SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Annual Report Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1999
Commission File No. 0-25551
MIDAMERICAN ENERGY HOLDINGS COMPANY
(Exact name of registrant as specified in its charter)
Iowa 94-2213782
---- ------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
666 Grand Avenue, Des Moines, IA 50309
-------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (515) 242-4300
--------------
Securities registered pursuant to Section 12(b) of the Act: N/A
Securities registered pursuant to Section 12(g) of the Act: N/A
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days:
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
All of the shares of MidAmerican Energy Holdings Company are held by a limited
group of private investors. As of March 30, 2000, 9,281,087 shares of common
stock were outstanding.
<PAGE>
Item 10. Directors, Executive and Other Officers of the Company and
Significant Subsidiaries
Item 10 of the Company's Form 10-K for the year ended December 31,
1999 is amended to add the following information concerning the Company's
directors:
Name Position
David L. Sokol Chairman of the Board and Chief Executive Officer, Director
Gregory E. Abel President and Chief Operating Officer, Director
Walter Scott Jr. Director
Warren E. Buffett Director
Richard R. Jaros Director
Stanley J. Bright Director
Edgar D. Aronson Director
Marc D. Hamburg Director
John K. Boyer Director
W. David Scott Director
Set forth below is certain information with respect to each of the
foregoing officers:
DAVID L. SOKOL, 43, Chairman of the Board of Directors and Chief
Executive Officer. Mr. Sokol has been CEO since April 19, 1993 and served as
President of MEHC from April 19, 1993 until January 21, 1995. Mr. Sokol has been
Chairman of the Board of Directors since May 1994 and a director since March
1991. Formerly, among other positions held in the independent power industry,
Mr. Sokol served as President and Chief Executive Officer of Kiewit Energy
Company, which at that time was a wholly owned subsidiary of PKS, and Ogden
Projects, Inc.
GREGORY E. ABEL, 37, President and Chief Operating Officer. Mr. Abel
joined the Company in 1992 and initially served as Vice President and
Controller. Mr. Abel is a Chartered Accountant and from 1984 to 1992 he was
employed by Price Waterhouse. As a Manager in the San Francisco office of Price
Waterhouse, he was responsible for clients in the energy industry.
WALTER SCOTT, JR., 67, Director. Mr. Scott has been a director of the
Company since June 1991. Mr. Scott was the Chairman and Chief Executive Officer
of the Company from January 8, 1992 until April 19, 1993. Mr. Scott is Chairman
and President of Peter Kiewit Sons' Inc. ("Kiewit"), a position he has held
since 1979. Mr. Scott is a director of Berkshire Hathaway, Inc., Burlington
Resources, Inc., ConAgra, Inc., Valmont Industries, Inc., U.S. Bancorp,
Commonwealth Telephone Enterprises, Inc., and RCN Corporation, a publicly-traded
company in which Kiewit holds a majority ownership interest
WARREN E. BUFFETT, 69, Director. Mr. Buffett has been a director of
the Company since March 14, 2000. He is Chairman of the Board and Chief
Executive Officer of Berkshire Hathaway Inc. Mr. Buffett is a Director of the
Coca-Cola Company, the Gillette Company and The Washington Post Company.
RICHARD R. JAROS, 47, Director. Mr. Jaros has been a director since
March 1991. Mr. Jaros served as President and Chief Operating Officer of the
Company from January 8, 1992 to April 19, 1993 and as Chairman of the Board from
April 19, 1993 to May 1994. Until July 1997, Mr. Jaros was Executive Vice
President and Chief Financial Officer of Kiewit and President of Kiewit
Diversified Group, Inc., which is now Level 3 Communications. From 1990 until
January 8, 1992, Mr. Jaros served as a Vice President of Kiewit. Mr. Jaros
serves as a director of Commonwealth Telephone, RCN Corporation and Level 3.
STANLEY J. BRIGHT, 58, Director. Mr. Bright is Vice Chairman of the
Company and Chairman and Chief Executive Officer of MidAmerican Energy Company
from July 1, 1995 until March 1999. Formerly, Mr. Bright joined Iowa-Illinois
Gas and Electric Company as vice president-finance and Chief Financial Officer
in 1986, becoming director in 1987, president and Chief Operating Officer in
1990, and chairman and Chief Executive Officer in 1991.
EDGAR D. ARONSON: 64. Mr. Aronson has been a director of the Company
since April 1983. Mr. Aronson founded EDACO, Inc., a private venture capital
company, in 1981, and has been President of EDACO, Inc. since that time. Prior
to that, Mr. Aronson was Chairman, Dillon, Read International from 1979 to 1981
and a General Partner in charge of the International Department at Salomon
Brothers Inc from 1973 to 1979. Mr. Aronson served during 1962-1968 as Vice
President consecutively in the International Departments of First National Bank
of Chicago and Republic National Bank of New York. He founded the International
Department of Salomon Brothers and Hutzler in 1968.
MARC D. HAMBURG, 50, Director. Mr. Hamburg has been a director of the
Company since March 14, 2000. He is Vice President - Chief Financial Officer and
Treasurer of Berkshire Hathaway Inc. since October 1, 1992. Mr. Hamburg was
employed by Berkshire Hathaway on June 1, 1987 and has been its Treasurer since
that date.
JOHN K. BOYER, 56, Director. Mr. Boyer has been a director of the
Company since March 14, 2000. He is a partner with Fraser, Stryker, Meusey,
Olson, Boyer & Bloch, P.C. from 1973 to present with emphasis on corporate,
commercial, federal, state, and local taxation.
W. DAVID SCOTT, 38, Mr. Scott has been a director of the Company since
March 14, 2000. Mr. Scott formed Magnum Resources, Inc., a commercial real
estate investment and management company, in October 1994 and has served as its
President and Chief Executive Officer since its inception. Before forming Magnum
Resources, Mr. Scott worked for America First Companies, Cornerstone Banking
Group and the Kiewit Companies. Mr. Scott has been a director of America First
Mortgage Investments, Inc., a mortgage REIT, since 1998.
<PAGE>
Item 11. Executive Compensation
Item 11 of the Company's Form 10-K for the year ended December 31,
1999 is amended to add the information set forth below.
Summary Compensation Table
The following table sets forth the compensation of the Company's five
most highly compensated executive officers who were employed as of the last day
in 1999. Information is provided regarding these individuals for the last three
fiscal years during which they were executive officers of the Company for the
year ended December 31, 1999, if applicable.
<TABLE>
<CAPTION>
OTHER RESTRICTED SECURITIES ALL
NAME AND YEAR BONUS ANNUAL STOCK UNDERLYING OTHER
PRINCIPAL ENDED SALARY CASH (1) STOCK COMP (2) AWARDS OPTIONS (4) COMP (3)
POSITIONS DEC 31, ($) ($) ($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David L. Sokol 1999 675,000 3,276,049 0 0 0 0 6,240
Chairman and 1998 675,000 2,042,735 0 0 0 1,600,000 4,927
Chief Executive 1997 515,000 2,377,280 0 0 0 1,200,000 4,927
Officer
Gregory E. Abel 1999 357,933 1,452,234 0 0 0 0 6,240
President and 1998 325,775 622,258 0 117,606 0 380,000 4,333
Chief Operating 1997 173,573 335,742 0 146,711 0 150,000 4,333
Officer
Ronald Stepien 1999 350,000 1,052,069 0 0 0 56,203 6,240
President, 1998 318,416 240,233 0 0 8,512 37,700 17,240
MidAmerican 1997 260,417 158,859 0 0 6,498 0 14,240
Energy
Company
Patrick J.Goodman 1999 199,279 334,374 0 0 0 60,000 6,240
Chief Financial 1998 127,750 140,000 0 0 0 55,000 5,150
Officer 1997 82,500 75,000 0 0 0 30,000 3,392
John Rasmussen 1999 220,000 250,000 0 0 0 44,008 6,240
General Counsel 1998 220,000 175,423 0 0 5,235 15,000 6,240
1997 200,000 96,000 0 0 4,043 0 6,240
</TABLE>
(1) Includes amounts voluntarily deferred by the executive, if applicable.
(2) Includes various expatriate compensation items, including expatriate
allowances, company provided transportation, housing and tax benefits.
(3) 401(k) Plan contributions and group term life insurance premiums.
(4) For Messrs. Sokol, Abel and Goodman for 1998, only 200,000, 100,000 and
10,000 reflect new grants, respectively; the balance reflect options
subject to repricing in 1998.
<PAGE>
Option Grants in Last Fiscal Year 1
The following table sets forth options granted to each of the named
executive officers of the Company during 1999 .
<TABLE>
<CAPTION>
Potential Realized
Value at Assumed
% of Annual Rates of Stock
Total Options Price Appreciation
Securities Granted to Exercise For Option Term 2
--------------------------
Underlying Employees Price Expiration 5% 10%
Name Options Granted In Fiscal Year ($/Share) Date ($) ($)
---- --------------- --------------- --------- ---- --- ---
<S> <C> <C> <C> <C> <C> <C>
David L. Sokol 0 0 0 0 0 0
Chairman and
Chief Executive
Officer
Gregory E. Abel 0 0 0 0 0 0
President
Patrick J. Goodman, 10,000 0.90% 28.57 3/11/09 179,675 455,332
Senior Vice President
Ronald Stepien, 20,000 1.81% 32.56 4/29/09 409,536 1,037,845
President
John A. Rasmussen, 20,000 1.81% 32.56 4/29/09 409,536 1,037,845
General Counsel
</TABLE>
1 Upon the change of control associated with the Berkshire Transaction, all of
the options vested. As part of the closing, each option was cancelled and in
consideration of such cancellation the Company paid each holder cash in an
amount equal to the product of (A) the excess, if any, of $35.05 over the per
share exercise price and (B) the number of shares of Company Common Stock
subject thereto.
2 As required by the Securities and Exchange Commission ("SEC"), potential
values stated are based on the prescribed assumption that the Company's Common
Stock will appreciate in value from the date of grant to the end of the option
term (ten years from the date of grant) at annualized rates of 5% and 10%,
respectively, and therefore are not intended to forecast possible future
appreciation, if any, in the price of the Company's Common Stock. The total of
all stock options granted to employees, including executive officers during
fiscal 1998 was approximately 1% of total shares outstanding during the year.
Accordingly, the potential value of such options for all optionees under the
prescribed assumptions is approximately 1% of the potential realizable value of
all shareholders for the same period under the same assumptions. (For the total
percentages including repricings, see footnote 2 below.) As an alternative to
the assumed potential realizable values stated above, SEC rules would permit
stating the present value of such options at the date of grant. Methods of
computing present value suggested by different authorities can produce
significantly different results. Moreover, since stock options granted by the
Company are not transferable, there are no objective criteria by which any
computation of present value can be verified. Consequently, the Company's
management does not believe there is a reliable method of computing the present
value of such stock options and that all assumptions as to annualized
appreciation rates are inherently speculative.
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table sets forth the option exercises and the value of
in-the-money unexercised options held by each of the named executive officers of
the Company at December 31, 1998, calculated as being equal to the difference
between the exercise price of the options and the closing price of the Company's
Common Stock on the New York Stock Exchange of $33.6875 per share on December
31, 1999.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options Held at FY End ($) In-the-Money Options at FY End ($)
Shares Value -------------------------- ---------------------------------
Acquired Realized
Name On Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David L. Sokol 0 666,696 983,304 4,599,568 3,220,439
Gregory E. Abel 0 303,973 191,027 3,318,232 1,187,477
Patrick J. 0 43,451 72,549 302,842 472,179
Ronald Stepien, 40,000 481,000 15,843 40,360 93,523 196,839
John A. 20,000 126,500 18,180 25,828 218,269 89,338
Rasmussen,
General Counsel (2)
</TABLE>
1 Upon the change of control associated with the Berkshire Transaction, all of
the options vested. As part of the closing on March 14, 2000, Messrs. Sokol and
Abel rolled over their existing options for new options in the Company.
2 Upon the change of control associated with the Berkshire Transaction, all of
the options vested. As part of the closing, each option was cancelled and in
consideration of such cancellation the Company paid each holder cash in an
amount equal to the product of (A) the excess, if any, of $35.05 over the per
share exercise price and (B) the number of shares of Company Common Stock
subject thereto.
<PAGE>
Compensation of Directors
For 2000, directors who are not employees of the Company will be paid
an annual retainer fee of $20,000 and a fee of $500 per day for attendance at
Board and Committee meetings. Directors who are employees of the Company will
not receive such fees. All directors are reimbursed for their expenses incurred
in attending Board meetings.
Termination of Employment Arrangement
Under the terms of his employment contract, Mr. Sokol is entitled to
receive three times his base salary and bonus and three years of accelerated
option vesting in the event of the termination of his employment by the Company
other than for cause. Under the terms of separate employment agreements between
each of Mr. Abel, Mr. Goodman, Mr. Stepien and Mr. Rasmussen and the Company,
each of such Executives is entitled to receive two years base salary
continuation, payments in respect of average bonuses for the prior two years and
two years continued option vesting in the event of the termination of his
employment by the Company other than for cause. If such persons were terminated
without cause, Mr. Sokol, Mr. Abel, Mr. Goodman, Mr. Stepien and Mr. Rasmussen
would currently be entitled to be paid approximately $10,190,915, $3,010,171,
$834,374, $1,071,840, $745,944, respectively, pursuant to their employment
agreements, without giving effect to any tax related provisions.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 12 of the Company's Form 10-K for the year ended December 31,
1999 is amended to add the information set forth below.
NAME (AND ADDRESS IF REQUIRED) NUMBER OF SHARES
OF BENEFICIAL OWNER BENEFICIALLY PERCENTAGE OF
OWNED (1) CLASS (1)
Common Stock:
Walter Scott, Jr.(2) 8,000,000 86.20%
Berkshire Hathaway Inc. 900,942 9.71%
David L. Sokol 1,989,462 18.17%
Gregory E. Abel 555,219 5.68%
All directors and executive officers
as a group (3 persons) 10,544,468 92.2%
(1)Includes shares which the listed beneficial owner is deemed to have the right
to acquire beneficial ownership under Rule 13d-3(d) under the Securities
Exchange Act, including, among other things, shares which the listed beneficial
owner has the right to acquire within 60 days.
(2) Includes shares held by family controlled trusts and corporations.
Item 13. Certain Relationships and Related Transactions
Item 13 of the Company's Form 10-K for the year ended December 31,
1999 is amended to add the information set forth below.
Under a subscription agreement with the Company, under certain
circumstances, Berkshire Hathaway has agreed to purchase additional 11% trust
issued preferred securities in the event preferred securities outstanding prior
to the closing of the Berkshire Transaction are tendered for conversion to cash
by the current holders.
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year, the Company is not aware of any director, officer or other person
subject to Section 16(a) of the Securities Exchange Act in respect of the
Company who failed to file on a timely basis, as disclosed in the above Forms,
reports required by Section 16(a) of the Exchange Act during the Company's most
recent fiscal year or prior fiscal years.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized, in the City of Omaha, State
of Nebraska, on this 14th day of April, 2000.
MIDAMERICAN ENERGY HOLDINGS COMPANY
/s/ David L. Sokol*
David L. Sokol
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Date
/s/ David L. Sokol*
April 14, 2000
David L. Sokol
Chairman of the Board,
Chief Executive Officer, and
Director
/s/ Gregory E. Abel* April 14, 2000
Gregory E. Abel
President, Chief Operating Officer and Director
/s/ Patrick J. Goodman* April 14, 2000
Patrick J. Goodman
Senior Vice President and
Chief Financial Officer
/s/ Edgar D. Aronson* April 14, 2000
Edgar D. Aronson
Director
/s/ Stanley J. Bright* April 14, 2000
Stanley J. Bright
Director
<PAGE>
/s/ Walter Scott, Jr.* April 14, 2000
Walter Scott, Jr.
Director
/s/ Marc D. Hamburg* April 14, 2000
Marc D. Hamburg
Director
/s/ Warren Buffett* April 14, 2000
Warren Buffett
Director
/s/ John Boyer* April 14, 2000
John Boyer
Director
/s/ W. David Scott* April 14, 2000
W. David Scott
Director
*By:/s/ Steven A. McArthur April 14, 2000
Steven A. McArthur
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
3.1 Restated Articles of Incorporation of the Company.
3.2 Bylaws of the Company.
4.2 Indenture for the 6 1/4% Convertible Junior Subordinated Debentures,
dated as of April 1, 1996, among CalEnergy Company, Inc., as Issuer,
and the Bank of New York, as Trustee (incorporated by reference to
Exhibit 4.3 to Amendment 1 to the Company's Registration Statement on
Form S-3, Registration No. 333-08315).
4.3 Indenture, dated as of September 20, 1996, between the Company and IBJ
Schroder Bank & Trust Company, as trustee, relating to $225,000,000
principal amount of 9 1/2% Senior Notes due 2006 (incorporated by
reference to Exhibit 4.1 to the Company's Registration Statement on
Form S-3, Registration No. 333-15591).
4.4 Indenture for the 6 1/4% Convertible Junior Subordinated Debentures due
2012, dated as of February 26, 1997, between the Company, as issuer,
and the Bank of New York, as Trustee (incorporated by reference to
Exhibit 10.129 to the Company's 1996 Form 10-K).
4.5 Indenture, dated as of October 15, 1997, among the Company and IBJ
Schroder Bank & Trust Company, as Trustee (incorporated by reference
to Exhibit 4.1 to the Company's Current Report on Form 8-K dated
October 23, 1997).
4.6 Form of First Supplemental Indenture, dated as of October 28, 1997,
among the Company and IBJ Schroder Bank & Trust Company, as Trustee
(incorporated by reference to Exhibit 4.2 to the Company's Current
Report on Form 8-K dated October 23, 1997).
4.7.1 Form of Second Supplemental Indenture, dated as of September 22, 1998
between the Company and IBJ Schroder Bank & Trust Company, as Trustee
(incorporated by reference to Exhibit 4.1 to the Company's Current
Report on Form 8-K dated September 17, 1998.)
4.7.2 Form of Third Supplemental Indenture, dated as of November 13, 1998,
between the Company and IBJ Schroder Bank & Trust Company, as Trustee
(incorporated by reference to the Company's Current Report on Form 8-K
dated November 10, 1998).
4.9 Indenture, dated as of March 14, 2000, among the Company and the Bank
of New York, as Trustee.
4.10 Subscription Agreement executed by Berkshire Hathaway Inc. dated as of
March 14, 2000.
10.1 Employment Agreement between the Company and David L. Sokol, dated May
10, 1999.
10.2 Amendment No. 1 to the Amended and Restated Employment Agreement
between the Company and David L. Sokol, dated March 14, 2000.
10.3 Amended and Restated Employment Agreement between the Company and
Gregory E. Abel, dated May 10, 1999.
10.4 Amended and Restated Employment Agreement between the Company and
Steven A. McArthur, dated May 10, 1999.
10.5 Employment Agreement between the Company and Patrick J. Goodman, dated
May 10, 1999.
10.9 125 MW Power Plant - Upper Mahiao Agreement (the "Upper Mahiao ECA")
dated September 6, 1993 between PNOC-Energy Development Corporation
("PNOC-EDC") and Ormat, Inc. as amended by the First Amendment to 125
MW Power Plant Upper Mahiao Agreement dated as of January 28, 1994, the
Letter Agreement dated February 10, 1994, the Letter Agreement dated
February 18, 1994 and the Fourth Amendment to 125 MW Power Plant -
Upper Mahiao Agreement dated as of March 7, 1994 (incorporated by
reference to Exhibit 10.95 to the Company's 1994 Form 10-K).
10.10 Credit Agreement dated April 8, 1994 among CE Cebu Geothermal Power
Company, Inc., the Banks thereto, Credit Suisse as Agent (incorporated
by reference to Exhibit 10.96 to the Company's 1994 Form 10-K).
10.11 Credit Agreement dated as of April 8, 1994 between CE Cebu Geothermal
Power Company, Inc., Export-Import Bank of the United States
(incorporated by reference to Exhibit 10.97 to the Company's 1994 Form
10-K).
10.12 Pledge Agreement among CE Philippines Ltd, Ormat-Cebu Ltd., Credit
Suisse as Collateral Agent and CE Cebu Geothermal Power Company, Inc.
dated as of April 8, 1994 (incorporated by reference to Exhibit 10.98
to the Company's 1994 Form 10-K).
10.13 Overseas Private Investment Corporation Contract of Insurance dated
April 8, 1994 between the Overseas Private Investment Corporation
("OPIC") and the Company through its subsidiaries CE International
Ltd., CE Philippines Ltd., and Ormat-Cebu Ltd. (incorporated by
reference to Exhibit 10.99 to the Company's 1994 Form 10-K).
10.14 180 MW Power Plant - Mahanagdong Agreement ("Mahanagdong ECA") dated
September 18, 1993 between PNOC-EDC and CE Philippines Ltd. and the
Company, as amended by the First Amendment to Mahanagdong ECA dated
June 22, 1994, the Letter Agreement dated July 12, 1994, the Letter
Agreement dated July 29, 1994, and the Fourth Amendment to Mahanagdong
ECA dated March 3, 1995 (incorporated by reference to Exhibit 10.100 to
the Company's 1994 Form 10-K).
10.15 Credit Agreement dated as of June 30, 1994 among CE Luzon Geothermal
Power Company, Inc., American Pacific Finance Company, the Lenders
party thereto, and Bank of America National Trust and Savings
Association as Administrative Agent (incorporated by reference to
Exhibit 10.101 to the Company's 1994 Form 10-K).
10.16 Credit Agreement dated as of June 30, 1994 between CE Luzon Geothermal
Power Company, Inc. and Export-Import Bank of the United States
(incorporated by reference to Exhibit 10.102 to the Company's 1994 Form
10-K).
10.17 Finance Agreement dated as of June 30, 1994 between CE Luzon Geothermal
Power Company, Inc. and Overseas Private Investment Corporation
(incorporated by reference to Exhibit 10.103 to the Company's 1994 Form
10-K).
10.18 Pledge Agreement dated as of June 30, 1994 among CE Mahanagdong Ltd.,
Kiewit Energy International (Bermuda) Ltd., Bank of America National
Trust and Savings Association as Collateral Agent and CE Luzon
Geothermal Power Company, Inc. (incorporated by reference to Exhibit
10.104 to the Company's 1994 Form 10-K).
10.19 Overseas Private Investment Corporation Contract of Insurance dated
July 29, 1994 between OPIC and the Company, CE International Ltd., CE
Mahanagdong Ltd. and American Pacific Finance Company and Amendment
No. 1 dated August 3, 1994 (incorporated by reference to Exhibit
10.105 to the Company's 1994 Form 10-K).
10.20 231 MW Power Plant - Malitbog Agreement ("Malitbog ECA") dated
September 10, 1993 between PNOC-EDC and Magma Power Company and the
First and Second Amendments thereto dated December 8, 1993 and March
10, 1994, respectively (incorporated by reference to Exhibit 10.106 to
the Company's 1994 Form 10-K).
10.21 Credit Agreement dated as of November 10, 1994 among Visayas Power
Capital Corporation, the Banks parties thereto and Credit Suisse Bank
Agent (incorporated by reference to Exhibit 10.107 to the Company's
1994 Form 10-K).
10.22 Finance Agreement dated as of November 10, 1994 between Visayas
Geothermal Power Company and Overseas Private Investment Corporation
(incorporated by reference to Exhibit 10.108 to the Company's 1994 Form
10-K).
10.23 Pledge and Security Agreement dated as of November 10, 1994 among
Broad Street Contract Services, Inc., Magma Power Company, Magma
Netherlands B.V. and Credit Suisse as Bank Agent (incorporated by
reference to Exhibit 10.109 to the Company's 1994 Form 10-K).
10.24 Overseas Private Investment Corporation Contract of Insurance dated
December 21, 1994 between OPIC and Magma Netherlands, B.V.
(incorporated by reference to Exhibit 10.110 to the Company's 1994 Form
10-K).
10.25 Agreement as to Certain Common Representations, Warranties, Covenants
and Other Terms, dated November 10, 1994 between Visayas Geothermal
Power Company, Visayas Power Capital Corporation, Credit Suisse, as
Bank Agent, OPIC and the Banks named therein (incorporated by reference
to Exhibit 10.111 to the Company's 1994 Form 10-K).
10.26 Trust Indenture dated as of November 27, 1995 between the CE Casecnan
Water and Energy Company, Inc. ("CE Casecnan") and Chemical Trust
Company of California (incorporated by reference to Exhibit 4.1 to CE
Casecnan's Registration Statement on Form S-4 dated January 25, 1996
("Casecnan S-4").
10.27 Amended and Restated Casecnan Project Agreement between the National
Irrigation Administration and CE Casecnan Water and Energy Company Inc.
dated June 26, 1995 (incorporated by reference to Exhibit 10.1 to the
Casecnan Form S-4).
10.28 Term Loan and Revolving Facility Agreement, dated as of October 28,
1996, among CE Electric UK Holdings, CE Electric UK plc and Credit
Suisse (incorporated by reference to Exhibit 10.130 to the Company's
1996 Form 10-K).
10.29 Public Electricity Supply License (incorporated by reference to
Exhibit 10.131 to the Company's 1996 Form 10-K)
10.30 Second Tier Supply Licenses to Supply Electricity for England & Wales
and Scotland (incorporated by reference to Exhibit 10.132 to the
Company's 1996 Form 10-K).
10.31 Pooling and Settlement Agreement for the Electricity Industry in
England and Wales dated 30th March, 1990 (as amended at 17th October,
1996), among The Generators (named therein), the Suppliers (named
therein), Energy Settlements and Information Services Limited (as
Settlement System Administrator), Energy Pool Funds Administration
Limited (as Pool Funds Administrator), Scottish Power plc, Electricite
deFrance, Service National and Others (incorporated by reference to
Exhibit 10.133 to the Company's 1996 Form 10-K).
10.32 Master Connection and User System Agreement with The National Grid
Company plc (incorporated by reference to Exhibit 10.134 to the
Company's 1996 Form 10-K).
10.33 Gas Suppliers License dated February 21, 1996 (incorporated by
reference to Exhibit 10.135 to the Company's 1996 Form 10-K).
10.34 Acquisition Agreement by and between CalEnergy Company, Inc. and
Kiewit Diversified Group Inc. dated as of September 10, 1997
(incorporated by reference to Exhibit 2 to the Company's Current
Report on Form 8-K dated September 11, 1997).
10.35 Agreement and Plan of Merger dated as of August 11, 1998 by and among
CalEnergy Company, Inc., Maverick Reincorporation Sub, Inc.,
MidAmerican Energy Holdings Company and MAVH Inc. (incorporated by
reference to the Company's Current Report on Form 8-K dated August 11,
1998).
10.36 Indenture and First Supplemental Indenture, dated March 11, 1999,
between MidAmerican Funding LLC and IBJ Whitehall Bank & Trust Company
and the First Supplement thereto relating to the $700 million Senior
Notes and Bonds. (incorporated by reference to the Company's 1998 Form
10-K).
10.37 Settlement Agreement by and between MidAmerican Energy Company, the
Iowa Utilities Board, the Iowa Office of Consumer Advocate, and
others. (incorporated by reference to the Company's 1998 Form 10-K).
10.38 General Mortgage Indenture and Deed of Trust dated as of January 1,
1993, between Midwest Power Systems Inc. and Morgan Guaranty Trust
Company of New York, Trustee. (incorporated by reference to Exhibit
4(b)-1 to Midwest Resources Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1992, Commission File No. 1-10654.)
10.39 First Supplemental Indenture dated as of January 1, 1993, between
Midwest Power Systems Inc. and Morgan Guaranty Trust Company of New
York, Trustee. (incorporated by reference to Exhibit 4(b)-2 to Midwest
Resources' Annual Report on Form 10-K for the year ended December 31,
1992, Commission File No. 1-10654.)
10.40 Second Supplemental Indenture dated as of January 15, 1993, between
Midwest Power Systems Inc. and Morgan Guaranty Trust Company of New
York, Trustee. (incorporated by reference to Exhibit 4(b)-3 to Midwest
Resources' Annual Report on Form 10-K for the year ended December 31,
1992, Commission File No. 1-10654.)
10.41 ThirdSupplemental Indenture dated as of May 1, 1993, between Midwest
Power Systems Inc. and Morgan Guaranty Trust Company of New York,
Trustee. (incorporated by reference to Exhibit 4.4 to Midwest
Resources' Annual Report on Form 10-K for the year ended December 31,
1993, Commission File No. 1-10654.)
10.42 Fourth Supplemental Indenture dated as of October 1, 1994, between
Midwest Power Systems Inc. and Harris Trust and Savings Bank, Trustee.
(incorporated by reference to Exhibit 4.5 to Midwest Resources' Annual
Report on Form 10-K for the year ended December 31, 1994, Commission
File No. 1-10654.)
10.43 Fifth Supplemental Indenture dated as of November 1, 1994, between
Midwest Power Systems Inc. and Harris Trust and Savings Bank, Trustee.
(incorporated by reference to Exhibit 4.6 to Midwest Resources' Annual
Report on Form 10-K for the year ended December 31, 1994, Commission
File No. 1-10654.)
10.44 Indenture of Mortgage and Deed of Trust, dated as of March 1, 1947.
(incorporated by reference to Iowa-Illinois Gas and Electric Company
("Iowa-Illinois") as Exhibit 7B to Commission File No. 2-6922.)
10.45 Sixth Supplemental Indenture dated as of July 1, 1967. (incorporated
by reference to Iowa-Illinois as Exhibit 2.08 to Commission File No.
2-28806.)
10.46 Twentieth Supplemental Indenture dated as of May 1, 1982. (incorporated
by reference to Exhibit 4.B.23 to Iowa-Illinois' Quarterly Report on
Form 10-Q for the period ended June 30, 1982, Commission File No.
1-3573.)
10.47 Resignation and Appointment of successor Individual Trustee.
(incorporated by reference to Iowa-Illinois as Exhibit 4.B.30 to
Commission File No. 33-39211.)
10.48 Twenty-Eighth Supplemental Indenture dated as of May 15, 1992.
(incorporated by reference to Exhibit 4.31.B to Iowa-Illinois' Current
Report on Form 8-K dated May 21, 1992, Commission File No. 1-3573.)
10.49 Twenty-Ninth Supplemental Indenture dated as of March 15, 1993.
(incorporated by reference to Exhibit 4.32.A to Iowa-Illinois' Current
Report on Form 8-K dated March 24, 1993, Commission File No. 1-3573.)
10.50 Thirtieth Supplemental Indenture dated as of October 1, 1993.
(incorporated by reference to Exhibit 4.34.A to Iowa-Illinois' Current
Report on Form 8-K dated October 7, 1993, Commission File No. 1-3573.)
10.51 Sixth Supplemental Indenture dated as of July 1, 1995, between Midwest
Power Systems Inc. and Harris Trust and Savings Bank, Trustee.
(incorporated by reference to Exhibit 4.15 to MidAmerican Energy
Company's ("MidAmerican Energy") Annual Report on Form 10-K dated
December 31, 1995, Commission File No. 1-11505.)
10.52 Thirty-First Supplemental Indenture dated as of July 1, 1995, between
Iowa-Illinois Gas and Electric Company and Harris Trust and Savings
Bank, Trustee. (incorporated by reference to Exhibit 4.16 to
MidAmerican Energy's Annual Report on Form 10-K dated December 31,
1995, Commission File No. 1-11505.)
10.53 Power Sales Contract between Iowa Power Inc. and Nebraska Public Power
District, dated September 22, 1967. (incorporated by reference to
Exhibit 4-C-2 to Iowa Power Inc.'s (IPR) Registration Statement,
Registration No. 2-27681).
10.54 Amendments Nos. 1 and 2 to Power Sales Contract between Iowa Power
Inc. and Nebraska Public Power District. (incorporated by reference to
Exhibit 4-C-2a to IPR's Registration Statement, Registration No.
2-35624.)
10.55 Amendment No. 3 dated August 31, 1970, to the Power Sales Contract
between Iowa Power Inc. and Nebraska Public Power District, dated
September 22, 1967. (incorporated by reference to Exhibit 5-C-2-b to
IPR's Registration Statement, Registration No. 2-42191.)
10.56 Amendment No. 4 dated March 28, 1974, to the Power Sales Contract
between Iowa Power Inc. and Nebraska Public Power District, dated
September 22, 1967. (incorporated by reference to Exhibit 5-C-2-c to
IPR's Registration Statement, Registration No. 2-51540.)
10.57 Amendment No. 5 dated September 2, 1997, to the Power Sales Contract
between MidAmerican Energy Company and Nebraska Public Power District,
dated September 22, 1967. (incorporated by reference to Exhibit 10.2
to MidAmerican Energy's Quarterly Reports on the combined Form 10-Q
for the quarter ended September 30, 1997, Commission File Nos. 1-12459
and 1-11505, respectively.)
10.58 MidAmerican Energy Company Severance Plan For Specified Officers dated
November 1, 1996. (incorporated by reference to Exhibit 10.1 to
MidAmerican Energy's Annual Reports on the combined Form 10-K for the
year ended December 31, 1996, Commission File Nos. 1-12459 and
1-11505, respectively.)
10.59 MidAmerican Energy Holdings Company Executive Voluntary Deferred
Compensation Plan (incorporated by reference to Exhibit 10 to the
Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1999).
10.60 MidAmerican Energy Company Supplemental Retirement Plan for Designated
Officers. (incorporated by reference to Exhibit 10.3 to MidAmerican
Energy's Annual Report on Form 10-K dated December 31, 1995,
Commission File No. 1-11505.)
10.61 MidAmerican Energy Company Restated Executive Deferred Compensation
Plan.
10.62 MidAmerican Energy Holdings Company Restated Deferred Compensation Plan
- Board of Directors (incorporated by reference to Exhibit 10 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1999).
10.63 MidAmerican Energy Company Combined Midwest Resources/Iowa Resources
Restated Deferred Compensation Plan - Board of Directors.
10.66 Midwest Resources Inc. Supplemental Retirement Plan (formerly the
Midwest Energy Company Supplemental Retirement Plan). (incorporated by
reference to Exhibit 10.10 to Midwest Resources' Annual Report on Form
10-K for the year ended December 31, 1993, Commission File No.
1-10654.)
10.72 Supplement Retirement Plan for Principal Officers, as amended as of
July 1, 1993. (incorporated by reference to Exhibit 10.K.2 to
Iowa-Illinois' Annual Report on Form 10-K for the year ended December
31, 1993, Commission File No. 1-3573.)
10.73 Compensation Deferral Plan for Principal Officers, as amended as of
July 1, 1993. (incorporated by reference to Exhibit 10.K.2 to
Iowa-Illinois' Annual Report on Form 10-K for the year ended December
31, 1993, Commission File No. 1-3573.)
10.74 Board of Directors' Compensation Deferral Plan. (incorporated by
reference to Exhibit 10.K.4 to Iowa-Illinois' Annual Report on Form
10-K for the year ended December 31, 1992, Commission File No.
1-3573.)
10.75 Amendment No. 1 to the Midwest Resources Inc. Supplemental Retirement
Plan. (incorporated by reference to Exhibit 10.24 to Midwest
Resources' Annual Report on Form 10-K for the year ended December 31,
1994, Commission File No. 1-10654.)
10.78 Amendment No. 5 dated September 2, 1997, to the Power Sales contract
between MidAmerican Energy Company and Nebraska Public Power District,
dated September 22, 1967. (incorporated by reference to Exhibit 10.2
to MidAmerican Energy's Quarterly Reports on the combined Form 10-Q
for the quarter ended September 30, 1997, Commission File Nos. 1-12459
and 1-11505, respectively.)
21.0 Subsidiaries of Registrant.
23.0 Consent of Independent Auditors
24.0 Power of Attorney.
27.0 Financial Data Schedule.
Exhibit 3.1
RESTATED ARTICLES OF INCORPORATION
OF
MIDAMERICAN ENERGY HOLDINGS COMPANY
TO THE SECRETARY OF STATE
OF THE STATE OF IOWA:
Pursuant to the provisions of Division X of the Iowa Business
Corporation Act (the "Act"), the undersigned corporation hereby adopts the
following Restated Articles of Incorporation ("Articles of Incorporation") (All
capitalized terms used herein, but not defined shall have the respective
meanings set forth in Article X hereof.):
The name of the corporation is "MidAmerican Energy Holdings Company"
(hereinafter sometimes called the "Corporation") and its registered office shall
be located at 666 Grand Avenue, Des Moines, Iowa 50309 with the right to
establish and maintain branch offices at such other points within and without
the State of Iowa as the Board of Directors of the Corporation (the "Board of
Directors") may, from time to time, determine. The name of the Corporation's
registered agent at such registered office is John A. Rasmussen, Jr.
The nature of the business or purposes to be conducted or promoted is
to engage in any or all lawful act or activity for which a corporation may be
incorporated under the Act.
A. The aggregate number of shares which the Corporation shall have authority to
issue is 60,000,000 shares of Common Stock, no par value ("Common Stock"), and
50,000,000 shares of Preferred Stock, no par value ("Preferred Stock").
B. The shares of authorized Common Stock shall be identical in all respects and
shall have equal rights and privileges. For all purposes, each registered holder
of Common Stock shall, at each meeting of shareholders, be entitled to one vote
for each share of Common Stock held, either in person or by proxy duly
authorized in writing. Except to the extent required by law or as permitted by
these Articles of Incorporation, as amended from time to time, the registered
holders of the shares of Common Stock shall have exclusive voting rights.
C. The Board of Directors, at any time or from time to time, may, and is hereby
authorized to, issue and dispose of any of the authorized and unissued shares of
Common Stock and any issued but not outstanding shares for such kind and amount
of consideration and to such persons, firms or corporations, as may be
determined by the Board of Directors, subject to any provisions of law then
applicable. The holders of Common Stock shall have no preemptive rights to
acquire or subscribe to any shares, or securities convertible into shares, of
Common Stock.
<PAGE>
D. A first series of the Preferred Stock is created pursuant to Article IV
hereof. The Board of Directors, at any time or from time to time may, and is
hereby authorized to, further divide the authorized and unissued shares of
Preferred Stock into one or more classes or series and in connection with the
creation of any class or series to determine, in whole or in part, to the full
extent now or hereafter permitted by law, by adopting one or more articles of
amendment to the Articles of Incorporation providing for the creation thereof,
the designation, preferences, limitations and relative rights of such class or
series, which may provide for special, conditional or limited voting rights, or
no rights to vote at all, and to issue and dispose of any of such shares and any
issued but not outstanding shares for such kind and amount of consideration and
to such persons, firms or corporations, as may be determined by the Board of
Directors, subject to any provisions of law then applicable.
E. The Board of Directors, at any time or from time to time may, and is hereby
authorized to, create and issue, whether or not in connection with the issue and
sale of any shares of its Common Stock, Preferred Stock or other securities of
the Corporation, warrants, rights and/or options entitling the holders thereof
to purchase from the Corporation any shares of its Common Stock, Preferred Stock
or other securities of the Corporation. Such warrants, rights, or options shall
be evidenced by such instrument or instruments as shall be approved by the Board
of Directors. The terms upon which, the time or times (which may be limited or
unlimited in duration) at or within which, and the price or prices (which shall
be not less than the minimum amount prescribed by law, if any) at which any such
shares or other securities may be purchased from the Corporation upon the
exercise of any such warrant, right or option shall be fixed and stated in the
resolution or resolutions of the Board of Directors providing for the creation
and issue of such warrants, rights or options. The Board of Directors is hereby
authorized to create and issue any such warrants, rights or options from time to
time for such consideration, if any, and to such persons, firms or corporations,
as the Board of Directors may determine.
F. The Corporation may authorize the issue of some or all of the shares of any
or all of the classes of its capital stock without certificates.
G. The Corporation shall not be required to issue certificates representing any
fraction or fractions of a share of stock of any class but may issue in lieu
thereof one or more non-dividend bearing and non-voting scrip certificates in
such form or forms as shall be approved by the Board of Directors, each scrip
certificate representing a fractional interest in one share of stock of any
class. Such scrip certificates upon presentation together with similar scrip
certificates representing in the aggregate an interest in one or more full
shares of stock of any class shall entitle the holders thereof to receive one or
more full shares of stock of such class. Such scrip certificates may contain
such terms and conditions as shall be fixed by the Board of Directors and may
become void and of no effect after a period to be determined by the Board of
Directors and to be specified in such scrip certificates.
H. The Corporation shall be entitled to treat the person in whose name any share
of Common Stock or Preferred Stock is registered as the owner thereof for all
purposes and shall not be bound to recognize any equitable or other claim to, or
interest in, such share on the part of any person, whether or not the
Corporation shall have notice thereof except as may be expressly provided
otherwise by the laws of the State of Iowa.
<PAGE>
ARTICLE IV.
A. Creation, Designation and Amount of First Series of Preferred Stock. A first
series of the Preferred Stock is hereby created as follows: The shares of such
series (the "Preferred Shares") shall be designated as "Zero Coupon Convertible
Preferred Stock", and the number of shares constituting such Preferred Stock
shall be 40,000,000.
B. Dividends and Distributions. In case the Corporation shall at any time or
from time to time declare, order, pay or make a dividend or other distribution
(including, without limitation, any distribution of stock or other securities or
property or rights or warrants to subscribe for securities of the Corporation or
any of its subsidiaries by way of a dividend, distribution or spin-off) on its
Common Stock, other than (i) a distribution made in compliance with the
provisions of Section F of this Article IV or (ii) a dividend or distribution
made in Common Stock, the holders of the Preferred Shares shall be entitled
(unless such right shall be waived by the affirmative vote or consent of the
holders of at least two-thirds of the number of the then outstanding Preferred
Shares) to receive from the Corporation with respect to each Preferred Share
held, any dividend or distribution that would be received by a holder of the
number of shares (including fractional shares) of Common Stock into which such
Preferred Share is convertible on the record date for such dividend or
distribution, with fractional shares of Common Stock deemed to be entitled to
the corresponding fraction of any dividend or distribution that would be
received by a whole share. Any such dividend or distribution shall be declared,
ordered, paid or made at the same time such dividend or distribution is
declared, ordered, paid or made on the Common Stock.
C. Conversion Rights.
Each Preferred Share is convertible at the option of the holder thereof
into one Conversion Unit at any time upon the occurrence of a Conversion Event.
A Conversion Unit will initially be one share of Common Stock of the Corporation
adjusted as follows:
(i) Stock splits, combinations, reclassifications etc. In case
the Corporation shall at any time or from time to time declare a
dividend or make a distribution on the outstanding shares of Common
Stock payable in Common Stock or subdivide or reclassify the
outstanding shares of Common Stock into a greater number of shares or
combine or reclassify the outstanding shares of Common Stock into a
smaller number of shares of Common Stock, then, and in each such event,
the number of shares of Common Stock into which each Preferred Share is
convertible shall be adjusted so that the holder thereof shall be
entitled to receive, upon conversion thereof, the number of shares of
Common Stock which such holder would have been entitled to receive
after the happening of any of the events described above had such share
been converted immediately prior to the happening of such event or the
record date therefor, whichever is the earlier. Any adjustment made
pursuant to this clause (i) shall become effective (I) in the case of
any such dividend or distribution on the record date for the
determination of holders of shares of Common Stock entitled to receive
such dividend or distribution, or (II) in the case of any such
subdivision, reclassification or combination, on the day upon which
such corporate action becomes effective.
<PAGE>
(ii) Issuances of Additional Shares below Fair Value Price. In
case the Corporation shall issue shares of Common Stock (or rights or
warrants or other securities exercisable or convertible into or
exchangeable (collectively, a "conversion") for shares of Common Stock)
(collectively, "convertible securities") (other than in Permitted
Transactions) at a price per share (or having a conversion price per
share) less than the Fair Value Price as of the date of issuance of
such shares (or of such convertible securities), then, and in each such
event, the number of shares of Common Stock into which each Preferred
Share is convertible shall be adjusted so that the holder thereof shall
be entitled to receive, upon conversion thereof, the number of shares
of Common Stock determined by multiplying the number of shares of
Common Stock into which such share was convertible immediately prior to
such date of issuance by a fraction, (I) the numerator of which is the
sum of (1) the number of shares of Common Stock outstanding on such
date and (2) the number of additional shares of Common Stock issued (or
into which the convertible securities may convert), and (II) the
denominator of which is the sum of (1) the number of shares of Common
Stock outstanding on such date and (2) the number of shares of Common
Stock which the aggregate consideration receivable (including any
amounts payable upon conversion of convertible securities) by the
Corporation for the total number of additional shares of Common Stock
so issued (or into which the convertible securities may convert) would
purchase at the Fair Value Price on such date. For purposes of the
foregoing, "Permitted Transactions" shall include issuances (i) as
consideration for the acquisition of businesses and/or related assets,
and (ii) in connection with employee benefit plans and any other
transaction approved by the Board of Directors (including the approval
of the directors elected by the holders of the Preferred Shares), and
"Fair Value Price" shall mean the average of the closing prices on the
principal stock exchange or over-the-counter quotation system on which
the Common Stock is then listed or quoted, or if not then listed or
quoted, the fair value of the Corporation's Common Stock as determined
in good faith by the Board of Directors. Although Permitted
Transactions do not require adjustment of a Conversion Unit, the
issuance of equity and equity-linked securities in a Permitted
Transaction remains subject to the vote of the Preferred Shares as
provided in Section D of this Article IV. Any adjustment made pursuant
to this clause (ii) shall become effective immediately upon the date of
such issuance.
(iii) Mergers, Consolidations, Sales of Assets etc. In case
the Corporation shall be a party to any transaction (including a
merger, consolidation, sale of all or substantially all of the
Corporation's assets, liquidation or recapitalization of the
Corporation, but excluding any transaction described in clause (i) or
(ii) above) in which the previously outstanding Common Stock shall be
changed into or, pursuant to the operation of law or the terms of the
transaction to which the Corporation is a party, exchanged for
different securities of the Corporation or common stock or other
<PAGE>
securities or interests in another Person or other property (including
cash) or any combination of the foregoing, then, as a condition of the
consummation of such transaction, lawful and adequate provision shall
be made so that each holder of Preferred Shares shall be entitled, upon
conversion, to an amount per share equal to (A) the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as
the case may be, into which or for which each share of Common Stock is
changed or exchanged times (B) the number of shares of Common Stock
into which such share was convertible immediately prior to the
consummation of such transaction. Any adjustment made pursuant to this
clause (iii) shall become effective immediately upon the consummation
of such transaction.
In calculating the adjustments provided in clauses (i), (ii) and (iii)
above, a Conversion Unit shall include any fractional share resulting from the
calculation.
