SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
October 24, 1999
__________________________________________________
Date of Report (Date of Earliest Event Reported)
MidAmerican Energy Holdings Company
__________________________________________________
(Exact Name of Registrant as Specified in Charter)
Iowa 0-25551 94-2213782
____________________________ ________________ ___________________
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
666 Grand Avenue
Des Moines, Iowa 50309
_____________________________________________________
(Address of Principal Executive Offices and Zip Code)
(515) 242-4300
____________________________________________________
(Registrant's Telephone Number, Including Area Code)
N/A
_____________________________________________________________
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events.
On October 25, 1999, MidAmerican Energy Holdings Company (the
"Company") announced that it had entered into an Agreement and Plan of
Merger, dated as of October 24, 1999 (the "Merger Agreement"), with
entities formed by an investor group including Berkshire Hathaway, Inc.,
Walter Scott, Jr. and David L. Sokol. Pursuant to the Merger Agreement,
the investor group's acquisition vehicle, Teton Acquisition Corp., will be
merged with and into the Company, with the Company as the surviving
corporation in the merger, and holders of the Company's common stock will
have the right to receive $35.05 per share in cash, without interest.
Consummation of the transactions contemplated by the Merger
Agreement is subject to the approval of a majority of the outstanding
shares of the Company's common stock, the receipt of certain regulatory
approvals and other customary conditions.
Copies of the Merger Agreement and the press release announcing
the execution of the Merger Agreement are filed herewith as Exhibits 99.1
and 99.2, respectively, and are incorporated herein by reference. The
description of the Merger Agreement set forth herein is qualified in its
entirety by reference to the provisions of the Merger Agreement.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(c) Exhibits.
99.1 Agreement and Plan of Merger, dated as of October 24,
1999, by and among MidAmerican Energy Holdings Company,
Teton Formation L.L.C. and Teton Acquisition Corp.
99.2 Press Release, dated October 25, 1999, of the Company.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: October 25, 1999
MIDAMERICAN ENERGY HOLDINGS COMPANY
By: /s/ Steven A. McArthur
_____________________________________
Name: Steven A. McArthur
Title: Senior Vice President, Mergers
and Acquisitions
Exhibit Index
Exhibit Description
------- -----------
99.1 Agreement and Plan of Merger, dated as of October 24, 1999, by
and among MidAmerican Energy Holdings Company, Teton Formation
L.L.C. and Teton Acquisition Corp.
99.2 Press Release, dated October 25, 1999, of the Company.
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
by and among
MIDAMERICAN ENERGY HOLDINGS COMPANY,
TETON FORMATION L.L.C.
and
TETON ACQUISITION CORP.
__________________________
Dated as of October 24, 1999
__________________________
TABLE OF CONTENTS
Page
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ARTICLE I.
THE MERGER
Section 1.1. The Merger . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Effective Time . . . . . . . . . . . . . . . . . . 2
Section 1.3. Effect of the Merger . . . . . . . . . . . . . . . 2
Section 1.4. Subsequent Actions . . . . . . . . . . . . . . . . 2
Section 1.5. Articles of Incorporation; By-Laws; Officers and
Directors . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II.
TREATMENT OF SHARES
Section 2.1. Conversion of Securities . . . . . . . . . . . . . 3
Section 2.2. Dissenting Shares . . . . . . . . . . . . . . . . . 4
Section 2.3. Surrender of Shares; Stock Transfer Books . . . . . 4
Section 2.4. Options Under Company Stock Plans . . . . . . . . . 6
ARTICLE III.
THE CLOSING
Section 3.1. Closing . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1. Organization and Qualification . . . . . . . . . . 7
Section 4.2. Subsidiaries . . . . . . . . . . . . . . . . . . . 8
Section 4.3. Capitalization . . . . . . . . . . . . . . . . . . 8
Section 4.4. Authority; Non-Contravention; Statutory
Approvals; Compliance . . . . . . . . . . . . . . 9
Section 4.5. Reports and Financial Statements . . . . . . . . . 11
Section 4.6. Absence of Certain Changes or Events;
Absence of Undisclosed Liabilities . . . . . . . 11
Section 4.7. Litigation . . . . . . . . . . . . . . . . . . . . 12
Section 4.8. Proxy Statement . . . . . . . . . . . . . . . . . . 12
Section 4.9. Tax Matters . . . . . . . . . . . . . . . . . . . . 13
Section 4.10. Employee Matters; ERISA . . . . . . . . . . . . . . 15
Section 4.11. Environmental Protection . . . . . . . . . . . . . 19
Section 4.12. Regulation as a Utility . . . . . . . . . . . . . . 22
Section 4.13. Vote Required . . . . . . . . . . . . . . . . . . . 22
Section 4.14. Insurance . . . . . . . . . . . . . . . . . . . . . 22
Section 4.15. Opinions of Financial Advisers . . . . . . . . . . 23
Section 4.16. Brokers . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.17. Non-Applicability of Certain Provisions
of Iowa Act . . . . . . . . . . . . . . . . . . . 23
Section 4.18. Company Rights Agreement . . . . . . . . . . . . . 23
Section 4.19. Year 2000 Compliance . . . . . . . . . . . . . . . 23
Section 4.20. Board Recommendation . . . . . . . . . . . . . . . 24
Section 4.21. Investment Company and Investment
Advisory Matters . . . . . . . . . . . . . . . . 24
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 5.1. Organization . . . . . . . . . . . . . . . . . . . 24
Section 5.2. Authority; Non-Contravention; Statutory
Approvals . . . . . . . . . . . . . . . . . . . . 24
Section 5.3. Proxy Statement . . . . . . . . . . . . . . . . . . 25
Section 5.4. Brokers . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.5. Financing . . . . . . . . . . . . . . . . . . . . . 26
Section 5.6. Sale of the Company . . . . . . . . . . . . . . . . 26
Section 5.7. Share Ownership . . . . . . . . . . . . . . . . . . 26
Section 5.8. Regulation Under the 1935 Act . . . . . . . . . . . 26
Section 5.9. Investor Agreements . . . . . . . . . . . . . . . . 27
ARTICLE VI.
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1. Conduct of Business by the Company Pending
the Merger . . . . . . . . . . . . . . . . . . . 27
Section 6.2. Conduct of Business by Parent and Merger Sub
Pending the Merger . . . . . . . . . . . . . . . 30
Section 6.3. Additional Covenants by the Company and
Parent Pending the Merger . . . . . . . . . . . . 30
ARTICLE VII.
ADDITIONAL AGREEMENTS
Section 7.1. Access to Information . . . . . . . . . . . . . . . 31
Section 7.2. Proxy Statement and Schedule 13E-3 . . . . . . . . 32
Section 7.3. Regulatory Approvals and Other Matters . . . . . . 32
Section 7.4. Shareholder Approval . . . . . . . . . . . . . . . 33
Section 7.5. Directors' and Officers' Indemnification . . . . . 34
Section 7.6. Disclosure Schedules . . . . . . . . . . . . . . . 35
Section 7.7. Public Announcements . . . . . . . . . . . . . . . 36
Section 7.8. No Solicitations . . . . . . . . . . . . . . . . . 36
Section 7.9. Expenses . . . . . . . . . . . . . . . . . . . . . 37
Section 7.10. Third Party Standstill Agreements . . . . . . . . . 37
Section 7.11. Takeover Statutes . . . . . . . . . . . . . . . . . 38
Section 7.12. Subscription Agreements . . . . . . . . . . . . . . 38
Section 7.13. Employee Benefits Matters . . . . . . . . . . . . . 38
ARTICLE VIII.
CONDITIONS
Section 8.1. Conditions to Each Party's Obligation to
Effect the Merger . . . . . . . . . . . . . . . . 39
Section 8.2. Conditions to Obligation of the Company
to Effect the Merger . . . . . . . . . . . . . . 40
Section 8.3. Conditions to Obligation of Parent and
Merger Sub to Effect the Merger . . . . . . . . . 41
ARTICLE IX.
TERMINATION, AMENDMENT AND WAIVER
Section 9.1. Termination . . . . . . . . . . . . . . . . . . . . 42
Section 9.2. Effect of Termination . . . . . . . . . . . . . . . 44
Section 9.3. Termination Fee; Expenses . . . . . . . . . . . . . 44
Section 9.4. Amendment . . . . . . . . . . . . . . . . . . . . . 46
Section 9.5. Waiver . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE X.
GENERAL PROVISIONS
Section 10.1. Non-Survival; Effect of Representations
and Warranties . . . . . . . . . . . . . . . . . 46
Section 10.2. Notices . . . . . . . . . . . . . . . . . . . . . . 46
Section 10.3. Miscellaneous . . . . . . . . . . . . . . . . . . . 48
Section 10.4. Interpretation . . . . . . . . . . . . . . . . . . 48
Section 10.5. Counterparts; Effect . . . . . . . . . . . . . . . 48
Section 10.6. Enforcement . . . . . . . . . . . . . . . . . . . . 48
Section 10.7. Parties in Interest . . . . . . . . . . . . . . . . 49
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 24, 1999 (this
"Agreement"), by and among MidAmerican Energy Holdings Company, an Iowa
corporation (the "Company"), Teton Formation L.L.C., an Iowa limited
liability company ("Parent"), and Teton Acquisition Corp., an Iowa
corporation and a wholly owned subsidiary of Parent ("Merger Sub").
W I T N E S S E T H :
WHEREAS, the Investors (as defined in Section 5.5) desire to acquire
the entire equity interest in the Company and have formed Parent and Merger
Sub for the purpose of effecting such transaction; and
WHEREAS, the Boards of Directors of the Company and Merger Sub have
each approved, and deem advisable and in the best interests of their
respective shareholders, and the Company, Parent and Merger Sub have
approved, the merger of Merger Sub with and into the Company, with the
Company being the surviving corporation, in accordance with the Iowa
Business Corporation Act (the "Iowa Act") and upon the terms and subject to
the conditions set forth in this Agreement (such transaction is referred to
as the "Merger"), as a result of which the former shareholders of Merger
Sub as of the effective time of the Merger will own all of the outstanding
capital stock of the Company.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I.
THE MERGER
Section 1.1. The Merger. At the Effective Time (as defined in
Section 1.2) and upon the terms and subject to the conditions of this
Agreement and the Iowa Act, Merger Sub shall be merged with and into the
Company, the separate corporate existence of Merger Sub shall cease, and
the Company shall continue as the surviving corporation (sometimes
hereinafter referred to as the "Surviving Corporation").
Section 1.2. Effective Time. On the Closing Date (as defined in
Section 3.1), articles of merger complying with the requirements of the
Iowa Act shall be executed and filed by the Company and Merger Sub with the
Secretary of State of Iowa. The Merger shall become effective on the date
on which the articles of merger are duly filed with the Secretary of State
of Iowa or at such later time as is mutually agreed by the parties and
specified in the articles of merger (the "Effective Time").
Section 1.3. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
the Iowa Act. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Merger Sub shall vest
in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of
the Surviving Corporation.
Section 1.4. Subsequent Actions. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that
any deeds, bills of sale, assignments, assurances or any other actions or
things are necessary or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title or interest in, to
or under any of the rights, properties or assets of, and assume the
liabilities of, either of the Company or Merger Sub acquired or to be
acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of either the Company or Merger Sub, all
such deeds, bills of sale, assignments and assurances and to take and do,
in the name and on behalf of each of such corporations or otherwise, all
such other actions and things as may be necessary or desirable to vest,
perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in, and the assumption of the liabilities
of, the Surviving Corporation or otherwise to carry out this Agreement.
Section 1.5. Articles of Incorporation; By-Laws; Officers and
Directors.
(a) Unless otherwise determined by Parent prior to the Effective
Time, at the Effective Time the Articles of Incorporation of Merger Sub, as
in effect immediately prior to the Effective Time, shall be the Restated
Articles of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Restated Articles of Incorporation.
(b) Unless otherwise determined by Parent prior to the Effective
Time, the By-Laws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the Restated By-Laws of the Surviving Corporation
until thereafter amended as provided by law, the Restated Articles of
Incorporation of the Surviving Corporation and such Restated By-Laws.
(c) Unless otherwise determined by Parent prior to the Effective
Time, the officers of Merger Sub in office at the Effective Time shall be
and constitute the officers of the Surviving Corporation, each holding the
same office in the Surviving Corporation as he or she held in Merger Sub
for the terms elected and/or until their respective successors shall be
elected or appointed and qualified.
(d) Unless otherwise determined by Parent prior to the Effective
Time, the directors of Merger Sub in office at the Effective Time shall be
and constitute the directors of the Surviving Corporation, each holding the
same directorship in the Surviving Corporation as he or she held in Merger
Sub for the terms elected and/or until their respective successors shall be
elected or appointed and qualified.
ARTICLE II.
TREATMENT OF SHARES
Section 2.1. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, the
Company, Merger Sub or the holder of any of the following securities:
(a) Each share (collectively, the "Shares") of common stock, no
par value, of the Company ("Company Common Stock"), together with the
associated purchase rights ("Company Rights") under the Company Rights
Agreement (as defined in Section 4.18), issued and outstanding immediately
prior to the Effective Time (other than any Shares to be canceled pursuant
to Section 2.1(b) and any Dissenting Shares (as defined in Section 2.2(a))
shall be canceled and extinguished and be converted into the right to
receive $35.05 (the "Per Share Amount"), in cash payable to the holder
thereof, without interest, upon surrender of the certificate representing
such Share in accordance with Section 2.3. Throughout this Agreement, the
term "Shares" refers to the shares of Company Common Stock together with
the associated Company Rights.
(b) Each Share held in the treasury of the Company and each
Share owned by Parent, Merger Sub or any direct or indirect Subsidiary (as
defined in Section 4.1) of Parent, Merger Sub or the Company (other than
Shares held in trust accounts, managed accounts, custodial accounts and the
like that are beneficially owned by third parties) immediately prior to the
Effective Time shall be canceled and extinguished, and no payment or other
consideration shall be made with respect thereto.
(c) Each share of common stock, no par value, of Merger Sub
issued and outstanding immediately prior to the Effective Time shall
thereafter represent one validly issued, fully paid and nonassessable share
of common stock, no par value, of the Surviving Corporation. Each share of
Zero Coupon Convertible Preferred Stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall thereafter
represent one validly issued, fully paid and nonassessable share of Zero
Coupon Convertible Preferred Stock of the Surviving Corporation.
Section 2.2. Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, any Shares held by a holder who has demanded and perfected his
demand for appraisal of his Shares in accordance with Section 1302 of the
Iowa Act and as of the Effective Time has neither effectively withdrawn nor
lost his right to such appraisal ("Dissenting Shares"), shall not be
converted into or represent a right to receive cash pursuant to Section
2.1, but the holder thereof shall be entitled to only such rights in
respect thereof as are granted by Section 1302 of the Iowa Act.
(b) Notwithstanding the provisions of subsection (a) of this
Section 2.2, if any holder of Shares who demands appraisal of his Shares
under the Iowa Act shall effectively withdraw or lose (through failure to
perfect or otherwise) his right to appraisal, then as of the Effective Time
or the occurrence of such event, whichever later occurs, such holder's
Shares shall automatically be converted into and represent only the right
to receive cash as provided in Section 2.1(a), without interest thereon,
upon surrender of the certificate or certificates representing such Shares
in accordance with Section 2.3.
(c) The Company shall give Parent (i) prompt notice of any
written demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands, and any other instruments served pursuant to
the Iowa Act received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under
the Iowa Act. The Company shall not voluntarily make any payment with
respect to any demands for appraisal and shall not, except with the prior
written consent of Parent, settle or offer to settle any such demands.
Section 2.3. Surrender of Shares; Stock Transfer Books.
(a) Prior to the Effective Time, the Company shall designate a
bank or trust company to act as agent for the holders of Shares (the
"Exchange Agent") to receive the funds necessary to make the payments
contemplated by Section 2.1. At the Effective Time, Parent or Merger Sub
shall deposit, or cause to be deposited (including from available cash
balances at the Company), in trust with the Exchange Agent for the benefit
of holders of Shares, the aggregate consideration to which such holders
shall be entitled at the Effective Time pursuant to Section 2.1.
(b) Each holder of a certificate or certificates representing
any Shares canceled upon the Merger pursuant to Section 2.1(a) may
thereafter surrender such certificate or certificates to the Exchange
Agent, as agent for such holder, to effect the surrender of such
certificate or certificates on such holder's behalf for a period ending one
year after the Effective Time. Parent and Merger Sub agree that as
promptly as practicable after the Effective Time the Surviving Corporation
shall cause the distribution to holders of record of Shares as of the
Effective Time of appropriate materials to facilitate such surrender. Upon
the surrender of certificates representing the Shares, the Surviving
Corporation shall cause the Exchange Agent to pay the holder of such
certificates in exchange therefor cash in an amount equal to the Per Share
Amount multiplied by the number of Shares represented by such certificate.
