-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WcoK0Wg4H/B7DNBAFWj5Ofy67JYbgCR7lYLDBR5+1m11aw38UYu1xtWE4oCoHU77 uf/Fd7ZgxoG2yWC1u6nOAQ== 0000912057-96-024476.txt : 19961104 0000912057-96-024476.hdr.sgml : 19961104 ACCESSION NUMBER: 0000912057-96-024476 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 23 FILED AS OF DATE: 19961101 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MIDAMERICAN ENERGY CO CENTRAL INDEX KEY: 0000928576 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 421425214 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-15387 FILM NUMBER: 96652657 BUSINESS ADDRESS: STREET 1: 666 GRAND AVE STREET 2: P O BOX 657 CITY: DES MOINES STATE: IA ZIP: 50306-9244 BUSINESS PHONE: 5152424300 MAIL ADDRESS: STREET 1: 666 GRAND AVENUE POST OFFICE BOX 9244 STREET 2: 666 GRAND AVENUE POST OFFICE BOX 9244 CITY: DES MOINES STATE: IA ZIP: 50306-9244 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MIDAMERICAN ENERGY FINANCING I CENTRAL INDEX KEY: 0001026223 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-15387-01 FILM NUMBER: 96652658 BUSINESS ADDRESS: STREET 1: 666 GRAND AVE STREET 2: P O BOX 657 CITY: DES MOINES STATE: IA ZIP: 50306-9244 BUSINESS PHONE: 5152424300 MAIL ADDRESS: STREET 1: 666 GRAND AVENUE POST OFFICE BOX 9244 STREET 2: 666 GRAND AVENUE POST OFFICE BOX 9244 CITY: DES MOINES STATE: IA ZIP: 50306-9244 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MIDAMERICAN ENERGY FINANCING II CENTRAL INDEX KEY: 0001026224 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-15387-02 FILM NUMBER: 96652659 BUSINESS ADDRESS: STREET 1: 666 GRAND AVE STREET 2: P O BOX 657 CITY: DES MOINES STATE: IA ZIP: 50306-9244 BUSINESS PHONE: 5152424300 MAIL ADDRESS: STREET 1: 666 GRAND AVENUE POST OFFICE BOX 9244 STREET 2: 666 GRAND AVENUE POST OFFICE BOX 9244 CITY: DES MOINES STATE: IA ZIP: 50306-9244 S-3 1 S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 1, 1996 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ MIDAMERICAN ENERGY FINANCING I MIDAMERICAN ENERGY FINANCING II MIDAMERICAN ENERGY COMPANY (Exact name of registrants as specified in their Trust Agreements) (Exact name of registrant as specified in its charter) DELAWARE IOWA (State or other jurisdiction of incorporation or organization) (To be applied for) 42-1425214 (I.R.S. Employer Identification Nos.) Paul J. Leighton Vice President and Corporate Secretary 666 Grand Avenue MidAmerican Energy Company P.O. Box 657 666 Grand Avenue Des Moines, Iowa 50303-0657 P.O. Box 657 (515) 242-4300 Des Moines, Iowa 50303-0657 (Address, including zip code, and telephone number (515) 242-4300 including area code, of registrants' principal executive (Name, address, including zip code, and telephone number offices) including area code, of agent for service)
PLEASE SEND COPIES OF ALL CORRESPONDENCE TO: R. Todd Vieregg, P.C. Sidley & Austin One First National Plaza Chicago, Illinois 60603 Approximate date of commencement of proposed sale to the public: From time to time after the Registration Statement becomes effective, as determined by market conditions and other factors. If only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, please check the following box. /X/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / -------------------------- CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE OFFERING SECURITIES TO BE REGISTERED BE REGISTERED(1) PER UNIT(2) PRICE(2) MidAmerican Energy Financing I MidAmerican Energy Financing II Preferred Securities............................. MidAmerican Energy Company Guarantees with respect to Preferred Securities(3).......................... MidAmerican Energy Company Junior Subordinated Debentures................... MidAmerican Energy Company Medium-Term Notes................................ Total.............................................. $500,000,000 100% $500,000,000 TITLE OF EACH CLASS OF AMOUNT OF SECURITIES TO BE REGISTERED REGISTRATION FEE MidAmerican Energy Financing I MidAmerican Energy Financing II Preferred Securities............................. MidAmerican Energy Company Guarantees with respect to Preferred Securities(3).......................... MidAmerican Energy Company Junior Subordinated Debentures................... MidAmerican Energy Company Medium-Term Notes................................ Total.............................................. $151,515
(1) There are being registered hereunder a presently indeterminate number of Preferred Securities of MidAmerican Energy Financing I and MidAmerican Energy Financing II (together with related Guarantees and Junior Subordinated Debentures of MidAmerican Energy Company for which no separate consideration will be received by any of the Registrants) and a presently indeterminate number of Medium-Term Notes of MidAmerican Energy Company, all with an aggregate initial public offering price not to exceed $500,000,000. (2) Pursuant to Rule 457(n) and (o), the registration fee is calculated on the basis of the proposed aggregate maximum offering price of the Preferred Securities and the Medium-Term Notes. (3) Includes the rights of holders of the Preferred Securities under the Guarantee Agreements and certain back-up undertakings as described in the Registration Statement. ---------------------------------- THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXPLANATORY NOTE This Registration Statement contains the following prospectuses: (i) a prospectus to be used in connection with the offer and sale of medium-term notes of MidAmerican Energy Company, an Iowa corporation ("MidAmerican Energy"), and (ii) a prospectus and form of prospectus supplement to be used in connection with the offer and sale of preferred securities of MidAmerican Energy Financing I, a Delaware business trust, and MidAmerican Energy Financing II, a Deleware business trust (collectively, the "Trust Issuers"). MidAmerican Energy and the Trust Issuers plan to consummate, from time to time, transactions involving the sale of securities registered pursuant to this Registration Statement, provided that the proceeds therefrom will not exceed an aggregate of $500,000,000. No decisions have been made as to which securities will be issued or the timing or size of any offering of such securities. Such determinations will be made from time to time in the light of market and other conditions. SUBJECT TO COMPLETION, DATED NOVEMBER 1, 1996 Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. PROSPECTUS [LOGO] MIDAMERICAN ENERGY COMPANY MEDIUM-TERM NOTES DUE FROM NINE MONTHS TO 30 YEARS FROM DATE OF ISSUE ----------------- MidAmerican Energy Company ("MidAmerican Energy" or the "Company") may offer from time to time, at prices and on terms to be determined at or prior to the time of sale, its unsecured Medium-Term Notes (the "Notes"), having an aggregate initial offering price not to exceed $500,000,000, subject to reduction in the event of sales of certain other securities under the registration statement referred to below of which this Prospectus is a part. Each Note will rank as senior unsecured debt, be registered as to principal and interest, and be denominated in United States dollars. Specific terms of the Notes in respect of which this Prospectus is being delivered will be set forth in an accompanying prospectus supplement, (as supplemented by any applicable pricing supplement relating thereto, a "Prospectus Supplement"), together with the terms of the offering of the Notes, the initial offering price and the net proceeds to the Company from the sale thereof. The applicable Prospectus Supplement will set forth, among other matters, the following with respect to the particular Notes: the aggregate principal amount, authorized denominations, maturity, rate or method of calculation of interest and dates for payment thereof, and any redemption, prepayment or sinking fund provisions. ------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------- The Company may sell Notes directly to purchasers or through agents designated from time to time by the Company or to or through underwriters or a group of underwriters which may be managed by one or more underwriters. If any agents of the Company or any underwriters are involved in the sale of Notes in respect of which this Prospectus is being delivered, the names of such agents or underwriters and any applicable commission or discount will be set forth in the applicable Prospectus Supplement. The net proceeds to the Company from the sale of Notes will be the public offering price of such Notes less such discount, in the case of an offering through an underwriter, or the purchase price of such Notes less such commission, in the case of an offering through an agent, and less, in each case, other expenses of the Company associated with the issuance and distribution of such Notes. ------------------- The date of this Prospectus is , 1996. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). The Company has filed with the Commission a registration statement on Form S-3 (the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Notes offered hereby and certain other securities. This Prospectus does not contain all information set forth in the Registration Statement and reference is hereby made to the Registration Statement and the exhibits thereto for further information with respect to the Company and the Notes offered hereby. Such reports, proxy statements, Registration Statement and exhibits and other information can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at its Northeast Regional Office located at 7 World Trade Center, Suite 1300, New York, New York 10048 and Midwest Regional Office located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be obtained at prescribed rates from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Company is subject to the electronic filing requirements of the Commission. Accordingly, pursuant to the rules and regulations of the Commission, certain documents, including annual and quarterly reports and proxy statements, filed by the Company with the Commission have been filed electronically. The Commission also maintains a World Wide Web site that contains reports, proxy and information statements and other information regarding registrants (including the Company) that file electronically with the Commission at (http://www.sec.gov). Certain of the Company's securities are listed on the New York Stock Exchange and such reports, proxy statements and other information may also be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Annual Report of the Company on Form 10-K, as amended, for the year ended December 31, 1995, the Quarterly Reports of the Company on Form 10-Q for the period ended March 31, 1996, as amended, and for the periods ended June 30, 1996 and September 30, 1996, and Current Reports of the Company on Form 8-K reporting events occurring on February 20, 1996, April 25, 1996, May 28, 1996 and October 17, 1996 are incorporated by reference into this Prospectus. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Notes contemplated hereby shall be deemed to be incorporated by reference into this Prospectus and to be made a part hereof from the respective dates of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of the Registration Statement and this Prospectus to the extent that a statement contained herein, in the applicable Prospectus Supplement or in any subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of the Registration Statement or this Prospectus. Copies of the above documents (other than exhibits to such documents unless such exhibits are specifically incorporated by reference into such documents) may be obtained upon written or oral request without charge from the Company, 666 Grand Avenue, P.O. Box 657, Des Moines, Iowa 50303-0657 (telephone number (515) 242-4300), Attention: Investor Relations. 2 THE COMPANY GENERAL MidAmerican Energy was formed on July 1, 1995 through the merger (the "Merger") of Iowa-Illinois Gas and Electric Company ("Iowa-Illinois"), Midwest Resources Inc. ("Midwest Resources") and Midwest Power Systems Inc. ("Midwest Power") with and into MidAmerican Energy. MidAmerican Energy is a combination electric and natural gas public utility engaged in the generation, transmission, distribution and sale of electric energy in Illinois, Iowa and South Dakota, and the purchase, distribution, transportation and sale of natural gas in those states and in the state of Nebraska. MidAmerican Energy's nonregulated operations are conducted by its MidAmerican Capital Company ("MidAmerican Capital") subsidiary; a separate wholly-owned subsidiary, Midwest Capital Group, Inc. ("Midwest Capital"), functions as a regional business development company in the utility service territory. The Company is incorporated in Iowa. Its executive offices are located at 666 Grand Avenue, P.O. Box 657, Des Moines, Iowa 50303-0657 (telephone number (515) 242-4300). RECENT DEVELOPMENTS On April 24, 1996, the Company's shareholders approved a proposal to form a holding company. The holding company will have three wholly-owned subsidiaries consisting of MidAmerican Energy (utility operations), MidAmerican Capital and Midwest Capital. The transaction is structured as a share exchange, with each share of MidAmerican Energy common stock being exchanged for one share of the holding company common stock. All regulatory approvals have been obtained and it is management's intention to complete the formation of the holding company on or about December 1, 1996. On May 28, 1996, MidAmerican Energy announced the restructuring of portions of its nonregulated businesses. InterCoast Energy Company ("InterCoast") was formed as an indirect subsidiary of MidAmerican Energy and a direct subsidiary of MidAmerican Capital. InterCoast has operations in oil and gas, natural gas marketing and wholesale electric power marketing and brokering. On October 17, 1996, MidAmerican Capital agreed to sell its subsidiaries which conduct oil and gas and gas marketing operations to KCS Energy, Inc. for $174 million in cash, $40 million in short term notes and warrants to acquire 610,000 shares of KCS Energy, Inc. common stock for $45 per share. RATIOS OF EARNINGS TO FIXED CHARGES The following table sets forth the consolidated and utility only ratios and supplemental ratios of earnings to fixed charges of MidAmerican Energy for each of the years 1991 through 1995 and for the twelve months ended September 30, 1996.
YEAR ENDED DECEMBER 31 ----------------------------------------------------- 1991 1992 1993 1994 1995 --------- --------- --------- --------- --------- TWELVE MONTHS ENDED SEPTEMBER 30, 1996 ------------------- (UNAUDITED) CONSOLIDATED: Ratio of earnings to fixed charges(1).............. 2.46x 1.87x 2.84x 2.78x 2.82x 3.08x Supplemental ratio of earnings to fixed charges(2)....................................... 2.39x 1.82x 2.75x 2.70x 2.75x 3.01x UTILITY ONLY(3): Ratio of earnings to fixed charges(1).............. 2.92x 2.34x 3.40x 3.30x 3.39x 3.72x Supplemental ratio of earnings to fixed charges(2)....................................... 2.80x 2.24x 3.25x 3.16x 3.28x 3.61x
- ------------------------ (1) For purposes of computing the ratios of earnings to fixed charges, "earnings" consist of net income from continuing operations before interest charges and preferred dividend requirements, plus income 3 taxes, plus the estimated interest component of rentals. "Earnings" also include allowances for borrowed and other funds used during construction. Fixed charges consist of interest charges and the estimated interest component of rentals. (2) The supplemental ratios have been calculated including obligations of the Company under its long-term power purchase contract with the Nebraska Public Power District relating to Cooper Nuclear Station. (3) Reflects the formation of the holding company and the transfer of MidAmerican Capital and Midwest Capital to the holding company by MidAmerican Energy. USE OF PROCEEDS Except as set forth in the Prospectus Supplement for a specific offering of Notes, MidAmerican Energy will use the net proceeds from the sale of the Notes for the repayment of a portion of its outstanding indebtedness. The Company has not yet selected the indebtedness to be repaid with such net proceeds. DESCRIPTION OF NOTES GENERAL The Notes offered hereby will be issued under the Indenture dated as of , 1996, as supplemented from time to time (the "Indenture"), between the Company and The First National Bank of Chicago, as trustee (the "Trustee"). The Indenture is subject to and governed by the Trust Indenture Act of 1939, as amended. The summary contained herein of certain provisions of the Notes is subject to and is qualified in its entirety by reference to the provisions of the Indenture and the forms of Notes (including the definitions of certain terms therein), each of which has been filed as an exhibit to the Registration Statement, to which exhibits reference is hereby made. Certain capitalized terms used below but not defined herein have the meanings ascribed to them in the Indenture. Unless otherwise noted, section references below are to the Indenture. The Notes are the only securities that may be issued under the Indenture. The Indenture does not limit the aggregate amount of Notes that may be issued under the Indenture, but the aggregate initial offering price of the Notes that may be issued under this Prospectus is limited to $500,000,000, subject to reduction in the event of sales of certain other securities under the Registration Statement of which this Prospectus is a part. The Notes will be denominated in United States dollars, and payments of principal of, premium, if any, and any interest on the Notes will be made in United States dollars. Currency amounts in this Prospectus and any Prospectus Supplement are stated in United States dollars. Unless otherwise specified in the applicable Prospectus Supplement, the Notes will have the terms described below. The general provisions of the Indenture do not contain any provisions that would limit the ability of the Company to incur indebtedness or that would afford holders of Notes protection in the event of a highly leveraged or similar transaction involving the Company. However, the general provisions of the Indenture contain certain restrictions on mortgages and liens. See "Restrictions on Secured Debt" below. Reference is made to the applicable Prospectus Supplement for information with respect to any deletions from, modifications of or additions to the Events of Default or covenants of the Company that are described below, including any addition of covenants or other provisions providing event risk or similar protection. All of the Notes need not be issued at the same time, and may vary as to interest rate, maturity and other provisions. (Section 2.05) The Notes are offered on a continuing basis and will mature on a day from nine months to 30 years from their date of issue, as selected by the initial purchaser and agreed to by the Company, and may be subject to redemption at the option of the Company or repayment at the option of the Holder prior to Stated Maturity (as defined below). See "Redemption and Repayment" below. 4 Each Note will be represented by either a global security (a "Book-Entry Note") registered in the name of a nominee of the Depositary or a certificate issued in definitive form (a "Certificated Note"), as specified in the applicable Prospectus Supplement. Beneficial interests in Book-Entry Notes will be shown on, and transfers thereof will be effected only through, records maintained by DTC and its participants. Owners of beneficial interests in Book-Entry Notes will be entitled to physical delivery of Certificated Notes only under the limited circumstances described herein. See "Book-Entry System" below. Unless otherwise specified in the applicable Prospectus Supplement, Notes will be issued in denominations of $1,000 and integral multiples thereof. (Section 2.04) Payments of interest and principal (and premium, if any) to Beneficial Owners (as defined below under "Book-Entry System") of Book-Entry Notes are expected to be made in accordance with the procedures of the Depositary and its participants in effect from time to time as described below under "Book-Entry System." Unless otherwise specified in the applicable Prospectus Supplement, the principal of and any premium and accrued interest on all Notes shall be payable as follows: (a) On or before 10:00 a.m., New York City time, of the day on which any payment of principal, accrued interest or premium is due on any Book-Entry Note pursuant to the terms thereof, the Company will deliver to the Trustee immediately available funds sufficient to make such payment. On or before 10:30 a.m., New York City time or such other time as shall be agreed upon between the Trustee and the Depositary, of the day on which such payment is due, the Trustee will deposit with the Depositary such funds by wire transfer into the account specified by the Depositary. As a condition to the payment at the Maturity of any part of the principal and any applicable premium of any Book-Entry Note, the Depositary will surrender, or cause to be surrendered, such Book-Entry Note to the Trustee, whereupon a new Book-Entry Note will be issued to the Depositary. (b) With respect to any Note that is not a Book-Entry Note, principal, any premium and accrued interest due at the Maturity of such Note will be payable in immediately available funds when due upon presentation and surrender of such Note at the Corporate Trust Office of the Trustee, currently c/o First Chicago Trust Company of New York, 14 Wall Street-8th Floor-Window 2, New York, New York 10005; PROVIDED that such Note is presented to the Trustee in time for the Trustee to make such payment in such funds in accordance with its normal procedures. Accrued interest on (and, in the case of Amortizing Notes, as defined below under "Amortizing Notes", installments of principal of) any Note that is not a Book-Entry Note (other than accrued interest or such installments payable at Maturity) will be paid by a clearinghouse funds check mailed on the Interest Payment Date; PROVIDED, HOWEVER, that if any Holder of Notes, the aggregate principal amount of which equals or exceeds $10,000,000, provides a written request to the Trustee on or before the applicable Record Date for such Interest Payment Date, accrued interest (and such installments of principal) shall be paid by wire transfer of immediately available funds to a bank within the continental United States or by direct deposit into the account of such Holder if such account is maintained with the Trustee. (Section 2.11) Notwithstanding anything in this Prospectus to the contrary, unless otherwise specified in the applicable Prospectus Supplement, if a Note is an Original Issue Discount Note (as defined below under "Original Issue Discount Notes"), the amount payable on such Note in the event the principal amount thereof is declared to be due and payable immediately as described below under "Description of Notes-- Events of Default" or in the event of redemption or repayment thereof prior to its Stated Maturity, in lieu of the principal amount due at the Stated Maturity thereof, will be the Amortized Face Amount of such Note as of the date of declaration, redemption or repayment, as the case may be. The "Amortized Face Amount" of an Original Issue Discount Note will be the amount equal to (i) the principal amount of such Note multiplied by the Issue Price (as defined below) specified in the applicable Prospectus Supplement plus (ii) the portion of the difference between the dollar amount determined pursuant to the preceding clause (i) and the principal amount of such Note that has accreted at the yield to maturity specified in the 5 applicable Prospectus Supplement (computed in accordance with generally accepted United States bond yield computation principles) to such date of declaration, redemption or repayment, but in no event will the Amortized Face Amount of an Original Issue Discount Note exceed the principal amount stated in such Note. (Section 1.03) Each Note will bear interest at a fixed rate (a "Fixed Rate Note"), which may be zero in the case of a Zero Coupon Note, or at a variable rate (a "Floating Rate Note") determined by reference to the Commercial Paper Rate, LIBOR, Prime Rate or Treasury Rate or such other interest rate formula (the "Interest Rate Basis") as may be specified in the applicable Prospectus Supplement as adjusted by a Spread and/or Spread Multiplier, if any (as defined herein), applicable to such Notes. The Prospectus Supplement relating to each Note will describe, among other things, the following items: (i) the price (expressed as a percentage of the aggregate principal amount thereof) at which such Note will be issued (the "Issue Price"); (ii) the date on which such Note will be issued (the "Original Issue Date"); (iii) the date on which such Note will mature (the "Stated Maturity") and whether the Stated Maturity may be extended by the Company, and if so, the Extension Periods and the Final Maturity Date (each as defined below under "Extension of Maturity"); (iv) whether such Note is a Fixed Rate Note or a Floating Rate Note; (v) if such Note is a Fixed Rate Note, the rate per annum at which such Note will bear interest, if any, the Interest Payment Date or Dates, if different from those set forth below under "Fixed Rate Notes" and whether such rate may be changed by the Company prior to Stated Maturity; (vi) if such Note is a Floating Rate Note, the Initial Interest Rate, the Interest Rate Basis, the Interest Reset Dates, the Interest Payment Dates, the Index Maturity, the Spread, if any, the Spread Multiplier, if any (all as defined herein), the maximum interest rate, if any, the minimum interest rate, if any, and any other terms relating to the particular method of calculating the interest rate for such Note, and whether any such Spread and/or Spread Multiplier may be changed by the Company prior to Stated Maturity; (vii) whether such Note is an Original Issue Discount Note, and if so, the yield to maturity; (viii) whether such Note is an Amortizing Note, and if so, the basis or formula for the amortization of principal and/or interest and the payment dates for such periodic principal payments; (ix) the record date or dates for determining the person entitled to receive payments of interest, principal and premium, if any (a "Record Date"), if other than as set forth below; (x) whether such Note may be redeemed at the option of the Company, or repaid at the option of the Holder, prior to Stated Maturity and, if so, the provisions relating to such redemption or repayment; (xi) any sinking fund or other mandatory redemption provisions with respect to such Note; (xii) whether such Note will be issued initially as a Book-Entry Note or a Certificated Note; and (xiii) any other terms of such Note not inconsistent with the provisions of the Indenture. Certificated Notes may be presented for payment and for registration of transfer or exchange at the Corporate Trust Office of the Trustee, currently c/o First Chicago Trust Company of New York, 14 Wall Street-8th Floor-Window 2, New York, New York 10005. (Section 6.02) All percentages resulting from any calculation with respect to any Notes will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655)), and all dollar amounts used in or resulting from such calculation on any Notes will be rounded to the nearest cent with one-half cent being rounded upward. (Section 2.04) As used herein, "Business Day" means, unless otherwise specified in the applicable Prospectus Supplement , any Monday, Tuesday, Wednesday, Thursday or Friday that in The City of New York is not a day on which banking institutions are authorized or obligated by law, regulation or executive order to close and, with respect to Notes as to which LIBOR (as defined below under "Floating Rate Notes--LIBOR Notes") is the applicable Interest Rate Basis is also a London Business Day. As used herein, "London Business Day" means any day on which dealings in deposits in United States dollars are transacted in the London interbank market. (Section 1.03) 6 RESTRICTIONS ON SECURED DEBT The Notes will constitute unsecured and unsubordinated indebtedness of the Company, and will rank on a parity with the Company's other unsecured and unsubordinated indebtedness, but will rank junior to the first mortgage bonds of the Company ("First Mortgage Bonds") which were issued under the Indenture of Mortgage and Deed of Trust, dated as of March 1, 1947, from Iowa-Illinois to Harris Trust and Savings Bank and Lynn Lloyd (C. Potter, successor individual trustee), as trustees, and indentures supplemental thereto ("Iowa-Illinois Bond Indenture"), or under the General Mortgage Indenture and Deed of Trust, dated as of January 1, 1993, between Midwest Power and Morgan Guaranty Trust Company of New York, trustee (Harris Trust and Savings Bank, successor trustee), and indentures supplemental thereto ("Midwest Power Bond Indenture"). The Iowa-Illinois Bond Indenture constitutes a first mortgage lien (subject to permissible encumbrances) on all of the electric generating, transmission and distribution property, and all of the gas distribution property, which was owned by Iowa-Illinois at the time of the Merger, and properties thereafter acquired by the Company which are an integral part of, or essential to the use or operation of, properties which were subject to the lien of the Iowa-Illinois Bond Indenture at the time of the Merger. The Midwest Power Bond Indenture constitutes a first mortgage lien (subject to permissible encumbrances) on all of the electric generating, transmission and distribution property of the Company within the State of Iowa which was owned by Midwest Power at the time of the Merger, and properties thereafter acquired by the Company which are an integral part of, or essential to the use or operation of, properties which were subject to the lien of the Midwest Power Bond Indenture at the time of the Merger. No gas distribution property or property located outside the State of Iowa which was owned by Midwest Power at the time of the Merger is currently subject to the lien of the Midwest Power Bond Indenture. However, the Company has the right to subject such exempted properties to the lien of the Midwest Power Bond Indenture at any time or times. As a result of the Merger, the Company has the right to issue First Mortgage Bonds under either the Iowa-Illinois Bond Indenture or the Midwest Power Bond Indenture, but after the Company has issued First Mortgage Bonds under one such Bond Indenture, it may not issue First Mortgage Bonds under the other such Bond Indenture. The Company has covenanted in the Indenture that while any of the Notes are outstanding, it will not (i) issue any additional First Mortgage Bonds, or (ii) subject to the lien of the Iowa-Illinois Bond Indenture or the lien of the Midwest Power Bond Indenture any property which is exempt from such liens, unless in each case the Company concurrently issues to the Trustee under the Indenture, a First Mortgage Bond or Bonds in the same aggregate principal amount and having the same interest rate or rates, maturity date or dates, redemption provisions and other terms as the Notes then outstanding and thereby give to the holders of all outstanding Notes the benefit of the security of such First Mortgage Bond or Bonds. (Section 4.01) At such time as the Trustee under the Indenture is the only holder of First Mortgage Bonds outstanding under the Iowa-Illinois Bond Indenture or the Midwest Power Bond Indenture, the Trustee will surrender such First Mortgage Bonds to the Company for cancellation and such Bond Indenture will be discharged and defeased. (Section 4.07). In addition, the Company has covenanted in the Indenture that neither the Company nor a Subsidiary will create or assume, except in favor of the Company or a Wholly-Owned Subsidiary (as defined below under "Certain Definitions"), any mortgage, pledge, or other lien or encumbrance upon any Principal Facility (as defined below under "Certain Definitions") or any stock of any Subsidiary or indebtedness of any Subsidiary to the Company or any other Subsidiary whether now owned or hereafter acquired without equally and ratably securing the outstanding Notes. This limitation will not apply to the lien of the Iowa- Illinois Bond Indenture, the lien of the Midwest Power Bond Indenture or certain permitted encumbrances described in the Indenture, including (a) purchase money mortgages entered into within specified time limits; (b) liens extending, renewing or refunding any liens permitted by clause (a) of this covenant; (c) liens existing on acquired property; (d) certain tax, materialmen's, mechanics' and judgment liens, certain liens arising by operation of law and certain other similar liens; (e) certain mortgages, pledges, liens 7 or encumbrances in favor of any state or local government or governmental agency in connection with certain tax-exempt financings; (f) liens to secure the cost of construction or improvement of any property entered into within specified time limits; and (g) mortgages, pledges, liens and encumbrances not otherwise permitted if the sum of the indebtedness thereby secured does not exceed the greater of $100,000,000 or 10% of Common Shareholders' Equity (as defined below under "Certain Definitions"). (Section 6.06) INTEREST AND INTEREST RATES Unless otherwise specified in the applicable Prospectus Supplement, each Note (other than a Zero Coupon Note), will bear interest from and including its Original Issue Date or from and including the most recent Interest Payment Date to which interest on such Note has been paid or duly provided for at a fixed rate per annum or at a rate per annum determined pursuant to an Interest Rate Basis, stated therein and in the applicable Prospectus Supplement, that may be adjusted by a Spread and/or Spread Multiplier, until Maturity and the principal thereof is paid or made available for payment. Unless otherwise specified in the applicable Prospectus Supplement, interest will be payable on each Interest Payment Date and at Maturity. "Maturity" means the date on which the principal of a Note or an installment of principal becomes due and payable in accordance with its terms and the terms of the Indenture, whether at Stated Maturity, upon acceleration, redemption, repayment or otherwise. Interest (other than defaulted interest which may be paid to the Holder on a special record date) will be payable to the Holder at the close of business on the Record Date next preceding an Interest Payment Date; provided, however, that the first payment of interest on any Note originally issued between a Record Date and the next Interest Payment Date will be made on the Interest Payment Date following the next succeeding Record Date to the Holder on such next succeeding Record Date and interest payable on the Maturity date, including, if applicable, upon redemption, shall be payable to the person to whom principal is payable. Interest rates, interest rate formulae and other variable terms of the Notes are subject to change by the Company from time to time, but no such change will affect any Note already issued or as to which an offer to purchase has been accepted by the Company. Unless otherwise specified in the applicable Prospectus Supplement, the Interest Payment Dates and the Record Dates for Fixed Rate Notes will be as described below under "Fixed Rate Notes." The Interest Payment Dates for Floating Rate Notes will be as specified in the applicable Prospectus Supplement, and unless otherwise specified in the applicable Prospectus Supplement, each Record Date for a Floating Rate Note will be the fifteenth day (whether or not a Business Day) preceding each Interest Payment Date. Each Note (other than a Zero Coupon Note) will bear interest at either (a) a fixed rate or (b) a floating rate determined by reference to an Interest Rate Basis which may be adjusted by a Spread and/or Spread Multiplier; provided that the interest rate in effect for the ten days immediately prior to Stated Maturity will be the interest rate in effect on the tenth day preceding such Stated Maturity. Any Floating Rate Note may also have either or both of the following: (i) a maximum interest rate, or ceiling, on the rate of interest which may accrue during any interest period, and (ii) a minimum interest rate, or floor, on the rate of interest which may accrue during any interest period. The applicable Prospectus Supplement relating to each Note will designate either a fixed rate of interest per annum on the applicable Fixed Rate Note or one or more of the following Interest Rate Bases as applicable to the relevant Floating Rate Note: (a) the Commercial Paper Rate, in which case such Note will be a "Commercial Paper Rate Note," (b) LIBOR, in which case such Note will be a "LIBOR Note," (c) the Prime Rate, in which case such Note will be a "Prime Rate Note," (d) the Treasury Rate, in which case such Note will be a "Treasury Rate Note," or (e) such other Interest Rate Basis or formula as may be specified in such Prospectus Supplement. Notwithstanding the determination of the interest rate as provided below, the interest rate on the Notes for any interest period shall not be greater than the maximum interest rate, if any, or less than the minimum interest rate, if any, specified in the applicable Prospectus Supplement. The interest rate on the 8 Notes will in no event be higher than the maximum rate permitted by New York or other applicable law, as the same may be modified by United States federal law of general application. Under present New York law, the maximum rate of interest is 25% per annum on a simple interest basis. This limit may not apply to Notes in which $2,500,000 or more has been invested. FIXED RATE NOTES Unless otherwise specified in the applicable Prospectus Supplement, each Fixed Rate Note (other than a Zero Coupon Note) will accrue interest from and including its Original Issue Date at the annual rate stated on the face thereof, as specified in the applicable Prospectus Supplement. Unless otherwise specified in the applicable Prospectus Supplement, payments of interest on any Fixed Rate Note with respect to any Interest Payment Date or Maturity will include interest accrued from and including the Original Issue Date, or from and including the most recent Interest Payment Date to which interest has been paid or duly provided for, to but excluding such Interest Payment Date or Maturity. Fixed Rate Notes may bear one or more annual rates of interest during the periods or under the circumstances specified therein and in the applicable Prospectus Supplement. Unless otherwise specified in the applicable Prospectus Supplement, interest on Fixed Rate Notes will be computed and paid on the basis of a 360-day year of twelve 30-day months. Unless otherwise specified in the applicable Prospectus Supplement, the Interest Payment Dates for Fixed Rate Notes, including Fixed Rate Amortizing Notes, will be semi-annually on each January 15 and July 15 and the Record Dates will be each January 1 and July 1 (whether or not a Business Day) and the Stated Maturity. In the case of Fixed Rate Amortizing Notes, Interest Payment Dates may be quarterly on each January 15, April 15, July 15 and October 15 if specified in the applicable Prospectus Supplement, and the Record Dates will be each January 1, April 1, July 1 and October 1 (whether or not a Business Day) next preceding each such Interest Payment Date. If the Interest Payment Date or Maturity for any Fixed Rate Note is not a Business Day, all payments to be made on such day with respect to such Note will be made on the next day that is a Business Day with the same force and effect as if made on the due date, and no additional interest will be payable on the date of payment for the period from and after the due date as a result of such delayed payment. FLOATING RATE NOTES The interest rate on each Floating Rate Note will be equal to the interest rate calculated by reference to the specified Interest Rate Basis (i) plus or minus the Spread, if any, and/or (ii) multiplied by the Spread Multiplier, if any. The "Spread" is the number of basis points (one basis point equals one-hundredth of a percentage point) specified in the applicable Prospectus Supplement as being applicable to such Note, and the "Spread Multiplier" is the percentage of the Interest Rate Basis (adjusted for any Spread) specified in the applicable Prospectus Supplement as being applicable to such Note. The applicable Prospectus Supplement will specify the Interest Rate Basis and the Spread and/or Spread Multiplier, if any, and the maximum or minimum interest rate, if any, applicable to each Floating Rate Note. In addition, such Prospectus Supplement will contain particulars as to the Calculation Agent (unless otherwise specified in the applicable Prospectus Supplement, The First National Bank of Chicago (in such capacity, the "Calculation Agent")), Index Maturity, Original Issue Date, the interest rate in effect for the period from the Original Issue Date to the first Interest Reset Date specified in the applicable Prospectus Supplement (the "Initial Interest Rate"), Interest Determination Dates, Interest Payment Dates, Record Dates, and Interest Reset Dates with respect to such Note. Except as provided below or in the applicable Prospectus Supplement, the Interest Payment Dates for Floating Rate Notes, including Floating Rate Amortizing Notes, will be (i) in the case of Floating Rate Notes that reset daily, weekly or monthly, the third Wednesday of each month or the third Wednesday of March, June, September and December of each year, as specified on the face thereof and in the applicable Prospectus Supplement; (ii) in the case of Floating Rate Notes that reset quarterly, the third Wednesday of 9 March, June, September and December of each year as specified on the face thereof and in the applicable Prospectus Supplement; (iii) in the case of Floating Rate Notes that reset semiannually, the third Wednesday of each of two months of each year, as specified on the face thereof and in the applicable Prospectus Supplement; and (iv) in the case of Floating Rate Notes that reset annually, the third Wednesday of one month of each year, as specified on the face thereof and in the applicable Prospectus Supplement and, in each case, at Maturity. If any Interest Payment Date, other than Maturity, for any Floating Rate Note is not a Business Day for such Floating Rate Note, such Interest Payment Date will be postponed to the next day that is a Business Day for such Floating Rate Note, except that, in the case of a LIBOR Note, if such Business Day for such Floating Rate Note is in the next succeeding calendar month, such Interest Payment Date will be the immediately preceding London Business Day. If the Maturity for any Floating Rate Note falls on a day that is not a Business Day, all payments to be made on such day with respect to such Note will be made on the next day that is a Business Day with the same force and effect as if made on the due date, and no additional interest will be payable on the date of payment for the period from and after the due date as a result of such delayed payment. The rate of interest on each Floating Rate Note will be reset daily, weekly, monthly, quarterly, semiannually or annually (such period being the "Interest Reset Period" for such Note, and the first day of each Interest Reset Period being an "Interest Reset Date"), as specified in the applicable Prospectus Supplement. Unless otherwise specified in the applicable Prospectus Supplement, the Interest Reset Date will be, in the case of Floating Rate Notes which reset daily, each Business Day for such Floating Rate Note; in the case of Floating Rate Notes (other than Treasury Rate Notes) which reset weekly, the Wednesday of each week; in the case of Treasury Rate Notes which reset weekly, the Tuesday of each week, except as provided below; in the case of Floating Rate Notes which reset monthly, the third Wednesday of each month; in the case of Floating Rate Notes which reset quarterly, the third Wednesday of each March, June, September and December; in the case of Floating Rate Notes which reset semiannually, the third Wednesday of each of two months of each year, as specified in the applicable Prospectus Supplement; and in the case of Floating Rate Notes which reset annually, the third Wednesday of one month of each year, as specified in the applicable Prospectus Supplement; provided, however, that the interest rate in effect from the Original Issue Date to but excluding the first Interest Reset Date with respect to a Floating Rate Note will be the Initial Interest Rate (as specified in the applicable Prospectus Supplement). If any Interest Reset Date for any Floating Rate Note is not a Business Day for such Floating Rate Note, such Interest Reset Date will be postponed to the next day that is a Business Day for such Floating Rate Note, except that in the case of a LIBOR Note, if such Business Day is in the next succeeding calendar month, such Interest Reset Date will be the immediately preceding London Business Day. Each adjusted rate will be applicable on and after the Interest Reset Date to which it relates to but excluding the next succeeding Interest Reset Date or until Maturity. The interest rate for each Interest Reset Period will be the rate determined by the Calculation Agent on the Calculation Date (as defined below) pertaining to the Interest Determination Date pertaining to the Interest Reset Date for such Interest Reset Period. Unless otherwise specified in the applicable Prospectus Supplement, the "Interest Determination Date" pertaining to an Interest Reset Date for (a) a Commercial Paper Rate Note (the "Commercial Paper Interest Determination Date") or (b) a Prime Rate Note (the "Prime Interest Determination Date") will be the second Business Day immediately preceding such Interest Reset Date. Unless otherwise specified in the applicable Prospectus Supplement, the Interest Determination Date pertaining to an Interest Reset Date for a LIBOR Note (the "LIBOR Interest Determination Date") will be the second London Business Day immediately preceding such Interest Reset Date. Unless otherwise specified in the applicable Prospectus Supplement, the Interest Determination Date pertaining to an Interest Reset Date for a Treasury Rate Note (the "Treasury Interest Determination Date") will be the day of the week in which such Interest Reset Date falls on which Treasury bills would normally be auctioned. Treasury bills are usually sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is usually held on the following Tuesday, except that such auction may be held on the preceding Friday. If an auction is so held on the preceding Friday, such Friday will be 10 the Treasury Interest Determination Date pertaining to the Interest Reset Period commencing in the next succeeding week. If an auction date falls on any Interest Reset Date for a Treasury Rate Note, then such Interest Reset Date will instead be the first Business Day immediately following such auction date. Unless otherwise specified in the applicable Prospectus Supplement, the "Calculation Date" pertaining to any Interest Determination Date will be the earlier of (i) the tenth calendar day after the Interest Determination Date or, if such day is not a Business Day, the next day that is a Business Day, or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. "Index Maturity" means, with respect to a Floating Rate Note, the period to Stated Maturity of the instrument or obligation on which the interest rate formula of such Floating Rate Note is calculated, as specified in the applicable Prospectus Supplement. Unless otherwise specified in the applicable Prospectus Supplement, each Floating Rate Note will accrue interest from and including its Original Issue Date at the rate determined as provided in such Note and as specified in the applicable Prospectus Supplement. Unless otherwise specified in the applicable Prospectus Supplement, payments of interest on any Floating Rate Note with respect to any Interest Payment Date will include interest accrued from and including the Original Issue Date, or from and including the most recent Interest Payment Date to which interest has been paid or duly provided for, to but excluding the Interest Payment Date or Maturity. With respect to Floating Rate Notes, accrued interest is calculated by multiplying the face amount of a Note by an accrued interest factor. This accrued interest factor is computed by adding the interest factors calculated for each day from and including the Original Issue Date, or from and including the last date to which interest has been paid or duly provided for, to but excluding the date for which accrued interest is being calculated. The interest factor for each such day (unless otherwise specified) is computed by dividing the interest rate applicable to such day by 360, in the case of Commercial Paper Rate Notes, LIBOR Notes and Prime Rate Notes or by the actual number of days in the year, in the case of Treasury Rate Notes. The Calculation Agent will calculate the interest rate on the Floating Rate Notes, as provided below. The Trustee will, upon the request of the Holder of any Floating Rate Note, provide the interest rate then in effect and, if then determined, the interest rate which will become effective as a result of a determination made with respect to the most recent Interest Determination Date (defined below) with respect to such Note. For purposes of calculating the rate of interest payable on Floating Rate Notes, the Company has entered into or will enter into an agreement with the Calculation Agent. The Calculation Agent's determination of any interest rate shall be final and binding in the absence of manifest error. COMMERCIAL PAPER RATE NOTES Each Commercial Paper Rate Note will bear interest at the interest rate (calculated with reference to the Commercial Paper Rate and the Spread and/or Spread Multiplier, if any) specified in the Commercial Paper Rate Note and in the applicable Prospectus Supplement. Unless otherwise specified in the applicable Prospectus Supplement, "Commercial Paper Rate" means, with respect to any Commercial Paper Interest Determination Date, the Money Market Yield (calculated as described below) of the rate on such date for commercial paper having the Index Maturity specified in the applicable Prospectus Supplement as published by the Board of Governors of the Federal Reserve System in "Statistical Release H.15(519), Selected Interest Rates" or any successor publication of the Board of Governors ("H.15(519)") under the heading "Commercial Paper." In the event that such rate is not published prior to 9:00 A.M., New York City time, on the Calculation Date pertaining to such Commercial Paper Interest Determination Date, then the Commercial Paper Rate with respect to such Commercial Paper Interest Determination Date will be the Money Market Yield of the rate on such Commercial Paper Interest Determination Date for commercial paper having the Index Maturity specified in the applicable Prospectus Supplement as published by the Federal Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M. Quotations for U.S. Government Securities" or any successor 11 publication ("Composite Quotations") under the heading "Commercial Paper." If by 3:00 P.M., New York City time, on such Calculation Date such rate is not published in either H.15(519) or Composite Quotations, then the Commercial Paper Rate with respect to such Commercial Paper Interest Determination Date will be calculated by the Calculation Agent and will be the Money Market Yield of the arithmetic mean of the offered rates (quoted on a bank discount basis) as of 11:00 A.M., New York City time, on such Commercial Paper Interest Determination Date of three leading dealers of commercial paper in The City of New York selected by the Calculation Agent for commercial paper having the Index Maturity specified in the applicable Prospectus Supplement placed for an industrial issuer whose bond rating is "AA," or the equivalent, from a nationally recognized securities rating agency; provided, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the Commercial Paper Rate with respect to such Commercial Paper Interest Determination Date will be the Commercial Paper Rate in effect immediately prior to such Commercial Paper Interest Determination Date. "Money Market Yield" will be a yield (expressed as a percentage rounded, if necessary, to the nearest one hundred-thousandth of a percent) calculated in accordance with the following formula: D x 360 Money Market Yield = -------------- x 100 360 - (D x M)
where "D" refers to the per annum rate for commercial paper, quoted on a bank discount basis and expressed as a decimal; and "M" refers to the actual number of days in the period for which accrued interest is being calculated. LIBOR NOTES Each LIBOR Note will bear interest at the interest rate (calculated with reference to LIBOR and the Spread and/or Spread Multiplier, if any) specified in the LIBOR Note and in the applicable Prospectus Supplement. Unless otherwise specified in the applicable Prospectus Supplement, "LIBOR" means, with respect to any LIBOR Interest Determination Date, the rate determined by the Calculation Agent in accordance with the following provisions: (i) With respect to any LIBOR Interest Determination Date, LIBOR will be either: (a) if "LIBOR Reuters" is specified in the Note and the applicable Prospectus Supplement, the arithmetic mean of the offered rates (unless the specified Designated LIBOR Page (as defined below) by its terms provides only for a single rate, in which case such single rate will be used) for deposits in United States dollars having the Index Maturity specified in the Note and the applicable Prospectus Supplement, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, which appear on the Designated LIBOR Page specified in the Note and the applicable Prospectus Supplement as of 11:00 A.M., London time, on that LIBOR Interest Determination Date, if at least two such offered rates appear (unless, as aforesaid, only a single rate is required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate" is specified in the Note and the applicable Prospectus Supplement, the rate for deposits in United States dollars having the Index Maturity specified in the Note and the applicable Prospectus Supplement, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, which appears on the Designated LIBOR Page specified in the Note and the applicable Prospectus Supplement as of 11:00 A.M., London time, on that LIBOR Interest Determination Date. Notwithstanding the foregoing, if fewer than two offered rates appear on the Designated LIBOR Page with respect to LIBOR Reuters (unless the specified Designated LIBOR Page by its terms provides only for a single rate, in which case such single rate will be used), or if no rate appears on the Designated LIBOR Page with respect to LIBOR Telerate, whichever may be applicable, LIBOR with respect to such 12 LIBOR Interest Determination Date will be determined as if the parties had specified the rate described in clause (ii) below. (ii) With respect to any LIBOR Interest Determination Date on which fewer than two offered rates appear on the Designated LIBOR Page with respect to LIBOR Reuters (unless the specified Designated LIBOR Page by its terms provides only for a single rate, in which case such single rate will be used), or if no rate appears on the Designated LIBOR Page with respect to LIBOR Telerate, as the case may be, the Calculation Agent will request the principal London office of each of four major banks in the London interbank market selected by the Calculation Agent to provide the Calculation Agent with its offered rate quotation for deposits in United States dollars for the period of the Index Maturity specified in the Note and the applicable Prospectus Supplement, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, to prime banks in the London interbank market as of 11:00 A.M., London time, on such LIBOR Interest Determination Date and in a principal amount that is representative for a single transaction in United States dollars in such market at such time. If at least two such quotations are provided, LIBOR with respect to such LIBOR Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR with respect to such LIBOR Interest Determination Date will be the arithmetic mean of the rates quoted as of 11:00 A.M. New York City Time, on such LIBOR Interest Determination Date by three major banks in The City of New York selected by the Calculation Agent for loans in United States Dollars to leading European banks, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date having the Index Maturity specified in the Note and the applicable Prospectus Supplement in a principal amount that is representative for a single transaction in such United States dollars in such market at such time; PROVIDED, HOWEVER, that if the banks so selected by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR with respect to such LIBOR Interest Determination Date will be LIBOR in effect immediately prior to such LIBOR Interest Determination Date. "Designated LIBOR Page" means either (a) the display on the Reuters Monitor Money Rates Service for the purpose of displaying the London interbank rates of major banks for United States Dollars (if "LIBOR Reuters" is specified in the Note and the applicable Prospectus Supplement), or (b) the display on the Dow Jones Telerate Service for the purpose of displaying the London interbank rates of major banks for United States dollars (if "LIBOR Telerate" is specified in the Note and the applicable Prospectus Supplement). If neither LIBOR Reuters nor LIBOR Telerate is specified in the Note and the applicable Prospectus Supplement, LIBOR for United States dollars will be determined as if LIBOR Telerate (and page 3750) had been chosen. PRIME RATE NOTES Each Prime Rate Note will bear interest at the interest rate (calculated with reference to the Prime Rate and the Spread and/or Spread Multiplier, if any) specified in the Prime Rate Note and in the applicable Prospectus Supplement. Unless otherwise specified in the applicable Prospectus Supplement, "Prime Rate" means, with respect to any Prime Interest Determination Date, the rate on such date as published in H.15(519) under the heading "Bank Prime Loan." In the event that such rate is not published prior to 9:00 A.M., New York City time, on the Calculation Date pertaining to such Prime Interest Determination Date, then the Prime Rate with respect to such Prime Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen USPRIME1 as such bank's prime rate or base lending rate as in effect with respect to such Prime Interest Determination Date. If fewer than four such rates appear on the Reuters Screen USPRIME1 with respect to such Prime Interest Determination Date, the Prime Rate with respect to such Prime Interest Determination Date will be calculated by the Calculation Agent and will be the arithmetic mean of the prime rates quoted on the basis of the actual number of days in the year divided by 360 as of 13 the close of business on such Prime Interest Determination Date by at least two of the three major money center banks in The City of New York selected by the Calculation Agent. If fewer than two quotations are provided, the Prime Rate with respect to such Prime Interest Determination Date will be determined on the basis of the rates furnished in The City of New York by the appropriate number of substitute banks or trust companies organized and doing business under the laws of the United States, or any state thereof, having total equity capital of at least $500,000,000 and being subject to supervision or examination by federal or state authority, selected by the Calculation Agent to provide such rate or rates; PROVIDED, HOWEVER, that if the appropriate number of substitute banks or trust companies selected as aforesaid are not quoting as mentioned in this sentence, the Prime Rate with respect to such Prime Interest Determination Date will be the Prime Rate in effect immediately prior to such Prime Interest Determination Date. "Reuters Screen USPRIME1" means the display designated as page "USPRIME1" on the Reuters Monitor Money Rate Service (or such other page which may replace the USPRIME1 page on the service for the purpose of displaying the prime rate or base lending rate of major banks). TREASURY RATE NOTES Each Treasury Rate Note will bear interest at the interest rate (calculated with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if any) specified in the Treasury Rate Note and in the applicable Prospectus Supplement. Unless otherwise specified in the applicable Prospectus Supplement, "Treasury Rate" means, with respect to any Treasury Interest Determination Date, the rate resulting from the most recent auction of direct obligations of the United States ("Treasury bills") having the Index Maturity specified in the applicable Prospectus Supplement, as such rate is published in H.15(519) under the heading, "Treasury bills--auction average (investment)" or, if not so published by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Treasury Interest Determination Date, the average auction rate on such Treasury Interest Determination Date (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) as otherwise announced by the United States Department of the Treasury. In the event that the results of the auction of Treasury Bills having the specified Index Maturity are not reported as provided above by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Treasury Interest Determination Date, or if no such auction is held in a particular week, then the Treasury Rate with respect to such Treasury Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 P.M., New York City time, on such Treasury Interest Determination Date, of three leading primary U.S. government securities dealers selected by the Calculation Agent for the issue of Treasury bills with a remaining maturity closest to the Index Maturity specified in the applicable Prospectus Supplement; PROVIDED, HOWEVER, that if the dealers selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, the Treasury Rate with respect to such Treasury Interest Determination Date will be the Treasury Rate in effect immediately prior to such Treasury Interest Determination Date. ORIGINAL ISSUE DISCOUNT NOTES The Company may from time to time offer Original Issue Discount Notes. The Prospectus Supplement applicable to certain Original Issue Discount Notes may provide that Holders of such Notes will not receive periodic payments of interest. For purposes of determining whether Holders of the requisite principal amount of Notes outstanding under the Indenture have made a demand or given a notice or waiver or taken any other action, the outstanding principal amount of Original Issue Discount Notes shall be deemed to be the amount of the principal that would be due and payable upon declaration of acceleration of the Stated Maturity thereof as of the date of such determination. See "General." 14 "Original Issue Discount Note" means (i) a Note that has a "stated redemption price at maturity" that exceeds its "issue price" (each as defined for United States federal income tax purposes) by at least 0.25% of its stated redemption price at maturity multiplied by the number of complete years from the Original Issue Date to the Stated Maturity for such Note (or, in the case of a Note that provides for payment of any amount other than the "qualified stated interest" (as so defined) prior to maturity, the weighted average maturity of the Note) and (ii) any other Note designated by the Company as issued with original issue discount for United States federal income tax purposes. AMORTIZING NOTES The Company may from time to time offer Notes for which payments of principal and interest are made in installments over the life of the Note ("Amortizing Notes"). Interest on each Amortizing Note will be computed as specified in the applicable Prospectus Supplement. Unless otherwise specified in the applicable Prospectus Supplement, payments with respect to an Amortizing Note will be applied first to interest due and payable thereon and then to the reduction of the unpaid principal amount thereof. A table setting forth repayment information with respect to each Amortizing Note will be attached to such Note and to the applicable Prospectus Supplement and will be available, upon request, to subsequent Holders. RESET NOTES The Prospectus Supplement relating to each Note will indicate whether the Company has the option with respect to such Note to reset the interest rate, in the case of a Fixed Rate Note, or to reset the Spread and/or Spread Multiplier, in the case of a Floating Rate Note (in each case, a "Reset Note"), and, if so, (i) the date or dates on which such interest rate or such Spread and/or Spread Multiplier, as the case may be, may be reset (each an "Optional Interest Reset Date") and (ii) the formula, if any, for such resetting. The Company may exercise such option with respect to a Note by notifying the Trustee of such exercise at least 45 but not more than 60 calendar days prior to an Optional Interest Reset Date for such Note. If the Company so notifies the Trustee of such exercise, the Trustee will send not later than 40 calendar days prior to such Optional Interest Reset Date, by telegram, telex, facsimile transmission, hand delivery or letter (first class, postage prepaid) to the Holder of such Note a notice (the "Reset Notice") indicating (i) that the Company has elected to reset the interest rate, in the case of a Fixed Rate Note, or the Spread and/or Spread Multiplier, in the case of a Floating Rate Note, (ii) such new interest rate or such new Spread and/or Spread Multiplier, as the case may be, and (iii) the provisions, if any, for redemption of such Note during the period from such Optional Interest Reset Date to the next Optional Interest Reset Date or, if there is no such next Optional Interest Reset Date, to the Stated Maturity of such Note (each such period a "Subsequent Interest Period"), including the date or dates on which or the period or periods during which and the price or prices at which such redemption may occur during such Subsequent Interest Period. Notwithstanding the foregoing, not later than 20 calendar days prior to an Optional Interest Reset Date for a Note, the Company may, at its option, revoke the interest rate, in the case of a Fixed Rate Note, or the Spread and/or Spread Multiplier, in the case of a Floating Rate Note, provided for in the Reset Notice and establish a higher interest rate, in the case of a Fixed Rate Note, or a Spread and/or Spread Multiplier resulting in a higher interest rate, in the case of a Floating Rate Note, for the Subsequent Interest Period commencing on such Optional Interest Reset Date by causing the Trustee to send by telegram, telex, facsimile transmission, hand delivery or letter (first class, postage prepaid) notice of such higher interest rate or Spread and/or Spread Multiplier resulting in a higher interest rate, as the case may be, to the Holder of such Note. Such notice will be irrevocable. All Notes with respect to which the interest rate or Spread and/or Spread Multiplier is reset on an Optional Interest Reset Date to a higher interest rate or Spread and/or Spread Multiplier resulting in a higher interest rate will bear such higher interest rate, in the case of a Fixed Rate Note, or Spread and/or Spread Multiplier resulting in a higher interest 15 rate, in the case of a Floating Rate Note, whether or not tendered for repayment as provided in the next paragraph. If the Company elects prior to an Optional Interest Reset Date to reset the interest rate or the Spread and/or Spread Multiplier of a Note, the Holder of such Note will have the option to elect repayment of such Note, in whole but not in part, by the Company on such Optional Interest Reset Date at a price equal to the principal amount thereof plus accrued and unpaid interest to but excluding such Optional Interest Reset Date. In order for a Note to be so repaid on an Optional Interest Reset Date, the Holder thereof must follow the procedures set forth below under "Redemption and Repayment" for optional repayment, except that the period for delivery of such Note or notification to the Trustee will be at least 25 but not more than 35 calendar days prior to such Optional Interest Reset Date. A Holder who has tendered a Note for repayment following receipt of a Reset Notice may revoke such tender for repayment by written notice to the Trustee received prior to 5:00 P.M., New York City time, on the tenth calendar day prior to such Optional Interest Reset Date. EXTENSION OF MATURITY The Prospectus Supplement relating to each Note will indicate whether the Company has the option to extend the Stated Maturity of such Note for one or more periods of from one to five whole years (each an "Extension Period") up to but not beyond the date (the "Final Maturity Date") specified in such Prospectus Supplement. The Company may exercise such option with respect to a Note by notifying the Trustee of such exercise at least 45 but not more than 60 calendar days prior to the Stated Maturity of such Note (including, if such Stated Maturity has previously been extended, the Stated Maturity as previously extended) in effect prior to the exercise of such option (the "Pre-Exercise Stated Maturity Date"). If the Company so notifies the Trustee of such exercise, the Trustee will send not later than 40 calendar days prior to the Pre-Exercise Stated Maturity Date, by telegram, telex, facsimile transmission, hand delivery or letter (first class, postage prepaid) to the Holder of such Note a notice (the "Extension Notice") relating to such Extension Period, indicating (i) that the Company has elected to extend the Stated Maturity of such Note, (ii) the new Stated Maturity, (iii) in the case of a Fixed Rate Note, the interest rate applicable to such Extension Period or, in the case of a Floating Rate Note, the Spread and/or Spread Multiplier applicable to the Extension Period, and (iv) the provisions, if any, for redemption of such Note during the Extension Period, including the date or dates on which or the period or periods during which and the price or prices at which such redemption may occur during the Extension Period. Upon the sending by the Trustee of an Extension Notice to the Holder of a Note, the Stated Maturity of such Note will be extended automatically, and, except as modified by the Extension Notice and as described in the next two paragraphs, such Note will have the same terms as prior to the sending of such Extension Notice. Notwithstanding the foregoing, not later than 20 calendar days prior to the Pre-Exercise Stated Maturity Date for a Note, the Company may, at its option, revoke the interest rate, in the case of a Fixed Rate Note, or the Spread and/or Spread Multiplier, in the case of a Floating Rate Note, provided for in the Extension Notice and establish a higher interest rate, in the case of a Fixed Rate Note, or a Spread and/or Spread Multiplier resulting in a higher interest rate, in the case of a Floating Rate Note, for the Extension Period by causing the Trustee to send by telegram, telex, facsimile transmission, hand delivery or letter (first class, postage prepaid) notice of such higher interest rate or Spread and/or Spread Multiplier resulting in a higher interest rate, as the case may be, to the Holder of such Note. Such notice will be irrevocable. All Notes with respect to which the Stated Maturity is extended will bear such higher interest rate, in the case of a Fixed Rate Note, or Spread and/or Spread Multiplier resulting in a higher interest rate, in the case of a Floating Rate Note, for the Extension Period, whether or not tendered for repayment as provided in the next paragraph. 16 If the Company extends the Stated Maturity of a Note (including, if such Stated Maturity has previously been extended, the Stated Maturity as previously extended), the Holder of such Note will have the option to elect repayment of such Note, in whole but not in part, by the Company on the Pre-Exercise Stated Maturity Date (including the last day of the then current Extension Period) at a price equal to the principal amount thereof plus accrued and unpaid interest to but excluding such date. In order for a Note to be so repaid on the Original Stated Maturity Date, the Holder thereof must follow the procedures set forth below under "Redemption and Repayment" for optional repayment, except that the period for delivery of such Note or notification to the Trustee will be at least 25 but not more than 35 calendar days prior to the Original Stated Maturity Date. A Holder who has tendered a Note for repayment following receipt of an Extension Notice may revoke such tender for repayment by written notice to the Trustee received prior to 5:00 P.M., New York City time, on the tenth calendar day prior to the Original Stated Maturity Date. RENEWABLE NOTES The applicable Prospectus Supplement will indicate whether a Note (other than an Amortizing Note) will mature at its Pre-Exercise Stated Maturity Date unless the term of all or any portion of any such Note is renewed by the Holder in accordance with the procedures described in such Prospectus Supplement. COMBINATION OF PROVISIONS If so specified in the applicable Prospectus Supplement, any Note may be subject to all of the provisions, or any combination of the provisions, described above under "Reset Notes," "Extension of Maturity" and "Renewable Notes." REDEMPTION AND REPAYMENT Unless otherwise specified in the applicable Prospectus Supplement, the Notes will not be subject to any sinking fund. The Notes will be redeemable at the option of the Company prior to the Stated Maturity thereof only if an Initial Redemption Date is specified in the applicable Prospectus Supplement ("Initial Redemption Date"). If so specified, the Notes will be subject to redemption at the option of the Company on the date or dates and at the prices specified in such Prospectus Supplement. The selection of Notes or portions thereof to be redeemed prior to their Stated Maturity shall be in the sole discretion of the Company. Each Note which by its terms is redeemable prior to its Stated Maturity may be redeemed by the Company in whole or in part without also redeeming any other Note which is redeemable prior to its Stated Maturity. The Company may exercise any such option by causing the Trustee to mail a notice of such redemption at least 30 but not more than 60 calendar days prior to the date of redemption in accordance with the provisions of the Indenture. In the event of redemption of a Note in part only, such Note will be cancelled and a new Note or Notes representing the unredeemed portion thereof will be issued in the name of the Holder thereof. (Section 3.02) Unless otherwise specified in the applicable Prospectus Supplement, a Note will not be repayable prior to Stated Maturity at the option of the Holder. If so specified, a Note will be repayable at the option of the Holder, in whole or in part, on a date or dates prior to Stated Maturity and at a price or prices specified in the applicable Prospectus Supplement, plus accrued and unpaid interest to but excluding the date of repayment. In order for a Note that is repayable at the option of the Holder to be repaid prior to Stated Maturity, the Trustee must receive at least 30 but not more than 45 calendar days prior to the repayment date (i) the Note with the form entitled "Option to Elect Repayment" set forth in the Note duly completed or (ii) a telegram, telex, facsimile transmission, hand delivery or letter (first class, postage prepaid) from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States setting forth the name of the Holder of the Note, the principal 17 amount of the Note, the principal amount of the Note to be repaid, the certificate number or a description of the tenor and terms of the Note, a statement that the option to elect repayment is being exercised thereby and a guarantee that the Note to be repaid with the form entitled "Option to Elect Repayment" set forth in the Note duly completed will be received by the Trustee not later than five Business Days after the date of such telegram, telex, facsimile transmission, hand delivery or letter and such Note and form duly completed are received by the Trustee by such fifth Business Day. Exercise of the repayment option by the Holder of a Note will be irrevocable, except that a Holder who has tendered a Note for repayment may revoke such tender for repayment by written notice to the Paying Agent received prior to 5:00 P.M., New York City time, on the tenth calendar day prior to the repayment date. The repayment option may be exercised by the Holder of a Note for less than the entire principal amount of the Note provided that the principal amount of the Note remaining outstanding after such repayment is an authorized denomination. Upon such partial repayment such Note will be cancelled and a new Note or Notes for the remaining principal amount thereof will be issued in the name of the Holder thereof. While any Book-Entry Note is represented by one or more global Notes (each, a "Global Note") held by or on behalf of the Depositary, and registered in the name of the Depositary or its nominee, any such option for repayment may be exercised by the applicable Participant (as defined below under "Book-Entry System") that has an account with the Depositary, on behalf of a Beneficial Owner of the Global Note or Notes representing such Book-Entry Notes, by delivering a written notice substantially similar to the above-mentioned form duly completed to the Trustee at its Corporate Trust Office (or such other address of which the Company will from time to time notify the Holders), at least 30 but not more than 60 calendar days prior to the date of repayment. Notices of election from Participants on behalf of Beneficial Owners of the Global Note or Notes representing such Book-Entry Notes to exercise their option to have such Book-Entry Notes repaid must be received by the Trustee by 5:00 P.M., New York City time, on the last day for giving such notice. In order to ensure that a notice is received by the Trustee on a particular day, the Beneficial Owner of the Global Note or Notes representing such Book-Entry Notes must so direct the applicable Participant before such Participant's deadline for accepting instructions for that day. Different firms may have different deadlines for accepting instructions from their customers. Accordingly, Beneficial Owners of the Global Note or Notes representing Book-Entry Notes should consult the Participants through which they own their interest therein for the respective deadlines for such Participants. All notices shall be executed by a duly authorized officer of such Participant (with signatures guaranteed) and will be irrevocable. In addition, Beneficial Owners of the Global Note or Notes representing Book-Entry Notes shall effect delivery at the time such notices of election are given to the Depositary by causing the applicable Participant to transfer such Beneficial Owner's interest in the Global Note or Notes representing such Book-Entry Notes, on the Depositary's records, to the Trustee. See "Book-Entry System." (Section 3.04) If applicable, the Company will comply with the requirements of Rule 14e-1 under the Exchange Act, and any other securities laws or regulations in connection with any such repayment. REPURCHASE The Company may at any time purchase Notes at any price or prices in the open market or otherwise. Notes so purchased by the Company may be held or resold or, at the discretion of the Company, may be surrendered to the Trustee for cancellation. OTHER PROVISIONS Any provisions with respect to the determination of an Interest Rate Basis, the specifications of an Interest Rate Basis, calculation of the interest rate applicable to, or the principal payable at Maturity on, any Note, its Interest Payment Dates or any other matter relating thereto may be modified by the terms as specified on the face of such Note, or in an annex relating thereto if so specified on the face thereof, and/or in the applicable Prospectus Supplement. 18 BOOK-ENTRY SYSTEM DTC will act as securities depositary for the Book-Entry Notes. The Book-Entry Notes will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee). One fully-registered Global Note will be issued for each issue of the Notes, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds the maximum principal amount (if any) permitted by DTC, one Global Note will be issued with respect to such maximum principal amount and an additional Global Note will be issued with respect to any remaining principal amount of such issue. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to Section 17A of the Exchange Act. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants ("Direct Participants") include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to DTC's system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and its Participants are on file with the Commission. Purchases of Book-Entry Notes under DTC's system must be made by or through Direct Participants, which will receive a credit for the Book-Entry Notes on DTC's records. The ownership interest of each actual purchaser of each Book-Entry Note ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. A Beneficial Owner will not receive written confirmation from DTC of its purchase, but such Beneficial Owner is expected to receive a written confirmation providing details of such transaction, as well as periodic statements of its holdings, from the Direct or Indirect Participant through which such Beneficial Owner entered into such transaction. Transfers of ownership interests in the Book-Entry Notes are to be accomplished by entries made on the books of Participants acting on behalf of the Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Book-Entry Notes, except in the event that use of the book-entry system for one or more Book-Entry Notes is discontinued. To facilitate subsequent transfers, all Global Notes deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Global Notes with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Book-Entry Notes; DTC's records reflect only the identity of the Direct Participants to whose accounts such Book-Entry Notes are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices for Book-Entry Notes shall be sent to Cede & Co. If less than all of the Book-Entry Notes within an issue are being redeemed, DTC's current practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 19 Neither DTC nor Cede & Co. will consent or vote with respect to Book-Entry Notes. Under its usual procedures, DTC will mail an "Omnibus Proxy" to the issuer as soon as possible after the Record Date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Book-Entry Notes are credited on the Record Date (identified in a listing attached to the Omnibus Proxy). Principal and interest payments on the Book-Entry Notes will be made to DTC. DTC's practice is to credit Direct Participants' accounts on the payable date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on the payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as in the case of securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participants and not of DTC, the paying agent or the Company, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the Company or the paying agent, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants. A Beneficial Owner must give notice to elect to have its Book-Entry Notes purchased or tendered, through its Participant, to the paying agent, and must effect delivery of such Book-Entry Notes by causing the Direct Participant to transfer the Participant's interest in the Book-Entry Notes, on DTC's records, to the paying agent. The requirement for physical delivery of Book-Entry Notes in connection with a demand for purchase or a mandatory purchase will be deemed satisfied when the ownership rights in the Book-Entry Notes are transferred by Direct Participants on DTC's records. If DTC is at any time unwilling or unable to continue as depositary or if DTC ceases to be a "clearing agency" registered pursuant to Section 17A of the Exchange Act, and, in either case, a successor depositary is not appointed by the Company within 90 days, or if any Notes are represented by a Global Note at a time when an Event of Default with respect to the Notes shall have occurred and be continuing, the Company will issue individual Certificated Notes in exchange for Book-Entry Notes represented by Global Notes. In addition, the Company may at any time, and in its sole discretion, determine that one or more Book-Entry Notes will no longer be represented by one or more Global Notes and, in such event, will issue individual Certificated Notes in exchange for Book-Entry Notes represented by such Global Notes. The Company may decide to discontinue use of the system of book-entry transfers through DTC (or a successor Notes depositary). In that event, Certificated Notes will be printed and delivered in exchange for the Book-Entry Notes represented by the Global Notes held by DTC. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that the Company believes to be reliable, but the Company takes no responsibility for the accuracy thereof. So long as DTC or its nominee is the registered owner of a Global Note, DTC or its nominee, as the case may be, will be considered the sole Holder of the Notes represented by such Global Note for all purposes under the Indenture. Except as provided above, owners of beneficial interests in a Global Note will not be entitled to have the Note represented by such Global Note registered in their names, will not receive or be entitled to receive physical delivery of such Note in certificated form and will not be considered the owners or Holders thereof under the Indenture. The laws of some states require that certain purchasers of securities take physical delivery of such securities in certificated form; accordingly, such laws may limit the transferability of beneficial interests in a Global Note. None of the Company, the Agent, the Trustee, any paying agent or the registrar for the Notes will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. (Section 2.12) 20 EXCHANGE, REGISTRATION AND TRANSFER Notes will be exchangeable for registered Notes of like aggregate principal amount and of like Stated Maturity (as defined below under "Certain Definitions") and with like terms and conditions. Upon surrender for registration of transfer of any Note at the office or agency of the Company maintained for such purpose, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee, one or more new registered Notes of the like aggregate principal amount of such denominations as are authorized for Notes of a like Stated Maturity and with like terms and conditions. No service charge will be made for any transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. (Section 3.05) The Company shall not be required (i) to register, transfer or exchange Notes during a period beginning at the opening of business 15 days before the day of the transmission of a notice of redemption of Notes of a like Stated Maturity and with like terms and conditions selected for redemption and ending at the close of business on the day of such transmission, or (ii) to register, transfer or exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (Section 3.05) EVENTS OF DEFAULT Under the Indenture, "Event of Default" with respect to any Note means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law, pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest upon any Note when it becomes due and payable, and continuance of such default for a period of 30 days; (2) default in the payment of the principal of (and premium, if any, on) any Note at its Maturity; (3) default in the performance or breach of any covenant or warranty in the Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in the Indenture specifically dealt with), and continuance of such default or breach for a period of 60 days after there has been given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Notes then outstanding, a written notice specifying such default or breach and requiring it to be remedied; (4) default (i) in the payment of any principal of or interest on any Indebtedness of the Company or any Subsidiary of the Company (other than Notes), aggregating more than $10,000,000 in principal amount, when due after giving effect to any applicable grace period or (ii) in the performance of any other term or provision of any Indebtedness of the Company or any Subsidiary of the Company (other than Notes) in excess of $10,000,000 principal amount that results in such Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, and such acceleration shall not have been rescinded or annulled, or such Indebtedness shall not have been discharged, within a period of 15 days after there has been given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Notes then outstanding, a written notice specifying such default or defaults; (5) the entry against the Company or any Subsidiary of the Company of one or more judgments, decrees or orders by a court from which no appeal may be or is taken for the payment of money, either individually or in the aggregate, in excess of $10,000,000, and the continuance of such judgment, decree or order unsatisfied and in effect for any period of 45 consecutive days after the amount thereof is due without a stay of execution; (6) certain events of bankruptcy, insolvency or reorganization with respect to the Company; or (7) any other Event of Default with respect to the subject Note described in the applicable Prospectus Supplement. (Section 8.01) The Indenture requires the Company to file with the Trustee, annually, an officer's certificate as to the Company's compliance with all conditions and covenants under the Indenture. (Section 6.04) The Indenture provides that the Trustee may withhold notice to the Holders of Notes of any default (except 21 payment defaults on any Note) if it determines that the withholding of such notice is in the interest of the Holders of such Notes. (Section 8.12) If an Event of Default with respect to the Notes at the time outstanding occurs and is continuing, then in every case the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes then outstanding may declare the principal amount (or, if any Notes are Original Issue Discount Notes, the Amortized Face Amount) of all the Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or Amortized Face Amount) shall become immediately due and payable. Upon payment of such amount in United States dollars, all obligations of the Company in respect of the payment of principal of the Notes shall terminate (except as otherwise provided in the Indenture or the Prospectus Supplement). (Section 8.02) Subject to the provisions of the Indenture relating to the duties of the Trustee, in case an Event of Default with respect to the Notes shall occur and be continuing, the Trustee shall be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders of the Notes unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. (Section 9.03) The Holders of a majority in principal amount of the outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee under the Indenture, or exercising any trust or power conferred on the Trustee with respect to the Notes, unless the Trustee determines that the proceeding or action so directed may not lawfully be taken, would involve the Trustee in personal liability or would be unduly prejudicial to other Holders of Notes. (Section 8.11) At any time after such a declaration of acceleration with respect to the Notes has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as provided in the Indenture, the Holders of a majority in aggregate principal amount of the Notes then outstanding, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (1) the Company has paid or deposited with the Trustee a sum in United States dollars sufficient to pay (A) all overdue installments of interest on all Notes, (B) the principal of (and premium, if any, on) any Notes which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Notes; (C) to the extent that payment of such interest is lawful, interest upon overdue installments of interest on each Note at the rate borne by such Note, and (D) all sums paid or advanced by the Trustee and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default with respect to the Notes, other than the nonpayment of the principal of the Notes which have become due solely by such declaration of acceleration, have been cured or waived as provided in the Indenture. No such rescission and waiver will affect any subsequent default or impair any right consequent thereon. (Section 8.02) MERGER OR CONSOLIDATION The Indenture provides that the Company may not consolidate with or merge into any other corporation or convey, transfer or lease its properties and assets substantially as an entirety to any Person, (1) unless the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety (the "successor corporation") is a corporation organized and existing under the laws of the United States or any State or the District of Columbia and expressly assumes by a supplemental indenture the due and punctual payment of the principal of (and premium, if any) and interest on all Notes and the performance of every covenant of the Indenture on the part of the Company to be performed or observed; (2) unless immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, 22 shall have occurred and be continuing; (3) if, as a result of any such consolidation or merger or such conveyance, transfer or lease, properties or assets of the Company would become subject to a mortgage, pledge, lien, security interest or other encumbrance which would not otherwise be permitted by the Indenture without making effective provision whereby the Notes then outstanding and any other indebtedness of the Company then entitled thereto will be equally and ratably secured with any and all indebtedness and obligations secured thereby, the Company or such successor corporation or Person, as the case may be, will take such steps as will be necessary effectively to secure all Notes equally and ratably with (or prior to) all indebtedness secured thereby; and (4) unless the Company has delivered to the Trustee an officers' certificate and an opinion of counsel each stating that such consolidation, merger, conveyance, transfer or lease and such supplemental indenture comply with the provisions of the Indenture and that all conditions precedent therein provided for relating to such transaction have been complied with. (Section 12.01) MODIFICATION OR WAIVER Without the consent of any Holders, the Company and the Trustee, at any time and from time to time, may enter into a supplemental indenture for any of the following purposes: (1) to make such provision in regard to matters or questions arising under the Indenture as may be necessary or desirable and not inconsistent with the Indenture or for the purpose of supplying any omission, curing any ambiguity, or curing, correcting or supplementing any defective or inconsistent provision; PROVIDED that such provisions may not adversely affect the interests of Holders of outstanding Notes created prior to the execution of such supplemental indenture in any material respect; (2) to change or eliminate any of the provisions of this Indenture; PROVIDED that any such change or elimination shall become effective only when there is no outstanding Note created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision; (3) to secure the Notes; (4) to establish the form of Notes as permitted by the Indenture or to establish or reflect any terms of any Note determined in accordance with the Indenture; (5) to evidence the succession of another corporation to the Company, and the assumption by any such successor of the covenants of the Company in the Indenture and in the Notes; (6) to grant to or confer upon the Trustee for the benefit of the Holders any additional rights, remedies, powers or authority; (7) to permit the Trustee to comply with any duties imposed upon it by law; (8) to specify further the duties and responsibilities of, and to define further the relationships among, the Trustee, any Authenticating Agent and any paying agent; (9) to add to the covenants of the Company for the benefit of the Holders of all or any Notes (and if such covenants are to be for the benefit of less than all Notes, stating that such covenants are expressly being included solely for the benefit of such Notes), or to surrender a right or power conferred on the Company in the Indenture; and (10) to add any additional Events of Default (and if such Events of Default are to be applicable to less than all Notes, stating that such Events of Default are expressly being included for the benefit of such Notes). (Section 13.01) With the consent of the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding that would be affected by the particular supplemental indenture, the Company and the Trustee, may at any time and from time to time, enter into a supplemental indenture for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of modifying in any manner the rights of the Holders of such Notes; PROVIDED, HOWEVER, that no such supplemental indenture may (i) change the Stated Maturity of any Note; or reduce the rate of interest on any Note; or change the method of calculating interest, or any term used in the calculation of interest or the period for which interest is payable, on any Floating Rate Note; or reduce the principal amount of any Note or any premium thereon, or reduce the amount of the principal of an Original Issue Discount Note that would be due and payable upon a declaration of acceleration of the Maturity thereof, or adversely affect the right of repayment or renewal, if any, at the option of the Holder; or change the currency of payment of any Note; or change the date on which any Note may be redeemed; or adversely affect the rights of any Holder to institute suit for the enforcement of any payment of principal of or any premium or interest on any Note; in each case without the consent of the Holder of each Note then outstanding that would be affected thereby, including Notes for which an offer to purchase has been accepted by the 23 Company, or (ii) reduce the aforesaid percentage of the principal amount of Notes, the Holders of which are required to consent to any such supplemental indenture, or the percentage in aggregate principal amount of the Notes then outstanding, the consent of the Holders of which is required for any waiver of certain past defaults or Events of Default hereunder or the consequences thereof, in each case without the consent of the Holders of all of the Notes then outstanding. (Section 13.02) Prior to any declaration accelerating the Maturity of the Notes, the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding may on behalf of the Holders of all the Notes waive any past default or Event of Default under the Indenture and its consequences, except a default (1) in the payment of the principal of or any premium or interest on any Note, or (2) in respect of a covenant or provision hereof which pursuant to the second paragraph under "Modification or Waiver" cannot be modified or amended without the consent of the Holder of each Note then outstanding that would be affected thereby. Upon any such waiver, such default will cease to exist, and any Event of Default arising therefrom will be deemed to have been cured, for every purpose of the Indenture and the Notes, but no such waiver will extend to any subsequent or other default or Event of Default or impair any right consequent thereon. (Section 8.11) The Company may omit in any particular instance to comply with the covenants in the Indenture described above under "Restrictions on Secured Debt" (and if so specified in the applicable Prospectus Supplement, any covenant not set forth in the Indenture but specified in such Prospectus Supplement to be applicable to any Note, except as otherwise provided in such Prospectus Supplement), if before the time for such compliance the Holders of at least a majority in aggregate principal amount of the Notes then outstanding either waive such compliance in such instance or generally waive compliance with such covenants, but no such waiver may extend to or affect any covenant except to the extent expressly so waived, and, until such waiver becomes effective, the obligations of the Company and the duties of the Trustee in respect of any such covenant will remain in full force and effect. (Section 6.07) DISCHARGE OF INDENTURE The Indenture may be discharged, subject to certain terms and conditions, when (1) either (A) all Notes theretofore authenticated and delivered have been delivered to the Trustee for cancellation, or (B) all such Notes not theretofore delivered to the Trustee for cancellation (i) have become due and payable, (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice by the Trustee, and the Company, in the case of (i), (ii) or (iii) of this subclause (B), has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose an amount in United States dollars, U.S. Government Obligations maturing as to principal and interest in such amounts and at such times as will ensure the availability of United States dollars, or a combination of United States dollars and U.S. Government Obligations, sufficient to pay and discharge the entire indebtedness on such Notes for principal (and premium, if any) and interest to the date of such deposit (in the case of Notes which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be; PROVIDED, HOWEVER, in the event a petition for relief under any applicable federal or state bankruptcy, insolvency or other similar law is filed with respect to the Company within 91 days after the deposit and the Trustee is required to return the deposited money to the Company, the obligations of the Company under the Indenture with respect to such Notes will not be deemed terminated or discharged; (2) the Company has paid or caused to be paid all other sums payable under the Indenture by the Company; (3) the Company has delivered to the Trustee an officers' certificate and an opinion of counsel each stating that all conditions precedent therein provided for