A "Conversion Event" includes (i) any conversion of Preferred Shares
that would not cause the holder of the shares of Common Stock issued upon
conversion (or any affiliate of such holder) or the Corporation to become
subject to regulation as a registered holding company, or as a subsidiary of a
registered holding company, under the Public Utility Holding Company Act of
1935, as amended from time to time and any successor legislation ("PUHCA")
either as a result of the repeal or amendment of PUHCA, the number of shares
involved or the identity of the holder of such shares and (ii) a Company Sale. A
"Company Sale" includes any involuntary or voluntary liquidation, dissolution,
recapitalization, winding-up or termination of the Corporation and any merger,
consolidation or sale of all or substantially all of the assets of the
Corporation.
The holder of any Preferred Shares may exercise such holder's right to
convert each such share into a Conversion Unit by surrendering for such purpose
to the Corporation, at its principal office or at such other office or agency
maintained by the Corporation for that purpose, a certificate or certificates
representing the Preferred Shares to be converted accompanied by a written
notice stating that such holder elects to convert all or a specified whole
number of such shares in accordance with the provisions of this Section C of
this Article IV and specifying the name or names in which such holder wishes the
certificate or certificates for securities included in the Conversion Unit or
Units to be issued. In case such notice shall specify a name or names other than
that of such holder, such notice shall be accompanied by payment of all transfer
taxes payable upon the issuance of securities included in the Conversion Unit or
Units in such name or names. Other than such taxes, the Corporation will pay any
and all issue and other taxes (other than taxes based on income) that may be
payable in respect of any issue or delivery of the securities and other property
then included in a Conversion Unit or Units upon conversion of Preferred Shares
pursuant hereto. As promptly as practicable, and in any event within three
Business Days after the surrender of such certificate or certificates and the
receipt of such notice relating thereto and, if applicable, payment of all
transfer taxes (or the demonstration to the satisfaction of the Corporation that
such taxes have been paid), the Corporation shall deliver or cause to be
delivered (i) certificates representing the number of validly issued, fully paid
and nonassessable shares of Common Stock (or other securities included in the
Conversion Unit or Units) to which the holder of Preferred Shares so converted
<PAGE>
shall be entitled and (ii) if less than the full number of Preferred Shares
evidenced by the surrendered certificate or certificates are being converted, a
new certificate or certificates, of like tenor, for the number of shares
evidenced by such surrendered certificate or certificates less the number of
shares converted. Such conversion shall be deemed to have been made at the close
of business on the date of giving of such notice and such surrender of the
certificate or certificates representing the Preferred Shares to be converted so
that the rights of the holder thereof as to the shares being converted shall
cease except for the right to receive the securities and other property included
in the Conversion Unit or Units in accordance herewith, and the Person entitled
to receive the securities and other property included in the Conversion Unit or
Units shall be treated for all purposes as having become the record holder of
such securities and other property included in the Conversion Unit or Units at
such time. No holder of Preferred Shares shall be prevented from converting
Preferred Shares, and any conversion of Preferred Shares in accordance with the
terms of this Section C of this Article IV shall be effective upon surrender,
whether or not the transfer books of the Corporation for the Common Stock are
closed for any purpose.
The Corporation shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for the purpose of effecting
the conversion of the Preferred Shares, such number of shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all then
outstanding Preferred Shares. The Corporation shall from time to time, subject
to and in accordance with the Act, increase the authorized amount of Common
Stock if at any time the number of authorized shares of Common Stock remaining
unissued shall not be sufficient to permit the conversion at such time of all
then outstanding Preferred Shares.
Whenever the number of shares of Common Stock and other property
comprising a Conversion Unit into which each Preferred Share is convertible is
adjusted as provided in this Section C of this Article IV, the Corporation shall
promptly mail to the holders of record of the outstanding Preferred Shares at
their respective addresses as the same shall appear in the Corporation's stock
records a notice stating that the number of shares of Common Stock and other
property comprising a Conversion Unit into which each Preferred Share is
convertible has been adjusted and setting forth the new number of shares of
Common Stock (or describing the new stock, securities, cash or other property)
into which each Preferred Share is convertible, as a result of such adjustment,
a brief statement of the facts requiring such adjustment and the computation
thereof, and when such adjustment became effective.
D. Voting Rights.
The holders of the Preferred Shares shall have the following voting
rights:
(A) The holders of the then-outstanding Preferred Shares shall be
entitled to elect, as a class, two (out of a total of ten) directors to the
Board of Directors and to elect the replacement for any director elected by them
who for any reason ceases to serve as a director. In addition, without first
obtaining the consent or approval of the holders of a majority of the
then-outstanding Preferred Shares, voting as a separate class, the Corporation
will not (a) effect any Fundamental Transaction or (b) amend the provisions of
<PAGE>
the Articles of Incorporation of the Corporation in any manner which would alter
or change the powers, preferences or special rights of the Preferred Shares or
that would otherwise adversely affect the rights of the holders of the Preferred
Shares. A "Fundamental Transaction" includes the following (in each case
referring to a single transaction or series of related transactions): (i) the
sale, lease, exchange, mortgage or other disposition (including any spin-off or
split-up) of any business or assets having a fair market value of 25% or more of
the fair market value of the business or assets of the Corporation and its
subsidiaries taken as a whole, the merger or consolidation of the Corporation
with any other Person, a liquidation, dissolution or winding-up of the
Corporation or any recapitalization or reclassification of the securities of the
Corporation; (ii) the acquisition of any business or assets (by way of merger,
acquisition of stock or assets or otherwise) or the making of capital
expenditures not included in the applicable annual budget approved by the Board
of Directors, in each case for a consideration or involving expenditures in
excess of $50,000,000; (iii) the issuance, grant or sale, or the repurchase, of
any equity securities (or any equity-linked securities or obligations) of the
Corporation (or securities convertible into or exchangeable or exercisable for
any such equity securities); (iv) transactions with officers, directors,
stockholders and affiliates of the Corporation except (x) to the extent
effectuated on terms no less favorable to the Corporation than those obtainable
in an arms' length transaction with an unaffiliated Person or (y) in the case of
cash compensation arrangements, which are approved by the Board of Directors
(without regard to the directors elected by the holders of the Preferred
Shares); (v) the removal as chief executive officer of the Corporation of the
person occupying that position on the date of original issuance of the Preferred
Shares (the "Initial CEO") and (vi) the appointment or removal of any person as
chief executive officer of the Corporation after the removal, resignation, death
or disability of the Initial CEO (the consent of the holders of the Preferred
Stock as to the matters set forth in this clause (vi) not to be unreasonably
withheld).
(B) Except as set forth herein, or as otherwise provided by law, holders
of the Preferred Shares shall have no voting rights.
E. Reacquired Shares.
Any Preferred Shares converted, purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock subject to the conditions and
restrictions on issuance set forth herein, in the Articles of Incorporation, or
in any Articles of Amendment creating a series of Preferred Stock or any similar
stock or as otherwise required by law.
F. Liquidation, Dissolution or Winding Up.
Upon any involuntary or voluntary liquidation, dissolution,
recapitalization, winding-up or termination of the Corporation, the assets of
the Corporation available for distribution to the holders of the Corporation's
capital stock shall be distributed in the following priority, with no
<PAGE>
distribution pursuant to the second priority until the first priority has been
fully satisfied and no distribution pursuant to the third priority until the
first and second priorities have both been fully satisfied, First, to the
holders of the Preferred Shares for each Preferred Share, a liquidation
preference of $1.00 per share, Second, to the holders of Common Stock, ratably,
an amount equal to (i) $1.00 divided by the number of shares of Common Stock
then comprising a Conversion Unit, multiplied by (ii) the number of shares of
Common Stock then outstanding, and Third, to the holders of the Preferred Shares
and the Common Stock (ratably, on the basis of the number of shares of Common
Stock then outstanding and, in the case of the Preferred Shares, the number of
shares of Common Stock then comprising a Conversion Unit multiplied by the total
number of Preferred Shares outstanding), all remaining assets of the Corporation
available for distribution to the holders of the Corporation's capital stock.
Neither the consolidation, merger or other business combination of the
Corporation with or into any other Person or Persons nor the sale, lease,
exchange or conveyance of all or any part of the property, assets or business of
the Corporation to a Person or Persons, shall be deemed to be a liquidation,
dissolution or winding up of the Corporation for purposes of this Section F of
this Article IV.
G. Redemption.
The Preferred Shares are not subject to redemption at the option of
the Corporation nor subject to any sinking fund or other mandatory right of
redemption accruing to the holders thereof.
ARTICLE V.
The term of corporate existence of the Corporation shall be perpetual.
ARTICLE VI.
A. No Person shall own shares of Common Stock equal to or in
excess of the Ownership Limit. If there is a purported Transfer or other event
caused by any Person or the Corporation such that a Preferred Eligible
Shareholder would own shares of Common Stock equal to or in excess of the
Ownership Limit, then, that number of shares of Common Stock owned by such
Preferred Eligible Shareholder by which the shares of Common Stock owned by such
Preferred Eligible Shareholder would be equal to or in excess of the Ownership
Limit as a result of the Transfer shall automatically be converted into that
same number of shares of Zero Coupon Convertible Preferred Stock. Such
conversion shall be effective on the books of the Corporation as of the close of
business on the business day prior to the date of the Transfer or other event.
B. If the Board of Directors shall at any time determine in good faith
that a Transfer or other event has taken place in violation of this Article VI,
the Board of Directors may take such action as it deems advisable to refuse to
give effect to or to prevent such Transfer or other event, including, but not
limited to, refusing to give effect to such Transfer or other event on the books
of the Corporation or instituting proceedings to enjoin such Transfer or other
event or transaction; provided, however, that any Transfers or attempted
<PAGE>
Transfers (or, in the case of events other than a Transfer, ownership) in
violation of this Article VI shall be void ab initio in the case of Transfers
that would cause ownership of shares of Common Stock equal to or in excess of
the Ownership Limit by any Person other than a Preferred Eligible Shareholder,
and in the case of ownership or Transfers that would cause ownership of shares
of Common Stock equal to or in excess of the Ownership Limit by a Preferred
Eligible Shareholder shall automatically result in the conversion described in
Section A of this Article VI, irrespective of any action (or non-action) by the
Board of Directors.
ARTICLE VII
The private property of the shareholders of the Corporation shall be
exempt from all corporate debts.
ARTICLE VIII
A. A director of the Corporation shall not be personally liable to
the Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for liability:
(i) for any breach of the director's duty of loyalty to the Corporation or
its shareholders; or
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; or
(iii) for any transaction from which the director derives an improper
personal benefit; or
(iv) under Section 490.833, or a successor provision, of the Act.
B. If, after the date these Articles of Incorporation are filed with
the Iowa Secretary of State, the Act is amended to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be deemed eliminated or limited
to the fullest extent permitted by the Act, as so amended. Any repeal or
modification of Section A or this Section B of this Article VIII, by the
shareholders of the Corporation shall be prospective only and shall not
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
ARTICLE IX
A. Each person who was or is a party or is threatened to be made a party to or
is involved in any action, suit or proceeding, whether civil, criminal,
administrative, investigative or arbitration and whether formal or informal
("proceeding"), by reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a director, officer or employee, of
the Corporation or is or was serving at the request of the Corporation as a
director, officer or employee of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged action in an
official capacity while serving as a director, officer or employee or in any
other capacity while serving as a director, officer or employee, shall be
<PAGE>
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Act, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than the Act permitted
the Corporation to provide prior to such amendment), against all reasonable
expenses, liability and loss (including without limitation attorneys' fees, all
costs, judgments, fines, Employee Retirement Income Security Act excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith. Such right shall be a contract
right and shall include the right to be paid by the Corporation expenses
incurred in defending any such proceeding in advance of its final disposition;
provided, however, that the payment of such expenses incurred by a director,
officer or employee in his or her capacity as a director, officer or employee
(and not in any other capacity in which service was or is rendered by such
person while a director, officer or employee including, without limitation,
service to an employee benefit plan) in advance of the final disposition of such
proceeding, shall be made only upon delivery to the Corporation of (i) a written
undertaking, by or on behalf of such director, officer or employee, to repay all
amounts so advanced if it should be determined ultimately that such director,
officer or employee is not entitled to be indemnified under this Article IX or
otherwise, or (ii) a written affirmation by or on behalf of such director,
officer or employee that, in such person's good faith belief, such person has
met the standards of conduct set forth in the Act.
B. If a claim under Section A is not paid in full by the Corporation within 30
days after a written claim has been received by the Corporation, the claimant
may at any time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in whole or in part, the claimant
shall be entitled to be paid also the expenses of prosecuting such claim. It
shall be a defense to any such action that the claimant has not met the
standards of conduct which make it permissible under the Act for the Corporation
to indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. The failure of the Corporation (including
its Board of Directors, independent legal counsel or its shareholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in the Act, shall not be a
defense to the action or create a presumption that the claimant had not met the
applicable standard of conduct.
C. Indemnification provided hereunder shall, in the case of the death of the
person entitled to indemnification, inure to the benefit of such person's heirs,
executors or other lawful representatives. The invalidity or unenforceability of
any provision of this Article IX shall not affect the validity or enforceability
of any other provision of this Article IX.
D. Any action taken or omitted to be taken by any director, officer or employee
in good faith and in compliance with or pursuant to any order, determination,
approval or permission made or given by a commission, board, official or other
agency of the United States or of any state or other governmental authority with
respect to the property or affairs of the Corporation or any such business
corporation, not-for-profit corporation, joint venture, trade association or
<PAGE>
other entity over which such commission, board, official or agency has
jurisdiction or authority or purports to have jurisdiction or authority shall be
presumed to be in compliance with the standard of conduct set forth in Section
490.851 (or any successor provision) of the Act whether or not it may thereafter
be determined that such order, determination, approval or permission was
unauthorized, erroneous, unlawful or otherwise improper.
E. Unless finally determined, the termination of any litigation, whether by
judgment, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that the action taken or omitted to
be taken by the person seeking indemnification did not comply with the standard
of conduct set forth in Section 490.851 (or any successor provision) of the Act.
F. The rights conferred on any person by this Article IX shall not be exclusive
of any other right which any person may have or hereafter acquire under any
statute, provision of the Articles of Incorporation, Bylaws, agreement, vote of
shareholders or disinterested directors or otherwise.
G. The Corporation may maintain insurance, at its expense, to protect itself and
any such director, officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
such expense, liability or loss, whether or not the Corporation would have the
power to indemnify such person against such expense, liability or loss under the
Act.
ARTICLE X
A. As used in these Articles of Incorporation, the following terms shall
have the following meanings:
(i) "Affiliate" shall mean any Person or entity, directly or
indirectly, controlling, controlled by or under common control with
such Person or entity; "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the State
of New York or the State of Iowa are authorized or obligated by law or
executive order to close;
(ii) "Ownership Limit" shall mean with respect to any Person,
ownership of 10% of the issued and outstanding Common Stock if such
ownership would cause such Person to become subject to regulation as a
registered holding company under PUHCA or the Corporation or any of
its subsidiaries to become subject to regulation as a subsidiary of a
registered holding company under PUHCA;
(iii) "Person" shall mean any person or entity of any nature
whatsoever, specifically including an individual, a firm, a company, a
corporation, a partnership, a trust or other entity;
<PAGE>
(iv) "Preferred Eligible Shareholder" shall mean a holder of Preferred
Shares or its Affiliates; and
(v) "Transfer" shall mean any sale, assignment, pledge, hypothecation,
other disposition or encumbrance, whether or not for consideration.
ARTICLE XI
These Articles of Incorporation may be amended, repealed,
changed or modified at any annual meeting of shareholders of the Corporation or
at a special meeting being called for that purpose or by written consent, in
compliance with the applicable statutes of the State of Iowa.
Exhibit 3.2
BYLAWS
OF
MIDAMERICAN ENERGY HOLDINGS COMPANY
ARTICLE I
OFFICES
Section 1. Principal Office. The principal office of the corporation
shall be in the City of Des Moines, Polk County, Iowa. The corporation may also
have an office or offices at such other place or places either within or without
the State of Iowa as the Board of Directors may from time to time determine or
the business of the corporation may require.
Section 2. Registered Office. The registered office of the corporation
required by the Iowa Business Corporation Act to be maintained in the State of
Iowa may be, but need not be, the same as the principal office of the
corporation in the State of Iowa, and the address of the registered office may
be changed from time to time by the Board of Directors.
ARTICLE II
SHAREHOLDERS' MEETINGS
Section 1. Place. All meetings of the shareholders shall be held in the
City of Des Moines, Iowa and, unless otherwise ordered by the Board of
Directors, shall be held at the principal office of the corporation.
Section 2. Annual Meetings. The annual meeting of shareholders shall be
held on the Wednesday next preceding the last Thursday of April in each year, at
ten o'clock in the morning, when they shall elect the Board of Directors and
transact such other business as may properly be brought before the meeting. The
Board of Directors may, in its discretion, change the date or time, or both, of
the annual meeting of shareholders.
Section 3. Special Meetings. Special meetings of the shareholders for
any purpose or purposes may be called by the President, or by a Vice President
(under such conditions as are prescribed in these bylaws), or by the Chairman of
the Board of Directors (if there be one), or by the Board of Directors, or by
the holders of not less than one-tenth of all the shares entitled to vote at the
meeting.
Section 4. Notice. Notice, in accordance with the Iowa Business
Corporation Act, stating the place, day and hour of the annual meeting and of
any special meeting, and in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be given so that it is effective
not less than ten (10) nor more than sixty (60) days before the date of the
meeting, by or at the direction of the President, or the Secretary, or the
officer or persons calling the meeting, to each shareholder of record entitled
to vote at such meeting.
<PAGE>
Section 5. Right to Vote. Except as provided in Sections 8 and 9 of
this Article II, only shareholders owning shares of stock of a class entitled to
vote as required by the Iowa Business Corporation Act or as provided in the
Articles of Incorporation of record on the books of the corporation on the day
fixed by the Board of Directors for the closing of the stock transfer books of
the corporation prior to any meeting of the shareholders, or, if the stock
transfer books be not closed, of record on the books of the corporation at the
close of business on the day fixed by the Board of Directors as the record date
for the determination of the shareholders entitled to vote at such meeting,
shall be entitled to notice of and shall have the right to vote (either in
person or by proxy) at such meeting.
Section 6. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or entitled to receive
payment of any dividend, or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors of the corporation may provide
that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, seventy (70) days. If the stock transfer books shall be
closed for the purpose of determining shareholders entitled to notice of or to
vote at a meeting of shareholders, such books shall be closed for at least ten
(10) days immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be not
more than seventy (70) days prior to the date on which the particular action
requiring such determination of shareholders is to be taken. Except as provided
in the Articles of Incorporation establishing one or more classes or series of
Preferred Stock, if the stock transfer books are not closed and no record date
is fixed for the determination of shareholders entitled to notice of or to vote
at a meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section 6, such
determination shall apply to any adjournment thereof, except that the Board of
Directors must fix a new record date if the meeting is adjourned to a date more
than one hundred twenty (120) days after the date fixed for the original
meeting.
Section 7. Shareholders' List. The officer having charge of the stock
transfer books for shares of stock of the corporation shall make a complete list
of the shareholders entitled to vote at a meeting of shareholders or any
adjournment thereof, arranged in alphabetical order, with the registered address
of and the number of shares held by each, which list shall be kept on file at
the office of the corporation and shall be subject to inspection by any
shareholder at any time during usual business hours beginning two business days
after notice of such meeting is given for which such list was prepared. Such
list shall also be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any shareholder during the whole time
of the meeting. The original stock transfer books shall be prima facie evidence
as to who are the shareholders entitled to examine such list or transfer books
or to vote at any meeting of shareholders. Failure to comply with the
requirement of this Section 7 shall not affect the validity of any action taken
at any such meeting.
<PAGE>
Section 8. Voting of Shares by Certain Holders. Shares standing in the
name of another corporation, domestic or foreign, may be voted by such officer,
agent or proxy as the bylaws of such corporation may prescribe, or, in the
absence of such provision, as the board of directors of such corporation may
determine.
Shares held by a person who is an administrator, executor, guardian or
conservator may be voted by such person, either in person or by proxy, without
the transfer of such shares into the name of such person. Shares standing in the
name of a trustee may be voted by such trustee, either in person or by proxy,
but no trustee shall be entitled to vote shares held by such trustee without a
transfer of such shares into the name of such trustee.
Shares held in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into the name of such receiver if
authority so to do is contained in an appropriate order of the court by which
such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
On and after the date on which written notice of redemption of
redeemable shares has been mailed to the holders thereof and a sum sufficient to
redeem such shares has been deposited with a bank or trust company with
irrevocable instruction and authority to pay the redemption price to the holders
thereof upon surrender of certificates therefor, such shares shall not be
entitled to vote on any matter and shall not be deemed to be outstanding shares.
Shares of the corporation are not entitled to be voted if they are
owned, directly or indirectly, by a second corporation, and the corporation
owns, directly or indirectly, a majority of the shares entitled to vote for the
election of directors of such second corporation, nor shall any such shares be
counted in determining the total number of outstanding shares at any given time.
At all meetings of shareholders, a shareholder may vote either in
person or by proxy executed in writing by the shareholder or by the duly
authorized attorney-in-fact of such shareholder. Such proxy and any revocation
thereof shall be filed with the Secretary of the corporation. No proxy shall be
valid after eleven (11) months from the date of its execution, unless otherwise
provided in the proxy.
Section 9. Proxies. When a valid proxy is filed with the Secretary of
the corporation, the proxy named therein (or the duly appointed substitute of
such proxy, if the proxy authority permits the appointment of a substitute)
shall be entitled to enter and be present at the shareholders' meeting
designated in the proxy appointment, and to exercise the power granted to such
proxy under such proxy appointment, notwithstanding that the shareholder who
gave the proxy appointment is personally present at the meeting, unless and
until such proxy appointment is revoked by a written instrument of revocation,
stating the time and date of revocation of the proxy appointment, duly signed by
the shareholder who executed the proxy appointment, and filed with the Secretary
of the corporation. Subject to any express limitation or restriction in any such
proxy appointment contained, a vote, consent or action taken by a proxy prior to
revocation thereof, as hereinbefore provided, shall be valid and binding on the
shareholder who gave the proxy appointment. Each proxy appointment, and also
each instrument of revocation thereof, shall be retained by the Secretary of the
corporation as required by regulatory authorities.
<PAGE>
Section 10. Quorum. The holders of a majority of the votes of the
shares entitled to vote thereat, represented in person or by proxy, shall
constitute a quorum for the transaction of business at all meetings of the
shareholders except as otherwise provided by the Iowa Business Corporation Act,
the Articles of Incorporation or these bylaws. The holders of a majority of the
votes of the shares present in person or by proxy at any meeting and entitled to
vote thereat shall have power successively to adjourn the meeting to a specified
date whether or not a quorum be present. The time and place to which any such
adjournment is taken shall be publicly announced at the meeting, and no further
notice thereof shall be necessary. At any such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally called.
Section 11. Manner of Voting. Upon demand of any shareholder entitled
to vote thereon, the vote on any question before the meeting shall be by ballot.
If a quorum is present, the affirmative vote of the majority of the votes of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders, unless the vote of a greater number or
voting by classes is required by the Iowa Business Corporation Act or the
Articles of Incorporation.
Section 12. Officers of the Meeting-Powers. The Chairman of the Board
of Directors (if there be one), or in the absence of the Chairman of the Board,
the President of the corporation shall call meetings of the shareholders to
order and shall act as chairman thereof. The Board of Directors may appoint any
shareholder to act as chairman of any meeting in the absence of the Chairman of
the Board of Directors and the President, and in the case of the failure of the
Board of Directors to appoint a chairman, the shareholders present at the
meeting shall elect a chairman who shall be either a shareholder or a proxy of a
shareholder.
The Secretary of the corporation shall act as secretary at all meetings
of shareholders. In the absence of the Secretary at any meeting of shareholders,
the chairman may appoint any person to act as secretary of the meeting.
Section 13. Power of Chairman. The chairman of any shareholders'
meeting shall have power to determine the eligibility of votes, and may reject
votes, whether cast in person or by proxy, as irregular, unauthorized or not
cast in accordance with the Articles of Incorporation or these bylaws. The
decisions of such chairman as to such matters shall be final unless challenged
from the floor, immediately after being announced, and overruled by the vote of
the holders of a majority of the shares represented at the meeting. Such
chairman may appoint inspectors of election to count ballots, whenever voting is
by ballot. Such chairman shall have power to order any unauthorized persons to
leave the meeting and to enforce such orders, and shall have and exercise all
power and authority, and perform all duties customarily possessed and performed
by the presiding officer of such a meeting.
<PAGE>
Section 14. Action Without Meeting. Any action required or permitted to
be taken at any annual or special meeting of shareholders may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding shares having not less than ninety percent (90%) of the votes
entitled to vote at the meeting at which all shares entitled to vote on the
action were present and voted and shall be delivered to the corporation by
delivery to its registered office in the State of Iowa, its principal place of
business, or an officer or agent of the corporation having custody of the book
in which proceedings of meetings of shareholders are recorded. Delivery made to
the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those shareholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Powers. The business and affairs of the corporation shall
be managed by the Board of Directors.
Section 2. Number and Qualification of Directors. The Board of
Directors shall consist of not more than ten and not less than three members who
shall be elected at the annual meeting of shareholders. A director may but need
not be a shareholder or a resident of the State of Iowa. Each director shall be
elected to serve until the next annual meeting of shareholders and until the
successor of such director shall be elected or appointed as provided in Section
3 of this Article III, and shall have qualified.
Section 3. Vacancies. If a vacancy in the Board of Directors shall
occur by reason of death, resignation, retirement, disqualification, removal
from office, an increase in the number of members, or otherwise, a majority of
the remaining directors, though less than a quorum, may appoint a director to
fill such vacancy, who shall hold office for the unexpired term of the
directorship in respect of which such vacancy occurred or for the full term of
any new directorship caused by any increase in the number of members.
Section 4. Time and Place of Meetings. A regular meeting of the Board
of Directors shall be held, without notice other than this bylaw, immediately
after, and at the same place as, the annual meeting of shareholders. The Board
of Directors may provide, by resolution, the time and place, either within or
without the State of Iowa, for the holding of additional regular meetings
without other notice than such resolution.
Section 5. Special Meetings. Special meetings of the Board of Directors
for any purpose or purposes may be called by the Chairman of the Board of
Directors (if there be one) or by the President or a majority of the Board of
<PAGE>
Directors, and shall be held at such place as may be fixed by the person or
persons calling such meeting and as shall be specified in the notice of such
meeting. The Secretary or an assistant secretary shall give not less than two
(2) days' notice of the date, time and place of each such meeting to each
director in the manner provided in Section 6 of this Article III. Neither the
business to be transacted at, nor the purpose of, any special meeting of the
Board of Directors need be specified in the notice given, or waiver of notice
obtained, of such meeting as provided in Section 7 or 8, as the case may be, of
this Article III.
Section 6. Manner of Giving Notice of Meetings. Notice of any special
meeting of the Board of Directors may be given to any director by telephone,
facsimile or by telegram addressed to such director at such address as last
appears in the records of the Secretary of the corporation or by mail by
depositing the same in the post office or letter box in a postpaid, sealed
envelope addressed to such director at such address.
It shall be the duty of every director to furnish the Secretary of the
corporation with the post office address of such director and to notify the
Secretary of any change therein.
Section 7. Waiver of Notice. Whenever any notice is required to be
given to directors under the provisions of the Iowa Business Corporation Act or
of the Articles of Incorporation or these bylaws, a waiver thereof in writing
signed by the director entitled to such notice, whether before, at or after the
time stated therein, shall be deemed equivalent thereto. Attendance of a
director at a meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called or
convened.
Section 8. Quorum. At all meetings of the Board of Directors, a
majority of the number of directors fixed by these bylaws shall constitute a
quorum for the transaction of business. The act of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors, except as may be otherwise specifically provided by the Iowa
Business Corporation Act or by the Articles of Incorporation or by these bylaws.
If a quorum shall not be present at any meeting of directors, the director or
directors present may adjourn the meeting to a specified time, without notice
other than announcement at the meeting.
Section 9. Conduct of Meetings. The Chairman of the Board of Directors
(if there be one), or in the absence of the Chairman of the Board of Directors,
the President of the corporation shall act as the presiding officer at Board of
Directors meetings, and the Secretary or an assistant secretary of the
corporation shall act as the secretary of the meeting. In the absence of the
Chairman of the Board of Directors (if there be one) and the President, the
Board of Directors may appoint one of its number to act as the presiding
officer. The presiding officer at Board of Director meetings shall be entitled
to vote as a director on all questions.
Minutes of all meetings of the Board shall be permanently kept by the
Secretary, and all minutes shall be signed by the presiding officer and attested
by the secretary of the meeting.
<PAGE>
The Board of Directors shall have power to formulate rules and
regulations governing the conduct of Board of Directors meetings and the
procedure thereat.
Section 10. Executive and Other Committees. The Board of Directors may,
by resolution adopted by a majority of the number of directors fixed in
accordance with Article III, Section 2 of these bylaws, designate from among its
members an executive committee and one or more other committees each of which,
to the extent provided in such resolution and permitted by the Iowa Business
Corporation Act, shall have and may exercise all the authority of the Board of
Directors.
Section 11. Compensation of Directors. The Board of Directors shall
have the authority to fix the compensation of directors. Any director may serve
the corporation in any other capacity and receive compensation therefor.
Section 12. Indemnification of Directors, Officers and Employees.
(a) Right to Indemnification. Each person who was or is a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative or
arbitration and whether formal or informal ("proceeding"), by reason of the fact
that he or she, or a person of whom he or she is the legal representative, is or
was a director, officer or employee of the corporation or is or was serving at
the request of the corporation as a director, officer or employee of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity while serving as a
director, officer or employee or in any other capacity while serving as a
director, officer or employee, shall be indemnified and held harmless by the
corporation to the fullest extent authorized by the Iowa Business Corporation
Act, as the same exists or may hereafter be amended, (but, in the case of any
such amendment, only to the extent that such amendment permits the corporation
to provide broader indemnification rights than the Iowa Business Corporation Act
permitted the corporation to provide prior to such amendment), against all
reasonable expenses, liability and loss(including, without limitation,
attorneys' fees, all costs, judgments, fines, Employee Retirement Income
Security Act excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person in connection
therewith. Such right shall be a contract right and shall include the right to
be paid by the corporation expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, the payment of such
expenses incurred by a director, officer or employee in his or her capacity as a
director, officer or employee (and not in any other capacity in which service
was or is rendered by such person while a director, officer or employee
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of such proceeding, shall be made only upon delivery to
the corporation of (i) a written undertaking, by or on behalf of such director,
officer or employee to repay all amounts so advanced if it should be determined
ultimately that such director, officer or employee is not entitled to be
indemnified under this Section or otherwise, or (ii) a written affirmation by or
on behalf of such director, officer or employee that, in such person's good
faith belief, such person has met the standards of conduct set forth in the Iowa
Business Corporation Act.
<PAGE>
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) is
not paid in full by the corporation within thirty (30) days after a written
claim has been received by the corporation, the claimant may at any time
thereafter bring suit against the corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expenses of prosecuting such claim. It shall be a defense to
any such action that the claimant has not met the standards of conduct which
make it permissible under the Iowa Business Corporation Act for the corporation
to indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the corporation. The failure of the corporation (including
its Board of Directors, independent legal counsel, or its shareholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in the Iowa Business
Corporation Act, shall not be a defense to the action or create a presumption
that claimant had not met the applicable standard of conduct.
(c) Benefit. Indemnification provided hereunder shall, in the case of
the death of the person entitled to indemnification, inure to the benefit of
such person's heirs, executors or other lawful representatives. The invalidity
or unenforceability of any provision of this Section 12 shall not affect the
validity or enforceability of any other provision of this Section 12.
(d) Certain Actions; Presumption of Standard of Conduct. Any action
taken or omitted to be taken by any director, officer or employee in good faith
and in compliance with or pursuant to any order, determination, approval or
permission made or given by a commission, board, official or other agency of the
United States or of any state or other governmental authority with respect to
the property or affairs of the corporation or any such business corporation,
not-for-profit corporation, joint venture, trade association or other entity
over which such commission, board, official or agency has jurisdiction or
authority or purports to have jurisdiction or authority shall be presumed to be
in compliance with the standard of conduct set forth in Section 490.851 (or any
successor provision) of the Iowa Business Corporation Act whether or not it may
thereafter be determined that such order, determination, approval or permission
was unauthorized, erroneous, unlawful or otherwise improper.
(e) Litigation; Presumption of Standard of Conduct. Unless finally
determined, the termination of any litigation, whether by judgment, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that the action taken or omitted to be taken by the person
seeking indemnification did not comply with the standard of conduct set forth in
Section 490.851 (or successor provision) of the Iowa Business Corporation Act.
<PAGE>
(f) Non-Exclusivity of Rights. The rights conferred on any person by
this Section 12 shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, provision of the Articles of
Incorporation, as amended, bylaws, agreement, vote of shareholders or
disinterested directors or otherwise.
(g) Insurance. The corporation may maintain insurance, at its expense,
to protect itself and any such director, officer or employee of the corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the corporation
would have the power to indemnify such person against such expense, liability or
loss under the Iowa Business Corporation Act.
Section 13. Action by Directors Without a Meeting. Any action required
to be taken at a meeting of the Board of Directors or a committee of directors
and any other action which may be taken at a meeting of the Board of Directors
or a committee of directors may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
directors or all of the members of the committee of directors, as the case may
be, entitled to vote with respect to the subject matter thereof.
ARTICLE IV
OFFICERS
At the first regular meeting of the Board of Directors following each
annual meeting of the shareholders, the Board of Directors shall elect a
President, a Secretary and a Treasurer; and the Board of Directors may at any
meeting elect or appoint a Chairman of the Board of Directors, vice presidents
and other officers or assistants to officers.
The Chairman of the Board of Directors (if there be one) shall be
selected from among the members of the Board of Directors. Other officers may
be, but are not required to be, directors. An officer may be, but need not be, a
shareholder of the corporation.
Subject to the power of the Board of Directors to remove any officer
from office at any time when in its judgment the best interests of the
corporation will be served thereby, each officer shall serve until the successor
of such officer is elected or appointed, unless his tenure of office is
otherwise fixed by the Board of Directors by resolution, contract or agreement
for a different period of time.
The Board of Directors shall have power to fix the compensation of each
officer, to decrease or increase such compensation, to prescribe the duties of
such officer, to change the nature of such duties, or to remove such officer
from office and elect or appoint the successor of such officer, in each case
subject to the terms of any agreement between such officer and the corporation.
Section 1. Chairman of the Board of Directors. The Chairman of the
Board of Directors (if there be one) shall preside at all meetings of the
shareholders and of the directors, at which the Chairman is present. The
Chairman shall perform all duties incident to the office of Chairman of the
Board of Directors and such other duties as, from time to time, may be assigned
to the Chairman by the Board of Directors, and, if so designated by an
<PAGE>
appropriate resolution of the Board of Directors or an agreement between the
Chairman and the corporation, shall be the chief executive officer of the
corporation, subject, however, to the right of the Board of Directors to
delegate any specific power to any other officer or officers of the corporation;
and the Chairman shall see that all orders and resolutions of the Board of
Directors are carried into effect.
Section 2. President. The President of the corporation shall have
general and active management of and exercise general supervision of the
business and affairs of the corporation and, if so designated by an appropriate
resolution of the Board of Directors, or an agreement between the President and
the corporation, shall be the chief executive officer of the corporation,
subject, however, to the right of the Board of Directors to delegate any
specific power to any other officer or officers of the corporation; and the
President shall see that all orders and resolutions of the Board of Directors
are carried into effect. The President shall have concurrent power with the
Chairman of the Board of Directors to sign bonds, mortgages, certificates for
shares, and other contracts and documents, except in cases where the signing and
execution thereof shall be expressly delegated by law, by the Board of
Directors, or by these bylaws to some other officer of the corporation. In the
absence of the Chairman of the Board of Directors or in the event of the
disability or refusal of the Chairman to act, the President shall have such
other powers as are vested in the Chairman of the Board of Directors. In
general, the President shall perform the duties incident to the office of
President and such other duties as may be prescribed by the Board of Directors
from time to time.
Section 3. Vice Presidents. The vice presidents shall perform such of
the duties and exercise such of the powers of the President as shall be assigned
to them from time to time by the Board of Directors or the President, and shall
perform such other duties as the Board of Directors or the President shall from
time to time prescribe. Any vice president may sign certificates for shares of
the corporation and any deeds, mortgages, bonds, contracts or other instruments
which the Board of Directors has authorized to be executed, which authorizations
may be either specific or general. In case of the death, disability or absence
of the Chairman of the Board of Directors (if there be one) and the President,
then a vice president shall perform the duties of the President, including
interim duties, and when so acting shall have all the powers of and be subject
to all restrictions upon the President.
Section 4. Secretary. The Secretary shall attend all meetings of the
shareholders and of the Board of Directors and shall keep the minutes of such
meetings. The Secretary shall perform like duties for the standing committees of
the Board of Directors when required. Except as otherwise provided by these
bylaws or by the Iowa Business Corporation Act, the Secretary shall give, or
cause to be given, notice of all meetings of the shareholders and of the Board
of Directors, and shall perform such other duties as may be prescribed by the
Board of Directors or the Chairman of the Board of Directors (if there be one)
or the President.
The Secretary shall have custody of the minute books, containing the
minutes of shareholders' and directors' meetings, of the stock books of the
corporation, and of all corporate records. The Secretary shall have the duty to
see that the books, reports, statements, certificates and all other documents
and reports of the corporation required by law are properly prepared, kept and
filed. The Secretary shall, in general, perform all duties incident to the
office of Secretary.
<PAGE>
Section 5. Assistant Secretaries. The assistant secretaries shall
perform such of the duties and exercise such of the powers of the Secretary as
shall be assigned to them from time to time by the Board of Directors or the
Chairman of the Board of Directors (if there be one) or the President or the
Secretary, and shall perform such other duties as the Board of Directors or the
Chairman of the Board of Directors (if there be one) or the President shall from
time to time prescribe.
Section 6. Treasurer. The Treasurer shall have the custody of all
moneys, stocks, bonds and other securities of the corporation, and of all other
papers on which moneys are to be received and of all papers which relate to the
receipt or delivery of the stocks, bonds, notes and other securities of the
corporation in the possession of the Treasurer. The Treasurer is authorized to
receive and receipt for stocks, bonds, notes and other securities belonging to
the corporation or which are received for its account, and to place and keep the
same in safety deposit vaults rented for the purpose, or in safes or vaults
belonging to the corporation. The Treasurer is authorized to collect and receive
all moneys due the corporation and to receipt therefor, and to endorse all
checks, drafts, vouchers or other instruments for the payment of money payable
to the corporation when necessary or proper and to deposit the same to the
credit of the corporation in such depositaries as the Treasurer may designate
for the purpose, and the Treasurer may endorse all commercial documents for or
on behalf of the corporation. The Treasurer is authorized to pay interest on
obligations when due and dividends on stock when duly declared and payable. The
Treasurer shall, when necessary or proper, disburse the funds of the
Corporation, taking proper vouchers for such disbursements. The Treasurer shall
cause to be kept in the office of the Treasurer true and full accounts of all
receipts and disbursements, and shall render to the Board of Directors and the
Chairman of the Board of Directors (if there be one) or the President, whenever
they may require it, an account of all the transactions as Treasurer and of the
financial condition of the corporation. The Treasurer shall also perform such
other duties as may be prescribed by the Board of Directors or the Chairman of
the Board of Directors (if there be one) or the President. The Treasurer shall,
in general, perform all duties usually incident to the office of Treasurer.
Section 7. Assistant Treasurers. The assistant treasurers shall perform
such of the duties and exercise such of the powers of the Treasurer as shall be
assigned to them from time to time by the Board of Directors or the Chairman of
the Board of Directors (if there be one) or the President or the Treasurer, and
shall perform such other duties as the Board of Directors or the Chairman of the
Board of Directors (if there be one) or the President shall from time to time
prescribe.
ARTICLE V
STOCK CERTIFICATES
<PAGE>
Section 1. Registrars and Transfer Agents. The Board of Directors shall
determine the form of and provide for the issue, registration and transfer of
the stock certificates of the corporation, and may appoint registrars and
transfer agents, who may be natural persons or corporations. The office of any
transfer agent or registrar may be maintained within or without the State of
Iowa.
Section 2. Signatures. Stock certificates issued by the corporation
shall bear the signatures of the Chairman of the Board of Directors (if there be
one) or the President or any Vice President and of the Secretary or any
assistant secretary and such officers are hereby authorized and empowered to
sign such certificates when the issuance thereof has been duly authorized by the
Board of Directors; provided, however, that if certificates representing shares
of any class or series of stock issued by the corporation are countersigned by
manual signature by a transfer agent, other than the corporation or its
employee, or registered by manual signature by a registrar, other than the
corporation or its employee, any other signature on such certificate may be a
facsimile, engraved, stamped or printed. In case any officer who has signed or
whose facsimile signature has been placed upon such certificate for the
corporation shall cease to be such officer of the corporation before such
certificate is issued, such certificate may be issued by the corporation with
the same effect as if he were such officer at the date of its issue.
Section 3. Transfers. Transfers of shares shall be made on the books of
the corporation only by the registered owner thereof (or the legal
representative of such owner, upon satisfactory proof of authority therefor), or
by the attorney of such owner lawfully constituted in writing by documents filed
with the Secretary or transfer agent of the corporation, and only upon surrender
of the certificate to be transferred, or delivery of an order of such owner if
such shares are not represented by a certificate, and payment of applicable
taxes with respect to such transfer, unless otherwise ordered by the Board of
Directors.
Section 4. Lost or Destroyed Certificates. New certificates may be
issued to replace lost, stolen or destroyed certificates, upon such terms and
conditions as the Board of Directors may prescribe.
Section 5. Rights of Registered Owners. The corporation shall be
entitled to recognize the exclusive right of a person registered or shown on its
books as the owner of shares of its stock to receive dividends or any other
distribution thereon, or to vote such shares, and to treat such person as the
owner of such shares for all purposes and the corporation shall not be bound to
recognize any equitable or other claim to or interest in its shares on the part
of any person other than the registered or record owner thereof, whether or not
it shall have notice thereof.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Instruments Affecting Real Estate. Deeds, mortgages and
other instruments affecting real estate owned by the corporation, the execution
of which has been duly authorized by the Board of Directors, shall be signed on
behalf of the corporation by the Chairman of the Board of Directors (if there be
one) or the President or any vice president and by the Secretary or any
assistant secretary. Leases, contracts to purchase, and other instruments
whereby the corporation acquires, in the ordinary course of business, an
interest in real estate owned by others may be executed on behalf of the
corporation by the Chairman of the Board of Directors (if there be one), the
President or by any officer or employee of the corporation thereunto authorized
by the Chairman of the Board of Directors (if there be one) or the President,
without obtaining specific authorization therefor from the Board of Directors.
<PAGE>
Section 2. Other Instruments. Bonds, notes and other secured or
unsecured obligations of the corporation, when duly authorized by the Board of
Directors, may be executed on behalf of the corporation by the Chairman of the
Board of Directors (if there be one) or the President or any vice president, or
by any other officer or officers thereunto duly authorized by the Board of
Directors and the signature of any such officer may, if the Board of Directors
shall so determine, be a facsimile. Contracts and other instruments executed in
the ordinary course of business may be signed on behalf of the corporation by
the Chairman of the Board of Directors (if there be one) or the President or by
any officer or employee of the corporation thereunto authorized by the Chairman
of the Board of Directors (if there be one) or the President, without obtaining
specific authorization therefor from the Board of Directors.
Section 3. Fiscal Year. The fiscal year of the corporation shall be
the calendar year.
Section 4. No Corporate Seal. The corporation shall have no corporate
seal.
Section 5. Stock in Other Corporations. Unless otherwise ordered by the
Board of Directors, the Chairman of the Board of Directors (if there be one) or
the President or any vice president of the corporation (i) shall have full power
and authority to act and vote, in the name and on behalf of this corporation, at
any meeting of shareholders of any corporation in which this corporation may
hold stock, and at any such meeting shall possess and may exercise any and all
of the rights and powers incident to the ownership of such stock, and (ii) shall
have full power and authority to execute, in the name and on behalf of this
corporation, proxies authorizing any suitable person or persons to act and to
vote at any meeting of shareholders of any corporation in which this corporation
may hold stock, and at any such meeting the person or persons so designated
shall possess and may exercise any and all of the rights and powers incident to
the ownership of such stock.
ARTICLE VII
AMENDMENTS
These bylaws may be altered, amended or repealed and new bylaws may be
adopted by vote of a majority of the Board of Directors at any regular or
special meeting of the Board of Directors.
