EQUITY COMMITMENT AGREEMENT
EXHIBIT
10.72
Execution
Copy
EQUITY
COMMITMENT AGREEMENT (“Agreement”), dated as of March 1, 2006, between
BERKSHIRE HATHAWAY INC., a corporation duly organized and validly existing
under
the laws of the State of Delaware (“Berkshire”),
and
MIDAMERICAN ENERGY HOLDINGS COMPANY, a corporation duly organized and validly
existing under the laws of the State of Iowa (“MEHC”).
RECITALS
WHEREAS,
it is necessary from time to time for MEHC to fund the capital requirements
of
its various subsidiaries; and
WHEREAS,
Berkshire, as the owner of certain of the equity interests in MEHC, anticipates
that it will benefit from MEHC’s funding of such capital requirements;
and
WHEREAS,
Berkshire desires to provide for equity contributions to MEHC for the express
purpose of funding such capital requirements;
AGREEMENT
NOW
THEREFORE, in consideration of the foregoing recitals and the covenants and
agreements as hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each of the parties hereto hereby agrees as follows:
Section
1. Definitions.
The
following terms shall have the following meanings when used in this
Agreement:
“Common
Stock Valuation”
means
the per share value of MEHC’s common stock on a given date, as mutually agreed
to by MEHC and the Equity Contributor, or if MEHC and the Equity Contributor
cannot agree on such per share value, the amount determined pursuant to the
appraisal procedure specified in Section
2(b).
“Equity
Contribution”
means
a
capital contribution to MEHC required to be made, or caused to be made, by
Berkshire in accordance with Section
2
hereof.
“Equity
Contributor”
means
Berkshire and any successor and assign as permitted by this
Agreement.
“Equity
Requisition Certificate”
means
a
certificate substantially in the form of Exhibit
A
hereto.
“Equivalent
Common Shares”
means,
with respect to any given Equity Contribution, the closest whole number of
duly
authorized, validly issued, fully paid and non-assessable shares of MEHC’s
common stock calculated by dividing the amount of such Equity Contribution
by
the Common Stock Valuation on the date of such Equity Contribution.
“Maximum
Equity Amount”
means
$3,500,000,000.
Section
2. Equity
Contributions.
(a)
From and after the date hereof until February 28, 2011 (the “Termination Date”),
the Equity Contributor shall contribute, or cause to be contributed, to MEHC
from time to time, on or prior to the date specified in the Equity Requisition
Certificate referred to below, any Equity Contribution (in an amount equal
to
$250,000,000 or any integral multiple thereof) requested by MEHC in an Equity
Requisition Certificate duly authorized by the MEHC Board of Directors and
received by the Equity Contributor at least 180 calendar days prior to such
date; provided,
however,
that
such Equity Contribution, together with the aggregate amount of all previous
Equity Contributions made by Berkshire and other MEHC equity holders pursuant
to
this Section
2
shall
not exceed the Maximum Equity Amount. Equity Contributor shall not be required
to contribute, or cause to be contributed, any Equity Contribution unless Equity
Contributor shall have received and not previously satisfied an appropriately
completed Equity Requisition Certificate for the amount of such contribution
from MEHC at least 180 calendar days prior to the date on which such Equity
Contribution is to be made. MEHC shall evidence each Equity Contribution by
issuing in the name of the Equity Contributor or its designee the Equivalent
Common Shares associated with such Equity Contribution and any such Equity
Contribution shall be made simultaneously with and conditioned upon issuance
to
the Equity Contributor of the Equivalent Common Shares.
(b) In
the
event that MEHC and the Equity Contributor cannot agree on the Common Stock
Valuation associated with any given Equity Contribution, then the Common Stock
Valuation shall be the fair market value of a share of MEHC’s common stock
assuming MEHC is valued on a going-concern basis as though it were a publicly
traded company and without a controlling shareholder and without attributing
any
change of control premium to the sale of such share, and taking into account
all
aspects of MEHC’s capital structure including all outstanding options,
determined as follows:
(i)
As
soon as reasonably practicable, but in any event within fifteen (15) days,
following the delivery of an Equity Requisition Certificate, MEHC shall prepare
and deliver to Berkshire a statement setting forth the good faith calculation
of
the Common Stock Valuation as of the date of the Equity Requisition Certificate,
together with detail reasonably sufficient for Berkshire to evaluate the
accuracy of such calculation (the “Valuation Statement”).
(ii)
Unless Berkshire, within fifteen (15) days after receipt of the Valuation
Statement, delivers to MEHC a notice (the “Dispute Notice”) objecting in good
faith to the Valuation Statement, the Valuation Statement shall be deemed to
be
final, and the Common Stock Valuation set forth therein shall be deemed to
be
the “Final Common Stock Valuation”.