Until so surrendered, each such certificate (other than certificates
representing Dissenting Shares and certificates representing Shares
canceled pursuant to Section 2.1(b)) shall represent solely the right to
receive the aggregate Per Share Amount relating thereto.
(c) If payment of cash in respect of canceled Shares is to be
made to a Person other than the Person in whose name a surrendered
certificate or instrument is registered, it shall be a condition to such
payment that the certificate or instrument so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and that the
Person requesting such payment shall have paid any transfer and other taxes
required by reason of such payment in a name other than that of the
registered holder of the certificate or instrument surrendered or shall
have established to the satisfaction of the Surviving Corporation or the
Exchange Agent that such tax either has been paid or is not payable.
(d) At the Effective Time, the stock transfer books of the
Company shall be closed and there shall not be any further registration of
transfer of any shares of capital stock thereafter on the records of the
Company. From and after the Effective Time, the holders of certificates
evidencing ownership of the Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after
the Effective Time, certificates for Shares are presented to the Surviving
Corporation, they shall be canceled and exchanged for cash as provided in
Section 2.1(a) and Sections 2.3(b) and (c). No interest shall accrue or be
paid on any cash payable upon the surrender of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Shares.
(e) Promptly following the date which is one year after the
Effective Time, the Exchange Agent shall deliver to the Surviving
Corporation all cash (including any interest received with respect
thereto), certificates and other documents in its possession relating to
the transactions contemplated hereby, and the Exchange Agent's duties shall
terminate. Thereafter, each holder of a certificate representing Shares
(other than certificates representing Dissenting Shares and certificates
representing Shares canceled pursuant to Section 2.1(b)) shall be entitled
to look only to the Surviving Corporation (subject to applicable abandoned
property, escheat and similar laws) and only as general creditors thereof
with respect to the aggregate Per Share Amount payable upon due surrender
of their certificates, without any interest or dividends thereon.
Notwithstanding the foregoing, neither Parent, the Surviving Corporation
nor the Exchange Agent shall be liable to any holder of a certificate
representing Shares for the Per Share Amount delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(f) The Per Share Amount paid in the Merger shall be net to the
holder of Shares in cash, subject to reduction only for any applicable
federal back-up withholding or, as set forth in Section 2.3(c), stock
transfer taxes payable by such holder.
Section 2.4. Options Under Company Stock Plans.
(a) Except as provided in Section 2.4(b), the Company shall take
all actions necessary to provide that, immediately prior to the Effective
Time, (x) each outstanding option to acquire shares of Company Common Stock
(the "Company Options") granted under any of the Company Stock Plans (as
defined in Section 4.3), whether or not then exercisable or vested, shall
become fully exercisable and vested, (y) each Company Option which is then
outstanding shall be canceled and (z) in consideration of such
cancellation, and except to the extent that Parent and the holder of any
such Company Option otherwise agree in writing, the Company (or, at
Parent's option, Parent or the Surviving Corporation) shall pay in cash to
such holders of Company Options an amount in respect thereof equal to the
product of (A) the excess, if any, for each Company Option, of the Per
Share Amount over the per share exercise price thereof and (B) the number
of shares of Company Common Stock subject thereto (such payment to be net
of applicable withholding taxes); provided that the foregoing shall not
require any action which violates the Company Stock Plans.
(b) Certain Company Options held by certain members or former
members of Company management, as Parent shall notify the Company in
writing prior to the Effective Time, shall become fully exercisable and
vested immediately prior to the Effective Time and shall thereafter remain
exercisable in accordance with their terms and any other terms which are
agreed to in writing between Parent and such holders.
(c) Except as provided in Section 2.4(b) or as otherwise agreed
to in writing by the parties to this Agreement, the Company shall use all
reasonable efforts to ensure that following the Effective Time no holder of
Company Options or any participant in the Company Stock Plans or any other
such plans, programs or arrangements shall have any right thereunder to
acquire any equity securities (or any interests therein) of the Company,
the Surviving Corporation or any Subsidiary thereof.
ARTICLE III.
THE CLOSING
Section 3.1. Closing. The closing of the Merger (the "Closing")
shall take place at the offices of Willkie Farr & Gallagher, 787 Seventh
Avenue, New York, New York, 10019 at 10:00 A.M., New York time, on the
second business day immediately following the date on which the last of the
conditions set forth in Article VIII hereof is fulfilled or waived, or at
such other time, date and place as Parent and the Company shall mutually
agree (the "Closing Date").
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub as
follows:
Section 4.1. Organization and Qualification. The Company and each
of the Company Subsidiaries and, to the knowledge of the Company, each of
the Company Joint Ventures is a corporation or other entity duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization, has all requisite power and authority and
has been duly authorized by all necessary approvals and orders to own,
lease and operate its assets and properties and to carry on its business as
it is now being conducted and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its assets and properties makes such qualification
necessary other than in such jurisdictions where the failure to so qualify
and be in good standing, when taken together with all other such failures,
would not have a material adverse effect on the business, operations,
properties, assets, financial condition, Company Prospects (as defined
below) or the results of operations of the Company and the Company
Subsidiaries taken as a whole or on the consummation of the transactions
contemplated by this Agreement (to the extent such adverse effect does not
arise from (i) general economic conditions or (ii) the securities markets
generally) (any such material adverse effect, a "Company Material Adverse
Effect"). The term "Subsidiary" of a Person shall mean any corporation or
other entity (including partnerships and other business associations and
joint ventures) in which such Person directly or indirectly owns at least a
majority of the voting power represented by the outstanding capital stock
or other voting securities or interests having voting power under ordinary
circumstances to elect a majority of the directors or similar members of
the governing body, or otherwise to direct the management and policies, of
such corporation or entity, and the term "Company Subsidiary" shall mean a
Subsidiary of the Company. The term "Joint Venture" of a Person shall mean
any corporation or other entity (including partnerships and other business
associations and joint ventures) in which such Person directly or
indirectly owns an equity interest that is less than a majority of any
class of the outstanding voting securities or equity of any such entity,
other than equity interests in entities in which such Person does not
control the operations and does not appoint at least 50% of the board of
directors (or comparable governing body), and the term "Company Joint
Venture" shall mean a Joint Venture of the Company. The term "Company
Prospects" shall mean the prospects of the Company and the Company
Subsidiaries, taken as a whole, but only as they may be affected by
statutory or regulatory changes (whether relating to utility, environmental
or other statutory or regulatory matters) or by expropriation events.
Section 4.2. Subsidiaries. Section 4.2 of the Company Disclosure
Schedule delivered by the Company to Parent prior to the execution of this
Agreement (the "Company Disclosure Schedule") sets forth a list of all the
Company Subsidiaries and the Company Joint Ventures, including the name of
each such entity, a brief description of the principal line or lines of
business conducted by each such entity and the interest of the Company and
the Company Subsidiaries therein. Each of the Company and MidAmerican
Funding, LLC ("MidAmerican Funding") is a "public utility holding company"
(as defined in the Public Utility Holding Company Act of 1935, as amended
(the "1935 Act")) exempt from all provisions (other than Section 9(a)(2))
of the 1935 Act, pursuant to Section 3(a)(1) in accordance with Rule 2 of
the 1935 Act, and MidAmerican Energy Company ("MidAmerican Utility") is a
"public utility company" within the meaning of Section 2(a)(5) of the 1935
Act. With the exception of MidAmerican Utility and MidAmerican Funding, no
Company Subsidiary or Company Joint Venture is a "holding company" or a
"public utility company" within the meaning of Sections 2(a)(7) and 2(a)(5)
of the 1935 Act, respectively, nor, except with respect to their
relationship with the Company and MidAmerican Funding, are any of such
entities an "affiliate" or a "subsidiary company" of a holding company
within the meaning of Sections 2(a)(11) and 2(a)(8) of the 1935 Act,
respectively. Except as set forth in Section 4.2 of the Company Disclosure
Schedule, (i) all of the issued and outstanding shares of capital stock of
each Company Subsidiary are validly issued, fully paid, nonassessable and
free of preemptive rights and are owned, directly or indirectly, by the
Company, free and clear of any liens, claims, encumbrances, security
interests, charges and options of any nature whatsoever, and (ii) there are
no outstanding subscriptions, options, calls, contracts, voting trusts,
proxies or other pledges, security interests, encumbrances, commitments,
understandings, restrictions, arrangements, rights or warrants, including
any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating the Company or any Company
Subsidiary to issue, deliver or sell, pledge, grant a security interest or
encumber, or cause to be issued, delivered or sold, pledged or encumbered
or a security interest to be granted on, shares of capital stock of any
Company Subsidiary or obligating the Company or any Company Subsidiary to
grant, extend or enter into any such agreement or commitment.
Section 4.3. Capitalization. The authorized capital stock of the
Company consists of 180,000,000 shares of Company Common Stock and
2,000,000 shares of preferred stock, no par value, none of which preferred
stock is outstanding. As of the close of business on October 22, 1999,
(i) 59,877,313 shares of Company Common Stock are outstanding, (ii) not
more than 7,156,363 shares of Company Common Stock are reserved for
issuance pursuant to the Company's existing stock option agreements and
plans and its 1994 Employee Stock Purchase Plan and 401(k) Savings Plan
(such agreements and plans, collectively, the "Company Stock Plans"),
(iii) 23,102,187 shares of Company Common Stock are held by the Company in
its treasury or by its wholly owned Subsidiaries, and (iv) except as set
forth in Section 4.3 of the Company Disclosure Schedule, no bonds,
debentures, notes or other indebtedness having the right to vote (or
convertible into securities having the right to vote) on any matters on
which shareholders may vote ("Voting Debt") is issued or outstanding. All
of the issued and outstanding shares of Company Common Stock are validly
issued, fully paid, nonassessable and free of preemptive rights. As of the
date of this Agreement, except as set forth in Section 4.3 of the Company
Disclosure Schedule or as may be provided by the Company Stock Plans, there
are no outstanding subscriptions, options, calls, contracts, voting trusts,
proxies or other pledges, security interests, encumbrances, commitments,
understandings, restrictions, arrangements, rights or warrants, including
any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating the Company to issue, deliver or
sell, pledge, grant a security interest or encumber, or cause to be issued,
delivered or sold, pledged or encumbered or a security interest to be
granted on, shares of capital stock or any Voting Debt of the Company or
obligating the Company to grant, extend or enter into any such agreement or
commitment.
Section 4.4. Authority; Non-Contravention; Statutory Approvals;
Compliance.
(a) Authority. The Company has all requisite power and
authority to enter into this Agreement and, subject to the receipt of the
Company Shareholders' Approval (as defined in Section 4.13) and the Company
Required Statutory Approvals (as defined in Section 4.4(c)), to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of the Company, subject to obtaining the Company
Shareholders' Approval. This Agreement has been duly and validly executed
and delivered by the Company, and, assuming the due authorization,
execution and delivery hereof by the other signatories hereto, this
Agreement constitutes the valid and binding obligation of the Company
enforceable against it in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general principles of equity.
(b) Non-Contravention. The execution and delivery of this
Agreement by the Company do not, and the consummation of the transactions
contemplated hereby will not, in any respect, violate, conflict with or
result in a breach of any provision of, or constitute a default (with or
without notice or lapse of time or both) under, or result in the
termination or modification of, or accelerate the performance required by,
or result in a right of termination, cancellation or acceleration of any
obligation or the loss of a benefit under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the agreements,
properties or assets of the Company or any of the Company Subsidiaries or
the Company Joint Ventures (any such violation, conflict, breach, default,
right of termination, modification, cancellation or acceleration, loss or
creation, is referred to herein as a "Violation" with respect to the
Company, and such term when used in Article V shall have a correlative
meaning with respect to Parent and Merger Sub) pursuant to any provisions
of (i) the articles of incorporation, by-laws or similar governing
documents of the Company or any of the Company Subsidiaries or the Company
Joint Ventures, (ii) subject to obtaining the Company Required Statutory
Approvals and the receipt of the Company Shareholders' Approval, any
statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any court, federal, state, local or
foreign governmental or regulatory body (including a stock exchange or
other self-regulatory body) or authority (each, a "Governmental Authority")
applicable to the Company or any of the Company Subsidiaries or the Company
Joint Ventures or any of their respective properties or assets or (iii)
subject to obtaining the third-party consents set forth in Section 4.4(b)
of the Company Disclosure Schedule (the "Company Required Consents"), any
note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of
any kind to which the Company or any of the Company Subsidiaries or the
Company Joint Ventures is a party or by which it or any of its properties
or assets may be bound or affected, excluding from the foregoing clauses
(ii) and (iii) such Violations which would not, in the aggregate, have a
Company Material Adverse Effect.
(c) Statutory Approvals. Except as set forth in Section 4.4(c)
of the Company Disclosure Schedule, no declaration, filing or registration
with, or notice to or authorization, consent or approval of, any
Governmental Authority is necessary for the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby (the "Company Required Statutory
Approvals," it being understood that references in this Agreement to
"obtaining" such Company Required Statutory Approvals shall mean making
such declarations, filings or registrations; giving such notices; obtaining
such authorizations, consents or approvals; and having such waiting periods
expire as are necessary to avoid a violation of law).
(d) Compliance. Except as set forth in Section 4.4(d) or 4.11
of the Company Disclosure Schedule or as disclosed in the Company SEC
Reports (as defined in Section 4.5) filed as of the date of this Agreement,
neither the Company nor any of the Company Subsidiaries nor, to the
knowledge of the Company, any Company Joint Venture is in violation of, is,
to the knowledge of the Company, under investigation with respect to any
violation of, or has been given notice or been charged with any violation
of, any law, statute, order, rule, regulation, ordinance or judgment
(including, without limitation, any applicable environmental law, ordinance
or regulation) of any Governmental Authority, except for violations which
individually or in the aggregate do not, and would not reasonably be
expected to, have a Company Material Adverse Effect. Except as set forth
in Section 4.4(d) or 4.11 of the Company Disclosure Schedule, the Company
and the Company Subsidiaries and, to the knowledge of the Company, the
Company Joint Ventures have all permits, licenses, franchises and other
governmental authorizations, consents and approvals necessary to conduct
their businesses as presently conducted which are material to the operation
of the businesses of the Company and the Company Subsidiaries. Except as
set forth in Section 4.4(d) of the Company Disclosure Schedule, the Company
and each of the Company Subsidiaries and, to the knowledge of the Company,
Company Joint Ventures is not in breach or violation of or in default in
the performance or observance of any term or provision of, and no event has
occurred which, with lapse of time or action by a third party, could result
in a default by the Company or any Company Subsidiary or, to the knowledge
of the Company, any Company Joint Venture under (i) its articles of
incorporation, by-laws or other organizational document or (ii) any
contract, commitment, agreement, indenture, mortgage, loan agreement, note,
lease, bond, license, approval or other instrument to which it is a party
or by which the Company or any Company Subsidiary or any Company Joint
Venture is bound or to which any of its property is subject, except in the
case of clause (ii) above, for violations, breaches or defaults which
individually or in the aggregate do not, and would not reasonably be
expected to, have a Company Material Adverse Effect.
Section 4.5. Reports and Financial Statements. The filings required
to be made by the Company and the Company Subsidiaries under the Securities
Act of 1933, as amended (the "Securities Act"), the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), the 1935 Act, the Public Utility
Regulatory Policies Act of 1978 ("PURPA"), the Federal Power Act (the
"Power Act") and applicable state, municipal, local and other laws,
including franchise and public utility laws and regulations, including all
forms, statements, reports, agreements (oral or written) and all documents,
exhibits, amendments and supplements appertaining thereto, have been filed
with the Securities and Exchange Commission (the "SEC"), the Federal Energy
Regulatory Commission (the "FERC"), and the appropriate Iowa, Illinois,
South Dakota, Nebraska or other appropriate Governmental Authorities, as
the case may be, and complied, as of their respective dates, in all
material respects with all applicable requirements of the appropriate
statutes and the rules and regulations thereunder. The Company has made
available to Parent a true and complete copy of each report, schedule,
registration statement and definitive proxy statement and all amendments
thereto filed with the SEC by the Company or any Company Subsidiary (or
their predecessors, including, without limitation, CalEnergy Company, Inc.)
pursuant to the requirements of the Securities Act or Exchange Act since
January 1, 1999 (as such documents have since the time of their filing been
amended, the "Company SEC Reports"). As of their respective dates, the
Company SEC Reports did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading. The audited consolidated financial
statements and unaudited interim financial statements of the Company and
MidAmerican Utility included in the Company SEC Reports (collectively, the
"Company Financial Statements") have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
("GAAP") (except as may be indicated therein or in the notes thereto) and
fairly present the financial position of the Company and MidAmerican
Utility, as the case may be, as of the dates thereof and the results of
their operations and cash flows for the periods then ended, subject, in the
case of the unaudited interim financial statements, to normal, recurring
audit adjustments. True, accurate and complete copies of the articles of
incorporation and by-laws of the Company and MidAmerican Utility, as in
effect on the date of this Agreement, are included (or incorporated by
reference) in the Company SEC Reports.