Exhibit 4.9
MIDAMERICAN ENERGY HOLDINGS COMPANY
TO
THE BANK OF NEW YORK
as Trustee
INDENTURE
Dated as of March __, 2000
------------------------
11% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
<PAGE>
TABLE OF CONTENTS
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.....1
Section 101. DEFINITIONS...............................................1
Section 102. COMPLIANCE CERTIFICATES AND OPINIONS......................7
Section 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE....................8
Section 104. ACTS OF HOLDERS; RECORD DATES.............................8
Section 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.....................9
Section 106. NOTICE TO HOLDERS; WAIVER.................................9
Section 107. CONFLICT WITH TRUST INDENTURE ACT........................10
Section 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.................10
Section 109. SUCCESSORS AND ASSIGNS...................................10
Section 110. SEPARABILITY CLAUSE......................................10
Section 111. BENEFITS OF INDENTURE....................................10
Section 112. GOVERNING LAW............................................11
Section 113. LEGAL HOLIDAYS...........................................11
ARTICLE TWO THE DEBENTURES.............................................11
Section 201. FORM AND DATING..........................................11
Section 202. MATURITY.................................................11
Section 203. PAYMENT..................................................11
Section 204. TRANSFERABILITY..........................................12
Section 205. INTEREST.................................................12
Section 206. EXTENSION OF INTEREST PAYMENT PERIOD.....................12
Section 207. NOTICE OF EXTENSION......................................13
Section 208. MANDATORY REDEMPTION.....................................13
Section 209. INTENTIONALLY LEFT BLANK.................................13
Section 210. DENOMINATIONS............................................13
Section 211. EXECUTION, AUTHENTICATION, DELIVERY AND
DATING...................................................14
Section 212. TEMPORARY DEBENTURES.....................................14
Section 213. REGISTRATION OF TRANSFER AND EXCHANGE....................15
Section 214. MUTILATED, DESTROYED, LOST AND STOLEN
DEBENTURES...............................................16
Section 215. DEFAULTED INTEREST; INTEREST RIGHTS PRESERVED............16
Section 216. PERSONS DEEMED OWNERS....................................17
Section 217. CANCELLATION.............................................17
ARTICLE THREE SATISFACTION AND DISCHARGE.................................18
Section 301. SATISFACTION AND DISCHARGE OF INDENTURE..................18
Section 302. APPLICATION OF TRUST MONEY...............................18
ARTICLE FOUR REMEDIES...................................................19
<PAGE>
Section 401. EVENTS OF DEFAULT........................................19
Section 402. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.......20
Section 403. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE...............................................20
Section 404. TRUSTEE MAY FILE PROOFS OF CLAIM.........................21
Section 405. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION
OF DEBENTURES............................................21
Section 406. APPLICATION OF MONEY COLLECTED...........................22
Section 407. LIMITATION ON SUITS......................................22
Section 408. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND
INTEREST; ACKNOWLEDGMENT REGARDING PREFERRED
SECURITIES HOLDERS....................................22
Section 409. RESTORATION OF RIGHTS AND REMEDIES.......................23
Section 410. RIGHTS AND REMEDIES CUMULATIVE...........................23
Section 411. DELAY OR OMISSION NOT A WAIVER...........................23
Section 412. CONTROL BY HOLDERS.......................................23
Section 413. WAIVER OF PAST DEFAULTS..................................24
Section 414. UNDERTAKING FOR COSTS....................................24
Section 415. WAIVER OF USURY, STAY OR EXTENSION LAWS..................24
Section 416. THIRD PARTY BENEFICIARIES................................24
ARTICLE FIVE THE TRUSTEE................................................25
Section 501. CERTAIN DUTIES AND RESPONSIBILITIES......................25
Section 502. NOTICE OF DEFAULTS.......................................25
Section 503. CERTAIN RIGHTS OF TRUSTEE................................25
Section 504. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF DEBENTURES...26
Section 505. MAY HOLD DEBENTURES......................................27
Section 506. MONEY HELD IN TRUST......................................27
Section 507. COMPENSATION AND REIMBURSEMENT...........................27
Section 508. DISQUALIFICATION; CONFLICTING INTERESTS..................28
Section 509. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY..................28
Section 510. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR........28
Section 511. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR...................29
Section 512. MERGER, CONVERSION, CONSOLIDATION OR
SUCCESSION TO BUSINESS...................................30
Section 513. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY........30
Section 514. APPOINTMENT OF AUTHENTICATING AGENT......................30
ARTICLE SIX HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY..........31
Section 601. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS...............................................31
<PAGE>
Section 602. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS...32
Section 603. REPORTS BY TRUSTEE.......................................32
Section 604. INTENTIONALLY LEFT BLANK.................................32
ARTICLE SEVEN CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE.......32
Section 701. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.....32
Section 702. SUCCESSOR SUBSTITUTED....................................33
ARTICLE EIGHT SUPPLEMENTAL INDENTURES....................................33
Section 801. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.......33
Section 802. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS..........34
Section 803. EXECUTION OF SUPPLEMENTAL INDENTURES.....................34
Section 804. EFFECT OF SUPPLEMENTAL INDENTURES........................35
Section 805. CONFORMITY WITH TRUST INDENTURE ACT......................35
Section 806. REFERENCE IN DEBENTURES TO SUPPLEMENTAL INDENTURES.......35
ARTICLE NINE COVENANTS..................................................35
Section 901. PAYMENT OF PRINCIPAL AND INTEREST........................35
Section 902. MAINTENANCE OF OFFICE OR AGENCY..........................35
Section 903. MONEY FOR DEBENTURES PAYMENTS TO BE HELD IN TRUST........36
Section 904. STATEMENT BY OFFICERS AS TO DEFAULT......................36
Section 905. EXISTENCE................................................37
Section 906. MAINTENANCE OF PROPERTIES................................37
Section 907. PAYMENT OF TAXES AND OTHER CLAIMS........................37
Section 908. LIMITATION ON DIVIDENDS AND REPURCHASES; TRANSACTIONS
WITH AFFILIATES.......................................37
Section 909. COVENANTS AS TO THE TRUST................................37
Section 910. PAYMENT OF EXPENSES......................................38
Section 911. INTENTIONALLY LEFT BLANK.................................38
Section 912. WAIVER OF CERTAIN COVENANTS..............................38
ARTICLE TEN REDEMPTION OF DEBENTURES...................................39
Section 1001. MANDATORY AND SPECIAL EVENT REDEMPTION...................39
Section 1002. ELECTION TO REDEEM: NOTICE TO TRUSTEE....................39
Section 1003. PARTIAL REPAYMENTS PRO RATA..............................39
Section 1004. NOTICE OF REDEMPTION.....................................39
Section 1005. DEPOSIT OF REDEMPTION PRICE..............................40
Section 1006. DEBENTURES PAYABLE ON REDEMPTION DATE....................40
Section 1007. DEBENTURES REDEEMED IN PART..............................40
<PAGE>
ARTICLE ELEVEN SUBORDINATION..............................................40
Section 1101. AGREEMENT TO SUBORDINATE; RANKING OF DEBENTURES..........41
Section 1102. DEFAULT ON SENIOR INDEBTEDNESS...........................41
Section 1103. LIQUIDATION; DISSOLUTION; BANKRUPTCY.....................41
Section 1104. SUBROGATION..............................................42
Section 1105. TRUSTEE TO EFFECTUATE SUBORDINATION......................43
Section 1106. NOTICE BY THE COMPANY....................................43
Section 1107. RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR INDEBTEDNESS....44
Section 1108. SUBORDINATION MAY NOT BE IMPAIRED........................44
ARTICLE TWELVE DEFEASANCE.................................................45
Section 1201. DEFEASANCE AND DISCHARGE.................................45
Section 1202. CONDITIONS TO DEFEASANCE.................................45
Section 1203. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.........47
Section 1204. REINSTATEMENT............................................47
ARTICLE THIRTEEN MEETINGS OF HOLDERS OF DEBENTURES..........................47
Section 1301. PURPOSE FOR WHICH MEETINGS MAY BE CALLED.................47
Section 1302. CALL, NOTICE AND PLACE OF MEETINGS.......................47
Section 1303. PERSONS ENTITLED TO VOTE AT MEETINGS.....................48
Section 1304. QUORUM; ACTION...........................................48
Section 1305. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT
OF MEETINGS...........................................49
Section 1306. COUNTING VOTES AND RECORDING ACTION OF MEETINGS..........49
<PAGE>
INDENTURE, dated as of March __, 2000, between MIDAMERICAN ENERGY
HOLDINGS COMPANY, a corporation duly organized and existing under the laws of
the State of Iowa (herein called the "Company"), having its principal office at
666 Grand Avenue, Des Moines, Iowa 50309 and The Bank of New York, a New York
banking corporation, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its 11% Junior
Subordinated Deferrable Interest Debentures to be issued in one or more series
(herein called the "Debentures").
The Company has entered into an agreement and plan of merger whereby
Teton Acquisition Corp. will merge with and into the Company with the Company
being the surviving corporation.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Debentures by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Debentures, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with United States generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation;
<PAGE>
(4) the words "Article" and "Section" refer to an Article and Section,
respectively, of this Indenture;
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(6) a reference to the masculine includes the feminine and vice versa.
"Act" when used with respect to any Holder, has the meaning specified in Section
104.
"Additional Interest" has the meaning given such term in Section 205(3).
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act or any successor rule thereunder.
"Authenticating Agent" means any Person authorized by the Trustee pursuant to
Section 514 to act on behalf of the Trustee to authenticate the Debentures.
"Board of Directors" means either the board of directors of the Company or any
duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification
and delivered to the Trustee.
"Business Day" means any day other than Saturday, Sunday or a day on which
banking institutions in New York, New York are authorized or required by law to
close.
"Commission" means the Securities and Exchange Commission, as from time to time
constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Securities" has the meaning given to such term in the Declaration.
<PAGE>
"Company" means the Person named as the "Company" in the first paragraph of this
instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" or "Company Order" means a written request or order signed in
the name of the Company by its Chairman of the Board, Chief Executive Officer,
President or a Vice President, Treasurer or an Assistant Treasurer or other
officer or agent of the Company duly authorized by the board of directors of the
Company to execute such request or order.
"Compounded Interest" has the meaning given such term in Section 206.
"Corporate Trust Office" means the principal office of the Trustee at which at
any particular time its corporate trust business shall be administered, which
office at the date of execution of this Indenture is located at The Bank of New
York, 101 Barclay Street, Corporate Trust Trustee Administration, Floor 21 West,
New York, New York 10286.
"Corporation" means a corporation, association, company, joint-stock company or
statutory business trust.
"Debentures" has the meaning stated in the first recital of this Indenture and
more particularly means any Debentures authenticated and delivered under this
Indenture.
"Debt" means with respect to the Company whether recourse is to all or a portion
of the assets of the Company and whether or not contingent, (i) every obligation
of the Company for money borrowed, (ii) every obligation of the Company
evidenced by bonds, debentures, notes or other similar instruments, including
obligations incurred in connection with the acquisition of property, assets or
businesses, (iii) every reimbursement obligation of the Company with respect to
letters of credit, bankers' acceptances, lines of credit or similar facilities
issued for the account of the Company, (iv) every obligation of the Company
issued or assumed as the deferred purchase price of property or services (but
excluding trade accounts payable or accrued liabilities arising in the ordinary
course of business) (v) every capital lease obligation of the Company and (vi)
every obligation of the type referred to in clauses (i) through (v) of another
person and all dividends of another person the payment of which, in either case,
the Company has guaranteed or is responsible or liable for, directly or
indirectly, as obligor or otherwise.
<PAGE>
"Declaration" means the Amended and Restated Declaration of Trust relating to
the Trust dated as of March __, 2000 among MidAmerican Energy Holdings Company,
as sponsor, The Bank of New York, as Property Trustee, The Bank of New York
(Delaware), as Delaware Trustee, Gregory E. Abel and David L. Sokol, as Regular
Trustees, and the holders, from time to time, of undivided beneficial interests
in the Trust issued pursuant to the Declaration.
"Defaulted Interest" has the meaning specified in Section 215.
"Defeasance" has the meaning specified in Section 1201.
"Deferred Interest" means Additional Interest and Compounded Interest; any
reference herein to interest on the Subordinated Debentures shall be deemed to
include any Deferred Interest.
"Definitive Debentures" has the meaning specified in Section 201.
"Definitive Preferred Security Certificates" has the meaning given such term in
the Declaration.
"Delaware Trustee" has the meaning given such term in the Declaration.
"Dissolution Event" means a termination of the Trust pursuant to Section
8.1(a)(v) of the Declaration pursuant to which the Debentures held by the
Property Trustee are to be distributed to the holders of the Trust Securities in
accordance with the Declaration.
"Distributions" has the meaning given such term in the Declaration.
"Event of Default" has the meaning specified in Section 401.
"Exchange Act" means the Securities Exchange Act of 1934, as the same may be
amended from time to time, and any successor legislation.
"Extension Period" has the meaning given such term in Section 206.
"Holder" means the Person in whose name a Debenture is registered in the
Register.
"Indenture" means this instrument as originally executed or as it may from time
to time be supplemented or amended, including, for all purposes of this
instrument, the provisions of the Trust Indenture Act, if applicable, that are
deemed to be a part of and govern this instrument.
<PAGE>
"Interest Payment Date" has the meaning given to such term in Section 205(1).
"Interest Rate" has the meaning given such term in Section 205(1).
"Investment Company Act Event" means receipt by the Trust or the Company of an
opinion of nationally recognized independent counsel experienced in such matters
to the effect that, as a result of a change in law or regulation or a written
change in interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority after the date hereof,
there is more than an insubstantial risk that the Trust is or will be considered
an investment company under the Investment Company Act of 1940 (the "1940 Act").
"Lien" means any lien, mortgage, pledge, security interest, charge or other
encumbrance of any kind.
"Maturity" when used with respect to any Debenture, means the date on which the
principal of such Debenture or an installment of interest thereon becomes due
and payable as therein or herein provided, whether at an Interest Payment Date,
at the Maturity Date or by declaration of acceleration, call for redemption or
otherwise.
"Maturity Date" means the date determined in accordance with Section 202 and on
which the Debentures shall mature and the principal thereof shall be due and
payable together with all accrued and unpaid interest thereon, including
Deferred Interest, if any.
"Officer's Certificate" means a certificate signed by the Chief Executive
Officer, President, a Vice President, Treasurer or an Assistant Treasurer or
other officer or agent of the Company duly authorized by the board of directors
of the Company to execute such certificate, and delivered to the Trustee. The
officer signing an Officer's Certificate pursuant to Section 904 shall be the
principal executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel for
the Company, and who shall, and which opinion shall, be acceptable to the
Trustee.
<PAGE>
"Outstanding" when used with respect to the Debentures, means, as of the date of
determination, all Debentures of all series theretofore authenticated and
delivered under this Indenture, EXCEPT:
(1) Debentures theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(2) Debentures for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for the Holders of
such Debentures; provided that, if such Debentures are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(3) Debentures as to which Defeasance has been effected pursuant to
Section 1202; and
(4) Debentures which have been paid pursuant to Section 214 or in
exchange for or in lieu of which other Debentures have been authenticated and
delivered pursuant to this Indenture, other than any such Debentures in respect
of which there shall have been presented to the Trustee proof satisfactory to it
that such Debentures are held by a bona fide purchaser in whose hands such
Debentures are valid obligations of the Company; provided, however, that in
determining whether the Holders of the requisite principal amount of the
Outstanding Debentures have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Debentures owned by the Company or any
other obligor upon the Debentures or any Subsidiary of the Company or of such
other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Debentures which a Responsible Officer of the Trustee actually knows to be so
owned shall be so disregarded. Debentures so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Debentures and that the pledgee is not the Company or any other obligor upon the
Debentures or any Subsidiary of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the principal
of or interest on any Debenture on behalf of the Company.
<PAGE>
"Permitted Holders" means (i) Berkshire Hathaway Inc. and any of its
subsidiaries which are directly or indirectly 50% or more owned by it and which
are consolidated with it for financial reporting purposes or (ii) any Person
following any Event of Default specified in Section 401 (1), (2), or (3) that
results in an acceleration of the Subordinated Debentures or any Event of
Default specified in Section 401 (4), (5) or (6).
Person" means a legal person, including any individual, corporation, estate,
limited liability company, partnership, joint venture, association, joint stock
company, trust, statutory business trust, unincorporated association or
government or any agency or political subdivision thereof.
"Place of Payment" means, except as otherwise specified herein, the Corporate
Trust Office of the Trustee.
"Predecessor Debenture" of any particular Debenture means every previous
Debenture evidencing all or a portion of the same debt as that evidenced by such
particular Debenture; and, for the purposes of this definition, any Debenture
authenticated and delivered under Section 214 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Debenture shall be deemed to evidence the
same debt as the lost, destroyed, mutilated or stolen Debenture.
"Preferred Securities" means 11% Trust Issued Preferred Securities of the Trust
representing preferred undivided beneficial interests in the assets of the Trust
in an aggregate amount of up to $800,000,000 as may be issued from time to time
pursuant to that certain Subscription Agreement between the Trust and Berkshire
Hathaway Inc. (including any of its assignees thereunder).
"Preferred Securities Guarantee" has the meaning given such term in the
Declaration.
"Property Trustee" has the meaning given such term in the Declaration.
"Redemption Date", when used with respect to any Debenture to be redeemed, means
the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price" has the meaning specified in Section 1001(1)(a).
"Register" and "Registrar" have the respective meanings specified in Section
213.
<PAGE>
"Regular Record Date" has the meaning given to such term in Section 205(1).
"Regular Trustee" has the meaning given to such term in the Declaration.
"Responsible Officer" when used with respect to the Trustee, means any vice
president, any assistant vice president, any assistant treasurer or any other
officer in the Corporate Trust Office of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
having direct responsibility for the administration of this Indenture, and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Securities Act" means the Securities Act of 1933, as the same may be amended
from time to time, or any successor legislation.
"Senior Indebtedness" means, with respect to the Company, principal of and
premium and interest, if any, on Debt of the Company, except for (i) any Debt
that is by its terms subordinated to or pari passu with the Debentures, (ii) any
Debt (including all other debt securities and guarantees in respect of those
debt securities) initially issued to any trust, or a trustee of such trust,
partnership, or other entity affiliated with the Company that is, directly or
indirectly, a financing vehicle of the Company in connection with the issuance
by such entity of preferred securities or other similar securities that contain
or have applicable thereto subordination provisions substantially identical in
effect to the subordination provisions set forth herein applicable to the
Debentures providing for such indebtedness being junior and subordinate in right
of payment to all Senior Indebtedness, (iii) any Debt of the Company to any of
its Subsidiaries, (iv) Debt or monetary obligations to trade creditors created
or assumed by the Company or any of its Subsidiaries in the ordinary course of
business in connection with the obtaining of goods, materials or services, (v)
any Debt of the Company which, when incurred and without respect to any election
under Section 1111(b) of the United States Bankruptcy Code, was without recourse
to the Company, (vi) Debt to any employee of the Company, and (vi) any liability
for taxes.
"Series Issue Date" has the meaning specified in Section 205.
"Special Event" means the occurrence of an Investment Company Act Event or a Tax
Event.
<PAGE>
"Special Record Date" for the payment of any Defaulted Interest on any Debenture
means a date fixed by the Trustee pursuant to Section 215.
"Subsidiary" means a corporation more than 50% of the outstanding voting stock
of which is owned, directly or indirectly, by the Company or by one or more
other Subsidiaries, or by the Company and one or more other Subsidiaries. For
the purposes of this definition, "voting stock" means stock which ordinarily has
voting power for the election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason of any contingency.
"Tax Event" means receipt by the Trust or the Company of an opinion of
nationally recognized independent tax counsel experienced in such matters to the
effect that, as a result of (i) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein, (ii) any amendment to or change in an interpretation or application of
such laws or regulations by any legislative body, court, governmental agency or
regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination on or after the
date hereof), (iii) any interpretation or pronouncement by any such body, court,
agency or authority that provides for a position with respect to such laws or
regulations that differs from the theretofore generally accepted position or
(iv) any action taken by any governmental agency or regulatory authority, which
amendment or change is enacted, promulgated or effective, or which
interpretation or pronouncement is issued or announced, or which action is
taken, in each case on or after the date hereof, there is more than an
insubstantial risk that (a) the Trust is, or within 90 days of the date thereof
will be, subject to United States federal income tax with respect to income
accrued or received on the Debentures, (b) interest payable by the Company on
the Debentures is not, or within 90 days of the date thereof will not be,
deductible by the Company for United States federal income tax purposes or (c)
the Trust is, or within 90 days of the date thereof will be, subject to more
than a de minimis amount of other taxes, duties or other governmental charges.
"Trust" means MidAmerican Capital Trust I, a Delaware statutory business trust.
"Trustee" means the Person named as the "Trustee" in the first paragraph of this
instrument until a successor Trustee shall have become such with respect to the
Debentures pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" shall mean or include each Person who is then a Trustee
hereunder.
<PAGE>
"Trust Indenture Act" means the Trust Indenture Act of 1939 as the same may be
amended from time to time, or any successor legislation.
"Trust Securities" means Common Securities and Preferred Securities.
"U.S. Government Obligations" has the meaning specified in Section 1202(1).
"Vice President", when used with respect to the Company or the Trustee, means
any vice president, whether or not designated by a number or a word or words
added before or after the title "vice president".
Section 102. COMPLIANCE CERTIFICATES AND OPINIONS.
------------------------------------
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officer's Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
<PAGE>
Section 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
--------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 104. ACTS OF HOLDERS; RECORD DATES.
-----------------------------
Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing. Except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments are delivered to the
Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent, or of the holding by any Person of a
Debenture, shall be sufficient for any purpose of this Indenture and (subject to
Section 501) conclusive in favor of the Trustee and the Company and any agent of
the Trustee or the Company, if made in the manner provided in this Section.
<PAGE>
The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
The ownership, principal amount and serial number of Debentures shall
be proved by the Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Debenture shall bind every future Holder of
the same Debenture and the Holder of every Debenture issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Debenture.
The Company may, in the circumstances permitted by the Trust Indenture
Act, set any day as the record date for the purpose of determining the Holders
of Outstanding Debentures entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action permitted by
this Indenture to be given or taken by Holders of Debentures. With regard to any
record date set pursuant to this paragraph, the Holders of Outstanding
Debentures on such record date (or their duly appointed agents), and only such
Persons, shall be entitled to give or take the relevant action, whether or not
such Holders remain Holders after such record date. With regard to any action
that may be given or taken hereunder only by Holders of a requisite principal
amount of Outstanding Debentures (or their duly appointed agents) and for which
a record date is set pursuant to this paragraph, the Company may, at its option,
set an expiration date after which no such action purported to be given or taken
by any Holder shall be effective hereunder unless given or taken on or prior to
such expiration date by Holders of the requisite principal amount of Outstanding
Debentures on such record date (or their duly appointed agents). On or prior to
any expiration date set pursuant to this paragraph, the Company may, on one or
more occasions at its option, extend such date to any later date. Nothing in
this paragraph shall prevent any Holder (or any duly appointed agent thereof)
from giving or taking, after any expiration date, any action identical to, or,
at any time, contrary to or different from, any action given or taken, or
purported to have been given or taken, hereunder by a Holder on or prior to such
date, in which event the Company may set a record date in respect thereof
pursuant to this paragraph.
<PAGE>
Without limiting the foregoing, a Holder entitled hereunder to give or
take any action hereunder with regard to any particular Debenture may do so with
regard to all or any part of the principal amount of such Debenture or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any different part of such principal amount.
Section 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.
-------------------------------------
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with, (1) the Trustee by any
Holder or by the Company shall be sufficient for every purpose hereunder if
made, given, furnished or filed in writing to or with the Trustee at its
Corporate Trust Office or sent by facsimile to the Trustee at (212)815-5915 or
at any other number previously furnished in writing to the Company by the
Trustee, or (2) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed to it
to the attention of its Treasurer at the address of its principal office
specified in the first paragraph of this instrument or at any other address
previously furnished in writing to the Trustee by the Company or if sent to the
Company by facsimile addressed to it to the attention of its Treasurer at (515)
242-4295.
Section 106. NOTICE TO HOLDERS; WAIVER.
-------------------------
Except as otherwise expressly provided in or pursuant to this
Indenture, where this Indenture provides for notice to Holders of Debentures of
any event, such notice shall be sufficiently given to Holders of Debentures if
in writing and mailed, first-class postage prepaid, to each Holder of a
Debenture affected by such event, at his address as it appears in the Register,
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice.
In any case where notice to Holders of Debentures is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
<PAGE>
to any particular Holder of a Debenture shall affect the sufficiency of such
notice with respect to other Holders of Debentures given as provided herein. Any
notice which is mailed in the manner herein provided shall be conclusively
presumed to have been duly given or provided. In case by reason of the
suspension of regular mail service or by reason of any other cause it shall be
impracticable to give such notice by mail, then such notification as shall be
made with the approval of the Trustee shall constitute a sufficient notification
for every purpose hereunder.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders of Debentures shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
Section 107. CONFLICT WITH TRUST INDENTURE ACT.
---------------------------------
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
Section 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
----------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 109. SUCCESSORS AND ASSIGNS.
----------------------
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 110. SEPARABILITY CLAUSE.
-------------------
In case any provision in this Indenture or any Debenture shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
<PAGE>
Section 111. BENEFITS OF INDENTURE.
---------------------
Nothing in this Indenture or the Debentures, express or implied, shall
give to any Person (including any Paying Agent or Authenticating Agent appointed
pursuant to Section 514), other than the parties hereto and holders of Senior
Indebtedness and their successors hereunder and the Holders of Debentures, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 112. GOVERNING LAW.
-------------
This Indenture and the Debentures shall, pursuant to New York General
Obligations Law Section 5-1401, be governed by and construed in accordance with
the law of the State of New York.
Section 113. LEGAL HOLIDAYS.
--------------
In any case where any Redemption Date or the Maturity Date shall not be
a Business Day at the Place of Payment, then (notwithstanding any other
provision of this Indenture or the Debentures) payment of principal need not be
made at the Place of Payment on such date, but may be made on the next
succeeding Business Day at the Place of Payment with the same force and effect
as if made on the respective Redemption Date or the Maturity Date, provided that
no interest shall accrue for the period from and after such Redemption Date or
the Maturity Date, as the case may be.
ARTICLE TWO
THE DEBENTURES
Section 201. FORM AND DATING.
---------------
There is hereby authorized $800,000,000.00 aggregate principal amount
of Debentures designated the "11% Junior Subordinated Deferrable Interest
Debentures."
The Debentures may be issued in one or more series, provided, however,
that the original principal amount of each series (other than the final series)
must be at least $50,000,000 and further provided that each series has its own
Series Issue Date (as defined below). There shall be established in or pursuant
to one or more Officer's Certificates, prior to the initial issuance of
Debentures of any series, the designation of the Debentures of such series,
which shall distinguish the Debentures of the series from the Debentures of all
other series. All other terms of such series shall be identical and consistent
with the provisions of this Indenture.
<PAGE>
Pursuant to Section 211, the Debentures are to be initially issued in
fully registered certificated form without interest coupons ("Definitive
Debentures") in the name of the Property Trustee pursuant to the Declaration on
behalf of the Trust. The Debentures and the Trustee's certificate of
authentication thereof shall be substantially in the form set forth in Exhibit A
hereto, which is hereby incorporated in and made a part of this Indenture. The
Debentures may have such notations, legends or endorsements as may be required
by any law, rule, usage or agreement to which the Company is subject.
Section 202. MATURITY.
--------
The Maturity Date of each series will be tenth anniversary of the
Series Issue Date of such series.
Section 203. PAYMENT.
-------
Principal of and interest on Definitive Debentures will be payable, the
transfer of such Debentures will be registrable and such Debentures will be
exchangeable for Debentures bearing identical terms and provisions, at the
Corporate Trust Office of the Trustee; provided, however, that payment of
interest may be made at the option of the Company by check mailed to the Holder
at such address as shall appear in the Register. Notwithstanding the foregoing,
so long as the Holder of the Debentures is the Property Trustee, the payment of
the principal of and interest, including Deferred Interest, if any, on such
Debentures held by the Property Trustee will be made in immediately available
funds at such place and to such account as may be designated by the Property
Trustee.
Section 204. TRANSFERABILITY.
---------------
The Debentures shall be transferable only to Permitted Holders.
Section 205. INTEREST.
--------
(1) Subject to the provisions of Section 206, the Debentures of each
series will bear interest at the rate of 11% per annum (the "Interest Rate")
from the date of original issuance of the Debentures of such series under this
Indenture (the "Series Issue Date") until the principal thereof becomes due and
payable, and on any overdue principal and (to the extent that payment of such
interest is enforceable under applicable law) on any overdue installment of
interest at the Interest Rate, compounded semi-annually, payable (subject to the
provisions of Section 206) semi-annually in arrears on June 15 and December 15
of each year (each, an "Interest Payment Date"), commencing on the first such
date following the Series Issue Date, to the Person in whose name such Debenture
or any predecessor Debenture is registered, at the close of business on the
regular record date for such interest installment, which, in respect of any
Debenture registered in the name of the Property Trustee, shall be the close of
business on the Business Day next preceding that Interest Payment Date (the
"Regular Record Date"). Notwithstanding the foregoing sentence, if the
Debentures are not registered in the name of the Property Trustee, the Company
may select a regular record date for such interest installment which shall be
any date at least one Business Day before an Interest Payment Date.
<PAGE>
(2) The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. Except as provided in the
following sentence, the amount of interest payable for any period shorter than a
full semi-annual period for which interest is computed, will be computed on the
basis of the actual number of days elapsed in such a 30-day month. In the event
that any date on which interest is payable on the Debentures is not a Business
Day, then payment of the interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, notwithstanding the
provisions of Section 113, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date.
(3) If at any time while the Property Trustee is the Holder of any
Debentures, the Trust is required to pay any taxes, duties, assessments or
governmental charges of whatever nature (other than withholding taxes) imposed
by the United States, or any other taxing authority, then, in such case, the
Company will pay as additional interest on the Debentures ("Additional
Interest"), such additional amounts as shall be required so that the net amounts
received and retained by the Trust after paying such taxes, duties, assessments
or other governmental charges will not be less than the amounts the Trust would
have received had no such taxes, duties, assessments or other governmental
charges been imposed.
Section 206. EXTENSION OF INTEREST PAYMENT PERIOD.
------------------------------------
So long as no Event of Default has occurred and is continuing, the
Company shall have the right at any time, and from time to time and for varying
lengths of time, during the term of the Debentures to defer payments of interest
by extending the interest payment period on the Debentures for a period not
exceeding 10 consecutive semi-annual periods (each, an "Extension Period").
Despite such deferral, semi-annual interest will continue to accumulate with
interest thereon (to the extent permitted by applicable law) at an annual rate
of thirteen percent (13%) per annum compounded semi-annually during any such
Extension Period ("Compounded Interest"). At the end of the Extension Period the
<PAGE>
Company shall pay all interest accrued and unpaid on the Debentures, including
any Deferred Interest that shall be payable, to the Holders of the Debentures in
whose names the Debentures are registered in the Register on the first Regular
Record Date after the end of the Extension Period. Prior to the termination of
any Extension Period, the Company may further defer payments of interest by
extending the interest payment period, provided that such Extension Period
together with all such previous and further extensions thereof shall not exceed
10 consecutive semi-annual periods. Upon the termination of any Extension Period
and upon the payment of all amounts then due, the Company may commence a new
Extension Period, subject to the foregoing requirements. No interest shall be
due and payable during an Extension Period except at the end thereof. An
Extension Period with respect to any Debenture may not extend beyond the
Maturity of the principal of such Debenture or, as to each Debenture being
optionally redeemed or, in the case of mandatory redemption, the portion thereof
being redeemed, beyond the relevant Redemption Date.
Section 207. NOTICE OF EXTENSION.
-------------------
(1) If the Property Trustee is the only Holder of the Debentures at the
time the Company selects an Extension Period, the Company shall give written
notice to the Regular Trustees, and the Property Trustee of its selection of
such Extension Period one Business Day prior to the earlier of
(a) the next succeeding date on which Distributions on the Trust
Securities are payable and
(b) the date the Regular Trustees are required to give notice of
the record date or the date such Distributions are payable
to the New York Stock Exchange, Inc. (or other applicable
self-regulatory organization) or to holders of the Preferred
Securities, but in any event at least one Business Day
before such record date.
(2) If the Property Trustee is not the only Holder of the Debentures at
the time the Company selects an Extension Period, the Company shall give the
Holders of the Debentures and the Trustee written notice of its selection of
such Extension Period 10 Business Days prior to the earlier of (i) the next
succeeding Interest Payment Date and (ii) the date the Company is required to
give notice of the record or such Interest Payment Date of such interest payment
to the New York Stock Exchange, Inc. (or other applicable self-regulatory
organization) or to Holders.
<PAGE>
(3) The semi-annual period in which any notice is given pursuant to
paragraphs (1) or (2) of this Section 207 shall be counted as one of the 10
semi-annual periods permitted in the maximum Extension Period permitted under
Section 206.
Section 208. MANDATORY REDEMPTION.
--------------------
The Debentures are subject to mandatory redemption in accordance with
Section 1001.
Section 209. INTENTIONALLY LEFT BLANK.
------------------------
Section 210. DENOMINATIONS.
-------------
The Debentures shall be issued in denominations of $25 and any integral
multiple thereof.
Section 211. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
----------------------------------------------
The Debentures shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or one of
its Vice Presidents or any other authorized officer. The signature of any of
these officers on the Debentures may be manual or facsimile.
Debentures bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Debentures.
The Company may at any time and from time to time deliver Debentures,
executed by the Company, to the Trustee for authentication, together with a
Company Order (attaching a form of the Debentures and the Officer's Certificate
required by Section 201) for the authentication and delivery of such Debentures,
and the Trustee in accordance with the Company Order shall authenticate and
deliver such Debentures. Each Debenture shall be dated the date of its
authentication. The Trustee shall be entitled to receive and (subject to Section
501) shall be fully protected in relying upon an Opinion of Counsel stating that
the Debentures, when authenticated and delivered by the Trustee and issued by
the Company in the manner and subject to any conditions specified in such
Opinion of Counsel, will constitute the legally valid and binding obligations of
the Company enforceable against the Company in accordance with their terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or affecting creditors, rights generally (including,
without limitation, fraudulent conveyance laws) and by general principles of
equity, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing and the possible unavailability of specific
performance or injunctive relief regardless of whether considered in a
proceeding in equity or at law.
<PAGE>
No Debenture shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Debenture a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Debenture shall be conclusive evidence, and the only evidence, that such
Debenture has been duly authenticated and delivered hereunder. Notwithstanding
the foregoing, if any Debenture shall have been authenticated and delivered
hereunder but never issued and sold by the Company, and the Company shall
deliver such Debenture to the Trustee for cancellation as provided in Section
217, for all purposes of this Indenture such Debenture shall be deemed never to
have been authenticated and delivered hereunder and shall never be entitled to
the benefits of this Indenture.
Section 212. TEMPORARY DEBENTURES.
--------------------
Pending the preparation of Definitive Debentures hereunder, the Company
may execute, and upon Company Order the Trustee shall, at the expense of the
Company, authenticate and deliver, temporary Debentures which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of such Definitive Debentures in lieu
of which they are issued, in registered form and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such temporary Debentures may determine, as evidenced by their
execution of such temporary Debentures.
Every temporary Debenture shall be executed by the Company and
authenticated by the Trustee and registered by the Registrar, upon the same
conditions, and with like effect, as a Definitive Debenture.
If temporary Debentures are issued, the Company will cause Definitive
Debentures to be prepared without unreasonable delay. After the preparation of
such Definitive Debentures, the temporary Debentures shall be exchangeable for
such Definitive Debentures upon surrender of the temporary Debentures at the
office or agency of the Company in the Place of Payment, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Debentures,
the Company shall execute and the Trustee shall, at the expense of the Company,
authenticate and deliver in exchange therefor one or more Definitive Debentures,
of any authorized denominations and of a like aggregate principal amount and
tenor. Until so exchanged such temporary Debentures shall in all respects be
entitled to the same benefits under this Indenture as Definitive Debentures.
<PAGE>
Section 213. REGISTRATION OF TRANSFER AND EXCHANGE.
-------------------------------------
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Company specified therefor being herein sometimes
collectively referred to as the "Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of transfer or exchange of Debentures. The Trustee is hereby appointed
"Registrar" for the purpose of registering transfers or exchanges of Debentures
as herein provided.
Upon surrender for registration of transfer of any Debenture at the
Corporate Trust Office of the Trustee or any office or agency specified therefor
by the Company, the Company shall execute, and the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Debentures of the same series, of any authorized denominations and of a
like aggregate principal amount and tenor.
At the option of the Holder, Debentures may be exchanged for other
Debentures of the same series, of any authorized denominations and of a like
aggregate principal amount and tenor, upon surrender of the Debentures to be
exchanged at such office or agency. Whenever any Debentures are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Debentures which the Holder making the exchange is entitled to
receive.
All Debentures issued upon any registration of transfer or exchange of
Debentures shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Debentures
surrendered upon such registration of transfer or exchange.
Every Debenture presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Registrar duly executed, by the Holder
thereof or his attorney duly authorized in writing.
<PAGE>
No service charge shall be made for any registration of transfer or
exchange of Debentures, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Debentures, other than
exchanges pursuant to Section 212, 806 or 1007 not involving any transfer.
The Company shall not be required (1) to issue, register the transfer
of or exchange Debentures during a period beginning at the opening of business
15 days before the day of the mailing of a notice of redemption of Debentures
selected for redemption under Section 1003 and ending at the close of business
on the day of such mailing, or (2) to register the transfer or exchange of any
Debenture so selected for redemption in whole or in part, except the unredeemed
portion of any Debenture being redeemed in part.
Section 214. MUTILATED, DESTROYED, LOST AND STOLEN DEBENTURES.
------------------------------------------------
If any mutilated Debenture is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Debenture of the same series of like tenor and principal amount
and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Debenture and
(ii) such security or indemnity as may be required by them to save each of them
and any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Debenture has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee, pursuant to a Company
Order, shall authenticate and deliver, in lieu of any such destroyed, lost or
stolen Debenture, a new Debenture of the same series of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Debenture has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Debenture, pay such Debenture.
Upon the issuance of any new Debenture under this Section 214, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
<PAGE>
Every new Debenture, issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Debenture shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Debenture shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Debentures duly issued hereunder.
The provisions of this Section 214 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Debentures.
Each Holder of a Debenture agrees to indemnify the Company and the
Trustee against any liability that may result from the transfer, exchange or
assignment of such Holder's Debenture in violation of any provision of this
Indenture and/or applicable United States Federal or state securities law.
The Trustees shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Debenture other than to require delivery of such certificates and other
documentation or evidence as expressly required by, and to do so if and when
expressly required by the terms of, this Indenture, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.
Section 215. DEFAULTED INTEREST; INTEREST RIGHTS PRESERVED.
---------------------------------------------
Any interest on any Debenture which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder thereof
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company as provided below:
The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names such Debentures (or
their respective Predecessor Debentures) are registered at the
close of business on a Special Record Date for the payment of
such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each
Debenture and the date of the proposed payment, and at the
same time the Company shall deposit with the Trustee an amount
of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date
<PAGE>
of the proposed payment, such money when deposited to be held
in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this clause (1) provided. Thereupon
the Trustee shall fix a special record date (the "Special
Record Date") for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior
to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed
payment.
The Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder of
Debentures at his address as it appears in the Register, not
less than 10 days prior to such Special Record Date. Notice of
the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such
Defaulted Interest shall be paid to the Persons in whose names
the Debentures (or their respective Predecessor Debentures)
are registered at the close of business on such Special Record
Date and shall no longer be payable pursuant to the following
clause (2).
Subject to the foregoing provisions of this Section 215, each Debenture
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Debenture shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Debenture.
Section 216. PERSONS DEEMED OWNERS.
---------------------
Prior to due presentment of a Debenture for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Debenture is registered as the owner of such
Debenture for the purpose of receiving payment of principal of and any interest
on such Debenture and for all other purposes whatsoever, whether or not such
Debenture be overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.
Section 217. CANCELLATION.
------------
<PAGE>
All Debentures surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly canceled by it. The Company
may at any time deliver to the Trustee for cancellation any Debentures
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and may deliver to the Trustee (or to any
other Person for delivery to the Trustee) for cancellation any Debentures
previously authenticated hereunder which the Company has not issued and sold,
and all Debentures so delivered shall be promptly canceled by the Trustee. No
Debentures shall be authenticated in lieu of or in exchange for any Debentures
canceled as provided in this Section, except as expressly permitted by this
Indenture. All canceled Debentures held by the Trustee shall be disposed of as
directed by a Company Order in accordance with the Trustee's customary
procedures..
ARTICLE THREE
SATISFACTION AND DISCHARGE
Section 301. SATISFACTION AND DISCHARGE OF INDENTURE.
---------------------------------------
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Debentures herein expressly provided for), and the Trustee, at the expense of
the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(a) all Debentures theretofore authenticated and
delivered (other than (i) Debentures which have been
destroyed, lost or stolen and which have been
replaced or paid as provided in Section 214, and (ii)
Debentures for whose payment money has theretofore
been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in
Section 903) have been delivered to the Trustee for
cancellation; or
(b) all such Debentures not theretofore delivered to the
Trustee for cancellation have become due and payable,
and the Company has deposited or caused to be
deposited with the Trustee as trust funds in trust
for the purpose an amount sufficient to pay and
discharge the entire indebtedness on such Debentures,
for principal and any interest to the date of such
deposit;
<PAGE>
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 507, the obligations of
the Trustee to any Authenticating Agent under Section 514 and, if money shall
have been deposited with the Trustee pursuant to subclause (b) of Clause (1) of
this Section 301, the obligations of the Trustee under Section 302 and the last
paragraph of Section 903 shall survive.
Section 302. APPLICATION OF TRUST MONEY.
--------------------------
Subject to provisions of the last paragraph of Section 903, all money
deposited with the Trustee pursuant to Section 301 shall be held in trust and
applied by it, in accordance with the provisions of the Debentures and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and interest for
whose payment such money has been deposited with the Trustee.
ARTICLE FOUR
REMEDIES
Section 401. EVENTS OF DEFAULT.
-----------------
"Event of Default" wherever used herein with respect to the Debentures,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be occasioned by the provisions of Article Four or
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(1) default in the payment of any interest upon any Debenture when it
becomes due and payable, and continuance of such default for a period of 10
days; provided, however, that a valid extension of the interest payment period
by the Company for the Debentures in accordance with this Indenture shall not
constitute a default in the payment of interest; or
<PAGE>
(2) default in the payment of the principal of any Debenture at its
Maturity; or
(3) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a default in
whose performance or whose breach is elsewhere in this Section specifically
dealt with), and continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Outstanding Debentures a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(4) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (ii) a decree or order adjudging the
Company bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of the
Company under any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company or of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the continuance of any such decree
or order for relief or any such other decree or order unstayed and in effect for
a period of 60 consecutive days; or
(5) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or order
for relief in respect of the Company in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or State law, or
the consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial part
of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the Company
in furtherance of any such action; or
<PAGE>
(6) the Trust shall have voluntarily or involuntarily dissolved, wound
up its business or otherwise terminated its existence pursuant to the
Declaration except in connection with (i) the distribution of Debentures to
holders of Trust Securities in liquidation or redemption of their interests in
the Trust, (ii) the redemption of all of the outstanding Trust Securities of the
Trust, or (iii) certain mergers, consolidations or amalgamations, each as
permitted by the Declaration.
Section 402. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
--------------------------------------------------
If an Event of Default with respect to Debentures at the time
Outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Debentures
may declare the principal amount of all of the Debentures to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to
the Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article
provided, the Holders of a majority in aggregate principal amount of the
Outstanding Debentures, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(a) all overdue interest on the Debentures,
(b) the principal of any Debentures which has become due
otherwise than by such declaration of acceleration and any
interest thereon at the rate prescribed therefor in the
Debentures,
(c) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate prescribed
therefor in the Debentures, and
<PAGE>
(d) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel; and
(2) all Events of Default with respect to the Debentures, other than
the non-payment of the principal of the Debentures which has become
due solely by such declaration of acceleration, have been cured or
waived as provided in Section 413.
No such rescission or annulment shall affect any subsequent default or
impair any right consequent thereon.
Section 403. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
---------------------------------------------------------------
The Company covenants that if
(1) default is made in the payment of any interest on any Debenture
when such interest becomes due and payable and such default continues
for a period of 10 days, or
(2) default is made in the payment of the principal of any Debenture
at the Maturity thereof, the Company will, upon demand of the Trustee,
pay to it, for the benefit of the Holders of such Debentures, the
whole amount then due and payable on such Debentures for principal and
interest and, to the extent that payment of such interest shall be
legally enforceable, interest on any overdue principal and on any
overdue interest, at the rate or rates prescribed therefor in such
Debentures, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If an Event of Default with respect to the Debentures occurs and is
continuing, the Trustee may in its discretion (or shall at the direction of the
requisite number of Holders pursuant to Section 412) proceed to protect and
enforce its rights and the rights of the Holders by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
<PAGE>
Section 404. TRUSTEE MAY FILE PROOFS OF CLAIM.
--------------------------------
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Debentures), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 507.
No provision of this Indenture shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Debentures or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and be a member of a creditors'
or other similar committee.
Section 405. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF DEBENTURES.
-----------------------------------------------------------
All rights of action and claims under this Indenture or the Debentures
may be prosecuted and enforced by the Trustee without the possession of any of
the Debentures or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Debentures in respect of which such
judgment has been recovered.
<PAGE>
Section 406. APPLICATION OF MONEY COLLECTED.
------------------------------
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or interest,
upon presentation of the Debentures and the notation thereon of the payment if
only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
507; and
SECOND: To the payment of the amounts then due and unpaid for
principal of and interest on the Debentures in respect of
which or for the benefit of which such money has been
collected, ratably, without preference or priority of any
kind, according to the amounts due and payable on the
Debentures for principal and interest, respectively.
Section 407. LIMITATION ON SUITS.
-------------------
No Holder of any Debenture shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Debentures;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Debentures shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request in such amount as shall be reasonably acceptable to
the Trustee;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Debentures; it being understood and intended
that no one or more of such Holders shall have any right in any manner whatever
by virtue of, or by availing of, any provision of this Indenture to affect,
disturb or prejudice the rights of any other of such Holders, or to obtain or to
seek to obtain priority or preference over any other of such Holders or to
enforce any right under this Indenture, except in the manner herein provided and
for the equal and ratable benefit of all of such Holders.
<PAGE>
Section 408. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND INTEREST;
ACKNOWLEDGMENT REGARDING PREFERRED SECURITIES HOLDERS.
-----------------------------------------------------------------
(1) Notwithstanding any other provision in this Indenture, the Holder
of any Debenture shall have the right, which is absolute and unconditional, to
receive payment of the principal of and (subject to Section 215) interest on
such Debenture, at the Maturity expressed in such Debenture and to institute
suit for the enforcement of any such payment, and such rights shall not be
impaired without the consent of such Holder.
(2) The Company acknowledges that, with respect to any Debentures
registered in the name of the Property Trustee for the benefit of the Trust, if
the Property Trustee fails to enforce its rights under the Debentures and this
Indenture as such Holder, then holders of Preferred Securities may institute
legal proceedings directly against the Company to enforce such rights without
first instituting any legal proceedings against the Property Trustee or any
other Person. Notwithstanding the foregoing, if an Event of Default has occurred
under Section 401(1) or 401(2), any holder of Preferred Securities may directly
institute a proceeding against the Company for enforcement of payment to such
holder of the principal of or interest on the Debentures having an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due dates specified in the
Debentures.
Section 409. RESTORATION OF RIGHTS AND REMEDIES.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
Section 410. RIGHTS AND REMEDIES CUMULATIVE.
------------------------------
<PAGE>
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Debentures in the last paragraph of
Section 214, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 411. DELAY OR OMISSION NOT A WAIVER.
------------------------------
No delay or omission of the Trustee or of any Holder to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.
