. Peterson........................................ 2,203 *
Nancy L. Seifert.......................................... 2,842(10) *
W. Scott Tinsman.......................................... 3,299 *
Leonard L. Woodruff....................................... 22,892 *
Richard C. Engle.......................................... 10,985(11) *
Donald C. Heppermann...................................... 2,932(12) *
Lynn K. Vorbrich.......................................... 5,072(13) *
Beverly A. Wharton........................................ 5,189(14) *
Directors and executive officers as a group (27
persons)................................................. 169,651(15) *
</TABLE>
- ------------------------
*Less than one percent of the shares of MidAmerican Common Stock outstanding.
(1) Beneficial ownership of each of the shares of MidAmerican Common Stock
listed in the foregoing table is comprised of sole voting power and sole
investment power, unless otherwise noted. The shares reported for the
non-employee directors and nominees includes 800 shares of restricted stock
granted in July 1995 in accordance with the 1995 Long-Term Incentive Plan.
These conditional grants are subject to the approval by the shareholders of
the 1995 Long-Term Incentive Plan as described in Item 3 of this Proxy
Statement/Prospectus. See "Directors' Compensation" for a discussion of
these grants.
(2) Shares beneficially owned by Dr. Asher and her spouse.
14
<PAGE>
(3) Includes 5,977 shares held in a defined contribution plan as of December
31, 1995 and 1,862 shares beneficially owned by Mr. Bright and his spouse.
(4) Includes 2,741 shares held by a trust for which Mr. Burnett is trustee.
(5) Includes 8,480 shares held by Dr. Christensen and his partner in a profit
sharing trust.
(6) Includes 8,991 shares held in a defined contribution plan as of December
31, 1995 and 7,070 shares beneficially owned by Mr. Christiansen and his
spouse.
(7) Includes 2,940 shares held by Mr. Foster's spouse, 14,700 shares held by a
company of which Mr. Foster is an officer and shareholder and 5,000 shares
held by a family partnership of which Mr. Foster is a partner.
(8) Includes 1,266 shares held in an individual retirement account.
(9) Shares beneficially owned by General Lawson and his spouse.
(10) Includes 2,042 shares held by a trust for which Mrs. Seifert is trustee.
(11) Includes 9,105 shares held in a defined contribution plan as of December
31, 1995, 1,367 shares beneficially owned by Mr. Engle's spouse and 513
shares beneficially owned by Mr. Engle and his spouse.
(12) Includes 2,932 shares held in a defined contribution plan as of December
31, 1995.
(13) Includes 2,489 shares held in a defined contribution plan as of December
31, 1995 and 262 shares beneficially owned by Mr. Vorbrich and his spouse.
(14) Includes 1,234 shares held in a defined contribution plan as of December
31, 1995, 3,536 shares beneficially owned by Mrs. Wharton and her spouse and
419 shares beneficially owned in a custodial account for a minor child.
(15) Includes shares held in defined contribution plans as of December 31, 1995
and shares beneficially owned jointly with and individually by family
members of directors and executive officers.
15
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation for services in all
capacities to the Company (including predecessor companies) and its subsidiaries
for the fiscal years ended December 31, 1995, 1994 and 1993 of those persons who
were, at December 31, 1995, (i) the two members of the office of the chief
executive officer and (ii) the other four most highly compensated executive
officers of the Company ("named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION (7)
--------------------------
AWARDS
ANNUAL COMPENSATION ------------- PAYOUTS
------------------------------------------------- SECURITIES ----------- ALL OTHER
NAME AND SALARY BONUS OTHER ANNUAL UNDERLYING LTP PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(2) COMPENSATION($) OPTIONS(#)(4) ($)(5) ($)(6)
- ---------------------------- --------- --------- --------- ---------------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Russell E. Christiansen .... 1995 427,500 148,000 60,267(3) 150,000 -- 26,370
Chairman, Chairman of 1994 415,000 0 0 0 -- 26,370
the Office of CEO 1993 398,333 164,920 5,310 0 -- 25,048
Stanley J. Bright .......... 1995 356,000 105,000 53,525(3) 150,000 -- 5,850
President, President of 1994 300,800 45,120 0 0 0 31,452
the Office of CEO 1993 285,000 17,100 0 0 84,075 11,273
Richard C. Engle ........... 1995 241,500 72,850 0 60,000 -- 17,275
Executive Vice 1994 238,000 0 0 0 -- 17,275
President 1993 233,000 62,541 0 0 -- 17,238
Lynn K. Vorbrich ........... 1995 241,500 67,850 21,482(3) 60,000 -- 11,083
President 1994 238,000 0 0 0 -- 11,083
Electric Division 1993 236,446 62,854 0 0 -- 9,529
Donald C. Heppermann ....... 1995 213,200 46,125 30,887(3) 60,000 -- 5,850
President and COO 1994 197,000 19,700 0 0 0 22,260
InterCoast Energy Co. 1993 186,583 33,660 0 0 0 6,467
Beverly A. Wharton ......... 1995 191,450 56,550 0 60,000 -- 4,918
President 1994 173,000 0 0 0 -- 4,918
Gas Division 1993 160,500 42,510 0 0 -- 4,598
</TABLE>
- ------------------------
(1) Includes lump sum payments in lieu of 1995 base salary adjustments for
Messrs. Christiansen, Engle and Vorbrich and Mrs. Wharton.
(2) Includes bonuses paid by predecessor companies.
(3) Consists of compensation supplemental to that provided by the Company's
employee relocation policy and reimbursement for income taxes paid in
connection with the executive's relocation.
(4) Consists of options conditionally granted pursuant the 1995 Long-Term
Incentive Plan which is subject to the approval of the holders of
MidAmerican Common Stock as described in Item 3 of this Proxy
Statement/Prospectus.
(5) Payments made pursuant to a predecessor company's long-term incentive
compensation plan.
(6) Amounts for 1995 consist of (i) contributions by the Company and predecessor
companies to defined contribution plans of $3,000 for each of Messrs.
Christiansen and Engle and Mrs. Wharton, $5,850 for each of Messrs. Bright
and Heppermann and $1,533 for Mr. Vorbrich and (ii) $23,370, $14,275 and
$9,550 for Messrs. Christiansen, Engle and Vorbrich, respectively, and
$1,918 for Mrs. Wharton for supplemental life insurance.
(7) As of December 31, 1995, Messrs. Christiansen, Bright, Engle, Vorbrich and
Heppermann and Mrs. Wharton held 13,675, 11,966, 6,291, 6,291, 5,607 and
5,470 restricted shares of MidAmerican Common Stock, respectively, having a
value of $229,056, $200,430, $105,374, $105,374, $93,917 and $91,622,
respectively, based on the closing price of MidAmerican Common Stock at
December 31, 1995. The restricted stock was conditionally granted as
performance shares pursuant to the 1995 Long-Term Incentive Plan and is
subject to the approval of the holders of
16
<PAGE>
MidAmerican Common Stock as described in Item 3 of this Proxy
Statement/Prospectus. See the "Compensation Committee Report on Executive
Compensation" and the table of "Long-Term Incentive Plans -- Awards in Last
Fiscal Year."
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
- ---------------------------------------------------------------------------------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES PRICE EXPIRATION PRESENT VALUE
NAME GRANTED (#) IN FISCAL YEAR ($/SHARE) DATE ($)(2)
- ----------------------------------------------- ----------- ----------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Russell E. Christiansen........................ 150,000 21% 14.50 7/26/05 237,000
Stanley J. Bright.............................. 150,000 21% 14.50 7/26/05 237,000
Richard C. Engle............................... 60,000 8% 14.50 7/26/05 94,800
Lynn K. Vorbrich............................... 60,000 8% 14.50 7/26/05 94,800
Donald C. Heppermann........................... 60,000 8% 14.50 7/26/05 94,800
Beverly A. Wharton............................. 60,000 8% 14.50 7/26/05 94,800
</TABLE>
- ------------------------
(1) The options shown in the foregoing table were conditionally granted pursuant
to the 1995 Long-Term Incentive Plan and are subject to the approval of the
holders of MidAmerican Common Stock as described in Item 3 of this Proxy
Statement/Prospectus. The aggregate number of shares attributable to the
1995 grants is 700,000.
The exercise price (the price the recipient must pay to purchase each share
of MidAmerican Common Stock that is the subject of the option) is equal to
the fair market value of MidAmerican Common Stock on the date of grant of
the option. All options shown were granted on July 26, 1995 and reflect the
closing price of MidAmerican Common Stock on that date. Options may be
exercised during a period that begins one year after the date of grant and
ends ten years after the date of the grant. During the exercise period the
recipient of the option grant may exercise 25% of the total options granted
after one year from the date of the grant, 50% after two years from the date
of the grant, 75% after three years from the date of the grant and all of
the options after four years from the date of the grant. Options become
fully exercisable in the event of termination of employment with the Company
by reason of disability, retirement at age 55 and after five years of
service with the Company, death or a change in control as defined in the
plan.
(2) The Black-Scholes Option Pricing Model was used to determine the grant date
present value of the stock options granted in 1995 by the Company to the
named executive officers. Under the Black-Scholes Option Pricing Model, the
grant date present value of the stock options referred to in the table was
$1.58.
The ultimate values of the options will depend on the future market price of
MidAmerican Common Stock, which cannot be forecast with reasonable accuracy.
The actual value, if any, an optionholder will realize upon exercise of an
option will depend on the excess of the market price of MidAmerican Common
Stock over the exercise price on the date the option is exercised.
The material assumptions and adjustments incorporated in the model in
estimating the value of the options include the following:
- An exercise price of the option of $14.50, equal to the fair market value
of the underlying stock on the date of the grant.
- An option term of ten years.
- An interest rate of 6.28% that represents the interest rate on a U.S.
Treasury security on the date of the grant with a maturity date
corresponding to that of the option term.
- Volatility of 23% calculated using daily stock prices, including
predecessor companies, for the six month period prior to the grant date.
- Dividends at the rate of $1.20 per share representing the annualized
dividends paid with respect to a share of MidAmerican Common Stock at the
date of the grant.
17
<PAGE>
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR FISCAL YEAR
END END
(#) ($)(1)
-------------- --------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Russell E. Christiansen.......................................................... 0/150,000 0/337,500
Stanley J. Bright................................................................ 0/150,000 0/337,500
Richard C. Engle................................................................. 0/60,000 0/135,000
Lynn K. Vorbrich................................................................. 0/60,000 0/135,000
Donald C. Heppermann............................................................. 0/60,000 0/135,000
Beverly A. Wharton............................................................... 0/60,000 0/135,000
</TABLE>
- ------------------------
(1) Based on the closing price of MidAmerican Common Stock at December 31, 1995
of $16.75 per share. Options shown as unexercisable were conditionally
granted and are subject to the approval by the shareholders of the 1995
Long-Term Incentive Plan as described in Item 3 to this Proxy
Statement/Prospectus. See footnote (1) to the Option Grants in Last Fiscal
Year table.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE OR
NUMBER OF SHARES, OTHER PERIOD UNTIL
UNITS OR OTHER MATURATION OR
NAME RIGHTS(#)(1) PAYOUT
- ------------------------------------------------------------------------- ----------------- -------------------
<S> <C> <C>
Russell E. Christiansen.................................................. 13,675 6/30/98
Stanley J. Bright........................................................ 11,966 6/30/98
Richard C. Engle......................................................... 6,291 6/30/98
Lynn K. Vorbrich......................................................... 6,291 6/30/98
Donald C. Heppermann..................................................... 5,607 6/30/98
Beverly A. Wharton....................................................... 5,470 6/30/98
</TABLE>
- ------------------------
(1) The restricted stock awards shown in the foregoing table were conditionally
made pursuant to the 1995 Long-Term Incentive Plan and are subject to the
approval of the holders of MidAmerican Common Stock as described in Item 3
of this Proxy Statement/Prospectus. Such awards are in the form of share
equivalent units based on MidAmerican Common Stock and will be credited with
dividends at the same time and at the same rate as dividends are paid on the
MidAmerican Common Stock. Until the plan is approved by the shareholders,
and in the event it is not approved, such awards will be in the form of
share equivalent units. After approval, the awards will be deemed to be
restricted stock. The awards are subject to achievement of specific
performance measures during a three-year performance period ending June 30,
1998. During this performance period, the holder of the restricted stock
will be entitled to receive the dividends on the restricted stock and vote
the stock; however, the stock will not be vested until the achievement of
the performance measures. A participant whose employment is terminated due
to retirement, will receive a pro rata portion of such participant's total
award based on the participant's service as an employee during the
performance period or as otherwise determined by the Board of Directors in
its sole discretion. The performance shares will vest, however, in the event
of termination of employment with the Company by reason of disability, death
or a change in control as defined in the plan. The Share Exchange will not
constitute a change in control. See the "Compensation Committee Report on
Executive Compensation" for a discussion of the restricted stock awards.
18
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation.
The Compensation Committee is comprised of directors who are not current or
former officers or employees of the Company or any of its subsidiaries. The
Committee has the following responsibilities:
- Review and recommend to the Board of Directors the election of officers of
the Company annually and at such other times as may be recommended by the
Chief Executive Officer of the Company.
- Formally review not less than annually the performance of the Chief
Executive Officer, the President and other designated senior officers and
recommend to the Board of Directors the criteria to be used in determining
senior management compensation. The Compensation Committee shall recommend
all elements of compensation, including base salary, annual and long-term
incentive award opportunities, for each of the senior officers, including
the Chief Executive Officer, for approval by the Board of Directors.
- Review and recommend to the Board of Directors the adoption of and
significant amendments to all nonqualified compensation plans, including
annual and long-term incentive compensation, stock option, supplemental
retirement and deferred compensation plans.
- Review and approve all elements of compensation, including base salary,
annual and long-term incentive award opportunities, for all officers of
the Company other than senior officers.
- Periodically review plans for management development and succession to
assure proficiency and continuity in the Company's management.
The Company has adopted a compensation policy which is designed to
compensate management with salary, incentives and benefits at the top quartile
level commensurate with top quartile performance of the Company as compared to
utility companies. The measurement of top quartile performance is in terms of
total shareholder return as discussed in this report. Company performance that
does not achieve top quartile performance will not result in management
compensation at top quartile levels. Comparative utility companies consist of
electric, gas and combination utilities that are members of utility industry
associations, some of which may also be included in the published industry index
referenced in the shareholder return performance graph. The industry index
referenced in the shareholder return performance graph is the Dow Jones
Utilities Index which consists of 15 public utility companies, many of which are
larger than MidAmerican in terms of revenues and assets. In order to provide a
broad comparison of utility industry compensation, the Committee reviewed
compensation surveys (some utilities may appear on more than one survey) made
available by the Edison Electric Institute (approximately 115 surveyed utility
companies), the American Gas Association (approximately 95 surveyed utility
companies) and the Company's compensation consultant (approximately 25 surveyed
utility companies).
Incentive plans and performance review processes are intended to encourage
and reward outstanding performance at the top quartile level. In addition to
aligning compensation levels with the Company's performance in terms of
shareholder value, the compensation policy and the goals set for incentive plans
are designed to attract and retain highly qualified and capable executives. As a
result, the policy places a portion, ranging from approximately one-fourth to
one-half, of total compensation at risk in recognition of the importance placed
on increasing shareholder value.
The Committee has established a policy of annually reviewing executive
compensation for the purpose of determining base salaries for the next year. As
part of its review, the Committee evaluates overall corporate performance,
including earnings, comparative utility and general industry compensation levels
and salary recommendations made by the Office of the Chief Executive Officer of
the Company, consisting of Mr. Christiansen, Chairman, and Mr. Bright,
President. The Committee then recommends base salaries to the Board of Directors
for the senior officers of the Company and
19
<PAGE>
approves such salaries for all other officers. The Committee also sets targets
and goals for the annual and long-term incentive compensation plans and
evaluates the attainment of these targets and goals in order to determine the
level of incentive awards to be made, if any.
BASE SALARIES. Base salaries for the named executive officers are targeted
at the midpoint of the applicable salary band which has a one hundred percentage
point range between the band minimum and the band maximum. The midpoint of the
salary band is determined by taking the average of competitive market data
available in the utility industry for comparative companies, including companies
having nonregulated operations, as determined through compensation surveys
prepared by utility industry associations and the Company's compensation
consultant. While it is the policy of the Company to use the salary band
midpoint as the target for annual salary levels, individual and business unit
performance are also considered in determining actual base salaries.
Prior to July 1, 1995, the effective date of the Merger creating the
Company, 1995 base salaries were determined in accordance with the existing
policies of the predecessor companies. Messrs. Engle and Vorbrich and Mrs.
Wharton received a lump sum payment equal to three and one-quarter percent of
their respective 1994 base salaries in lieu of a 1995 base salary adjustment.
Therefore, 1995 base salaries for these officers, except for Mrs. Wharton who
received a twenty-one percent base salary increase effective July 1, 1995 in
recognition of her assumption of responsibilities as President of the Gas
Division, remained the same as their 1994 base salaries. Mr. Heppermann received
a four percent increase in his 1995 base salary.
ANNUAL INCENTIVE COMPENSATION. Immediately prior to the effective time of
the Merger and in recognition of their outstanding performance in consummating
the Merger, a discretionary bonus equal to seven percent of their respective
base salaries was approved for Messrs. Engle and Vorbrich and Mrs. Wharton.
On July 26, 1995, the Company adopted a Key Employee Short Term Incentive
Compensation Plan for key employees, including the named executive officers.
Since the Merger became effective in mid-year, neither performance targets nor
program awards were established for 1995. Therefore, no awards under the plan
were made to plan participants, including Messrs. Christiansen and Bright and
the other named executive officers, for the year 1995.
In December 1995, upon the recommendation of the Compensation Committee, the
Board of Directors, in recognition of the successful completion and
implementation of the Merger and the effective management of transition issues
related to the combining of the predecessor companies, approved the award of
discretionary bonuses in the amount of approximately twenty-five percent of his
1995 base salary for Mr. Engle and approximately twenty-two percent of their
respective 1995 base salaries for Messrs. Heppermann and Vorbrich and Mrs.
Wharton. Fifty percent of the award received by the named executive officers was
paid in cash with the remainder deferred under the Company's Executive Deferred
Compensation Plan.
LONG-TERM INCENTIVE COMPENSATION. The 1995 Long-Term Incentive Plan was
adopted by the Board of Directors in 1995. Under the plan, officers and other
key employees, including the named executive officers, may be awarded incentive
stock options, non-statutory stock options, stock appreciation rights,
restricted stock, bonus stock and performance shares, individually or in
combination, upon the achievement of specific performance measures. Upon the
recommendation of the Committee, the Board of Directors approved the grant of
stock options to the named executive officers in the amounts shown in the table
of Option Grants for the Fiscal Year. In addition, the Committee recommended and
the Board of Directors approved the grant of restricted shares of MidAmerican
Common Stock to the named executive officers in the amounts shown on the table
of Long-Term Incentive Plan Awards for a performance period ending June 30,
1998. Under the plan, it is contemplated that restricted stock will be granted
at the beginning of each three year performance period; however, the shares are
not earned or distributed to the participant unless the performance targets for
that period have been met. The performance target for this performance period is
a total shareholder return (as measured by growth in stock price and dividends)
by the Company that is in the top quartile of electric and combination gas and
electric utilities included in the VALUE LINE INVESTMENT SURVEY. During the
20
<PAGE>
performance period, the participant has the right to vote the shares and receive
dividends thereon. The stock options and restricted stock grants are subject to
the approval by the shareholders of the 1995 Long-Term Incentive Plan as
described in Item 3 of this Proxy Statement/Prospectus.
CHIEF EXECUTIVE OFFICERS' COMPENSATION
Although the minimum base salary for each of Messrs. Christiansen and
Bright, the two members of the Office of the Chief Executive Officer, is
specified by their respective employment contracts, their total compensation,
including base salary, annual and long-term incentive compensation are
determined by the Board of Directors upon the recommendation of the Committee in
accordance with the policies described above. The measures of the Company's
performance upon which each of Messrs. Christiansen's and Bright's total 1995
compensation was based were the successful consummation of the Merger creating
the Company and the effective management of transition issues related to the
combining of the predecessor companies, including the selection of management,
structuring the new organization and implementing cost saving measures.
Mr. Christiansen did not receive a base salary adjustment for 1995 due to
the pending Merger between the predecessor companies, Midwest Resources and
Iowa-Illinois. He did, however, receive a lump sum payment equal to three and
one-half percent of his 1994 salary in recognition of his contributions in
planning and negotiating the Merger. Mr. Bright received a 1995 base salary
adjustment of approximately eighteen percent in recognition of his employment
agreement with the Company specifying that his base salary at the effective time
of the Merger be not less than $350,000. Neither Mr. Christiansen nor Mr. Bright
received a base salary adjustment during 1995 after July 1, 1995, the effective
time of the Merger.
Immediately prior to the effective time of the Merger and in recognition of
his outstanding performance in managing the consummation of the Merger, a
discretionary bonus equal to seven percent of his base salary was approved for
Mr. Christiansen by the Board of Directors of Midwest Resources. In December
1995, upon the recommendation of the Compensation Committee, the Board of
Directors of the Company, in recognition of the successful completion and
implementation of the Merger and the improvement in shareholder value, approved
a discretionary bonus for each of Messrs. Christiansen and Bright in an amount
equal to thirty percent of their respective 1995 base salaries.
As discussed above, each of Messrs. Christiansen and Bright received awards
of stock options and restricted shares of MidAmerican Common Stock in the
respective amounts disclosed in the table of Option Grants for the Fiscal Year
and the table of Long-Term Incentive Plans -- Awards in Last Fiscal Year,
respectively. Each of the foregoing grants to both of Messrs. Christiansen and
Bright were made in accordance with the Company's executive compensation policy
of more closely aligning executive compensation with shareholder value. The
value of the options granted increases as overall shareholder value increases
and the restricted stock awards are subject to the achievement of the total
shareholder return performance goal at the end of the three-year performance
period.
The Committee believes that executive compensation for 1995, especially for
the period following the effective time of the Merger, reflects its policy of
aligning executive compensation with an enhanced shareholder value and ensuring
that the Company's goals and performance are consistent with the interests of
the shareholders.
COMPENSATION COMMITTEE
J. W. Eugster, Chair
N. L. Seifert, Vice Chair
R. A. Burnett
J. W. Colloton
M. Foster, Jr.
R. A. Schneider (retiring as a director in 1996)
21
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following is a line graph comparing the yearly change in the cumulative
total shareholder return on MidAmerican Common Stock to the cumulative total
return of the S&P 500 Index and the Dow Jones Utilities Index (which does not
include the Company) for the five-year period commencing December 31, 1990 and
ending December 31, 1995.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG MIDAMERICAN ENERGY COMPANY, THE S & P 500 INDEX
AND THE DOW JONES UTILITIES INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MIDAMERICAN ENERGY COMPANY S&P 500 DOW JONES UTILITIES
<S> <C> <C> <C>
12/90 100 100 100
12/91 124 130 115
12/92 109 140 120
12/93 131 155 131
12/94 111 157 111
12/95 148 215 147
</TABLE>
*Assumes that the value of the investment in MidAmerican Common Stock and
each index was $100 on December 31, 1990 and that all dividends were reinvested.