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(iii)
If
Berkshire delivers a Dispute Notice and if MEHC and Berkshire are unable to
agree upon a Final Common Stock Valuation within thirty (30) days of the date
of
the Dispute Notice, then either Berkshire or MEHC may elect to submit the
calculation of the Common Stock Valuation to an independent appraiser who shall
be a member of a reputable valuation firm or investment bank which is designated
jointly by Berkshire and MEHC. Such appraiser shall determine the Common Stock
Valuation at the date of the Equity Requisition Certificate, and such Common
Stock Valuation shall be deemed to be the Final Common Stock Valuation with
respect to such Equity Requisition Certificate.
(c) Submission
of an Equity Requisition Certificate shall be at MEHC’s discretion and this
Agreement does not create any obligation requiring MEHC to request an Equity
Contribution. MEHC shall use its reasonable best efforts to fund the obligations
of MEHC and its subsidiaries and minimize or avoid requests for an Equity
Contribution.
(d) Contemporaneous
with the delivery of any Equity Requisition Certificate to Berkshire under
this
Agreement, MEHC shall also deliver a copy of such Equity Requisition Certificate
to the then current holders of record of each share of MEHC’s common stock.
Within one (1) business day of the determination of the Common Stock Valuation
associated with such Equity Requisition Certificate, MEHC shall also send a
notice thereof to each such holder (a “Common Stock Valuation Notice”). If any
such holder sends a written notice to MEHC and Berkshire within thirty (30)
calendar days of the date of such Common Stock Valuation Notice (or such lesser
number of days as may be remaining prior to the date specified in the Equity
Requisition Certificate) of such holder’s irrevocable commitment to participate
in such Equity Contribution, then Berkshire’s portion of the Equity Contribution
shall be reduced by an amount equal to the product of (i) the Equity
Contribution and (ii) the ratio of (A) the aggregate number of shares of MEHC’s
common stock then held by such holder determined on a diluted basis over (B)
the
total number of shares of MEHC’s common stock determined on a diluted basis (a
“Proportionate Reduction”). MEHC and Berkshire hereby agree to permit such
holder to participate in the Equity Contribution in an amount equal to the
Proportionate Reduction and receive the Equivalent Common Shares associated
therewith. If any such holder fails to timely fund such irrevocable commitment,
Berkshire shall provide such portion of the Equity Contribution and the
applicable Equivalent Common Shares shall be issued to Berkshire, without
prejudice to MEHC’s rights to seek damages for breach of any holder’s
irrevocable commitment.
Section
3. Use
of
Equity Contribution.
MEHC
shall use the proceeds of an Equity Contribution only for the purpose of (a)
paying when due MEHC debt obligations and (b) funding the general corporate
purposes and capital requirements of MEHC’s regulated subsidiaries.
Section
4. Obligations
Unconditional; Waivers.
(a) The
obligations of the Equity Contributor under Section
2
shall be
absolute, unconditional and irrevocable under any and all circumstances, and
shall be performed (to the fullest extent permitted by applicable law) by the
Equity Contributor regardless of:
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(i)
the
existence of any indebtedness owing by MEHC or any affiliate thereof to the
Equity Contributor or of any setoff, abatement, counterclaim, recoupment,
defense or other right or claim which the Equity Contributor may have against
MEHC, any affiliate thereof or any other person; or
(ii)
the
availability of other possible funding sources to MEHC or any of its
subsidiaries.
(b) The
obligation of the Equity Contributor to make or cause to be made an Equity
Contribution as provided in Section
2
shall
not be affected by (to the fullest extent permitted by applicable law) any
abatement, reduction, limitation, impairment, termination, setoff, defense,
counterclaim or recoupment whatsoever or any right to any thereof, and shall
not
be released, discharged or in any way affected by any reorganization,
arrangement, compromise or plan affecting MEHC or any affiliate
thereof.
(c) In
respect of the obligation of the Equity Contributor to make or cause to be
made
Equity Contributions as provided in Section
2,
the
Equity Contributor hereby unconditionally (to the fullest extent permitted
by
applicable law):
(i)
waives notice of acceptance hereof and of any defaults by MEHC or any affiliate
thereof in the payment of any amounts due, protest, presentment, or any other
act or omission or thing or delay to do any other act or thing which might
in
any manner or to any extent vary the risk of such Equity Contributor, but does
not waive the conditions set forth in Section 2(a);
(ii)
agrees that this Agreement shall remain in full force and effect without regard
to, and shall not be affected or impaired by, any invalidity, irregularity
or
unenforceability in whole or in part of any other document;
(iii)
agrees that no failure or delay on the part of MEHC or any other person in
exercising any right, power or privilege hereunder or under any other document
and no course of dealing between such Equity Contributor on the one hand, and
MEHC, any affiliate thereof on the other hand, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder;
(iv)
agrees that the rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies which MEHC would otherwise have;
and
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(v)
agrees that this Agreement shall be discharged only by complete performance
and
payment in full of the obligations contained herein or by occurrence of the
Termination Date (so long as no Equity Requisition Certificate remains
outstanding and unsatisfied) and that the Equity Contributor shall have no
right
to withhold or set-off against any payments due for any reason.
