SUBSCRIPTION AGREEMENT
MidAmerican Capital Trust II
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 II (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.
Certain affiliates of the Company have entered into that
certain Purchase Agreement dated as of March 7, 2002 (the "Williams Purchase
Agreement") with The Williams Companies, Inc., a Delaware corporation
("Williams"), and certain entities affiliated with Williams providing for the
purchase of 100% of the partnership interests in Kern River Gas Transmission
Company, a Texas general partnership. The purchase and sale of the partnership
interests contemplated under the Williams Purchase Agreement is referred to
herein as the "Transaction."
The undersigned hereby irrevocably agrees with, and represents
and warrants to and for the benefit of, the Trust, the Company and the
shareholders of the Company, as follows:
1. Subscription.
(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 Closing Date (as defined in Section 5 below):
12,920,000 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
Closing Date and in the form attached as Schedule I hereto (the "Declaration of
Trust"), for an aggregate purchase price of $323,000,000.
(b) 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 Agreement. The Company has entered into a subscription
agreement with the undersigned (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 the Company's Zero Coupon
Convertible Preferred Stock (the "Preferred Stock"). The Berkshire Subscription
Agreement is a separate and several agreement, and the sale of the Preferred
Stock to the undersigned under the Berkshire Subscription Agreement is to be a
separate and several sale.
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 Williams Purchase Agreement
or in connection with its organization, on the 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 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 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. 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, to be dated as of the Closing Date, 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.
(e) Use of Proceeds. The Trust will use all of the proceeds from the sale of the
Trust Securities hereby to purchase a series of the Company's 11% Junior
Subordinated Deferrable Interest Debentures, which shall require that, if the
Transaction is consummated by June 15, 2002, the Company will cause the proceeds
of such debenture issuance to be applied toward funding the Transaction.
4. Representations and Warranties of the Undersigned. The undersigned hereby
represents and warrants to the Trust that:
(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 Williams Purchase Agreement would be subject to regulation as a
registered holding company under the Public Utility Holding Company Act of 1935,
as amended. 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.
(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 Williams Purchase 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 Williams Purchase 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 "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.
5. Closing. The closing (the "Closing") of the purchase and sale of the Trust
Securities pursuant to this Agreement shall be held on March 12, 2002 (such
date, the "Closing Date").
6. Conditions to Closing. (a) The undersigned's obligation to purchase the
Trust Securities under this Agreement at the Closing is subject to the fulfill-
ment 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.
(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.
(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.
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 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 contemplated by the Williams Purchase 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.
(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 or any 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.
10. Termination.
(a) This Agreement may be terminated, and the transactions contemplated hereby
may be abandoned at any time before the Closing (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 contemplated by this Agreement, upon notification of the
non-terminating party by the terminating party.
(b) This Agreement shall terminate prior to the Closing Date, with no further
action being required on the part of either party hereto, automatically, upon
any termination of the Williams Purchase Agreement in accordance with its terms
by the Company.
(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 or the Company (or any of
their respective shareholders, 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
address 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 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 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.
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement on this 12th day of March, 2002.
BERKSHIRE HATHAWAY INC. 1440 Kiewit Plaza
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Mailing Address
By: /s/ Marc D. Hamburg Omaha NE 68131
------------------------ -------------------------
Name: Marc D. Hamburg City State Zip Code
Title: Vice President
47-0813844
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Tax Identification Number
(402) 346-3375
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Facsimile Number
SUBSCRIPTION ACCEPTED AS OF THE ABOVE DATE
MIDAMERICAN CAPITAL TRUST II
By: /s/ David L. Sokol
---------------------------
Name: David L. Sokol
Title: Regular Trustee
By: /s/ Gregory E. Abel
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Name: Gregory E. Abel
Title: Regular Trustee