Information shown for the Company prior to July 1, 1995 is a pro forma
calculation based on an investment in each of the predecessor companies
amounting to $56 for Midwest Resources and $44 for Iowa-Illinois on December 31,
1990.
22
<PAGE>
RETIREMENT PLANS
The Company maintains an unfunded Supplemental Retirement Plan for
Designated Officers ("Supplemental Plan") to provide additional retirement
benefits to designated participants, as determined by the Board of Directors.
Messrs. Christiansen, Bright, Engle, Heppermann and Vorbrich and Mrs. Wharton
are participants in the Supplemental Plan. The Supplemental Plan provides
retirement benefits up to sixty-five percent of a participant's Total Cash
Compensation in effect immediately prior to retirement. "Total Cash
Compensation" means the highest amount payable to a participant as annual base
salary during the five years immediately prior to retirement plus the average of
the participant's last three years' awards under an annual incentive bonus
program. Participants must be credited with five years service in order to be
eligible to receive benefits under the Supplemental Plan. Each of the named
executive officers has or will have five years of credited service with the
Company as of their respective normal retirement age and will be eligible to
receive benefits under the Supplemental Plan. A participant who elects early
retirement is entitled to reduced benefits under the Supplemental Plan.
The supplemental retirement benefit will be reduced by the amount of the
participant's regular retirement benefit under the Midwest Power Systems Inc.
Salaried Employees' Retirement Plan ("Midwest Power Retirement Plan") or the
Iowa-Illinois Gas and Electric Company Pension Plan ("Iowa-Illinois Pension
Plan"), as applicable, and by benefits under the Iowa-Illinois Gas and Electric
Company Supplemental Retirement Plan or the Iowa Resources Inc. and Subsidiaries
Supplemental Retirement Income Plan ("IOR Supplemental Plan"), as applicable.
The Midwest Power Retirement Plan provides for payment of fixed pension
benefits to persons who retire after a specified age and number of years of
service, based on average annual salary during the five highest paid consecutive
years out of the last ten years prior to retirement. The Iowa-Illinois Pension
Plan provides for the payment of fixed pension benefits upon retirement
determined under a formula based on the eligibility date of the employee, age at
retirement, final average compensation and years of credited service. Final
average compensation is determined by the highest sixty consecutive months of
compensation during the ten years prior to retirement.
Part A of the IOR Supplemental Plan provides retirement benefits up to
sixty-five percent of a participant's highest annual salary during the five
years prior to retirement reduced by the participant's Midwest Power Retirement
Plan benefit. The percentage applied is based on years of credited service. A
participant who elects early retirement is entitled to reduced benefits under
the plan. A survivor benefit is payable to a surviving spouse. Benefits are
adjusted annually for inflation. Part B of the IOR Supplemental Plan provides
that an additional one hundred-fifty percent of annual salary is to be paid out
to participants at the rate of ten percent per year over fifteen years, except
in the event of a participant's death, in which event the unpaid balance would
be paid to the participant's beneficiary or estate. Benefits from the IOR
Supplemental Plan will be paid out of general corporate funds. Deferred
compensation is considered part of the salary covered by the IOR Supplemental
Plan.
A survivor benefit is payable to a surviving spouse under the Supplemental
Plan. Benefits from the Supplemental Plan will be paid out of general corporate
funds. Deferred compensation is considered part of the salary covered by the
Supplemental Plan.
The table below shows the estimated aggregate annual benefits payable under
the Supplemental Plan and the Midwest Power Retirement Plan and the
Iowa-Illinois Pension Plan. The amounts exclude Social Security and are based on
a straight life annuity and retirement at ages 55, 60 and 65. Federal law limits
the amount of benefits payable to an individual through the tax qualified
defined benefit plans, and benefits exceeding such limitation are payable under
the Supplemental Plan.
23
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFIT
-------------------------------------
TOTAL CASH AGE AT RETIREMENT
COMPENSATION -------------------------------------
AT RETIREMENT 55 60 65
- ----------------- ----------- ----------- -----------
<S> <C> <C> <C>
$ 200,000 $ 110,000 $ 120,000 $ 130,000
250,000 137,500 150,000 162,500
300,000 165,000 180,000 195,000
350,000 192,500 210,000 227,500
400,000 220,000 240,000 260,000
450,000 247,500 270,000 292,500
500,000 275,000 300,000 325,000
550,000 302,500 330,000 357,500
600,000 330,000 360,000 390,000
650,000 357,500 390,000 422,500
700,000 385,000 420,000 455,000
750,000 412,500 450,000 487,500
</TABLE>
EMPLOYMENT AGREEMENTS
On July 1, 1995, the Employment Agreements between Messrs. Christiansen and
Bright and the Company became effective. Pursuant to his Employment Agreement,
Mr. Christiansen serves as Chairman of the Board of Directors of the Company and
Chairman of the Office of the Chief Executive Officer until July 1, 1996, at
which time he will continue as Chairman of the Company until May 31, 1997. For a
three year period commencing June 1, 1997, Mr. Christiansen will serve as a
consultant to the Company.
Pursuant to his Employment Agreement, Mr. Bright serves as President of the
Company and President of the Office of the Chief Executive Officer until July 1,
1996, at which time he will become President and Chief Executive Officer.
Commencing on June 1, 1997 and until July 1, 2000, Mr. Bright will serve as
Chairman of the Board of Directors and Chief Executive Officer of the Company.
The Employment Agreements provide that the Company may terminate the
employment of either Mr. Christiansen or Mr. Bright (i) in the event of a breach
of the respective Employment Agreement in any material respect as determined by
the vote of not less than two-thirds of the entire Board of Directors of the
Company, (ii) for cause as determined by an affirmative vote of not less than
two-thirds of the entire Board of Directors of the Company or (iii) upon the
affirmative vote of not less than two-thirds of the entire Board of Directors of
the Company, provided that in the case of (iii), the Company will be obligated
to make all salary and bonus payments and to provide all benefits specified in
the Employment Agreement through the end of the Employment Agreement's term,
notwithstanding its termination.
The Employment Agreements provide that Messrs. Christiansen and Bright are
to receive annual base salaries of not less than $400,000 and $350,000,
respectively, executive officer benefits and management bonuses based on the
achievement of corporate goals and objectives. In addition to executive officer
benefits, Mr. Christiansen is to receive annual compensation of $50,000 for his
service as a consultant during the consulting period.
If either of Messrs. Christiansen's or Bright's employment is terminated for
cause or due to breach of his respective Employment Agreement, he will receive
earned and unpaid salary accrued through the end of the month in which such
termination occurs. In the event of their death during the term of their
respective Employment Agreements, salary payments will terminate on the date
death benefits are made available to their respective beneficiaries under the
Company's benefit plans.
It is expected that new individual employment agreements between Holdings
and Messrs. Christiansen and Bright, respectively, containing terms and
conditions which are in all
24
<PAGE>
material respects identical to the Employment Agreements will replace the
Employment Agreements effective at the effective time of the Share Exchange. As
a result, the Employment Agreements will be terminated at such time.
In addition to Mr. Christiansen's Employment Agreement, an agreement between
a predecessor company and Mr. Christiansen remains in effect. That agreement
provides for certain benefits in the event of a termination of employment other
than for cause within five years following a change in control which is defined
as (i) the public announcement or commencement of a tender offer by an other
entity of 20% or more of the Company's outstanding common stock, (ii)
shareholder approval of a merger in which the Company is not the surviving
corporation or which results in the Company shareholders owning less than a
majority of the voting securities of the surviving corporation, (iii) the sale,
lease or transfer of all or substantially all of the assets of the Company or
(iv) a change in the majority of the members of the Board of Directors within
any 24 month period. The Merger did not constitute a change in control for which
Mr. Christiansen may receive benefits under the agreement if he terminates his
employment or his employment is terminated without cause. Implementation of the
Holding Company Proposal upon receipt of the requisite approvals as described in
Item 2 of this Proxy Statement/Prospectus will also not constitute a change in
control.
As part of the termination benefits, Mr. Christiansen may elect to either
(i) continue to receive his Base Salary (which means the higher of his monthly
rate of pay for the month immediately preceding termination or his twelve month
average rate of pay) and benefits until age 62 and then the greater of the
retirement benefits available to the person in his former position or those
available to him at the time of termination or (ii) receive a present value lump
sum payment for such period net of any excise tax equal to his Base Salary and
benefits with the continuation of health and life insurance and disability
coverage. In the event his employment is terminated after five years following a
change in control but before age 62, Mr. Christiansen is entitled to all
available benefits and a trust will be established for payment of benefits under
the applicable supplemental executive retirement plan without reduction for
early retirement. During the first six months following a change in control, Mr.
Christiansen may terminate his employment and receive all available benefits for
three years or until the sum of such benefits would cause the imposition of an
excise tax. Mr. Christiansen would also be entitled to reimbursement of certain
legal expenses to enforce this agreement. In exchange for such benefits, Mr.
Christiansen has agreed not to disclose any proprietary information or undertake
any activity competing with or resulting in material economic damage to the
Company.
Effective July 1, 1995, the Company adopted the MidAmerican Energy Company
Severance Plan (the "Company Severance Plan") for ten specified officers, five
of whom were each officers of Midwest Resources or Midwest Power and
Iowa-Illinois (collectively, the "Specified Officers"), who are entitled to
receive Severance Benefits (as hereinafter defined) for a two year period ending
on July 1, 1997 (the "Term"), if such Specified Officer incurs a Qualifying
Termination. Each of the named executive officers, except for Messrs.
Christiansen and Bright, are covered by the Company Severance Plan. A Qualifying
Termination means a termination of employment of a Specified Officer occurring
within the Term either (i) involuntarily for any reason (except in the instance
of a felony) or (ii) voluntarily if the Specified Officer has furnished the
President of the Company with six months prior written notice of the intent to
voluntarily terminate employment. Termination of employment due, in whole or in
part, to the commission of a felony by a Specified Officer will not constitute a
Qualifying Termination under the Company Severance Plan. All Severance Benefits
(as hereinafter defined) for a Specified Officer charged with a felony will be
suspended until such time as a felony charge is finally disposed. Conviction of
a felony or a plea of no contest to a felony will be sufficient to disqualify
the Specified Officer for Severance Benefits.
"Severance Benefits" under the Company Severance Plan include: (i) an amount
equal to two times the Specified Officer's highest Total Cash Compensation
(defined as annual salary plus bonus) payable in a lump sum on the effective
date of the Qualifying Termination; (ii) the Specified Officer's accrued
vacation pay through the effective date of the Qualifying Termination, payable
in a lump sum on such date; (iii) continuation of the welfare benefits of health
insurance, disability insurance and
25
<PAGE>
group term life insurance for a period of 24 full calendar months after the
effective date of the Qualifying Termination, and (iv) standard outplacement
services for a period of 24 full calendar months after the effective date of the
Qualifying Termination. In addition, Specified Officers are eligible to receive
a cash "gross-up" payment equal to the federal excise tax, if any, due on the
total severance package.
Iowa-Illinois maintained a severance plan ("Iowa-Illinois Severance Plan")
which provided benefits as set forth herein. Under the Iowa-Illinois Severance
Plan, ten named officers ("Designated Officer") are entitled to receive
Severance Benefits (as hereinafter defined), if a Qualifying Termination (as
hereinafter defined) occurs within 24 full calendar months after a Change in
Control (as hereinafter defined). Messrs. Bright and Heppermann are Designated
Officers.
A "Change in Control" means either (i) the closing date of the restructuring
of Iowa-Illinois as a result of a merger, consolidation, takeover or
reorganization unless at least 60% of the members of the board of directors of
the corporation resulting from such merger, consolidation, takeover or
reorganization were members of the incumbent Iowa-Illinois Board of Directors;
or (ii) the occurrence of any other event that is designated as being a "Change
in Control" by a majority vote of the incumbent Iowa-Illinois Board of Directors
who are not also employees of Iowa-Illinois. The merger of Iowa-Illinois Gas,
Midwest Resources and Midwest Power Systems with and into the Company effective
July 1, 1995 constituted a Change in Control within the meaning of the
Iowa-Illinois Severance Plan.
A "Qualifying Termination" occurs when a Designated Officer's employment
with Iowa-Illinois, or any of its subsidiaries, or the corporation which results
from such Change in Control, is terminated either (a) involuntarily for any
reason; or (b) voluntarily, provided that the Designated Officer shall have
furnished to the President of such corporation six full months prior written
notice of the intent to voluntarily terminate employment.
"Severance Benefits" include (i) an amount equal to two times the Designated
Officer's highest Total Cash Compensation (defined as annual salary and bonus),
to be paid in a lump sum on the effective date of his/her Qualifying
Termination; and (ii) the Designated Officer's accrued vacation pay through the
effective date of the Qualifying Termination of such Designated Officer to be
paid in a lump sum on the effective date of such Qualifying Termination; and
(iii) a continuation of the welfare benefits of health insurance, disability
insurance, and group term life insurance for 24 full calendar months after the
effective date of the Designated Officer's Qualifying Termination, at the same
premium cost and at the same coverage level as in effect on such effective date;
and (iv) standard outplacement services from a nationally recognized firm of the
Designated Officer's selection for a period up to 24 full calendar months after
the effective date of the Designated Officer's Qualifying Termination or until
such Designated Officer obtains subsequent employment, whichever period is less.
The cost of such services shall not exceed 20% of the Designated Officer's Total
Cash Compensation.
In addition, Designated Officers are eligible to receive a cash "gross-up"
payment equal to federal excise tax, if any, due on the total severance package.
Designated Officers must elect between payment under the Iowa-Illinois
Severance Plan or the Company Severance Plan in the event of a termination of
employment.
ITEM 2
HOLDING COMPANY PROPOSAL
GENERAL
The Board of Directors and management of MidAmerican consider it to be in
the best interest of MidAmerican, its shareholders and customers, to adopt a
holding company structure. The Holding Company Proposal will be accomplished
through a statutory share exchange whereby the outstanding shares of MidAmerican
Common Stock will be exchanged, on a share-for-share basis, for shares of
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Holdings Common Stock. This transaction will result in MidAmerican becoming a
subsidiary of Holdings which will hold all of the MidAmerican Common Stock, and
the present holders of MidAmerican Common Stock becoming the holders of Holdings
Common Stock.
To achieve this change in structure, Holdings was formed for the purpose of
becoming the holding company of MidAmerican. The respective Boards of Directors
of MidAmerican and Holdings unanimously approved the Agreement, which is subject
to shareholder and regulatory approval. See "Required Shareholder Approval" and
"Required Regulatory Approvals." A copy of the Agreement is attached to this
Proxy Statement/Prospectus as Annex I and is incorporated herein by reference.
It is intended that the Share Exchange will not result in the recognition of
gain or loss by MidAmerican shareholders for federal income tax purposes. See
"Certain Federal Income Tax Consequences."
The other securities of MidAmerican, including its preferred stock and first
mortgage bonds, will not be changed by the Share Exchange and will continue to
be outstanding securities of MidAmerican.
RECOMMENDATION OF BOARD OF DIRECTORS. The Board of Directors unanimously
approved the Agreement and believes the Holding Company Proposal to be in the
best interests of MidAmerican's shareholders. See "Reasons for the Holding
Company Proposal."
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE AGREEMENT AND THE SHARE
EXCHANGE CONTEMPLATED THEREBY, AND RECOMMENDS THAT THE HOLDERS OF MIDAMERICAN
COMMON STOCK VOTE "FOR" APPROVAL OF THE AGREEMENT AND THE HOLDING COMPANY
PROPOSAL.
CORPORATE ORGANIZATION
As a result of the Merger, the common shareholders of Midwest Resources and
Iowa-Illinois became the common shareholders of MidAmerican, and the preferred
shareholders of Midwest Power and the preference shareholders of Iowa-Illinois
became the preferred shareholders of MidAmerican. Pursuant to the Merger, each
of the outstanding shares of common stock of Midwest Resources was converted
into one share of MidAmerican Common Stock, each of the outstanding shares of
preferred stock of Midwest Power was converted into one share of MidAmerican
preferred stock, no par value ("Preferred Stock"), each of the outstanding
shares of preference stock of Iowa-Illinois was converted into one share of
Preferred Stock, and each of the outstanding shares of common stock of
Iowa-Illinois was converted into the right to receive 1.47 shares of MidAmerican
Common Stock. The aggregate market value of the shares of common stock of
Midwest Resources and Iowa-Illinois converted in the Merger totaled
approximately $1.2 billion and the aggregate market value of the shares of
preferred stock of Midwest Power and the preference shares of Iowa-Illinois
converted in the Merger totaled approximately $140 million.
As a result of the Merger, MidAmerican owns all the issued and outstanding
capital stock of Midwest Capital Group, Inc. ("Midwest Capital"), under which
its business development activities are conducted, and InterCoast Energy Company
("InterCoast"), under which its nonutility businesses operate. The combined
operations of MidAmerican represent total annual revenues of approximately $1.7
billion and total assets of approximately $4.5 billion.
Holdings was incorporated under the laws of the State of Iowa on January 24,
1996, to become the parent of MidAmerican and currently has only nominal equity
capital and no debt. Prior to the consummation of the Share Exchange, the only
business of Holdings will be the execution, delivery and the performance of the
Agreement. Prior to the effectiveness of the Share Exchange, the assets of
Holdings will consist of $1,000 in cash, representing the equity capital
contributed by its sole shareholder. Pursuant to the Agreement, concurrently
with the effectiveness of the Share Exchange, all previously issued shares of
Holdings will be cancelled.
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Immediately after the Share Exchange, MidAmerican will transfer its
ownership of the capital stock of each InterCoast and Midwest Capital to
Holdings so that each InterCoast and Midwest Capital will become a direct
subsidiary of Holdings. After the Share Exchange, Holdings will own all of the
outstanding shares of MidAmerican Common Stock.
Charts showing the corporate structure and ownership before and after the
Share Exchange are presented below.
[LOGO]
MIDAMERICAN UTILITY REGULATION
MidAmerican, as an operating public utility company, is subject to
regulation by the ICC, the IUB, and the South Dakota Public Utilities Commission
("SDPUC") as to rates, territory, service, accounts, issuance of securities,
affiliated transactions, and other respects under Illinois, Iowa and South
Dakota law. FERC has jurisdiction under the Federal Power Act ("FPA") over
certain of the electric utility facilities and operations, accounting practices,
issuance of securities and wholesale electric rates of MidAmerican. See
"Required Regulatory Approvals."
REASONS FOR THE HOLDING COMPANY PROPOSAL
GENERAL. The principal reason for forming a holding company is to create an
organizational structure that will have greater flexibility for MidAmerican and
enhanced capability to address the changes associated with operating in a more
competitive market place. Such changes include changing customer demands and
expectations, competition from non-traditional energy suppliers and expanding
energy markets. MidAmerican also believes that a holding company structure will
permit it and its affiliates to better respond to new growth opportunities while
maintaining the strength of MidAmerican's utility operations.
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RECENT DEVELOPMENTS IN THE UTILITY INDUSTRY. For several years the electric
and gas public utility industries have been encountering increasing competition
from both utility and non-utility providers of energy and related services. This
level of competition continues to increase, in both the electric and gas sectors
and on both the wholesale and retail levels, due to a variety of regulatory,
economic and technological developments.
In the late 1980's and early 1990's, the FERC considered and then issued
orders significantly changing the operations and regulatory requirements for
interstate natural gas pipeline companies. These changes directly impact local
natural gas distribution companies ("LDCs"), including MidAmerican's gas utility
operations, by requiring LDCs to assume responsibility for the procurement,
transportation and storage of natural gas to meet customer needs. Further, in
the states in which MidAmerican operates as an LDC, certain classes of retail
customers can procure natural gas from suppliers other than the LDC, such as gas
marketing companies.
Federal legislation enacted in 1992 was designed, among other things, to
foster competition in the electric wholesale market by allowing for the
ownership and operation of generating facilities without regulation under the
Holding Company Act, and by authorizing the FERC under certain conditions to
order utilities which own transmission facilities to provide wholesale
transmission services to or for other utilities and other entities generating
electric energy for resale. Recently proposed administrative initiatives at FERC
would further facilitate the development of competitive wholesale bulk power
markets by mandating owners and operators of transmission facilities to offer
non-discriminatory open access to transmission services. FERC has accepted
MidAmerican's wholesale transmission tariff which provides for such open access.
In addition, brokers and marketers have also entered into the business of buying
and selling electric capacity and energy, or arranging sales thereof, without
owning or operating any generation or transmission facilities.
On the retail level, industrial and large commercial electric customers may
have the ability to own and operate facilities to generate their own electric
energy requirements. Such facilities may be operated by the customers themselves
or by other entities. Further, the legislatures and/or the regulatory
commissions in a number of states (including Illinois and Iowa) have considered
or have indicated that they will be considering electric utility regulatory
issues that may include retail competition. Certain members of the United States
Congress are currently advocating comprehensive legislation which would
eliminate on a national level the current regulatory scheme in the utility
industry which presently allows for regulated monopolies with designated service
territories.
The changes in the electric utility industry described above may necessitate
the restructuring of the existing vertically integrated electric utility
industry. The restructuring, if it were to occur, could include the "unbundling"
of the traditional electric utility's generation, transmission and distribution
operations. While MidAmerican has not made a determination as to the appropriate
structure for its utility businesses, it is expected that the holding company
structure will provide the requisite flexibility as future organizational needs
are addressed.
BENEFITS OF A HOLDING COMPANY STRUCTURE. The holding company structure is
an established form of organization for companies conducting multiple lines of
business and is utilized by a significant number of investor owned electric
utilities. As stated above, it provides a more flexible framework than
MidAmerican's present structure within which to address future organizational
needs, such as a partial or total separation of the electric utility's
vertically integrated operations, the potential combination of utility delivery
systems, the unbundling of utility services or the creation of marketing or
services companies.
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Benefits to be derived from a holding company structure may be generally
summarized as follows:
- The new structure will better position MidAmerican to make fundamental
changes in its business units to address the changing marketplace and the
laws and administrative rules which regulate MidAmerican's operations.
- The new structure will permit the use of specific financing techniques
applicable to the particular requirements, characteristics and risks of
specific business units without affecting the capital structure or
creditworthiness of MidAmerican and is expected to increase financial
flexibility by allowing the design and implementation of capital
structures that are most appropriate for each business. Since the capital
structure of MidAmerican's utility operations will not be affected by the
use of such alternative financing, the regulatory approval process will be
lessened, enabling Holdings and its affiliates to respond more promptly
and economically to growth opportunities as they may arise.
