SUBSCRIPTION AGREEMENT
MidAmerican Capital Trust III
c/o MidAmerican Energy Holdings Company
000 Xxxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Attn: Xxxxxxx X. Xxxx
Ladies and Gentlemen:
The undersigned is executing this Agreement in connection with
its subscription for Trust Securities (as defined below) of MidAmerican Capital
Trust III (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.
The Company has entered into that certain Purchase Agreement
dated as of July 28, 2002 (the "Dynegy Purchase Agreement") with Dynegy, Inc.,
an Illinois corporation ("Dynegy"), and certain entities affiliated with Dynegy
providing for the purchase of 100% of the outstanding common stock and 100% of
the outstanding Series A Preferred Stock in Northern Natural Gas Corporation, a
Delaware corporation. The purchase and sale of the stock interests contemplated
under the Dynegy 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.
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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 Closing Date (as defined in Section 5
below): 38,000,000 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 $950,000,000.
(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. [Intentionally omitted.]
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 Dynegy 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
(except as otherwise obtained) 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 the Company will cause the proceeds of
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such debenture issuance to be applied toward funding the Transaction, related
fees and expenses and related capital expenditures.
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 Dynegy 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
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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 Dynegy 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 Dynegy 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
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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 Xxxxx 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.
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5. Closing. The closing (the "Closing") of the purchase and sale
of the Trust Securities pursuant to this Agreement shall be held on the day of
the closing of the Transaction (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 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.
(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, Series A, 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
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third parties required of the Trust and the undersigned to consummate the
transactions contemplated hereby and by the Dynegy 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
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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 Dynegy 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 000 Xxxxx Xxxxxx,
Xxx Xxxxxx, Xxxx 00000, Attn: President, Telecopy: (000) 000-0000, 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
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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.
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IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement on this 16 day of August 2002.
BERKSHIRE HATHAWAY INC. 0000 Xxxxxx Xxxxx
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Mailing Address
By: /s/ Xxxx X. Hamburg Xxxxx XX 00000
-------------------- ---------------------------------------
Name: Xxxx X. Hamburg City State Zip Code
Title: Vice President
00-0000000
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Tax Identification Number
(000) 000-0000
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Facsimile Number
SUBSCRIPTION ACCEPTED AS OF THE ABOVE DATE
MIDAMERICAN CAPITAL TRUST III
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Regular Trustee
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Regular Trustee