Section 4.6. Absence of Certain Changes or Events; Absence of
Undisclosed Liabilities.
(a) Absence of Certain Changes or Events. Except as set forth
in Section 4.6(a) of the Company Disclosure Schedule or as disclosed in the
Company SEC Reports filed prior to the date of this Agreement, since
December 31, 1998, the Company and each of the Company Subsidiaries and, to
the knowledge of the Company, each of the Company Joint Ventures, have
conducted their business only in the ordinary course of business consistent
with past practice and there has not been, and no fact or condition exists
which would have, or could reasonably be expected to have, a Company
Material Adverse Effect.
(b) Absence of Undisclosed Liabilities. Neither the Company nor
any Company Subsidiary, nor, to the knowledge of the Company, any Company
Joint Venture, has any liabilities or obligations (whether absolute,
accrued, contingent or otherwise and including, without limitation, margin
loans) of a nature required by GAAP to be reflected in a consolidated
corporate balance sheet, except liabilities, obligations or contingencies
which are accrued or reserved against in the consolidated financial
statements of the Company and MidAmerican Utility or reflected in the notes
thereto for the year ended December 31, 1998, or which were incurred after
December 31, 1998 in the ordinary course of business and would not, in the
aggregate, have a Company Material Adverse Effect.
Section 4.7. Litigation. Except as set forth in Section 4.7 or 4.11
of the Company Disclosure Schedule or as disclosed in the Company SEC
Reports filed prior to the date of this Agreement, (a) there are no claims,
suits, actions or proceedings by any Governmental Authority or any
arbitrator, pending or, to the knowledge of the Company, threatened, nor
are there, to the knowledge of the Company, any investigations or reviews
by any Governmental Authority or any arbitrator pending or threatened
against, relating to or affecting the Company or any of the Company
Subsidiaries or, to the knowledge of the Company, the Company Joint
Ventures, (b) there have not been any significant developments since
December 31, 1998 with respect to such disclosed claims, suits, actions,
proceedings, investigations or reviews and (c) there are no judgments,
decrees, injunctions, rules or orders of any Governmental Authority or any
arbitrator applicable to the Company or any of the Company Subsidiaries or,
to the knowledge of the Company, applicable to any of the Company Joint
Ventures, which, when taken together with any other nondisclosures
described in clauses (a), (b) or (c), could reasonably be expected to have
a Company Material Adverse Effect.
Section 4.8. Proxy Statement. None of the information supplied or
to be supplied by or on behalf of the Company for inclusion or
incorporation by reference in the proxy statement in definitive form
("Proxy Statement") relating to the Company Meeting (as defined in Section
7.4(a)) will, at the date mailed to shareholders of the Company or at the
time of the Company Meeting (giving effect to any documents incorporated by
reference therein), include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading or necessary to correct any statement in any earlier authorized
communication with respect to the solicitation of proxies on behalf of the
Company for the Company Meeting which has become false or misleading.
Notwithstanding the foregoing, the Company does not make any representation
or warranty with respect to any information that has been supplied by
Parent, Merger Sub or their affiliates (other than the Company and the
Company Subsidiaries), accountants, counsel or other authorized
representatives for use in any of the foregoing documents. The Proxy
Statement will comply as to form in all material respects with the
provisions of applicable federal securities law.
Section 4.9. Tax Matters. "Taxes," as used in this Agreement, means
any federal, state, county, local or foreign taxes, charges, fees, levies
or other assessments, including all net income, gross income, sales and
use, ad valorem, transfer, gains, profits, excise, franchise, real and
personal property, gross receipt, capital stock, production, business and
occupation, disability, employment, payroll, license, estimated, stamp,
custom duties, severance or withholding taxes or charges imposed by any
governmental entity, and includes any interest and penalties (civil or
criminal) on or additions to any such taxes and any expenses incurred in
connection with the determination, settlement or litigation of any Tax
liability. "Tax Return," as used in this Agreement, means a report, return
or other information required to be supplied to a governmental entity with
respect to Taxes including, without limitation, where permitted or
required, combined or consolidated returns for any group of entities that
includes the Company or any Company Subsidiary.
(a) Filing of Timely Tax Returns. The Company and each of the
Company Subsidiaries have filed (or there has been filed on their behalf)
all material Tax Returns required to be filed by each of them under
applicable law. All such Tax Returns were and are in all material respects
true, complete and correct and filed on a timely basis.
(b) Payment of Taxes. The Company and each of the Company
Subsidiaries have, within the time and in the manner prescribed by law,
paid (and until the Closing Date will pay within the time and in the manner
prescribed by law) all Taxes that are currently due and payable, except for
those contested in good faith and for which adequate reserves have been
taken.
(c) Tax Reserves. The Company and the Company Subsidiaries have
established (and until the Closing Date will maintain) on their books and
records reserves which adequately reflect its estimate of the amounts
required to pay all Taxes in accordance with GAAP.
(d) Tax Liens. There are no Tax liens upon any material assets
of the Company or any of the Company Subsidiaries except liens for Taxes
not yet due.
(e) Withholding Taxes. The Company and each of the Company
Subsidiaries have complied (and until the Closing Date will comply) in all
material respects with the provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), relating to the payment and withholding of Taxes,
including, without limitation, the withholding and reporting requirements
under Code Sections 1441 through 1464, 3401 through 3406 and 6041 through
6049, as well as similar provisions under any other laws, and have, within
the time and in the manner prescribed by law, withheld from employee wages
and paid over to the proper governmental authorities all amounts required.
(f) Extensions of Time For Filing Tax Returns. Except as set
forth in Section 4.9(f) of the Company Disclosure Schedule, neither the
Company nor any of the Company Subsidiaries has requested any extension of
time within which to file any Tax Return, which Tax Return has not since
been timely filed.
(g) Waivers of Statute of Limitations. Except as set forth in
Section 4.9(g) of the Company Disclosure Schedule, neither the Company nor
any of the Company Subsidiaries has executed any outstanding waivers or
comparable consents regarding the application of the statute of limitations
with respect to any Taxes or Tax Returns.
(h) Expiration of Statute of Limitations. Except as disclosed
in Section 4.9(h) of the Company Disclosure Schedule, the statute of
limitations for the assessment of all Taxes has expired for all applicable
Tax Returns of the Company and the Company Subsidiaries or those Tax
Returns have been examined by the appropriate taxing authorities for all
tax periods ending before the date of this Agreement, and no deficiency for
any Taxes has been proposed, asserted or assessed against The Company or
any of the Company Subsidiaries that has not been resolved and paid in
full.
(i) Audit, Administrative and Court Proceedings. Except as
disclosed in Section 4.9(i) of the Company Disclosure Schedule, no audits
or other administrative proceedings or court proceedings are presently
pending, or, to the knowledge of the Company, threatened, with regard to
any Taxes or Tax Returns of the Company or any of the Company Subsidiaries.
(j) Tax Rulings. Neither The Company nor any of the Company
Subsidiaries has received or requested a Tax Ruling (as defined below) or
entered into a Closing Agreement (as defined below), with any taxing
authority that would have a continuing adverse effect after the Closing
Date. "Tax Ruling," as used in this Agreement, shall mean a written ruling
of a taxing authority relating to Taxes. "Closing Agreement," as used in
this agreement, shall mean a written and legally binding agreement with a
taxing authority relating to Taxes.
(k) Availability of Tax Returns. The Company has made available
to Parent, where requested by Parent, complete and accurate copies of (i)
all federal and state income Tax Returns for open years, and any amendments
thereto, filed by the Company or any of the Company Subsidiaries, (ii) all
audit reports or written proposed adjustments (whether formal or informal)
received from any taxing authority relating to any Tax Return filed by the
Company or any of the Company Subsidiaries and (iii) any Tax Ruling or
request for a Tax Ruling applicable to the Company or any of the Company
Subsidiaries and Closing Agreements entered into by the Company or any of
the Company Subsidiaries.
(l) Tax Sharing Agreements. Except as disclosed in Section
4.9(l) of the Company Disclosure Schedule, neither the Company nor any
Company Subsidiary is a party to any agreement relating to allocating or
sharing of Taxes.
(m) Code Section 341(F). Neither the Company nor any of the
Company Subsidiaries has filed (or will file prior to the Closing) a
consent pursuant to Code Section 341(f) or has agreed to have Code Section
341(f)(2) apply to any disposition of a subsection (f) asset (as that term
is defined in Code Section 341(f)(4)), owned by the Company or any of the
Company Subsidiaries.
(n) Code Section 168. Except as set forth in Section 4.9(n) of
the Company Disclosure Schedule, no property of the Company or any of the
Company Subsidiaries is property that the Company or any Company Subsidiary
or any party to this transaction is or will be required to treat as being
owned by another person pursuant to the provisions of Code Section
168(f)(8) (as in effect prior to its amendment by the Tax Reform Act of
1986) or is "tax-exempt use property" within the meaning of Code Section
168(h).
(o) Code Section 481 Adjustments. Except as set forth in
Section 4.9(o) of the Company Disclosure Schedule, neither the Company nor
any of the Company Subsidiaries is required to include in income for any
tax period ending after the date hereof any adjustment pursuant to Code
Section 481(a) by reason of a voluntary change in accounting method
initiated by the Company or any of the Company Subsidiaries, and, to the
knowledge of the Company, the Internal Revenue Service ("IRS") has not
proposed any such adjustment or change in accounting method.
(p) Consolidated Tax Returns. Except as disclosed in Section
4.9(p) of the Company Disclosure Schedule, neither the Company nor any of
the Company Subsidiaries has ever been a member of an affiliated group of
corporations (within the meaning of Code Section 1504(a)) filing
consolidated returns, other than the affiliated group of which the Company
is the common parent.
(q) 5% Foreign Shareholders. To the Company's knowledge, based
on Schedule 13D and 13G filings with the SEC with respect to the Company,
no foreign person owns, as of the date of this Agreement, 5% or more of the
outstanding shares of Company Common Stock.
Section 4.10. Employee Matters; ERISA.
(a) Benefit Plans. Section 4.10(a) of the Company Disclosure
Schedule contains a true and complete list of each employee benefit plan,
practice, program or arrangement currently sponsored, maintained or
contributed to by the Company or any of the Company Subsidiaries for the
benefit of employees, former employees or directors and their beneficiaries
in respect of services provided to any such entity, including, but not
limited to, any employee benefit plans within the meaning of Section 3(3)
of Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
employee pension benefit plan, program, arrangement or agreement, any
health, medical, welfare, disability, life insurance, bonus, option, stock
appreciation plan, performance stock plan, restricted stock plan, deferred
compensation plan, retiree benefits plan, severance pay and other employee
benefit or fringe benefit plan and any employment, consulting, non-compete,
severance or change in control agreement (collectively, the "Company
Benefit Plans"), together with, for any option, stock appreciation plan,
performance stock plan, restricted stock plan, deferred compensation plan
and supplemental retirement plan, the amounts or benefits granted or
payable under each, as of September 30, 1999 and as of the Effective Time
(assuming no termination of employment as of such times), and exercise
prices regarding Company Options or other securities which represent the
right (contingent or other) to purchase or receive shares of Company Common
Stock or, following the Merger, of Surviving Corporation Common Stock. For
the purposes of this Section 4.10, the term "Company" shall be deemed to
include predecessors thereof.
(b) Contributions. Except as set forth in Section 4.10(b) of
the Company Disclosure Schedule, all material contributions and other
payments required to be made by the Company or any of the Company
Subsidiaries to any Company Benefit Plan (or to any person pursuant to the
terms thereof) have been timely made or the amount of such payment or
contribution obligation has been reflected in the Company Financial
Statements. Except as set forth in Section 4.10(b) of the Company
Disclosure Schedule, (i) the current value of all accrued benefits under
any Company Benefit Plan which is a defined benefit plan did not, as of the
date of the most recent actuarial valuation for such plan, exceed the then
current value of the assets of such plan, based on the actuarial
assumptions set forth in such valuation for calculating the minimum funding
requirements of Code Section 412, which actuarial assumptions and
calculations have been provided to Parent prior to the date of this
Agreement, and (ii) neither the Company nor any Company Subsidiary
contributes or has contributed, during the six-year period immediately
prior to the date of this Agreement, to a multiemployer plan (as defined in
Section 3(37) of ERISA), or has any liability under ERISA Section 4203 or
Section 4205 in respect of any such plan.
(c) Qualification; Compliance. Except as set forth in Section
4.10(c) of the Company Disclosure Schedule, each of the Company Benefit
Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code has been determined by the IRS to be so qualified, and, to the
knowledge of the Company, no circumstances exist that are reasonably
expected by the Company to result in the revocation of any such
determination. The Company and each of the Company Subsidiaries are in
compliance in all material respects with, and each Company Benefit Plan is
and has been operated in all material respects in compliance with the terms
thereof and all applicable laws, rules and regulations governing such plan,
including, without limitation, ERISA and the Code. Each Company Benefit
Plan intended to provide for the deferral of income, the reduction of
salary or other compensation or to afford other income tax benefits is
reasonably designed to comply with the requirements of the applicable
provisions of the Code or other laws, rules and regulations required to
provide such income tax benefits.
(d) Liabilities. With respect to the Company Benefit Plans
individually and in the aggregate, there are no actions, suits, claims
pending or, to the knowledge of the Company, threatened, and, to the
knowledge of the Company, no event has occurred that could reasonably be
expected to subject the Company or any of the Company Subsidiaries to any
liability arising under the Code, ERISA or any other applicable law
(including, without limitation, any liability of any kind whatsoever,
whether direct or indirect, contingent, inchoate or otherwise, to any such
plan or the Pension Benefit Guaranty Corporation (the "PBGC")), or under
any indemnity agreement to which the Company or any of the Company
Subsidiaries is a party, in each such case, which liability, individually
or in the aggregate, could reasonably be expected to have a Company
Material Adverse Effect.
(e) Welfare Plans. Except as set forth in Section 4.10(e) of
the Company Disclosure Schedule, none of the Company Benefit Plans that are
"welfare plans", within the meaning of Section 3(1) of ERISA, provides for
any benefits payable to or on behalf of any employee or director after
termination of employment or service, as the case may be, other than
elective continuation required pursuant to Code Section 4980B or coverage
which expires at the end of the calendar month following such event. Each
such plan that is a "group health plan" (as defined in Code Section
4980B(g)) has been operated in compliance with Code Section 4980B at all
times, except for any non-compliance that could not reasonably be expected
to give rise to a Company Material Adverse Effect.
(f) Documents Made Available. The Company has made available to
Parent a true and correct copy of each collective bargaining agreement to
which the Company or any of the Company Subsidiaries is a party or under
which the Company or any of the Company Subsidiaries has obligations, and
with respect to each Company Benefit Plan, to the extent applicable, (i)
such plan and summary plan description (including all amendments to each
such document), (ii) the most recent annual report filed with the IRS,
(iii) each related trust agreement, insurance contract, service provider or
investment management agreement (including all amendments to each such
document), (iv) the most recent determination of the IRS with respect to
the qualified status of such plan and (v) the most recent actuarial report
or valuation.
(g) Payments Resulting from Merger and Other Severance Payments.
Except as set forth in Section 4.10(g) of the Company Disclosure Schedule
or as specifically provided for in this Agreement, the announcement or
consummation of any transaction contemplated by this Agreement will not
(either alone or upon the occurrence of any additional or further acts or
events, including, without limitation, termination of employment) result,
as of September 30, 1999 or as of the Effective Time, in any (A) payment
(whether of severance pay or otherwise) becoming due from the Company or
any of the Company Subsidiaries to any officer, employee, former employee
or director thereof or to the trustee under any "rabbi trust" or similar
arrangement or (B) benefit being established or becoming accelerated,
vested or payable under any Company Benefit Plan.
(h) Labor Agreements. As of the date hereof, except as set
forth in Section 4.10(h) of the Company Disclosure Schedule, neither the
Company nor any of the Company Subsidiaries is a party to any collective
bargaining agreement or other labor agreement with any union or labor
organization. Except as set forth in Section 4.10(h) of the Company
Disclosure Schedule, to the knowledge of the Company, as of the date
hereof, there is no current union representation question involving
employees of the Company or any of the Company Subsidiaries, nor does the
Company know of any activity or proceeding of any labor organization (or
representative thereof) or employee group to organize any such employees.