- The new structure is intended to facilitate the analysis and valuation of
potential lines of business by management and securities analysts.
- The new structure is expected to provide additional legal protection
against the imposition on MidAmerican of liabilities arising out of other
Holdings subsidiaries.
EMPLOYMENT AGREEMENTS
Each of Messrs. Stanley J. Bright and Russell E. Christiansen has entered
into an Employment Agreement with Holdings to become effective upon consummation
of the Share Exchange. The Employment Agreements are in all material respects
identical to and supersede the employment agreements effective as of the
effective time of the Merger and currently in effect between MidAmerican and
Messrs. Bright and Christiansen. See "Executive Compensation -- Employment
Agreements."
AGREEMENT AND PLAN OF EXCHANGE
The Agreement in the form attached hereto as Annex I has been unanimously
approved by the respective Boards of Directors of MidAmerican and Holdings and
by MidAmerican as the sole shareholder of Holdings. In the Share Exchange:
- each outstanding share of MidAmerican Common Stock will be exchanged for
one share of Holdings Common Stock;
- each outstanding share of each series of Preferred Stock will continue as
an issued and outstanding share of Preferred Stock, with the same
preferences, designations, relative rights, privileges and powers as now
provided by MidAmerican's Restated Articles of Incorporation, as amended
("Restated Articles of Incorporation"); and
- each share of Holdings Common Stock presently held by MidAmerican will be
cancelled.
As a result, MidAmerican will become a subsidiary of Holdings, and all of
Holdings Common Stock outstanding immediately after the Share Exchange will be
owned by the holders of MidAmerican Common Stock outstanding immediately before
the Share Exchange takes effect. MidAmerican's first mortgage bonds, other
long-term debt, and all other MidAmerican securities and contracts and
agreements to which MidAmerican is a party and the terms thereof will not be
altered by the Share Exchange. The Restated Articles of Incorporation will also
not be changed in any way as a result of the Share Exchange.
REQUIRED SHAREHOLDER APPROVAL
The IBCA provides for a statutory share exchange such as the Share Exchange
contemplated herein. Under the IBCA, a statutory share exchange must be approved
by the affirmative vote of the holders of a majority of the outstanding shares
of MidAmerican Common Stock. The Board of Directors decided to seek such
approval at the 1996 Annual Meeting of MidAmerican shareholders
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and, subject to the receipt of all required regulatory approvals and other
conditions, to consummate the Share Exchange thereafter. See "Effective Date of
the Share Exchange," "Required Regulatory Approvals" and "Certain Federal Income
Tax Consequences."
REQUIRED REGULATORY APPROVALS
ILLINOIS PUBLIC UTILITY REGULATION. Illinois law requires approval by the
ICC of the Holding Company Proposal, subject to certain rules and exceptions. An
application will be filed with the ICC seeking such approval. Illinois law does
not set forth a specific time period within which the ICC must act on the
application.
IOWA PUBLIC UTILITY REGULATION. Iowa law provides that the Holding Company
Proposal shall not take place if the IUB disapproves. An application will be
filed with the IUB for its order permitting the Holding Company Proposal to take
place. Iowa law provides that the application will be deemed to have been
approved unless the IUB disapproves within 90 days after the filing of the
application, and that the IUB cannot disapprove the Holding Company Proposal
without providing for a notice and opportunity for hearing.
FEDERAL POWER ACT. The FERC has held that the transfer of the common stock
of a public utility company, such as MidAmerican, from its existing shareholders
to a holding company in a transaction such as the Share Exchange constitutes a
transfer of the "ownership and control" of the facilities of such utility which
is subject to FERC jurisdiction under the FPA and is thus a "disposition of
facilities" subject to FERC review and approval under Section 203 of the FPA.
MidAmerican will apply for such approval.
ATOMIC ENERGY ACT. A provision of the Atomic Energy Act requires NRC
consent for the transfer of control of NRC licenses. In response to an inquiry
from another utility, the NRC Staff has asserted that this provision applies to
the creation of a holding company by an NRC-licensed utility company in a
transaction such as the Share Exchange. MidAmerican holds two NRC operating
licenses for nuclear generating stations in which MidAmerican holds minority
interests, and will apply for NRC approval under the Atomic Energy Act of the
transfer of control of such licenses in the Share Exchange.
Consummation of the Share Exchange is conditioned upon receiving all of the
above approvals. If any requirements or restrictions are imposed by any
regulatory authority having jurisdiction to review the proposed transaction as a
condition for approval of the Holding Company Proposal and are deemed by the
Board of Directors to negate the benefits of having a holding company structure,
the Board of Directors could determine not to consummate the Share Exchange. See
"Amendment or Termination."
REGULATION OF HOLDINGS
In the opinion of LeBoeuf, Lamb, Greene & MacRae L.L.P., the Company's
special counsel, Holdings has a good faith basis to claim an exemption from
registration as a holding company under the Holding Company Act pursuant to
Section 3(a)(1) and Rule 2 thereof. Section 3(a)(1) of the Holding Company Act
provides that the SEC may, by rule or order, provide an exemption from
registration to a holding company to the extent that the holding company and
every public utility subsidiary from which such holding company derives any
material part of its income are predominantly intrastate in character and carry
on their business substantially in a single state. Each of the holding company
and its public utility subsidiary must be organized in such single state. Rule
2, promulgated under the Holding Company Act, allows a holding company to claim
an exemption from all provisions of the Holding Company Act, except Section
9(a)(2), provided that the holding company and its material utility subsidiaries
meet the criteria set forth in Section 3(a)(1) of the Holding Company Act. In
order to claim and maintain an exemption under Rule 2, Holdings must file a Form
U-3A-2 with the SEC prior to March 1 of each year. Such exemption is subject to
termination by the SEC under Rule 6 upon a finding that the Company does not
meet the conditions of the exemption or that the exemption is no longer in the
public interest or the interest of investors or consumers.
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There are limitations under the Holding Company Act and current SEC
interpretations on the extent to which Holdings may derive income from the
utility business of MidAmerican or any other material utility subsidiary outside
of the State of Iowa and retain its exemption under Section 3(a)(1) of the
Holding Company Act. If these limitations were to be exceeded, the exempt status
of Holdings under the Holding Company Act could be jeopardized. In addition,
Section 9(a)(2) of the Holding Company Act requires prior SEC approval of the
acquisition by Holdings of 5% or more of the voting securities of any other
electric or gas utility company.
On November 2, 1994, the SEC issued a concept release regarding possible
modernization of the Holding Company Act. Additionally, the SEC Division of
Investment Management issued on June 21, 1995 a report calling for the
conditional repeal and administrative reform of the Holding Company Act.
MidAmerican and Holdings cannot predict whether the Holding Company Act will be
amended or repealed or what action, if any, the SEC will take on the proposed
regulatory reform.
MidAmerican and Holdings have been advised by counsel that so long as
Holdings is not a public utility, it will not be subject under present Illinois,
Iowa, South Dakota or federal law to utility regulation by the ICC, IUB, SDPUC
or FERC. Holdings will, however, be an "affiliate" and an "affiliated interest"
of MidAmerican under Iowa and Illinois law, respectively. As such, certain
contracts and other transactions between MidAmerican and Holdings are subject to
review and/or must be approved by the ICC and/or the IUB.
BUSINESS OF HOLDINGS
Upon the consummation of the Share Exchange, Holdings will be a holding
company owning all of the outstanding MidAmerican Common Stock and all of the
outstanding common stock of each of InterCoast and Midwest Capital, and may
engage, directly or through subsidiaries, in other businesses. It is anticipated
that all of Holdings' subsidiaries (except MidAmerican) will be primarily
engaged in businesses that are not regulated by state or federal agencies as
public utilities. Such businesses may have different, and perhaps greater,
financial risks than those involved in the regulated utility business. Holdings
expects to obtain funds it invests in such subsidiaries from dividends it
receives from its subsidiaries and the issuance and sale of its securities.
Holdings' nonutility subsidiaries are expected to continue to comprise less than
a predominant amount of its consolidated assets and to provide a less than
predominant amount of its consolidated revenues. It is also expected, however,
that all or substantially all of Holdings's dividends for the foreseeable future
will be provided by the utility operations of MidAmerican. There can be no
assurance that the nonutility businesses will be successful or, if unsuccessful,
that they will not have a direct or indirect adverse effect on Holdings. Any
losses incurred by such businesses will not be recoverable in utility rates of
MidAmerican. See also "Reasons for the Holding Company Proposal."
DIVIDEND POLICY
Dividends on Holdings Common Stock will depend for the foreseeable future
primarily upon the earnings, financial condition, cash flow and capital
requirements of MidAmerican. Holdings does not now, nor will it after the Share
Exchange, conduct directly any business operations from which it will derive any
revenues. Holdings plans to obtain funds for its own operations from dividends
paid to Holdings on the stock of its subsidiaries, and from the issuance and
sale of its securities. The amount of dividends on MidAmerican Common Stock
after the Share Exchange may, from time to time, be greater than the amount of
dividends on Holdings Common Stock to the extent Holdings requires funds to pay
its expenses and for other corporate purposes. Although MidAmerican and Holdings
are currently unable to make any assurances with regard to the payment of
dividends, it is currently contemplated that Holdings will pay quarterly
dividends on the Holdings Common Stock at the same rate, and on the same
schedule as, dividends have most recently been paid on MidAmerican Common Stock.
The quarterly dividend most recently declared by the Board of Directors on
MidAmerican Common Stock was $0.30 per share paid March 1, 1996, to holders of
record of such stock on February 8, 1996.
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LISTING OF HOLDINGS COMMON STOCK
Holdings will apply to list the Holdings Common Stock on the NYSE. It is
expected that such listing will become effective on the effective date of the
Share Exchange, subject to the rules of the NYSE. After the effective date of
the Share Exchange, the MidAmerican Common Stock will no longer meet the
requirements for listing on the NYSE because all of such stock will be held by
Holdings as the sole shareholder.
TREATMENT OF PREFERRED STOCK
The Share Exchange and formation of the holding company structure will not
result in any change in the outstanding shares of Preferred Stock. The decision
to have the Preferred Stock continue as securities of MidAmerican is based upon,
among other factors, a desire not to alter or potentially alter the nature of
the investment represented by such Preferred Stock, as well as the need of
MidAmerican not to foreclose future issuances of Preferred Stock to help meet
its capital requirements. The utility operations of MidAmerican presently
constitute, and are expected to continue to constitute, the predominant part of
the consolidated assets and earning power of Holdings. Accordingly, it is
believed that the Preferred Stock will retain its current investment ratings, as
well as its qualification for legal investment for certain investors, by
remaining as stock of MidAmerican. The Preferred Stock will continue to rank
senior to MidAmerican Common Stock as to dividends and as to assets of
MidAmerican upon any liquidation. After the Share Exchange, MidAmerican will
continue to be subject to the informational requirements of the Exchange Act.
AMENDMENT OR TERMINATION
By mutual consent of each of their Boards of Directors, MidAmerican and
Holdings may amend, modify, or supplement the Agreement in such manner as may be
agreed upon by them at any time before or after approval of the Agreement by the
shareholders of MidAmerican; provided, however, that no amendment, modification
or supplement shall be made which would, in the judgment of the Board of
Directors, materially and adversely affect the shareholders of MidAmerican.
The Agreement may be terminated, at any time before or after its approval by
the shareholders of MidAmerican Common Stock, by action of the Board of
Directors if, in its sole discretion, it determines that the Share Exchange
would be inadvisable or not in the best interests of MidAmerican or its
shareholders. In making such determination, the Board of Directors would
consider, among other things, the ICC, IUB, NRC and FERC orders and any
conditions imposed in such orders, failure to receive a favorable Internal
Revenue Service ruling or opinion of counsel as described under "Certain Federal
Income Tax Consequences," or the nature of any further regulatory approval
requirements not now anticipated. MidAmerican is unable to predict under what
circumstances the Share Exchange might be terminated or abandoned.
DISSENTERS' RIGHTS
The IBCA provides dissenters' rights for shareholders who object to the
Share Exchange and meet the requisite statutory requirements contained in
Sections 1301 through 1331 of the IBCA. Under the IBCA, if the Agreement is
approved by the shareholders of MidAmerican and the Share Exchange is
consummated, any shareholder who wishes to assert dissenters' rights must do all
of the following: (i) deliver to MidAmerican before the vote is taken written
notice of the shareholder's intent to demand payment for the shareholder's
shares of stock, (ii) not vote such shares of stock in favor of the approval of
the Agreement, and (iii) upon the receipt of a dissenters' notice from
MidAmerican, demand payment, certify whether the shareholder acquired beneficial
ownership of such shares of stock before the date set forth in the dissenters'
notice and deposit the certificate or certificates representing such shares of
stock in accordance with the terms of the notice. Upon receipt of a payment
demand as set forth above, or at the effective time, Holdings will pay to such
shareholder the amount Holdings estimates to be the "fair value" of such shares
of capital stock as of the time immediately prior to the consummation of the
Share Exchange, excluding any appreciation or depreciation in anticipation of
the Share Exchange, unless exclusion would be inequitable, plus accrued
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interest. A shareholder who does not satisfy each of the aforementioned
requirements is not entitled to payment for such shareholder's shares of capital
stock under the dissenters' rights provisions of the IBCA and will be bound by
the terms of the Share Exchange.
A shareholder may dissent as to less than all of the shares of capital stock
registered in the name of such shareholder only if such shareholder dissents
with respect to all shares beneficially owned by any one person and notifies
MidAmerican in writing of the name and address of each person on whose behalf
such shareholder asserts dissenters' rights. The rights of a partial dissenter
are determined as if the shares of capital stock as to which the shareholder
dissents and such shareholder's other shares of capital stock were registered in
the names of different shareholders. A beneficial shareholder may assert
dissenters' rights as to shares held on such shareholder's behalf only if such
shareholder (i) submits to MidAmerican the record shareholder's written consent
to the dissent not later than the time the beneficial shareholder asserts
dissenters' rights and (ii) asserts dissenters' rights with respect to all
shares of capital stock of which the shareholder is the beneficial shareholder
or over which such beneficial shareholder has the power to direct the vote.
Set forth below is a summary of the procedures relating to the exercise of
dissenters' rights under the IBCA. Reference is made to Annex III hereto which
includes sections 1301-1331 relating to dissenters' rights under the IBCA in
effect as of the date of this Proxy Statement Prospectus.
The IBCA requires that a shareholder who wishes to assert dissenters' rights
(i) deliver to MidAmerican before the vote is taken, written notice of the
shareholder's intent to demand payment for shares of MidAmerican Common Stock if
the Share Exchange is consummated and (ii) not vote such shares of capital stock
in favor of the Share Exchange. Any such notice by dissenting shareholders must
be received by MidAmerican at 666 Grand Avenue, P.O. Box 657, Des Moines, Iowa
50309-0657, Attention: Vice President and Corporate Secretary, prior to such
vote. The submission by a shareholder of a blank proxy card or one voted in
favor of the Share Exchange (if not revoked) will count as a vote in favor of
the Share Exchange and will serve to waive dissenters' rights. However, failure
to return a proxy or to vote against or abstain from voting will not serve to
waive such rights.
Within ten days after the date on which the Agreement is approved by its
shareholders, MidAmerican must deliver a written dissenters' notice to all of
its shareholders that have given a written notice and not voted in favor of the
Share Exchange in accordance with the preceding paragraph. The dissenters'
notice will (i) state where the payment demand must be sent and where and when
certificates for shares of capital stock must be deposited, (ii) supply a form
for demanding payment that includes the date of the first announcement to the
news media or to shareholders of the terms of the proposed Share Exchange and
which requires that the shareholder asserting dissenters' rights certify whether
or not such shareholder acquired beneficial ownership of the shares before such
date, (iii) set a date by which MidAmerican must receive the payment demand,
which date will be not less than 30 nor more than 60 days from the date such
dissenters' notice is delivered, and (iv) be accompanied by the relevant
sections of the IBCA. A shareholder who receives a written dissenters' notice as
described above and who wishes to assert dissenters' rights must demand payment,
certify whether the shareholder acquired beneficial ownership of the shares
before the date set forth in the dissenters' notice and send the payment demand
and the certificate representing the dissenting shares to the location and in
accordance with the schedule included in the notice.
Upon receipt of the payment demand, or at the effective time, Holdings must
pay each dissenting shareholder that has complied with the provisions of the
IBCA the amount estimated to be the fair value of the dissenter's shares, plus
accrued interest from the effective time to the date of payment at the average
rate paid by Holdings on its bank loans or, if none, at a rate that is fair and
equitable under all the circumstances. Such payment must be accompanied by
certain financial data relating to Holdings and other specified information as
required by the IBCA. If the proposed Share Exchange is not effected within 60
days after the date set for demanding payment and depositing capital share
certificates, MidAmerican will return the deposited certificates and, if the
Share Exchange is subsequently effected, Holdings will deliver a new dissenters'
notice and repeat the payment demand
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procedure. Holdings may elect to withhold payment from a dissenting shareholder
unless the dissenting shareholder was the beneficial owner of the shares before
the date set forth in the dissenters' notice as the date of the first
announcement of the terms of the proposed Share Exchange. If Holdings so elects
to withhold payment, it must, after the effective time, estimate the fair value
of the shares, plus accrued interest at the rate described above, and pay such
amount and provide certain other specified information as set forth in the IBCA,
to each such dissenting shareholder who agrees to accept it in full satisfaction
of the dissenter's demand.
If (i) the dissenter believes that the amount offered or paid is less than
the fair value of the dissenter's shares or that the interest due is incorrectly
calculated, (ii) Holdings fails to make payment within 60 days after the date
set for demanding payment, or (iii) MidAmerican, having failed to effect the
Share Exchange, does not return the deposited certificates within 60 days after
the date set for demanding payment, dissenters may, within 30 days after the
payment was made or offered, notify Holdings or MidAmerican, as the case may be,
in writing of the dissenting shareholder's own estimate of the fair value of the
shares and the amount of interest due, and demand payment of the fair value of
such shares and interest so calculated less payments received by such dissenting
shareholder, if any. A dissenter waives the right to demand payment as described
in this paragraph unless the dissenter notifies Holdings of the dissenter's
demand within 30 days after Holdings made or offered payment for the dissenter's
shares. If the demand of a MidAmerican dissenter for payment remains unsettled,
Holdings must (i) commence a proceeding in the Iowa District Court for Polk
County in Des Moines, Iowa, within 60 days after receiving the payment demand to
determine the fair value of the shares and accrued interest or (ii) pay to each
such dissenter the amount demanded. The costs of a proceeding, including the
reasonable compensation and expenses of appraisers appointed by the Court, will
generally be assessed against Holdings. The court may, however, assess such
court costs, including the fees and expenses of counsel and experts, against a
dissenter that is found by the court to have acted arbitrarily, vexatiously or
not in good faith in demanding payment.
EFFECTIVE DATE OF THE SHARE EXCHANGE
After the shareholders of MidAmerican Common Stock have approved the
Agreement, satisfactory orders of the ICC, IUB, FERC and NRC have been received,
and all other conditions to the Share Exchange have been satisfied or waived,
Holdings will file Articles of Exchange with the Iowa Secretary of State. The
Share Exchange will become effective on the date such Articles of Exchange are
filed, unless a later date is specified therein. See also "Required Shareholder
Approval" and "Amendment or Termination."
EXCHANGE OF STOCK CERTIFICATES NOT REQUIRED
If the Share Exchange is effected, it will not be necessary for holders of
MidAmerican Common Stock to exchange their existing certificates of such stock
for certificates of Holdings Common Stock. The holders of MidAmerican Common
Stock will become the owners of shares of Holdings Common Stock on a
share-for-share basis, and the present stock certificates of MidAmerican will
automatically represent shares of Holdings Common Stock. After the Share
Exchange, as presently outstanding certificates of MidAmerican Common Stock are
presented for transfer, new certificates bearing Holdings's name will be issued.
Holdings may elect to offer direct registration to holders of Holdings
Common Stock. Through the direct registration system, investors may elect to
have a statement-based account, rather than having to keep track of a
certificate. This would eliminate the risk of loss, theft or destruction of
certificates and provide convenience to Holdings and its shareholders.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL. The following general discussion summarizes certain federal income
tax considerations relating to the Agreement. This summary is included for
general information only. This summary does not discuss all aspects of federal
income taxation that may be relevant to a particular holder
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of MidAmerican Common Stock in light of the personal tax circumstances of the
holder or to certain types of holders of MidAmerican Common Stock subject to
special treatment under the federal income tax laws.
MidAmerican has received a satisfactory opinion of Sidley & Austin regarding
expected federal income tax consequences of the Share Exchange under current
law. Consummation of the Share Exchange is conditioned upon the receipt by
MidAmerican of either an Internal Revenue Service ruling or, in the alternative,
a further similar opinion of Sidley & Austin dated as of the effective date of
the Share Exchange. Except as otherwise indicated, statements of legal
conclusion regarding federal tax treatments, effects or consequences as detailed
below reflect the opinion of Sidley & Austin. While such statements and
conclusions represent the legal judgment of Sidley & Austin, such judgment is
not binding in any manner upon the Internal Revenue Service or the courts. Each
holder of MidAmerican Common Stock should consult such holder's own tax advisor
as to the specific income tax consequences to such holder, including the
application and effect of state or local income and other tax laws.
The following discussion is based on existing statutory provisions, existing
and proposed regulations and existing administrative interpretations and court
decisions. Future legislation, regulations, administrative interpretations, or
court decisions could significantly change such authorities, either
prospectively or retroactively.
The Share Exchange will be treated as a transfer of the outstanding
MidAmerican Common Stock held by the nondissenting holders thereof to Holdings
solely in exchange for Holdings Common Stock, in an exchange qualifying for
nonrecognition under Section 351 of the Internal Revenue Code of 1986, as
amended ("Code").
TAX IMPLICATIONS TO THE HOLDERS. For federal income tax purposes, no gain
or loss will be recognized by the nondissenting holders of MidAmerican Common
Stock as a result of the Share Exchange. The tax basis of the Holdings Common
Stock deemed received by the holders of MidAmerican Common Stock in the Share
Exchange will be the same as their basis in the MidAmerican Common Stock deemed
surrendered in the Share Exchange. The holding period of the Holdings Common
Stock deemed received by each holder of MidAmerican Common Stock will include
the period during which such holder held the MidAmerican Common Stock deemed
exchanged therefor, provided that the MidAmerican Common Stock was held as a
capital asset on the date of the deemed exchange.