Section 412. CONTROL BY HOLDERS.
------------------
The Holders of a majority in aggregate principal amount of the
Outstanding Debentures shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Debentures, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) subject to the provisions of Section 501, the Trustee shall have
the right to decline to follow such direction if the Trustee shall, in good
faith, determine that the proceeding so directed would be unjustly prejudicial
to the Holders not joining in any such direction or would potentially involve
the Trustee in personal liability.
Section 413. WAIVER OF PAST DEFAULTS.
-----------------------
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Debentures may on behalf of the Holders of all the Debentures
waive any past default hereunder with respect to the Debentures and its
consequences, except a default
<PAGE>
(1) in the payment of the principal of or interest on any Debenture,
or
(2) in respect of a covenant or provision hereof which under Article
Eight cannot be modified or amended without the consent of the Holder of each
Outstanding Debenture affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 414. UNDERTAKING FOR COSTS.
---------------------
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that neither this Section 414 nor the Trust Indenture
Act shall be deemed to authorize any court to require such an undertaking or to
make such an assessment in any suit instituted by the Company or by the Trustee.
Section 415. WAIVER OF USURY, STAY OR EXTENSION LAWS.
---------------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
Section 416. THIRD PARTY BENEFICIARIES.
-------------------------
The Property Trustee, the trustee under the Preferred Securities
Guarantee and the Delaware Trustee are each a third party beneficiary of, and
shall be entitled to enforce, and to exercise all rights and remedies with
respect to, the provisions of Section 910.
<PAGE>
ARTICLE FIVE
THE TRUSTEE
Section 501. CERTAIN DUTIES AND RESPONSIBILITIES.
-----------------------------------
The duties, responsibilities, rights, immunities and protection of the
Trustee shall be as provided by the Trust Indenture Act. Prior to any Event of
Default the Trustee shall not be liable except for the performance of such
duties as are specifically set out herein and in the Trust Indenture Act and no
implied covenants or obligations shall be read into this Indenture against the
Trustee. In the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in the case of any such
certificates or opinions which by any provision hereof are specifically required
to be furnished to the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Indenture (but need not confirm or investigate the accuracy of mathematical
calculations or other facts stated therein.) Upon the occurrence of an Event of
Default (which has not been cured or waived), the Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent individual would exercise or use
under the circumstances in the conduct of his or her own affairs.
Notwithstanding the foregoing, no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it. Whether or not therein expressly
so provided, every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
Section 502. NOTICE OF DEFAULTS.
------------------
The Trustee shall give notice of any default known to a Responsible
Officer of the Trustee with respect to the Debentures when, as and to the extent
provided by the Trust Indenture Act and in the manner provided by Section 106
hereof; provided, however, that in the case of any default of the character
specified in Section 401(3) with respect to Debentures, no such notice to
Holders shall be given until at least 30 days after the default is actually
known (as set forth in Section 503(9)) to a Responsible Officer of the Trustee.
For the purpose of this Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default with
respect to the Debentures.
<PAGE>
Section 503. CERTAIN RIGHTS OF TRUSTEE.
-------------------------
Subject to the provisions of Section 501:
(1) the Trustee may conclusively rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, Officer's
Certificate, statement, instrument, opinion, Opinion of Counsel, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors shall be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(4) the Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity reasonably satisfactory
to it against the costs, expenses and liabilities (including legal fees and
expenses) which might be incurred by it in compliance with such request or
direction;
<PAGE>
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney
upon 10 Business Days advance written notice and during regular business hours
at the sole cost of the Company and shall incur no liability or additional
liability of any kind by reason of such inquiry or investigation;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(8) the Trustee shall not be under any obligation to take any action
that is discretionary under the provisions of this Indenture;
(9) the Trustee shall not be charged with knowledge of any Event of
Default unless either (i) a Responsible Officer of the Trustee shall have actual
knowledge or (ii) the Trustee shall have received written notice thereof in
accordance with Section 105(1) hereof from the Company or a Holder; and
(10) no permissive power or authority available to the Trustee shall
be construed as a duty.
(11) the rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder, absent any gross negligence or willful misconduct.
Section 504. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF DEBENTURES.
------------------------------------------------------
The recitals contained herein and in the Debentures, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Debentures. The Trustee
or any Authenticating Agent shall not be accountable for the use or application
by the Company of the Debentures or the proceeds thereof.
<PAGE>
Section 505. MAY HOLD DEBENTURES.
-------------------
The Trustee, any Authenticating Agent, any Paying Agent, any Registrar
or any other agent of the Company, in its individual or any other capacity, may
become the owner or pledgee of Debentures and, subject to Sections 508 and 513,
may otherwise deal with the Company with the same rights it would have if it
were not Trustee, Authenticating Agent, Paying Agent, Registrar or such other
agent.
Section 506. MONEY HELD IN TRUST.
-------------------
Money held by the Trustee, or by any Paying Agent (other than the
Company if the Company shall act as Paying Agent), in trust hereunder need not
be segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Company.
Section 507. COMPENSATION AND REIMBURSEMENT.
------------------------------
The Company agrees
(1) to pay to the Trustee from time to time such compensation as the
Company and the Trustee shall from time to time agree in writing for all
services rendered by it hereunder (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or willful misconduct; and
(3) to indemnify the Trustee or any predecessor Trustee for, and to
hold it harmless against, any and all loss, damage, liability or expense
(including taxes (other than taxes based upon, measured by or determined by the
income of the Trustee), incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder or performance of its duties hereunder, including the
costs and expenses (including legal fees and expenses) of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder.
<PAGE>
As security for the performance of the obligations of the Company under
this Section 507, the Trustee shall have a claim prior to the Debentures upon
all property and funds held or collected by the Trustee as such, except funds
held in trust for the payment of principal of or interest on particular
Debentures.
When the Trustee renders services or incurs expenses after the
occurrence of an Event of Default specified in Sections 401(4) or 401(5) hereof,
the compensation for services and expenses are intended to constitute expenses
of administration under any applicable bankruptcy or insolvency law or law
applicable to creditors' rights to the extent permitted by applicable law.
Section 508. DISQUALIFICATION; CONFLICTING INTERESTS.
---------------------------------------
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture and the Company
shall take prompt action to have a successor Trustee appointed in the manner
provided herein.
Section 509. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
---------------------------------------
There shall at all times be a Trustee hereunder, which shall be a
Person that (1) is eligible pursuant to the Trust Indenture Act to act as such,
and (2) has a combined capital and surplus of at least $50,000,000 and is
subject to supervision or examination by a Federal or State authority; provided,
however, that if the Trustee shall be a member of a bank holding company group,
such bank holding company group shall have combined capital and surplus of at
least $50,000,000 and the Trustee shall have a combined capital and surplus of
at least $10,000,000. If such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Person shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 509, it shall resign immediately in the manner and
with the effect hereinafter specified in this Article.
Section 510. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
-------------------------------------------------
<PAGE>
No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 511.
The Trustee may resign at any time by giving written notice thereof to
the Company. If the instrument of acceptance by a successor Trustee required by
Section 511 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee with
respect to the Debentures, at the sole expense of the Company.
The Trustee may be removed at any time by Act of the Company or the
Holders of a majority in principal amount of the Outstanding Debentures,
delivered to the Trustee and to the Company.
If at any time:
(1) the Trustee shall fail to comply with Section 508 after written
request therefor by the Company or by any Holder who has been a Holder of a
Debenture for at least six months, or
(2) the Trustee shall cease to be eligible under Section 509 and shall
fail to resign after written request therefor by the Company or by any such
Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then, in any such case, (i) the Company by a Board Resolution may
remove the Trustee, or (ii) subject to Section 414, any Holder who has been a
Holder of a Debenture for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
If an instrument of acceptance by a successor Trustee shall not have
been delivered to the Trustee within 30 days after the giving of such notice of
removal, the Trustee being removed may petition, at the expense of the Company,
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Debentures of such series.
<PAGE>
If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company,
by a Board Resolution, shall promptly appoint a successor Trustee (it being
understood that any time there shall be only one Trustee) and shall comply with
the applicable requirements of Section 511. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee shall be appointed by an Act of the Holders of a majority in
principal amount of the Outstanding Debentures delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements of
Section 511, become the successor Trustee and to that extent supersede the
successor Trustee appointed by the Company. If no successor Trustee shall have
been so appointed by the Company or the Holders and accepted appointment in the
manner required by Section 511, any Holder who has been a Holder of a Debenture
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of a
successor Trustee.
The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee to all Holders of
Debentures in the manner provided in Section 106. The Company also shall give
notice of appointment (and acceptance of such appointment) of a successor
Trustee to the Trustee who is resigning or being removed. Each notice shall
include the name of the successor Trustee and the address of its Corporate Trust
Office.
No resignation or removal pursuant to this Section 510 shall be
effective unless and until any and all amounts due to such Trustee pursuant to
Section 507 shall have been paid. The obligations of the Company provided for in
Section 507 shall survive such resignation or removal.
Section 511. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
--------------------------------------
In case of the appointment hereunder of a successor Trustee, every such
successor Trustee so appointed shall execute, acknowledge and deliver to the
Company and to the retiring Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee, provided, however, that no Trustee under this Indenture
shall be liable for any act or omission of any successor Trustee; but, on the
request of the Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the retiring Trustee
and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder.
<PAGE>
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 512. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
-----------------------------------------------------------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Debentures shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Debentures so authenticated with the same effect
as if such successor Trustee had itself authenticated such Debentures. In the
event any Debentures shall not have been authenticated by such predecessor
Trustee, any such successor Trustee may authenticate and deliver such
Debentures, in either its own name or that of its predecessor Trustee, with the
full force and effect which this indenture provides for the certificate of
authentication of the Trustee.
Section 513. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
-------------------------------------------------
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Debentures), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
Section 514. APPOINTMENT OF AUTHENTICATING AGENT.
-----------------------------------
The Trustee may appoint an Authenticating Agent or Agents which shall
be authorized to act on behalf of the Trustee to authenticate Debentures issued
upon original issue and upon exchange, registration of transfer or partial
redemption thereof or pursuant to Section 214, and Debentures so authenticated
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee hereunder.
<PAGE>
Wherever reference is made in this Indenture to the authentication and delivery
of Debentures by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Company and shall at all times
be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or examination
by Federal or State authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall provide notice of such
appointment to the Holders of Debentures, in the manner provided in Section 106.
Any successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
<PAGE>
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 507.
If an appointment is made pursuant to this Section 514, the Debentures
may have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Debentures referred to in the within-mentioned
Indenture.
- ----------------------------------
As Trustee
By,
- ----------------------------------
As Authenticating Agent
- -----------------------
By,
- ----------------------------------
Authorized Officer
- ------------------
ARTICLE SIX
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 601. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
---------------------------------------------------------
The Company will furnish or cause to be furnished to the Trustee
(1) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders as of such Regular Record Date, and
(2) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished;
<PAGE>
EXCLUDING from any such list names and addresses received by the Trustee in its
capacity as Registrar.
Section 602. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
------------------------------------------------------
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 601 and the names and
addresses of Holders received by the Trustee in its capacity as Registrar. The
Trustee may destroy any list furnished to it as provided in Section 601 upon
receipt of a new list so furnished.
The rights of the Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Debentures, and the
corresponding rights and privileges of the Trustee, shall be as provided by the
Trust Indenture Act.
Every Holder of Debentures, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
Section 603. REPORTS BY TRUSTEE.
------------------
The Trustee shall transmit to the Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
Section 604. INTENTIONALLY LEFT BLANK.
------------------------
ARTICLE SEVEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 701. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
----------------------------------------------------
The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless:
<PAGE>
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an
entirety shall be a corporation, partnership, limited liability company or
trust, shall be organized and validly existing under the laws of the United
States of America, any State thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of and interest on all the Debentures and the performance or
observance of every covenant of this Indenture on the part of the Company to be
performed or observed;
(2) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company as a result of such
transaction as having been incurred by the Company at the time of such
transaction, no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have happened and be
continuing; and
(3) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture, comply with this
Article and that all conditions precedent herein provided for relating to such
transaction have been complied with.
Section 702. SUCCESSOR SUBSTITUTED.
---------------------
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety in accordance with
Section 701, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter, except in the case
of a lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Debentures.
<PAGE>
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
Section 801. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
--------------------------------------------------
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein and
in the Debentures; or
(2) to add to the covenants of the Company or to surrender any right
or power herein conferred upon the Company; or
(3) to add any additional Events of Default; or
(4) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee and to add to or change any of the provisions
of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by the Trustee, pursuant to the
requirements of Section 511; or
(5) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this
Indenture, provided that such action pursuant to this clause (5) shall not
adversely affect the interests of the Holders (except for holders consenting
pursuant to Section 802).
Section 802. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
-----------------------------------------------
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Debentures, by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Debenture,
<PAGE>
(1) change the Maturity of the principal of or interest on, the
Debentures, or reduce the principal amount thereof or the rate of interest
thereon, or change the coin or currency in which any Debenture or interest
thereon is payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding
Debentures, the consent of whose Holders is required for any such supplemental
indenture or other modification or amendment of this Indenture, or the consent
of whose Holders is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Indenture relating to the
subordination of the Debentures in a manner adverse to the Holders, or
(4) modify any of the provisions of this Section 802 or Section 413,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Outstanding Debenture affected thereby, provided, however,
that this clause shall not be deemed to require the consent of any Holder with
respect to changes in the references to "the Trustee" and concomitant changes in
this Section 802, or the deletion of this proviso, in accordance with the
requirements of Sections 511 and 801(4).
It shall not be necessary for any Act of Holders under this Section 802
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Section 803. EXECUTION OF SUPPLEMENTAL INDENTURES.
------------------------------------
In executing, or accepting the additional trusts created by any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 501) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
<PAGE>
Section 804. EFFECT OF SUPPLEMENTAL INDENTURES.
---------------------------------
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Debentures theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 805. CONFORMITY WITH TRUST INDENTURE ACT.
-----------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
Section 806. REFERENCE IN DEBENTURES TO SUPPLEMENTAL INDENTURES.
--------------------------------------------------
Debentures authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Debentures so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Debentures.
ARTICLE NINE
COVENANTS
Section 901. PAYMENT OF PRINCIPAL AND INTEREST.
---------------------------------
The Company covenants and agrees for the benefit of the Holders that it
will duly and punctually pay the principal of and interest on the Debentures in
accordance with the terms of the Debentures and this Indenture.
Section 902. MAINTENANCE OF OFFICE OR AGENCY.
-------------------------------
The Company will maintain in the Place of Payment for the Debentures an
office or agency where Debentures may be presented or surrendered for payment,
where Debentures may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Debentures
and this Indenture may be served. The Company will give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
<PAGE>
The Company may also from time to time designate one or more other
offices or agencies where the Debentures may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Place of Payment for the Debentures for such purposes. The Company will give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
Section 903. MONEY FOR DEBENTURES PAYMENTS TO BE HELD IN TRUST.
-------------------------------------------------
If the Company shall at any time act as its own Paying Agent with
respect to the Debentures, it will, on or before each due date of the principal
of or interest on any of the Debentures, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay the principal
and interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will immediately notify the Trustee
of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the
Debentures, it will, prior to each due date of the principal of or interest on
the Debentures, deposit with a Paying Agent a sum sufficient to pay such amount,
such sum to be held as provided by the Trust Indenture Act, and (unless such
Paying Agent is the Trustee) the Company will immediately notify the Trustee of
its action or failure so to act.
The Company will cause each Paying Agent for the Debentures other than
the Trustee to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this
Section 903, that such Paying Agent will (1) comply with the provisions of the
Trust Indenture Act applicable to it as a Paying Agent and (2) during the
continuance of any default by the Company (or any other obligor upon the
Debentures) in the making of any payment in respect of the Debentures, and upon
the written request of the Trustee, forthwith pay to the Trustee all sums held
in trust by such Paying Agent for payment in respect of the Debentures.
<PAGE>
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or interest on any
Debenture and remaining unclaimed for two years after such principal or interest
has become due and payable shall be paid to the Company on Company Request
(including interest income accrued on said funds to which the Company is
otherwise entitled), or (if then held by the Company) shall be discharged from
such trust; and the Holder of such Debenture shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in an appropriate newspaper in the Place of Payment, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
Section 904. STATEMENT BY OFFICERS AS TO DEFAULT.
-----------------------------------
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officer's
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
Section 905. EXISTENCE.
---------
<PAGE>
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
Section 906. MAINTENANCE OF PROPERTIES.
-------------------------
The Company will cause all properties used or useful in the conduct of
its business to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, in the judgment of the Company, desirable
in the conduct of its business and not disadvantageous in any material respect
to the Holders.
Section 907. PAYMENT OF TAXES AND OTHER CLAIMS.
---------------------------------
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or upon the income,
profits or property of the Company, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Company; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
Section 908. LIMITATION ON DIVIDENDS AND REPURCHASES; TRANSACTIONS WITH
-----------------------------------------------------------
AFFILIATES.
----------
If (1) there shall have occurred any event that would constitute an
Event of Default, (2) the Company shall be in default with respect to its
payment of any obligations under the Preferred Securities or the Preferred
Securities Guarantee, or (3) if the Company shall have given notice of its
election to defer payments of interest on the Debentures by extending the
interest payment period as provided herein and such period, or any extension
thereof, shall be continuing, then the Company shall not (1) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock or (2) make any
payment of principal of, or interest or premium, if any, on or repay, repurchase
or redeem, or make any sinking fund payment with respect to, any indebtedness
for money borrowed of the Company (including other junior subordinated debt
securities) that ranks pari passu with or junior in right of payment to the
Debentures or make any guarantee payments with respect to the foregoing (other
than (a) dividends or distributions in common stock of the Company and (b)
payments under the Preferred Securities Guarantee.
<PAGE>
Section 909. COVENANTS AS TO THE TRUST.
-------------------------
For so long as the Trust Securities remain outstanding, the Company
will (1) maintain 100% direct or indirect ownership of the Common Securities of
the Trust; provided, however, that any permitted successor of the Company under
this Indenture may succeed to the Company's ownership of the Common Securities,
(2) not cause, as sponsor of the Trust, or permit, as holder of the Common
Securities, the dissolution or winding-up of the Trust, except in connection
with a distribution of the Debentures held by the Trust as provided in the
Declaration, and (3) use its reasonable efforts to cause the Trust (a) to remain
a statutory business trust, except in connection with a distribution of
Debentures as provided in the Declaration, the redemption of all of the Trust
Securities and in connection with certain mergers, consolidations or
amalgamations permitted by the Declaration, and (b) to otherwise continue to be
treated as a grantor trust for United States federal income tax purposes.
Section 910. PAYMENT OF EXPENSES.
-------------------
In connection with the offering, sale and issuance of the Debentures to
the Trust in connection with the sale of the Trust Securities by the Trust, as
long as the Preferred Securities are outstanding the Company shall:
(1) pay all costs and expenses relating to the offering, sale and
issuance of the Debentures, including compensation of the Trustee under the
Indenture in accordance with the provisions of Section 507 of the Indenture;
(2) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and expenses
with respect to such taxes of the Trust; and
<PAGE>
(3) pay all other debts and obligations of the Trust (other than with
respect to the Trust Securities) and all costs and expenses of the Trust
(including, but not limited to, costs and expenses relating to the organization,
maintenance and dissolution of the Trust, the fees and expenses of the Property
Trustee, the trustee under the Preferred Securities Guarantee and the Delaware
Trustee, the costs and expenses relating to the operation of the Trust,
including without limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses or printing and engraving and
computing or accounting equipment, paying agent(s), registrar(s), transfer
agent(s), duplicating, travel and telephone and other telecommunications
expenses and costs and expenses incurred in connection with the acquisition,
financing, and disposition of Trust assets).
Section 911. INTENTIONALLY LEFT BLANK.
------------------------
Section 912. WAIVER OF CERTAIN COVENANTS.
---------------------------
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in this Indenture with respect to the
Debentures if before the time for such compliance the Holders of a majority in
aggregate principal amount of the Outstanding Debentures shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such term, provision or condition, provided that no such waiver
shall without the consent of each Holder affected thereby (1) change the
Maturity Date, (2) reduce the principal amount of the Debentures or the rate of
interest thereon or extend the time of payment of interest thereon (except
pursuant to Section 206), (3) change any Place of Payment or the currency in
which the Debentures or any interest thereon is payable or (4) reduce the
percentage in principal amount of the Outstanding Debentures, the consent of
whose Holders is required with respect to supplemental indentures and for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for herein.
ARTICLE TEN
REDEMPTION OF DEBENTURES
Section 1001. MANDATORY AND SPECIAL EVENT REDEMPTION.
--------------------------------------
The Debentures shall be redeemable in accordance with their terms and
in accordance with this Article as follows:
<PAGE>
(1) MANDATORY REDEMPTION. Each series of Debentures is subject to
mandatory redemption, in ten semi-annual principal installments equal to the
then applicable Sinking Fund Amount (each, an "Installment"), with the first
Installment payable on the Interest Payment Date which is at least five years
and six months following the Series Issue Date of the Debentures of such series
and an Installment payable on each Interest Payment Date thereafter and on the
Maturity Date, at a redemption price equal to the principal amount to be
redeemed, without premium, plus accrued interest thereon to the date of
redemption. The "Sinking Fund Amount" of each Installment shall be an amount
equal to 10% of the aggregate principal amount of Debentures of such series
issued upon original issuance under this Indenture.
(2) SPECIAL EVENT REDEMPTION. Upon the occurrence of a Special Event,
the Company shall have the right, at any time, to redeem the Debentures, in
whole and not in part, at the Redemption Price (a "Special Redemption").
Section 1002. ELECTION TO REDEEM: NOTICE TO TRUSTEE.
-------------------------------------
The election of the Company to redeem any Debentures under Section
1001(2) shall be evidenced by a Board Resolution. In the case of any Special
Event Redemption of Debentures, the Company shall, within 30 days after any such
redemption, furnish the Trustee with an Officer's Certificate evidencing
compliance with all conditions precedent to such redemption.
Section 1003. PARTIAL REPAYMENTS PRO RATA.
---------------------------
Upon any partial redemption of the Debentures of any series, the
principal amount so redeemed shall be allocated to all Debentures of such series
at the time outstanding (including for the purpose of this Section 1003 only,
all Debentures redeemed or otherwise retired or purchased or otherwise acquired
by the Company or any of its subsidiaries) in proportion to the respective
outstanding principal amounts thereof.
Section 1004. NOTICE OF REDEMPTION.
--------------------
Notice of redemption shall be given in the manner provided in Section
106, not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Debentures to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
<PAGE>
(3) that on the Redemption Date the Redemption Price will become due
and payable upon each such Debenture to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date, and
(4) the place or places where such Debentures are to be surrendered
for payment of the Redemption Price.
Notice of redemption of Debentures to be redeemed shall be given by the
Company or, at the Company's direction, by the Trustee in the name and at the
expense of the Company and shall be irrevocable.
Section 1005. DEPOSIT OF REDEMPTION PRICE.
---------------------------
At least one Business Day prior to any Redemption Date, the Company
shall deposit with the Trustee or with a Paying Agent (or, if the Company is
acting as its own Paying Agent, segregate and hold in trust as provided in
Section 903) an amount of money sufficient to pay the Redemption Price of all of
the Debentures which are to be redeemed on that date. The Redemption Price shall
be paid prior to 12:00 noon, New York time, on the Redemption Date or at such
earlier time as the Company determines.
Section 1006. DEBENTURES PAYABLE ON REDEMPTION DATE.
-------------------------------------
Any required notice of redemption having been given as aforesaid, all
Debentures to be redeemed shall, on the Redemption Date, become due and payable
at the Redemption Price therein specified, and from and after such date (unless
the Company shall default in the payment of the Redemption Price and accrued
interest) such Debentures (or any portion thereof which is mandatorily redeemed)
shall cease to bear interest. Upon surrender of any such Debenture for
redemption, in accordance with said notice in the case of Special Event
Redemption, or to the Company in the case of each mandatory redemption, such
Debenture shall be paid by the Company at the Redemption Price; provided,
however, that installments of interest whose Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Debentures, or one or
more Predecessor Debentures, registered as such at the close of business on the
relevant record dates according to their terms and the provisions of Section
215.
If any Debenture called for Special Event Redemption or required to be
mandatorily redeemed shall not be so paid upon surrender thereof for redemption,
the principal shall, until paid, bear interest from the Redemption Date at the
rate prescribed therefor in the Debenture.
<PAGE>
Section 1007. DEBENTURES REDEEMED IN PART.
---------------------------
Any Debenture which is to be redeemed only in part shall be surrendered
at the Place of Payment therefor (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), and the Company shall execute, and
the Trustee shall authenticate and deliver to the Holder of such Debenture
without service charge, a new Debenture or Debentures of like tenor, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Debenture so surrendered.
ARTICLE ELEVEN
SUBORDINATION
Section 1101. AGREEMENT TO SUBORDINATE; RANKING OF DEBENTURES.
-----------------------------------------------
The Company covenants and agrees, and each Holder of Debentures issued
hereunder by such Holder's acceptance thereof likewise covenants and agrees,
that all Debentures shall be issued subject to the provisions of this Article
Eleven; and each Holder of a Debenture, whether upon original issue or upon
transfer or assignment thereof, accepts and agrees to be bound by such
provisions.
The payment by the Company of the principal of and interest on the
Debentures shall, to the extent and in the manner hereinafter set forth, be
subordinated and junior in right of payment to the prior payment in full of all
present and future Senior Indebtedness and shall rank pari passu with (1) all
notes, debentures and other evidences of indebtedness of the Company that shall
contain or have applicable thereto subordination provisions substantially
identical in effect to the subordination provisions applicable to the Debentures
providing for such indebtedness being junior and subordinate in right of payment
to all Senior Indebtedness, (2) any Debt (including all other debt securities
and guarantees in respect of those debt securities) initially issued to any
trust, or a trustee of such trust, partnership, or other entity affiliated with
the Company that is, directly or indirectly, a financing vehicle of the Company
in connection with the issuance by such entity of preferred securities or other
similar securities that contain or have applicable thereto subordination
provisions substantially identical in effect to the subordination provisions set
forth herein applicable to the Debentures providing for such indebtedness being
junior and subordinate in right of payment to all Senior Indebtedness, and (3)
obligations to, or rights of, the Company's other general unsecured creditors,
in each case whether outstanding at the date of this Indenture or thereafter
incurred.
<PAGE>
No provision of this Article Eleven shall prevent the occurrence of any
default or Event of Default hereunder.
Section 1102. DEFAULT ON SENIOR INDEBTEDNESS.
------------------------------
In the event and during the continuation of any default by the Company
in the payment of principal, premium, interest or any other payment due on any
Senior Indebtedness of the Company, as the case may be, or in the event that the
maturity of any Senior Indebtedness of the Company, as the case may be, has been
accelerated because of a default, then, in either case, no payment shall be made
by the Company with respect to the principal (including redemption payments) of,
or interest on, the Debentures.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee when such payment is prohibited by the preceding
paragraph of this Section 1102, subject to the provisions of Section 1106, such
payment shall be held in trust for the benefit of, and shall be paid over or
delivered to, the holders of Senior Indebtedness or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Indebtedness may have been issued, as their respective
interests may appear, but only to the extent that the holders of the Senior
Indebtedness (or their representative or representatives or a trustee) notify
the Trustee in writing within 90 days of such payment of the amounts then due
and owing on the Senior Indebtedness and only the amounts specified in such
notice to the Trustee shall be paid to the holders of Senior Indebtedness.
Section 1103. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
------------------------------------
Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior Indebtedness
of the Company shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company on
account of the principal of or interest on the Debentures; and upon any such
dissolution or winding-up or liquidation or reorganization, any payment by the
Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the Holders or the Trustee
would be entitled to receive from the Company, except for the provisions of this
Article Eleven, shall be paid by the Company or by any receiver, trustee in
<PAGE>
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders or by the Trustee under this Indenture if
received by them or it, directly to the holders of Senior Indebtedness of the
Company (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders, as calculated by the Company) or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay such Senior Indebtedness in full, in money or money's worth,
after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness, before any payment or distribution is made
to the Holders or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee before all Senior Indebtedness of the Company is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated by
the Company, for application to the payment of all Senior Indebtedness of the
Company, as the case may be, remaining unpaid to the extent necessary to pay
such Senior Indebtedness in full in money in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the holders of
such Senior Indebtedness.
For purposes of this Article Eleven, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article Eleven with
respect to the Debentures to the payment of all Senior Indebtedness of the
Company, as the case may be, that may at the time be outstanding provided that
(i) such Senior Indebtedness is assumed by the new corporation, if any,
resulting from any such reorganization or readjustment, and (ii) the rights of
the holders of such Senior Indebtedness are not, without the consent of such
holders, altered by such reorganization or readjustment. The consolidation of
<PAGE>
the Company with, or the merger of the Company into, another corporation or
other entity or the liquidation or dissolution of the Company following the
conveyance or transfer of its property as an entirety, or substantially as an
entirety, to another corporation or other entity upon the terms and conditions
provided for in Article Seven shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section 1103 if such
other corporation or other entity shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article
Seven. Nothing in Section 1102 or in this Section 1103 shall apply to claims of,
or payments to, the Trustee under or pursuant to Section 507.
Section 1104. SUBROGATION.
-----------
Subject to the payment in full of all Senior Indebtedness of the
Company, the rights of the Holders shall be subrogated to the rights of the
holders of such Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company, as the case may be, applicable to
such Senior Indebtedness until the principal of and interest on the Debentures
shall be paid in full; and, for the purposes of such subrogation, no payments or
distributions to the holders of such Senior Indebtedness of any cash, property
or securities to which the Holders or the Trustee would be entitled except for
the provisions of this Article Eleven to or for the benefit of the holders of
such Senior Indebtedness by Holders or the Trustee, shall, as between the
Company, its creditors other than holders of Senior Indebtedness of the Company
and the Holders, be deemed to be a payment by the Company to or on account of
such Senior Indebtedness. It is understood that the provisions of this Article
Eleven are intended solely for the purposes of defining the relative rights of
the Holders, on the one hand, and the holders of such Senior Indebtedness on the
other hand.
Nothing contained in this Article Eleven or elsewhere in this Indenture
or in the Debentures is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior Indebtedness of the Company, and the
Holders, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders the principal of and interest on the Debentures as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders and creditors of
the Company, as the case may be, other than the holders of Senior Indebtedness
of the Company, as the case may be, nor shall anything herein or therein prevent
the Trustee or any Holder from exercising all remedies otherwise permitted by
applicable law upon default under the Indenture, subject to the rights, if any,
under this Article Eleven of the holders of such Senior Indebtedness in respect
of cash, property or securities of the Company, as the case may be, received
upon the exercise of any such remedy.
<PAGE>
Upon any payment or distribution of assets of the Company referred to
in this Article Eleven, the Trustee, subject to the provisions of Section 503,
and the Holders shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction in which any dissolution, winding-up,
liquidation or reorganization proceedings in respect of the Company are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidation trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Holders, for the purposes of ascertaining the Persons entitled
to participate in such distribution, the holders of Senior Indebtedness and
other indebtedness of the Company, as the case may be, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article Eleven.
Section 1105. TRUSTEE TO EFFECTUATE SUBORDINATION.
-----------------------------------
Each Holder of Debentures by such Holder's acceptance thereof
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article Eleven and appoints the Trustee such Holder's attorney-in-fact for
any and all such purposes.
Section 1106. NOTICE BY THE COMPANY.
---------------------
The Company shall give prompt written notice to a Responsible Officer
of the Trustee of any fact known to the Company that would prohibit the making
of any payment of monies to or by the Trustee in respect of the Debentures
pursuant to the provisions of this Article Eleven. Notwithstanding the
provisions of this Article Eleven or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts that
would prohibit the making of any payment of monies to or by the Trustee in
respect of the Debentures pursuant to the provisions of this Article Eleven,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof from the Company or a holder or holders of Senior
Indebtedness or from any trustee therefor; and before the receipt of any such
written notice, the Trustee, subject to the provisions of Section 503, shall be
entitled in all respects to assume that no such facts exist; provided, however,
<PAGE>
that, if a Responsible Officer of the Trustee shall not have received the notice
provided for in this Section 1106 at least two Business Days prior to the date
upon which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of or interest on
any Debenture), then, anything herein contained to the contrary notwithstanding,
the Trustee shall have full power and authority to receive such money and to
apply the same to the purposes for which they were received, and shall not be
affected by any notice to the contrary that may be received by it within two
Business Days prior to such date.
The Trustee, subject to the provisions of Section 503, shall be
entitled to conclusively rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior Indebtedness of the
Company, as the case may be (or a trustee on behalf of such holder) to establish
that such notice has been given by a holder of such Senior Indebtedness or a
trustee on behalf of any such holder or holders. In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of such Senior Indebtedness to participate in
any payment or distribution pursuant to this Article Eleven, the Trustee shall
be entitled to require such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of such Senior Indebtedness held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article Eleven, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
Section 1107. RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR INDEBTEDNESS.
-----------------------------------------------------
The Trustee or any Authenticating Agent in its individual capacity
shall be entitled to all the rights set forth in this Article Eleven in respect
of any Senior Indebtedness at any time held by it, to the same extent as any
other holder of Senior Indebtedness, and nothing in this Indenture shall deprive
the Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the Company, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Eleven, and no implied
covenants or obligations with respect to the holders of such Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and,
subject to the provisions of Section 503, the Trustee shall not be liable to any
holder of such Senior Indebtedness if it shall pay over or deliver to Holders,
the Company or any other Person money or assets to which any holder of such
Senior Indebtedness shall be entitled by virtue of this Article Eleven or
otherwise.
<PAGE>
Section 1108. SUBORDINATION MAY NOT BE IMPAIRED.
---------------------------------
No right of any present or future holder of any Senior Indebtedness of
the Company to enforce subordination as herein provided shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company, or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by the Company, as the case may be, with the terms,
provisions and covenants of this Indenture, regardless of any knowledge thereof
that any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness of the Company may, at any time and from time
to time, without the consent of or notice to the Trustee or the Holders, without
incurring responsibility to the Holders and without impairing or releasing the
subordination provided in this Article Eleven or the obligations hereunder of
the Holders to the holders of such Senior Indebtedness, do any one or more of
the following: (1) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, such Senior Indebtedness, or otherwise
amend or supplement in any manner such Senior Indebtedness or any instrument
evidencing the same or any agreement under which such Senior Indebtedness is
outstanding; (2) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing such Senior Indebtedness; (3) release
any Person liable in any manner for the collection of such Senior Indebtedness;
and (4) exercise or refrain from exercising any rights against the Company, as
the case may be, and any other Person.
ARTICLE TWELVE
DEFEASANCE
Section 1201. DEFEASANCE AND DISCHARGE.
------------------------
The Company shall be deemed to have been discharged from its
obligations with respect to the Outstanding Debentures appertaining thereto as
provided in this Section on and after the date the conditions set forth in
Section 1202 are satisfied (hereinafter called "Defeasance"). For this purpose,
such Defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by the Outstanding Debentures and
to have satisfied all its other obligations under the Debentures and this
<PAGE>
Indenture insofar as the Debentures are concerned (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), subject to the following which shall survive until otherwise terminated
or discharged hereunder: (1) the rights of Holders of Debentures to receive,
solely from the trust fund described in Section 1202 and as more fully set forth
in such Section, payments in respect of the principal of and interest on such
Debentures when payments are due, (2) the Company's obligations with respect to
the Debentures under Sections 212, 213, 214, 902 and 903, (3) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and (4) this
Article Twelve.
Section 1202. CONDITIONS TO DEFEASANCE.
------------------------
The following shall be the conditions to application of Section 1201 to
the Outstanding Debentures:
(1) The Company shall irrevocably have deposited or caused to be deposited
with the Trustee (or another trustee that satisfies the requirements
contemplated by Section 509 and agrees to comply with the provisions of
this Article Twelve applicable to it) as trust funds in trust for the
purpose of making the following payments, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of
Outstanding Debentures, (a) money in an amount, or (b) U.S. Government
Obligations that through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment,
money in an amount, or (c) a combination thereof, in each case,
sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and which shall
be applied by the Trustee (or any such other qualifying trustee) to pay
and discharge, the principal of and interest on the Debentures on the
Maturity thereof in accordance with the terms of this Indenture and the
Debentures. As used herein, "U.S. Government Obligation" means (x) any
security that is (i) a direct obligation of the United States of
America for the payment of which the full faith and credit of the
United States of America is pledged or (ii) an obligation of a Person
controlled or supervised by and acting as an agency or instrumentality
<PAGE>
of the United States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States
of America, which, in either case (i) or (ii), is not callable or
redeemable at the option of the issuer thereof, and (y) any depositary
receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act, as amended) as custodian with respect to any U.S.
Government Obligation specified in clause (x) and held by such
custodian for the account of the holder of such depositary receipt, or
with respect to any specific payment of principal of or interest on any
such U.S. Government Obligation, provided that (except as required by
law) such custodian is not authorized to make any deduction from the
amount payable to the holder of such depositary receipt from any amount
received by the custodian in respect of the U.S. Government Obligation
or the specific payment of principal or interest evidenced by such
depositary receipt.
(2) The Company shall have delivered to the Trustee an Opinion of Counsel
stating that (a) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (b) since the
date first set forth hereinabove, there has been a change in the
applicable Federal income tax law, in either case (a) or (b) to the
effect that, and based thereon such opinion shall confirm that, the
Holders of the Outstanding Debentures will not recognize income, gain
or loss for United States federal income tax purposes as a result of
the deposit, Defeasance and discharge to be effected with respect to
the Debentures and will be subject to United States federal income tax
on the same amount, in the same manner and at the same times as would
be the case if such deposit, Defeasance and discharge were not to
occur.
(3) The Company shall have delivered to the Trustee an Officer's
Certificate to the effect that the Debentures, if then listed on any
Debentures exchange, will not be delisted as a result of such deposit.
(4) No Event of Default or event that (after notice or lapse of time or
both) would become an Event of Default shall have occurred and be
continuing at the time of such deposit or, with regard to any Event of
Default or any such event specified in Sections 401(4), (5) and (6), at
any time on or prior to the 90th day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied
until after such 90th day).
(5) Such Defeasance shall not cause the Trustee to have a conflicting
interest within the meaning of the Trust Indenture Act (assuming all
Debentures are in default within the meaning of the Trust Indenture
Act).
<PAGE>
(6) Such Defeasance shall not result in a breach or violation of, or
constitute a default under, any other agreement or instrument to which
the Company is a party or by which it is bound.
(7) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance have been complied with.
(8) Such Defeasance shall not result in the trust arising from such deposit
constituting an investment company within the meaning of the 1940 Act,
as amended, unless such trust shall be qualified under such Act or
exempt from regulation thereunder.
Section 1203. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN
-----------------------------------------------------------------
TRUST; OTHER MISCELLANEOUS PROVISIONS.
-------------------------------------
Subject to the provisions of the last paragraph of Section 903, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee or other qualifying trustee (solely for purposes of this
Section 1203 and Section 1204, the Trustee and any such other trustee are
referred to collectively as the "Trustee") pursuant to Section 1202 in respect
of the Debentures shall be held in trust and applied by the Trustee, in
accordance with the provisions of the Debentures and this Indenture, to the
payment, either directly or through any such Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Holders, of
all sums due and to become due thereon in respect of principal and interest, but
money so held in trust need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1202 or the principal and interest received in
respect thereof other than any such tax, fee or other charge that by law is for
the account of the Holders of Outstanding Debentures.
Anything in this Article Twelve to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 1202 with respect to Debentures that, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof that would then be required to be deposited to effect a Defeasance with
respect to the Debentures.
<PAGE>
Section 1204. REINSTATEMENT.
-------------
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article Twelve with respect to the Debentures by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Company's
obligations under this Indenture and the Debentures shall be revived and
reinstated as though no deposit had occurred pursuant to this Article Twelve
with respect to Debentures until such time as the Trustee or Paying Agent is
permitted to apply all money held in trust pursuant to Section 1203 with respect
to Debentures in accordance with this Article Twelve; provided, however, that if
the Company makes any payment of principal of or interest on any Debenture
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of Debentures to receive such payment from the
money so held in trust.
ARTICLE THIRTEEN
MEETINGS OF HOLDERS OF DEBENTURES
Section 1301. PURPOSE FOR WHICH MEETINGS MAY BE CALLED.
----------------------------------------
A meeting of Holders may be called at any time and from time to time
pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders.
Section 1302. CALL, NOTICE AND PLACE OF MEETINGS.
----------------------------------
(1) The Trustee may at any time call a meeting of Holders for any
purpose specified in Section 1301, to be held at such time and at such place in
Des Moines, Iowa, as the Trustee shall determine. Notice of every meeting of
Holders, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting, shall be given, in the
manner provided in Section 106, not less than 21 nor more than 180 days prior to
the date fixed for the meeting. The Trustee or the Company may fix, in advance
of the giving of such notice, a date as the record date for determining the
Holders entitled to notice or to vote at any such meeting not more than 15 days
prior to the date fixed for the giving of such notice.
(2) In case at any time the Company or the Holders of at least 10% in
principal amount of the Outstanding Debentures shall have requested the Trustee
to call a meeting of the Holders for any purpose specified in Section 1301, by
written request setting forth in reasonable detail the action proposed to be
<PAGE>
taken at the meeting, and the Trustee shall not have made the first publication
of the notice of such meeting within 21 days after receipt of such request or
shall not thereafter proceed to cause the meeting to be held as provided herein,
then the Company or the Holders of Debentures in the amount above specified, as
the case may be, may determine the time and the place in
__________________________, for such meeting and may call such meeting for such
purposes by giving notice thereof as provided in subsection (1) of this Section.
Section 1303. PERSONS ENTITLED TO VOTE AT MEETINGS.
------------------------------------
To be entitled to vote at any meeting of Holders, a Person shall be (1)
a Holder of one or more Outstanding Debentures, or (2) a Person appointed by an
instrument in writing as proxy for a Holder or Holders of one or more
Outstanding Debentures by such Holder or Holders. The only Persons who shall be
entitled to be present or to speak at any meeting of Holders shall be the
Persons entitled to vote at such meeting and their counsel, any representatives
of the Trustee and its counsel and any representatives of the Company and its
counsel.
Section 1304. QUORUM; ACTION.
--------------
The Persons entitled to vote a majority in principal amount of the
Outstanding Debentures shall constitute a quorum for a meeting of Holders. In
the absence of a quorum within 30 minutes after the time appointed for any such
meeting, the meeting shall, if convened at the request of Holders, be dissolved.
In any other case the meeting may be adjourned for a period of not less than 10
days as determined by the chairman of the meeting prior to the adjournment of
such meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than 10 days
as determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting. Notice of the reconvening of any adjourned meeting shall be
given as provided in Section 1302(1), except that such notice need be given only
once not less than five days prior the date on which the meeting is scheduled to
be reconvened.
Except as limited by the proviso to Section 802, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum is
present as aforesaid may be adopted only by the affirmative vote of the Holders
of a majority in principal amount of the Outstanding Debentures, provided,
however, that, except as limited by the proviso to Section 802, any resolution
with respect to any request, demand, authorization, direction, notice, consent,
<PAGE>
waiver or other action which this Indenture expressly provides may be made,
given or taken by the Holders of a specified percentage, which is less than a
majority in principal amount of the Outstanding Debentures may be adopted at a
meeting or an adjourned meeting duly reconvened and at which a quorum is present
as aforesaid by the affirmative vote of the Holders of such specified percentage
in principal amount of the Outstanding Debentures.
Any resolution passed or decision taken at any meeting of Holders duly
held in accordance with this Section shall be binding on all the Holders,
whether or not present or represented at the meeting.
Section 1305. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT OF
MEETINGS.
-----------------------------------------------------------
(1) Notwithstanding any other provisions of this Indenture, the Company
may make such reasonable regulations as it may deem advisable for any meeting of
Holders in regard to proof of the holding of Debentures and of the appointment
of proxies and in regard to the appointment and duties of inspectors of votes,
the submission and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct of the meetings
as it shall deem appropriate. Except as otherwise permitted or required by any
such regulations, the holding of Debentures shall be proved in the manner
specified in Section 104. Such regulations may provide that written instruments
appointing proxies, regular on their face, may be presumed valid and genuine
without the proof specified in Section 104 or other proof.
(2) The Company shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Holders as provided in Section 1302(2), in which case the Company
or the Holders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the Persons entitled to vote a majority
in principal amount of the Outstanding Debentures represented at the meeting.
(3) At any meeting each Holder or proxy shall be entitled to one vote
for each $1,000 principal amount of Debentures held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
respect of any Debenture challenged as not Outstanding and ruled by the chairman
of the meeting to be not Outstanding. The chairman of the meeting shall have no
right to vote, except as a Holder or proxy.
<PAGE>
(4) Any meeting of Holders duly called pursuant to Section 1302 at
which a quorum is present may be adjourned from time to time by Persons entitled
to vote a majority in principal amount of the Outstanding Debentures represented
at the meeting; and the meeting may be held as so adjourned without further
notice.
Section 1306. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.
------------------------------------------------
The vote upon any resolution submitted to any meeting of Holders shall
be by written ballots on which shall be subscribed the signatures of the Holders
or of their representatives by proxy and the principal amounts and serial
numbers of the Outstanding Debentures held or represented by them. The permanent
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
triplicate of all votes cast at the meeting. A record, at least in triplicate,
of the proceedings of each meeting of Holders shall be prepared by the secretary
of the meeting and there shall be attached to said record the original reports
of the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was given as provided in
Section 1302 and, if applicable, Section 1304. Each copy shall be signed and
verified by the affidavits of the permanent chairman and secretary of the
meeting and one such copy shall be delivered to the Company, and another to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
MIDAMERICAN ENERGY HOLDINGS COMPANY
By:
- ----------------------------------------
Name:
Title:
THE BANK OF NEW YORK
as Trustee
By:
- ----------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF DEBENTURE
(FORM OF FACE OF DEBENTURE)
Series ________ Series Issue Date:
No. __________________
-------
$
------------------- Original Aggregate
Principal Amount of
Series:
-------------------
11% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE, SERIES __, DUE ____
MidAmerican Energy Holdings Company, an Iowa corporation (the
"Company"), which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
____________________, or registered assigns, the principal sum of
__________________ Dollars on ______________, ____, subject to mandatory
redemption in ten equal semi-annual principal installments, commencing ________,
as more fully described on the reverse hereof, together with any accrued and
unpaid interest thereon, including any Deferred Interest, and to pay interest on
said principal sum from ____________, ____, or from the most recent Interest
Payment Date (as defined below) to which interest has been paid or duly provided
for, semi-annually (subject to deferral as set forth herein) in arrears on June
15 and December 15 of each year (each such date, an "Interest Payment Date")
commencing __________, ____, at the rate of 11% per annum until the principal
hereof shall have become due and payable, and on any overdue principal and
(without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at the
same rate per annum compounded semi-annually. The amount of interest payable on
<PAGE>
any Interest Payment Date shall be computed on the basis of a 360-day year of
twelve 30-day months. The amount of interest payable for any period shorter than
a full semi-annual period for which interest is computed will be computed on the
basis of the actual number of days elapsed per 30-day month. In the event that
any date on which interest is payable on this Debenture is not a Business Day,
then payment of interest payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Debenture (or one or more Predecessor
Debentures, as defined in said Indenture) is registered at the close of business
on the regular record date for such interest installment, which shall be the
close of business on the Business Day next preceding such Interest Payment Date.