Except as set forth in Section 4.10(h) of the Company Disclosure Schedule,
(i) there is no unfair labor practice, employment discrimination or other
complaint against the Company or any of the Company Subsidiaries pending
or, to the knowledge of the Company, threatened, which has or could
reasonably be expected to have a Company Material Adverse Effect, (ii)
there is no strike, dispute, slowdown, work stoppage or lockout pending,
or, to the knowledge of the Company, threatened, against or involving the
Company or any of the Company Subsidiaries which has or could reasonably be
expected to have, a Company Material Adverse Effect and (iii) there is no
proceeding, claim, suit, action or governmental investigation pending or,
to the knowledge of the Company, threatened, in respect of which any
director, officer, employee or agent of the Company or any of the Company
Subsidiaries is or may be entitled to claim indemnification from the
Company pursuant to their respective articles of incorporation or by-laws
or as provided in the Indemnification Agreements listed in Section 4.10(h)
of the Company Disclosure Schedule. Except as set forth in Section 4.10(h)
of the Company Disclosure Schedule, the Company and the Company
Subsidiaries have complied in all material respects with all laws relating
to the employment of labor, including without limitation any provisions
thereof relating to wages, hours, collective bargaining and the payment of
social security and similar taxes, and no person has, to the knowledge of
the Company, asserted that the Company or any of the Company Subsidiaries
is liable in any material amount for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing.
(i) Parachute Payments. Section 4.10(i) of the Company
Disclosure Schedule sets forth (1) the name of each officer of the Company
and the President of each of MidAmerican Utility and the Company's U.K.
utility Subsidiary who, in connection with the transactions contemplated
with this Agreement, will receive, or will or may become entitled to
receive in the future or upon termination of such person's employment, any
payments (including without limitation accelerated vesting of Company
Options or other equity-based awards) which could reasonably be expected to
constitute "excess parachute payments" with respect to such person within
the meaning of Section 280G of the Code ("Excess Parachute Payments"), and
(2) with respect to each such person, the maximum amount of Excess
Parachute Payments which could reasonably be expected to be so received
(determined in accordance with proposed regulations of the IRS promulgated
under Section 280G of the Code).
(j) Section 162(m). Except as set forth in Section 4.10(j) of
the Company Disclosure Schedule, no payments to any executive officer of
the Company or any Company Subsidiaries will fail to be deductible for
Federal income tax purposes by reason of the deduction limit imposed under
Section 162(m) of the Code. Section 4.10(j) of the Company Disclosure
Schedule sets forth the name of each executive officer who will receive
compensation which may not be fully deductible by reason of the application
of Section 162(m), and a reasonable estimate of the amount of such
potentially nondeductible compensation.
(k) Changes in Compensation, Benefits Since September 30, 1999.
Except as specifically described in Section 4.10(k) of the Company
Disclosure Schedule, since September 30, 1999, the Company has not, nor has
any of the Company Subsidiaries, (i) entered into, adopted or amended or
increased the amount or accelerated the payment or vesting of any benefit
or amount payable under, any employee benefit plan or other contract,
agreement, commitment, arrangement, plan, trust, fund or policy maintained
by, contributed to or entered into by the Company or any of the Company
Subsidiaries (including, without limitation, the Company Benefit Plans set
forth in Section 4.10(a) of the Company Disclosure Schedule, as in effect
on September 30, 1999) or increased, or entered into any contract,
agreement, commitment or arrangement to increase in any manner, the
compensation or fringe benefits, or otherwise to extend, expand or enhance
the engagement, employment or any related rights, of any director, officer
or other employee of the Company or any of the Company Subsidiaries, except
pursuant to binding legal commitments existing on September 30, 1999 and
specifically identified in Section 4.10(a) of the Company Disclosure
Schedule and except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, did not result in a
material increase in benefits or compensation expense to the Company or any
of the Company Subsidiaries; (ii) entered into or amended any employment,
severance, pension, deferred compensation or special pay arrangement with
respect to the termination of employment or other similar contract,
agreement or arrangement with (A) any director or officer or (B) other
employee other than in the ordinary course of business consistent with past
practice; or (iii) deposited into any trust (including any "rabbi trust")
amounts in respect of any employee benefit obligations or obligations to
directors other than transfers into trusts (other than a rabbi or other
trust with respect to any non-qualified deferred compensation) in
accordance with past practice or pursuant to binding legal agreements
existing on September 30, 1999.
Section 4.11. Environmental Protection.
(a) Definitions. As used in this Agreement:
(i) "Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters,
directives, claims, liens, investigations, proceedings or notices of
noncompliance or violation (written or oral) by any person or entity
(including any Governmental Authority) alleging potential liability
(including, without limitation, potential responsibility for or
liability for enforcement, investigatory costs, cleanup costs, spent
fuel or waste disposal costs, decommissioning costs, governmental
response costs, removal costs, remediation costs, natural resources
damages, property damages, personal injuries or penalties) arising out
of, based on or resulting from (A) the presence, Release or threatened
Release into the environment of any Hazardous Materials at any
location in which the Company or any of the Company Subsidiaries has
an economic or ownership interest, whether or not owned, operated,
leased or managed by the Company or any of the Company Subsidiaries or
Company Joint; or (B) circumstances forming the basis of any violation
or alleged violation of any Environmental Law or (C) any and all
claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief
resulting from the presence or Release of any Hazardous Materials.
(ii) "Environmental Laws" means all applicable federal,
state and local laws, rules, regulations, ordinances, orders,
directives and any binding judicial or administrative interpretation
thereof, and regulatory common law and equitable doctrines relating to
pollution, the environment (including, without limitation, indoor or
ambient air, surface water, groundwater, land surface or subsurface
strata) or protection of human health or safety as it relates to the
environment including, without limitation, those relating to Releases
or threatened Releases of Hazardous Materials, or otherwise relating
to the manufacture, generation, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials.
(iii) "Hazardous Materials" means (A) any petroleum or
petroleum products, radioactive materials, asbestos in any form that
is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid
containing polychlorinated biphenyls; (B) any chemicals, materials or
substances which are now defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants" or words of similar import; under any
Environmental Law and (C) any other chemical, material, substance or
waste, exposure to which is now prohibited, limited or regulated under
any Environmental Law in a jurisdiction in which the Company or any of
the Company Subsidiaries or Company Joint Ventures operates.
(iv) "Release" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or
migration into the atmosphere, soil, surface water, groundwater or
property.
(b) Compliance. Except as set forth in Section 4.11(b) of the
Company Disclosure Schedule, the Company and each of the Company
Subsidiaries and, to the knowledge of the Company, the Company Joint
Ventures are in compliance with all applicable Environmental Laws except
where the failure to so comply would not have a Company Material Adverse
Effect, and neither the Company nor any of the Company Subsidiaries has
received any communication (written or oral), from any person or
Governmental Authority that alleges that the Company or any of the Company
Subsidiaries or the Company Joint Ventures is not in such compliance with
applicable Environmental Laws. To the knowledge of the Company, compliance
with all applicable Environmental Laws will not require the Company or any
Company Subsidiary or, to the knowledge of the Company, any Company Joint
Venture to incur costs that will be reasonably likely to result in a
Company Material Adverse Effect, including but not limited to the costs of
the Company and Company Subsidiary and Company Joint Venture pollution
control equipment required or reasonably contemplated to be required in the
future.
(c) Environmental Permits. Except as set forth in Section
4.11(c) of the Company Disclosure Schedule, the Company and each of the
Company Subsidiaries and, to the knowledge of the Company, the Company
Joint Ventures, have obtained or has applied for all permits, registrations
and governmental authorizations required under any Environmental Law
(collectively, the "Environmental Permits") necessary for the construction
of its facilities or the conduct of its operations except where the failure
to so obtain would not have a Company Material Adverse Effect, and all such
Environmental Permits are in good standing or, where applicable, a renewal
application has been timely filed and is pending agency approval, and the
Company and the Company Subsidiaries and, to the knowledge of the Company,
the Company Joint Ventures are in compliance with all terms and conditions
of all Environmental Permits necessary for the construction of its
facilities or the conduct of its operations, except where the failure to so
comply, in the aggregate, would not have a Company Material Adverse Effect.
(d) Environmental Claims. Except as set forth in Section
4.11(d) of the Company Disclosure Schedule, there is no Environmental Claim
pending (or, to the knowledge of the Company, threatened) (A) against the
Company or any of the Company Subsidiaries or, to the knowledge of the
Company, any of the Company Joint Ventures, (B) to the knowledge of the
Company, against any person or entity whose liability for any Environmental
Claim the Company or any of the Company Subsidiaries or, to the knowledge
of the Company, any of the Company Joint Ventures has or may have retained
or assumed either contractually or by operation of law, or (C) against any
real or personal property or operations which the Company or any of the
Company Subsidiaries or, to the knowledge of the Company, any of the
Company Joint Ventures owns, leases or manages, in whole or in part, which
would reasonably be expected to have, in the aggregate, a Company Material
Adverse Effect.
(e) Releases. Except as set forth in Section 4.11(e) of the
Company Disclosure Schedule, the Company has no knowledge of any Releases
of any Hazardous Material that would be reasonably likely to form the basis
of any Environmental Claim against the Company or any of the Company
Subsidiaries or the Company Joint Ventures, or against any person or entity
whose liability for any Environmental Claim the Company or any of the
Company Subsidiaries or the Company Joint Ventures has or may have retained
or assumed either contractually or by operation of law except for any
Environmental Claim which would not have, in the aggregate, a Company
Material Adverse Effect.
(f) Predecessors. Except as set forth in Section 4.11(f) of the
Company Disclosure Schedule, the Company has no knowledge, with respect to
any predecessor of the Company or any of the Company Subsidiaries or the
Company Joint Ventures, of any Environmental Claim pending or threatened,
or of any Release of Hazardous Materials that would be reasonably likely to
form the basis of any Environmental Claim, which, if determined adversely
could reasonably be expected to require payments of $20 million or more or
which could reasonably be expected to have a Company Material Adverse
Effect.
(g) Disclosure. The Company has disclosed in writing to Parent
all material facts which the Company reasonably believes form the basis of
an Environmental Claim which could have a Company Material Adverse Effect
arising from (i) the cost of the Company pollution control equipment
(including, without limitation, upgrades and other modifications to
existing equipment) currently required or reasonably contemplated to be
required in the future, (ii) current remediation costs or costs to the
Company or any of the Company Subsidiaries for remediation reasonably
contemplated to be required in the future or (iii) any other environmental
matter affecting the Company or any of the Company Subsidiaries.
(h) Cost Estimates. To the Company's knowledge, no
environmental matter set forth in the Company SEC Reports or the Company
Disclosure Schedule could reasonably be expected to exceed the cost
estimates provided in the Company SEC Reports by an amount that
individually or in the aggregate could reasonably be expected to have a
Company Material Adverse Effect.
Section 4.12. Regulation as a Utility. MidAmerican Utility is
regulated as a public utility by the FERC and in the States of Illinois,
Iowa, Nebraska and South Dakota and in no other state. Except as set forth
in the preceding sentence or Section 4.12 of the Company Disclosure
Schedule, neither the Company nor any "subsidiary company" or "affiliate"
(as each such term is defined in the 1935 Act) of the Company is subject to
regulation as a public utility or public service company (or similar
designation) by the FERC or any municipality, locality, state in the United
States or any foreign country.
Section 4.13. Vote Required. The approval of the Merger by the
affirmative vote of a majority of the votes entitled to be cast by holders
of Company Common Stock (the "Company Shareholders' Approval") is the only
vote of the holders of any class or series of the securities of the Company
or any of the Company Subsidiaries required to approve this Agreement, the
Merger and the other transactions contemplated hereby.
Section 4.14. Insurance. Except as set forth in Section 4.14 of the
Company Disclosure Schedule, the Company and each of the Company
Subsidiaries is, and has been continuously since January 1, 1998, insured
with financially responsible insurers in such amounts and against such
risks and losses as are customary in all material respects for companies
conducting the business as conducted by the Company and the Company
Subsidiaries during such time period. Neither the Company nor any of the
Company Subsidiaries has received any notice of cancellation or termination
with respect to any material insurance policy of the Company or any of the
Company Subsidiaries. The insurance policies of the Company and each of
the Company Subsidiaries are valid and enforceable policies in all material
respects.
Section 4.15. Opinions of Financial Advisers. The Company has
obtained the opinions of Warburg Dillon Read LLC ("Dillon Read") and Lehman
Brothers Inc. ("Lehman"), each dated as of the date of this Agreement, to
the effect that, as of the date hereof, the Per Share Amount to be paid to
holders of Company Common Stock (other than the Investors) pursuant to this
Agreement is fair from a financial point of view to such holders. True and
correct copies of such opinions have been provided by the Company to
Parent.
Section 4.16. Brokers. No broker, finder or investment banker (other
than Dillon Read and Lehman) is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger based upon
arrangements made by or on behalf of the Company. The Company has
heretofore furnished to Parent a complete and correct copy of all
agreements between the Company and each of Dillon Read and Lehman, pursuant
to which each such firm would be entitled to any payment relating to the
Merger. The fees payable under such agreements and any other brokerage,
finder's or other fee or commission payable in connection with the Merger
based upon arrangements made by or on behalf of the Company do not exceed
$11 million in the aggregate.
Section 4.17. Non-Applicability of Certain Provisions of Iowa Act.
None of the business combination provisions of Section 1110 of the Iowa Act
or any similar provisions of the Iowa Act, the articles of incorporation or
by-laws of the Company are applicable to the transactions contemplated by
this Agreement because such provisions do not apply by their terms or
because any required approvals of the Board of Directors of the Company
have been obtained.
Section 4.18. Company Rights Agreement. Prior to the date of this
Agreement, the Company has delivered to Parent and its counsel a true and
complete copy of the Amended and Restated Rights Agreement, dated as of
September 14, 1999, between ChaseMellon Shareholder Services, L.L.C., as
Rights Agent, and the Company (the "Company Rights Agreement") in effect as
of the date hereof, and has authorized all necessary action (and promptly
after the date of this Agreement and prior to the Closing Date, will have
taken all necessary action), including amending the Company Rights Plan,
such that the consummation of the transactions contemplated by this
Agreement will not result in the separation of the Company Rights from the
Shares, the Company Rights becoming non-redeemable, the Rights associated
with Shares beneficially owned by the Investors (or their affiliates or
associates) becoming void or voidable, or the triggering of any right or
entitlement of shareholders of the Company under the Company Rights
Agreement or any similar agreement to which the Company or any of its
affiliates is a party.
Section 4.19. Year 2000 Compliance. The Company and the Company
Subsidiaries have put into effect reasonable and customary practices and
programs to be Year 2000 Compliant (as defined below)) designed to enable
all material software, hardware and equipment (including microprocessors)
that are owned or utilized by the Company or any of the Company
Subsidiaries in the operations of its or their respective business to be
capable, by December 31, 1999, of accounting for all calculations using a
century and date sensitive algorithm for the year 2000 and the fact that
the year 2000 is a leap year and to otherwise continue to function without
any material interruption caused by the occurrence of the year 2000 (such
capabilities are herein referred to as being "Year 2000 Compliant").
Section 4.20. Board Recommendation. The Board of Directors of the
Company, at a meeting duly called and held, has by unanimous vote of those
directors present (who constituted all of the directors then in office
other than David L. Sokol, Walter Scott, Jr. and Bernard W. Reznicek, who
did not participate in such deliberations or vote due to their status as,
and/or affiliation with, one of the Investors) (i) determined that this
Agreement, the Merger and the other transaction contemplated hereby are
fair to and in the best interests of the shareholders of the Company, and
(ii) resolved to recommend that the holders of Company Common Stock approve
this Agreement, the Merger and the other transactions contemplated hereby.
Section 4.21. Investment Company and Investment Advisory Matters.
Neither the Company nor any of the Company Subsidiaries is an "investment
company" as defined in the Investment Company Act of 1940, as amended.
Neither the Company nor any of the Company Subsidiaries is an "investment
advisor" as defined in the Investment Advisers Act of 1940, as amended, or
conducts activities of or controls an "investment adviser" as defined
therein, whether or not registered under such Act.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby represent and warrant to the Company as
follows:
Section 5.1. Organization. Parent is a limited liability company
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization. Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation. Parent and Merger Sub were organized solely for the
purposes of consummating the Merger and the other transactions contemplated
by this Agreement and taking action with respect thereto. Except for
obligations or liabilities incurred in connection with the transactions
contemplated by this Agreement or in connection with their organization, at
the Effective Time neither Parent nor Merger Sub will have incurred any
obligations or liabilities or engaged in any business activities of any
kind.
Section 5.2. Authority; Non-Contravention; Statutory Approvals.