TAX IMPLICATIONS TO HOLDINGS. No gain or loss will be recognized by
Holdings for federal income tax purposes upon the deemed receipt of the
MidAmerican Common Stock. The basis of the MidAmerican Common Stock deemed
received by Holdings will be the same as the aggregate tax basis that the
holders of MidAmerican Common Stock had in such stock immediately prior to the
Share Exchange. Holdings's holding period in the MidAmerican Common Stock deemed
received in the Share Exchange should include the period during which such stock
was held by the holders of MidAmerican Common Stock.
OTHER TAX ASPECTS. Apart from the federal income tax aspects discussed
above, no attempt has been made to determine any tax that may be imposed on a
holder of MidAmerican Common Stock by the country, state or jurisdiction in
which the holder resides or is a citizen. Holders of MidAmerican Common Stock
may be subject to other taxes, such as state or local income taxes that may be
imposed by various jurisdictions. Holders of MidAmerican Common Stock may also
be subject to intangible property, estate and inheritance taxes in their state
of domicile. Holders of MidAmerican Common Stock should consult their own tax
advisors with regard to foreign, state and local income, inheritance and estate
taxes.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INTENDED TO PROVIDE
ONLY A GENERAL SUMMARY, AND DOES NOT ADDRESS TAX CONSEQUENCES WHICH MAY VARY
WITH, OR ARE CONTINGENT ON, INDIVIDUAL CIRCUMSTANCES. MOREOVER, THIS DISCUSSION
DOES NOT ADDRESS ANY FOREIGN, FEDERAL, STATE OR LOCAL TAX CONSEQUENCES OF THE
36
<PAGE>
DISPOSITION OF STOCK IN MIDAMERICAN OR HOLDINGS EITHER BEFORE OR AFTER THE SHARE
EXCHANGE. ACCORDINGLY, EACH HOLDER OF MIDAMERICAN COMMON STOCK IS STRONGLY URGED
TO CONSULT WITH SUCH HOLDER'S TAX ADVISOR TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO SUCH HOLDER OF THE SHARE EXCHANGE OR SUCH DISPOSITION OF STOCK.
MANAGEMENT
The directors of MidAmerican will become the directors of Holdings at the
effective time of the Share Exchange. If the holders of MidAmerican Common Stock
approve the Agreement, they will be considered also to have ratified the
election of such persons as directors of Holdings. Until the Share Exchange
becomes effective, Russell E. Christiansen, Chairman, Chairman of Office of the
Chief Executive Officer and a Director of MidAmerican, and Stanley J. Bright,
President, President of Office of the Chief Executive Officer and a Director of
MidAmerican, will be the only directors of Holdings.
The current executive officers of Holdings are also executive officers of
MidAmerican. The Holdings executive officers are:
<TABLE>
<S> <C>
Russell E.
Christiansen Chairman
Stanley J. Bright President
Lance E. Cooper Vice President and Treasurer
John A. Rasmussen, Jr. Vice President and General Counsel
Paul J. Leighton Corporate Secretary
</TABLE>
See "Election of Directors" for information with respect to Messrs.
Christiansen and Bright. Mr. Cooper is a Group Vice President of MidAmerican,
Mr. Rasmussen is a Group Vice President and General Counsel of MidAmerican and
Mr. Leighton is a Vice President and Corporate Secretary of MidAmerican. The
foregoing officers have held their respective positions in MidAmerican since the
effective time of the Merger creating MidAmerican. Prior thereto, each of the
foregoing officers held similar positions with their respective predecessor
companies.
HOLDINGS CAPITAL STOCK
The provisions of the Restated Articles of Incorporation of Holdings
("Holdings Restated Articles of Incorporation") which establish the rights of
the holders of the Holdings Common Stock are essentially the same as those in
the Restated Articles of Incorporation. The Holdings Restated Articles of
Incorporation are attached to this Proxy Statement/Prospectus as Annex II.
AUTHORIZED. The authorized capital stock of Holdings consists of 350
million shares of Holdings Common Stock, no par value, and 100 million shares of
preferred stock, no par value.
DISTRIBUTIONS. Holders of Holdings Common Stock are entitled to receive (a)
dividends when, as and if declared by its board of directors, and (b) all of the
assets of Holdings available for distribution on a pro rata basis upon its
liquidation, dissolution or winding up, after the payment of all debts and other
obligations.
VOTING. Each share of Holdings Common Stock entitles its holder to one vote
on matters properly submitted to a vote of Holdings shareholders. Holders of
Holdings Common Stock do not have the right to cumulate their votes in elections
of directors.
No holder of Holdings Common Stock has any preemptive or preferential right
to subscribe for any additional issue of Holdings Common Stock or to subscribe
for any security convertible into Holdings Common Stock. No redemption,
conversion or sinking fund provisions are applicable to shares of Holdings
Common Stock. The Holdings Common Stock issued in the Share Exchange will be
fully paid and nonassessable.
STOCK PLANS
If the Share Exchange is consummated, Holdings will adopt plans
substantially similar to the MidAmerican Shareholder Options Plan, the
MidAmerican Employee Stock Purchase Plan, the MidAmerican Retirement Savings
Plan and the MidAmerican 1995 Long-Term Incentive Plan. Such
37
<PAGE>
plans will provide that Holdings Common Stock (or stock units) will be delivered
instead of MidAmerican Common Stock (or stock units) pursuant to such plans. By
approving the Agreement, the holders of MidAmerican Common Stock will be
considered also to have ratified the adoption of such plans by Holdings to
provide for the delivery of Holdings Common Stock thereunder.
MIDAMERICAN COMMON STOCK MARKET PRICES AND DIVIDENDS
The MidAmerican Common Stock is listed and traded on the NYSE. The table
below sets forth, for the periods indicated, the dividends declared per share
and the high and low sales prices per share of the MidAmerican Common Stock
("MEC") and the common stock of Midwest Resources ("MWR") and Iowa-Illinois
("IWG") as reported in The Wall Street Journal as New York Stock Exchange --
Composite Transactions. The dividends declared per share and high and low prices
per share for Iowa-Illinois in the table below have not been adjusted to reflect
the exchange ratio received in the Merger.
<TABLE>
<CAPTION>
PRICE RANGE
----------------------------------------------------------------
DIVIDENDS DECLARED MIDAMERICAN IOWA-ILLINOIS RESOURCES
------------------------------- -------------------- -------------------- --------------------
MEC IWG MWR HIGH LOW HIGH LOW HIGH LOW
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996.......................... $ 0.30
1995
4th Quarter................. $ 0.30 $ -- $ -- $ 171/8 $ 15 $ -- $ -- $ -- $ --
3rd Quarter................. 0.30 -- -- 155/8 135/8 -- -- -- --
2nd Quarter................. -- 0.4325 0.29 -- -- 22 197/8 15 137/8
1st Quarter................. -- 0.4325 0.29 -- -- 221/8 19 145/8 133/8
1994
4th Quarter................. $ -- $ 0.4325 $ 0.29 $ -- $ -- $ 205/8 $ 187/8 $ 141/2 $ 127/8
3rd Quarter................. -- 0.4325 0.29 -- -- 221/2 191/4 153/8 131/2
2nd Quarter................. -- 0.4325 0.29 -- -- 241/2 197/8 163/4 137/8
1st Quarter................. -- 0.4325 0.29 -- -- 243/4 223/8 18 16
1993
4th Quarter................. $ -- $ 0.4325 $ 0.29 $ -- $ -- $ 263/8 $ 225/8 $ 191/2 $ 171/8
</TABLE>
EXPERTS
The audited financial statements and schedules incorporated in this Proxy
Statement/Prospectus by reference from the MidAmerican Annual Report on Form
10-K for the calendar year ended December 31, 1995 have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance upon the authority of such
firm as experts in auditing and accounting in giving such reports.
LEGAL MATTERS
Certain legal matters relating to the issuance of the Holdings Common Stock
in the Share Exchange will be passed upon by Sidley & Austin, One First National
Plaza, Chicago, Illinois 60603. Legal matters relating to the Public Utility
Holding Company Act of 1935, as amended, have been passed upon by LeBoeuf, Lamb,
Greene & MacRae, L.L.P., a limited liability partnership including professional
corporations.
ITEM 3
PROPOSAL TO APPROVE AND ADOPT THE MIDAMERICAN ENERGY
COMPANY 1995 LONG-TERM INCENTIVE PLAN
INTRODUCTION. On July 26, 1995, the Board of Directors adopted the
MidAmerican Energy Company 1995 Long-Term Incentive Plan (the "Plan"), subject
to approval by the shareholders. If approved, the Plan will become effective on
the date of such approval and continue in effect for a ten year period
thereafter. See "Directors' Compensation," "Securities Ownership of Certain
Beneficial Owners and Management," "Executive Compensation" and the
"Compensation Committee Report on Executive Compensation" for a discussion of
restricted stock and stock option awards made at the
38
<PAGE>
time of the adoption of the Plan, subject to the approval of the Plan by the
shareholders. The Plan is an incentive compensation plan for officers and other
key employees of the Company and its subsidiaries and provides for restricted
stock grants to non-employee directors as a part of their total compensation for
service as a director of the Company.
The full text of the Plan appears in Annex IV to this Proxy
Statement/Prospectus and should be referred to for a complete description of its
provisions. A summary of the material features of the Plan appears below.
RECOMMENDATION. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS OF MIDAMERICAN COMMON STOCK VOTE "FOR" THE PROPOSAL TO APPROVE AND
ADOPT THE 1995 LONG-TERM INCENTIVE PLAN.
PURPOSE. The purpose of the Plan is to (i) align the interests of the
Company's shareholders and the recipients of awards under the Plan by increasing
the proprietary interest of such recipients in the Company's growth and success,
(ii) advance the interests of the Company by attracting and retaining
non-employee directors, officers and other key employees and (iii) motivate such
participants to act in the long-term best interests of the Company's
shareholders.
ADMINISTRATION. The Plan provides for administration by the Compensation
Committee of the Board of Directors (the "Committee"), consisting of three or
more members of the Board of Directors each of whom shall be a "disinterested
person" within the meaning of Rule 16b-3 of the Exchange Act. Among the powers
granted to the Committee are the authority to interpret the Plan, establish
rules and regulations for its operation, select employees of the Company and its
subsidiaries to receive awards under the Plan and determine the form and amount
and other terms and conditions of such awards. The Plan authorizes the Committee
to delegate its power and authority under the Plan to the President or other
executive officer of the Company; provided, however, that the Committee may not
delegate its power and authority with regard to the selection for participation
in the Plan of an officer or other person subject to Section 16 of the Exchange
Act or decisions concerning the timing, pricing or amount of an award to such an
officer or other person.
ELIGIBILITY FOR PARTICIPATION. Officers and other key employees of the
Company and its subsidiaries are eligible to be selected to participate in the
Plan. Non-employee directors are eligible to participate in Article V,
"Restricted Stock Awards for Non-Employee Directors," of the Plan. Other than
with respect to the participation of non-employee directors, the selection of
participants is within the discretion of the Committee. The Committee has
initially determined that the ten executive officers of the Company and its
subsidiaries are eligible to participate in the stock options portion of the
Plan and twenty officers the Company and its subsidiaries are eligible to
participate in the restricted stock awards portion of the Plan.
TYPES OF AWARDS. The Plan provides for the grant of any or all of the
following types of awards: (i) options to purchase shares of MidAmerican Common
Stock in the form of incentive stock options or non-statutory stock options,
(ii) SARs in the form of tandem SARs or free-standing SARs, (iii) stock awards
in the form of restricted stock or unrestricted stock and (iv) performance
shares. Such awards may be granted singly, in combination or in tandem as
determined by the Committee.
AMENDMENT OF THE PLAN. The Board of Directors may terminate the Plan or
amend it at any time as it shall deem advisable, subject to shareholder approval
as may be required by applicable law, rule or regulation, including Section 16
of the Exchange Act, provided that no amendment may be made without shareholder
approval if such amendment would (i) increase the maximum number of shares of
MidAmerican Common Stock available under the Plan (subject to adjustment as
provided in the Plan), (ii) reduce the minimum purchase price in the case of an
option or an SAR or (iii) effect any change inconsistent with Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or (iv) extend the term
of the Plan.
39
<PAGE>
AVAILABLE SHARES. Four million shares of MidAmerican Common Stock are
available for grant under the Plan subject to reduction by the sum of the
aggregate number of shares of MidAmerican Common Stock that are issued upon the
grant of a stock award and which become subject to outstanding options,
free-standing SARs and performance shares. In the event such shares of
MidAmerican Common Stock are not issued or delivered by reason of the
expiration, termination, cancellation or forfeiture of such award or by reason
of the delivery or withholding of shares of MidAmerican Common Stock to pay all
or a portion of the exercise price of an award, if any, to satisfy all or a
portion of the tax withholding obligations relating to an award, then such
shares of MidAmerican Common Stock shall again be available under the Plan.
LIMITATION ON AWARDS. Included within the 4,000,000 shares of MidAmerican
Common Stock available for grants under the Plan, is a maximum of 600,000 shares
available for awards granted in the form of stock awards under the Plan during
its term. The amount of all awards to individual participants is to be
determined by the Committee in its sole discretion.
STOCK OPTIONS. Under the Plan, the Committee may grant awards in the form
of options to purchase shares of MidAmerican Common Stock. The Committee will,
with regard to each stock option, determine the number of shares subject to the
option, the manner and time of the option's exercise, a vesting schedule, if
any, and the exercise price per share subject to the option. In no event,
however, may the exercise price of a stock option be less than 100% of the fair
market value of the MidAmerican Common Stock on the date of the stock option's
grant or the exercise period be longer than ten years from the date of the
option grant. Upon exercise, the option price may be paid in cash or, at the
discretion of the Committee, in shares of MidAmerican Common Stock, a
combination thereof, or such other consideration as the Plan permits. Unvested
stock options of a participant who terminates employment with the Company by
reason of disability, retirement upon reaching at least age 55 with a minimum of
five years of employment with the Company or death will become fully vested at
the time of termination. Any stock option granted in the form of an incentive
stock option will satisfy the applicable requirements of Section 422 of the
Code.
STOCK APPRECIATION RIGHTS. The Plan authorizes the Committee to grant SARs
either in tandem with a stock option ("Tandem SARs") or independent of a stock
option ("Free-Standing SARs"). An SAR is a right to receive a payment equal to
the appreciation in market value at exercise in excess of the grant price
multiplied by the stated number of shares of MidAmerican Common Stock subject to
the exercise.
A Tandem SAR granted in connection with an incentive stock option shall be
granted at the same time as the incentive stock option is granted. A Tandem SAR
shall be exercisable to the extent its related stock option is exercisable and
the exercise price of such an SAR shall be the same as the option price under
the related stock option. Upon the exercise of a stock option as to some or all
of the shares related to the award, the related Tandem SAR shall be cancelled
automatically to the extent of the number of shares covered by the stock option
exercise.
The Committee will, with regard to a Free-Standing SAR, determine the number
of shares of MidAmerican Common Stock subject to the SAR, the manner and time of
the SAR's exercise and the exercise price of the SAR. However, the exercise
price of a Free-Standing SAR will in no event be less than 100% of the fair
market value of the MidAmerican Common Stock on the date of the grant of the
Free-Standing SAR.
STOCK AWARDS. The Plan authorizes the Committee to grant awards in the form
of shares of MidAmerican Common Stock, either restricted or unrestricted. Such
awards will be subject to such terms, conditions, restrictions and/or
limitations, if any, as the Committee deems appropriate including, but not by
way of limitation, restrictions based on performance measures and continued
employment.
40
<PAGE>
PERFORMANCE SHARES. The Plan allows for the grant of "performance shares."
For purposes of the Plan, "performance shares" means a right, contingent upon
the attainment of specified performance measures within a specified performance
period, to receive one share of MidAmerican Common Stock, which may be
restricted, or in lieu of all or a portion thereof, the fair market value of
such performance share. The performance objectives to be achieved during such
period and the measure of whether and to what extent such objectives have been
attained will also be determined by the Committee.
OTHER TERMS OF AWARDS. The Plan describes the continuation, termination,
nonforfeiture and forfeiture of stock options, SARs, stock and performance share
awards in the event of death, disability, retirement or termination as an
employee of the Company. Transfers, assignments or pledges of such awards other
than by will or the laws of descent and distribution or as permitted by Section
16 of the Exchange Act are not permitted.
RESTRICTED STOCK FOR NON-EMPLOYEE DIRECTORS. The Plan provides that as of
the date of adoption of the Plan, each non-employee director (a member of the
Board of Directors who is not an officer or employee of the Company or any
subsidiary) is to receive a restricted stock award of 800 shares of MidAmerican
Common Stock. Furthermore, upon the initial election of a director to the Board
of Directors, whether at an annual election or to fill a vacancy, a restricted
stock award consisting of 800 shares of MidAmerican Common Stock shall be made
to such director. Additional restricted stock awards of 800 shares of
MidAmerican Common Stock will be made to each non-employee director who
continues on the Board of Directors annually on May 1 beginning in 1996,
assuming approval of the Plan by the holders of MidAmerican Common Stock. The
shares are restricted until such time as the non-employee director terminates
service as a director of the Company and become nonforfeitable upon death or
disability while serving as a member of the Board, failure to be reelected to
the Board after being duly nominated, retirement from the Board after five years
of service as a director or removal from the Board or failure to be nominated
for reelection following a change in control of the Company.
CHANGE IN CONTROL. The Plan provides that in the event of a change in
control (as defined in the Plan) (i) all outstanding options and SARs shall
immediately become exercisable in full, (ii) the restriction period applicable
to any outstanding restricted stock award shall lapse, (iii) the performance
period applicable to any outstanding performance share award will lapse and (iv)
the performance measures applicable to any outstanding restricted stock award
(if any) and to any outstanding performance share award will be deemed to be
satisfied at the target level. The Share Exchange will not constitute a change
of control.
FEDERAL INCOME TAX CONSEQUENCES. The following is a brief summary of the
principal United States federal income tax consequences under the Code as it
relates to awards under the Plan. This summary is not intended to be complete
and, among other things, does not describe state or local tax consequences.
Capital gains are currently taxed at a minimum federal rate of 28 percent, while
ordinary income rates are graduated to a maximum rate of 39.6 percent. The
following discusses the characterization of income under the various Plan
features as ordinary income or capital gain or loss.
Incentive Stock Options. A participant who receives an incentive stock
option will not be treated as receiving taxable income upon the grant of the
option or upon its exercise, provided the exercise occurs, in general, during
employment or within three months after termination of employment for cause.
However, any appreciation in share value since the date of the grant will be an
item of tax preference at the time of exercise in determining liability for the
alternative minimum tax. If stock acquired pursuant to an incentive stock option
is not sold or otherwise disposed of within two years from the date of grant of
the option and is held for at least one year after delivery of the stock
purchased by the option, any gain or loss resulting from a sale or other
disposition of the stock will be treated as long-term capital gain or loss. If
stock acquired upon exercise of an incentive stock option is disposed of prior
to the expiration of such holding periods, the participant will realize ordinary
income in the year of such disposition in an amount equal to the excess of the
fair market value of the stock on
41
<PAGE>
the date exercised over the exercise price. Any gain in excess of that ordinary
income amount generally will be taxed at capital gains rates. However, under a
special rule, the ordinary income realized upon a disqualifying disposition will
not exceed the amount of the participant's gain.
The Company will not be entitled to any deduction as a result of the grant
or exercise of any incentive stock option, or on a later disposition of the
stock received, except that in the event of a disqualifying disposition, the
Company will be entitled to a deduction equal to the amount of ordinary income
realized by the participant, or, if less, the amount equal to the excess of the
fair market value of the stock on the date exercised over the exercise price.
Non-Statutory Stock Options. No taxable income will be realized by a
participant upon the grant of a non-statutory stock option. Upon exercise of a
non-statutory stock option, the participant will realize ordinary income in an
amount measured by the excess of the fair market value of the shares on the date
exercised over the option price, and the Company will be entitled to a
corresponding deduction. In the case of a participant subject to Section 16(b)
of the Exchange Act, unless the participant elects otherwise, the amount and
timing of such income (and deduction by the Company) will instead be based on
the fair market value of the shares on the date the Section 16(b) restriction
lapses as to such shares. Upon a subsequent disposition of the shares, the
participant will realize short-term or long-term capital gain or loss to the
extent of any intervening appreciation or depreciation. The Company will not be
entitled to any further deduction at that time.
SARs. At the time of receiving an SAR, the participant will not
recognize any taxable income. Likewise, the Company will not be entitled to a
deduction for the SAR. Upon the exercise of an SAR, the participant will
recognize ordinary income in an amount equal to the cash and/or fair market
value of the shares received. However, participants who are subject to Section
16(b) of the Exchange Act and who receive stock, will not recognize ordinary
income until the restrictions imposed by Section 16(b) lapse and the stock will
be valued on that date. Nevertheless, such participants may elect, at the date
of exercise, to recognize ordinary income pursuant to Section 83(b) of the Code.
If such an election is made, the stock is valued on the date of exercise of the
SAR. If a participant receives stock, then the fair market value of the stock
(recognized as ordinary income) becomes the participant's tax basis for
determining gains or losses on the subsequent sale of such stock. The Company
will be entitled to a deduction in the amount and at the time that the
participant first recognizes ordinary income.
Performance Shares. A participant who has been granted performance
shares will not realize taxable income at the time of the grant and the Company
will not be entitled to a deduction at that time. A participant will realize
ordinary income at the time the award is paid equal to the excess of the fair
market value of the MidAmerican Common Stock over the amount paid by the
participant, if any, for such shares. The Company will be entitled to a
corresponding deduction.
Restricted Shares. A participant receiving an award of restricted
shares of MidAmerican Common Stock will not realize taxable income at the time
of the grant and the Company will not be entitled to a deduction at that time,
assuming that the restrictions constitute a substantial risk of forfeiture for
federal income tax purposes. When such restrictions lapse, the participant will
receive taxable income in an amount equal to the excess of the fair market value
of the shares at such time over the amount, if any, paid for such shares. The
Company will be entitled to a corresponding deduction.
The tax treatment of restricted shares of MidAmerican Common Stock which is
disposed of will depend upon whether the participant made an election to include
the value of the stock in income when awarded. If the participant made such an
election, any disposition thereafter will result in a long-term or short-term
capital gain depending upon the period the restricted shares of MidAmerican
Common Stock were held. If an election is not made, disposition prior to the
lapse of restrictions will result in ordinary income to the participant equal to
the amount received on disposition. The Company may also deduct the amount.
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<PAGE>
NEW PLAN BENEFITS. As described elsewhere in this Proxy
Statement/Prospectus, certain conditional awards have been made under the Plan
subject to shareholder approval of the Plan. The following table shows these
awards.