relating to the satisfaction and discharge of the Indenture with respect to the Notes have been complied with; and (4) the Company has delivered to the Trustee an opinion of counsel or a ruling of the Internal Revenue Service to the effect that Holders of the Notes will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and discharge. (Section 5.01) 24 PAYMENT AND PAYING AGENTS So long as any of the Notes remain outstanding, the Company will maintain in the Borough of Manhattan, The City of New York, an office or agency where the Notes may be presented for registration of transfer and for exchange as in the Indenture provided, and where, at any time when the Company is obligated to make a payment upon Notes (other than a payment which it is permitted to make by check), the Notes may be presented for payment, and will maintain at any such office or agency and at its principal office an office or agency where notices and demands to or upon the Company in respect of the Notes or of the Indenture may be served; PROVIDED that the Company may maintain at its principal executive offices, one or more other offices or agencies for any or all of the foregoing purposes. The Company has appointed the Trustee as agent of the Company for the foregoing purposes. (Section 6.02) REGARDING THE TRUSTEE The First National Bank of Chicago is one of a number of banks with which the Company maintains ordinary banking relationships and from which the Company has obtained credit facilities and lines of credit, and acts as the trustee under an indenture under which subordinated debentures of the Company may be or become outstanding. CERTAIN DEFINITIONS Set forth below is a summary of certain defined terms as used in the Indenture. Reference is made to Article One of the Indenture for the full definition of all such terms. "Common Shareholders' Equity," at any time, means the total common shareholders' equity of the Company and its consolidated subsidiaries, determined on a consolidated basis in accordance with generally accepted accounting principles, as of the end of the most recently completed fiscal quarter of the Company for which financial information is then available. "Holder" means the person in whose name a Registered Note is registered in the Note register. "Indebtedness" means with respect to any person (i) any liability of such person (a) for borrowed money, or (b) evidenced by a bond, note, debenture or similar instrument (including purchase money obligations but excluding trade payables), or (c) for the payment of money relating to a lease that is required to be classified as a capitalized lease obligation in accordance with generally accepted accounting principles; (ii) any liability of others described in the preceding clause (i) that such person has guaranteed, that is recourse to such person or that is otherwise its legal liability; and (iii) any amendment, supplement, modification, deferral, renewal, extension or refunding of any liability of the types referred to in clauses (i) and (ii) above. "Maturity" when used with respect to any Note means the date on which the principal of the Note or an installment of principal becomes due and payable as provided therein or in the Indenture, whether at the Stated Maturity or by declaration of acceleration, call for redemption, repayment at the option of the Holder or otherwise. "Outstanding" when used with respect to Notes, means, as of the date of determination, all the Notes theretofore authenticated and delivered under the Indenture, except as provided in such Indenture. "Principal Facility" means the real property, fixtures, machinery and equipment relating to any facility owned by the Company or any Subsidiary, except any facility that, in the opinion of the Board of Directors, is not of material importance to the business conducted by the Company and its Subsidiaries, taken as a whole. "Subsidiary" means any corporation of which at least a majority of the outstanding stock having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation, irrespective of whether or not at the time stock of any other class or classes of such corporation shall have or might have 25 voting power by reason of the happening of any contingency, is at the time, directly or indirectly, owned or controlled by the Company or by one or more Subsidiaries thereof, or by the Company and one or more Subsidiaries. "U.S. Government Obligations" means securities that are (i) direct obligations of the United States for the payment of which its full faith and credit is pledged, or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States, which, in either case under clauses (i) or (ii), are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt; PROVIDED that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depository receipt. "Wholly-Owned Subsidiary" means a Subsidiary of which all of the outstanding voting stock (other than directors' qualifying shares) is at the time, directly or indirectly, owned by the Company, or by one or more Wholly-Owned Subsidiaries of the Company or by the Company and one or more Wholly-Owned Subsidiaries. UNITED STATES FEDERAL INCOME TAX CONSEQUENCES The following summary describes the principal United States federal income tax consequences of the purchase, ownership and disposition of Notes to beneficial owners ("holders") of Notes purchasing Notes at their original issuance. This summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), legislative history, administrative pronouncements, judicial decisions and final, temporary and proposed Treasury Regulations, changes to any of which subsequent to the date hereof may affect the tax consequences described herein. Any such change may apply retroactively. This summary is also based on final Treasury Regulations (the "1996 OID Regulations") published by the Internal Revenue Service ("IRS") on June 14, 1996, which set forth rules applicable to "contingent payment debt instruments." This summary discusses only the principal United States federal income tax consequences to those holders holding Notes as capital assets within the meaning of Section 1221 of the Code. It does not address all of the tax consequences that may be relevant to a holder in light of the holder's particular circumstances or to holders subject to special rules (including pension plans and other tax-exempt investors, banks, thrifts, insurance companies, real estate investment trusts, regulated investment companies, dealers in securities, currencies and persons so treated for federal income tax purposes, persons whose functional currency (as defined in Section 985 of the Code) is other than the United States dollar, and persons who hold Notes as part of a straddle, hedging or conversion transaction). This summary also assumes that a taxpayer obtains any necessary consent of the IRS before changing a method of accounting. Persons considering the purchase of Notes should consult their tax advisors with regard to the application of United States federal income tax laws to their particular situations as well as any tax consequences to them arising under the laws of any state, local or foreign taxing jurisdiction. State, local and foreign income tax laws may differ substantially from the corresponding federal income tax laws, and this discussion does not purport to describe any aspect of the tax laws of any state, local or foreign jurisdiction. Therefore, potential investors should consult their own tax advisors with respect to the various state, local and foreign tax consequences of an investment in Notes. As used herein, the term "United States Holder" means a beneficial owner of a Note who or which is, for United States federal income tax purposes, either (i) a citizen or resident of the United States, (ii) a corporation or partnership created or organized in or under the laws of the United States or of any 26 political subdivision thereof or (iii) an estate or trust the income of which is subject to United States federal income taxation regardless of its source. The term also includes certain holders who are former citizens of the United States whose income and gain from the Notes will be subject to United States taxation. TAXATION OF INTEREST The taxation of interest on a Note depends on whether it constitutes "qualified stated interest" (as defined below). Interest on a Note that constitutes qualified stated interest is includible in a United States Holder's income as ordinary interest income when actually or constructively received, if such Holder uses the cash method of accounting for federal income tax purposes, or when accrued, if such Holder uses an accrual method of accounting for federal income tax purposes. Interest that does not constitute qualified stated interest is included in a United States Holder's income under the rules described below under "Original Issue Discount," regardless of such Holder's method of accounting. Notwithstanding the foregoing, interest that is payable on a Note with a maturity of one year or less from its issue date (a "Short-Term Note") is included in a United States Holder's income under the rules described below under "Short-Term Notes." FIXED RATE NOTES Interest on a Fixed Rate Note will constitute "qualified stated interest" if the interest is unconditionally payable, or will be constructively received under Section 451 of the Code, in cash or in property (other than debt instruments of the Company) at least annually at a single fixed rate. FLOATING RATE NOTES Interest on a Floating Rate Note that is unconditionally payable, or will be constructively received under Section 451 of the Code, in cash or in property (other than debt instruments of the Company) at least annually will constitute "qualified stated interest" if the Note is a "variable rate debt instrument" ("VRDI") under the rules described below and the interest is payable at a single "qualified floating rate" or single "objective rate" (each as defined below). If the Note is a VRDI but the interest is payable other than at a single qualified floating rate or at a single objective rate, special rules apply to determine the portion of such interest that constitutes "qualified stated interest." See "Original Issue Discount Floating--RATE NOTES THAT ARE VRDIS," below. DEFINITION OF VARIABLE RATE DEBT INSTRUMENT (VRDI), QUALIFIED FLOATING RATE AND OBJECTIVE RATE A Note is a VRDI if all of the four following conditions are met. First, the "issue price" of the Note (as described below) must not exceed the total noncontingent principal payments by more than an amount equal to the lesser of (i) .015 multiplied by the product of the total noncontingent principal payments and the number of complete years to maturity from the issue date (or, in the case of a Note that provides for payment of any amount other than qualified stated interest before maturity, its weighted average maturity) and (ii) 15% of the total noncontingent principal payments. Second, the Note must provide for stated interest (compounded or paid at least annually) at (a) one or more qualified floating rates, (b) a single fixed rate and one or more qualified floating rates, (c) a single objective rate or (d) a single fixed rate and a single objective rate that is a "qualified inverse floating rate" (as defined below). Third, the Note must provide that a qualified floating rate or objective rate in effect at any time during the term of the Note is set at the value of the rate on any day that is no earlier than three months prior to the first day on which that value is in effect and no later than one year following that first day. 27 Fourth, the Note may not provide for any principal payments that are contingent except as provided in the first requirement set forth above. Subject to certain exceptions, a variable rate of interest on a Note is a "qualified floating rate" if variations in the value of the rate can reasonably be expected to measure contemporaneous fluctuations in the cost of newly borrowed funds in United States dollars. A variable rate will be considered a qualified floating rate if the variable rate equals (i) the product of an otherwise qualified floating rate and a fixed multiple (I.E., a Spread Multiplier) that is greater than 0.65, but not more than 1.35 or (ii) an otherwise qualified floating rate (or the product described in clause (i)) plus or minus a fixed rate (I.E., a Spread). If the variable rate equals the product of an otherwise qualified floating rate and a single Spread Multiplier greater than 1.35 or less than or equal to 0.65, however, such rate will generally constitute an objective rate, described more fully below. A variable rate will not be considered a qualified floating rate if the variable rate is subject to a cap, floor, governor (I.E., a restriction on the amount of increase or decrease in the stated interest rate) or similar restriction that is reasonably expected as of the issue date to cause the yield on the Note to be significantly more or less than the expected yield determined without the restriction (other than a cap, floor or governor that is fixed throughout the term of the Note). Subject to certain exceptions, an "objective rate" is a rate (other than a qualified floating rate) that is determined using a single fixed formula and that is based on objective financial or economic information that is neither within the control of the Company (or a related party) nor unique to the circumstances of the Company (or a related party). For example, an objective rate generally includes a rate that is based on one or more qualified floating rates or on the yield of actively traded personal property (within the meaning of Section 1092(d)(1) of the Code). Notwithstanding the first sentence of this paragraph, a rate on a Note is not an objective rate if it is reasonably expected that the average value of the rate during the first half of the Note's term will be either significantly less than or significantly greater than the average value of the rate during the final half of the Note's term. An objective rate is a "qualified inverse floating rate" if (a) the rate is equal to a fixed rate minus a qualified floating rate and (b) the variations in the rate can reasonably be expected to reflect inversely contemporaneous variations in the cost of newly borrowed funds (disregarding any caps, floors, governors or similar restrictions that would not, as described above, cause a rate to fail to be a qualified floating rate). If interest on a Note is stated at a fixed rate for an initial period of less than one year, followed by a variable rate that is either a qualified floating rate or an objective rate for a subsequent period, and the value of the variable rate on the issue date is intended to approximate the fixed rate, the fixed rate and the variable rate together constitute a single qualified floating rate or objective rate. ORIGINAL ISSUE DISCOUNT Original issue discount ("OID") with respect to a Note is the excess, if any, of the Note's "stated redemption price at maturity" over the Note's "issue price." A Note's "stated redemption price at maturity" is the sum of all payments provided by the Note (whether designated as interest or as principal) other than payments of qualified stated interest. The "issue price" of a Note is the first price at which a substantial amount of the Notes in the issuance that includes such Note is sold for money (excluding sales to bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). As described more fully below, United States Holders of Notes with OID that mature more than one year from their issue date generally will be required to include such OID in income as it accrues in accordance with the constant yield method described below, irrespective of the receipt of the related cash payments. A United States Holder's tax basis in a Note is increased by each accrual of OID and decreased by each payment other than a payment of qualified stated interest. The amount of OID with respect to a Note will be treated as zero if the OID is less than an amount equal to .0025 multiplied by the product of the stated redemption price at maturity and the number of 28 complete years to maturity (or, in the case of a Note that provides for payment of any amount other than qualified stated interest prior to maturity, the weighted average maturity of the Note). If the amount of OID with respect to a Note is less than that amount, the OID that is not included in payments of stated interest is generally included in income as capital gain as principal payments are made. The amount includible with respect to a principal payment equals the product of the total amount of OID and a fraction, the numerator of which is the amount of such principal payment and the denominator of which is the stated principal amount of the Note. FIXED RATE NOTES In the case of OID with respect to a Fixed Rate Note, the amount of OID includible in the income of a United States Holder for any taxable year is determined under the constant yield method, as follows. First, the "yield to maturity" of the Note is computed. The yield to maturity is the discount rate that, when used in computing the present value of all interest and principal payments to be made under the Note (including payments of qualified stated interest), produces an amount equal to the issue price of the Note. The yield to maturity is constant over the term of the Note and, when expressed as a percentage, must be calculated to at least two decimal places. Second, the term of the Note is divided into "accrual periods." Accrual periods may be of any length and may vary in length over the term of the Note, provided that each accrual period is no longer than one year and that each scheduled payment of principal or interest occurs either on the final day of an accrual period or on the first day of an accrual period. Third, the total amount of OID on the Note is allocated among accrual periods. In general, the OID allocable to an accrual period equals the product of the "adjusted issue price" of the Note at the beginning of the accrual period and the yield to maturity of the Note, less the amount of any qualified stated interest allocable to the accrual period. The adjusted issue price of a Note at the beginning of the first accrual period is its issue price. Thereafter, the adjusted issue price of the Note is its issue price, increased by the amount of OID previously includible in the gross income of any holder and decreased by the amount of any payment previously made on the Note other than a payment of qualified stated interest. For purposes of computing the adjusted issue price of a Note, the amount of OID previously includible in the gross income of any holder is determined without regard to "premium" and "acquisition premium," as those terms are defined below under "Premium and Acquisition Premium." Fourth, the "daily portions" of OID are determined by allocating to each day in an accrual period its ratable portion of the OID allocable to the accrual period. A United States Holder includes in income in any taxable year the daily portions of OID for each day during the taxable year that such Holder held Notes. In general, under the constant yield method described above, United States Holders will be required to include in income increasingly greater amounts of OID in successive accrual periods. FLOATING RATE NOTES THAT ARE VRDIS The taxation of OID (including interest that does not constitute qualified stated interest) on a Floating Rate Note will depend on whether the Note is a "VRDI," as that term is defined above under "Taxation of Interest--DEFINITION OF VARIABLE RATE DEBT INSTRUMENT (VRDI), QUALIFIED FLOATING RATE AND OBJECTIVE RATE." In the case of a VRDI that provides for qualified stated interest, the amount of qualified stated interest and the amount of OID, if any, includible in income during a taxable year are determined under the rules applicable to Fixed Rate Notes (described above) by assuming that the variable rate is a fixed rate equal to (i) in the case of a qualified floating rate or a qualified inverse floating rate, the value, as of the issue date, of the qualified floating rate or qualified inverse floating rate, or (ii) in the case of an objective 29 rate (other than a qualified inverse floating rate), the rate that reflects the yield that is reasonably expected for the Note. Qualified stated interest allocable to an accrual period is increased (or decreased) if the interest actually paid during an accrual period exceeds (or is less than) the interest assumed to be paid during the accrual period. If a Note that is a VRDI does not provide for interest at a single variable rate as described above, the amount of interest and OID accruals are determined by constructing an equivalent fixed rate debt instrument, as follows. First, in the case of an instrument that provides for interest at one or more qualified floating rates or at a qualified inverse floating rate and, in addition, at a fixed rate, replace the fixed rate with a qualified floating rate (or qualified inverse floating rate) such that the fair market value of the instrument, so modified, as of the issue date would be approximately the same as the fair market value of the unmodified instrument. Second, determine the fixed rate substitute for each variable rate provided by the Note. The fixed rate substitute for each qualified floating rate provided by the Note is the value of that qualified floating rate on the issue date. If the Note provides for two or more qualified floating rates with different intervals between interest adjustment dates (for example, the 30-day Commercial Paper Rate and quarterly LIBOR), the fixed rate substitutes are based on intervals that are equal in length (for example, the 90-day Commercial Paper Rate and quarterly LIBOR, or the 30-day Commercial Paper Rate and monthly LIBOR). The fixed rate substitute for an objective rate that is a qualified inverse floating rate is the value of the qualified inverse floating rate on the issue date. The fixed rate substitute for an objective rate (other than a qualified inverse floating rate) is a fixed rate that reflects the yield that is reasonably expected for the Note. Third, construct an equivalent fixed rate debt instrument that has terms that are identical to those provided under the Note, except that the equivalent fixed rate debt instrument provides for the fixed rate substitutes determined in the second step, in lieu of the qualified floating rates or objective rate provided by the Note. Fourth, determine the amount of qualified stated interest and OID for the equivalent fixed rate debt instrument under the rules (described above) for Fixed Rate Notes. These amounts are taken into account as if the United States Holder held the equivalent fixed rate debt instrument. See "Taxation of Interest" and "Original Issue Discount--FIXED RATE NOTES," above. Fifth, make appropriate adjustments for the actual values of the variable rates. In this step, qualified stated interest or OID allocable to an accrual period is increased (or decreased) if the interest actually accrued or paid during the accrual period exceeds (or is less than) the interest assumed to be accrued or paid during the accrual period under the equivalent fixed rate debt instrument. FLOATING RATE NOTES THAT ARE NOT VRDIS The tax treatment of Floating Rate Notes that are not VRDIs ("Contingent Notes") is as follows. First, the Company is required to determine, as of the issue date, the comparable yield for the Contingent Note. The comparable yield is generally the yield at which the Company would issue a fixed rate debt instrument with terms and conditions similar to those of the Contingent Note (including the level of subordination, term, timing of payments and general market conditions, but not taking into consideration the riskiness of the contingencies or the liquidity of the Contingent Note), but not less than the applicable federal rate announced monthly by the IRS (the "AFR"). In certain cases where Contingent Notes are marketed or sold in substantial part to tax-exempt investors or other investors for whom the prescribed inclusion of interest is not expected to have a substantial effect on their U.S. tax liability, the comparable yield for the Contingent Note, without proper evidence to the contrary, is presumed to be the AFR. Second, solely for tax purposes, the Company constructs a projected schedule of payments determined under the 1996 OID Regulations for the Contingent Note (the "Schedule"). The Schedule is determined 30 as of the issue date and generally remains in place throughout the term of the Contingent Note. If a right to a contingent payment is based on market information, the amount of the projected payment is the forward price of the contingent payment. If a contingent payment is not based on market information, the amount of the projected payment is the expected value of the contingent payment as of the issue date. The Schedule must produce the comparable yield determined as set forth above. Otherwise, the Schedule must be adjusted under the rules set forth in the 1996 OID Regulations. Third, under the usual rules applicable to OID and based on the Schedule, the interest income on the Contingent Note for each accrual period is determined by multiplying the comparable yield of the Contingent Note (adjusted for the length of the accrual period) by the Contingent Note's adjusted issue price at the beginning of the accrual period (determined under rules set forth in the 1996 OID Regulations). The amount so determined is then allocated on a ratable basis to each day in the accrual period that the United States Holder held the Contingent Note. Fourth, appropriate adjustments are made to the interest income determined under the foregoing rules to account for any differences between the Schedule and actual contingent payments. Under the rules set forth in the 1996 OID Regulations, differences between the actual amounts of any contingent payments made in a calendar year and the projected amounts of such payments are generally aggregated and taken into account, in the case of a positive difference, as additional interest income, or, in the case of a negative difference, first as a reduction in interest income for such year and thereafter, subject to certain limitations, as ordinary loss. The Company is required to provide each holder of a Contingent Note with the Schedule described above. If the Company does not create a Schedule or the Schedule is unreasonable, a United States Holder must set its own projected payment schedule and explicitly disclose the use of such schedule and the reason therefor. Unless otherwise prescribed by the IRS, the United States Holder must make such disclosure on a statement attached to the United States Holder's timely filed federal income tax return for the taxable year in which the Contingent Note was acquired. In general, any gain realized by a United States Holder on the sale, exchange or retirement of a Contingent Note is interest income. In general, any loss on a Contingent Note accounted for under the method described above is ordinary loss to the extent it does not exceed such Holder's prior interest inclusions on the Contingent Note (net of negative adjustments). Special rules apply in determining the tax basis of a Contingent Note and the amount realized on the retirement of a Contingent Note. OTHER RULES Certain Notes having OID may be redeemed prior to maturity or may be repayable at the option of the holder. Such Notes may be subject to rules that differ from the general rules discussed above relating to the tax treatment of OID. Purchasers of such Notes with a redemption feature should consult their tax advisors with respect to such feature since the tax consequences with respect to original issue discount will depend, in part, on the particular terms and the particular features of the purchased Note. The Treasury Regulations relating to the tax treatment of OID contain certain language ("aggregation rules") stating in general that, with some exceptions, if more than one type of Note is issued in connection with the same transaction or related transactions, such Notes may be treated as a single debt instrument with a single issue price, maturity date, yield to maturity and stated redemption price at maturity for purposes of calculating and accruing any OID. Unless otherwise provided in the applicable Prospectus Supplement, the Company does not expect to treat different types of Notes as being subject to the aggregation rules for purposes of computing OID. 31 MARKET DISCOUNT If a United States Holder acquires a Note having a maturity date of more than one year from the date of its issuance and has a tax basis in the Note that is, in the case of a Note that does not have OID, less than its stated redemption price at maturity, or, in the case of a Note that has OID, less than its adjusted issue price (as defined above), the amount of such difference is treated as "market discount" for federal income tax purposes, unless such difference is less than 1/4 of one percent of the stated redemption price at maturity multiplied by the number of complete years to maturity (from the date of acquisition). Under the market discount rules of the Code, a United States Holder is required to treat any principal payment (or, in the case of a Note that has OID, any payment that does not constitute a payment of qualified stated interest) on, or any gain on the sale, exchange, retirement or other disposition of, a Note as ordinary income to the extent of the accrued market discount that has not previously been included in income. Thus, partial principal payments are treated as ordinary income to the extent of accrued market discount that has not previously been included in income. If such Note is disposed of by the United States Holder in certain otherwise nontaxable transactions, accrued market discount will be includible as ordinary income by the United States Holder as if such Holder had sold the Note at its then fair market value. In general, the amount of market discount that has accrued is determined on a ratable basis. A United States Holder may, however, elect to determine the amount of accrued market discount on a constant yield to maturity basis. This election is made on a Note-by-Note basis and is irrevocable. With respect to Notes with market discount, a United States Holder may not be allowed to deduct immediately a portion of the interest expense on any indebtedness incurred or continued to purchase or to carry such Notes. A United States Holder may elect to include market discount in income currently as it accrues, in which case the interest deferral rule set forth in the preceding sentence will not apply. Such an election will apply to all debt instruments acquired by the United States Holder on or after the first day of the first taxable year to which such election applies and is irrevocable without the consent of the IRS. A United States Holder's tax basis in a Note will be increased by the amount of market discount included in such Holder's income under such an election. In lieu of the foregoing rules, different rules apply in the case of Contingent Notes where a holder's tax basis in a Contingent Note is less than the Contingent Note's adjusted issue price (determined under special rules set out in the 1996 OID Regulations). Accordingly, prospective purchasers of Contingent Notes should consult with their tax advisors with respect to the application of such rules to such Notes. PREMIUM AND ACQUISITION PREMIUM A United States Holder will be treated as having purchased a Note at a "premium" (or "amortizable bond premium") if the Note's adjusted basis, immediately after its purchase by such Holder, exceeds the sum of all amounts payable on the Note after the purchase date other than payments of qualified stated interest. United States Holders may elect to amortize the premium over the remaining term of the Note (where such Note is not callable prior to its maturity date), as a reduction in the amount of the interest payments otherwise includible in income, and the United States Holder will not be required to include in income OID (if any) with respect to any Note purchased at a premium. If such Note may be called by the Company prior to maturity after the United States Holder has acquired it, the amount of amortizable bond premium is determined with reference to either the amount payable at maturity, or, if it results in a smaller premium attributable to the period through the earlier call date, with reference to the amount payable on the earlier call date. If a United States Holder makes this election, the premium will be allocated among all the interest payments on the Note, on the basis of the United States Holders's yield to maturity, with compounding at the close of each accrual period. A United States Holder who elects to amortize premium must reduce the tax basis of the Note by the amount of the premium amortized in any year. If this election is made with respect to any Note, it will also apply to all debt instruments held by the United States Holder at the beginning of the first taxable year to which the election applies and to all debt instruments acquired 32 by the United States Holder, and will be binding for all subsequent taxable years unless the election is revoked with the consent of the IRS. On June 27, 1996, the IRS published in the Federal Register proposed regulations (the "Proposed Premium Regulations") on the amortization of bond premium. The Proposed Premium Regulations describe the constant yield method under which such premium is amortized and provide that the resulting offset to interest income can be taken into account only as a United States Holder takes the corresponding interest income into account under such holder's regular accounting method. In the case of instruments that may be redeemed at the option of the Company or repaid at the option of the holder prior to maturity, the Proposed Premium Regulations provide that the premium is calculated by assuming that the Company will exercise or not exercise its redemption rights in the manner that maximizes the United States Holder's yield and the United States Holder will exercise or not exercise its repayment option in a manner that maximizes the United States Holder's yield. The Proposed Premium Regulations are proposed to be effective for debt instruments acquired on or after the date 60 days after the date final regulations are published in the Federal Register. However, if a United States Holder elects to amortize bond premium for the taxable year containing such effective date, the Proposed Premium Regulations would apply to all the United States Holder's debt instruments held on or after the first day of that taxable year. It cannot be predicted at this time whether the Proposed Premium Regulations will become effective or what, if any, modifications will be made to them prior to their becoming effective. If a United States Holder purchases a Note issued with OID at an "acquisition premium," the amount of OID that the United States Holder includes in gross income is reduced to reflect the acquisition premium. A Note is purchased at an acquisition premium if its adjusted basis, immediately after its purchase, is (a) less than or equal to the sum of all amounts payable on the Note after the purchase date other than payments of qualified stated interest and (b) greater than the Note's "adjusted issue price" (as described above under "Original Issue Discount--FIXED RATE NOTES"). If a Note is purchased at an acquisition premium, the United States Holder reduces the amount of OID otherwise includible in income during an accrual period by an amount equal to (i) the amount of OID otherwise includible in income multiplied by (ii) a fraction, the numerator of which is the excess of the adjusted basis of the Note immediately after its acquisition by the purchaser over the adjusted issue price of the Note and the denominator of which is the excess of the sum of all amounts payable on the Note after the purchase date, other than payments of qualified stated interest, over the Note's adjusted issue price. As an alternative to reducing the amount of OID otherwise includible in income by this fraction, the United States Holder may elect to compute OID accruals by treating the purchase as a purchase at original issuance and applying the constant yield method described above. In lieu of the foregoing rules, different rules apply in the case of Contingent Notes where a holder's tax basis in a Contingent Note is greater than the Contingent Note's adjusted issue price (determined under special rules set out in the 1996 OID Regulations). Accordingly, prospective purchasers of Contingent Notes should consult with their tax advisors with respect to the application of such rules to such Notes. SHORT-TERM NOTES In the case of a Short-Term Note, no interest is treated as qualified stated interest, and therefore all interest is included in OID. United States Holders that report income for federal income tax purposes on an accrual method and certain other United States Holders, including banks and dealers in securities, are required to include OID in income on such Short-Term Notes on a straight-line basis, unless an election is made to accrue the OID according to a constant yield method based on daily compounding. Any other United States Holder of a Short-Term Note is not required to accrue OID for federal income tax purposes, unless it elects to do so, with the consequence that the reporting of such income is 33 deferred until it is received. In the case of a United States Holder that is not required, and does not elect, to include OID in income currently, any gain realized on the sale, exchange or retirement of a Short-Term Note is ordinary income to the extent of the OID accrued on a straight-line basis (or, if elected, according to a constant yield method based on daily compounding) through the date of sale, exchange or retirement. In addition, United States Holders that are not required, and do not elect, to include OID in income currently are required to defer deductions for any interest paid on indebtedness incurred or continued to purchase or carry a Short-Term Note in an amount not exceeding the deferred interest income with respect to such Short-Term Note (which includes both the accrued OID and accrued interest that are payable but that have not been included in gross income), until such deferred interest income is realized. A United States Holder of a Short-Term Note may elect to apply the foregoing rules (except for the rule characterizing gain on sale, exchange or retirement as ordinary) with respect to "acquisition discount" rather than OID. Acquisition discount is the excess of the stated redemption price at maturity of the Short-Term Note over the United States Holder's basis in the Short-Term Note. This election applies to all obligations acquired by the taxpayer on or after the first day of the first taxable year to which such election applies, unless revoked with the consent of the IRS. A United States Holder's tax basis in a Short-Term Note is increased by the amount included in such Holder's income on such a Note. ELECTION TO TREAT ALL INTEREST AS OID United States Holders may elect to include in gross income all interest that accrues on a Note, including any stated interest, acquisition discount, OID, market discount, DE MINIMIS OID, DE MINIMIS market discount and unstated interest (as adjusted by amortizable bond premium and acquisition premium), by using the constant yield method described above under "Original Issue Discount." Such an election for a Note with amortizable bond premium will result in a deemed election to amortize bond premium for all debt instruments owned and later acquired by the United States Holder with amortizable bond premium and may be revoked only with the permission of the IRS. Similarly, such an election for a Note with market discount will result in a deemed election to accrue market discount in income currently for such Note and for all other debt instruments acquired by the United States Holder with market discount on or after the first day of the taxable year to which such election first applies, and may be revoked only with the permission of the IRS. A United States Holder's tax basis in a Note will be increased by each accrual of the amounts treated as OID under the constant yield election described in this paragraph. EXTENDIBLE NOTES, RENEWABLE NOTES AND RESET NOTES If so specified in an applicable Prospectus Supplement relating to a Note, the Company or a holder may have the option to extend the maturity of or renew such Note. See "Description of Notes--Extension of Maturity" and "Description of Notes--Renewable Notes." In addition, the Company may have the option to reset the interest rate, the Spread or the Spread Multiplier with respect to a Note. See "Description of Notes--Reset Notes." The treatment of a United States Holder of Notes to which such options apply will depend, in part, on the terms established for such Notes by the Company pursuant to the exercise of such option by the Company or a holder. Upon the exercise of any such option, the United States Holder of such Notes may be treated for federal income tax purposes as having exchanged such Notes (the "Old Notes") for new Notes with revised terms (the "New Notes"). If such holder is treated as having exchanged Old Notes for New Notes, such exchange may be treated as either a taxable exchange or a tax-free recapitalization. Final Treasury Regulations under Section 1001 of the Code, published on June 26, 1996 (the "Final Section 1001 Regulations"), generally provide that the exercise of an option provided to an issuer or a holder to change a term of a debt instrument (such as the maturity or the interest rate) in a manner such as that contemplated for Extendible Notes, Renewable Notes and Reset Notes will create a deemed exchange of Old Notes for New Notes if such exercise modifies such terms to a degree that is "economically 34 significant." With respect to certain types of debt instruments, under the Final Section 1001 Regulations a deemed exchange for tax purposes occurs if the exercise of such an option alters the annual yield of the debt instrument by more than the greater of (i) 25 basis points or (ii) 5 percent of the annual yield of the debt instrument prior to modification. The exercise of an option that changes the timing of payments under a debt instrument creates a deemed exchange under the Final Section 1001 Regulations (whether or not the annual yield is altered) if there is a "material deferral" of scheduled payments. In this connection, the Final Section 1001 Regulations generally provide that a deferral of scheduled payments within a safe-harbor period which begins on the original due date for the first deferred payment and extends for a period not longer than the lesser of five years or 50 percent of the original term of the debt instrument will not be considered to be a material deferral. If the exercise of the option by the Company or a holder is not treated as an exchange of Old Notes for New Notes, no gain or loss will be recognized by a United States Holder as a result thereof. If the exercise of the option is treated as a taxable exchange of Old Notes for New Notes, a United States Holder will recognize gain or loss equal to the difference between the issue price of the New Notes and such Holder's tax basis in the Old Notes. However, if the exercise of the option is treated as a tax-free recapitalization, no loss will be recognized by a United States Holder as a result thereof and gain, if any, will be recognized to the extent of the fair market value of the excess, if any, of the principal amount of securities received over the principal amount of securities surrendered. In this regard, the meaning of the term "principal amount" is not clear. Such term could be interpreted to mean "issue price" with respect to securities that are received and "adjusted issue price" with respect to securities that are surrendered. Legislation to that effect has been introduced in the past. It is not possible to determine whether such legislation will be reintroduced or enacted, and, if enacted, whether it would apply to a recapitalization occurring prior to the date of enactment. The presence of such options may also affect the calculation of interest income and OID, among other things. For purposes of determining the yield and maturity of a Note, if the Company has an unconditional option or combination of options to require payments to be made on the Note under an alternative payment schedule or schedules (e.g., an option to extend or an option to call the Note at a fixed premium), it will be deemed to exercise or not exercise an option or combination of options in a manner that minimizes the yield on the Note. Conversely, a holder having such option or combination of such options will be deemed to exercise or not exercise such option or combination of options in a manner that maximizes the yield on such Note. If both the Company and the holder have options, the foregoing rules are applied to the options in the order that they may be exercised. Thus, the deemed exercise of one option may eliminate other options that are later in time. If the exercise of such option or options actually occurs or does not occur, contrary to what is deemed to occur pursuant to the foregoing rules, then, solely for purposes of the accrual of OID, the yield and maturity of the Note are redetermined by treating the Note as reissued on the date of the occurrence or non-occurrence of the exercise for an amount equal to its adjusted issue price on that date. Depending on the terms of the options described above, the presence of such options may instead cause the Notes to be taxable as Contingent Notes under the 1996 OID Regulations. See "Original Issue Discount--FLOATING RATE NOTES THAT ARE NOT VRDIS." THE FOREGOING DISCUSSION OF EXTENDIBLE NOTES, RENEWABLE NOTES AND RESET NOTES IS PROVIDED FOR GENERAL INFORMATION ONLY. ADDITIONAL TAX CONSIDERATIONS MAY ARISE FROM THE OWNERSHIP OF SUCH NOTES IN LIGHT OF THE PARTICULAR FEATURES OR COMBINATION OF FEATURES OF SUCH NOTES AND, ACCORDINGLY, PERSONS CONSIDERING THE PURCHASE OF SUCH NOTES ARE ADVISED AND EXPECTED TO CONSULT WITH THEIR OWN LEGAL AND TAX ADVISERS REGARDING THE TAX CONSEQUENCES OF THE OWNERSHIP OF SUCH NOTES. INTEGRATION OF NOTES WITH OTHER FINANCIAL INSTRUMENTS Any United States Holder of Notes that also acquires or has acquired any financial instrument which, in combination with such Notes, would permit the calculation of a single yield to maturity or could generally constitute a VRDI of an equivalent term, may in certain circumstances treat such Notes and such 35 financial instrument as an integrated debt instrument for purposes of the Code, with a single determination of issue price and the character and timing of income, deductions, gains and losses. (For purposes of determining OID, none of the payments under the integrated debt instrument will be treated as qualified stated interest.) Moreover, under the 1996 OID Regulations, the IRS may require in certain circumstances that a United States Holder who owns Notes integrate such Notes with a financial instrument held or acquired by such Holder or a related party. United States Holders should consult their tax advisors as to such possible integration. SALE OR EXCHANGE OF NOTES A United States Holder generally will recognize gain or loss upon the sale or exchange of a Note equal to the difference between the amount realized upon such sale or exchange and the United States Holder's adjusted basis in the Note. Such adjusted basis in the Note generally will equal the cost of the Note, increased by OID, acquisition discount or market discount previously included in respect thereof, and reduced (but not below zero) by any payments on the Note other than payments of qualified stated interest and by any premium that the United States Holder has taken into account. To the extent attributable to accrued but unpaid qualified stated interest, the amount realized by the United States Holder will be treated as a payment of interest. Generally, any gain or loss will be capital gain or loss if the Note was held as a capital asset, except as provided under "Market Discount," "Short-Term Notes" and "Original Issue Discount--FLOATING RATE NOTES THAT ARE NOT VRDIS," above. Special rules apply in determining the tax basis of a Contingent Note and the amount realized on the retirement of a Contingent Note. The excess of net long-term capital gains over net short-term capital losses is taxed at a lower rate than ordinary income for certain non-corporate taxpayers. The distinction between capital gain or loss and ordinary income or loss is also relevant for purposes of, among other things, limitations on the deductibility of capital losses. FOREIGN HOLDERS As used herein, the term "Non-United States Holder" means a holder of a Note that is, for United States federal income tax purposes, (i) a nonresident alien individual, (ii) a foreign corporation, (iii) a nonresident alien fiduciary of a foreign estate or trust or (iv) a foreign partnership one or more of the members of which is, for United States federal income tax purposes, a nonresident alien individual, a foreign corporation or a nonresident alien fiduciary of a foreign estate or trust. On April 15, 1996, proposed Treasury Regulations (the "1996 Proposed Regulations") were issued which, if adopted in final form, could affect the United States taxation of Non-United States Holders. The 1996 Proposed Regulations are generally proposed to be effective for payments after December 31, 1997, regardless of the issue date of the Note with respect to which such payments are made, subject to certain transition rules. It cannot be predicted at this time whether the 1996 Proposed Regulations will become effective as proposed or what, if any, modifications may be made to them. The discussion under this heading and under "Backup Withholding and Information Reporting," below, is not intended to include a complete discussion of the provisions of the 1996 Proposed Regulations, and prospective investors are urged to consult their tax advisors with respect to the effect the 1996 Proposed Regulations may have if adopted. Under current United States federal income tax law now in effect, and subject to the discussion of backup withholding in the following section, payments of principal and interest (including OID) with respect to a Note by the Company or by any paying agent to any Non-United States Holder will not be subject to the withholding of United States federal income tax, provided, in the case of interest (including OID), that (i) such Holder does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote, (ii) such Holder is not for federal income tax purposes a controlled foreign corporation related, directly or indirectly, to the Company 36 through stock ownership, (iii) such Holder is not a bank receiving interest described in Section 881(c)(3)(A) of the Code and (iv) either (A) the beneficial owner of the Note certifies, under penalties of perjury, to the Company or paying agent, as the case may be, that such Holder is a Non-United States Holder and provides such Holder's name and address, or (B) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business (a "financial institution") and holds the Note, certifies, under penalties of perjury, to the Company or paying agent, as the case may be, that such certificate has been received from the beneficial owner by it or by a financial institution between it and the beneficial owner and furnishes the payor with a copy thereof. A certificate described in this paragraph is effective only with respect to payments of interest (including OID) made to the certifying Non-United States Holder after the issuance of the certificate in the calendar year of its issuance and the two immediately succeeding calendar years. Under temporary Treasury Regulations, the foregoing certification may be provided by the beneficial owner of a Note on IRS Form W-8. The 1996 Proposed Regulations provide optional documentation procedures designed to simplify compliance by withholding agents. The 1996 Proposed Regulations would not affect the documentation rules described above, but would add "intermediary certification" options for certain qualifying withholding agents. Under one such option, a withholding agent would be allowed to rely on IRS Form W-8 furnished by a financial institution or other intermediary on behalf of one or more beneficial owners (or other intermediaries) without having to obtain the beneficial owner certificate described in the preceding paragraph, provided that the financial institution or intermediary has entered into a withholding agreement with the IRS and thus is a "qualified intermediary." Under another option, an authorized foreign agent of the U.S. withholding agent would be permitted to act on behalf of the U.S. withholding agent, provided certain conditions are met. For purposes of establishing entitlement to the withholding exemption described above, the 1996 Proposed Regulations generally would, if adopted, treat as the beneficial owners of payments on a Note those persons that, under United States tax principles, are the taxpayers with respect to such payments. For example, the partners of a foreign partnership, rather than the partnership itself, would be required to provide the required certifications to qualify for such withholding exemption. Thus, subject to certain exceptions, each partner, rather than the partnership, would be required to provide the required certifications to qualify for the withholding exemption described above. The 1996 Proposed Regulations provide certain presumptions with respect to withholding for holders not providing the required certifications to qualify for the withholding exemption described above. In addition, the 1996 Proposed Regulations would replace a number of current tax certification forms (including IRS Form W-8 and IRS Form 4224, discussed below) with a single, restated form (and, in certain circumstances, additional information) and standardize the period of time for which withholding agents could rely on such certifications. Notwithstanding the foregoing, interest described in Section 871(h)(4) of the Code will be subject to United States withholding tax at a 30% rate (or such lower rate as may be provided by an applicable treaty). In general, interest described in Section 871(h)(4) of the Code includes (subject to certain exceptions) any interest the amount of which is determined by reference to receipts, sales or other cash flow of the issuer or a related person, any income or profits of the issuer or a related person, any change in the value of any property of the issuer or a related person or any dividends, partnership distribution or similar payments made by the issuer or a related person. Interest described in Section 871(h)(4) of the Code may include other types of contingent interest identified by the IRS in future Treasury Regulations. If a Non-United States Holder is engaged in a trade or business in the United States and interest (including OID) on the Note is effectively connected with the conduct of such trade or business, the Non-United States Holder, although exempt from the withholding tax discussed above, will be subject to United States federal income tax on such interest (including OID) in the same manner as if it were a United States 37 Holder. In lieu of the certificate described above, such Holder will be required to provide a properly executed IRS Form 4224 in order to claim an exemption from withholding tax. In addition, if such Holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% (or such lower rate as may be specified by an applicable treaty) of its effectively connected earnings and profits for the taxable year, subject to adjustments. For this purpose, interest (including OID) on a Note will be included in the earnings and profits of such Holder if such interest (including OID) is effectively connected with the conduct by such Holder of a trade or business in the United States. Generally, any gain or income (other than that attributable to accrued interest or OID) realized upon the sale, exchange, retirement or other disposition of a Note will not be subject to United States federal income tax unless (i) such gain or income is effectively connected with a trade or business in the United States of the Non-United States Holder or (ii) in the case of a Non-United States Holder who is a nonresident alien individual, the Non-United States Holder is present in the United States for 183 days or more in the taxable year of such sale, exchange, retirement or other disposition and either (a) such individual has a "tax home" (as defined in Section 911(d)(3) of the Code) in the United States or (b) the gain is attributable to an office or other fixed place of business maintained by such individual in the United States. BACKUP WITHHOLDING AND INFORMATION REPORTING Under current United States federal income tax law, information reporting requirements apply to interest (including OID) and principal payments made to, and to the proceeds of sales before maturity by, certain non-corporate United States Holders. In addition, a 31% backup withholding tax will apply if the non-corporate United States Holder (i) fails to furnish such holder's Taxpayer Identification Number ("TIN") (which, for an individual, would be his or her Social Security Number) to the payor in the manner required, (ii) furnishes an incorrect TIN and the payor is so notified by the IRS, (iii) is notified by the IRS that it has failed properly to report payments of interest and dividends or (iv) in certain circumstances, fails to certify, under penalties of perjury, that it has not been notified by the IRS that it is subject to backup withholding for failure properly to report interest and dividend payments. Backup withholding will not apply with respect to payments made to certain exempt recipients, including corporations, tax-exempt organizations, qualified pension and profit-sharing trusts and individual retirement accounts, provided that they establish entitlement to an exemption. In the case of a Non-United States Holder, under Treasury Regulations, backup withholding and information reporting will not apply to payments of principal and interest made by the Company or any paying agent thereof on a Note with respect to which such holder has provided the required certification under penalties of perjury that it is a Non-United States Holder or has otherwise established an exemption, provided that (i) the Company or paying agent, as the case may be, does not have actual knowledge that the payee is a United States person and (ii) certain other conditions are satisfied. In general, (i) principal or interest payments on a Note collected outside the United States by a foreign office of a custodian, nominee or other agent acting on behalf of a beneficial owner of a Note and (ii) payments on the sale, exchange or retirement of a Note to or through a foreign office of a broker are not subject to backup withholding or information reporting. However, if such custodian, nominee, agent or broker is a United States person, a controlled foreign corporation for United States tax purposes, or a foreign person 50% or more of whose gross income is effectively connected with the conduct of a United States trade or business for a specified three-year period, such custodian, nominee, agent or broker may be subject to certain information reporting (but not backup withholding) requirements with respect to such payments unless such custodian, nominee, agent or broker has in its records documentary evidence that the beneficial owner is not a United States person and certain conditions are met or the beneficial owner otherwise establishes an exemption. 38 The 1996 Proposed Regulations would, if adopted, alter the foregoing rules in certain respects. In particular, the 1996 Proposed Regulations would require backup withholding in the event that the custodian, nominee, agent or broker has actual knowledge that the beneficial owner is a United States person. Backup withholding tax is not an additional tax. Rather, any amounts withheld from a payment to a holder under the backup withholding rules will be allowed as a refund or a credit against such holder's United States federal income tax, provided that the required information is furnished to the IRS. Holders should consult their tax advisors regarding the application of information reporting and backup withholding to their particular situations, the availability of an exemption therefrom, and the procedure for obtaining such an exemption, if available. PLAN OF DISTRIBUTION The Company may sell the Notes in and/or outside the United States: (i) through underwriters or dealers; (ii) directly to a limited number of purchasers or to a single purchaser; or (iii) through agents. The Prospectus Supplement with respect to the Notes being offered (the "Offered Notes") will set forth the terms of the offering of the Offered Notes, including the name or names of any underwriters or agents, the purchase price of the Offered Notes and the proceeds to the Company from such sale, any underwriting discounts and other items constituting underwriters' compensation, any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. If underwriters are used in the sale, the Offered Notes will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The Notes may be offered to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more underwriters. The underwriter or underwriters with respect to a particular underwritten offering of Notes, or, if an underwriting syndicate is used, the managing underwriter or underwriters, will be set forth on the cover of the applicable Prospectus Supplement. Unless otherwise set forth in the Prospectus Supplement relating thereto, the obligations of the underwriters to purchase the Offered Notes will be subject to conditions precedent and the underwriters will be obligated to purchase all of the Offered Notes if any are purchased. If dealers are utilized in the sale of Offered Notes in respect of which this Prospectus is delivered, and if so specified in the applicable Prospectus Supplement, the Company will sell such Offered Notes to the dealers as principals. The dealers may then resell such Offered Notes to the public at varying prices to be determined by such dealers at the time of resale. The names of the dealers and the terms of the transaction will be set forth in the applicable Prospectus Supplement. The Notes may be sold directly by the Company or through agents designated by the Company from time to time. Any agent involved in the offer or sale of the Offered Notes in respect to which this Prospectus is delivered will be named, and any commissions payable by the Company to such agent will be set forth, in the Prospectus Supplement. Underwriters, dealers and agents may be entitled under agreements entered into with the Company to indemnification by the Company against certain civil liabilities, including liabilities under the Securities Act, or to contribution with respect to payments which the underwriters, dealers or agents may be required to make in respect thereof. Underwriters, dealers and agents may be customers of, may engage in transactions with, or perform services for, the Company in the ordinary course of business. 39 LEGAL MATTERS The legality of the Notes offered hereby will be passed upon for MidAmerican Energy by John A. Rasmussen, Jr., Group Vice President and General Counsel of MidAmerican Energy, and for the Agent by Sidley & Austin, Chicago, Illinois. Sidley & Austin will rely upon the opinion of Mr. Rasmussen as to matters of Iowa law and the opinion of such firm will be conditioned upon, and subject to certain assumptions regarding, future action required to be taken by MidAmerican Energy and the Trustee in connection with the issuance and sale of any particular Note, the specific terms of the Notes and other matters which may affect the validity of the Notes but which cannot be ascertained on the date of such opinion. Sidley & Austin regularly serves as special counsel to MidAmerican Energy and to its affiliates on certain matters. Mr. Rasmussen is an officer and full-time employee of MidAmerican Energy and at September 30, 1996, he owned directly and/or beneficially 6,200 shares of common stock of MidAmerican Energy and had been granted, pursuant to and subject to the terms of MidAmerican Energy's Long-Term Incentive Plan, options to purchase 40,000 shares of MidAmerican Energy common stock and 6,500 performance shares. EXPERTS The consolidated financial statements and supporting schedules included in or incorporated by reference in MidAmerican Energy's 1995 Annual Report on Form 10-K have been audited by Arthur Andersen LLP, independent public accountants, as set forth in its report. The consolidated financial statements and supporting schedules referred to above have been incorporated herein in reliance upon the authority of Arthur Andersen LLP as experts in giving said reports. 40 - ------------------------------------------- ------------------------------------------- - ------------------------------------------- ------------------------------------------- NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS (OR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT) AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE AGENT. THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF MIDAMERICAN ENERGY SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION. ------------------- TABLE OF CONTENTS
PAGE ---- Available Information..................................................... 2 Incorporation of Certain Documents by Reference............................................................ 2 The Company............................................................... 3 Ratios of Earnings to Fixed Charges....................................... 3 Use of Proceeds........................................................... 4 Description of Notes...................................................... 4 United States Federal Income Tax Consequences............................................................ 26 Plan of Distribution...................................................... 39 Legal Matters............................................................. 40 Experts................................................................... 40
[LOGO] MEDIUM-TERM NOTES DUE FROM NINE MONTHS TO 30 YEARS FROM DATE OF ISSUE ----------------- P R O S P E C T U S ------------------- ------------ , 1996 - ------------------------------------------- ------------------------------------------- - ------------------------------------------- ------------------------------------------- INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED , 1996 PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1996 [LOGO] PREFERRED SECURITIES MIDAMERICAN ENERGY FINANCING I % PREFERRED SECURITIES, SERIES A (LIQUIDATION PREFERENCE $25 PER PREFERRED SECURITY) GUARANTEED TO THE EXTENT THAT THE SERIES A ISSUER HAS FUNDS AS SET FORTH HEREIN, BY MIDAMERICAN ENERGY COMPANY ---------- The % Preferred Securities, Series A (the "Series A Preferred Securities") offered hereby are being issued by and represent undivided preferred beneficial interests in the assets of MidAmerican Energy Financing I, a statutory business trust formed under the laws of the State of Delaware (the "Series A Issuer" or the "Series A Trust"). The preferred interests represented by the Series A Preferred Securities will have a preference under certain circumstances with respect to cash distributions and amounts payable on liquidation, redemption or otherwise over the trust interests represented by the Series A Common Securities (as defined herein) issued by the Series A Issuer. See "Description of the Preferred Securities -- Subordination of Common Securities" in the accompanying Prospectus. MidAmerican Energy Company, an Iowa corporation ("MidAmerican Energy" or the "Company"), is the owner of the trust interests represented by the common securities (the "Series A Common Securities" and together with the Series A Preferred Securities the "Series A Trust Securities") issued by the Series A Issuer. The Series A Issuer exists for the sole purpose of issuing its trust interests and investing the proceeds thereof in the % Junior Subordinated Debentures, Series A (the "Series A Debentures") issued by MidAmerican Energy. The Series A Debentures will mature on , 20 , which date may be extended to a date not later than , 20 if certain conditions are met. See "Certain Terms of the Series A Debentures--General". MidAmerican Energy has the right to, at any time, cause the termination of the Series A Issuer and the distribution of the Series A Debentures to the Holders of the Series A Trust Securities on a pro rata basis in liquidation of such Holders' interests in the Trust. See "Certain Terms of the Series A Preferred Securities -- Termination of the Series A Issuer and Distribution of the Series A Debentures". The First National Bank of Chicago is the Property Trustee of the Series A Issuer and the Indenture Trustee and Guarantee Trustee of MidAmerican Energy. (COVER CONTINUED ON NEXT PAGE) ------------------ SEE "RISK FACTORS" BEGINNING ON PAGE HEREOF FOR CERTAIN INFORMATION RELEVANT TO AN INVESTMENT IN THE SERIES A PREFERRED SECURITIES, INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENT OF DISTRIBUTIONS ON THE SERIES A PREFERRED SECURITIES MAY BE DEFERRED AND THE RELATED FEDERAL INCOME TAX CONSEQUENCES. ---------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROCEEDS TO THE INITIAL PUBLIC UNDERWRITING SERIES A OFFERING PRICE COMMISSION (1) ISSUER (2)(3) -------------- ---------------- ---------------- Per Series A Preferred Security..................................... $ (2) $ Total............................................................... $ (2) $
- ---------- (1) The Series A Issuer and MidAmerican Energy have agreed to indemnify the several Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting". (2) In view of the fact that the entire proceeds of the sale of the Series A Preferred Securities will be used to purchase the Series A Debentures, the Underwriting Agreement provides that MidAmerican Energy will pay to the Underwriters, as compensation for their arranging the investment therein of such proceeds, $ per Series A Preferred Security (or $ ("Underwriters' Compensation") in the aggregate). See "Underwriting". (3) Expenses of the offering, which are payable by MidAmerican Energy, are estimated to be $ . ------------------ The Series A Preferred Securities offered hereby are offered severally by the Underwriters, as specified herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. It is expected that the Series A Preferred Securities will be ready for delivery in book-entry form only through the facilities of The Depository Trust Company on or about , 1996, against payment therefor in immediately available funds. [NAMES OF UNDERWRITERS] ----------- The date of this Prospectus Supplement is , 1996. (COVER CONTINUED) Registered owners (the "Holders") of the Series A Preferred Securities will be entitled to receive preferential cumulative cash distributions accruing from the date of original issuance and payable quarterly in arrears on the first day of March, June, September and December of each year, commencing , at the per annum rate of % of the liquidation preference amount of $25 per Series A Preferred Security (together, at any given time, with any accrued but unpaid such amounts and interest thereon, if any, "Distributions"). Interest on the Series A Debentures is the sole source of income for the Series A Issuer from which payment of Distributions on the Series A Preferred Securities can be made. MidAmerican Energy has the right to defer payments of interest on the Series A Debentures by extending the interest payment period thereon at any time or from time to time for up to 20 consecutive quarters with respect to each deferral period (each, an "Extension Period"), provided that any such Extension Period may not extend beyond the maturity of the Series A Debentures and that MidAmerican Energy may not defer any payment of Additional Interest Attributable to Taxes (as defined in the accompanying Prospectus). If interest payments on the Series A Debentures are deferred, Distributions on the Series A Preferred Securities will also be deferred. During an Extension Period, quarterly Distributions on the Series A Preferred Securities will continue to accrue and Distributions that are in arrears will bear interest on the amount thereof at the per annum rate of [ ]% (to the extent permitted by applicable law, compounded quarterly), and Holders of Series A Preferred Securities will be required to accrue income for United States federal income tax purposes. See "Description of the Series A Debentures -- Option to Extend Interest Payment Period" and "United States Federal Income Taxation -- Original Issue Discount." Upon the termination of any Extension Period and the payment of all amounts then due, including interest on deferred interest payments, MidAmerican Energy may select a new Extension Period, subject to the above requirements. The payment of Distributions and payments on liquidation of the Series A Issuer or the redemption of Series A Preferred Securities, in each case out of moneys held by the Series A Issuer as set forth below, are guaranteed by MidAmerican Energy to the extent the Series A Issuer has sufficient funds available to make such payments (the "Series A Guarantee"). See "Certain Terms of the Series A Guarantee." If MidAmerican Energy fails to make interest payments on the Series A Debentures held by the Series A Issuer, the Series A Issuer will have insufficient funds to pay Distributions on the Series A Preferred Securities. The Series A Guarantee does not cover payment of Distributions when the Series A Issuer does not have sufficient funds to pay such Distributions. In such event, a Holder of Series A Preferred Securities will have the right to institute a suit directly against MidAmerican Energy to enforce payment of principal of or interest on the Series A Debentures. See "Description of the Debentures-- Enforcement of Certain Rights by Holders of Preferred Securities" in the accompanying Prospectus. MidAmerican Energy's obligations under the Series A Guarantee are subordinate and junior in right of payment to Senior Indebtedness (as defined in the accompanying Prospectus) of MidAmerican Energy except any liabilities that may be made PARI PASSU expressly by their terms. MidAmerican Energy has agreed in an Agreement as to Expenses and Liabilities (the "Expense Agreement") to provide funds to the Series A Issuer as needed to pay obligations of the Series A Issuer to parties other than Holders of Series A Trust Securities. The Series A Debentures and the Series A Guarantee, together with the obligations of MidAmerican Energy with respect to the Series A Preferred Securities under the Indenture, the Series A Supplemental Indenture (as defined herein), the Trust Agreement (as defined herein) and the Expense Agreement constitute a full and unconditional guarantee of the Series A Preferred Securities by MidAmerican Energy. The Series A Preferred Securities are subject to mandatory redemption upon repayment of the Series A Debentures at maturity or upon their earlier redemption. See "Description of the Preferred Securities--Redemption Procedures" in the accompanying Prospectus. MidAmerican Energy will have the option at any time on or after , to redeem the Series A Debentures, in whole or in part. MidAmerican Energy also will have the option, upon the occurrence and during the continuation of a Special Event (as defined herein), to redeem at any time the Series A Debentures, in whole but not in part, which will result in the redemption of all the Series A Trust Securities by the Series A Issuer. Any redemption of Series A Trust Securities by the Series A Issuer will be in amounts having an aggregate liquidation preference amount equal to the aggregate principal of Series A Debentures to be redeemed and will be at a redemption price equal to 100% of such liquidation preference amount, plus accrued and unpaid Distributions, if any, to the redemption date. Each class of the Series A Trust Securities will be redeemed in S-2 proportion to the percentage they represent of all the Series A Trust Securities. See "Description of the Debentures -- Optional Redemption" in the accompanying Prospectus. MidAmerican Energy will have the right, at any time, to cause the termination of the Series A Issuer and, in connection therewith, after satisfaction of creditors of the Series A Issuer, if any, to cause the distribution of Series A Debentures to the Holders of Series A Preferred Securities and the Common Securities in liquidation of the Series A Issuer. See "Certain Terms of the Series A Preferred Securities--Termination of Series A Issuer and Distribution of Series A Debentures". The Series A Debentures and the obligations of MidAmerican Energy under the Guarantee are subordinate and junior in right of payment to all Senior Indebtedness (as defined in the accompanying Prospectus) of MidAmerican Energy. The terms of the Series A Debentures place no limitation on the amount of Senior Indebtedness that may be incurred by MidAmerican Energy. As of , , MidAmerican Energy had approximately $ million of principal amount of indebtedness for borrowed money and capital lease obligations constituting Senior Indebtedness. See "Description of the Debentures -- Subordination" and "Description of the Preferred Securities" in the accompanying Prospectus. In the event of the liquidation of the Series A Issuer, the Holders of the Series A Trust Securities will be entitled to receive either (i) Series A Debentures in an aggregate principal amount of $25 per Series A Preferred Security or (ii) a liquidation preference amount of $25 per Series A Preferred Security, plus accrued and unpaid Distributions thereon to the date of payment, subject to certain limitations. See Description of the "Preferred Securities -- Liquidation Distribution upon Termination" in the accompanying Prospectus. Trading of the Series A Preferred Securities on the NYSE is expected to commence within 30 days after the initial delivery of the Series A Preferred Securities. If the Series A Debentures are distributed to the holders of Series A Preferred Securities upon the liquidation of the Series A Issuer, MidAmerican Energy will use its best efforts to list the Series A Debentures on the NYSE or such other stock exchanges, if any, on which the Series A Preferred Securities are then listed. The Series A Preferred Securities will be represented by a global certificate registered in the name of The Depository Trust Company ("DTC") or its nominee. Beneficial interests in the Series A Preferred Securities will be shown on, and transfers thereof will be effected only through, records maintained by Participants (as defined in the accompanying Prospectus) in DTC. Except as described herein, Series A Preferred Securities in certificated form will not be issued in exchange for the global certificate. See "Description of the Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust Company" in the accompanying Prospectus. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A PREFERRED SECURITIES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. S-3 RISK FACTORS Prospective purchasers of Series A Preferred Securities should carefully review the information contained elsewhere herein and should particularly consider the following risk factors with respect to the Series A Preferred Securities: RANKING OF SUBORDINATED OBLIGATIONS UNDER THE SERIES A GUARANTEE AND THE SERIES A DEBENTURES MidAmerican Energy's obligations under the Series A Guarantee issued by MidAmerican Energy for the benefit of the Holders of the Series A Preferred Securities are unsecured and rank subordinate and junior in right of payment to Senior Indebtedness of MidAmerican Energy, except any liabilities that may be made PARI PASSU expressly by their terms. The obligations of MidAmerican Energy under the Series A Debentures are subordinate and junior in right of payment to Senior Indebtedness of MidAmerican Energy. As of , 1996, MidAmerican Energy had approximately $ billion principal amount of Senior Indebtedness. There are no terms of the Series A Preferred Securities, the Series A Debentures or the Series A Guarantee that limit MidAmerican Energy's ability to incur additional indebtedness, including indebtedness that would rank senior to the Series A Debentures and the Series A Guarantee. See "Description of the Guarantee -- Status of the Guarantee" and "Description of the Debentures - -- Subordination" in the accompanying Prospectus. The ability of the Series A Issuer to pay amounts due on the Series A Preferred Securities is solely dependent upon MidAmerican Energy making payments on the Series A Debentures as and when required. OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES MidAmerican Energy has the right under the Indenture to extend the interest payment period at any time and from time to time on the Series A Debentures, for a period not exceeding 20 consecutive quarters. As a consequence of any such extension, quarterly Distributions on the Series A Preferred Securities would be deferred by the Series A Issuer during such Extension Period, but would continue to accumulate additional Distributions thereon at the rate of % per annum. In the event that MidAmerican Energy exercises this right, during any Extension Period MidAmerican Energy may not and may not permit any of its subsidiaries to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of MidAmerican Energy's capital stock or (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of MidAmerican Energy (including other debentures issued pursuant to the Indenture (as defined in the accompanying Prospectus)) that rank PARI PASSU with or junior in interest to the Series A Debentures or make any guarantee payments with respect to any guarantee by MidAmerican Energy of the debt securities of any of its subsidiaries if such guarantee ranks PARI PASSU with or junior in interest to the Series A Debentures (other than (a) dividends or distributions in Common Stock of MidAmerican Energy, (b) payments under any Guarantee (as defined in the accompanying Prospectus), and (c) purchases of common stock related to the issuance of common stock under any of MidAmerican Energy's benefit plans for its directors, officers or employees). Prior to the termination of any such Extension Period, MidAmerican Energy may further extend the interest payment period, provided that such Extension Period together with all such previous and further extensions thereof may not exceed 20 consecutive quarters and that such Extension Period may not extend beyond the maturity date of the Series A Debentures. Upon the termination of any Extension Period and the payment of all amounts then due on any Interest Payment Date, MidAmerican Energy may elect to begin a new Extension Period subject to the above requirements. Consequently, there could be multiple Extension Periods of varying lengths throughout the term of the Series A Debentures. See "Certain Terms of the Series A Preferred Securities--Distributions" and "Certain Terms of the Series A Debentures--Option to Extend Interest Payment Period." S-4 Because MidAmerican Energy has the right to extend the interest payment period on the Series A Debentures, the Series A Debentures will be treated as having been issued with original issue discount ("OID") for United States federal income tax purposes. As a result, Holders of Series A Preferred Securities will be required to include in their gross income Distributions as they accrue, rather than when they are paid, regardless of the Holder's regular method of accounting. OID on the Series A Preferred Securities will be treated as interest and, except with respect to an Extension Period, will generally be equal to the Distributions on the Series A Preferred Securities each year. Should an Extension Period occur, a Holder of Series A Preferred Securities will continue to accrue interest (in the form of OID) in income in respect of its pro rata share of the Series A Debentures held by the Series A Issuer for United States federal income tax purposes. As a result, a Holder of Series A Preferred Securities will include such interest in gross income for United States federal income tax purposes in advance of the receipt of cash, and will not receive the cash related to such income from the Series A Issuer if the Holder disposes of the Series A Preferred Securities prior to the record date for the payment of Distributions. See "United States Federal Income Taxation--Original Issue Discount." MidAmerican Energy has no current intention of exercising its right to defer payments of interest by extending the interest payment period on the Series A Debentures. However, should MidAmerican Energy elect to exercise such right in the future, the market price of the Series A Preferred Securities is likely to be affected. A Holder that disposes of its Series A Preferred Securities during an Extension Period, therefore, might not receive the same return on its investment as a Holder that continues to hold its Series A Preferred Securities. In addition, as a result of the existence of MidAmerican Energy's right to defer interest payments, the market price of the Series A Preferred Securities (which represent a preferred undivided beneficial interest in the Series A Debentures) may be more volatile than other securities on which OID accrues and which do not contain such rights. TERMINATION OF SERIES A ISSUER AND DISTRIBUTION OF SERIES A DEBENTURES MidAmerican Energy has the right to, at any time, direct the Property Trustee to dissolve the Series A Issuer and, in connection therewith, after satisfaction of creditors of the Series A Issuer, if any, cause the Series A Debentures to be distributed to the Holders of Series A Trust Securities on a pro rata basis in liquidation of such Holders' interests in the Trust. Under current United States federal income tax law, a distribution of Series A Debentures upon the termination and dissolution of the Series A Issuer would not be a taxable event to holders of the Series A Preferred Securities. See "United States Federal Income Taxation--Receipt of Series A Debentures or Cash Upon Liquidation of the Series A Trust." Because Holders of Series A Preferred Securities may receive Series A Debentures, prospective purchasers of Series A Preferred Securities are also making an investment decision with regard to the Series A Debentures and should carefully review all the information regarding the Series A Debentures contained herein. See "Description of the Series A Preferred Securities--Termination of Series A Issuer and Distribution of Series A Debentures" herein and "Description of the Series A Debentures--General" in the accompanying Prospectus. MARKET PRICE There can be no assurance as to the market prices for Series A Preferred Securities or Series A Debentures that may be distributed in exchange for Series A Preferred Securities if the Series A Issuer were to be terminated and dissolved. Accordingly, the Series A Preferred Securities that an investor may purchase, whether pursuant to the offer made hereby or in the secondary market, or the Series A Debentures that a Holder of Series A Preferred Securities may receive on termination and liquidation of the Series A Issuer, may trade at a discount to the price that the investor paid to purchase the Series A Preferred Securities offered hereby. S-5 SPECIAL EVENT REDEMPTION Upon the occurrence and continuation of a Special Event, MidAmerican Energy has the right to redeem the Series A Debentures, in whole but not in part, and therefore cause a mandatory redemption of all the Series A Preferred Securities and Series A Common Securities within 90 days following the occurrence of such Special Event. See "Certain Terms of the Series A Preferred Securities--Special Event Redemption." The receipt of cash by the holders of the Series A Preferred Securities upon a dissolution of the Series A Trust would be a taxable event to such holders. See "United States Federal Income Taxation--Receipt of Series A Debentures or Cash Upon Liquidation of the Series A Trust." POSSIBLE TAX LAW CHANGES On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill") was released, which would, among other things, generally deny interest deductions for interest on an instrument, issued by a corporation, that has a maximum weighted average maturity of more than 40 years. The Bill would also generally deny interest deductions for interest on an instrument, issued by a corporation, that has a maximum term of more than 20 years and that is not shown as indebtedness on the separate balance sheet of the issuer or, where the instrument is issued to a related party (other than a corporation), where the holder or some other related party issues a related instrument that is not shown as indebtedness on the issuer's consolidated balance sheet. The above-described provisions of the Bill were proposed to be effective generally for debt instruments issued on or after December 7, 1995. If either of such provisions were to apply to the Series A Debentures, the Company would be unable to deduct interest on the Series A Debentures. However, on March 29, 1996, the Chairmen of the Senate Finance and House Ways and Means Committees issued a joint statement to the effect that it was their intention that the effective date of the President's legislative proposals, if adopted, will be no earlier than the date of appropriate Congressional action. The Company believes that, under current law, it will be able to deduct interest on the Series A Debentures. There can be no assurance, however, that current or future legislative proposals or final legislation will not affect the ability of the Company to deduct interest on the Series A Debentures. Such a change could give rise to a Tax Event (as hereinafter defined), which may permit the Company to cause a redemption of the Series A Preferred Securities. See "Certain Terms of the Series Preferred A Securities--Special Event Redemption" and "United States Federal Income Taxation-- Possible Tax Law Changes." RIGHTS UNDER THE GUARANTEE; LIMITATION AS TO FUNDS AVAILABLE TO THE SERIES A ISSUER The Series A Guarantee will be qualified as an indenture under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The First National Bank of Chicago will act as indenture trustee under the Series A Guarantee for the purposes of compliance with the Trust Indenture Act (the "Series A Guarantee Trustee") and will hold the Guarantee for the benefit of the Holders of the Series A Preferred Securities. The First National Bank of Chicago will also act as trustee for the Series A Debentures and as Property Trustee under the Series A Trust Agreement (as defined herein) pursuant to which the Series A Issuer has been formed. The Series A Guarantee guarantees to the Holders of the Series A Preferred Securities to the extent not paid by the Series A Issuer, the payment (but not the collection) of (i) any accrued and unpaid Distributions required to be paid on the Series A Preferred Securities, to the extent the Series A Issuer has funds available therefor, (ii) the redemption price, and all accrued and unpaid distributions to the date of redemption, with respect to Series A Preferred Securities called for redemption by the Series A Issuer, to the extent the Series A Issuer has funds available therefor and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the Series A Issuer (unless the Series A Debentures are distributed to Holders of the Series A Preferred Securities), the lesser of (a) the aggregate of the liquidation preference amount and all accrued and unpaid Distributions on the Series A Preferred S-6 Securities to the date of payment and (b) the amount of assets of the Series A Issuer remaining available for distribution to Holders of the Series A Preferred Securities in liquidation of the Series A Issuer. The Holders of not less than a majority in aggregate liquidation preference amount of the Series A Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Series A Guarantee Trustee or to direct the exercise of any trust power conferred upon the Series A Guarantee Trustee under the Series A Guarantee. Any Holder of Series A Preferred Securities may institute a legal proceeding directly against MidAmerican Energy to enforce its rights under the Series A Guarantee without first instituting a legal proceeding against the Series A Issuer, the Guarantee Trustee or any other person or entity. If MidAmerican Energy were to default on its obligations under the Series A Debentures, the Series A Issuer would lack available funds for the payment of Distributions or amounts payable on redemption of the Series A Preferred Securities or otherwise, and in such event Holders of the Series A Preferred Securities would not be able to rely upon the Series A Guarantee for payment of such amounts. Instead, Holders of Series A Preferred Securities would have the limited enforcement rights described under "Description of Preferred Securities--Events of Default; Notice" in the accompanying Prospectus. See "Description of the Guarantees -- Status of the Guarantees" and "Description of the Debentures -- Subordination" in the accompanying Prospectus. The Series A Trust Agreement provides that each Holder of Series A Preferred Securities by acceptance thereof agrees to the provisions of the Series A Guarantee and the Indenture (as defined in the accompanying Prospectus). LIMITED VOTING RIGHTS Holders of Series A Preferred Securities will generally have limited voting rights relating only to the modification of the Series A Preferred Securities and the dissolution, winding-up or termination of the Series A Issuer. Holders of Series A Preferred Securities will not be entitled to vote to appoint, remove or replace the Property Trustee or the Delaware Trustee under the Series Trust Agreement, which voting rights are vested exclusively in the Holder of the Common Securities except upon the occurrence of certain events. The Administrative Trustees under the Series A Trust Agreement and MidAmerican Energy may amend the Series A Trust Agreement to ensure that the Series A Issuer will be classified for United States federal income tax purposes as a grantor trust without the consent of Holders, even if such action adversely affects the interests of Holders. See "Description of the Preferred Securities -- Voting Rights", "-- Amendments" and "-- Co-Trustees and Separate Property Trustees" in the accompanying Prospectus. TRADING CHARACTERISTICS OF SERIES A PREFERRED SECURITIES The Series A Preferred Securities constitute a new issue of securities with no established trading market. While MidAmerican Energy will apply to list the Series A Preferred Securities on the NYSE, a minimum of 400 beneficial holders and 1,000,000 outstanding securities is required for listing a new class of securities on the NYSE. Accordingly, no assurance can be given as to the liquidity of or the development and maintenance of trading markets for the Series A Preferred Securities. If approved for listing, the Series A Preferred Securities may trade at a price that does not fully reflect the value of accrued but unpaid interest with respect to the underlying Series A Debentures. A Holder that disposes of Series A Preferred Securities between record dates for payments of Distributions thereon will be required to include accrued but unpaid interest on the Series A Debentures through the date of disposition in income as ordinary income and to add such amount to such Holder's adjusted tax basis in such Holder's pro rata share of the underlying Series A Debentures deemed disposed of. To the extent the selling price is less than such Holder's adjusted tax basis (which will include, in the form of OID, all accrued and unpaid interest), such Holder will recognize a capital loss. Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes. See "United States Federal Income Taxation -- Original Issue Discount" and "-- Sales of Series A Preferred Securities." S-7 MIDAMERICAN ENERGY FINANCING I MidAmerican Energy Financing I is a statutory business trust formed under the Delaware Business Trust Act pursuant to (i) a Trust Agreement executed by MidAmerican Energy, as Depositor of the Series A Issuer, and the Property Trustees referred to therein and (ii) the filing of a Certificate of Trust with the Delaware Secretary of State on October 31, 1996. Such Trust Agreement will be amended and restated in its entirety (as so amended and restated, the "Series A Trust Agreement") substantially in the form filed as an exhibit to the Registration Statement of which this Prospectus Supplement is a part. The Series A Trust Agreement will be qualified as an indenture under the Trust Indenture Act. The Series A Issuer exists for the exclusive purposes of (i) issuing the Series A Preferred Securities and the Series A Common Securities representing trust interests in the Series A Issuer, (ii) purchasing the Series A Debentures with the Series A Common Securities and the proceeds from the sale of the Series A Preferred Securities and (iii) engaging only in those other activities necessary or incidental thereto. All of the Series A Common Securities will be owned by MidAmerican Energy. The Series A Common Securities will rank PARI PASSU, and payments will be made thereon pro rata, with the Series A Preferred Securities, except that upon the occurrence and continuance of a default under the Indenture, the rights of the Holders of the Series A Common Securities to payment in respect of Distributions and payments upon liquidation, redemption and otherwise will be subordinate to the rights of the Holders of the Series A Preferred Securities. MidAmerican Energy will acquire Series A Common Securities having an aggregate Liquidation Amount (as defined in the accompanying Prospectus) equal to 3% of the total capital of the Series A Issuer. The Series A Issuer will terminate on unless earlier terminated as provided in the Series A Trust Agreement. The Series A Issuer's business and affairs will be conducted by the Administrative Trustees. The duties and obligations of the Trustees shall be governed by the Series A Trust Agreement. Philip G. Lindner, J. Sue Rozema and Paul J. Leighton, all officers of MidAmerican Energy, will be appointed as Administrative Trustees pursuant to the terms of the Series A Trust Agreement. Under the Series A Trust Agreement, the Administrative Trustees will have certain duties and powers including, but not limited to, the delivery of certain notices to the holders of the Series A Preferred Securities, the appointment of the Paying Agent (as defined in the accompanying Prospectus) and the Registrar (as defined in the accompanying Prospectus) and the registering of transfers of the Series A Preferred Securities. Under the Series A Trust Agreement, The First National Bank of Chicago, as the Property Trustee, will have certain duties and powers including, but not limited to, holding legal title to the Series A Debentures on behalf of the Series A Trust, the collection of payments in respect of the Series A Debentures, maintenance of the Payment Account (as defined in the Series A Trust Agreement), the sending of default notices with respect to the Series A Preferred Securities and the distribution of the assets of the Series A Trust in the event of a winding up of the Series A Trust. See "Description of the Preferred Securities" in the accompanying Prospectus. MidAmerican Energy has agreed to pay all fees and expenses related to the Series A Issuer and the offering of the Series A Preferred Securities. S-8 MIDAMERICAN ENERGY COMPANY GENERAL MidAmerican Energy was formed on July 1, 1995 through the merger (the "Merger") of Iowa-Illinois Gas and Electric Company ("Iowa-Illinois"), Midwest Resources Inc. ("Midwest Resources") and Midwest Power Systems Inc. ("Midwest Power") with and into MidAmerican. MidAmerican Energy is a combination electric and natural gas public utility engaged in the generation, transmission, distribution and sale of electric energy in Illinois, Iowa and South Dakota, and the purchase, distribution, transportation and sale of natural gas in those states and in the state of Nebraska. MidAmerican Energy's nonregulated operations are conducted by its MidAmerican Capital Company ("MidAmerican Capital") subsidiary; a separate wholly-owned subsidiary, Midwest Capital Group, Inc. ("Midwest Capital"), functions as a regional business development company in the utility service territory. RECENT DEVELOPMENTS On April 24, 1996, MidAmerican Energy's shareholders approved a proposal to form a holding company. The holding company will have three wholly-owned subsidiaries consisting of MidAmerican Energy (utility operations), MidAmerican Capital and Midwest Capital. The transaction is structured as a share exchange, with each share of MidAmerican Energy common stock being exchanged for one share of the holding company common stock. All regulatory approvals have been obtained and it is management's intention to complete the formation of the holding company on or about December 1, 1996. On May 28, 1996, MidAmerican Energy announced the restructuring of portions of its nonregulated businesses. InterCoast Energy Company ("InterCoast") was formed as an indirect subsidiary of MidAmerican Energy and a direct subsidiary of MidAmerican Capital. InterCoast has operations in oil and gas, natural gas marketing and wholesale electric power marketing and brokering. On October 17, 1996, MidAmerican Capital agreed to sell its subsidiaries which conduct oil and gas and gas marketing operations to KCS Energy, Inc. for $174 million in cash, $40 million in short term notes and warrants to acquire 610,000 shares of KCS Energy, Inc. common stock for $45 per share. S-9 RATIOS OF EARNINGS TO FIXED CHARGES The following table sets forth the consolidated and utility only ratio and supplemental ratio of earnings to fixed charges and ratio and supplemental ratio of earnings to fixed charges and preferred dividend requirements of MidAmerican Energy for each of the years 1991 through 1995 and for the twelve months ended September 30, 1996.