[IF THE PROPERTY TRUSTEE IS NO LONGER THE HOLDER OF THE DEBENTURES -- which
shall be the close of business on the ___ Business Day next preceding such
Interest Payment Date.] Any such interest installment not punctually paid or
duly provided for shall forthwith cease to be payable to the registered Holders
on such regular record date and may be paid to the Person in whose name this
Debenture (or one or more Predecessor Debentures) is registered at the close of
business on a special record date to be fixed by the Trustee for the payment of
such defaulted interest, notice whereof shall be given to the registered Holders
of the Debentures not less than 10 days prior to such special record date. The
principal of and the interest on this Debenture shall be payable at the
Corporate Trust Office of the Trustee maintained for that purpose in any coin or
currency of the United States of America that at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
of interest may be made at the option of the Company by check mailed to the
registered Holder at such address as shall appear in the Debenture Register.
Notwithstanding the foregoing, so long as the Holder of this Debenture is the
Property Trustee, the payment of the principal of and interest on this Debenture
will be made at such place and to such account as may be designated by the
Property Trustee.
The indebtedness evidenced by this Debenture is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness of the Company, and this Debenture is
issued subject to the provisions of the Indenture with respect thereto. Each
Holder of this Debenture, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee on his or her
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each Holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.
<PAGE>
Unless the Certificate of Authentication hereon has been executed by
the Trustee referred to on the reverse side hereof, this Debenture shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
The provisions of this Debenture are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
Dated:
MIDAMERICAN ENERGY HOLDINGS COMPANY
By
- ----------------------------------------
<PAGE>
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures described in the within-mentioned
Indenture.
THE BANK OF NEW YORK
By:
- ----------------------------------------
Name:
Title:
<PAGE>
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of the duly authorized Debentures of the Company
(herein sometimes referred to as the "Debentures"), all issued under and
pursuant to an Indenture dated as of March __, 2000, (the "Indenture") duly
executed and delivered between the Company and The Bank of New York, as Trustee
(the "Trustee"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of rights,
obligations, duties and immunities thereunder of the Trustee, the Company and
the Holders of the Debentures. The Debentures are issuable in series (this
Debenture being of the series specified on the front hereof) in an aggregate
principal amount not exceeding $800,000,000. The Debentures of this series are
subject to mandatory redemption in ten semi-annual principal installments each
equal to 10% of the original aggregate principal amount of Debentures of this
series, with the first installment payable on the first interest payment date
which is at least five years and six months following the Series Issue Date and
an installment payable on each interest payment date thereafter and on the
maturity date.
The Company shall also have the option to redeem this Debenture, at any
time in certain circumstances upon the occurrence of a Special Event, at a
redemption price equal to 100% of the principal amount plus any accrued but
unpaid interest to the date of such redemption (the "Redemption Price"). Any
Special Event Redemption pursuant to this paragraph will be made upon not less
than 30 nor more than 60 days' notice at the Redemption Price. If the Debentures
are only partially redeemed by the Company pursuant to a mandatory redemption,
the Debentures of this series will be redeemed pro rata.
In the event of redemption of this Debenture in part only, a new
Debenture of the same series for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
<PAGE>
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debentures affected at the time outstanding,
as defined in the Indenture, to execute supplemental indentures for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or of modifying in
any manner the rights of the Holders of the Debentures; provided, however, that
no such supplemental indenture shall (i) extend the fixed maturity of the
Debentures, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon, without the consent of the Holder of
each Debenture so affected, or (ii) reduce the aforesaid percentage of
Debentures, the Holders of which are required to consent to any such
supplemental indenture, without the consent of the Holders of each Debenture
then outstanding and affected thereby. The Indenture also contains provisions
permitting the Holders of a majority in aggregate principal amount of the
Debentures at the time outstanding affected thereby, on behalf of all of the
Holders of the Debentures, to waive any past default in the performance of any
of the covenants contained in the Indenture, or established pursuant to the
Indenture with respect to the Debentures, and its consequences, except a default
in the payment of the principal of or interest on any of the Debentures. Any
such consent or waiver by the registered Holder of this Debenture (unless
revoked as provided in the Indenture) shall be conclusive and binding upon such
Holder and upon all future Holders and owners of this Debenture and of any
Debenture issued in exchange herefor or in place hereof (whether by registration
of transfer or otherwise), irrespective of whether or not any notation of such
consent or waiver is made upon this Debenture.
No reference herein to the Indenture and no provision of this Debenture
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this
Debenture at the time and place and at the rate and in the money herein
prescribed.
The Company shall have the right at any time during the term of the
Debentures from time to time to extend the interest payment period of such
Debentures to up to 10 consecutive six-month payment periods (an "Extension
Period"); provided that an Extension Period may not extend beyond the Maturity
Date or, as to each Debenture being optionally redeemed or, in the case of
mandatory redemption, the portion thereof being redeemed, beyond the relevant
Redemption Date. At the end of any such Extension Period, the Company shall pay
all interest then accrued and unpaid (together with interest thereon at the rate
specified for the Debentures to the extent that payment of such interest is
enforceable under applicable law). Before the termination of any such Extension
<PAGE>
Period, the Company may further extend such Extension Period, provided that such
Extension Period together with all such further extensions thereof shall not
exceed 10 consecutive six-month payment periods. At the termination of any such
Extension Period and upon the payment of all accrued and unpaid interest and any
additional amounts then due, the Company may commence a new Extension Period.
As provided in the Indenture and subject to certain limitations therein
set forth, this Debenture is transferable under limited circumstances by the
registered Holder hereof on the Register of the Company, upon surrender of this
Debenture for registration of transfer at the office or agency of the Company in
____________________ accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company or the Trustee duly executed by the
registered Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Debentures of authorized denominations and for the
same aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be made for any such transfer, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any paying agent and any Registrar may deem
and treat the registered Holder hereof as the absolute owner hereof (whether or
not this Debenture shall be overdue and notwithstanding any notice of ownership
or writing hereon made by anyone other than the Registrar) for the purpose of
receiving payment of or on account of the principal hereof and interest due
hereon and for all other purposes, and neither the Company nor the Trustee nor
any paying agent nor any Registrar shall be affected by any notice to the
contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
The Debentures are issuable only in definitive form without coupons in
denominations of $25 and any integral multiple thereof. Debentures so issued are
issuable only in registered form without coupons in denominations of $25 and any
integral multiple thereof as provided in the Indenture and subject to certain
limitations herein and therein set forth. Debentures so issued are exchangeable
for a like aggregate principal amount of Debentures of the same series of a
different authorized denomination, as requested by the Holder surrendering the
same.
<PAGE>
All terms used in this Debenture that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
SUBSCRIPTION AGREEMENT
MidAmerican Capital Trust I
c/o MidAmerican Energy Holdings Company
302 South 36th Street
Suite 400
Omaha, Nebraska 68131
Attn: David L. Sokol
Ladies and Gentlemen:
The undersigned is executing this Agreement in connection with
its subscription for Trust Securities (as defined below) of MidAmerican Capital
Trust I (the "Trust"), a statutory business trust formed by MidAmerican Energy
Holdings Company, an Iowa corporation (the "Company"), under the laws of the
State of Delaware. The undersigned understands that the Trust is relying upon
the accuracy and completeness of the information contained herein in complying
with its obligations under federal and state securities and other applicable
laws.
Teton Formation L.L.C. ("Parent"), an Iowa limited liability
company, Teton Acquisition Corp., an Iowa corporation ("Merger Sub"), and the
Company have entered into an Agreement and Plan of Merger, dated as of October
24, 1999 (the "Merger Agreement"), pursuant to which, and subject to the terms
and conditions set forth therein, Merger Sub will merge with and into
MidAmerican, with MidAmerican being the surviving corporation (the "Merger").
The undersigned hereby irrevocably agrees with, and represents
and warrants to and for the benefit of, the Trust, the Company, Merger Sub,
Parent and the members of Parent, as follows:
1. Subscription.
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(a) On the terms and subject to the conditions of this
Agreement, the undersigned hereby irrevocably agrees to purchase, and the Trust
hereby irrevocably agrees to sell, on the Initial Closing Date (as defined in
Section 5 below) 18,190,880 11% Trust Issued Preferred Securities (liquidation
amount $25 per security) (the "Trust Securities") of the Trust, having the
terms, limitations and relative rights and preferences set forth in the Amended
and Restated Declaration of Trust (including the exhibits thereto), to be dated
as of the Initial Closing Date and in the form attached as Schedule I hereto
(the "Declaration of Trust"), for an aggregate purchase price of $454,772,000.
<PAGE>
(b) The undersigned hereby irrevocably agrees to
purchase, from time to time after the Initial Closing Date, additional Trust
Securities for a purchase price of $25 per Trust Security, up to an aggregate
purchase price for all such additional Trust Securities of $345,228,000, subject
to the following terms and conditions:
(i) The amount of additional Trust Securities to be purchased
upon notice from the Trust, or the Company on its behalf, as described
below (when calculated based on the aggregate purchase price thereof),
at any time shall not exceed the aggregate cash consideration paid or
to be paid to holders of trust preferred securities of CalEnergy
Capital Trust II and/or CalEnergy Capital Trust III (together referred
to as "TIDES") with respect to which securities conversion rights have
been exercised (A) during the Subscription Period to which the notice
to be given pursuant to subsection (ii) below relates, or (B) during
the period from the end of such Subscription Period until the date of
such notice (the "Notice Period"); provided, that, the amount of
additional Trust Securities otherwise required to be purchased pursuant
to clause (A) shall be reduced by the amount of any Trust Securities
purchased with respect to any Notice Period included in such
Subscription Period. "Subscription Period" shall mean the period
commencing on the date following the end of the previous Subscription
Period (or commencing on the Initial Closing Date, in the case of the
first Subscription Period,) and (B) ending on the date on which the
aggregate cash consideration paid or to be paid to holders of TIDES
with respect to which securities conversion rights have been exercised
since the end of the previous Subscription Period (or the Initial
Closing Date, in the case of the first Subscription Period) equals or
exceeds the Minimum Commitment (as defined below);
(ii) The closing of any such additional purchase of Trust
Securities pursuant to this Section 1(b) shall take place on the tenth
day (or such earlier day, as the undersigned may agree in its
discretion) following receipt by the undersigned of written
notification by the Trust, or by the Company on its behalf, to the
undersigned given within thirty (30) days of the end of the previous
Subscription Period. Such notice shall request that the undersigned
purchase additional Trust Securities and state (A) the aggregate cash
consideration paid or to be paid to holders of TIDES with respect to
which securities conversion rights have been exercised during such
previous Subscription Period or thereafter but prior to the date of
such notice, and (B) the amount of additional Trust Securities to be
purchased by the undersigned (which amount shall not be greater than
the amount set forth pursuant to the immediately preceding clause (A)).
If no such notice is given within thirty (30) days of the end of a
Subscription Period, the undersigned shall have no further obligation
under this Agreement to purchase the amount of Trust Securities which
it was otherwise required to purchase with respect to such Subscription
Period;
(iii) The stated maturity of such additional Trust Securities
shall be ten years from the date of issuance, and the amortization
schedule of such additional Trust Securities shall commence on the next
Interest Payment Date (as defined in the Declaration of Trust)
following the date that is five and one-half years from the date of
issuance;
<PAGE>
(iv) The purchase and sale of such additional Trust Securities
pursuant to this Section 1(b) shall be subject to fulfillment of all
the conditions set forth in Section 6 hereof;
(v) The undersigned shall not be obligated to purchase any
additional Trust Securities unless the purchase price of such Trust
Securities being purchased at such time is at least $50 million;
provided, however, that if the maximum amount of the undersigned's
remaining commitment to purchase Trust Securities under this Section
1(b) is less than $50 million, then the minimum purchase amount shall
be the amount of such remaining commitment ($50 million, or such lesser
amount pursuant to the preceding clause, the "Minimum Commitment"); and
(vi) The undersigned's obligation to purchase additional Trust
Securities pursuant to this Section 1(b) shall expire on the seventh
anniversary of the Initial Closing Date.
(c) The purchase price for the Trust Securities is
payable in cash or other immediately available funds. The undersigned may assign
its subscription rights hereunder to one or more of its consolidated
subsidiaries; provided, however, that the undersigned shall remain fully liable
for all of its obligations hereunder, including, without limitation, the payment
of the purchase price for all of the Trust Securities. As a condition to such
subscription, each consolidated subsidiary of the undersigned purchasing Trust
Securities shall execute and deliver to the Trust a counterpart of this
Agreement, and shall be bound by the terms and conditions of this Agreement (but
with its obligations limited to the Trust Securities being purchased by it) as
if such person was the original signatory hereto.
2. Other Subscription Agreements. Merger Sub has entered into, in
connection with the transactions contemplated under the Merger Agreement, (i) a
subscription agreement with David L. Sokol (as amended, the "Sokol Subscription
Agreement"), pursuant to which David L. Sokol has agreed to purchase, on the
terms and subject to the conditions stated therein, shares of the Company's
common stock, no par value per share ("Common Stock"), and options to purchase
Common Stock, (ii) a subscription agreement with Gregory E. Abel (the "Abel
Subscription Agreement"), pursuant to which Gregory E. Abel has agreed to
purchase, on the terms and subject to the conditions stated therein, shares of
Common Stock and options to purchase Common Stock, (iii) a subscription
agreement with the undersigned (as amended and restated, the "Berkshire
Subscription Agreement"), pursuant to which the undersigned has agreed to
purchase, on the terms and subject to the conditions stated therein, shares of
Common Stock and shares of the Company's Zero Coupon Convertible Preferred
Stock, and (iv) a subscription agreement with Walter Scott, Jr. (as amended, the
"Scott Subscription Agreement" and, together with this Agreement, the Sokol
Subscription Agreement, the Abel Subscription Agreement and the Berkshire
Subscription Agreement, collectively, the "Subscription Agreements), pursuant to
which Walter Scott, Jr. has agreed to purchase, on the terms and subject to the
conditions stated therein, shares of Common Stock. Each of the Subscription
Agreements are separate and several agreements, and the sales of Securities to
the undersigned and to the other purchasers under the Subscription Agreements
are to be separate and several sales.
<PAGE>
3. Representations and Warranties of the Trust.
-------------------------------------------
The Trust hereby represents and warrants to the undersigned that:
(a) Organization and Qualification. The Trust is a
statutory business trust duly organized, validly existing and in good standing
under the laws of the State of Delaware. Except for obligations or liabilities
incurred, or to be incurred, in connection with the transactions contemplated by
the Merger Agreement or in connection with its organization, on the Initial
Closing Date the Trust will not have incurred any obligations or liabilities or
engaged in any business activities of any kind.
(b) Authority. On the Closing Date, the issuance and
delivery of the Trust Securities being purchased on such date in accordance with
this Agreement will have been duly authorized by the Trust.
(c) Issuance of Securities. On the Closing Date, the
Trust Securities to be issued and sold by the Trust on such date pursuant to
this Agreement, when issued in accordance with the provisions hereof, will be
validly issued, fully paid and nonassessable undivided beneficial interests in
the assets of the Trust, and no holder of interests in the Trust will have any
preemptive rights to subscribe for any such Trust Securities, except pursuant to
this Agreement. On the Closing Date, the only securities which will be
authorized for issuance by the Trust are the Trust Securities to be issued and
sold by the Trust pursuant to this Agreement and the Trust's Common Securities
issued or to be issued by the Trust pursuant to the Common Securities Purchase
Agreement, dated as of the date hereof, by and between the Trust and the
Company.
(d) Approvals and Consents; Non-Contravention. The
creation, authorization, issuance, offer and sale of the Trust Securities do not
require any consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority on the part of the Company or the
Trust (other than with respect to the organization of the Trust) or the vote,
consent or approval in any manner of the holders of any capital stock or other
security of the Company as a condition to the execution and delivery of this
Agreement or the creation, authorization, issuance, offer and sale of the Trust
Securities. The execution and delivery by the Trust of this Agreement and the
performance by the Trust of its obligations hereunder will not violate (i) the
terms and conditions of the Trust's Certificate of Trust or the Declaration of
Trust or any agreement to which the Trust is a party or by which it is bound or
(ii) subject to the accuracy of the representations and warranties of the
undersigned contained in Section 4 hereof, any federal or state law.
4. Representations and Warranties of the Undersigned.
-------------------------------------------------
The undersigned hereby represents and warrants to the Trust that:
<PAGE>
(a) Organization and Qualification. The undersigned is
duly organized or formed, validly existing and in good standing under the laws
of the state of its organization or formation.
(b) Authority. The undersigned has the requisite power
and authority to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement by the undersigned and the consummation by the
undersigned of the transactions contemplated hereby have been duly and validly
approved by all necessary action, and no other proceedings on the part of the
undersigned are necessary to authorize the execution, delivery and performance
of this Agreement by the undersigned and the consummation by the undersigned of
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the undersigned and, assuming the due authorization,
execution and delivery of this Agreement by the Trust, constitutes a legal,
valid and binding obligation of the undersigned enforceable against the
undersigned in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(c) Approvals and Consents; Non-Contravention. The
execution, delivery and performance of this Agreement by the undersigned and the
consummation by the undersigned of the transactions contemplated hereby do not
require any consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority on the part of the undersigned,
or the vote, consent or approval in any manner of the holders of any capital
stock or other security of the undersigned as a condition to the execution and
delivery of this Agreement or the consummation by the undersigned of the
transactions contemplated hereby. The execution and delivery by the undersigned
of this Agreement and the performance by the undersigned of its obligations
hereunder will not violate (i) the terms and conditions of the certificate of
incorporation, or other applicable formation document, or the bylaws of the
undersigned, or any agreement to which the undersigned is a party or by which it
is bound or (ii) any federal or state law. Notwithstanding any other provision
of this Section 4(c), no representation or warranty is made as to whether the
undersigned or any of its affiliates, as a result of the transactions
contemplated by this Agreement or the Merger Agreement would be subject to
regulation as a registered holding company under the 1935 Act. The undersigned
would not intend to register as such a holding company if that were a required
condition of the transaction.
(d) Residence. The principal place of business address
set forth on the signature page hereof is the undersigned's true and correct
principal place of business and is the only jurisdiction in which an offer to
sell the Trust Securities was made to the undersigned and the undersigned has no
present intention of moving its principal place of business to any other state
or jurisdiction.
<PAGE>
(e) No Registration; Transfer Restrictions. The
undersigned understands that the Trust Securities have not been registered under
the Securities Act of 1933, as amended (the "Act"), or under the laws of any
other jurisdiction, and that the Trust does not contemplate and is under no
obligation to so register the Trust Securities and that the Trust Securities are
only transferable to "Permitted Holders" (as defined in the Declaration of
Trust). The undersigned understands and agrees that the Trust Securities must be
held indefinitely unless they are subsequently transferred (i) pursuant to an
effective registration statement under the Act and, where required, under the
laws of other jurisdictions or (ii) pursuant to an exemption from applicable
registration requirements. The undersigned recognizes that there is no
established trading market for the Trust Securities and that it is unlikely that
any public market for the Trust Securities will develop. The undersigned will
not offer, sell, transfer or assign its Trust Securities or any interest therein
in contravention of this Agreement, the Declaration of Trust, the Act or any
state or federal law.
(f) Purchase for Investment. The Trust Securities for
which the undersigned hereby subscribes are being acquired solely for the
undersigned's own account for investment and are not being purchased with a view
to or for resale, distribution or other disposition, and the undersigned has no
present plans to enter into any contract, undertaking, agreement or arrangement
for any such resale, distribution or other disposition.
(g) Information. The undersigned has been granted the
opportunity to ask questions of, and receive answers from, the Trust and the
Company and the officers of the Trust and the Company concerning the terms and
conditions of the sale of the Trust Securities, the Merger Agreement and the
transactions contemplated thereby, and to obtain any additional information
which the undersigned deems necessary to make an informed investment decision.
The undersigned has received or has had access to other documents requested from
the Trust and the Company relating to the Trust Securities and the purchase
thereof, and the Trust and the Company have afforded the undersigned the
opportunity to discuss the undersigned's investment in the Trust and to ask and
receive answers to any questions relating to the investment in the Trust
Securities, the Merger Agreement and the transactions contemplated thereby. The
undersigned understands and has evaluated the risks of a purchase of the Trust
Securities.
(h) Accredited Investor. The undersigned has read the
text of Rule 501(a)(1) - (8) of Regulation D under the Act and confirms that it
is an "accredited investor" as described thereby.
(i) Plan Assets.
-----------
(i) By checking below, the undersigned has indicated whether
or not it is, or is acting on behalf of, a "benefit plan investor", as
defined in 29 C.F.R. ss. 2510.3-101. The undersigned acknowledges that
(A) a benefit plan investor includes (x) an "employee benefit plan"
within the meaning of Section 3(3) of the U.S. Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), whether or not such
plan is subject to ERISA, or (y) a plan or arrangement subject to
Section 4975 of the Internal Revenue Code of 1986, as amended (the
<PAGE>
"Code") or (iii) an entity which is deemed to hold the assets of any
such employee benefit plan, plan or arrangement described in (x) or (y)
above pursuant to 29 C.F.R. ss. 2510.3-101 or otherwise, (B) a plan
which is maintained by a foreign corporation, governmental entity or
church, a Keogh plan covering no common-law employees and an individual
retirement account would each be a benefit plan investor for this
purpose, even though they are generally not subject to ERISA and (C) a
foreign or U.S. entity which is not an operating company and which is
not publicly traded or registered as an investment company under the
Investment Company Act of 1940, as amended, and in which 25% or more of
the value of any class of equity interests is held by benefit plan
investors, would be deemed to hold the assets of one or more employee
benefit plans pursuant to 29 C.F.R. 2510.3-101. The undersigned further
understands that for purposes of determining whether this 25% threshold
has been met or exceeded, the value of any equity interests held by a
person (other than a benefit plan investor) who has discretionary
authority or control with respect to the assets of the entity, or any
person who provides investment advice for a fee (direct or indirect)
with respect to such assets, or any affiliate of such a person, is
disregarded:
___ Yes X No
---
(ii) By checking below, the undersigned has indicated whether
it is, or is acting on behalf of, such an employee benefit plan, plan
or arrangement described in the preceding question, or is an entity
deemed to hold the assets of any such employee benefit plan, plan or
arrangement that is subject to ERISA and/or Section 4975 of the Code.
___ Yes X No
---
(iii) By checking below, the undersigned has indicated whether
it is an insurance company using assets of its general account.
___ Yes X No
---
If the answer to the above question is yes, please indicate the
percentage of the general account that is attributable to benefit plan
investors subject to ERISA and/or Section 4975 of the Code: _______%.
(j) Holding Company. The undersigned is not a "public
utility company", a "holding company", a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company",
as such terms are defined in the Public Utility Holding Company Act of 1935, as
amended, or a "public utility" as such term is defined in the Federal Power Act.
(k) Assignment. The undersigned will only assign its
subscription rights hereunder to one or more of its consolidated subsidiaries
who are capable of making the representations and warranties contained in this
Section 4 and of performing the obligations they undertake hereunder.
<PAGE>
5. Closing. The closing of the purchase and sale of the Trust
Securities pursuant to Section 1(a) of this Agreement shall be held at the same
place and at the same time as the closings under the other Subscription
Agreements (the "Initial Closing Date") and immediately prior to the effective
time of the Merger (but contingent upon such effectiveness of the Merger).
"Closing Date" shall refer to the date of the closing of any purchase and sale
of Trust Securities on such date pursuant to this Agreement. Any such closing is
referred to herein as a "Closing."
6. Conditions to Closing. (a) The undersigned's obligation to purchase
---------------------
the Trust Securities under this Agreement at the Closing is subject to the
fulfillment on or prior to the Closing of the following conditions:
(i) Representations and Warranties. Each representation and
warranty made by the Trust in this Agreement shall be true and correct
in all material respects on and as of the Closing Date as though such
representation or warranty was made on the Closing Date, and any
representation or warranty made as of a specified date earlier than the
Closing Date shall have been true and correct in all material respects
on and as of such earlier date.
(ii) Performance. The Trust shall have performed and complied
with, in all material respects, each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by the
Trust at or before the Closing Date.
(iii) Merger Agreement. As of the Initial Closing Date, all
conditions to the consummation of the transactions contemplated by the
Merger Agreement shall have been satisfied or waived and the closing of
the transactions contemplated hereunder shall occur immediately prior
to the effective time of the Merger.
(iv) Subscription Agreements. As of the Initial Closing Date,
the Subscription Agreements shall be in full force and effect, no
cancellation or termination (purported or otherwise) shall have
occurred in respect of any Subscription Agreement, no material breach
or default shall have occurred and be continuing under any of the
Subscription Agreements, and closings under all of the Subscription
Agreements shall be effected concurrently.
(b) The Trust's obligation to sell the Trust Securities
under this Agreement at the Closing is subject to the fulfillment on or prior to
the Closing of the following conditions:
(i) Representations and Warranties. Each representation and
warranty made by the undersigned in this Agreement shall be true and
correct in all material respects on and as of the Closing Date as
though such representation or warranty was made on the Closing Date,
and any representation or warranty made as of a specified date earlier
than the Closing Date shall have been true and correct in all material
respects on and as of such earlier date.
<PAGE>
(ii) Performance. The undersigned shall have performed and
complied with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or complied
with by the undersigned at or before the Closing Date.
(iii) Merger Agreement. As of the Initial Closing Date, all
conditions to the consummation of the transactions contemplated by the
Merger Agreement shall have been satisfied or waived and the closing of
the transactions contemplated hereunder shall occur immediately prior
to the effective time of the Merger.
(iv) Subscription Agreements. As of the Initial Closing Date,
the Subscription Agreements shall be in full force and effect, no
cancellation or termination (purported or otherwise) shall have
occurred in respect of any Subscription Agreement, no material breach
or default shall have occurred and be continuing under any of the
Subscription Agreements, and closings under all of the Subscription
Agreements shall be effected concurrently.
7. Covenants. Each of the Trust and the undersigned covenants and
agrees with the other that, at all times from and after the date hereof until
the Closing Date, it will comply with all covenants and provisions of this
Section 7, except to the extent the other party may otherwise consent in
writing.
(a) Formation of Trust. The Company shall take all
actions necessary to organize the Trust, to issue its 11% Junior Subordinated
Deferrable Interest Debentures to the Trust and to cause the Trust to perform
its obligations in accordance with the terms, and subject to the conditions, of
this Agreement.
(b) Regulatory and Other Approvals. Subject to the terms
and conditions of this Agreement, each of the Company and the undersigned will
proceed diligently and in good faith to, as promptly as practicable (x) obtain
all consents, approvals or actions of, make all filings with and give all
notices to governmental or regulatory authorities or any public or private third
parties required of the Trust and the undersigned to consummate the transactions
contemplated hereby, and (y) provide such other information and communications
to such governmental or regulatory authorities or other public or private third
parties as the other party or such governmental or regulatory authorities or
other public or private third parties may reasonably request in connection
therewith. Subject to the terms and conditions of this Agreement, prior to the
Initial Closing Date, each of the Company and the undersigned will proceed
diligently and in good faith to, as promptly as practicable (x) obtain all
consents, approvals or actions of, make all filings with and give all notices to
governmental or regulatory authorities or any public or private third parties
required of the Trust and the undersigned to consummate the transactions
<PAGE>
contemplated by the Merger Agreement, and (y) provide such other information and
communications to such governmental or regulatory authorities or other public or
private third parties as the other party or such governmental or regulatory
authorities or other public or private third parties may reasonably request in
connection therewith. In addition to and not in limitation of the foregoing,
prior to the Initial Closing Date, each of the parties will (1) take promptly
all actions necessary to make the filings required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act"), (2) comply at the earliest practicable
date with any request for additional information received from the Federal Trade
Commission (the "FTC") or the Antitrust Division of the Department of Justice
(the "Antitrust Division"), pursuant to the HSR Act, and (3) cooperate with the
other party in connection with such party's filings under the HSR Act and in
connection with resolving any investigation or other inquiry concerning the
transactions contemplated by this Agreement commenced by either the FTC or the
Antitrust Division or state attorneys general.
(c) Notice and Cure. Each of the Trust and the
undersigned will promptly notify the other in writing of, and contemporaneously
will provide the other with true and complete copies of any and all information
or documents relating to, and will use all commercially reasonable efforts to
cure before the Closing Date, any event, transaction or circumstance, occurring
after the date of this Agreement that causes or will cause any covenant or
agreement of either such party under this Agreement to be breached or that
renders or will render untrue any representation or warranty of either such
party contained in this Agreement as if the same were made on or as of the date
of such event, transaction or circumstance.
(d) Fulfillment of Conditions. Each of the Trust and the
undersigned will take all commercially reasonable steps necessary or desirable
and proceed diligently and in good faith to satisfy each condition to the
obligations of such party contained in this Agreement and will not take any
action that could reasonably be expected to result in the nonfulfillment of any
such condition or fail to take any commercially reasonable action that could
reasonably be expected to prevent the nonfulfillment of any such condition.
8. Indemnification. The undersigned agrees to indemnify and hold
harmless the Trust, the Company, Merger Sub, Parent, or any member, officer,
director, employee, agent or control person (within the meaning of Section 15 of
the Act) of any such entity from and against any and all loss, damage or
liability due to or arising out of a breach of any representation or warranty of
the undersigned contained in any document furnished by the undersigned in
connection with the offering and sale of the Trust Securities, including,
without limitation, this Agreement, or failure by the undersigned to comply with
any covenant or agreement made by the undersigned herein or in any other
document furnished by the undersigned to any of the foregoing in connection with
this transaction.
9. Survival; Binding Effect. All covenants, agreements, representations
and warranties made herein shall survive the execution and delivery of this
Agreement and delivery of the Trust Securities and payment therefor and,
notwithstanding any investigation heretofore or hereafter made by the
undersigned or on the undersigned's behalf, shall continue in full force and
effect. Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of such
party and all covenants, promises and agreements in this Agreement by or on
behalf of the Trust, or by or on behalf of the undersigned, shall bind and inure
to the benefit of the successors and assigns of such parties hereto.
<PAGE>
10. Termination.
-----------
(a) This Agreement may be terminated, and the
transactions contemplated hereby (but only to the extent not previously
consummated), may be abandoned (i) by mutual written agreement of the Trust and
the undersigned or (ii) by the Trust or the undersigned, in the event that any
order or law becomes effective restraining, enjoining or otherwise prohibiting
or making illegal the consummation of any of the transactions (but only to the
extent not previously consummated) contemplated by this Agreement or the Trust,
upon notification of the non-terminating party by the terminating party.
(b) This Agreement shall terminate prior to the Initial
Closing Date, with no further action being required on the part of either party
hereto, automatically, upon any termination of the Merger Agreement in
accordance with its terms by MidAmerican or (with the requisite Member vote
under the Parent's Operating Agreement or the requisite two-thirds vote of
Merger Sub's Board of Directors) by the Parent or Merger Sub, as applicable.
(c) If this Agreement is validly terminated pursuant to
this Section 10, this Agreement will forthwith become null and void, and there
will be no liability or obligation on the part of the undersigned or the Trust,
Parent or Merger Sub (or any of their respective members, officers, directors,
employees, agents or other representatives or affiliates), except to the extent
of the transactions previously consummated hereunder. Notwithstanding the
foregoing, no such termination shall affect the obligations of the undersigned
pursuant to Section 8, which shall survive any such termination.
11. Notices. All notices, statements, instructions or other documents
required to be given hereunder shall be in writing and shall be given either
personally, by overnight courier or by facsimile, addressed to the Trust at its
principal offices, with a copy to the Company, at 666 Grand Avenue, Des Moines,
Iowa 50309, Attn: President, Telecopy: (515) 242-4031, and to the other party at
its addresses or facsimile number reflected on the signature page hereto. The
undersigned, by written notice given to the Trust in accordance with this
Section 11 may change the address to which notices, statements, instructions or
other documents are to be sent to the undersigned.
12. Complete Agreement; Counterparts. This Agreement constitutes the
entire agreement and supersedes all other agreements and understandings, both
written and oral, between the parties hereto, with respect to the subject matter
hereof. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.
13. Assignment. Without the prior written consent of each of the
parties hereto, neither this Agreement nor any right, interest or obligation
hereunder may be assigned by any party hereto and any attempt to do so will be
void; provided, however, that, notwithstanding any other provisions of this
<PAGE>
Agreement, this Agreement and all rights, interests and obligations of the
undersigned hereunder (or, at the option of the undersigned, the right and
obligation to purchase some, but not all, of the Trust Securities) may be
assigned by the undersigned to one or more subsidiaries of the undersigned which
are, and which continue to be as of the applicable Closing Date, consolidated
with the undersigned for financial accounting purposes, without obtaining the
consent of any other party hereto. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and shall be
enforceable by the parties hereto and their respective successors and assigns.
14. Amendment and Waiver. This Agreement may be amended or modified
only by an instrument signed by the parties hereto. A waiver of any provision of
this Agreement must be in writing, designated as such, and signed by the party
against whom enforcement of that waiver is sought. The waiver by a party of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent or other breach thereof.
15. Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement on this ____ day of March 2000.
BERKSHIRE HATHAWAY INC.
Mailing Address
By:
Name: City State Zip Code
Title:
Tax Identification Number
SUBSCRIPTION ACCEPTED AS OF THE ABOVE DATE
MIDAMERICAN CAPITAL TRUST I
By:
Name: David L. Sokol
Title: Regular Trustee
Name: Gregory E. Abel
Title: Regular Trustee
Exhibit 10.1
EXECUTION COPY
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement, originally entered into
as of August 21, 1995, as amended by Amendment No. 1, dated as of August 28,
1996, and as further amended by Amendment No. 2, dated as of April 16, 1997, and
as further amended by Amendment No. 3, dated as of August 19, 1998, and as
further amended by Amendment No. 4, dated as of March 11, 1999, is further
amended and restated as of May 10, 1999 by and between MidAmerican Energy
Holdings Company (formerly California Energy Company ("CalEnergy")), an Iowa
corporation (the "Company"), and David L. Sokol (the "Executive").
RECITALS
The Company desires to employ the Executive as its Chairman and Chief
Executive Officer on the terms set forth in this Agreement, and the Executive
desires to accept such employment.
Accordingly, the Company and the Executive agree as follows:
AGREEMENT
Section 1. Defined Terms. Terms used but not defined in this Agreement
will have the meanings ascribed to them in Exhibit A to this Agreement.
Section 2. Employment.
(a) The Company will employ the Executive as, and the Executive will
act as, the Chairman and Chief Executive Officer of the Company upon the terms
set forth in this Agreement, for the Term of Employment, except that in the
event the Executive relinquishes his position as Chief Executive Officer but
offers to remain employed as Chairman of the Board of the Company pursuant to
Section 7(c), the Executive will act solely as Chairman of the Board upon the
terms set forth in this Agreement for the Term of Employment.
(b) The Executive's primary place of employment will be Omaha,
Nebraska.
Section 3. Duties.
(a) The Executive (i) will manage the business of the Company and
supervise and direct the other officers of the Company and its employees, agents
and representatives, and (ii) will perform and discharge such other duties, and
will have such other authority, as are customary to his office. In performing
such duties, the Executive will report directly to the Board of Directors.
<PAGE>
(b) The Board will not reduce the title, office, duties or authority
of the Executive in any material respect and will not require the Executive to
relocate his residence from Omaha, Nebraska. During the Term of Employment, the
Company will use its best efforts to cause the Executive to be nominated and
elected to the Company's Board of Directors.
(c) The Executive will act, without any compensation in addition to
the compensation payable pursuant to this Agreement, as an officer of any
subsidiary of the Company, or as a member of the board of directors of any
subsidiary of the Company, if so appointed or elected.
(d) During the Term of Employment, the Executive (i) will devote his
entire time, attention and energies during normal business hours to the business
of the Company, and (ii) will not, without the Consent of the Board, perform any
services for any other Person or engage in any other business or professional
activity; provided, however, that in the event the Executive relinquishes his
position as Chief Executive Officer but offers to remain employed as Chairman of
the Board of the Company pursuant to Section 7(c), the foregoing items (i) and
(ii) shall no longer apply and instead the Executive shall provide services to
the Company as reasonably requested by the Chief Executive Officer or the Board
and agrees to be available to provide such services for up to forty (40) hours
during each month while this Agreement is in effect.
(e) Notwithstanding subsection (d), the Executive, without the Consent
of the Board, may (i) perform the consulting duties contemplated in the letter
agreement dated October 5, 1990, as it may be amended, by and among the
Executive, Ogden Corporation and Ogden Projects, Inc., (ii) purchase securities
issued by, or otherwise passively invest his personal or family assets in, any
other company or business, and (iii) engage in governmental, political,
educational or charitable activities, but only to the extent that those
activities (A) are not inconsistent with any direction of the Board or any
duties under this Agreement, and (B) do not interfere with the devotion by the
Executive of his time, attention and energies during normal business hours to
the business of the Company.
Section 4. Compensation.
<PAGE>
(a) During the Term of Employment, the Company will pay the Executive
a base salary at a minimum annual rate of six hundred and seventy-five thousand
dollars ($675,000), in substantially equal periodic payments in accordance with
the Company's practices for executive employees. Notwithstanding the foregoing,
if the Executive relinquishes his position as Chief Executive Officer but offers
to remain employed as Chairman of the Board of the Company pursuant to Section
7(c), the Company shall pay the Executive an annual salary in the amount of six
hundred and seventy-five thousand dollars ($675,000) for each 12-month period
during the Term of Employment, payable in equal monthly installments on the
first business day of the Company of each month during the Term of Employment.
(b) The Board will review the salary payable to the Executive at least
annually beginning in the fourth fiscal quarter of 1999. The Board, in its
discretion, may increase the salary of the Executive from time to time, but may
not reduce the salary of the Executive below the amount set forth in subsection
(a) above. The Board may issue the Executive stock options from time to time at
its discretion.
(c) During the Term of Employment, the Company will pay the Executive
an annual bonus, not later than ten calendar days after the end of the preceding
fiscal year of the Company in an amount determined by the Board, by reference to
the accomplishment by the Executive of goals established by the Board for the
related fiscal year. The annual bonus paid to the Executive, however, will not
be less than the Minimum Bonus. The Executive shall also be eligible to be paid
other bonuses for each fiscal year as determined by the Board. The Executive's
annual bonus, together with all such other bonuses paid or payable for the
fiscal year (including any amounts for which receipt is otherwise deferred
pursuant to a plan or arrangement with the Company), is referred to herein as
"Annual Bonus Compensation."
(d) If the Executive suffers a Disability which continues for more
than 60 calendar days, the Company may elect to pay the Executive, for so long
as the Disability continues, fifty (50) percent of the salary otherwise payable
to the Executive under Section 4(a), and fifty (50) percent of the Minimum Bonus
otherwise payable to the Executive pursuant to Section 4(c). Any such election
shall be subject to and will not affect the rights of the Company or the
Executive under Sections 7(a)(v) and 8(b) hereof.
(e) The Company will reimburse the Executive, subject to compliance by
the Executive with the Company's customary reimbursement practices, for all
reasonable and necessary out-of-pocket expenses incurred by the Executive on
behalf of the company in the course of its business.
<PAGE>
(f) The Company may reduce any payments made to the Executive under
this Agreement by any required federal, state or local government withholdings
or deductions for taxes or similar charges, or otherwise pursuant to law,
regulation or order.
(g) Any base salary payable to the Executive for any period of
employment of less than a year during the Term of Employment will be reduced to
reflect the actual number of days of employment during the period except as
provided in Section 8(b).
Section 5. Other Benefits.
(a) During the Term of Employment (including the Term of Employment
after Executive has relinquished his position as Chief Executive Officer), the
Executive and his family may participate in and receive benefits under any
employee benefit plan which the Company makes generally available to its
employees and their families, including any pension, life insurance, medical
benefits, dental benefits or disability plan, but only to the extent that the
Executive or his family otherwise satisfies the standards established for
participation in the plan.
(b) The Executive may take up to six weeks of vacation during each
full calendar year during the Term of employment, without loss of compensation
or other benefits under this Agreement.
Section 5A. Supplemental Retirement Benefits.
(a) Effective as of March 12, 1999, the closing date of the merger
between the Company and MidAmerican Energy Company, resulting in the creation of
MidAmerican Energy Holdings Company (the "Merger Date"), the Executive shall
irrevocably become a participant in the MidAmerican Energy Company Supplemental
Retirement Plan for Designated Officers (the "SERP").
(b) The Executive shall receive fully vested years of participation
credit under the SERP (for all purposes, including vesting and benefit accrual)
for all years of service (or portions thereof) performed at the Company prior to
the Merger Date, as provided on Exhibit B attached hereto.
(c) The Executive shall be entitled to an Early Retirement Benefit
Payment Option under the SERP pursuant to which he may elect to commence
receiving benefits under the SERP after the Executive's retirement or disability
on or after attaining age 47, which payments shall be calculated pursuant to the
<PAGE>
SERP but which shall be no less than as provided on Exhibit C hereto (including
for purposes of the following sentence). In the event of the Executive's death,
benefits shall be paid pursuant to Section 6.4 of the SERP; provided, however,
that any payment due under Section 6.4(a) of the SERP shall continue for the
remaining lifetime of the Executive's surviving "Spouse" (as defined in the
SERP) or for 360 months if the Executive dies without a surviving Spouse; and
further provided, however, that any payment due under Section 6.4(b) of the SERP
shall be payable without regard to the two-thirds and fifty percent limitations
contained therein.
(d) In the event of a Triggering Event (as defined below), the
Executive shall be entitled to the following under the SERP:
(i) for purposes of determining years of
participation credit, the Executive shall be credited
with additional years of participation (or portions
thereof) equal to the difference between age 65 and
the Executive's age (in years or portions thereof) on
the date of the Triggering Event, and
(ii) any benefits under the SERP not fully vested on
the date of the Triggering Event (including the
benefits arising by the foregoing subparagraph) shall
become fully vested as of such date.
For purposes of this Section 5A(d), a Triggering Event shall mean (x) the
termination of the Executive by the Company without Cause; (y) the resignation
by the Executive pursuant to Section 7(a)(iv) of this Agreement; or (z) a Change
in Control occurring after the Merger Date. All capitalized terms shall have the
meanings ascribed to them in Exhibit A of this Agreement.
(e) Notwithstanding anything herein or in the SERP to the contrary,
for purposes of determining the benefit payable to Executive under the SERP, the
Executive's annual base salary and annual bonus shall never be less than the
base salary referenced in Section 4(a) hereof and that portion of the Annual
Bonus Compensation earned by Executive for the 1998 calendar year which the SERP
Committee has determined shall be included for purposes of calculating the SERP
benefit (i.e., $1,850,000).
(f) Within 30 days prior to a Change in Control, the Company shall (i)
establish a rabbi trust or an irrevocable standby letter of credit with a U.S.
Bank rated A or better, in each case naming the Executive as the beneficiary and
<PAGE>
having terms reasonably satisfactory to Executive, in order to provide security
for the payment of benefits to Executive pursuant to the SERP, and (ii) if a
rabbi trust is established, deposit into the rabbi trust an amount which, with
the expected earnings thereon from reasonably prudent and conservative
investments (as confirmed by a certificate of a national accounting firm of
recognized standing which is independent of the Company) shall be sufficient to
satisfy the ultimate benefit obligations to Executive pursuant to the SERP.
(g) A general release of claims under the SERP shall not be required
of the Executive in order to receive benefits thereunder.
(h) The Executive's entitlement to benefits under the SERP shall be
nonforfeitable and, Section 6.5 of the SERP notwithstanding, shall not be
adversely affected in any way upon termination of the Executive's employment for
Cause.
Section 6. Confidentiality and Post-Employment Restrictions.
(a) The Executive acknowledges that the Company has confidential
information and trade secrets, whether written or unwritten, with respect to
carrying on its business, including sensitive technology and engineering
information and data, names, of past, present and prospective customers and
vendors of the Company, methods of pricing contracts and income and expenses
associated therewith, negotiated prices and offers outstanding, credit terms and
status of accounts and the terms or circumstances of any business arrangements
between the Company and any third parties ("Confidential Information and Trade
Secrets"). As used in this Agreement, the term Confidential Information and
Trade Secrets does not include (i) information which becomes generally available
to the public other than as a result of a disclosure by the Executive, (ii)
information which becomes available to the Executive on a nonconfidential basis
from a source other than the Company, or (iii) information known to the
Executive prior to any disclosure to him by the Company. The Executive further
acknowledges that the Executive possesses a high degree of knowledge of the
geothermal energy industry and, in particular, has committed to a long-standing
relationship with the Company as employee, director and officer, which has
allowed, and will continue to allow, him access to the Company's Confidential
Information and Trade Secrets. Accordingly, any employment by the Executive with
another employer in the geothermal energy industry or participation by him as a
substantial investor in any such industry may necessarily involve disclosure of
the Company's Confidential Information and Trade Secrets. Consequently, the
<PAGE>
Executive agrees that, if he voluntarily resigns his employment with the Company
for any reason other than a breach of this Agreement by the Company, he shall
not at any time during the two-year period after such resignation, directly or
indirectly accept employment by or invest in (except as a passive investor in a
public corporation or in a publicly issued partnership interest which, in either
event, would not exceed an ownership interest of 3% of the outstanding equity or
partnership interest) in any person, firm, corporation, partnership, joint
venture or business which is primarily engaged in the production or marketing of
electrical energy from geothermal resources. The preceding sentence
notwithstanding, if the Executive's resignation occurs upon or after a Change in
Control, he shall not be precluded from accepting employment or providing
services to Peter Kiewit Sons', Inc. or any Affiliate thereof.