NEW PLAN BENEFITS
MIDAMERICAN ENERGY COMPANY
1995 LONG-TERM INCENTIVE PLAN
<TABLE>
<CAPTION>
PERFORMANCE RESTRICTED
SHARE STOCK
DOLLAR DOLLAR
STOCK PERFORMANCE VALUE RESTRICTED VALUE
NAME AND POSITION OPTIONS (#) SHARES (#) ($)(1) STOCK (#) ($)(2)
- ------------------------------------------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Russell E. Christiansen 150,000 13,675 199,997 N/A N/A
Chairman, Chairman of the Office of CEO
Stanley J. Bright 150,000 11,966 175,003 N/A N/A
President, President of the Office of CEO
Richard C. Engle 60,000 6,291 92,006 N/A N/A
Executive Vice President
Lynn K. Vorbrich 60,000 6,291 92,006 N/A N/A
President, Electric Division
Donald C. Heppermann 60,000 5,607 82,002 N/A N/A
President, InterCoast Energy Company
Beverly A. Wharton 60,000 5,470 79,999 N/A N/A
President, Gas Division
All Executive Officers, 700,000 63,177 923,964 N/A N/A
including the above
All Directors who are N/A N/A N/A 25,600 398,200
not executive officers
All employees, excluding N/A 23,100 337,838 N/A N/A
executive officers
</TABLE>
- ------------------------
(1) Based on the closing price of the MidAmerican Common Stock of $14.625 on
July 3, 1995, the effective date of the conditional grant of the awards. The
amount of Performance Shares represents the amount that could be paid out at
the end of the applicable performance period if the performance measures are
achieved. If performance does not meet the performance measures, then no
awards will be paid. Performance Shares will be fully vested upon
disability, death or a change in control. The Share Exchange will not
constitute a change in control. Unless otherwise determined by the Board of
Directors at its discretion, recipients of Performance Shares who terminate
employment due to retirement prior to the end of the applicable performance
period will be vested in the pro rata amount of such shares as determined by
their length of employment during the performance period.
(2) Based on the July 25, 1995 market price of the MidAmerican Common Stock of
$14.50 for 800 shares which was the date of the conditional grant of such
800 shares and on the December 31, 1995 market price of the MidAmerican
Common Stock of $16.75 for the balance of the shares of Restricted Stock
expected to be granted on May 1, 1996.
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<PAGE>
HOLDINGS COMMON STOCK. If the Holding Company Proposal and the Plan are
approved by the holders of the MidAmerican Common Stock, the Plan will become
the plan of Holdings and Holdings Common Stock will be issued under the Plan
instead of MidAmerican Common Stock.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP, accountants and
auditors, to examine the books, accounts and records of the Company for the year
1996 and to render their auditors' report thereon. A representative of Arthur
Andersen LLP is expected to be present at the annual meeting with the
opportunity to make a statement if so desired and to be available to respond to
appropriate questions.
1997 SHAREHOLDER PROPOSALS
In order for proposals of MidAmerican Energy Company Common Shareholders
intended to be presented at the annual meeting of shareholders to be held in
1997 to be considered for inclusion in the MidAmerican Energy Company Proxy
Statement and form of proxy relating to that meeting, such proposals must be
received by the Company on or before November 18, 1996. Proposals should be sent
to the Corporate Secretary, MidAmerican Energy Company, P.O. Box 657, Des
Moines, Iowa 50303-0657.
OTHER MATTERS
The annual report of MidAmerican Energy Company, including financial
statements for the year ended December 31, 1995, is included with this Proxy
Statement/Prospectus. Additional copies of the report will be mailed to any
shareholder upon request.
The Board of Directors does not know of any other matter to be presented at
the meeting. If, however, any other matter properly comes before the meeting, it
is the intention of the persons named in the proxies to vote thereon in
accordance with their judgment.
By Order of the Board of Directors
Paul J. Leighton
VICE PRESIDENT AND CORPORATE SECRETARY
Des Moines, Iowa
March 18, 1996
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ANNEX I
AGREEMENT AND PLAN OF EXCHANGE
THIS AGREEMENT AND PLAN OF EXCHANGE ("Agreement"), dated as of January 24,
1996, is between MidAmerican Energy Company, an Iowa corporation ("MidAmerican"
or "Company"), the company whose shares will be acquired pursuant to the Share
Exchange (described hereinafter), and MidAmerican Energy Holdings Company, an
Iowa corporation ("Holdings"), the acquiring company. MidAmerican and Holdings
are hereinafter sometimes referred to, collectively, as the "Companies".
WITNESSETH:
WHEREAS, the authorized capital stock of MidAmerican consists of (a)
350,000,000 shares of common stock without par value ("Company Common Stock"),
of which 100,751,713 shares are issued and outstanding, and (b) 100,000,000
shares of preferred stock, without par value ("Company Preferred Stock"), of
which 3,217,769 shares are issued and outstanding; and
WHEREAS, Holdings has 1,000 shares of common stock, no par value, ("Holdings
Common Stock") presently authorized, issued and outstanding, and at the
Effective Time (as hereinafter defined), the authorized capital stock of
Holdings will consist of (a) 350,000,000 shares of Holdings Common Stock and (b)
100,000,000 shares of preferred stock, no par value ("Holdings Preferred
Stock"); and
WHEREAS, the Boards of Directors of each of MidAmerican and Holdings deem it
desirable and in the best interests of the Companies and their shareholders that
each share of Company Common Stock be exchanged for a share of Holdings Common
Stock with the result that Holdings becomes the owner of all outstanding Company
Common Stock and each holder of Company Common Stock becomes the owner of an
equal number of shares of Holdings Common Stock, all pursuant to the terms and
conditions hereinafter set forth ("Share Exchange"); and
WHEREAS, the Iowa Business Corporation Act ("IBCA") permits share exchanges
which bind all of the shareholders upon the approval of a plan of share exchange
by the holders of a majority of all votes entitled to be voted thereon; and
WHEREAS, the Boards of Directors of MidAmerican and Holdings have
recommended that their respective shareholders approve the Share Exchange and
this Agreement, and this Agreement has been approved by the requisite vote of
Holdings' shareholder pursuant to Section 490.1103 of the IBCA;
NOW, THEREFORE, in consideration of the premises, and of the agreements,
covenants and conditions hereinafter contained, the parties hereto agree with
respect to the Share Exchange that, at the Effective Time, each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time will
be exchanged for one share of Holdings Common Stock, and that the terms and
conditions of the Share Exchange and the method of carrying the same into effect
are as follows:
ARTICLE I
Subject to the satisfaction of the conditions and obligations of the parties
hereto, the Share Exchange will be effective upon the filing, with the Iowa
Secretary of State, in accordance with the IBCA, of articles of share exchange
("Articles of Exchange") with respect to the Share Exchange or at such later
time as may be stated in the Articles of Exchange (the time at which the Share
Exchange becomes effective being referred to herein as the "Effective Time").
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ARTICLE II
(1) The name of the corporation whose shares will be acquired is MidAmerican
Energy Company, and the name of the acquiring corporation is MidAmerican Energy
Holdings Company.
(2) The terms and conditions of the exchange, and the manner and basis of
exchanging the shares of Company Common Stock to be acquired for shares of
Holdings Common Stock, are as follows:
At the Effective Time:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time shall be exchanged for one share of
Holdings Common Stock, which shall thereupon be fully paid and
non-assessable, except the shares for which dissenters' rights were
exercised;
(b) Holdings shall become the owner and holder of each issued and
outstanding share of Company Common stock so exchanged;
(c) Each share of Holdings Common Stock issued and outstanding
immediately prior to the Effective Time shall be cancelled and shall
thereupon constitute an authorized and unissued share of Holdings Common
Stock;
(d) The former owners of Company Common Stock shall be entitled only to
receive shares of Holdings Common Stock as provided herein; and
(e) Holders of Company Common Stock who exercised their dissenters'
rights in accordance with the IBCA shall be entitled to receive payment of
"fair value" for their shares of Company Common Stock.
Shares of outstanding Company Preferred Stock shall not be exchanged or
otherwise affected by the Share Exchange.
ARTICLE III
The consummation of the Share Exchange is subject to the following
conditions precedent:
(1) The receipt of the requisite approval of the Share Exchange by the
holders of Company Common Stock;
(2) The filing of Restated Articles of Incorporation of Holdings
increasing the number of authorized shares of Holdings Common Stock and
Holdings Preferred Stock to 350,000,000 and 100,000,000 shares,
respectively, in the form attached hereto as Exhibit A;
(3) The satisfaction of the respective obligations of the parties hereto
set forth in this Agreement in accordance with the terms and conditions
herein contained;
(4) The execution and filing of Articles of Exchange with the Iowa
Secretary of State pursuant to the IBCA in the form attached hereto as
Exhibit B;
(5) The approval for listing upon official notice of issuance by the New
York Stock Exchange of Holdings Common Stock to be issued in accordance with
this Agreement;
(6) The receipt of either a ruling of the Internal Revenue Service
satisfactory to MidAmerican and its counsel, or an opinion of counsel
satisfactory to MidAmerican, with respect to the tax consequences of the
Share Exchange and other transactions incident thereto; and
(7) The receipt of such orders, authorizations, approvals or waivers
from all jurisdictional regulatory bodies, boards or agencies, which are
required in connection with the Share Exchange and related transactions.
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ARTICLE IV
Holdings will not engage in any business following the execution of this
Agreement until the consummation of the Share Exchange, other than such business
as is necessary to organize and maintain the corporate status and good standing
of Holdings in the State of Iowa and such other states in which it may be
authorized to conduct business.
ARTICLE V
This Agreement may be amended, modified or supplemented, or compliance with
any provision or condition hereof may be waived, at any time, by the mutual
consent of the Board of Directors of each of MidAmerican and Holdings; provided,
however, that no such amendment, modification, supplement or waiver shall be
made or effected, if such amendment, modification, supplement or waiver would,
in the judgment of the Board of Directors of MidAmerican, materially and
adversely affect the shareholders of MidAmerican.
This Agreement may be terminated and the Share Exchange and related
transactions abandoned at any time prior to the time the Articles of Exchange
are filed with the Iowa Secretary of State, if the Board of Directors of
MidAmerican determines, in its sole discretion, that consummation of the Share
Exchange would be inadvisable or not in the best interest of MidAmerican or its
shareholders.
ARTICLE VI
This Agreement has been submitted to the shareholder of Holdings for
approval, and the shareholder of Holdings has approved this Agreement, as
provided by the IBCA.
ARTICLE VII
Following the Effective Time, each holder of an outstanding certificate or
certificates theretofore representing shares of Company Common Stock may, but
shall not be required to, surrender the same to Holdings for cancellation and
reissuance of a new certificate or certificates in such holder's name or for
cancellation and transfer, and each such holder or transferee will be entitled
to receive a certificate or certificates representing the same number of shares
of Holdings Common Stock as the shares of Company Common Stock previously
represented by the certificate or certificates surrendered. Until so surrendered
or presented for transfer, each outstanding certificate which, immediately prior
to the Effective Time, represented Company Common Stock shall be deemed and
treated for all corporate purposes to represent the ownership of the same number
of shares of Holdings Common Stock as though such surrender or transfer had
taken place. The holders of Company Common Stock at the Effective Time shall
have no right to have their shares of Company Common Stock transferred on the
stock transfer books of MidAmerican, and such stock transfer books shall be
deemed to be closed for this purpose at the Effective Time.
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IN WITNESS WHEREOF, each of MidAmerican and Holdings, pursuant to
authorization and approval given by their respective Boards of Directors, has
caused this Agreement to be executed by its Chairman and President,
respectively, and attested by its Corporate Secretary as of the date first above
written.
MIDAMERICAN ENERGY COMPANY
By _____/s/ Russell E. Christiansen___
CHAIRMAN, OFFICE OF THE
CHIEF EXECUTIVE OFFICER
ATTEST
___________Paul J. Leighton___________
CORPORATE SECRETARY
MIDAMERICAN ENERGY HOLDINGS COMPANY
By ________/s/ Stanley J. Bright______
PRESIDENT
ATTEST
___________Paul J. Leighton___________
CORPORATE SECRETARY
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ANNEX II
RESTATED
ARTICLES OF INCORPORATION
OF
MIDAMERICAN ENERGY HOLDINGS COMPANY
TO THE SECRETARY OF STATE
OF THE STATE OF IOWA:
Pursuant to the provisions of Section 490.1007 of the Iowa Business
Corporation Act, the undersigned corporation hereby adopts the following
Restated Articles of Incorporation ("Articles of Incorporation"):
ARTICLE I
The name of the corporation is "MidAmerican Energy Holdings Company"
(hereinafter sometimes called the "Corporation") and its registered office shall
be located at 666 Grand Avenue, Des Moines, Iowa 50303 with the right to
establish and maintain branch offices at such other points within and without
the State of Iowa as the Board of Directors of the Corporation may, from time to
time, determine. The name of the Corporation's registered agent at such
registered office is Paul J. Leighton, Vice President and Corporate Secretary.
ARTICLE II
The nature of the business or purposes to be conducted or promoted is to
engage in any or all lawful act or activity for which a corporation may be
incorporated under the Iowa Business Corporation Act.
ARTICLE III
A. The aggregate number of shares which the Corporation shall have
authority to issue is 350,000,000 shares of Common Stock, no par value ("Common
Stock"), and 100,000,000 shares of Preferred Stock, no par value ("Preferred
Stock").
B. The shares of authorized Common Stock shall be identical in all respects
and shall have equal rights and privileges. For all purposes, each registered
holder of Common Stock shall, at each meeting of shareholders, be entitled to
one vote for each share of Common Stock held, either in person or by proxy duly
authorized in writing. Except to the extent required by law or as permitted by
these Articles of Incorporation, as amended from time to time, the registered
holders of the shares of Common Stock shall have unlimited and exclusive voting
rights.
C. The Board of Directors, at any time or from time to time, may, and is
hereby authorized to, issue and dispose of any of the authorized and unissued
shares of Common Stock and any treasury shares for such kind and amount of
consideration and to such persons, firms or corporations, as may be determined
by the Board of Directors, subject to any provisions of law then applicable. The
holders of Common Stock shall have no preemptive rights to acquire or subscribe
to any shares, or securities convertible into shares, of Common Stock.
D. The Board of Directors, at any time or from time to time may, and is
hereby authorized to, divide the authorized and unissued shares of Preferred
Stock into one or more classes or series and in connection with the creation of
any class or series to determine, in whole or in part, to the full extent now or
hereafter permitted by law, by adopting one or more articles of amendment to the
Articles of Incorporation providing for the creation thereof, the designation,
preferences, limitations and relative rights of such class or series, which may
provide for special, conditional or limited voting rights, or no
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rights to vote at all, and to issue and dispose of any of such shares and any
treasury shares for such kind and amount of consideration and to such persons,
firms or corporations, as may be determined by the Board of Directors, subject
to any provisions of law then applicable.
E. The Board of Directors, at any time or from time to time may, and is
hereby authorized to, create and issue, whether or not in connection with the
issuance and sale of any shares of Common Stock, Preferred Stock or other
securities of the Corporation, warrants, rights and/or options entitling the
holders thereof to purchase from the Corporation any shares of Common Stock,
Preferred Stock or other securities of the Corporation. Such warrants, rights or
options shall be evidenced by such instrument or instruments as shall be
approved by the Board of Directors of the Corporation. The terms upon which, the
time or times (which may be limited or unlimited in duration) at or within
which, and the price or prices (which shall be not less than the minimum amount
prescribed by law, if any) at which any such shares or other securities may be
purchased from the Corporation upon the exercise of any such warrant, right or
option shall be fixed and stated in the resolution or resolutions of the Board
of Directors providing for the creation and issuance of such warrants, rights or
options. The Board of Directors is hereby authorized to create and issue any
such warrants, rights or options from time to time for such consideration, if
any, and to such persons, firms or corporations, as the Board of Directors may
determine.
F. The Corporation may authorize the issuance of some or all of the shares
of any or all of the classes of its capital stock without certificates.
G. The Corporation shall not be required to issue certificates representing
any fraction or fractions of a share of stock of any class but may issue in lieu
thereof one or more non-dividend bearing and non-voting scrip certificates in
such form or forms as shall be approved by the Board of Directors, each scrip
certificate representing a fractional interest in one share of stock of any
class. Such scrip certificates upon presentation together with similar scrip
certificates representing in the aggregate an interest in one or more full
shares of stock of any class shall entitle the holders thereof to receive one or
more full shares of stock of such class. Such scrip certificates may contain
such terms and conditions as shall be fixed by the Board of Directors and may
become void and of no effect after a period to be determined by the Board of
Directors and to be specified in such scrip certificates.
H. The Corporation shall be entitled to treat the person in whose name any
share of Common Stock or Preferred Stock is registered as the owner thereof for
all purposes and shall not be bound to recognize any equitable or other claim
to, or interest in, such share on the part of any person, whether or not the
Corporation shall have notice thereof except as may be expressly provided
otherwise by the laws of the State of Iowa.
ARTICLE IV
The term of corporate existence of the Corporation shall be perpetual.
ARTICLE V
A. All corporate powers shall be exercised by or under the authority of,
and the business and affairs of the Corporation shall be managed under the
direction of, the Board of Directors. The number of directors of the Corporation
shall be fixed by the Bylaws but shall be no less than ten (10) and no greater
than twenty-two (22), and such number may be increased or decreased from time to
time in accordance with the Bylaws, but no decrease shall have the effect of
shortening the term of any incumbent director. Directors shall be elected by the
shareholders at each annual meeting of the Corporation as specified herein and
in the Bylaws. Directors need not be shareholders.
B. Each director shall serve until his or her successor is elected and
qualified or until his or her prior death, retirement, resignation or removal.
Should a vacancy occur or be created, whether arising through death, resignation
or removal of a director or through an increase in the number of directors,
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such vacancy shall be filled solely by a majority vote of the remaining
directors though less than a quorum of the Board of Directors. A director so
elected to fill a vacancy shall serve for the remainder of the then present term
of office of the Board of Directors.
C. Any director or the entire Board of Directors may be removed for cause
as set forth in this paragraph C. Removal of a director for cause must be
approved by the affirmative vote of the holders of shares of capital stock of
the Corporation having at least 75% of the votes of all outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of
directors, voting together as a single class, only at a meeting called for the
purpose of removing the director and after notice stating that the purpose, or
one of the purposes, of the meeting is removal of the director. Any action for
removal of a director must be taken within one year of such cause.
D. The Board of Directors, by a vote of a majority of the entire Board of
Directors, may appoint from the directors an executive committee and such other
committees as they may deem judicious; and to such extent as shall be provided
in the resolution of the Board of Directors or in the Bylaws, may delegate to
such committees all or any of the powers of the Board of Directors which may be
lawfully delegated, and such committees shall have and thereupon may exercise
all or any of the powers so delegated to them. The Board of Directors or the
Bylaws may provide the number of members necessary to constitute a quorum of any
committee and the number of affirmative votes necessary for action by any
committee.
E. The Board of Directors shall elect such officers of the Corporation as
specified in the Bylaws. All vacancies in the offices of the Corporation shall
be filled by the Board of Directors. The Board of Directors shall also have
authority to appoint such other managing officers as they may from time to time
determine.
ARTICLE VI
Special meetings of shareholders of the Corporation may be called at any
time by the Chairman of the Board of Directors or by the President on at least
ten days' notice to each shareholder entitled to vote at the special meeting, by
mail at such shareholder's last known post office address, specifying the time,
place and purpose or purposes of the special meeting.
ARTICLE VII
The private property of the shareholders of the Corporation shall be exempt
from all corporate debts.
ARTICLE VIII
A. In addition to any affirmative vote required by law or under any other
provision of these Articles of Incorporation:
(i) any merger or consolidation of the Corporation or any Subsidiary (as
hereinafter defined) with or into any Other Entity (as hereinafter defined);
or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related transactions) to or
with any Other Entity of any assets of the Corporation or any Subsidiary
having an aggregate Fair Market Value (as hereinafter defined) of
$25,000,000 or more; or
(iii) the issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of related transactions) of any securities of
the Corporation or any Subsidiary to any Other Entity in exchange for cash,
securities or other property (or a combination thereof) having an aggregate
Fair Market Value of $25,000,000 or more; or
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(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation; or
(v) any reclassification of securities (including any reverse stock
split), recapitalization, reorganization, merger or consolidation of the
Corporation with any of its Subsidiaries or any similar transaction (whether
or not with or into or otherwise involving any Other Entity) which has the
effect, directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly owned by any
Other Entity; or
(vi) any direct or indirect purchase or other acquisition by the
Corporation of any equity security (as defined in Rule 3a11-1 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as in
effect on June 30, 1995) of any class from an Interested Securityholder (as
hereinafter defined) who has beneficially owned such securities for less
than two years prior to the date of such purchase or any agreement in
respect thereof,
shall require the affirmative vote of the holders of shares of capital stock of
the Corporation having at least 75% (excluding, in the case of (i) through (v)
above, shares beneficially owned by a 25% Shareholder (as hereinafter defined),
and, in the case of (vi) above, shares beneficially owned by such Interested
Securityholder) of the votes of all outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors, considered
for the purpose of this Article VIII as one class ("Voting Shares"). Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that some lesser percentage vote may be specified, by law or in any
agreement with any national securities exchange or otherwise.
B. The provisions of paragraph A of this Article VIII shall not be
applicable to any particular Business Combination (as hereinafter defined), and
such Business Combination shall require only such affirmative vote as is
required by law and any other provision of these Articles of Incorporation, if
all of the conditions specified in either of the following subparagraphs 1 and 2
shall have been satisfied.