(a) Authority. Parent and Merger Sub have all requisite power
and authority to enter into this Agreement and, subject to the Parent
Required Statutory Approvals (as defined in Section 5.2(c)), to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation by Parent and Merger Sub of the transactions
contemplated hereby have been duly authorized by all necessary limited
liability company action on the part of Parent and all necessary corporate
action on the part of Merger Sub. This Agreement has been duly and validly
executed and delivered by Parent and Merger Sub, and, assuming the due
authorization, execution and delivery hereof by the Company, this Agreement
constitutes the valid and binding obligation of each of Parent and Merger
Sub enforceable against them in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general principles of equity.
(b) Non-Contravention. The execution and delivery of this
Agreement by Parent and Merger Sub do not, and the consummation of the
transactions contemplated hereby will not, result in a Violation pursuant
to any provisions of (i) the articles of formation or operating agreement
of Parent or the articles of incorporation or by-laws of Merger Sub, (ii)
subject to obtaining the Parent Required Statutory Approvals, any statute,
law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any Governmental Authority applicable to Parent
or Merger Sub or any of their properties or assets or (iii) any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to
which Parent or Merger Sub is a party or by which it or any of its
properties or assets may be bound or affected, excluding from the foregoing
clauses (ii) and (iii) such Violations which would not, in the aggregate,
have a material adverse effect on the ability of Parent or Merger Sub to
consummate the transactions contemplated by this Agreement (any such
material adverse effect, a "Parent Material Adverse Effect").
(c) Statutory Approvals. Except as described in Section 5.2(c)
of the Parent Disclosure Schedule delivered by Parent to the Company prior
to the execution of this Agreement (the "Parent Disclosure Schedule"), no
declaration, filing or registration with, or notice to or authorization,
consent or approval of, any Governmental Authority is necessary for the
execution and delivery of this Agreement by Parent and Merger Sub or the
consummation by Parent and Merger Sub of the transactions contemplated
hereby (the "Parent Required Statutory Approvals"), it being understood
that references in this Agreement to "obtaining" Parent Required Statutory
Approvals shall mean making such declarations, filings or registrations;
giving such notices; obtaining such authorizations, consents or approvals;
and having such waiting periods expire as are necessary to avoid a
violation of law).
Section 5.3. Proxy Statement. None of the information supplied by
Parent or Merger Sub, or their officers, directors, representatives, agents
or employees, for inclusion in the Proxy Statement, or in any amendments
thereof or supplements thereto, will, on the date the Proxy Statement is
first mailed to shareholders or at the time of the Company Meeting (giving
effect to any documents incorporated by reference therein), contain any
statement which, at such time and in light of the circumstances under which
it will be made, will be false or misleading with respect to any material
fact, or will omit to state any material fact necessary in order to make
the statements therein not false or misleading or necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Company Meeting which has become false or misleading.
Section 5.4. Brokers. No broker, finder or investment banker (other
than Credit Suisse First Boston ("CSFB")) is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger based
upon arrangements made by or on behalf of Parent or Merger Sub. Parent has
heretofore furnished to the Company a complete and correct copy of all
agreements between Parent or Merger Sub and CSFB, pursuant to which such
firm would be entitled to any payment relating to the Merger.
Section 5.5. Financing. Merger Sub has, on or prior to the date
hereof, entered into subscription agreements, dated as of the date of this
Agreement, with each of David L. Sokol, Walter Scott, Jr. and Berkshire
Hathaway Inc. (collectively, the "Subscription Agreements"), pursuant to
which the subscribers thereunder (the "Investors") have agreed, on the
terms and subject to the conditions contained in the Subscription
Agreements, to provide an aggregate of $2.352 billion to Merger Sub in cash
and/or shares of Common Stock or options to purchase shares of Common Stock
(valued for these purposes at the Per Share Amount) in exchange for
securities of Merger Sub. Merger Sub has furnished true and correct copies
of the Subscription Agreements to the Company.
Section 5.6. Sale of the Company. Neither Parent nor Merger Sub nor
any of their affiliates has any agreement, understanding or any present
intention (i) to sell the Company or any material part of the Company
(other than the purchase of securities of Merger Sub by (A) one or more
subsidiaries of Berkshire Hathaway Inc. which are consolidated with
Berkshire Hathaway Inc. for financial accounting purposes, in accordance
with the Subscription Agreement with Berkshire Hathaway Inc. and (B) the
Scott Family Entities (as defined in the Subscription Agreement with Walter
Scott, Jr.), in accordance with the Subscription Agreement with Walter
Scott, Jr.) or (ii) enter into, or cause the Company to enter into, any
extraordinary transaction.
Section 5.7. Share Ownership. Section 5.7 of the Parent Disclosure
Schedule sets forth the number of shares of Company Common Stock
beneficially owned, as of the date of this Agreement, by each of Parent and
Merger Sub and their respective Subsidiaries and affiliates, either
individually or as part of a group for purposes of Rule 13d-3 under the
Exchange Act.
Section 5.8. Regulation Under the 1935 Act. Neither Parent nor
Merger Sub is a "public utility company" or a "holding company" (as each
such term is defined in the 1935 Act), and neither Parent nor Merger Sub is
a "subsidiary company" or "affiliate" (as each such term is defined in the
1935 Act) of a "public utility company" or "holding company," in each case,
without giving effect to the Merger.
Section 5.9. Investor Agreements. Except (i) for the Subscription
Agreements and the other agreements contemplated thereby, (ii) as would not
reasonably be expected to have a Parent Material Adverse Effect and (iii)
except as set forth in Section 5.9 of the Parent Disclosure Schedule, there
are no governance, voting or similar agreements among the Investors
relating to Parent, Merger Sub or the Company.
ARTICLE VI.
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1. Conduct of Business by the Company Pending the Merger.
The Company covenants and agrees, as to itself and each of the Company
Subsidiaries, that after the date of this Agreement and prior to the
Effective Time or earlier termination of this Agreement, except as
expressly contemplated or permitted in this Agreement, or to the extent
Parent shall have otherwise consented in writing, which decision regarding
consent shall be made as soon as reasonably practicable (it being
understood that if a particular activity is permissible as a result of its
being disclosed and, where applicable, approved in writing by Parent under
any one of the Section 6.1 subsections of the Company Disclosure Schedule,
that activity will not be prohibited under any of the subsections of
Section 6.1):
(a) Ordinary Course of Business. The Company shall, and shall
cause the Company Subsidiaries to, carry on their respective businesses in
the usual, regular and ordinary course in substantially the same manner as
heretofore conducted and use their commercially reasonable efforts to
preserve intact their present business organizations and goodwill, preserve
the goodwill and relationships with customers, suppliers and others having
business dealings with them and, subject to prudent management of workforce
needs and ongoing or planned programs relating to downsizing, re-
engineering and similar matters, keep available the services of their
present officers and employees to the end that their goodwill and ongoing
businesses shall not be impaired in any material respect at the Effective
Time. Except as set forth in Section 6.1(a) of the Company Disclosure
Schedule, the Company shall not, nor shall the Company permit any of the
Company Subsidiaries to, (i) enter into a new line of business involving
any material investment of assets or resources or any material exposure to
liability or loss to the Company and the Company Subsidiaries taken as a
whole, or (ii) acquire, or agree to acquire, by merger or consolidation
with, or by purchase or otherwise, a substantial equity interest in or a
substantial portion of the assets of, any business or any corporation,
partnership, association or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets (other than
equipment, fuel, supplies and similar items or for capital expenditures, in
each case, in the ordinary course of business consistent with past
practice); provided, however, that notwithstanding the above, the Company
or any of the Company Subsidiaries may enter into a new line of business or
make such an other acquisition to the extent the investment or other
acquisition, as the case may be (which shall include the amount of equity
invested plus the amount of indebtedness incurred, assumed or otherwise
owed by or with recourse to the Company or any Company Subsidiary (other
than the entity being acquired or in which the investment is made or any
special purpose entity formed in connection with such investment or other
acquisition)), in a new line of business or acquisition, as the case may
be, does not exceed, together with all other such investments and other
acquisitions made from and after the date of this Agreement, $100 million
in the aggregate; and provided, further, that no such investment shall be
made in, and no such other acquisition shall consist of, any common equity
securities of any U.S. gas or electric utility company.
(b) Dividends. The Company shall not, nor shall the Company
permit any of the Company Subsidiaries to, (i) declare or pay any dividends
on or make other distributions in respect of any of their capital stock
other than (A) to the Company or its wholly owned Subsidiaries and (B)
dividends required to be paid on any outstanding preferred stock of the
Company or its Subsidiaries in accordance with the terms of the preferred
stocks identified in Section 6.1(b) of the Company Disclosure Schedule; or
(ii) split, combine, reclassify, redeem or repurchase any of their capital
stock or issue or authorize or propose the issuance of any other securities
in respect of, in lieu of, or in substitution for, shares of their capital
stock.
(c) Issuance of Securities. Except as described in Section
6.1(c) of the Company Disclosure Schedule, the Company shall not, nor shall
the Company permit any of the Company Subsidiaries to, issue, agree to
issue, deliver, sell, award, pledge, dispose of or otherwise encumber or
authorize or propose the issuance, delivery, sale, award, pledge, grant of
a security interest, disposal or other encumbrance of, any shares of their
capital stock of any class or any securities convertible into or
exchangeable for, or any rights, warrants or options to acquire, any such
shares or convertible or exchangeable securities, other than (i) issuances
by a wholly owned Subsidiary of its capital stock to its direct or indirect
parent and (ii) issuances of shares of Company Common Stock after the date
of this Agreement pursuant to Company Options and other Company convertible
securities, in each case existing as of the date hereof and as identified
in Section 4.10(a) of the Company Disclosure Schedule.
(d) Indebtedness. Except as set forth in Section 6.1(d) of the
Company Disclosure Schedule, the Company shall not, nor shall the Company
permit any of the Company Subsidiaries to, incur or guarantee any
indebtedness (including any debt borrowed or guaranteed or otherwise
assumed including, without limitation, the issuance of debt securities or
warrants or rights to acquire debt) or enter into any "keep well" or
indemnity or other agreement to maintain any financial statement condition
of another Person or enter into any arrangement having the economic effect
of any of the foregoing other than (i) indebtedness or guarantees or "keep
well" or other agreements incurred in the ordinary course of business
consistent with past practice (including refinancings, the issuance of
commercial paper or the use of existing or replacement credit facilities or
hedging activities), (ii) arrangements between the Company and wholly owned
Company Subsidiaries or among wholly owned Company Subsidiaries, (iii) in
connection with the refunding or defeasance of existing indebtedness that
becomes due in accordance with its terms before the Effective Time, or (iv)
as may be necessary in connection with investments or acquisitions
permitted by Section 6.1(a).
(e) Compensation, Benefits. Except as may be required by
applicable law, as specifically set forth in Section 6.1(e) of the Company
Disclosure Schedule or as contemplated by this Agreement, the Company shall
not, nor shall the Company permit any of the Company Subsidiaries to, (i)
enter into, adopt or amend or increase the amount or accelerate the payment
or vesting of any benefit or amount payable under, any employee benefit
plan or other contract, agreement, commitment, arrangement, plan, trust,
fund or policy maintained by, contributed to or entered into by the Company
or any of the Company Subsidiaries (including, without limitation, the
Company Benefit Plans set forth in Section 4.10(a) of the Company
Disclosure Schedule, as in effect on September 30, 1999) or increase, or
enter into any contract, agreement, commitment or arrangement to increase
in any manner, the compensation or fringe benefits, or otherwise to extend,
expand or enhance the engagement, employment or any related rights, of any
director, officer or other employee of the Company or any of the Company
Subsidiaries, except pursuant to binding legal commitments existing on
September 30, 1999 and specifically identified in Section 4.10(a) of the
Company Disclosure Schedule and except for normal increases in the ordinary
course of business consistent with past practice that, in the aggregate, do
not result in a material increase in benefits or compensation expense to
the Company or any of the Company Subsidiaries; (ii) enter into or amend
any employment, severance, pension, deferred compensation or special pay
arrangement with respect to the termination of employment or other similar
contract, agreement or arrangement with (A) any director or officer or (B)
other employee other than in the ordinary course of business consistent
with past practice; or (iii) deposit into any trust (including any "rabbi
trust") amounts in respect of any employee benefit obligations or
obligations to directors; provided that transfers into any trust, other
than a rabbi or other trust with respect to any non-qualified deferred
compensation, may be made in accordance with past practice or pursuant to
legally binding agreements in effect on September 30, 1999.
(f) 1935 Act. The Company shall not, nor shall the Company
permit any of the Company Subsidiaries to, except as required or
contemplated by this Agreement, engage in any activities (i) which would
cause a change in its status, or that of the Company Subsidiaries, under
the 1935 Act, including any action or inaction that would cause the prior
approval of the SEC under the 1935 Act to be required for the consummation
of the Merger and the other transactions contemplated hereby, or (ii) that
would impair the ability of the Company, MidAmerican Funding, Parent or the
Surviving Corporation or any Subsidiary of Surviving Corporation to claim
an exemption as of right under Rule 2 of the 1935 Act following the Merger
or (iii) that would subject Parent or any affiliate (within the meaning of
Section 2(a)(11) of the 1935 Act) of Parent or any of the Investor Entities
(as defined in Section 6.2(b)) to regulation as a registered holding
company under such Act following the Merger.
(g) Tax-Exempt Status. The Company shall not, nor shall the
Company permit any Company Subsidiary to, take any action that would likely
jeopardize the qualification of the Company's or any Company Subsidiary's
outstanding revenue bonds which qualify as of the date hereof under Section
142(a) of the Code as "exempt facility bonds" or as tax-exempt industrial
development bonds under Section 103(b)(4) of the Internal Revenue Code of
1954, as amended, prior to the Tax Reform Act of 1986.
Section 6.2. Conduct of Business by Parent and Merger Sub Pending
the Merger. Each of Parent and Merger Sub covenant and agree that after
the date of this Agreement and prior to the Effective Time or earlier
termination of this Agreement, except as expressly contemplated or
permitted in this Agreement, or to the extent the Company shall have
otherwise consented in writing, which decision regarding consent shall be
made as soon as reasonably practicable (it being understood that if a
particular activity is permissible as a result of its being disclosed and,
where applicable, approved in writing by the Company under any one of the
Section 6.2 subsections of the Parent Disclosure Schedule, that activity
will not be prohibited under any of the subsections of Section 6.2):
(a) Limited Business Activities. Except for obligations or
liabilities incurred in connection with the transactions contemplated by
this Agreement or in connection with their organization, neither Parent nor
Merger Sub shall incur any obligations or liabilities or engage in any
business activities of any kind.
(b) 1935 Act. Neither Parent nor Merger Sub shall, except as
required or contemplated by this Agreement, engage in any activities (i)
which would cause a change in its status under the 1935 Act, including any
action or inaction that would cause the prior approval of the SEC under the
1935 Act to be required for the consummation of the Merger and the other
transactions contemplated hereby, (ii) that would impair the ability of the
Company, MidAmerican Funding, Parent or Merger Sub to claim an exemption as
of right under Rule 2 of the 1935 Act following the Merger or (iii) that
would subject Parent or any affiliate (within the meaning of Section
2(a)(11) of the 1935 Act) of Parent to regulation as a registered holding
company under such Act following the Merger; provided that, notwithstanding
anything contained in this Agreement to the contrary, in no event shall
Parent or Merger Sub or any affiliate (within the meaning of Section
2(a)(11) of the 1935 Act) of either such entity or any of Berkshire
Hathaway Inc., any subsidiary of Berkshire Hathaway Inc., any Scott Family
Entity or any entity controlled by either David L. Sokol or Walter Scott,
Jr. (all such persons and entities, collectively, the "Investor Entities")
be required to restructure their capitalization or amend any of their
existing shareholder arrangements in order to permit Parent and Merger Sub
to qualify for an exemption from the requirement to register as a holding
company under such Act following the Merger or in order to ensure that none
of Parent, Merger Sub or Parent's affiliates (within the meaning of Section
2(a)(11) of the 1935 Act) or any Investor Entity will become subject to
regulation as a registered holding company under such Act following the
Merger.
Section 6.3. Additional Covenants by the Company and Parent Pending
the Merger. Each of Parent and the Company covenants and agrees, each as to
itself and each of its Subsidiaries, that after the date of this Agreement
and prior to the Effective Time or earlier termination of this Agreement,
except as expressly contemplated or permitted in this Agreement, or to the
extent the other parties hereto shall otherwise consent in writing, which
decision regarding consent shall be made as soon as reasonably practicable:
(a) Cooperation, Notification. Each party shall (i) confer on a
regular and frequent basis with one or more representatives of the other
party to discuss, subject to applicable law, material operational matters
and the general status of the Company's ongoing operations, (ii) promptly
advise the other party of any change or event which has had, or would
reasonably be expected to result in, a Company Material Adverse Effect or a
Parent Material Adverse Effect, as the case may be, and (iii) pursuant to
Section 7.3, promptly provide the other party with copies of all filings
made by such party or any of its Subsidiaries with any state or federal
court, administrative agency, commission or other Governmental Authority.