(b) Without the Consent of the Board, the Executive will not, for two
years after the Term of Employment, (i) disclose any Confidential Information
and Trade Secrets of the Company or any Affiliate of the Company to any Person
(other than the Company, directors, officers or employees of the Company or
representatives thereof), or (ii) otherwise make use of any Confidential
Information and Trade Secrets other than in connection with authorized dealings
with or by the Company.
(c) For a period of two years after the Term of Employment, the
Executive shall neither directly nor indirectly solicit, on behalf of another
employer, the employment of any person who is then currently employed by the
Company, or otherwise induce, on behalf of another employer, such person to
leave the employment of the Company without the Company's prior written
approval.
(d) The Executive will hold on behalf of the Company and as the
property of the Company, all memoranda, manuals, books, papers, letters,
documents, computer software and other similar property obtained during the
course of his employment by the Company and relating to the Company's business,
and will return such property to the Company at any time upon demand by the
Board and, in any event, within five calendar days after the end of the Term of
Employment.
Section 7. Termination of Employment or Change in Employment Status.
(a) The employment of the Executive under this Agreement will
terminate on the earliest of: (i) written notice by the Executive of his
resignation; (ii) the 30th calendar day after the Company gives to the Executive
written notice of termination without Cause; (iii) the fifth calendar day after
<PAGE>
the Company gives to the Executive written notice of the existence of Cause;
(iv) the 30th calendar day after the Executive gives to the Company written
notice of (A) the failure by the Company to pay to the Executive, for a material
period of time and in a material amount, compensation due and payable by the
Company under Section 4(a) or 4(c), or (B) any breach by the Company or the
Board of Section 3(b) or Section 4(b); (v) the Permanent Disability of the
Executive; or (vi) the death of the Executive.
(b) If the Employment of the Executive is terminated under this
Agreement, the obligations of the Executive under Section 6 will remain in full
force and effect, and the termination will not abrogate any rights or remedies
of the Company or the Executive with respect to any breach of the Agreement,
except as expressly provided in Sections 8 and 9.
(c) If the Executive relinquishes his position as Chief Executive
Officer but offers to remain employed as Chairman of the Board of the Company,
this Agreement will remain in full force and effect, subject to the provisions
hereof governing his employment solely as Chairman of the Board. In such event,
the first sentence of Section 3(a) and Sections 3(c), (e) and 4(d) shall no
longer be applicable.
Section 8. Payment Upon Termination.
(a) If the employment of the Executive is terminated pursuant to
subsections (i) or (iii) of Section 7(a), the Company will pay to the Executive,
within 30 calendar days, (x) any salary pursuant to Section 4(a) which is
accrued but unpaid through the Termination Date, and (y) a bonus payment, in an
amount determined by the Board by reference to the performance of the Executive
for a portion of the fiscal year of the Company before the Termination Date,
which is not less than the Minimum Bonus.
(b) If the employment of the Executive is terminated pursuant to
subsections (ii), (iv), (v) or (vi) of Section 7(a), the Company will pay the
Executive, on or before the related Termination Date, an amount equal to three
times the sum of (1) the annual salary then in effect pursuant to Section 4, and
(2) the greater of (x) the Minimum Bonus or (y) an amount equal to the average
Annual Bonus Compensation payable to the Executive in respect of the two fiscal
years immediately preceding the fiscal year in which the Executive's employment
with the Company terminates. In addition, (x) any portion of the options granted
<PAGE>
to the Executive which would become vested within the next 36 months (beginning
with the month following the month in which the Termination Date occurs) will
vest immediately and may be exercised within the remaining term of the options
as provided in the applicable option agreements, and (y) the Company shall
continue in effect for Executive and his dependents, for a period of 36 months
after the Termination Date, the life insurance benefits, medical benefits and
dental benefits, the disability plan, the tax preparation and investment
advisory services and any other employee benefits made generally available to
senior executives of the Company on and after the date hereof through the end of
the 36 month post-termination period, subject to such employee contributions and
other terms and conditions as are applicable to active employees generally and
subject to subsequent modification or termination of such plans to the extent
such subsequent actions are also applicable to active employees generally;
provided that such plan benefits shall terminate earlier on the date, if any,
that comparable benefits are made available to the Executive by any new employer
(the "Continuation of Benefits"). To the degree that any of the above employee
benefit programs are not available to Executive on account of his status as a
non-employee after termination of employment, the Company shall provide for
economically equivalent programs during the 36 month period or pay to executive
a lump sum cash amount designed to allow him to obtain economically equivalent
benefits or put him in the same economic position on an after tax basis (the
"Economic Equivalent").
If the Executive relinquishes his position as Chief Executive Officer
but offers to remain employed as Chairman of the Board of the Company pursuant
to Section 7(c) and the Executive's employment is subsequently terminated
pursuant to subsection (ii), (iv), (v) or (vi) of Section 7(a), in lieu of the
payments described above, the Company shall (i) pay the Executive any due and
payable salary pursuant to Section 4(a) for his services rendered to the Company
prior to the termination of this Agreement, (ii) reimburse pursuant to Section
4(e) the expenses incurred by the Executive prior to the termination of this
Agreement, (iii) pay the Executive the full amount of the aggregate annual
salary that would have been paid pursuant to Section 4(a) through the fifth
anniversary of the date he commenced his employment solely as Chairman of the
Board, (iv) provide for the immediate vesting and exercisability of all options
awarded to the Executive by the Company and (iv) provide for the Continuation of
Benefits through the fifth anniversary of the date he commenced his employment
solely as Chairman of the Board or the Economic Equivalent thereof.
(c) If the employment of the Executive is terminated pursuant to
subsections (ii), (iv), (v) or (vi) of Section 7(a), all Performance Accelerated
Stock Options ("PASOs") held by the Executive on the Termination Date will
become vested and immediately exercisable on such Termination Date, and shall
otherwise remain exercisable for their term in accordance with the terms
thereof.
<PAGE>
(d) If the employment of the Executive is terminated pursuant to
subsections (ii), (iv), (v) or (vi) of Section 7(a) at any time prior to a
Change in Control or for any reason after a Change in Control, then without
further action by the Company, the Board or any committee thereof, the Executive
may exercise any vested stock options (including vested PASOs) held by the
Executive pursuant to existing procedures approved by the Stock Option Committee
for cashless exercise, by surrendering previously owned shares, electing to have
the Company withhold shares otherwise deliverable upon exercise of such options,
or by providing an irrevocable direction to a broker to sell shares and deliver
all or a portion of the proceeds to the Company, in any case in an amount equal
to the aggregate exercise price and any tax withholding obligation attendant to
the exercise.
(e) If the Executive relinquishes his position as Chief Executive
Officer but offers to remain employed as the Chairman of the Board of the
Company pursuant to Section 7(c), the Company will pay the Executive, on or
before the date he relinquishes such position, a special achievement bonus which
is equal to two times the sum of (1) the annual salary then in effect pursuant
to Section 4, and (2) the greater of (x) the Minimum Bonus or (y) an amount
equal to the average Annual Bonus Compensation payable to the Executive in
respect of the two fiscal years immediately preceding the fiscal year in which
the Executive relinquishes such position. In addition to the foregoing, all
options awarded by the Company to the Executive that would become vested and
exercisable during the two year period following the date the Executive
relinquishes his position as Chief Executive Officer but offers to remain as
Chairman of the Board pursuant to Section 7(c) (the "Relinquishment Date") shall
become immediately vested and exercisable as of the Relinquishment Date, and all
remaining options that would commence vesting in the period of time subsequent
to such two-year period shall commence vesting in accordance with their terms as
of the Relinquishment Date.
Section 8A. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment, distribution, waiver of Company
rights, acceleration of vesting of any stock options or restricted stock, or any
other payment or benefit in the nature of compensation to or for the benefit of
the Executive, alone or in combination (whether such payment, distribution,
waiver, acceleration or other benefit is made pursuant to the terms of this
<PAGE>
Agreement or any other agreement, plan or arrangement providing payments or
benefits in the nature of compensation to or for the benefit of the Executive,
but determined without regard to any additional payments required under this
Section 8A) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986 (the "Code") (or any successor
provision) or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
with respect to the Gross-Up Payment (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 8A(c), all determinations
required to be made under this Section 8A, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Deloitte and
Touche LLP, or such other nationally recognized accounting firm then auditing
the accounts of the Company (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. In the event that the
Accounting Firm is unwilling or unable to perform its obligations pursuant to
this Section 8A, the Executive shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to hereunder as the Accounting Firm). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, determined pursuant to this Section 8A, shall be paid by the
Company to the Executive within five days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. The parties hereto acknowledge that, as a
result of the potential uncertainty in the application of Section 4999 of the
Code (or any successor provision) at the time of the initial determination by
the Accounting Firm hereunder, it is possible that the Company will not have
made Gross-Up Payments which should have been made consistent with the
calculations required to be made hereunder (an "Underpayment"). In the event
<PAGE>
that the Company exhausts its remedies pursuant to Section 8A(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than 20 business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which he gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this Section
8A(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and
all administrative appeals, proceedings, hearings and conferences with
the taxing authority in respect of such claim and may, at its sole
option, either direct the Executive to pay the tax claimed and sue for
a refund or contest the claim in any permissible manner, and the
<PAGE>
Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company shall determine; provided,
however, that if the Company directs the Executive to pay such claim
and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to
payment of taxes for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 8A(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 8A(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 8A(c), a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
Section 9. Remedies.
(a) The Company will be entitled, if it elects, to enjoin any breach
or threatened breach of, or enforce the specific performance of, the obligations
of the Executive under Sections 3 or 6, without showing any actual damage or
that monetary damages would be inadequate. Any such equitable remedy will not be
the sole and exclusive remedy for any such breach, and the Company may pursue
other remedies for such a breach.
<PAGE>
(b) Any court proceeding to enforce this Agreement may be commenced in
federal courts, or in the absence of federal jurisdiction the state courts,
located in Omaha, Nebraska. The parties submit to the jurisdiction of such
courts and waive any objection which they might have to pursuit of any such
proceeding of any such court.
(c) Except to the extent that the Company elects to seek injunctive
relief in accordance with subsection (a), any controversy or claim arising out
of or relating to this Agreement or the validity, interpretation, enforceability
or breach of this Agreement will be submitted to arbitration in Omaha, Nebraska,
in accordance with the then existing rules of the American Arbitration
Association, and judgment upon the award rendered in any such arbitration may be
entered in any court having jurisdiction.
(d) The Company will pay, promptly upon request, any legal fees or
expenses incurred by the Executive in connection with any legal proceedings
instituted by the company to enforce the provisions of this Agreement against
the Executive, but such advances will be reimbursable to the Company, but only
to the extent the Company ultimately prevails in the proceeding (after any
applicable appeals have been exhausted).
Section 10. Assignment. Neither the Company nor the Executive may
sell, transfer or otherwise assign their rights, or delegate their obligations,
under this Agreement.
Section 11. Unfunded Benefits. All compensation and other benefits
payable to the Executive under this Agreement will be unfunded, and neither the
company nor any affiliate of the Company will segregate any assets to satisfy
any obligation of the Company under this Agreement. The obligations of the
Company to the Executive are not the subject of any guarantee or other assurance
of any Person other than the Company.
Section 12. Severability. Should any provision, paragraph, clause or
portion thereof of this Agreement be declared or be determined by any court or
arbitrator of competent jurisdiction to be illegal, unenforceable or invalid,
the validity or enforceability of the remaining parts, terms or provisions shall
not be affected thereby and said illegal or invalid part, term or provision
shall be deemed not to be a part of this Agreement. Alternatively, the court or
arbitrator having jurisdiction shall have the power to modify such illegal,
unenforceable or invalid provision so that it will be valid and enforceable,
and, in any case, the remaining provisions of this Agreement shall remain in
full force and effect.
<PAGE>
Section 13. Miscellaneous.
(a) This Agreement may be amended or modified only by a writing
executive by the Executive and the Company.
(b) This Agreement will be governed by and construed in accordance
with the internal laws of the State of Nebraska.
(c) This Agreement constitutes the entire agreement of the Company and
the Executive with respect to the matters set forth in this Agreement and
supersedes any and all other agreements between the Company and the Executive
relating to those matters.
(d) Any notice required to be given pursuant to this Agreement will be
deemed given (i) when delivered in person, or (ii) on the third calendar day
after it is sent by facsimile, express delivery service, or registered or
certified mail, if to the Company or to the Executive, at 302 South 36th Street,
Suite 400, Omaha, Nebraska 68131, fax number (402) 231-1658 or to such other
address as may be subsequently designated by the Company or the Executive in
writing to the other party.
(e) A waiver by a party of a breach of this Agreement will not
constitute a waiver of any other breach, prior or subsequent, of this Agreement.
IN WITNESS WHEREOF, the Company and the Executive have entered into
this Agreement as of May 10, 1999.
MIDAMERICAN ENERGY HOLDINGS COMPANY
BY:_____________________________
Steven A. McArthur
Senior Vice President
EXECUTIVE:
BY:_____________________________
David L. Sokol
<PAGE>
EXHIBIT A
Defined Terms
"Affiliate means, with respect to a Person, (a) any Person directly or
indirectly owning, controlling, or holding power to vote 10% or more of the
outstanding voting securities of the Person; (b) any Person 10% or more of whose
outstanding voting securities are directly or indirectly owned, controlled or
held with power to vote by the Person; (c) any Person directly or indirectly
controlling, controlled by or under common control with, the Person and (d) any
officer or director of the Person, or of any Person directly or indirectly
controlling the Person, controlled by the Person or under common control with
the Person. As used in this definition, "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person.
"Agreement" means this Employment Agreement dated as of August 21,
1995, by and between the Company and the Executive, as it may be amended from
time to time in accordance with its terms.
"Board" means the Board of Directors of the Company or, if the context
is appropriate, any duly authorized and appointed committee or member of the
Board of Directors having authority to act on behalf of the Board of Directors
with respect to the matter in question.
"Cause means any or all of the following:
(a) the willful and continued failure by the Executive to perform
substantially the services contemplated by the Agreement
(other than any such failure resulting from the Executive's
incapacity due to disability) after a written demand for
substantial performance is delivered to the Executive by a
member or representative of the Board which specifically
identifies the manner in which it is alleged that the
Executive has not substantially performed such services;
(b) the willful engaging by the Executive in gross misconduct
which is materially and demonstrably injurious to the Company,
provided that, no act, or failure to act, on the Executive's
part shall be considered "willful" unless done, or omitted to
be done, in bad faith and without reasonable belief that such
action or omission was in, or not opposed to, the best
interests of the Company; or
<PAGE>
(c) the gross negligence of the Executive in performing the
services contemplated by the Agreement which is materially
and demonstrably injurious to the Company.
"Cause" will exist only if the Board has delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of a majority of the
entire membership of the Board at a meeting of the Board called and held for
that purpose (after reasonable notice to the Executive and an opportunity for
the Executive, together with his counsel, to be heard before the Board), finding
that, in the good faith judgment of the Board, the Executive was guilty of the
conduct constituting such Cause and specifying, the particulars thereof in
detail.
"Change in Control" means (i) approval by the Company's stockholders of
(A) the dissolution of the Company, (B) a merger or consolidation of the Company
where the Company is not the surviving corporation, except for a transaction the
principal purpose of which is to change the state in which the Company is
incorporated, (C) a reverse merger in which the Company survives as an entity
but in which securities possessing more than 50 percent of the total combined
voting power of the Company's securities are transferred to a person or persons
different from those who hold such securities immediately prior to the merger or
(D) the sale or other disposition of all or substantially all of the Company's
assets; (ii) the direct or indirect acquisition by any Person or related group
of Persons (other than an acquisition from or by the Company or by a
Company-sponsored employee benefit plan or by a Person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
50 percent of the total combined voting power of the Company's outstanding
voting securities; or (iii) a change in the composition of the Board over a
period of thirty-six (36) months or less such that a majority of the Board
members cease, by reason of one or more contested elections for Board membership
or by one or more actions by written consent of stockholders, to be comprised of
individuals who either (A) have been Board members continuously since the
beginning of such period or (B) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time such election or
nomination was approved by the Board.
"Company" means MidAmerican Energy Holdings Company, an Iowa
corporation, and any successor or assign permitted under the Agreement.
<PAGE>
"Consent of the Board" means, with respect to an action, the consent of
the Board to the action given prior to the action in a resolution duly adopted
by the Board, appropriate committee of the Board, or by a member of the Board
duly authorized to consent to such action.
"Disability" means, with respect to the Executive, that the Executive
has become physically or mentally incapacitated or disabled so that, in the
reasonable judgment of majority of the members of the Board, he is unable to
perform his duties under this Agreement and such other services as he performed
on behalf of the Company before incurring such incapacity or disability.
"Minimum Bonus" means, with respect to a fiscal year, $675,000;
provided, however, in the event the Executive relinquishes his position as Chief
Executive Officer but offers to remain employed as Chairman of the Board of the
Company pursuant to Section 7(c) of this Agreement, there shall be no Minimum
Bonus, but the Board shall retain its discretion to award Annual Bonus
Compensation pursuant to Section 4(c) of the Agreement.
"Permanent Disability" means a Disability which has continued for at
least six consecutive calendar months.
"Person" means any natural person, general partnership, limited
partnership, corporation, joint venture, trust, business trust, or other entity.
"Term of Employment" means the period of time beginning on August 21,
1995, and ending on the fifth anniversary of such date, unless earlier
terminated pursuant to Section 7(a) or automatically extended pursuant to the
following sentence. The Term of Employment will be automatically extended for
one year on each anniversary of the date of this Agreement beginning on the
fifth anniversary unless the Executive has given the Company a notice declining
automatic extension at least 120 calendar days before the anniversary; provided,
however, in the event the Executive relinquishes his position as Chief Executive
Officer but offers to remain employed as Chairman of the Board of the Company
pursuant to Section 7(c) of this Agreement, the Term of Employment shall mean
the period of time beginning on the date the Executive relinquishes his position
as Chief Executive Officer of the Company and ending on the fifth anniversary of
such date, unless earlier terminated pursuant to Section 7(a).
"Termination Date" means the date of termination of employment of the
Executive pursuant to Section 7 of this Agreement.
<PAGE>
EXHIBIT B
David L. Sokol
Credited Years of Service as of March 12, 1999: 6 years, 9 months
<PAGE>
EXHIBIT C
David L. Sokol
Minimum Annual SERP benefit payment for retirement or disability payable on or
after attaining age 47: $853,887.
Exhibit 10.2
AMENDMENT NO. 1
TO THE
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
BETWEEN
MIDAMERICAN ENERGY HOLDINGS COMPANY
AND
DAVID L. SOKOL
This Amendment No. 1 (the "Amendment") to the Amended and
Restated Employment Agreement dated as of May 10, 1999 (the "Employment
Agreement") by and between MidAmerican Energy Holdings Company, an Iowa
corporation (the "Company"), and David L. Sokol (the "Executive"), is entered
into as of March __, 2000.
WHEREAS, the Company and the Executive are presently parties
to the Employment Agreement; and
WHEREAS, in consideration of the performance of future
services by the Executive, the Company and the Executive desire to amend the
Employment Agreement to increase the Executive's salary, and grant Executive
additional options;
NOW, THEREFORE, the Employment Agreement is hereby amended as
follows:
By inserting immediately following Section 2(b) a new Section
2(c) to read as follows:
"(c) For so long as the Executive continues to serve as either
Chairman or Chief Executive Officer of the Company, he shall
have the right (i) to serve as a member of the Board, and (ii)
to designate two other individuals as nominees for election to
the Board."
By deleting the phrase "six hundred seventy-five thousand
($675,000)" each time it appears in Section 4(a) and replacing it with
"seven hundred fifty thousand ($750,000)".
By inserting immediately following Section 5(b) a new Section
5(c) to read as follows:
"(c) Effective as of the Closing Date (as defined in the
Agreement and Plan of Merger by and among the Company, Teton
<PAGE>
Formation L.L.C. and Teton Acquisition Corp. (the "Merger
Agreement")) and conditioned on the occurrence of the Closing,
the Executive shall be granted under the Company's 1996 Stock
Option Plan (or any successor plan thereto), new options (the
"New Options") for a number of shares of Company common stock
equal to 30% of the sum of (i) the number of shares of Company
common stock owned beneficially by Executive as of October 23,
1999 (provided that all such shares are rolled over into
common stock of the Surviving Corporation (as such term is
defined in the Merger Agreement)), plus (ii) without
duplication, the number of shares subject to outstanding
Company common stock options held by Executive as of October
23, 1999 (provided that all such options are rolled over into
equivalent options in respect of Surviving Corporation common
stock). The exercise price applicable to the New Options shall
be $35.05 per share. The New Options shall vest in equal
installments of one thirty-sixth (1/36th) of the number of
shares subject to the grant on each of the monthly anniversary
dates of the Closing Date, shall have an exercise term of ten
(10) years from the Closing Date, and shall otherwise be
subject to customary terms and conditions, including
anti-dilution protections."
By inserting immediately following Section 5(c) a new Section
5(d) to read as follows:
"(d) The Executive acknowledges that the grant of Company
options to Executive in exchange for his surrender to Teton
Acquisition Corp. of Company stock options and his right to
continue to exercise such options is in consideration of his
performance of future services."
Except as provided herein and to the extent necessary to give
full effect to the provisions of this Amendment, the terms of the Employment
Agreement shall remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have entered into this
Amendment effective as of the above date.
MIDAMERICAN ENERGY HOLDINGS COMPANY
By: ____________________________
Name:
Title:
EXECUTIVE
-----------------------------
David L. Sokol
Exhibit 10.3
EXECUTION COPY
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement, originally entered into
as of August 6, 1996, as amended by Amendment No. 1, dated as of April 16, 1997,
as amended by Amendment No. 2, dated as of March 11, 1999, is amended and
restated as of May 10, 1999 by and between MidAmerican Energy Holdings Company
(formerly CalEnergy Company, Inc. ("CalEnergy")), an Iowa corporation (the
"Company"), and Gregory E. Abel (the "Executive").
RECITALS
The Company desires to employ the Executive as its President and Chief
Operating Officer on the terms set forth in this Agreement, and the Executive
desires to accept such employment.
Accordingly, the Company and the Executive agree as follows:
AGREEMENT
Section 1. Defined Terms. Terms used but not defined in this
Agreement will have the meanings ascribed to them in Exhibit A to this
Agreement.
Section 2. Employment.
(a) The Company will employ the Executive as, and the
Executive will act as, the President and Chief Operating Officer of the Company,
subject to and upon the terms set forth in this Agreement, for the Term of
Employment.
(b) The Executive's primary place of employment will be Des
Moines, Iowa or such other place as is determined, prior to a Change in Control,
in good faith by the Chairman of the Board and Chief Executive Officer of the
Company (hereinafter referred to as the "Chairman of the Board") to be in the
best interests of the Company.
Section 3. Duties.
(a) The Executive (i) will perform and discharge the duties
incident to and consistent with his title of President and Chief Operating
Officer, and (ii) will perform and discharge such other duties, and will have
such other authority, as are delegated to him by the Chairman of the Board. In
performing such duties, the Executive will report directly to, and be subject to
the direction of, the Chairman of the Board. Prior to a Change in Control, the
Executive's title and duties may in good faith be modified by the Chairman of
the Board.
<PAGE>
(b) The Executive will act, without any compensation in
addition to the compensation payable pursuant to this Agreement, as an officer
or member of the board of directors of any subsidiary of the Company, if so
appointed or elected.
(c) During the Term of Employment, the Executive (i) will
devote his entire time, attention and energies during normal business hours to
the business of the Company and its subsidiaries and (ii) will not, without the
written consent of the Chairman of the Board, perform any services for any other
Person or engage in any other business or professional activity, whether or not
performed or engaged in for profit.
(d) Notwithstanding subsection 3(c), the Executive, without
the consent of the Chairman of the Board, may (i) purchase securities issued by,
or otherwise passively invest his personal or family assets in, any other
company or business within the constraints imposed by the Policy of Business
Conduct referred to below, and (ii) engage in governmental, political,
educational or charitable activities, but only to the extent that those
activities (A) are not inconsistent with any direction of the Chairman of the
Board or any duties under this Agreement, and (B) do not interfere with the
devotion by the Executive of his entire time, attention and energies during
normal business hours to the business of the Company.
Section 4. Compensation.
(a) During the Term of Employment, the Company will pay the
Executive a base salary at an annual rate of $350,000, in substantially equal
periodic payments in accordance with the Company's practices for executive
employees, as determined from time to time by the Chairman of the Board.
(b) The Chairman of the Board will review the salary payable
to the Executive at least annually beginning in the fourth fiscal quarter of
1999. The Chairman of the Board, in his discretion, may increase the salary of
the Executive from time to time, but may not reduce the salary of the Executive
below the amount set forth in subsection 4(a) above.
(c) During the Term of Employment, the Executive shall be
eligible for consideration for an annual incentive merit bonus, for the
Executive's performance during the preceding fiscal year of the Company in an
amount determined by the Chairman of the Board in his discretion, by reference
to the accomplishment by the Executive of goals established by the Chairman of
the Board for the related fiscal year. The annual bonus paid to the Executive,
<PAGE>
however, will not be less than the Minimum Bonus. The Executive shall also be
eligible to be paid other bonuses for each fiscal year as determined by the
Chairman of the Board. The Executive's annual incentive merit bonus, together
with all such other bonuses paid or payable for the fiscal year (including any
amounts for which receipt is otherwise deferred pursuant to a plan or
arrangement with the Company), is referred to herein as "Annual Bonus
Compensation."
(d) The Company will reimburse the Executive, subject to
compliance by the Executive with the Company's customary reimbursement
practices, for all reasonable and necessary out-of-pocket expenses incurred by
the Executive on behalf of the Company in the course of its business.
(e) The Company may reduce any payments made to the
Executive under this Agreement by any required federal, state or local
government withholdings or deductions for taxes or similar charges, or otherwise
pursuant to law, regulation or order.
(f) Any base salary payable to the Executive for any period
of employment of less than one year during the Term of Employment will be
reduced to reflect the actual number of days of employment during the period
except as provided in Sections 8(b) and 8(c).
Section 5. Other Benefits.
(a) During the Term of Employment, the Executive and his
dependents may participate in and receive benefits under any employee benefit
plan which the Company makes generally available to its employees and their
families, including any pension, life insurance, medical benefits, dental
benefits or disability plan, but only to the extent that the Executive or his
dependents otherwise satisfies the standards established for participation in
the plan. The terms of Executive's existing option agreements, as amended,
remain unaffected hereby, except as set forth in Sections 8(b) and 8(c) hereof.
(b) The Executive may take up to four weeks of vacation
during each full calendar year during the Term of Employment at a time mutually
convenient to the Executive and the Company, without loss of compensation or
other benefits under this Agreement.
Section 5A. Supplemental Retirement Benefits.
<PAGE>
(a) Effective as of March 12, 1999, the closing date of the
merger between CalEnergy Company, Inc. and MidAmerican Energy Company, resulting
in the creation of MidAmerican Energy Holdings Company (the "Merger Date"), the
Executive shall irrevocably become a participant in the MidAmerican Energy
Company Supplemental Retirement Plan for Designated Officers (the "SERP").
(b) The Executive shall receive fully vested years of
participation credit under the SERP (for all purposes, including vesting and
benefit accrual) for all years of service (or portions thereof) performed at
CalEnergy prior to the Merger Date, and for certain additional years of service
(or portions thereof) as provided on Exhibit B attached hereto.
(c) The Executive shall be entitled to an Early Retirement
Benefit Payment Option under the SERP pursuant to which he may elect to commence
receiving benefits under the SERP after the Executive's retirement or disability
on or after attaining age 47, which payments shall be calculated pursuant to the
SERP but which shall be no less than as provided on Exhibit C hereto (including
for purposes of the following sentence). In the event of the Executive's death,
benefits shall be paid pursuant to Section 6.4 of the SERP; provided, however,
that any payment due under Section 6.4(a) of the SERP shall continue for the
remaining lifetime of the Executive's surviving "Spouse" (as defined in the
SERP) or for 360 months if the Executive dies without a surviving Spouse; and
further provided, however, that any payment due under Section 6.4(b) of the SERP
shall be payable without regard to the two-thirds and fifty percent limitations
contained therein.
(d) In the event of a Triggering Event (as defined below),
the Executive shall be entitled to the following under the SERP:
(i) for purposes of determining years of
participation credit, the Executive shall be credited
with additional years of participation (or portions
thereof) equal to the difference between age 65 and
the Executive's age (in years or portions thereof) on
the date of the Triggering Event, and
(ii) any benefits under the SERP not fully vested on
the date of the Triggering Event (including the
benefits arising by the foregoing subparagraph) shall
become fully vested as of such date.
<PAGE>
For purposes of this Section 5A(d), a Triggering Event shall mean (x) the
termination of the Executive by the Company without Cause; (y) the resignation
by the Executive pursuant to Section 7(a)(vi) of this Agreement; or (z) a Change
in Control occurring after the Merger Date. All capitalized terms shall have the
meanings ascribed to them in Exhibit A of this Agreement.
(e) Notwithstanding anything herein or in the SERP to the
contrary, for purposes of determining any benefit payable to Executive under the
SERP, Executive's annual base salary and annual bonus shall never be less than
the base salary referenced in Section 4(a) hereof and that portion of the Annual
Bonus Compensation earned by Executive for the 1998 calendar year which the SERP
Committee has determined shall be included for purposes of calculating the SERP
benefit (i.e., $500,000).
(f) Within 30 days prior to a Change in Control, the Company
shall (i) establish a rabbi trust or an irrevocable standby letter of credit
with a U.S. Bank rated A or better, in each case naming the Executive as a
beneficiary and having terms reasonably satisfactory to the Executive in order
to provide security for the payment of benefits to Executive pursuant to the
SERP, and (ii) if a rabbi trust is established, deposit into the rabbi trust an
amount which, with the expected earnings thereon from reasonably prudent and
conservative investments (as confirmed by a certificate of a national accounting
firm of recognized standing which is independent of the Company) shall be
sufficient to satisfy the ultimate benefit obligations to Executive pursuant to
the SERP.
(g) A general release of claims under the SERP shall not be
required of the Executive in order to receive benefits thereunder.
(h) The Executive's entitlement to benefits under the SERP
shall be nonforfeitable and, Section 6.5 of the SERP notwithstanding, shall not
be adversely affected in any way upon termination of the Executive's employment
for Cause.
Section 6. Confidentiality and Post-Employment Restrictions.
(a) The Executive acknowledges that the Company and its
Affiliates have confidential information and trade secrets, whether written or
unwritten, with respect to carrying on their business, including sensitive
marketing, bidding, technological and engineering information and data, names of
past, present and prospective customers or partners of and vendors or suppliers
to the Company and its Affiliates, working relationships with governmental
agencies and officials, methods of pricing contracts and income and expenses
associated therewith, the international business strategy and relative ranking
of opportunities in various countries, negotiated prices and offers outstanding,
<PAGE>
credit terms and status of accounts and the terms or circumstances of any
current or prospective business arrangements between the Company and its
Affiliates and any third parties ("Confidential Information and Trade Secrets").
As used in this Agreement, the term Confidential Information and Trade Secrets
does not include (i) information which becomes generally available to the public
other than as a result of a disclosure by the Executive, (ii) information which
becomes available to the Executive on a nonconfidential basis from a source
other than the Company or its Affiliates, or (iii) information known to the
Executive prior to any disclosure to him by the Company or its Affiliates. The
Executive further acknowledges that the Executive possesses a high degree of
knowledge of the independent energy industry and, in particular, has committed
to a long-standing relationship with the Company and its Affiliates as an
employee and officer, which has allowed, and will continue to allow, him access
to the Company's Confidential Information and Trade Secrets. Accordingly, any
employment by the Executive with another employer in the independent energy
industry or participation by him as a substantial investor in any such industry
may necessarily involve disclosure of the Company's Confidential Information and
Trade Secrets. Consequently, the Executive agrees that, if he voluntarily
resigns his employment with the Company for any reason other than (i) a breach
of this Agreement by the Company, or (ii) for Good Reason, he shall not at any
time during the two-year period after such resignation, directly or indirectly
accept employment by or invest in (except as a passive investor in a public
corporation or in a publicly issued partnership interest which, in either event,
would not exceed an ownership interest of 2% of the outstanding equity or
partnership interest) in any person, firm, corporation, partnership, joint
venture or business which is primarily engaged in the production or marketing of
steam or electrical energy or which otherwise directly competes with the
business of the Company or its controlled Affiliates and, further, the Executive
agrees that, to avoid the risk of disclosing or improperly using Confidential
Information or Trade Secrets, he shall not directly, or indirectly, provide
consulting or advisory services to any of such independent energy businesses.
The preceding sentence notwithstanding, if the Executive's resignation occurs
upon or after a Change in Control, he shall not be precluded from accepting
employment or providing services to Peter Kiewit Sons', Inc. or any Affiliate
thereof.
(b) Without the written consent of the Chairman of the
Board, the Executive will not, during and for three years after the Term of
Employment, (i) disclose any Confidential Information and Trade Secrets of the
<PAGE>
Company or any Affiliate of the Company to any Person (other than the Company,
directors, officers or employees of the Company, its Affiliates or duly
authorized agents, attorneys or other representatives thereof), or (ii)
otherwise make use of any Confidential Information and Trade Secrets other than
in connection with authorized dealings with or by the Company and its
Affiliates.
(c) For a period of three years after the Term of
Employment, the Executive shall neither directly nor indirectly solicit, on
behalf of another employer, the employment of, or hire or cause another employer
to hire, any person who is then currently employed by the Company or an
Affiliate thereof, or otherwise induce, on behalf of another employer, such
person to leave the employment of the Company or an Affiliate thereof without
the prior written approval of the Chairman of the Board.
(d) The Executive will hold, on behalf of the Company and
its Affiliates and as the property of the Company and its Affiliates, all
memoranda, manuals, books, papers, letters, documents, computer discs, data and
software and other similar property obtained during the course of his employment
by the Company or its Affiliates and relating to the Company's or its Affiliates
business, and will return such property to the Company or its Affiliates at any
time upon demand by the Chairman of the Board and, in any event, within five
calendar days after the end of the Term of Employment.
(e) During the Term of Employment, Executive agrees to
comply in all material respects with the Company's Policy of Business Conduct as
in effect on the date hereof.
(f) If any of the provisions of, or covenants contained in,
this Section 6 are hereafter construed to be invalid or unenforceable in any
jurisdiction, the same shall not affect the remainder of the provisions or the
enforceability thereof in any other jurisdiction, which shall be given full
effect, without regard to the invalidity or unenforceability in such other
jurisdiction. If any of the provisions of, or covenants contained in, this
Section 6 are held to be unenforceable in any jurisdiction because of the
duration or geographical scope thereof, the parties agree that the court making
such determination shall have the power to reduce the duration or geographical
scope of such provision or covenant and, in its reduced form, such provision or
covenant shall be enforceable; provided, however, that the determination of such
court shall not affect the enforceability of this Section 6 in any other
jurisdiction.
Section 7. Termination of Employment.
<PAGE>
(a) The employment of the Executive under this Agreement
will terminate on the earliest of: (i) written notice by the Executive of his
resignation other than for Good Reason; (ii) the day the Company gives to the
Executive written notice of termination without Cause; (iii) the day the Company
gives to the Executive written notice of termination for Cause; (iv) the
Permanent Disability of the Executive; (v) the death of the Executive; or (vi)
written notice by the Executive of his resignation for Good Reason.
(b) If the employment of the Executive is terminated under
this Agreement for any reason whatsoever, the obligations of the Executive under
Section 6 will remain in full force and effect to the extent provided therein,
and the termination will not abrogate any rights or remedies of the Company or
the Executive with respect to any breach of the Agreement, except as expressly
provided in Section 8.
Section 8. Payment Upon Termination.
(a) If the employment of the Executive is terminated
pursuant to subsections (i) or (iii) of Section 7(a), the Company will pay to
the Executive, within 30 calendar days, any base salary and reimbursable
expenses pursuant to Section 4(a) and Section 4(d) which are accrued but unpaid
through the Termination Date.
(b) If the employment of the Executive is terminated
pursuant to subsections (ii), (iv) or (v) of Section 7(a) prior to a Change in
Control, the Company will pay the Executive, subject to the Executive's
compliance in all material respects with his post-termination obligations under
Section 6, (i) within 30 calendar days, any base salary and reimbursable
expenses which are accrued and unpaid through such date, (ii) commencing one
month after the month of his Termination Date, 24 monthly payments each equal to
1/24 of a sum equal to twice his annual base salary then in effect pursuant to
Section 4 and (iii) commencing one month after the month of his Termination
Date, 24 monthly payments each equal to 1/24 of a sum equal to two times the
greater of (x) the Minimum Bonus or (y) the average Annual Bonus Compensation
payable to the Executive in respect of the two fiscal years immediately
preceding the year in which the Executive's employment with the Company
terminates (with any such year for which no bonus was payable included in such
two year average as a zero). In addition, in the event of any such termination,
subject to the Executive's compliance in all material respects with his
post-termination obligations under Section 6, the Company agrees that (x) the
<PAGE>
Company stock options previously granted to Executive will continue to vest
according to their terms within such next 24 months (beginning with the month
following the month in which the Termination Date occurs, after which time the
unvested remainder will lapse) and such vested options may be exercised within
the remaining term of such options as provided in the respective option
agreements, and (y) the Company shall continue in effect for Executive, for a
period of 24 months after the date of any such termination, the life insurance
benefits, medical benefits and dental benefits, the disability plan, the tax
preparation and investment advisory services and any other employee benefits
made generally available to senior executives of the Company on and after the
date hereof through the end of the 24- month post-termination period, subject to
such employee contributions and other terms and conditions as are applicable to
active employees generally and subject to subsequent modification or termination
of such plans to the extent such subsequent actions are also applicable to
active employees generally; provided that such plan benefits shall terminate
earlier on the date, if any, that comparable benefits are made available to the
Executive by any new employer. To the degree that any of the above employee
benefit programs are not available to Executive on account of his status as a
non-employee after termination of employment, the Company shall provide for
economically equivalent programs during the 24-month period or pay to executive
a lump sum cash amount designed to allow him to obtain economically equivalent
benefits or put him in the same economic position on an after tax basis.
(c) If the employment of the Executive is terminated on or
after a Change in Control pursuant to subsections (ii), (iv), (v) or (vi) of
Section 7(a), the Executive shall receive the same payments, additional option
vesting and benefits continuation described in Section 8(b) hereof, except that
the monthly payments described in clauses (ii) and (iii) of the first sentence
of Section 8(b) shall be aggregated and paid to Executive in a single lump sum
without any discount to reflect present value.
(d) If the employment of the Executive is terminated
pursuant to subsections (ii), (iv), (v) or (vi) of Section 7(a), all Performance
Accelerated Stock Options ("PASOs") held by the Executive on the Termination
Date will become vested and immediately exercisable on such Termination Date and
shall otherwise remain exercisable for their term in accordance with the terms
thereof.
(e) If the employment of the Executive is terminated
pursuant to subsections (iv) or (v) at any time prior to a Change in Control or
for any reason after a Change in Control, then without further action by the
Company, the Board or any committee thereof, the Executive may exercise any
vested stock options (including vested PASOs) held by the Executive pursuant to
<PAGE>
existing procedures approved by the Stock Option Committee for cashless
exercise, by surrendering previously owned shares, electing to have the Company
withhold shares otherwise deliverable upon exercise of such options, or by
providing an irrevocable direction to a broker to sell shares and deliver all or
a portion of the proceeds to the Company, in any case in an amount equal to the
aggregate exercise price and any tax withholding obligation attendant to the
exercise.
Section 8A. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment,
distribution, waiver of Company rights, acceleration of vesting of any stock
options or restricted stock, or any other payment or benefit in the nature of
compensation to or for the benefit of the Executive, alone or in combination
(whether such payment, distribution, waiver, acceleration or other benefit is
made pursuant to the terms of this Agreement or any other agreement, plan or
arrangement providing payments or benefits in the nature of compensation to or
for the benefit of the Executive, but determined without regard to any
additional payments required under this Section 8A) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code (or any successor
provision) or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
with respect to the Gross-Up Payment (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 8A(c), all
determinations required to be made under this Section 8A, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by Deloitte and Touche LLP, or such other nationally recognized accounting firm
then auditing the accounts of the Company (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the Executive that there
has been a Payment, or such earlier time as is requested by the Company. In the
<PAGE>
event that the Accounting Firm is unwilling or unable to perform its obligations
pursuant to this Section 8A, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to hereunder as the Accounting Firm). All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, determined pursuant to this Section 8A, shall be paid by
the Company to the Executive within five days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. The parties hereto acknowledge that, as a
result of the potential uncertainty in the application of Section 4999 of the
Code (or any successor provision) at the time of the initial determination by
the Accounting Firm hereunder, it is possible that the Company will not have
made Gross-Up Payments which should have been made consistent with the
calculations required to be made hereunder (an "Underpayment"). In the event
that the Company exhausts its remedies pursuant to Section 8A(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than 20 business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which he gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in
writing from time to time, including, without
limitation, accepting legal representation with
respect to such claim by an attorney reasonably
selected by the Company,
<PAGE>
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Section 8A(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 8A(c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Section 8A(c))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 8A(c), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
<PAGE>
Section 9. Remedies.
(a) The Company will be entitled, if it elects, to enjoin
any breach or threatened breach of, or enforce the specific performance of, the
obligations of the Executive under Sections 3 or 6, without showing any actual
damage or that monetary damages would be inadequate. Any such equitable remedy
will not be the sole and exclusive remedy for any such breach, and the Company
may pursue other remedies for such a breach.
(b) Any court proceeding to enforce this Agreement may be
commenced in federal courts, or in the absence of federal jurisdiction the state
courts, located in Omaha, Nebraska. The parties submit to the jurisdiction of
such courts and waive any objection which they may have to pursuit of any such
proceeding in any such court.
(c) Except to the extent that the Company elects to seek
injunctive relief in accordance with subsection 9(a), any controversy or claim
arising out of or relating to this Agreement or the validity, interpretation,
enforceability or breach of this Agreement will be submitted to arbitration in
Omaha, Nebraska, in accordance with the then existing rules of the American
Arbitration Association, and judgment upon the award rendered in any such
arbitration may be entered in any court having jurisdiction.
Section 10. Assignment. Neither the Company nor the Executive may sell,
transfer or otherwise assign their rights, or delegate their obligations, under
this Agreement, provided that the Company shall require any successor to all or
substantially all of the business, stock or assets of the Company to expressly
assume the Company's rights and obligations hereunder.
Section 11. Unfunded Benefits. All compensation and other benefits
payable to the Executive under this Agreement will be unfunded, and neither the
Company nor any Affiliate of the Company will segregate any assets to satisfy
any obligation of the Company under this Agreement. The obligations of the
Company to the Executive are not the subject of any guarantee or other assurance
of any Person other than the Company.
Section 12. Severability. Should any provision, paragraph, clause or
portion thereof of this Agreement be declared or be determined by any court or
arbitrator of competent jurisdiction to be illegal, unenforceable or invalid,
the validity or enforceability of the remaining parts, terms or provisions shall
not be affected thereby and said illegal or invalid part, term or provision
shall be deemed not to be a part of this Agreement. Alternatively, the court or
arbitrator having jurisdiction shall have the power to modify such illegal,
unenforceable or invalid provision so that it will be valid and enforceable,
and, in any case, the remaining provisions of this Agreement shall remain in
full force and effect.
Section 13. Miscellaneous.
(a) This Agreement may be amended or modified only by a
writing executed by the Executive and the Company.
(b) This Agreement will be governed by and construed in
accordance with the internal laws of the State of Nebraska.
(c) This Agreement constitutes the entire agreement of the
Company and the Executive with respect to the matters set forth in this
Agreement and supersedes any and all other agreements between the Company and
the Executive relating to those matters.
(d) Any notice required to be given pursuant to this
Agreement will be deemed given (i) when delivered in person or by courier or
(ii) on the third calendar day after it is sent by facsimile, with written
confirmation of receipt, if to the Company, to: Chairman of the Board,
MidAmerican Energy Holdings Company at 302 South 36th Street, Suite 400, Omaha,
Nebraska 68131, fax number (402) 231-1658, and, if to the Executive, at 666
Grand Avenue, Des Moines, Iowa 50309, fax number (515) 242-4031 or to such other
address as may be subsequently designated by the Company or the Executive in
writing to the other party.
(e) A waiver by a party of a breach of this Agreement will
not constitute a waiver of any other breach, prior or subsequent, of this
Agreement.
<PAGE>
IN WITNESS WHEREOF, the Company and the Executive have entered into
this Agreement as of May 10, 1999.
MIDAMERICAN ENERGY HOLDINGS COMPANY
By:____________________________
Steven A. McArthur
Senior Vice President
EXECUTIVE:
By:____________________________
Gregory E. Abel
<PAGE>
EXHIBIT A
Defined Terms
"Affiliate" means, with respect to a Person, (a) any Person directly or
indirectly owning, controlling, or holding power to vote 10% or more of the
outstanding voting securities of the Person; (b) any Person 10% or more of whose
outstanding voting securities are directly or indirectly owned, controlled or
held with power to vote by the Person; (c) any Person directly or indirectly
controlling, controlled by or under common control with, the Person; and (d) any
officer or director of the Person, or of any Person directly or indirectly
controlling the Person, controlled by the Person or under common control with
the Person. As used in this definition, "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person.
"Agreement" means this Employment Agreement dated as of August 6, 1996,
by and between the Company and the Executive, as it may be amended from time to
time in accordance with its terms.
"Board" means the Board of Directors of the Company.
"Cause" means any or all of the following:
(a) the willful and continued failure by the Executive to perform
substantially the services and duties contemplated by this Agreement
(other than any such failure resulting from the Executive's incapacity
due to disability);
(b) the willful engaging by the Executive in gross misconduct which is
injurious to the business or reputation of the Company in any material
respect;
(c) the gross negligence of the Executive in performing the services
contemplated by this Agreement which is injurious to the business or
reputation of the Company in any material respect; or
(d) Executive's conviction of, or pleading guilty or no contest to, a
felony involving moral turpitude.