1. A majority of the Continuing Directors (as hereinafter defined)
shall have approved the Business Combination (but only if a majority of the
Board of Directors are Continuing Directors); or
2. All of the following conditions shall have been met:
a. The ratio of:
(i) the aggregate amount of the cash and the Fair Market Value as
of the date of consummation of the Business Combination of other
consideration to be received per share by holders of a particular
class or series of Voting Shares in such Business Combination
to
(ii) the Fair Market Value per share of such class or series of
Voting Shares on the date of the first public announcement of such
Business Combination or the date on which any 25% Shareholder became
a 25% Shareholder, whichever is higher
is at least as great as the ratio (which ratio shall equal the number one
in the event that such 25% Shareholder has never beneficially owned any
shares of such class or series of Voting Shares) of
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(x) the highest per share price (including brokerage commissions,
transfer taxes and soliciting dealers' fees) which such 25%
Shareholder has theretofore paid for any share of such class or
series of Voting Shares acquired by it
to
(y) the Fair Market Value per share of such class or series of
Voting Shares on the date of the initial acquisition by such 25%
Shareholder of any share of such class or series of Voting Shares;
b. The aggregate amount of the cash and Fair Market Value as of the
date of consummation of the Business Combination of other consideration
to be received per share by holders of each class or series of Preferred
Stock in such Business Combination is not less than the highest
preferential amount per share to which holders of shares of such class or
series of Preferred Stock would, respectively, be entitled in the event
of any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, regardless of whether the Business Combination to be
consummated constitutes such an event;
c. The consideration to be received by holders of a particular class
or series of Voting Shares in such Business Combination shall be in cash
or in the same form and of the same kind as the consideration paid by the
25% Shareholder in acquiring the shares of such class or series of Voting
Shares already owned by it;
d. After such 25% Shareholder has acquired ownership of not less
than 25% of the then outstanding Voting Shares (a "25% Interest") and
prior to the consummation of such Business Combination:
(i) the 25% Shareholder shall have taken steps to ensure that the
Corporation's Board of Directors includes at all times representation
by Continuing Director(s) proportionate to the ratio that the Voting
Shares which from time to time are owned by persons who are not 25%
Shareholders ("Public Holders") bear to all Voting Shares outstanding
at such respective times (with a Continuing Director to occupy any
resulting fractional board position);
(ii) there shall have been no reduction in the rate of
distributions ("Dividends") payable on the Common Stock except as may
have been approved by a majority vote of the Continuing Directors;
(iii) such 25% Shareholder shall not have acquired any newly
issued shares of stock, directly or indirectly, from the Corporation
(except upon conversion of convertible securities acquired by it
prior to obtaining a 25% Interest or as a result of a pro rata stock
Dividend or stock split); and
(iv) such 25% Shareholder shall not have acquired any additional
Voting Shares or securities convertible into or exchangeable for
Voting Shares except as a part of the transaction which resulted in
such 25% Shareholder acquiring its 25% Interest;
e. Prior to or upon the consummation of such Business Combination,
such 25% Shareholder shall not have (i) received the benefit, directly or
indirectly (except proportionately as a shareholder), of any loans,
advances, guarantees, pledges or other financial assistance or tax
credits provided by the Corporation, or (ii) made any major change in the
Corporation's business or equity capital structure without the unanimous
approval of the entire Board of Directors; and
f. A proxy statement responsive to the requirements of the
Securities Exchange Act of 1934 and the General Rules and Regulations
promulgated thereunder shall have been mailed to all holders of Voting
Shares for the purpose of soliciting shareholders' approval of such
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Business Combination. Such proxy statement shall contain at the front
thereof in a prominent place, any recommendations as to the advisability
(or inadvisability) of the Business Combination which the Continuing
Directors, or any of them, may have furnished in writing and, if deemed
advisable by a majority of the Continuing Directors, an opinion of a
reputable investment banking firm as to the fairness (or lack of
fairness) of the terms of such Business Combination, from a financial
point of view, to the holders of Voting Shares other than any 25%
Shareholder (such investment banking firm to be selected by a majority of
the Continuing Directors, to be furnished with all information it
reasonably requests and to be paid a reasonable fee for its services upon
receipt by the Corporation of such opinion).
C. For the purposes of this Article VIII:
1. The term "Business Combination" shall mean any transaction which is
referred to in any one or more of clauses (i) through (v) of paragraph A of
this Article VIII;
2. The term "Other Entity" shall include (a) any 25% Shareholder and
(b) any other person (whether or not itself a 25% Shareholder) which after
any Business Combination, would be an Affiliate (as hereinafter defined) of
any 25% Shareholder;
3. The term "person" shall mean any individual, firm, trust,
partnership, association, corporation or other entity;
4. The term "25% Shareholder" shall mean, in respect to any Business
Combination, any person (other than the Corporation or any Subsidiary) who
or which, as of the record date for the determination of shareholders
entitled to notice of and to vote on such Business Combination, or
immediately prior to the consummation of any such transactions,
(a) is the beneficial owner, directly or indirectly, of not less than
25% of the Voting Shares, or
(b) is an Affiliate of the Corporation and at any time within five
years prior thereto was the beneficial owner, directly or indirectly, of
not less than 25% of the then outstanding Voting Shares, or
(c) is an assignee of or has otherwise succeeded to any shares of
capital stock of the Corporation which were at any time within five years
prior thereto beneficially owned by any 25% Shareholder, and such
assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933;
5. A person shall be the beneficial owner of any Voting Shares
(a) which such person or any of its Affiliates and Associates (as
hereinafter defined) beneficially own, directly or indirectly, or
(b) which such person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately or
only after the passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(c) which are beneficially owned, directly or indirectly, by any
other person with which such first mentioned person or any of its
Affiliates or Associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any shares
of capital stock of the Corporation;
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6. The outstanding Voting Shares shall include shares deemed owned
through application of subparagraph 5 of this paragraph C above but shall
not include any other Voting Shares which may be issuable pursuant to any
agreement or upon exercise of conversion rights, warrants or options, or
otherwise;
7. The term "Continuing Director" shall mean (a) a person who was a
member of the Board of Directors elected by the Public Holders prior to the
date as of which any 25% Shareholder acquired in excess of 10% of the then
outstanding Voting Shares or (b) a person designated (before his or her
initial election as a director) as a Continuing Director by a majority of
the then Continuing Directors;
8. The term "other consideration to be received" shall include, without
limitation, Voting Shares retained by Public Holders in the event of a
Business Combination in which the Corporation is the surviving corporation;
9. The terms "Affiliate" and "Associate" shall have the respective
meanings given those terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on June
30, 1995;
10. The term "Subsidiary" shall mean any corporation or other entity of
which a majority of the outstanding voting securities or other equity
interests having the power, under ordinary circumstances, to elect a
majority of the directors or otherwise to direct the management and
policies, of such corporation or other entity, is owned, directly or
indirectly, by the Corporation;
11. The term "Interested Securityholder" shall mean, with respect to any
transaction which is referred to in Clause (vi) of paragraph A of this
Article VIII, any person (other than the Corporation or any Subsidiary) who
or which, as of the record date for the determination of shareholders
entitled to notice of and to vote on such transaction, or immediately prior
to the consummation of any such transaction,
(a) is the beneficial owner, directly or indirectly, of not less than
five percent of the Voting Shares, or
(b) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or indirectly, of
not less than five percent of the then outstanding Voting Shares, or
(c) is an assignee of or has otherwise succeeded to any shares of the
class of securities to be acquired which were at any time within two
years prior thereto beneficially owned by an Interested Securityholder,
and such assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933; and
12. The term "Fair Market Value" shall mean (i) in the case of capital
stock, the highest closing sale price during the 30-day period immediately
preceding the date in question of a share of such capital stock on the
Composite Tape for New York Stock Exchange-Listed Stocks, or, if such
capital stock is not quoted on the Composite Tape, on the New York Stock
Exchange, or, if such capital stock is not listed on such exchange, on the
principal United States securities exchange registered under the Securities
Exchange Act of 1934 on which such capital stock is listed, or, if such
capital stock is not listed on any such exchange, the highest closing bid
quotation with respect to a share of such capital stock during the 30-day
period preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations System or any system then in
use, or if no such quotations are available the fair market value on the
date in question of a share of such capital stock as determined by a
majority of the Continuing Directors in good faith; and (ii) in the case of
property other than cash or capital stock, the fair market value
II-7
<PAGE>
of such property on the date in question as determined in good faith by a
majority of the Continuing Directors; provided that any such determination
by the Continuing Directors shall only be effective if made at a meeting at
which a majority of Continuing Directors is present.
D. A majority of the Continuing Directors shall have the power and duty to
determine for purposes of this Article VIII, on the basis of information known
to them, (i) the number of Voting Shares beneficially owned by any person, (ii)
whether a person is an Affiliate or Associate of another, (iii) whether a person
has an agreement, arrangement or understanding with another as to the matters
referred to in subparagraph 4 of paragraph C, (iv) whether the assets subject to
any Business Combination have an aggregate Fair Market Value of $25,000,000 or
more, and (v) such other matters with respect to which a determination is
required under this Article VIII.
E. Nothing contained in this Article VIII shall be construed to relieve any
25% Shareholder from any fiduciary obligation imposed by law.
ARTICLE IX
Any amendment, alteration, change or repeal of Article VA, VB and VC,
Article VIII or this Article IX of these Articles of Incorporation shall require
the affirmative vote of the holders of shares of capital stock of the
Corporation having at least 75% of the votes of all outstanding Voting Shares
(as defined in Article VIII), excluding from such affirmative vote shares
beneficially owned by any 25% Shareholder or by any Interested Securityholder in
the case of an amendment of the provisions of paragraph A of Article VIII that
exclude from an affirmative vote required pursuant to such paragraph A shares
beneficially owned by 25% Shareholders or shares beneficially owned by
Interested Securityholders, as the case may be.
ARTICLE X
The Board of Directors may make Bylaws and from time to time may alter,
amend or repeal any Bylaws; but any Bylaws made by the Board of Directors may be
altered or repealed by the shareholders entitled to vote generally at any annual
meeting or at any special meeting provided notice of such proposed alteration or
repeal be included in the notice of meeting.
ARTICLE XI
A. A director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for liability:
(i) for any breach of the director's duty of loyalty to the Corporation
or its shareholders; or
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; or
(iii) for any transaction from which the director derives an improper
personal benefit; or
(iv) under Section 490.833, or a successor provision, of the Iowa
Business Corporation Act.
B. If, after the date these Articles of Incorporation are filed with the
Secretary of State of the State of Iowa, the Iowa Business Corporation Act is
amended to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation shall be deemed eliminated or limited to the fullest extent
permitted by the Iowa Business Corporation Act, as so amended. Any repeal or
modification of Section A or Section B of this Article XI, by the shareholders
of the Corporation shall be prospective only and shall not adversely affect any
right or protection of a director of the Corporation existing at the time of
such repeal or modification.
II-8
<PAGE>
ARTICLE XII
A. Each person who was or is a party or is threatened to be made a party to
or is involved in any action, suit or proceeding, whether civil, criminal,
administrative, investigative, or arbitration and whether formal or informal
("proceeding"), by reasons of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a director, officer or employee of
the Corporation or is or was serving at the request of the Corporation as a
director, officer or employee of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged action in an
official capacity while serving as a director, officer or employee or in any
other capacity while serving as a director, officer or employee, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Iowa Business Corporation Act, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than the Iowa Business Corporation Act permitted the Corporation to
provide prior to such amendment), against all reasonable expenses, liability and
loss (including, without limitation, attorneys' fees, all costs, judgments,
fines, Employee Retirement Income Security Act excise taxes or penalties and
amounts paid or to be paid in settlement) reasonably incurred or suffered by
such person in connection therewith. Such right shall be a contract right and
shall include the right to be paid by the Corporation expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that the payment of such expenses incurred by a director, officer or
employee in his or her capacity as a director, officer or employee (and not in
any other capacity in which service was or is rendered by such person while a
director, officer or employee including, without limitation, service to an
employee benefit plan) in advance of the final disposition of such proceeding,
shall be made only upon delivery to the Corporation of (i) a written
undertaking, by or on behalf of such director, officer or employee, to repay all
amounts so advanced if it should be determined ultimately that such director,
officer or employee is not entitled to be indemnified under this Article XII or
otherwise, or (ii) a written affirmation by or on behalf of such director,
officer or employee that, in such person's good faith belief, such person has
met the standards of conduct set forth in the Iowa Business Corporation Act.
B. If a claim under Section A is not paid in full by the Corporation within
thirty (30) days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to also be paid the expenses of prosecuting such
claim. It shall be a defense to any such action that the claimant has not met
the standards of conduct which make it permissible under the Iowa Business
Corporation Act for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation. The
failure of the Corporation (including its Board of Directors, independent legal
counsel or its shareholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the Iowa Business Corporation Act, shall not be a defense to the
action or create a presumption that the claimant had not met the applicable
standard of conduct.
C. Indemnification provided hereunder shall, in the case of the death of
the person entitled to indemnification, inure to the benefit of such person's
heirs, executors or other lawful representatives. The invalidity or
unenforceability of any provision of this Article XII shall not affect the
validity or enforceability of any other provision of this Article XII.
D. Any action taken or omitted to be taken by (i) any director, officer or
employee in good faith and in compliance with or pursuant to any order,
determination, approval or permission made or given by a commission, board,
official or other agency of the United States or of any state or other
governmental authority with respect to the property or affairs of the
Corporation or any such business corporation, not-for-profit corporation, joint
venture, trade association or other entity over which such commission, board,
official or agency has jurisdiction or authority or purports to have
jurisdiction or authority or (ii) by any director of the Corporation pursuant to
Section D of Article VIII shall be
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presumed to be in compliance with the standard of conduct set forth in Section
490.851 (or any successor provision) of the Iowa Business Corporation Act
whether or not, in the case of clause (i), it may thereafter be determined that
such order, determination, approval or permission was unauthorized, erroneous,
unlawful or otherwise improper.
E. Unless finally determined, the termination of any litigation, whether by
judgment, settlement, conviction or upon a plea of NOLO CONTENDERE, or its
equivalent, shall not create a presumption that the action taken or omitted to
be taken by the person seeking indemnification did not comply with the standard
of conduct set forth in Section 490.851 (or any successor provision) of the Iowa
Business Corporation Act.
F. The rights conferred on any person by this Article XII shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of the Articles of Incorporation, Bylaws,
agreement, vote of shareholders or disinterested directors or otherwise.
G. The Corporation may maintain insurance, at its expense, to protect itself
and any such director, officer or employee of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
such expense, liability or loss, whether or not the Corporation would have the
power to indemnify such person against such expense, liability or loss under the
Iowa Business Corporation Act.
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<PAGE>
EXHIBIT B
ARTICLES OF EXCHANGE
OF
MIDAMERICAN ENERGY HOLDINGS COMPANY
TO THE SECRETARY OF STATE OF THE STATE OF IOWA:
Pursuant to Section 1105 of the Iowa Business Corporation Act, the
undersigned corporation hereby adopts the following Articles of Exchange:
1. The Agreement and Plan of Exchange is attached hereto as Exhibit "A."
2. The designation, number of outstanding shares, and number of votes entitled
to be cast by each voting group entitled to vote separately on the plan as
to each corporation is a follows:
MidAmerican Energy Company
<TABLE>
<CAPTION>
VOTES ENTITLED
TO BE CAST ON
DESIGNATION GROUP SHARES OUTSTANDING SHARE EXCHANGE
- ---------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Common 100,751,713 100,751,713
</TABLE>
MidAmerican Energy Holdings Company
<TABLE>
<CAPTION>
VOTES ENTITLED
TO BE CAST ON
DESIGNATION GROUP SHARES OUTSTANDING SHARE EXCHANGE
- ---------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Common 1,000 1,000
</TABLE>
2a. The total number of votes cast for and against the plan by each voting group
entitled to vote separately on the plan is as follows:
MidAmerican Energy Company
<TABLE>
<CAPTION>
VOTING GROUP VOTES FOR VOTES AGAINST
- ---------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Common
</TABLE>
MidAmerican Energy Holdings Company
<TABLE>
<CAPTION>
VOTING GROUP VOTES FOR VOTES AGAINST
- ---------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Common
</TABLE>
The number of votes cast for the Agreement and Plan of Exchange by each
voting group was sufficient for approval by that voting group.
These Articles of Exchange are to become effective when filed by the
Secretary of State.
MIDAMERICAN ENERGY HOLDINGS COMPANY
---------------------------------------------
Paul J. Leighton, CORPORATE SECRETARY
B-1
<PAGE>
ANNEX III
IOWA BUSINESS CORPORATION ACT
DISSENTERS' RIGHTS PROVISIONS
DIVISION XIII
DISSENTERS' RIGHTS
PART A
490.1301 DEFINITIONS FOR DIVISION XIII.
In this division:
1. "Beneficial shareholders" means the person who is a beneficial owner of
shares held by a nominee as the record shareholder.
2. "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring corporation by merger or
share exchange of that issuer.
3. "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 490.1302 and who exercises that right when and in
the manner required by sections 490.1320 through 490.1328.
4. "Fair Value", with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
5. "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.
6. "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
7. "Shareholder" means the record shareholder or the beneficial
shareholder.
490.1302 SHAREHOLDERS' RIGHT TO DISSENT.
1. A shareholder is entitled to dissent from, and obtain payment of the
fair value of the shareholder's shares in the event of, any of the following
corporate actions:
a. Consummation of a plan of merger to which the corporation is a party
if either of the following apply:
(1) Shareholder approval is required for the merger by section
490.1103 or the articles of incorporation and the shareholder is entitled
to vote on the merger.
(2) The corporation is a subsidiary that is merged with its parent
under section 490.1104.
b. Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, if the shareholder
is entitled to vote on the plan.
c. Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course
of business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially
all of the net proceeds of the sale will be distributed to the shareholders
within one year after the date of sale.
III-1
<PAGE>
d. An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it does
any or all of the following:
(1) Alters or abolishes a preferential right of the shares.
(2) Creates, alters, or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares.
(3) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities.
(4) Excludes or limits the right of the shares to vote on any matter,
or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights.
(5) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be acquired
for cash under section 490.604.
(6) Extends, for the first time after being governed by this chapter,
the period of duration of a corporation organized under chapter 491 or
496A and existing for a period of years on the day preceding the date the
corporation is first governed by this chapter.
e. Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board
of directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
2. A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this chapter is not entitled to challenge the
corporate action creating the shareholder's entitlement unless the action is
unlawful or fraudulent with respect to the shareholder or the corporation.
490.1303 DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
1. A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in that shareholder's name only if the shareholder
dissents with respect to all shares beneficially owned by any one person and
notifies the corporation in writing of the name and address of each person on
whose behalf the shareholder asserts dissenters' rights. The rights of a partial
dissenter under this subsection are determined as if the shares as to which the
shareholder dissents and the shareholder's other shares were registered in the
names of different shareholders.
2. A beneficial shareholder may assert dissenters' rights as to shares held
on the shareholder's behalf only if the shareholder does both of the following:
a. Submits to the corporation the record shareholder's written consent
to the dissent not later than the time the beneficial shareholder asserts
dissenters' rights.
b. Does so with respect to all shares of which the shareholder is the
beneficial shareholder or over which that beneficial shareholder has power
to direct the vote.
PART B
490.1320 NOTICE OF DISSENTERS' RIGHTS.
1. If proposed corporate action creating dissenters' rights under section
490.1302 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters' rights
under this part and be accompanied by a copy of this part.
2. If corporate action creating dissenters' rights under section 490.1302
is taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in section 490.1322
III-2
<PAGE>
490.1321 NOTICE OF INTENT TO DEMAND PAYMENT.
1. If proposed corporate action creating dissenters' rights under section
490.1302 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights must do all of the following;
a. Deliver to the corporation before the vote is taken written notice
of the shareholder's intent to demand payment for the shareholder's shares
if the proposed action is effectuated.
b. Not vote the dissenting shareholder's shares in favor of the
proposed action.
2. A shareholder who does not satisfy the requirements of subsection 1, is
not entitled to payment for the shareholder's shares under this part.
490.1322 DISSENTERS' NOTICE.
1. If proposed corporate action creating dissenters' rights under section
490.1302 is authorized at a shareholders' meeting, the corporation shall deliver
a written dissenters' notice to all shareholders who satisfied the requirements
of section 490.1321.
2. The dissenters' notice must be sent no later than ten days after the
proposed corporate action is authorized at a shareholders' meeting, or, if the
corporate action is taken without a vote of the shareholders, no later than ten
days after the corporate action is taken, and must do all of the following:
a. State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited.
b. Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received.
c. Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting dissenters'
rights certify whether or not the person acquired beneficial ownership of
the shares before that date.
d. Set a date by which the corporation must receive the payment demand,
which date shall not be fewer than thirty nor more than sixty days after the
date the dissenters' notice is delivered
e. Be accompanied by a copy of this division.
490.1323 DUTY TO DEMAND PAYMENT.
1. A shareholder sent a dissenters' notice described in section 490.1322
must demand payment, certify whether the shareholder acquired beneficial
ownership of the shares before the date required to be set forth in the
dissenter's notice pursuant to section 490.1322, subsection 2, paragraph "c,"
and deposit the shareholder's certificates in accordance with the terms of the
notice.
2. The shareholder who demands payment and deposits the shareholder's
shares under subsection 1 retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
3. A shareholder who does not demand payment or deposit the shareholder's
share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for the shareholder's shares under this
division.
490.1324 SHARE RESTRICTIONS.
1. The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under section 490.1326
III-3
<PAGE>
2. The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are canceled
or modified by the taking of the proposed corporate action.
490.1325 PAYMENT.
1. Except as provided in section 490.1327, at the time the proposed
corporate action is taken, or upon receipt of a payment demand, whichever occurs
later, the corporation shall pay each dissenter who complied with section
490.1323 the amount the corporation estimates to be the fair value of the
dissenter's shares, plus accrued interest.
2. The payment must be accompanied by all of the following:
a. The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any.
b. A statement of the corporation's estimate of the fair value of the
shares.
c. An explanation of how the interest was calculated.
d. A statement of the dissenter's right to demand payment under section
490.1328.
e. A copy of this division.
490.1326 FAILURE TO TAKE ACTION.
1. If the corporation does not take the proposed action within sixty days
after the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
2. If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under section 490.1322 as if the corporate action was taken
without a vote of the shareholders and repeat the payment demand procedure.
493B.1327 AFTER-ACQUIRED SHARES.
1. A corporation may elect to withhold payment required by section 490.1325
from a dissenter unless the dissenter was the beneficial owner of the shares
before the date set forth in the dissenters' notice as the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action.
2. To the extent the corporation elects to withhold payment under
subsection 1, after taking the proposed corporate action, it shall estimate the
fair value of the shares, plus accrued interest, and shall pay this amount to
each dissenter who agrees to accept it in full satisfaction of the dissenter's
demand. The corporation shall send with its offer a statement of its estimate of
the fair value of the shares, an explanation of how the interest was calculated,
and a statement of the dissenter's right to demand payment under section
490.1328.
490.1328 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
1. A dissenter may notify the corporation in writing of the dissenter's own
estimate of the fair value of the dissenter's shares and amount of interest due,
and demand payment of the dissenter's estimate, less any payment under section
490.1325, or reject the corporation's offer under section 490.1327 and demand
payment of the fair value of the dissenter's shares and interest due, if any of
the following apply:
a. The dissenter believes that the amount paid under section 490.1325
or offered under section 490.1327 is less than the fair value of the
dissenter's shares or that the interest due is incorrectly calculated.
III-4
<PAGE>
b. The corporation fails to make payment under section 490.1325 within
sixty days after the date set for demanding payment.
c. The corporation, having failed to take the proposed action, does not
return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty days after the date set for
demanding payment.
2. A dissenter waives the dissenter's right to demand payment under this
section unless the dissenter notifies the corporation of the dissenter's demand
in writing under subsection 1 within thirty days after the corporation made or
offered payment for the dissenter's shares.