In addition, the Company shall promptly notify Parent of any significant
changes in the Company's business, properties, assets, financial condition
or results of operations or in the Company Prospects.
(b) No Breach, Etc. Each of the parties shall not, nor shall it
permit any of its Subsidiaries to, take any action that would or is
reasonably likely to result in a material breach of any provision of this
Agreement or in any of its representations and warranties set forth in this
Agreement being untrue on and as of the Closing Date.
ARTICLE VII.
ADDITIONAL AGREEMENTS
Section 7.1. Access to Information. Upon reasonable notice, the
Company shall, and shall cause the Company Subsidiaries to, afford to the
officers, directors, employees, accountants, counsel, investment bankers,
financial advisors and other representatives of Parent (collectively,
"Representatives") reasonable access, during normal business hours
throughout the period prior to the Effective Time, to all of its
properties, books, contracts, commitments, records and other information
(including, but not limited to, Tax Returns) and, during such period, each
of the parties hereto shall, and shall cause its Subsidiaries to, furnish
promptly to the other party access to each significant report, schedule and
other document filed or received by it or any of its Subsidiaries pursuant
to the requirements of federal or state securities laws or filed with or
sent to the SEC, the FERC, the public utility commission of any State, the
Nuclear Regulatory Commission, the Department of Labor, the Immigration and
Naturalization Service, the Environmental Protection Agency (state, local
and federal), the IRS, the Department of Justice, the Federal Trade
Commission, or any other federal, state or foreign regulatory agency or
commission or other Governmental Authority. In addition, during such
period, the Company shall, and shall cause the Company Subsidiaries to,
furnish promptly to Parent and Merger Sub access to all information
concerning the Company, the Company Subsidiaries, directors, officers and
shareholders, properties, facilities or operations owned, operated or
otherwise controlled by the Company, or if not so owned, operated or
controlled, which properties, facilities or operations that the Company may
nonetheless obtain access to through the exercise of reasonable diligence,
and such other matters as may be reasonably requested by Parent in
connection with any filings, applications or approvals required or
contemplated by this Agreement or for any other reason related to the
transactions contemplated by this Agreement. Parent shall, and shall cause
its Subsidiaries and Representatives (other than its Representatives who
have entered into separate confidentiality agreements with the Company) to,
hold in strict confidence all documents and information concerning the
Company furnished to it in connection with the transactions contemplated by
this Agreement in accordance with the Confidentiality Agreement, dated as
of October 1, 1999, between David L. Sokol and the Company (the
"Confidentiality Agreement").
Section 7.2. Proxy Statement and Schedule 13E-3.
(a) The Company shall prepare, in consultation with Parent, the
Proxy Statement and shall file the Proxy Statement with the SEC as soon as
is reasonably practicable after the date of this Agreement and shall use
all reasonable efforts to respond to comments from the SEC and to cause the
Proxy Statement to be mailed to the Company's shareholders at the earliest
practicable time. The Company will not mail, amend or supplement the Proxy
Statement unless the Proxy Statement or any amendment or supplement thereof
is satisfactory in content to Parent in the exercise of its reasonable
judgment.
(b) As soon as practicable after the date of this Agreement,
Parent and the Company shall file with the SEC, and shall use all
reasonable efforts to cause any of their respective affiliates engaging in
this transaction to file with the SEC, a Rule 13e-3 Transaction Statement
on Schedule 13E-3 (the "Schedule 13E-3 Transaction Statement") with respect
to the Merger. Each of the parties hereto agrees to use all reasonable
efforts to cooperate and to provide each other with such information as any
of such parties may reasonably request in connection with the preparation
of the Proxy Statement and the Schedule 13E-3 Transaction Statement.
(c) Each party hereto agrees promptly to supplement, update and
correct any information provided by it for use in the Proxy Statement and
the Schedule 13E-3 Transaction Statement if and to the extent that such
information is or shall have become incomplete, false or misleading.
Section 7.3. Regulatory Approvals and Other Matters.
(a) HSR Filings. Each party hereto shall file or cause to be
filed with the Federal Trade Commission and the Department of Justice any
notifications required to be filed under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the rules and
regulations promulgated thereunder with respect to the transactions
contemplated hereby. Such parties will use all reasonable efforts to
coordinate such filings and any responses thereto, to make such filings
promptly and to respond promptly to any requests for additional information
made by either of such agencies.
(b) Other Approvals. Each party hereto shall cooperate and use
all reasonable efforts to promptly prepare and file all necessary
documentation, to effect all necessary applications, notices, petitions,
filings and other documents, and to use all reasonable efforts to obtain
all necessary permits, consents, approvals and authorizations of all
Governmental Authorities and all other persons necessary or advisable to
consummate the transactions contemplated hereby, including, without
limitation, the Company Required Statutory Approvals, the Parent Required
Statutory Approvals and the Company Required Consents (and any concurrent
or related rate filings, if any). Parent and the Company agree that they
will consult with each other with respect to the obtaining of all such
necessary or advisable permits, consents, approvals and authorizations of
Governmental Authorities; provided, however, that it is agreed that the
Company shall have primary responsibility for the preparation and filing of
any applications with state public utility commissions for approval of the
Merger. Each of Parent and the Company shall have the right to review and
approve in advance drafts of all such necessary applications, notices,
petitions, filings and other documents made or prepared in connection with
the transactions contemplated by this Agreement, which approval shall not
be unreasonably withheld or delayed. The Company shall promptly notify
Parent of any failure or prospective failure to obtain any such consents
and shall provide copies of all Company Required Consents obtained by the
Company to Parent.
Section 7.4. Shareholder Approval.
(a) Approval of Company Shareholders. The Company shall, as
soon as reasonably practicable after the date of this Agreement, (i) take
all steps necessary to duly call, give notice of, convene and hold a
meeting of its shareholders (the "Company Meeting"), as promptly as
practicable after the date of this Agreement, for the purpose of securing
the Company Shareholders' Approval, (ii) distribute to its shareholders the
Proxy Statement in accordance with applicable federal and state law and
with its articles of incorporation and by-laws, (iii) subject to the
fiduciary duties of its Board of Directors, recommend to its shareholders
the approval of the Merger, this Agreement and the transactions
contemplated hereby and (iv) cooperate and consult with Parent with respect
to each of the foregoing matters.
(b) Meeting Date. The Company shall duly call and give notice
of the Company Meeting, and shall commence distribution of the Proxy
Statement to its shareholders, within five business days after the
clearance of the Proxy Statement by the staff of the SEC (or after the
expiration of the ten calendar day period after filing the preliminary
proxy statement with the SEC if the staff of the SEC has not commented on
or otherwise notified the Company within such ten day period of the staff's
intent to review and comment on the preliminary proxy statement).
Section 7.5. Directors' and Officers' Indemnification.
(a) Indemnification. From and after the Effective Time, the
Surviving Corporation shall, to the fullest extent not prohibited by
applicable law, indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date hereof, or who becomes prior to
the Effective Time, an officer or director of any of the parties hereto
(each an "Indemnified Party" and collectively, the "Indemnified Parties")
against all losses, expenses (including reasonable attorney's fees and
expenses), claims, damages or liabilities or, subject to the proviso of the
next succeeding sentence, amounts paid in settlement, arising out of
actions or omissions occurring at or prior to the Effective Time that, in
whole or in part, (i) are based on or arising out of the fact that such
person is or was a director or officer of such party or (ii) arise out of
or pertain to the transactions contemplated by this Agreement (the
"Indemnified Liabilities"). In the event of any such loss, expense, claim,
damage or liability (whether or not arising prior to the Effective Time),
(i) the Surviving Corporation shall pay the reasonable fees and expenses of
counsel for the Indemnified Parties selected by the Indemnified Parties,
which counsel may also serve as counsel to the Surviving Corporation
(unless there is a conflict between the positions of the Surviving
Corporation and the Indemnified Parties on any significant issue) and which
counsel shall be reasonably satisfactory to the Surviving Corporation
(which consent shall not be unreasonably withheld), promptly after
statements therefor are received and otherwise advance to such Indemnified
Party upon request reimbursement of documented expenses reasonably
incurred, in either case to the extent not prohibited by the Iowa Act, (ii)
the Surviving Corporation will cooperate in the defense of any such matter
and (iii) any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under the
Iowa Act and the articles of incorporation or by-laws of the Company shall
be made by independent counsel mutually acceptable to the Surviving
Corporation and the Indemnified Party (the "Independent Counsel");
provided, however, that the Surviving Corporation shall not be liable for
any settlement effected without its written consent (which consent shall
not be unreasonably withheld). The Indemnified Parties as a group may
retain only one law firm with respect to each related matter except to the
extent there is, in the opinion of the Independent Counsel, under
applicable standards of professional conduct, a conflict on any significant
issue between positions of such Indemnified Party and any other Indemnified
Party or Indemnified Parties.
(b) Insurance. For a period of six years after the Effective
Time, the Surviving Corporation shall cause to be maintained in effect
policies of directors' and officers' liability insurance maintained by the
Company; provided, that the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms that are no less
advantageous with respect to matters occurring prior to the Effective Time
to the extent such liability insurance can be maintained annually at a cost
to the Surviving Corporation not greater than 200 percent of the current
annual premiums for such directors' and officers' liability insurance,
which existing premium costs are disclosed on Schedule 7.5(b) of the
Company Disclosure Schedule; provided, further, that if such insurance
cannot be so maintained or obtained at such cost, the Surviving Corporation
shall maintain or obtain as much of such insurance for the Company as can
be so maintained or obtained at a cost equal to 200 percent of the current
annual premiums of the Company for its directors' and officers' liability
insurance.
(c) Successors. In the event the Surviving Corporation or any
of its successors or assigns (i) consolidates with or merges into any other
person or entity and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person or entity,
then and in either such case, proper provisions shall be made so that the
successors and assigns of the Surviving Corporation shall assume the
obligations set forth in this Section 7.5.
(d) Survival of Indemnification. To the fullest extent not
prohibited by law, from and after the Effective Time, all rights to
indemnification as of the date hereof in favor of the employees, agents,
directors and officers of Parent, the Company and its Subsidiaries with
respect to their activities as such prior to the Effective Time, as
provided in their respective articles of incorporation and by-laws in
effect on the date of this Agreement, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years
from the Effective Time.
Section 7.6. Disclosure Schedules. On or before the date hereof,
(i) Parent has delivered to the Company the Parent Disclosure Schedule,
accompanied by a certificate signed by an officer of Parent stating the
Parent Disclosure Schedule has been delivered pursuant to this Section 7.6
and (ii) the Company has delivered to Parent the Company Disclosure
Schedule, accompanied by a certificate signed by the chief financial
officer of the Company stating the Company Disclosure Schedule has been
delivered pursuant to this Section 7.6. The Parent Disclosure Schedule and
the Company Disclosure Schedule are collectively referred to herein as the
"Disclosure Schedules." The Disclosure Schedules shall be deemed to
constitute an integral part of this Agreement and to modify the respective
representations, warranties, covenants or agreements of the parties hereto
contained herein to the extent that such representations, warranties,
covenants or agreements expressly refer to the Disclosure Schedules.
Anything to the contrary contained herein or in the Disclosure Schedules
notwithstanding, any and all statements, representations, warranties or
disclosures set forth in the Disclosure Schedules delivered on or before
the date hereof shall be deemed to have been made on and as of the date
hereof. From time to time prior to the Closing, the parties shall promptly
supplement or amend the Disclosure Schedules with respect to any matter,
condition or occurrence hereafter arising affecting the representations and
warranties contained herein which, if existing or occurring at the date of
this Agreement, would have been required to be set forth or described in
the Disclosure Schedules pertaining to the parties' representations and
warranties contained herein. No supplement or amendment shall be deemed to
cure any breach of any representation or warranty made in this Agreement or
have any effect for the purpose of determining satisfaction of the
conditions set forth in Section 8.2(b) or 8.3(b).
Section 7.7. Public Announcements. Subject to each party's
disclosure obligations imposed by law or regulation, Parent and the Company
will cooperate with each other in the development and distribution of all
news releases and other public information disclosures with respect to this
Agreement or any of the transactions contemplated hereby and shall not
issue any public announcement or statement with respect hereto or thereto
without the consent of the other party (which consent shall not be
unreasonably withheld and which decision regarding consent shall be made as
soon as reasonably practicable).
Section 7.8. No Solicitations. From and after the date hereof, the
Company will not, and will not authorize or permit any of its
Representatives to, directly or indirectly, (i) solicit, initiate or
encourage (including by way of furnishing information) or take any other
action to facilitate any inquiries or the making of any proposal which
constitutes or may reasonably be expected to lead to an Acquisition
Proposal (as defined below), (ii) enter into any agreement with respect to
any Acquisition Proposal or (iii) in the event of an unsolicited written
Acquisition Proposal, engage in negotiations or discussions with, or
provide any information or data to, any Person (other than to Parent, any
of its affiliates or Representatives and except for information which has
been previously publicly disseminated by the parties) relating to any
Acquisition Proposal; provided, however, that nothing contained in this
Section 7.8 or any other provision hereof shall prohibit the Company or its
Board of Directors from (i) taking and disclosing to its shareholders a
position with respect to a tender or an exchange offer by a third party
pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act or
(ii) making such disclosure to its shareholders as, in good faith judgment
of its Board of Directors, after consultation with outside counsel, is
required under applicable law.
Without limiting the foregoing, it is understood that any violation of
the restrictions set forth in the preceding sentence by an executive
officer of the Company or any investment banker, attorney or other
Representative of the Company, whether or not such person is purporting to
act on behalf of the Company or otherwise, shall be deemed to be a breach
of this Section 7.8 by the Company. Notwithstanding any other provision
hereof, the Company may (i) at any time prior to the time its shareholders
shall have voted to approve this Agreement, engage in discussions or
negotiations with a third party who (without any solicitation, initiation,
encouragement, discussion or negotiation (except as permitted by Section
7.8), directly or indirectly, by or with the Company or its Representatives
after the date hereof) seeks to initiate such discussions or negotiations
and may furnish such third party information concerning the Company and its
business, properties and assets if, and only if, (A)(w) the third party has
first made an Acquisition Proposal that is reasonably expected to be more
favorable to the Company's shareholders than the Merger, taking into
account all legal, regulatory, timing and financial aspects of the Merger
and of the Acquisition Proposal, including the degree of certainty of
financing therefor, (x) the Acquisition Proposal is reasonably capable of
being completed (as determined in good faith by the Company's Board of
Directors after consultation with its financial advisors and outside
counsel), (y) the third party has demonstrated that financing for the
Acquisition Proposal is reasonably likely to be obtained (as determined in
good faith by the Company's Board of Directors after consultation with its
financial advisors) and (z) its Board of Directors shall have concluded in
good faith, after considering applicable provisions of state law and after
consultation with outside counsel, that a failure to do so could reasonably
be expected to constitute a breach by its Board of Directors of its
fiduciary duties to its shareholders under applicable law and (B) prior to
furnishing such information to or entering into discussions or negotiations
with such person or entity, the Company (x) provides prompt notice to
Parent to the effect that it is furnishing information to or entering into
discussions or negotiations with such person or entity and (y) receives
from such person an executed confidentiality agreement substantially
similar to the Confidentiality Agreement, together with its written
acknowledgment and agreement to pay at closing the termination and other
fees set forth in Section 9.3 if such Acquisition Proposal is consummated
or any other Acquisition Proposal is consummated with such party or any of
its affiliates, and (ii) comply with Rule 14e-2 promulgated under the
Exchange Act with regard to a tender or exchange offer. The Company shall
immediately cease and terminate any existing solicitation, initiation,
encouragement, activity, discussion or negotiation with any parties
conducted heretofore by the Company or its Representatives with respect to
the foregoing. The Company shall notify Parent hereto orally and in
writing of any such inquiries, offers or proposals (including, without
limitation, the material terms and conditions of any such proposal and the
identity of the person making it), within 24 hours of the receipt thereof,
shall keep Parent informed of the status and details of any such inquiry,
offer or proposal, and shall give Parent three business days' advance
notice of any agreement (specifying the material terms and conditions
thereof) to be entered into with or any information to be supplied to any
person making such inquiry, offer or proposal.
The term "Acquisition Proposal" shall mean a written proposal or offer
(other than by Parent or Merger Sub) for a tender or exchange offer,
merger, consolidation or other business combination involving the Company
or any material Company Subsidiary or any proposal to acquire in any manner
a substantial equity interest in or a substantial portion of the assets of
the Company or any material Company Subsidiary, other than the transactions
contemplated by this Agreement. As used in this Section, "Board of
Directors" includes any committee thereof.