Section
5. Representations
and Warranties:
Berkshire hereby represents and warrants that:
(a) it
is a
corporation duly formed, validly existing and in good standing under the laws
of
the State of Delaware, and it is duly qualified and authorized to do business
and is in good standing as a foreign corporation in each jurisdiction in which
it owns or leases real property or in which the nature of its business requires
it to be so qualified, except where the failure to be so qualified and
authorized to do business and in good standing would not reasonably be expected
to materially adversely affect its ability to perform its obligations under
this
Agreement;
(b) it
has
all necessary power and authority to execute and deliver this Agreement and
to
perform all of its obligations hereunder, and its execution, delivery and
performance of this Agreement have been duly authorized by all necessary action
on its part and do not require any approval or consent of any holder (or any
trustee for or agent of any holder) of any indebtedness or other obligation
of
it or any other person or entity, other than approvals or consents which have
previously been obtained and which are in full force and effect;
(c) it
has
duly executed and delivered this Agreement and this Agreement constitutes the
valid and binding obligation of it enforceable against it in accordance with
its
terms, except as enforceability may be limited by general equitable principles
and applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally;
(d) the
execution and delivery by it of the Agreement and the performance by it of
its
obligations hereunder do not (i) conflict with its certificate of incorporation
or bylaws, (ii) conflict with or result in any breach of any of the terms,
covenants, conditions or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, agreement or other material instrument
to
which it is a party or by which it or any of its material properties or assets
is bound, or (iii) conflict with any applicable laws, or any order, writ,
injunction or decree of any court or governmental authority binding on it or
its
material properties or assets, except in the case of clauses (ii) and (iii)
any
such conflict, breach or default which would not reasonably be expected to
materially adversely affect its ability to perform its obligations under this
Agreement;
(e) no
governmental approvals or other consents or approvals are required in connection
with the execution, delivery and performance by it of this Agreement, other
than
governmental approvals which the failure to obtain would not reasonably be
expected to materially adversely affect its ability to perform under this
Agreement;
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(f) it
is in
compliance with all applicable laws except to the extent that the failure to
comply therewith would not reasonably be expected to materially adversely affect
its ability to perform its obligations under this Agreement; and
(g) no
litigation, investigation or proceeding of or before any arbitrator or
governmental authority is pending or, to the best of its knowledge, threatened
against it or any of its properties, rights, revenues or assets which would
reasonably be expected to materially adversely affect its ability to perform
its
obligations under this Agreement.
Section
6. Expenses.
Each of
MEHC and Equity Contributor hereby agrees to pay all of its respective costs,
including reasonable attorneys' fees, incurred with respect to the enforcement
of the provisions of this Agreement.
Section
7. Miscellaneous.
a) Notices.
All
notices to be given hereunder shall be in writing (including by telecopy),
and
shall be deemed to have been duly given or made when delivered by hand, or,
in
the case of telecopy notice, when confirmation is received, at the following
addresses:
Berkshire:
|
Berkshire
Hathaway Inc.
0000
Xxxxxx Xxxxx
Xxxxx,
Xxxxxxxx 00000
|
Telephone:
( 000) 000-0000
Fax:
(000) 000-0000
Attn: Chief
Financial Officer
|
|
MEHC:
|
MidAmerican
Energy Holdings Company
000
Xxxxx 00xx
Xxxxxx
Xxxxx,
Xxxxxxxx 00000
|
Telephone:
(000) 000-0000
Fax:
(000) 000-0000
Attn: General
Counsel
|
Each
of
Berkshire’s and MEHC’s address for notice hereunder may be changed at any time
upon notice to the other party given in accordance with this clause
(a).
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b) Counterparts.
This
Agreement may be executed in separate counterparts, each of which when so
executed and delivered shall be an original but all such counterparts shall
constitute one and the same instrument.
c) Amendments,
etc.; Termination.
No
termination of, or amendment or waiver of any provision of, this Agreement,
or
consent to any departure by Berkshire therefrom, shall be effective unless
the
same shall be in writing and signed by each of the parties hereto. Any such
waiver or consent shall be effective only in the specific instance and for
the
specific purpose for which given. Notwithstanding the foregoing, (i) this
Agreement will automatically terminate on the Termination Date; provided,
however,
that
notwithstanding such termination, Equity Contributor shall have the obligation
as set forth in Section 2 to make any Equity Contribution validly requested
by
MEHC pursuant to this Agreement prior to the Termination Date and (ii) the
provisions of Sections 4, 6 and 7 shall survive such termination.
d) Successors
and Assigns.