"Change in Control" means (i) approval by the Company's stockholders of
(A) the dissolution of the Company, (B) a merger or consolidation of the Company
where the Company is not the surviving corporation, except for a transaction the
principal purpose of which is to change the state in which the Company is
incorporated, (C) a reverse merger in which the Company survives as an entity
<PAGE>
but in which securities possessing more than 50 percent of the total combined
voting power of the Company's securities are transferred to a person or persons
different from those who hold such securities immediately prior to the merger or
(D) the sale or other disposition of all or substantially all of the Company's
assets; (ii) the direct or indirect acquisition by any Person or related group
of Persons (other than an acquisition from or by the Company or by a
Company-sponsored employee benefit plan or by a Person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
50 percent of the total combined voting power of the Company's outstanding
voting securities; or (iii) a change in the composition of the Board over a
period of thirty-six (36) months or less such that a majority of the Board
members cease, by reason of one or more contested elections for Board membership
or by one or more actions by written consent of stockholders, to be comprised of
individuals who either (A) have been Board members continuously since the
beginning of such period or (B) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time such election or
nomination was approved by the Board.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means MidAmerican Energy Holdings Company, an Iowa
corporation, and any successor or assign permitted under the Agreement.
"Disability" means, with respect to the Executive, that the Executive
has become physically or mentally incapacitated or disabled so that, in the
reasonable judgment of the Chairman of the Board, he is unable to perform his
duties under this Agreement and such other services as he performed on behalf of
the Company before incurring such incapacity or disability.
"Good Reason" means any of the following events, but only if such
event(s) occur on, after or in connection with a Change in Control: (i) the
failure by the Company to pay to the Executive, for a material period of time
and in a material amount, compensation due and payable by the Company under
Section 4(a) of this Agreement; (ii) any reduction by the Company of the title,
office, duties or authority of the Executive in any material respect; or (iii)
any relocation of the Executive's primary place of employment to a location more
than 25 miles from Omaha, Nebraska.
<PAGE>
"Minimum Bonus" means, with respect to a fiscal year, $200,000.
"Permanent Disability" means a Disability which has continued for at
least six consecutive calendar months.
"Person" means any natural person, general partnership, limited
partnership, corporation, joint venture, trust, business trust, or other entity.
"Term of Employment" means the period of time beginning on August 6,
1996, and ending on the eighth anniversary of such date, unless earlier
terminated pursuant to Section 7(a) or automatically extended pursuant to the
following sentence. The Term of Employment will be automatically extended for
one year on each anniversary of the date of this Agreement beginning on the
fifth anniversary unless the Executive has given the Company, or the Company has
given the Executive, a notice declining automatic extension at least 365
calendar days before the anniversary.
"Termination Date" means the date of termination of employment of the
Executive pursuant to Section 7 of this Agreement.
<PAGE>
EXHIBIT B
Gregory E. Abel
Credited Years of Service as of March 12, 1999: 11 years, 1 month
<PAGE>
EXHIBIT C
Gregory E. Abel
Minimum Annual SERP benefit payment for retirement or disability payable on or
after attaining age 47: $244,812.
Exhibit 10.4
EXECUTION COPY
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement, originally entered into
as of August 6, 1996, as amended by Amendment No. 1, dated as of April 16, 1997,
as amended by Amendment No. 2, dated as of March 11, 1999, is amended and
restated as of May 10, 1999 by and between MidAmerican Energy Holdings Company
(formerly CalEnergy Company, Inc. ("CalEnergy")), an Iowa corporation (the
"Company"), and Steven A. McArthur (the "Executive").
RECITALS
The Company desires to employ the Executive as its Senior Vice
President - Mergers & Acquisitions and Secretary on the terms set forth in this
Agreement, and the Executive desires to accept such employment.
Accordingly, the Company and the Executive agree as follows:
AGREEMENT
Section 1. Defined Terms. Terms used but not defined in this Agreement
will have the meanings ascribed to them in Exhibit A to this Agreement.
Section 2. Employment.
(a) The Company will employ the Executive as, and the Executive
will act as, the Senior Vice President - Mergers & Acquisitions and Secretary of
the Company, subject to and upon the terms set forth in this Agreement, for the
Term of Employment.
(b) The Executive's primary place of employment will be Omaha,
Nebraska or such other place as is determined, prior to a Change in Control, in
good faith by the Chairman of the Board and Chief Executive Officer of the
Company (hereinafter referred to as the "Chairman of the Board") to be in the
best interests of the Company.
Section 3. Duties.
(a) The Executive (i) will perform and discharge the duties
incident to and consistent with his title of Senior Vice President - Mergers &
Acquisitions and Secretary, and (ii) will perform and discharge such other
duties, and will have such other authority, as are delegated to him by the
Chairman of the Board. In performing such duties, the Executive will report
directly to, and be subject to the direction of, the Chairman of the Board.
Prior to a Change in Control, the Executive's title and duties may in good faith
be modified by the Chairman of the Board.
<PAGE>
(b) The Executive will act, without any compensation in addition
to the compensation payable pursuant to this Agreement, as an officer or member
of the board of directors of any subsidiary of the Company, if so appointed or
elected.
(c) During the Term of Employment, the Executive (i) will devote
his entire time, attention and energies during normal business hours to the
business of the Company and its subsidiaries and (ii) will not, without the
written consent of the Chairman of the Board, perform any services for any other
Person or engage in any other business or professional activity, whether or not
performed or engaged in for profit.
(d) Notwithstanding subsection 3(c), the Executive, without the
consent of the Chairman of the Board, may (i) purchase securities issued by, or
otherwise passively invest his personal or family assets in, any other company
or business within the constraints imposed by the Policy of Business Conduct
referred to below, and (ii) engage in governmental, political, educational or
charitable activities, but only to the extent that those activities (A) are not
inconsistent with any direction of the Chairman of the Board or any duties under
this Agreement, and (B) do not interfere with the devotion by the Executive of
his entire time, attention and energies during normal business hours to the
business of the Company.
Section 4. Compensation.
(a) During the Term of Employment, the Company will pay the
Executive a base salary at an annual rate of $220,000, in substantially equal
periodic payments in accordance with the Company's practices for executive
employees, as determined from time to time by the Chairman of the Board.
(b) The Chairman of the Board will review the salary payable to
the Executive at least annually beginning in the fourth fiscal quarter of 1999.
The Chairman of the Board, in his discretion, may increase the salary of the
Executive from time to time, but may not reduce the salary of the Executive
below the amount set forth in subsection 4(a) above.
<PAGE>
(c) During the Term of Employment, the Executive shall be
eligible for consideration for an annual incentive merit bonus, for the
Executive's performance during the preceding fiscal year of the Company in an
amount determined by the Chairman of the Board in his discretion, by reference
to the accomplishment by the Executive of goals established by the Chairman of
the Board for the related fiscal year. The annual bonus paid to the Executive,
however, will not be less than the Minimum Bonus. The Executive shall also be
eligible to be paid other bonuses for each fiscal year as determined by the
Chairman of the Board. The Executive's annual incentive merit bonus, together
with all such other bonuses paid or payable for the fiscal year (including any
amounts for which receipt is otherwise deferred pursuant to a plan or
arrangement with the Company), is referred to herein as "Annual Bonus
Compensation."
(d) The Company will reimburse the Executive, subject to
compliance by the Executive with the Company's customary reimbursement
practices, for all reasonable and necessary out-of-pocket expenses incurred by
the Executive on behalf of the Company in the course of its business.
(e) The Company may reduce any payments made to the Executive
under this Agreement by any required federal, state or local government
withholdings or deductions for taxes or similar charges, or otherwise pursuant
to law, regulation or order.
(f) Any base salary payable to the Executive for any period of
employment of less than one year during the Term of Employment will be reduced
to reflect the actual number of days of employment during the period except as
provided in Sections 8(b) and 8(c).
Section 5. Other Benefits.
(a) During the Term of Employment, the Executive and his
dependents may participate in and receive benefits under any employee benefit
plan which the Company makes generally available to its employees and their
families, including any pension, life insurance, medical benefits, dental
benefits or disability plan, but only to the extent that the Executive or his
dependents otherwise satisfies the standards established for participation in
the plan. The terms of Executive's existing option agreements, as amended,
remain unaffected hereby, except as set forth in Sections 8(b) and 8(c) hereof.
(b) The Executive may take up to four weeks of vacation during
each full calendar year during the Term of Employment at a time mutually
convenient to the Executive and the Company, without loss of compensation or
other benefits under this Agreement.
<PAGE>
Section 5A. Supplemental Retirement Benefits.
(a) Effective as of March 12, 1999, the closing date of the
merger between CalEnergy Company, Inc. and MidAmerican Energy Company, resulting
in the creation of MidAmerican Energy Holdings Company (the "Merger Date"), the
Executive shall irrevocably become a participant in the MidAmerican Energy
Company Supplemental Retirement Plan for Designated Officers (the "SERP").
(b) The Executive shall receive fully vested years of
participation credit under the SERP (for all purposes, including vesting and
benefit accrual) for all years of service (or portions thereof) performed at
CalEnergy prior to the Merger Date, as provided on Exhibit B attached hereto.
(c) The Executive shall be entitled to an Early Retirement
Benefit Payment Option under the SERP pursuant to which he may elect to commence
receiving benefits under the SERP after the Executive's retirement or disability
on or after attaining age 47, which payments shall be calculated pursuant to the
SERP but which shall be no less than as provided on Exhibit C hereto (including
for purposes of the following sentence). In the event of the Executive's death,
benefits shall be paid pursuant to Section 6.4 of the SERP; provided, however,
that any payment due under Section 6.4(a) of the SERP shall continue for the
remaining lifetime of the Executive's surviving "Spouse" (as defined in the
SERP) or for 360 months if the Executive dies without a surviving Spouse; and
further provided, however, that any payment due under Section 6.4(b) of the SERP
shall be payable without regard to the two-thirds and fifty percent limitations
contained therein.
(d) In the event of a Triggering Event (as defined below), the
Executive shall be entitled to the following under the SERP:
(i) for purposes of determining years of
participation credit, the Executive shall be credited
with additional years of participation (or portions
thereof) equal to the difference between age 65 and
the Executive's age (in years or portions thereof) on
the date of the Triggering Event, and
(ii) any benefits under the SERP not fully vested on
the date of the Triggering Event (including the
benefits arising by the foregoing subparagraph) shall
become fully vested as of such date.
<PAGE>
For purposes of this Section 5A(d), a Triggering Event shall mean (x) the
termination of the Executive by the Company without Cause; (y) the resignation
by the Executive pursuant to Section 7(a)(vi) of this Agreement; or (z) a Change
in Control occurring after the Merger Date. All capitalized terms shall have the
meanings ascribed to them in Exhibit A of this Agreement.
(e) Notwithstanding anything herein or in the SERP to the
contrary, for purposes of determining any benefit payable to Executive under the
SERP, Executive's annual base salary and annual bonus shall never be less than
the base salary referenced in Section 4(a) hereof and that portion of the Annual
Bonus Compensation earned by Executive for the 1998 calendar year which the SERP
Committee has determined shall be included for purposes of calculating the SERP
benefit (i.e., $500,000).
(f) Within 30 days prior to a Change in Control, the Company
shall (i) establish a rabbi trust or an irrevocable standby letter of credit
with a U.S. Bank rated A or better, in each case naming the Executive as a
beneficiary and having terms reasonably satisfactory to the Executive in order
to provide security for the payment of benefits to Executive pursuant to the
SERP, and (ii) if a rabbi trust is established, deposit into the rabbi trust an
amount which, with the expected earnings thereon from reasonably prudent and
conservative investments (as confirmed by a certificate of a national accounting
firm of recognized standing which is independent of the Company) shall be
sufficient to satisfy the ultimate benefit obligations to Executive pursuant to
the SERP.
(g) A general release of claims under the SERP shall not be
required of the Executive in order to receive benefits thereunder.
(h) The Executive's entitlement to benefits under the SERP shall
be nonforfeitable and, Section 6.5 of the SERP notwithstanding, shall not be
adversely affected in any way upon termination of the Executive's employment for
Cause.
Section 6. Confidentiality and Post-Employment Restrictions.
(a) The Executive acknowledges that the Company and its
Affiliates have confidential information and trade secrets, whether written or
unwritten, with respect to carrying on their business, including sensitive
marketing, bidding, technological and engineering information and data, names of
past, present and prospective customers or partners of and vendors or suppliers
to the Company and its Affiliates, working relationships with governmental
agencies and officials, methods of pricing contracts and income and expenses
associated therewith, the international business strategy and relative ranking
<PAGE>
of opportunities in various countries, negotiated prices and offers outstanding,
credit terms and status of accounts and the terms or circumstances of any
current or prospective business arrangements between the Company and its
Affiliates and any third parties ("Confidential Information and Trade Secrets").
As used in this Agreement, the term Confidential Information and Trade Secrets
does not include (i) information which becomes generally available to the public
other than as a result of a disclosure by the Executive, (ii) information which
becomes available to the Executive on a nonconfidential basis from a source
other than the Company or its Affiliates, or (iii) information known to the
Executive prior to any disclosure to him by the Company or its Affiliates. The
Executive further acknowledges that the Executive possesses a high degree of
knowledge of the independent energy industry and, in particular, has committed
to a long-standing relationship with the Company and its Affiliates as an
employee and officer, which has allowed, and will continue to allow, him access
to the Company's Confidential Information and Trade Secrets. Accordingly, any
employment by the Executive with another employer in the independent energy
industry or participation by him as a substantial investor in any such industry
may necessarily involve disclosure of the Company's Confidential Information and
Trade Secrets. Consequently, the Executive agrees that, if he voluntarily
resigns his employment with the Company for any reason other than (i) a breach
of this Agreement by the Company, or (ii) for Good Reason, he shall not at any
time during the two-year period after such resignation, directly or indirectly
accept employment by or invest in (except as a passive investor in a public
corporation or in a publicly issued partnership interest which, in either event,
would not exceed an ownership interest of 2% of the outstanding equity or
partnership interest) in any person, firm, corporation, partnership, joint
venture or business which is primarily engaged in the production or marketing of
steam or electrical energy or which otherwise directly competes with the
business of the Company or its controlled Affiliates and, further, the Executive
agrees that, to avoid the risk of disclosing or improperly using Confidential
Information or Trade Secrets, he shall not directly, or indirectly, provide
consulting or advisory services to any of such independent energy businesses.
The preceding sentence notwithstanding, if the Executive's resignation occurs
upon or after a Change in Control, he shall not be precluded from accepting
employment or providing services to Peter Kiewit Sons', Inc. or any Affiliate
thereof.
(b) Without the written consent of the Chairman of the Board, the
Executive will not, during and for three years after the Term of Employment, (i)
disclose any Confidential Information and Trade Secrets of the Company or any
<PAGE>
Affiliate of the Company to any Person (other than the Company, directors,
officers or employees of the Company, its Affiliates or duly authorized agents,
attorneys or other representatives thereof), or (ii) otherwise make use of any
Confidential Information and Trade Secrets other than in connection with
authorized dealings with or by the Company and its Affiliates.
(c) For a period of three years after the Term of Employment, the
Executive shall neither directly nor indirectly solicit, on behalf of another
employer, the employment of, or hire or cause another employer to hire, any
person who is then currently employed by the Company or an Affiliate thereof, or
otherwise induce, on behalf of another employer, such person to leave the
employment of the Company or an Affiliate thereof without the prior written
approval of the Chairman of the Board.
(d) The Executive will hold, on behalf of the Company and its
Affiliates and as the property of the Company and its Affiliates, all memoranda,
manuals, books, papers, letters, documents, computer discs, data and software
and other similar property obtained during the course of his employment by the
Company or its Affiliates and relating to the Company's or its Affiliates
business, and will return such property to the Company or its Affiliates at any
time upon demand by the Chairman of the Board and, in any event, within five
calendar days after the end of the Term of Employment.
(e) During the Term of Employment, Executive agrees to comply in
all material respects with the Company's Policy of Business Conduct as in effect
on the date hereof.
(f) If any of the provisions of, or covenants contained in, this
Section 6 are hereafter construed to be invalid or unenforceable in any
jurisdiction, the same shall not affect the remainder of the provisions or the
enforceability thereof in any other jurisdiction, which shall be given full
effect, without regard to the invalidity or unenforceability in such other
jurisdiction. If any of the provisions of, or covenants contained in, this
Section 6 are held to be unenforceable in any jurisdiction because of the
duration or geographical scope thereof, the parties agree that the court making
such determination shall have the power to reduce the duration or geographical
scope of such provision or covenant and, in its reduced form, such provision or
covenant shall be enforceable; provided, however, that the determination of such
court shall not affect the enforceability of this Section 6 in any other
jurisdiction.
Section 7. Termination of Employment.
<PAGE>
(a) The employment of the Executive under this Agreement will
terminate on the earliest of: (i) written notice by the Executive of his
resignation other than for Good Reason; (ii) the day the Company gives to the
Executive written notice of termination without Cause; (iii) the day the Company
gives to the Executive written notice of termination for Cause; (iv) the
Permanent Disability of the Executive; (v) the death of the Executive; or (vi)
written notice by the Executive of his resignation for Good Reason.
(b) If the employment of the Executive is terminated under this
Agreement for any reason whatsoever, the obligations of the Executive under
Section 6 will remain in full force and effect to the extent provided therein,
and the termination will not abrogate any rights or remedies of the Company or
the Executive with respect to any breach of the Agreement, except as expressly
provided in Section 8.
Section 8. Payment Upon Termination.
(a) If the employment of the Executive is terminated pursuant to
subsections (i) or (iii) of Section 7(a), the Company will pay to the Executive,
within 30 calendar days, any base salary and reimbursable expenses pursuant to
Section 4(a) and Section 4(d) which are accrued but unpaid through the
Termination Date.
(b) If the employment of the Executive is terminated pursuant to
subsections (ii), (iv) or (v) of Section 7(a) prior to a Change in Control, the
Company will pay the Executive, subject to the Executive's compliance in all
material respects with his post-termination obligations under Section 6, (i)
within 30 calendar days, any base salary and reimbursable expenses which are
accrued and unpaid through such date, (ii) commencing one month after the month
of his Termination Date, 24 monthly payments each equal to 1/24 of a sum equal
to twice his annual base salary then in effect pursuant to Section 4 and (iii)
commencing one month after the month of his Termination Date, 24 monthly
payments each equal to 1/24 of a sum equal to two times the greater of (x) the
Minimum Bonus or (y) the average Annual Bonus Compensation payable to the
Executive in respect of the two fiscal years immediately preceding the year in
which the Executive's employment with the Company terminates (with any such year
for which no bonus was payable included in such two year average as a zero). In
addition, in the event of any such termination, subject to the Executive's
compliance in all material respects with his post-termination obligations under
Section 6, the Company agrees that (x) the Company stock options previously
granted to Executive will continue to vest according to their terms within such
next 24 months (beginning with the month following the month in which the
<PAGE>
Termination Date occurs, after which time the unvested remainder will lapse) and
such vested options may be exercised within the remaining term of such options
as provided in the respective option agreements, and (y) the Company shall
continue in effect for Executive, for a period of 24 months after the date of
any such termination, the life insurance benefits, medical benefits and dental
benefits, the disability plan, the tax preparation and investment advisory
services and any other employee benefits made generally available to senior
executives of the Company on and after the date hereof through the end of the
24-month post-termination period, subject to such employee contributions and
other terms and conditions as are applicable to active employees generally and
subject to subsequent modification or termination of such plans to the extent
such subsequent actions are also applicable to active employees generally;
provided that such plan benefits shall terminate earlier on the date, if any,
that comparable benefits are made available to the Executive by any new
employer. To the degree that any of the above employee benefit programs are not
available to Executive on account of his status as a non-employee after
termination of employment, the Company shall provide for economically equivalent
programs during the 24-month period or pay to executive a lump sum cash amount
designed to allow him to obtain economically equivalent benefits or put him in
the same economic position on an after tax basis.
(c) If the employment of the Executive is terminated on or after
a Change in Control pursuant to subsections (ii), (iv), (v) or (vi) of Section
7(a), the Executive shall receive the same payments, additional option vesting
and benefits continuation described in Section 8(b) hereof, except that the
monthly payments described in clauses (ii) and (iii) of the first sentence of
Section 8(b) shall be aggregated and paid to Executive in a single lump sum
without any discount to reflect present value.
(d) If the employment of the Executive is terminated pursuant to
subsections (ii), (iv), (v) or (vi) of Section 7(a), all Performance Accelerated
Stock Options ("PASOs") held by the Executive on the Termination Date will
become vested and immediately exercisable on such Termination Date and shall
otherwise remain exercisable for their term in accordance with the terms
thereof.
(e) If the employment of the Executive is terminated pursuant to
subsections (iv) or (v) at any time prior to a Change in Control or for any
reason after a Change in Control, then without further action by the Company,
the Board or any committee thereof, the Executive may exercise any vested stock
options (including vested PASOs) held by the Executive pursuant to existing
procedures approved by the Stock Option Committee for cashless exercise, by
surrendering previously owned shares, electing to have the Company withhold
<PAGE>
shares otherwise deliverable upon exercise of such options, or by providing an
irrevocable direction to a broker to sell shares and deliver all or a portion of
the proceeds to the Company, in any case in an amount equal to the aggregate
exercise price and any tax withholding obligation attendant to the exercise.
Section 8A. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any payment, distribution, waiver of
Company rights, acceleration of vesting of any stock options or restricted
stock, or any other payment or benefit in the nature of compensation to or for
the benefit of the Executive, alone or in combination (whether such payment,
distribution, waiver, acceleration or other benefit is made pursuant to the
terms of this Agreement or any other agreement, plan or arrangement providing
payments or benefits in the nature of compensation to or for the benefit of the
Executive, but determined without regard to any additional payments required
under this Section 8A) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code (or any successor provision) or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes with respect to the
Gross-Up Payment (including any interest or penalties imposed with respect to
such taxes), including, without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 8A(c), all
determinations required to be made under this Section 8A, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by Deloitte and Touche LLP, or such other nationally recognized accounting firm
then auditing the accounts of the Company (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the Executive that there
has been a Payment, or such earlier time as is requested by the Company. In the
<PAGE>
event that the Accounting Firm is unwilling or unable to perform its obligations
pursuant to this Section 8A, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to hereunder as the Accounting Firm). All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, determined pursuant to this Section 8A, shall be paid by
the Company to the Executive within five days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. The parties hereto acknowledge that, as a
result of the potential uncertainty in the application of Section 4999 of the
Code (or any successor provision) at the time of the initial determination by
the Accounting Firm hereunder, it is possible that the Company will not have
made Gross-Up Payments which should have been made consistent with the
calculations required to be made hereunder (an "Underpayment"). In the event
that the Company exhausts its remedies pursuant to Section 8A(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than 20 business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which he gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in
writing from time to time, including, without
limitation, accepting legal representation with
respect to such claim by an attorney reasonably
selected by the Company,
<PAGE>
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Section 8A(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 8A(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of Section 8A(c)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 8A(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
<PAGE>
Section 9. Remedies.
(a) The Company will be entitled, if it elects, to enjoin
any breach or threatened breach of, or enforce the specific performance of, the
obligations of the Executive under Sections 3 or 6, without showing any actual
damage or that monetary damages would be inadequate. Any such equitable remedy
will not be the sole and exclusive remedy for any such breach, and the Company
may pursue other remedies for such a breach.
(b) Any court proceeding to enforce this Agreement may be
commenced in federal courts, or in the absence of federal jurisdiction the state
courts, located in Omaha, Nebraska. The parties submit to the jurisdiction of
such courts and waive any objection which they may have to pursuit of any such
proceeding in any such court.
(c) Except to the extent that the Company elects to seek
injunctive relief in accordance with subsection 9(a), any controversy or claim
arising out of or relating to this Agreement or the validity, interpretation,
enforceability or breach of this Agreement will be submitted to arbitration in
Omaha, Nebraska, in accordance with the then existing rules of the American
Arbitration Association, and judgment upon the award rendered in any such
arbitration may be entered in any court having jurisdiction.
Section 10. Assignment. Neither the Company nor the Executive may sell,
transfer or otherwise assign their rights, or delegate their obligations, under
this Agreement, provided that the Company shall require any successor to all or
substantially all of the business, stock or assets of the Company to expressly
assume the Company's rights and obligations hereunder.
Section 11. Unfunded Benefits. All compensation and other benefits
payable to the Executive under this Agreement will be unfunded, and neither the
Company nor any Affiliate of the Company will segregate any assets to satisfy
any obligation of the Company under this Agreement. The obligations of the
Company to the Executive are not the subject of any guarantee or other assurance
of any Person other than the Company.
<PAGE>
Section 12. Severability. Should any provision, paragraph, clause or
portion thereof of this Agreement be declared or be determined by any court or
arbitrator of competent jurisdiction to be illegal, unenforceable or invalid,
the validity or enforceability of the remaining parts, terms or provisions shall
not be affected thereby and said illegal or invalid part, term or provision
shall be deemed not to be a part of this Agreement. Alternatively, the court or
arbitrator having jurisdiction shall have the power to modify such illegal,
unenforceable or invalid provision so that it will be valid and enforceable,
and, in any case, the remaining provisions of this Agreement shall remain in
full force and effect.
Section 13. Miscellaneous.
(a) This Agreement may be amended or modified only by a
writing executed by the Executive and the Company.
(b) This Agreement will be governed by and construed in
accordance with the internal laws of the State of Nebraska.
(c) This Agreement constitutes the entire agreement of the
Company and the Executive with respect to the matters set forth in this
Agreement and supersedes any and all other agreements between the Company and
the Executive relating to those matters.
(d) Any notice required to be given pursuant to this
Agreement will be deemed given (i) when delivered in person or by courier or
(ii) on the third calendar day after it is sent by facsimile, with written
confirmation of receipt, if to the Company or to the Executive, at 302 South
36th Street, Suite 400, Omaha, Nebraska 68131, fax number (402) 231-1658 or to
such other address as may be subsequently designated by the Company or the
Executive in writing to the other party.
(e) A waiver by a party of a breach of this Agreement will
not constitute a waiver of any other breach, prior or subsequent, of this
Agreement.
IN WITNESS WHEREOF, the Company and the Executive have entered into
this Agreement as of May 10, 1999.
MIDAMERICAN ENERGY HOLDINGS COMPANY
By:____________________________
Gregory E. Abel
President and Chief
Operating Officer
EXECUTIVE:
By:____________________________
Steven A. McArthur
<PAGE>
EXHIBIT A
Defined Terms
"Affiliate" means, with respect to a Person, (a) any Person directly or
indirectly owning, controlling, or holding power to vote 10% or more of the
outstanding voting securities of the Person; (b) any Person 10% or more of whose
outstanding voting securities are directly or indirectly owned, controlled or
held with power to vote by the Person; (c) any Person directly or indirectly
controlling, controlled by or under common control with, the Person; and (d) any
officer or director of the Person, or of any Person directly or indirectly
controlling the Person, controlled by the Person or under common control with
the Person. As used in this definition, "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person.
"Agreement" means this Employment Agreement dated as of August 6, 1996,
by and between the Company and the Executive, as it may be amended from time to
time in accordance with its terms.
"Board" means the Board of Directors of the Company.
"Cause" means any or all of the following:
(a) the willful and continued failure by the Executive to perform
substantially the services and duties contemplated by this Agreement
(other than any such failure resulting from the Executive's incapacity
due to disability);
(b) the willful engaging by the Executive in gross misconduct which is
injurious to the business or reputation of the Company in any material
respect;
(c) the gross negligence of the Executive in performing the services
contemplated by this Agreement which is injurious to the business or
reputation of the Company in any material respect; or
(d) Executive's conviction of, or pleading guilty or no contest to, a
felony involving moral turpitude.
"Change in Control" means (i) approval by the Company's stockholders of
(A) the dissolution of the Company, (B) a merger or consolidation of the Company
where the Company is not the surviving corporation, except for a transaction the
principal purpose of which is to change the state in which the Company is
incorporated, (C) a reverse merger in which the Company survives as an entity
but in which securities possessing more than 50 percent of the total combined
<PAGE>
voting power of the Company's securities are transferred to a person or persons
different from those who hold such securities immediately prior to the merger or
(D) the sale or other disposition of all or substantially all of the Company's
assets; (ii) the direct or indirect acquisition by any Person or related group
of Persons (other than an acquisition from or by the Company or by a
Company-sponsored employee benefit plan or by a Person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
50 percent of the total combined voting power of the Company's outstanding
voting securities; or (iii) a change in the composition of the Board over a
period of thirty-six (36) months or less such that a majority of the Board
members cease, by reason of one or more contested elections for Board membership
or by one or more actions by written consent of stockholders, to be comprised of
individuals who either (A) have been Board members continuously since the
beginning of such period or (B) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time such election or
nomination was approved by the Board.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means MidAmerican Energy Holdings Company, an Iowa
corporation, and any successor or assign permitted under the Agreement.
"Disability" means, with respect to the Executive, that the Executive
has become physically or mentally incapacitated or disabled so that, in the
reasonable judgment of the Chairman of the Board, he is unable to perform his
duties under this Agreement and such other services as he performed on behalf of
the Company before incurring such incapacity or disability.
"Good Reason" means any of the following events, but only if such
event(s) occur on, after or in connection with a Change in Control: (i) the
failure by the Company to pay to the Executive, for a material period of time
and in a material amount, compensation due and payable by the Company under
Section 4(a) of this Agreement; (ii) any reduction by the Company of the title,
office, duties or authority of the Executive in any material respect; or (iii)
any relocation of the Executive's primary place of employment to a location more
than 25 miles from Omaha, Nebraska.
<PAGE>
"Minimum Bonus" means, with respect to a fiscal year, $200,000.
"Permanent Disability" means a Disability which has continued for at
least six consecutive calendar months.
"Person" means any natural person, general partnership, limited
partnership, corporation, joint venture, trust, business trust, or other entity.
"Term of Employment" means the period of time beginning on August 6,
1996, and ending on the eighth anniversary of such date, unless earlier
terminated pursuant to Section 7(a) or automatically extended pursuant to the
following sentence. The Term of Employment will be automatically extended for
one year on each anniversary of the date of this Agreement beginning on the
fifth anniversary unless the Executive has given the Company, or the Company has
given the Executive, a notice declining automatic extension at least 365
calendar days before the anniversary.
"Termination Date" means the date of termination of employment of the
Executive pursuant to Section 7 of this Agreement.
<PAGE>
EXHIBIT B
Steven A. McArthur
Credited Years of Service as of March 12, 1999: 8 years, 1 month
<PAGE>
EXHIBIT C
Steven A. McArthur
Minimum Annual SERP benefit payment for retirement or disability payable on or
after attaining age 47: $233,662.
Exhibit 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of April 21, 1999, by and
between MidAmerican Energy Holdings Company, an Iowa corporation (the
"Company"), and Patrick J. Goodman (the "Executive").
RECITALS
The Company desires to employ the Executive as its Senior Vice
President and Chief Financial Officer on the terms set forth in this Agreement,
and the Executive desires to accept such employment.
Accordingly, the Company and the Executive agree as follows:
AGREEMENT
Section 1. Defined Terms. Terms used but not defined in this Agreement
will have the meanings ascribed to them in Exhibit A to this Agreement.
Section 2. Employment.
(a) The Company will employ the Executive as, and the
Executive will act as the Senior Vice President and Chief Financial Officer of
the Company, subject to and upon the terms set forth in this Agreement, for the
Term of Employment.
(b) The Executive's primary place of employment will be Des
Moines, Iowa or such other place as is determined, prior to a Change in Control,
in good faith by the Chairman of the Board and Chief Executive Officer of the
Company (hereinafter referred to as the "Chairman of the Board") to be in the
best interests of the Company.
Section 3. Duties.
(a) The Executive (i) will perform and discharge the duties
incident to and consistent with his title of Senior Vice President and Chief
Financial Officer, and (ii) will perform and discharge such other duties, and
will have such other authority, as are delegated to him by the Chairman of the
Board. In performing such duties, the Executive will report directly to, and be
subject to the direction of, the Chairman of the Board. Prior to a Change in
Control, the Executive's title and duties may in good faith be modified by the
Chairman of the Board.
(b) The Executive will act, without any compensation in
addition to the compensation payable pursuant to this Agreement, as an officer
or member of the board of directors of any subsidiary of the Company, if so
appointed or elected.
<PAGE>
(c) During the Term of Employment, the Executive (i) will
devote his entire time, attention and energies during normal business hours to
the business of the Company and its subsidiaries and (ii) will not, without the
written consent of the Chairman of the Board, perform any services for any other
Person or engage in any other business or professional activity, whether or not
performed or engaged in for profit.
(d) Notwithstanding subsection 3(c), the Executive, without
the consent of the Chairman of the Board, may (i) purchase securities issued by,
or otherwise passively invest his personal or family assets in, any other
company or business within the constraints imposed by the Policy of Business
Conduct referred to below, and (ii) engage in governmental, political,
educational or charitable activities, but only to the extent that those
activities (A) are not inconsistent with any direction of the Chairman of the
Board or any duties under this Agreement, and (B) do not interfere with the
devotion by the Executive of his entire time, attention and energies during
normal business hours to the business of the Company.
Section 4. Compensation.
(a) During the Term of Employment, the Company will pay the
Executive a base salary at an annual rate of $250,000, in substantially equal
periodic payments in accordance with the Company's practices for executive
employees, as determined from time to time by the Chairman of the Board.
(b) The Chairman of the Board will review the salary payable
to the Executive at least annually beginning in the fourth fiscal quarter of
1999. The Chairman of the Board, in his discretion, may increase the salary of
the Executive from time to time, but may not reduce the salary of the Executive
below the amount set forth in subsection 4(a) above.
(c) During the Term of Employment, the Executive shall be
eligible for consideration for an annual incentive merit bonus, for the
Executive's performance during the preceding fiscal year of the Company in an
amount determined by the Chairman of the Board in his discretion, by reference
to the accomplishment by the Executive of goals established by the Chairman of
the Board for the related fiscal year. The Executive shall also be eligible to
be paid other bonuses for each fiscal year as determined by the Chairman of the
Board. The Executive's annual incentive merit bonus, together with all such
other bonuses paid or payable for the fiscal year (including any amounts for
which receipt is otherwise deferred pursuant to a plan or arrangement with the
Company), is referred to herein as "Annual Bonus Compensation."
<PAGE>
(d) The Company will reimburse the Executive, subject to
compliance by the Executive with the Company's customary reimbursement
practices, for all reasonable and necessary out-of-pocket expenses incurred by
the Executive on behalf of the Company in the course of its business.
(e) The Company may reduce any payments made to the Executive
under this Agreement by any required federal, state or local government
withholdings or deductions for taxes or similar charges, or otherwise pursuant
to law, regulation or order.
(f) Any base salary payable to the Executive for any period of
employment of less than one year during the Term of Employment will be reduced
to reflect the actual number of days of employment during the period except as
provided in Sections 8(b) and 8(c).
Section 5. Other Benefits.
(a) During the Term of Employment, the Executive and his
dependents may participate in and receive benefits under any employee benefit
plan which the Company makes generally available to its employees and their
families, including any pension, life insurance, medical benefits, dental
benefits or disability plan, but only to the extent that the Executive or his
dependents otherwise satisfies the standards established for participation in
the plan. The terms of Executive's existing option agreements, as amended,
remain unaffected hereby, except as set forth in Sections 8(b) and 8(c) hereof.
(b) The Executive may take up to three weeks of vacation
during each full calendar year during the Term of Employment at a time mutually
convenient to the Executive and the Company, without loss of compensation or
other benefits under this Agreement.
Section 6. Confidentiality and Post-Employment Restrictions.
(a) The Executive acknowledges that the Company and its
Affiliates have confidential information and trade secrets, whether written or
unwritten, with respect to carrying on their business, including sensitive
marketing, bidding, technological and engineering information and data, names of
past, present and prospective customers or partners of and vendors or suppliers
to the Company and its Affiliates, working relationships with governmental
agencies and officials, methods of pricing contracts and income and expenses
associated therewith, the international business strategy and relative ranking
of opportunities in various countries, negotiated prices and offers outstanding,
<PAGE>
credit terms and status of accounts and the terms or circumstances of any
current or prospective business arrangements between the Company and its
Affiliates and any third parties ("Confidential Information and Trade Secrets").
As used in this Agreement, the term Confidential Information and Trade Secrets
does not include (i) information which becomes generally available to the public
other than as a result of a disclosure by the Executive, (ii) information which
becomes available to the Executive on a nonconfidential basis from a source
other than the Company or its Affiliates, or (iii) information known to the
Executive prior to any disclosure to him by the Company or its Affiliates. The
Executive further acknowledges that the Executive possesses a high degree of
knowledge of the independent energy industry and, in particular, has committed
to a longstanding relationship with the Company and its Affiliates as an
employee and officer, which has allowed, and will continue to allow, him access
to the Company's Confidential Information and Trade Secrets. Accordingly, any
employment by the Executive with another employer in the independent energy
industry or participation by him as a substantial investor in any such industry
may necessarily involve disclosure of the Company's Confidential information and
Trade Secrets. Consequently, the Executive agrees that, if he voluntarily
resigns his employment with the Company for any reason other than (i) a breach
of this Agreement by the Company, or (ii) for Good Reason, he shall not at any
time during the two-year period after such resignation, directly or indirectly
accept employment by or invest in (except as a passive investor in a public
corporation or in a publicly issued partnership interest which, in either event,
would not exceed an ownership interest of 2% of the outstanding equity or
partnership interest) in any person, firm, corporation, partnership, joint
venture or business which is engaged in the production or marketing of steam or
electrical energy or the distribution or supply of electricity or natural gas
(in each case in the States of Iowa, Illinois, Nebraska, South Dakota, Kansas,
Missouri, Minnesota or Wisconsin) or which otherwise directly competes with the
business of the Company or its Affiliates and, further, the Executive agrees
that, to avoid the risk of disclosing or improperly using Confidential
Information or Trade Secrets, he shall not directly, or indirectly, provide
consulting or advisory services to any of such independent energy or utility
businesses which conduct business in such States or otherwise directly compete
with the Company or its Affiliates. The preceding sentence notwithstanding, if
the Executive's resignation occurs upon or after a Change in Control, he shall
not be precluded from accepting employment or providing services to Peter Kiewit
Sons', Inc. or any Affiliate thereof.
<PAGE>
(b) Without the written consent of the Chairman of the Board,
the Executive will not, during and for three years after the Term of Employment,
(i) disclose any Confidential Information and Trade Secrets of the Company or
any Affiliate of the Company to any Person (other than the Company, directors,
officers or employees of the Company, its Affiliates or duly authorized agents,
attorneys or other representatives thereof), or (ii) otherwise make use of any
Confidential Information and Trade Secrets other than in connection with
authorized dealings with or by the Company and its Affiliates.
(c) For a period of three years after the Term of Employment,
the Executive shall neither directly nor indirectly solicit, on behalf of
another employer, the employment of, or hire or cause another employer to hire,
any person who is then currently employed by the Company or an Affiliate
thereof, or otherwise induce, on behalf of another employer, such person to
leave the employment of the Company or an Affiliate thereof without the prior
written approval of the Chairman of the Board.
(d) The Executive will hold, on behalf of the Company and its
Affiliates and as the property of the Company and its Affiliates, all memoranda,
manuals, books, papers, letters, documents, computer discs, data and software
and other similar property obtained during the course of his employment by the
Company or its Affiliates and relating to the Company's or its Affiliates
business, and will return such property to the Company or its Affiliates at any
time upon demand by the Chairman of the Board and, in any event, within five
calendar days after the end of the Term of Employment.
(e) During the Term of Employment, Executive agrees to comply
in all material respects with the Company's predecessor's Policy of Business
Conduct attached hereto as Exhibit A (all references in such Exhibit A to
"CalEnergy" being deemed to refer to the Company and its Affiliates) and all
future amendments and restatements to such policy and to deliver an executed
Certificate of Compliance with respect thereto upon request by the Company.
(f) If any of the provisions of, or covenants contained in,
this Section 6 are hereafter construed to be invalid or unenforceable in any
jurisdiction, the same shall not affect the remainder of the provisions or the
enforceability thereof in any other jurisdiction, which shall be given full
effect, without regard to the invalidity or unenforceability in such other
jurisdiction. If any of the provisions of, or covenants contained in, this
Section 6 are held to be unenforceable in any jurisdiction because of the
duration or geographical scope thereof, the parties agree that the court making
such determination shall have the power to reduce the duration or geographical
scope of such provision or covenant and, in its reduced form, such provision or
covenant shall be enforceable; provided, however, that the determination of such
court shall not affect the enforceability of this Section 6 in any other
jurisdiction.
<PAGE>
Section 7. Termination of Employment.
(a) The employment of the Executive under this Agreement will
terminate on the earliest of: (i) written notice by the Executive of his
resignation other than for Good Reason; (ii) the day the Company gives to the
Executive written notice of termination without Cause; (iii) the day the Company
gives to the Executive written notice of termination for Cause; (iv) the
Permanent Disability of the Executive; (v) the death of the Executive; or (vi)
written notice by the Executive of his resignation for Good Reason.
(b) If the employment of the Executive is terminated under
this Agreement for any reason whatsoever, the obligations of the Executive under
Section 6 will remain in full force and effect to the extent provided therein,
and the termination will not abrogate any rights or remedies of the Company or
the Executive with respect to any breach of the Agreement, except as expressly
provided in Section 8.
Section 8. Payment Upon Termination.
(a) If the employment of the Executive is terminated pursuant
to subsections (i) or (iii) of Section 7(a), the Company will pay to the
Executive, within 30 calendar days, any base salary and reimbursable expenses
pursuant to Section 4(a) and Section 4(d) which are accrued but unpaid through
the Termination Date.
(b) If the employment of the Executive is terminated pursuant
to subsections (ii), (iv) or (v) of Section 7(a) prior to a Change in Control,
the Company will pay the Executive, subject to the Executive's compliance in all
material respects with his post-termination obligations under Section 6, (i)
within 30 calendar days, any base salary and reimbursable expenses which are
accrued and unpaid through such date, (ii) commencing one month after the month
of his Termination Date, 24 monthly payments each equal to 1/24 of a sum equal
to twice his annual base salary then in effect pursuant to Section 4 and (iii)
commencing one month after the month of his Termination Date, 24 monthly
payments each equal to 1/24 of a sum equal to two times the average Annual Bonus
Compensation payable to the Executive in respect of the two fiscal years
immediately preceding the year in which the Executive's employment with the
Company terminates (with any such year for which no bonus was payable included
in such two year average as a zero).
<PAGE>
In addition, in the event of any such termination, subject to the Executive's
compliance in all material respects with his post-termination obligations under
Section 6, the Company agrees that (x) the Company stock options previously
granted to Executive will continue to vest according to their terms within such
next 24 months (beginning with the month following the month in which the
Termination Date occurs, after which time the unvested remainder will lapse) and
such vested options may be exercised within the remaining term of such options
as provided in the respective option agreements, and (y) the Company shall
continue in effect for Executive, for a period of twelve months after the date
of any such termination, the life insurance, medical benefits, dental benefits
and disability plan available to the Executive and his dependents on the date of
such termination, subject to such employee contributions and other terms and
conditions as are applicable to active employees generally and subject to
subsequent modification or termination of such plans to the extent such
subsequent actions are also applicable to active employees generally; provided
that such plan benefits shall terminate earlier on the date, if any, that
comparable benefits are made available to the Executive by any new employer.
(c) If the employment of the Executive is terminated on or
after a Change in Control pursuant to subsections (ii), (iv), (v) or (vi) of
Section 7(a), the Executive shall receive the same payments, additional option
vesting and benefits continuation described in Section 8(b) hereof, except that
the monthly payments described in clauses (ii) and (iii) of the first sentence
of Section 8(b) shall be aggregated and paid to Executive in a single lump sum
without any discount to reflect present value.
(d) If the employment of the Executive is terminated pursuant
to subsections (ii) or (vi) of Section 7(a), any Performance Accelerated Stock
Options ("PASOs") held by the Executive on the Termination Date will become
vested and immediately exercisable on such Termination Date and shall otherwise
remain exercisable for their term in accordance with the terms thereof.
(e) If the employment of the Executive is terminated for any
reason after a Change in Control, then without further action by the Company,
the Board or any committee thereof, the Executive may exercise any vested stock
options (including any vested PASOs) held by the Executive pursuant to existing
procedures approved by the Stock Option Committee for cashless exercise, by
<PAGE>
surrendering previously owned shares, electing to have the Company withhold
shares otherwise deliverable upon exercise of such options, or by providing an
irrevocable direction to a broker to sell shares and deliver all or a portion of
the proceeds to the Company, in any case in an amount equal to the aggregate
exercise price and any tax withholding obligation attendant to the exercise.
Section 8A. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment,
distribution, waiver of Company rights, acceleration of vesting of any stock
options or restricted stock, or any other payment or benefit in the nature of
compensation to or for the benefit of the Executive, alone or in combination
(whether such payment, distribution, waiver, acceleration or other benefit is
made pursuant to the terms of this Agreement or any other agreement, plan or
arrangement providing payments or benefits in the nature of compensation to or
for the benefit of the Executive, but determined without regard to any
additional payments required under this Section 8A) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code (or any successor
provision) or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
with respect to the Gross-Up Payment (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 8A(c), all
determinations required to be made under this Section 8A, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by Deloitte and Touche LLP, or such other nationally recognized accounting firm
then auditing the accounts of the Company (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the Executive that there
has been a Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is unwilling or unable to perform its obligations
pursuant to this Section 8A, the Executive shall appoint another nationally
<PAGE>
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to hereunder as the Accounting Firm). All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, determined pursuant to this Section 8A, shall be paid by
the Company to the Executive within five days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. The parties hereto acknowledge that, as a
result of the potential uncertainty in the application of Section 4999 of the
Code (or any successor provision) at the time of the initial determination by
the Accounting Firm hereunder, it is possible that the Company will not have
made Gross-Up Payments which should have been made consistent with the
calculations required to be made hereunder (an "Underpayment"). In the event
that the Company exhausts its remedies pursuant to Section 8A(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than 20 business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which he gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in
writing from time to time, including, without
limitation, accepting legal representation with
respect to such claim by an attorney reasonably
selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
<PAGE>
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Section 8A(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis, and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 8A(c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Section 8A(c))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 8A(c), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid."
<PAGE>
Except as provided herein and to the extent necessary to give
full effect to the provisions of this Amendment, the terms of the Employment
Agreement shall remain in full force and effect.
Section 9. Remedies.
(a) The Company will be entitled, if it elects, to enjoin any
breach or threatened breach of, or enforce the specific performance of, the
obligations of the Executive under Sections 3 or 6, without showing any actual
damage or that monetary damages would be inadequate. Any such equitable remedy
will not be the sole and exclusive remedy for any such breach, and the Company
may pursue other remedies for such a breach.