Section 7.9. Expenses. Subject to Section 9.3, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
Section 7.10. Third Party Standstill Agreements. During the period
from the date of this Agreement through the Effective Time, neither the
Company nor any of its Subsidiaries shall terminate, amend, modify or waive
any material provision of any confidentiality or standstill agreement to
which it is a party. During such period, the Company and its Subsidiaries
shall enforce, to the fullest extent permitted under applicable law, the
provisions of any such agreement, including, but not limited to, by
obtaining injunctions to prevent any breaches of such agreements and to
enforce specifically the terms and provisions thereof in any court having
jurisdiction.
Section 7.11. Takeover Statutes. If any "business combination,"
"fair price," "moratorium," "control stock acquisition" or other form of
antitakeover statute or regulation shall become applicable to the Merger or
the transactions contemplated hereby, the Company and the members of the
Board of Directors of the Company shall grant such approvals and take such
actions as are reasonably necessary so that the Merger or the transactions
contemplated hereby may be consummated as promptly as practicable on the
terms contemplated hereby and otherwise act to eliminate or minimize the
effects of such statute or regulation on the Merger or the transactions
contemplated hereby.
Section 7.12. Subscription Agreements. Parent and Merger Sub agree
that they will not, without the prior consent of the Company, enter into
any amendment to, or modification or waiver of, any of the Subscription
Agreements if such amendment, modification or waiver would (i) reduce the
aggregate amount of funds committed under the Subscription Agreements, (ii)
add additional conditions to the consummation of the transactions
contemplated by the Subscription Agreements or (iii) have a material
adverse effect on or delay the receipt of any of the Parent Statutory
Approvals or the consummation of the Merger. Parent and Merger Sub shall
enforce to the fullest extent permitted under applicable law, the
provisions of Subscription Agreements, including but not limited to
obtaining injunctions to enforce specifically the terms and provisions
thereof in any court having jurisdiction. Parent and Merger Sub shall use
all reasonable efforts to fulfill all of their obligations under the
Subscription Agreements and to cause all conditions to funding under the
Subscription Agreements (other than conditions to funding that are
conditions to consummation of the Merger under this Agreement) to be
fulfilled as promptly as reasonably practicable. Parent and Merger Sub
shall give the Company prompt written notice of (i) any material breach or
threatened material breach by any party of the terms or provisions of the
Subscription Agreements, (ii) any termination or threatened termination of
any of the Subscription Agreements or (iii) any exercise or threatened
exercise of any condition under any of the Subscription Agreements.
Section 7.13. Employee Benefits Matters. (a) Except to the extent
necessary to avoid duplication of benefits, the Surviving Corporation shall
give Company Employees full credit for purposes of eligibility and vesting
under any employee benefit plans or arrangements maintained by the
Surviving Corporation or any of its Subsidiaries in which such employees
are eligible to participate for such employees' service with the Company
and its Subsidiaries to the same extent recognized by the Company and its
Subsidiaries immediately prior to the Effective Time. The Surviving
Corporation shall (i) waive all limitations as to preexisting conditions
exclusions and waiting periods with respect to participation and coverage
requirements applicable to Company Employees under any welfare plan that
such employees may be eligible to participate in after the Effective Time,
other than limitations or waiting periods that are already in effect with
respect to such employees and that have not been satisfied as of the
Effective Time under any welfare plan maintained for the Company Employees
immediately prior to the Effective Time, and (ii) provide each Company
Employee with credit for any co-payments and deductibles paid prior to the
Effective Time in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans that such employees are eligible to
participate in after the Effective Time.
(b) The Surviving Corporation shall comply with the terms of all
Company Benefit Plans.
(c) The Company shall take all such steps as may be reasonably
required to cause the transactions contemplated by Article II hereof and
any other dispositions of the Company equity securities (including
derivative securities) in connection with this Agreement by each individual
who is a director or officer of the Company to be exempt under Rule 16b-3
promulgated under the Exchange Act, such steps to be taken in accordance
with the No-Action Letter dated January 12, 1999, issued by the SEC to
Skadden, Arps, Slate, Meagher & Flom LLP.
ARTICLE VIII.
CONDITIONS
Section 8.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger
shall be subject to the satisfaction on or prior to the Closing Date of the
following conditions, except, to the extent permitted by applicable law,
that such conditions may be waived in writing pursuant to Section 9.5 by
the joint action of the parties hereto:
(a) Shareholder Approval. The Company Shareholders' Approval
shall have been obtained.
(b) No Injunction. No temporary restraining order or
preliminary or permanent injunction or other order by any federal or state
court preventing consummation of the Merger or the other transactions
contemplated hereby shall have been issued and be continuing in effect, and
the Merger and the other transactions contemplated hereby shall not have
been prohibited under any applicable federal or state law or regulation;
provided, however, that the parties hereto shall use all reasonable efforts
to have any such order, injunction, or prohibition vacated.
(c) Statutory Approvals. The Company Required Statutory
Approvals and the Parent Required Statutory Approvals shall have been
obtained at or prior to the Effective Time, such approvals shall have
become Final Orders (as defined below) and such Final Orders shall not
impose terms or conditions which, in the aggregate, would have, or could
reasonably be expected to have, a Company Material Adverse Effect or a
Parent Material Adverse Effect, or which would be materially inconsistent
with the agreements of the parties contained herein. The term "Final
Order" shall mean action by the relevant regulatory authority which has not
been reversed, stayed, enjoined, set aside, annulled or suspended, with
respect to which any waiting period prescribed by law before the
transactions contemplated hereby may be consummated has expired, and as to
which all conditions to the consummation of such transactions prescribed by
law, regulation or order have been satisfied.
(d) HSR Act. All applicable waiting periods under the HSR Act
shall have expired or been terminated.
Section 8.2. Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be
further subject to the satisfaction, on or prior to the Closing Date, of
the following conditions, except as may be waived by the Company in writing
pursuant to Section 9.5:
(a) Performance of Obligations of Parent and Merger Sub. Parent
and Merger Sub will have performed in all material respects their
agreements and covenants contained in or contemplated by this Agreement,
which are required to be performed by them at or prior to the Effective
Time.
(b) Representations and Warranties. The representations and
warranties of Parent and Merger Sub set forth in Article V of this
Agreement shall be true and correct, unless the failure of such
representations and warranties to be so true and correct, in the aggregate,
have not had and would not reasonably be expected to have a Parent Material
Adverse Effect (ignoring, for purposes of this Section 8.2(b), any
materiality standard expressly included in such representations or
warranties) as of the date hereof (or, to the extent such representations
and warranties speak as of an earlier or later date, as of such earlier or
later date) and as of the Closing Date (except to the extent such
representations and warranties speak as of an earlier or later date) as if
made on and as of the Closing Date, except as otherwise contemplated by
this Agreement.
(c) Closing Certificates. The Company shall have received a
certificate signed by the managing member of Parent, dated the Closing
Date, to the effect that, to the best of such person's knowledge, the
conditions set forth in Section 8.2(a) and Section 8.2(b) have been
satisfied.
(d) Legal Opinions as to Corporate and Regulatory Matters. The
Company shall have received the opinions of (i) Willkie Farr & Gallagher,
Parent's special counsel, in form and substance customary for transactions
of this type and reasonably satisfactory to the Company, dated the
Effective Time, as to the authorization, validity and enforceability of
this Agreement and (ii) LeBoeuf, Lamb, Greene & MacRae, L.L.P., Parent's
special regulatory counsel, in form and substance customary for
transactions of this type and reasonably satisfactory to the Company, dated
the Effective Time, as to certain regulatory matters, including that all
regulatory approvals, permits and consents have been obtained; provided,
that such firms may reasonably rely on local counsel (including local
counsel as to local regulatory matters) as to matters of local law.
Section 8.3. Conditions to Obligation of Parent and Merger Sub to
Effect the Merger. The obligation of Parent and Merger Sub to effect the
Merger shall be further subject to the satisfaction, on or prior to the
Closing Date, of the following conditions, except as may be waived by
Parent in writing pursuant to Section 9.5:
(a) Performance of Obligations of the Company. The Company
(and/or appropriate Company Subsidiaries) will have performed in all
material respects its agreements and covenants contained in or contemplated
by this Agreement which are required to be performed by it at or prior to
the Effective Time.
(b) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct, unless the failure of such representations and warranties to be so
true and correct, in the aggregate, have not had and would not reasonably
be expected to have a Company Material Adverse Effect (ignoring, for
purposes of this Section 8.3(b), any materiality standard expressly
included in such representations or warranties) as of the date hereof (or,
to the extent such representations and warranties speak as of an earlier or
later date, as of such earlier or later date) and as of the Closing Date
(except to the extent such representations and warranties speak as of an
earlier or later date) as if made on and as of the Closing Date, except as
otherwise contemplated by this Agreement.
(c) Company Material Adverse Effect. No Company Material
Adverse Effect shall have occurred and there shall exist no fact or
circumstance that would or, insofar as reasonably can be foreseen, could
have a Company Material Adverse Effect.
(d) Company Required Consents. The Company Required Consents
shall have been obtained.
(e) Insurance Matters. The condition regarding certain
insurance matters set forth in Section 8.3(e) of the Parent Disclosure
Schedule shall have been satisfied.
(f) Closing Certificates. Parent shall have received a
certificate signed by the chief executive officer and the chief financial
officer of the Company, dated the Closing Date, to the effect that, to the
best of such officers' knowledge, the conditions set forth in Sections
8.3(a), (b), (c), (d) and (e) have been satisfied.
(g) 1935 Act Status. The Investors shall have received evidence
reasonably satisfactory to them that neither they nor any of their
affiliates (within the meaning of Section 2(a)(11) of the 1935 Act) nor any
other of the Investor Entities will be subject to regulation as a
registered holding company under the 1935 Act following the Merger;
provided, that the Investors shall have used all commercially reasonable
efforts to obtain such evidence, subject to the proviso in Section 6.2(b).
(h) Legal Opinions as to Corporate and Regulatory Matters.
Parent shall have received the opinions of (i) Dorsey and Whitney LLP, the
Company's special Iowa counsel, in form and substance customary for
transactions of this type and reasonably satisfactory to Parent, dated the
Effective Time, as to the authorization, validity and enforceability of
this Agreement and (ii) LeBoeuf, Lamb, Greene & MacRae, L.L.P., the
Company's special regulatory counsel, in form and substance customary for
transactions of this type and reasonably satisfactory to Parent, dated the
Effective Time, as to certain regulatory matters, including that all
regulatory approvals, permits and consents have been obtained; provided,
that LeBoeuf, Lamb, Greene & MacRae, L.L.P. may reasonably rely on local
counsel (including local counsel as to local regulatory matters) as to
matters of local law.
(i) Company Options. Except as otherwise agreed by Parent in
writing as provided in Section 2.4, all Company Options under the Company
Stock Plans shall have been validly cancelled and none shall remain
outstanding no later than the Effective Time, and no holder of Company
Options or any participant in the Company Stock Plans or any other Company
Benefit Plan shall have any right thereunder to acquire any equity
securities or interests therein of the Company, the Surviving Corporation
or any of their respective Subsidiaries.
(j) Dissenting Shares. Holders of not more than ten percent
(10%) of the outstanding shares of Company Common Stock shall have
perfected such holder's right to dissent in accordance with the applicable
provisions of the Iowa Act and shall not have withdrawn or lost such
rights.
ARTICLE IX.
TERMINATION, AMENDMENT AND WAIVER
Section 9.1. Termination. This Agreement may be terminated at any
time prior to the Closing Date, whether before or after the Company
Shareholders' Approval has been obtained:
(a) by mutual written consent of Parent and the Board of
Directors of the Company;
(b) by any party hereto, by written notice to the other, if the
Effective Time shall not have occurred on or before April 30, 2000;
provided, that such date shall automatically be changed to July 31, 2000 if
on April 30, 2000 the conditions set forth in Section 8.1(c) and/or 8.3(g)
have not been satisfied or waived and the other conditions to the
consummation of the transactions contemplated hereby are then capable of
being satisfied, and the approvals required by Section 8.1(c) and/or
8.3(g), as the case may be, which have not yet been obtained are being
pursued with diligence; and provided, further, that the right to terminate
this Agreement under this Section 9.1(b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Effective Time to occur on
or before such date;
(c) by any party hereto, by written notice to the other party,
if the Company Shareholders' Approval shall not have been obtained at a
duly held the Company Meeting, including any adjournments thereof;
(d) by any party hereto, after consultation with outside
counsel, if any state or federal law, order, rule or regulation is adopted
or issued, which has the effect of prohibiting the Merger, or by any party
hereto, if any court of competent jurisdiction in the United States or any
State shall have issued an order, judgment or decree permanently
restraining, enjoining or otherwise prohibiting the Merger, and such order,
judgment or decree shall have become final and nonappealable; provided,
that such terminating party shall have complied with its obligations
pursuant to Section 10.8.
(e) by the Company, upon three business days' prior notice to
Parent if, as a result of an Acquisition Proposal described in clauses
(A)(w), (x) and (y) of the second paragraph of Section 7.8, (i) the Board
of Directors of the Company shall have concluded in good faith, after
considering applicable provisions of state law and after consultation with
outside counsel, that their fiduciary duties could reasonably require that
such Acquisition Proposal be accepted; (ii) the Company shall have complied
with all its obligations under Sections 7.4 and 7.8; (iii) the person
making the Acquisition Proposal shall have acknowledged and agreed in
writing to pay or cause to be paid the termination and other fees set forth
in Section 9.3 if such Acquisition Proposal is consummated or any other
Acquisition Proposal is consummated with such person or any of its
affiliates and (iv) during the three business days prior to any such
termination, the Company shall, and shall cause its respective financial
and legal advisors to, in good faith seek to negotiate with Parent to make
such adjustments in the terms and conditions of this Agreement as would
enable the Company to proceed with the transactions contemplated herein;
(f) by Parent, by written notice to the Company, if (i)(A) there
shall have been any breach of any representation or warranty, or any non-
willful breach of any covenant or agreement, of the Company hereunder,
other than such breaches, which, together with any other such breaches, has
not had and would not reasonably be expected to have a Company Material
Adverse Effect, or (B) there shall have been any material breach (if
willful) of any covenant or agreement of the Company hereunder and, in case
of each of clauses (A) and (B) above, such breach shall not have been
remedied within twenty days after receipt by the Company of notice in
writing from Parent, specifying the nature of such breach and requesting
that it be remedied and provided, that, any materiality standard expressly
included in such representations, warranties, covenants or agreements shall
be ignored for purposes of this Section 9.1(f)(i); or (ii) the Board of
Directors of the Company (A) shall withdraw or modify in any manner adverse
to Parent its approval of this Agreement and the transactions contemplated
hereby or its recommendation to its shareholders regarding the approval of
this Agreement, (B) shall fail to reaffirm such approval or recommendation
within five business days after a written request therefor of Parent
(unless such request is made during the last seven business days
immediately prior to the Company Meeting, in which case, such reaffirmation
shall fail to be made within two business days after the request), (C)
shall approve or recommend any Acquisition Proposal or (D) shall resolve to
take any of the actions specified in clause (A), (B) or (C);
(g) by the Company, by written notice to Parent, if (A) there
shall have been any breach of any representation or warranty, or any non-
willful breach of any covenant or agreement, of Parent or Merger Sub
hereunder, other than such breaches, which, together with any other such
breaches, has not had and would not reasonably be expected to have a Parent
Material Adverse Effect, or (B) there shall have been any material breach
(if willful) of any covenant or agreement of Parent or Merger Sub hereunder
(which shall be deemed to include, for this purpose only, the failure of
Parent and Merger Sub to deposit, or cause to be deposited (including from
available cash balances at the Company), the cash to the Exchange Agent
required pursuant to Section 2.3(a), assuming all other conditions to
Closing have been satisfied or otherwise waived in writing by Parent), and,
in case of each of clauses (A) and (B) above, such breach shall not have
been remedied within twenty days after receipt by Parent of notice in
writing from the Company, specifying the nature of such breach and
requesting that it be remedied and provided, that, any materiality standard
expressly included in such representations, warranties, covenants or
agreements shall be ignored for purposes of this Section 9.1(g);
(h) by the Company if any of the Subscription Agreements shall
have been terminated at any time when Parent would not be entitled to
terminate this Agreement pursuant to Section 9.1(b), (c), (d) or (f) and,
within ten (10) business days after any such termination, such Subscription
Agreement shall not have been replaced with another Subscription Agreement
with such Investor or another Investor and containing terms at least as
favorable to Merger Sub as the terminated Subscription Agreement; provided,
that, following any such replacement, Berkshire Hathaway Inc. shall own
(including ownership through one or more subsidiaries of Berkshire Hathaway
Inc. which are consolidated with Berkshire Hathaway Inc. for financial
accounting purposes) at least 70% of the equity (determined by reference to
economic interest) in the Surviving Corporation upon consummation of the
Merger.