This
Agreement shall not be assignable by either Equity Contributor or MEHC without
the prior written consent of the other party.
e) No
Third Party Beneficiaries.
Except
as provided in clause (d) of this Section
7,
nothing
herein contained shall confer any right upon any person other than the parties
hereto.
f) Headings
Descriptive.
The
headings of the several sections of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement.
g) Survival.
All
agreements, statements, representations and warranties made by the Equity
Contributor herein or in any certificate or other instrument delivered by the
Equity Contributor or on its behalf under this Agreement shall survive the
execution and delivery of this Agreement until the satisfaction in full by
the
Equity Contributor of its obligations hereunder.
h) Consent
to Jurisdiction.
Any
legal action or proceeding by or against the Equity Contributor with respect
to
or arising out of this Agreement may be brought in or removed to the courts
of
the State of Nebraska, or of the United States of America located in the State
of Nebraska. By execution and delivery of this Agreement, each Equity
Contributor accepts, for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts for legal proceedings
arising out of or in connection with this Agreement. The Equity Contributor
hereby waives any right to stay or dismiss any action or proceeding under or
in
connection with this Agreement brought before the foregoing courts on the basis
of forum
non-conveniens
or
improper venue.
i) Waiver
of Jury Trial.
EACH OF
THE EQUITY CONTRIBUTOR AND MEHC HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT,
OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF THE OTHER PARTIES HERETO.
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j) Reinstatement.
This
Agreement shall continue to be effective or be reinstated, as the case may
be,
if at any time any amount received by MEHC hereunder or pursuant hereto is
rescinded and repaid to the Equity Contributor or is otherwise restored or
returned to the Equity Contributor by MEHC upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Equity Contributor, MEHC
or
any affiliate thereof or upon the appointment of any intervenor or conservator
of, or trustee or similar official for, the Equity Contributor, MEHC or any
affiliate thereof, or any substantial part of the Equity Contributor's, MEHC's
or any such affiliate's assets, or upon the entry of an order by any court
avoiding the payment of such amount, all as though such payments had not been
made.
k) Entire
Agreement.
This
Agreement constitutes the entire agreement and understanding of Berkshire and
MEHC relating to the subject matter hereof and supersedes all prior agreements
and understandings among Berkshire and MEHC, whether written or oral, relating
to the subject matter hereof.
l) Severability.
In case
any provision of or obligation under this Agreement shall be invalid, illegal
or
unenforceable in any jurisdiction, the validity, legality and enforceability
of
the remaining provisions or obligations, or of such provision or obligation
in
any other jurisdiction, shall not in any way be affected or impaired
thereby.
m) Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Nebraska without regard to the conflict of law rules
thereof.
n) Limitation
of Liability.
Notwithstanding anything else in this Agreement or any other document,
Berkshire’s liability in respect of this Agreement is limited to the Maximum
Equity Amount. No shareholder, officer, employee, controlling person, executive,
director, agent or affiliate of Berkshire shall be liable for any payments
under
this Agreement or any other obligations of Berkshire due to MEHC.
8
IN
WITNESS WHEREOF, the parties hereto have caused their duly authorized officers
to execute and deliver this Equity Commitment Agreement as of the date first
above written.
BERKSHIRE HATHAWAY INC. | ||
|
|
|
By: | /s/ Xxxx X. Hamburg | |
Name: Xxxx X. Hamburg | ||
Title: Vice President |
MIDAMERICAN ENERGY HOLDINGS COMPANY | ||
|
|
|
By: | /s/ Xxxxxxx X. Xxxxxxxx | |
Name: Xxxxxxx X. Xxxxxxxx | ||
Title: Senior Vice President |
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EXHIBIT
A
FORM
OF EQUITY REQUISITION CERTIFICATE
[DATE]
Berkshire
Hathaway Inc.
0000
Xxxxxx Xxxxx
0000
Xxxxxx Xxxxxx
Xxxxx,
XX
00000
Attention:
Ladies
and Gentlemen:
This
Equity Requisition Certificate is delivered to you pursuant to Section
2
of that
certain Equity Commitment Agreement, dated as of ________________, 2006 (the
"Equity
Commitment Agreement"),
by
and among you and MEHC. This request has been authorized by the MEHC Board
of
Directors. Capitalized terms used herein but not otherwise defined herein shall
have the meanings assigned to them in the Equity Commitment
Agreement.
We
hereby
request that, in exchange for issuance of Equivalent Common Shares, you
contribute an Equity Contribution to MEHC in the amount and on or prior to
the
date set forth below:
Amount
of
Equity Contribution: $_________________
Date
of
Equity Contribution: _____________________
Very
truly yours,
MIDAMERICAN
ENERGY HOLDINGS COMPANY
By:
|
_________________________
|
Name:
Title:
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