(b) Any court proceeding to enforce this Agreement may be
commenced in federal courts, or in the absence of federal jurisdiction the state
courts, located in Omaha, Nebraska. The parties submit to the jurisdiction of
such courts and waive any objection which they may have to pursuit of any such
proceeding in any such court.
(c) Except to the extent that the Company elects to seek
injunctive relief in accordance with subsection 9(a), any controversy or claim
arising out of or relating to this Agreement or the validity, interpretation,
enforceability or breach of this Agreement will be submitted to arbitration in
Omaha, Nebraska, in accordance with the then existing rules of the American
Arbitration Association, and judgment upon the award rendered in any such
arbitration may be entered in any court having jurisdiction.
Section 10. Assignment. Neither the Company nor the Executive may sell,
transfer or otherwise assign their rights, or delegate their obligations, under
this Agreement, provided that the Company shall require any successor to all or
substantially all of the business, stock or assets of the Company to expressly
assume the Company's rights and obligations hereunder.
Section 11. Unfunded Benefits. All compensation and other benefits
payable to the Executive under this Agreement will be unfunded, and neither the
Company nor any Affiliate of the Company will segregate any assets to satisfy
any obligation of the Company under this Agreement. The obligations of the
Company to the Executive are not the subject of any guarantee or other assurance
of any Person other than the Company.
<PAGE>
Section 12. Severability. Should any provision, paragraph, clause or
portion thereof of this Agreement be declared or be determined by any court or
arbitrator of competent jurisdiction to be illegal, unenforceable or invalid,
the validity or enforceability of the remaining parts, terms or provisions shall
not be affected thereby and said illegal or invalid part, term or provision
shall be deemed not to be a part of this Agreement. Alternatively, the court or
arbitrator having jurisdiction shall have the power to modify such illegal,
unenforceable or invalid provision so that it will be valid and enforceable,
and, in any case, the remaining provisions of this Agreement shall remain in
full force and effect.
Section 13. Miscellaneous.
(a) This Agreement may be amended or modified only by a writing
executed by the Executive and the Company.
(b) This Agreement will be governed by and construed in accordance
with the internal laws of the State of Nebraska.
(c) This Agreement constitutes the entire agreement of the Company and
the Executive with respect to the matters set forth in this Agreement and
supersedes any and all other agreements between the Company and the Executive
relating to those matters.
(d) Any notice required to be given pursuant to this Agreement will be
deemed given (i) when delivered in person or by courier or (ii) on the third
calendar day after it is sent by facsimile, with written confirmation of
receipt, if to the Company, to: Chairman of the Board, MidAmerican Energy
Holdings Company at 302 South 36th Street, Suite 400, Omaha, Nebraska 68131, fax
number (402) 231-1658, and, if to the Executive, at MidAmerican Energy Holdings
Company, 666 Grand Avenue, Des Moines, Iowa 50303, fax number (515) 242-4031 or
to such other address as may be subsequently designated by the Company or the
Executive in writing to the other party.
(e) A waiver by a party of a breach of this Agreement will not
constitute a waiver of any other breach, prior or subsequent, of this Agreement.
IN WITNESS WHEREOF, the Company and the Executive have entered into
this Agreement as of April 21, 1999.
<PAGE>
MIDAMERICAN ENERGY HOLDINGS COMPANY
By:
Steven A. McArthur
Senior Vice President
EXECUTIVE:
By:
Patrick J. Goodman
<PAGE>
EXHIBIT A
Defined Terms
"Affiliate" means, with respect to a Person, (a) any Person directly or
indirectly owning, controlling, or holding power to vote 10% or more of the
outstanding voting securities of the Person; (b) any Person 10% or more of whose
outstanding voting securities are directly or indirectly owned, controlled or
held with power to vote by the Person; (c) any Person directly or indirectly
controlling, controlled by or under common control with, the Person; and (d) any
officer or director of the Person, or of any Person directly or indirectly
controlling the Person, controlled by the Person or under common control with
the Person. As used in this definition, "control," means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person.
"Agreement" means this Employment Agreement dated as of April 21, 1999,
by and between the Company and the Executive, as it may be amended from time to
time in accordance with its terms.
"Board" means the Board of Directors of the Company.
"Cause" means any or all of the following:
(a) the willful and continued failure by the Executive to perform
substantially the services and duties contemplated by this Agreement
(other than any such failure resulting from the Executive's incapacity
due to disability);
(b) the willful engaging by the Executive in gross misconduct which is
injurious to the business or reputation of the Company in any material
respect;
(c) the gross negligence of the Executive in performing the services
contemplated by this Agreement which is injurious to the business or
reputation of the Company in any material respect; or
(d) Executive's conviction of, or pleading guilty or no contest to, a
felony involving moral turpitude.
"Change in Control" means (i) approval by the Company's stockholders of
(A) the dissolution of the Company, (B) a merger or consolidation of the Company
where the Company is not the surviving corporation, except for a transaction the
principal purpose of which is to change the state in which the Company is
incorporated, (C) a reverse merger in which the Company survives as an entity
but in which securities possessing more than 50 percent of the total combined
voting power of the Company's securities are transferred to a person or persons
<PAGE>
different from those who hold such securities immediately prior to the merger or
(D) the sale or other disposition of all or substantially all of the Company's
assets; (ii) the direct or indirect acquisition by any Person or related group
of Persons (other than an acquisition from or by the Company or by a
Company-sponsored employee benefit plan or by a Person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
50 percent of the total combined voting power of the Company's outstanding
voting securities; or (iii) a change in the composition of the Board over a
period of thirty-six (36) months or less such that a majority of the Board
members cease, by reason of one or more contested elections for Board membership
or by one or more actions by written consent of stockholders, to be comprised of
individuals who either (A) have been Board members continuously since the
beginning of such period or (B) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time such election or
nomination was approved by the Board.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means MidAmerican Energy Holdings Company, an Iowa
corporation, and any successor or assign permitted under the Agreement.
"Disability" means, with respect to the Executive, that the Executive
has become physically or mentally incapacitated or disabled so that, in the
reasonable judgment of majority of the Chairman of the Board, he is unable to
perform his duties under this Agreement and such other services as he performed
on behalf of the Company before incurring such incapacity or disability.
"Good Reason" means any of the following events, but only if such
event(s) occur on, after or in connection with a Change in Control: (i) the
failure by the Company to pay to the Executive, for a material period of time
and in a material amount, compensation due and payable by the Company under
Section 4(a) of this Agreement; (ii) any reduction by the Company of the title,
office, duties or authority of the Executive in any material respect; or (iii)
any relocation of the Executive's primary place of employment to a location more
than 25 miles from Omaha, Nebraska.
"Permanent Disability" means a Disability which has continued for at
least six consecutive calendar months.
<PAGE>
"Person" means any natural person, general partnership, limited
partnership, corporation, joint venture, trust, business trust, or other entity.
"Term of Employment" means the period of time beginning on April 21,
1999, and ending on the fifth anniversary of such date, unless earlier
terminated pursuant to Section 7(a) or automatically extended pursuant to the
following sentence. The Term of Employment will be automatically extended for
one year on each anniversary of the date of this Agreement beginning on the
fifth anniversary unless the Executive has given the Company, or the Company has
given the Executive, a notice declining automatic extension at least 365
calendar days before the anniversary.
"Termination Date" means the date of termination of employment of the
Executive pursuant to Section 7 of this Agreement.
Exhibit 10.61
MIDAMERICAN ENERGY COMPANY
RESTATED EXECUTIVE
DEFERRED COMPENSATION PLAN
ARTICLE I
ESTABLISHMENT AND PURPOSE
1.1 Background of Plan. MidAmerican Energy Company presently maintains a
deferred compensation plan for selected employees and also maintains certain
deferred compensation plans of predecessor employers. This Plan shall replace
those arrangements, effective January 1, 1999, and is known as the MidAmerican
Energy Company Restated Executive Deferred Compensation Plan (the "Plan").
The Plan shall be maintained as an unfunded plan of deferred compensation for a
select group of management or highly compensated employees. The Plan, therefore,
is intended to be exempt from the participation, vesting, funding, and fiduciary
requirements of Title I of the Employee Retirement Income Security Act of 1974.
1.2 Purpose of Plan. The purpose of this Plan is to provide certain employees
with an additional way to defer portions of their compensation. The plan is also
intended to provide Participants with an effective means of deferring all or a
portion of short-term incentive bonus payments they are entitled to receive.
1.3 Applicability of Plan. The provisions of this Plan are applicable to
Employees who are employed by an Employer on or after January 1, 1999, and, with
respect to amounts deferred under any Predecessor Plan, are applicable to
participants who still have account balances under any such Plan.
1.4 Merger of Predecessor Plans. For ease of administration, and in recognition
of the need to change earnings credit and method of valuation in the Predecessor
Plans in light of the anticipated acquisition of MidAmerican Energy Holdings
Company by CalEnergy Company, Inc. (through a merger of a subsidiary of
CalEnergy with and into MidAmerican Energy Holdings Company ("Merger")), each
Predecessor Plan is hereby merged into the Plan, effective January 1, 1999.
ARTICLE 2
DEFINITIONS
Whenever used in this Plan, the following terms shall have the meanings set
forth below unless otherwise expressly provided. When the defined meaning is
intended, the term is capitalized. The definition of any term in the singular
shall also include the plural, whichever is appropriate in the context.
<PAGE>
2.1 Account. Account means the bookkeeping account maintained for each
Participant that represents the Participant's total interest under the Plan as
of any Valuation Date. An Account shall consist of the sum of deferrals of
Salary and Bonus credited pursuant to section 4.1, and any gains and losses
credited on these amounts. It shall also consist of any accounts transferred
from Predecessor Plans. A Participant shall have a fully vested and
nonforfeitable interest at all times in his or her Account.
2.2 Affiliate. Affiliate means any corporation, association, joint venture,
proprietorship or partnership while it is connected with the Company through
stock ownership, common control, membership in an affiliated service group, or
otherwise within the meaning of Code section 414(b), (c), (m) and (o).
2.3 Beneficiary. Beneficiary means the person or persons designated by the
Participant to receive any benefits payable from the Participant's Account after
his or her death. Each Participant shall designate his or her Beneficiary (or
change this designation) at a time and in a manner specified by the Committee.
If no person is designated as a Beneficiary, if a designation is revoked, or if
no designated Beneficiary survives the Participant, the Beneficiary shall be the
Participant's estate.
2.4 Bonus. Bonus means the cash portion of the Participant's short-term
incentive bonus award payable to a Participant on account of services performed
by the Participant.
2.5 Code. Code means the Internal Revenue Code of 1986, as amended, or as it may
be amended from time to time. A reference to a particular section of the Code
shall also include the regulations promulgated under such section.
2.6 Committee. Committee means the Compensation Committee established by the
Board of Directors of the MidAmerican Energy Holdings Company.
2.7 Company. Company means MidAmerican Energy Company.
2.8 Employee. Employee means any person who is employed by an Employer.
2.9 Employer. Employer means the Company and any Affiliate that elects to become
a party to the Plan with the approval of the Company.
2.10 Investment Fund. Investment Fund means an investment benchmark or fund
designated by the Committee as an investment medium for the hypothetical
investment of a Participant's Account. As of January 1, 1999, there shall be a
choice between the S&P 500 Stock Index Benchmark, the Lehman Brothers Aggregate
Bond Index Benchmark and the Stable Fund Fixed Rate Benchmark. The Committee
shall have the discretion to establish and terminate investment benchmarks or
funds as it may deem appropriate.
<PAGE>
(a) S&P 500 Stock Index Benchmark means the S&P 500 Stock Index
Value as published by Standard and Poor as of the end of each
business day, including dividends reinvested.
(b) Lehman Brothers Aggregate Bond Index Benchmark means the
Aggregate Bond Index Value as published by Lehman Brothers as
of the end of each business day.
(c) Stable Fund Fixed Rate Benchmark shall be an account in which
the credits in the account do not fluctuate in value, and the
values in the account are credited with an annual interest
rate, compounded annually. The annual interest rate shall be
set for each calendar year based on the one-year U.S. Treasury
Bill rate on October 15 in the prior year (or the previous
business day if October 15 is not a business day), except that
for 1999, the rate shall be 4.3%.
2.11 Participant. Participant means an Employee who has met and continues to
meet the eligibility requirements described in section 3.1 and who has elected
to defer amounts under the Plan. It also means any person with an account
balance under this Plan.
2.12 Plan. Plan means this MidAmerican Energy Company Restated Executive
Deferred Compensation Plan, as it may be amended from time to time.
2.13 Plan Year. Plan Year means the calendar year.
2.14 Predecessor Plan. The following plans shall individually be considered a
Predecessor Plan and collectively shall be considered the Predecessor Plans:
(a) MidAmerican Energy Company Deferred Compensation Plan -
Executives
(b) Deferred Compensation Plan for Executives of Midwest
Resources Inc. and Subsidiaries
(c) Midwest Resources Inc. - Iowa Resources Inc. and
Subsidiaries - Executive Incentive Compensation Plan Revised
and Amended (1/29/92 latest revision). (This Plan consists of
both the Iowa Resources Inc. Executive Incentive Plan in
existence prior to the merger of Iowa Resources Inc. and
Midwest Energy Company and the Midwest Resources Inc.
Executive Incentive Plan after such merger.)
<PAGE>
(d) Midwest Power Systems 1993 Key Executive Incentive
Compensation Plan
(e) Midwest Resources Inc. - Iowa Resources Inc. and
Subsidiaries - Executive Deferred Compensation Plan Revised
and Amended
(f) Non-Cash Bonus Award Plan for Executives of Midwest
Resources Inc.
2.15 Retirement Date. The date the Participant chooses as his or her retirement
date under the terms of the Company's cash balance defined benefit plan, or
successor plan, which can be either the normal retirement date or an early
retirement date under such plan.
2.16 Salary. Salary means the Participant's regular basic wage from the
Employer, exclusive of any Bonus, and determined before reduction for amounts
deferred pursuant to the Plan, and before reduction for any salary reduction
contributions made on the Participant's behalf under a plan maintained by the
Company or an Affiliate under Code section 125 or 401(k).
2.17 Terminated for Cause. Terminated for Cause means the Participant was
terminated by an Employer because the Participant:
(a) committed an act of fraud, embezzlement, theft or other
criminal act(s) constituting a felony;
(b) was grossly negligent in the performance of any or all
material terms of his or her employment for reasons other
than the Employee's death, disability, retirement and the
Employee failed to cure any defect in performance within 10
days of receiving written notice regarding such defect;
(c) committed an act of gross misconduct in the performance
of his or her duties or is guilty of any conduct which, in
the reasonable opinion of the Committee, brings the
Participant, the Company or any Affiliate into serious
disrepute; or
(d) breached the terms of an employment agreement in effect
between the Participant and Employer.
<PAGE>
2.18 Valuation Date. Valuation Date means the last business day of each calendar
year and any other date that the Committee selects in its sole discretion for
the revaluation and adjustment of Accounts.
ARTICLE 3
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility. An Employee shall be eligible to participate in this Plan if he
or she is a member of a select group of management or highly compensated
employees who is approved for participation by the Committee.
3.2 Participation.
(a) Commencement of Participation. An Employee who has
satisfied the eligibility requirements of section 3.1 may
enroll in the Plan by making the elections described in this
Plan. This enrollment shall be effective as of the first day
of any Plan Year after the Employee satisfies these
eligibility requirements, provided that he or she is still
eligible to participate under section 3.1.
(b) Duration of Participation. A Participant shall continue
to be an active Participant until he or she ceases to meet
the eligibility requirements under section 3.1. Thereafter,
he or she shall be an inactive Participant and shall retain
all the rights described under this Plan, except the right to
elect any further deferrals of Bonus or Salary until he or
she again becomes an active Participant. A Participant who
has head his or her account balance transferred from any
Predecessor Plan shall not be eligible to make elective
deferrals unless he or she is otherwise eligible under
section 3.1.
ARTICLE 4
DEFERRAL ELECTIONS
4.1 Amount of Deferral. Prior to the beginning of each Plan Year, a Participant
may elect to defer up to --
(a) 50 percent (in increments of 1 percent) of the Salary
that would otherwise be payable to the Participant during the
Plan Year; and
(b) 100 percent (in increments of 1 percent) of the Bonus
that would otherwise be payable to the Participant during the
Plan Year.
Each deferral of Salary and/or Bonus shall be credited to the Participant's
Account as of the business day on which the cash would have otherwise been paid.
If the closing of the Merger occurs in 1999, the deferral election filed for
1999 shall terminate with respect to Salary payable after such date unless the
Company affirmatively elects to continue this Plan for new deferrals after such
date.
<PAGE>
4.2 Change or Revocation of Deferral. After the beginning of a Plan Year, a
Participant may not increase, decrease or revoke the amount of Salary or Bonus
deferred for that Plan Year under section 4.1.
ARTICLE 5
PARTICIPANTS' ACCOUNTS
5.1 Investment of Accounts. With respect to each deferral election a Participant
makes under Section 4.1, the Participant shall elect in writing to
hypothetically deem to have the deferrals made on his or her behalf invested in
any one or more of the Investment Funds in 1 percent increments. The account
value for each amount deferred shall be determined based on the Investment
Fund's value on the date the amount deferred would have otherwise been payable
to the Participant.
5.2 Investment Changes for Predecessor Plans. With respect to account balances
in each Predecessor Plan, if the valuation of any account is dependent upon the
book value or fair market value of MidAmerican Energy Holdings Company common
stock, or if earnings on an account are determined by the dividend rate on
MidAmerican Energy Holdings Company common stock (other than a rate that has
been fixed as of a certain date and is not subject to further change), each
Participant who has such an account balance shall file an election form with the
Committee prior to the closing date of the Merger, designating, pursuant to the
procedures in section 5.1, the Investment Funds in which such account is deemed
to be invested. To the extent the value of an account, as of the closing date of
the Merger, is based on the value of MidAmerican Energy Holdings Company common
stock, the value of each stock unit in any such account shall be deemed to be
$27.15, plus any dividend paid to shareholders of MidAmerican Energy Holdings
Company common stock through the closing date of the Merger. In any account
based on a fixed value with crediting of interest only, but which varies in the
interest rate credited from time to time, interest on the account shall be
credited through date of closing of the Merger. Amounts converted to the
Investment Funds as of the closing date of the Merger shall be converted based
on the Investment Fund benchmark values on the date of closing. As to any
Participant's account transferred from a Predecessor Plan with a fixed value and
fixed interest rate credited to the account (i.e. debentures under the Iowa
Resources Inc. Executive Deferred Compensation Plan), the Participant's account
balance shall continue to reflect such fixed value and shall continue to be
credited with the fixed interest rate, unless the Participant elects to have his
or her account value related to such fixed investment converted to one or more
of the Investment Funds pursuant to the procedure set forth above within the
time frame specified above.
<PAGE>
5.3 Contingency of Merger. In the event the Merger does not take place, then
with respect to amounts deferred for 1999, such amounts shall be reconverted, as
of January 1, 1999, to the forms of deemed investments as existed in the
MidAmerican Energy Company Executive Deferred Compensation Plan prior to the
establishment of this Plan, with each affected Participant filing an appropriate
election form as to the investment for the amounts deferred for 1999. In
addition, with respect to investment changes for Predecessor Plans as provided
in Section 5.2, in the event the Merger does not take place, the provisions of
Section 5.2 shall become null and void and the account balances transferred to
this Plan from the Predecessor Plans shall continue in the same form and deemed
investments as in the Predecessor Plans. However, all other provisions of this
Plan, including, but not limited to payment provisions in Article 6, shall apply
to such accounts.
5.4 Changes in Investments. A Participant may change the hypothetical investment
allocation in his or her account no more than once during any calendar quarter
by filing an appropriate form with the Committee (or its designated
administrative representative) specifying the change to be made. The change
shall be processed effectively as of the fifth (5th) business day following
receipt of the change request by the Committee (or its designated
representative).
5.5 Valuation of Accounts.
(a) Allocation of Gains and Losses. A Participant's Account
shall be adjusted as of each Valuation Date to reflect any
gains or losses that would have been credited or debited to
the Account if it had actually been invested in the manner
described in section 5.1. Accounts where an investment change
request has been received between these dates will be
credited or charged for any investment gains or losses since
the last Valuation Date through the effective date of the
investment change.
(b) Charges Against Account. Any payments made to a
Participant or Beneficiary under Article 6 shall be charged
against the Participant's Account.
(c) Annual Report to Participant. An annual report shall be
provided to each Participant showing the value of the account
balances as of the beginning and end of the year.
5.6 Financing. The benefits under this Plan shall be paid out of the general
assets of the Employer, except to the extent they are paid from the assets of a
grantor trust established by an Employer to pay these benefits.
<PAGE>
5.7 Unsecured Interest. No Participant shall have any interest whatsoever in any
specific asset of the Employer. To the extent that any person acquires a right
to receive payments under this Plan, this right shall be no greater than the
right of any unsecured general creditor of the Employer.
5.8 Nontransferability. In no event shall an Employer make any payments under
this Plan to any assignee or creditor of a Participant or Beneficiary. Prior to
the time of payment hereunder, no Participant or Beneficiary shall have any
right by way of anticipation or otherwise to assign or otherwise dispose of any
interest under this Plan, nor shall rights be assigned or transferred by
operation of law.
ARTICLE 6
PAYMENT OF ACCOUNTS
6.1 Payments to Participants.
(a) Retirees Receiving Payments Under Predecessor Plans.
Those Participants receiving annual payments under any
Predecessor Plan or Plans shall continue to be paid for the
remaining term as originally approved by the Committee.
(b) Participants Retiring Before January 1, 2001. With
respect to any Participant whose Retirement Date is after
December 31, 1998, but before January 1, 2001, the following
shall be applicable with respect to payment of benefits:
(1) At the election of the Committee, upon consultation with
the Participant, payment shall be made in a lump sum or in
annual installments. The Committee's decision shall be made
as soon as practical prior to or immediately following
Retirement Date. The Committee's decision shall also specify
the year of payment in the case of a lump sum payment or the
year of the first payment in the case of annual installments.
(2) If annual installments are selected, each annual
installment shall be not less than an amount equal to the
value of the account at the beginning of the Plan Year in
which distribution is to be made divided by the life
expectancy of the Participant at the beginning of such Plan
Year (or the joint life expectancy of the Participant and
spouse if the Participant is married). Each annual
installment payment shall be made within fifteen (15) days
following the first day of each Plan Year.
<PAGE>
(3) If an election is made to receive a lump sum payment,
payment shall be made within fifteen (15) days following the
first day of the Plan Year in which payment is to be made,
and the amount of the lump sum payment shall be equal to the
value of the account as of December 31 of the preceding Plan
Year.
(4) In the event of the death of a Participant occurring
either before the commencement of payment or before the full
balance of the Participant's account has been paid, the
unpaid balance of Deferred Compensation shall be paid in a
lump sum to the Participant's designated beneficiary or
estate. Payment shall be made within thirty (30) days
following the date of death.
(5) All payments shall be made in cash and no payments shall
be made prior to retirement.
(c) Participants Retiring After December 31, 2000. With
respect to any Participant whose Retirement Date is after
December 31, 2000, the following shall be applicable with
respect to payment of benefits:
(1) The Participant may file an election with the Committee
as to the method and timing of benefits at any time
(including during employment), but no later than 30 days
following his or her Retirement Date, specifying the method
(lump sum or substantially equal annual installments over a
period not exceeding the life expectancy of the Participant
or the joint life expectancy of the Participant and his or
her designated beneficiary) and the timing of payments
(specifying the Plan Year for receipt of lump sum or Plan
Year of first installment payment); provided however the lump
sum payment or the first installment payment cannot be any
later than the Plan Year following the year in which the
Participant turns age 70 1/2. An election may be changed at
any time prior to Retirement Date (subject to the rules
below) by filing a new election with the Committee.
(2) The first annual payment or the lump sum payment cannot
be any earlier than the January following the third
anniversary of the date of the Participant's most recent
election filed with the Committee.
<PAGE>
(3) If termination of employment does not occur until after
the date selected by the Participant for a lump sum payment
or the date of the first annual payment, payment will be
postponed until the January following termination of
employment.
(4) If a Participant has not filed an election as of thirty
(30) days following Retirement Date, payment will be made in
ten (10) annual installments beginning in the Plan Year
following the year in which the Participant reaches age
sixty-five (65), or in a lump sum in the Plan year following
age 65 if the account value is less than $100,000 as of his
or her Retirement Date.
(5) If annual installments are selected, each annual
installment shall be not less than an amount equal to the
value of the account at the beginning of the Plan Year in
which distribution is to be made divided by the life
expectancy of the Participant at the beginning of such Plan
Year (or the joint life expectancy of the Participant and
spouse if the Participant is married). Each annual
installment payment shall be made within fifteen (15) days
following the first day of each Plan Year.
(6) If an election is made to receive a lump sum payment,
payment shall be made within fifteen (15) days following the
first day of the Plan Year in which payment is to be made,
and the amount of the lump sum payment shall be equal to the
value of the account as of December 31 of the preceding Plan
Year.
(7) In the event of the death of a Participant occurring
either before the commencement of payment or before the full
balance of the Participant's account has been paid, the
unpaid balance of Deferred Compensation shall be paid in a
lump sum to the Participant's designated beneficiary or
estate. Payment shall be made within thirty (30) days
following the date of death.
(8) All payments shall be made in cash.
6.2 Payments After Termination of Employment but Prior to Retirement. No
payments shall be made after termination of employment but prior to the
Participant's Retirement Date except as follows:
(a) Pursuant to a valid election form filed with the
Committee under subsection 6.1(c)(1) above;
<PAGE>
(b) Pursuant to an unforeseen hardship as approved by the
Committee under the guidelines in section 6.3 below; or
(c) In the case of Termination for Cause payment shall be
made in a lump sum in January following termination of
employment.
6.3 In-Service Withdrawal.
(a) Generally, a Participant may not receive a distribution
from the Participant's Account prior to the applicable
distribution date under section 6.1. However, the Committee
may, in its sole and absolute discretion, allow a Participant
to withdraw all or part of his or her Account in the event of
an unforeseen financial hardship. The amount withdrawn may
not exceed the amount needed to satisfy the financial
hardship, less all amounts that are reasonably available from
other sources.
(b) For purposes of this section, a "financial hardship" is
an unforeseeable emergency resulting from a sudden and
unexpected illness of the Participant or a dependent, loss of
the Participant's property due to casualty, or other similar
circumstances arising from events that are beyond the
Participant's control.
6.4 Lump Sum Payment After Annual Installments Begin. Once annual payments begin
to a Participant, payments may not be accelerated except in the case of an
unforeseen financial hardship as approved by the Committee pursuant to the
guidelines in section 6.3 above.
ARTICLE 7
ADMINISTRATION
7.1 Administration. The Plan shall be administered by the Committee. A majority
of the members of the Committee at the time in office shall constitute a quorum
for the transaction of business. All resolutions and other actions taken by the
Committee at any meeting shall be by a majority vote of those present at the
meeting. Upon the unanimous concurrence in writing of all Committee members,
action of the Committee may be taken other than at a meeting.
The Committee shall have all powers necessary or appropriate to carry out the
provisions of the Plan. It may, from time to time, establish rules for the
administration of the Plan and the transaction of the Plan's business. The
Committee may designate one or more employees of the Company to carry out the
day to day administration of the Plan.
<PAGE>
The Committee shall have the exclusive right to make any finding of fact
necessary or appropriate for any purpose under the Plan including, but not
limited to, the determination of eligibility for and amount of any benefit.
The Committee shall have the exclusive right to interpret the terms and
provisions of the Plan and to determine any and all questions arising under the
Plan or in connection with its administration, including, without limitation,
the right to remedy or resolve possible ambiguities, inconsistencies, or
omissions by general rule or particular decision, all in its sole and absolute
discretion.
All findings of fact, determinations, interpretations and decisions of the
Committee shall be conclusive and binding upon all persons having or claiming to
have any interest or right under the Plan and shall be given the maximum
possible deference allowed by law.
7.2 Appeals from Denial of Claims. If any claim for benefits under the Plan is
wholly or partially denied, the claimant shall be given notice in writing of the
denial. This notice shall be in writing, within a reasonable period of time
after receipt of the claim by the Committee. This period shall not exceed 90
days after receipt of the claim, except that if special circumstances require an
extension of time, written notice of the extension shall be furnished to the
claimant and an additional 90 days will be considered reasonable.
This notice shall be written in a manner calculated to be understood by the
claimant and shall set forth the following information:
(a) the specific reasons for the denial;
(b) specific reference to the Plan provisions on which the
denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why this material or information is necessary;
(d) an explanation that a full and fair review by the
Committee of the decision denying the claim may be requested
by the claimant or an authorized representative by filing
with the Committee, within 60 days after the notice has been
received, a written request for the review; and
(e) if this request is so filed, an explanation that the
claimant or an authorized representative may review pertinent
documents and submit issues and comments in writing within
the same 60-day period specified in subsection (d).
<PAGE>
The decision of the Committee upon review shall be made promptly, and not later
than 60 days after the Committee's receipt of the request for review, unless
special circumstances require an extension of time for processing. In this case
the claimant shall be so notified, and a decision shall be rendered as soon as
possible, but not later than 120 days after receipt of the request for review.
If the claim is denied, wholly or in part, the claimant shall be given a copy of
the decision promptly. The decision shall be in writing, shall include specific
reasons for the denial, shall include specific references to the pertinent Plan
provisions on which the denial is based, and shall be written in a manner
calculated to be understood by the claimant.
7.3 Tax Withholding. The Employer or the trustee under any grantor trust
established to pay benefits may withhold from any payment under this Plan any
federal, state or local taxes required by law to be withheld with respect to the
payment and any sum the Employer or trustee may reasonably estimate as necessary
to cover any taxes for which they may be liable and that may be assessed with
regard to the payment. With respect to any FICA/Medicare taxes on deferred
amounts which may be due prior to payment of benefits hereunder, the Employer
may withhold the Participant's share of such taxes from other income due the
Participant by the Employer.
7.4 Expenses. All expenses incurred in the administration of the Plan shall be
paid by the Employers.
ARTICLE 8
ADOPTION OF THE PLAN BY AFFILIATE;
AMENDMENT AND TERMINATION OF THE PLAN
8.1 Adoption of the Plan by Affiliate. An Affiliate may adopt the Plan by
appropriate action of its board of directors or authorized officers or
representatives, subject to the approval of the Company's board of directors.
8.2 Amendment and Termination. The Company hereby reserves the right to amend,
modify or terminate the Plan at any time, and for any reason, by action of its
board of directors. However, no amendment or termination shall adversely affect
benefits accrued prior to the date of the amendment or termination.
ARTICLE 9
MISCELLANEOUS PROVISIONS
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9.1 No Contract of Employment. Nothing contained in the Plan shall be construed
to give any Participant the right to be retained in the service of an Employer
or to interfere with the right of an Employer to discharge a Participant at any
time.
9.2 Severability. If any provision of this Plan shall be held illegal or
invalid, the illegality or invalidity shall not affect its remaining parts. The
Plan shall be construed and enforced as if it did not contain the illegal or
invalid provision.
9.3 Successors. All obligations of the Company under the Plan shall be binding
upon and inure to the benefit of any successor to the Company, whether the
existence of such successor is the direct or indirect result of a merger or
reorganization involving the Company or the purchase or other acquisition, of
all or substantially all of the business or assets of the Company.
9.4 Applicable Law. Except to the extent preempted by applicable federal law,
this Plan shall be governed by and construed in accordance with the laws of the
State of Iowa.
IN WITNESS WHEREOF, MidAmerican Energy Company has caused this instrument to be
executed by its duly authorized officer effective as of the ___ day of
_________________, 1999.
MIDAMERICAN ENERGY COMPANY
By________________________
Its ______________________
Exhibit 10.63
MIDAMERICAN ENERGY COMPANY
COMBINED
MIDWEST RESOURCES/IOWA RESOURCES
RESTATED DEFERRED COMPENSATION PLAN
BOARD OF DIRECTORS
ARTICLE I
ESTABLISHMENT AND PURPOSE
1.1 Background of Plan. MidAmerican Energy Company presently maintains two
deferred compensation plans for prior members of the Boards of Directors of
Midwest Resources Inc. and Iowa Resources Inc. This restated Plan shall replace
those two plans if the Merger, as defined in Section 1.4 below closes in 1999,
and shall replace those plans as of the closing date of the Merger. This Plan
shall be maintained as an unfunded plan of deferred compensation for
Participants.
1.2 Purpose of Plan. The purpose of this Plan is to consolidate the Predecessor
Plans into one Plan if the Merger closes in 1999.
1.3 Applicability of Plan. The provisions of this Plan are applicable to
individuals who have account balances in the Predecessor Plans as of the closing
date of the Merger.
1.4 Merger of Predecessor Plans. For ease of administration, and in recognition
of the need to change earnings credit and method of valuation in the Predecessor
Plans in light of the anticipated acquisition of MidAmerican Energy Holdings
Company by CalEnergy Company, Inc. (through a merger of a subsidiary of
CalEnergy with and into MidAmerican Energy Holdings Company ("Merger")), the
accounts under the Predecessor Plans are hereby merged into the Plan, effective
as of the date of closing of the Merger.
ARTICLE 2
DEFINITIONS
Whenever used in this Plan, the following terms shall have the meanings set
forth below unless otherwise expressly provided. When the defined meaning is
intended, the term is capitalized. The definition of any term in the singular
shall also include the plural, whichever is appropriate in the context.
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2.1 Account. Account means the bookkeeping account maintained for each
Participant that represents the Participant's total interest under the Plan as
of any Valuation Date. It shall also consist of any accounts transferred from
Predecessor Plans. A Participant shall have a fully vested and nonforfeitable
interest at all times in his or her Account.
2.2 Beneficiary. Beneficiary means the person or persons designated by the
Participant to receive any benefits payable from the Participant's Account after
his or her death. Each Participant shall designate his or her Beneficiary (or
change this designation) at a time and in a manner specified by the Committee.
If no person is designated as a Beneficiary, if a designation is revoked, or if
no designated Beneficiary survives the Participant, the Beneficiary shall be the
Participant's estate.
2.3 Code. Code means the Internal Revenue Code of 1986, as amended, or as it may
be amended from time to time. A reference to a particular section of the Code
shall also include the regulations promulgated under such section.
2.4 Committee. Committee means the Compensation Committee established by the
Board of Directors of MidAmerican Energy Holdings Company.
2.5 Company. Company means MidAmerican Energy Company.
2.6 Investment Fund. Investment Fund means an investment benchmark or fund
designated by the Committee as an investment medium for the hypothetical
investment of a Participant's Account. There shall be a choice between the S&P
500 Stock Index Benchmark, the Lehman Brothers Aggregate Bond Index Benchmark
and the Stable Fund Fixed Rate Benchmark. The Committee shall have the
discretion to establish and terminate investment benchmarks or funds as it may
deem appropriate.
(a) S&P 500 Stock Index Benchmark means the S&P 500 Stock Index
Value as published by Standard and Poor as of the end of each
business day, including dividends reinvested.
(b) Lehman Brothers Aggregate Bond Index Benchmark means the
Aggregate Bond Index Value as published by Lehman Brothers as
of the end of each business day.
(c) Stable Fund Fixed Rate Benchmark shall be an account in which
the credits in the account do not fluctuate in value, and the
values in the account are credited with an annual interest
rate, compounded annually. The annual interest rate shall be
set for each calendar year based on the one-year U.S. Treasury
Bill rate on October 15 in the prior year (or the previous
business day if October 15 is not a business day), except that
for 1999, the rate shall be 4.3%.
<PAGE>
2.7 Participant. Participant means an individual with an account balance under
this Plan.
2.8 Plan. Subsequent to the closing date of the Merger, Plan means this
MidAmerican Energy Company Combined Midwest Resources/Iowa Resources Restated
Deferred Compensation Plan - Board of Directors, as it may be amended from time
to time.
2.9 Plan Year. Plan Year means the calendar year.
2.10 Predecessor Plan. The following plans shall be considered a Predecessor
Plan:
(a) Midwest Resources Inc./Iowa Resources Inc. and
Subsidiaries Board of Directors Deferred Compensation Plan
Revised and Amended
(b) Deferred Compensation Plan for Board of Directors of
Midwest Resources Inc. and Subsidiaries
2.11 Valuation Date. Valuation Date means the last business day of each calendar
year and any other date that the Committee selects in its sole discretion for
the revaluation and adjustment of Accounts.
ARTICLE 3
PARTICIPATION
3.1 Participation. A Participant with an Account under the Plan as of the
closing date of the Merger shall continue to be a Participant under the Plan
until all amounts have been distributed from his or her Account.
ARTICLE 4
DEFERRAL ELECTIONS
4.1 No Deferrals. No new deferrals are permitted under this Plan.
ARTICLE 5
PARTICIPANTS' ACCOUNTS
5.1 Investment Changes for Predecessor Plans. With respect to account balances
in a Predecessor Plan, if the valuation of any account is dependent upon the
book value or fair market value of MidAmerican Energy Holdings Company common
<PAGE>
stock, or if earnings on an account are determined by the dividend rate on
MidAmerican Energy Holdings Company common stock (other than a rate that has
been fixed as of a certain date and is not subject to further change), each
Participant who has such an account balance shall file an election form with the
Committee prior to, or within fifteen (15) days after, the closing date of the
Merger, designating, in 1 percent increments, the Investment Funds in which such
account are deemed to be invested. To the extent the value of an account, as of
the closing date of the Merger, is based on the value of MidAmerican Energy
Holdings Company common stock, the value of each stock unit in any such account
shall be deemed to be $27.15, plus any dividend paid to shareholders of
MidAmerican Energy Holdings Company common stock through the closing date of the
Merger. In any account based on a fixed value with crediting of interest only,
but which varies in the interest rate credited from time to time, interest on
the account shall be credited through date of closing of the Merger. Amounts
converted to the Investment Funds as of the closing date of the Merger shall be
converted based on the Investment Fund benchmark values on the date of closing.
As to any Participant's Account transferred from a Predecessor Plan with a fixed
value and fixed interest rate credited to the account (i.e. debentures under the
former Iowa Resources Inc. Board of Directors deferred compensation plan), the
Participant's Account shall continue to reflect such fixed value and shall
continue to be credited with the fixed interest rate, unless the Participant
elects to have his or her account value related to such fixed investment
converted to one or more of the Investment Funds pursuant to the procedure set
forth above within the time frame specified above.
5.2 Changes in Investments. A Participant may change the hypothetical investment
allocation in his or her account no more than once during any calendar quarter
by filing an appropriate form with the Committee (or its designated
administrative representative) specifying the change to be made. The change
shall be processed effective as of the fifth (5th) business day following
receipt of the change request by the Committee (or its designated
representative).
5.3 Valuation of Accounts.
(a) Allocation of Gains and Losses. A Participant's Account
shall be adjusted as of each Valuation Date to reflect any
gains or losses that would have been credited or debited to
the Account if it had actually been invested in the manner
described in section 5.1. Accounts where an investment change
request has been received between these dates will be
credited or charged for any investment gains or losses since
the last Valuation Date through the effective date of the
investment change.
<PAGE>
(b) Charges Against Account. Any payments made to a
Participant or Beneficiary under Article 6 shall be charged
against the Participant's Account.
(c) Annual Report to Participants. An annual report shall be
provided to each Participant showing the value of the account
balance as of the beginning and end of the year.
5.4 Financing. The benefits under this Plan shall be paid out of the general
assets of the Company, except to the extent they are paid from the assets of a
grantor trust established by the Company to pay these benefits.
5.5 Unsecured Interest. No Participant shall have any interest whatsoever in any
specific asset of the Company. To the extent that any person acquires a right to
receive payments under this Plan, this right shall be no greater than the right
of any unsecured general creditor of the Company.
5.6 Nontransferability. In no event shall the Company make any payments under
this Plan to any assignee or creditor of a Participant or Beneficiary. Prior to
the time of payment hereunder, no Participant or Beneficiary shall have any
right by way of anticipation or otherwise to assign or otherwise dispose of any
interest under this Plan, nor shall rights be assigned or transferred by
operation of law.
ARTICLE 6
PAYMENT OF ACCOUNTS
6.1 Conditions on Right to Receive Payment. A Participant shall not be entitled
to payment of any deferred compensation from his or her account until the time
elected by the Participant as set forth on the written deferral election form
previously filed with the Corporate Secretary of the Company under the
Predecessor Plan, or until his or her death or permanent disability, whichever
occurs first. An election shall not be changed except by approval of the Board
of Directors of the Company. If annual installments were selected, each annual
installment shall not be less than an amount equal to the value of the account
at the beginning of the Plan Year in which distribution is to be made divided by
the life expectancy of the Participant at the beginning of such Plan Year (or
the joint life expectancy of the Participant and spouse if the Participant is
married). Each annual installment shall be made within fifteen (15) days
following the first day of each Plan Year. If an election was made to receive a
lump sum payment, payment shall be made within fifteen (15) days following the
first day of the Plan Year in which payment is to be made, and the amount of the
lump sum payment shall be equal to the value of the account as of December 31 of
the preceding Plan Year. Payment of a lump sum amount or any annual installment
shall be made in cash.
<PAGE>
6.2 Change in Election Under Predecessor Plan. Except as provided below, with
respect to elections filed for deferred amounts under a Predecessor Plan, such
election as to method and timing of payment shall continue to be applicable to
the accounts transferred from a Predecessor Plan. A Participant may file a
revised election with respect to the account transferred from a Predecessor
Plan. The revised election form shall specify the new timing and method of
payout (either lump sum or annual installments). If the new election serves to
accelerate the payout of a lump sum or to elect a lump sum payment where annual
installments had been previously elected, and if the new lump sum election is
for payment to occur within three years of the date of closing of the Merger,
the value of the account shall be reduced by 6% as of the new date elected for
payout. If the new election form does not accelerate payments to within three
years following the date of closing of the Merger, no reduction shall be made in
the value of the account to be paid. A change may be made with respect to
revising the timing of payout of substantially equal annual installments as long
as the final annual payment does not occur any earlier than January 1, 2002. Any
new elections as to timing or method of payout must be made within fifteen (15)
days following the closing date of the Merger.
6.3 Payment in the Event of Death. In the event of the death of a Participant
occurring either before the commencement of payment or before the full balance
of the Participant's account has been paid, the unpaid balance in the Account
shall be paid in a lump sum to the Participant's designated beneficiary or
estate, payment shall be made within thirty (30) days following the date of
death. The value of the Account shall be based upon the value of the Investment
Funds in his or her account on the date of death (or on the preceding business
day, if date of death is not a business day).
ARTICLE 7
GENERAL PROVISIONS
7.1 General Provisions.
(a) Unfunded Plan.
<PAGE>
(i) This Plan is intended to be an unfunded plan maintained
primarily to provide benefits to a "select group of
management or highly compensated employees" within the
meaning of Section 201, 301 and 401 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
and as amended from time to time or any successor thereto,
and, therefore, is further intended to be exempt from the
provisions of Parts 2, 3 and 4 of Title I of ERISA.
Accordingly, the Compensation Committee may terminate the
Plan for any or all Participants in order to achieve and
maintain this intended result, provided that previously
accrued benefits hereunder shall not be reduced or otherwise
adversely affected without the written consent of the
affected Participants.
(ii) The obligations hereunder shall at all times be
unsecured and payments with respect to any benefits hereunder
shall be paid out of the general operating revenue of the
Company. A trust may be established to provide for the
payment of benefits to Participants hereunder as long as the
assets of such trust are subject to the claims of general
creditors of the Company with respect to the deferrals (and
earnings thereon, if applicable).
(b) Withholding. The Company shall have the right to require
Participants to remit to the Company an amount sufficient to satisfy
Federal, state and local tax withholding requirements, or to deduct
from any or all payments made pursuant to the Plan amounts sufficient
to satisfy such withholding tax requirements.
(c) Costs of the Plan. All costs of implementing and administering the
Plan shall be borne by the Company.
(d) Non-Alienation of Benefits. No right or benefit under this Plan
shall be subject to anticipation, alienation, sale, assignment, pledge,
encumbrance, or charge, and any attempt to anticipate, alienate, sell,
assign, pledge, encumber, or charge the same shall be void. No right or
benefit hereunder shall in any manner be liable for or subject to the
debts, contracts, liabilities, or claims of the person entitled to such
benefit. If any Participant or designated beneficiary hereunder should
become bankrupt or attempt to anticipate, alienate, sell, assign,
pledge, encumber, or charge any right or benefit hereunder, then such
right or benefit shall, in the discretion of the Compensation
Committee, cease, and in such event, the Company may hold or apply the
same or any part thereof for the benefit of the Participant or the
designated beneficiary, his or her spouse, children, or other
dependents, or any of them, in such manner and in such proportion as
the Compensation Committee may deem proper.
<PAGE>
(e) Successors. All obligations of the Company under the Plan shall be
binding upon and inure to the benefit of any successor to the Company,
whether the existence of such successor is the direct or indirect
result of a merger or reorganization involving the Company or the
purchase or other acquisition, of all or substantially all of the
business or assets of the Company.
(f) Amendment or Termination of Plan.
(i) The Board of Directors of the Company reserves the right at
any time and from time to time to amend, suspend or terminate
the Plan without the consent of any Participant or other
person claiming a right under the Plan.
(ii) Any amendment or termination of this Plan shall not adversely
affect the rights of Participants or designated beneficiaries
to payments of amounts credited to Participants in their
Account at the time of such amendment or termination.
(g) Separability. If any term or provision of this Plan as presently in
effect or as amended from time to time, or the application thereof to
any payments or circumstances, shall to any extent be invalid or
unenforceable, the remainder of the Plan, and the application of such
term or provision to payments or circumstances other than those as to
which it is invalid or unenforceable, shall not be affected thereby,
and each term or provision of the Plan shall be valid and enforced to
the fullest extent permitted by law.
(h) Construction. The provisions of this Plan shall be construed,
administered and enforced according to the laws of the State of Iowa.
(i) Titles. The titles of the Articles and Sections herein are included
for convenience of reference only and shall not be construed as part of
this Plan, or have any effect upon the meaning of the provisions
hereof.
(j) Impossibility of Action. In case it becomes impossible for the
Company to perform any act under this Plan, that act shall be preformed
which in the judgment of the Company will most nearly carry out the
intent and purposes of this Plan. All parties concerned shall be bound
by any such acts performed under such conditions.
<PAGE>
(k) Authorized Officers. Whenever the Company under the terms of the
Plan is permitted and required to perform any act or matter or thing,
it shall be done and performed by a duly authorized officer of the
Company.