Section 9.2. Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent pursuant to Section 9.1,
there shall be no liability on the part of either Parent or the Company or
their respective officers, members or directors hereunder, except as
provided in Section 7.9 and 9.3 and except that the agreement contained in
the last sentence of Section 7.1 shall survive the termination.
Section 9.3. Termination Fee; Expenses.
(a) Termination and Expense Fees. If this Agreement (i) is
terminated by Parent pursuant to Section 9.1(f)(ii), or (ii) is terminated
by the Company pursuant to Section 9.1(e), then the Company shall pay to
Parent promptly (but not later than five business days after such notice is
given or received by the Company pursuant to Section 9.1(f)(ii) or 9.1(e))
a termination fee equal to $40 million in cash plus an additional $8
million in cash (the "Expense Amount") constituting reimbursement of
expenses and fees incurred or to be incurred by Parent or Merger Sub in
connection with or related to the Merger and the transactions contemplated
by this Agreement, without any requirement that Parent or Merger Sub
account for actual expenses. If (i) this Agreement is terminated pursuant
to Section 9.1(b), 9.1(c) or 9.1(f)(i) and (ii) at the time of such
termination, there shall have been an Acquisition Proposal made by a third
party which, at the time of such termination, shall not have been (x)
rejected by the Company and its Board of Directors and (y) withdrawn by the
third party and (iii) within eighteen months of any such termination, the
Company or its affiliate becomes a subsidiary or part of such third party
or a subsidiary or part of an affiliate of such third party, or merges with
or into the third party or a subsidiary or affiliate of the third party or
enters into a definitive agreement to consummate an Acquisition Proposal
with such third party or affiliate thereof, then the Company shall pay to
Parent, at the closing of the transaction (and as a condition to the
closing) in which the Company or its affiliate becomes such a subsidiary or
part of such other person or the closing of such Acquisition Proposal
occurs, a termination fee equal to $40 million in cash plus (unless the
Expense Amount is paid pursuant to the following sentence) the Expense
Amount. If this Agreement is terminated pursuant to (i) Section 9.1(b) due
to any failure to satisfy any of the conditions set forth in Sections
8.1(b), 8.1(c) or 8.3 (other than 8.3(g)), or (ii) Section 9.1(d) or
Section 9.1(f)(i), the Company shall pay to Parent promptly (but not later
than five business days after such notice of termination is given or
received by the Company) the Expense Amount.
(b) If this Agreement is terminated by the Company, by written
notice to Parent, due to the failure of Parent and Merger Sub to deposit,
or cause to be deposited (including from available cash balances at the
Company), the cash to the Exchange Agent required pursuant to Section
2.3(a) at a time when all conditions to Parent's obligation to close have
been satisfied or otherwise waived in writing by Parent, then Parent shall
pay to the Company a termination fee of $40 million, plus additional
damages (but only if and to the extent proven) in an amount not to exceed
$40 million.
(c) Expenses. The parties agree that the agreements contained
in this Section 9.3 are an integral part of the transactions contemplated
by this Agreement and constitute liquidated damages and not a penalty.
Notwithstanding anything to the contrary contained in this Section 9.3, if
one party fails to promptly pay to the other any fee or expense due under
this Section 9.3, in addition to any amounts paid or payable pursuant to
such Section, the defaulting party shall pay the costs and expenses
(including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of any unpaid fee at the
publicly announced prime rate of Citibank, N.A. from the date such fee was
required to be paid.
(d) Limitation Of Fees. Notwithstanding anything herein to the
contrary, if any Investor (x) would, upon consummation of the Merger,
become subject to regulation as a public utility holding company required
to register under the 1935 Act and (y) solely as a result thereof, this
Agreement is terminated, then no fees under this Section 9.3 shall be
payable by the Company.
Section 9.4. Amendment. This Agreement may be amended by Parent and
the Boards of Directors of the Company and Merger Sub, at any time before
or after the Company Shareholders' Approval has been obtained and prior to
the Effective Time, but after such Approval has been obtained, no such
amendment shall (a) alter or change the Per Share Amount or (b) alter or
change any of the terms and conditions of this Agreement if any of the
alterations or changes, alone or in the aggregate, would materially
adversely affect the rights of holders of Company Common Stock. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
Section 9.5. Waiver. At any time prior to the Effective Time, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto and (c) waive compliance with any of
the agreements or conditions contained herein, to the extent permitted by
applicable law. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE X.
GENERAL PROVISIONS
Section 10.1. Non-Survival; Effect of Representations and Warranties.
No representations or warranties in this Agreement shall survive the
Effective Time, except as otherwise provided in this Agreement.
Section 10.2. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given (a) when delivered
personally, (b) when sent by reputable overnight courier service or (c)
when telecopied (which is confirmed by copy sent within one business day by
a reputable overnight courier service) to the parties at the following
addresses (or at such other address for a party as shall be specified by
like notice):
(i) If to Parent or Merger Sub, to:
Teton Formation L.L.C.
c/o MidAmerican Energy Holdings Company
666 Grand Avenue
Des Moines, Iowa 50309
Attn: Chief Executive Officer
Telecopy: (515) 242-4031
Telephone: (515) 242-4300
with copies to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
Attn: Peter J. Hanlon
Telecopy: (212) 728-8111
Telephone: (212) 728-8000
Munger, Tolles & Olson LLP
355 South Grand Avenue
Los Angeles, CA 90071,
Attn: Robert E. Denham
Telecopy: (213) 687-3702
Telephone: (213) 683-9100
Fraser, Stryker, Vaughn, Meusey, Olson,
Boyer & Bloch, P.C.
500 Energy Plaza
409 South 17th Street
Omaha, Nebraska 68102
Attn: John K. Boyer
Telecopy: (402) 341-8290
Telephone: (402) 341-6000
and
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, New York 10019
Attn: Douglas W. Hawes
Telecopy: (212) 424-8500
Telephone: (212) 424-8000
(ii) if to the Company, to:
MidAmerican Energy Holdings Company
666 Grand Avenue
Des Moines, Iowa 50309
Attn: General Counsel
Telecopy: (515) 242-4080
Telephone: (515) 242-4300
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attn: Alan C. Myers
Telecopy: (212) 735-2000
Telephone: (212) 735-3000
Section 10.3. Miscellaneous. This Agreement (a) constitutes the
entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of them,
with respect to the subject matter hereof (other than the Confidentiality
Agreement), (b) shall not be assigned by operation of law or otherwise and
(c) shall be governed by and construed in accordance with the laws of the
State of New York applicable to contracts executed in and to be fully
performed in such State, without giving effect to its conflicts of law
rules or principles and except to the extent the provisions of this
Agreement (including the documents or instruments referred to herein) are
expressly governed by or derive their authority from the Iowa Act.
Section 10.4. Interpretation. When a reference is made in this
Agreement to Sections or Exhibits, such reference shall be to a Section or
Exhibit of this Agreement, respectively, unless otherwise indicated. The
table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
Section 10.5. Counterparts; Effect. This Agreement may be executed
in one or more counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same agreement.
Section 10.6. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any
court of the United States located in the State of New York or in New York
state court, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any federal court
located in the State of New York or any New York state court in the event
any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (b) agrees that it will not attempt to deny
such personal jurisdiction by motion or other request for leave from any
such court and (c) agrees that it will not bring any action relating to
this Agreement or any of the transactions contemplated by this Agreement in
any court other than a federal or state court sitting in the State of New
York.
Section 10.7. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and, except for
rights of Indemnified Parties as set forth in Section 7.5, nothing in this
Agreement, express or implied, is intended to confer upon any other person
any rights or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 10.8. Further Assurances. Each party will execute such
further documents and instruments and take such further actions as may
reasonably be requested by any other party in order to consummate the
Merger in accordance with the terms hereof.
Section 10.9. Waiver Of Jury Trial. Each party to this Agreement
waives, to the fullest extent permitted by applicable law, any right it may
have to a trial by jury in respect of any action, suit or proceeding
arising out of or relating to this Agreement.
Section 10.10. Certain Definitions. The term "affiliate," except
where otherwise defined herein, shall mean, as to any Person, any other
Person which directly or indirectly controls, or is under common control
with, or is controlled by, such Person. The term "control" (including,
with its correlative meanings, "controlled by" and "under common control
with") shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
IN WITNESS WHEREOF, the Company, Parent and Merger Sub have caused
this Agreement as of the date first written above to be signed by their
respective officers thereunto duly authorized.
MIDAMERICAN ENERGY HOLDINGS COMPANY
By: /s/ Steven A. McArthur
________________________________
Name: Steven A. McArthur
Title: Senior Vice President
TETON FORMATION L.L.C.
By: /s/ David L. Sokol
________________________________
Name: David L. Sokol
Title: Managing Member
TETON ACQUISITION CORP.
By: /s/ David L. Sokol
________________________________
Name: David L. Sokol
Title: Chief Executive Officer
and President
INDEX OF DEFINED TERMS
Term Page
---- ----
1935 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . . . 37
affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Closing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . 16
Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . 8
Company Financial Statements . . . . . . . . . . . . . . . . . . . . . 11
Company Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . 7
Company Material Adverse Effect . . . . . . . . . . . . . . . . . . . . 7
Company Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Company Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Company Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Company Required Consents . . . . . . . . . . . . . . . . . . . . . . . 10
Company Required Statutory Approvals . . . . . . . . . . . . . . . . . 10
Company Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . 23
Company SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Company Shareholders' Approval . . . . . . . . . . . . . . . . . . . . 22
Company Stock Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Company Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . 32
control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
CSFB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Dillon Read . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 35
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Environmental Claim . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Environmental Permits . . . . . . . . . . . . . . . . . . . . . . . . . 21
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Excess Parachute Payments . . . . . . . . . . . . . . . . . . . . . . . 18
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Expense Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
FERC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Final Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . 9
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . 20
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Indemnified Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 34
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Independent Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Investor Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Iowa Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Lehman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
MidAmerican Funding . . . . . . . . . . . . . . . . . . . . . . . . . . 8
MidAmerican Utility . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Parent Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . 25
Parent Material Adverse Effect . . . . . . . . . . . . . . . . . . . . 25
Parent Required Statutory Approvals . . . . . . . . . . . . . . . . . . 25
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Per Share Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Power Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PURPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Schedule 13E-3 Transaction Statement . . . . . . . . . . . . . . . . . 32
Scott Family Entities . . . . . . . . . . . . . . . . . . . . . . . . . 26
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Subscription Agreements . . . . . . . . . . . . . . . . . . . . . . . . 26
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . 1
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Tax Ruling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Voting Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Year 2000 Compliant . . . . . . . . . . . . . . . . . . . . . . . . . . 24
FOR IMMEDIATE RELEASE
Keith Hartje, Corporate Communications (515) 281-2785
Kevin Waetke, Corporate Communications (515) 281-2785
Jodie Stephens, Investor Relations (515) 281-2204
BERKSHIRE HATHAWAY, WALTER SCOTT AND DAVID SOKOL TO ACQUIRE
MIDAMERICAN ENERGY HOLDINGS; TRANSACTION PRICED AT 29% PREMIUM TO MARKET
DES MOINES, IOWA, October 25, 1999 An investor group including Berkshire
Hathaway, Inc. has reached a definitive agreement to acquire MidAmerican
Energy Holdings Company ("MidAmerican" or the "Company") (NYSE: MEC, PCX
and London) for $35.05 per share in cash which, together with the
assumption of debt, represents a total enterprise value of approximately $9
billion. The per-share purchase price represents a 29% premium over the
closing price of $27.25 on Friday, October 22. The transaction is the
first entry by Berkshire Hathaway into the energy sector, endorsing
MidAmerican's growth strategy as a global energy provider delivering
quality service and value to customers.
Berkshire Hathaway will invest approximately $1.25 billion in common stock
and a non-dividend-paying convertible preferred stock of the surviving
corporation, giving Berkshire about a 75% interest in the Company on a
fully-diluted basis. Berkshire Hathaway will also buy an $800 million
issue of non-transferable trust preferred stock. The other investors, who
in total will invest approximately $300 million, are Walter Scott, the
former chairman of Peter Kiewit Sons' Inc. and MidAmerican's largest
individual shareholder, and certain Scott family interests, and David L.
Sokol, the Chairman and Chief Executive Officer of MidAmerican.
After the completion of the transaction, expected by April of 2000,
MidAmerican will become a privately owned company with publicly traded
fixed-income securities.
MidAmerican's Board of Directors approved the acquisition yesterday.
Speaking on behalf of the Board, Stanley J. Bright, Vice Chairman of the
Board and Chair of a Special Board Committee that negotiated the
transaction, said, "This transaction is the best way to provide value to
shareholders, while also serving the long-term interests of the Company.
It also provides benefits to customers, bondholders, employees and the
communities in which MidAmerican operates."
Mr. Sokol said, "This transaction is beneficial for our shareholders while
at the same time allowing us to make the long-term decisions that are right
for the business in a changing industry. We will be able to focus even
more closely on delivering excellent service and value to customers, and
growth for our communities and employees."
The transaction is subject to MidAmerican shareholder and certain
regulatory approvals. Regulators will continue to oversee the Company's
utility operations.
Aiding regulatory approval, Mr. Sokol added, is the fact that the investor
group owns no other energy interests. Additionally, he said, "With no
financing contingencies, this transaction should provide an attractive
price to shareholders without the time delay and uncertainty inherent in
other potential options."
Mr. Sokol continued, "This transaction represents an endorsement of
MidAmerican by two of the most respected and successful investors in the
world. It provides better access to capital, an expected improvement in
credit quality and association with a long-term investor who allows
management to operate autonomously."
Commenting on the Berkshire Hathaway investment, Warren E. Buffett,
Chairman and Chief Executive Officer of Berkshire Hathaway, said, "We buy
good companies with outstanding management and good growth potential at a
fair price, and we're willing to wait longer than some investors for that
potential to be realized. This investment is right in our sweet spot. If
I only had two draft picks out of American business, Walter Scott and David
Sokol are the ones I would choose for this industry."
Company headquarters will continue to be in Des Moines, Iowa, with the
office of the Chairman and Chief Executive Officer remaining in Omaha,
Nebraska, to focus on strategic planning, mergers and acquisitions and
global development.
Company President Gregory E. Abel said, "No management changes are planned,
no employee reductions will result from the transaction and the Company's
name will stay 'MidAmerican'.
"It will be business as usual, with advantages that did not exist before,"
Mr. Abel said. "We will focus even harder on delivering high-quality
service and the best possible value to customers, using leading-edge
technology. As we prosper, so should our communities. This is a great
deal for all concerned."
MidAmerican Energy Holdings Company, headquartered in Des Moines, Iowa,
USA, has approximately 9,800 employees. Through its retail utility
subsidiaries, MidAmerican Energy in the U.S. and Northern Electric in the
U.K., the Company provides electric service to 2.2 million customers and
natural gas service to 1.2 million customers worldwide. The Company
manages and owns interests in approximately 8,300 net megawatts of
diversified power generation facilities in operation, construction and
development. Information about MidAmerican and its three principal
subsidiary companies is available on the Internet at
http://www.midamerican.com.
Berkshire Hathaway and its subsidiaries engage in a number of diverse
business activities among which the most important is the property and
casualty insurance business conducted on both a direct and reinsurance
basis. Common stock of the company is listed on the New York Stock
Exchange, trading symbols BRK.A and BRK.B.
Lehman Brothers, Inc. advised, and Lehman Brothers, Inc. and Warburg Dillon
Read provided fairness opinions to, the MidAmerican Board. Credit Suisse
First Boston advised David Sokol in connection with the transaction, and
was retained by Teton Acquisition Corp., the special-purpose acquisition
vehicle for the transaction.
Certain information included in this release contains forward-looking
statements made pursuant to the Private Securities Litigation Reform Act of
1995 ("Reform Act"). Such statements are based on current expectations and
involve a number of known and unknown risks and uncertainties that could
cause the actual results and performance of the Company to differ
materially from any expected future results or performance, expressed or
implied, by the forward-looking statements. In connection with the safe
harbor provisions of the Reform Act, the Company has identified important
factors that could cause actual results to differ materially from such
expectations, including development uncertainty, operating uncertainty,
acquisition uncertainty, uncertainties relating to doing business outside
of the United States, uncertainties relating to geothermal resources,
uncertainties relating to domestic and international (and in particular
Indonesian) economic and political conditions and uncertainties regarding
the impact of regulations, changes in government policy, industry
deregulation and competition. Reference is made to all of the Company's
SEC filings, including the Company's Report on Form 8-K dated March 26,
1999, incorporated herein by reference, for a description of such factors.
The Company assumes no responsibility to update forward-looking information
contained herein.
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