PART C
490.1330 COURT ACTION.
1. If a demand for payment under section 490.1328 remains unsettled, the
corporation shall commence a proceeding within sixty days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within
the sixty-day period, it shall pay each dissenter whose demand remains unsettled
the amount demanded.
2. The corporation shall commence the proceeding in the district court of
the county where a corporation's principal office or, if none in this state, its
registered office is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign corporation was
located.
3. The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
4. The jurisdiction of the court in which the proceeding is commenced under
subsection 2 is plenary and exclusive. The court may appoint one or more persons
as appraisers to receive evidence and recommend decision on the question of fair
value.
The appraisers have the powers described in the order appointing them, or in
any amendment to it. The dissenters are entitled to the same discovery rights as
parties in other civil proceedings.
5. Each dissenter made a party to the proceeding is entitled to judgment
for either of the following:
a. The amount, if any, by which the court finds the fair value of the
dissenter's shares, plus interest, exceeds the amount paid by the
corporation.
b. The fair value, plus accrued interest, of the dissenter's
after-acquired shares for which the corporation elected to withhold payment
under section 490.1327.
490.1331 COURT COSTS AND COUNSEL FEES.
1. The court in an appraisal proceeding commenced under section 490.1330
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously, or not
in good faith in demanding payment under section 490.1328.
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<PAGE>
The court may also assess the fees and expenses of counsel and experts for
the respective parties, in amounts the court finds equitable, for either of the
following:
a. Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the
requirements of sections 490.1320 through 490.1328.
b. Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses
are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this chapter.
3. If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
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<PAGE>
ANNEX IV
MIDAMERICAN ENERGY COMPANY
1995 LONG-TERM INCENTIVE PLAN
I. INTRODUCTION
1.1 PURPOSES. The purposes of the 1995 Long-Term Incentive Plan (the
"Plan") of MidAmerican Energy Company (the "Company") and its subsidiaries from
time to time (individually a "Subsidiary" and collectively the "Subsidiaries")
are (i) to align the interests of the Company's stockholders and the recipients
of awards under this Plan by increasing the proprietary interest of such
recipients in the Company's growth and success, (ii) to advance the interests of
the Company by attracting and retaining non-employee directors, officers and
other key employees and (iii) to motivate such employees to act in the long-term
best interests of the Company's stockholders. For purposes of this Plan,
references to employment by the Company shall also mean employment by a
Subsidiary.
1.2 CERTAIN DEFINITIONS.
"AGREEMENT" shall mean the written agreement evidencing an award hereunder
between the Company and the recipient of such award.
"BOARD" shall mean the Board of Directors of the Company and predecessor
companies where applicable.
"BONUS STOCK" shall mean shares of Common Stock which are not subject to a
Restriction Period or Performance Measures.
"BONUS STOCK AWARD" shall mean an award of Bonus Stock under this Plan.
"CAUSE" shall mean any act of dishonesty, commission of a felony,
significant activities harmful to the reputation of the Company, refusal to
perform or substantial disregard of duties properly assigned or significant
violation of any statutory or common law duty of loyalty to the Company.
"CHANGE IN CONTROL" shall have the meaning set forth in Section 6.8(b).
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMITTEE" shall mean the Compensation Committee of the Board, consisting
of three or more members of the Board, each of whom shall be a "disinterested
person" within the meaning of Rule 16b-3 under the Exchange Act.
"COMMON STOCK" shall mean the common stock of the Company.
"COMPANY" has the meaning specified in Section 1.1 and shall include
predecessor companies where applicable.
"DISABILITY" shall mean the inability of the holder of an award to perform
substantially such holder's duties and responsibilities for a continuous period
of at least six months, as determined solely by the Committee.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" shall mean the closing transaction price of a share of
Common Stock as reported in the New York Stock Exchange Composite Transactions
on the date as of which such value is being determined; provided, however, that
if Fair Market Value for any date cannot be so determined, Fair Market Value
shall be determined by the Committee by whatever means or method as the
Committee, in the good faith exercise of its discretion, shall at such time deem
appropriate.
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"FREE-STANDING SAR" shall mean an SAR which is not issued in tandem with, or
by reference to, an option, which entitles the holder thereof to receive, upon
exercise, shares of Common Stock (which may be Restricted Stock), cash or a
combination thereof with an aggregate value equal to the excess of the Fair
Market Value of one share of Common Stock on the date of exercise over the base
price of such SAR, multiplied by the number of such SARs which are exercised.
"INCENTIVE STOCK OPTION" shall mean an option to purchase shares of common
stock that meets the requirements of Section 422 of the Code, or any successor
provision, which is intended by the Committee to constitute an Incentive Stock
Option.
"INCUMBENT BOARD" means the members of the Board on August 1, 1995. For this
purpose, an individual who becomes a member of the Board subsequent to August 1,
1995 and who has been nominated for election by the Company's shareholders by
resolution adopted by a vote of at least two-thirds of the directors then
comprising the Incumbent Board at a duly convened meeting thereof shall be
deemed to be a member of the Incumbent Board.
"MATURE SHARES" shall mean shares of Common Stock for which the holder
thereof has good title, free and clear of all liens and encumbrances and which
such holder either (i) has held for at least six months or (ii) has purchased on
the open market.
"NON-STATUTORY STOCK OPTION" shall mean a stock option which is not an
Incentive Stock Option.
"PERFORMANCE MEASURES" shall mean the criteria and objectives, established
by the Committee, which shall be satisfied or met (i) as a condition to the
exercisability of all or a portion of an option or SAR, (ii) as a condition to
the grant of a Stock Award or (iii) during the applicable Restriction Period or
Performance Period as a condition to the holder's receipt, in the case of a
Restricted Stock Award, of the shares of Common Stock subject to such award, or,
in the case of a Performance Share Award, of payment with respect to such award.
Such criteria and objectives may include, but are not limited to, the attainment
by a share of Common Stock of a specified Fair Market Value for a specified
period of time, earnings per share, total earnings, net income, return to
stockholders (including dividends), return on gross assets, return on net
assets, growth in assets, return on equity, revenues, free cash flow, expenses
as a percentage of assets, cost reduction goals, shareholder value, and customer
satisfaction, or any combination of the foregoing and any other criteria and
objectives established by the Committee. In the sole discretion of the
Committee, the Committee may amend or adjust the Performance Measures or other
terms and conditions of an outstanding award in recognition of unusual or
nonrecurring events affecting the Company or its financial statements or changes
in law or accounting principles.
"PERFORMANCE PERIOD" shall mean a period of not less than one year or
greater than five years, designated by the Committee during which the
Performance Measures applicable to a Performance Share Award shall be measured.
"PERFORMANCE SHARES" shall mean a right, contingent upon the attainment of
specified Performance Measures within a specified Performance Period, to receive
one share of Common Stock, which may be Restricted Stock, or in lieu of all or a
portion thereof, the Fair Market Value of such Performance Share in cash.
"PERFORMANCE SHARE AWARD" shall mean an award of Performance Shares under
this Plan.
"PERMANENT AND TOTAL DISABILITY" shall have the meaning set forth in Section
22(e)(3) of the Code or any successor thereto.
"RESTRICTED STOCK" shall mean shares of Common Stock which are subject to a
Restriction Period.
"RESTRICTED STOCK AWARD" shall mean an award of Restricted Stock under this
Plan.
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"RESTRICTION PERIOD" shall mean a period of not less than one year or
greater than five years, designated by the Committee during which the Common
Stock subject to a Restricted Stock Award may not be sold, transferred,
assigned, pledged, hypothecated or otherwise encumbered or disposed of, except
as provided in this Plan or the Agreement relating to such award.
" SAR" shall mean a stock appreciation right which may be a Free-Standing
SAR or a Tandem SAR.
"STOCK AWARD" shall mean a Restricted Stock Award or a Bonus Stock Award.
"TANDEM SAR" shall mean an SAR which is granted in tandem with, or by
reference to, an option (including a Non-Statutory Stock Option granted prior to
the date of grant of the SAR), which entitles the holder thereof to receive,
upon exercise of such SAR and surrender for cancellation of all or a portion of
such option, shares of Common Stock (which may be Restricted Stock), cash or a
combination thereof with an aggregate value equal to the excess of the Fair
Market Value of one share of Common Stock on the date of exercise over the base
price of such SAR, multiplied by the number of shares of Common Stock subject to
such option, or portion thereof, which is surrendered.
"TAX DATE" shall have the meaning set forth in Section 6.5.
1.3 ADMINISTRATION. This Plan shall be administered by the Committee. Any
one or a combination of the following awards may be made under this Plan to
eligible officers and other key employees of the Company and its Subsidiaries: (
i ) options to purchase shares of Common Stock in the form of Incentive Stock
Options or Non-Statutory Stock Options, (ii) SARs in the form of Tandem SARs or
Free-Standing SARs, (iii) Stock Awards in the form of Restricted Stock or Bonus
Stock and (iv) Performance Shares. The Committee shall, subject to the terms of
this Plan, select eligible officers and other key employees for participation in
this Plan and determine the form, amount and timing of each award to such
persons and, if applicable, the number of shares of Common Stock, the number of
SARs and the number of Performance Shares subject to such an award, the exercise
price or base price associated with the award, the time and conditions of
exercise or settlement of the award and all other terms and conditions of the
award, including, without limitation, the form of the Agreement evidencing the
award. The Committee shall, subject to the terms of this Plan, interpret this
Plan and the application thereof, establish rules and regulations it deems
necessary or desirable for the administration of this Plan and may impose,
incidental to the grant of an award, conditions with respect to the award, such
as limiting competitive employment or other activities. All such
interpretations, rules, regulations and conditions shall be conclusive and
binding on all parties.
The Committee may delegate some or all of its power and authority hereunder
to the President or other executive officer of the Company as the Committee
deems appropriate; provided, however, that the Committee may not delegate its
power and authority with regard to the selection for participation in this Plan
of an officer or other person subject to Section 16 of the Exchange Act or
decisions concerning the timing, pricing or amount of an award to such an
officer or other person.
No member of the Board of Directors or Committee, and neither the President
and Chief Executive Officer nor any other executive officer to whom the
Committee delegates any of its power and authority hereunder, shall be liable
for any act, omission, interpretation, construction or determination made in
connection with this Plan in good faith, and the members of the Board of
Directors and the Committee and the President and Chief Executive Officer or
other executive officer shall be entitled to indemnification and reimbursement
by the Company in respect of any claim, loss, damage or expense (including
attorneys' fees) arising therefrom to the full extent permitted by law, except
as otherwise may be provided in the Company's Articles of Incorporation and/or
By-laws, and under any directors' and officers' liability insurance that may be
in effect from time to time.
A majority of the Committee shall constitute a quorum. The acts of the
Committee shall be either (i) acts of a majority of the members of the Committee
present at any meeting at which a quorum is present or (ii) acts approved in
writing by a majority of the members of the Committee without a meeting.
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1.4 ELIGIBILITY. Participants in this Plan shall consist of such officers
and other key employees of the Company and its Subsidiaries as the Committee in
its sole discretion may select from time to time. The Committee's selection of a
person to participate in this Plan at any time shall not require the Committee
to select such person to participate in this Plan at any other time.
1.5 SHARES AVAILABLE. Subject to adjustment as provided in Section 6.7,
4,000,000 shares of Common Stock shall be available under this Plan, reduced by
the sum of the aggregate number of shares of Common Stock (i) that are issued
upon the grant of a Stock Award and (ii) which become subject to outstanding
options, outstanding Free-Standing SARs and outstanding Performance Shares. To
the extent that shares of Common Stock subject to an outstanding option (except
to the extent shares of Common Stock are issued or delivered by the Company in
connection with the exercise of a Tandem SAR), Free-Standing SAR or Performance
Share are not issued or delivered by reason of the expiration, termination,
cancellation or forfeiture of such award or by reason of the delivery or
withholding of shares of Common Stock to pay all or a portion of the exercise
price of an award, if any, or to satisfy all or a portion of the tax withholding
obligations relating to an award, then such shares of Common Stock shall again
be available under this Plan.
Shares of Common Stock to be delivered under this Plan shall be made
available from authorized and unissued shares of Common Stock, or authorized and
issued shares of Common Stock reacquired and held as treasury shares or
otherwise or a combination thereof.
II. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1 STOCK OPTION. The Committee may, in its discretion, grant options to
purchase shares of Common Stock to such eligible persons as may be selected by
the Committee. Each option, or portion thereof, that is not an Incentive Stock
Option, shall be a Non-Statutory Stock Option. Each Incentive Stock Option shall
be granted within ten years of the effective date of this Plan.
To the extent that the aggregate Fair Market Value (determined as of the
date of grant) of shares of Common Stock with respect to which options
designated as Incentive Stock Options are exercisable for the first time by a
participant during any calendar year (under this Plan or any other plan of the
Company, or any parent or Subsidiary) exceeds the amount (currently $100,000)
established by the Code, such options shall constitute Non-Statutory Stock
Options.
Options shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:
(a) NUMBER OF SHARES AND PURCHASE PRICE. The number of shares of
Common Stock subject to an option and the purchase price per share of Common
Stock purchasable upon exercise of the option shall be determined by the
Committee; provided, however, that the purchase price per share of Common
Stock purchasable upon exercise of a Non-Statutory Stock Option shall not be
less than 100% of the Fair Market Value of a share of Common Stock on the
date of grant of such option and the purchase price per share of Common
Stock purchasable upon exercise of an Incentive Stock Option shall not be
less than 100% of the Fair Market Value of a share of Common Stock on the
date of grant of such option.
(b) OPTION PERIOD AND EXERCISABILITY. The period during which an
option may be exercised shall be determined by the Committee; provided,
however, that no Incentive Stock Option shall be exercised later than ten
years after its date of grant. The Committee may, in its discretion,
establish Performance Measures which shall be satisfied or met as a
condition to the grant of an option or to the exercisability of all or a
portion of an option. The Committee shall determine whether an option shall
become exercisable in cumulative or non-cumulative installments and in part
or in full at any time. An exercisable option, or portion thereof, may be
exercised only with respect to whole shares of Common Stock.
IV-4
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(c) METHOD OF EXERCISE. An option may be exercised (i) by giving
written notice to the Company specifying the number of whole shares of
Common Stock to be purchased and accompanied by payment therefor in full (or
arrangement made for such payment to the Company's satisfaction) either (A)
in cash, (B) by delivery of Mature Shares having a Fair Market Value,
determined as of the date of exercise, equal to the aggregate purchase price
payable by reason of such exercise, (C) by authorizing the Company to
withhold whole shares of Common Stock which would otherwise be delivered
upon exercise of the option having a Fair Market Value, determined as of the
date of exercise, equal to the aggregate purchase price payable by reason of
such exercise, (D) in cash by a broker-dealer acceptable to the Company to
whom the optionee has submitted an irrevocable notice of exercise or (E) a
combination of (A), (B) and (C), in each case to the extent set forth in the
Agreement relating to the option, (ii) if applicable, by surrendering to the
company any tandem SARs which are cancelled by reason of the exercise of the
option and (iii) by executing such documents as the Company may reasonably
request. The Committee shall have sole discretion to disapprove of an
election pursuant to any of clauses (B)-(E) and in the case of an optionee
who is subject to Section 16 of the Exchange Act, the Company may require
that the method of making such payment be in compliance with Section 16 and
the rules and regulations thereunder. Any fraction of a share of Common
Stock which would be required to pay such purchase price shall be
disregarded and the remaining amount due shall be paid in cash by the
optionee. No certificate representing Common Stock shall be delivered until
the full purchase price therefor has been paid.
2.2 STOCK APPRECIATION RIGHTS. The Committee may, in its discretion, grant
SARs to such eligible persons as may be selected by the Committee. The Agreement
relating to an SAR shall specify whether the SAR is a Tandem SAR or a
Free-Standing SAR.
SARs shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
this Plan, as the Committee shall deem advisable:
(a) NUMBER OF SARS AND BASE PRICE. The number of SARs subject to an
award shall be determined by the Committee. Any Tandem SAR related to an
Incentive Stock Option shall be granted at the same time that such Incentive
Stock Option is granted. Subject to the terms of this Plan and any
applicable Agreement relating to an SAR, an SAR granted under this Plan
shall confer on the holder thereof a right to receive, upon exercise
thereof, the excess of (i) the Fair Market Value of one share of Common
Stock on the date of exercise or, if the Committee shall so determine in the
case of any such right other than a Tandem SAR, at any time during a
specified period before or after the date of exercise over (ii) the grant
price of the right as specified by the Committee, which shall not be less
than the Fair Market Value of one share of Common Stock on the date of grant
of the SAR (or if the Committee so determines, in the case of any SAR
retroactively granted in tandem with or substitution for another award or
any outstanding award granted under any other plan of the Company, on the
date of grant of such other award). Subject to the terms of this Plan and
any applicable agreement, the grant price, term, method of exercise, method
of settlement and any other terms and conditions of any SAR shall be
determined by the Committee. The Committee may impose such conditions or
restrictions on the exercise of any SAR or Tandem SAR as it may deem
appropriate.
2.3 TERMINATION OF EMPLOYMENT. (a) DISABILITY. Subject to paragraph
(f) below and Section 6.8 and unless otherwise specified in the Agreement
relating to an option or SAR, as the case may be, if the employment with the
Company of the holder of an option or SAR terminates by reason of
Disability, each option and SAR held by such holder shall be fully
exercisable and may thereafter be exercised by such holder (or such holder's
legal representative or similar person) until and including the earliest to
occur of (i) a date set by the Committee and (ii) the expiration date of the
term of such option or SAR.
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(b) RETIREMENT. Subject to paragraph (f) below and Section 6.8 and
unless otherwise specified in the Agreement relating to an option or SAR, as
the case may be, if the employment with the Company of the holder of an
option or SAR terminates by reason of retirement on or after age 55 after a
minimum of 5 years of employment with the Company, each option and SAR held
by such holder shall be fully exercisable and may thereafter be exercised by
such holder (or such holder's legal representative or similar person) until
and including the earliest to occur of (i) a date set by the Committee and
(ii) the expiration date of the term of such option or SAR.
(c) DEATH. Subject to paragraph (f) below and Section 6.8 and unless
otherwise specified in the Agreement relating to an option or SAR, as the
case may be, if the employment with the Company of the holder of an option
or SAR terminates by reason of death, each option and SAR held by such
holder shall be fully exercisable and may thereafter be exercised by such
holder's executor, administrator, legal representative, beneficiary or
similar person, as the case may be, until and including the earliest to
occur of (i) the date which is 1 year after the date of death and (ii) the
expiration date of the term of such option or SAR.
(d) OTHER TERMINATION. Subject to paragraph (f) below and Section 6.8
and unless otherwise specified in the Agreement relating to an option or
SAR, as the case may be, if the employment with the Company of the holder of
an option or SAR is terminated by the Company for Cause, each option and SAR
held by such holder shall terminate automatically on the effective date of
such holder's termination of employment.
Subject to paragraph (f) below and Section 6.8 and unless otherwise
specified in the Agreement relating to an option or SAR, as the case may be,
if the employment with the Company of the holder of an option or SAR
terminates for any reason other than Disability, retirement on or after age
55 after a minimum of 5 years of employment with the Company with the
consent of the Company, death or Cause, each option and SAR held by such
holder shall be exercisable only to the extent that such option or SAR is
exercisable on the effective date of such holder's termination of employment
and may thereafter be exercised by such holder (or such holder's legal
representative or similar person) until and including the earliest to occur
of (i) the date which is 6 months after the effective date of termination of
employment and (ii) the expiration date of the term of such option or SAR.
(e) DEATH FOLLOWING TERMINATION OF EMPLOYMENT. Subject to paragraph
(f) below and Section 6.8 and unless otherwise specified in the Agreement
relating to an option or SAR, as the case may be, if the holder of an option
or SAR dies during the 1 year period following termination of employment by
reason of Disability, or if the holder of an option or SAR dies during the 1
year period following termination of employment by reason of retirement on
or after age 55 after a minimum of 5 years of employment with the Company or
if the holder of an option or SAR dies during the 6 month period following
termination of employment for any reason other than Disability or retirement
on or after age 55 after a minimum of 5 years of employment with the Company
(or, in each case, such other period as set forth in the Agreement relating
to such option or SAR), each option and SAR held by such holder shall be
exercisable only to the extent that such option or SAR, as the case may be,
is exercisable on the date of such holder's death and may thereafter be
exercised by the holder's executor, administrator, legal representative,
beneficiary or similar person, as the case may be, until and including the
earliest to occur of (i) the date which is 6 months after the date of death
and (ii) the expiration date of the term of such option or SAR.
(f) TERMINATION OF EMPLOYMENT -- INCENTIVE STOCK OPTIONS. Subject to
Section 6.8 and unless otherwise specified in the Agreement relating to the
option, if the employment with the Company of a holder of an Incentive Stock
Option terminates by reason of Disability, each Incentive Stock Option held
by such optionee shall be fully exercisable and may thereafter be exercised
by such optionee (or such optionee's legal representative or similar person)
until and including the earliest to occur of (i) a date set by the Committee
upon the determination a Disability exists and (ii) the expiration date of
the term of such option.
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<PAGE>
Subject to Section 6.8 and unless otherwise specified in the Agreement
relating to the option, if the employment with the Company of a holder of an
Incentive Stock Option terminates by reason of death, each Incentive Stock
Option held by such optionee shall be fully exercisable and may thereafter be
exercised by such optionee's executor, administrator, legal representative,
beneficiary or similar person until and including the earliest to occur of (i)
the date which is 1 year after the date of death and (ii) the expiration date of
the term of such option.
If the employment with the Company of the optionee of an Incentive Stock
Option is terminated by the Company for Cause, each Incentive Stock Option held
by such optionee shall terminate automatically on the effective date of such
optionee's termination of employment. Subject to Section 6.8 and unless
otherwise specified in the Agreement relating to the option, if the employment
with the Company of a holder of an Incentive Stock Option terminates for any
reason other than Permanent and Total Disability, death or Cause, each Incentive
Stock Option held by such optionee shall be exercisable only to the extent such
option is exercisable on the effective date of such optionee's termination of
employment, and may thereafter be exercised by such holder (or such holder's
legal representative or similar person) until and including the earliest to
occur of (i) the date which is 3 months after the effective date of such
optionee's termination of employment and (ii) the expiration date of the term of
such option.
If the holder of an Incentive Stock Option dies during the one-year period
following termination of employment by reason of Permanent and Total Disability
(or such shorter period as set forth in the Agreement relating to such option),
or if the holder of an incentive stock option dies during the three-month period
following termination of employment for any reason other than Permanent and
Total Disability, death or Cause, each Incentive Stock Option held by such
optionee shall be exercisable only to the extent such option is exercisable on
the date of the optionee's death and may thereafter be exercised by the
optionee's executor, administrator, legal representative, beneficiary or similar
person until and including the earliest to occur of (i) the date which is 6
months after the date of death and (ii) the expiration date of the term of such
option.