YEAR ENDED DECEMBER 31 ----------------------------------------------------- TWELVE MONTHS ENDED 1991 1992 1993 1994 1995 SEPTEMBER 30, 1996 --------- --------- --------- --------- --------- --------------------- CONSOLIDATED: Ratios of Earnings to Fixed Charges(1)........ 2.46x 1.87x 2.84x 2.78x 2.82x 3.08x Ratios of Earnings to Fixed Charges and Preferred Dividend Requirements(1).......... 2.21x 1.71x 2.56x 2.44x 2.55x 2.75x Supplemental Ratios of Earnings to Fixed Charges(2).................................. 2.39x 1.82x 2.75x 2.70x 2.75x 3.01x Supplemental Ratios of Earnings to Fixed Charges and Preferred Dividend Requirements................................ 2.16x 1.68x 2.49x 2.38x 2.50x 2.70x UTILITY ONLY (3): Ratios of Earnings to Fixed Charges(1)........ 2.92x 2.34x 3.40x 3.30x 3.39x 3.72x Ratios of Earnings to Fixed Charges and Preferred Dividend Requirements(1).......... 2.54x 2.06x 2.95x 2.75x 2.96x 3.21x Supplemental Ratios of Earnings to Fixed Charges(2).................................. 2.80x 2.24x 3.25x 3.16x 3.28x 3.61x Supplemental Ratios of Earnings to Fixed Charges and Preferred Dividend Requirements(2)............................. 2.45x 1.99x 2.85x 2.66x 2.88x 3.13x
- --------- (1) For purposes of computing the ratios of earnings to fixed charges, "earnings" consist of net income from continuing operations before interest charges and preferred dividend requirements, plus income taxes, plus the estimated interest component of rentals. "Earnings" also include allowances for borrowed and other funds used during construction. Fixed charges consist of interest charges and the estimated interest component of rentals. (2) The supplemental ratios have been calculated including obligations of the Company under its long-term power purchase contract with the Nebraska Public Power District relating to Cooper Nuclear Station. (3) Reflects the formation of the holding company and the transfer of MidAmerican Capital and Midwest Capital to the holding company by MidAmerican Energy. S-10 USE OF PROCEEDS The Series A Issuer will use the proceeds from this offering of $ million of Series A Preferred Securities, together with the issuance of the Series A Common Securities, to purchase the Series A Debentures. MidAmerican Energy will use the cash proceeds from the sale of the Series A Debentures net of the Underwriters' Compensation and the other expenses of this offering, for the repayment of a portion of its outstanding indebtedness and for general corporate purposes. The Company has not yet selected the indebtedness to be repaid with such net proceeds. ACCOUNTING TREATMENT For financial reporting purposes, the Issuer will be treated as a subsidiary of MidAmerican Energy and, accordingly, the accounts of the Issuer will be included in the consolidated financial statements of MidAmerican Energy. The Series A Preferred Securities will be presented as a separate line item in the consolidated balance sheet of MidAmerican Energy and appropriate disclosures about the Series A Preferred Securities, the Series A Guarantee and the Series A Debentures will be included in the notes to the consolidated financial statements. For financial reporting purposes, MidAmerican Energy will record Distributions payable on the Series A Preferred Securities as an expense. S-11 CERTAIN TERMS OF THE SERIES A PREFERRED SECURITIES GENERAL The following summary of certain terms and provisions of the Series A Preferred Securities does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Series A Trust Agreement. The form of the Series A Trust Agreement has been filed as an exhibit to the Registration Statement of which this Prospectus Supplement and the accompanying Prospectus are a part. See "Description of the Preferred Securities" in the accompanying Prospectus. DISTRIBUTIONS The Series A Preferred Securities represent preferred undivided beneficial interests in the assets of the Series A Issuer, and the Distributions on each Series A Preferred Security are payable at the rate set forth on the cover page of this Prospectus Supplement, payable, except in the event of an extension, quarterly in arrears on March 1, June 1, September 1 and December 1 of each year. Distributions in arrears after the quarterly payment date therefor will bear interest on the amount thereof at the same per annum rate (to the extent permitted by law, compounded quarterly). The term "Distributions", as used herein, includes interest payable on overdue Distributions, unless otherwise stated. Distributions will accrue from the date of original issuance of the Series A Preferred Securities. The amount of Distributions payable for any period will be computed on the basis of a 360-day year of twelve 30-day months and, for any period shorter than a full month, shall be computed on the basis of the actual number of days elapsed in such period. So long as no Event of Default under the Indenture has occurred and is continuing, MidAmerican Energy has the right at any time and from time to time to extend the interest payment period on the Series A Debentures for not more than 20 consecutive quarters, provided that any such Extension Period shall not extend beyond the maturity date or redemption date of the Series A Debentures and that MidAmerican Energy may not defer any payment of Additional Interest Attributable to Taxes (as defined in the accompanying Prospectus). During any Extension Period quarterly distributions on the Series A Preferred Securities would be deferred by the Series A Issuer and would continue to accrue, and holders of Series A Preferred Securities would be required to accrue interest income for United States Federal income tax purposes. See "Certain Terms of the Series A Debentures -- Option to Extend Interest Payment Period" and "United States Federal Income Taxation -- Original Issue Discount." MidAmerican Energy has no current intention of exercising its right to defer payments of distributions on the Series A Preferred Securities by extending the interest payment period on the Series A Debentures. TERMINATION OF SERIES A ISSUER AND DISTRIBUTION OF SERIES A DEBENTURES MidAmerican Energy has the right to, at any time, direct the Property Trustee to dissolve the Series A Issuer and, in connection therewith, after satisfaction of creditors of the Series A Issuer, if any, cause the Series A Debentures to be distributed to the Holders of Series A Trust Securities on a pro rata basis in liquidation of such Holders' interests in the Trust. See "Description of Preferred Securities -- Liquidation, Distribution Upon Termination" in the accompanying Prospectus. If the Series A Debentures are distributed to Holders of the Series A Preferred Securities as a result of the termination of the Series A Issuer, the Company will use its best efforts to list the Series A Preferred Securities on the NYSE or on such other exchange as the Series A Preferred Securities are then listed. Under current United States Federal income tax law and interpretations, if the Series A Issuer is treated as a grantor trust at the time of the distribution, such a distribution should not be a taxable event to holders of the Series A Preferred Securities. See "United States Taxation -- Receipt of Series A Debentures or Cash Upon Liquidation of the Series A Trust." S-12 REDEMPTION MidAmerican Energy has the right to redeem the Series A Debentures (a) on or after , 200 , in whole or in part, or (b) at any time, in whole but not in part, upon the occurrence of a Tax Event or an Investment Company Event (each as defined below, a "Special Event"), subject to the conditions described under "-- Special Event Redemption," below. Upon the repayment of the Series A Debentures, whether at maturity or upon earlier redemption as provided in the Indenture, the proceeds from such payment will be applied by the Property Trustee to redeem a Like Amount (as defined below) of the Series A Common Securities and the Series A Preferred Securities, upon not less than 30 nor more than 60 days' notice, at a redemption price equal to the aggregate Liquidation Amount plus accumulated and unpaid distributions, plus additional distributions thereon to the extent permitted by law, to the Redemption Date. See "Certain Terms of the Series A Debentures -- Redemption." "Like Amount" means (i) with respect to a redemption of the Series A Preferred Securities and the Series A Common Securities, Series A Trust Securities having an aggregate Liquidation Amount (as hereinafter defined) equal to the principal amount of Series A Debentures to be contemporaneously redeemed in accordance with the Indenture and the proceeds of which shall be used to pay the Redemption Price of such Series A Trust Securities and (ii) with respect to a distribution of Series A Debentures to Holders of Series A Trust Securities in connection with a termination or liquidation of the Series A Issuer, Series A Debentures having a principal amount equal to the aggregate Liquidation Amount of the Series A Trust Securities of the Holders to such Series A Debentures are distributed. SPECIAL EVENT REDEMPTION If a Special Event shall occur and be continuing with respect to the Series A Issuer or the Series A Preferred Securities, MidAmerican Energy has the right to redeem the Series A Debentures in whole (but not in part) and thereby cause a mandatory redemption of the Series A Preferred Securities in whole (but not in part) at a redemption price equal to the aggregate Liquidation Amount of such Preferred Securities plus accumulated and unpaid distributions thereon within 90 days following the occurrence of such Special Event. In the event a Tax Event has occurred and is continuing and MidAmerican Energy does not elect to terminate the Series A Issuer (as described in "-- Termination of Series A Issuer and Distribution of Series A Debentures") or redeem the Series A Debentures (as described in the preceding sentence), the Series A Preferred Securities will remain outstanding and Additional Interest Attributable to Taxes (as defined in the accompanying Prospectus) will be payable on the Series A Debentures. "Tax Event" means the receipt by the Series A Issuer of an opinion of counsel (which may be counsel to MidAmerican Energy or an affiliate but not an employee thereof and which must be acceptable to the Property Trustee) experienced in such matters to the effect that, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or (b) any amendment to, or change in an interpretation or application of, such laws or regulations by any legislative body, court, governmental agency or regulatory authority (including the enactment of any legislation and the publication of any judicial decision or regulatory determination on or after the date of issuance of the Series A Preferred Securities), there is more than an insubstantial risk that (i) the Series A Issuer is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to interest income received or accrued on the Series A Debentures, (ii) interest payable by the Company on the Series A Debentures is not, or within 90 days of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes, or (iii) the Series A Issuer is, or will be within 90 days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges. S-13 "Investment Company Event" means the occurrence of a change in law or regulation or a change in the interpretation or application of any law or regulation by any legislative body, court, governmental agency or regulatory authority (a "Change in 1940 Act Law") to the effect that the Series A Issuer is or will be considered an "investment company" that is required to be registered under the Investment Company Act of 1940, as amended, which Change in 1940 Act Law becomes effective on or after the date of original issuance of the Series A Preferred Securities. LIQUIDATION AMOUNT The Liquidation Amount payable on the Series A Preferred Securities in the event of any liquidation of the Series A Issuer is $25 per Series A Preferred Security, plus accumulated and unpaid distributions unless, in connection with such liquidation, the Series A Debentures are distributed to the holders of the Series A Preferred Securities. RIGHTS UNDER THE SERIES A GUARANTEE AND THE SERIES A DEBENTURES The Series A Guarantee will be a full unsecured guarantee with respect to the Series A Preferred Securities from the time of issuance of the Series A Preferred Securities, but will not apply to any payment of distributions or other amounts due to the extent the Series A Issuer does not have sufficient available funds to pay such distributions or other amounts due (which will occur in the event that MidAmerican Energy has failed to make a payment of principal or interest on the Series A Debentures). There are no preconditions to a holder of Series A Preferred Securities instituting a legal proceeding directly against MidAmerican Energy to enforce such holder's rights under the Series A Guarantee. If the Guarantee Trustee fails to enforce the Series A Guarantee, any Holder of Series A Preferred Securities may institute a legal proceeding directly against MidAmerican Energy to enforce such Holder's rights under the Series A Guarantee without first instituting a legal proceeding against the Series A Issuer, the Guarantee Trustee or any other person or entity. If and to the extent MidAmerican Energy defaults on its obligation to pay amounts payable on the Series A Debentures, the Series A Issuer would lack sufficient available funds for the payment of distributions on or amounts payable on redemption of the Series A Trust Securities and, in such event, Holders of the Series A Preferred Securities would not be able to rely on the Series A Guarantee for payment of such amounts. Instead, Holders of Series A Preferred Securities would have the limited enforcement rights described under "Description of Preferred Securities; Events of Default; Notice" in the accompanying Prospectus. CERTAIN TERMS OF THE SERIES A GUARANTEE GENERAL The following summary description of the Series A Guarantee sets forth certain portions of the description of the terms and provisions of the Series A Guarantee included in the accompanying Prospectus under the heading, "Description of the Guarantees," to which reference is hereby made. This summary of certain terms and provisions of the Series A Guarantee does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Series A Guarantee. The form of Series A Guarantee has been filed as an exhibit to the Registration Statement of which this Prospectus Supplement and the accompanying Prospectus are a part. MidAmerican Energy will guarantee, on an unsecured subordinated basis, the obligations of the Series A Issuer with respect to the Series A Preferred Securities; provided that the Series A Guarantee will not apply to any payment of Distributions if and to the extent that the Series A Issuer does not have funds sufficient to make such payments. If MidAmerican Energy does not make interest payments on the Series A Debentures held by the Series A Issuer, it is expected that the Series A Issuer will not pay Distributions on the Series A Preferred Securities. The Series A Guarantee will rank subordinate and junior in right of payment to all liabilities of MidAmerican Energy (except liabilities that may be made PARI S-14 PASSU with the Series A Guarantee by their terms). See "Description of the Guarantees -- Status of the Guarantees" in the accompanying Prospectus. EVENTS OF DEFAULT An event of default under the Series A Guarantee will occur upon the failure of MidAmerican Energy to perform any of its payment obligations thereunder. If the Guarantee Trustee fails to enforce the Series A Guarantee, any holder of Series A Preferred Securities may institute a legal proceeding directly against MidAmerican Energy to enforce such holder's rights under the Series A Guarantee without first instituting a legal proceeding against the Series A Issuer, the Guarantee Trustee or any other person or entity. The Series A Guarantee is a guarantee of payment, not of collection. TERMINATION OF THE SERIES A GUARANTEE The Series A Guarantee will terminate and be of no further force and effect upon full payment of the Redemption Price of all Series A Preferred Securities, the distribution of Series A Debentures to holders of Series A Preferred Securities in exchange for all of the Series A Preferred Securities or upon payment in full of the amounts payable upon liquidation of the Series A Issuer. CERTAIN TERMS OF THE SERIES A DEBENTURES GENERAL The following summary description of the Series A Debentures sets forth certain portions of the description of the terms and provisions of the Debentures included in the accompanying Prospectus under the heading, "Description of the Debentures," to which reference is hereby made. This summary of certain terms and provisions of the Series A Debentures does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Indenture, including the Series A Supplemental Indenture. The forms of Indenture and Supplemental Indenture (as defined in the accompanying Prospectus) have been filed as exhibits to the Registration Statement of which this Prospectus Supplement and the accompanying Prospectus are a part. Concurrently with the issuance of the Series A Preferred Securities, the Series A Issuer will invest the proceeds thereof, together with the Series A Common Securities, in the Series A Debentures issued by MidAmerican Energy to the Series A Issuer. The Series A Debentures will bear interest at the annual rate of %, payable quarterly in arrears, except in the event of an extension, on March 1, June 1, September 1 and December 1 of each year commencing , 19 . Interest which is accrued and unpaid after the quarterly payment date therefor will bear additional interest on the amount thereof (to the extent permitted by law, compounded quarterly) at the rate specified for the Series A Debentures. The Series A Debentures will be issued under the Indenture and the Series A Supplemental Indenture. The Series A Debentures will mature on , 20 , which date may be extended at any time at the election of MidAmerican Energy for one or more periods, but in no event to a date later than , 20 (such date, as it may be extended, the "Maturity Date"), provided that at the time such election is made and at the time of extension (i) MidAmerican Energy is not in bankruptcy, otherwise insolvent or in liquidation, (ii) MidAmerican Energy is not in default in the payment of any interest or principal on the Series A Debentures, (iii) the Series A Issuer is not in arrears on payments of Distributions on the Series A Preferred Securities and no deferred Distributions are accumulated, (iv) the Series A Debentures are rated not less than BBB - by Standard & Poor's Ratings Services or Baa3 by Moody's Investors Service, Inc. or the equivalent by any other nationally recognized statistical rating organization and (v) the extended Maturity Date is no later than the 49th anniversary of the initial issuance of the Series A Preferred Securities; provided, however, that, if MidAmerican Energy exercises S-15 its right to liquidate the Series A Issuer and distribute the Series A Preferred Securities, effective upon such exercise the Maturity Date of the Series A Debentures may be changed to any dates elected by MidAmerican Energy that is (i) no earlier than the date five years after the initial issuance of the Series A Preferred Securities and (ii) no later than the date 30 years (plus an extended term of up to an additional 19 years if the above-referenced conditions are satisfied) after the date of the initial issuance of the Series A Preferred Securities. The Series A Debentures will be unsecured and will rank junior and be subordinate in right of payment to all Senior Indebtedness of MidAmerican Energy. See "Description of the Debentures -- Subordination" in the accompanying Prospectus. OPTION TO EXTEND INTEREST PAYMENT PERIOD MidAmerican Energy has the right at any time and from time to time, so long as no Event of Default under the Indenture has occurred and is continuing, to extend the interest payment period for the Series A Debentures for up to 20 consecutive quarters; provided that no Extension Period shall extend beyond the maturity of the Series A Debentures and that MidAmerican Energy may not defer any payment of Additional Interest Attributable to Taxes (which shall be payable on the relevant interest payment date). At the end of the Extension Period, MidAmerican Energy is obligated to pay all interest then accrued and unpaid (together with interest thereon to the extent permitted by law). During any such Extension Period MidAmerican Energy may not, and may not permit any of its subsidiaries to, (i) declare or pay any dividends or distribution on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of MidAmerican Energy's capital stock or (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of MidAmerican Energy (including other debentures issued pursuant to the Indenture) that rank PARI PASSU with or junior in interest to the Series A Debentures or make any guarantee payments with respect to any guarantee by MidAmerican Energy of the debt securities of any of its subsidiaries if such guarantee ranks PARI PASSU with or junior in interest to such series of Debentures (other than (a) dividends or distributions in common stock of MidAmerican Energy, (b) payments under any Guarantee, and (c) purchases of common stock related to the issuance of common stock under any of MidAmerican Energy's benefit plans for its directors, officers or employees). This covenant effectively requires that any Extension Period with respect to the Series A Debentures also apply to other debentures which may be issued by MidAmerican Energy pursuant to the Indenture. Prior to the termination of any Extension Period, MidAmerican Energy may further extend the interest payment period, provided that such Extension Period, together with all such previous and further extensions thereof, may not exceed 20 consecutive quarters or extend beyond the maturity of the Series A Debentures. Upon the termination of any Extension Period and the payment of all amounts then due, MidAmerican Energy may select a new Extension Period subject to the above requirements. REDEMPTION The Series A Debentures are redeemable prior to maturity at the option of MidAmerican Energy (i) at any time on or after , 200 , in whole or in part, and (ii) if a Special Event occurs and is continuing, in whole, but not in part, in each case at a Redemption Price equal to 100% of the principal amount thereof plus accrued interest to the Redemption Date. The Series A Debentures will be subject to optional redemption in whole, but not in part, upon the termination and liquidation of the Series A Issuer pursuant to an order for the dissolution, termination or liquidation of the Series A Issuer entered by a court of competent jurisdiction. For so long as the Series A Trust is the holder of all Series A Debentures outstanding, the proceeds of any redemption described in this paragraph shall be used by the Series A Issuer to redeem the Series A Preferred Securities and the Series A Common Securities in accordance with their terms. S-16 MidAmerican Energy may not redeem the Series A Debentures in part unless all accrued and unpaid interest (including any Additional Interest) has been paid in full on all Series A Debentures outstanding for all quarterly interest periods on or prior to the Redemption Date. DISTRIBUTIONS OF SERIES A DEBENTURES Under certain circumstances involving the termination of the Series A Issuer, Series A Debentures may be distributed to the holders of the Series A Preferred Securities in liquidation of the Series A Issuer, after satisfaction of all liabilities to creditors of the Series A Issuer as provided by applicable law. If distributed to holders of Series A Preferred Securities in liquidation, the Series A Debentures will initially be issued in the form of one or more global securities, and DTC, or any successor depositary for the Series A Preferred Securities, will act as depositary for the Series A Debentures. It is anticipated that the depositary arrangements for the Series A Debentures, if distributed, would be substantially identical to those in effect for the Series A Preferred Securities. Neither MidAmerican Energy, the Debenture Trustee, any Paying Agent nor any other agent of MidAmerican Energy or the Debenture Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of persons holding Series A Debentures in the form of a global security for the Series A Debentures or for maintaining, supervising or reviewing any records relating to such holders. A global security will be exchangeable for Series A Debentures registered in the names of persons other than DTC or its nominee only if (i) DTC notifies MidAmerican Energy that it is unwilling or unable to continue as a depositary for such global security and no successor depositary shall have been appointed, or if at any time DTC ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, at a time when DTC is required to be so registered to act as such depositary, (ii) MidAmerican Energy in its sole discretion determines that such global security shall be so exchangeable, or (iii) there shall have occurred and be continuing an Event of Default with respect to such global security. Any global security that is exchangeable pursuant to the preceding sentence shall be exchangeable for definitive certificates registered in such names as DTC shall direct. It is expected that such instructions will be based upon directions received by DTC from its Participants (as defined in the accompanying Prospectus) with respect to the ownership of beneficial interests in such global security. In the event that Series A Debentures are issued in definitive form, such Series A Debentures will be issued in denominations of $25 and integral multiples thereof and may be transferred or exchanged at the offices described below. Payments on Series A Debentures represented by a global security will be made to DTC, as the depositary for the Series A Debentures. In the event Series A Debentures are issued in definitive form, principal and interest will be payable, the transfer of the Series A Debentures will be registrable, and Series A Debentures will be exchangeable for Series A Debentures of other denominations of a like aggregate principal amount, at the corporate office of the Debenture Trustee in Chicago, Illinois, or at the offices of any paying or transfer agent appointed by MidAmerican Energy, provided that payment of interest may be made, at the option of MidAmerican Energy, by check mailed to the address of the persons entitled thereto or by wire transfer. In addition, if the Series A Debentures are issued in certificated form, the record dates for payment of interest will be the 15th day preceding the first day of March, June, September and December, respectively. For a description of DTC and the terms of the depositary arrangements relating to payments, transfers, voting rights and other matters, see "Description of the Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust Company" in the accompanying Prospectus. If the Series A Debentures are distributed to the holders of Series A Preferred Securities upon the liquidation of the Series A Issuer, MidAmerican Energy will use its best efforts to list the Series A Debentures on such stock exchanges, if any, as the Series A Preferred Securities are then listed. S-17 UNITED STATES FEDERAL INCOME TAXATION GENERAL The following is a summary of certain of the material United States federal income tax consequences of the purchase, ownership and disposition of Series A Preferred Securities. Unless otherwise stated, this summary deals only with Series A Preferred Securities held as capital assets by holders that purchase the Series A Preferred Securities upon original issuance. This summary does not address all the tax consequences that may be relevant to holders that may be subject to special tax treatment such as, for example, banks, real estate investment trusts, regulated investment companies, insurance companies, dealers in securities or currencies, tax-exempt investors, persons whose functional currency is other than the United States dollar, persons who hold Series A Preferred Securities as part of a straddle, hedging or conversion transaction or, except as specifically described herein, foreign taxpayers. In addition, this summary does not address any aspects of state, local, or foreign laws. This summary is based on the Internal Revenue Code of 1986, as amended, Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, as of the date hereof, all of which are subject to change, possibly on a retroactive basis. Each holder should consult its tax advisor as to its particular tax consequences of acquiring, holding, and disposing of the Series A Preferred Securities, including the tax consequences under state, local, and foreign laws. CLASSIFICATION OF THE SERIES A DEBENTURES It is a condition to the issuance of the Series A Preferred Securities that Sidley & Austin, acting as counsel to the underwriters in connection with this offering, render its opinion generally to the effect that, under then current United States federal income tax law and assuming full compliance with the terms of the Indenture (and certain other documents), and based on certain facts and assumptions contained in such opinion, the Series A Debentures held by the Series A Trust will be classified for United States federal income tax purposes as indebtedness of the Company. Accordingly, corporate holders of Series A Preferred Securities will not be entitled to a dividends-received deduction with respect to any income recognized with respect to the Series A Preferred Securities. CLASSIFICATION OF THE SERIES A TRUST It is a condition to the issuance of the Series A Preferred Securities that Sidley & Austin, acting as counsel to the underwriters in connection with this offering, render its opinion generally to the effect that, under then current United Stated federal income tax law and assuming full compliance with the terms of the Series A Trust Agreement and the Indenture (and certain other documents), and based on certain facts and assumptions contained in such opinion, the Series A Trust will be classified for United States federal income tax purposes as a grantor trust and not as an association taxable as a corporation. Accordingly, for United States federal income tax purposes, each holder of Series A Preferred Securities will generally be considered the owner of an undivided interest in the Series A Debentures, and each holder will be required to include in its gross income any original issue discount ("OID") accrued with respect to its allocable share of those Series A Debentures. Investors should be aware that the foregoing opinions of Sidley & Austin have not been confirmed by the Internal Revenue Service (the "Service"), by private ruling or otherwise, and are not binding on the Service or the courts. The Company, the Series A Trust, and, by its acceptance of a Series A Preferred Security or a beneficial interest therein, the holder of, and any person that acquires a beneficial interest in, such Series A Preferred Security agree to treat such Series A Preferred Security and the Series A Debentures consistently with the foregoing opinions. S-18 ORIGINAL ISSUE DISCOUNT Because the Company has the option, under the terms of the Series A Debentures, to defer payments of interest by extending interest payment periods for up to 20 quarters, all of the stated interest payments on the Series A Debentures will be treated as OID. Holders of debt instruments issued with OID must include that discount in income on an economic accrual basis before the receipt of cash attributable to the discount, regardless of their method of tax accounting. Generally, all of a holder's taxable interest income with respect to the Series A Debentures will be accounted for as OID, and actual distributions of stated interest will not be separately reported as taxable income. The amount of OID that accrues in any quarter will approximately equal the amount of the interest that accrues on the Series A Debentures in that quarter at the stated interest rate. In the event that the interest payment period is extended, holders will continue to accrue OID approximately equal to the amount of the interest payment due at the end of the extended interest payment period on an economic accrual basis over the length of the extended interest period. MARKET DISCOUNT AND PREMIUM Holders of Series A Preferred Securities other than holders that purchased the Series A Preferred Securities upon original issuance may be considered to have acquired their undivided interest in the Series A Debentures with market discount, amortizable bond premium or acquisition premium as such terms are defined for the United States federal income tax purposes. Such holders are advised to consult their tax advisors as to the income tax consequences of the acquisition, ownership and disposition of the Series A Preferred Securities. RECEIPT OF SERIES A DEBENTURES OR CASH UPON LIQUIDATION OF THE SERIES A TRUST Under certain circumstances, as described under the caption "Certain Terms of the Series A Preferred Securities--Termination of Series A Issuer and Distribution of Series A Debentures" and "Certain Terms of the Series A Debentures--Distributions of Series A Debentures," Series A Debentures may be distributed to holders in exchange for the Series A Preferred Securities and in liquidation of the Series A Trust. Under current United States federal income tax law, such a distribution would be treated as a non-taxable event to each holder, and each holder would have an aggregate tax basis in the Series A Debentures equal to such holder's aggregate tax basis in its Series A Preferred Securities. A holder's holding period in the Series A Debentures so received in liquidation of the Series A Trust would include the period during which the Series A Preferred Securities were held by such holder. Under certain circumstances described herein (see "Certain Terms of the Series A Preferred Securities -- Redemption" and "Certain Terms of the Series A Debentures -- Distributions of Series A Debentures,"), the Series A Debentures may be redeemed for cash and the proceeds of such redemption distributed to holders in redemption of their Series A Preferred Securities. Under current United States federal income tax law, such a redemption would constitute a taxable disposition of the redeemed Series A Preferred Securities, and a holder would recognize gain or loss as if it sold such redeemed Series A Preferred Securities for cash. See "Sales of Series A Preferred Securities" below. SALES OF SERIES A PREFERRED SECURITIES A holder that sells Series A Preferred Securities will recognize gain or loss equal to the difference between such holder's adjusted tax basis in the Series A Preferred Securities and the amount realized on the sale of such Series A Preferred Securities. A holder's adjusted tax basis in the Series A Preferred Securities will generally be the initial purchase price increased by OID previously includible in such holder's gross income to the date of disposition and decreased by payments received on the Series A Preferred Securities. Such gain or loss will generally be a capital gain or loss and will generally be a long-term capital gain or loss if the Series A Preferred Securities have been held for more than one year. S-19 The Series A Preferred Securities may trade at prices that do not accurately reflect the value of accrued but unpaid interest with respect to the underlying Series A Debentures. A holder that disposes of Series A Preferred Securities between record dates for payments of distributions thereon will be required to include accrued but unpaid interest on the Series A Debentures through the date of disposition in income as ordinary income, and to add such amount to such holder's adjusted tax basis in the pro rata share of the underlying Series A Debentures deemed disposed of. To the extent that the selling price is less than the holder's adjusted tax basis (so determined), a holder will recognize a capital loss. Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for United States federal income tax purposes. UNITED STATES ALIEN HOLDERS For purposes of this discussion, a "United States Alien Holder" is any corporation, individual, partnership, estate or trust that is, as to the United States, a foreign corporation, a nonresident alien individual, a foreign partnership, or a nonresident fiduciary of a foreign estate or trust. The discussion assumes that income with respect to the Series A Preferred Security is not effectively connected with a trade or business in the United States in which the United States Alien Holder is engaged. Under current United States federal income tax law, and subject to the discussion of backup withholding in the following section: (1) payments of principal and interest (including OID) by the Series A Trust or any of its paying agents to any holder of a Series A Preferred Security that is a United States Alien Holder will not be subject to withholding of United States federal income tax; provided that, in the case of interest, (a) the beneficial owner of the Series A Preferred Security does not actually or constructively own 10% of more of the total combined voting power of all classes of stock of the Company entitled to vote, (b) the beneficial owner of the Series A Preferred Security is not a controlled foreign corporation that is related, directly or indirectly, to the Company through stock ownership, and (c) either (A) the beneficial owner of the Series A Preferred Security certifies to the Series A Trust or its agent, under penalties of perjury, that it is a United States Alien Holder and provides its name and address or (B) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business (a "Financial Institution"), and holds the Series A Preferred Securities in such capacity, certifies to the Series A Trust or its agent, under penalties of perjury, that such statement has been received from the beneficial owner by it or by a Financial Institution between it and the beneficial owner and furnishes the Series A Trust or its agent with a copy thereof; and (2) a United States Alien Holder of a Series A Preferred Security will generally not be subject to withholding of United States federal income tax on any gain realized upon the sale or other disposition of a Series A Preferred Security. On April 15, 1996, proposed Treasury Regulations (the "1996 Proposed Regulations") were issued which, if adopted in final form, could affect the United States taxation of United States Alien Holders. The 1996 Proposed Regulations are generally proposed to be effective for payments after December 31, 1997, regardless of the issue date of the instrument with respect to which such payments are made, subject to certain transition rules. It cannot be predicted at this time whether the 1996 Proposed Regulations will become effective as proposed or what, if any, modifications may be made to them. Prospective investors are urged to consult their tax advisors with respect to the effect the 1996 Proposed Regulations may have if adopted. BACKUP WITHHOLDING TAX AND INFORMATION REPORTING Under current United States federal income tax law, information reporting requirements apply to interest (including OID) and principal payments made to, and to the proceeds of sales before maturity by, certain non-corporate persons. In addition, a 31% backup withholding tax applies if a non-corporate person (i) fails to furnish such person's Taxpayer Identification Number ("TIN") (which, for an individual, is his or her Social Security Number) to the payor in the manner required, (ii) furnishes an incorrect TIN S-20 and the payor is so notified by the Service, (iii) is notified by the Service that such person has failed properly to report payments of interest and dividends or (iv) in certain circumstances, fails to certify, under penalties of perjury, that such person has not been notified by the Service that such person is subject to backup withholding for failure properly to report interest and dividend payments. Backup withholding does not apply with respect to payments made to certain exempt recipients, including corporations, tax-exempt organizations, qualified pension and profit-sharing trusts and individual retirement accounts, provided that they establish entitlement to an exemption. In the case of a United States Alien Holder, backup withholding and information reporting do not apply to payments of principal and interest on a Series A Preferred Security with respect to which such Holder has provided the required certification under penalties of perjury that such Holder is a United States Alien Holder or has otherwise established an exemption, provided that certain conditions are satisfied. In general, (i) principal or interest payments on a Series A Preferred Security collected outside the United States by a foreign office of a custodian, nominee or other agent acting on behalf of a beneficial owner of a Series A Preferred Security and (ii) payments on the sale, exchange or retirement of a Series A Preferred Security to or through a foreign office of a broker are not subject to backup withholding or information reporting. However, if such custodian, nominee, agent or broker is a United States person, a controlled foreign corporation for United States tax purposes, or a foreign person 50% of more of whose gross income is effectively connected with the conduct of a United States trade or business for a specified three-year period, such custodian, nominee, agent or broker may be subject to certain information reporting (but not backup withholding) requirements with respect to such payments. Backup withholding tax is not an additional tax. Rather, any amounts withheld from a payment to a person under the backup withholding rules are allowed as a refund or a credit against such person's United States federal income tax, provided that the required information is furnished to the Service. POSSIBLE TAX LAW CHANGES On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill"), the revenue portion of President Clinton's budget proposal, was released. The Bill would, among other things, generally deny interest deductions for interest on an instrument, issued by a corporation, that has a maximum weighted average maturity of more than 40 years. The Bill would also generally deny interest deductions for interest on an instrument, issued by a corporation, that has a maximum term of more than 20 years and that is not shown as indebtedness on the separate balance sheet of the issuer, or where the instrument is issued to a related party (other than a corporation), where the holder or some other related party issues a related instrument that is not shown as indebtedness on the issuer's consolidated balance sheet. For purposes of determining the weighted average maturity or the term of an instrument, any right to extend would be treated as exercised. The above-described provisions of the Bill were proposed to be effective generally for instruments issued on or after December 7, 1995. If either provision were to apply to the Series A Debentures, the Company would be unable to deduct interest on the Series A Debentures. However, on March 29, 1996, the Chairmen of the Senate Finance and House Ways and Means Committees issued a joint statement to the effect that it was their intention that the effective date of the President's legislative proposals, if adopted, will be no earlier than the date of appropriate Congressional action. The Company believes, that, under current law, it will be able to deduct interest on the Series A Debentures. There can be no assurance, however, that current or future legislative proposals or final legislation will not affect the ability of the Company to deduct interest on the Series A Debentures. Such a change could give rise to a Tax Event, which may permit the Company to cause a redemption of the Series A Preferred Securities. See "Certain Terms of the Series A Preferred Securities -- Special Event Redemption." Such a tax law change would not alter the United States federal income tax consequences of the purchase, ownership and disposition of Series A Preferred Securities to holders thereof. S-21 UNDERWRITING Subject to the terms and conditions of the Underwriting Agreement, MidAmerican Energy and the Series A Issuer have agreed that the Series A Issuer will sell to each of the Underwriters named below, and each of such Underwriters, for whom , , , and are acting as representatives (the "Representatives"), has severally agreed to purchase from the Series A Issuer, the respective number of Series A Preferred Securities set forth opposite its name below:
NUMBER OF SERIES A PREFERRED UNDERWRITER SECURITIES - --------------------------------------------------------------------------------- ----------- ----------- Total.................................................................... ----------- -----------
Under the terms and conditions of the Underwriting Agreement, the Underwriters are committed to take and pay for all the Series A Preferred Securities offered hereby, if any are taken. The Underwriters propose to offer the Series A Preferred Securities in part directly to the public at the initial public offering price set forth on the cover page of this Prospectus Supplement and in part to certain securities dealers at such price less a concession of $ per Series A Preferred Security. The Underwriters may allow, and such dealers may reallow, a concession not in excess of $ per Series A Preferred Security to certain brokers and dealers. After the Series A Preferred Securities are released for sale to the public, the offering price and other selling terms may from time to time be varied by the Representatives. In view of the fact that the proceeds from the sale of the Series A Preferred Securities will be used to purchase the Series A Debentures issued by MidAmerican Energy, the Underwriting Agreement provides that MidAmerican Energy will pay as Underwriters' Compensation for the Underwriters arranging the investment therein of such proceeds an amount of $ per Series A Preferred Security for the accounts of the several Underwriters. MidAmerican Energy and the Series A Issuer have agreed that, during the period beginning from the date of the Underwriting Agreement and continuing to and including the earlier of (i) the date on which the distribution of the Series A Preferred Securities ceases, as determined by the Representatives, and (ii) 30 days after the issuance of the Series A Preferred Securities, they will not offer, sell, contract to sell or otherwise dispose of any securities, any other beneficial interests in the Series A Issuer or any preferred securities or interests of any other issuer, as the case may be, that are substantially similar to the Series A Preferred Securities (including any guarantee of such securities or interests) or any securities that are convertible into or exchangeable for, or that represent the right to receive, any such securities or other interests, without the prior written consent of the Representatives, except for the Series A Preferred Securities, the Series A Common Securities and the Series A Guarantee. S-22 Prior to this offering, there has been no public market for the Series A Preferred Securities. Application will be made to list the Series A Preferred Securities on the New York Stock Exchange under the symbol " ". In order to meet one of the requirements for listing the Series A Preferred Securities on the New York Stock Exchange, the Underwriters will undertake to sell lots of 100 or more Series A Preferred Securities to a minimum of 400 beneficial holders. Trading of the Series A Preferred Securities on the New York Stock Exchange is expected to commence within a thirty-day period after the initial delivery of the Series A Preferred Securities. The Representatives have advised MidAmerican Energy that they intend to make a market in the Series A Preferred Securities prior to the commencement of trading on the New York Stock Exchange, but are not obligated to do so and may discontinue market-making at any time without notice. No assurance can be given as to the liquidity of the trading market for the Series A Preferred Securities. MidAmerican Energy and the Series A Issuer have agreed to indemnify the several Underwriters against certain liabilities, including liabilities under the Securities Act of 1933. Certain of the Underwriters or their affiliates have provided from time to time, and expect to provide in the future, services for MidAmerican Energy in the ordinary course of business, for which such Underwriters or their affiliates have received or will receive customary fees and commissions. S-23 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED , 1996 [LOGO] MIDAMERICAN ENERGY FINANCING I MIDAMERICAN ENERGY FINANCING II PREFERRED SECURITIES (LIQUIDATION PREFERENCE $25 PER PREFERRED SECURITY) GUARANTEED TO THE EXTENT THAT EACH SUCH ISSUER, RESPECTIVELY, HAS FUNDS AS SET FORTH HEREIN BY MIDAMERICAN ENERGY COMPANY ---------- MidAmerican Energy Financing I and MidAmerican Energy Financing II, each a statutory business trust formed under the laws of the State of Delaware (each, an "Issuer" and, collectively, the "Issuers") may severally offer, from time to time, their respective preferred securities (the "Preferred Securities") representing preferred undivided beneficial interests in the assets of each Issuer. MidAmerican Energy Company, an Iowa corporation ("MidAmerican Energy"), will be the sole owner of the undivided common beneficial interests in such assets represented by common securities (the "Common Securities", together with the Preferred Securities herein referred to as the "Trust Securities") of each Issuer. The payment of periodic cash distributions ("Distributions") with respect to the Preferred Securities and payments on liquidation or redemption with respect to such Preferred Securities will be each guaranteed by MidAmerican Energy in the case of each Issuer (a "Guarantee"), in each case only out of funds held by such Issuer. Concurrently with the issuance by an Issuer of its Preferred Securities, such Issuer will invest the proceeds thereof in MidAmerican Energy's junior subordinated debentures (the "Debentures") having terms corresponding to such Issuer's Preferred Securities. The Debentures will be unsecured and subordinate indebtedness of MidAmerican Energy issued under an Indenture dated as of , 1996 between the Company and The First National Bank of Chicago, as Trustee (such Indenture, as the same may be supplemented or amended from time to time, herein referred to as the "Indenture"). The Debentures held by each Issuer will be its sole asset, and the interest and payments of principal on such Debentures will be its only revenues. The Debentures purchased by an Issuer may be subsequently distributed pro rata to holders of Preferred Securities and Common Securities in connection with the dissolution of such Issuer. See "Description of Preferred Securities-- Termination of an Issuer and Distribution of Debentures". In addition, upon the occurrence of certain events, MidAmerican Energy may redeem the Debentures and cause the redemption of the Preferred Securities. See "Description of the Preferred Securities--Redemption." The Preferred Securities may be offered in amounts, at prices and on terms to be determined at the time of offering, provided, however, that the aggregate initial public offering price of all Preferred Securities issued pursuant to the Registration Statement of which this Prospectus forms a part shall not exceed $500,000,000 (subject to reduction in the event of sales of certain other securities included in such Registration Statement)). Certain specific terms of each Issuer's Preferred Securities in respect of which this Prospectus is being delivered will be set forth in an accompanying Prospectus Supplement, including, where applicable and to the extent not set forth herein, the identity of the Issuer, the specific title, the aggregate amount, the distribution rate (or the method for determining such rate), the stated liquidation preference, redemption provisions, other rights, the initial public offering price and any other special terms, as well as any planned listing on a securities exchange, of such Preferred Securities. The Preferred Securities may be sold in a public offering to or through underwriters or dealers designated from time to time. See "Plan of Distribution." The names of any of the underwriters or dealers involved in the sale of the Preferred Securities in respect of which this Prospectus is being delivered, the number of Preferred Securities to be purchased by any such underwriters or dealers, any applicable commissions or discounts and the net proceeds to each Issuer will be set forth in the applicable Prospectus Supplement. Each Prospectus Supplement will also contain information concerning certain United States federal income tax considerations applicable to the Preferred Securities offered thereby. ---------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------------- The date of this Prospectus is , 1996. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). MidAmerican Energy and the Issuers have filed with the Commission a registration statement on Form S-3 (the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act") with respect to the Preferred Securities offered hereby and certain other securities. This Prospectus does not contain all of the information set forth in the Registration Statement and reference is hereby made to the Registration Statement and the exhibits thereto for further information with respect to the Company and the Preferred Securities offered hereby. Such reports, proxy statements, Registration Statement and exhibits and other information can be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at its Northeast Regional Office located at 7 World Trade Center, Suite 1300, New York, New York 10048 and Midwest Regional Office located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be obtained at prescribed rates from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Company is subject to the electronic filing requirements of the Commission. Accordingly, pursuant to the rules and regulations of the Commission, certain documents, including annual and quarterly reports and proxy statements, filed by the Company with the Commission have been filed electronically. The Commission also maintains a World Wide Web site that contains reports, proxy and information statements and other information regarding registrants (including the Company) that file electronically with the Commission at (http:// www.sec.gov). Certain of the Company's securities are listed on the New York Stock Exchange and such reports, proxy statements and other information may also be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005. No separate financial statements of the Issuers are included herein. The Company considers that such financial statements would not be material to holders of the Preferred Securities because: (i) all of the Common Securities of the Issuers are owned by MidAmerican Energy, a reporting company under the Exchange Act; (ii) the Issuers have no independent operations, but exist for the sole purpose of issuing the Trust Securities and holding the Debentures as trust assets; and (iii) the obligations of the Issuers under the Preferred Securities, to the extent funds are available therefor, are fully and unconditionally guaranteed to the extent set forth herein by MidAmerican Energy. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Annual Report of the Company on Form 10-K, as amended, for the year ended December 31, 1995, the Quarterly Reports of the Company on Form 10-Q for the period ended March 31, 1996 as amended, and for the periods ended June 30, 1996 and September 30, 1996, and the Current Reports of the Company on Form 8-K reporting events occurring on February 20, 1996, April 25, 1996, May 28, 1996 and October 17, 1996, are incorporated by reference into this Prospectus. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Preferred Securities contemplated hereby shall be deemed to be incorporated by reference into this Prospectus and to be made a part hereof from the respective dates of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of the Registration Statement and this Prospectus to the extent that a statement contained herein, in the applicable Prospectus Supplement or in any subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of the Registration Statement or this Prospectus. 2 Copies of the above documents (other than exhibits to such documents unless such exhibits are specifically incorporated by reference into such documents) may be obtained upon written or oral request without charge from the Company, 666 Grand Avenue, P.O. Box 657, Des Moines, Iowa 50303-0657 (telephone number (515) 281-2268), Attention: Investor Relations. ---------------- The Company is incorporated in Iowa. Its executive offices are located at 666 Grand Avenue, P.O. Box 657, Des Moines, Iowa 50303-0657 (telephone number (515) 242-4300). 3 THE ISSUERS GENERAL Each of the Issuers is a statutory business trust formed under Delaware law pursuant to (i) a trust agreement executed by MidAmerican Energy as the depositor of each Issuer (the "Depositor"), and the Issuer Trustees (as defined herein) and (ii) the filing of a certificate of trust with the Delaware Secretary of State on October 29, 1996. Each such trust agreement will be amended and restated in its entirety (as so amended and restated, a "Trust Agreement" and, collectively, the "Trust Agreements") substantially in the form filed as an exhibit to the Registration Statement of which this Prospectus is a part. Each Trust Agreement will be qualified as an indenture under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Issuers exist for the exclusive purpose of (i) issuing Trust Securities representing undivided beneficial interests in the Issuers, (ii) holding the Debentures as Trust Assets and (iii) engaging only in those other activities necessary or incidental thereto. All of the Common Securities will be owned by MidAmerican Energy. The Common Securities will rank PARI PASSU, and payments will be made thereon pro rata, with the Preferred Securities, except that upon the occurrence and continuance of an Event of Default under the Indenture (see "Description of the Debentures -- Events of Default"), the rights of the holders of the corresponding Common Securities to payment in respect of distributions and payments upon liquidation, redemption or other acquisition of Common Securities will be subordinated to the rights of the holders of Preferred Securities. MidAmerican Energy will acquire Common Securities of each Issuer in an aggregate equal to 3% of the total capital of each Issuer. Each Issuer will have a term of approximately 30 to 49 years, as specified in the applicable Prospectus Supplement, but may terminate earlier as provided in the Trust Agreement with respect to such Issuer. Each Issuer's business and affairs are conducted by its trustees, each appointed by MidAmerican Energy as holder of the Common Securities: First Chicago Delaware Inc. (the "Delaware Trustee"), The First National Bank of Chicago (the "Property Trustee") and three individual trustees (the "Administrative Trustees") who are employees or officers of or affiliated with MidAmerican Energy (collectively, the "Issuer Trustees"). MIDAMERICAN ENERGY COMPANY GENERAL MidAmerican Energy was formed on July 1, 1995 through the merger (the "Merger") of Iowa-Illinois Gas and Electric Company ("Iowa-Illinois"), Midwest Resources Inc. ("Midwest Resources") and Midwest Power Systems Inc. ("Midwest Power") with and into MidAmerican Energy. MidAmerican Energy is a combination electric and natural gas public utility engaged in the generation, transmission, distribution and sale of electric energy in Illinois, Iowa and South Dakota, and the purchase, distribution, transportation and sale of natural gas in those states and in the state of Nebraska. MidAmerican Energy's nonregulated operations are conducted by its MidAmerican Capital Company ("MidAmerican Capital") subsidiary; a separate wholly-owned subsidiary, Midwest Capital Group, Inc., functions as a regional business development company in the utility service territory. 4 DESCRIPTION OF THE PREFERRED SECURITIES The Preferred Securities and the Common Securities of each Issuer (together, the "Issuer Securities") will be created pursuant to the terms of the Trust Agreements. Each Issuer's Preferred Securities will represent undivided beneficial interests in the assets of such Issuer and entitle registered owners (the "Holders") thereof to a preference over such Issuer's Common Securities in certain circumstances with respect to Distributions and amounts payable on redemption or liquidation, as well as other benefits as described in the applicable Trust Agreement. The following summaries of certain provisions of the Trust Agreements do not purport to be complete and are subject to, and are qualified in their entirety by reference to, the provisions of the Trust Agreements, including the definitions therein of certain terms, and the Trust Indenture Act. Wherever particular sections or defined terms of the Trust Agreements are referred to, such sections or defined terms are incorporated herein by reference. The Trust Agreements have been filed as exhibits to the Registration Statement of which this Prospectus forms a part. GENERAL All of the Common Securities are owned by MidAmerican Energy. The Common Securities of each Issuer will rank PARI PASSU, and payments will be made thereon pro rata, with the Preferred Securities of each Issuer based on the liquidation preference amount of the Trust Securities, except as described herein under "-- Subordination of Common Securities." (Section 4.03). The Debentures will be owned by the Issuers and held by the Property Trustee in trust for the benefit of the Holders of the Trust Securities. (Section 2.09). The Debentures and the Guarantees, together with the obligations of MidAmerican Energy with respect to the Preferred Securities under the Indenture, the Trust Agreements and the Expense Agreements constitute full and unconditional guarantees of the Preferred Securities by MidAmerican Energy. DISTRIBUTIONS The Distributions payable on the Preferred Securities will be fixed at the rate per annum set forth in the applicable Prospectus Supplement. Distributions that are in arrears will bear interest on the amount thereof at same per annum rate (to the extent permitted by applicable law, compounded quarterly). The term "Distributions" as used herein includes interest payable on overdue Distributions, unless otherwise stated. The amount of Distributions payable for any period will be computed on the basis of a 360-day year of twelve 30-day months and for any period shorter than a full month, on the basis of the actual number of days elapsed. (Section 4.01(b)). Distributions on the Preferred Securities will be cumulative, will accrue from the date of initial issuance thereof, and will be payable quarterly in arrears, on March 1, June 1, September 1 and December 1 of each year, except as otherwise described below. Such Distributions will originally accrue from, and include, the date of initial issuance and will accrue to, and include, the first distribution payment date, and thereafter will accrue from, and exclude, the last distribution payment date through which Distributions have been paid. In the event that any date on which Distributions are otherwise payable on the Preferred Securities is not a Business Day, payment of the distribution payable on such date will be made on the next succeeding Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, payment of such distribution shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date (each date on which Distributions are otherwise payable in accordance with the foregoing, a distribution payment date). (Section 4.01(a)). A Business Day is used herein to mean any day other than a Saturday or a Sunday or a day on which banking institutions in The City of New York are authorized or required by law or executive order to remain closed or a day on which the Corporate Trust Office of the Property Trustee or the Debenture Trustee (as defined herein) is closed for business. 5 MidAmerican Energy shall have the right under the Indenture, as supplemented by a Supplemental Indenture relating to a series of Debentures (a "Supplemental Indenture"), to extend the interest payment period at any time or from time to time on each series of Debentures to a period ("Extension Period") not exceeding 20 consecutive quarters. In the event that MidAmerican Energy exercises this right, during such Extension Period quarterly Distributions on the corresponding Preferred Securities will be deferred (and the amount of Distributions to which holders of such Preferred Securities are entitled will accumulate additional Distributions thereon at the rate per annum set forth in the applicable Prospectus Supplement, compounded quarterly from the relevant payment date for such Distributions); provided, however, that distributions attributable to payments of Additional Interest Attributable to Taxes (as hereinafter defined), if any, on such Debentures will not be deferred and will be payable on the relevant interest payment date. During any such Extension Period MidAmerican Energy may not, and may not permit any of its subsidiaries to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of MidAmerican Energy's capital stock or (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of MidAmerican Energy (including other Debentures) that rank PARI PASSU with or junior in interest to the series of Debentures to which such Extension Period applies, or make any guarantee payments with respect to any guarantee by MidAmerican Energy of the debt securities of any of its subsidiaries if such guarantee ranks PARI PASSU or junior in interest to such series of Debentures (other than (a) dividends or distributions in common stock of MidAmerican Energy, (b) payments under any Guarantee, and (c) purchases of common stock related to the issuance of common stock under any of MidAmerican Energy's benefit plans for its directors, officers or employees). This covenant effectively requires that any extension period with respect to any series of Debentures also apply to all other series of Debentures. Prior to the termination of any such Extension Period, MidAmerican Energy may further extend the interest payment period, provided that such Extension Period together with all such previous and further extensions thereof may not exceed 20 consecutive quarters and that such Extension Period may not extend beyond the maturity or the redemption date of the series of the Debentures in question. Upon the termination of any Extension Period and the payment of all amounts then due, MidAmerican Energy may select a new extended interest payment period, subject to the foregoing requirements. See "Description of the Debentures -- Interest" and "-- Option to Extend Interest Payment Period." It is anticipated that the income of each Issuer available for distribution to the Holders of the Preferred Securities of such Issuer will be limited to payments on the Debentures to be purchased by such Issuer with the proceeds of the sale of the Preferred Securities. See "Description of the Debentures." If MidAmerican Energy does not make interest payments on the Debentures, the Property Trustee will not have funds available to pay Distributions on the Preferred Securities and the Common Securities. The payment of Distributions (if and to the extent an Issuer has sufficient funds available for the payment of such Distributions) is guaranteed by MidAmerican Energy as set forth herein under "Description of the Guarantees." Distributions on the Preferred Securities will be payable to the Holders thereof as they appear on the register of the applicable Issuer on the relevant record dates, which as long as the Preferred Securities remain in book-entry form, will be one Business Day prior to the relevant Distribution Date. Subject to any applicable laws and regulations and the provision of the applicable Trust Agreement, each such payment will be made as described under "-- Book-Entry Only Issuance -- The Depository Trust Company." In the event any Preferred Securities are not in book-entry form, the relevant record date for such Preferred Securities shall be the date 15 days prior to the relevant distribution date or if such date is not a Business Day, the next succeeding Business Day. (Section 4.01(d)). REDEMPTION MANDATORY REDEMPTION. Upon the repayment of any series of the Debentures, whether at maturity or upon earlier redemption as provided in the Indenture, the proceeds from such repayment shall be 6 applied by the Property Trustee to redeem a Like Amount (as defined herein) of corresponding Trust Securities, upon not less than 30 nor more than 60 days' notice, at a redemption price equal to the aggregate Liquidation Amount (as defined herein) plus accumulated and unpaid Distributions thereon to the Redemption Date. See "Description of the Debentures -- Optional Redemption." "Like Amount" means (i) with respect to a redemption of any series of Preferred Securities, Preferred Securities of such series having a Liquidation Amount (as defined below) equal to that portion of the principle amount of Debentures to be contemporaneously redeemed in accordance with the Indenture and the proceeds of which will be used to pay the Redemption Price of such Preferred Securities plus accumulated and unpaid Distributions to the date of such payment, and (ii) with respect to a distribution of Debentures to Holders of any series of Preferred Securities in connection with a termination or liquidation of the related Issuer, Debentures having a principal amount equal to the Liquidation Amount of the Preferred Securities of the Holder to whom such Debentures are distributed. "Liquidation Amount" means the stated amount of $25 per Preferred Security and Common Security. OPTIONAL REDEMPTION. MidAmerican Energy will have the right to redeem the Debentures of any particular series in whole or in part, on or after a date to be specified in the Prospectus Supplement with respect to such series of Debentures and therefore cause a mandatory redemption of the corresponding Preferred Securities as described above. SPECIAL EVENT REDEMPTION. If a Tax Event or an Investment Company Event (each defined below, a "Special Event") shall occur and be continuing at any time with respect to an Issuer or the Preferred Securities of such Issuer, MidAmerican Energy has the right to redeem the corresponding Debentures in whole, but not in part, and therefore cause a mandatory redemption of such Preferred Securities at a redemption price equal to the aggregate Liquidation Amount of such Preferred Securities plus accumulated and unpaid distributions thereon within 90 days following the occurrence of such Special Event. "Tax Event" means the receipt by the Issuer of an opinion of counsel (which may be counsel to the Company or an affiliate but not an employee thereof and which must be acceptable to the Property Trustee) experienced in such matters to the effect that, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or (b) any amendment to, or change in an interpretation or application of, such laws or regulations by any legislative body, court, governmental agency or regulatory authority (including the enactment of any legislation and the publication of any judicial decision or regulatory determination on or after the date of issuance of the Preferred Securities), there is more than an insubstantial risk that (i) the Issuer is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to interest income received or accrued on the Debentures, (ii) interest payable by the Company on the Debentures is not, or within 90 days of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes, or (iii) the Issuer is, or will be within 90 days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges. "Investment Company Event" means the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority ("Change in 1940 Act Law") to the effect that an Issuer is or will be considered an "investment company" that is required to be registered under the Investment Company Act of 1940, as amended, which Change in 1940 Act Law becomes effective on or after the date of original issuance of a particular series of Preferred Securities. REDEMPTION PROCEDURES MidAmerican Energy may not redeem fewer than all of a particular series of Debentures then outstanding and an Issuer may not redeem fewer than all of the corresponding series of the outstanding 7 Preferred Securities then outstanding (i) unless all accrued and unpaid Distributions have been paid on all such Preferred Securities for all quarterly distribution periods terminating on or prior to the date of redemption or (ii) if a partial redemption of such Preferred Securities would result in the delisting of such Preferred Securities by any national securities exchange on which such Preferred Securities are then listed. Preferred Securities redeemed on each date selected for redemption (the "Redemption Date") shall be redeemed at the Redemption Price with the proceeds from the contemporaneous redemption of the corresponding Debentures. Redemptions of the Preferred Securities shall be made and the Redemption Price shall be deemed payable on each Redemption Date only to the extent that an Issuer has funds available for the payment of such Redemption Price. (Section 4.02(c)). See also "Subordination of Common Securities." If an Issuer gives a notice of redemption in respect of a particular series of Preferred Securities (which notice will be irrevocable), then, on or before the Redemption Date, such Issuer, to the extent funds are available, will, so long as such securities are in book-entry form, irrevocably deposit with DTC funds sufficient to pay the applicable Redemption Price and will give DTC irrevocable instructions and authority to pay the Redemption Price to the beneficial holders of such Preferred Securities. If such Preferred Securities are no longer in book-entry form, such Issuer, to the extent funds are available, will irrevocably deposit with the paying agent for such Preferred Securities funds sufficient to pay the applicable Redemption Price and will give such paying agent irrevocable instructions and authority to pay the Redemption Price to the Holders thereof upon surrender of their certificates evidencing such Preferred Securities. Notwithstanding the foregoing, Distributions payable on or prior to the Redemption Date for any Preferred Securities called for redemption shall be payable to the Holders of such Preferred Securities on the relevant record dates for the related distribution payment dates. If notice of redemption shall have been given and funds deposited as required, then on the Redemption Date, all rights of Holders of such Preferred Securities so called for redemption will cease, except the right of the Holders of such Preferred Securities to receive the Redemption Price, but without interest thereon, and such Preferred Securities will cease to be outstanding. In the event that any date fixed for redemption of Preferred Securities is not a Business Day, then payment of the amount payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay). In the event that payment of the Redemption Price in respect of Preferred Securities called for redemption is improperly withheld or refused and not paid either by the applicable Issuer or by MidAmerican Energy pursuant to the corresponding Guarantee described herein under "Description of the Guarantees", Distributions on such Preferred Securities will continue to accrue at the then applicable rate, from the original Redemption Date to the date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the Redemption Price. Subject to applicable law (including, without limitation, United States federal securities law), MidAmerican Energy or its subsidiaries may at any time and from time to time purchase outstanding Preferred Securities by tender, in the open market or by private agreement. If less than all the outstanding Trust Securities of an Issuer are to be redeemed on a Redemption Date, then the aggregate liquidation preference of such securities to be redeemed shall be allocated on a pro rata basis to the Common Securities and the Preferred Securities. The particular Preferred Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Property Trustee from the outstanding Preferred Securities of such series not previously called for redemption, by such method as the Property Trustee shall deem fair and appropriate and which may provide for the selection for redemption of Preferred Securities in liquidation preference amounts equal to $25 or integral multiples thereof. The Property Trustee shall promptly notify the security registrar in writing of the Preferred Securities selected for redemption and, in the case of any Preferred Securities selected for partial redemption, the liquidation preference amount thereof to be redeemed. For all 8 purposes of each Trust Agreement, unless the context otherwise requires, all provisions relating to the redemption of a series of Preferred Securities shall relate, in the case of any Preferred Securities of such series redeemed or to be redeemed only in part, to the portion of the liquidation preference amount of Preferred Securities of such series that has been or is to be redeemed. (Section 4.02(f)). SUBORDINATION OF COMMON SECURITIES Payment of Distributions on, and the Redemption Price of, Issuer Securities, shall be made pro rata based on the Liquidation Amount of the Common Securities and Preferred Securities comprising such Issuer Securities; provided, however, that if on any distribution payment date or Redemption Date an Event of Default under the Indenture (as described below, see "Description of the Debentures -- Events of Default") shall have occurred and be continuing, no payment of any Distribution on, or Redemption Price of, any Common Security corresponding thereto, and no other payment on account of the redemption, liquidation or other acquisition of the corresponding Common Securities, shall be made unless payment in full in cash of all accrued and unpaid Distributions on all outstanding Preferred Securities of such series for all distribution periods terminating on or prior thereto, or in the case of payment of the Redemption Price, the full amount of such Redemption Price on all such outstanding Preferred Securities, shall have been made or provided for, and all funds available to the Property Trustee shall first be applied to the payment in full, in cash, of all Distributions on, or Redemption Price of, Preferred Securities then due and payable. (Section 4.03(a)). In the case of any default under a Trust Agreement resulting from an Event of Default under the Indenture, MidAmerican Energy as Holder of the Common Securities issued under such Trust Agreement will be deemed to have waived any such default under such Trust Agreement until the effect of all such defaults with respect to the Preferred Securities issued under such Trust have been cured, waived or otherwise eliminated. Until any such default under such Trust Agreement with respect to such Preferred Securities has been so cured, waived or otherwise eliminated, the Property Trustee shall act solely on behalf of the Holders of such Preferred Securities and not the Holders of such Common Securities, and only Holders of such Preferred Securities will have the right to direct the Property Trustee to act on their behalf. (Section 4.03(b)). TERMINATION OF AN ISSUER AND DISTRIBUTION OF DEBENTURES MidAmerican Energy has the right to, at any time, direct the Property Trustee to dissolve an Issuer and, in connection therewith, after satisfaction of creditors of such Issuer, if any, cause the Debentures held by such Issuer to be distributed to the Holders of the Trust Securities of such Issuer on a pro rata basis in liquidation of such Holders' interests in the Trust. (See "-- Liquidation, Distribution Upon Termination". There can be no assurance as to the market price for the Debentures which may be distributed in exchange for Preferred Securities if a termination and liquidation of an Issuer were to occur. Accordingly, the Debentures which an investor may subsequently receive on termination and liquidation of an Issuer may trade at a discount to the price of the Preferred Securities exchanged. LIQUIDATION, DISTRIBUTION UPON TERMINATION Pursuant to either Trust Agreement, an Issuer shall dissolve and shall be liquidated by the Property Trustee on the first to occur of: (i) the expiration of the term of the relevant Trust; (ii) the bankruptcy, dissolution or liquidation of MidAmerican Energy; (iii) the redemption of all of the Preferred Securities of such Issuer; (iv) delivery of written direction to the Property Trustee by MidAmerican Energy, as Depositer, to dissolve such Issuer and distribute the Debentures held by such Issuer to Holders of its Issuer Securities and (v) an order for judicial dissolution of such Issuer having been entered by a court of competent jurisdiction. (Sections 9.01 and 9.02). 9 If an automatic or early termination occurs as described in clause (i), (ii), (iv) or (v) above, such Issuer shall be liquidated by the Property Trustee as expeditiously as the Property Trustee determines to be appropriate by adequately providing for the satisfaction of liabilities of creditors, if any, and by distributing to each Holder of Preferred Securities and Common Securities of such Issuer a Like Amount of Debentures, unless such distribution is determined by the Property Trustee not to be practical, in which event such Holders will be entitled to receive, out of the assets of such Issuer available for distribution to Holders after satisfaction of liabilities of creditors as provided by applicable law, an amount determined as follows. In the case of Holders of Preferred Securities, the amount will be equal to the aggregate liquidation preference of the Preferred Securities plus accrued and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"), to the extent that there are sufficient assets available. If such Liquidation Distribution can be paid only in part because such Issuer has insufficient assets available to pay in full the aggregate Liquidation Distribution, then the amounts payable directly by such Issuer on the Preferred Securities shall be paid on a pro rata basis. MidAmerican Energy, as Holder of the Common Securities, will be entitled to receive Distributions upon any such liquidation pro rata with the Holders of the Preferred Securities, except that if an Event of Default under the Indenture has occurred and is continuing under the Indenture, the Preferred Securities shall have a preference over the Common Securities. (Sections 9.04(a) and 9.04(d)). A Supplemental Indenture may provide that if an early termination occurs as described in clause (v) above, the Debentures will be subject to optional redemption in whole but not in part. On the date fixed for any distribution of Debentures upon termination of an Issuer (i) the Preferred Securities and the Common Securities issued by such Issuer will no longer be deemed to be outstanding, (ii) DTC or its nominee, as the record holder of such Preferred Securities, will receive a registered global certificate or certificates representing the Debentures to be delivered upon such distribution and (iii) certificates representing such Preferred Securities will be deemed to represent Debentures of the corresponding series having an aggregate principal amount equal to the stated liquidation preference amount of, and bearing accrued and unpaid interest equal to accrued and unpaid Distributions on, such Preferred Securities until such certificates are presented to MidAmerican Energy or its agent for transfer or reissuance. (Section 9.02(c)). EVENTS OF DEFAULT; NOTICE Any one of the following events constitutes an Event of Default under the affected Trust Agreement (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (i) the occurrence of an Event of Default as defined in Section 801 of the Indenture (see "Description of the Debentures -- Events of Default"); or (ii) default by an Issuer in the payment of any Distribution when it becomes due and payable, and continuation of such default for a period of 30 days; or (iii) default by an Issuer in the payment of any Redemption Price of any Trust Security when it becomes due and payable; or (iv) default in the performance, or breach, in any material respect, of any covenant or warranty of the Issuer Trustees in the applicable Trust Agreement (other than a covenant or warranty a default in the performance of which or the breach of which is specifically dealt with in clause (ii) or (iii) above), and continuation of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Property Trustee by the Holders of Preferred Securities of such Issuer having at least 10% of the total liquidation preference amount of the outstanding Preferred Securities of such Issuer, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a Notice of Default thereunder; or 10 (v) the occurrence of certain events of bankruptcy or insolvency with respect to an Issuer. Within five Business Days after the occurrence of any Event of Default, the Property Trustee shall transmit to the Holders of Trust Securities and MidAmerican Energy notice of any such Event of Default actually known to the Property Trustee, unless such Event of Default shall have been cured or waived. MERGER OR CONSOLIDATION OF THE PROPERTY TRUSTEE OR THE DELAWARE TRUSTEE Any entity into which the Property Trustee or the Delaware Trustee may be merged or with which it may be consolidated, or any entity resulting from any merger, conversion or consolidation to which the Property Trustee or the Delaware Trustee shall be a party, or any entity succeeding to all or substantially all the corporate trust business of the Property Trustee or the Delaware Trustee, shall be the successor to such Trustee under the Trust Agreements, provided such entity shall be otherwise qualified and eligible. (Section 8.12). BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY The Depository Trust Company (the "DTC") will act as securities depositary for all of the Preferred Securities. The Preferred Securities will be issued only as fully-registered securities registered in the name of Cede & Co. ("DTC's nominee"). One or more fully-registered global Preferred Securities certificates, representing the aggregate number of Preferred Securities, will be issued and will be deposited with DTC. DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the 1934 Act. DTC holds securities that its participants ("Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations ("Direct Participants"). DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others, such as securities brokers and dealers, banks and trust companies that clear transactions through or maintain a direct or indirect custodial relationship with a Direct Participant ("Indirect Participants"). The rules applicable to DTC and its Direct Participants and Indirect Participants are on file with the Commission. Purchases of Preferred Securities within the DTC system must be made by or through Direct Participants, which will receive a credit for the Preferred Securities on DTC's records. The ownership interest of each actual purchaser of each Preferred Security (the "Beneficial Owner") is in turn to be recorded in the Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchases, but Beneficial Owners are expected to receive written confirmations providing details of the transactions, as will as periodic statements of their holdings, from the Participants through which the Beneficial Owners purchased Preferred Securities. Transfers of ownership interests in the Preferred Securities are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Preferred Securities, except in the event that use of the book-entry system for the Preferred Securities is discontinued. To facilitate subsequent transfers, all the Preferred Securities deposited by Direct Participants with DTC are registered in the name of DTC's nominee, Cede & Co. The deposit of Preferred Securities with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has 11 no knowledge of the actual Beneficial Owners of the Preferred Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Preferred Securities are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants and by Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements that may be in effect from time to time. Redemption notices shall be sent to Cede & Co. as the registered Holder of Preferred Securities. If less than all of the Preferred Securities are being redeemed, DTC's current practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Although voting with respect to the Preferred Securities is limited, in those cases where a vote is required, neither DTC nor Cede & Co. will itself consent or vote with respect to Preferred Securities. Under its usual procedures, DTC would mail an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. consenting or voting rights to those Direct Participants to whose accounts the Preferred Securities are credited on the record date identified in a listing attached to the Omnibus Proxy. MidAmerican Energy and the Issuers believe that the arrangements among DTC, Direct and Indirect Participants, and Beneficial Owners will enable the Beneficial Owners to exercise rights equivalent in substance to the rights that can be directly exercised by a holder of a beneficial interest in the Issuers. Distribution payments on the Preferred Securities will be made to DTC. DTC's practice is to credit Direct Participants' accounts on the relevant payment date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payments on such payment date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the account of customers in bearer form or registered in "street name," and such payments will be the responsibility of such Participant and not of DTC, the Property Trustee, the applicable Issuer or MidAmerican Energy, subject to any statutory or regulatory requirements to the contrary that may be in effect from time to time. Payment of Distributions to DTC is the responsibility of the Issuer in question, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of Participants. Except as provided herein, a Beneficial Owner will not be entitled to receive physical delivery of Preferred Securities. Accordingly, each Beneficial Owner must rely on the procedures of DTC to exercise any rights under the Preferred Securities. DTC may discontinue providing its services as securities depositary with respect to the Preferred Securities at any time by giving reasonable notice to the Issuer in question and MidAmerican Energy. Under such circumstances, in the event that a successor securities depositary is not obtained, Preferred Securities certificates are required to be printed and delivered. Additionally, the Administrative Trustees (with the consent of MidAmerican Energy) may decide to discontinue use of the system of book-entry transfers through DTC (or any successor depositary) with respect to the Preferred Securities. In that event, certificates for the Preferred Securities will be printed and delivered. The information in this section concerning DTC and DTC's book-entry system has been obtained from sources that MidAmerican Energy and the Issuers believe to be reliable, but neither MidAmerican Energy nor the Issuers take responsibility for the accuracy thereof. Neither MidAmerican Energy nor any Issuer has responsibility for the performance by DTC or its Participants of their respective obligations as described herein or under the rules and procedures governing their respective operations. 12 VOTING RIGHTS Holders of Trust Securities shall be entitled to one vote for each $25 in liquidation preferences represented by their Trust Securities in respect of any matter as to which such Holders of Trust Securities are entitled to vote. Except as described below and under "-- Amendments," and under "Description of the Guarantees -- Amendments and Assignment" and as otherwise required by law and the applicable Trust Agreement, the Holders of the Preferred Securities will have no voting rights. (Section 6.01(a)). So long as any Debentures of a particular series are held by the Property Trustee of an Issuer, the Property Trustee shall not (i) direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee, or executing any trust or power conferred on the Debenture Trustee with respect to such Debentures, (ii) waive any past default which is waivable under Section 813 of the Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all such Debentures shall be due and payable or (iv) consent to any amendment, modification or termination of the Indenture or such Debentures, where such consent shall be required, without, in each case, obtaining the prior approval of the Holders of Preferred Securities having at least 66 2/3% of the liquidation preference amount of the outstanding Preferred Securities of such Issuer; provided, however, that where a consent under the Indenture would require the consent of each Holder of Debentures affected thereby, no such consent shall be given by the Property Trustee without the prior consent of each Holder of Preferred Securities of such Issuer. The Property Trustee shall not revoke any action previously authorized or approved by a vote of the holders of Preferred Securities of a particular Issuer except pursuant to a subsequent vote of the outstanding Preferred Securities of such Issuer. The Property Trustee shall notify all Holders of an affected series of Preferred Securities of any notice of default received from the Debenture Trustee. In addition to obtaining the foregoing approvals of the Holders of the Preferred Securities of a particular series, prior to taking any of the foregoing actions, the Property Trustee shall receive an opinion of counsel experienced in such matters to the effect that the applicable Issuer will be classified as a "grantor trust" and will not be classified as an association taxable as a corporation for United States federal income tax purposes on account of such action. (Section 6.01(b)). Notwithstanding the foregoing, a Holder of Preferred Securities of a particular series may institute a proceeding for enforcement of payment to such Holder directly of principal of or interest on Debentures of the corresponding series having a principal amount equal to the aggregate liquidation preference amount of such Preferred Securities of such Holder on or after the due dates specified in the Debentures. Any required approval of Holders of Preferred Securities of a particular series may be given at a separate meeting of Holders of such Preferred Securities convened for such purpose or pursuant to written consent. The Administrative Trustees will cause a notice of any meeting at which Holders of such Preferred Securities are entitled to vote, or of any matter upon which action by written consent of such Holders is to be taken, to be given to each Holder of such Preferred Securities in the manner set forth in the applicable Trust Agreement (Section 6.02). No vote or consent of the Holders of Preferred Securities of a particular series will be required for the Issuer to redeem and cancel Preferred Securities of such series in accordance with the applicable Trust Agreements. Notwithstanding that Holders of Preferred Securities are entitled to vote or consent under any of the circumstances described above, any of the Preferred Securities that are owned by MidAmerican Energy, the Property Trustee or any affiliate of MidAmerican Energy or the Property Trustee, shall, for purposes of such vote or consent, be treated as if they were not outstanding. 13 AMENDMENTS Either Trust Agreement may be amended from time to time by the applicable Issuer (on approval of a majority of the Administrative Trustees) and MidAmerican Energy, without the consent of any Holders of Trust Securities, (i) to cure any ambiguity, correct or supplement any provision therein which may be inconsistent with any other provision therein, or to make any other provisions with respect to matters or questions arising under the applicable Trust Agreement, which shall not be inconsistent with the other provisions of the applicable Trust Agreement, or (ii) to modify, eliminate or add to any provisions of the applicable Trust Agreement to such extent as shall be necessary to ensure that the Issuer will be classified for United States federal income tax purposes as a grantor trust at any time that any Trust Securities are outstanding or to ensure the Issuer's exemption from the status of an "investment company" under the Investment Company Act of 1940, as amended (the "1940 Act"); provided, however, that, except in the case of clause (ii), such action shall not adversely affect in any material respect the interests of any Holder of Trust Securities issued pursuant to such Trust Agreement and, in the case of clause (i), any amendments of such Trust Agreement shall become effective when notice thereof is given to the Holders of Trust Securities issued thereunder. Except as provided below, any provision of either Trust Agreement may be amended by the Administrative Trustees and MidAmerican Energy with (i) the consent of Holders of Trust Securities issued pursuant to such Trust Agreement representing not less than a majority in liquidation preference of such Trust Securities then outstanding and (ii) receipt by the applicable Trustee of an opinion of counsel to the effect that such amendment or the exercise of any power granted to such Trustee in accordance with such amendment will not affect the Issuer's status as a grantor trust for United States federal income tax purposes or affect the Issuer's exemption from status of an "investment company" under the 1940 Act. Without the consent of each affected Holder of Trust Securities, a Trust Agreement may not be amended to (i) change the amount or timing of any distribution with respect to the Trust Securities issued pursuant to such Trust Agreement or otherwise adversely affect the amount of any distribution required to be made in respect of such Trust Securities as of a specified date or (ii) restrict the right of a Holder of such Trust Securities to institute suit for the enforcement of any such payment on or after such date. REMOVAL OF PROPERTY TRUSTEE Unless an Event of Default under the Indenture shall have occurred and be continuing, the Property Trustee may be removed at any time by act of MidAmerican Energy as the Holder of the Common Securities. If an Event of Default under the Indenture has occurred and is continuing, the Property Trustee may be removed at such time by act of the Holders of Preferred Securities having a majority of the liquidation preference of the Preferred Securities then outstanding. In no event will the Holders of the Preferred Securities have the right to vote to appoint, remove or replace the Administrative Trustees, which voting rights are vested exclusively in MidAmerican Energy as the Holder of the Common Securities. No resignation or removal of the Property Trustee and no appointment of a successor trustee shall be effective until the acceptance of appointment by the successor Property Trustee in accordance with the provisions of the Trust Agreements. (Section 8.10). CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE Unless an Event of Default under the Indenture shall have occurred and be continuing, at any time or times, for the purpose of meeting the legal requirements of the Trust Indenture Act or of any jurisdiction in which any part of the Trust Property (as defined in the applicable Trust Agreement) may at the time be located, the Holder of the Common Securities and the Property Trustee shall have power to appoint, and upon the written request of the Property Trustee, MidAmerican Energy, as Depositor, shall for such purpose join with the Property Trustee in the execution, delivery and performance of all 14 instruments and agreements necessary or proper to appoint, one or more persons approved by the Property Trustee either to act as co-trustee, jointly with the Property Trustee, of all or any part of such Trust Property, or to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such person or persons in such capacity, any property, title, right or power deemed necessary or desirable, subject to the provisions of the applicable Trust Agreement. If MidAmerican Energy, as Depositor, does not join in such appointment within 15 days after the receipt by it of a request so to do, or in case an Event of Default under the Indenture has occurred and is continuing, the Property Trustee alone shall have the power to make such appointment. (Section 8.09). FORM, EXCHANGE AND TRANSFER Preferred Securities will be issuable only in fully registered form each having a liquidation preference amount of $25 and any integral multiple thereof. At the option of the Holder, subject to the terms of the applicable Trust Agreement, Preferred Securities of any series will be exchangeable for other Preferred Securities of such series, of any authorized denomination and of like tenor and aggregate liquidation preference. Subject to the terms of the applicable Trust Agreement, Preferred Securities of any series may be presented for exchange as provided above or for registration of transfer (duly endorsed or accompanied by a duly executed instrument of transfer) at the office of the Transfer Agent designated for such purpose. The Administrative Trustees may designate MidAmerican Energy as Transfer Agent and as Registrar. No service charge will be made for any registration of transfer or exchange of Preferred Securities, but MidAmerican Energy may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Such transfer or exchange will be effected upon the Transfer Agent being satisfied with the documents of title and identity of the person making the request. The Administrative Trustees may at any time designate additional Transfer Agents or rescind the designation of any Transfer Agent or approve a change in the office through which any Transfer Agent acts. An Issuer will not be required to (i) issue, register the transfer of, or exchange any of its Preferred Securities during a period beginning at the opening of business 15 calendar days before the day of mailing of a notice of redemption of any of its Preferred Securities called for redemption and ending at the close of business on the day of such mailing or (ii) register the transfer of or exchange any Preferred Securities so selected for redemption, in whole or in part, except the unredeemed portion of any such Preferred Securities being redeemed in part. (Section 5.04). REGISTRAR AND TRANSFER AGENT Initially, The First National Bank of Chicago will act as Registrar and Transfer Agent for the Preferred Securities. Registration of transfers of Preferred Securities will be effected without charge by or on behalf of either Issuer, but upon payment (with the giving of such indemnity as the Issuer or MidAmerican Energy may require) in respect of any tax or other governmental charges which may be imposed in relation to it. The Issuers will not be required to register or cause to be registered any transfer of Preferred Securities after they have been called for redemption except the unredeemed portion of any Preferred Securities being redeemed in part. (Section 5.04). 15 CONCERNING THE PROPERTY TRUSTEE MidAmerican Energy maintains deposit accounts and conducts other banking transactions with the Property Trustee in the ordinary course of its businesses. The Property Trustee also acts as the Guarantee Trustee under the Guarantee, the Debenture Trustee under the Indenture and under another indenture under which medium-term notes of MidAmerican Energy are or may become outstanding. MISCELLANEOUS Application will be made to list the Preferred Securities on the New York Stock Exchange. The Delaware Trustee will act as the resident trustee in the state of Delaware and will have no other significant duties. The Property Trustee will hold the Debentures on behalf of the Issuers and will maintain a payment account with respect to the Trust Securities, and will also act as trustee under the Trust Agreements for the purposes of the Trust Indenture Act. See "-- Events of Default; Notice." The Administrative Trustees will administer the day to day operations of the Issuers. See "-- Voting Rights." The Administrative Trustees are authorized and directed to conduct the affairs of each Issuer and to operate each Issuer so that neither Issuer will be deemed to be an "investment company" required to be registered under the 1940 Act or classified other than as a grantor trust for United States federal income tax purposes and so that the Debentures will be treated as indebtedness of MidAmerican Energy for United States federal income tax purposes. In this connection, the Administrative Trustees and MidAmerican Energy are authorized to take any action, not inconsistent with applicable law, the certificate of trust of either Issuer or the Trust Agreements, that the Administrative Trustees and MidAmerican Energy determine in their discretion to be necessary or desirable for such purposes, as long as such action does not materially adversely affect the interests of the Holders of the Preferred Securities. (Section 2.07(d)). Holders of the Preferred Securities have no preemptive or similar rights. 16 DESCRIPTION OF THE GUARANTEES Set forth below is a summary of information concerning the Guarantees that will be executed and delivered by MidAmerican Energy for the benefit of the Holders from time to time of Preferred Securities of each series. Each Guarantee will be qualified as an indenture under the Trust Indenture Act. The First National Bank of Chicago will act as Guarantee Trustee under each Guarantee for the purposes of compliance with the Trust Indenture Act. The terms of each Guarantee will be those set forth in such Guarantee and those made part of such Guarantee by the Trust Indenture Act. This summary does not purport to be complete and is subject in all respects to the provisions of, and is qualified in its entirety by reference to, the Guarantees, a form of which is filed as an exhibit to the Registration Statement of which this Prospectus forms a part, and the Trust Indenture Act. The Guarantee Trustee will hold each Guarantee for the benefit of the Holders of the corresponding Preferred Securities. GENERAL MidAmerican Energy will fully and unconditionally agree, to the extent set forth herein, to pay the Guarantee Payments (as defined herein) in full to the Holders of the Preferred Securities of a particular series (except to the extent paid by or on behalf of the applicable Issuer), as and when due, regardless of any defense, right of set-off or counterclaim that the applicable Issuer may have or assert. The following payments with respect to the Preferred Securities, to the extent not paid by or on behalf of the applicable Issuer (the "Guarantee Payments"), will be subject to the related Guarantee (without duplication): (i) any accrued and unpaid Distributions required to be paid on the Preferred Securities of such series, to the extent the Property Trustee has available in the payment account for such Issuer sufficient funds to make such payment, (ii) the Redemption Price with respect to any Preferred Securities called for redemption by the applicable Issuer, to the extent the Property Trustee has available in the payment account for such Issuer sufficient funds to make such payment and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the applicable Issuer (other than in connection with a redemption of all of the Preferred Securities), the lesser of (a) the aggregate of the liquidation preference amount and all accrued and unpaid Distributions on such Preferred Securities to the date of payment and (b) the amount of assets of such Issuer remaining available for distribution to Holders of such Preferred Securities in liquidation of such Issuer. MidAmerican Energy's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by MidAmerican Energy to the Holders of such Preferred Securities or by causing the applicable Issuer to pay such amounts to such Holders. Each Guarantee will be a guarantee with respect to the Preferred Securities issued by the applicable Issuer from the time of issuance of such Preferred Securities, but will not apply to (i) any payment of Distributions if and to the extent that such Issuer does not have funds available to make such payments, or (ii) collection of payment. If MidAmerican Energy does not make interest payments on the Debentures held by an Issuer, such Issuer will not have funds available to pay Distributions on the Preferred Securities. The Guarantees will rank subordinate and junior in right of payment to all Senior Indebtedness (except those made PARI PASSU by their terms). See "Status of the Guarantees." MidAmerican Energy will agree in the Agreements as to Expenses and Liabilities (the "Expense Agreements"), a form of which is filed as an exhibit to the Registration Statement of which this Prospectus forms a part, to provide funds to the Issuers as needed to pay obligations of the Issuers to parties other than Holders of Trust Securities. The Debentures and the Guarantees, together with the obligations of MidAmerican Energy with respect to the Preferred Securities under the Indenture, the Trust Agreements, the Guarantees and the Expense Agreements constitute full and unconditional guarantees of the Preferred Securities by MidAmerican Energy. No single document standing alone or operating in conjunction with fewer than all of the other documents constitutes such guarantees. It is only the combined operation of these documents that has the effect of providing full and unconditional guarantees by MidAmerican Energy of the Preferred Securities. 17 AMENDMENTS AND ASSIGNMENT Except with respect to any changes that do not materially adversely affect the rights of Holders of Preferred Securities of a particular Issuer (in which case no vote will be required), the terms of a Guarantee may be changed only with the prior approval of the Holders of such Preferred Securities having at least 66 2/3% of the liquidation preference amount of such outstanding Preferred Securities. All guarantees and agreements contained in any Guarantee shall bind the successors, assigns, receivers, trustees and representatives of MidAmerican Energy and shall inure to the benefit of the Holders of the corresponding Preferred Securities then outstanding. EVENTS OF DEFAULT An event of default under a Guarantee will occur upon the failure of MidAmerican Energy to perform any of its payment obligations thereunder. The Holders of Preferred Securities of an Issuer having a majority of the liquidation preference of such Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of such Guarantee or to direct the exercise of any trust or power conferred upon the Guarantee Trustee under such Guarantee. Any Holder of Preferred Securities may institute a legal proceeding directly against MidAmerican Energy to enforce its rights under a Guarantee without first instituting a legal proceeding against the applicable Issuer, the Guarantee Trustee or any other person or entity. MidAmerican Energy, as Guarantor, will be required to provide annually to the Guarantee Trustee a statement as to the performance by MidAmerican Energy of certain of its obligations under the Guarantees and as to any default in such performance and an officer's certificate as to MidAmerican Energy's compliance with all conditions under the Guarantees. INFORMATION CONCERNING THE GUARANTEE TRUSTEE The Guarantee Trustee, prior to the occurrence of a default by MidAmerican Energy in performance of a Guarantee, has undertaken to perform only such duties as are specifically set forth in the Guarantees and, after default with respect to any Guarantee, must exercise the same degree of care as a prudent individual would exercise in the conduct of his or her own affairs. Subject to this provision, the Guarantee Trustee is under no obligation to exercise any of the powers vested in it by a Guarantee at the request of any Holder of Preferred Securities of a particular series unless it is offered reasonable indemnity against the costs, expenses and liabilities that might be incurred thereby. See "Description of the Preferred Securities -- Concerning the Property Trustee." TERMINATION OF THE GUARANTEES A Guarantee will terminate and be of no further force and effect upon full payment of the Redemption Price of all related Preferred Securities, the distribution of Debentures to Holders of such Preferred Securities in exchange for all of such Preferred Securities or full payment of the amounts payable upon liquidation of the related Issuer. Each Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any such Holder of Preferred Securities must restore payment of any sums paid under such Preferred Securities or the related Guarantee. STATUS OF THE GUARANTEES Each Guarantee will constitute an unsecured obligation of MidAmerican Energy and will rank (i) subordinate and junior in right of payment to all liabilities of MidAmerican Energy (except liabilities that may be made PARI PASSU by their terms), (ii) PARI PASSU with the most senior preferred or preference stock now or hereafter issued by MidAmerican Energy and with any guarantee now or hereafter entered into 18 by MidAmerican Energy in respect of any preferred or preference stock of any affiliate of MidAmerican Energy and (iii) senior to MidAmerican Energy's common stock. Each Trust Agreement provides that each Holder of Preferred Securities issued thereunder agrees, by acceptance thereof, to the subordination provisions and other terms of the related Guarantee. Each Guarantee will rank PARI PASSU with each other Guarantee and with any similar guarantees issued by the Guarantor on behalf of the holders of Preferred Securities issued by any other Issuer holding Debentures issued under the Indenture. Each Guarantee will constitute a guarantee of payment and not of collection (i.e., the guaranteed party may institute a legal proceeding directly against the Guarantor to enforce its rights under the applicable Guarantee without first instituting a legal proceeding against any other person or entity). GOVERNING LAW Each Guarantee will be governed by and construed in accordance with the laws of the State of New York. DESCRIPTION OF THE DEBENTURES Set forth below is a description of certain terms of the Debentures which each of the Issuers will hold as trust assets. The following description does not purport to be complete and is qualified in its entirety by reference to the description in the Indenture, as supplemented by the Supplemental Indenture creating each series of Debentures, between MidAmerican Energy and the Trustee with respect to the Debentures (the "Debenture Trustee"), the forms of which are filed as exhibits to the Registration Statement of which this Prospectus forms a part, and to the Trust Indenture Act. Whenever particular provisions or defined terms in the Indenture are referred to herein, such provisions or defined terms are incorporated by reference herein. Section references used herein are references to provisions of the Indenture unless otherwise noted. The Indenture provides for the issuance of Debentures in an unlimited amount from time to time. Each series of Debentures will constitute a separate series under the Indenture, will be in a principal amount equal to the aggregate stated Liquidation Amount of the corresponding Preferred Securities plus MidAmerican Energy's concurrent investment in the Common Securities and will rank PARI PASSU with all other series of Debentures. GENERAL Each series of Debentures will be limited in aggregate principal amount to the sum of the aggregate liquidation preference amount of the Preferred Securities of the applicable Issuer and the consideration paid by MidAmerican Energy for the Common Securities of such Issuer and will have terms similar to the terms of such Preferred Securities. The Debentures will be unsecured, subordinated obligations of MidAmerican Energy which rank junior to all of MidAmerican Energy's Senior Indebtedness (as defined under "--Subordination" below). Each series of Debentures will bear interest at the same rate, payable at the same times, as the distributions payable on the corresponding series of Trust Securities, and will have a maturity and redemption provisions correlative to those of such Trust Securities. The amounts payable as principal and interest on each series of Debentures will be sufficient to provide for payment of Distributions payable on the corresponding series of Trust Securities. Each series of Debentures may be distributed pro rata to the holders of the corresponding series of Trust Securities in connection with the dissolution of the applicable Issuer upon the occurrence of certain events described in the Prospectus Supplement relating to such Trust Securities. If Debentures are distributed to Holders of Preferred Securities in connection with the dissolution of an Issuer, such 19 Debentures will be issued in fully registered certificated form in denominations of $25 and integral multiples thereof and may be transferred or exchanged at the offices described below. Payments of principal of and interest on Debentures will be payable, the transfer of Debentures will be registrable, and Debentures will be exchangeable for Debentures of the same series with other denominations and a like aggregate principal amount, at the office or agency of the Company in [The City of New York]; provided that payment of interest may be made at the option of MidAmerican Energy by check mailed to the address of the persons entitled thereto and that the payment in full of principal with respect to any Debenture will be made only upon surrender of such Debenture to the Debenture Trustee. OPTIONAL REDEMPTION MidAmerican Energy will have the right, at any time and from time to time on or after the date set forth in the applicable Supplemental Indenture, to redeem any series of Debentures, in whole or in part, at a redemption price as set forth in such Supplemental Indenture, together with any accrued but unpaid interest, including Additional Interest Attributable to Taxes (as defined below), if any, to the Redemption Date. Except as otherwise specified in the applicable Prospectus Supplement, if a Special Event shall occur and be continuing, MidAmerican Energy shall have the right to redeem any series of Debentures, in whole but not in part, at a redemption price equal to 100% of the principal amount of such series of Debentures then outstanding plus any accrued and unpaid interest, including Additional Interest Attributable to Taxes, if any, to the Redemption Date. For so long as an Issuer is the Holder of all the outstanding Debentures of a particular series, the proceeds of any such redemption will be used by such Issuer to redeem its Preferred Securities and Common Securities in accordance with their terms. MidAmerican Energy may not redeem any series of Debentures in part unless all accrued and unpaid interest (including any Additional Interest Attributable to Taxes) has been paid in full on all outstanding Debentures of such series for all quarterly interest periods terminating on or prior to the date of redemption. Any optional redemption of a series of Debentures shall be made upon not less than 30 nor more than 60 days' notice from the Debenture Trustee to the Holders of such Debentures, as provided in the Indenture. All notices of redemption shall state the Redemption Date; the redemption price plus accrued and unpaid distributions; if less than all of such Debentures are to be redeemed, the identification of those to be redeemed and the portion of the principal amount of any such Debentures to be redeemed in part; that on the Redemption Date, subject to the Debenture Trustee's receipt of the redemption monies, the redemption price plus accrued and unpaid distributions will become due and payable upon each such Debenture to be redeemed and that interest thereon will cease to accrue on and after said date; and the place or places where such securities are to be surrendered for payment of the redemption price plus accrued and unpaid distributions. INTEREST The Debentures of a particular series will bear interest at the rate per annum set forth in the applicable Supplemental Indenture and from the date specified therein. Such interest is payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year (each, an "Interest Payment Date"), to the person in whose name such Debentures are registered, by the close of business on the Business Day 15 days preceding such Interest Payment Date. It is anticipated that each Issuer will be the sole Holder of a particular series of Debentures. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months and for any period shorter than a full month, on the basis of the actual number of 20 days elapsed. (Section 310). In the event that any date on which interest is payable on the Debentures is not a Business Day, then payment of the interest payable on such date will be made on the next succeeding day which is a Business Day and without any interest or other payment in respect of any such delay, except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the date the payment was originally payable. (Section 113). OPTION TO EXTEND INTEREST PAYMENT PERIOD MidAmerican Energy shall have the right, at any time and from time to time during the term of any of the Debentures, to extend the interest payment period on such Debentures to a period not exceeding 20 consecutive quarters during which period interest will be compounded quarterly. At the end of an Extension Period, MidAmerican Energy must pay all interest then accrued and unpaid (together with interest thereon at the rate specified for such Debentures compounded quarterly, to the extent permitted by applicable law). However, during any such Extension Period, MidAmerican Energy may not, and may not permit any of its subsidiaries to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of MidAmerican Energy's capital stock or (ii) make any payment of principal of, interest or premium, if any, on, or repay, repurchase or redeem any debt securities of MidAmerican Energy (including other Debentures) that rank PARI PASSU with or junior in interest to the series of Debentures to which such Extension Period applies, or make any guarantee payments with respect to any guarantee by MidAmerican Energy of the debt securities of any of its subsidiaries if such guarantee ranks PARI PASSU or junior in interest to such Series of Debentures (other than (a) dividends or distributions in common stock of MidAmerican Energy, (b) payments under any Guarantee, and (c) purchases of common stock related to the issuance of common stock under any of MidAmerican Energy's benefit plans for its directors, officers or employees). This covenant effectively requires that any Extension Period with respect to payment of interest on a series of Debentures will apply to all other series of Debentures. Prior to the termination of any such Extension Period, MidAmerican Energy may further extend the interest payment period, provided that such Extension Period together with all such previous and further extensions thereof shall not exceed 20 consecutive quarters at any one time or extend beyond the Maturity Date of the Debentures in question. Upon the termination of any such Extension Period and the payment of all amounts then due, MidAmerican Energy may select a new Extension Period, subject to the above requirements. No interest shall be due and payable during an Extension Period, except at the end thereof; provided, however, that Additional Interest Attributable to Taxes, if any, shall not be deferred and shall be payable on the relevant Interest Payment Date. MidAmerican Energy shall give the Debenture Trustee and the Administrative Trustees of the Issuer notice of its election of an Extension Period no less than 15 Business Days prior to the later of (i) the Regular Record Date next preceding the first Interest Payment Date on which a distribution would occur but for such election and (ii) five Business Days prior to such Interest Payment Date. Upon receipt of any such notice, the Debenture Trustee shall give written notice of the Company's election by mail to the Holders of the affected series of Preferred Securities not less than 10 Business Days prior to such Interest Payment Date. MidAmerican Energy also shall make a public announcement of such election in accordance with New York Stock Exchange Rules not less than five Business Days prior to such Regular Record Date. (Section 311). ADDITIONAL INTEREST ATTRIBUTABLE TO TAXES So long as Preferred Securities of any series remain outstanding, if the Issuer thereof would be required to pay, with respect to its income derived from the interest payments on the corresponding series of Debentures, any amounts for or on account of any taxes, duties, assessments or governmental charges of whatever nature imposed by the United States, or any other taxing authority, then, in any such case, MidAmerican Energy will pay as interest on such Debentures such additional interest (the "Additional Interest Attributable to Taxes") as may be necessary in order that the net amounts received and 21 retained by such Issuer after the payment of such taxes, duties, assessments or governmental charges shall result in such Issuer having such funds as it would have had in the absence of the payment of such taxes, duties, assessments or governmental charges. (Section 312). EXTENSION OR ADJUSTMENT OF STATED MATURITY If provided in the applicable Prospectus Supplement, MidAmerican Energy shall have the right to (i) extend or shorten the maturity of any series of Debentures at the time that MidAmerican Energy exercises its right to elect to liquidate the related Issuer and cause such Debentures to be distributed to the Holders of such Issuer's Preferred Securities and Common Securities in liquidation of the Issuer (see "Description of the Preferred Securities -- Termination of an Issuer and Distribution of Debentures"), and (ii) extend the maturity of any series of Debentures at any time; provided that in the case of both (i) and (ii) above, it can extend the maturity only if certain conditions specified in the applicable Prospectus Supplement are met at the time such election is made and at the time of such extension. DEFEASANCE The principal amount of any series of Debentures issued under the Indenture will be deemed to have been paid for purposes of the Indenture and the entire indebtedness of MidAmerican Energy in respect thereof will be deemed to have been satisfied and discharged, if there shall have been irrevocably deposited with the Debenture Trustee or any paying agent, in trust: (a) money in an amount which will be sufficient, or (b) in the case of a deposit made prior to the maturity of such series of Debentures, Government Obligations (as defined herein), which do not contain provisions permitting the redemption or other prepayment thereof at the option of the issuer thereof, the principal of and the interest on which when due, without any regard to reinvestment thereof, will provide moneys which, together with the money, if any, deposited with or held by the Debenture Trustee, will be sufficient, or (c) a combination of (a) and (b) which will be sufficient, to pay when due the principal of and premium, if any, and interest, if any, due and to become due on the Debentures of such series that are outstanding. For this purpose, Government Obligations include direct obligations of, or obligations unconditionally guaranteed by, the United States of America entitled to the benefit of the full faith and credit thereof and certificates, depositary receipts or other instruments which evidence a direct ownership interest in such obligations or in any specific interest or principal payments due in respect thereof. (Section 701). Under current United States federal income tax law any deposit contemplated in the preceding paragraph would be treated as a taxable exchange of such outstanding Debentures for an issue of obligations of an Issuer or a direct interest in the cash and securities held by an Issuer. In that case, Holders of such outstanding Debentures would recognize a gain or loss for federal income tax purposes, as if their share of such Issuer obligations or the cash or securities deposited, as the case may be, had actually been received by them in exchange for their Debentures. In addition, such Holders thereafter would be required to include in income a share of the income, gain or loss of such Issuer. The amount so required to be included in income could be different from the amount that would be includable in the absence of such deposit. Prospective investors are urged to consult their own tax advisors as to the specific consequences to them of any such deposit. SUBORDINATION The Debentures will be subordinate and junior in right of payment to all Senior Indebtedness of MidAmerican Energy to the extent provided in the Indenture. No payment of principal of (including redemption and sinking fund payments), or interest on, the Debentures may be made (i) upon the occurrence of certain events of bankruptcy, insolvency or reorganization, (ii) if any Senior Indebtedness is not paid when due, (iii) if any other default has occurred pursuant to which the Holders of Senior Indebtedness have accelerated the maturity thereof and with respect to (ii) and (iii), such default has not been cured or waived, or (iv) if the maturity of any series of Debentures has been accelerated, because 22 of an event of default with respect thereto, which remains uncured. Upon any payment or distribution of assets of MidAmerican Energy to creditors upon any dissolution, winding-up, liquidation or reorganization, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all principal of, and premium, if any, and interest due or to become due on, all Senior Indebtedness must be paid in full before the Holders of the Debentures are entitled to receive or retain any payment thereon. (Section 1502). Subject to the prior payment of all Senior Indebtedness, the rights of the Holders of the Debentures will be subrogated to the rights of the Holders of Senior Indebtedness to receive payments or distributions applicable to Senior Indebtedness until all amounts owing on the Debentures are paid in full. (Section 1504). The term Senior Indebtedness is defined in the Indenture to mean all obligations (other than non-recourse obligations and the indebtedness issued under the Indenture) of, or guaranteed or assumed by, MidAmerican Energy for borrowed money, including both senior and subordinated indebtedness for borrowed money (other than the Debentures), or for the payment of money relating to any lease which is capitalized on the consolidated balance sheet of MidAmerican Energy and its subsidiaries in accordance with generally accepted accounting principles as in effect from time to time, or evidenced by bonds, debentures, notes or other similar instruments, and in each case, amendments, renewals, extensions, modifications and refundings of any such indebtedness or obligations, whether existing as of the date of the Indenture or subsequently incurred by MidAmerican Energy unless, in the case of any particular indebtedness, renewal, extension or refunding, the instrument creating or evidencing the same or the assumption or guarantee of the same expressly provides that such indebtedness, renewal, extension or refunding is not superior in right of payment to or is PARI PASSU with the Debentures; provided that MidAmerican Energy's obligations under the Guarantees shall not be deemed to be Senior Indebtedness. (Section 101). The Indenture does not limit the aggregate amount of Senior Indebtedness that may be issued. As of September 30, 1996, MidAmerican Energy had approximately $1.2 billion principal amount of Senior Indebtedness. CONSOLIDATION, MERGER, AND SALE OF ASSETS Under the terms of the Indenture, MidAmerican Energy may not consolidate with or merge into any other entity or convey, transfer or lease its properties and assets substantially as an entirety to any entity, unless (i) the corporation formed by such consolidation or into which MidAmerican Energy is merged or the entity which acquires by conveyance or transfer, or which leases, the property and assets of MidAmerican Energy substantially as an entirety shall be an entity organized and validly existing under the laws of any domestic jurisdiction and such entity expressly assumes (by a Supplemental Indenture) MidAmerican Energy's obligations on all Debentures under the Indenture, (ii) immediately after giving effect to the transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing, and (iii) MidAmerican Energy shall have delivered to the Debenture Trustee an Officer's Certificate and an Opinion of Counsel as provided in the Indenture. (Section 1101). EVENTS OF DEFAULT Each of the following will constitute an Event of Default under the Indenture with respect to any series of Debentures: (a) failure to pay any interest on the Debentures of such series within 30 days after the same becomes due and payable, provided that deferral of payment during an Extension Period will not constitute an Event of Default; (b) failure to pay principal or premium, if any, on the Debentures of such series when due and payable; (c) failure to perform, or breach of, any other covenant or warranty of MidAmerican Energy in the Indenture (other than a covenant or warranty of MidAmerican Energy in the Indenture solely for the benefit of one or more series of Debentures other than such series) for 60 days after written notice to MidAmerican Energy by the Debenture Trustee, or to MidAmerican Energy and the 23 Debenture Trustee by the Holders of at least 33% in principal amount of the Debentures of such series outstanding under the Indenture as provided in the Indenture (provided that such 60 day period shall be automatically extended if corrective action is initiated by MidAmerican Energy within such period and is being diligently pursued); (d) the entry by a court having jurisdiction in the premises of (1) a decree or order for relief in respect of MidAmerican Energy in an involuntary case or proceeding under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or (2) a decree or order adjudging MidAmerican Energy bankrupt or insolvent, or approving as properly filed a petition by one or more Persons other than MidAmerican Energy seeking reorganization, arrangement, adjustment or composition of or in respect of MidAmerican Energy under any applicable Federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official for MidAmerican Energy or for any substantial part of its property, or ordering the winding up or liquidation of its affairs, and any such decree or order for relief or any such other decree or order shall have remained unstayed and in effect for a period of 90 consecutive days; and (e) the commencement by MidAmerican Energy of a voluntary case or proceeding under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of MidAmerican Energy in a case or other similar proceeding or to the commencement of any bankruptcy or insolvency case or proceeding against it under any applicable Federal or state law or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or state law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of MidAmerican Energy or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the authorization of such action by the Board of Directors. (Section 801). An Event of Default with respect to the Debentures of a particular series may not necessarily constitute an Event of Default with respect to Debentures of any other series issued under the Indenture. If an Event of Default with respect to Debentures of any series at the time outstanding occurs and is continuing, then either the Debenture Trustee or the Holders of 33% in principal amount of the outstanding Debentures of such series may declare the principal of all of the Debentures of such series and interest accrued thereon to be due and payable immediately (subject to the subordination provisions of the Indenture), and, should the Debenture Trustee or such Holders of Debentures fail to make such declaration, the Holders of at least 33% in aggregate liquidation preference of the outstanding shares (if any) of the corresponding series of Preferred Securities shall have such right. (Section 802). At any time after the declaration of acceleration with respect to the Debentures of any series has been made and before a judgment or decree for payment of the money due has been obtained, the Event or Events of Default giving rise to such declaration of acceleration will, without further act, be deemed to have been waived, and such declaration and its consequences will, without further act, be deemed to have been rescinded and annulled, if: (a) MidAmerican Energy has paid or deposited with the Debenture Trustee a sum sufficient to pay (1) all overdue interest on all Debentures of such series; (2) the principal of and premium, if any, on any Debentures of such series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Debentures; (3) interest upon overdue interest at the rate or rates prescribed therefor in such Debentures, to the extent that payment of such interest is lawful; and (4) all amounts due to the Debenture Trustee under the Indenture; and 24 (b) any other Event or Events of Default with respect to Debentures of such series, other than the nonpayment of the principal of the Debentures of such series which has become due solely by such declaration of acceleration, have been cured or waived as provided in the Indenture. (Section 802). Subject to the provisions of the Indenture relating to the duties of the Debenture Trustee in case an Event of Default shall occur and be continuing, the Debenture Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders of the Debentures, unless such Holders shall have offered to the Debenture Trustee reasonable indemnity. (Section 903). If an Event of Default has occurred and is continuing in respect of a series of Debentures, subject to such provisions for the indemnification of the Debenture Trustee, the Holders of a majority in principal amount of the outstanding Debentures of such series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee, or exercising any trust or power conferred on the Debenture Trustee, with respect to the Debentures of such series; provided, however, that if an Event of Default occurs and is continuing with respect to more than one series of Debentures, the Holders of a majority in aggregate principal amount of the outstanding Debentures of all such series, considered as one class, will have the right to make such direction, and not the Holders of the Debentures of any one of such series; and provided, further, that such direction will not be in conflict with any rule of law or with the Indenture. (Section 812). No Holder of Debentures of any series will have any right to institute any proceeding with respect to the Indenture, or for the appointment of a receiver or a trustee, or for any other remedy thereunder unless (i) such Holder has previously given to the Debenture Trustee written notice of a continuing Event of Default with respect to the Debentures of such series, (ii) the Holders of not less than a majority in aggregate principal amount of the outstanding Debentures of all series in respect of which an Event of Default shall have occurred and be continuing, considered as one class, have made written request to the Debenture Trustee, and such Holder or Holders have offered reasonable indemnity to the Debenture Trustee to institute such proceeding in respect of such Event of Default in its own name as trustee and (iii) the Debenture Trustee has failed to institute any proceeding, and has not received from the Holders of a majority in aggregate principal amount of the outstanding Debentures of such series a direction inconsistent with such request, within 60 days after such notice, request and offer. (Section 807). However, such limitations do not apply to (a) a suit instituted by a Holder of a Debenture for the enforcement of payment of the principal of or any premium or interest on such Debenture on or after the applicable due date specified in such Debenture, or (b) a Direct Action by a Holder of Preferred Securities as described under "-- Enforcement of Certain Rights by Holders of Preferred Securities." (Section 808). MidAmerican Energy will be required to furnish to the Debenture Trustee annually a statement by an appropriate officer as to such officer's knowledge of MidAmerican Energy's compliance with all conditions and covenants under the Indenture, such compliance to be determined without regard to any period of grace or requirement of notice under the Indenture. (Section 606). ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES If an Event of Default with respect to a series of Debentures has occurred and is continuing and such event is attributable to the failure of MidAmerican Energy to pay interest or principal on such Debentures on the date such interest or principal is otherwise payable, a Holder of the corresponding series of Preferred Securities may institute a legal proceeding directly against MidAmerican Energy for enforcement of payment to such Holder of the principal of or interest on such Debentures having a principal amount equal to the aggregate Liquidation Amount of the related Preferred Securities of such holder (a "Direct Action"). MidAmerican Energy may not amend the Indenture to remove the foregoing right to bring a Direct Action without the prior written consent of the Holders of all of the Preferred Securities. If the right to bring a Direct Action is removed, the applicable Issuer may become subject to the reporting 25 obligations under the Securities Exchange Act of 1934, as amended. MidAmerican Energy shall have the right under the Indenture to set-off any payment made to a Holder of Preferred Securities by MidAmerican Energy in connection with a Direct Action. The Holders of Preferred Securities will not be able to exercise directly any other remedy available to the holders of the related Debentures. MODIFICATION AND WAIVER Without the consent of any Holder of Debentures, MidAmerican Energy and the Debenture Trustee may amend or supplement the Indenture for any of the following purposes: (a) to evidence the assumption by any permitted successor to MidAmerican Energy of the covenants of MidAmerican Energy in the Indenture and the Debentures; or (b) to add one or more covenants of MidAmerican Energy or other provisions for the benefit of the Holders of outstanding Debentures or to surrender any right or power conferred upon MidAmerican Energy by the Indenture; or (c) to add any additional Events of Default with respect to outstanding Debentures; or (d) to change or eliminate any provision of the Indenture or to add any new provision to the Indenture, provided that if such change, elimination or addition will adversely affect the interests of the Holders of Debentures of any series in any material respect, such change, elimination or addition will become effective with respect to such series only (1) when the consent of the Holders of Debentures of such series has been obtained in accordance with the Indenture, or (2) when no Debentures of such series remain outstanding under the Indenture; or (e) to provide collateral security for all but not part of the Debentures; or (f) to establish the form or terms of Debentures of any other series as permitted by the Indenture; or (g) to provide for the authentication and delivery of bearer securities and coupons appertaining thereto representing interest, if any, thereon and for the procedures for the registration, exchange and replacement thereof and for the giving of notice to, and the solicitation of the vote or consent of, the Holders thereof, and for any and all other matters incidental thereto; or (h) to evidence and provide for the acceptance of appointment of a successor Debenture Trustee under the Indenture with respect to the Debentures of one or more series and to add to or change any of the provisions of the Indenture as shall be necessary to provide for or to facilitate the administration of the trusts under the Indenture by more than one trustee; or (i) to provide for the procedures required to permit the utilization of a noncertificated system of registration for the Debentures of all or any series; or (j) to change any place where (1) the principal of and premium, if any, and interest, if any, on all or any series of Debentures shall be payable, (2) all or any series of Debentures may be surrendered for registration of transfer or exchange and (3) notices and demands to or upon MidAmerican Energy in respect of Debentures and the Indenture may be served; or (k) to cure any ambiguity or inconsistency or to add or change any other provisions with respect to matters and questions arising under the Indenture, provided such changes or additions shall not adversely affect the interests of the Holders of Debentures of any series in any material respect. (Section 1201). The Holders of at least a majority in aggregate principal amount of the Debentures of all series then outstanding may waive compliance by MidAmerican Energy with certain restrictive provisions of the Indenture. (Section 607). The Holders of not less than a majority in principal amount of the outstanding Debentures of any series may waive any past default under the Indenture with respect to such series (and should the holders of such Debentures fail to waive such default, the holders of a majority in aggregate liquidation preference of the outstanding shares (if any) of the corresponding series of Preferred Securities shall have such right), in each case except for a default in the payment of principal, premium, or interest and certain covenants and provisions of the Indenture that cannot be modified or be amended without the consent of the Holder of each outstanding Debenture of such series affected. (Section 813). Without limiting the generality of the foregoing, if the Trust Indenture Act is amended after the date of the Indenture in such a way as to require changes to the Indenture or the incorporation therein of additional provisions or so as to permit changes to, or the elimination of, provisions which, at the date of the Indenture or at any time thereafter, were required by the Trust Indenture Act to be contained in the 26 Indenture, the Indenture will be deemed to have been amended so as to conform to such amendment of the Trust Indenture Act or to effect such changes, additions or elimination, and MidAmerican Energy and the Debenture Trustee may, without the consent of any Holders, enter into one or more supplemental indentures to evidence or effect such amendment. (Section 1201). Except as provided above, the consent of the Holders of not less than a majority in aggregate principal amount of the Debentures of all series then outstanding, considered as one class, is required for the purpose of adding any provisions to, or changing in any manner, or eliminating any of the provisions of, the Indenture or modifying in any manner the rights of the Holders of such Debentures under the Indenture pursuant to one or more supplemental indentures; provided, however, that if less than all of the series of Debentures outstanding thereunder are directly affected by a proposed supplemental indenture, then the consent only of the Holders of a majority in aggregate principal amount of outstanding Debentures of all series so directly affected, considered as one class, will be required; and provided further, that no such amendment or modification may (a) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Debenture, or reduce the principal amount thereof or the rate of interest thereon (or the amount of any installment of interest thereon) or change the method of calculating such rate or reduce any premium payable upon the redemption thereof, or change the coin or currency or other property) in which any Debenture or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Maturity Date of any Debenture (or, in the case of redemption, on or after the Redemption Date) without, in any such case, the consent of the Holder of such Debenture, (b) reduce the percentage in principal amount of the outstanding Debenture of any series, (or, if applicable, in liquidation preference of Preferred Securities) the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any waiver of compliance with any provision of the Indenture or any default thereunder and its consequences, or reduce the requirements for quorum or voting, without, in any such case, the consent of the Holder of each outstanding Debenture of such series, or (c) modify certain of the provisions of the Indenture relating to supplemental indentures, waivers of certain covenants and waivers of past defaults with respect to the Debenture of any series, without the consent of the Holder of each outstanding Debenture affected thereby. A supplemental indenture which changes or eliminates any covenant or other provision of the Indenture which has expressly been included solely for the benefit of one or more particular series of Debentures, or modifies the rights of the Holders of Debentures of such series with respect to such covenant or other provision, will be deemed not to affect the rights under the Indenture of the Holders of the Debentures of any other series. (Section 1202). The Indenture provides that in determining whether the Holders of the requisite principal amount of the outstanding Debentures have given any request, demand, authorization, direction, notice, consent or waiver under the Indenture, or whether a quorum is present at the meeting of the Holders of Debentures, Debentures owned by MidAmerican Energy or any other obligor upon the Debentures or any affiliate of MidAmerican Energy or of such other obligor (unless MidAmerican Energy, such affiliate or such obligor owns all Debentures outstanding under the Indenture, determined without regard to this provision) shall be disregarded and deemed not to be outstanding. (Section 101). If MidAmerican Energy shall solicit from Holders any request, demand, authorization, direction, notice, consent, election, waiver or other act, MidAmerican Energy may, at its option, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other such act, but MidAmerican Energy shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of the outstanding Debentures have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other act, and 27 for that purpose the outstanding Debentures shall be computed as of the record date. Any request, demand, authorization, direction, notice, consent, election, waiver or other Act of a Holder shall bind every future Holder of the same Debenture and the Holder of every Debenture issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Debenture Trustee or MidAmerican Energy in reliance thereon, whether or not notation of such action is made upon such Debenture. (Section 104). RESIGNATION OF DEBENTURE TRUSTEE The Debenture Trustee may resign at any time by giving written notice thereof to MidAmerican Energy or may be removed at any time by Act of the Holders of a majority in principal amount of all series of Debentures then outstanding delivered to the Debenture Trustee and MidAmerican Energy. No resignation or removal of the Debenture Trustee and no appointment of a successor trustee will become effective until the acceptance of appointment by a successor trustee in accordance with the requirements of the Indenture. So long as no Event of Default or event which, after notice or lapse of time, or both, would become an Event of Default has occurred and is continuing and except with respect to a Debenture Trustee appointed by Act of the Holders, if MidAmerican Energy has delivered to the Debenture Trustee a resolution of its Board of Directors appointing a successor trustee and such successor has accepted such appointment in accordance with the terms of the Indenture, the Debenture Trustee will be deemed to have resigned and the successor will be deemed to have been appointed as trustee in accordance with the Indenture. (Section 910). NOTICES Notices to Holders of Debentures will be given by mail to the addresses of such Holders as they may appear in the security register therefor. (Section 106). TITLE MidAmerican Energy, the Debenture Trustee, and any agent of MidAmerican Energy or the Debenture Trustee, may treat the Person in whose name Debentures are registered as the absolute owner thereof (whether or not such Debentures may be overdue) for the purpose of making payments and for all other purposes irrespective of notice to the contrary. (Section 308). GOVERNING LAW The Indenture, the Supplemental Indentures and the Debentures will be governed by, and construed in accordance with, the laws of the State of New York. (Section 112). CONCERNING THE DEBENTURE TRUSTEE The Debenture Trustee under the Indenture is The First National Bank of Chicago. In addition, The First National Bank of Chicago acts as Property Trustee under the Trust Agreements and as Guarantee Trustee under the Guarantee. First Chicago Delaware Inc. acts as the Delaware Trustee under the Trust Agreements. See "Description of the Preferred Securities -- Concerning the Property Trustee." 28 RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE DEBENTURES AND THE GUARANTEES As long as payments of interest and other payments are made when due on each series of Debentures, such payments will be sufficient to cover Distributions and other payments due on the Preferred Securities of the corresponding series, because: (i) the aggregate principal amount of each series of Debentures will be equal to the sum of the aggregate stated Liquidation Amount of the corresponding Trust Securities; (ii) the interest rate and interest and other payment dates on each series of Debentures will correspond to the Distribution rate and Distribution and other payment dates on the Preferred Securities of such series; (iii) the Expense Agreements entered into by MidAmerican Energy pursuant to the Trust Agreements provide that MidAmerican Energy shall pay for all, and an Issuer shall not be obligated to pay, directly or indirectly, for any, costs, expenses or liabilities of such Issuer, including any income taxes, duties and other governmental charges, and all costs and expenses with respect thereto, to which such Issuer may become subject, except for United States withholding taxes and such Issuer's payment obligations to holders of the Preferred Securities of a particular series under such Preferred Securities; and (iv) each Trust Agreement further provides that the Trustees shall not cause or permit an Issuer to, among other things, engage in any activity that is not consistent with the limited purposes of each Issuer. Payments of Distributions and other amounts due on Preferred Securities of each series (to the extent an Issuer has funds sufficient for such payments) are guaranteed by MidAmerican Energy as and to the extent set forth under "Description of the Guarantees." The Debentures and the Guarantees, together with the obligations of MidAmerican Energy with respect to the Preferred Securities under the Indenture, the Trust Agreements, the Guarantees and the Expense Agreements constitute full and unconditional guarantees of the Preferred Securities by MidAmerican Energy. No single document standing alone or operating in conjunction with fewer than all of the other documents constitutes such guarantees. It is only the combined operation of these documents that has the effect of providing full and unconditional guarantees by MidAmerican Energy of the Preferred Securities. If and to the extent that MidAmerican Energy does not make payments on any series of Debentures, such Issuer will not pay Distributions or other amounts due on the Preferred Securities of the corresponding series. Notwithstanding anything to the contrary in the Indenture, MidAmerican Energy has the right to set-off any payment it is otherwise required to make thereunder with and to the extent MidAmerican Energy has theretofore made, or is concurrently on the date of such payment making, a payment under the related Guarantee. If the Guarantee Trustee fails to enforce any Guarantee, a Holder of a Preferred Security to which such Guarantee applies may institute a legal proceeding directly against MidAmerican Energy to enforce such Holder's rights under such Guarantee without first instituting a legal proceeding against the Issuer of such Preferred Security or any other person or entity. Each Issuer's Preferred Securities will evidence the rights of the Holders thereof to the benefits of such Issuer, a trust that exists for the sole purpose of issuing its Trust Securities and investing the proceeds of its Preferred Securities in corresponding series of Debentures of MidAmerican Energy while each series of Debentures represents indebtedness of MidAmerican Energy. A principal difference between the rights of a Holder of a Preferred Security and a Holder of a Debenture is that a Holder of a Debenture will accrue, and (subject to the permissible extensions of the interest payment period) is entitled to receive, interest on the principal amount of Debentures held, while a Holder of Preferred Securities is only entitled to receive Distributions if and to the extent the Issuer has funds sufficient for the payment of such Distributions. Upon any voluntary or involuntary dissolution, winding up or termination of any Issuer involving the distribution of a series of Debentures, the Holders of Trust Securities of the corresponding series will be 29 entitled to receive, out of assets legally available for distribution to such Holders, a Liquidation Distribution; provided, however, that if an Event of Default under an applicable Trust Agreement shall have occurred and be continuing, the Holders of the Common Securities shall be entitled to receive, out of assets legally available for Distribution to such Holders, distributions only after the Holders of the corresponding Preferred Securities. See "Description of the Preferred Securities -- Liquidation, Distribution Upon Dissolution." Upon any voluntary or involuntary liquidation or bankruptcy of MidAmerican Energy, each Issuer, as a Holder of Debentures, would be a subordinated creditor of MidAmerican Energy, junior in right of payment to all Senior Indebtedness, but entitled to receive payment in full of principal and interest before any stockholders of MidAmerican Energy receive any payments or distributions. Since MidAmerican Energy has agreed to pay for all costs, expenses and liabilities of the Issuers (other than United States withholding taxes and other than the Issuers' obligations to the Holders of Preferred Securities under the Preferred Securities, which obligations are independently covered by the Guarantees), the positions of a Holder of Preferred Securities and a Holder of Debentures relative to other creditors and to stockholders of MidAmerican Energy in the event of a liquidation or bankruptcy of MidAmerican Energy would be substantially the same. A default or event of default under any Senior Indebtedness will not constitute a default or Event of Default under the Debentures. However, in the event of payment defaults under, or acceleration of, Senior Indebtedness, the subordination provisions of the Debentures provide that no payments may be made in respect of the Debentures until such Senior Indebtedness has been paid in full or any payment default thereunder has been cured or waived. Failure to make required payments on any series of Debentures would constitute an Event of Default under the Indenture. PLAN OF DISTRIBUTION The Preferred Securities may be sold in a public offering to or through underwriters or dealers designated from time to time. An Issuer may sell its Preferred Securities as soon as practicable after the effectiveness of the Registration Statement of which this Prospectus is a part. The names of any underwriters or dealers involved in the sale of the Preferred Securities of a particular series in respect of which this Prospectus is delivered, the number of Preferred Securities to be purchased by any such underwriters or dealers and the applicable commissions or discounts will be set forth in the applicable Prospectus Supplement. Underwriters may offer and sell Preferred Securities at a fixed price or prices, which may be changed, or from time to time at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. In connection with the sale of Preferred Securities, underwriters will be deemed to have received compensation from MidAmerican Energy and/or an Issuer in the form of underwriting discounts or commissions. Underwriters may sell Preferred Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters. Any underwriting compensation paid by MidAmerican Energy to underwriters in connection with the offering of the Preferred Securities, and any discounts, concessions or commissions allowed by such underwriters to participating dealers, will be set forth in the applicable Prospectus Supplement. Underwriters and dealers participating in the distribution of Preferred Securities may be deemed to be underwriters, and any discounts and commissions received by them, and any profit realized by them on resale of such Preferred Securities, may be deemed to constitute underwriting discounts and commissions under the Securities Act. Underwriters and dealers may be entitled, pursuant to their agreement with MidAmerican Energy and an Issuer, to indemnification against and contribution toward certain civil liabilities, including liabilities under the Securities Act, and to reimbursement by MidAmerican Energy for certain expenses. 30 In connection with the offering of the Preferred Securities of a particular series, the Issuer thereof may grant to the underwriters an option to purchase additional Preferred Securities to cover over-allotments, if any, at the initial public offering price (with an additional underwriting commission), as set forth in the applicable Prospectus Supplement. Underwriters and dealers may engage in transactions with, or perform services for, MidAmerican Energy, an Issuer and any of their respective affiliates. An Issuer's Preferred Securities will be a new issue of securities and will have no established trading market. Any underwriters to whom an Issuer's Preferred Securities are sold by such Issuer for public offering and sale may make a market in such Preferred Securities, but such underwriters will not be obligated to do so and may discontinue any market-making at any time without notice. Such Preferred Securities may or may not be listed on a national securities exchange. No assurance can be given as to the liquidity of or the existence of meaningful trading markets for any Preferred Securities. LEGAL MATTERS Certain legal matters will be passed upon for MidAmerican Energy by John A. Rasmussen, Jr., Group Vice President and General Counsel of MidAmerican Energy, and by Richards, Layton & Finger, special Delaware counsel to MidAmerican Energy and the Issuers. The validity of the Preferred Securities will be passed upon for the underwriters by Sidley & Austin. Sidley & Austin regularly serves as special counsel to MidAmerican Energy and its affiliates on certain matters. Sidley & Austin will rely upon the opinion of John A. Rasmussen, Jr., as to matters of Iowa law. Mr. Rasmussen is an officer and full-time employee of MidAmerican Energy and at September 30, 1996, he owned directly and/or beneficially 6,200 shares of common stock of MidAmerican Energy and had been granted, pursuant to and subject to the terms of MidAmerican Energy's Long-Term Incentive Plan, options to purchase 40,000 shares of MidAmerican Energy common stock and 6,500 performance shares. EXPERTS The consolidated financial statements and supporting schedules included in or incorporated by reference in MidAmerican Energy's 1995 Annual Report on Form 10-K have been audited by Arthur Andersen LLP, independent public accountants, as set forth in its report. The consolidated financial statements and supporting schedules referred to above have been incorporated herein in reliance upon the authority of Arthur Andersen LLP as experts in giving said reports. 31 - ---------------------------------------------- ---------------------------------------------- - ---------------------------------------------- ---------------------------------------------- NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF MIDAMERICAN ENERGY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. ------------------------ TABLE OF CONTENTS PROSPECTUS SUPPLEMENT PAGE --------- Risk Factors....................................... S-4 MidAmerican Energy Financing I..................... S-8 MidAmerican Energy, Inc............................ S-9 Ratios of Earnings To Fixed Charges................ S-10 Use of Proceeds.................................... S-11 Accounting Treatment............................... S-11 Certain Terms of the Series A Preferred Securities....................................... S-12 Certain Terms of the Series A Guarantee............ S-14 Certain Terms of the Series A Debentures........... S-15 United States Federal Income Taxation.............. S-18 Underwriting....................................... S-22 PROSPECTUS Available Information.............................. 2 Incorporation of Certain Documents by Reference.... 2 The Issuers........................................ 4 MidAmerican Energy Company......................... 4 Description of the Preferred Securities............ 5 Description of the Guarantees...................... 17 Description of the Debentures...................... 19 Relationship Among the Preferred Securities, the Debentures and the Guarantees.................... 29 Plan of Distribution............................... 30 Legal Matters...................................... 31 Experts............................................ 31
PREFERRED SECURITIES MIDAMERICAN ENERGY FINANCING I % PREFERRED SECURITIES, SERIES A FULLY AND UNCONDITIONALLY GUARANTEED, AS SET FORTH HEREIN, BY MIDAMERICAN ENERGY COMPANY ------------ [LOGO] -------------------- - ---------------------------------------------- ---------------------------------------------- - ---------------------------------------------- ---------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. An estimate of expenses, other than discounts or commissions of underwriters or agents, follows: Securities and Exchange Commission registration fee............... $ 151,515* New York Stock Exchange listing fee............................... 58,300 Trustee's fees and expenses....................................... 18,500 Printing.......................................................... 300,000 Legal fees and expenses........................................... 150,000 Accountants' fees and expenses.................................... 15,000 Rating agencies fees.............................................. 48,000 Blue Sky expenses................................................. 2,000 Miscellaneous expenses............................................ 16,685 --------- Total......................................................... $ 760,000 --------- ---------
- ------------------------ *Fees marked with an asterisk are actual, not estimated. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Sections 490.850-490.855 and 490.857 of the Iowa Business Corporation Act ("IBCA") permit corporations organized thereunder to indemnify directors, officers, employees and agents against liability under certain circumstances. The Restated Articles of Incorporation ("Articles of Incorporation") and the Restated Bylaws ("Bylaws") of the Company provide for indemnification of directors, officers and employees to the full extent provided by the IBCA. The Articles of Incorporation and the Bylaws state that the indemnification provided therein shall not be deemed exclusive. The Company may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Company or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss under the IBCA. Pursuant to Section 490.857 of the IBCA, the Articles of Incorporation and the Bylaws, the Company maintains directors' and officers' liability insurance coverage. The Company has also entered into indemnification agreements with certain directors and officers, and expects to enter into similar agreements with future directors and officers, to further assure such persons indemnification as permitted by Iowa law. As permitted by Section 490.832 of the IBCA, the Articles of Incorporation of the Company provide that no director shall be personally liable to the Company or its shareholders for monetary damages for breach of fiduciary duty as a director, except for liability: (i) for any breach of the directors's duty of loyalty to the Company or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional midconduct or a knowing violation of law, (iii) under Section 490.833 of the IBCA (relating to certain unlawful distributions to shareholders) or (iv) for any transaction from which the director derived an improper personal benefit. The forms of Underwriting Agreement and Distribution Agreement filed as Exhibits 1(a) and 1(b) hereto include provisions requiring the underwriters, dealers or agents to indemnify directors, officers and certain controlling persons of the Company in certain circumstances. The Trust Agreements filed as Exhibits 4(c) and 4(d) hereto provide that MidAmerican Energy shall indemnify each of the Issuer Trustees for, and to hold each Issuer Trustee harmless against, any and all loss, damage, claims, liability or expense incurred without negligence (gross negligence, in the case of any Administrative Trustee), bad faith or willful misconduct on its part, arising out of or in connection with the II-1 acceptance or administration of the Trust Agreements, including the reasonable costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties thereunder. ITEM 16. EXHIBITS. The Exhibits to this Registration Statement are listed in the Exhibit Index on Page E-1 of this Registration Statement, which Index is incorporated herein by reference. ITEM 17. UNDERTAKINGS. The undersigned Registrants hereby undertake: 1. To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement unless the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement: a. To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; b. To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; c. To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; 2. That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned Registrants hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of MidAmerican Energy' s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrants pursuant to the provisions described under Item 15 above, or otherwise, the Registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than II-2 the payment by the Registrants of expenses incurred or paid by a director, officer or controlling person of the Registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrants will, unless in the opinion of their counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 SIGNATURES THE REGISTRANT. Pursuant to the requirements of the Securities Act of 1933, MidAmerican Energy Company, on behalf of the Registrants, certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Des Moines, and State of Iowa as of this 31st day of October, 1996. MIDAMERICAN ENERGY COMPANY By Stanley J. Bright* ------------------------------------ Stanley J. Bright* PRESIDENT AND CHIEF EXECUTIVE OFFICER Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated as of this 31st day of October, 1996.
SIGNATURE TITLE - ------------------------------------------------------ ------------------------------------------------------ RUSSELL E. CHRISTIANSEN* ------------------------------------------- Chairman of the Board of Directors Russell E. Christiansen STANLEY J. BRIGHT* ------------------------------------------- President and Chief Executive Officer and Director Stanley J. Bright (Principal Executive Officer) PHILIP G. LINDNER* Group Vice President and Chief Financial Officer ------------------------------------------- (Principal Financial Officer and Principal Philip G. Lindner Accounting Officer) JOHN W. AALFS* ------------------------------------------- Director John W. Aalfs ROBERT A. BURNETT* ------------------------------------------- Director Robert A. Burnett ROSS D. CHRISTENSEN* ------------------------------------------- Director Ross D. Christensen JOHN W. COLLOTON* ------------------------------------------- Director John W. Colloton
II-4
SIGNATURE TITLE - ------------------------------------------------------ ------------------------------------------------------ FRANK S. COTTRELL* ------------------------------------------- Director Frank S. Cottrell JACK W. EUGSTER* ------------------------------------------- Director Jack W. Eugster MEL FOSTER, JR.* ------------------------------------------- Director Mel Foster, Jr. NOLDEN GENTRY* ------------------------------------------- Director Nolden Gentry JAMES M. HOAK, JR.* ------------------------------------------- Director James M. Hoak, Jr. RICHARD L. LAWSON* ------------------------------------------- Director Richard L. Lawson ROBERT L. PETERSON* ------------------------------------------- Director Robert L. Peterson NANCY L. SEIFERT* ------------------------------------------- Director Nancy L. Seifert W. SCOTT TINSMAN* ------------------------------------------- Director W. Scott Tinsman LEONARD L. WOODRUFF* ------------------------------------------- Director Leonard L. Woodruff *By: /s/ PAUL J. LEIGHTON -------------------------------------- Paul J. Leighton ATTORNEY-IN-FACT
II-5 MIDAMERICAN ENERGY FINANCING I (Registrant) By: MidAmerican Energy Company as Depositor By: STANLEY J. BRIGHT* --------------------------------------- Stanley J. Bright President and Chief Executive Officer MIDAMERICAN ENERGY FINANCING II (Registrant) By: MidAmerican Energy Company as Depositor By: STANLEY J. BRIGHT* --------------------------------------- Stanley J. Bright President and Chief Executive Officer *By: /s/ PAUL J. LEIGHTON -------------------------------------- Paul J. Leighton ATTORNEY-IN-FACT
II-6 INDEX TO EXHIBITS
EXHIBIT NUMBER EXHIBIT - --------------- ------------------------------------------------------------------------------------------------- 1(a) -- Form of Underwriting Agreement relating to the Preferred Securities. 1(b) -- Form of Distribution Agreement for the Medium-Term Notes. 3(a) -- Restated Articles of Incorporation of MidAmerican Energy Company, as amended. (Filed as Exhibit 3 to MidAmerican's Registration Statement on Form 8-B, File No. 11505.) 3(b) -- Restated Bylaws of MidAmerican Energy Company, as amended. (Filed as Exhibit 3.1 to MidAmerican's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996, File No. 1-11505.) 4(c) -- Trust Agreement for MidAmerican Energy Financing I ("MAEF I"). 4(d) -- Trust Agreement for MidAmerican Energy Financing II ("MAEF II"). 4(e) -- Form of Amended and Restated Trust Agreement relating to the Preferred Securities. (Agreements are substantially identical except for names and dates). 4(f) -- Form of Indenture relating to the Debentures. 4(g) -- Form of Supplemental Indenture to Indenture relating to Debentures. 4(h) -- Form of Debenture. (Included in Exhibit 4(g).) 4(i) -- Form of Guarantee Agreement. (Agreements are substantially identical except for names and dates). 4(j) -- Form of Agreement as to Expenses and Liabilities (Included in Exhibit 4(e).) 4(k) -- Form of Preferred Securities. (Included in Exhibit 4(e).) 4(l) -- Indenture dated as of , 1996 between the Company and The First National Bank of Chicago, as trustee, relating to the Medium-Term Notes. 4(m) -- Forms of Fixed Rate Medium-Term Note. (Included in Exhibit 4(l).) 4(n) -- Forms of Floating Rate Medium-Term Note. (Included in Exhibit 4(l).) 4.1 -- General Mortgage Indenture and Deed of Trust dated as of January 1, 1993, between Midwest Power Systems Inc. and Morgan Guaranty Trust Company of New York, Trustee. (Filed as Exhibit 4(b)-1 to Midwest Resources' Annual Report on Form 10-K for the year ended December 31, 1992, File No. 1-10654.) 4.2 -- First Supplemental Indenture dated as of January 1, 1993, between Midwest Power Systems Inc. and Morgan Guaranty Trust Company of New York, Trustee. (Filed as Exhibit 4(b)-2 to Midwest Resources' Annual Report on Form 10-K for the year ended December 31, 1992, File No. 1-10654.) 4.3 -- Second Supplemental Indenture dated as of January 15, 1993, between Midwest Power Systems Inc. and Morgan Guaranty Trust Company of New York, Trustee. (Filed as Exhibit 4(b)-3 to Midwest Resources' Annual Report on Form 10-K for the year ended December 31, 1992, File No. 1-10654.) 4.4 -- Third Supplemental Indenture dated as of May 1, 1993, between Midwest Power Systems Inc. and Morgan Guaranty Trust Company of New York, Trustee. (Filed as Exhibit 4.4 to Midwest Resources' Annual Report on Form 10-K for the year ended December 31, 1993, File No. 1-10654.)
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EXHIBIT NUMBER EXHIBIT - --------------- ------------------------------------------------------------------------------------------------- 4.5 -- Fourth Supplemental Indenture dated as of October 1, 1994, between Midwest Power Systems Inc. and Harris Trust and Savings Bank, Trustee. (Filed as Exhibit 4.5 to Midwest Resources' Annual Report on Form 10-K for the year ended December 31, 1994, File No. 1-10654.) 4.6 -- Fifth Supplemental Indenture dated as of November 1, 1994, between Midwest Power Systems Inc. and Harris Trust and Savings Bank, Trustee. (Filed as Exhibit 4.6 to Midwest Resources' Annual Report on Form 10-K for the year ended December 31, 1994, File No. 1-10654.) 4.7 -- Indenture of Mortgage and Deed of Trust, dated as of March 1, 1947. (Filed by Iowa-Illinois as Exhibit 7B to File No. 2-6922.) 4.8 -- Sixth Supplemental Indenture dated as of July 1, 1967. (Filed by Iowa-Illinois as Exhibit 1.08 to File No. 2-228806.) 4.9 -- Twentieth Supplemental Indenture dated as of May 1, 1982. (Filed as Exhibit 4.B.23 to Iowa-Illinois' Quarterly Report on Form 10-Q for the period ended June 30, 1982, File No. 1-3573.) 4.10 -- Resignation and Appointment of successor Individual Trustee. (Filed by Iowa-Illinois as Exhibit 4.B.30 to Commission File No. 33-39211.) 4.11 -- Twenty-Seventh Supplemental Indenture dated as of October 1, 1991. (Filed as Exhibit 4.31.A to Iowa-Illinois' Current Report on Form 8-K dated October 1, 1991, File No. 1-3573.) 4.12 -- Twenty-Eighth Supplemental Indenture dated as of May 15, 1992. (Filed as Exhibit 4.31.B to Iowa-Illinois' Current Report on Form 8-K dated May 21, 1992, File No. 1-3573.) 4.13 -- Twenty-Ninth Supplemental Indenture dated as of March 15, 1993. (Filed as Exhibit 4.32.A to Iowa-Illinois' Current Report on Form 8-K dated March 24, 1993, File No. 1-3573.) 4.14 -- Thirtieth Supplemental Indenture dated as of October 1, 1993. (Filed as Exhibit 4.34.A to Iowa-Illinois' Current Report on Form 8-K dated October 7, 1993, File No. 1-3573.) 4.15 -- Sixth Supplemental Indenture dated as of July 1, 1995, between Midwest Power Systems Inc. and Harris Trust and Savings Bank, Trustee. (Filed as Exhibit 4.15 to MidAmerican's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 1-11505.) 4.16 -- Thirty-First Supplemental Indenture dated as of July 1, 1995, between Iowa-Illinois Gas and Electric Company and Harris Trust and Savings Bank, Trustee. (Filed as Exhibit 4.16 to MidAmerican's Annual Report on Form 10-K for the year ended December 31, 1995, File No. 1-11505.) 5(a) -- Opinion and Consent of John A. Rasmussen, Jr., Group Vice President and General Counsel of MidAmerican Energy. 5(b) -- Opinion and Consent of Richards, Layton & Finger, Special Delaware Counsel to MidAmerican Energy, MAEF I and MAEF II relating to the legality of the Preferred Securities. 8(a) -- Opinion and Consent of Sidley & Austin relating to tax matters concerning the Medium-Term Notes.
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EXHIBIT NUMBER EXHIBIT - --------------- ------------------------------------------------------------------------------------------------- 8(b) -- Opinion and Consent of Sidley & Austin relating to tax matters concerning the Preferred Securities. 12(a) -- Computation of Ratio of Earnings to Fixed Charges and Supplemental Ratio of Earnings to Fixed Charges and Preferred Dividend Requirements of MidAmerican Energy--Consolidated. (Filed as Exhibit 12.1 to MidAmerican's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, File No. 1-11505.) 12(b) -- Computation of Ratio of Earnings to Fixed Charges and Supplemental Ratio of Earnings to Fixed Charges and Preferred Dividend Requirements of MidAmerican Energy--Utility Only. (Filed as Exhibit 12.2 to MidAmerican's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, File No. 1-11505.) 23(a) -- Consent of Arthur Andersen LLP. 23(b) -- Consent of Deloitte & Touche LLP. 23(c) -- Consents of John A. Rasmussen, Jr., Richards, Layton & Finger and Sidley & Austin are contained in Exhibits 5(a), 5(b) and 8, respectively. 24 -- Powers of Attorney. 25(a) -- Statement Of Qualifications on Form T-1 of The First National Bank of Chicago as Indenture Trustee under the Indenture relating to the Medium Term Notes. 25(b) -- Statement Of Qualifications on Form T-1 of The First National Bank of Chicago as Property Trustee under the Amended and Restated Trust Agreement for MidAmerican Energy Financing I. 25(c) -- Statement of Qualifications on Form T-1 of The First National Bank of Chicago as Property Trustee under the Amended and Restated Trust Agreement for MidAmerican Energy Financing II. 25(d) -- Statement Of Qualifications on Form T-1 of The First National Bank of Chicago as Indenture Trustee under the Indenture relating to the Subordinated Debentures. 25(e) -- Statement Of Qualifications on Form T-1 of The First National Bank of Chicago as Guarantee Trustee under the Guarantee Agreement for MidAmerican Energy Financing I. 25(f) -- Statement of Qualifications on Form T-1 of The First National Bank of Chicago as Guarantee Trustee under the Guarantee Agreement for MidAmerican Energy Financing II.
E-3 EX-1.(A) 2 EXHIBIT 1(A) FORM OF UNDERWRITING AGREEMENT Exhibit 1(a) MIDAMERICAN ENERGY FINANCING I ,000,000 PREFERRED SECURITIES CUMULATIVE QUARTERLY INCOME PREFERRED SECURITIES SERIES A (LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY) GUARANTEED ON A SUBORDINATED BASIS BY MIDAMERICAN ENERGY COMPANY UNDERWRITING AGREEMENT , 1996 To the Representative named in Schedule I hereto of the Underwriters named in Schedule II hereto. Ladies and Gentlemen: MidAmerican Energy Financing I, a statutory business trust formed under the laws of the State of Delaware (the "Trust") and MidAmerican Energy Company, an Iowa corporation, as depositor of the Trust and as guarantor (the "Guarantor"), propose, subject to the terms and conditions stated herein, that the Trust issue and sell to the Underwriters named in Schedule II hereto (the "Underwriters"), an aggregate of $___________, __% Cumulative Quarterly Income Preferred Securities, Series A (liquidation amount $25 per preferred security) (the "Securities") representing beneficial interests in the Trust, guaranteed on a subordinated basis by the Guarantor as to the payment of distributions, and as to payments on liquidation or redemption, to the extent set forth in a guarantee agreement (the "Guarantee") between the Guarantor and The First National Bank of Chicago, a national banking corporation (the "Guarantee Trustee"). The Trust is to purchase, with the proceeds of the Securities and its Common Securities (liquidation amount $25 per common security) (the "Common Securities"), an aggregate of $___________, ___% Junior Subordinated Debentures, Series A due [ ](the "Subordinated Debentures") of the Guarantor, to be issued pursuant to an Indenture (the "Indenture") between the Guarantor and The First National Bank of Chicago, as trustee (the "Debenture Trustee"). The payments made by the Guarantor on the Subordinated Debentures are established at a level sufficient to permit the Trust, upon receipt of such payments, to make payments on the Securities in accordance with their tenor. Section 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Trust and Guarantor represent and warrant to, and agrees with, the several Underwriters that: (a) DUE INCORPORATION AND QUALIFICATION. The Guarantor has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Iowa with corporate power (including power in any relevant joint venture, partnership or other enterprise in which the Guarantor is a participant) and authority (corporate and other) to own, lease and operate its properties and to conduct its business as described in the Prospectus; and the Guarantor is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify and be in good standing would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Guarantor. (b) PUBLIC UTILITY. The Guarantor has the legal right to function and operate as an electric public utility company in the States of Iowa, Illinois and South Dakota, and as a gas public utility company in the States of Iowa, Illinois, South Dakota and Nebraska. (c) SUBSIDIARIES. The Guarantor has no significant subsidiaries, as "significant subsidiary" is defined in Rule 405 of Regulation C of the rules and regulations ("1933 Act Regulations") promulgated by the Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as amended ("1933 Act"). (d) REGISTRATION STATEMENT AND PROSPECTUS - FILING. A registration statement on Form S-3 (No. 333-_____) with respect to the Securities, the Subordinated Debentures and the Guarantees (collectively, the "Registered Securities") and certain other securities, has been prepared by the Guarantor and the Trust in conformity with the requirements of the 1933 Act and the 1933 Act Regulations and has become effective. As used in this Agreement, (i) "Registration Statement" means that registration statement, as amended or supplemented to the date hereof; (ii) "Preliminary Prospectus" means each prospectus (including all documents incorporated therein by reference) specifically relating to the Registered Securities included in the Registration Statement before it became effective under the 1933 Act, including any prospectus filed with the SEC pursuant to Rule 424(a) of the 1933 Act Regulations; (iii) "Basic Prospectus" means the prospectus (including all documents incorporated therein by reference) specifically relating to the Registered Securities included in the Registration -2- Statement; and (iv) "Prospectus" means the Basic Prospectus together with any prospectus amendment or supplement (including in each case all documents incorporated therein by reference) specifically relating to the Registered Securities, as filed with, or mailed for filing to, the SEC pursuant to paragraph (b) of Rule 424 of the 1933 Act Regulations. The SEC has not issued any order preventing or suspending the use of the Prospectus. The Guarantor meets the requirements for use of Form S-3 under the 1933 Act and the 1933 Act Regulations. (e) REGISTRATION STATEMENT AND PROSPECTUS - ACCURACY. The Registration Statement and the Prospectus contain, and (in case of any amendment or supplement to any such document, or any material incorporated by reference in any such document, filed with the SEC after the date as of which this representation is being made) will contain at all times during the period specified in Section 3(e) hereof, all statements which are required by the 1933 Act, the Securities Exchange Act of 1934, as amended ("1934 Act"), and the rules and regulations of the SEC under such Acts; and the Registration Statement and the Prospectus do not, and (in the case of any amendment or supplement to any such document, or any material incorporated by reference in any such document, filed with the SEC after the date as of which this representation is being made) will not, at any time during the period specified in Section 3(e) hereof, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; PROVIDED, HOWEVER, that the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or Prospectus made in reliance upon and in conformity with information furnished to the Trust or the Guarantor in writing by any Underwriter through the Representative expressly for use in the Registration Statement or Prospectus. (f) INCORPORATED DOCUMENTS. The documents incorporated by reference in any Preliminary Prospectus or the Prospectus, at the time they were or hereafter are filed with the SEC, complied or when so filed will comply, as the case may be, in all material respects with the requirements of the 1934 Act and the rules and regulations promulgated thereunder ("1934 Act Regulations"), and, when read together and with the other information in the Prospectus, did not and will at all times during the period specified in Section 3(e) hereof not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were or are made, not misleading. -3- (g) ACCOUNTANTS. The accountants who issued their reports on the financial statements included or incorporated by reference in the Prospectus are independent public accountants within the meaning of the 1933 Act and the 1933 Act Regulations. (h) FINANCIAL STATEMENTS. The financial statements and any supporting schedules of the Trust and the Guarantor included or incorporated by reference in the Registration Statement and the Prospectus present fairly the financial position of the Trust and the Guarantor as of the dates indicated and the results of their respective operations for the periods specified; and, except as stated therein, said financial statements have been prepared in conformity with generally accepted accounting principles in the United States applied on a consistent basis; and any supporting schedules included in the Registration Statement present fairly the information required to be stated therein. (i) AUTHORIZATION AND VALIDITY OF THIS AGREEMENT AND THE REGISTERED SECURITIES. This Agreement has been duly authorized, executed and delivered by the Trust and the Guarantor and is a valid and binding agreement of the Trust and the Guarantor, subject to the execution and delivery of this Agreement by the Representative on behalf of the Underwriters; the Registered Securities have been duly and validly authorized for issuance, offer and sale pursuant to this Agreement and, when issued, authenticated and delivered pursuant to this Agreement against payment of the consideration therefor specified in this Agreement, the Securities will be validly issued, fully paid and non-assessable; and the Registered Securities will conform in all material respects to the descriptions thereof in the Registration Statement and the Prospectus. (j) MATERIAL CHANGES OR MATERIAL TRANSACTIONS. Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as may otherwise be stated therein or contemplated thereby, (i) there has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Guarantor, whether or not arising in the ordinary course of business and (ii) there have been no material transactions entered into by the Guarantor other than those in the ordinary course of business. (k) ORGANIZATION OF TRUST. The Trust has been duly created and is validly existing as a statutory business trust in good standing under the Business Trust Act of the State of Delaware (the "Delaware Business Trust Act") with the power and authority to own property and conduct its business as described in the Prospectus, and has conducted and will conduct no business other than the transactions -4- contemplated by this Agreement and as described in the Prospectus; the Trust is not a party to or bound by any agreement or instrument other than this Agreement, the Amended and Restated Trust Agreement (the "Trust Agreement") between the Guarantor and the trustees named therein (the "Trustees") and the agreements and the instruments contemplated by the Trust Agreement and the Prospectus; the Trust has no liabilities or obligations other than those arising out of the transactions contemplated by this Agreement and the Trust Agreement and described in the Prospectus; and the Trust is not a party to or subject to any action, suit or proceeding of any nature. (l) CAPITALIZATION. The Guarantor has an authorized capitalization as set forth in the Prospectus, and all of the issued shares of capital stock of the Guarantor have been duly and validly authorized and issued and are fully paid and non-assessable; all of the issued shares of capital stock of each subsidiary of the Guarantor have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly by the Guarantor, free and clear of all liens, encumbrances, equities and claims; and all of the outstanding beneficial interests in the Trust have been duly authorized and issued, are fully paid and non-assessable and conform to the descriptions thereof contained in the Prospectus. (m) COMMON SECURITIES OF TRUST. The Common Securities have been duly authorized by the Depositor of the Trust, and upon delivery by the Trust to the Guarantor against payment therefor as described in the Prospectus, will be duly and validly issued and non-assessable beneficial interests in the Trust and will conform to the description thereof contained in the Prospectus; the issuance of the Common Securities is not subject to preemptive or other similar rights; and, at the Delivery Date, all of the issued and outstanding Common Securities of the Trust will be directly owned by the Guarantor free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. (n) PREFERRED SECURITIES OF TRUST. The Securities have been duly authorized by the Depositor of the Trust, and when issued and delivered against payment therefor as provided herein, will be duly and validly issued and non-assessable beneficial interests in the Trust and will conform in all material respects to the description thereof contained in the Prospectus; and the holders of the Securities (the "Securityholders") will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware (subject to the obligations of the Securityholders under the Trust Agreement -5- to make certain payments to the Trust to defray expenses such as any applicable transfer and stamp taxes). (o) GUARANTOR AGREEMENTS. The Guarantee, the Subordinated Debentures, the Trust Agreement and the Indenture (the Guarantee, the Subordinated Debentures, the Trust Agreement and the Indenture being collectively referred to as the "Guarantor Agreements") have each been duly authorized and when validly executed and delivered by the Guarantor and, in the case of the Guarantee, by the Guarantee Trustee, in the case of the Trust Agreement, by the Trustees (as defined in the Trust Agreement) and, in the case of the Indenture, by the Debenture Trustee, and, in the case of the Subordinated Debentures, when validly issued by the Guarantor and validly authenticated and delivered by the Debenture Trustee, will constitute valid and legally binding obligations of the Guarantor, enforceable in accordance with their respective terms, except as enforcement thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting the enforcement of creditors' rights generally and general equitable principles; the Trust Agreement, the Indenture and the Guarantee have been duly qualified under the Trust Indenture Act of 1939, as amended (the "TIA"); the Subordinated Debentures are entitled to the benefits of the Indenture; and the Guarantee Agreement will conform to the descriptions thereof in the Prospectus. (p) ISSUE AND SALE OF SECURITIES. The issue and sale of the Securities and the Common Securities by the Trust, the compliance by the Trust with all of the provisions of this Agreement, the purchase of the Subordinated Debentures by the Trust, and the consummation of the transactions herein contemplated will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Trust is a party or by which the Trust is bound or to which any of the property or assets of the Trust is subject (in each case except for such conflicts, breaches, violations or defaults that would not have a material adverse effect on the business, business prospects, financial condition or results of operations of the Guarantor and its subsidiaries considered as a whole), nor will such action result in any violation of the provisions of the Trust Agreement or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Trust or any of its properties; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body, other than the authorization of the Federal Energy Regulatory Commission ("FERC") and the Illinois Commerce Commission ("ICC"), each of which has been duly obtained and is in full force and effect, is required for the issue and sale of the -6- Securities and the Common Securities by the Trust, the purchase of the Subordinated Debentures by the Trust or the consummation by the Trust of the transactions contemplated by this Agreement, except the registration under the Act and the Exchange Act of the Securities, the Subordinated Debentures and the Guarantee, the qualification of the Trust Agreement, the Indenture and the Guarantee under the TIA, and such consents, approvals authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase of the Securities and the distribution of the Securities by the Underwriters. (q) GUARANTOR. The issuance by the Guarantor of the Guarantee, the compliance by the Guarantor with all of the provisions of this Agreement, the execution, delivery and performance by the Guarantor of the Guarantor Agreements, and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Guarantor is a party or by which the Guarantor is bound or to which any of the property or assets of the Guarantor is subject (in each case, except for such conflicts, breaches, violations or defaults that would not have a material adverse effect on the business, business prospects, financial condition or results of operations of the Guarantor and its subsidiaries considered as a whole), nor will such action result in any violation of the provisions of the Articles of Incorporation or by-laws of the Guarantor or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Guarantor or any of its properties; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body, other than the FERC and the ICC, each of which has been duly obtained and is in full force and effect, is required for the issue of the Guarantee or the issue and sale of the Subordinated Debentures or the consummation by the Guarantor of the other transactions contemplated by this Agreement, except the registration under the Act of the Registered Securities, the qualification of the Trust Agreement, the Indenture and the Guarantee under the TIA and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase of the Securities and distribution of the Securities by the Underwriters. (r) NO DEFAULTS. The Guarantor is not in violation of its Articles of Incorporation or bylaws, or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, -7- indenture, mortgage, loan agreement, note, lease or other instrument to which it is a party or by which it or its properties may be bound; the execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been duly authorized by all necessary corporate action and will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Guarantor pursuant to any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Guarantor is a party or by which it may be bound or to which any of the property or assets of the Guarantor is subject, nor will such action result in any violation of the Articles of Incorporation or bylaws of the Guarantor or any applicable law, administrative regulation or administrative or court order or decree. (s) The Company's obligations under the Guarantee are subordinate and junior in right of payment to all liabilities of the Company and are pari passu with the most senior preferred stock issued by the Company. (t) The Subordinated Debentures are subordinated and junior in right of payment to all "Senior Indebtedness" (as defined in the Indenture) of the Company. (u) Neither the Company nor the Trust is an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"). (v) LEGAL PROCEEDINGS; CONTRACTS. Except as may be set forth in the Registration Statement, there is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Guarantor, threatened against or affecting, the Guarantor which might, in the opinion of the Guarantor, result in any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Guarantor, or might materially and adversely affect its properties or assets or might materially and adversely affect the consummation of this Agreement; and there are no contracts or documents of the Guarantor which are required to be filed as exhibits to the Registration Statement by the 1933 Act Regulations which have not been so filed. (w) FRANCHISES. The Guarantor holds valid and subsisting franchises, licenses and permits authorizing it to carry on the respective utility businesses in which it is engaged in the territories from which substantially all of its gross operating revenue is derived. -8- (x) HOLDING COMPANY. The Guarantor is not a holding company, or a subsidiary company of a holding company, as such terms are defined in the Public Utility Holding Company Act of 1935, as amended. On December 1, 1996, the Guarantor will become or became a subsidiary company of MidAmerican Energy Holdings Company, which on such date became or will become a holding company which, together with the Guarantor, is exempt from regulations under such Act except under Section 9(a)(2) thereof. Section 2 ISSUANCE, PURCHASE, DELIVERY AND OFFERING OF SECURITIES. (a) ISSUANCE AND PURCHASE OF SECURITIES. Subject to the terms and conditions herein set forth, the Trust and the Guarantor agree that the Trust shall issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Trust, at a purchase price of $25 per Security, the number of Securities set forth opposite the name of such Underwriter in Schedule II hereto. As compensation to the Underwriters for their commitments hereunder, and in view of the fact that the proceeds of the sale of the Securities will be used by the Trust to purchase the Subordinated Debentures of the Guarantor, the Guarantor hereby agrees to pay on the Delivery Date (as defined below) to ____________________, for the accounts of the several Underwriters, an amount equal to $_______ per Security sold to certain non-institutional purchasers and $_____ per Security sold to institutional purchasers for the Securities to be delivered on the Delivery Date. (b) DELIVERY CONDITION. The Trust shall not be obligated to deliver any Securities except upon payment for all Securities to be purchased pursuant to this Agreement as hereinafter provided. (c) DELIVERY DATE. Delivery of and payment for the Securities shall be made at such address, date and time as are specified in Schedule I hereto. This date and time are sometimes referred to as the "Delivery Date." On the Delivery Date the Trust shall deliver the Securities to the Representative through the facility of The Depository Trust Company ("DTC"),for the account of each Underwriter against payment to or upon the order of the Trust of the purchase price as described in Schedule I. Time shall be of the essence, and delivery at the time and place specified pursuant to this Agreement is a further condition of the obligation of each Underwriter hereunder. Upon delivery, the Securities shall be in such authorized denominations and registered in such names as the Representative shall request in writing not less than two full business days prior to the -9- Delivery Date. For the purpose of expediting the checking and packaging of the Securities, the Trust and the Guarantor shall make the Securities available for inspection by the Representative in New York, New York not later than 2:00 P.M., local time, on the business day prior to the Delivery Date. As used herein, "business day" means any day on which the New York Stock Exchange is open for trading. (d) OFFERING. Upon the authorization by you of the release of the Securities, the several Underwriters propose to offer the Securities for sale upon the terms and conditions set forth in the Prospectus. (e) COMMISSIONS. On the Delivery Date, the Guarantor will pay, or cause to be paid, the commission payable on the Delivery Date to the Underwriters described in Schedule I to the account specified by the Underwriters. (f) PRE-CLOSING. The documents to be delivered on the Delivery Date by or on behalf of the parties hereto under the Agreement, including the cross-receipt for the Securities and payment by certified or bank cashiers checks of the amounts specified in subsection (a) above, will be delivered at the office of Sidley & Austin, 875 Third Avenue, New York, NY 10022 (the "Closing Location"), and the Securities will be delivered at the office designated by the Representative, all on the Delivery Date. A meeting will be held at the Closing Location at 2:00 p.m., New York City time, on the New York Business Day next preceding such Delivery Date, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the purposes of this Section 2, "New York Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close. Section 3. COVENANTS OF THE TRUST AND THE GUARANTOR. The Trust and the Guarantor agree with the several Underwriters: (a) RULE 424(B) FILING. Promptly following execution of this Agreement, to cause the Prospectus, including as part thereof a prospectus supplement relating to the Securities, to be filed with, or mailed for filing to, the SEC pursuant to Rule 424(b) under the 1933 Act and the Guarantor will promptly advise the Representative when such filing or mailing has been made. Prior to such filing or mailing, the Trust and the Guarantor will cooperate with the Representative in the preparation of such supplement to the Prospectus to assure that the Representative has no reasonable objection to the form or content thereof when filed or mailed; -10- (b) FERC OR ICC ACTION. To advise the Representative promptly of any additional action by the FERC or ICC pertaining to the Securities; (c) COPIES OF 1933 ACT DOCUMENTS. To furnish promptly to the Representative and to counsel for the Underwriters one signed copy of the Registration Statement as originally filed and each amendment thereto filed prior to the date hereof and relating to the Securities, and a copy of the Prospectus filed with the SEC, including all documents incorporated therein by reference and all consents and exhibits filed therewith; (d) CONFORMED COPIES. To deliver promptly to the Representative such reasonable number of the following documents as the Representative may request: (i) conformed copies of the Registration Statement (excluding exhibits, the computation of the ratio of earnings to fixed charges and preferred stock dividends and this Agreement), (ii) the Prospectus and (iii) any documents incorporated by reference in the Prospectus; (e) AMENDMENTS AND SUPPLEMENTS. To file with the SEC, during such period following the date hereof as the Prospectus is required by law to be delivered, any amendment to the Registration Statement or supplement to the Prospectus that may in the reasonable judgment of the Guarantor or the Representative, be required by the 1933 Act or requested by the SEC; (f) REPRESENTATIVE REVIEW. Prior to filing with the SEC during the period referred to in Section 3(e) hereof, (i) any amendment to the Registration Statement, (ii) the Prospectus or any supplement thereto or (iii) any document incorporated by reference in any of the foregoing or any amendment or supplement to such incorporated document, to furnish a copy thereof to the Representative and to counsel for the Underwriters, and the Trust and the Guarantor will not file any amendment to the Registration Statement or supplement to the Prospectus unless the Trust and the Guarantor have furnished to the Representative a copy of such document for review prior to filing and will not file any such proposed amendment or supplement to which the Representative reasonably objects; (g) NOTICES TO REPRESENTATIVE. To advise the Representative promptly during the period referred to in Section 3(e) hereof, (i) when any post-effective amendment to the Registration Statement becomes effective, (ii) of any request or proposed request by the SEC for an amendment or supplement to the Registration Statement, to the Prospectus, to any document incorporated by reference in any of the foregoing or for any additional information, (iii) of the issuance by the SEC of any stop order suspending the -11- effectiveness of the Registration Statement or any order directed to the Prospectus or any document incorporated therein by reference or the initiation or threat of any stop order proceeding or of any challenge by the SEC to the accuracy or adequacy of any document incorporated by reference in the Prospectus, (iv) of receipt by the Trust or the Guarantor of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threat of any proceeding for that purpose and (v) of the happening of any event which makes untrue any statement of a material fact made in the Registration Statement (insofar as the Registration Statement relates to or covers the Securities) or the Prospectus or which requires the making of a change in the Registration Statement or the Prospectus in order to make any material statement therein not misleading; (h) STOP ORDER. If, during the period referred to in Section 3(e) hereof, the SEC shall issue a stop order suspending the effectiveness of the Registration Statement, to make every reasonable effort to obtain the lifting of that order at the earliest possible time; (i) EARNINGS STATEMENT. As soon as practicable, to make generally available to their respective security holders and to deliver to the Representative an earnings statement, conforming with the requirements of Section 11(a) of the 1933 Act and Rule 158 of the 1933 Act Regulations, covering a period of at least twelve months beginning the first day of the fiscal quarter following the effective date of the Registration Statement as defined in Rule 158(c) of the 1933 Act Regulations; (j) SHAREHOLDER AND OTHER REPORTS. During the period of five years hereafter, or such lesser period as any of the Securities shall be outstanding, to furnish to the Representative, (i) as soon as available, a copy of each report of the Guarantor mailed to its shareholders or report filed by the Trust or the Guarantor with the SEC and (ii) from time to time such other information concerning the Trust or the Guarantor as the Representative may reasonably request; (k) BLUE SKY. To endeavor to qualify the Securities for offer and sale under the securities laws of such jurisdictions as the Representative may reasonably request; (l) COSTS. To pay all costs incident to the authorization, issuance, sale and delivery of the Securities; the fees and disbursements of the Trust's and the Guarantor's counsel and their accountants in connection with the registration of the Securities under the Act and the other transactions contemplated thereby; the costs incident to the preparation, printing and filing under the -12- 1933 Act of the Registration Statement and the Prospectus and any amendments, supplements and exhibits thereto; the costs incident to the preparation, printing and filing of the documents and any amendments and exhibits thereto required to be filed by the Guarantor under the 1934 Act; the costs of distributing the Registration Statement as originally filed and each amendment and post-effective amendment thereof (including exhibits), any Preliminary Prospectus, the Prospectus and any documents incorporated by reference in any of the foregoing documents; the costs of printing this Agreement, the Indenture, the Trust Agreement, and the Guarantee; the costs of any filings with the National Association of Securities Dealers, Inc.; fees paid to rating agencies in connection with the rating of the Securities; the fees and expenses of qualifying the Securities under the securities laws of the several jurisdictions as provided in Section 3(k) hereof and of preparing and printing a Blue Sky Memorandum, (including fees of counsel to the Underwriters not to exceed $_____ in the aggregate); the cost of qualifying the Securities with The Depository Trust Company; all fees and expenses of the Trustees, the Debenture Trustee and the Guarantee Trustee and their counsel; all fees and expenses in connection with the listing of the Securities on the New York Stock Exchange and the cost of registering the Securities under Section 12 of the Exchange Act; the cost of preparing certificates for the Securities and the Subordinated Debentures; and all other costs and expenses incident to the performance of the Trust's and the Guarantor's obligations under this Agreement; PROVIDED that, except as provided in this Section 3(l) and in Section 7 hereof, the Underwriters shall pay their own costs and expenses, including the fees and expenses of their counsel, any transfer taxes on the Securities which they may sell and the expenses of advertising any offering of the Securities made by the Underwriters; (m) 1934 ACT FILINGS. Until the termination of the offering of the Securities, to timely file all documents, and any amendments to previously filed documents, required to be filed by the Guarantor pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act; (n) STAND-OFF AGREEMENT. During the period beginning from the date hereof and continuing to and including the earlier of (i)the date, after the Delivery Date, on which the distribution of the Securities ceases, as determined by you, and (ii) 30 days after the Delivery Date not to offer, sell, contract to sell or otherwise dispose of any securities, any other interests of the Trust or any preferred securities or interests of any other issuer, as the case may be, that are substantially similar to the Securities (including any guarantee of such securities or interests) or any securities that are convertible into or -13- exchangeable for, or that represent the right to receive any such securities or other interest, without the prior written consent of the Representative; and (o) LISTING. To use its best efforts to list, subject to notice of issuance, the Securities on the New York Stock Exchange. Section 4 CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The respective obligations of the Underwriters under this Agreement with respect to the Securities are subject to the accuracy, on the date hereof and on the Delivery Date, of the representations and warranties of the Trust and the Guarantor contained herein and in any certificate delivered pursuant to the provisions hereof, to performance by the Trust and the Guarantor of their respective obligations herein contained, and to each of the following additional terms and conditions applicable to the Registered Securities: (a) NO STOP ORDER. At or before the Delivery Date, no stop order suspending the effectiveness of the Registration Statement nor any order directed to any document incorporated by reference in the Prospectus shall have been issued and prior to that time no stop order proceeding shall have been initiated or threatened by the SEC and no challenge shall have been made by the SEC to the accuracy or adequacy of any document incorporated by reference in the Prospectus; any request of the SEC for inclusion of additional information in the Registration Statement or the Prospectus or otherwise shall have been complied with and there shall be no material adverse change in the financial condition of the Guarantor or the Trust; (b) LEGAL MATTERS. All corporate proceedings and other legal matters incident to the authorization, form and validity of this Agreement, the Registered Securities and the form of the Registration Statement, the Prospectus (other than financial statements and other financial data) and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be satisfactory in all respects to Sidley & Austin, counsel for the Underwriters, and the Trust and the Guarantor shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters; (c) OPINION OF TRUST AND GUARANTOR COUNSEL. John A. Rasmussen, Jr., Esq., counsel to the Guarantor, shall have furnished to the Representative a letter addressed to the Underwriters and dated the Delivery Date stating his opinion to the effect that: (i) the Guarantor is a validly organized and existing corporation in good standing under the laws of -14- the State of Iowa; and as of December 1, 1996, the Guarantor became or will become a subsidiary of MidAmerican Energy Holdings Company, an Iowa corporation, both of which are or as of December 1, 1996 will be exempt from regulation under the Public Utility Holding Company Act of 1935, as amended, except under Section 9(a)(2) thereof; (ii) this Agreement has been duly authorized, executed and delivered by the Guarantor; (iii) all of the issued and outstanding Common Securities of the Trust are owned of record by the Company free and clear, to the best of the knowledge of such counsel, of any security interest, mortgage, pledge, lien, encumbrance, claim or equitable right; (iv) the certificates for the Securities are in due and proper form; the issue and sale of the Securities by the Guarantor in accordance with the terms of this Agreement have been duly and validly authorized by the necessary corporate action; the Securities have been duly authorized, executed, issued, and delivered by the Guarantor and constitute valid and legally binding obligations of the Guarantor; (v) the statements set forth in the Prospectus under the captions "Description of the Preferred Securities," "Description of the Guarantees" and "Description of the Debentures," and the statements set forth in the Prospectus Supplement dated ________ __, 1996 under the captions "Certain Terms of the Series A Preferred Securities," "Certain Terms of the Series A Guarantee" and "Certain Terms of the Series A Debentures," insofar as they purport to constitute a summary of the terms of the securities therein described, fairly summarize the terms of such securities in all material respects; (vi) the Guarantee Agreement, the Trust Agreement and the Indenture have each been duly authorized, executed and delivered by the Guarantor, and such agreements constitute valid and legally binding obligations of the Guarantor, enforceable in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting the enforcement of creditors' rights generally and general equitable principles; (vii) the Subordinated Debentures are in the form contemplated by the Indenture, have been duly authorized, executed and delivered by the Company and, -15- when authenticated by the Debenture Trustee in the manner provided for in the Indenture and delivered against payment therefor as provided in this Agreement, will constitute valid and binding obligations of the Guarantor, enforceable in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting the enforcement of creditors' rights generally, and general equitable principles; (viii) the Subordinated Debentures are subordinate and junior in right of payment to all "Senior Indebtedness" (as defined in the Indenture) of the Company; (ix) the Company's obligations under the Guarantees are subordinate and junior in right of payment to all liabilities of the Company and are pari passu with the most senior preferred stock issued by the Company; (x) the Trust Agreement, the Indenture and the Guarantee Agreement each have been duly qualified under the TIA; (xi) the orders of the FERC and the ICC referred to in Sections 1(p) and 1(q) hereof pertaining to the Registered Securities have been duly entered and, to the best of the knowledge of such counsel, are still in force and effect; and no further approval, authorization, consent, certificate or order of any state or federal commission or regulatory authority (other than in connection or compliance with the provisions of the securities or Blue Sky laws of any jurisdiction) is necessary with respect to the issue and sale of the Registered Securities as contemplated by this Agreement; (xii) the Registration Statement has become effective under the 1933 Act and, to the best of the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or threatened under the 1933 Act; (xiii) the Registration Statement and the Prospectus and each amendment or supplement thereto comply as to form in all material respects with the requirements of the 1933 Act (except that such counsel need express no opinion as to the financial statements and financial or statistical data contained therein); -16- (xiv) such counsel does not know of any legal or governmental proceeding required to be described in the Prospectus which is not described as required, or of any contract or document of a character required to be described or incorporated in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement which is not described, incorporated or filed as required; (xv) neither the execution and delivery of the Securities, this Agreement, the Guarantee Agreement, the Indenture or the Trust Agreement, nor the consummation of the transactions therein contemplated, nor compliance with the terms and provisions thereof, will conflict with, violate or result in a breach of any law, any administrative regulation or any court decree known to such counsel to be applicable to the Guarantor, conflict with or result in a breach of any of the terms, conditions or provisions of the Articles of Incorporation or the by-laws of the Guarantor or of any material agreement or instrument known to such counsel to which the Guarantor is a party or by which the Guarantor is bound or constitute a default thereunder, or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Guarantor; (xvi) the documents referred to in Section 1(f) hereof, as of their respective filing dates, complied as to form in all material respects with the applicable requirements of the 1934 Act and the 1934 Act Regulations (except that such counsel does not need to express any opinion as to the financial statements and financial or statistical data contained therein); (xvii) the statements made in the Prospectus which are stated therein to have been made on the authority of said counsel have been reviewed by him and, as to matters of law and legal conclusions, are correct; (xviii) the Guarantor is a public utility company authorized by its Articles of Incorporation to carry on the businesses in which it is engaged, as set forth in the Prospectus; the Guarantor has the legal right to function and operate as an electric public utility company in the States of Iowa, Illinois and South Dakota, and as a gas public utility company in the States of Iowa, Illinois, South Dakota and Nebraska; and the franchises and permits of the Guarantor are valid and subsisting and authorize the Guarantor to carry on the utility businesses in which it is engaged -17- in the communities and territory covered by such franchises and permits; (xix) the descriptions in the Registration Statement and the Prospectus of statutes, legal and governmental proceedings and contracts and other documents are accurate and fairly present the information required to be presented; and (xx) except as set forth in the Prospectus, (A) there are no pending legal proceedings to which the Guarantor is a party or in which any of its property is the subject which are material to the Guarantor, other than ordinary routine legal proceedings incident to the business in which the Guarantor is engaged, and (B) there are no material pending administrative or judicial proceedings to which the Guarantor is a party or in which any of its property is the subject arising under any federal, state or local provisions regulating the discharge of materials into the environment or otherwise relating to the protection of the environment, and, to the best of the knowledge of said counsel, no such proceedings are threatened by governmental authorities; and such letter shall additionally state that nothing has come to the attention of such counsel that would lead him to believe that the Registration Statement, at the time it became effective, and if an amendment to the Registration Statement or an Annual Report on Form 10-K has been filed by the Guarantor with the SEC subsequent to the effectiveness of the Registration Statement, then at the time such amendment became effective or at the time of the most recent such filing, and at the date hereof, contains or contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus as amended or supplemented at the time it was filed or mailed for filing pursuant to Rule 424(b) under the 1933 Act contained or as amended or supplemented at the Delivery Date contains any untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (d) OPINION OF SPECIAL DELAWARE COUNSEL. Richards, Layton & Finger special Delaware counsel, shall have furnished to the Representative a letter addressed to the Underwriters and dated the Delivery Date to the effect that: (i) The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Business Trust Act, and all filings required under the laws of the State of Delaware with -18- respect to the creation and valid existence of the Trust as a business trust have been made. (ii) Under the Delaware Business Trust Act and the Trust Agreement, the Trust has the requisite trust power and authority to own property and conduct its business, all as described in the Prospectus. (iii) The Trust Agreement constitutes a valid and binding obligation of the Guarantor and the Trustees and is enforceable against the Guarantor and the Trustees in accordance with its terms, subject as to enforceability to (a) bankruptcy, insolvency, moratorium, receivership, reorganization, liquidation, fraudulent conveyance and other similar laws relating to or affecting the rights and remedies of creditors generally, (b) principles of equity, including applicable law relating to fiduciary duties (regardless of whether considered and applied in a proceeding in equity or at law) and (c) the effect of applicable public policy on the enforceability of provisions relating to indemnification or contribution. (iv) Under the Business Trust Act and the Trust Agreement, the Trust has the requisite trust power and authority to (a) execute and deliver, and to perform its obligations under, the Underwriting Agreement and (b) issue and perform its obligations under the Securities. (v) Under the Business Trust Act and the Trust Agreement, the execution and delivery by the Trust of this Agreement, and the performance by the Trust of its obligations thereunder, have been duly authorized by the requisite trust action on the part of the Trust. (vi) The Securities have been duly authorized by the Trust Agreement and are duly and validly issued and, subject to the qualifications set forth herein, fully paid and nonassessable beneficial interests in the Trust and are entitled to the benefits provided by the Trust Agreement. The Holders of the Securities, as beneficial owners of the Trust, will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. Such counsel may note that the Securityholders may be obligated, pursuant to the Trust Agreement, to (a) provide indemnity or security in connection with and pay taxes or governmental charges arising from transfers or exchanges of certificates for the Securities certificates and the issuance of such certificates and (b) provide security or indemnity in connection with requests of or directions to the -19- Property Trustee to exercise its rights and remedies under the Trust Agreement. (vii) The Common Securities created under the Trust have been duly authorized by the Trust Agreement and are validly issued and represent beneficial interests in the Trust. (viii) Under the Business Trust Act and the Trust Agreement, the issuance of the Securities under the Trust is not subject to preemptive rights. (ix) The issuance and sale by the Trust of the securities created thereunder, the execution, delivery and performance by the Trust of this Agreement, the consummation by the Trust of the transactions contemplated thereby and compliance by the Trust with its obligations thereunder will not violate (a) any of the provisions of the Certificate of Trust of the Trust or the Trust Agreement or (b) any applicable Delaware law or administrative regulation. (x) No authorization, approval, consent or order of any Delaware court or governmental authority or agency is required to be obtained by the Trust solely in connection with the issuance and sale of the Securities created by the Trust. (xi) The Holders of the Securities (other than those Holders of the Securities who reside or are domiciled in the State of Delaware) will have no liability for income taxes imposed by the State of Delaware solely as a result of their participation in the Trust, and the Trust will not be liable for any income tax imposed by the State of Delaware. (e) OFFICERS' CERTIFICATE. Each of the Trust and the Guarantor shall have furnished to the Representative on the Delivery Date a certificate, dated the Delivery Date, of its Chairman of the Board, its President or a Vice President and its Treasurer or an Assistant Treasurer stating that, to the best of their knowledge after reasonable investigation, the representations and warranties of the Trust and the Guarantor as the case may be in Section 1 hereof are true and correct as of the Delivery Date; the Trust and the Guarantor have complied with all of their respective agreements contained herein; and the conditions set forth in Sections 4(a), 4(h), 4(i) and 4(j) hereof have been fulfilled; (f) COMFORT LETTER. On the Delivery Date, the Underwriters shall have received a letter from Arthur Andersen LLP dated as of the Delivery Date and in form and -20- substance satisfactory to the Representative, to the effect that: (i) They are independent public accountants with respect to the Trust and the Guarantor within the meaning of the 1933 Act and the 1933 Act Regulations. (ii) In their opinion, the financial statements and supporting schedule(s) of the Guarantor audited by them and included or incorporated by reference in the Registration Statement comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations with respect to registration statements on Form S-3 and the 1934 Act and the 1934 Act Regulations. (iii) They have performed specified procedures, not constituting an audit, including a reading of the latest available interim financial statements of the Guarantor, a reading of the minute books of the Guarantor since the end of the most recent fiscal year with respect to which an audit report has been issued, inquiries of and discussions with certain officials of the Guarantor responsible for financial and accounting matters with respect to the unaudited consolidated financial statements of the Guarantor included in the Registration Statement and Prospectus and the latest available interim unaudited financial statements of the Guarantor, and such other inquiries and procedures as may be specified in such letter, and on the basis of such inquiries and procedures nothing came to their attention that caused them to believe that: (A) the unaudited consolidated financial statements of the Guarantor included in the Registration Statement and Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the 1934 Act and the 1934 Act Regulations or were not fairly presented in conformity with generally accepted accounting principles in the United States applied on a basis substantially consistent with that of the audited financial statements included therein, or (B) at a specified date not more than five days prior to the date of such letter, there was any change in the capital stock or any increase in long-term debt of the Guarantor or any decrease in the common shareholders' equity of the Guarantor other than for the declaration of regular quarterly dividends, in each case as compared with the amounts shown on the most recent balance sheet of the Guarantor included in the Registration Statement and Prospectus or, during the period from the date of such balance sheet to a specified date not more than five days prior to the date of such letter, there were any decreases, as compared with the corresponding period in the preceding -21- year, in operating revenues or net income of the Guarantor, except in each such case as set forth in or contemplated by the Registration Statement and Prospectus or except for such exceptions (e.g. inability to determine such decreases because of insufficient accounting information available after the date of such most recent balance sheet) enumerated in such letter as shall have been agreed to by the Representative and the Guarantor. (iv) In addition to the examination referred to in their report included or incorporated by reference in the Registration Statement and the Prospectus, and the limited procedures referred to in clause (iii) above, they have carried out certain other specified procedures, not constituting an audit, with respect to certain amounts, percentages and financial information which are included or incorporated by reference in the Registration Statement and Prospectus and which are specified by the Representative, and have found such amounts, percentages and financial information to be in agreement with the relevant accounting, financial and other records of the Guarantor identified in such letter. (g) ADDITIONAL COMFORT LETTER. On the Delivery Date, the Underwriters shall have received a letter from Deloitte & Touche LLP dated as of the Delivery Date and in form and substance satisfactory to the Representative, to the effect of Section 4(f)(i) and (ii). (h) OPINION OF UNDERWRITERS COUNSEL. Sidley & Austin, as counsel for the Underwriters, shall have furnished to the Representative on the Delivery Date such opinions with respect to the validity of the Securities and with respect to the Registration Statement, the Prospectus, and other related matters as the Representative may reasonably require and including that: (i) under current law, for United States federal income tax purposes (A) the Subordinated Debentures will constitute indebtedness of the Company and (B) the interest on the Subordinated Debentures will be deductible by the Company on an economic accrual basis in accordance with section 163(e) of the Internal Revenue Code of 1986, as amended, and Treasury Regulation Section 1.163-7, subject to any applicable limitations on the Company's ability to deduct interest on any of its indebtedness; (ii) under current law, the Trust will be classified for United States federal income tax purposes as a grantor trust and not as an association taxable as a corporation; accordingly, for United -22- States federal income tax purposes, each holder of Securities generally will be considered the owner of an undivided interest in the Subordinated Debentures, and each holder will be required to include in its gross income any original issue discount accrued with respect to its allocable share of the Subordinated Debentures; (iii) the discussion set forth in the Prospectus Supplement under the caption "United States Federal Income Taxation" is a fair and accurate summary of the matters addressed therein, based upon current law and the assumptions stated or referred to therein; and (iv) the Trust is not an "investment company" or an entity "controlled" by an "investment company" required to be registered under the 1940 Act; (i) FERC AND ICC ORDERS. The orders of the FERC and the ICC referred to in Sections 1(p)and 1(q) hereof shall be in full force and effect and no proceedings to suspend the effectiveness of either such order shall be pending or threatened; (j) RATINGS. Subsequent to the execution of this Agreement, there shall not have been any decrease in the ratings of the Securities or of any of the equity securities of the Guarantor by either Standard & Poor's Rating Group or Moody's Investors Service Inc.; (k) NO MATERIAL ADVERSE CHANGE. Subsequent to the date of the most recent financial statements incorporated by reference in the Prospectus, there shall have been no material adverse change in the condition (financial or otherwise), business or results of operations of the Guarantor, except as set forth in the Registration Statement and the Prospectus, including the documents incorporated by reference therein, as of the effective date of this Agreement, and (l) STOCK EXCHANGE LISTING. The Securities to be sold by the Trust shall have been duly listed, subject to notice of issuance, on the New York Stock Exchange. All opinions, letters, evidence, and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to the Representative. In case any of the conditions specified above in this Section 4 shall not have been fulfilled on the Delivery Date, this Agreement may be terminated by the Representative by delivering written notice of termination to the Trust and the Guarantor. Any such termination shall be without liability of -23- any party to any other party except to the extent provided in Sections 3, 7 and 9 hereof. Section 5. CONDITIONS TO THE OBLIGATIONS OF THE TRUST AND THE GUARANTOR. The obligations of the Trust and the Guarantor to sell and deliver the Securities are subject to the following conditions precedent: (a) NO STOP ORDER. At or before the Delivery Date, no stop order suspending the effectiveness of the Registration Statement nor any order directed to any document incorporated by reference in the Prospectus shall have been issued and prior to that time no stop order proceeding shall have been initiated or threatened by the SEC and no challenge shall have been made by the SEC to the accuracy or adequacy of any document incorporated by reference in the Prospectus; any request of the SEC for inclusion of additional information in the Registration Statement or the Prospectus or otherwise shall have been complied with; and (b) FERC AND ICC ORDERS. The orders of the FERC and ICC referred to in Section 1(p) and 1(q) hereof shall be in full force and effect and no proceedings to suspend the effectiveness of either such order shall be pending or threatened; and (c) OPINION OF COUNSEL. The opinion of Sidley & Austin referred to in Section 5(g) shall include the opinions described in Section 5(g)(i), (ii), (iii) and (iv). In case any of the conditions specified above in this Section 5 shall not have been fulfilled on the Delivery Date, this Agreement may be terminated by the Trust and the Guarantor by delivering written notice of termination to the Representative. Any such termination shall be without liability of any party to any other party except to the extent provided in Sections 3, 7 and 9 hereof. Section 6. TERMINATION BY REPRESENTATIVE. The Representative may terminate this Agreement, immediately upon notice to the Trust or the Guarantor, at any time prior to the Delivery Date (i) if there has been, since the date of this Agreement or since the respective dates as of which information is given in the Registration Statement, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Guarantor, whether or not arising in the ordinary course of business, or (ii) if there shall have occurred any material adverse change in the financial markets in the United States or any outbreak or escalation of hostilities or other national or international calamity or crisis the effect of which is such as to make it, in the judgment of the Representative, impracticable to market the Securities or (iii) if trading in any securities of the Guarantor has been suspended by the SEC or a national -24- securities exchange,or if trading generally on either the American Stock Exchange or the New York Stock Exchange shall have been suspended, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required, by either of said exchanges or by order of the SEC or any other governmental authority, or if a banking moratorium shall have been declared by either Federal or New York authorities, or (iv) if the rating assigned by any nationally recognized securities rating agency to the Securities or to any equity security of the Guarantor as of the date of this Agreement shall have been lowered since that date or if any such rating agency shall have publicly announced that it has under surveillance or review, with possible negative implications, any such rating or (v) if there shall have come to the attention of the Representative any facts that would cause the Representative to believe that the Prospectus, at the Delivery Date, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at the time of such delivery, not misleading. Section 7. PAYMENT OF EXPENSES IN CERTAIN CIRCUMSTANCES. If the purchase of the Securities by the Underwriters is not consummated for any reason other than a default by one or more of the Underwriters, the Guarantor shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 3 hereof, the respective obligations of the Trust and the Guarantor and the Underwriters pursuant to Section 9 hereof shall remain in effect, and the Guarantor will reimburse the Representative for the reasonable out-of-pocket expenses of the Underwriters, not exceeding $10,000, and for the fee and disbursements of Sidley & Austin, the Underwriters agreeing to pay such expenses, fee and disbursements in any other event. In no event will the Trust or the Guarantor be liable to any of the Underwriters for damages on account of loss of anticipated profits. Section 8. DEFAULT BY UNDERWRITERS. If one or more of the Underwriters shall fail at the Delivery Date to purchase the Securities which it or they are obligated to purchase under this Agreement ("Defaulted Securities"), the Representative shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the Representative shall not have completed such arrangements within such 24-hour period, then: (a) if the amount of Defaulted Securities does not exceed 10% of the amount of the Securities, each of the non-defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations -25- hereunder bear to the underwriting obligations of all non-defaulting Underwriters, or (b) if the amount of Defaulted Securities exceeds 10% of the amount of the Securities, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter. No action taken pursuant to this Section shall relieve any defaulting Underwriter from liability in respect of its default. In the event of any such default which does not result in a termination of this Agreement, either the Representative or the Guarantor shall have the right to postpone the Delivery Date for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangements. Section 9. INDEMNIFICATION. (a) INDEMNIFICATION OF THE UNDERWRITERS. The Trust and the Guarantor agree, jointly and severally, to indemnify and hold harmless each Underwriter and each person, if any, who controls such Underwriter within the meaning of Section 15 of the 1933 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), or the omission or alleged omission therefrom of a material fact necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact contained in the Prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of the Guarantor; and (iii) against any and all expense whatsoever, as incurred, (including, subject to Section 9(c) hereof, the fees and disbursements of counsel) reasonably incurred in investigating, preparing or defending -26- against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above. PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Trust or the Guarantor by any Underwriter through the Representative expressly for use in the Registration Statement (or any amendment thereto) or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto); and PROVIDED, FURTHER, that this indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, liabilities, claims, damages or expenses purchased Securities, or any person controlling such Underwriter, if a copy of the Prospectus (as then amended or supplemented if the Trust and the Guarantor shall have furnished any such amendment or supplement thereto, but excluding documents incorporated or deemed to be incorporated by reference therein) was not sent or given by or on behalf of such Underwriter to such person, if such is required by law, at or prior to the written confirmation of the sale of such Securities to such person and if the Prospectus (as so amended or supplemented, but excluding documents incorporated or deemed to be incorporated by reference therein) would have corrected the defect giving rise to such loss, liability, claim, damage or expense, it being understood that this proviso shall have no application if such defect shall have been corrected in a document which is incorporated or deemed to be incorporated by reference in the Prospectus. (b) INDEMNIFICATION OF THE TRUST AND THE GUARANTOR. Each Underwriter severally agrees to indemnify and hold harmless the Trust and the Guarantor, their respective trustees and directors, each of their respective officers who signed the Registration Statement, and each person, if any, who controls the Trust or the Guarantor within the meaning of Section 15 of the 1933 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto) or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Trust and the Guarantor by such Underwriter through the Representative expressly for use in the Registration Statement (or any amendment thereto) or such preliminary -27- prospectus or the Prospectus (or any amendment or supplement thereto). (c) GENERAL. Each indemnified party shall give prompt notice to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure so to notify an indemnifying party shall not relieve such indemnifying party from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of such action. In no event shall the indemnifying parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. (d) CONTRIBUTION. In order to provide for just and equitable contribution in circumstances in which the indemnity agreements provided for in this Section 9 are for any reason held to be unenforceable by the indemnified parties although applicable in accordance with their terms, the Trust and the Guarantor and the Underwriters shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreements incurred by the Trust and the Guarantor and one or more of the Underwriters, as incurred, in such proportions that the Underwriters are responsible for that portion represented by the percentage that the commission to the Underwriters set forth under "Underwriting" in the Prospectus Supplement bears to the sum of (a) the initial public offering price appearing thereon and (b) such commission, and the Trust and the Guarantor, jointly and severally, are responsible for the balance; PROVIDED, HOWEVER, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as such Underwriter, and each trustee of the Trust, each director of the Trust and the Guarantor, each officer of the Trust and the Guarantor who signed the Registration Statement, and each person, if any, who controls the Guarantor within the meaning of Section 15 of 1933 Act, shall have the same rights to contribution as the Guarantor. Section 10. NOTICES. The Trust and the Guarantor shall be entitled to act and rely upon any request, consent, notice of agreement by, or on behalf of, the Representative. Any notice by the Trust or the Guarantor to the Underwriters shall be -28- sufficient if given in writing or by telegraph addressed to the Representative at its address set forth in Schedule I hereto, and any notice by the Underwriter to the Trust or the Guarantor shall be sufficient if given in writing or by telegraph addressed to the Guarantor, 666 Grand Avenue, Des Moines, Iowa 50309, Attention of the Treasurer. Section 11. SUCCESSORS. This Agreement shall be binding upon the Underwriters, the Trust, the Guarantor and their respective successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except that (a) the representations, warranties, indemnities and agreements of the Trust and the Guarantor contained in this Agreement shall also be deemed to be for the benefit of the person or persons, if any, who control any Underwriter within the meaning of Section 15 of the 1933 Act, and (b) the indemnity agreement of the Underwriters contained in Section 9 hereof shall be deemed to be for the benefit of directors of the Guarantor, the trustees and officers of the Trust and the Guarantor who have signed the Registration Statement and any person controlling the Trust or the Guarantor. Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in this Section 11, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. The term "successors" shall not include any purchaser of the Securities merely because of such purchase. Section 12. GOVERNING LAW. The validity and interpretation of this Agreement shall be governed by the laws of the State of New York. Section 13. EXECUTION IN COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. -29- If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this Agreement shall represent a binding agreement among the Trust, the Guarantor and the several Underwriters. Very truly yours, MidAmerican Energy Company By:___________________________ TITLE: MidAmerican Energy Financing I By:____________________________ TITLE: The foregoing Agreement is hereby confirmed and accepted as of the date first above written. By:_____________________________ TITLE: For itself and as Representative of the several Underwriters named in Schedule II to the foregoing Agreement. -30- SCHEDULE I Underwriting Agreement dated ________ __, 1996. Registration Statement No. 333- Representative and Address: Description of Securities: __% Cumulative Quarterly Securities, Series A issued by MidAmerican Energy Financing I Number of Preferred Securities: Interest Accrues From: ________ __, 1996 Interest Payment Dates: Redemption Provisions: Liquidation Amount per Preferred Security: $25 per share Public Offering Price per Security: $25 Underwriting Commissions per Security: Purchase Price per Security: $25 Dealer Discount per Security not in Excess of: Reallowance to Dealers per Security not in Excess of: Time, Date and Place of Closing and Payment: Time and Date: 10:00 A.M., New York Time, Closing: Sidley & Austin 875 Third Avenue New York, New York 10022 Payment by delivery of certified or bank cashiers checks $ SCHEDULE II AMOUNT OF NAME OF UNDERWRITER SECURITIES EX-1.(B) 3 EXHIBIT 1(B) DISTRIBUTION AGREEMENT (NOTES) Exhibit 1(b) MIDAMERICAN ENERGY COMPANY MEDIUM-TERM NOTES DUE NOT LESS THAN 9 MONTHS FROM DATE OF ISSUE DISTRIBUTION AGREEMENT _________ __, 1996 [Name and Address of Agent(s) Dear Sirs: MidAmerican Energy Company, an Iowa corporation (the "Company"), confirms its agreement with _________________ (the "Agent") with respect to the issue and sale by the Company of its Medium-Term Notes described herein (the "Notes"). The Notes are to be issued pursuant to an indenture (the "Indenture") dated as of _______ __, 1996 between the Company and The First National Bank of Chicago, as trustee (the "Trustee"). As of the date hereof, the Company has authorized the issuance and sale of up to $___,000,000 aggregate principal amount of Notes through the Agent pursuant to the terms of this Agreement. It is understood, however, that the Company from time to time may reduce the maximum principal amount of Notes which it may issue and sell or authorize the issuance of additional Notes and that such additional Notes may be sold through or to the Agent pursuant to the terms of this Agreement, all as though the issuance of such Notes were authorized as of the date hereof. This Agreement provides both for the sale of Notes by the Company directly to purchasers, in which case the Agent will act as agent of the Company in soliciting Note purchases, and (as may from time to time be agreed to by the Company and the Agent) to the Agent as principal for resale to purchasers. The Company has filed with the Securities and Exchange Commission (the "SEC") a registration statement on Form S-3 (No. 333-_____) for the registration of certain securities, including the Notes, under the Securities Act of 1933 (the "1933 Act") and the offering thereof from time to time in accordance with Rule 415 of the rules and regulations of the SEC under the 1933 Act (the "1933 Act Regulations"). Such registration statement has been declared effective by the SEC and the Indenture has been qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"). Such registration statement (and any further registration statements which may be filed by the Company for the purpose of registering additional Notes and in connection with which this Agreement is included or incorporated by reference as an exhibit) and the prospectus specifically relating to the Notes constituting a part thereof, and any prospectus supplements specifically relating to the Notes, including all documents incorporated therein by reference, as from time to time amended or supplemented by the filing of documents pursuant to the Securities Exchange Act of 1934 (the "1934 Act") or the 1933 Act or otherwise, are referred to herein as the "Registration Statement" and the "Prospectus", respectively, except that if any revised prospectus specifically relating to the Notes shall be provided to the Agent by the Company for use in connection with the offering of the Notes which is not required to be filed by the Company pursuant to Rule 424(b) of the 1933 Act Regulations, the term "Prospectus" shall refer to such revised prospectus from and after the time it is first provided to an agent for such use. SECTION 1. APPOINTMENT AS AGENT. (a) APPOINTMENT OF AGENT. Subject to the terms and conditions stated herein and subject to the reservation by the Company of the right to sell Notes directly on its own behalf, the Company hereby appoints the Agent as its agent for the purpose of soliciting purchases of the Notes from the Company by others and agrees that, except as otherwise contemplated herein, whenever the Company determines to sell Notes directly to the Agent as principal for resale to others, it will enter into a Terms Agreement (hereafter defined) relating to such sale in accordance with the provisions of Section 3(b) hereof. The Agent is authorized to appoint sub-agents or to engage the services of any other broker or dealer in connection with the offer or sale of the Notes. The Company agrees that, during the period the Agent is acting as the Company's Agent hereunder, the Company will not contact or solicit potential investors introduced to it by the Agent to purchase the Notes. The Company may appoint, upon one day prior written notice to the Agent, additional persons to serve as Agent hereunder, but 2 only if each such additional person agrees to be bound by all of the terms of this Agreement as an agent. (b) REASONABLE EFFORTS SOLICITATIONS; RIGHT TO REJECT OFFERS. Upon receipt of instructions from the Company, the Agent will use its reasonable efforts to solicit purchases of such principal amount of the Notes as the Company and the Agent shall agree upon from time to time during the term of this Agreement, it being understood that the Company shall not approve the solicitation of purchases of Notes in excess of the amount which shall be authorized by the Company from time to time or in excess of the principal amount of Notes registered pursuant to the Registration Statement. The Agent will have no responsibility for maintaining records with respect to the aggregate principal amount of Notes sold, or of otherwise monitoring the availability of Notes for sale under the Registration Statement. The Agent will communicate to the Company, orally or in writing, each offer to purchase Notes, other than those offers rejected by the Agent. The Agent shall have the right, in its discretion reasonably exercised, to reject any proposed purchase of Notes, as a whole or in part, and any such rejection shall not be deemed a breach of the Agent's agreement contained herein. The Company may accept or reject any proposed purchase of the Notes, in whole or in part. (c) SOLICITATIONS AS AGENT; PURCHASES AS PRINCIPAL. In soliciting purchases of the Notes on behalf of the Company, the Agent shall act solely as agent for the Company and not as principal. The Agent shall make reasonable efforts to assist the Company in obtaining performance by each purchaser whose offer to purchase Notes has been solicited by the Agent and accepted by the Company. The Agent shall not have any liability to the Company in the event any such purchase is not consummated for any reason. The Agent shall not have any obligation to purchase Notes from the Company as principal, but the Agent may agree from time to time to purchase Notes as principal. Any such purchase of Notes by the Agent as principal shall be made pursuant to a Terms Agreement in accordance with Section 3(b) hereof. (d) RELIANCE. The Company and the Agent agree that any Notes the placement of which the Agent arranges shall be placed by the Agent, and any Notes purchased by the Agent shall be purchased, in reliance on the representations, warranties, covenants and agreements of the Company contained herein and on the terms and conditions and in the manner provided herein. 3 SECTION 2. REPRESENTATIONS AND WARRANTIES. (a) The Company represents and warrants to the Agent as of the date hereof, as of the date of each acceptance by the Company of an offer for the purchase of Notes (whether through the Agent as agent or to the Agent as principal), as of the date of each delivery of Notes (whether through the Agent as agent or to the Agent as principal) (the date of each such delivery to the Agent as principal being hereafter referred to as a "Settlement Date"), and as of any time that the Registration Statement or the Prospectus shall be amended or supplemented (other than by an amendment or supplement providing solely for a change in the interest rates of Notes or similar changes) or there is filed with the SEC any document incorporated by reference into the Prospectus (other than any Current Report on Form 8-K relating exclusively to the issuance of debt securities under the Registration Statement, unless the Agent shall otherwise specify) (each of the times referenced above being referred to herein as a "Representation Date") as follows: (i) DUE INCORPORATION AND QUALIFICATION. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the state of Iowa with corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus; and the Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify and be in good standing would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company. (ii) PUBLIC UTILITY. The Company has the legal right to function and operate as an electric public utility company in the States of Iowa, Illinois and South Dakota, and as a gas public utility company in the States of Iowa, Illinois, South Dakota and Nebraska. (iii) SUBSIDIARIES. The Company has no significant subsidiaries, as "significant subsidiary" is defined in Rule 405 of Regulation C of the rules and regulations ("1933 Act Regulations") promulgated by the Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as amended ("1933 Act"). 4 (iv) REGISTRATION STATEMENT AND PROSPECTUS. At the time the Registration Statement became effective, the Registration Statement complied, and as of the applicable Representation Date will comply, in all material respects, with the requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act and the rules and regulations of the SEC promulgated thereunder. The Registration Statement, at the time it became effective, did not, and at each time thereafter at which any amendment to the Registration Statement becomes effective or any Annual Report on Form 10-K is filed by the Company with the SEC and as of each Representation Date, will not, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus, as of the date hereof does not, and as of each Representation Date will not, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; PROVIDED, HOWEVER, that the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by the Agent expressly for use in the Registration Statement or Prospectus. (v) INCORPORATED DOCUMENTS. The documents incorporated by reference in any Preliminary Prospectus or the Prospectus, at the time they were or hereafter are filed with the SEC, complied or when so filed will comply, as the case may be, in all material respects with the requirements of the 1934 Act and the rules and regulations promulgated thereunder ("1934 Act Regulations"), and, when read together with the other information in the Prospectus, did not and will at all times during the period specified in Section 4(e) hereof not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were or are made, not misleading. (vi) ACCOUNTANTS. The accountants who issued their reports on the financial statements included or incorporated by reference in the Prospectus are independent public accountants within the meaning of the 1933 Act and the 1933 Act Regulations. 5 (vii) FINANCIAL STATEMENTS. The financial statements and any supporting schedules of the Company included or incorporated by reference in the Registration Statement and the Prospectus present fairly the financial position of the Company as of the dates indicated and the results of its operations for the periods specified; and, except as stated therein, said financial statements have been prepared in conformity with generally accepted accounting principles in the United States applied on a consistent basis; and any supporting schedules included in the Registration Statement present fairly the information required to be stated therein. (viii) AUTHORIZATION AND VALIDITY OF THIS AGREEMENT, THE INDENTURE AND THE NOTES. This Agreement has been duly authorized and, upon execution and delivery by the Agent, will be a valid and binding agreement of the Company; the Indenture has been duly authorized and constitutes a valid and binding obligation of the Company enforceable in accordance with its terms; the Notes have been duly and validly authorized for issuance, offer and sale pursuant to this Agreement and, when issued, authenticated and delivered pursuant to the provisions of this Agreement and the Indenture against payment of the consideration therefor specified in the Prospectus or pursuant to any Terms Agreement, the Notes will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms; except as enforcement of the Indenture and the Notes may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting the enforcement of creditors' rights generally and general equitable principles; the Notes and the Indenture will be substantially in the form heretofore delivered to the Agent and conform in all material respects to all statements relating thereto contained in the Prospectus; and the Notes will be entitled to the benefits provided by the Indenture. (ix) MATERIAL CHANGES OR MATERIAL TRANSACTIONS. Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as may otherwise be stated therein or contemplated thereby, (A) there has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company, whether or not arising in the ordinary course of business and (B) there have been no 6 material transactions entered into by the Company other than those in the ordinary course of business. (x) NO DEFAULTS. The Company is not in violation of its Articles of Incorporation or bylaws, or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which it is a party or by which it or its properties may be bound; the execution and delivery of this Agreement and the Indenture and the consummation of the transactions contemplated herein, therein and pursuant to any applicable Terms Agreement have been duly authorized by all necessary corporate action and will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Company is a party or by which it may be bound or to which any of the property or assets of the Company is subject, nor will such action result in any violation of the Articles of Incorporation or bylaws of the Company or any law, administrative regulation or administrative or court order or decree. (xi) REGULATORY APPROVALS. the Company has made all necessary filings and obtained all necessary consents, orders or approvals from the Federal Energy Regulatory Commission ("FERC") and the Illinois Commerce Commission ("ICC") in connection with the issuance and sale of the Notes, and no consent, approval, authorization, order or decree of any other court or governmental agency or body is required for the consummation by the Company of the transactions contemplated by this Agreement, except such as may be required under state securities ("Blue Sky") laws. (xiii) LEGAL PROCEEDINGS; CONTRACTS. Except as may be set forth in the Registration Statement, there is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Company, threatened against or affecting, the Company which might, in the opinion of the Company, result in any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company, or might materially and adversely affect its properties or assets or might materially and adversely affect the consummation of this Agreement, the 7 Indenture or any applicable Terms Agreement; and there are no contracts or documents of the Company which are required to be filed as exhibits to the Registration Statement by the 1939 Act or by the 1933 Act Regulations which have not been so filed. (xiii) FRANCHISES. The Company holds valid and subsisting franchises, licenses and permits authorizing it to carry on the respective utility businesses in which it is engaged in the territories from which substantially all of its gross operating revenue is derived. (x) HOLDING COMPANY. The Company is not a holding company, or a subsidiary company of a holding company, as such terms are defined in the Public Utility Hold Company Act of 1935, as amended. On December 1, 1996, the Company will become or became a subsidiary company of MidAmerican Energy Holdings Company, which on such date became or will become a holding company which, together with the Company, is exempt from regulation under such Act, except under Section 9(a)(2) thereof. (b) ADDITIONAL CERTIFICATIONS. Any certificate signed by any director or officer of the Company and delivered to the Agent or to counsel for the Agent in connection with an offering of Notes or the sale of Notes to the agent as principal shall be deemed a representation and warranty by the Company to the Agent as to the matters covered thereby on the date of such certificate and at each Representation Date subsequent thereto. SECTION 3. SOLICITATIONS AS AGENT; PURCHASES AS PRINCIPAL. (a) SOLICITATIONS AS AGENT. On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, the Agent agrees, as the agent of the Company, to use its reasonable efforts to solicit offers to purchase the Notes upon the terms and conditions set forth herein and in the Prospectus. The Company reserves the right, in its sole discretion, to suspend solicitation of purchases of the Notes through the Agent, as agent, commencing at any time for any period of time or permanently. Upon receipt of instructions from the Company, the Agent will forthwith suspend solicitation of purchases from the Company until such time as the Company has advised the Agent that such solicitation may be resumed. 8 The Company agrees to pay the Agent a commission, in the form of a discount, equal to the applicable percentage of the principal amount of each Note sold by the Company as a result of a solicitation made by such Agent as set forth in Schedule A hereto. The Agent may allow any portion of the commission payable pursuant hereto to dealers or purchasers in connection with the offer and sale of any Notes. The purchase price, interest rate, maturity date and other terms of the Notes shall be agreed upon by the Company and the Agent and set forth in a pricing supplement to the Prospectus to be prepared following each acceptance by the Company of an offer for the purchase of Notes. Except as may be otherwise provided in such supplement to the Prospectus, the Notes will be issued in denominations of $100,000 or any larger amount that is an integral multiple of $1,000. All Notes sold through the Agent as agent will be sold at 100% of their principal amount unless otherwise agreed to by the Company and the Agent. (b) PURCHASES AS PRINCIPAL. Each sale of Notes to the Agent as principal shall be made in accordance with the terms contained herein and (unless the Company and the Agent shall otherwise agree) pursuant to a separate agreement which will provide for the sale of such Notes to, and the purchase and reoffering thereof by, the Agent. Each such separate agreement (which may be an oral agreement) between the Agent and the Company is herein referred to as a "Terms Agreement". Unless the context otherwise requires, each reference contained herein to "this Agreement" shall be deemed to include any applicable Terms Agreement between the Company and the Agent. Each such Terms Agreement, whether oral or in writing, shall be with respect to such information (as applicable) as is specified in Exhibit A hereto. The Agent's commitment to purchase Notes as principal pursuant to any Terms Agreement or otherwise shall be deemed to have been made on the basis of the representations and warranties of the Company herein contained and shall be subject to the terms and conditions herein set forth. Each Terms Agreement shall specify the principal amount of Notes to be purchased by the Agent pursuant thereto, the price to be paid to the Company for such Notes (which, if not so specified in a Terms Agreement, shall be at a discount equivalent to the applicable commission set forth in Schedule A hereto), the time and place of delivery of and payment for such Notes, any provisions relating to rights of, and default by purchasers acting together with the Agent in the reoffering of the Notes, and such other provisions (including further terms of the Notes) as may be mutually agreed upon. The Agent may utilize a selling or dealer group in connection with the resale of the Notes purchased. Such Terms 9 Agreement shall also specify the requirements for the officers' certificate, opinions of counsel and comfort letter pursuant to Sections 7(b), 7(c) and 7(d) hereof. (c) ADMINISTRATIVE PROCEDURES. Administrative procedures with respect to the sale of Notes shall be agreed upon from time to time by the Agent and the Company (the "Procedures"). The Agent and the Company agree to perform the respective duties and obligations specifically provided to be performed by them in the Procedures. SECTION 4. COVENANTS OF THE COMPANY. The Company covenants with the Agent as follows: (a) RULE 424(B) FILING. Promptly following execution of this Agreement, to cause the Prospectus, including as part thereof a prospectus supplement relating to the Notes, to be filed with, or mailed for filing to, the SEC pursuant to Rule 424(b)(2) and (3) under the 1933 Act and the Company will promptly advise the Agent when such filing or mailing has been made. Prior to such filing or mailing, the Company will cooperate with the Agent in the preparation of such supplement to the Prospectus to assure that the Agent has no reasonable objection to the form or content thereof when filed or mailed. (b) FERC OR ICC ACTION. To advise the Agent promptly of any additional action by the FERC or ICC pertaining to the Notes; (c) COPIES OF 1933 ACT DOCUMENTS. To furnish promptly to the Agent and to counsel for the Agent one signed copy of the Registration Statement as originally filed and such amendment thereto filed prior to the date hereof and relating to the Notes, and a copy of the Prospectus filed with the SEC, including all documents incorporated therein by reference and all consents and exhibits filed therewith; (d) CONFORMED COPIES. To deliver promptly to the Agent such reasonable number of the following documents as the Agent may request: (i) conformed copies of the Registration Statement (excluding exhibits other than the computation of the ratio of earnings to fixed charges, the Indenture, and this Agreement), (ii) the Prospectus and (iii) any documents incorporated by reference in the Prospectus; 10 (e) REVISIONS OF PROSPECTUS -- MATERIAL CHANGES. Except as otherwise provided in subsection (q) of this Section, if at any time during the term of this Agreement any event shall occur or condition exist as a result of which it is necessary, in the reasonable opinion of counsel for the Agent or counsel for the Company, to further amend or supplement the Prospectus in order that the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time the Prospectus is delivered to a purchaser, or if it shall be necessary, in the reasonable opinion of either such counsel, to amend or supplement the Registration Statement or the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations, immediate notice shall be given, and confirmed in writing, to the Agent to cease the solicitation of offers to purchase the Notes in the Agent's capacity as agent and to cease sales of any Notes the Agent may then own as principal pursuant to a Terms Agreement, and the Company will promptly prepare and file with the SEC such amendment or supplement, whether by filing documents pursuant to the 1934 Act, the 1933 Act or otherwise, as may be necessary to correct such untrue statement or omission or to make the Registration Statement and Prospectus comply with such requirements. (f) AGENT'S REVIEW. Prior to filing with the SEC during the period referred to in Section 4(e) hereof, (i) any amendment to the Registration Statement, (ii) the Prospectus or any supplement thereto or (iii) any document incorporated by reference in any of the foregoing or any amendment or supplement to such incorporated document, to furnish a copy thereof to the Agent and to counsel for the Agent, and the Company will not file any amendment to the Registration Statement or supplement to the Prospectus unless the Company has furnished to the Agent a copy of such document for review prior to filing and will not file any such proposed amendment or supplement to which the Agent reasonably objects; (g) NOTICES TO AGENT. To advise the Agent promptly during the period referred to in Section 4(e) hereof, (i) when any post-effective amendment to the Registration Statement becomes effective, (ii) of any request or proposed request by the SEC for an amendment or supplement to the Registration Statement, to the Prospectus, to any document incorporated by reference in any of the foregoing or for any additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or any order directed to the Prospectus or any document incorporated therein by reference or the initiation or 11 threat of any stop order proceeding or of any challenge by the SEC to the accuracy or adequacy of any document incorporated by reference in the Prospectus, (iv) of receipt by the Company of any notification with respect to the suspension of the qualification of the Notes for sale in any jurisdiction or the initiation or threat of any proceeding for that purpose and (v) of the happening of any event which makes untrue any statement of a material fact made in the Registration Statement (insofar as the Registration Statement relates to or covers the Notes) or the Prospectus or which requires the making of a change in the Registration Statement or the Prospectus in order to make any material statement therein not misleading; (h) PREPARATION OF PRICING SUPPLEMENTS. The Company will prepare, with respect to any Notes to be sold through or to the Agent pursuant to this Agreement, a Pricing Supplement with respect to such Notes in a form previously approved by the Agent and will file such Pricing Supplement pursuant to Rule 424(b)(3) under the 1933 Act not later than the close of business of the SEC on the fifth business day after the date on which such Pricing Supplement is first used. (i) PROSPECTUS REVISIONS -- PERIODIC FINANCIAL INFORMATION. Except as otherwise provided in subsection (q) of this Section, on or prior to the date on which there shall be released to the general public interim financial statement information related to the Company with respect to each of the first three quarters of any fiscal year or preliminary financial statement information with respect to any fiscal year, the Company shall furnish such information to the Agent, confirmed in writing, and shall cause the Prospectus to be amended or supplemented to include or incorporate by reference financial information with respect thereto and corresponding information for the comparable period of the preceding fiscal year, as well as such other information and explanations as shall be necessary for an understanding thereof or as shall be required by the 1933 Act or the 1933 Act Regulations. (j) PROSPECTUS REVISIONS -- AUDITED FINANCIAL INFORMATION. Except as otherwise provided in subsection (q) of this Section, on or prior to the date on which there shall be released to the general public financial information included in or derived from the audited financial statements of the Company for the preceding fiscal year, the Company shall cause the Registration Statement and the Prospectus to be amended, whether by the filing of documents pursuant to the 1934 Act, the 1933 Act or otherwise, to include or incorporate by reference such audited financial statements and the report or reports, and consent or consents to such inclusion or 12 incorporation by reference, of the independent accountants with respect thereto, as well as such other information and explanations as shall be necessary for an understanding of such financial statements or as shall be required by the 1933 Act or the 1933 Act Regulations. (k) STOP ORDER. If, during the period referred to in Section 4(e) hereof, the SEC shall issue a stop order suspending the effectiveness of the Registration Statement, to make every reasonable effort to obtain the lifting of that order at the earliest possible time; (l) EARNINGS STATEMENT. As soon as practicable, to make generally available to its security holders and to deliver to the Agent an earnings statement, conforming with the requirements of Section 11(a) of the 1933 Act and Rule 158 of the 1933 Act Regulations, covering a period of at least twelve months beginning after the effective date of the Registration Statement as defined in Rule 158(c) of the 1933 Act Regulations; (m) SHAREHOLDER AND OTHER REPORTS. During the period of five years hereafter, or such lesser period as any of the Notes shall be outstanding, to furnish to the Agent, (i) as soon as available, a copy of each report of the Company mailed to its shareholders or report filed by the Company with the SEC and (ii) from time to time such other information concerning the Company as the Agent may reasonably request; (n) BLUE SKY QUALIFICATIONS. The Company will endeavor, in cooperation with the Agent, to qualify the Notes for offering and sale under the applicable securities laws of such states and other jurisdictions of the United States as the Agent may designate, and will maintain such qualifications in effect for as long as may be required for the distribution of the Notes; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation in any jurisdiction in which it is not so qualified. The Company will file such statements and reports as may be required by the laws of each jurisdiction in which the Notes have been qualified as above provided. The Company will promptly advise the Agent of the receipt by the Company of any notification with respect to the suspension of the qualification of the Notes for sale in any such state or jurisdiction or the initiating or threatening of any proceeding for such purpose. (o) 1934 ACT FILINGS. The Company, during the period when the Prospectus is required to be delivered under the 1933 Act, will 13 file promptly all documents required to be filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act. (p) STAND-OFF AGREEMENT. If required pursuant to the terms of a Terms Agreement, between the date of any Terms Agreement and the Settlement Date with respect to such Terms Agreement, the Company will not, without the Agent's prior consent, offer or sell, or enter into any agreement to sell, any debt securities of the Company (other than the Notes that are to be sold pursuant to such Terms Agreement and commercial paper in the ordinary course of business). (q) SUSPENSION OF CERTAIN OBLIGATIONS. The Company shall not be required to comply with the provisions of subsections (e), (i) or (j) of this Section 4 during any period from the time (i) the Agent shall have suspended solicitation of purchases of the Notes in its capacity as agent pursuant to a request from the Company and (ii) the Agent shall not then hold any Notes as principal purchased pursuant to a Terms Agreement, to the time the Company shall determine that solicitation of purchases of the Notes should be resumed or shall subsequently enter into a new Terms Agreement with the Agent. (r) CONDITION TO AGENCY TRANSACTIONS. Any person who has agreed to purchase Notes as the result of an offer to purchase solicited by the Agent shall have the right to refuse to purchase and pay for such Notes if, on the related settlement date fixed pursuant to the Procedures, (i) there has been, since the date on which such person agreed to purchase the Notes (the "Trade Date"), or since the respective dates as of which information is given in the Registration Statement, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company, whether or not arising in the ordinary course of business, or (ii) there shall have occurred any outbreak or escalation of hostilities or other national or international calamity or crisis the effect of which is such as to make it, in the judgment of such person, impracticable or inadvisable to purchase the Notes, or (iii) trading in any securities of the Company has been suspended by the SEC or a national securities exchange, or if trading generally on either the American Stock Exchange or the New York Stock Exchange shall have been suspended, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required, by either of said exchanges or by order of the SEC or any other governmental authority, or if a banking moratorium shall have been declared by either Federal or New York authorities, or (iv) the rating assigned by any nationally recognized securities rating 14 agency to any debt securities of the Company as of the Trade Date shall have been lowered since that date or if any such rating agency shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any debt securities of the Company. (s) COSTS. To pay all costs incident to the authorization, issuance, sale and delivery of the Notes; the costs incident to the preparation, printing and filing under the 1933 Act of the Registration Statement and the Prospectus and any amendments, supplements and exhibits thereto; the costs incident to the preparation, printing and filing of the documents and any amendments and exhibits thereto required to be filed by the Company under the 1934 Act; the costs of distributing the Registration Statement as originally filed and each amendment and post-effective amendment thereof (including exhibits), any Preliminary Prospectus, the Prospectus and any documents incorporated by reference in any of the foregoing documents; the costs of printing this Agreement, the Indenture and any Terms Agreement; the costs of any filings with the National Association of Securities Dealers, Inc.; fees paid to rating agencies in connection with the rating of the Notes; the fees and expenses of qualifying the Notes under the securities laws of the several jurisdictions as provided in Section 4(n) hereof and of preparing and printing a Blue Sky Memorandum, (including fees of counsel to the Agent not to exceed $1,000 in the aggregate); the reasonable fees and expenses of counsel for the Agent; and all other costs and expenses incident to the performance of the Company's obligations under this Agreement; PROVIDED that, except as provided in this Section 4(s),the Agent shall pay its own costs and expenses, any transfer taxes on the Notes which they may sell and the expenses of advertising any offering of the Notes made by the Agent; SECTION 5. CONDITIONS OF OBLIGATIONS. The obligations of the Agent to solicit offers to purchase the Notes as agent of the Company, the obligations of any purchasers of the Notes sold through the Agent as agent, and any obligation of the Agent to purchase Notes pursuant to a Terms Agreement or otherwise will be subject to the accuracy of the representations and warranties on the part of the Company herein and to the accuracy of the statements of the Company's officers made in any certificate furnished pursuant to the provisions hereof, to the performance and observance by the Company of all its covenants and agreements herein contained and to each of the following additional terms and conditions applicable to the Notes: 15 (a) NO STOP ORDER. No stop order suspending the effectiveness of the Registration Statement nor any order directed to any document incorporated by reference in the Prospectus shall have been issued and prior to that time no stop order proceeding shall have been initiated or threatened by the SEC and no challenge shall have been made by the SEC to the accuracy or adequacy of any document incorporated by reference in the Prospectus; any request of the SEC for inclusion of additional information in the Registration Statement or the Prospectus or otherwise shall have been complied with and there shall be no material adverse change in the financial condition of the Company; (b) LEGAL MATTERS. All corporate proceedings and other legal matters incident to the authorization, form and validity of this Agreement, the Indenture, any Terms Agreement, the Notes, the form of the Registration Statement, the Prospectus (other than financial statements and other financial data) and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be satisfactory in all respects to Sidley & Austin, counsel for the Agent, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters; (c) OPINION OF COMPANY COUNSEL. John A. Rasmussen, Jr., Esq., counsel to the Company, shall have furnished to the Agent a letter addressed to the Agent and dated the date hereof stating his opinion to the effect that: (i) the Company is a validly organized and existing corporation in good standing under the laws of the State of Iowa; and the Company is a subsidiary of MidAmerican Energy Holdings Company, an Iowa corporation, both of which are exempt from regulation under the Public Utility Holding Company Act of 1935, as amended, except under Section 9(a)(2) thereof; (ii) this Agreement and each Terms Agreement, if any, has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company in accordance with its terms, except as rights to indemnity hereunder may be limited by applicable law and except as enforcement hereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally and general principles of equity; 16 (iii) the Indenture is in due and proper form, has been duly and validly authorized by the necessary corporate action, has been duly and validly executed and delivered and is a valid instrument legally binding on the Company, except as enforcement thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally or by general equitable principles; (iv) the Notes are in due and proper form; the issue and sale of the Notes by the Company in accordance with the terms of this Agreement have been duly and validly authorized by the necessary corporate action; the Notes, when duly executed (which execution may include facsimile signatures of officers of the Company), authenticated and delivered to the purchasers or to the Agent pursuant to any Terms Agreement, against payment of the agreed consideration therefor, will constitute legal, valid and binding obligations of the Company enforceable in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting enforcement of creditors' rights generally or by general equitable principles; and each holder of Notes will be entitled to the benefits of the Indenture; (v) the Notes, the Indenture and any Terms Agreement conform as to legal matters with the statements concerning them made in the Prospectus, and such statements accurately set forth the matters respecting the Notes, the Indenture and the Terms Agreement required to be set forth in the Prospectus; (vi) the Indenture is qualified under the 1939 Act; (vii) the orders of the FERC and the ICC referred to in Section 2(a)(xi) hereof pertaining to the Notes have been duly entered and, to the best of the knowledge of such counsel, are still in force and effect; and no further approval, authorization, consent, certificate or order of any state or federal commission or regulatory authority (other than in connection or compliance with the provisions of the securities or Blue Sky laws of any jurisdiction) is necessary with respect to the issue and sale of the Notes as contemplated by this Agreement; 17 (viii) the Registration Statement has become effective under the 1933 Act and, to the best of the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or threatened under the 1933 Act; (ix) the Registration Statement and the Prospectus and each amendment or supplement thereto comply as to form in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations (except that such counsel need express no opinion as to the financial statements and financial or statistical data contained therein); (x) such counsel does not know of any legal or governmental proceeding required to be described in the Prospectus which is not described as required, or of any contract or document of a character required to be described or incorporated in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement which is not described, incorporated or filed as required; (xi) neither the execution and delivery of this Agreement and the Indenture nor the issuance and sale of the Notes in accordance with the terms of this Agreement or Terms Agreement nor the consummation of the transactions therein contemplated, nor compliance with the terms and provisions thereof, will conflict with, violate or result in a breach of any law, any administrative regulation or any court decree known to such counsel to be applicable to the Company, conflict with or result in a breach of any of the terms, conditions or provisions of the Articles of Incorporation or the by-laws of the Company or of any material agreement or instrument known to such counsel to which the Company is a party or by which the Company is bound or constitute a default thereunder, or result in the creation or imposition of any lien, charge or encombrance of any nature whatsoever upon any of the properties or assets of the Company; (xii) the documents referred to in Section 2(a)(v) hereof, as of their respective filing dates, complied as to form in all material respects with the applicable requirements of the 1934 Act and the 1934 Act Regulations (except that such counsel does not need to express any opinion as to the financial statements and financial or statistical data contained therein); 18 (xiii) the statements made in the Prospectus which are stated therein to have been made on the authority of such counsel have been reviewed by him and, as to matters of law and legal conclusion, are correct; (xiv) the Company is a public utility authorized by its Articles of Incorporation to carry on the businesses in which it is engaged, as set forth in the Prospectus; the Company has the legal right to function and operate as an electric public utility company in the States of Iowa, Illinois and South Dakota, and as a gas public utility company in the States of Iowa, Illinois, South Dakota and Nebraska; and the franchises and permits of the Company are valid and subsisting and authorize the Company to carry on the utility businesses in which it is engaged in the communities and territory covered by such franchises and permits; (xv) the descriptions in the Registration Statement and the Prospectus of statutes, legal and governmental proceedings and contracts and other documents are accurate and fairly present the information required to be presented; and (xvi) except as set forth in the Prospectus, (A) there are no pending legal proceedings to which the Company is a party or in which any of its property is the subject which are material to the Company, other than ordinary routine legal proceedings incident to the business in which the Company is engaged, and (B) there are no material pending administrative or judicial proceedings to which the Company is a party or in which any of its property is the subject arising under any federal, state or local provisions regulating the discharge of materials into the environment or otherwise relating to the protection of the environment, and, to the best of the knowledge of said counsel, no such proceedings are threatened by governmental authorities; and such letter shall additionally state that nothing has come to the attention of such counsel that would lead him to believe that the Registration Statement, at the time it became effective, and if an amendment to the Registration Statement or an Annual Report on Form 10-K has been filed by the Company with the SEC subsequent to the effectiveness of the Registration Statement, then at the time such amendment became effective or at the time of the most recent such filing, and at the date hereof, or (if such opinion is being delivered in connection with a Terms Agreement pursuant to Section 3(b) hereof) at the date of any Terms Agreement and at the Settlement Date with respect thereto as the case may be, contains 19 or contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus as amended or supplemented at the date hereof, or (if such opinion is being delivered in connection with a Terms Agreement pursuant to Section 3(b) hereof) at the date of any Terms Agreement and at the Settlement Date with respect thereto, as the case may be, contains or contained any untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (d) OFFICERS' CERTIFICATE. The Company shall have furnished to the Agent on the date hereof a certificate, dated the date hereof, of its Chairman of the Board, its President or a Vice President and its Treasurer or an Assistant Treasurer stating that, to the best of their knowledge after reasonable investigation, the representations and warranties of the Company in Section 2 hereof are true and correct as of the date hereof; the Company has complied with all its agreements contained herein; and the conditions set forth in Sections 5(a), 5(g), 5(h)and 5(i) hereof have been fulfilled; (e) COMFORT LETTER. On the date hereof, the Agent shall have received a letter from Arthur Andersen LLP. dated as of the date hereof and in form and substance satisfactory to the Representative, to the effect that: (i) They are independent public accountants with respect to the Company within the meaning of the 1933 Act and the 1933 Act Regulations. (ii) In their opinion, the financial statements and supporting schedule(s) of the Company audited by them and included or incorporated by reference in the Registration Statement comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations with respect to registration statements on Form S-3 and the 1934 Act and the 1934 Act Regulations. (iii) They have performed specified procedures, not constituting an audit, including a reading of the latest available interim financial statements of the Company, a reading of the minute books of the Company since the end of the most recent fiscal year with respect to which an audit report has been issued, inquiries of and 20 discussions with certain officials of the Company responsible for financial and accounting matters with respect to the unaudited consolidated financial statements of the Company included in the Registration Statement and Prospectus and the latest available interim unaudited financial statements of the Company, and such other inquiries and procedures as may be specified in such letter, and on the basis of such inquiries and procedures nothing came to their attention that caused them to believe that: (A) the unaudited consolidated financial statements of the Company included in the Registration Statement and Prospectus do not comply as to form in all material respects with the applicable accounting requirements of the 1934 Act and the 1934 Act Regulations or were not fairly presented in conformity with generally accepted accounting principles in the United States applied on a basis substantially consistent with that of the audited financial statements included therein, or (B) at a specified date not more than five days prior to the date of such letter, there was any change in the capital stock or any increase in long-term debt of the Company or any decrease in the common shareholders' equity of the Company other than for the declaration of regular quarterly dividends, in each case as compared with the amounts shown on the most recent balance sheet of the Company included in the Registration Statement and Prospectus or, during the period from the date of such balance sheet to a specified date not more than five days prior to the date of such letter, there were any decreases, as compared with the corresponding period in the preceding year, in operating revenues or net income of the Company, except in each such case as set forth in or contemplated by the Registration Statement and Prospectus or except for such exceptions (e.g. inability to determine such decreases because of insufficient accounting information available after the date of such most recent balance sheet) enumerated in such letter as shall have been agreed to by the Representative and the Company. (iv) In addition to the examination referred to in their report included or incorporated by reference in the Registration Statement and the Prospectus, and the limited procedures referred to in clause (iii) above, they have carried out certain other specified procedures, not constituting an audit, with respect to certain amounts, percentages and financial information which are 21 included or incorporated by reference in the Registration Statement and Prospectus and which are specified by the Agent, and have found such amounts, percentages and financial information to be in agreement with the relevant accounting, financial and other records of the Company identified in such letter. (f) ADDITIONAL COMFORT LETTER. On the date hereof, the Agent shall have received from Deloitte & Touche LLP a letter dated the date hereof and in form and substance satisfactory to the Agent, to the effect of Section 5(e)(i) and (ii). (g) OPINION OF AGENT'S COUNSEL. Sidley & Austin, as counsel for the Agent, shall have furnished to the Agent the date hereof such opinions with respect to the validity of the Notes and with respect to the Registration Statement, the Prospectus, and other related matters as the Agent may reasonably require; (h) FERC AND ICC ORDERS. The orders of the FERC and ICC referred to in Section 2(p) hereof shall be in full force and effect and no proceedings to suspend the effectiveness of either such order shall be pending or threatened; (i) RATINGS. Subsequent to the execution of this Agreement, there shall not have been any decrease in the ratings of any of the Company's debt securities by Standard & Poor's Rating Service or Moody's Investors Service Inc.; and (j) NO MATERIAL ADVERSE CHANGE. Subsequent to the date of the most recent financial statements incorporated by reference in the Prospectus, there shall have been no material adverse change in the condition (financial or otherwise), business or results of operations of the Company, except as set forth in the Registration Statement and the Prospectus, including the documents incorporated by reference therein, as of the effective date of this Agreement. (k) OTHER DOCUMENTS. On the date hereof and on each Settlement Date with respect to any applicable Terms Agreement, counsel to the Agent shall have been furnished with such documents and opinions as such counsel may reasonably require for the purpose of enabling such counsel to pass upon the issuance and sale of Notes as herein contemplated and related proceedings, or in order to evidence the accuracy and completeness of any of the representations and warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the 22 Company in connection with the issuance and sale of Notes as herein contemplated shall be satisfactory in form and substance to the Agent and to counsel to the Agent. If any condition specified in this Section 5 shall not have been fulfilled when and as required to be fulfilled, this Agreement (or, at the option of the Agent, any applicable Terms Agreement) may be terminated by the Agent by notice to the Company at any time and any such termination shall be without liability of any party to any other party, except that the covenant regarding provision of an earnings statement set forth in Section 4(l) hereof, the provisions concerning payment of expenses under Section 4(s) hereof, the indemnity and contribution agreement set forth in Section 9 hereof, the provisions concerning the representations, warranties and agreements to survive delivery in Section 10 hereof and the provisions set forth under "Parties" of Section 14 hereof shall remain in effect. Section 6. Conditions to the Obligations of the Company. The obligations of the Company to sell and deliver the Notes are subject to the following conditions precedent: (a) NO STOP ORDER. At or before the date hereof, no stop order suspending the effectiveness of the Registration Statement nor any order directed to any document incorporated by reference in the Prospectus shall have been issued and prior to that time no stop order proceeding shall have been initiated or threatened by the SEC and no challenge shall have been made by the SEC to the accuracy or adequacy of any document incorporated by reference in the Prospectus; any request of the SEC for inclusion of additional information in the Registration Statement or the Prospectus or otherwise shall have been complied with; and (b) FERC AND ICC ORDERS. The orders of the FERC and the ICC referred to in Section (2)(a)(xi) hereof shall be in full force and effect and no proceeding to suspend the effectiveness of such order shall be pending or threatened. In case any of the conditions specified above in this Section 6 shall not have been fulfilled on the date hereof, this Agreement may be terminated by the Company by delivering written notice of termination to the Agent. Any such termination shall be without liability of any party to any other party except to the extent provided in Sections 4(s), and 9 hereof. 23 SECTION 7. DELIVERY OF AND PAYMENT FOR NOTES SOLD THROUGH THE AGENT. Delivery of Notes sold through the Agent as agent shall be made by the Company to such Agent for the account of any purchaser only against payment therefor in immediately available funds. In the event that a purchaser shall fail either to accept delivery of or to make payment for a Note on the date fixed for settlement, the Agent shall promptly notify the Company and deliver the Note to the Company, and, if the Agent has theretofore paid the Company for such Note, the Company will promptly return such funds to the Agent. If such failure occurred for any reason other than default by the Agent in the performance of its obligations hereunder, the Company will reimburse the Agent on an equitable basis for its loss of the use of the funds for the period such funds were credited to the Company's account. SECTION 8 ADDITIONAL COVENANTS OF THE COMPANY. The Company covenants and agrees with the Agent that: (a) REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Each acceptance by the Company of an offer for the purchase of Notes, and each delivery of Notes to the Agent pursuant to a Terms Agreement, shall be deemed to be an affirmation by the Company that the representations and warranties of the Company contained in this Agreement and in any certificate theretofore delivered to the Agent pursuant hereto are true and correct at the time of such acceptance or sale, as the case may be, and an undertaking that such representations and warranties will be true and correct at the time of delivery to the purchaser or the agent of such purchaser, or to the Agent, of the Note or Notes relating to such acceptance or sale, as the case may be, as though made at and as of each such time (and it is understood that such representations and warranties shall relate to the Registration Statement and Prospectus as amended and supplemented to each such time). (b) SUBSEQUENT DELIVERY OF CERTIFICATES. Each time that the Registration Statement or the Prospectus shall be amended or supplemented (other than by an amendment or supplement providing solely for a change in the interest rates of Notes or similar changes, and, unless the Agent shall otherwise specify, other than by an amendment or supplement which relates exclusively to an offering of securities other than the Notes) or there is filed with the SEC any document incorporated by reference into the Prospectus (other than any Current Report on Form 8-K relating exclusively to the issuance of securities other than Notes under the Registration 24 Statement, unless the Agent shall otherwise specify) or (if required pursuant to the terms of a Terms Agreement) the Company sells Notes to the Agent pursuant to a Terms Agreement, the Company shall furnish or cause to be furnished to the Agent forthwith a certificate dated the date of filing with the SEC of such supplement or document, the date of effectiveness of such amendment, or the date of such sale, as the case may be, in form satisfactory to the Agent to the effect that the statements contained in the certificate referred to in Section 5(d) hereof which was last furnished to the Agent is true and correct at the time of such amendment, supplement, filing or sale, as the case may be, as though made at and as of such time (except that such statements shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to such time) or, in lieu of such certificate, a certificate of the same tenor as the certificate referred to in said Section 5(d), modified as necessary to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such certificate. (c) SUBSEQUENT DELIVERY OF LEGAL OPINIONS. Each time that the Registration Statement or the Prospectus shall be amended or supplemented (other than by an amendment or supplement providing solely for a change in the interest rates of the Notes or similar changes or solely for the inclusion of additional financial information, and, unless the Agent shall otherwise specify, other than by an amendment or supplement which relates exclusively to an offering of securities other than the Notes) or there is filed with the SEC any document incorporated by reference into the Prospectus (other than any Current Report on Form 8-K or Quarterly Report on Form 10-Q, unless the Agent shall otherwise specify), or (if required pursuant to the terms of a Terms Agreement) the Company sells Notes to the Agent pursuant to a Terms Agreement, the Company shall furnish or cause to be furnished forthwith to the Agent and to counsel to the Agent a written opinion of John A. Rasmussen, Jr., Esq., counsel to the Company, or other counsel satisfactory to the Agent, dated the date of filing with the SEC of such supplement or document, the date of effectiveness of such amendment, or the date of such sale, as the case may be, in form and substance satisfactory to the Agent, of the same tenor as the opinion referred to in Section 5(c) hereof, but modified, as necessary, to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such opinion; or, in lieu of such opinion, counsel last furnishing such opinion to the Agent shall furnish the Agent with a letter to the effect that the Agent may rely on such last opinion to the same extent as though it was dated the date of such letter authorizing reliance (except that 25 statements in such last opinion shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such letter authorizing reliance). (d) SUBSEQUENT DELIVERY OF COMFORT LETTERS. Each time that the Registration Statement or the Prospectus shall be amended or supplemented to include additional financial information or there is filed with the SEC any document incorporated by reference into the Prospectus which contains additional financial information or, (if required pursuant to the terms of a Terms Agreement) the Company sells Notes to the Agent pursuant to a Terms Agreement, the Company shall cause Arthur Andersen LLP forthwith to furnish the Agent a letter, dated the date of effectiveness of such amendment, supplement or document with the SEC , or the date of such sale, as the case may be, in form satisfactory to the Agent, of the same tenor as the portions of the letter referred to in clauses (i) and (ii) of Section 5(e) hereof but modified to relate to the Registration Statement and Prospectus, as amended and supplemented to the date of such letter, and of the same general tenor as the portions of the letter referred to in clauses (iii) and (iv) of said Section 5(e) with such changes as may be necessary to reflect changes in the financial statements and other information derived from the accounting records of the Company; PROVIDED, HOWEVER, that if the Registration Statement or the Prospectus is amended or supplemented solely to include financial information as of and for a fiscal quarter, Arthur Andersen LLP may limit the scope of such letter to the unaudited financial statements included in such amendment or supplement unless any other information included therein of an accounting, financial or statistical nature is of such a nature that, in the reasonable judgment of the Agent, such letter should cover such other information. Section 9. Indemnification. (a) INDEMNIFICATION OF THE AGENT. The Company agrees to indemnify and hold harmless the Agent within the meaning of Section 15 of the 1933 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), or the omission or alleged omission therefrom of a material fact necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact contained in the Prospectus (or any amendment or supplement thereto) or the omission or 26 alleged omission therefrom of a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever, as incurred, (including, subject to Section 9(c) hereof, the fees and disbursements of counsel) reasonably incurred in investigating, preparing or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above. PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by the Agent expressly for use in the Registration Statement (or any amendment thereto) or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto); and PROVIDED, FURTHER, that this indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of the Agent from whom the person asserting any such losses, liabilities, claims, damages or expenses purchased Notes, or any person controlling the Agent, if a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any such amendment or supplement thereto, but excluding documents incorporated or deemed to be incorporated by reference therein) was not sent or given by or on behalf of the Agent to such person, if such is required by law, at or prior to the written confirmation of the sale of such Notes to such person and if the Prospectus (as so amended or supplemented, but excluding documents incorporated or deemed to be incorporated by reference therein) would have corrected the defect giving rise to such loss, liability, claim, damage or expense, it being understood that this 27 proviso shall have no application if such defect shall have been corrected in a document which is incorporated or deemed to be incorporated by reference in the Prospectus. (b) INDEMNIFICATION OF THE COMPANY. The Agent agrees to indemnify and hold harmless the Company, its directors, each of its officers who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto) or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by the Agent expressly for use in the Registration Statement (or any amendment thereto) or such preliminary prospectus or the Prospectus (or any amendment or supplement thereto). (c) GENERAL. Each indemnified party shall give prompt notice to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure so to notify an indemnifying party shall not relieve such indemnifying party from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of such action. In no event shall the indemnifying parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. (d) CONTRIBUTION. In order to provide for just and equitable contribution in circumstances in which the indemnity agreements provided for in this Section 9 are for any reason held to be unenforceable by the indemnified parties although applicable in accordance with their terms, the Company and the Agent shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreements incurred by the Company and the Agent, as incurred, in such proportions that the Agent is responsible for that portion represented by the percentage that the total commissions and underwriting discounts received 28 by such Agent to the date of such liability bears to the total sales price from the sale of Notes sold to or through such Agent to the date of such liability and the Company is responsible for the balance; PROVIDED, HOWEVER, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section, each person, if any, who controls the Agent within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as the Agent, and each director of the Company and each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of 1933 Act, shall have the same rights to contribution as the Company. SECTION 10. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company submitted pursuant hereto or thereto, shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of the Agent or any controlling person of any Agent, or by or on behalf of the Company, and shall survive each delivery of and payment for any of the Notes. SECTION 11. TERMINATION. (a) TERMINATION OF THIS AGREEMENT. This Agreement (excluding any Terms Agreement) may be terminated for any reason, at any time by either the Company or the Agent upon the giving of 30 days' written notice of such termination to the other party hereto. (b) TERMINATION OF A TERMS AGREEMENT. The Agent may terminate any Terms Agreement, immediately upon notice to the Company, at any time prior to the Settlement Date relating thereto (i) if there has been, since the date of such Terms Agreement or since the respective dates as of which information is given in the Registration Statement, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, or (ii) if there shall have occurred any material adverse change in the financial markets in the United States or any outbreak or escalation of hostilities or other national or international calamity or crisis the effect of which is 29 such as to make it, in the judgment of Agent, impracticable to market the Notes or enforce contracts for the sale of the Notes, or (iii) if trading in any securities of the Company has been suspended by the SEC or a national securities exchange, or if trading generally on either the American Stock Exchange or the New York Stock Exchange shall have been suspended, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required, by either of said exchanges or by order of the SEC or any other governmental authority, or if a banking moratorium shall have been declared by either Federal or New York authorities, or (iv) if the rating assigned by any nationally recognized securities rating agency to any debt securities of the Company as of the date of any applicable Terms Agreement shall have been lowered since that date or if any such rating agency shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any debt securities of the Company, or (v) if there shall have come to the Agent's attention any facts that would cause the Agent to believe that the Prospectus, at the time it was required to be delivered to a purchaser of Notes, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances existing at the time of such delivery, not misleading. (c) GENERAL. In the event of any such termination, neither party will have any liability to the other party hereto, except that (i) the Agent shall be entitled to any commission earned in accordance with the third paragraph of Section 3(a) hereof, (ii) if at the time of termination (a) the Agent shall own any Notes purchased pursuant to a Terms Agreement with the intention of reselling them or (b) an offer to purchase any of the Notes has been accepted by the Company but the time of delivery to the purchaser or his agent of the Note or Notes relating thereto has not occurred, the covenants set forth in Sections 4 and 7 hereof shall remain in effect until such Notes are so resold or delivered, as the case may be, and (iii) the covenant set forth in Section 4(s) hereof, the indemnity and contribution agreements set forth in Section 9 hereof, and the provisions of Sections 4(s), 10 and 14 hereof shall remain in effect. SECTION 12. NOTICES. Unless otherwise provided herein, all notices required under the terms and provisions hereof shall be in writing, either delivered by hand, by mail or by telex, telecopier or telegram, and 30 any such notice shall be effective when received at the address specified below. If to the Company: MidAmerican Energy Company 666 Grand Avenue Des Moines, Iowa 50309 Attention: Treasurer Fax: 515-242-4261 If to Agent: __________________________________ __________________________________ __________________________________ Attention: __________________________________ or at such other address as such party may designate from time to time by notice duly given in accordance with the terms of this Section 12. SECTION 13. GOVERNING LAW. This Agreement and all the rights and obligations of the parties shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed in the State of New York. Any suit, action or proceeding brought by the Company against the Agent in connection with or arising under this Agreement shall be brought solely in the state or federal court of appropriate jurisdiction located in the Borough of Manhattan, The City of New York. SECTION 14. PARTIES. This Agreement shall inure to the benefit of and be binding upon the Agent and the Company and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the parties hereto and their respective successors and the controlling persons and officers and directors referred to in Section 9 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the parties hereto and respective successors and said controlling persons and officers and directors 31 and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Notes shall be deemed to be a successor by reason merely of such purchase. SECTION 15. Execution in Counterparts. This Agreement may be executed in counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. If the foregoing is in accordance with the Agent's understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument along with all counterparts will become a binding agreement between the Agent and the Company in accordance with its terms. Very truly yours, MIDAMERICAN ENERGY COMPANY By:____________________________ Name: Title: Accepted: ______________________ Agent By: ________________________________ Name: Title: 32 EXHIBIT A The following terms, if applicable, shall be agreed to by the Agent and the Company pursuant to each Terms Agreement: Principal Amount: $_______ Interest Rate: If Fixed Rate Note, Interest Rate: Interest Payment Dates: If Floating Rate Note: Interest Rate Basis: Initial Interest Rate: Initial Interest Reset Date: Spread, if any: Spread Multiplier, if any: Interest Rate Reset: Interest Payment Dates: Index Maturity: Maximum Interest Rate, if any: Minimum Interest Rate, if any: Interest Rate Reset Period: Interest Payment Period: Interest Payment Date: Calculation Agent: If Redeemable: Initial Redemption Date: Initial Redemption Percentage: Annual Redemption Percentage Reduction: Date of Maturity: Purchase Price: ___% Settlement Date and Time: Stand-off Period (if any): Additional Terms: Also, agreement as to whether the following will be required: Legal Opinion pursuant to Section 5(c)of the Distribution Agreement. Officer's Certificate pursuant to Section 5(d) of the Distribution Agreement. Comfort Letter pursuant to Section 5(e) of the Distribution Agreement. SCHEDULE A As compensation for the services of the Agent hereunder, the Company shall pay the Agent, on a discount basis, a commission for the sale of each Note equal to the principal amount of such Note multiplied by the appropriate percentage set forth below: PERCENT OF MATURITY RANGES PRINCIPAL AMOUNT - --------------- ---------------- From 9 months but less than 1 year............. .125% From 1 year but less than 18 months............ .150% From 18 months but less than 2 years........... .200% From 2 years but less than 3 years............. .250% From 3 years but less than 4 years............. .350% From 4 years but less than 5 years............. .450% From 5 years but less than 6 years............. .500% From 6 years but less than 7 years............. .550% From 7 years but less than 10 years............ .600% From 10 years but less than 15 years........... .625% From 15 years but less than 20 years........... .675% From 20 years to 30 years...................... .750% EX-4.C 4 EXHIBIT 4(C) TRUST AGREEMENT--(MAEF I) Exhibit 4(c) TRUST AGREEMENT OF MIDAMERICAN ENERGY FINANCING I This TRUST AGREEMENT of MidAmerican Energy Financing I (the "Trust"), dated as of October 24, 1996, among (i) MidAmerican Energy Company, an Iowa corporation (the "Depositor"), (ii) The First National Bank of Chicago, a national banking association, not in its individual capacity but solely as trustee of the Trust, (iii) First Chicago Delaware Inc., a Delaware corporation, not in its individual capacity but solely as trustee of the Trust, and (iv) Paul J. Leighton, an individual employed by the Depositor, not in his individual capacity but solely as trustee of the Trust (each of such trustees in (ii), (iii) and (iv) a "Trustee" and collectively, the "Trustees"). The Depositor and the Trustees hereby agree as follows: 1. The trust created hereby shall be known as "MidAmerican Energy Financing I", in which name the Trustees, or the Depositor to the extent provided herein, may conduct the business of the Trust, make and execute contracts, and sue and be sued. 2. The Depositor hereby assigns, transfers, conveys and sets over to the Trustees the sum of $10. The Trustees hereby acknowledge receipt of such amount in trust from the Depositor, which amount shall constitute the initial trust estate. The Trustees hereby declare that they will hold the trust estate in trust for the Depositor. It is the intention of the parties hereto that the Trust created hereby constitute a business trust under Chapter 38 of Title 12 of the Delaware Code, 12 DEL. C. S.3801 ET SEQ. (the "Business Trust Act"), and that this document constitutes the governing instrument of the Trust. The Trustees are hereby authorized and directed to execute and file a certificate of trust with the Delaware Secretary of State in accordance with the provisions of the Business Trust Act. 3. The Depositor and the Trustees will enter into an amended and restated Trust Agreement, satisfactory to each such party and substantially in the form to be included as an exhibit to the 1933 Act Registration Statement referred to below, to provide for the contemplated operation of the Trust created hereby and the issuance of the Preferred Securities and Common Securities referred to therein. Prior to the execution and delivery of such amended and restated Trust Agreement, the Trustees shall not have any duty or obligation hereunder or with respect to the trust estate, except as otherwise required by applicable law or as may be necessary to obtain prior to such execution and delivery any licenses, consents or approvals required by applicable law or otherwise. 4. The Depositor and the Trustees hereby authorize and direct the Depositor (i) to file with the Securities and Exchange Commission (the "Commission") and execute, in each case on behalf of the Trust, (a) a Registration Statement on Form S-3 (the "1933 Act Registration Statement"), including any pre-effective or post-effective amendments to the 1933 Act Registration Statement, relating to the registration under the Securities Act of 1933, as amended, of the Preferred Securities of the Trust and certain other securities and (b) a Registration Statement on Form 8-A (the "1934 Act Registration Statement") (including all pre-effective and post-effective amendments thereto) relating to the registration of the Preferred Securities of the Trust under Section 12(b) of the Securities Exchange Act of 1934, as amended; (ii) to file with the New York Stock Exchange (the "Exchange") and execute on behalf of the Trust a listing application and all other applications, statements, certificates, agreements and other instruments as shall be necessary or desirable to cause the Preferred Securities to be listed on the Exchange and (iii) to file and execute on behalf of the Trust such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents as shall be necessary or desirable to register the Preferred Securities under the securities or "Blue Sky" laws of such jurisdictions as the Depositor, on behalf of the Trust, may deem necessary or desirable. In the event that any filing referred to in clauses (i) and (ii) above is required by the rules and regulations of the Commission, the Exchange or state securities or blue sky laws, to be executed on behalf of the Trust by one or more of the Trustees, each of the Trustees, in its or his capacity as Trustee of the Trust, is hereby authorized and, to the extent so required, directed to join in any such filing and to execute on behalf of the Trust any and all of the foregoing, it being understood that The First National Bank of Chicago and First Chicago Delaware Inc., in their capacities as Trustees of the Trust, respectively, shall not be required to join in any such filing or execute on behalf of the Trust any such document unless required by the rules and regulations of the Commission, the Exchange or state securities or blue sky laws. In connection with all of the foregoing, the Depositor and each Trustee, solely in its or his capacity as Trustee of the Trust, hereby constitutes and appoints Phillip G. Lindner, Paul J. Leighton, and J. Sue Rozema, and each of them, as its or his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for the Depositor or such Trustee or in the Depositor's or such Trustee's name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to the 1933 Act Registration Statement and the 1934 Act Registration Statement and to file the same, with all exhibits thereto, and other documents in connection therewith and in connection with the filing of the 1933 Act Registration Statement and the 1934 Act Registration Statement, with the Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as the Depositor or such Trustee might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their respective substitute or substitutes, shall do or cause to be done by virtue hereof. -2- 5. This Trust Agreement may be executed in one or more counterparts. 6. The number of Trustees initially shall be three (3) and thereafter the number of Trustees shall be such number as shall be fixed from time to time by a written instrument signed by the Depositor which may increase or decrease the number of Trustees; provided, however, that to the extent required by the Business Trust Act, one Trustee shall either be a natural person who is a resident of the State of Delaware, or, if not a natural person, an entity which has its principal place of business in the State of Delaware and otherwise meets the requirements of applicable Delaware law. Subject to the foregoing, the Depositor is entitled to appoint or remove without cause any Trustee at any time. The Trustees may resign upon thirty days prior notice to Depositor. 7. First Chicago Delaware Inc., in its capacity as Trustee, shall not have any of the powers or duties of the Trustees set forth herein and shall be a Trustee of the Trust for the sole purpose of satisfying the requirements of Section 3807 of the Business Trust Act. 8. This Trust Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware (without regard to conflict of laws principles). -3- IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed as of the day and year first above written. MIDAMERICAN ENERGY PAUL J. LEIGHTON, not in COMPANY, as Depositor his individual capacity but solely as Trustee By: /s/ J. Sue Rozema By: /s/ Paul J. Leighton -------------------- --------------------------- Name: J. Sue Rozema --------------- Title: Vice President and Treasurer ------------------------------ THE FIRST NATIONAL BANK OF CHICAGO, not in its individual capacity but solely as Trustee By: /s/ Richard D. Manella ---------------------------------- Name: Richard D. Manella -------------------- Title: Vice President ---------------- FIRST CHICAGO DELAWARE INC. not in its individual capacity but solely as Trustee By: /s/ Steven M. Wagner ----------------------------------- Name: Steven M. Wagner ------------------ Title: Vice President ----------------- -4- EX-4.D 5 EXHIBIT 4(D) TRUST AGREEMENT--(MAEF II) Exhibit 4(d) TRUST AGREEMENT OF MIDAMERICAN ENERGY FINANCING II This TRUST AGREEMENT of MidAmerican Energy Financing II (the "Trust"), dated as of October 24, 1996, among (i) MidAmerican Energy Company, an Iowa corporation (the "Depositor"), (ii) The First National Bank of Chicago, a national banking association, not in its individual capacity but solely as trustee of the Trust, (iii) First Chicago Delaware Inc., a Delaware corporation, not in its individual capacity but solely as trustee of the Trust, and (iv) Paul J. Leighton, an individual employed by the Depositor, not in his individual capacity but solely as trustee of the Trust (each of such trustees in (ii), (iii) and (iv) a "Trustee" and collectively, the "Trustees"). The Depositor and the Trustees hereby agree as follows: 1. The trust created hereby shall be known as "MidAmerican Energy Financing II", in which name the Trustees, or the Depositor to the extent provided herein, may conduct the business of the Trust, make and execute contracts, and sue and be sued. 2. The Depositor hereby assigns, transfers, conveys and sets over to the Trustees the sum of $10. The Trustees hereby acknowledge receipt of such amount in trust from the Depositor, which amount shall constitute the initial trust estate. The Trustees hereby declare that they will hold the trust estate in trust for the Depositor. It is the intention of the parties hereto that the Trust created hereby constitute a business trust under Chapter 38 of Title 12 of the Delaware Code, 12 DEL. C. S.3801 ET SEQ. (the "Business Trust Act"), and that this document constitutes the governing instrument of the Trust. The Trustees are hereby authorized and directed to execute and file a certificate of trust with the Delaware Secretary of State in accordance with the provisions of the Business Trust Act. 3. The Depositor and the Trustees will enter into an amended and restated Trust Agreement, satisfactory to each such party and substantially in the form to be included as an exhibit to the 1933 Act Registration Statement referred to below, to provide for the contemplated operation of the Trust created hereby and the issuance of the Preferred Securities and Common Securities referred to therein. Prior to the execution and delivery of such amended and restated Trust Agreement, the Trustees shall not have any duty or obligation hereunder or with respect to the trust estate, except as otherwise required by applicable law or as may be necessary to obtain prior to such execution and delivery any licenses, consents or approvals required by applicable law or otherwise. 4. The Depositor and the Trustees hereby authorize and direct the Depositor (i) to file with the Securities and Exchange Commission (the "Commission") and execute, in each case on behalf of the Trust, (a) a Registration Statement on Form S-3 (the "1933 Act Registration Statement"), including any pre-effective or post-effective amendments to the 1933 Act Registration Statement, relating to the registration under the Securities Act of 1933, as amended, of the Preferred Securities of the Trust and certain other securities and (b) a Registration Statement on Form 8-A (the "1934 Act Registration Statement") (including all pre-effective and post-effective amendments thereto) relating to the registration of the Preferred Securities of the Trust under Section 12(b) of the Securities Exchange Act of 1934, as amended; (ii) to file with the New York Stock Exchange (the "Exchange") and execute on behalf of the Trust a listing application and all other applications, statements, certificates, agreements and other instruments as shall be necessary or desirable to cause the Preferred Securities to be listed on the Exchange and (iii) to file and execute on behalf of the Trust such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents as shall be necessary or desirable to register the Preferred Securities under the securities or "Blue Sky" laws of such jurisdictions as the Depositor, on behalf of the Trust, may deem necessary or desirable. In the event that any filing referred to in clauses (i) and (ii) above is required by the rules and regulations of the Commission, the Exchange or state securities or blue sky laws, to be executed on behalf of the Trust by one or more of the Trustees, each of the Trustees, in its or his capacity as Trustee of the Trust, is hereby authorized and, to the extent so required, directed to join in any such filing and to execute on behalf of the Trust any and all of the foregoing, it being understood that The First National Bank of Chicago and First Chicago Delaware Inc., in their capacities as Trustees of the Trust, respectively, shall not be required to join in any such filing or execute on behalf of the Trust any such document unless required by the rules and regulations of the Commission, the Exchange or state securities or blue sky laws. In connection with all of the foregoing, the Depositor and each Trustee, solely in its or his capacity as Trustee of the Trust, hereby constitutes and appoints Phillip G. Lindner, Paul J. Leighton, and J. Sue Rozema, and each of them, as its or his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for the Depositor or such Trustee or in the Depositor's or such Trustee's name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to the 1933 Act Registration Statement and the 1934 Act Registration Statement and to file the same, with all exhibits thereto, and other documents in connection therewith and in connection with the filing of the 1933 Act Registration Statement and the 1934 Act Registration Statement, with the Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as the Depositor or such Trustee might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their respective substitute or substitutes, shall do or cause to be done by virtue hereof. -2- 5. This Trust Agreement may be executed in one or more counterparts. 6. The number of Trustees initially shall be three (3) and thereafter the number of Trustees shall be such number as shall be fixed from time to time by a written instrument signed by the Depositor which may increase or decrease the number of Trustees; provided, however, that to the extent required by the Business Trust Act, one Trustee shall either be a natural person who is a resident of the State of Delaware, or, if not a natural person, an entity which has its principal place of business in the State of Delaware and otherwise meets the requirements of applicable Delaware law. Subject to the foregoing, the Depositor is entitled to appoint or remove without cause any Trustee at any time. The Trustees may resign upon thirty days prior notice to Depositor. 7. First Chicago Delaware Inc., in its capacity as Trustee, shall not have any of the powers or duties of the Trustees set forth herein and shall be a Trustee of the Trust for the sole purpose of satisfying the requirements of Section 3807 of the Business Trust Act. 8. This Trust Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware (without regard to conflict of laws principles). -3- IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed as of the day and year first above written. MIDAMERICAN ENERGY PAUL J. LEIGHTON, not in COMPANY, as Depositor his individual capacity but solely as Trustee By: /S/ J. Sue Rozema By: /S/ Paul J. Leighton ----------------- -------------------- Name: J. Sue Rozema ------------- Title: Vice President and Treasurer ---------------------------- THE FIRST NATIONAL BANK OF CHICAGO, not in its individual capacity but solely as Trustee By: /S/ Richard D. Manella ---------------------- Name: Richard D. MAnella ------------------ Title: Vice President -------------- FIRST CHICAGO DELAWARE INC. not in its individual capacity but solely as Trustee By: /S/ Steven M. Wagner -------------------- Name: Steven M. Wagner ---------------- Title: Vice President -------------- -4- EX-4.E 6 EXHIBIT 4(E) AMENDED AND RESTATED TRUST AGREEMENT Exhibit 4(e) =============================================================================== AMENDED AND RESTATED TRUST AGREEMENT between MIDAMERICAN ENERGY COMPANY, as Depositor and THE FIRST NATIONAL BANK OF CHICAGO , FIRST CHICAGO DELAWARE INC., PHILIP G. LINDNER J. SUE ROZEMA and PAUL J. LEIGHTON, as Trustees Dated as of , 1996 MIDAMERICAN ENERGY FINANCING I =============================================================================== MidAmerican Energy Financing I Certain Sections of this Trust Agreement relating to Sections 310 through 318 of the Trust Indenture Act of 1939: Trust Indenture Trust Agreement Act Section Section - ------------------- ---------------------- Section 310(a)(1) . . . . . . . . . . . . . . . . . . . .8.07 (a)(2) . . . . . . . . . . . . . . . . . . . .8.07 (a)(3) . . . . . . . . . . . . . . . . . . . .8.09 (a)(4) . . . . . . . . . . . . . . .Not Applicable (b). . . . . . . . . . . . . . . . . . . . . .8.08 Section 311(a). . . . . . . . . . . . . . . . . . . . . .8.13 (b). . . . . . . . . . . . . . . . . . . . . .8.13 Section 312(a). . . . . . . . . . . . . . . . . . . . . .5.07 (b). . . . . . . . . . . . . . . . . . . . . .5.07 (c). . . . . . . . . . . . . . . . . . . . . .5.07 Section 313(a). . . . . . . . . . . . . . . . . . . . 8.14(a) (a)(4) . . . . . . . . . . . . . . . . . . 8.14(b) (b). . . . . . . . . . . . . . . . . . . . 8.14(b) (c). . . . . . . . . . . . . . . . . . . . 8.14(a) (d). . . . . . . . . . . . . . . .8.14(a), 8.14(b) Section 314(a). . . . . . . . . . . . . . . . .Not Applicable (b). . . . . . . . . . . . . . . . .Not Applicable (c)(1) . . . . . . . . . . . . . . .Not Applicable (c)(2) . . . . . . . . . . . . . .Not Applicable (c)(3) . . . . . . . . . . . . . . .Not Applicable (d). . . . . . . . . . . . . . . . .Not Applicable (e). . . . . . . . . . . . . . . . .Not Applicable Section 315(a). . . . . . . . . . . . . . . . . . . . . .8.01 (b). . . . . . . . . . . . . . . . . 8.02, 8.14(b) (c). . . . . . . . . . . . . . . . . . . . 8.01(a) (d). . . . . . . . . . . . . . . . . . .8.01, 8.03 (e). . . . . . . . . . . . . . . . .Not Applicable Section 316(a). . . . . . . . . . . . . . . . .Not Applicable (a)(1)(A). . . . . . . . . . . . . .Not Applicable (a)(1)(B). . . . . . . . . . . . . .Not Applicable (a)(2) . . . . . . . . . . . . . . .Not Applicable -i- (b). . . . . . . . . . . . . . . . .Not Applicable (c). . . . . . . . . . . . . . . . .Not Applicable Section 317(a)(1) . . . . . . . . . . . . . . .Not Applicable (a)(2) . . . . . . . . . . . . . . .Not Applicable (b). . . . . . . . . . . . . . . . . . . . . .5.09 Section 318(a). . . . . . . . . . . . . . . . . . . . . 10.10 - ---------------------- Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Trust Agreement. -ii- TABLE OF CONTENTS ARTICLE I. Defined Terms Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . -2- ARTICLE II. Establishment of the Trust Section 2.01. Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . .-11- Section 2.02. Office of the Delaware Trustee; Principal Place of Business..-11- Section 2.03. Initial Contribution of Trust Property, Organizational Expenses.. . . . . . . . . . . . . . . . . . .-11- Section 2.04. Issuance of the Preferred Securities. . . . . . . . . . . . .-12- Section 2.05. Subscription and Purchase of Debentures; Issuance of the Common Securities. . . . . . . . . . . . . . . . . . .-12- Section 2.06. Declaration of Trust; Appointment of Additional Administrative Trustees . . . . . . . . . . . . . . . . . . .-12- Section 2.07. Authorization to Enter into Certain Transactions. . . . . . .-12- Section 2.08. Assets of Trust.. . . . . . . . . . . . . . . . . . . . . . .-16- Section 2.09. Title to Trust Property.. . . . . . . . . . . . . . . . . . .-16- ARTICLE III. Payment Account Section 3.01. Payment Account.. . . . . . . . . . . . . . . . . . . . . . .-17- ARTICLE IV. Distributions; Redemption Section 4.01. Distributions.. . . . . . . . . . . . . . . . . . . . . . . .-17- Section 4.02. Redemption. . . . . . . . . . . . . . . . . . . . . . . . . .-18- Section 4.03. Subordination of Common Securities. . . . . . . . . . . . . .-20- Section 4.04. Payment Procedures. . . . . . . . . . . . . . . . . . . . . .-21- Section 4.05. Tax Returns and Reports.. . . . . . . . . . . . . . . . . . .-21- -iii- ARTICLE V. Trust Securities Certificates Section 5.01. Initial Ownership.. . . . . . . . . . . . . . . . . . . . . .-21- Section 5.02. The Trust Securities Certificates.. . . . . . . . . . . . . .-21- Section 5.03. Execution and Delivery of Trust Securities Certificates . . .-22- Section 5.04. Registration of Transfer and Exchange of Preferred Securities Certificates.. . . . . . . . . . . . . . . . . . .-22- Section 5.05. Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates. . . . . . . . . . . . . . . . . . . . . . . . .-23- Section 5.06. Persons Deemed Securityholders. . . . . . . . . . . . . . . .-23- Section 5.07. Access to List of Securityholders' Names and Addresses. . . .-24- Section 5.08. Maintenance of Office or Agency.. . . . . . . . . . . . . . .-24- Section 5.09. Appointment of Paying Agent.. . . . . . . . . . . . . . . . .-24- Section 5.10. Ownership of Common Securities by Depositor.. . . . . . . . .-25- Section 5.11. Definitive Preferred Securities Certificates. . . . . . . . .-25- Section 5.12. Book-Entry System.. . . . . . . . . . . . . . . . . . . . . .-25- Section 5.13. Rights of Securityholders.. . . . . . . . . . . . . . . . . .-26- Section 5.14. Agreed Tax Treatment. . . . . . . . . . . . . . . . . . . . .-27- ARTICLE VI. Acts of Securityholders; Meetings; Voting Section 6.01. Limitations on Voting Rights. . . . . . . . . . . . . . . . .-27- Section 6.02. Notice of Meetings. . . . . . . . . . . . . . . . . . . . . .-28- Section 6.03. Meetings of Holders of Preferred Securities.. . . . . . . . .-29- Section 6.04. Voting Rights.. . . . . . . . . . . . . . . . . . . . . . . .-29- Section 6.05. Proxies, Etc. . . . . . . . . . . . . . . . . . . . . . . . .-29- Section 6.06. Securityholder Action by Written Consent. . . . . . . . . . .-29- Section 6.07. Record Date for Voting and Other Purposes.. . . . . . . . . .-30- Section 6.08. Acts of Securityholders.. . . . . . . . . . . . . . . . . . .-30- Section 6.09. Inspection of Records.. . . . . . . . . . . . . . . . . . . .-31- ARTICLE VII. Representations and Warranties of the Property Trustee and the Delaware Trustee Section 7.01. Property Trustee. . . . . . . . . . . . . . . . . . . . . . .-31- Section 7.02. Delaware Trustee. . . . . . . . . . . . . . . . . . . . . . .-32- -iv- ARTICLE VIII. The Trustees Section 8.01. Certain Duties and Responsibilities.. . . . . . . . . . . . .-32- Section 8.02. Notice of Defaults. . . . . . . . . . . . . . . . . . . . . .-34- Section 8.03. Certain Rights of Property Trustee. . . . . . . . . . . . . .-34- Section 8.04. Not Responsible for Recitals or Issuance of Securities. . . .-37- Section 8.05. May Hold Securities.. . . . . . . . . . . . . . . . . . . . .-37- Section 8.06. Compensation; Fees; Indemnity.. . . . . . . . . . . . . . . .-37- Section 8.07. Certain Trustees Required; Eligibility. . . . . . . . . . .-38- Section 8.08. Conflicting Interests.. . . . . . . . . . . . . . . . . . . .-39- Section 8.09. Co-Trustees and Separate Trustee. . . . . . . . . . . . . . .-39- Section 8.10. Resignation and Removal; Appointment of Successor.. . . . . .-40- Section 8.11. Acceptance of Appointment by Successor. . . . . . . . . . . .-41- Section 8.12. Merger, Conversion, Consolidation or Succession to Business..-42- Section 8.13. Preferential Collection of Claims Against Depositor or Trust.-42- Section 8.14. Reports by Property Trustee. . . . . . . . . . . . . . . . .-42- Section 8.15. Reports to the Property Trustee.. . . . . . . . . . . . . . .-43- Section 8.16. Evidence of Compliance with Conditions Precedent. . . . . . .-43- Section 8.17. Number of Trustees. . . . . . . . . . . . . . . . . . . . . .-43- Section 8.18. Delegation of Power.. . . . . . . . . . . . . . . . . . . . .-43- Section 8.19. Fiduciary Duty. . . . . . . . . . . . . . . . . . . . . . . .-44- Section 8.20 Outside Business. . . . . . . . . . . . . . . . . . . . . . .-45- ARTICLE IX. Termination and Liquidation Section 9.01. Termination Upon Expiration Date. . . . . . . . . . . . . . .-45- Section 9.02. Early Termination.. . . . . . . . . . . . . . . . . . . . . .-45- Section 9.03. Termination.. . . . . . . . . . . . . . . . . . . . . . . . .-46- Section 9.04. Liquidation.. . . . . . . . . . . . . . . . . . . . . . . . .-46- ARTICLE X. Miscellaneous Provisions Section 10.01. Guarantee by the Depositor and Assumption of Obligations.. .-48- Section 10.02. Limitation of Rights of Securityholders. . . . . . . . . . .-48- Section 10.03. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . .-48- Section 10.04. Separability.. . . . . . . . . . . . . . . . . . . . . . . .-49- Section 10.05. Governing Law. . . . . . . . . . . . . . . . . . . . . . . .-49- Section 10.06. Successors.. . . . . . . . . . . . . . . . . . . . . . . . .-50- -v- Section 10.07. Headings.. . . . . . . . . . . . . . . . . . . . . . . . . .-50- Section 10.08. Notice and Demand. . . . . . . . . . . . . . . . . . . . . .-50- Section 10.09. Agreement Not to Petition. . . . . . . . . . . . . . . . . .-50- Section 10.10. Conflict with Trust Indenture Act. . . . . . . . . . . . . .-51- EXHIBITS Exhibit A . . . . . . . . . . . . . . .Certificate of Trust Exhibit B . . . . . . . . . . Common Securities Certificate Exhibit C . . . . .Agreement as to Expenses and Liabilities Exhibit D . . . . . . . . .Preferred Securities Certificate -vi- AMENDED AND RESTATED TRUST AGREEMENT, dated as of _________ ___, 1996, between (i) MidAmerican Energy Company, an Iowa corporation (the "Depositor"), (ii) The First National Bank of Chicago, a national banking association duly organized and existing under the laws of the United States, as trustee (the "Property Trustee" and, in its separate capacity and not in its capacity as Property Trustee, the "Bank"), (iii) First Chicago Delaware Inc., a corporation duly organized under the laws of Delaware, as trustee (the "Delaware Trustee") and (iv) Philip G. Lindner, J. Sue Rozema and Paul J. Leighton, each an individual, as trustee, and each of whose address is c/o MidAmerican Energy Company, 666 Grand Avenue, P.O. Box 657, Des Moines, Iowa 50303-0657 (each, an "Administrative Trustee" and collectively the "Administrative Trustees") (the Property Trustee, the Delaware Trustee and the Administrative Trustees referred to collectively as the "Trustees") and (v) the several Holders, as hereinafter defined. W I T N E S S E T H: -------------------------- WHEREAS, the Depositor, the Property Trustee, the Delaware Trustee and Paul J. Leighton, as the Administrative Trustee, have heretofore duly declared and established a business trust pursuant to the Delaware Business Trust Act by the entering into of that certain Trust Agreement, dated as of October 24, 1996 (the "Original Trust Agreement"), and by the execution by the Property Trustee, the Delaware Trustee and Paul J. Leighton, as Administrative Trustee and filing with the Secretary of State of the State of Delaware of the Certificate of Trust, dated October 24, 1996, a copy of which is attached as Exhibit A; and WHEREAS, the Depositor, the Property Trustee, Delaware Trustee and Paul J. Leighton, as Administrative Trustee, desire to amend and restate the Original Trust Agreement in its entirety as set forth herein to provide for, among other things, (i) the acquisition by the Trust from the Depositor of all of the right, title and interest in the Debentures, (ii) the issuance of the Common Securities by the Trust to the Depositor, (iii) the issuance of the Preferred Securities by the Trust and (iv) the appointment of additional Administrative Trustees of the Trust; NOW THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, each party, for the benefit of the other party and for the benefit of the Securityholders, hereby amends and restates the Original Trust Agreement in its entirety and agrees as follows: ARTICLE I. Defined Terms Section 1.01. Definitions. For all purposes of this Trust Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (b) all other terms used herein that are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (c) unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or a Section, as the case may be, of this Trust Agreement; and (d) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or other subdivision. "Act" has the meaning specified in Section 6.08. "Additional Amount" means, with respect to Trust Securities of a given Liquidation Amount and/or a given period, the sum of the amount of Additional Interest Attributable to Taxes and Additional Interest Attributable to Deferral (each as defined in the Subordinated Indenture) paid by the Depositor on a Like Amount of Debentures for such period. "Administrative Trustee" means each of the individuals identified as an "Administrative Trustee" in the preamble to this Trust Agreement solely in their capacities as Administrative Trustees of the Trust created hereunder and not in their individual capacities, or such trustee's successor in interest in such capacity, or any successor trustee appointed as herein provided. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Bank" has the meaning specified in the preamble to this Trust Agreement. -2- "Bankruptcy Event" means, with respect to any Person: (i) the entry of a decree or order by a court having jurisdiction in the premises judging such Person a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjudication or composition of or in respect of such Person under Federal bankruptcy law or any other applicable Federal or State law, or appointing a receiver, liquidator, assignee, trustee sequestrator or other similar official of such Person or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or (ii) the institution by such Person of proceedings to be adjudicated a bankrupt or insolvent, or of the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under Federal bankruptcy law or any other applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator or similar official of such Person or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due. "Bankruptcy Laws" has the meaning specified in Section 10.09. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Depositor to have been duly adopted by the Depositor's Board of Directors or a duly authorized committee thereof and to be in full force and effect on the date of such certification, and delivered to the appropriate Trustee. "Business Day" means a day other than (x) a Saturday or a Sunday, (y) a day on which banks in New York, New York are authorized or obligated by law or executive order to remain closed or (z) a day on which the Property Trustee's Corporate Trust Office or the Debenture Trustee's principal corporate trust office is closed for business. "Certificate of Trust" has the meaning specified in Section 2.07(d). "Clearing Agency" means an organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act. "Closing Date" means the date of delivery of this Trust Agreement. "Code" means the Internal Revenue Code of 1986, as amended. -3- "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Security" means an undivided beneficial interest in the assets of the Trust having a Liquidation Amount of $25 and having the rights provided therefor in this Trust Agreement, including the right to receive Distributions and a Liquidation Distribution as provided herein. "Common Securityholder" means a Securityholder that holds Common Securities. "Common Securities Certificate" means a certificate evidencing ownership of Common Securities, substantially in the form attached as Exhibit B. "Corporate Trust Office" means the principal office of the Property Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of original execution of this Trust Agreement is located at One First National Plaza, Suite 0126, Chicago, IL 60670, Attention: Corporate Trust Administration, except that, with respect to presentation of the Preferred Securities for payment or registration of transfers or exchange and the location of the register, such term means the office or agency of the Trustee at which at any particular time its corporate agency business shall be conducted, which at the date of original execution of this Trust Agreement is located as c/o First Chicago Trust Company of New York, 14 Wall Street, 8th Floor, Window 2, New York, New York 10005. "Covered Person" means: (a) any officer, director, shareholder, partner, member, representative, employee or agent of the Trust or the Trust's Affiliates; and (b) any Holder of Trust Securities. "Debenture Event of Default" means an "Event of Default" as defined in the Subordinated Indenture. "Debenture Issuer" means MidAmerican Energy Company, an Iowa corporation, in its capacity as issuer of the Debentures. "Debenture Redemption Date" means "Redemption Date" as defined in the Subordinated Indenture with respect to the Debentures. "Debenture Trustee" means The First National Bank of Chicago, as trustee under the Subordinated Indenture. -4- "Debentures" means the $_______ aggregate principal amount of the Depositor's _______% Junior Subordinated Debentures, Series_____,due ________, issued pursuant to the Subordinated Indenture. "Definitive Preferred Securities Certificates" means Preferred Securities Certificates issued in certificated, fully registered form as provided in Section 5.11. "Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 DEL. C. Section 3801 ET SEQ., as it may be amended from time to time. "Delaware Trustee" means the Delaware corporation identified as the "Delaware Trustee" in the preamble to this Trust Agreement solely in its capacity as Delaware Trustee of the Trust formed hereunder and not in its individual capacity, or its successor in interest in such capacity, or any successor trustee appointed as herein provided. "Depositor" has the meaning specified in the preamble to this Trust Agreement. "Distribution Date" has the meaning specified in Section 4.01(a). "Distributions" means amounts payable in respect of the Trust Securities as provided in Section 4.01. "Early Termination Event" has the meaning specified in Section 9.02. "Event of Default" means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (i) the occurrence of a Debenture Event of Default; or (ii) default by the Trust in the payment of any Distribution when it becomes due and payable, and continuation of such default for a period of 30 days; or (iii) default by the Trust in the payment of any Redemption Price, plus accumulated and unpaid distributions of any Trust Security when it becomes due and payable; or (iv) default in the performance, or breach, in any material respect of any covenant or warranty of the Trustees in this Trust Agreement (other than a covenant or warranty a default in whose performance or breach is specifically dealt with in clause (ii) or (iii), above) and continuation of such default or breach for a period of 60 days after there -5- has been given, by registered or certified mail, to the Trust by the Holders of at least 10% in Liquidation Amount of the Outstanding Preferred Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (v) the occurrence of a Bankruptcy Event with respect to the Trust. "Exchange Act" has the meaning specified in Section 2.07(c). "Expense Agreement" means the Agreement as to Expenses and Liabilities between the Depositor and the Trust, substantially in the form attached as Exhibit C, as amended from time to time. "Expiration Date" shall have the meaning specified in Section 9.01. "Guarantee" means the Guarantee Agreement executed and delivered by the Depositor and The First National Bank of Chicago, a national banking association, as trustee, contemporaneously with the execution and delivery of this Trust Agreement, for the benefit of the Holders of the Preferred Securities, as amended from time to time. "Holder" has the same meaning assigned to Securityholder herein. "Indemnified Person" means any Trustee, any Affiliate of any Trustee, or any officer, director, shareholder, member, partner, employee, representative or agent of any Trustee, or any employee or agent of the Trust or its Affiliates. "Indenture Debenture" means all Debentures (as defined herein) and all other series of Securities (as defined in the Subordinated Indenture) issued under the Subordinated Debenture. "Investment Company Event" means the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority to the effect that the Trust is or will be considered an "investment company" that is required to be registered under the Investment Company Act of 1940, as amended, which change in law becomes effective on or after the date of original issuance of the Preferred Securities. "Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of trust, adverse ownership interest, hypothecation, assignment, security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever. "Like Amount" means (i) Trust Securities having a Liquidation Amount equal to the principal amount of Debentures to be contemporaneously redeemed in accordance with the -6- Subordinated Indenture and the proceeds of which will be used to pay the Redemption Price of such Trust Securities plus accumulated and unpaid Distributions to the date of such payment and (ii) Debentures having a principal amount equal to the Liquidation Amount of the Trust Securities of the Holder to whom such Debentures are distributed. "Liquidation Amount" means the stated amount of $25 per Trust Security. "Liquidation Date" means the date on which Debentures are to be distributed to Holders of Trust Securities in connection with a termination and liquidation of the Trust pursuant to Section 9.04(a). "Liquidation Distribution" has the meaning specified in Section 9.04(e). "Maturity Date" has the meaning specified in the Subordinated Debenture. "Offer" has the meaning specified in Section 2.07(c). "Officers' Certificate" means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Depositor, and delivered to the appropriate Trustee. One of the officers signing an Officers' Certificate given pursuant to Section 8.16 shall be the principal executive, financial or accounting officer of the Depositor. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Trust Agreement shall include: (a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto; (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate; (c) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Trust, the Property Trustee, the Delaware Trustee or the Depositor, but not an employee of the Trust, the Property Trustee, the Delaware Trustee or the Depositor, and who shall be reasonably acceptable to the Property Trustee. -7- "Original Trust Agreement" has the meaning specified in the recitals to this Trust Agreement. "Outstanding," when used with respect to Preferred Securities, means, as of the date of determination, all Preferred Securities theretofore delivered under this Trust Agreement, except: (i) Preferred Securities theretofore canceled by the Administrative Trustees or delivered to the Administrative Trustees for cancellation; (ii) Preferred Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Property Trustee or any Paying Agent for the Holders of such Preferred Securities; provided that, if such Preferred Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Trust Agreement; and (iii) Preferred Securities in exchange for or in lieu of which other Preferred Securities have been delivered pursuant to this Trust Agreement, including pursuant to Sections 5.04, 5.05 or 5.11; provided, however, that in determining whether the Holders of the requisite Liquidation Amount of the Outstanding Preferred Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Preferred Securities owned by the Depositor, any Trustee or any Affiliate of the Depositor or any Trustee shall be disregarded and deemed not to be Outstanding, except that (a) in determining whether any Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Preferred Securities which such Trustee knows to be so owned shall be so disregarded and (b) the foregoing shall not apply at any time when all of the outstanding Preferred Securities are owned by the Depositor, one or more of the Trustees and/or any such Affiliate. Preferred Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Administrative Trustee the pledgee's right so to act with respect to such Preferred Securities and that the pledgee is not the Depositor or any Affiliate of the Depositor. "Owner" means each Person who is the beneficial owner of a Preferred Securities Certificate as reflected in the records of the Securities Depository or, if a Securities Depository Participant is not the beneficial owner, then as reflected in the records of a Person maintaining an account with such Securities Depository (directly or indirectly), in accordance with the rules of such Securities Depository. "Paying Agent" means any paying agent or co-paying agent appointed pursuant to Section 5.09 and shall initially be The First National Bank of Chicago. -8- "Payment Account" means a segregated non-interest-bearing corporate trust account maintained by the Property Trustee at The First National Bank of Chicago, or such other banking institution as the Depositor shall select, in its trust department for the benefit of the Securityholders in which all amounts paid in respect of the Debentures will be held and from which the Paying Agent, pursuant to Section 5.09, shall make payments to the Securityholders in accordance with Sections 4.01 and 4.02. "Person" means any individual, corporation, partnership, joint venture, trust, limited liability company or corporation, unincorporated organization or government or any agency or political subdivision thereof. "Preferred Security" means a quarterly income preferred security representing an undivided beneficial interest in the assets of the Trust having a Liquidation Amount of $25 and having rights provided therefor in this Trust Agreement, including the right to receive Distributions and a Liquidation Distribution as provided herein. "Preferred Securities Certificate" means a certificate evidencing ownership of Preferred Securities, substantially in the form attached as Exhibit D. "Property Trustee" means the commercial bank or trust company identified as the "Property Trustee" in the preamble to this Trust Agreement solely in its capacity as Property Trustee of the Trust formed and continued hereunder and not in its individual capacity, or its successor in interest in such capacity, or any successor trustee appointed as herein provided. "Redemption Date" means, with respect to any Trust Security to be redeemed, the date fixed for such redemption by or pursuant to this Trust Agreement; provided that each Debenture Redemption Date shall be a Redemption Date for a Like Amount of Trust Securities. "Redemption Price" means, with respect to any date fixed for redemption of any Trust Security, the Liquidation Amount of such Trust Security. "Redemption Tax Opinion" has the meaning specified in Section 9.04(d). "Registrar" shall mean the registrar for the Preferred Securities appointed by the Trust and shall be initially The First National Bank of Chicago. "Relevant Trustee" shall have the meaning specified in Section 8.10. "Responsible Officer," when used with respect to the Property Trustee means an officer of the Property Trustee assigned by the Property Trustee to administer its corporate trust matter. -9- "Securities Depository" shall be The Depository Trust Company. "Securities Depository Participant" means an institution which deposits securities with a Securities Depository for holding thereby. "Securities Register" shall mean the Securities Register described in Section 5.04. "Securityholder" or "Holder" means a Person in whose name a Trust Security or Securities is registered in the Securities Register; any such Person shall be deemed to be a beneficial owner within the meaning of the Delaware Business Trust Act. "Special Event" means either a Tax Event or an Investment Company Event. "Subordinated Indenture" means the Indenture, dated as of __________, 1996, between the Depositor and the Debenture Trustee, as trustee, as amended or supplemented from time to time. "Tax Event" means the receipt by the Trust of an opinion of counsel (which may be counsel to the Depositor or an Affiliate but not an employee thereof and which must be acceptable to the Property Trustee) experienced in such matters to the effect that, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or (b) any amendment to, or change in an interpretation or application of, such laws or regulations by any legislative body, court, governmental agency or regulatory authority (including the enactment of any legislation and the publication of any judicial decision or regulatory determination on or after the date of issuance of the Preferred Securities under this Trust Agreement), there is more than an insubstantial risk that (i) the Trust is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to interest income received or accrued on the Debentures, (ii) interest payable by the Depositor on the Debentures is not, or within 90 days of the date of such opinion, will not be, deductible by the Depositor, in whole or in part, for United States federal income tax purposes, or (iii) the Trust is, or will be within 90 days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges. "Transfer Agent" shall mean one or more transfer agents for the Preferred Securities appointed by the Trust and shall be initially The First National Bank of Chicago. "Trust" means the Delaware business trust created by the Original Trust Agreement and continued hereby and identified on the cover page to this Trust Agreement. "Trust Agreement" means this Amended and Restated Trust Agreement, as the same may be modified, amended or supplemented in accordance with the applicable provisions -10- hereof, including all exhibits hereto, including, for all purposes of this Amended and Restated Trust Agreement and any such modification, amendment or supplement, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this Amended and Restated Trust Agreement and any such modification, amendment or supplement, respectively. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "Trust Property" means (i) the Debentures, (ii) any cash on deposit in, or owing to, the Payment Account and (iii) all proceeds and rights in respect of the foregoing and any other property and assets for the time being held by the Property Trustee pursuant to the trusts of this Trust Agreement. "Trust Security" means any one of the Common Securities or the Preferred Securities. "Trust Securities Certificate" means any one of the Common Securities Certificates or the Preferred Securities Certificates. "Underwriting Agreement" means the Underwriting Agreement, dated as of _______________ , 1996, among the Trust, the Depositor and the underwriters named therein. ARTICLE II. Establishment of the Trust Section 2.01. Name. The Trust continued hereby shall be known as "MidAmerican Energy Financing _", in which name the Trustees may engage in the transactions contemplated hereby, make and execute contracts and other instruments on behalf of the Trust and sue and be sued. Section 2.02. Office of the Delaware Trustee; Principal Place of Business. The office of the Delaware Trustee in the State of Delaware is 300 King Street, Wilmington, Delaware 19801, or at such other address in Delaware as the Delaware Trustee may designate by written notice to the Securityholders and the Depositor. The principal place of business of the Trust is c/o MidAmerican Energy Company, 666 Grand Avenue, P.O. Box 657, Des Moines, Iowa 50303-0657. Section 2.03. Initial Contribution of Trust Property, Organizational Expenses. The Property Trustee acknowledges receipt in trust from the Depositor in connection with the -11- Original Trust Agreement of the sum of $10, which constituted the initial Trust Property. The Depositor shall pay organizational expenses of the Trust as they arise or shall, upon request of any Trustee, promptly reimburse such Trustee for any such expenses paid by such Trustee. The Depositor shall make no claim upon the Trust Property for the payment of such expenses. Section 2.04. Issuance of the Preferred Securities. On _________ , 1996 the Depositor and an Administrative Trustee, on behalf of the Trust, both executed and delivered the Underwriting Agreement. Contemporaneously with the execution and delivery of this Trust Agreement, one of the Administrative Trustees, on behalf of the Trust in accordance with Section 5.02, executed manually and delivered a Preferred Securities Certificate, registered in the name of the nominee of The Depositary Trust Company, having an aggregate Liquidation Amount of $ _______________. Section 2.05. Subscription and Purchase of Debentures; Issuance of the Common Securities. Contemporaneously with the execution and delivery of this Trust Agreement, the Administrative Trustees, on behalf of the Trust, shall subscribe to and purchase from the Depositor Debentures, registered in the name of the Property Trustee and having an aggregate principal amount equal to $____________, and, in satisfaction of the purchase price for such Debentures, (x) one of the Administrative Trustees, on behalf of the Trust, shall execute and deliver to the Depositor Common Securities Certificates, registered in the name of the Depositor, in an aggregate amount of ____ Common Securities having an aggregate Liquidation Amount of $ ___________, and (y) the Property Trustee, on behalf of the Trust, shall deliver to the Depositor the sum of $ ____________ representing the proceeds from the sale of the Preferred Securities pursuant to the Underwriting Agreement. Section 2.06. Declaration of Trust; Appointment of Additional Administrative Trustees. (a) The exclusive purposes and functions of the Trust are (i) to issue Trust Securities and invest the proceeds thereof in Debentures, and (ii) to engage in those activities necessary, convenient or incidental thereto. The Depositor hereby appoints the Trustees as trustees of the Trust, to have all the rights, powers and duties to the extent set forth herein. The Property Trustee hereby declares that it will hold the Trust Property in trust upon and subject to the conditions set forth herein for the benefit of the Trust and the Securityholders. The Trustees shall have all rights, powers and duties set forth herein and in accordance with applicable law with respect to accomplishing the purposes of the Trust. Anything in this Trust Agreement to the contrary notwithstanding, the Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities, of the Property Trustee or the Administrative Trustees set forth herein. The Delaware Trustee shall be one of the Trustees of the Trust for the sole and limited purpose of fulfilling the requirements of Section 3807 of the Delaware Business Trust Act. Section 2.07. Authorization to Enter into Certain Transactions. (a) The Trustees shall conduct the affairs of the Trust in accordance with the terms of this Trust Agreement. Subject to the limitations set forth in paragraph (b) of this Section and Article VIII and in accordance with the following provisions (A) and (B), the Trustees shall have the -12- authority to enter into all transactions and agreements determined by the Trustees to be appropriate in exercising the authority, express or implied, otherwise granted to the Trustees under this Trust Agreement, and to perform all acts in furtherance thereof, including without limitation, the following: (A) As among the Trustees, the Administrative Trustees shall have the power, duty and authority to act on behalf of the Trust with respect to the following matters: (i) the issuance and sale of the Trust Securities; (ii) without the consent of any Person, to cause the Trust to enter into and to execute, deliver and perform on behalf of the Trust, the Underwriting Agreement, Expense Agreement, and such agreements as may be necessary or desirable in connection with the consummation of the Underwriting Agreement (such execution to be by the Administrative Trustees or any one of them); (iii) to qualify the Trust to do business in any jurisdiction as may be necessary or desirable; (iv) the collection of interest, principal and any other payments made in respect of the Debentures in the Payment Account; (v) the registration of the Preferred Securities under the Securities Act of 1933, as amended, and under state securities or blue sky laws, and the qualification of this Trust Agreement as a trust indenture under the Trust Indenture Act; (vi) the listing of the Preferred Securities upon such securities exchange or exchanges as shall be determined by the Depositor and the registration of the Preferred Securities under the Exchange Act, and the preparation and filing of all periodic and other reports and other documents pursuant to the foregoing; (vii) the appointments of a Paying Agent, a Transfer Agent and a Registrar in accordance with this Trust Agreement (subject to Section 5.09); (viii) registering transfers of the Trust Securities in accordance with this Trust Agreement; and (ix) the taking of any action incidental to the foregoing as the Administrative Trustees may from time to time determine is necessary or advisable to protect and conserve the Trust Property for the benefit of the Securityholders (without consideration of the effect of any such action on any particular Securityholder). -13- (B) As among the Trustees, the Property Trustee shall have the power, duty and authority to act on behalf of the Trust with respect to the following ministerial matters: (i) the establishment of the Payment Account; (ii) the receipt of the Debentures; (iii) the deposit of interest, principal and any other payments made in respect of the Debentures in the Payment Account; (iv) the distribution of amounts owed to the Securityholders in respect of the Trust Securities in accordance with the terms of this Trust Agreement; (v) the sending of notices of default and other information regarding the Trust Securities and the Debentures to the Securityholders in accordance with the terms of this Trust Agreement; (vi) the distribution of the Trust Property in accordance with the terms of this Trust Agreement; (vii) as provided in this Trust Agreement, the winding up of the affairs of and liquidation of the Trust and the execution of the certificate of cancellation to be prepared and filed by the Administrative Trustees with the Secretary of State of the State of Delaware; and (viii) the taking of any ministerial action incidental to the foregoing as the Property Trustee may from time to time determine is necessary or advisable to protect and conserve the Trust Property for the benefit of the Securityholders (without consideration of the effect of any such action on any particular Securityholder). Subject to this Section 2.07(a)(B), the Property Trustee shall have none of the duties, powers or authority of the Administrative Trustee set forth in Section 2.07(a)(A) or the Depositor set forth in Section 2.07(c). The Property Trustee shall have the power and authority to exercise all of the rights, powers and privileges of a holder of Debentures under the Subordinated Indenture and, if an Event of Default occurs and is continuing, the Property Trustee may, for the benefit of Holders of the Trust Securities, in its discretion proceed to protect and enforce its rights as holder of the Debentures subject to the rights of the Holder pursuant to the terms of this Trust Agreement. (b) So long as this Trust Agreement remains in effect, the Trust (or the Trustees acting on behalf of the Trust) shall not undertake any business, activities or transaction except as expressly provided herein or contemplated hereby. In particular, the Trustees shall cause the -14- Trust not to (i) acquire any investments or engage in any activities not authorized by this Trust Agreement, (ii) sell, assign, transfer, exchange, pledge, set-off or otherwise dispose of any of the Trust Property or interests therein, including to Securityholders, except as expressly provided herein, (iii) take any action that would cause the Trust to fail or cease to qualify as a "grantor trust" for United States federal income tax purposes and not as an association taxable as a corporation, (iv) incur any indebtedness for borrowed money or (v) take or consent to any action that would result in the placement of a Lien on any of the Trust Property. The Trustees shall defend all claims and demands of all Persons at any time claiming any Lien on any of the Trust Property adverse to the interest of the Trust or the Securityholders in their capacity as Securityholders. (c) In connection with the issue of the Preferred Securities, the Depositor shall have the right and responsibility to assist the Trust with respect to, or effect on behalf of the Trust, the following (and any actions taken by the Depositor in furtherance of the following prior to the date of this Trust Agreement are hereby ratified and confirmed in all respects): (i) to prepare for filing by the Trust with the Commission and to execute a registration statement on Form S-3 in relation to the Preferred Securities, including any amendments thereto; (ii) to determine the States in which to take appropriate action to qualify or register for sale all or part of the Preferred Securities and to do any and all such acts, other than actions which must be taken by or on behalf of the Trust, and advise the Trustees of actions they must take on behalf of the Trust, and prepare for execution and filing and to execute any documents to be executed and filed by the Trust or on behalf of the Trust, as the Depositor deems necessary or advisable in order to comply with the applicable laws of any such States; (iii) to prepare for filing by the Trust and to execute an application to the New York Stock Exchange or any other national stock exchange or the Nasdaq National Market for listing upon notice of issuance of any Preferred Securities and to file or cause the Administrative Trustees to file thereafter with such exchange such notifications and documents as may be necessary from time to time to maintain such listing; (iv) to prepare for filing by the Trust with the Commission and to execute a registration statement on Form 8-A relating to the registration of the Preferred Securities under Section 12(b) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), including any amendments thereto; -15- (v) to execute and deliver on behalf of the Trust the Underwriting Agreement and such other agreements as may be necessary or desirable in connection with the consummation thereof; (vi) to select the investment banker or bankers to act as underwriters with respect to the offer and sale by the Trust of Preferred Securities ("Offer") and negotiate the terms of an Underwriting Agreement and pricing agreement providing for the Offer; and (vii) to take any other actions necessary or desirable to carry out any of the foregoing activities. (d) Notwithstanding anything herein to the contrary, the Administrative Trustees are authorized and directed to conduct the affairs of the Trust and to operate the Trust so that the Trust will not be deemed to be an "investment company" required to be registered under the Investment Company Act of 1940, as amended, or classified other than as a "grantor trust" for United States federal income tax purposes and not as an association taxable as a corporation and so that the Debentures will be treated as indebtedness of the Depositor for United States federal income tax purposes. In this connection, subject to the provisions of Section 10.03, the Depositor and the Administrative Trustees are authorized to take any action, not inconsistent with applicable law, the certificate of trust filed with the Secretary of State of the State of Delaware with respect to the Trust (as amended or restated from time to time, the "Certificate of Trust") or this Trust Agreement, that each of the Depositor and the Administrative Trustees determines in its discretion to be necessary or desirable for such purposes, as long as such action does not materially adversely affect the interests of the Holders of the Preferred Securities. Section 2.08. Assets of Trust. The assets of the Trust shall consist of the Trust Property. Section 2.09. Title to Trust Property. Legal title to all Trust Property shall be vested at all times in the Property Trustee (in its capacity as such) and shall be held and administered by the Property Trustee for the benefit of the Trust and the Securityholders in accordance with this Trust Agreement. -16- ARTICLE III. Payment Account Section 3.01. Payment Account. (a) On or prior to the Closing Date, the Property Trustee shall establish the Payment Account. The Property Trustees and the Paying Agent appointed by the Administrative Trustees shall have exclusive control and sole right of withdrawal with respect to the Payment Account for the purpose of making deposits in and withdrawals from the Payment Account in accordance with this Trust Agreement. All monies and other property deposited or held from time to time in the Payment Account shall be held by the Property Trustee in the Payment Account for the exclusive benefit of the Holders of Trust Securities and for distribution as herein provided, including (and subject to) any priority of payments provided for herein. (b) The Property Trustee shall deposit in the Payment Account, promptly upon receipt, all payments of principal or interest on, and any other payments or proceeds with respect to, the Debentures. Amounts held in the Payment Account shall not be invested by the Property Trustee pending distribution thereof. ARTICLE IV. Distributions; Redemption Section 4.01. Distributions. (a) Distributions on the Trust Securities shall be cumulative, and will accumulate whether or not there are funds of the Trust available for the payment of Distributions. Distributions shall accrue from the Closing Date, and, except in the event that the Depositor exercises its right to extend the interest payment period for the Debentures pursuant to Section 311 of the Subordinated Indenture, shall be payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, commencing on ___________, 199_. If any date on which Distributions are otherwise payable on the Trust Securities is not a Business Day, then the payment of such Distribution shall be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, payment of such Distribution shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on such date (each date on which distributions are payable in accordance with this Section 4.01(a) a "Distribution Date"). (b) Distributions payable on the Trust Securities shall be fixed at a rate of _____% per annum of the Liquidation Amount of the Trust Securities. The amount of Distributions payable for any full quarterly period shall be computed on the basis of twelve -17- 30-day months and a 360-day year and for any period shorter than a full month, on the basis of the actual number of days elapsed. If the interest payment period for the Debentures is extended pursuant to Section 311 of the Subordinated Indenture, then Distributions on the Preferred Securities will be deferred for the period equal to the extension of the interest payment period for the Debentures and the rate per annum at which Distributions on the Trust Securities accumulate shall be increased by an amount such that the aggregate amount of Distributions that accumulate on all Trust Securities during any such extended interest payment period is equal to the aggregate amount of interest (including, to the extent permitted by law, interest payable on unpaid interest at the percentage rate per annum set forth above, compounded quarterly) that accrues during any such extended interest payment period on the Debentures. The amount of Distributions payable for any period shall include the Additional Amounts, if any. (c) Distributions on the Trust Securities shall be made and shall be deemed payable on each Distribution Date only to the extent that the Trust has funds available in the Payment Account for the payment of such Distributions. (d) Distributions on the Trust Securities with respect to a Distribution Date shall be payable to the Holders thereof as they appear on the Securities Register for the Trust Securities on the relevant record date, which shall be 15 days prior to the relevant Distribution Date. Section 4.02. Redemption. (a) On each Debenture Redemption Date and on the Maturity Date of the Debentures, the Property Trustee will be required to redeem a Like Amount of Trust Securities at the Redemption Price plus accumulated and unpaid Distributions to the date of such payment. (b) Notice of redemption shall be given by the Property Trustee by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date to each Holder of Trust Securities to be redeemed, at such Holder's address appearing in the Security Register. All notices of redemption or liquidation shall state: (i) the Redemption Date; (ii) the Redemption Price and the amount of accumulated and unpaid Dividends to be paid on the Redemption Date; (iii) the CUSIP number; (iv) if less than all the Outstanding Trust Securities are to be redeemed, the identification and the total Liquidation Amount of the particular Trust Securities to be redeemed; and -18- (v) that on the Redemption Date the Redemption Price plus accumulated and unpaid Distributions to the date of such payment will become due and payable upon each such Trust Security to be redeemed and that interest thereon will cease to accrue on and after said date. (c) The Trust Securities redeemed on each Redemption Date shall be redeemed at the Redemption Price plus accumulated and unpaid Distributions to the date of such payment with the proceeds from the contemporaneous redemption of Debentures. Redemptions of the Trust Securities shall be made and the Redemption Price plus accumulated and unpaid Distributions to the date of such payment shall be deemed payable on each Redemption Date only to the extent that the Trust has funds immediately available in the Payment Account for such payment. (d) If the Property Trustee gives a notice of redemption in respect of any Preferred Securities, then, by 12:00 noon, New York time, on the Redemption Date, subject to Section 4.02(c), the Property Trustee shall irrevocably deposit with the Paying Agent (or Securities Depository, in the event the Preferred Securities are book-entry only) funds sufficient to pay the applicable Redemption Price plus accumulated and unpaid Distributions to the date of such payment and will give the Paying Agent (or Securities Depository, as the case may be) irrevocable instructions and authority to pay the Redemption Price plus accumulated and unpaid Distributions to the date of such payment to the Holders thereof upon surrender of their Preferred Securities Certificates. Notwithstanding the foregoing, Distributions payable on or prior to the Redemption Date for any Trust Securities called for redemption shall be payable to the Holders of such Trust Securities as they appear on the Securities Register for the Trust Securities on the relevant record dates for the related Distribution Dates. If notice of redemption shall have been given and funds deposited as required, then on the Redemption Date, all rights of Securityholders holding Trust Securities so called for redemption will cease, except the right of such Securityholders to receive the Redemption Price plus accumulated and unpaid Distributions to the date of such payment, but without interest thereon, and such Trust Securities will cease to be outstanding. In the event that any Redemption Date is not a Business Day, then payment of the Redemption Price payable on such date plus accumulated and unpaid Distributions to such date shall be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay). In the event that payment of the Redemption Price plus accumulated and unpaid Distributions in respect of any Trust Securities called for redemption is improperly withheld or refused and not paid either by the Trust or by the Depositor pursuant to the Guarantee, Distributions on such Trust Securities will continue to accrue, at the then applicable rate, from the Redemption Date originally established by the Trust for such Trust Securities to the date such Redemption Price plus accumulated and unpaid Distributions is actually paid, in which case the actual payment date will be deemed the date fixed for redemption for purposes of calculating the Redemption Price plus accumulated and unpaid Distributions to such date. -19- (e) Payment of the Redemption Price on the Trust Securities shall be made to the Holders thereof as they appear on the Securities Register for the Trust Securities on the relevant record date, which shall be the fifteenth day prior to the Redemption Date. (f) If less than all the Outstanding Trust Securities are to be redeemed on a Redemption Date, then the aggregate Liquidation Amount of Trust Securities to be redeemed shall be allocated 3% to the Common Securities and 97% to the Preferred Securities. The particular Preferred Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Property Trustee from the Outstanding Preferred Securities not previously called for redemption, by such method as the Property Trustee shall deem fair and appropriate and which may provide for the selection for a redemption of portions (equal to $25 or integral multiples thereof) of the Liquidation Amount of Preferred Securities of a denomination larger than $25. The Property Trustee shall promptly notify the Transfer Agent and Registrar in writing of the Preferred Securities selected for redemption and, in the case of any Preferred Securities selected for partial redemption, the Liquidation Amount thereof to be redeemed. For all purposes of this Trust Agreement, unless the context otherwise requires, all provisions relating to the redemption of Preferred Securities shall relate, in the case of any Preferred Securities redeemed or to be redeemed only in part, to the portion of the Liquidation Amount of Preferred Securities which has been or is to be redeemed. Section 4.03. Subordination of Common Securities. (a) Payment of Distributions (including Additional Amounts, if applicable) on, and the Redemption Price plus accumulated and unpaid distributions of, the Trust Securities, as applicable, shall be made pro rata based on the Liquidation Amount of the Trust Securities; provided, however, that if on any Distribution Date or Redemption Date a Debenture Event of Default shall have occurred and be continuing, no payment of any Distribution (including Additional Amounts, if applicable) on, or Redemption Price of, any Common Security, and no other payment on account of the redemption, liquidation or other acquisition of Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid Distributions (including Additional Amounts, if applicable) on all Outstanding Preferred Securities for all distribution periods terminating on or prior thereto, or in the case of payment of the Redemption Price plus accumulated and unpaid Distributions the full amount of such Redemption Price plus accumulated and unpaid Distributions on all Outstanding Preferred Securities, shall have been made or provided for, and all funds immediately available to the Property Trustee shall first be applied to the payment in full in cash of all Distributions (including Additional Amounts, if applicable) on, or Redemption Price plus accumulated and unpaid Distributions of, Preferred Securities then due and payable. (b) In the case of the occurrence of any Event of Default resulting from a Debenture Event of Default, the Holder of Common Securities will be deemed to have waived any such Event of Default under this Trust Agreement until the effect of all such Events of Default with respect to the Preferred Securities have been cured, waived or otherwise eliminated. Until any such Events of Default under this Trust Agreement with respect to the -20- Preferred Securities have been so cured, waived or otherwise eliminated, the Property Trustee shall act solely on behalf of the Holders of the Preferred Securities and not the Holder of the Common Securities, and only the Holders of the Preferred Securities will have the right to direct the Property Trustee to act on their behalf. Section 4.04. Payment Procedures. Payments in respect of the Preferred Securities shall be made by check mailed to the address of the Person entitled thereto as such address shall appear on the Securities Register or, if the Preferred Securities are held by a Securities Depository, such Distributions shall be made to the Securities Depository, which shall credit the relevant Persons' accounts at such Securities Depository on the applicable distribution dates. Payments in respect of the Common Securities shall be made in such manner as shall be mutually agreed between the Administrative Trustees and the Holder of the Common Securities. Section 4.05. Tax Returns and Reports. The Administrative Trustees shall prepare (or cause to be prepared), at the Depositor's expense and direction, and file all United States federal, state and local tax and information returns and reports required to be filed by or in respect of the Trust. In this regard, the Administrative Trustees shall (a) prepare and file (or cause to be prepared or filed) the Internal Revenue Service Form 1041 (or any successor form) required to be filed in respect of the Trust in each taxable year of the Trust and (b) prepare and furnish (or cause to be prepared and furnished) to each Securityholder the related Internal Revenue Service Form 1099, or any successor form or the information required to be provided on such form. The Administrative Trustees shall provide the Depositor and the Property Trustee with a copy of all such returns, reports and schedules promptly after such filing or furnishing. The Trustees shall comply with United States federal withholding and backup withholding tax laws and information reporting requirements with respect to any payments to Securityholders under the Trust Securities. ARTICLE V. Trust Securities Certificates Section 5.01. Initial Ownership. Upon the creation of the Trust by the contribution by the Depositor referred to in Section 2.03 and until the issuance of the Trust Securities, and at any time during which no Trust Securities are outstanding, the Depositor shall be the sole beneficial owner of the Trust. Section 5.02. The Trust Securities Certificates. The Trust Securities Certificates shall be issued in denominations of $25 Liquidation Amount and integral multiples thereof. Subject to Section 2.04 relating to the original issuance of the Preferred Securities Certificate registered in the name of the nominee of The Depository Trust Company, the Trust Securities Certificates shall be executed on behalf of the Trust by manual or facsimile signature of at least one Administrative Trustee and, if executed on behalf of the Trust by facsimile -21- signature, countersigned by a Transfer Agent or its agent. Trust Securities Certificates bearing the manual signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust and, if executed on behalf of the Trust by facsimile signature, countersigned by a Transfer Agent or its agent, shall be validly issued and entitled to the benefits of this Trust Agreement, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the delivery of such Trust Securities Certificates or did not hold such offices at the date of delivery of such Trust Securities Certificates. A transferee of a Trust Securities Certificate shall become a Securityholder, and shall be entitled to the rights and subject to the obligations of a Securityholder hereunder, upon due registration of such Trust Securities Certificate in such transferee's name pursuant to Section 5.04. Section 5.03. Execution and Delivery of Trust Securities Certificates. On the Closing Date, the Administrative Trustees shall cause Trust Securities Certificates, in an aggregate Liquidation Amount as provided in Sections 2.04 and 2.05, to be executed on behalf of the Trust, and in the case of Preferred Securities executed by facsimile signature, countersigned by a Transfer Agent or its agent, and delivered to or upon the written order of the Depositor signed by its chairman of the board, any of its vice presidents or its Treasurer, without further corporate action by the Depositor, in authorized denominations. The Depositor agrees to indemnify, defend and hold each Transfer Agent harmless against any and all costs and liabilities incurred without negligence arising out of or in connection with any such countersigning by it. Section 5.04. Registration of Transfer and Exchange of Preferred Securities Certificates. The Registrar shall keep or cause to be kept, at its principal corporate office, a Securities Register in which, subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the registration of Preferred Securities Certificates and the Common Securities Certificates (subject to Section 5.10 in the case of the Common Securities Certificates) and registration of transfers and exchanges of Preferred Securities Certificates as herein provided. Upon surrender for registration of transfer of any Preferred Securities Certificate at the office or agency maintained pursuant to Section 5.08, the Administrative Trustees, or any one of them, shall execute on behalf of the Trust by manual or facsimile signature and, if executed on behalf of the Trust by facsimile signature, cause a Transfer Agent or its agent to countersign and deliver, in the name of the designated transferee or transferees, one or more new Preferred Securities Certificates in authorized denominations of a like aggregate Liquidation Amount. At the option of a Holder, Preferred Securities Certificates may be exchanged for other Preferred Securities Certificates in authorized denominations of the same class and of a like aggregate Liquidation Amount upon surrender of the Preferred Securities Certificates to be exchanged at the office or agency maintained pursuant to Section 5.08. -22- Every Preferred Securities Certificate presented or surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Administrative Trustees and a Transfer Agent duly executed by the Holder or such Holder's attorney duly authorized in writing. Each Preferred Securities Certificate surrendered for registration of transfer or exchange shall be canceled and subsequently disposed of by the Administrative Trustees in accordance with customary practice. The Trust shall not be required to (i) issue, register the transfer of, or exchange any Preferred Securities during a period beginning at the opening of business 15 calendar days before the day of mailing of a notice of redemption of any Preferred Securities called for redemption and ending at the close of business on the day of such mailing or (ii) register the transfer of or exchange any Preferred Securities so selected for redemption, in whole or in part, except the unredeemed portion of any such Preferred Securities being redeemed in part. No service charge shall be made for any registration of transfer or exchange of Preferred Securities Certificates, but a Transfer Agent may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Preferred Securities Certificates. Section 5.05. Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates. If (a) any mutilated Trust Securities Certificate shall be surrendered to a Transfer Agent, or if a Transfer Agent shall receive evidence to its satisfaction of the destruction, loss or theft of any Trust Securities Certificate and (b) there shall be delivered to the Transfer Agent and the Administrative Trustees such security or indemnity as may be required by them to save each of them and the Depositor harmless, then in the absence of notice that such Trust Securities Certificate shall have been acquired by a bona fide purchaser, the Administrative Trustees, or any one of them, on behalf of the Trust, shall execute by manual or facsimile signature and, if execution on behalf of the Trust is by facsimile signature, countersigned by a Transfer Agent; and the Administrative Trustees, or any one of them, shall make available for delivery, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust Securities Certificate, a new Trust Securities Certificate of like class, tenor and denomination. In connection with the issuance of any new Trust Securities Certificate under this Section, the Administrative Trustees or the Transfer Agent may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Trust Securities Certificate issued pursuant to this Section shall constitute conclusive evidence of an ownership interest in the Trust, as if originally issued, whether or not the lost, stolen or destroyed Trust Securities Certificate shall be found at any time. Section 5.06. Persons Deemed Securityholders. Prior to due presentation of a Trust Securities Certificate for registration of transfer, the Trustees and the Registrar shall be entitled to treat the Person in whose name any Trust Securities Certificate shall be registered in the Securities Register as the owner of such Trust Securities Certificate for the purpose of receiving Distributions and for all other purposes whatsoever, and neither the Trustee nor the Registrar shall be bound by any notice to the contrary. -23- Section 5.07. Access to List of Securityholders' Names and Addresses. The Administrative Trustees shall furnish or cause to be furnished (x) to the Depositor, within 15 days after receipt by any Administrative Trustee of a request therefor from the Depositor in writing and (y) to the Property Trustee, promptly after receipt by any Administrative Trustee of a request therefor from the Property Trustee in writing in order to enable the Property Trustee to discharge its obligations under this Trust Agreement, a list, in such form as the Depositor or the Property Trustee may reasonably require, of the names and addresses of the Securityholders as of the most recent Record Date. If Holders of Trust Securities Certificates evidencing ownership at such time and for the previous six months not less than 25% of the outstanding aggregate Liquidation Amount apply in writing to any Administrative Trustee, and such application states that the applicants desire to communicate with other Securityholders with respect to their rights under this Trust Agreement or under the Trust Securities Certificates and such application is accompanied by a copy of the communication that such applicants propose to transmit, then the Administrative Trustees shall, within five Business Days after the receipt of such application, afford such applicants access during normal business hours to the current list of Securityholders. Each Holder, by receiving and holding a Trust Securities Certificate, shall be deemed to have agreed not to hold either the Depositor or the Administrative Trustees accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived. Section 5.08. Maintenance of Office or Agency. The Company shall or shall cause the Transfer Agent to maintain in the Borough of Manhattan, The City of New York, an office or offices or agency or agencies where Preferred Securities Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company or the Transfer Agent in respect of the Trust Securities Certificates may be served. The Company initially designates the Corporate Trust Office of the Property Trustee as its office for such purposes. The Company shall or shall cause the Transfer Agent to give prompt written notice to the Depositor, the Property Trustee and to the Securityholders of any change in any such office or agency. Section 5.09. Appointment of Paying Agent. The Paying Agent shall make distributions to Securityholders from the Payment Account and shall report the amounts of such distributions to the Administrative Trustees and the Property Trustee. Any Paying Agent shall have the revocable power to withdraw funds from the Payment Account for the purpose of making the Distributions referred to above. The Property Trustee shall be entitled to rely upon a certificate of the Paying Agent stating in effect the amount of such funds so to be withdrawn and that same are to be applied by the Paying Agent in accordance with this Section 5.09. The Administrative Trustees or any one of them may revoke such power and remove the Paying Agent if the Administrative Trustee or any one of them determines in its sole discretion that the Paying Agent shall have failed to perform its obligations under this Trust Agreement in any material respect. The Paying Agent may choose any co-paying agent that is acceptable to the Administrative Trustees and the Depositor. The Paying Agent shall be permitted to resign upon 30 days' written notice to the Administrative Trustees and the Depositor. In the event of the removal or resignation of the Paying Agent, the Administrative -24- Trustees shall appoint a successor that is reasonably acceptable to the Property Trustee and the Depositor to act as Paying Agent (which shall be a bank, trust company or an Affiliate of the Depositor). The Administrative Trustees shall cause such successor Paying Agent or any additional Paying Agent appointed by the Administrative Trustees to execute and deliver to the Trustees an instrument in which such successor Paying Agent or additional Paying Agent shall agree with the Trustees that as Paying Agent, such successor Paying Agent or additional Paying Agent will hold all sums, if any, held by it for payment to the Securityholders in trust for the benefit of the Securityholders entitled thereto until such sums shall be paid to such Securityholders. The Paying Agent shall return all unclaimed funds to the Property Trustee and upon resignation or removal of a Paying Agent such Paying Agent shall also return all funds in its possession to the Property Trustee. The provisions of Sections 8.01, 8.03 and 8.06 shall apply to the Paying Agent appointed hereunder, and the Paying Agent shall be bound by the requirements with respect to paying agents of securities issued pursuant to the Trust Indenture Act. Any reference in this Trust Agreement to the Paying Agent shall include any co-paying agent unless the context requires otherwise. Section 5.10. Ownership of Common Securities by Depositor. On the Closing Date and on each other date provided for in Section 2.05, the Depositor shall acquire, and thereafter retain, beneficial and record ownership of the Common Securities. Any attempted transfer of the Common Securities shall be void. The Administrative Trustees shall cause each Common Securities Certificate issued to the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE". Common Securities Certificates representing the Common Securities shall be issued to the Depositor in the form of a typewritten or definitive Common Securities Certificate. Section 5.11. Definitive Preferred Securities Certificates. The Definitive Preferred Securities Certificates shall be typewritten, printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Administrative Trustees, as evidenced by the execution thereof by the Administrative Trustees, or any one of them. The Trust shall issue no Securities in bearer form. Section 5.12. Book-Entry System. Some or all of the Preferred Securities may be registered in the name of the Securities Depository or a nominee therefor, and held in the custody of the Securities Depository. In such event, a single certificate will be issued and delivered to the Securities Depository for such Preferred Securities, in which case the Owners of such Preferred Securities will not receive physical delivery of certificates for Preferred Securities. Except as provided herein, all transfers of beneficial ownership interests in such Preferred Securities will be made by book-entry only, and no investor or other party purchasing, selling or otherwise transferring beneficial ownership of the Preferred Securities will receive, hold or deliver any certificate for Preferred Securities. The Depositor, the Trustees and the Paying Agent will recognize the Securities Depository or its nominee as the Holder of Preferred Securities for all purposes, including notices and voting; PROVIDED, that solely for the purposes of determining whether the Holders of the requisite amount of Preferred Securities have voted on any matter provided for in this Trust Agreement, with -25- respect to the vote by Owners of Preferred Securities registered in the name of a Securities Depository, or its nominee, the Trustees may conclusively rely on, and shall be protected in relying on, any written instrument (including a proxy) delivered to the Trustees by such Securities Depository setting forth the Owners' votes or assigning the right to vote on any matter to any other Persons either in whole or in part. The Administrative Trustees, at the direction and expense of the Depositor, may from time to time appoint a Securities Depository or a successor thereto and enter into a letter of representations or other agreement with such Securities Depository to establish procedures with respect to the Preferred Securities. Any Securities Depository shall be a Clearing Agency. The Depositor and the Trustees covenant and agree to meet the requirements of a Securities Depository for the Preferred Securities with respect to required notices and other provisions of the letter of representations or agreement executed with respect to such Preferred Securities. Whenever the beneficial ownership of any Preferred Securities is determined through the books of a Securities Depository, the requirements in this Trust Agreement of holding, delivering or transferring such Preferred Securities shall be deemed modified with respect to such Preferred Securities to meet the requirements of the Securities Depository with respect to actions of the Trustees, the Depositor and the Paying Agent. Any provisions hereof permitting or requiring delivery of such Preferred Securities shall, while such Preferred Securities are in a book-entry system, be satisfied by the notation on the books of the Securities Depository in accordance with applicable state law. Section 5.13. Rights of Securityholders. (a) The legal title to the Trust Property is vested exclusively in the Property Trustee (in its capacity as such) in accordance with Section 2.09, and the Securityholders shall not have any right or title therein other than an undivided beneficial interest in the assets of the Trust conferred by their Trust Securities and they shall have no right to call for any partition or division of property, profits or rights of the Trust except as described below. The Trust Securities shall be personal property giving only the rights specifically set forth therein and in this Trust Agreement. The Preferred Securities shall have no preemptive or similar rights and when issued and delivered to Securityholders against payment of the purchase price therefor will be fully paid and nonassessable interests in the Trust. (b) For so long as any Preferred Securities remain Outstanding, if, upon a Debenture Event of Default that relates to the Debentures, the Debenture Trustee fails or the holders of not less than 33% in principal amount of the Debentures then outstanding fail to declare the principal of the Debentures to be immediately due and payable, the Holders of at least 33% in Liquidation Amount of the Preferred Securities then Outstanding shall have such right by a notice in writing to the Depositor and the Debenture Trustee; and upon any such declaration such principal amount of and the accrued interest on the Debentures shall become -26- immediately due and payable, provided that the payment of principal and interest on the Debentures shall remain subordinated to the extent provided in the Subordinated Indenture. (c) For so long as any Preferred Securities remain Outstanding, if the holders of the Debentures fail to waive any past Debenture Event of Default under the Subordinated Indenture and its consequences with respect to the Debentures, the Holders of not less than a majority in Liquidation Amount of the Preferred Securities may, on behalf of the Holders of all the Preferred Securities, waive any such past default and its consequences with respect to the Debentures, except a default in the payment of principal, premium or interest or a default in respect of a covenant or provision which under the Subordinated Indenture cannot be modified or amended without the consent of the holder of each outstanding Debenture. No such rescission shall affect any subsequent default or impair any right consequent thereon. (d) For so long as any Preferred Securities remain Outstanding, to the fullest extent permitted by law and subject to the terms of this Trust Agreement and the Subordinated Indenture, upon a Debenture Event of Default specified in Section 801(a) or 801(b) of the Supplemental Indenture, any Holder of Preferred Securities shall have the right to institute a proceeding directly against the Depositor, pursuant to Section 808 of the Subordinated Indenture, for enforcement of payment to such Holder of the principal amount of or interest on Debentures having a principal amount equal to the Liquidation Amount of the Preferred Securities of such Holder (a "Direct Action"). The Depositor will be subrogated to the rights of any such Holder to the extent of payment made to such Holder pursuant to this Section 5.13(d). (e) Except as set forth in this Section 5.13, the Holders of Preferred Securities shall have no right to exercise directly any right or remedy available to the holders of, or in respect of, the Debentures. Section 5.14. Agreed Tax Treatment. Each Preferred Security issued hereunder shall provide that the Company and, by its acceptance of a Preferred Security or a beneficial interest therein, the Owner of, and any Person that acquires a beneficial interest in, such Preferred Security agree that, for United States federal, state, and local tax purposes, it is intended that such Preferred Security constitute an undivided interest in indebtedness and agree to treat such Preferred Security accordingly for such purposes. ARTICLE VI. Acts of Securityholders; Meetings; Voting Section 6.01. Limitations on Voting Rights. (a) Except as provided in this Section 6.01, in Section 10.03 and as otherwise required by law, no Holder of Preferred Securities shall have any right to vote or in any manner otherwise control the administration, operation and management of the Trust or the -27- obligations of the parties hereto, nor shall anything herein set forth, or contained in the terms of the Trust Securities Certificates, be construed so as to constitute the Securityholders from time to time as partners or members of an association. (b) So long as any Debentures are held by the Property Trustee, the Trustees shall not (i) direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee, or executing any trust or power conferred on the Debenture Trustee with respect to such Debentures, (ii) waive any past default which is waivable under Section 813 of the Subordinated Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all the Debentures shall be due and payable or (iv) consent to any amendment, modification or termination of the Subordinated Indenture or the Debentures, where such consent shall be required, without, in each case, obtaining the prior approval of the Holders of at least 66 2/3% of the aggregate Liquidation Amount of the Outstanding Preferred Securities; provided, however, that where a consent under the Subordinated Indenture would require the consent of each holder of Debentures affected thereby, no such consent shall be given by any Trustee without the prior written consent of each holder of Preferred Securities. The Trustees shall not revoke any action previously authorized or approved by a vote of the Preferred Securities, except pursuant to a subsequent vote of the Preferred Securities. The Property Trustee shall notify all Holders of the Preferred Securities of any notice of default received from the Debenture Trustee with respect to the Debentures. In addition to obtaining the foregoing approvals of the Holders of the Preferred Securities, prior to taking any of the foregoing actions, the Property Trustee shall, at the expense of the Depositor, obtain an Opinion of Counsel experienced in such matters to the effect that the Trust will be classified as a "grantor trust" and not as an association taxable as a corporation for United States federal income tax purposes on account of such action. (c) If any proposed amendment to the Trust Agreement provides for, or the Trustees otherwise propose to effect, (i) any action that would materially adversely affect the powers, preferences or special rights of the Preferred Securities, whether by way of amendment to the Trust Agreement or otherwise, or (ii) the dissolution, winding-up or termination of the Trust, other than pursuant to the terms of this Trust Agreement, then the Holders of Outstanding Preferred Securities as a class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of the Holders of at least 66 2/3% in Liquidation Amount of the Outstanding Preferred Securities. No amendment to this Trust Agreement may be made if, as a result of such amendment, the Trust would not be classified as a "grantor trust" but as an association taxable as a corporation for United States federal income tax purposes. Section 6.02. Notice of Meetings. Notice of all meetings of the Holders of Preferred Securities, stating the time, place and purpose of the meeting, shall be given by the Administrative Trustees pursuant to Section 10.08 to each Holder of a Preferred Security, at his registered address, at least 15 days and not more than 90 days before the meeting. At any such meeting, any business properly before the meeting may be so considered whether or not -28- stated in the notice of the meeting. Any adjourned meeting may be held as adjourned without further notice. Section 6.03. Meetings of Holders of Preferred Securities. No annual meeting of Securityholders is required to be held. The Administrative Trustees, however, shall call a meeting of Securityholders to vote on any matter upon the written request of the Holders of 25% of the then Outstanding Preferred Securities (based upon their aggregate Liquidation Amount) and may, at any time in their discretion, call a meeting of Holders of Preferred Securities to vote on any matters as to which the Holders of Preferred Securities are entitled to vote. Holders of 50% of the then Outstanding Preferred Securities (based upon their aggregate Liquidation Amount), present in person or by proxy, shall constitute a quorum at any meeting of Securityholders. If a quorum is present at a meeting, an affirmative vote by the Holders of Preferred Securities present, in person or by proxy, holding more than the lesser of (x) 66 2/3% of the then Outstanding Preferred Securities (based upon their aggregate Liquidation Amount) held by the Holders of then Outstanding Preferred Securities present, either in person or by proxy, at such meeting and (y) 50% of the Outstanding Preferred Securities (based upon their aggregate Liquidation Amount) shall constitute the action of the Securityholders, unless this Trust Agreement requires a greater number of affirmative votes. Section 6.04. Voting Rights. Securityholders shall be entitled to one vote for each $25 of Liquidation Amount represented by their Trust Securities in respect of any matter as to which such Securityholders are entitled to vote. Section 6.05. Proxies, Etc. At any meeting of Securityholders, any Securityholder entitled to vote thereat may vote by proxy, provided that no proxy shall be voted at any meeting unless it shall have been placed on file with the Administrative Trustees, or with such other officer or agent of the Trust as the Administrative Trustees may direct, for verification prior to the time at which such vote shall be taken. Only Securityholders of record shall be entitled to vote. When Trust Securities are held jointly by several Persons, any one of them may vote at any meeting in person or by proxy in respect of such Trust Securities, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such vote shall not be received in respect of such Trust Securities. A proxy purporting to be executed by or on behalf of a Securityholder shall be deemed valid unless challenged at or prior to its exercise, or, if earlier, until eleven months after it is sent and the burden of proving invalidity shall rest on the challenger. Section 6.06. Securityholder Action by Written Consent. Any action which may be taken by Securityholders at a meeting may be taken without a meeting if Securityholders holding more than a majority of all Outstanding Trust Securities entitled to -29- vote in respect of such action (or such larger proportion thereof as shall be required by any express provision of this Trust Agreement) shall consent to the action in writing (based upon their aggregate Liquidation Amount). Section 6.07. Record Date for Voting and Other Purposes. For the purposes of determining the Securityholders who are entitled to notice of and to vote at any meeting or by written consent, or to participate in any Distribution on the Trust Securities in respect of which a record date is not otherwise provided for in this Trust Agreement, or for the purpose of any other action, the Administrative Trustees may from time to time fix a date, not more than 90 days prior to the date of any meeting of Securityholders or the payment of Distribution or other action, as the case may be, as a record date for the determination of the identity of the Securityholders of record for such purposes. Section 6.08. Acts of Securityholders. Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Trust Agreement to be given, made or taken by Securityholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Securityholders in person or by an agent duly appointed in writing; and, except as otherwise expressly provided herein, such action shall become effective when such instrument or instruments are delivered to the Administrative Trustees. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Securityholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Trust Agreement and (subject to Section 8.01) conclusive in favor of the Trustees, if made in the manner provided in this Section. The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which any Trustee deems sufficient. The ownership of Preferred Securities shall be proved by the Securities Register. Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Securityholder of any Trust Security shall bind every future Securityholder of the same Trust Security and the Securityholder of every Trust Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, -30- omitted or suffered to be done by the Trustees or the Trust in reliance thereon, whether or not notation of such action is made upon such Trust Security. Without limiting the foregoing, a Securityholder entitled hereunder to take any action hereunder with regard to any particular Trust Security may do so with regard to all or any part of the Liquidation Amount of such Trust Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such Liquidation Amount. If any dispute shall arise between or among the Securityholders and the Administrative Trustees with respect to the authenticity, validity or binding nature of any request, demand, authorization, direction, consent, waiver or other Act of such Securityholder or Trustee under this Article VI, then the determination of such matter by the Property Trustee shall be conclusive with respect to such matter. Section 6.09. Inspection of Records. Subject to Section 5.07 concerning access to the list of Securityholders, upon reasonable notice to the Administrative Trustees and the Property Trustee, the other records of the Trust shall be open to inspection by Securityholders during normal business hours for any purpose reasonably related to such Securityholder's interest as a Securityholder. ARTICLE VII. Representations and Warranties of the Property Trustee and the Delaware Trustee Section 7.01. Property Trustee. The Property Trustee hereby represents and warrants for the benefit of the Depositor and the Securityholders that: (a) the Property Trustee is a national banking association or trust company duly organized, validly existing and in good standing under the laws of the United States of America; (b) the Property Trustee has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Agreement; (c) this Trust Agreement has been duly authorized, executed and delivered by the Property Trustee and constitutes the valid and legally binding agreement of the Property Trustee enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; -31- (d) the execution, delivery and performance by the Property Trustee of this Trust Agreement will not violate, conflict with or constitute a breach of the Property Trustee's charter or by-laws; and (e) neither the authorization, execution or delivery by the Property Trustee of this Trust Agreement nor the consummation of any of the transactions by the Property Trustee contemplated herein require the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to any governmental authority or agency under any existing Federal or state law governing the banking or trust powers of the Property Trustee. Section 7.02. Delaware Trustee. The Delaware Trustee represents and warrants for the benefit of the Depositor and the Securityholders that: (a) the Delaware Trustee is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (b) the Delaware Trustee has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Agreement; (c) this Trust Agreement has been duly authorized, executed and delivered by the Delaware Trustee and constitutes the valid and legally binding agreement of the Delaware Trustee enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; (d) the execution, delivery and performance by the Delaware Trustee of this Trust Agreement will not violate the Delaware Trustee's charter or by-laws; and (e) neither the authorization, execution or delivery by the Delaware Trustee of this Trust Agreement nor the consummation of any of the transactions by the Delaware Trustee contemplated herein require the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to any governmental authority or agency under any existing Federal or Delaware law governing the corporate powers of the Delaware Trustee. ARTICLE VIII. The Trustees Section 8.01. Certain Duties and Responsibilities. -32- (a) The duties and responsibilities of the Trustees shall be as provided by this Trust Agreement and, in the case of the Property Trustee, the Trust Indenture Act, and no implied covenants or obligations shall be read into this Trust Agreement against any of the Trustees. Notwithstanding the foregoing, no provision of this Trust Agreement shall require any of the Trustees to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. No Trustee, other than the Property Trustee, shall be liable for its acts or omissions hereunder unless as a result of its gross negligence or willful misconduct. Notwithstanding anything contained in this Trust Agreement to the contrary, the duties and responsibilities of the Property Trustee under this Trust Agreement shall be subject to the protections, exculpations and limitations on liability afforded to the Property Trustee under the provisions of the Trust Indenture Act and, to the extent applicable, Rule 3A-7 under the Investment Company Act of 1940, as amended, or any successor rule thereunder. Whether or not therein expressly so provided, every provision of this Trust Agreement relating to the conduct or affecting the liability of or affording protection to the Trustees shall be subject to the provisions of this Section. (b) All payments made by the Property Trustee or a Paying Agent in respect of the Trust Securities shall be made only from the income and proceeds from the Trust Property and only to the extent that there shall be sufficient income or proceeds from the Trust Property to enable the Property Trustee or Paying Agent to make payments in accordance with the terms hereof. Each Securityholder, by its acceptance of a Trust Security, agrees that it will look solely to the income and proceeds from the Trust Property to the extent available for distribution to it as herein provided and that the Trustees are not personally liable to it for any amount distributable in respect of any Trust Security or for any other liability in respect of any Trust Security. This Section 8.01(b) does not limit the liability of the Trustees expressly set forth elsewhere in this Trust Agreement or, in the case of the Property Trustee, in the Trust Indenture Act. (c) All duties and responsibilities of the Property Trustee contained in this Trust Agreement are subject to the following: (i) the Property Trustee's sole duty with respect to the custody, safe keeping and physical preservation of the Trust Property shall be to deal with such property in a similar manner as the Property Trustee deals with similar property for its own account, subject to the protections and limitations on liability afforded to the Property Trustee under this Trust Agreement, the Trust Indenture Act and, to the extent applicable, Rule 3a-7 under the Investment Company Act of 1940, as amended; (ii) the Property Trustee shall have no duty or liability for or with respect to the value, genuineness, existence or sufficiency of the Trust Property or the payment of any taxes or assessments levied thereon or in connection therewith; -33- (iii) the Property Trustee shall not be liable for any interest on any money received by it except as it may otherwise agree with the Depositor. Money held by the Property Trustee need not be segregated from other funds held by it except in relation to the Payment Account established by the Property Trustee pursuant to this Trust Agreement and except to the extent otherwise required by law; and (iv) the Property Trustee shall not be responsible for monitoring the compliance by the Administrative Trustees or the Depositor with their respective duties under this Trust Agreement, nor shall the Property Trustee be liable for the default or misconduct of the Administrative Trustees or the Depositor. Section 8.02. Notice of Defaults. Within five Business Days after the occurrence of any Event of Default, the Property Trustee shall transmit, in the manner and to the extent provided in Section 10.08, notice of any default known to the Property Trustee to the Securityholders and the Depositor, unless such default shall have been cured or waived. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default. Section 8.03. Certain Rights of Property Trustee. Subject to the provisions of Section 8.01 and except as provided by law: (i) the Property Trustee may rely and shall be protected in acting or refraining from acting in good faith upon any resolution, Opinion of Counsel, certificate, written representation of a Holder or transferee, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, appraisal, bond, debenture, note, other evidence of indebtedness or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties; (ii) if (A) in performing its duties under this Trust Agreement the Property Trustee is required to decide between alternative courses of action or (B) in construing any of the provisions in this Trust Agreement the Property Trustee finds the same ambiguous or inconsistent with any other provisions contained herein or (C) the Property Trustee is unsure of the application of any provision of this Trust Agreement, then, except as to any matter as to which the Preferred Securityholders are entitled to vote under the terms of this Trust Agreement, the Property Trustee shall deliver a notice to the Depositor requesting written instructions of the Depositor as to the course of action to be taken. The Property Trustee shall take such action, or refrain from taking such action, as the Property Trustee shall be instructed in writing to take, or to refrain from taking, by the Depositor; provided, however, that if the Property Trustee does not receive such instructions of the Depositor within ten Business Days after it -34- has delivered such notice, or such reasonably shorter period of time set forth in such notice (which to the extent practicable shall not be less than two Business Days), it may, but shall be under no duty to, take or refrain from taking such action not inconsistent with this Trust Agreement as it shall deem advisable and in the best interests of the Securityholders, in which event the Property Trustee shall have no liability except for its own bad faith, negligence or willful misconduct; (iii) whenever in the administration of this Trust Agreement the Property Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Property Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, request and rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Depositor or the Administrative Trustees; (iv) the Property Trustee may consult with counsel of its selection and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (v) the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement at the request or direction of any of the Securityholders pursuant to this Trust Agreement, unless such Securityholders shall have offered to the Property Trustee reasonable security or indemnity against the costs, expenses (including reasonable attorneys' fees and expenses) and liabilities which might be incurred by it in complying with such request or direction; (vi) the Property Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, approval, bond, debenture, note or other evidence of indebtedness or other paper or document reasonably believed by it to be genuine, unless requested in writing to do so by one or more Securityholders, but the Property Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Property Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Depositor personally or by agent or attorney; (vii) the Property Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents or attorneys, and the Property Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with -35- due care by it hereunder, provided that the Property Trustee shall be responsible for its own negligence or recklessness with respect to selection of any agent or attorney appointed by it hereunder; (viii) the Property Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Trust Agreement; (ix) the Property Trustee shall not be charged with knowledge of any default or Event of Default with respect to the Trust Securities unless either (1) a Responsible Officer of the Property Trustee shall have actual knowledge of the default or Event of Default or (2) written notice of such default or Event of Default shall have been given to the Property Trustee by the Depositor, the Administrative Trustees or by any Holder of the Trust Securities; (x) no provision of this Trust Agreement shall be deemed to impose any duty or obligation on the Property Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Property Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts or to exercise any such right, power, duty or obligation; and no permissive or discretionary power or authority available to the Property Trustee shall be construed to be a duty; (xi) no provision of this Trust Agreement shall require the Property Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Property Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Trust Agreement or adequate indemnity against such risk or liability is not reasonably assured to it; (xii) the Property Trustee shall have no duty to see to any recording, filing or registration of any instrument (including any financing or continuation statement or any tax or securities) (or any rerecording, refiling or registration thereof); (xiii) the Property Trustee shall have the right at any time to seek instructions concerning the administration of this Trust Agreement from any court of competent jurisdiction; and (xiv) whenever in the administration of this Trust Agreement the Property Trustee shall deem it desirable to receive instructions with respect to enforcing -36- any remedy or right or taking any other action hereunder the Property Trustee (i) may request instructions from the Holders of the Trust Securities, which instructions may only be given by the Holders of the same proportion of Liquidation Amount of the Trust Securities as would be entitled to direct the Property Trustee under the terms of this Trust Agreement in respect of such remedies, rights or actions, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in acting in accordance with such instructions. Section 8.04. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Trust Securities Certificates shall be taken as the statements of the Trust or the Depositor, and the Trustees do not assume any responsibility for their correctness. The Trustees make no representations as to the value or condition of the property of the Trust or any part thereof or as to the title of the Trust thereto or as to the security afforded thereby or hereby, or as to the validity or genuineness of any securities at any time pledged and deposited with any Trustees hereunder, nor as to the validity or sufficiency of this Trust Agreement or the Trust Securities. The Trustees shall not be accountable for the use or application by the Trust of the proceeds of the Trust Securities in accordance with Section 2.05. Section 8.05. May Hold Securities. Except as provided in the definition of the term "Outstanding" in Article I, any Trustee or any other agent of any Trustee or the Trust, in its individual or any other capacity, may become the owner or pledgee of Trust Securities and may otherwise deal with the Trust with the same rights it would have if it were not a Trustee or such other agent. Section 8.06. Compensation; Fees; Indemnity. The Depositor agrees (1) to pay to the Trustees from time to time reasonable compensation for all services rendered by the Trustees hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustees upon request for all reasonable expenses, disbursements and advances reasonably incurred or made by the Trustees in accordance with any provision of this Trust Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence (gross negligence, in the case of any Administrative Trustee), bad faith or willful misconduct; and (3) to indemnify each Trustee, any Affiliate of any Trustee, and any officer, director, shareholder or employee of any Trustee for, and to hold each of them harmless against, any and all loss, damage, claims, liability or expenses incurred without negligence -37- (gross negligence, in the case of any Administrative Trustee), bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or administration of this Trust Agreement, including the reasonable costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. As security for the performance of the obligations of the Depositor under this Section, each of the Trustees shall have a lien prior to the Trust Securities upon all property and funds held or collected by such Trustee as such, except funds held in trust for the payment of Distributions on the Trust Securities. The provisions of this Section shall survive the termination of this Trust Agreement. Section 8.07. Certain Trustees Required; Eligibility. (a) There shall at all times be a Property Trustee hereunder with respect to the Trust Securities. The Property Trustee shall be a Person that has a combined capital and surplus of at least $50,000,000. If any such Person publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Property Trustee with respect to the Trust Securities shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article VIII. (b) There shall at all times be one or more Administrative Trustees hereunder with respect to the Trust Securities. Each Administrative Trustee shall be either a natural person who is at least 21 years of age or a legal entity that shall act through one or more persons authorized to bind such entity. (c) There shall at all times be a Delaware Trustee with respect to the Trust Securities. The Delaware Trustee shall either be (i) a natural person who is at least 21 years of age and a resident of the State of Delaware or (ii) a legal entity with its principal place of business in the State of Delaware that otherwise meets the requirements of applicable Delaware law and that shall act through one or more persons authorized to bind such entity. -38- Section 8.08. Conflicting Interests. If the Property Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Property Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Trust Agreement. The Subordinated Indenture and the Guarantee Agreement shall be deemed to be specifically described in this Trust Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. Section 8.09. Co-Trustees and Separate Trustee. Unless a Debenture Event of Default shall have occurred and be continuing, at any time or times, for the purpose of meeting the legal requirements of the Trust Indenture Act or of any jurisdiction in which any part of the Trust Property may at the time be located, the Depositor and the Property Trustee shall have power to appoint, and upon the written request of the Property Trustee, the Depositor shall for such purpose join with the Property Trustee in the execution, delivery, and performance of all instruments and agreements necessary or proper to appoint, one or more Persons approved by the Property Trustee either to act as co-trustee, jointly with the Property Trustee, of all or any part of such Trust Property, or to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section. If the Depositor does not join in such appointment within 15 days after the receipt by it of a request so to do, or in case an Event of Default under the Subordinated Indenture has occurred and is continuing, the Property Trustee alone shall have power to make such appointment. Should any written instrument from the Depositor be required by any co-trustee or separate trustee so appointed for more fully confirming to such co-trustee or separate trustee such property, title, right, or power, any and all such instruments shall, on request, be executed, acknowledged, and delivered by the Depositor. Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms, namely: (1) The Trust Securities shall be executed and delivered and all rights, powers, duties, and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustees designated for such purpose hereunder, shall be exercised, solely by such Trustees. (2) The rights, powers, duties, and obligations hereby conferred or imposed upon the Property Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed by the Property Trustee or -39- by the Property Trustee and such co-trustee or separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Property Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties, and obligations shall be exercised and performed by such co-trustee or separate trustee. (3) The Property Trustee at any time, by an instrument in writing executed by it, with the written concurrence of the Depositor, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section 8.09, and, in case an Event of Default under the Subordinated Indenture has occurred and is continuing, the Property Trustee shall have power to accept the resignation of, or remove, any such co-trustee or separate trustee without the concurrence of the Depositor. Upon the written request of the Property Trustee, the Depositor shall join with the Property Trustee in the execution, delivery, and performance of all instruments and agreements necessary or proper to effectuate such resignation or removal. A successor to any co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section. (4) No co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Trustee, or any other such trustee hereunder. (5) The Property Trustee shall not be liable by reason of any act of a co-trustee or separate trustee. (6) Any Act of Holders delivered to the Property Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee. Section 8.10. Resignation and Removal; Appointment of Successor. No resignation or removal of any Trustee (as the case may be, the "Relevant Trustee") and no appointment of a successor Relevant Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Relevant Trustee in accordance with the applicable requirements of Section 8.11. The Relevant Trustee may resign at any time by giving written notice thereof to the Common Securityholders. If the instrument of acceptance by a successor Relevant Trustee required by Section 8.11 shall not have been delivered to the Relevant Trustee within 30 days after the giving of such notice of resignation, the resigning Relevant Trustee may petition any court of competent jurisdiction for the appointment of a successor Relevant Trustee. Unless a Debenture Event of Default shall have occurred and be continuing, the Relevant Trustee may be removed at any time by Act of the Common Securityholder. If a Debenture Event of Default shall have occurred and be continuing, the Property Trustee may be removed at such time only by Act of the Securityholders of a majority of the aggregate -40- Liquidation Amount of the Outstanding Preferred Securities, delivered to the Property Trustee (in its individual capacity and on behalf of the Trust). If the Relevant Trustee shall resign, be removed or become incapable of continuing to act as Relevant Trustee at a time when no Debenture Event of Default shall have occurred and be continuing, the Common Securityholder, by Act of the Common Securityholder delivered to the retiring Relevant Trustee, shall promptly appoint a successor Relevant Trustee or Trustees, and the retiring Relevant Trustee shall comply with the applicable requirements of Section 8.11. If the Property Trustee shall resign, be removed or become incapable of continuing to act as the Property Trustee at a time when a Debenture Event of Default shall have occurred and be continuing, the Preferred Securityholders, by Act of the Preferred Securityholders of a majority in Liquidation Amount of the Outstanding Preferred Securities delivered to the retiring Property Trustee, shall promptly appoint a successor Property Trustee, and such successor Property Trustee shall comply with the applicable requirements of Section 8.11. If no successor Relevant Trustee shall have been so appointed by the Common Securityholders or the Preferred Securityholders and accepted appointment in the manner required by Section 8.11, any Securityholder who has been a Securityholder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Relevant Trustee. The retiring Relevant Trustee shall give notice of each resignation and each removal of the Relevant Trustee and each appointment of a successor Trustee to the Common Securityholders in the manner provided in Section 10.08 and shall give notice to the Depositor. Each notice shall include the name and address of the successor Relevant Trustee and, in the case of the Property Trustee, the address of its Corporate Trust Office. Notwithstanding the foregoing or any other provision of this Trust Agreement, in the event any Administrative Trustee or a Delaware Trustee who is a natural person dies or becomes incompetent or incapacitated, the vacancy created by such death, incompetence or incapacity may be filled by (i) the unanimous act of remaining Administrative Trustees if there are at least two of them or (ii) otherwise by the Depositor (with the successor in each case being a Person who satisfies the eligibility requirements for Administrative Trustees or Delaware Trustee, as the case may be, set forth in Section 8.07). Additionally, notwithstanding the foregoing or any other provision of this Trust Agreement, in the event the Depositor reasonably believes that any Administrative Trustee who is a natural person has become incompetent or incapacitated, the Depositor, by notice to the remaining Trustees, may terminate the status of such Person as an Administrative Trustee (in which case the vacancy so created will be filled in accordance with the preceding sentence). Section 8.11. Acceptance of Appointment by Successor. In case of the appointment hereunder of a successor Relevant Trustee, the retiring Relevant Trustee and each successor Trustee shall execute and deliver an instrument wherein each successor Relevant Trustee shall accept such appointment and which shall contain such provisions as shall be -41- necessary or desirable to transfer and confirm to, and to vest in, each successor Relevant Trustee all the rights, powers, trusts and duties of the retiring Relevant Trustee with respect to the Trust Securities and the Trust and upon the execution and delivery of such instrument the resignation or removal of the retiring Relevant Trustee shall become effective to the extent provided therein and each such successor Relevant Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Relevant Trustee; but, on request of the Trust or any successor Relevant Trustee such retiring Relevant Trustee shall duly assign, transfer and deliver to such successor Trustee all Trust Property, all proceeds thereof and money held by such retiring Relevant Trustee hereunder with respect to the Trust Securities and the Trust. Upon request of any such successor Relevant Trustee, the retiring Relevant Trustee shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Relevant Trustee all such rights, powers and trusts referred to in the first or second preceding paragraph, as the case may be. No successor Relevant Trustee shall accept its appointment unless at the time of such acceptance such successor Relevant Trustee shall be qualified and eligible under this Article VIII. Section 8.12. Merger, Conversion, Consolidation or Succession to Business. Any Person into which the Property Trustee or the Delaware Trustee or any Administrative Trustee or any Trustee that is not a natural person may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Relevant Trustee shall be a party, or any Person succeeding to all or substantially all the corporate trust business of such Relevant Trustee, shall be the successor of such Relevant Trustee hereunder, provided such Person shall be otherwise qualified and eligible under this Article VIII, without the execution or filing of any paper or any further act on the part of any of the parties hereto. Section 8.13. Preferential Collection of Claims Against Depositor or Trust. If and when the Property Trustee shall be or become a creditor of the Depositor or the Trust (or any other obligor upon the Debentures or the Trust Securities), the Property Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Depositor or Trust (or any such other obligor). Section 8.14. Reports by Property Trustee. (a) the Property Trustee shall transmit to Securityholders such reports concerning the Property Trustee and its actions under this Trust Agreement as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. Such of those reports as are required to be transmitted by the Property Trustee pursuant to Section 313(a) of the Trust Indenture Act shall be so transmitted within 60 days after _______ of each year, commencing ____________, 1997. -42- (b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Property Trustee with each stock exchange upon which the Trust Securities are listed, with the Commission and with the Depositor. The Depositor will notify the Property Trustee when any Trust Securities are listed on any stock exchange. Section 8.15. Reports to the Property Trustee. The Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such documents, reports and information as required by Section 314 (if any) and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. Section 8.16. Evidence of Compliance with Conditions Precedent. Each of the Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such evidence of compliance with any conditions precedent, if any, provided for in this Trust Agreement (including any covenants compliance with which constitutes a condition precedent) that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) of the Trust Indenture Act may be given in the form of an Officers' Certificate. Section 8.17. Number of Trustees. (a) The number of Trustees shall be five, provided that Depositor, by written instrument may increase or decrease the number of Administrative Trustees. (b) If a Trustee ceases to hold office for any reason and the number of Administrative Trustees is not reduced pursuant to Section 8.17(a), or if the number of Trustees is increased pursuant to Section 8.17(a), a vacancy shall occur. The vacancy shall be filled with a Trustee appointed in accordance with Section 8.10. (c) The death, resignation, retirement, removal, bankruptcy, incompetence or incapacity to perform the duties of a Trustee shall not operate to annul the Trust. Whenever a vacancy in the number of Administrative Trustees shall occur, until such vacancy is filled by the appointment of an Administrative Trustee in accordance with Section 8.10, the Administrative Trustees in office, regardless of their number (and notwithstanding any other provision of this Agreement), shall have all the powers granted to the Administrative Trustees and shall discharge all the duties imposed upon the Administrative Trustees by this Trust Agreement. -43- Section 8.18. Delegation of Power. (a) Any Administrative Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purpose of executing any documents contemplated in Section 2.07(a), including any registration statement or amendment thereto filed with the Commission, or making any other governmental filing; and (b) the Administrative Trustees shall have power to delegate from time to time to such of their number the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Administrative Trustees or otherwise as the Administrative Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of the Trust, as set forth herein. Section 8.19. Fiduciary Duty. (a) To the extent that, at law or in equity, an Indemnified Person has duties (including fiduciary duties) and liabilities relating thereto to the Trust or to any other Covered Person, an Indemnified Person acting under this Trust Agreement shall not be liable to the Trust or to any other Covered Person for its good faith reliance on the provisions of this Trust Agreement. The provisions of this Trust Agreement, to the extent that they restrict the duties and liabilities of an Indemnified Person otherwise existing at law or in equity (other than the duties imposed on the Property Trustee under the Trust Indenture Act), are agreed by the parties hereto to replace such other duties and liabilities of such Indemnified Person; (b) Unless otherwise expressly provided herein and subject to the provisions of the Trust Indenture Act: (i) whenever a conflict of interest exists or arises between an Indemnified Person and any Covered Person; or (ii) whenever this Trust Agreement or any other agreement contemplated herein or therein provides that an Indemnified Person shall act in a manner that is, or provides terms that are, fair and reasonable to the Trust or any Holder of Trust Securities, the Indemnified Person shall resolve such conflict of interest, take such action or provide such terms, considering in each case the relative interest of each party (including its own interest) to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, and any applicable generally accepted accounting practices or principles. In the absence of bad faith by the Indemnified Person, the resolution, action or term so made, taken or provided by the Indemnified Person shall not constitute a breach of this Trust Agreement or any other agreement contemplated herein or of any duty or obligation of the Indemnified Person at law or in equity or otherwise; and -44- (c) Unless otherwise expressly provided herein and subject to the provisions of the Trust Indenture Act, whenever in this Trust Agreement an Indemnified Person is permitted or required to make a decision (i) in its "discretion" or under a grant of similar authority, the Indemnified Person shall be entitled to consider such interests and factors as it reasonably desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Trust or any other Person; or (ii) in its "good faith" or under another express standard, the Indemnified Person shall act under such express standard and shall not be subject to any other or different standard imposed by this Trust Agreement or by applicable law. Section 8.20 Outside Business. The Depositor and any Trustee may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Trust, and the Trust and the Holders of Trust Securities shall have no rights by virtue of this Trust Agreement in and to such independent ventures or the income or profits derived therefrom, and the pursuit of any such venture, even if competitive with the business of the Trust, shall not be deemed wrongful or improper. Neither the Depositor, nor any Trustee, shall be obligated to present any particular investment or other opportunity to the Trust even if such opportunity is of a character that, if presented to the Trust, could be taken by the Trust, and the Depositor or any Trustee shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment or other opportunity. Any Trustee may engage or be interested in any financial or other transaction with the Depositor or any Affiliate of the Depositor, or may act as depository for, trustee or agent for, or act on any committee or body of holders of, securities or other obligations of the Depositor or its Affiliates. ARTICLE IX. Termination and Liquidation Section 9.01. Termination Upon Expiration Date. The Trust shall automatically dissolve on _____________, ______ (the "Expiration Date") and the Trust Property shall be distributed in accordance with Section 9.04. Section 9.02. Early Termination. Upon the first to occur of any of the following events (such first occurrence, an "Early Termination Event"): (i) the occurrence of a Bankruptcy Event in respect of, or the dissolution or liquidation of, the Depositor; -45- (ii) the redemption of all of the Preferred Securities; (iii) delivery of written direction to the Property Trustee by the Depositor at any time (which direction is wholly optional and within the discretion of the Depositor) to dissolve the Trust and distribute the Debentures to Securityholders in accordance with Section 9.04; (iv) an order for judicial dissolution of the Trust having been entered by a court of competent jurisdiction; the Trust shall dissolve and the Trustees shall take such action as is required by Section 9.04. Section 9.03. Termination. The respective obligations and responsibilities of the Trustees and the Trust created hereby shall terminate upon the latest to occur of the following: (i) the distribution by the Property Trustee to Securityholders upon the liquidation of the Trust pursuant to Section 9.04, or upon the redemption of all of the Trust Securities pursuant to Section 4.02, of all amounts required to be distributed hereunder upon the final payment of the Trust Securities; (ii) the payment or provision for payment of any expenses owed by the Trust; (iii) the discharge of all administrative duties of the Administrative Trustees, including the performance of any tax reporting obligations with respect to the Trust or the Securityholders and (iv) the filing of a certificate of cancellation under the Delaware Business Trust Act. Section 9.04. Liquidation. (a) Upon the occurrence of the Expiration Date or an Early Termination Event specified in clause (i), (iii) or (iv) of Section 9.02, after satisfaction of creditors of the Trust, if any, as provided by applicable law, the Trust shall be liquidated by the Property Trustee as expeditiously as the Property Trustee determines to be appropriate by distributing to each Securityholder a Like Amount of Debentures, subject to Section 9.04(d). Notice of liquidation shall be given by the Administrative Trustees by first-class mail, postage prepaid, mailed not later than 30 nor more than 60 days prior to the Liquidation Date to each Holder of Trust Securities at such Holder's address appearing in the Securities Register. All notices of liquidation shall: (i) state the Liquidation Date; (ii) state that from and after the Liquidation Date, the Trust Securities will no longer be deemed to be outstanding and any Trust Securities Certificates not surrendered for exchange will be deemed to represent a Like Amount of Debentures; and (iii) provide such information with respect to the mechanics by which Holders may exchange Trust Securities Certificates for Debentures, or if Section 9.04(d) applies, receive a Liquidation Distribution, as the Administrative Trustees or the Property Trustee shall deem appropriate. -46- (b) Except where Section 9.02(ii) or 9.04(d) applies, in order to effect the liquidation of the Trust, if any, and distribution of the Debentures to Securityholders, the Property Trustee shall establish a record date for such distribution (which shall be not more than 45 days prior to the Liquidation Date) and, either itself acting as exchange agent or through the appointment of a separate exchange agent, shall establish such procedures as it shall deem appropriate to effect the distribution of Debentures in exchange for the Outstanding Trust Securities Certificates. (c) Except where Section 9.02(ii) or 9.04(d) applies, after the Liquidation Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii) certificates (or, at the election of the Depositor, a Global Debenture, subject to the provisions of the Indenture) representing a Like Amount of Debentures will be issued to Holders of Trust Securities Certificates, upon surrender of such Trust Securities Certificates to the Administrative Trustees or their agent for exchange, (iii) the Depositor shall use its reasonable efforts to have the Debentures listed on the New York Stock Exchange or on such other securities exchange or other organization as the Preferred Securities are then listed or traded, (iv) any Trust Securities Certificates not so surrendered for exchange will be deemed to represent a Like Amount of Debentures, accruing interest at the rate provided for in the Debentures from the last Distribution Date on which a Distribution was made on such Trust Certificates until such Trust Securities Certificates are so surrendered (and until such Trust Securities Certificates are so surrendered, no payments or interest or principal will be made to Holders of Trust Securities Certificates with respect to such Debentures) and (v) all rights of Securityholders holding Trust Securities will cease, except the right of such Securityholders to receive Debentures upon surrender of Trust Securities Certificates. (d) In the event that, notwithstanding the other provisions of this Section 9.04, whether because of an order for dissolution entered by a court of competent jurisdiction or otherwise, distribution of the Debentures in the manner provided herein is determined by the Property Trustee not to be practical, the Trust Property shall be liquidated, and the Trust shall be dissolved, wound-up or terminated, by the Property Trustee in such manner as the Property Trustee determines. In such event, on the date of the dissolution, winding-up or other termination of the Trust, Securityholders will be entitled to receive out of the assets of the Trust available for distribution to Securityholders, after satisfaction of liabilities to creditors of the Trust, if any, as provided by applicable law, an amount equal to the Liquidation Amount per Trust Security plus accumulated and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"). If, upon any such dissolution, winding up or termination, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then, subject to the next succeeding sentence, the amounts payable by the Trust on the Trust Securities shall be paid on a pro rata basis (based upon Liquidation Amounts). The Holder of Common Securities will be entitled to receive Liquidation Distributions upon any such dissolution, winding-up or termination pro rata (determined as aforesaid) with Holders of Preferred Securities, except that, if a Debenture Event of Default has occurred and is continuing or if a Debenture Event of Default has not occurred solely by reason of a requirement that time lapse -47- or notice be given, the Preferred Securities shall have a priority over the Common Securities. ARTICLE X. Miscellaneous Provisions Section 10.01. Guarantee by the Depositor and Assumption of Obligations. Subject to the terms and conditions hereof, the Depositor irrevocably and unconditionally guarantees to each Person to whom the Trust is now or hereafter becomes indebted or liable (the "Beneficiaries"), and agrees to assume liability for, the full payment, when and as due, of any and all Obligations (as hereinafter defined) to such Beneficiaries. As used herein, "Obligations" means any indebtedness, expenses or liabilities of the Trust, other than obligations of the Trust to pay to Holders or other similar interests in the Trust the amounts due such Holders pursuant to the terms of the Preferred Securities or such other similar interests, as the case may be. This guarantee and assumption is intended to be for the benefit, of, and to be enforceable by, all such Beneficiaries, whether or not such Beneficiaries have received notice hereof. Section 10.02. Limitation of Rights of Securityholders. The death or incapacity of any person having an interest, beneficial or otherwise, in a Trust Security shall not operate to terminate this Trust Agreement, nor entitle the legal representatives or heirs of such person or any Securityholder for such person, to claim an accounting, take any action or bring any proceeding in any court for a partition or winding up of the arrangements contemplated hereby, nor otherwise affect the rights, obligations and liabilities of the parties hereto or any of them. Section 10.03. Amendment. (a) This Trust Agreement may be amended from time to time by the Trust (on approval of a majority of the Administrative Trustees and the Depositor, without the consent of any Securityholders), (i) to cure any ambiguity, correct or supplement any provision herein or therein which may be inconsistent with any other provision herein or therein, or to make any other provisions with respect to matters or questions arising under this Trust Agreement, which shall not be inconsistent with the other provisions of this Trust Agreement or (ii) to modify, eliminate or add to any provisions of this Trust Agreement to such extent as shall be necessary to ensure that the Trust will not be classified for United States federal income tax purposes other than as a "grantor trust" and not as an association taxable as a corporation at any time that any Trust Securities are outstanding or to ensure the Trust's exemption from the status of an "investment company" under the Investment Company Act of 1940, as amended; provided, however, that, except in the case of clause (ii), such action shall not adversely affect in any material respect the interests of any Securityholder and, in the case of clause (i), any amendments of this Trust Agreement shall become effective when notice thereof is given to the Securityholders. -48- (b) Except as provided in Sections 6.01(c) and 10.03(c), any provision of this Trust Agreement may be amended by the Administrative Trustees and the Depositor with (i) the consent of Holders of Trust Securities representing not less than a majority (based upon Liquidation Amounts) of the Outstanding Trust Securities and (ii) receipt by the Trustees of an Opinion of Counsel to the effect that such amendment or the exercise of any power granted to the Trustees in accordance with such amendment will not affect the Trust's status as a grantor trust for federal income tax purposes or the Trust's exemption from status of an "investment company" under the Investment Company Act of 1940, as amended. (c) In addition to and notwithstanding any other provision in this Trust Agreement, without the consent of each affected Securityholder (such consent being obtained in accordance with Section 6.03 or 6.06), this Trust Agreement may not be amended to (i) change the amount or timing of any Distribution on the Trust Securities or otherwise adversely affect the amount of any Distribution required to be made in respect of the Trust Securities as of a specified date or (ii) restrict the right of a Securityholder to institute suit for the enforcement of any such payment on or after such date. (d) Notwithstanding any other provisions of this Trust Agreement, no Trustee shall enter into or consent to any amendment to this Trust Agreement which would cause the Trust to fail or cease to qualify for the exemption from status of an "investment company" under the Investment Company Act of 1940, as amended, afforded by Rule 3a-5 thereunder. (e) Notwithstanding anything in this Trust Agreement to the contrary, without the consent of the Depositor and the Trustees, this Trust Agreement may not be amended in a manner which imposes any additional obligation on the Depositor or any Trustee. (f) In the event that any amendment to this Trust Agreement is made, the Administrative Trustees shall promptly provide to the Depositor a copy of such amendment. (g) The Property Trustee is entitled to receive an Opinion of Counsel as conclusive evidence that any amendment to this Trust Agreement executed pursuant to this Section 10.03 is authorized or permitted by, and conforms to, the terms of this Section 10.03, has been duly authorized by and lawfully executed and delivered on behalf of the other requisite parties, and that it is proper for the Property Trustee under the provisions of this Section 10.03 to join in the execution thereof. Section 10.04. Separability. In case any provision in this Trust Agreement or in the Trust Securities Certificates shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 10.05. Governing Law. This Trust Agreement and the rights and obligations of each of the Securityholders, the Trust and the Trustees with respect to this Trust -49- Agreement and the Trust Securities shall be construed in accordance with and governed by the laws of the State of Delaware (without regard to conflict of laws principles). Section 10.06. Successors. This Trust Agreement shall be binding upon and shall inure to the benefit of any successor to the Trust or the Relevant Trustees or any of them, including any successor by operation of law. Section 10.07. Headings. The Article and Section headings are for convenience only and shall not affect the construction of this Trust Agreement. Section 10.08. Notice and Demand. Any notice, demand or other communication which by any provision of this Trust Agreement is required or permitted to be given or served to or upon any Securityholder or the Depositor may be given or served in writing by deposit thereof, postage prepaid, in the United States mail, hand delivery or facsimile transmission, in each case, addressed, (i) in the case of a Preferred Securityholder, to such Preferred Securityholder as such Securityholder's name and address may appear on the Securities Register and (ii) in the case of the Common Securityholder or the Depositor, to MidAmerican Energy Company, 666 Grand Avenue, P.O. Box 657, Des Moines, Iowa 50303-0657, Attention: Treasurer, facsimile no. 515-242-4261, with a copy to the Secretary, facsimile no. 515-242-4261. Such notice, demand or other communication to or upon a Securityholder shall be deemed to have been sufficiently given or made, for all purposes, upon hand delivery, mailing or transmission. Any notice, demand or other communication which by any provision of this Trust Agreement is required or permitted to be given or served to or upon the Trust, the Property Trustee, the Delaware Trustee or the Administrative Trustees shall be given in writing addressed (until another address is published by the Trust) as follows: (i) with respect to the Property Trustee or the Delaware Trustee, One First National Plaza, Suite 0126, Chicago, Illinois 60670- 0126, Attention: Corporate Trust Administration with a copy to: First Chicago Delaware Inc., 300 King Street, Wilmington, Delaware 19801 and (ii) with respect to the Trust or the Administrative Trustees, at the address above for notice to the Depositor, marked "Attention: Administrative Trustees for MidAmerican Energy Financing I". Such notice, demand or other communication to or upon the Trust or the Property Trustee shall be deemed to have been sufficiently given or made only upon actual receipt of the writing by the Trust or the Property Trustee. Section 10.09. Agreement Not to Petition. Each of the Trustees and the Depositor agrees for the benefit of the Securityholders that, until at least one year and one day after the Trust has been terminated in accordance with Article IX, it shall not file, or join in the filing of, a petition against the Trust under any bankruptcy, reorganization, arrangement, insolvency, liquidation or other similar law (including, without limitation, the United States Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in the commencement of any proceeding against the Trust under any Bankruptcy Law. In the event the Depositor takes action in violation of this Section 10.09, the Property Trustee agrees, for the benefit of -50- Securityholders, that it shall file an answer with the bankruptcy court or otherwise properly contest the filing of such petition by the Depositor against the Trust or the commencement of such action and raise the defense that the Depositor has agreed in writing not to take such action and should be stopped and precluded therefrom and such other defenses, if any, as counsel for the Property Trustee or the Trust may assert. The provisions of this Section 10.09 shall survive the termination of this Trust Agreement. Section 10.10. Conflict with Trust Indenture Act. (a) This Trust Agreement is subject to the provisions of the Trust Indenture Act that are required or deemed to be part of this Trust Agreement and shall, to the extent applicable, be governed by such provisions. (b) The Property Trustee shall be the only Trustee which is a trustee for the purposes of the Trust Indenture Act. (c) If any provision hereof limits, qualifies or conflicts with another provision hereof which is required or deemed to be included in this Trust Agreement by any of the provisions of the Trust Indenture Act, such required or deemed provision shall control. (d) The application of the Trust Indenture Act to this Trust Agreement shall not affect the nature of the Trust Securities as equity securities representing interests in the Trust. THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THOSE TERMS AND PROVISIONS SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS. IN WITNESS WHEREOF, the parties have caused this Trust Agreement to be duly executed, all as of the day and year first above written. MIDAMERICAN ENERGY COMPANY By: __________________________________ Title: -51- THE FIRST NATIONAL BANK OF CHICAGO , As Property Trustee By: __________________________________ Title: -52- FIRST CHICAGO DELAWARE INC., as Delaware Trustee By: __________________________________ Title: __________________________________ Philip G. Lindner, solely in his capacity as Administrative Trustee ______________________________ J. Sue Rozema solely in her capacity as Administrative Trustee ______________________________ Paul J. Leighton solely in his capacity as Administrative Trustee -53- EXHIBIT A CERTIFICATE OF TRUST OF MIDAMERICAN ENERGY FINANCING I THIS CERTIFICATE OF TRUST of MidAmerican Energy Financing I (the "Trust"), dated as of October 24, 1996, is being duly executed and filed by the undersigned, as trustees, to create a business trust under the Delaware Business Trust Act (12 DEL. C. Section 3801, ET SEQ.). 