MIDAMERICAN ENERGY HOLDINGS COMPANY
RESTATED DEFERRED COMPENSATION PLAN
BOARD OF DIRECTORS
ARTICLE I
ESTABLISHMENT AND PURPOSE
1.1 BACKGROUND OF PLAN. MidAmerican Energy Holdings Company presently
maintains a deferred compensation plan for its Board of Directors.
This restated Plan shall replace that Plan if the Merger, as defined in Section
1.4 below closes in 1999, and shall replace that Plan as of the closing date of
the Merger.
The Plan shall be maintained as an unfunded plan of deferred compensation for
its Board of Directors.
1.2 PURPOSE OF PLAN. The purpose of this Plan is to provide the Company's
Board of Directors with an additional way to defer portions of their Board of
Directors fees.
1.3 APPLICABILITY OF PLAN. The provisions of this Plan are applicable to
members of the Company's Board of Directors who serve on the Board 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. This Plan shall not accept any deferrals with respect to any Director
fees payable after 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 Plan 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 Plan 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.
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 the Company.
2.5 COMPANY. Company means MidAmerican Energy Holdings Company.
2.6 DIRECTOR. Director means any person serving as a member of the Board of
Directors of the Company.
2.7 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
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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%.
2.8 PARTICIPANT. Participant means a Director who has elected to participate
in the Plan. It also means any person with an account balance under this Plan.
2.9 PLAN. Subsequent to the closing date of the Merger, Plan means this
MidAmerican Energy Holdings Company Restated Deferred Compensation Plan - Board
of Directors, as it may be amended from time to time. Prior to the closing date
of the Merger, Plan means the MidAmerican Energy Holdings Company Deferred
Compensation Plan - Board of Directors in existence prior to this restated Plan.
2.10 PLAN YEAR. Plan Year means the calendar year.
2.11 PREDECESSOR PLAN. The following plan shall be considered a Predecessor
Plan:
(a) MidAmerican Energy Holdings Company Deferred Compensation Plan -
Board of Directors
2.12 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 Plan 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 AFTER MERGER. Following the closing date of the Merger, no
additional deferrals shall be made or credited under this Plan with respect to
any Director fees payable after such date except for Director fees earned for
services rendered before such date.
ARTICLE 5
PARTICIPANTS' ACCOUNTS
5.1 INVESTMENT OF 1999 DEFERRALS. With respect to each deferral election a
Participant made under this Plan for 1999 prior to the closing date of the
Merger, the Participant shall elect in writing,
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prior to the closing date of the Merger, 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 paid. This investment election
shall supersede and replace the investment election made by the Participant with
respect to amounts deferred for 1999 under the Plan prior to the closing date of
the Merger.
5.2 INVESTMENT CHANGES FOR PREDECESSOR PLANS. With respect to account balances
in the 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, 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,
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. 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.
5.3 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 within five (5) business days of receipt of the change
request by the Committee.
5.4 VALUATION OF ACCOUNTS.
(a) ALLOCATION OF EARNINGS 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.
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(b) CHARGES AGAINST ACCOUNT. Any payments made to a Participant or
Beneficiary under Article 6 shall be charged against the
Participant's Account.
5.5 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.
5.6 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.
5.7 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 filed with the Corporate Secretary of the Company, or until his or
her death or permanent disability, whichever occurs first. The election form
shall state the date the payment shall commence and the period over which
payment shall be made. The Participant may elect to receive deferred
compensation and accumulated earnings thereon in his or her Account either in a
lump sum payment or in annual installments. Once an election is filed, it shall
not be changed except by approval of the Board of Directors of the Company. If
annual installments are 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 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.
Payment of a lump sum amount or any annual installment shall be made in cash.
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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.
(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
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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.
(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
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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 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.
(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.
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