III. STOCK AWARDS
3.1 STOCK AWARDS. The Committee may, in its discretion, grant Stock Awards
to such eligible persons as may be selected by the Committee. Subject to
adjustment as provided in Section 6.7 of this Plan, the aggregate number of
shares of Common Stock available under this Plan pursuant to all Stock Awards
shall not exceed 600,000 of the aggregate number of shares of Common Stock
available under this Plan. The Agreement relating to a Stock Award shall specify
whether the Stock Award is a Restricted Stock Award or Bonus Stock Award.
3.2 TERMS OF STOCK AWARDS. Stock Awards shall be subject to the following
terms and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem advisable.
(a) NUMBER OF SHARES AND OTHER TERMS. The number of shares of Common
Stock subject to a Restricted Stock Award or Bonus Stock Award and the
Performance Measures (if any) and Restriction Period applicable to a
Restricted Stock Award shall be determined by the Committee.
(b) VESTING AND FORFEITURE. The Agreement relating to a Restricted
Stock Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of
the shares of Common Stock subject to such award (i) if specified
Performance Measures are satisfied or met during the specified Restriction
Period or (ii) if the holder of such award remains continuously in the
employment of the Company during the specified Restriction Period and for
the forfeiture of the shares of Common Stock subject to such award (x) if
specified Performance Measures are not satisfied or met during the specified
Restriction Period or (y) if the holder of such award does not remain
continuously in the employment of the Company during the specified
Restriction Period.
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<PAGE>
Bonus Stock Awards shall not be subject to any Performance Measures or
Restriction Periods.
(c) SHARE CERTIFICATES. During the Restriction Period, a certificate
or certificates representing a Restricted Stock Award may be registered in
the holder's name and may bear a legend, in addition to any legend which may
be required pursuant to Section 6.6, indicating that the ownership of the
shares of Common Stock represented by such certificate is subject to the
restrictions, terms and conditions of this Plan and the Agreement relating
to the Restricted Stock Award. All such certificates shall be deposited with
the Company, together with stock powers or other instruments of assignment
(including a power of attorney), each endorsed in blank with a guarantee of
signature if deemed necessary or appropriate, which would permit transfer to
the Company of all or a portion of the shares of Common Stock subject to the
Restricted Stock Award in the event such award is forfeited in whole or in
part upon termination of any applicable Restriction Period (and the
satisfaction or attainment of applicable Performance measures), or upon the
grant of a Bonus Stock Award, in each case subject to the Company's right to
require payment of any taxes in accordance with Section 6.5, a certificate
or certificates evidencing ownership of the requisite number of shares of
Common Stock shall be delivered to the holder of such award.
(d) RIGHTS WITH RESPECT TO RESTRICTED STOCK AWARDS. Unless otherwise
set forth in the Agreement relating to a Restricted Stock Award, and subject
to the terms and conditions of a Restricted Stock Award, the holder of such
award shall have all rights as a stockholder of the Company, including, but
not limited to, voting rights, the right to receive dividends and the right
to participate in any capital adjustment applicable to all holders of Common
Stock; provided, however, that a distribution with respect to shares of
Common Stock, other than a regular cash dividend shall be deposited with the
Company and shall be subject to the same restrictions as the shares of
Common Stock with respect to which such distribution was made.
3.3 TERMINATION OF EMPLOYMENT. (a) DISABILITY. RETIREMENT AND
DEATH. Subject to Section 6.8 and unless otherwise set forth in the Agreement
relating to a Restricted Stock Award, if the employment with the Company of the
holder of such award terminates by reason of (i) Disability or death, then the
Restriction Period shall terminate as of the effective date of such holder's
disability or as of the date of death and all Performance Measures, if any,
applicable to such award shall be deemed to have been satisfied at the target
level or (ii) retirement on or after age 55 with a minimum of 5 years of
employment with the Company or termination by the Company without cause, the
Restriction Period shall continue to apply and all Performance Measures, if any,
applicable to such award shall also continue to apply and the restrictions on
the restricted stock awards shall be removed based on actual results with
respect to any performance measures.
(b) OTHER TERMINATION. Subject to Section 6.8 and unless otherwise set
forth in the Agreement relating to a Restricted Stock Award, if the
employment with the Company of the holder of a Restricted Stock Award
terminates for any reason other than Disability, retirement on or after age
55 after a minimum of 5 years of employment with the Company, termination by
the Company without cause or death, the portion of such award which is
subject to a Restriction Period on the effective date of such holder's
termination of employment shall be forfeited and such portion shall be
cancelled by the Company.
IV. PERFORMANCE SHARE AWARDS
4.1 PERFORMANCE SHARE AWARDS. The Committee may, in its discretion, grant
Performance Share Awards to such eligible persons as may be selected by the
Committee.
4.2 TERMS OF PERFORMANCE SHARE AWARDS. Performance Share Awards shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of this Plan, as the
Committee shall deem advisable.
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<PAGE>
(a) NUMBER OF PERFORMANCE SHARES AND PERFORMANCE MEASURES. The number
of Performance Shares subject to any award and the Performance Measures and
Performance Period applicable to such award shall be determined by the
Committee.
(b) VESTING AND FORFEITURE. The Agreement relating to a Performance
Share Award shall provide, in the manner determined by the Committee, in its
discretion, and subject to the provisions of this Plan, for the vesting of
such award if specified Performance Measures are satisfied or met during the
specified Performance Period, and for the forfeiture of such award, if
specified Performance Measures are not satisfied or met during the specified
Performance Period.
(c) SETTLEMENT OF VESTED PERFORMANCE SHARE AWARDS. The Agreement
relating to a Performance Share Award (i) shall specify whether such award
may be settled in shares of Common Stock (including shares of Restricted
Stock) or cash or a combination thereof and (ii) may specify whether the
holder thereof shall be entitled to receive, on a current or deferred basis,
dividend equivalents, and, if determined by the Committee, interest on any
deferred dividend equivalents, with respect to the number of shares of
Common Stock subject to such award. If a Performance Share Award is settled
in shares of Restricted Stock, a certificate or certificates representing
such Restricted Stock shall be issued in accordance with Section 3.2(c) and
the holder of such Restricted Stock shall have such rights of a stockholder
of the Company as determined pursuant to Section 3.2(d). Prior to the
settlement of a Performance Share Award in shares of Common Stock, including
Restricted Stock, the holder of such award shall have no rights as a
stockholder of the Company with respect to the shares of Common Stock
subject to such award and shall have rights as a stockholder of the Company
in accordance with Section 6.10.
4.3 TERMINATION OF EMPLOYMENT. (a) DISABILITY, RETIREMENT AND
DEATH. Subject to Section 6.8 and unless otherwise set forth in the Agreement
relating to a Performance Share Award, if the employment with the Company of the
holder of such award terminates by reason of (i) Disability or death, then all
Performance Measures applicable to such award shall be deemed to have been
satisfied at the target level and the Performance Period applicable to such
award shall thereupon terminate or (ii) retirement on or after age 55 after a
minimum of 5 years of employment with the Company or termination by the Company
without cause, all Performance Measures applicable to such award shall continue
to apply and payment of any Performance Share Awards shall be made in a pro rata
amount at the same time and manner as with other eligible persons with respect
to such awards, based on actual results of the Performance Measures, unless in
its sole discretion, the Committee determines otherwise. Such pro rata amount
shall be determined by multiplying the award that would have otherwise been paid
had there been no termination under (ii) above by a fraction, the numerator of
which is the number of full months of employment during the Performance Period
and the denominator of which is the number of full months in the Performance
Period. A partial month shall be treated as a full month if the holder of a
Performance Share Award has held such award for 15 or more calendar days of such
month.
(b) OTHER TERMINATION. Subject to Section 6.8 and unless otherwise set
forth in the Agreement relating to a Performance Share Award, if the
employment with the Company of the holder of a Performance Share Award
terminates for any reason other than Disability, retirement on or after age
55 after a minimum of 5 years of employment with the Company, termination by
the Company without cause or death, the portion of such award which is
subject to a Performance Period on the effective date of such holder's
termination of employment shall be forfeited and such portion shall be
cancelled by the Company.
V. RESTRICTED STOCK AWARDS FOR NON-EMPLOYEE DIRECTORS
5.1 RESTRICTED STOCK AWARDS. As of the date of adoption of this Plan, each
Non-Employee Director (a member of the Board who is not an officer or employee
of the Company or any Subsidiary) shall receive a Restricted Stock Award of 800
shares of Common Stock. Furthermore, upon the initial election of a director to
the Board, whether at an annual election or to fill a vacancy, a Restricted
Stock
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Award consisting of 800 shares of Common Stock shall be made to such director.
Additional Restricted Stock Awards of 800 shares of Common Stock will be made to
each Non-Employee Director, who continues on the Board, each year effective as
of May 1st of such year, beginning in 1996.
5.2 RIGHTS AND RESTRICTIONS AS TO RESTRICTED STOCK AWARDS. The provisions
of Sections 3.2(b) and (c) shall apply with respect to the Restricted Stock
Awards hereunder.
5.3 RESTRICTION PERIODS. All of the shares of Common Stock issued pursuant
to the Restricted Stock Awards hereunder shall become free of the restrictions
imposed by this Article V and shall become nonforfeitable upon any termination
of Board service for any reason by the Non-Employee Director.
VI. GENERAL
6.1 EFFECTIVE DATE AND TERM OF PLAN. This Plan shall be submitted to the
stockholders of the Company for approval and, if approved by the affirmative
vote of a majority of the shares of Common Stock present in person or
represented by proxy at the 1996 annual meeting of stockholders, shall become
effective on the date of such approval. This Plan shall terminate 10 years after
its effective date unless terminated earlier by the Board. Termination of this
Plan shall not affect the terms or conditions of any award granted prior to
termination.
Awards hereunder may be made at any time prior to the termination of this
Plan, provided that no award may be made later than 10 years after the effective
date of this Plan. In the event that this Plan is not approved by the
stockholders of the Company, this Plan and any awards hereunder shall be void
and of no force or effect.
6.2 AMENDMENTS. The Board may amend this Plan as it shall deem advisable,
subject to any requirement of stockholder approval required by applicable law,
rule or regulation including Rule 16b-3 under the Exchange Act, provided,
however, that no amendment shall be made without stockholder approval if such
amendment would (a) increase the maximum number of shares of Common Stock
available under this Plan (subject to Section 6.7), (b) reduce the minimum
purchase price in the case of an option or the base price in the case of an SAR,
(c) effect any change inconsistent with Section 422 of the Code or (d) extend
the term of this Plan. No amendment may impair the rights of a holder of an
outstanding award without the consent of such holder.
6.3 AGREEMENT. Except with respect to Restricted Stock Awards under
Article V, each award under this Plan shall be evidenced by an Agreement setting
forth the terms and conditions applicable to such award. No award shall be valid
until an Agreement is executed by the Company and the recipient of such award
and, upon execution by each party and delivery of the Agreement to the Company,
such award shall be effective as of the effective date set forth in the
Agreement.
6.4 NON-TRANSFERABILITY OF STOCK OPTIONS, SARS AND PERFORMANCE SHARES. No
option, SAR or Performance Share shall be transferable other than (i) by will,
the laws of descent and distribution or pursuant to beneficiary designation
procedures approved by the Company or (ii) as otherwise permitted under Rule
16b-3 under the Exchange Act as set forth in the Agreement relating to such
award except to the extent permitted by the foregoing sentence, each option, SAR
or Performance Share may be exercised or settled during the participant's
lifetime only by the holder or the holder's legal representative or similar
person. Except as permitted by the second preceding sentence, no option, SAR or
Performance Share may be sold, transferred, assigned, pledged, hypothecated,
encumbered or otherwise disposed of (whether by operation of law or otherwise)
or be subject to execution, attachment or similar process. Upon any attempt to
so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of
any option, SAR or Performance Share, such award and all rights thereunder shall
immediately become null and void.
6.5 TAX WITHHOLDING. The Company shall have the right to require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash pursuant to an award made
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<PAGE>
hereunder, payment by the holder of such award of any Federal, state, local or
other taxes which may be required to be withheld or paid in connection with such
award. An Agreement may provide that (i) the Company shall withhold whole shares
of Common Stock which would otherwise be delivered to a holder, having an
aggregate Fair Market Value determined as of the date the obligation to withhold
or pay taxes arises in connection with an award (the "Tax Date"), or withhold an
amount of cash which would otherwise be payable to a holder, in the amount
necessary to satisfy any such obligation or (ii) the holder may satisfy any such
obligation by any of the following means: (A) a cash payment to the company, (B)
delivery to the Company of Mature Shares having an aggregate Fair Market Value,
determined as of the Tax date, equal to the amount necessary to satisfy any such
obligation, (C) authorizing the Company to withhold whole shares of Common stock
which would otherwise be delivered having an aggregate Fair Market Value,
determined as of the Tax Date, or withhold an amount of cash which would
otherwise be payable to a holder, equal to the amount necessary to satisfy any
such obligation, (D) in the case of the exercise of an option, a cash payment by
a broker-dealer acceptable to the Company to whom the optionee has submitted an
irrevocable notice of exercise or (E) any combination of (A), (B) and (C), in
each case to the extent set forth in the Agreement relating to the award;
provided, however, that the Committee shall have sole discretion to disapprove
of an election pursuant to any of clauses (B)-(E) and that in the case of a
holder who is subject to Section 16 of the Exchange Act, the Company may require
that the method of satisfying such an obligation be in compliance with Section
16 and the rules and regulations thereunder. An Agreement may provide for shares
of Common Stock to be delivered or withheld having an aggregate Fair Market
Value in excess of the minimum amount required to be withheld, but not in excess
of the amount determined by applying the holder's maximum marginal tax rate. Any
fraction of a share of Common Stock which would be required to satisfy such an
obligation shall be disregarded and the remaining amount due shall be paid in
cash by the holder.
6.6 RESTRICTIONS ON SHARES. Each award made hereunder shall be subject to
the requirement that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
award upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the delivery of shares
thereunder, such shares shall not be delivered unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the Company. The
Company may require that certificates evidencing shares of Common Stock
delivered pursuant to any award made hereunder bear a legend indicating that the
sale, transfer or other disposition thereof by the holder is prohibited except
in compliance with the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
6.7 ADJUSTMENT. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Common Stock other than a regular cash
dividend, the number and class of securities available under this Plan, the
number and class of securities subject to each outstanding option and the
purchase price per security, the terms of each outstanding Performance Share
shall be appropriately adjusted by the Committee, such adjustments to be made in
the case of outstanding options and SARs without an increase in the aggregate
purchase price or base price. The decision of the Committee regarding any such
adjustment shall be final, binding and conclusive. If any such adjustment would
result in a fractional security being (i) available under this Plan, such
fractional security shall be disregarded, or (ii) subject to an award under this
Plan, the Company shall pay the holder of such award, in connection with the
first vesting, exercise or settlement of such award, in whole or in part,
occurring after such adjustment, an amount in cash determined by multiplying (i)
the fraction of such security (rounded to the nearest hundredth) by (ii) the
excess, if any, of (A) the Fair Market Value on the vesting, exercise or
settlement date over (B) the exercise or base price, if any, of such award.
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<PAGE>
6.8 CHANGE IN CONTROL.
(a) Notwithstanding any provision in this Plan or any Agreement, in the
event of a Change in Control, (i) all outstanding options and SARS shall
immediately become exercisable in full, (ii) the Restriction Period applicable
to any outstanding Restricted Stock Award shall lapse, (iii) the Performance
Period applicable to any outstanding Performance Share Award shall lapse, (iv)
the Performance Measures applicable to any outstanding Restricted Stock Award
(if any) and to any outstanding Performance Share Award shall be deemed to be
satisfied at the target level.
(b) "Change in Control" shall be deemed to have occurred as of:
(1) the closing date of the restructuring of the Company as a result of
merger, consolidation, takeover or reorganization unless at least sixty
percent (60%) of the members of the Board of Directors of the Corporation
resulting from such merger, consolidation, takeover or reorganization were
members of the Incumbent Board; or
(2) the occurrence of any other event that is designated as being a
"Change in Control" by a majority vote of the directors of the Incumbent
Board who are not also employees of the Company.
6.9 NO RIGHT OF PARTICIPATION OR EMPLOYMENT. No person shall have any
right to participate in this Plan. Neither this Plan nor any award made
hereunder shall confer upon any person any right to continued employment by the
Company, any Subsidiary or any affiliate of the Company or affect in any manner
the right of the Company, any Subsidiary or any affiliate of the Company to
terminate the employment of any person at any time without liability hereunder.
6.10 RIGHTS AS STOCKHOLDER. No person shall have any right as a
stockholder of the Company with respect to any shares of Common Stock or other
equity security of the Company which is subject to an award hereunder unless and
until such person becomes a stockholder of record with respect to such shares or
Common Stock or equity security.
6.11 GOVERNING LAW. This Plan, each award hereunder and the related
Agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of Iowa and construed in accordance
therewith without giving effect to principles of conflicts of laws.
6.12 EFFECTIVE DATE. This Plan shall become effective as of November 1,
1995, subject to subsequent approval of the shareholders of the Company at the
1996 annual shareholders meeting. Any grants of options, SAR's, Stock Awards or
Performance Share Awards by the Board or Committee between July 1, 1995 and
October 31, 1995 shall be considered to have been granted under this Plan and
shall be governed by this Plan's terms and conditions. If this Plan is not
approved by the shareholders of the Company at the 1996 annual shareholders
meeting, all awards granted hereunder shall be null and void.
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<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 490.850-490.855 and 490.857 of the Iowa Business Corporation Act
("IBCA") permit corporations organized thereunder to indemnify directors,
officers, employees and agents against liability under certain circumstances.
The Articles of Incorporation and the Bylaws of Holdings provide for
indemnification of directors, officers, employees and agents to the full extent
provided by the IBCA. The Articles of Incorporation and the Bylaws of Holdings
state that the indemnification provided therein shall not be deemed exclusive.
Holdings may purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of the Company or another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not Holdings would have the power to
indemnify such person against such expense, liability or loss under the IBCA.
Pursuant to Section 490.857 of the IBCA and its Articles of Incorporation and
Bylaws, Holdings maintains directors' and officers' liability insurance
coverage. Holdings has also entered into indemnification agreements with certain
directors and officers, and expects to enter into similar agreements with future
directors and officers, to further assure such persons indemnification as
permitted by Iowa law.
As permitted by Section 490.832 of the IBCA, the Articles of Incorporation
of Holdings provide that no director shall be personally liable to Holdings or
its shareholders for monetary damages for breach of fiduciary duty as a
director, except for liability: (i) for any breach of the director's duty of
loyalty to Holdings or its shareholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 490.833 of the IBCA (relating to certain unlawful
distributions to shareholders) or (iv) for any transaction from which the
director derived an improper personal benefit.
ITEM 21. EXHIBITS.
The following exhibits are being filed herewith:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------------- --------------------------------------------------------------------------------------------------------
<S> <C>
2(a) Agreement and Plan of Exchange dated as of January 24, 1996 (attached as Annex I).
3(a) Restated Articles of Incorporation of MidAmerican Energy Holdings Company (attached as Annex II).
3(b) Bylaws of MidAmerican Energy Holdings Company.*
4 Rights of MidAmerican Energy Holdings Company Common Shareholders (included in 3(a)).
5(a) Opinion re Legality of Sidley & Austin.*
5(b) Opinion re Legality of LeBoeuf, Lamb, Greene & MacRae, L.L.P.*
8 Opinion re Tax Matters of Sidley & Austin.*
10(a) MidAmerican Energy Company 1995 Long-Term Incentive Plan (attached as Annex IV).
23(a) Consents of Sidley & Austin (included in Exhibits 5 and 8).
23(b) Consent of LeBoeuf, Lamb, Greene & MacRae, L.L.P. (included in Exhibit 5(b)).
23(c) Consent of Arthur Andersen LLP.*
23(d) Consent of Deloitte & Touche LLP*
99(a) Form of Proxy/Direction.*
99(b) Consents of Persons to be Directors of MidAmerican Energy Holdings Company at the Effective Time of the
Share Exchange.*
</TABLE>
- ------------------------
* Previously filed.
II-1
<PAGE>
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement.
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial BONA FIDE offering thereof.
(3) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(4) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
(5) To remove from registration by means of a post-effective amendment
any shares of Holdings Common Stock which are not issued in the Share
Exchange.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 20, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Pre-Effective Amendment No. 1 to the Registration Statement
on Form S-4 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Des Moines, State of Iowa as of March 13, 1996.
MIDAMERICAN ENERGY HOLDINGS COMPANY
By /s/ RUSSELL E. CHRISTIANSEN
--------------------------------------
Russell E. Christiansen
CHAIRMAN
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 1 to the Registration Statement on Form S-4 has been
signed below by the following persons in the capacities indicated, as of March
13, 1996.
<TABLE>
<CAPTION>
SIGNATURE AND TITLE
- --------------------------------------------------------
<S> <C>
/s/ RUSSELL E. CHRISTIANSEN
-------------------------------------------- /s/ STANLEY J. BRIGHT
Russell E. Christiansen --------------------------------------------
CHAIRMAN AND DIRECTOR Stanley J. Bright
(PRINCIPAL EXECUTIVE OFFICER) PRESIDENT AND DIRECTOR
/s/ LANCE E. COOPER
--------------------------------------------
Lance E. Cooper
VICE PRESIDENT AND TREASURER
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
</TABLE>
II-3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS PAGE
- ------------- ---------
<S> <C> <C>
2(a) Agreement and Plan of Exchange dated as of January 24, 1996 (attached as Annex I).
3(a) Restated Articles of Incorporation of MidAmerican Energy Holdings Company (attached as Annex
II).
3(b) Bylaws of MidAmerican Energy Holdings Company.*
4 Rights of MidAmerican Energy Holdings Company Common Shareholders (included in 3(a)).
5(a) Opinion re Legality of Sidley & Austin.*
5(b) Opinion re Legality of LeBoeuf, Lamb, Greene & MacRae, L.L.P.*
8 Opinion re Tax Matters of Sidley & Austin.*
10(a) MidAmerican Energy Company 1995 Long-Term Incentive Plan (attached as Annex IV).
23(a) Consents of Sidley & Austin (included in Exhibits 5 and 8).
23(b) Consent of LeBoeuf, Lamb, Greene & MacRae, L.L.P. (included in Exhibit 5(b)).
23(c) Consent of Arthur Andersen LLP.*
23(d) Consent of Deloitte & Touche LLP*
99(a) Form of Proxy/Direction.*
99(b) Consents of Persons to be Directors of MidAmerican Energy Holdings Company at the Effective Time
of the Share Exchange.*
</TABLE>
- ------------------------
* Previously filed.