1. Name. The name of the business trust being created hereby is MidAmerican Energy Financing I. 2. Delaware Trustee. The name and business address of the trustee of the Trust with a principal place of business in the State of Delaware are First Chicago Delaware Inc., 300 King Street, Wilmington, Delaware 19801. 3. Effective Date. This Certificate of Trust shall be effective as of its filing. IN WITNESS WHEREOF, the undersigned, being the only trustees of the Trust, have executed this Certificate of Trust as of the date first above written. FIRST CHICAGO DELAWARE INC., not PAUL J. LEIGHTON, in its individual capacity but solely not in his individual capacity as Trustee but solely as Trustee By: ______________________________ By: ______________________________ Name: Name: Title: Title: THE FIRST NATIONAL BANK OF CHICAGO , not in its individual capacity but solely as Trustee By: ______________________________ Name: Title: EXHIBIT B THIS CERTIFICATE IS NOT TRANSFERABLE Certificate Number Number of Common Securities C-[ ] Certificate Evidencing Common Securities of MIDAMERICAN ENERGY FINANCING I Common Securities (Liquidation Amount $25 per Common Security) MidAmerican Energy Financing I, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that MidAmerican Energy Company (the "Holder") is the registered owner of _____ (_____) common securities of the Trust representing undivided beneficial interests in the assets of the Trust and designated the Common Securities (liquidation amount $25 per Common Security) (the "Common Securities"). In accordance with Section 5.10 of the Trust Agreement (as defined below) the Common Securities are not transferable and any attempted transfer hereof shall be void. The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities are set forth in, and this certificate and the Common Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust dated as of _______ ___, 1996, as the same may be amended from time to time (the "Trust Agreement"). The Trust will furnish a copy of the Trust Agreement to the Holder without charge upon written request to the Trust at its principal place of business or registered office. Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder. IN WITNESS WHEREOF, an Administrative Trustee of the Trust has executed this certificate for and on behalf of the Trust this ____ day of _________, 199 . MIDAMERICAN ENERGY FINANCING I By: ______________________________ not in his (her) individual capacity, but solely as Administrative Trustee -2- EXHIBIT C AGREEMENT AS TO EXPENSES AND LIABILITIES AGREEMENT dated as of ________ ___, 1996, between MidAmerican Energy Company, an Iowa corporation ("MidAmerican Energy"), and MidAmerican Energy Financing I, a Delaware business trust (the "Trust"). WHEREAS, the Trust intends to issue its Common Securities (the "Common Securities") to and receive Debentures from MidAmerican Energy and to issue its ___% Preferred Securities (the "Preferred Securities") with such powers, preferences and special rights and restrictions as are set forth in the Amended and Restated Trust Agreement of the Trust dated as of ________ __, 1996 as the same may be amended from time to time (the "Trust Agreement"); WHEREAS, MidAmerican Energy is the issuer of the Debentures; NOW, THEREFORE, in consideration of the acceptance by each holder of the Preferred Securities, which acceptance MidAmerican Energy hereby agrees shall benefit MidAmerican Energy and which acceptance MidAmerican Energy acknowledges will be made in reliance upon the execution and delivery of this Agreement, MidAmerican Energy, including in its capacity as holder of the Common Securities, and the Trust hereby agree as follows: ARTICLE I Section 1.01 ASSUMPTION BY MIDAMERICAN ENERGY. Subject to the terms and conditions hereof, MidAmerican Energy hereby irrevocably and unconditionally assumes the full payment, when and as due, of any and all Obligations (as hereinafter defined) to each person or entity to whom the Trust is now or hereafter becomes indebted or liable (the "Beneficiaries"). As used herein, "Obligations" means any indebtedness, expenses or liabilities of the Trust, other than (i) obligations of the Trust to pay to holders of any Preferred Securities or other similar interests in the Trust the amounts due such holders pursuant to the terms of the Preferred Securities or such other similar interests, as the case may be and (ii) obligations arising out of the negligence, willful misconduct or bad faith of the Trustees of the Trust. This Agreement is intended to be for the benefit of, and to be enforceable by, all such Beneficiaries, whether or not such Beneficiaries have received notice hereof. Section 1.02. TERM OF AGREEMENT. This Agreement shall terminate and be of no further force and effect upon the date on which there are no Beneficiaries remaining; provided, however, that this Agreement shall continue to be effective or shall be reinstated, as the case may be, if at any time any holder of Preferred Securities or any Beneficiary must restore payment of any sums paid under the Preferred Securities, under any Obligation, under the Guarantee Agreement dated the date hereof by MidAmerican Energy and The First National Bank of Chicago, as guarantee trustee, or under this Agreement for any reason whatsoever. This Agreement is continuing, irrevocable, unconditional and absolute. Section 1.03. WAIVER OF NOTICE. MidAmerican Energy hereby waives notice of acceptance of this Agreement and of any Obligation to which it applies or may apply, and MidAmerican Energy hereby waives presentment, demand for payment, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. Section 1.04. NO IMPAIRMENT. The obligations, covenants, agreements and duties of MidAmerican Energy under this Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the extension of time for the payment by the Trust of all or any portion of the Obligations or for the performance of any other obligation under, arising out of, or in connection with, the Obligations; (b) any failure, omission, delay or lack of diligence on the part of the Beneficiaries to enforce, assert or exercise any right, privilege, power or remedy conferred on the Beneficiaries with respect to the Obligations or any action on the part of the Trust granting indulgence or extension of any kind; or (c) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Trust or any of the assets of the Trust. There shall be no obligation of the Beneficiaries to give notice to, or obtain the consent of, MidAmerican Energy with respect to the happening of any of the foregoing. Section 1.05. ENFORCEMENT. A Beneficiary may enforce this Agreement directly against MidAmerican Energy and MidAmerican Energy waives any right or remedy to require that any action be brought against the Trust or any other person or entity before proceeding against MidAmerican Energy. ARTICLE II Section 2.01. BINDING EFFECT. All guarantees and agreements contained in this Agreement shall bind the successors, assigns, receivers, trustees and representatives of MidAmerican Energy and shall inure to the benefit of the Beneficiaries. Section 2.02. AMENDMENT. So long as there remains any Beneficiary or any Preferred Securities of any series are outstanding, this Agreement shall not be modified or amended in any manner adverse to such Beneficiary or to the holders of the Preferred Securities. -2- Section 2.03. NOTICES. Any notice, request or other communication required or permitted to be given hereunder shall be given in writing by delivering the same against receipt therefor by facsimile transmission (confirmed by mail), telex or by registered or certified mail, addressed as follows (and if so given, shall be deemed given when mailed or upon receipt of an answer-back, if sent by telex), to wit: MidAmerican Energy Financing I c/o Paul J. Leighton, Administrative Trustee 666 Grand Avenue P.O. Box 657 Des Moines, Iowa 50303-0657 Facsimile No.: 515-242-4261 MidAmerican Energy Company 666 Grand Avenue P.O. Box 657 Des Moines, Iowa 50303-0657 Facsimile No.: 515-242-4261 Attention: Treasurer Section 2.04 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES). THIS AGREEMENT is executed as of the day and year first above written. -3- (Clearing Agency Legend) EXHIBIT D Certificate Number Number of Preferred Securities P- CUSIP NO. Certificate Evidencing Preferred Securities of MIDAMERICAN ENERGY FINANCING I _____% Quarterly Income Preferred Securities (Liquidation Amount $25 per Preferred Security) MidAmerican Energy Financing I, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that ____________ (the "Holder") is the registered owner of _____ (_____) preferred securities of the Trust representing an undivided beneficial interest in the assets of the Trust and designated the MidAmerican Energy Financing I ____% Quarterly Income Preferred Securities (liquidation amount $25 per Preferred Security) (the "Preferred Securities"). The Preferred Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer as provided in Section 5.04 or 5.11 of the Trust Agreement (as defined below). The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities are set forth in, and this certificate and the Preferred Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust dated as of __________, 1996, as the same may be amended from time to time (the "Trust Agreement"). The holder of this certificate is entitled to the benefits of the Guarantee Agreement of MidAmerican Energy Company, an Iowa corporation (the "Company"), and The First National Bank of Chicago, as guarantee trustee, dated as of _____________, 1996 (the "Guarantee") to the extent provided therein. The Trust will furnish a copy of the Trust Agreement and the Guarantee to the holder of this certificate without charge upon written request to the Trust at its principal place of business or registered office. The Company and, by its acceptance of these Preferred Securities or a beneficial interest therein, the owner of, and any person that acquires a beneficial interest in, these Preferred Securities agree that, for United States federal, state and local tax purposes, it is intended that these Preferred Securities constitute an undivided interest in indebtedness and agree to treat these Preferred Securities accordingly for such purposes. Upon receipt of this certificate, the holder of this certificate is bound by the Trust Agreement and is entitled to the benefits thereunder. IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has executed this certificate for and on behalf of the Trust. Dated: MIDAMERICAN ENERGY FINANCING I By:___________________________________________ [ ] not in his (her) individual capacity, but solely as Administrative Trustee [TRANSFER AGENT] -2- ASSIGNMENT FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred Security to: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Insert assignee's social security or tax identification number) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Insert address and zip code of assignee) of the Preferred Securities represented by this Preferred Securities Certificate and irrevocably appoints __________________________________________ attorney to transfer such Preferred Securities Certificate on the books of the Trust. The attorney may substitute another to act for him or her. Date: ___________________________________ Signature: ______________________________ (Sign exactly as your name appears on the other side of this Preferred Securities Certificate) Signature: _____________________________ (Sign exactly as your name appears on the other side of this Preferred Securities Certificate) EX-4.F 7 EXHIBIT 4(F) FORM OF INDENTURE Exhibit 4(f) __________________________________________ MIDAMERICAN ENERGY COMPANY TO THE FIRST NATIONAL BANK OF CHICAGO, As Trustee _________ Indenture (For Unsecured Subordinated Debentures relating to Trust Securities) Dated as of , 1996 __________________________________________ TABLE OF CONTENTS PARTIES . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . .-1- RECITAL OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . .-1- ARTICLE ONE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-1- Definitions and Other Provisions of General Application. . . . . . . .-1- SECTION 101. Definitions. . . . . . . . . . . . . . . . . . . . .-1- Act . . . . . . . . . . . . . . . . . . . . . . . . . . . .-2- Additional Interest Attributable to Taxes . . . . . . . . . .-2- Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . .-2- Authenticating Agent . . . .. . . . . . . . . . . . . . . . .-2- Authorized Officer. . . . . . . . . . . . . . . . . . . . . .-2- Board of Directors. . . . . . . . . . . . . . . . . . . . . .-2- Board Resolution. . . . . . . . . . . . . . . . . . . . . . .-3- Business Day. . . . . . . . . . . . . . . . . . . . . . . . .-3- Commission. . . . . . . . . . . . . . . . . . . . . . . . . .-3- Common Securities . . . . . . . . . . . . . . . . . . . . . .-3- Company . . . . . . . . . . . . . . . . . . . . . . . . . . .-3- Company Request or Company Order. . . . . . . . . . . . . . .-3- Corporate Trust Office. . . . . . . . . . . . . . . . . . . .-3- Corporation . . . . . . . . . . . . . . . . . . . . . . . . .-3- Defaulted Interest. . . . . . . . . . . . . . . . . . . . . .-3- Dollar, or $. . . . . . . . . . . . . . . . . . . . . . . . .-4- Event of Default. . . . . . . . . . . . . . . . . . . . . . .-4- Governmental Authority. . . . . . . . . . . . . . . . . . . .-4- Government Obligations. . . . . . . . . . . . . . . . . . . .-4- Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . .-4- Holder. . . . . . . . . . . . . . . . . . . . . . . . . . . .-4- Indenture . . . . . . . . . . . . . . . . . . . . . . . . . .-4- Interest Payment Date . . . . . . . . . . . . . . . . . . . .-4- Maturity Date . . . . . . . . . . . . . . . . . . . . . . . .-5- Officer's Certificate . . . . . . . . . . . . . . . . . . . .-5- Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . .-5- Outstanding . . . . . . . . . . . . . . . . . . . . . . . . .-5- Paying Agent. . . . . . . . . . . . . . . . . . . . . . . . .-6- Person. . . . . . . . . . . . . . . . . . . . . . . . . . . .-6- Place of Payment. . . . . . . . . . . . . . . . . . . . . . .-6- Predecessor Security. . . . . . . . . . . . . . . . . . . . .-6- -i- Preferred Securities. . . . . . . . . . . . . . . . . . . . .-6- Redemption Date . . . . . . . . . . . . . . . . . . . . . . .-6- Redemption Price. . . . . . . . . . . . . . . . . . . . . . .-6- Regular Record Date . . . . . . . . . . . . . . . . . . . . .-6- Responsible Officer . . . . . . . . . . . . . . . . . . . . .-6- Securities. . . . . . . . . . . . . . . . . . . . . . . . . .-6- Security Register and Security Registrar. . . . . . . . . . .-7- Senior Indebtedness . . . . . . . . . . . . . . . . . . . . .-7- Special Record Date . . . . . . . . . . . . . . . . . . . . .-7- Stated Maturity . . . . . . . . . . . . . . . . . . . . . . .-7- Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . .-7- Trust Agreement. . . . . . . . . . . . . . . . . . . . . . .-7- Trust Indenture Act . . . . . . . . . . . . . . . . . . . . .-7- Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . .-7- United States . . . . . . . . . . . . . . . . . . . . . . . .-8- SECTION 102. Compliance Certificates and Opinions . . . . . . . .-8- SECTION 103. Form of Documents Delivered to Trustee . . . . . . .-8- SECTION 104. Acts of Holders. . . . . . . . . . . . . . . . . . .-9- SECTION 105. Notices, etc. to Trustee and Company . . . . . . . -11- SECTION 106. Notice to Holders of Securities; Waiver. . . . . . -12- SECTION 107. Conflict with Trust Indenture Act. . . . . . . . . -12- SECTION 108. Effect of Headings and Table of Contents . . . . . -13- SECTION 109. Successors and Assigns . . . . . . . . . . . . . . -13- SECTION 110. Separability Clause. . . . . . . . . . . . . . . . -13- SECTION 111. Benefits of Indenture. . . . . . . . . . . . . . . -13- SECTION 112. Governing Law. . . . . . . . . . . . . . . . . . . -13- SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . -13- ARTICLE TWO . .. . . . . . . . . . . . . . . . . . . . . . . . . . . -14- Security Forms.. . . . . . . . . . . . . . . . . . . . . . . . . . . -14- SECTION 201. Forms Generally. . . . . . . . . . . . . . . . . . -14- SECTION 202. Form of Trustee's Certificate of Authentication. . -14- ARTICLE THREE .. . . . . . . . . . . . . . . . . . . . . . . . . . . -15- The Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . -15- SECTION 301. Amount Unlimited; Issuable in Series . . . . . . . -15- SECTION 302. Denominations. . . . . . . . . . . . . . . . . . . -19- SECTION 303. Execution, Authentication, Delivery and Dating . . -19- SECTION 304. Temporary Securities . . . . . . . . . . . . . . . -21- SECTION 305. Registration, Registration of Transfer and Exchange-21- SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . -23- SECTION 307. Payment of Interest; Interest Rights Preserved . . -23- -ii- SECTION 308. Persons Deemed Owners. . . . . . . . . . . . . . . -25- SECTION 309. Cancellation by Security Registrar . . . . . . . . -25- SECTION 310. Computation of Interest. . . . . . . . . . . . . . -25- SECTION 311. Extension of Interest Payment. . . . . . . . . . . -25- SECTION 312. Additional Interest Attributable to Taxes. . . . . -26- SECTION 313. Agreed Tax Treatment . . . . . . . . . . . . . . . -26- SECTION 314. Extension of Maturity Date; Adjustment of Maturity Date Upon an Exchange . . . . . . . -26- ARTICLE FOUR . . . . . . . . . . . . . . . . . . . . . . . . . . . -27- Redemption of Securities . . . . . . . . . . . . . . . . . . . . . . -27- SECTION 401. Applicability of Article . . . . . . . . . . . . . -27- SECTION 402. Election to Redeem; Notice to Trustee. . . . . . . -27- SECTION 403. Selection of Securities to Be Redeemed . . . . . . -27- SECTION 404. Notice of Redemption . . . . . . . . . . . . . . . -28- SECTION 405. Securities Payable on Redemption Date. . . . . . . -29- SECTION 406. Securities Redeemed in Part. . . . . . . . . . . . -29- ARTICLE FIVE . . . . . . . . . . . . . . . . . . . . . . . . . . . -30- Sinking Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . -30- SECTION 501. Applicability of Article . . . . . . . . . . . . . -30- SECTION 502. Satisfaction of Sinking Fund Payments with Securities. . . . . . . . . . . . . . . . . . -30- SECTION 503. Redemption of Securities for Sinking Fund. . . . . -31- ARTICLE SIX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31- Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31- SECTION 601. Payment of Principal, Premium and Interest . . . . -31- SECTION 602. Maintenance of Office or Agency. . . . . . . . . . -31- SECTION 603. Money for Securities Payments to Be Held in Trust. -32- SECTION 604. Corporate Existence. . . . . . . . . . . . . . . . -34- SECTION 605. Maintenance of Properties. . . . . . . . . . . . . -34- SECTION 606. Annual Officer's Certificate as to Compliance. . . -34- SECTION 607. Waiver of Certain Covenants. . . . . . . . . . . . -34- SECTION 608. Restriction on Payment of Dividends. . . . . . . . -35- SECTION 609. Maintenance of Trust Existence . . . . . . . . . . -35- ARTICLE SEVEN. . . . . . . . . . . . . . . . . . . . . . . . . . . . -36- Satisfaction and Discharge . . . . . . . . . . . . . . . . . . . . . -36- -iii- SECTION 701. Defeasance . . . . . . . . . . . . . . . . . . . . -36- SECTION 702. Satisfaction and Discharge of Indenture. . . . . . -38- SECTION 703. Application of Trust Money . . . . . . . . . . . . -39- ARTICLE EIGHT .. . . . . . . . . . . . . . . . . . . . . . . . . . . -39- Events of Default; Remedies. . . . . . . . . . . . . . . . . . . . . -39- SECTION 801. Events of Default. . . . . . . . . . . . . . . . . -40- SECTION 802. Acceleration of Maturity; Rescission and Annulment -41- SECTION 803. Collection of Indebtedness and Suits for Enforcement by Trustee. . . . . . . . . . . -42- SECTION 804. Trustee May File Proofs of Claim . . . . . . . . . -43- SECTION 805. Trustee May Enforce Claims Without Possession of Securities. . . . . . . . . . . . . . . . . -43- SECTION 806. Application Of Money Collected . . . . . . . . . . -44- SECTION 807. Limitation on Suits. . . . . . . . . . . . . . . . -44- SECTION 808. Unconditional Right of Holders to Receive Principal, Premium and Interest. . . . . . . . . . . . -45- SECTION 809. Restoration of Rights and Remedies . . . . . . . . -45- SECTION 810. Rights and Remedies Cumulative . . . . . . . . . . -46- SECTION 811. Delay or Omission Not Waiver . . . . . . . . . . . -46- SECTION 812. Control by Holders of Securities . . . . . . . . . -46- SECTION 813. Waiver of Past Defaults. . . . . . . . . . . . . . -46- SECTION 814. Undertaking for Costs. . . . . . . . . . . . . . . -47- SECTION 815. Waiver of Stay or Extension Laws . . . . . . . . . -47- ARTICLE NINE . . . . . . . . . . . . . . . . . . . . . . . . . . . . -48- The Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . -48- SECTION 901. Certain Duties and Responsibilities. . . . . . . . -48- SECTION 902. Notice of Defaults . . . . . . . . . . . . . . . . -48- SECTION 903. Certain Rights of Trustee. . . . . . . . . . . . . -49- SECTION 904. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . -50- SECTION 905. May Hold Securities. . . . . . . . . . . . . . . . -50- SECTION 906. Money Held in Trust. . . . . . . . . . . . . . . . -50- SECTION 907. Compensation and Reimbursement . . . . . . . . . . -50- SECTION 908. Disqualification; Conflicting Interests. . . . . . -51- SECTION 909. Corporate Trustee Required; Eligibility. . . . . . -52- SECTION 910. Resignation and Removal; Appointment of Successor. -52- SECTION 911. Acceptance of Appointment by Successor . . . . . . -54- SECTION 912. Merger, Conversion, Consolidation or Succession to Business. . . . . . . . . . . -55- SECTION 913. Preferential Collection of Claims Against Company. . . . . . . . . . . . . . -56- SECTION 914. Co-trustees and Separate Trustees. . . . . . . . . -56- -iv- SECTION 915. Appointment of Authenticating Agent. . . . . . . . -58- ARTICLE TEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . -60- Holders' Lists and Reports by Trustee and Company. . . . . . . . . . -60- SECTION 1001. Lists of Holders. . . . . . . . . . . . . . . . . -60- SECTION 1002. Reports by Trustee and Company. . . . . . . . . . -60- ARTICLE ELEVEN.. . . . . . . . . . . . . . . . . . . . . . . . . . . -60- Consolidation, Merger, Conveyance or Other Transfer . . . . . . . . -60- SECTION 1101. Company May Consolidate, etc., Only on Certain Terms.. . . . . . . . . . . . . -60- SECTION 1102. Successor Corporation Substituted . . . . . . . . -61- ARTICLE TWELVE.. . . . . . . . . . . . . . . . . . . . . . . . . . . -61- Supplemental Indentures. . . . . . . . . . . . . . . . . . . . . . . -61- SECTION 1201. Supplemental Indentures Without Consent of Holders. . . . . . . . . . . . . -61- SECTION 1202. Supplemental Indentures With Consent of Holders . -63- SECTION 1203. Execution of Supplemental Indentures. . . . . . . -65- SECTION 1204. Effect of Supplemental Indentures . . . . . . . . -65- SECTION 1205. Conformity With Trust Indenture Act . . . . . . . -65- SECTION 1206. Reference in Securities to Supplemental Indentures . . . . . . . . . . -65- SECTION 1207. Modification Without Supplemental Indenture . . . -65- ARTICLE THIRTEEN . . . . . . . . . . . . . . . . . . . . . . . . . . -66- Meetings of Holders; Action Without Meeting. . . . . . . . . . . . . -66- SECTION 1301. Purposes for Which Meetings May Be Called . . . . -66- SECTION 1302. Call, Notice and Place of Meetings. . . . . . . . -66- SECTION 1303. Persons Entitled to Vote at Meetings. . . . . . . -67- SECTION 1304. Quorum; Action. . . . . . . . . . . . . . . . . . -67- SECTION 1305. Attendance at Meetings; Determination of Voting Rights; Conduct and Adjournment of Meetings . . . . . . . . -68- SECTION 1306. Counting Votes and Recording Action of Meetings . -69- SECTION 1307. Action Without Meeting. . . . . . . . . . . . . . -69- ARTICLE FOURTEEN . . . . . . . . . . . . . . . . . . . . . . . . . . -70- Immunity of Incorporators, Stockholders, Officers and Directors. . . -70- SECTION 1401. Liability Solely Corporate. . . . . . . . . . . . -70- -v- ARTICLE FIFTEEN. . . . . . . . . . . . . . . . . . . . . . . . . . . -70- Subordination of Securities. . . . . . . . . . . . . . . . . . . . . -70- SECTION 1501. Securities Subordinate to Senior Indebtedness . . -70- SECTION 1502. Payment Over of Proceeds of Securities. . . . . . -70- SECTION 1503. Disputes with Holders of Certain Senior Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . -72- SECTION 1504. Subrogation . . . . . . . . . . . . . . . . . . . -73- SECTION 1505. Obligation of the Company Unconditional . . . . . -73- SECTION 1506. Priority of Senior Indebtedness Upon Maturity . . -74- SECTION 1507. Trustee as Holder of Senior Indebtedness. . . . . -74- SECTION 1508. Notice to Trustee to Effectuate Subordination . . -74- SECTION 1509. Modification, Extension, etc. of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . -75- SECTION 1510. Trustee Has No Fiduciary Duty to Holders of Senior Indebtedness . . . . . . . . . . . . . . . . -75- SECTION 1511. Paying Agents Other Than the Trustee. . . . . . . -75- SECTION 1512. Rights of Holders of Senior Indebtedness Not Impaired . . . . . . . . . . . . . . . . . . . . . -75- SECTION 1513. Effect of Subordination Provisions; Termination . -76- -vi- MIDAMERICAN ENERGY COMPANY Reconciliation and tie between Trust Indenture Act of 1939 and Indenture, dated as of , 1996 Trust Indenture Act Section Indenture Section S310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .909 (a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .909 (a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .914 (a)(4) . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .908 910 S311 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .913 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .913 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .913 S312 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1001 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1001 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1001 S313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1002 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1002 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1002 S314 (a) . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . 1002 (a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .606 (b). . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102 (c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102 (c)(3) . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (d). . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102 S315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .901 903 (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .902 (c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .901 (d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .901 (e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .814 S316 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .812 813 (a)(1)(A). . . . . . . . . . . . . . . . . . . . . . . . . . . . .802 812 (a)(1)(B). . . . . . . . . . . . . . . . . . . . . . . . . . . . .813 (a)(2) . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .808 S317 (a)(1). . . . . .. . . . . . . . . . . . . . . . . . . . . . . . .803 (a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .804 -vii- (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .603 S318 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107 -viii- INDENTURE, dated as of , 1996, between MIDAMERICAN ENERGY COMPANY, a corporation duly organized and existing under the laws of the State of Iowa (herein called the "Company"), having its principal office at 666 Grand Avenue, P.O. Box 657, Des Moines, Iowa 50303-0657, and THE FIRST NATIONAL BANK OF CHICAGO, a national banking association, having its principal corporate trust office at One First National Plaza, Suite 0126, Chicago, Illinois 60670- 0126, as Trustee (herein called the "Trustee"). RECITAL OF THE COMPANY The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured subordinated debentures (herein called the "Securities"), in an unlimited aggregate principal amount to be issued in one or more series as contemplated herein; and all acts necessary to make this Indenture a valid agreement of the Company have been performed. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires, capitalized terms used herein shall have the meanings assigned to them in Article One of this Indenture. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of any series thereof, as follows: ARTICLE ONE Definitions and Other Provisions of General Application SECTION 101. Definitions. For all purposes of this indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (b) all terms used herein without definition which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States, and, except as otherwise herein expressly provided the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted in the United States at the date of such computation or, at the election of the Company from time to time, at the date of the execution and delivery of this Indenture; provided, however, that in determining generally accepted accounting principles applicable to the Company, the Company shall, to the extent required, conform to any order, rule or regulation of any administrative agency, regulatory authority or other governmental body having jurisdiction over the Company; and (d) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. Certain terms, used principally in Article Nine, are defined in that Article. "Act", when used with respect to any Holder of a Security, has the meaning specified in Section 104. "Additional Interest Attributable to Deferral" means the interest, if any, that shall accrue on any interest on the Securities of any series the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Security. "Additional Interest Attributable to Taxes" has the meaning specified in Section 312. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or through one or more intermediaries, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Authenticating Agent" means any Person (other than the Company or an Affiliate of the Company) authorized by the Trustee pursuant to Section 915 to act on behalf of the Trustee to authenticate one or more series of Securities. "Authorized Officer" means the Chairman of the Board, the President, any Vice President, the Treasurer, any Assistant Treasurer, or any other officer or agent of the Company duly authorized by the Board of Directors to act in respect of matters relating to this Indenture. "Board of Directors" means either the board of directors of the Company or any committee thereof duly authorized to act in respect of matters relating to this Indenture. -2- "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day", when used with respect to a Place of Payment or any other particular location specified in the Securities or this Indenture, means any day, other than a Saturday or Sunday, which is not a day on which banking institutions or trust companies in such Place of Payment or other location are generally authorized or required by law, regulation or executive order to remain closed, except as may be otherwise specified as contemplated by Section 301. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, as amended, or, if at any time after the date of execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body, if any, performing such duties at such time. "Common Securities" means any common trust interests issued by a Trust or similar securities issued by permitted successors to such Trust in accordance with the Trust Agreement pertaining to such Trust. "Company" means the Person named as the "Company" in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person. " Company Request" or "Company Order" means a written request or order signed in the name of the Company by an Authorized Officer and delivered to the Trustee. "Corporate Trust Office" means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which office at the date of execution and delivery of this Indenture is located at One First National Plaza, Suite 0126, Chicago, Illinois 60670-0126, Attention: Corporate Trust Administration, except that, with respect to presentation of the Securities for payment or registration of transfers or exchanges and the location of the register, such term means the office or agency of the Trustee at which at any particular time its corporate agency business shall be conducted, which at the date of original execution of this Indenture is located at c/o First Chicago Trust Company of New York, 14 Wall Street, 8th Floor - Window 2, New York, New York 10005. "Corporation" means a corporation, association, company, joint stock company or business trust. "Defaulted Interest" has the meaning specified in Section 307. -3- "Dollar, or "$" means a dollar or other equivalent unit in such coin or currency of the United States as at the time shall be legal tender for the payment of public and private debts. "Event of Default" has the meaning specified in Section 801. "Governmental Authority" means the government of the United States or of any State or Territory thereof or of the District of Columbia or of any county, municipality or other political subdivision of any or the foregoing, or any department, agency, authority or other instrumentality of any of the foregoing. "Government Obligations" means: (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States and entitled to the benefit of the full faith and credit thereof; and (b) certificates, depositary receipts or other instruments which evidence a direct ownership interest in obligations described in clause (a) above or in any specific interest or principal payments due in respect thereof; provided, however, that the custodian of such obligations or specific interest or principal payment shall be a bank or trust company (which may include the Trustee or any Paying Agent) subject to Federal or state supervision or examination with a combined capital and surplus of at least $50,000,000; and provided, further, that except as may be otherwise required by law, such custodian shall be obligated to pay to the holders of such certificates, depositary receipts or other instruments the full amount receive by such custodian in respect of such obligations or specific payments and shall not be permitted to make any deduction therefrom. "Guarantee" means the guarantee agreement delivered from the Company to a Trust, for the benefit of the holders of Preferred Securities issued by such Trust. "Holder" means a Person in whose name a Security is registered in the Security Register. "Indenture" means this instrument as originally executed and delivered and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and shall include the terms of a particular series of Securities established as contemplated by Section 301. "Interest Payment Date", when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security. -4- "Maturity Date", when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as provided in such Security or in this Indenture, whether at the Stated Maturity, by declaration of acceleration, upon call for redemption or otherwise. "Officer's Certificate" means a certificate signed by an Authorized Officer and delivered to the Trustee. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company, or other counsel acceptable to the Trustee. "Outstanding", when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (a) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation; (b) Securities deemed to have been paid in accordance with Section 701; and (c) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it and the Company that such Securities are held by a bona fide purchaser or purchasers in whose hands such Securities are valid obligations of the Company; provided, however, that in determining whether or not the Holders of the requisite principal amount of the Securities Outstanding under this Indenture, or the Outstanding Securities of any series, have given any request, demand, authorization, direction, notice, consent or waiver hereunder or whether or not a quorum is present at a meeting of Holders of Securities, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor (unless the Company, such Affiliate or such obligor owns all Securities Outstanding under this Indenture, or all Outstanding Securities of each such series, as the case may be, determined without regard to this provision) shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver or upon any such determination as to the presence of a quorum, only Securities which the Trustee knows to be so owned shall be so disregarded; provided, however, that Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor; and provided, further, that, in the case of any Security the -5- principal of which is payable from time to time without presentment or surrender, the principal amount of such Security that shall be deemed to be Outstanding at any time for all purposes of this Indenture shall be the original principal amount thereof less the aggregate amount of principal thereof theretofore paid. "Paying Agent" means any Person, including the Company, authorized by the Company to pay the principal of, and premium, if any, or interest, if any, on any Securities on behalf of the Company. "Person" means any individual, corporation, partnership, joint venture, trust or unincorporated organization or any Governmental Authority. "Place of Payment", when used with respect to the Securities of any series, means the place or places, specified as contemplated by Section 301, at which, subject to Section 602, principal of and premium, if any, and interest, if any, on the Securities of such series are payable. "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed (to the extent lawful) to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "Preferred Securities" means any preferred trust interests issued by a Trust or similar securities issued by permitted successors to such Trust in accordance with the Trust Agreement pertaining to such Trust. "Redemption Date", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Regular Record Date" for the interest payable on any Interest Payment Date on the Securities of any series means the date specified for that purpose as contemplated by Section 301. "Responsible Officer", when used with respect to the Trustee, means any officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "Securities" has the meaning stated in the first recital of this Indenture and more particularly means any securities authenticated and delivered under this Indenture. -6- "Security Register" and "Security Registrar" have the respective meanings specified in Section 305. "Senior Indebtedness" means all obligations (other than non-recourse obligations and the indebtedness issued under this Indenture) of, or guaranteed or assumed by, the Company for borrowed money, including both senior and subordinated indebtedness for borrowed money (other than the Securities), or for the payment of money relating to any lease which is capitalized on the consolidated balance sheet of the Company and its subsidiaries in accordance with generally accepted accounting principles as in effect from time to time, or evidenced by bonds, debentures, notes or other similar instruments, and in each case, amendments, renewals, extensions, modifications and refundings of any such indebtedness or obligations, whether existing as of the date of this Indenture or subsequently incurred by the Company unless, in the case of any particular indebtedness, renewal, extension or refunding, the instrument creating or evidencing the same or the assumption or guarantee of the same expressly provides that such indebtedness, renewal, extension or refunding is not superior in right of payment to or is pari passu with the Securities; provided that the Company's obligations under the Guarantee shall not be deemed to be Senior Indebtedness. "Special Record Date" for the payment of any Defaulted Interest on the Securities of any series means a date fixed by the Trustee pursuant to Section 307. "Stated Maturity", when used with respect to any obligation or any installment of principal thereof or interest thereon, means the date on which the principal of such obligation or such installment of principal or interest is stated to be due and payable (without regard to any provisions for redemption, prepayment, acceleration, purchase or extension). "Trust" means MidAmerican Energy Financing I, a statutory business trust created under the laws of the State of Delaware, MidAmerican Energy Financing II, a statutory business trust created under the laws of Delaware, or any other Trust designated pursuant to Section 301 hereof or any permitted successor under the Trust Agreement pertaining to such Trust. "Trust Agreement" means any agreement establishing a Trust, in each case, among the Company, as Depositor, the trustees named therein and several holders referred to therein as they may be amended from time to time. "Trust Indenture Act" means, as of any time, the Trust Indenture Act of 1939, or any successor statute, as in effect at such time. "Trustee" means the Person named as the "Trustee" in the first paragraph of this Indenture until a successor Trustee shall have become such with respect to one or more series of Securities pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more -7- than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series. "United States" means the United States of America, its Territories, its possessions and other areas subject to its political jurisdiction. SECTION 102. Compliance Certificates and Opinions. Except as otherwise expressly provided in this Indenture, upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall, if requested by the Trustee, furnish to the Trustee an Officer's Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action (including any covenants compliance with which constitutes a condition precedent) have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (a) a statement that each Person signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of each such Person, such Person has made such examination or investigation as is necessary to enable such Person to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such Person, such condition or covenant has been complied with. SECTION 103. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only -8- one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which such Officer's Certificate or opinion are based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Officer's Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other inadvertent or unintentional error or omission shall be discovered therein, a new document or instrument may be substituted therefor in corrected form with the same force and effect as if originally filed in the corrected form and, irrespective of the date or dates of the actual execution and/or delivery thereof, such substitute document or instrument shall be deemed to have been executed and/or delivered as of the date or dates required with respect to the document or instrument for which it is substituted. Anything in this Indenture to the contrary notwithstanding, if any such corrective document or instrument indicates that action has been taken by or at the request of the Company which could not have been taken had the original document or instrument not contained such error or omission, the action so taken shall not be invalidated or otherwise rendered ineffective but shall be and remain in full force and effect, except to the extent that such action was a result of willful misconduct or bad faith. Without limiting the generality of the foregoing, any Securities issued under the authority of such defective document or instrument shall nevertheless be the valid obligations of the Company entitled to the benefits of this Indenture equally and ratably with all other Outstanding Securities, except as aforesaid. SECTION 104. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, election, waiver or other action provided by this Indenture to be made, given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar -9- tenor signed by such Holders in person or by an agent duly appointed in writing or, alternatively, may be embodied in and evidenced by the record of Holders voting in favor thereof, either in person or by proxies duly appointed in writing, at any meeting of Holders duly called and held in accordance with the provisions of Article Thirteen, or a combination of such instruments and any such record. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments and any such record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments and so voting at any such meeting. Proof of execution of any such instrument or of a writing appointing any such agent, or of the holding by any Person of a Security, shall be sufficient for any purpose of this Indenture and (subject to section 901) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. The record of any meeting of Holders shall be proved in the manner provided in Section 1306. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof or may be proved in any other manner which the Trustee and the Company deem sufficient. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. (c) The principal amount and serial numbers of Securities held by any Person, and the date of holding the same, shall be proved by the Security Register. (d) Any request, demand, authorization, direction, notice, consent, election, waiver or other Act of a Holder shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security. (e) Until such time as written instruments shall have been delivered to the Trustee with respect to the requisite percentage of principal amount of Securities for the action contemplated by such instruments, any such instrument executed and delivered by or on behalf of a Holder may be revoked with respect to any or all of such Securities by written notice by such Holder or any subsequent Holder, proven in the manner in which such instrument was proven. -10- (f) Securities of any series authenticated and delivered after any Act of Holders may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any action taken by such Act of Holders. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to such action may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series. (g) If the Company shall solicit from Holders any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so, if such a record date is fixed, such request demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on the record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of the Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Securities shall be computed as of the record date. SECTION 105. Notices, etc. to Trustee and Company. Any request, demand, authorization, direction, notice, consent, election, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, the Trustee by any Holder or by the Company, or the Company by the Trustee or by any Holder, shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and delivered personally to an officer or other responsible employee of the addressee, or transmitted by facsimile transmission or other direct written electronic means to such telephone number or other electronic communications address as the parties hereto shall from time to time designate, or transmitted by certified or registered mail, charges prepaid, to the applicable address set opposite such party's name below or to such other address as either party hereto may from time to tire designate: If to the Trustee, to: The First National Bank of Chicago One First National Plaza, Suite 0126 Chicago, Illinois 60670-0126 Attention: Corporate Trust Administration Telephone: (815) 356-0390 -11- Telecopy: (312) 407-1708 If to the Company, to: MidAmerican Energy Company 666 Grand Avenue P.O. Box 657 Des Moines, Iowa 50303-0657 Attention: Telephone: (515) 242-4300 Telecopy: (515) 242-4261 Any communication contemplated herein shall be deemed to have been made, given, furnished and filed if personally delivered, on the date of delivery, if transmitted by facsimile transmission or other direct written electronic means, on the date of transmission, and if transmitted by registered mail, on the date of receipt. SECTION 106. Notice to Holders of Securities; Waiver. Except as otherwise expressly provided herein, where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given, and shall be deemed given, to Holders if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at the address of such Holder as it appears in the Security Register, not later than the latest date, if any, and not earlier than the earliest date, if any, prescribed for the giving of such notice. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice to Holders by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. In any case, where notice to Holders is given by mail. neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice required by this Indenture may be waived in writing by the Person entitled to receive such notice, either before or after the event otherwise to specified therein, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 107. Conflict with Trust Indenture Act. If any provision of this Indenture limits, qualifies or conflicts with another provision hereof which is required or deemed to be included in this Indenture by, or is otherwise -12- governed by, any of the provisions of the Trust Indenture Act, such other provision shall control; and if any provision hereof otherwise conflicts with the Trust Indenture Act, the Trust Indenture Act shall control. SECTION 108. Effect of Headings and Table of Contents. The Article and Section headings in this Indenture and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 109. Successors and Assigns. All covenants and agreements in this Indenture by the Company and Trustee shall bind their respective successors and assigns, whether so expressed or not. SECTION 110. Separability Clause. In case any provision in this Indenture or the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 111. Benefits of Indenture. Nothing in this Indenture or the Securities, express or implied, shall give to any Person, other than the parties hereto, their successors hereunder, the Holders and, so long as the notice described in Section 1513 hereof has not been given, the holders of Senior Indebtedness, any benefit or any legal or equitable right, remedy or claim under this Indenture; provided, however, if the Property Trustee fails to enforce its rights with respect to the Securities or the related Trust Agreement, a holder of Preferred Securities may institute a legal proceeding directly against the company to enforce the Property Trustee's rights with respect to the Securities or such Trust Agreement, to the fullest extent permitted by law, without first instituting any legal proceeding against the Property Trustee or any other person or entity. SECTION 112. Governing Law. This Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York, except to the extent that the law of any other jurisdiction shall be mandatorily applicable. SECTION 113. Legal Holidays. In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of Payment, then (notwithstanding any -13- other provision of this Indenture or of the Securities other than a provision in Securities of any series, or in the Board Resolution or Officer's Certificate which establishes the terms of the Securities of such series, which specifically states that such provision shall apply in lieu of this Section) payment of interest or principal and premium, if any, need not be made at such Place of Payment on such date, but may be made on the next Succeeding Business Day at such Place of Payment, except that if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect, and in the same amount, as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity, as the case may be, and, if such payment is made or duly provided for on such Business Day, no interest shall accrue on the amount so payable for the period from and after such interest Payment Date, Redemption Date or Stated Maturity, as the case may be, to such Business Day. ARTICLE TWO Security Forms SECTION 201. Forms Generally. The definitive Securities of each series shall be in substantially the form or forms thereof established in the indenture supplemental hereto establishing such series or in a Board Resolution establishing such series, or in an Officer's Certificate pursuant to such supplemental indenture or Board Resolution, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution of the Securities. If the form or forms of Securities of any series are established in a Board Resolution or in an Officer's Certificate pursuant to a Board Resolution, such Board Resolution and Officer's Certificate, if any, shall be delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 for the authentication and delivery of such Securities. Unless otherwise specified as contemplated by Section 301, the Securities of each series shall be issuable in registered form without coupons. The definitive Securities shall be produced in such manner as shall be determined by the officers executing such Securities, as evidenced by their execution thereof. SECTION 202. Form of Trustee's Certificate of Authentication. -14- The Trustee's certificate of authentication shall be in substantially the form set forth below: This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. ____________________________ as Trustee By:_________________________ Authorized Signatory ARTICLE THREE The Securities SECTION 301. Amount Unlimited; Issuable in Series. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited; provided, however, that all Securities shall be issued to a Trust in exchange for securities of the Company or to evidence loans by a Trust of the proceeds of the issuance of Preferred Securities and Common Securities of such Trust. The Securities may be issued in one or more series. Prior to the authentication and delivery of Securities of any series there shall be established by specification in a supplemental indenture or in a Board Resolution, or in an Officer's Certificate pursuant to a supplemental indenture or a Board Resolution: a) the title of the Securities of such series (which shall distinguish the Securities of such series from Securities of all other series); b) any limit upon the aggregate principal amount of the Securities of such series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of such series pursuant to Section 304, 305, 306, 406 or 1206 and -15- except for any Securities which, pursuant to Section 303, are deemed never to have been authenticated and delivered hereunder); c) the Person or Persons (without specific identification) to whom interest on Securities of such series shall be payable on any Interest Payment Date, if other than the Persons in whose names such Securities (or one or more Predecessor Securities) are registered at the close of business on the Regular Record Date for such interest; d) the date or dates on which the principal of the Securities of such series is payable or any formulary or other method or other means by which such date or dates shall be determined, by reference or otherwise (without regard to any provisions for redemption, prepayment, acceleration, purchase or extension); e) the rate or rates at which the Securities of such series shall bear interest, if any (including the rate or rates at which overdue principal shall bear interest, if different from the rate or rates at which such Securities shall bear interest prior to the Maturity Date and, if applicable, the rate or rates at which overdue premium or interest shall bear interest, if any), or any formulary or other method or other means by which such rate or rates shall be determined, by reference or otherwise; the date or dates from which such interest shall accrue; the Interest Payment Dates on which such interest shall be payable and the Regular Record Date, if any, for the interest payable on such Securities on any Interest Payment Date; the right of the Company, if any, to extend the interest payment periods and the duration of any such extension as contemplated by Section 311; and the basis of computation of interest, if other than as provided in Section 310; f) the place or places at which or methods by which (l) the principal of and premium, if any, and interest, if any, on Securities of such series shall be payable, (2) registration of transfer of Securities of such series may be effected, (3) exchanges of Securities of such series may be effected and (4) notices and demands to or upon the Company in respect of the Securities of such series and this Indenture may be served; the security Registrar for such series; and if such is the case, that the principal of such Securities shall be payable without presentment or surrender thereof; g) the period or periods within which, or the date or dates on which, the price or prices at which and the terms and conditions upon which the Securities of such series may be redeemed, in whole or in part, at the option of the Company and any restrictions on such redemptions, including but not limited to a restriction on a partial redemption by the Company of the Securities of any series resulting in delisting of such Securities from any national exchange; h) the obligation or obligations, if any, of the Company to redeem or purchase the Securities of such series pursuant to any sinking fund or other mandatory redemption -16- provisions or at the option of a Holder thereof and the period or periods within which or the date or dates on which, the price or prices at which and the terms and conditions upon which such Securities shall be redeemed or purchased, in whole or in part, pursuant to such obligation, and applicable exceptions to the requirements of Section 404 in the case of mandatory redemption or redemption at the option of the Holder; i) the denominations in which Securities of such series shall be issuable if other than denominations of $25 and any integral multiple thereof; j) the currency or currencies, including composite currencies, in which payment of the principal of and premium, if any, and interest, if any, on the Securities of such series shall be payable (if other than in Dollars); k) if the principal of or premium, if any, or interest, if any, on the Securities of such series are to be payable, at the election of the Company or a Holder thereof, in a coin or currency other than that in which the securities are stated to be payable, the period or periods within which and the terms and conditions upon which, such election may be made; l) if the principal of or premium, if any, or interest, if any, on the Securities of such series are to be payable, or are to be payable at the election of the Company or a Holder thereof, in securities or other property, the type and amount of such securities or other property, or the formulary or other method or other means by which such amount shall be determined, and the period or periods within which, and the terms and conditions upon which, any such election may be made; m) if the amount payable in respect of principal of or premium, if any, or interest, if any, on the Securities of such series may be determined with reference to an index or other fact or event ascertainable outside this Indenture, the manner in which such amounts shall be determined to the extent not established pursuant to clause (e) of this paragraph; n) if other than the principal amount thereof, the portion of the principal amount of Securities of such series which shall be payable upon declaration of acceleration of the Maturity Date thereof pursuant to Section 802; o) any addition to or change in the Events of Default which apply to any Securities of the series and any change in the right of the Trustee or the requisite Holders of such Securities to declare the principal amount thereof due and payable pursuant to Section 802; -17- p) the terms, if any, pursuant to which the Securities of such series may be converted into or exchanged for shares of capital stock or other securities of the Company or any other Person; q) the obligations or instruments, if any, which shall be considered to be Government Obligations in respect of the Securities of such series denominated in a currency other than Dollars or in a composite currency, and any additional or alternative provisions for the reinstatement of the Company's indebtedness in respect of such Securities after the satisfaction and discharge thereof as provided in Section 701; r) if the Securities of such series are to be issued in global form, (i) any limitations on the rights of the Holder or Holders of such Securities to transfer or exchange the same or to obtain the registration of transfer thereof, (ii) any limitations on the rights of the Holder or Holders thereof to obtain certificates therefor in definitive form in lieu of temporary form and (iii) any and all other matters incidental to such Securities; s) if the Securities of such series are to be issuable as bearer securities, any and all matters incidental thereto which are not specifically addressed in a supplemental indenture as contemplated by clause (g) of Section 1201; t) to the extent not established pursuant to clause (r) of this paragraph, any limitations on the rights of the Holders of the Securities of such Series to transfer or exchange such Securities or to obtain the registration of transfer thereof; and if a service charge will be made for the registration of transfer or exchange of Securities of such series the amount or terms thereof; u) any exceptions to Section 113, or variation in the definition of Business Day, with respect to the Securities of such series; v) the designation of the Trust to which Securities of such series are to be issued; w) any addition to or change in the covenants set forth in Article Six which applies to Securities of the series; x) subject to Section 314, the right of the Company to change the Maturity Date of the Securities upon the liquidation of the corresponding Trust and the exchange of such Securities for the Preferred Securities of such Trust; y) subject to Section 314, the right of the Company to extend the Maturity Date for the Securities of such series; and -18- z) any other terms of the Securities of such series not inconsistent with the provisions of this Indenture. All securities of any one series shall be substantially identical, except as to principal amount and date of issue and except as may be set forth in the terms of such series as contemplated above. The Securities of each series shall be subordinated in right of payment to Senior Indebtedness as provided in Article Fifteen. SECTION 302. Denominations. Unless otherwise provided as contemplated by Section 301 with respect to any series of Securities, the Securities of each series shall be issuable in denominations of $25 and any integral multiple thereof. SECTION 303. Execution, Authentication, Delivery and Dating. Unless otherwise provided as contemplated by Section 301 with respect to any series of Securities, the Securities shall be executed on behalf of the Company by an Authorized Officer and attested by any other Authorized Officer or by the Secretary or an Assistant Secretary of the Company. The signature of any or all of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at the time of execution Authorized Officers or the Secretary or an Assistant Secretary of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. The Trustee shall authenticate and deliver Securities of a series, for original issue, at one time or from time to time in accordance with the Company Order referred to below, upon receipt by the Trustee of: a) the instrument or instruments establishing the form or forms and terms of such series, as provided in sections 201 and 301; b) a Company Order requesting the authentication and delivery of such Securities and, to the extent that the terms of such Securities shall not have been established in an indenture supplemental hereto or in a Board Resolution, or in an Officer's Certificate pursuant to a supplemental indenture or Board Resolution, all as contemplated by Sections 201 and 301, establishing such terms; -19- c) the Securities of such series, executed on behalf of the Company by an Authorized Officer; d) an Opinion of Counsel to the effect that: (i) the form or forms of such Securities have been duly authorized by the Company and have been established in conformity with the provisions of this Indenture; (ii) the terms of such Securities have been duly authorized by the Company and have been established in conformity with the provisions of this Indenture; and (iii) such Securities, when authenticated and delivered by the Trustee and issued and delivered by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will have been duly issued under this Indenture and will constitute valid and legally binding obligations of the Company, entitled to the benefits provided by this Indenture, and enforceable in accordance with their terms, subject, as to enforcement, to laws relating to or affecting generally the enforcement of creditors' rights, including, without limitation, bankruptcy and insolvency laws and to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). If the form or terms of the Securities of any series have been established by or pursuant to a Board Resolution or an Officer's Certificate as permitted by Section 201 or 301, the Trustee shall not be required to authenticate such Securities if the issuance of such securities pursuant to this Indenture will materially or adversely affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee. Unless otherwise specified as contemplated by Section 301 with respect to any series of Securities, each Security shall be dated the date of its authentication. Unless otherwise specified as contemplated by Section 301 with respect to any series of Securities, no Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee or an Authenticating Agent by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder to the Company, or any Person acting on its behalf, but shall never have been issued and sold by the Company, and the Company shall deliver such -20- Security to the Trustee for cancellation as provided in Section 309 together with a written statement which need not comply with Section 102 and need not be accompanied by an Opinion of Counsel) stating that such Security has never been issued and sold by the Company, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits hereof. SECTION 304. Temporary Securities. Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company order the Trustee shall authenticate and deliver, temporary Securities, which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued, with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities; provided, however, that temporary Securities need not recite specific redemption, sinking fund, conversion or exchange provisions. Unless otherwise specified as contemplated by Section 301 with respect to the Securities of any series, after the preparation of definitive Securities of such series the temporary Securities of such series shall be exchangeable, without charge to the Holder thereof, for definitive Securities of such series upon surrender of such temporary Securities at the office or agency of the Company maintained pursuant to Section 602 in a Place of Payment for such Securities. Upon such surrender of temporary securities for such exchange, the Company shall, except as aforesaid, execute and the Trustee shall authenticate and deliver in exchange therefor definitive Securities of the same series, of authorized denominations and of like tenor and aggregate principal amount. Until exchanged in full as hereinabove provided, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities or the same series and or like tenor authenticated and delivered hereunder. SECTION 305. Registration, Registration of Transfer and Exchange. The Company shall cause to be kept in each office designated pursuant to Section 602, with respect to the Securities of each series, a register (all registers kept in accordance with this Section being collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities of such series and the registration of transfer thereof. The Company shall designate one Person to maintain the Security Register for the Securities of each series on a consolidated basis and such Person is referred to herein, with respect to such series, as the "Security Registrar." Anything herein to the contrary notwithstanding, the Company may designate one or more of its offices as an office in which a register with respect to the Securities of one or more series shall be maintained, and the Company may designate itself the Security Registrar with respect to one -21- or more of such series. The Security Register shall be open for inspection by the Trustee and the Company at all reasonable times. Except as otherwise specified as contemplated by Section 301 with respect to the Securities of any series, upon surrender for registration of transfer of any Security of such series at the office or agency of the Company maintained pursuant to Section 602 in a Place of Payment for such series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series, of authorized denominations and of like tenor and aggregate principal amount. Except as otherwise specified as contemplated by Section 301 with respect to the Securities of any series, any Security of such series may be exchanged at the option of the Holder, for one or more new Securities of the same series, of authorized denominations and of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at any such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities delivered upon any registration of transfer or exchange of Securities shall be valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company, the Trustee or the Security Registrar) be duly endorsed or shall be accompanied by a written instrument of transfer in form satisfactory to the Company, the Trustee or the Security Registrar, as the case may be, duly executed by the Holder thereof or his attorney duly authorized in writing. Unless otherwise specified as contemplated by Section 301 with respect to Securities of any series, no service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 406 or 1206 not involving any transfer. The Company shall not be required to execute or to provide for the registration of transfer of or the exchange of (a) Securities of any series during a period of 15 days immediately preceding the date of the mailing of any notice of redemption of such Securities called for redemption or (b) any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part. -22 SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities. If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same series, and of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Trustee (a) evidence to their satisfaction of the ownership of and the destruction, loss or theft of any Security and (b) such security or indemnity as may be reasonably required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security is held by a Person purporting to be the owner of such security, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same series, and of like tenor and principal amount and bearing a number not contemporaneously outstanding. Notwithstanding the foregoing, in case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone other than the Holder of such new Security, and any such new Security shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of such series duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 307. Payment of Interest; Interest Rights Preserved. Unless otherwise specified as contemplated by Section 301 with respect to the Securities of any series, interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that -23- Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. Subject to Section 311, any interest on any Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the related Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (a) or (b) below: a) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a date (herein called a "Special Record Date") for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the Payment of such Defaulted interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall promptly cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder of Securities of such series; at the address of such Holder as it appears in the Security Register, not less then 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date. b) The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee. -24- Subject to the foregoing provisions of this Section and Section 305, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other security. SECTION 308. Persons Deemed Owners. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such security is registered as the absolute owner of such Security for the purpose of receiving payment of principal of and premium, if any, and (subject to Sections 305 and 307) interest, if any, on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. SECTION 309. Cancellation by Security Registrar. All Securities surrendered for payment, redemption, registration of transfer or exchange shall, if surrendered to any Person other than the Security Registrar, be delivered to the Security Registrar and, if not theretofore canceled, shall be promptly canceled by the Security Registrar. The Company may at any time deliver to the Security Registrar for cancellation any securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever or which the Company shall not have issued and sold, and all Securities so delivered shall be promptly canceled by the Security Registrar. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled securities held by the Security Registrar shall be disposed of in accordance with a Company Order delivered to the Security Registrar and the Trustee, and the Security Registrar shall promptly deliver a certificate of disposition to the Trustee and the Company unless, by a Company Order, similarly delivered, the Company shall direct that canceled Securities be returned to it. The Security Registrar shall promptly deliver evidence of any cancellation of a Security in accordance with this Section 309 to the Trustee and the Company. SECTION 310. Computation of Interest. Except as otherwise specified as contemplated by Section 301 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year consisting of twelve 30-day months and for any period shorter than a full month, on the basis of the actual number of days elapsed in such period. SECTION 311. Extension of Interest Payment. -25- The Company shall have the right at any time, so long as the Company is not in default in the payment of interest on the Securities of any series hereunder, to extend interest payment periods on all Securities of one or more series, if so specified as contemplated by Section 301 with respect to such Securities and upon such terms as may be specified as contemplated by Section 301 with respect to such Securities. SECTION 312. Additional Interest Attributable to Taxes. So long as any Preferred Securities remain outstanding, if the Trust which issued such Preferred Securities shall be required to pay, with respect to its income derived from the interest payments on the Securities of any series, any amounts for or on account of any taxes, duties, assessments or governmental charges of whatever nature imposed by the United States, or any other taxing authority, then, in any such case, the Company will pay as interest on such series such additional interest ("Additional Interest Attributable to Taxes") as may be necessary in order that the net amounts received and retained by such Trust after the payment of such taxes, duties, assessments or governmental charges shall result in such Trust's having such funds as it would have had in the absence of the payment of such taxes, duties, assessments or governmental charges. SECTION 313. Agreed Tax Treatment. Each Security issued hereunder shall provide that the Company and, by its acceptance of a Security or a beneficial interest therein, the Holder of, and any Person that acquires a beneficial interest in, such Security agree that for United States federal, state and local tax purposes it is intended that such Security constitute indebtedness and agree to treat such security accordingly for such purposes. SECTION 314. Extension of Maturity Date; Adjustment of Maturity Date Upon an Exchange. If specified as contemplated by Section 301 with respect to the Securities of a particular series, the Company shall have the right to (a) change the Maturity Date of the Securities of such series upon the liquidation of the corresponding Trust and the exchange of such Securities for the Preferred Securities of such Trust and (b) extend the Maturity Date for the Securities of such series at any time and from time to time; PROVIDED, that at the time any election to extend the Maturity Date is made and at the time of such extension (i) the Company is not in bankruptcy, otherwise insolvent or in liquidation, (ii) the Company is not in default in the payment of any interest or principal on the Securities of such series and no deferred interest payments thereon have accrued, (iii) such Trust is not in arrears in payments of Distributions on its Preferred Securities and no deferred Distributions thereon are accumulated, (iv) the Securities are rated not less than BBB - by Standard & Poor's Ratings Services or Baa3 by Moody's Investors Service, Inc. or the equivalent by any other nationally recognized statistical rating organization and (v) the extended Maturity Date is no later than the 49th anniversary of the initial -26- issuance of the Preferred Securities of such Trust; and PROVIDED, FURTHER, that, if the Company exercises its rights to liquidate a Trust and exchange the Securities of such series for the Preferred Securities of such Trust as specified in clause (a) above, any changed Maturity Date of the Securities of such series shall be (A) no earlier than the date five years after the initial issuance of the Preferred Securities of such Trust and (B) no later than the date 30 years (plus an extended term of up to an additional 19 years if the above-referenced conditions are satisfied) after the date of the initial issuance of the Preferred Securities of such Trust. ARTICLE FOUR Redemption of Securities SECTION 401. Applicability of Article. Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 301 for Securities of such series) in accordance with this Article. SECTION 402. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities shall be evidenced by a Board Resolution or an Officer's Certificate. The Company shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such Redemption Date and of the principal amount of such Securities to be redeemed. In the case of any redemption of Securities (a) prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture or (b) pursuant to an election of the Company which is subject to a condition specified in the terms of such Securities, the Company shall furnish the Trustee with an Officer's Certificate evidencing compliance with such restriction or condition. SECTION 403. Selection of Securities to Be Redeemed. If less than all the Securities of any series are to be redeemed, the particular Securities to be redeemed shall be selected by the Trustee from the Outstanding Securities of such series not previously called for redemption, by such method as shall be provided for any particular series, or, in the absence of any such provision, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Securities of such series or any integral multiple thereof) of the principal amount of Securities of such series of a denomination larger than the minimum authorized denomination for Securities of such series; provided, however, that if, as indicated in an Officer's Certificate, the Company shall have offered to purchase all or any principal amount of the Securities then Outstanding of any series and less than all of such Securities as to which -27- such offer was made shall have been tendered to the Company for such purchase the Trustee, if so directed by Company order, shall select for redemption all or any principal amount of such Securities which have not been so tendered. The Trustee shall promptly notify the Company and the Security Registrar in writing of the securities selected for redemption and, in the case of any Securities selected to be redeemed in part, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such securities which has been or is to be redeemed. SECTION 404. Notice of Redemption. Notice of redemption shall be given in the manner provided in Section 106 to the Holders of the Securities to be redeemed not less than 30 nor more than 60 days prior to the Redemption Date. All notices of redemption shall state: a) the Redemption Date, b) the Redemption Price, c) if less than all the Securities of any series are to be redeemed, the identification of the particular Securities to be redeemed and the portion of the principal amount of any Security to be redeemed in part, d) that on the Redemption Date the Redemption Price, together with accrued interest, if any, to the Redemption Date, will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date, e) the place or places where such Securities are to be surrendered for payment of the Redemption Price and accrued interest, if any, unless it shall have been specified as contemplated by Section 301 with respect to such Securities that such surrender shall not be required, f) that the redemption is for a sinking or other fund, if such is the case, and g) such other matters as the Company shall deem desirable or appropriate. -28- Unless otherwise specified with respect to any Securities in accordance with Section 301, with respect to any notice of redemption of Securities at the election of the Company, unless, upon the giving of such notice, such Securities shall be deemed to have been paid in accordance with Section 701, such notice may state that such redemption shall be conditional upon the receipt by the Paying Agent or Agents for such Securities, on or prior to the date fixed for such redemption, of money sufficient to pay the principal of and premium, if any, and interest, if any, on such Securities and that if such money shall not have been so received such notice shall be of no force or effect and the Company shall not be required to redeem such Securities. In the event that such notice of redemption contains such a condition and such money is not so received, the redemption shall not be made and within a reasonable time thereafter notice shall be given, in the manner in which the notice of redemption was given, that such money was not so received and such redemption was not required to be made, and the Paying Agent or Agents for the Securities otherwise to have been redeemed shall promptly return to the Holders thereof any of such Securities which had been surrendered for payment upon such redemption. Notice of redemption of Securities to be redeemed at the election of the Company, and any notice of non-satisfaction of a condition for redemption as aforesaid, shall be given by the Company or, at the Company's request, by the Security Registrar in the name and at the expense of the Company. Notice of mandatory redemption of Securities shall be given by the Security Registrar in the name and at the expense of the Company. SECTION 405. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, and the conditions, if any, set forth in such notice having been satisfied, the Securities or portions thereof so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless, in the case of an unconditional notice of redemption, the Company shall default in the payment of the Redemption Price and accrued interest, if any) such Securities or portions thereof, if interest-bearing, shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with such notice, such Security or portion thereof shall be paid by the Company at the Redemption Price, together with accrued interest, if any, to the Redemption Date; provided, however, that no such surrender shall be a condition to such payment if so specified as contemplated by Section 301 with respect to such Security; and provided, further, that except as otherwise specified as contemplated by Section 301 with respect to such Security, any installment of interest on any Security the Stated Maturity of which installment is on or prior to the Redemption Date shall be payable to the Holder of such Security, or one or more Predecessor Securities, registered as such at the close of business on the related Regular Record Date according to the terms of such Security and subject to the provisions of Section 307. SECTION 406. Securities Redeemed in Part. -29- Upon the surrender of any Security which is to be redeemed only in part at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge, a new Security or securities of the same series, of any authorized denomination requested by such Holder and of like tenor and in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. ARTICLE FIVE Sinking Funds SECTION 501. Applicability of Article. The provisions of this Article shall be applicable to any sinking fund for the retirement of the Securities of any series, except as otherwise specified as contemplated by Section 301 for Securities of such series. The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 502. Each sinking fund payment shall be applied to the redemption of Securities of the series in respect of which it was made as provided for by the terms of such Securities. SECTION 502. Satisfaction of Sinking Fund Payments with Securities. The Company (a) may deliver to the Trustee Outstanding Securities (other than any previously called for redemption) of a series in respect of which a mandatory sinking fund payment is to be made and (b) may apply as a credit Securities of such series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities or Outstanding Securities purchased by the Company, in each case in satisfaction of all or any part of such mandatory sinking fund payment with respect to the Securities of such series; provided, however, that no Securities shall be applied in satisfaction of a mandatory sinking fund payment if such securities shall have been previously so applied. Securities so applied shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund and the amount of such mandatory sinking fund payment shall be reduced accordingly. -30- SECTION 503. Redemption of Securities for Sinking Fund. Not less than 45 days prior to each sinking fund payment date for the Securities of any series, the Company shall deliver to the Trustee an Officer's Certificate specifying: (a) the amount of the next succeeding mandatory sinking fund payment for such series; (b) the amount, if any, of the optional sinking fund payment to be made together with such mandatory sinking fund payment; (c) the aggregate sinking fund payment; (d) the portion, if any, of such aggregate sinking fund payment which is to be satisfied by the payment of cash; (e) the portion, if any, of such aggregate sinking fund payment which is to be satisfied by delivering and crediting Securities of such series pursuant to section 502 and stating the basis for such credit and that such Securities have not previously been so credited, and the Company shall also deliver to the Trustee any Securities to be so delivered. If the Company shall not deliver such Officer's Certificate, the next succeeding sinking fund payment for such series shall be made entirely in cash in the amount of the mandatory sinking fund payment. Not less than 30 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 403 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 404. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 405 and 406. ARTICLE SIX Covenants SECTION 601. Payment of Principal, Premium and Interest. The Company shall pay the principal of and premium, if any, and interest, if any, (including Additional Interest Attributable to Taxes), on the Securities of each series in accordance with the terms of such Securities and this Indenture. SECTION 602. Maintenance of Office or Agency. -31- The Company shall maintain in each Place of Payment for the Securities of each series an office or agency where payment of such Securities shall be made, where the registration of transfer or exchange of such Securities may be effected and where notices and demands to or upon the Company in respect of such Securities and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of each such office or agency and prompt notice to the Holders of any such change in the manner specified in Section 106. If at any time the Company shall fail to maintain any such required office or agency in respect of Securities of any series, or shall fail to furnish the Trustee with the address thereof, payment of such Securities shall be made, registration of transfer or exchange thereof may be effected and notices and demands in respect thereof may be served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent for all such purposes in any such event. The Company may also from time to time designate one or more other offices or agencies with respect to the Securities of one or more series, for any or all of the foregoing purposes and may from time to time rescind such designations; provided, however, that, unless otherwise specified as contemplated by Section 301 with respect to the Securities of such series, no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency for such purposes in each Place of Payment for such Securities in accordance with the requirements set forth above. The Company shall give prompt written notice to the Trustee, and prompt notice to the Holders in the manner specified in Section 106, of any such designation or rescission and of any change in the location of any such other office or agency. Anything herein to the contrary notwithstanding, any office or agency required by this Section may be maintained at an office of the Company, in which event the Company shall perform all functions to be performed at such office or agency. SECTION 603. Money for Securities Payments to Be Held in Trust. If the Company shall at any time act as its own Paying Agent with respect to the Securities of any series, it shall, on or before each due date of the principal of and premium, if any, and interest, if any, on any of such Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and premium or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided. The Company shall promptly notify the Trustee of any failure by the Company (or any other obligor on such Securities) to make any payment of principal of or premium, if any, or interest, if any, on such Securities. Whenever the Company shall have one or more Paying Agents for the Securities of any series, it shall, on or before each due date of the principal of and premium, if any, and interest, if any, on such Securities, deposit with such Paying Agents sums sufficient (without -32- duplication) to pay the principal and premium or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company shall promptly notify the Trustee of any failure by it so to act. The Company shall cause each Paying Agent for the Securities of any series, other than the company or the Trustee, to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent shall: (a) hold all sums held by it for the payment of the principal of and premium, if any, or interest, if any, on such Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (b) give the Trustee notice of any failure by the Company (or any other obligor upon such Securities) to make any payment of principal of or premium, if any, or interest, if any, on such Securities; and (c) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent and furnish to the Trustee such information as it possesses regarding the names and addresses of the Persons entitled to such sums. The Company may at any time pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums to be held by the Company or such Paying Agent and, if so stated in a Company order delivered to the Trustee, in accordance with the provisions of Article Seven; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of and premium, if any, or interest, if any, on any Security and remaining unclaimed for two years after such principal and premium, if any, or interest has become due and payable shall be paid to the Company on Company Request, or, if then held by the Company, shall be discharged from such trust; and, upon such payment or discharge, the Holder of such Security shall, as an unsecured general creditor and not as a Holder of an Outstanding Security, look only to the Company for payment of the amount so due and payable and remaining unpaid, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any -33- such payment to the Company, may at the expense of the Company cause to be mailed, on one occasion only, notice to such Holder that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such mailing, any unclaimed balance of such money then remaining will be paid to the Company. SECTION 604. Corporate Existence. Subject to the rights of the Company under Article Eleven, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence. SECTION 605. Maintenance of Properties. The Company shall cause (or, with respect to property owned in common with others, make reasonable effort to cause) all its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and shall cause (or, with respect to property owned in common with others, make reasonable effort to cause) to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as, in the judgment of the Company, may be necessary so that the business carried on in connection therewith may be properly conducted; provided, however, that nothing in this Section shall prevent the Company from discontinuing, or causing the discontinuance of, the operation and maintenance of any of its properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business. SECTION 606. Annual Officer's Certificate as to Compliance. Not later that September 15 in each year, commencing September 15, [1997], the Company shall deliver to the Trustee an Officer's Certificate which need not comply with Section 102, executed by the principal executive officer, the principal financial officer or the principal accounting officer of the Company, as to such officer's knowledge of the Company's compliance with all conditions and covenants under this Indenture, such compliance to be determined without regard to any period of grace or requirement of notice under this Indenture. SECTION 607. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any term, provision or condition set forth in (a) Section 602 or any additional covenant or restriction specified with respect to the Securities of any series, as contemplated by Section 301, if before the time for such compliance the Holders of at least a majority in aggregate principal amount of the Outstanding Securities of all series with respect to which compliance with Section 602 or such additional covenant or restriction is to be omitted, considered as one class, shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such -34- term, provision or condition and (b) Section 604, 605 or Article Eleven if before the time for such compliance the Holders of at least a majority in principal amount of Securities Outstanding under this Indenture shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition; but, in the case of (a) or (b), no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect; provided, however, that so long as a Trust holds Securities of any series, such Trust may not waive compliance or waive any default in compliance by the Company with any covenant or other term contained in this Indenture or the Securities of such series without the approval of the holders of at least a majority in aggregate liquidation preference of the outstanding Preferred Securities issued by such Trust affected, obtained as provided in the Trust Agreement pertaining to such Trust. SECTION 608. Restriction on Payment of Dividends. So long as any Preferred Securities of any series remain outstanding, the Company shall not declare or pay any dividend on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company's capital stock, or make any guarantee payments with respect to the foregoing (other than payments under the Guarantee relating to such Preferred Securities) if at such time (a) the Company shall be in default with respect to its payment or other obligations under the Guarantee relating to such Preferred Securities, (b) there shall have occurred and be continuing a payment default (whether before or after expiration of any period of grace) or an Event of Default hereunder or (c) the Company shall have elected to extend any interest payment period as provided in Section 311, and any such period, or any extension thereof, shall be continuing. SECTION 609. Maintenance of Trust Existence. So long as Preferred Securities of any series remain outstanding, the Company shall (i) maintain direct or indirect ownership of all interests in the Trust which issued such Preferred Securities, other than such Preferred Securities, (ii) not voluntarily (to the extent permitted by law) dissolve, liquidate or wind up such Trust, except in connection with a distribution of the Securities to the holders of the Preferred Securities in liquidation of such Trust, (iii) remain the sole Depositor under the Trust Agreement (the "Depositor") of such Trust and timely perform in all material respects all of its duties as Depositor of such Trust, and (iv) use reasonable efforts to cause such Trust to remain a business trust and otherwise continue to be treated as a grantor trust for Federal income tax purposes; provided that any permitted successor to the Company under this Indenture may succeed to the Company's duties as Depositor of such Trust; and provided further that the Company may permit such Trust to consolidate or merge with or into another business trust or other permitted successor under the Trust Agreement pertaining to such Trust as long as -35- the Company agrees to comply with this Section 609 with respect to such successor business trust or other permitted successor. ARTICLE SEVEN Satisfaction and Discharge SECTION 701. Defeasance. Any Security or Securities, or any portion of the principal amount thereof, shall be deemed to have been paid for all purposes of this Indenture, and the entire indebtedness of the Company in respect thereof shall be deemed to have been satisfied and discharged, if there shall have been irrevocably deposited with the Trustee or any Paying Agent (other than the Company), in trust: (a) money in an amount which shall be sufficient, or (b) in the case of a deposit made prior to the Maturity Date of such Securities or portions thereof, Government Obligations, which shall not contain provisions permitting the redemption or other prepayment thereof at the option of the issuer thereof, the principal of and the interest on which when due, without any regard to reinvestment thereof, will provide moneys which, together with the money, if any, deposited with or held by the Trustee or such Paying Agent, shall be sufficient, or (c) a combination of (a) or (b) which shall be sufficient, to pay when due the principal of and premium, if any, and interest, if any, due and to become due on such Securities or portions thereof on or prior to the Maturity Date; provided, however, that in the case of the provision for payment or redemption of less than all the Securities of any series, such Securities or portions thereof shall have been selected by the Trustee as provided herein and, in the case of a redemption, the notice requisite to the validity of such redemption shall have been given or irrevocable authority shall have been given by the Company to the Trustee to give such notice, under arrangements satisfactory to the Trustee; and provided, further, that the Company shall have delivered to the Trustee and such Paying Agent: (x) if such deposit shall have been made prior to the Maturity Date of such Securities, a Company Order stating that the money and Government Obligations deposited in accordance with this Section shall be held in trust, as provided in Section 703; and (y) if Government Obligations shall have been deposited, an Opinion of Counsel that the obligations so deposited constitute Government Obligations and -36- do not contain provisions permitting the redemption or other prepayment at the option of the issuer thereof, and an opinion of an independent public accountant of nationally recognized standing, selected by the Company, to the effect that the requirements set forth in clause (b) above have been satisfied; and (z) if such deposit shall have been made prior to the Maturity Date of such Securities, an Officer's Certificate stating the Company's intention that, upon delivery of such Officer's Certificate, its indebtedness in respect of such securities or portions thereof will have been satisfied and discharged as contemplated in this Section. Upon the deposit of money or Government Obligations, or both, in accordance with this Section, together with the documents required by clauses (x), (y) and (z) above, the Trustee shall, upon receipt of a Company Request, acknowledge in writing that the Security or securities or portions thereof with respect to which such deposit was made are deemed to have been paid for all purposes of this Indenture and that the entire indebtedness of the Company in respect thereof has been satisfied and discharged as contemplated in this Section. In the event that all of the conditions set forth in the preceding paragraph shall have been satisfied in respect of any Securities or portions thereof except that, for any reason, the Officer's Certificate specified in clause (z) shall not have been delivered, such Securities or portions thereof shall nevertheless be deemed to have been paid for all purposes of this Indenture, and the Holders of such Securities or portions thereof shall nevertheless be no longer entitled to the benefits of this Indenture or of any of the covenants of the Company under Article Six (except the covenants contained in Sections 602 and 603) or any other covenants made in respect of such Securities or portions thereof as contemplated by Section 301, but the indebtedness of the Company in respect of such Securities or portions thereof shall not be deemed to have been satisfied and discharged prior to the Maturity Date for any other purpose, and the Holders of such Securities or portions thereof shall continue to be entitled to look to the Company for payment of the indebtedness represented thereby; and, upon Company Request, the Trustee shall acknowledge in writing that such Securities or portions thereof are deemed to have been paid for all purposes of this Indenture. If payment at Stated Maturity of less than all of the Securities of any series is to be provided for in the manner and with the effect provided in this Section, the Security Registrar shall select such Securities, or portions of principal amount thereof, in the manner specified by Section 403 for selection for redemption of less than all the Securities of a series. In the event that Securities which shall be deemed to have been paid for purposes of this Indenture, and, if such is the case, in respect of which the Company's indebtedness shall have been satisfied and discharged, all as provided in this Section do not mature and are not to be redeemed within the 60 day period commencing with the date of the deposit of moneys or Government obligations, as aforesaid, the Company shall, as promptly as practicable, give a -37- notice, in the same manner as a notice of redemption with respect to such Securities, to the Holders of such Securities to the effect that such deposit has been made and the effect thereof. Notwithstanding that any Securities shall be deemed to have been paid for purposes of this Indenture, as aforesaid, the obligations of the Company and the Trustee in respect of such Securities under Sections 304, 305, 306, 404, 503 (as to notice of redemption), 602, 603, 907 and 915 and this Article Seven shall survive. The Company shall pay, and shall indemnify the Trustee or any Paying Agent with which Government Obligations shall have been deposited as provided in this Section against, any tax, fee or other charge imposed on or assessed against such Government Obligations or the principal or interest received in respect of such Government Obligations, including, but not limited to, any such tax payable by any entity deemed, for tax purposes, to have been created as a result of such deposit. Anything herein to the contrary notwithstanding, (a) if, at any time after a Security would be deemed to have been paid for purposes of this Indenture, and, if such is the case, the Company's indebtedness in respect thereof would be deemed to have been satisfied or discharged, pursuant to this Section (without regard to the provisions of this paragraph), the Trustee or any Paying Agent, as the case may be, shall be required to return the money or Government Obligations, or combination thereof, deposited with it as aforesaid to the Company or its representative under any applicable Federal or State bankruptcy, insolvency or other similar law, such Security shall thereupon be deemed retroactively not to have been paid and any satisfaction and discharge of the Company's indebtedness in respect thereof shall retroactively be deemed not to have been effected, and such Security shall be deemed to remain Outstanding and (b) any satisfaction and discharge of the Company's indebtedness in respect of any Security shall be subject to the provisions of the last paragraph of Section 603. SECTION 702. Satisfaction and Discharge of Indenture. This Indenture shall upon Company Request cease to be of further effect (except as hereinafter expressly provided), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (a) no Securities remain Outstanding hereunder; and (b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; provided, however, that if, in accordance with the last paragraph of Section 701, any security, previously deemed to have been paid for purposes of this Indenture, shall be deemed retroactively not to have been so paid, this Indenture shall thereupon be deemed retroactively not to have been -38- satisfied and discharged, as aforesaid, and to remain in full force and effect, and the Company shall execute and deliver such instruments as the Trustee shall reasonably request to evidence and acknowledge the same. Notwithstanding the satisfaction and discharge of this indenture as aforesaid, the obligations of the Company and the Trustee under Sections 304, 305, 306, 404, 503 (as to notice of redemption), 602, 603, 907 and 915 and this Article Seven shall survive. Upon satisfaction and discharge of this Indenture as provided in this Section, the Trustee shall assign, transfer and turn over to the Company, subject to the lien provided by Section 907, any and all money, securities and other property then held by the Trustee for the benefit of the Holders of the Securities other than money and Government Obligations held by the Trustee pursuant to Section 703. SECTION 703. Application of Trust Money. Neither the Government Obligations nor the money deposited pursuant to Section 701, nor the principal or interest payments on any such Government Obligations, shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal of and premium, if any, and interest, if any, on the Securities or portions of principal amount thereof in respect of which such deposit was made, all subject, however, to the provisions of Section 603; provided, however, that, so long as there shall not have occurred and be continuing an Event of Default any cash received from such principal or interest payments on such Government Obligations, if not then needed for such purpose, shall, to the extent practicable, be invested in Government Obligations of the type described in clause (b) in the first paragraph of Section 701 maturing at such times and in such amounts as shall be sufficient to pay when due the principal of and premium, if any, and interest, if any, due and to become due on such Securities or portions thereof on and prior to the Maturity Date thereof, and interest earned from such reinvestment shall be paid over to the Company as received, free and clear of any trust, lien or pledge under this Indenture except the lien provided by Section 907; and provided, further, that, so long as there shall not have occurred and be continuing an Event of Default, any moneys held in accordance with this Section on the Maturity Date of all such Securities in excess of the amount required to pay the principal of and premium, if any, and interest, if any, then due on such Securities shall be paid over to the Company free and clear of any trust, lien or pledge under this Indenture except the lien provided by Section 907; and provided, further, that if an Event of Default shall have occurred and be continuing, moneys to be paid over to the Company pursuant to this Section shall be held until such Event of Default shall have been waived or cured. ARTICLE EIGHT Events of Default; Remedies -39- SECTION 801. Events of Default. "Event of Default" wherever used herein with respect to Securities of any series, means any one of the following events: (a) failure to pay interest, if any, including any Additional Interest Attributable to Taxes, on any Security of such series within 30 days after the same becomes due and payable (whether or not payment is prohibited by the provisions of Article Fifteen hereof); provided, however, that a valid extension of the interest payment period by the Company as contemplated in Section 311 of this Indenture shall not constitute a failure to pay interest for this purpose; or (b) failure to pay the principal of or premium, if any, on any Security of such series at its Maturity Date (whether or not payment is prohibited by the provisions of Article Fifteen hereof); or (c) failure to perform or breach of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in the performance of which or breach of which is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of one or more series of Securities other than such series) for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee, or to the Company and the Trustee by the Holders of at least 33% in principal amount of the Outstanding Securities of such series, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder, unless the Trustee, or the Trustee and the Holders of a principal amount of securities of such series not less than the principal amount of securities the Holders of which gave such notice, as the case may be, shall agree in writing to an extension of such period prior to its expiration; provided, however, that the Trustee, or the Trustee and the Holders of such principal amount of Securities of such series, as the case may be, shall be deemed to have agreed to an extension of such period if corrective action is initiated by the Company within such period and is being diligently pursued; or (d) the entry by a court having jurisdiction in the premises of (1) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (2) a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition by one or more Persons other than the Company seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or State law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official for the Company or for any substantial part of its property, or ordering the winding up or liquidation of its affairs, and -40- any such decree or order for relief or any such other decree or order shall have remained unstayed and in effect for a period of 90 consecutive days; or (e) the commencement by the Company of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company in a case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the authorization of such action by the Board of Directors; or (f) any other Event of Default specified with respect to Securities of such series. SECTION 802. Acceleration of Maturity; Rescission and Annulment. (a) If an Event of Default with respect to Securities of any series at the time Outstanding shall have occurred and be continuing, either the Trustee or the Holders of not less than 33% in principal amount of the Securities of such series may then declare the principal of all Securities of such series and interest accrued thereon to be due and payable immediately provided that, in the case of Securities of a series issued to a Trust, if, upon an Event of Default, the Trustee or the Holders of not less than 33% in principal amount of the Outstanding Securities of that series fail to declare the principal of all the Securities of that series to be immediately due and payable, the holders of at least 33% in aggregate liquidation amount of the corresponding series of Preferred Securities then outstanding (if any) shall have such right by a notice in writing to the Company and the Trustee; and upon any such declaration such principal amount (or specified amount) of and the accrued interest (including any Additional Interest Attributable to Taxes) on all the Securities of that series shall become immediately due and payable (provided that the payment of principal and interest on such Securities shall remain subordinated to the extent provided in Article Fifteen hereof). (b) At any time after such a declaration of acceleration with respect to Securities of any series shall have been made pursuant to paragraph (a) above and before a judgment or decree for payment of the money due shall have been obtained by the Trustee as hereinafter in this Article provided, the Event or Events of Default giving rise to such declaration of acceleration -41- shall, without further act, be deemed to have been waived, and such declaration and its consequences shall, without further act, be deemed to have been rescinded and annulled, if (i) the Company shall have paid or deposited with the Trustee a sum sufficient to pay (1) all overdue interest on all Securities of such series; (2) the principal of and premium, if any, on any Securities of such series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Securities; (3) to the extent that payment of such interest is lawful, interest upon overdue interest, if any, at the rate or rates prescribed therefor in such Securities; (4) all amounts due to the Trustee under Section 907; and (ii) any other Event or Events of Default with respect to Securities of such series, other than the nonpayment of the principal of Securities of such series which shall have become due solely by such declaration of acceleration, shall have been cured or waived as provided in Section 813. No such rescission shall affect any subsequent Event of Default or impair any right consequent thereon. SECTION 803. Collection of Indebtedness and Suits for Enforcement by Trustee. If an Event of Default described in clause (a) or (b) of Section 801 shall have occurred and be continuing, the Company shall, upon demand of the Trustee, pay to it, for the benefit of the Holders of the Securities of the series with respect to which such Event of Default shall have occurred, the whole amount then due and payable on such Securities for principal and premium, if any, and interest, if any, and, to the extent permitted by law, interest on premium, if any, and on any overdue principal and interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover any amounts due to the Trustee under Section 907. If the Company shall fail to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to Judgment or final decree and may enforce the same against the Company or any other obligor upon such Securities -42- and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated. If an Event of Default with respect to Securities of any series shall have occurred and be continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 804. Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (a) to file and prove a claim for the whole amount of principal, premium, if any, and interest, if any, owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for amounts due to the Trustee under Section 907) and of the Holders allowed in such judicial proceeding, and (b) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amounts due it under Section 907. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 805. Trustee May Enforce Claims Without Possession of Securities. -43- All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders in respect of which such judgment has been recovered. SECTION 806. Application Of Money Collected. Subject to the provisions of Article Fifteen, any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or premium, if any, or interest, if any, upon presentation of the Securities in respect of which or for the benefit of which such money shall have been collected and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: First: To the payment of all amounts due the Trustee under Section 907; Second: To the payment of the amounts then due and unpaid upon the Securities for principal of and premium, if any, and interest, if any, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal, premium, if any, and interest, if any, respectively; and Third: To the payment of the remainder, if any, to the Company or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction way direct. SECTION 807. Limitation on Suits. No Holder shall have any right to institute any proceedings, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (a) such Holder shall have previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of such series; (b) the Holders of not less then a majority in aggregate principal amount of the Outstanding Securities of all series in respect of which an Event of Default shall have occurred and be continuing, considered as one class, shall have made written request to the -44- Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (c) such Holder or Holders shall have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (d) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such proceeding; and (e) no direction inconsistent with such written request shall have been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities of all series in respect of which an Event of Default shall have occurred and be continuing, considered as one class; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this indenture to affect, disturb or prejudice the rights of any other of such Holders or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders. SECTION 808. Unconditional Right of Holders to Receive Principal, Premium and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium, if any) and (subject to Sections 307 and 311) interest (including any Additional Interest Attributable to Taxes) on such Security on the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. In the case of Securities of a series issued to a Trust, any holder of the corresponding series of Preferred Securities shall have the right, upon the occurrence of an Event of Default described in Section 801(a) or 801(b) hereof, to institute a suit directly against the Company for enforcement of payment to such holder of principal of (and premium, if any) and (subject to Sections 307 and 311) interest (including any Additional Interest Attributable to Taxes) on the Securities of such series having a principal amount equal to the aggregate liquidation preference of the Preferred Securities of the corresponding series held by such holder. SECTION 809. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee or to such Holder, then and -45- in every such case, subject to any determination in such proceeding, the Company, and Trustee and such Holder shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and such Holder shall continue as though no such proceeding had been instituted. SECTION 810. Rights and Remedies Cumulative. Except as otherwise provided in the last paragraph of Section 306, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 811. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders say be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 812. Control by Holders of Securities. If an Event of Default shall have occurred and be continuing in respect of a series of Securities, the Holders of a majority in principal amount of the Outstanding Securities of such series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series; provided, however, that if an Event of Default shall have occurred and be continuing with respect to more than one series of Securities, the Holders of a majority in aggregate principal amount of the Outstanding Securities of all such series, considered as one class, shall have the right to make such direction, and not the Holders of the Securities of any one of such series; and provided, further, that such direction shall not be in conflict with any rule of law or with this Indenture. Before proceeding to exercise any right or power hereunder at the direction of such Holders, the Trustee shall be entitled to receive from such Holders reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with any such direction. SECTION 813. Waiver of Past Defaults. -46- The Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series waive any past default hereunder and its consequences with respect to such series, and, in the case of Securities of a series issued to a Trust, should the holders of such Securities fail to waive such default, the holders of a majority in aggregate liquidation preference of the related series of Preferred Securities shall have such right, in each case except for a default (a) in the payment of the principal of or premium, if any, or interest (including any Additional Interest Attributable to Taxes) on any Security of such series, or (b) in respect of a covenant or provision hereof which under Section 1202 cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected; provided, however, that so long as a Trust holds the Securities of any series, such Trust may not waive any past default without the consent of at least a majority in aggregate liquidation preference of the outstanding Preferred Securities issued by such Trust affected, obtained as provided in the Trust Agreement pertaining to such Trust. Upon any such waiver, such default shall cease to exist, and any and all Events of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 814. Undertaking for Costs. The Company and the Trustee agree, and each Holder by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in aggregate principal amount of the Outstanding Securities of all series in respect of which such suit may be brought, considered as one class, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or premium, if any, or interest, if any, on any Security on or after the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on or after the Redemption Date). SECTION 815. Waiver of Stay or Extension Laws. -47- The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE NINE The Trustee SECTION 901. Certain Duties and Responsibilities. (a) The Trustee shall have and be subject to all the duties and responsibilities specified with respect to an indenture trustee in the Trust Indenture Act and no implied covenants or obligations shall be read into this Indenture against the Trustee. (b) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (c) Notwithstanding anything contained in this indenture to the contrary, the duties and responsibilities of the Trustee under this Indenture shall be subject to the protections, exculpations and limitations on liability afforded to the Trustee under the provisions of the Trust Indenture Act. (d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. SECTION 902. Notice of Defaults. The Trustee shall give notice of any default hereunder with respect to the Securities of any series to the Holders of Securities of such series in the manner and to the extent required to do so by the Trust Indenture Act, unless such default shall have been cured or waived; provided, however, that in the case of any default of the character specified in Section 801(c), no such notice to Holders shall be given until at least 45 days after the occurrence thereof. For the -48- purpose of this Section, the term "default" means any event which is, or after notice or lapse of time, or both, would become, an Event of Default. SECTION 903. Certain Rights of Trustee. Subject to the provisions of Section 901 and to the applicable provisions of the Trust Indenture Act: (a) the Trustee may rely and shall be protected in acting or refraining from acting in good faith upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order, or as otherwise expressly provided herein, and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer's Certificate; (d) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any Holder pursuant to this Indenture, unless such Holder shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may take such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall (subject to applicable legal -49- requirements) be entitled to examine, during normal business hours, the books, records and premises of the Company, personally or by agent or attorney; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and (h) the Trustee shall not be charged with knowledge of any default or Event of Default, as the case may be, with respect to the Securities of any series for which it in acting as Trustee unless either (1) a Responsible Officer of the Trustee shall have actual knowledge of the default or Event of Default, as the case may be, or (2) written notice of such default or Event of Default, as the case may be, shall have been given to the Trustee by the Company, any other obligor on such Securities or by any Holder of such Securities. SECTION 904. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities (except the Trustee's certificates of authentication) shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of Securities or the proceeds thereof. SECTION 905. May Hold Securities. Each of the Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 908 and 913, may otherwise deal with the Company with the same rights it would have if it were not the Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent. SECTION 906. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds, except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as expressly provided herein or otherwise agreed with, and for the sole benefit of, the Company. SECTION 907. Compensation and Reimbursement. The Company shall -50- (a) pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shalt not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein, reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances reasonably incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except to the extent that any such expense, disbursement or advance may be attributable to the Trustee's negligence, willful misconduct or bad faith; and (c) indemnify the Trustee for, and hold it harmless from and against, any loss, liability or expense reasonably incurred by it arising out of or in connection with the acceptance or administration of the trust or trusts hereunder or the performance of its duties hereunder, including the reasonable costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence, wilful misconduct or bad faith. As security for the performance of the obligations of the Company under this Section, the Trustee shall have a lien prior to the Securities upon all property and funds held or collected by the Trustee as such other than property and funds held in trust under Section 703 (except as otherwise provided in Section 703). "Trustee" for purposes of this Section shall include any predecessor Trustee; provided, however, that the negligence, wilful misconduct or bad faith of any Trustee hereunder shall not affect the rights of any other Trustee hereunder. In addition to the rights provided to the Trustee pursuant to the provisions of the immediately preceding paragraph of this Section 907, when the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 801(d) or Section 801(e), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable Federal or State bankruptcy, insolvency or other similar law. SECTION 908. Disqualification; Conflicting Interests. If the Trustee shall have or acquire any conflicting interest within the meaning of the Trust Indenture Act, it shall either eliminate such conflicting interest or resign to the extent, in the manner and with the effect, and subject to the conditions, provided in the Trust Indenture Act and this Indenture. For purposes of Section 310(b)(l) of the Trust Indenture Act and to the extent permitted thereby, the Trustee, in its capacity as trustee in respect of the Securities of any series, shall not be deemed to have a conflicting interest arising from its capacity as trustee in respect of the Securities of any other series. The Trust Agreement and the Guarantee Agreement -51- pertaining to each Trust shall be deemed to be specifically described in this Indenture for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. SECTION 909. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be (a) a corporation organized and doing business under the laws of the United States, any State or Territory thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by Federal or State authority, or (b) if and to the extent permitted by the Commission by rule, regulation or order upon application, a corporation or other Person organized and doing business under the laws of a foreign government, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 or the Dollar equivalent of the applicable foreign currency and subject to supervision or examination by authority of such foreign government or a political subdivision thereof substantially equivalent to supervision or examination applicable to United States institutional trustees, and, in either ease, qualified and eligible under this Article and the Trust Indenture Act. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 910. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 911. (b) The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 911 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. -52- (c) The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Trustee and to the Company; provided that so long as any Preferred Securities remain outstanding, the Trust which issued such Preferred Securities shall not execute any Act to remove the Trustee without the consent of the holders of a majority in aggregate liquidation preference of Preferred Securities issued by such Trust outstanding, obtained as provided in the Trust Agreement pertaining to such Trust. (d) If at any time: (1) the Trustee shall fail to comply with Section 908 after written request therefor by the Company or by any Holder who has been a bona fide Holder for at least six months, or (2) the Trustee shall cease to be eligible under Section 909 and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (x) the Company by a Board Resolution may remove the Trustee with respect to all Securities or (y) subject to Section 814, any Holder who has been a bona fide Holder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause (other than as contemplated in clause (y) in subsection (d) of this Section), with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 911. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in -53- accordance with the applicable requirements of Section 911, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 911, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of itself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series. (f) So long as no event which is, or after notice or lapse of time, or both, would become, an Event of Default shall have occurred and be continuing, and except with respect to a Trustee appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities pursuant to subsection (e) of this Section, if the Company shall have delivered to the Trustee (i) a Board Resolution appointing a successor Trustee, effective as of a date specified therein, end (ii) an instrument of acceptance of such appointment, effective as of such date, by such successor Trustee in accordance with Section 911, the Trustee shall be deemed to have resigned as contemplated in subsection (b) of this Section, the successor Trustee shall be deemed to have been appointed by the Company pursuant to subsection (e) of this Section and such appointment shall be deemed to have been accepted as contemplated in Section 911, all as of such date, and all other provisions of this Section and Section 911 shall be applicable to such resignation, appointment and acceptance except to the extent inconsistent with this subsection (f). (g) The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series by mailing written notice of such event by first-class mail, postage prepaid, to all Holders of Securities of such series as their names and addresses appear in the Security Register. Each notice shall include the name of the successor trustee with respect to the Securities of such series and the address of its corporate trust office. SECTION 911. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee with respect to the Securities of all series, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of all sums owed to it, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring -54- Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. (b) In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee, upon payment of all sums owed to it, shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates. (c) Upon request of any such successor Trustee, the Company shall execute any instruments which fully vest in and confirm to such successor Trustee all such rights, powers and trusts referred to in subsection (a) or (b) of this Section, as the case may be. (d) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 912. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or -55- consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. SECTION 913. Preferential Collection of Claims Against Company. If the Trustee shall be or become a creditor of the Company or any other obligor upon the Securities (other than by reason of a relationship described in Section 311(b) of the Trust Indenture Act), the Trustee shall be subject to any and all applicable provisions of the Trust Indenture Act regarding the collection of claims against the Company or such other obligor. For purposes of Section 311(b) of the Trust Indenture Act: (a) the term "cash transaction" means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; (b) the term "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation. SECTION 914. Co-trustees and Separate Trustees. At any time or times, for the purpose of meeting the legal requirements of any applicable jurisdiction, the Company and the Trustee shall have power to appoint, and, upon the written request of the Trustee or of the Holders of at least 33% in principal amount of the Securities then Outstanding, the Company shall for such purpose join with the Trustee in the execution and delivery of all instruments and agreements necessary or proper to appoint, one or more Persons approved by the Trustee either to act as co-trustee, jointly with the Trustee, or to act as separate trustee, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons, in the capacity aforesaid, any property, title, -56- right or power deemed necessary or desirable, subject to the other provisions of this Section. If the Company does not join in such appointment within 15 days after the receipt by it of a request so to do, or if an Event of Default shall have occurred and be continuing, the Trustee alone shall have power to make such appointment. Should any written instrument or instruments from the Company be required by any co-trustee or separate trustee so appointed to more fully confirm to such co-trustee or separate trustee such property, title, right or power, any and all such instruments shall, on request, be executed, acknowledged and delivered by the Company. Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following conditions: (a) the Securities shall be authenticated and delivered, and all rights, powers, duties and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustee hereunder, shall be exercised solely, by the Trustee; (b) the rights, powers, duties and obligations hereby conferred or imposed upon the Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed either by the Trustee or by the Trustee and such co-trustee or separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co-trustee or separate trustee; (c) the Trustee at any time, by an instrument in writing executed by it, with the concurrence of the Company, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section, and, if an Event of Default shall have occurred and be continuing, the Trustee shall have power to accept the resignation of, or remove, any such co-trustee or separate trustee without the concurrence of the Company. Upon the written request of the Trustee, the Company shall join with the Trustee in the execution and delivery of all instruments and agreements necessary or proper to effectuate such resignation or removal. A successor to any co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section; (d) no co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Trustee, or any other such trustee hereunder; and (e) any Act of Holders delivered to the Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee. -57- SECTION 915. Appointment of Authenticating Agent. The Trustee may appoint an Authenticating Agent or Agents with respect to the Securities of one or more series, which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon original issuance and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 306, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States, any State or territory thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No -58- successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section, and the Trustee shall be entitled to be reimbursed for such payments, in accordance with, and subject to the provisions of Section 907. The provisions of Sections 308, 904 and 905 shall be applicable to each Authenticating Agent. If an appointment with respect to the Securities of one or more series shall be made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternate certificate of authentication substantially in the following form: This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. ________________________ As Trustee By______________________ As Authenticating Agent By______________________ Authorized Signatory If all of the Securities of a series may not be originally issued at one time, and if the Trustee does not have an office capable of authenticating Securities upon original issuance located in a Place of Payment where the Company wishes to have Securities of such series authenticated upon original issuance, the Trustee, if so requested by the Company in writing (which writing need not comply with Section 102 and need not be accompanied by an Opinion of Counsel), shall appoint, in accordance with this Section and in accordance with such procedures as shall be acceptable to the Trustee, an Authenticating Agent having an office in a Place of Payment designated by the Company with respect to such series of Securities. -59- ARTICLE TEN Holders' Lists and Reports by Trustee and Company SECTION 1001. Lists of Holders. Semiannually, not later than June 1 and December 1 in each year, commencing June 1, [1997], and at such other times as the Trustee may request in writing, the Company shall furnish or cause to be furnished to the Trustee information as to the names and addresses of the Holders, and the Trustee shall preserve such information and similar information received by it in any other capacity and afford to the Holders access to information so preserved by it, all to such extent, if any, and in such manner as shall be required by the Trust Indenture Act; provided, however, that no such list need be furnished so long as the Trustee shall be the Security Registrar. SECTION 1002. Reports by Trustee and Company. Not later than July 15 in each year, commencing July 15, 1997, the Trustee shall transmit to the Holders and the Commission a report, dated as of the next preceding May 15, with respect to any events and other matters described in Section 313(a) of the Trust Indenture Act, in such manner and to the extent required by the Trust Indenture Act. The Trustee shall transmit to the Holders and the Commission, and the Company shall file with the Trustee (within 30 days after filing with the Commission in the case of reports which pursuant to the Trust Indenture Act must be filed with the Commission and furnished to the Trustee) and transmit to the Holders, such other information, reports and other documents, if any, at such times and in such manner, as shall be required by the Trust Indenture Act. ARTICLE ELEVEN Consolidation, Merger, Conveyance or Other Transfer SECTION 1101. Company May Consolidate, etc., Only on Certain Terms. The Company shall not consolidate with or merge into any other corporation, or convey or otherwise transfer or lease its properties and assets substantially as an entirety to any Person, unless (a) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a Person organized and validly existing under the laws of the United States, any State thereof or the District of Columbia, and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and -60- punctual payment of the principal of and premium, if any, and interest, if any, on all Outstanding Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed; (b) immediately after giving effect to such transaction no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and (c) the Company shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, or other transfer or lease and such supplemental indenture comply with this Article and that all conditions precedent herein provided for relating to such transactions have been complied with. SECTION 1102. Successor Corporation Substituted. Upon any consolidation by the Company with or merger by the Company into any other corporation or any conveyance, or other transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with Section 1101, the successor corporation formed by such consolidation or into which the Company is merged or the Person to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities Outstanding hereunder. ARTICLE TWELVE Supplemental Indentures SECTION 1201. Supplemental Indentures Without Consent of Holders. Without the consent of any Holders, the Company and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (a) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities, all as provided in Article Eleven; or (b) to add one or more covenants of the Company or other provisions for the benefit of all Holders or for the benefit of the Holders of, or to remain in effect only so -61- long as there shall be Outstanding, Securities of one or more specified series, or to surrender any right or power herein conferred upon the Company; or (c) to add any additional Events of Default with respect to all or any series of Securities Outstanding hereunder; or (d) to change or eliminate any provision of this Indenture or to add any new provision to this Indenture; provided, however, that if such change, elimination or addition shall adversely affect the interests of the Holders of Securities of any series Outstanding on the date of such indenture supplemental hereto in any material respect, such change, elimination or addition shall become effective with respect to such series only pursuant to the provisions of Section 1202 hereof or when no Security of such series remains Outstanding; or (e) to provide collateral security for all but not part of the Securities; or (f) to establish the form or terms of Securities of any series as contemplated by Sections 201 and 301; or (g) to provide for the authentication and delivery of bearer securities and coupons appertaining thereto representing interest, if any, thereon and for the procedures for the registration, exchange and replacement thereof and for the giving of notice to, and the solicitation of the vote or consent of, the holders thereof, and for any and all other matters incidental thereto; or (h) to evidence and provide for the acceptance of appointment hereunder by a separate or successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 911(b); or (i) to provide for the procedures required to permit the Company to utilize, at its option, a noncertificated system of registration for all, or any series of, the Securities; or (j) to change any place or places where (1) the principal of and premium, if any, and interest, if any, on all or any series of Securities shall be payable, (2) all or any series of Securities may be surrendered for registration of transfer, (3) all or any series of Securities may be surrendered for exchange and (4) notices and demands to or upon the Company in respect of all or any series of Securities and this Indenture may be served; or -62- (k) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other changes to the provisions hereof or to add other provisions with respect to matters or questions arising under this Indenture, provided that such other changes or additions shall not adversely affect the interests of the Holders of Securities of any series in any material respect. Without limiting the generality of the foregoing, if the Trust Indenture Act as in effect at the date of the execution and delivery of this Indenture or at any time thereafter shall be amended and (x) if any such amendment shall require one or more changes to any provisions hereof or the inclusion herein of any additional provisions, or shall by operation of law be deemed to effect such changes or incorporate such provisions by reference or otherwise, this Indenture shall be deemed to have been amended so as to conform to such amendment to the Trust Indenture Act, and the Company and the Trustee may, without the consent of any Holders, enter into an indenture supplemental hereto to effect or evidence such changes or additional provisions; or (y) if any such amendment shall permit one or more changes to, or the elimination of, any provisions hereof which, at the date of the execution and delivery hereof or at any time thereafter, are required by the Trust Indenture Act to be contained herein, this Indenture shall be deemed to have been amended to effect such changes or elimination, and the Company and the Trustee may, without the consent of any Holders, enter into an indenture supplemental hereto to evidence such amendment hereof. SECTION 1202. Supplemental Indentures With Consent of Holders. With the consent of the Holders of not less than a majority in aggregate principal amount of the Securities of all series then Outstanding under this Indenture, considered as one class, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or modifying in any manner the rights of the Holders of Securities of such series under the Indenture; provided, however, that if there shall be Securities of more than one series Outstanding hereunder and if a proposed supplemental indenture shall directly affect the rights of the Holders of Securities of one or more, but less than all, of such series, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding Securities of all series so directly affected, considered as one class, shall be required; and provided, further, that no such supplemental indenture shall: -63- (a) except to the extent permitted by Section 311 or as otherwise specified as contemplated by Section 301 with respect to the extension of the interest payment period of the Securities of any series, change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon (or the amount of any installment of interest thereon) or change the method of calculating such rate or reduce any premium payable upon the redemption thereof, or change the coin or currency (or other property), in which any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), without, in any such case, the consent of the Holder of such Security, or (b) reduce the percentage in principal amount of the Outstanding Securities of any series (or, if applicable, in liquidation preference of any series of Preferred Securities), the consent of the Holders of which is required for any such supplemental indenture, or the consent of the Holders of which is required for any waiver of compliance with any provision of this Indenture or of any default hereunder and its consequences, or reduce the requirements of Section 1304 for quorum or voting, without, in any such case, the consent of the Holders of each Outstanding Security of such series, or (c) modify any of the provisions of this Section, Section 607 or Section 813 with respect to the Securities of any series, except to increase the percentages in principal amount referred to in this Section or such other Sections or to provide that other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to "the Trustee" and concomitant changes in this Section, or the deletion of this proviso, in accordance with the requirements of Sections 911(b) and 1201(h). Notwithstanding the foregoing, so long as any of the Preferred Securities remain outstanding, the Trustee may not consent to a supplemental indenture under this Section 1202 without the prior consent, obtained as provided in the Trust Agreement pertaining to each Trust which issued such Preferred Securities, of the holders of not less than a majority in aggregate liquidation preference of all Preferred Securities issued by each such Trust affected thereby, considered as one class, or, in the case of changes described in clauses (a), (b) and (c) above, 100% in aggregate liquidation preference of all such Preferred Securities then outstanding which would be affected thereby, considered as one class. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series. -64- It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. A waiver by a Holder of such Holder's right to consent under this Section shall be deemed to be a consent of such Holder. SECTION 1203. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 901) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties, immunities or liabilities under this Indenture or otherwise. SECTION 1204. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Any supplemental indenture permitted by this Article may restate this Indenture in its entirety, and, upon the execution and delivery thereof, any such restatement shall supersede this Indenture as theretofore in effect for all purposes. SECTION 1205. Conformity With Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. SECTION 1206. Reference in Securities to Supplemental Indentures. Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series. SECTION 1207. Modification Without Supplemental Indenture. -65- If the terms of any particular series of Securities shall have been established in a Board Resolution or an Officer's Certificate as contemplated by Section 301, and not in an indenture supplemental hereto, additions to, changes in or the elimination of any of such terms may be effected by means of a supplemental Board Resolution or Officer's Certificate, as the case may be, delivered to, and accepted by, the Trustee; provided, however, that such supplemental Board Resolution or Officer's Certificate shall not be accepted by the Trustee or otherwise be effective unless all conditions set forth in this Indenture which would be required to be satisfied if such additions, changes or elimination were contained in a supplemental indenture shall have been appropriately satisfied. Upon the acceptance thereof by the Trustee, any such supplemental Board Resolution or Officer's Certificate shall be deemed to be a "supplemental indenture" for purposes of Section 1204 and 1206. ARTICLE THIRTEEN Meetings of Holders; Action Without Meeting SECTION 1301. Purposes for Which Meetings May Be Called. A meeting of Holders of Securities of one or more, or all, series may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be made, given or taken by Holders of Securities of such series. SECTION 1302. Call, Notice and Place of Meetings. (a) The Trustee may at any time call a meeting of Holders of Securities of one or more, or all, series for any purpose specified in Section 1301, to be held at such time and at such place in the State of Illinois, as the Trustee shall determine, or, with the approval of the Company, at any other place. Notice of every such meeting, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 106, not less than 21 nor more than 180 days prior to the date fixed for the meeting. (b) If the Trustee shall have been requested to call a meeting of the Holders of Securities of one or more, or all, series by the Company or by the Holders of 33% in aggregate principal amount of all of such series, considered as one class, for any purpose specified in Section 1301, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have given the notice of such meeting within 21 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the Holders of Securities of such series in the amount above specified, as the case may be, may determine the time and the place in the State of Illinois, or in such other place as shall be determined or -66- approved by the Company, for such meeting and may call such meeting for such purposes by giving notice thereof as provided in subsection (a) of this Section. (c) Any meeting of Holders of Securities of one or more, or all, series shall be valid without notice if the Holders of all Outstanding Securities of such series are present in person or by proxy and if representatives of the Company and the Trustee are present, or if notice is waived in writing before or after the meeting by the Holders of all Outstanding Securities of such series, or by such of them as are not present at the meeting in person or by proxy, and by the Company and the Trustee. SECTION 1303. Persons Entitled to Vote at Meetings. To be entitled to vote at any meeting of Holders of Securities of one or more, or all, series a Person shall be (a) a Holder of one or more Outstanding Securities of such series, or (b) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more Outstanding Securities of such series by such Holder or Holders. The only Persons who shall be entitled to attend any meeting of Holders of Securities of any series shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. SECTION 1304. Quorum; Action. The Persons entitled to vote a majority in aggregate principal amount of the Outstanding Securities of the series with respect to which a meeting shall have been called as herein before provided, considered as one class, shall constitute a quorum for a meeting of Holders of Securities of such series; provided, however, that if any action is to be taken at such meeting which this Indenture expressly provides may be taken by the Holders of a specified percentage, which is less than a majority, in principal amount of the Outstanding Securities of such series, considered as one class, the Persons entitled to vote such specified percentage in principal amount of the Outstanding Securities of such series, considered as one class, shall constitute a quorum. In the absence of a quorum within one hour of the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of Securities of such series, be dissolved. In any other case the meeting may be adjourned for such period as may be determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for such period as may be determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Except as provided by Section 1305(e), notice of the reconvening of any meeting adjourned for more than 30 days shall be given as provided in Section 1302(a) not less than 10 days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Outstanding Securities of such series which shall constitute a quorum. -67- Except as limited by Section 1202, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted only by the affirmative vote of the Holders of a majority in aggregate principal amount of the Outstanding Securities of the series with respect to which such meeting shall have been called, considered as one class; provided, however, that, except as so limited, any resolution with respect to any action which this Indenture expressly provides may be taken by the Holders of a specified percentage, which is less than a majority, in principal amount of the Outstanding Securities of such series, considered as one class, may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative vote of the Holders of such specified percentage in principal amount of the Outstanding Securities of such series, considered as one class. Any resolution passed or decision taken at any meeting of Holders of Securities duly held in accordance with this Section shall be binding on all the Holders of Securities of the series with respect to which such meeting shall have been held, whether or not present or represented at the meeting. SECTION 1305. Attendance at Meetings; Determination of Voting Rights; Conduct and Adjournment of Meetings. (a) Attendance at meetings of Holders of Securities may be in person or by proxy; and, to the extent permitted by law, any such proxy shall remain in effect and be binding upon any future Holder of the Securities with respect to which it was given unless and until specifically revoked by the Holder or future Holder of such Securities before being voted. (b) Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Securities in regard to proof of the holding of such Securities and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Securities shall be proved in the manner specified in Section 104 and the appointment of any proxy shall be proved in the manner specified in Section 104. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 104 or other proof. (c) The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders as provided in Section 1302(b), in which case the Company or the Holders of Securities of the series calling the meeting, as the case may be, shall in like manner appoint -68- a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in aggregate principal amount of the Outstanding Securities of all series represented at the meeting, considered as one class. (d) At any meeting each Holder or proxy shall be entitled to one vote for each $1 principal amount of Securities held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Security or proxy. (e) Any meeting duly called pursuant to Section 1302 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in aggregate principal amount of the Outstanding Securities of all series represented at the meeting, considered as one class; and the meeting may be held as so adjourned without further notice. SECTION 1306. Counting Votes and Recording Action of Meetings. The vote upon any resolution submitted to any meeting of Holders shall be by written ballots on which shall be subscribed the signatures of the Holders or of their representatives by proxy and the principal amounts and serial numbers of the Outstanding Securities, of the series with respect to which the meeting shall have been called, held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports of all votes cast at the meeting. A record of the proceedings of each meeting of Holders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 1302 and, if applicable, Section 1304. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to the Company, and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. SECTION 1307. Action Without Meeting. In lieu of a vote of Holders at a meeting as herein before contemplated in this Article, any request, demand, authorization, direction, notice, consent, waiver or other action may be made, given or taken by Holders by written instruments as provided in Section 104. -69- ARTICLE FOURTEEN Immunity of Incorporators, Stockholders, Officers and Directors SECTION 1401. Liability Solely Corporate. No recourse shall be had for the payment of the principal of or premium, if any, or interest, if any, on any Securities, or any part thereof, or for any claim based thereon or otherwise in respect thereof, or of the indebtedness represented thereby, or upon any obligation, covenant or agreement under this Indenture, against any incorporator, stockholder, officer or director, as such, past, present or future of the Company or of any predecessor or successor corporation (either directly or through the Company or a predecessor or successor corporation), whether by virtue of any constitutional provision, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly agreed and understood that this Indenture and all the Securities are solely corporate obligations, and that no personal liability whatsoever shall attach to, or be incurred by, any incorporator, stockholder, officer or director, past, present or future, of the Company or of any predecessor or successor corporation, either directly or indirectly through the Company or any predecessor or successor corporation, because of the indebtedness hereby authorized or under or by reason of any of the obligations, covenants or agreements contained in this Indenture or in any of the Securities or to be implied herefrom or therefrom, and that any such personal liability is hereby expressly waived and released as a condition of, and as part of the consideration for, the execution of this Indenture and the issuance of the Securities. ARTICLE FIFTEEN Subordination of Securities SECTION 1501. Securities Subordinate to Senior Indebtedness. The Company, for itself, its successors and assigns, covenants and agrees, and each Holder of the Securities of each series, by its acceptance thereof, likewise covenants and agrees, that the payment of the principal of and premium, if any, and interest, if any, on each and all of the Securities is hereby expressly subordinated and subject to the extent and in the manner set forth in this Article, in right of payment to the prior payment in full of all Senior Indebtedness. Each Holder of the Securities of each series, by its acceptance thereof, authorizes and directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article, and appoints the Trustee its attorney-in-fact for any and all such purposes. SECTION 1502. Payment Over of Proceeds of Securities. -70- In the event (a) of any insolvency or bankruptcy proceedings or any receivership, liquidation, reorganization or other similar proceedings in respect of the Company or a substantial part of its property, or of any proceedings for liquidation, dissolution or other winding up of the Company, whether or not involving insolvency or bankruptcy, or (b) subject to the provisions of Section 1503, that (i) a default shall have occurred with respect to the payment of principal of or interest on or other monetary amounts due and payable on any Senior Indebtedness, or (ii) there shall have occurred a default (other than a default in the payment of principal or interest or other monetary amounts due and payable) in respect of any Senior Indebtedness, as defined therein or in the instrument under which the same is outstanding, permitting the holder or holders thereof to accelerate the maturity thereof (with notice or lapse of time, or both), and such default shall have continued beyond the period of grace, if any, in respect thereof, and, in the cases of subclauses (i) and (ii) of this clause (b), such default shall not have been cured or waived or shall not have ceased to exist, or (c) that the principal of and accrued interest on the Securities of any series shall have been declared due and payable pursuant to Section 801 and such declaration shall not have been rescinded and annulled as provided in Section 802, then: (1) the holders of all Senior Indebtedness shall first be entitled to receive payment of the full amount due thereon, or provision shall be made for such payment in money or money's worth, before the Holders of any of the Securities are entitled to receive a payment on account of the principal of or interest on the indebtedness evidenced by the Securities, including, without limitation, any payments made pursuant to Articles Four and Five; (2) any payment by, or distribution of assets of, the Company of any kind or character, whether in cash, property or securities, to which any Holder or the Trustee would be entitled except for the provisions of this Article, shall be paid or delivered by the person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of such Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, ratably according to the aggregate amounts remaining unpaid on account of such Senior Indebtedness held or represented by each, to the extent necessary to make payment in full of all Senior Indebtedness remaining unpaid after giving effect to any concurrent payment or distribution (or provision therefor) to the holders of such Senior Indebtedness, before any payment or distribution is made to the Holders of the indebtedness evidenced by the Securities or to the Trustee under this Indenture; and (3) in the event that, notwithstanding the foregoing, any payment by, or distribution of assets of, the Company of any kind or character, -71- whether in cash, property or securities, in respect of principal of or interest on the Securities or in connection with any repurchase by the Company of the Securities, shall be received by the Trustee or any Holder before all Senior Indebtedness is paid in full, or provision is made for such payment in money or money's worth, such payment or distribution in respect of principal of or interest on the Securities or in connection with any repurchase by the Company of the Securities shall be paid over to the holders of such Senior Indebtedness or their representative or representatives or to the trustee or trustees under any indenture under which any instruments evidencing any such Senior Indebtedness may have been issued, ratably as aforesaid, for application to the payment of all Senior Indebtedness remaining unpaid until all such Senior Indebtedness shall have been paid in full, after giving effect to any concurrent payment or distribution (or provision therefor) to the holders of such Senior Indebtedness. Notwithstanding the foregoing, at any time after the 123rd day following the date of deposit of cash or Government Obligations pursuant to Section 701 (provided all conditions set out in such Section shall have been satisfied), the funds so deposited and any interest thereon will not be subject to any rights of holders of Senior Indebtedness including, without limitation, those arising under this Article Fifteen; provided that no event described in clauses (d) and (e) of Section 801 with respect to the Company has occurred during such 123-day period. For purposes of this Article only, the words "cash, property or securities" shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment which are subordinate in right of payment to all Senior Indebtedness which may at the time be outstanding to the same extent as, or to a greater extent than, the Securities are so subordinated as provided in this Article. The consolidation of the Company with, or the merger of the Company into, another corporation or the liquidation or dissolution of the Company following the conveyance or transfer of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided for in Article Eleven hereof shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 1502 if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Article Eleven hereof. Nothing in Section 1501 or in this Section 1502 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 907. SECTION 1503. Disputes with Holders of Certain Senior Indebtedness. Any failure by the Company to make any payment on or perform any other obligation in respect of Senior Indebtedness, other than any indebtedness incurred by the Company or assumed or guaranteed, directly or indirectly, by the Company for money borrowed (or any -72- deferral, renewal, extension or refunding thereof) or any other obligation as to which the provisions of this Section shall have been waived by the Company in the instrument or instruments by which the Company incurred, assumed, guaranteed or otherwise created such indebtedness or obligation, shall not be deemed a default under clause (b) of Section 1502 if (i) the Company shall be disputing its obligation to make such payment or perform such obligation and (ii) either (A) no final judgment relating to such dispute shall have been issued against the Company which is in full force and effect and is not subject to further review, including a judgment that has become final by reason of the expiration of the time within which a party may seek further appeal or review, or (B) in the event that a judgment that is subject to further review or appeal has been issued, the Company shall in good faith be prosecuting an appeal or other proceeding for review and a stay or execution shall have been obtained pending such appeal or review. SECTION 1504. Subrogation. Senior Indebtedness shall not be deemed to have been paid in full unless the holders thereof shall have received cash (or securities or other property satisfactory to such holders) in full payment of such Senior Indebtedness then outstanding. Subject to the prior payment in full of all Senior Indebtedness, the rights of the Holders of the Securities shall be subrogated to the rights of the holders of Senior Indebtedness to receive any further payments or distributions of cash, property or securities of the Company applicable to the holders of the Senior Indebtedness until all amounts owing on the Securities shall be paid in full; and such payments or distributions of cash, property or securities received by the Holders of the Securities, by reason of such subrogation, which otherwise would be paid or distributed to the holders of such Senior Indebtedness shall, as between the Company, its creditors other than the holders of Senior Indebtedness, and the Holders, be deemed to be a payment by the Company to or on account of Senior Indebtedness, it being understood that the provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of the Senior Indebtedness, on the other hand. SECTION 1505. Obligation of the Company Unconditional. Nothing contained in this Article or elsewhere in this Indenture or in the Securities is intended to or shall impair, as among the Company, its creditors other than the holders of Senior Indebtedness and the Holders, the obligation of the Company, which is absolute and unconditional, to pay to the Holders the principal of and interest on the Securities as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Company other than the holders of Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article of the holders of Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy. -73- Upon any payment or distribution of assets or securities of the Company referred to in this Article, the Trustee and the Holders shall be entitled to rely upon any order or decree of a court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon, and all other facts pertinent thereto or to this Article. SECTION 1506. Priority of Senior Indebtedness Upon Maturity. Upon the maturity of the principal of any Senior Indebtedness by lapse of time, acceleration or otherwise, all matured principal of Senior Indebtedness and interest and premium, if any, thereon shall first be paid in full before any payment of principal or premium, if any, or interest, if any, is made upon the Securities or before any Securities can be acquired by the Company or any sinking fund payment is made with respect to the Securities (except that required sinking fund payments may be reduced by Securities acquired before such maturity of such Senior Indebtedness). SECTION 1507. Trustee as Holder of Senior Indebtedness. The Trustee shall be entitled to all rights set forth in this Article with respect to any Senior Indebtedness at any time held by it, to the same extent as any other holder of Senior Indebtedness. Nothing in this Article shall deprive the Trustee of any of its rights as such holder. SECTION 1508. Notice to Trustee to Effectuate Subordination. Notwithstanding the provisions of this Article or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to or by the Trustee unless and until the Trustee shall have received written notice thereof from the Company, from a Holder or from a holder of any Senior Indebtedness or from any representative or representatives of such holder and, prior to the receipt of any such written notice, the Trustee shall be entitled, subject to Section 901, in all respects to assume that no such facts exist; provided, however, that, if prior to the fifth Business Day preceding the date upon which by the terms hereof any such moneys may become payable for any purpose, or in the event of the execution of an instrument pursuant to Section 702 acknowledging satisfaction and discharge of this Indenture, then if prior to the second Business Day preceding the date of such execution, the Trustee shall not have received with respect to such moneys the notice provided for in this Section, then, anything herein contained to the contrary notwithstanding, the Trustee may, in its discretion, receive such moneys and/or apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary, which may be received by it on or after such date; provided, however, that no such -74- application shall affect the obligations under this Article of the persons receiving such moneys from the Trustee. SECTION 1509. Modification, Extension, etc. of Senior Indebtedness. The holders of Senior Indebtedness may, without affecting in any manner the subordination of the payment of the principal of and premium, if any, and interest, if any, on the Securities, at any time or from time to time and in their absolute discretion, agree with the Company to change the manner, place or terms of payment, change or extend the time of payment of, or renew or alter, any Senior Indebtedness, or amend or supplement any instrument pursuant to which any Senior Indebtedness is issued, or exercise or refrain from exercising any other of their rights under the Senior Indebtedness including, without limitation, the waiver of default thereunder, all without notice to or assent from the Holders or the Trustee. SECTION 1510. Trustee Has No Fiduciary Duty to Holders of Senior Indebtedness. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and objectives as are specifically set forth in this Indenture, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness, and shall not be liable to any such holders if it shall mistakenly pay over or deliver to the Holders or the Company or any other Person, money or assets to which any holders of Senior Indebtedness shall be entitled by virtue of this Article or otherwise. SECTION 1511. Paying Agents Other Than the Trustee. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this Article shall in such case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article in addition to or in place of the Trustee; provided, however, that Sections 1507, 1508 and 1510 shall not apply to the Company if it acts as Paying Agent. SECTION 1512. Rights of Holders of Senior Indebtedness Not Impaired. No right of any present or future holder of Senior Indebtedness to enforce the subordination herein shall at any time or in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with. -75- SECTION 1513. Effect of Subordination Provisions; Termination. Notwithstanding anything contained herein to the contrary, other than as provided in the immediately succeeding sentence, all the provisions of this Indenture shall be subject to the provisions of this Article, so far as the same may be applicable thereto. Notwithstanding anything contained herein to the contrary, the provisions of this Article Fifteen shall be of no further effect, and the Securities shall no longer be subordinated in right of payment to the prior payment of Senior Indebtedness, if the Company shall have delivered to the Trustee a notice to such effect. Any such notice delivered by the Company shall not be deemed to be a supplemental indenture for purposes of Article Twelve. _________________________ This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the day and year first above written. MIDAMERICAN ENERGY COMPANY By:____________________________________ THE FIRST NATIONAL BANK OF CHICAGO, Trustee By:_____________________________ -76- STATE OF ___________________) ) ss.: COUNTY OF __________________) On the th day of , 1996, before me personally came , to me known, who, being by me duly sworn, did depose and say that he is the of MidAmerican Energy Company, one of the corporations described herein and which executed the foregoing instrument; and that he signed his name thereto by authority of the Board of Directors of said corporation. ___________________________________ Notary Public, State of ___________ -77- STATE OF ___________________) ) ss.: COUNTY OF __________________) On the th day of , 1996, before me personally came , to me known, who, being by me duly sworn, did depose and say that he is a of The First National Bank of Chicago, one of the corporations described herein and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. ___________________________________ Notary Public, State of ___________ -78- EX-4.G 8 EXHIBIT 4(G) FORM OF SUPPLEMENTAL INDENTURE Exhibit 4(g) MIDAMERICAN ENERGY COMPANY TO THE FIRST NATIONAL BANK OF CHICAGO, AS TRUSTEE ___________________ ______ SUPPLEMENTAL INDENTURE Dated as of ___________, ____ TO INDENTURE Dated as of ___________, ____ ___________________ _____% Deferrable Interest Subordinated Debentures, Series [ ] Due ____ ______ SUPPLEMENTAL INDENTURE, dated as of __________, ____ (the "______ Supplemental Indenture"), between MidAmerican Energy Company, an Iowa corporation (the "Company"), and The First National Bank of Chicago, as trustee (the "Trustee") under the Indenture dated as of ___________, 199_, from the Company to the Trustee (the "Indenture"). WHEREAS, the Company has executed and delivered the Indenture to the Trustee in order to provide for the future issuance of its subordinated debentures (the "Securities"), such Securities to be issued from time to time in one or more series as may be determined by the Company under the Indenture, in an unlimited aggregate principal amount that may be authenticated and delivered thereunder as provided in the Indenture; WHEREAS, MidAmerican Energy Financing [I][II] (the "Series [ ] Trust") may pursuant to the Underwriting Agreement dated _________, 199_ among the Company, the Series [ ] Trust and the Underwriters named therein issue $_________ aggregate liquidation amount of its ___% cumulative quarterly income preferred securities, Series [ ] (the "Series [ ] Preferred Securities") with a liquidation amount of $25 per Series [ ] Preferred Security; WHEREAS, the Company is guaranteeing (the "Parent Guarantee") the payment of distributions on the Series [ ] Preferred Securities, the payment of the redemption price and the payment on liquidation with respect to the Series [ ] Preferred Securities, to the extent provided in the Guarantee Agreement of even date herewith between the Company and The First National Bank of Chicago, as guarantee trustee for the benefit of the holders of the Series [ ] Preferred Securities; WHEREAS, the Company wishes to sell to the Series [ ] Trust, and the Series [ ] Trust wishes to purchase from the Company, Series [ ] Securities (as defined below) in an aggregate principal amount equal to $_________, and in satisfaction of the purchase price for such Series [ ] Securities, the Administrative Trustees of the Series [ ] Trust, on behalf of the Series [ ] Trust, wish to (i) execute and deliver to the Company Common Securities certificates representing Common Securities of the Series [ ] Trust, registered in the name of the Company, having an aggregate liquidation amount of $_________ (the "Series [ ] Common Securities") and (ii) deliver to the Company the sum of $___________; WHEREAS, the Company has duly authorized the creation of an issue of its _____% Deferrable Interest Subordinated Debentures, Series [ ] (the "Series [ ] Securities"), of the tenor and amount hereinafter set forth, and to provide therefor -2- the Company has duly authorized the execution and delivery of this ______ Supplemental Indenture; and WHEREAS, all things necessary to make the Securities, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this ______ Supplemental Indenture a valid agreement of the Company, each in accordance with their terms, have been done; and WHEREAS, capitalized terms used herein without definition shall have the meanings specified in the Indenture. NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Series [ ] Securities by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Series [ ] Securities as follows: ARTICLE ONE GENERAL TERMS OF THE SERIES [ ] SECURITIES SECTION 101. Title; Stated Maturity; Interest. The aggregate principal amount of Securities which may be authenticated and delivered under this ______ Supplemental Indenture is limited to $__________ at any time Outstanding; provided, however, that such amount may be increased by a Board Resolution to that effect. The Securities shall be known and designated as the "____% Deferrable Interest Subordinated Debentures, Series [ ]" of the Company. The principal amount of the Series [ ] Securities (together with any accrued and unpaid interest thereon) shall be payable in a single installment on __________, ____; PROVIDED, that the Company may (i) change the Maturity Date upon the occurrence of an exchange of the Series [ ] Securities for the Series [ ] Preferred Securities subject to certain conditions set forth in Section 314 of the Indenture, which changed Maturity Date shall in no case be earlier than __________, ____ or later than __________, ____ and (ii) extend the Maturity Date subject to certain conditions specified in Section 314 of the Indenture, which extended Maturity Date shall -3- in no case be later than __________, _____. The Series [ ] Securities shall bear interest at the rate of ____% per annum, from _________, ____, or from the most recent Interest Payment Date to which interest has been paid or duly provided for, as the case may be, payable quarterly (subject to deferral as set forth herein), in arrears, on the first day of March, June, September and December of each year, commencing _________, ____. The amount of interest payable for any such period will be computed on the basis of a 360-day year of twelve 30-day months and for any period shorter than a full month, on the basis of the actual number of days elapsed in such period. In the event that any Interest Payment Date is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, such Interest Payment Date shall be the immediately preceding Business Day, in each case with the same force and effect as if made on such Interest Payment Date. Any interest installment in arrears or deferred during an extension of an Interest Payment Period as set forth below will bear interest at the rate of __% per annum, compounded quarterly (to the extent permitted by applicable law). Each installment of interest on a Series [ ] Security shall be payable to the Person in whose name such Series [ ] Security is registered at the close of business on the Business Day 15 days preceding the corresponding Interest Payment Date (the "Regular Record Date") for the Series [ ] Securities; provided, however, that if the Series [ ] Securities are held neither by the Series [ ] Trust nor by a securities depositary, the Company shall have the right to change the Regular Record Date by one or more Officer's Certificates. Any installment of interest on the Series [ ] Securities not punctually paid or duly provided for shall forthwith cease to be payable to the Holders of such Series [ ] Securities on such Regular Record Date, and may be paid to the Persons in whose name the Series [ ] Securities are registered at the close of business on a Special Record Date to be fixed by the Trustee for the payment of such Defaulted Interest. Notice of such Defaulted Interest and Special Record Date shall be given to the Holders of the Series [ ] Securities not less than 10 days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Series [ ] Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. -4- The Company shall have the right, at any time during the term of the Series [ ] Securities, from time to time to extend the interest payment period thereon for up to 20 consecutive quarters (the "Extension Period") during which period interest will compound quarterly and the Company shall have the right to make partial payments of interest on any Interest Payment Date; provided that no Extension Period may extend beyond the Maturity Date of the Securities and provided further that the Company shall not defer the interest payment period with respect to Additional Interest Attributable to Taxes and shall make payment thereof on the relevant Interest Payment Date. At the end of the Extension Period, the Company shall pay all interest then accrued and unpaid thereon (together with additional interest thereon at the rate of __% per annum, compounded quarterly, to the extent permitted by applicable law). During any such Extension Period the Company will not, and will not permit any subsidiary of the Company to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company's outstanding capital stock or (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company (including other Securities) that rank PARI PASSU with or junior in interest to the Series [ ] Securities or make any guarantee payments with respect to any guarantee by the Company of the debt securities of any subsidiary of the Company if such guarantee ranks PARI PASSU or junior in interest to the Series [ ] Securities (other than (a) dividends or distributions in common stock of the Company, (b) payments under any Guarantee, and (c) purchases of common stock related to the issuance of common stock under any of the Company's benefit plans for its directors, officers or employees). Prior to the termination of any such Extension Period, the Company may further extend the interest payment period, PROVIDED that no Extension Period shall exceed 20 consecutive quarters or extend beyond the Maturity Date of the Series [ ] Securities. Upon the termination of any Extension Period and upon the payment of all amounts then due, the Company may select a new Extension Period, subject to the foregoing requirements. Except for Additional Interest Attributable to Taxes, no interest shall be due and payable during an Extension Period, except at the end thereof. The Company shall give the Trustee and, if any Series [ ] Preferred Securities are Outstanding, the Administrative Trustees of the Series [ ] Trust notice of its election of an Extension Period no less than 15 Business Days prior to the later of (i) the Regular Record Date next preceding the first Interest Payment Date on which a distribution would occur but for such election and (ii) five Business Days prior to such Interest Payment Date. Upon -5- receipt of any such notice, the Trustee shall give written notice of the Company's election by mail to the Holders of the Series [ ] Securities not less than 10 Business Days prior to such Interest Payment Date. The Company also shall make a public announcement of such election in accordance with New York Stock Exchange Rules not less than five Business Days prior to such Regular Record Date. The principal of and interest on the Series [ ] Securities shall be payable at, and registration and registration of transfers of the Series [ ] Securities may be effected at, the office or agency of the Company in ______________________; provided, however, that, at the option of the Company, payment of interest may be made (i) by check mailed to the address of the Persons entitled thereto under the Indenture or (ii) by wire transfer in immediately available funds at such place and to such account as may be designated by the Person entitled thereto under the Indenture; provided further, that for so long as any Series [ ] Security is registered in the name of the Property Trustee of the Series [ ] Trust, payment of principal (including Redemption Price and interest) shall be made by wire transfer in immediately available funds at such place and to such account as may be designated by the Property Trustee of the Series [ ] Trust. The Trustee will initially be the agent of the Company for such service of notices and demands; provided, however, that the Company reserves the right to change, by one or more Officer's Certificates, any such office or agent. The Company will be the Security Registrar and the Paying Agent for the Series [ ] Securities. The Series [ ] Securities shall be subordinated in right of payment to Senior Indebtedness as provided in Article Fifteen of the Indenture. The Series [ ] Securities shall be pari passu with the Parent Guarantee. The Series [ ] Securities shall be redeemable as provided in Section 102 below and in Article Four of the Indenture. SECTION 102. Redemption. At any time on or after _____________, the Company shall have the right to redeem the Series [ ] Securities, in whole or, subject to the last paragraph of this Section 102, in part, from time to time, at a Redemption Price equal to 100% of the principal amount of Series [ ] Securities to be redeemed plus accrued but unpaid interest, including any Additional Interest Attributable to Taxes, if any, to the Redemption Date. -6- If a Special Event shall occur and be continuing, the Company shall have the right to redeem the Series [ ] Securities within 90 days of the occurrence of such Special Event in whole but not in part, at a Redemption Price equal to 100% of the principal amount thereof plus accrued but unpaid interest, including Additional Interest Attributable to Taxes, if any, to the Redemption Date. The Series [ ] Securities will also be redeemable, in whole but not in part, at the option of the Company upon the termination and liquidation of the Series [ ] Trust pursuant to an order for the dissolution, termination or liquidation of the Series [ ] Trust entered by a court of competent jurisdiction at a Redemption Price equal to 100% of the principal amount of the Series [ ] Securities then Outstanding plus any accrued and unpaid interest, including Additional Interest Attributable to Taxes, if any, to the Redemption Date. "Special Event" means a Tax Event or an Investment Company Event. "Tax Event" means the receipt by the Series [ ] Trust of an opinion of counsel (which may be counsel to the Company or an affiliate but not an employee thereof and which must be acceptable to the Property Trustee of the Series [ ] Trust) experienced in such matters to the effect that, as a result of (a) any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or (b) any amendment to, or change in an interpretation or application of, such laws or regulations by any legislative body, court, governmental agency or regulatory authority (including the enactment of any legislation and the publication of any judicial decision or regulatory determination on or after the date of issuance of the Series [ ] Preferred Securities), there is more than an insubstantial risk that (i) the Series [ ] Trust is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to interest income received or accrued on the Series [ ] Securities, (ii) interest payable by the Company on the Series [ ] Securities is not, or within 90 days of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes, or (iii) the Series [ ] Trust is, or will be within 90 days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges. "Investment Company Event" means the occurrence of a change in law or regulation or a change in interpretation or application of law or regulation by any legislative body, court, -7- governmental agency or regulatory authority to the effect that the Series [ ] Trust is or will be considered an "investment company" that is required to be registered under the Investment Company Act of 1940, as amended, which change in law becomes effective on or after the date of original issuance of the Series [ ] Preferred Securities. The Company shall not redeem the Series [ ] Securities in part unless all accrued and unpaid interest (including any Additional Interest Attributable to Taxes) has been paid in full on all Series [ ] Securities Outstanding for all quarterly interest periods terminating on or prior to the Redemption Date or if a partial redemption of the Series [ ] Preferred Securities would result in a delisting of such securities by any national securities exchange on which they are then listed. SECTION 103. Global Security. In the event that, at any time subsequent to the initial authentication and delivery of the Series [ ] Securities, the Series [ ] Securities are to be held by a securities depositary, the Company may at such time establish the matters contemplated in clause (r) in the second paragraph of Section 301 of the Indenture in an Officer's Certificate supplemental to this Supplemental Indenture. SECTION 104. Exchange. At any time, the Company may terminate the Series [ ] Trust and cause the Series [ ] Securities to be distributed to holders of the Series [ ] Preferred Securities and Series [ ] Common Securities in liquidation of the Series [ ] Trust. SECTION 105. Registration of Transfer or Exchange. No service charge shall be made for the registration of transfer or exchange of the Series [ ] Securities; provided, however, that the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the exchange or transfer. SECTION 106. Form of Series [ ] Security. Series [ ] Securities shall have such other terms and provisions as are provided in the form set forth in Exhibit A hereto, and shall be issued in substantially such form. -8- SECTION 107. Listing. In the event that the Series [ ] Securities are distributed to holders of the Preferred Securities as a result of the termination of Series [ ] Trust, the Company will use its best efforts to list the Series [ ] Securities on the New York Stock Exchange or on such other exchange as the Series [ ] Preferred Securities are then listed. ARTICLE TWO MISCELLANEOUS PROVISIONS SECTION 201. Definitions of Terms. Except as otherwise expressly provided in this _____ Supplemental Indenture or in the form of Series [ ] Security otherwise clearly required by the context hereof or thereof, all terms used herein that are defined in the Indenture shall have the meanings assigned to them therein. SECTION 202. Ratification of Indenture. The Indenture, as supplemented by this _____ Supplemental Indenture, is in all respects ratified and confirmed, and this _____ Supplemental Indenture shall be deemed part of the Indenture in the manner and to the extent herein and therein provided. SECTION 203. Recitals. The recitals herein contained are made by the Company and not by the Trustee, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representation as to the validity or sufficiency of this First Supplemental Indenture. SECTION 204. Counterparts. This _____ Supplemental Indenture may be executed in any number of counterparts each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed and attested, on -9- the date or dates indicated in the acknowledgments and as of the day and year first above written. MIDAMERICAN ENERGY COMPANY By_______________________ Name: Title: Attest: _______________________ Name: Title: THE FIRST NATIONAL BANK OF CHICAGO, as Trustee By_______________________ Name: Title: Attest: _______________________ Name: Title: (Seal) -10- EXHIBIT A [FORM OF FACE OF SERIES [ ] SECURITY] MIDAMERICAN ENERGY COMPANY ____% Deferrable Interest Subordinated Debenture, Series [ ] Due ____ No. $________ MIDAMERICAN ENERGY COMPANY, a corporation duly organized and existing under the laws of the State of Iowa (herein called the "Company," which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to _________________, or registered assigns, the principal sum of __________ DOLLARS ($__________) on _________, ____, and to pay interest on said principal sum from ___________, ____, or from, and excluding, the most recent Interest Payment Date through which interest has been paid or duly provided for, quarterly in arrears on the first day of March, June, September and December of each year, commencing __________, ____, at the rate of ____% per annum until the principal hereof is paid or made available for payment. The amount payable on any Interest Payment Date shall be computed on the basis of a 360-day year of twelve 30-day months. Interest on the Securities of this series will accrue from, and including, __________, ____ through the first Interest Payment Date, and thereafter will accrue, from, and excluding, the last Interest Payment Date through which interest has been paid or duly provided for. In the event that any Interest Payment Date is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such Interest Payment Date. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the Business Day 15 days preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for shall -11- forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, of which notice shall be given to Holders of Securities not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payment of the principal of and premium, if any, and interest on this Security will be made at the office or agency of the Company maintained for that purpose in [The City of New York], in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Securities Register or (ii) by wire transfer in immediately available funds at such place and to such account as may be designated by the Person entitled thereto as specified in the Securities Register. Reference is hereby made to the further provisions of this Security summarized on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. -12- IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. Dated: ____________, ___ MIDAMERICAN ENERGY COMPANY By:____________________ Name: Title: Attest: ____________________ CERTIFICATE OF AUTHENTICATION Dated: This is one of the Securities of the series designated therein referred to in the within mentioned Indenture. THE FIRST NATIONAL BANK OF CHICAGO, as Trustee By:___________________________ Authorized Signatory -13- FORM OF REVERSE OF SERIES [ ] SECURITY This Security is one of a duly authorized issue of securities of the Company, designated as its ____% Deferrable Interest Subordinated Debentures (herein called the "Securities"), limited in aggregate principal amount to $__________ issued under an Indenture, dated as of __________, ____, supplemented by a ______ Supplemental Indenture, dated as of _________, ____, (herein called the "Indenture"), from the Company to The First National Bank of Chicago, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), to which Indenture and such supplemental indenture (the "Supplemental Indenture") reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Trustee, the Company and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. The Securities of this series are subject to redemption upon not less than 30 nor more than 60 days' notice by mail, at any time on or after __________, ____ as a whole or in part, at the election of the Company, at a Redemption Price equal to 100% of the principal amount, together in the case of any such redemption with accrued interest to, but not including, the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holder of such Security, or one or more Predecessor Securities, of record at the close of business on the related Regular Record Date referred to on the face hereof, all as provided in the Indenture. The Securities of this series will also be redeemable at the option of the Company if a Tax Event or an Investment Company Event (each as defined in the Supplemental Indenture) shall occur and be continuing, in whole but not in part, at a redemption price equal to 100% of the principal amount of the Securities of this series then Outstanding plus any accrued and unpaid interest, including Additional Interest Attributable to Taxes, if any, to the redemption date, upon not less than 30 nor more than 60 days' notice given as provided in the Indenture. -14- The Securities of this series will also be redeemable, in whole but not in part, at the option of the Company upon the termination and liquidation of the Trust pursuant to an order for the dissolution, termination or liquidation of the Trust entered by a court of competent jurisdiction at a redemption price equal to 100% of the principal amount of the Securities of this series then Outstanding plus any accrued and unpaid interest, including Additional Interest Attributable to Taxes, if any, to the redemption date, upon not less than 30 nor more than 60 days' notice given as provided in the Indenture. In the event of the redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinated and subject in right of payment to the prior payment in full of all Senior Indebtedness, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints the Trustee his attorney-in-fact for any and all such purposes. Each Holder hereof, by his acceptance hereof, hereby waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such Holder upon said provisions. The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Security upon compliance by the Company with certain conditions set forth in the Indenture. If an Event of Default with respect to the Securities shall occur and be continuing, the principal of the Securities may be declared due and payable in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the company and the rights of the Holders of the Securities of each series to be affected under the -15- Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of all series to be affected. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than a majority in aggregate principal amount of the Securities of all series at the time Outstanding in respect of which an Event of Default shall have occurred and be continuing shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not have received from the Holders of a majority in aggregate principal amount of Securities of all series at the time Outstanding in respect of which an Event of Default shall have occurred and be continuing a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed. -16- The Company has the right, at any time during the term of the Securities of this series, from time to time to extend the interest payment period thereon for up to 20 consecutive quarters (the "Extension Period") during which period interest will compound quarterly and the Company shall have the right to make partial payments of interest on any Interest Payment Date; provided that no Extension Period may extend beyond the Maturity Date of the Securities and provided further that the Company shall not defer the interest payment period with respect to Additional Interest Attributable to Taxes and shall make payment thereof on the relevant Interest Payment Date. At the end of the Extension Period, the Company shall pay all interest then accrued and unpaid thereon (together with additional interest thereon at the rate of __% per annum, compounded quarterly, to the extent permitted by applicable law). During any such Extension Period the Company will not, and will not permit any subsidiary of the Company to, (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company's outstanding capital stock or (ii) make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company (including other Securities) that rank PARI PASSU with or junior in interest to the Series [ ] Securities or make any guarantee payments with respect to any guarantee by the Company of the debt securities of any subsidiary of the Company if such guarantee ranks PARI PASSU or junior in interest to the Series [ ] Securities (other than (a) dividends or distributions in common stock of the Company, (b) payments under any Guarantee, and (c) purchases of common stock related to the issuance of common stock under any of the Company's benefit plans for its directors, officers or employees). Prior to the termination of any such Extension Period, the Company may further extend the interest payment period, PROVIDED that no Extension Period shall exceed 20 consecutive quarters or extend beyond the Maturity Date of the Series [ ] Securities. Upon the termination of any Extension Period and upon the payment of all amounts then due, the Company may select a new Extension Period, subject to the foregoing requirements. Except for Additional Interest Attributable to Taxes, no interest shall be due and payable during an Extension Period, except at the end thereof. Notice of the Company's election of an Extension Period will be given as provided in or pursuant to the Indenture. The Securities are issuable only in registered form without coupons in denominations of $25 and any integral multiple thereof. As provided in the Indenture and subject to certain -17- limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor and of authorized denominations, as requested by the Holder surrendering the same. As provided in the Indenture, the Company shall not be required to make transfers or exchanges of Securities of this series for a period of 15 days immediately preceding the date of the mailing of any notice of redemption of such Securities and the Company shall not be required to make transfers or exchanges of any Securities of this series so selected for redemption in whole or in part (except the unredeemed portion of thereof). No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Company, the Trustee and any agent of the company or the Trustee may treat the Person in whose name this Security is registered as the absolute owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. The Company and, by its acceptance of this Security or a beneficial interest therein, the Holder of, and any Person that acquires a beneficial interest in, this Security agree that for United States federal, state and local tax purposes it is intended that this Security constitute indebtedness and agree to treat this Security accordingly for such purposes. THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. EX-4.I 9 EXHIBIT 4(I) FORM OF GUARANTEE AGREEMENT Exhibit 4(i) GUARANTEE AGREEMENT Between MidAmerican Energy Company (as Guarantor) and The First National Bank of Chicago (as Trustee) dated as of , 1996 TABLE OF CONTENTS ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . .1 SECTION 1.01 Definitions . . . . . . . . . . . . . . . . . . . . .1 ARTICLE II TRUST INDENTURE ACT . . . . . . . . . . . . . . . . .4 SECTION 2.01 Trust Indenture Act; Application. . . . . . . . . . .4 SECTION 2.02 Lists of Holders of Preferred Securities. . . . . . .4 SECTION 2.03 Reports by the Guarantee Trustee. . . . . . . . . . .4 SECTION 2.04 Periodic Reports to Guarantee Trustee.. . . . . . . .5 SECTION 2.05 Evidence of Compliance with Conditions Precedent. . .5 SECTION 2.06 Events of Default; Waiver . . . . . . . . . . . . . .5 SECTION 2.07 Event of Default; Notice. . . . . . . . . . . . . . .5 SECTION 2.08 Conflicting Interests . . . . . . . . . . . . . . . .5 ARTICLE III POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE . . .6 SECTION 3.01 Powers and Duties of the Guarantee Trustee. . . . . .6 SECTION 3.02 Certain Rights of Guarantee Trustee.. . . . . . . . .7 ARTICLE IV GUARANTEE TRUSTEE. . . . . . . . . . . . . . . . . .9 SECTION 4.01 Guarantee Trustee; Eligibility. . . . . . . . . . . .9 SECTION 4.02 Compensation and Reimbursement. . . . . . . . . . . .10 SECTION 4.03 Appointment, Removal and Resignation of Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . .11 ARTICLE V GUARANTEE . . . . . . . . . . . . . . . . . . . . . .12 SECTION 5.01 Guarantee . . . . . . . . . . . . . . . . . . . . . .12 SECTION 5.02 Waiver of Notice and Demand . . . . . . . . . . . . .12 SECTION 5.03 Obligations Not Affected. . . . . . . . . . . . . . .12 SECTION 5.04 Rights of Holders . . . . . . . . . . . . . . . . . .13 SECTION 5.05 Guarantee of Payment. . . . . . . . . . . . . . . . .13 SECTION 5.06 Subrogation . . . . . . . . . . . . . . . . . . . . .13 SECTION 5.07 Independent Obligations.. . . . . . . . . . . . . . .14 ARTICLE VI SUBORDINATION. .. . . . . . . . . . . . . . . . . . .14 SECTION 6.01 Subordination . . . . . . . . . . . . . . . . . . . .14 ARTICLE VII TERMINATION. . . . . . . . . . . . . . . . . . . . . 14 SECTION 7.01 Termination . . . . . . . . . . . . . . . . . . . . .14 ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . 15 SECTION 8.01 Successors and Assigns. . . . . . . . . . . . . . . .15 SECTION 8.02 Amendments. . . . . . . . . . . . . . . . . . . . . .15 -i- SECTION 8.03 Notices . . . . . . . . . . . . . . . . . . . . . . .15 SECTION 8.04 Benefit . . . . . . . . . . . . . . . . . . . . . . .16 SECTION 8.05 Interpretation. . . . . . . . . . . . . . . . . . . .16 SECTION 8.06 Governing Law . . . . . . . . . . . . . . . . . . . .17 -ii- CROSS-REFERENCE TABLE Section of Section of Trust Indenture Act Guarantee of 1939, as amended Agreement - ------------------- ----------- 310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.01(a) 310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.01(c), 2.08 310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(b) 311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(b) 311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(a) 312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(b) 313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04 314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05 314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01, 2.05, 3.02 314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01, 3.02 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01(b) 315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.07 315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01(b) 315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01(c) 316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.04, 2.06 316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.03 316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02 317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(b) 318(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01 318(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(a) _____________ * This Cross-Reference Table does not constitute part of the Guarantee Agreement and shall not affect the interpretation of any of its terms or provisions. -iii- GUARANTEE AGREEMENT This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of __________ , 1996, is executed and delivered by MidAmerican Energy Company, an Iowa corporation (the "Guarantor"), and The First National Bank of Chicago, as trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined herein) from time to time of the Preferred Securities (as defined herein) of MidAmerican Energy Financing [ ], a Delaware statutory business trust (the "Issuer"). WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust Agreement"), dated as of __________, 1996 between the Trustees of the Issuer named therein, MidAmerican Energy Company, as Depositor, and the several Holders (as defined therein) the Issuer is issuing as of the date hereof $_______ aggregate liquidation amount of its _____% cumulative quarterly income preferred securities (the "Preferred Securities") representing preferred undivided beneficial ownership interests in the Issuer and having the terms set forth in the Trust Agreement; WHEREAS, the Preferred Securities are to be issued for sale by the Issuer and the proceeds are to be invested in $ _______ principal amount of Debentures (as defined in the Trust Agreement); and WHEREAS, in order to enhance the value of the Preferred Securities, the Guarantor desires to irrevocably and unconditionally agree, to the extent set forth herein, to pay to the Holders the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the purchase of Debentures, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the benefit of the Holders from time to time. ARTICLE I DEFINITIONS SECTION 1.01 Definitions. As used in this Guarantee Agreement, the terms set forth below shall, unless the context otherwise requires, have the following meanings. Capitalized or otherwise defined terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Trust Agreement as in effect on the date hereof. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Common Securities" means the securities representing common undivided beneficial ownership interests in the assets of the Issuer. "Event of Default" means a default by the Guarantor on any of its payment obligations under this Guarantee Agreement. "Guarantee Payments" shall mean the following payments or distributions, without duplication, with respect to the Preferred Securities, to the extent not paid or made by or on behalf of the Issuer: (i) any accrued and unpaid Distributions that are required to be paid on such Preferred Securities but only if and to the extent that the Property Trustee has available in the Payment Account funds sufficient to make such payment, (ii) the redemption price (the "Redemption Price"), and all accrued and unpaid Distributions to the date of redemption, with respect to the Preferred Securities called for redemption by the Issuer but only if and to the extent that the Property Trustee has available in the Payment Account funds sufficient to make such payment, (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the Issuer (other than in connection with a redemption of all of the Preferred Securities), the lesser of (a) the aggregate of the Liquidation Amount and all accrued and unpaid Distributions on the Preferred Securities to the date of payment, and (b) the amount of assets of the Issuer remaining available for distribution to Holders in liquidation of the Issuer (in either case, the "Liquidation Distribution"). "Guarantee Trustee" means The First National Bank of Chicago, until a Successor Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee Agreement and thereafter means each such Successor Guarantee Trustee. "Holder" shall mean any holder, as registered on the books and records of the Issuer, of any Preferred Securities then outstanding; provided, however, that in determining whether the holders of the requisite percentage of Preferred Securities have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of the Guarantor. "Indenture" means the Indenture dated as of ___________, 1996, among the Guarantor (the "Debenture Issuer") and The First National Bank of Chicago, as trustee, pursuant to which the Debentures are issued. "Majority in liquidation amount of the Preferred Securities" means a vote by Holders, voting separately as a class, of more than 50% of the aggregate liquidation amount of all Preferred Securities. "Officers' Certificate" means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Guarantor, and delivered to -2- the Guarantee Trustee. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee Agreement shall include: (a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto; (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate; (c) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. "Person" means any individual, corporation, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof. "Responsible Officer" means, with respect to the Guarantee Trustee, any vice-president, any assistant vice-president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, any trust officer or assistant trust officer or any other officer of the Corporate Trust Department of the Guarantee Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "Successor Guarantee Trustee" means a successor Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under Section 4.01. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. -3- ARTICLE II TRUST INDENTURE ACT SECTION 2.01 Trust Indenture Act; Application. (a) This Guarantee Agreement is subject to the provisions of the Trust Indenture Act that are required or deemed to be part of this Guarantee Agreement and shall, to the extent applicable, be governed by such provisions; and (b) if and to the extent that any provision of this Guarantee Agreement limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. SECTION 2.02 Lists of Holders of Preferred Securities. (a) The Guarantor shall furnish or cause to be furnished to the Guarantee Trustee (a) semiannually, not later than December 1 and June 1 in each year, a list, in such form as the Guarantee Trustee may reasonably require, of the names and addresses of the Holders ("List of Holders") as of a date not more than 15 days prior to the delivery thereof, and (b) at such other times as the Guarantee Trustee may request in writing, within 30 days after the receipt by the Guarantor of any such request, a List of Holders as of a date not more than 15 days prior to the time such list is furnished; provided that, the Guarantor shall not be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Guarantee Trustee by the Guarantor. The Guarantee Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. (b) The Guarantee Trustee shall comply with its obligations under Section 311(a) of the Trust Indenture Act, subject to the provisions of Section 311(b) and Section 312(b) of the Trust Indenture Act. SECTION 2.03 Reports by the Guarantee Trustee. Within 60 days after December 31 of each year, commencing December 31, 1996, the Guarantee Trustee shall provide to the Holders such reports, if any, as are required by Section 313(a) of the Trust Indenture Act in the form and in the manner provided by Section 313(a) of the Trust Indenture Act. The Guarantee Trustee shall also comply with the requirements of Sections 313(b), (c) and (d) of the Trust Indenture Act. -4- SECTION 2.04 Periodic Reports to Guarantee Trustee. The Guarantor shall provide to the Guarantee Trustee such documents, reports and information as required by Section 314 (if any) and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. SECTION 2.05 Evidence of Compliance with Conditions Precedent. The Guarantor shall provide to the Guarantee Trustee such evidence of compliance with any conditions precedent provided for in this Guarantee Agreement as and to the extent required by Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) of the Trust Indenture Act may be given in the form of an Officers' Certificate. SECTION 2.06 Events of Default; Waiver. The Holders of a Majority in liquidation amount of Preferred Securities may, by vote, on behalf of all of the Holders, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Guarantee Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. SECTION 2.07 Event of Default; Notice. (a) The Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders, notices of all Events of Default known to the Guarantee Trustee, unless such defaults have been cured before the giving of such notice, provided that, the Guarantee Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee, or a trust committee of directors or Responsible Officers of the Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders. (b) The Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Guarantee Trustee shall have received written notice, or a Responsible Officer charged with the administration of the Trust Agreement shall have obtained written notice, of such Event of Default. SECTION 2.08 Conflicting Interests. The Trust Agreement and the Indenture shall be deemed to be specifically described in this Guarantee Agreement for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. -5- ARTICLE III POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE SECTION 3.01 Powers and Duties of the Guarantee Trustee. (a) This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit of the Holders, and the Guarantee Trustee shall not transfer this Guarantee Agreement or any rights hereunder to any Person except a Holder exercising his or her rights pursuant to Section 5.04 or to a Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall automatically vest in any Successor Guarantee Trustee, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee. (b) The Guarantee Trustee, prior to the occurrence of any Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Guarantee Agreement, and no implied covenants or obligations shall be read into this Guarantee Agreement against the Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.06), the Guarantee Trustee shall exercise such of the rights and powers vested in it by this Guarantee Agreement, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (c) No provision of this Guarantee Agreement shall be construed to relieve the Guarantee Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred: (A) the duties and obligations of the Guarantee Trustee shall be determined solely by the express provisions of this Guarantee Agreement, and the Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Guarantee Agreement; and (B) in the absence of bad faith on the part of the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Guarantee Trustee and conforming to the -6- requirements of this Guarantee Agreement; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Guarantee Agreement; (ii) the Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Guarantee Trustee, unless it shall be proved that the Guarantee Trustee or such Responsible Officer was negligent in ascertaining the pertinent facts upon which such judgment was made; (iii) the Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a Majority in liquidation amount of the Preferred Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee, or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and (iv) no provision of this Guarantee Agreement shall require the Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Guarantee Agreement or adequate indemnity against such risk or liability is not reasonably assured to it. SECTION 3.02 Certain Rights of Guarantee Trustee. (a) Subject to the provisions of Section 3.01: (i) the Guarantee Trustee may rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document reasonably believed by it to be genuine and to have been signed, sent or presented by the proper party or parties; -7- (ii) any direction or act of the Guarantor contemplated by this Guarantee Agreement shall be sufficiently evidenced by an Officers' Certificate; (iii) whenever, in the administration of this Guarantee Agreement, the Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Guarantor; (iv) the Guarantee Trustee may consult with counsel of its choice, and the written advice or opinion of such counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion; such counsel may be counsel to the Guarantor or any of its Affiliates and may include any of its employees; the Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Guarantee Agreement from any court of competent jurisdiction; (v) the Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Guarantee Agreement at the request or direction of any Holder, unless such Holder shall have provided to the Guarantee Trustee such adequate security and indemnity as would satisfy a reasonable person in the position of the Guarantee Trustee, against the costs, expenses (including attorneys' fees and expenses) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Guarantee Trustee; provided that, nothing contained in this Section 3.02(a)(v) shall be taken to relieve the Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Guarantee Agreement; (vi) the Guarantee Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document reasonably believed by it to be genuine, but the Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit; -8- (vii) the Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys, and the Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; (viii) whenever in the administration of this Guarantee Agreement the Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Guarantee Trustee (1) may request instructions from the Holders, (2) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (3) shall be protected in acting in accordance with such instructions; and (ix) the Guarantee Trustee shall not be liable for any action taken, suffered or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Guarantee. (b) No provision of this Guarantee Agreement shall be deemed to impose any duty or obligation on the Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Guarantee Trustee shall be construed to be a duty. ARTICLE IV GUARANTEE TRUSTEE SECTION 4.01 Guarantee Trustee; Eligibility. (a) There shall at all times be a Guarantee Trustee which shall: (i) not be an Affiliate of the Guarantor; and (ii) be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or a corporation or Person permitted by the Securities and Exchange Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise -9- corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, State, Territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then, for the purposes of this Section 4.01(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. (b) If at any time the Guarantee Trustee shall cease to be eligible to so act under Section 4.01(a), the Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.03(c). (c) If the Guarantee Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. SECTION 4.02 Compensation and Reimbursement. The Guarantor agrees: (a) to pay the Guarantee Trustee from time to time such reasonable compensation as the Guarantor and the Guarantee Trustee shall from time to time agree in writing for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein, to reimburse the Guarantee Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Guarantee Trustee in accordance with the provisions of this Guarantee (including the reasonable compensation and expenses of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (c) to indemnify each of the Guarantee Trustee and any predecessor Guarantee Trustee for, and to hold it harmless from and against, any and all loss, damage, claim, liability or expense, including taxes (other than taxes based upon the income of the Guarantee Trustee) incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance of the administration of this Guarantee Agreement, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any its powers or duties hereunder. -10- As security for the performance of the obligations of the Guarantor under this Section, the Guarantee Trustee shall have a lien prior to the Preferred Securities upon all the property and funds held or collected by the Guarantee Trustee as such, except funds held in trust for the payment of principal of, and premium (if any) or interest on, particular obligations of the Guarantor under this Guarantee Agreement. The provisions of this Section shall survive the termination of this Guarantee Agreement. SECTION 4.03 Appointment, Removal and Resignation of Guarantee Trustee. (a) Subject to Section 4.03(b), unless an Event of Default shall have occurred and be continuing, the Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor. (b) The Guarantee Trustee shall not be removed until a Successor Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Guarantee Trustee and delivered to the Guarantor. (c) The Guarantee Trustee appointed to office shall hold office until a Successor Guarantee Trustee shall have been appointed or until its removal or resignation. The Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Guarantee Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee Trustee. (d) If no Successor Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.03 within 60 days after delivery to the Guarantor of an instrument of resignation, the resigning Guarantee Trustee may petition any court of competent jurisdiction for appointment of a Successor Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee. (e) The Guarantor shall give notice of each resignation and each removal of the Guarantee Trustee and each appointment of a successor Guarantee Trustee to all Holders in the manner provided in Section 8.03 hereof. Each notice shall include the name of the successor Guarantee Trustee and the address of its Corporate Trust Office. -11- ARTICLE V GUARANTEE SECTION 5.01 Guarantee. The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by the Issuer), as and when due, regardless of any defense, right of set-off or counterclaim which the Issuer may have or assert. The Guarantor's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Issuer to pay such amounts to the Holders. SECTION 5.02 Waiver of Notice and Demand. The Guarantor hereby waives notice of acceptance of this Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Issuer or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. SECTION 5.03 Obligations Not Affected. The obligation of the Guarantor to make the Guarantee Payments under this Guarantee Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Issuer of any express or implied agreement, covenant, term or condition relating to the Preferred Securities to be performed or observed by the Issuer; (b) the extension of time for the payment by the Issuer of all or any portion of the Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Preferred Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Preferred Securities (other than an extension of time for payment of Distributions, Redemption Price, Liquidation Distribution or other sum payable that results from the extension of any interest payment period on the Debentures permitted by the Indenture); (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Preferred Securities, or any action on the part of the Issuer granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of -12- creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Issuer or any of the assets of the Issuer; (e) any invalidity of, or defect or deficiency in, the Preferred Securities; (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.03 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. There shall be no obligation of the Holders to give notice to, or obtain consent of, the Guarantor with respect to the happening of any of the foregoing. SECTION 5.04 Rights of Holders. The Guarantor expressly acknowledges that: (i) this Guarantee Agreement will be deposited with the Guarantee Trustee to be held for the benefit of the Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority in liquidation amount of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of this Guarantee Agreement or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement; and (iv) any Holder may institute a legal proceeding directly against the Guarantor to enforce its rights under this Guarantee Agreement without first instituting a legal proceeding against the Issuer or any other person or entity. SECTION 5.05 Guarantee of Payment. This Guarantee Agreement creates a guarantee of payment and not of collection. This Guarantee Agreement will not be discharged except by payment of the Guarantee Payments in full (without duplication). SECTION 5.06 Subrogation. The Guarantor shall be subrogated to all (if any) rights of the Holders against the Issuer in respect of any amounts paid to the Holders by the Guarantor under this Guarantee Agreement; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights which it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee Agreement, if, at the time of any such payment, any amounts of Guarantee Payments are due and unpaid under this Guarantee Agreement. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders. -13- SECTION 5.07 Independent Obligations. The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Issuer with respect to the Preferred Securities and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.03. ARTICLE VI SUBORDINATION SECTION 6.01 Subordination. This Guarantee Agreement will constitute an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment to all other liabilities of the Guarantor, including the Debentures, except those made PARI PASSU or subordinate by their terms, (ii) PARI PASSU with the most senior preferred or preference stock now or hereafter issued by the Guarantor and with any guarantee now or hereafter entered into by the Guarantor in respect of any preferred or preference stock of any Affiliate of the Guarantor, and (iii) senior to all common stock of the Guarantor. Nothing in this Section 6.01 shall apply to claims of, or payments to, the Guarantee Trustee under or pursuant to Section 4.02 hereof. ARTICLE VII TERMINATION SECTION 7.01 Termination. This Guarantee Agreement shall terminate and be of no further force and effect upon: (i) full payment of the Redemption Price of all Preferred Securities, and all accrued and unpaid Distributions to the date of redemption, (ii) the distribution of Debentures to Holders in exchange for all of the Preferred Securities or (iii) full payment of the amounts payable in accordance with the Trust Agreement upon liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee Agreement will continue to be effective or will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid with respect to the Preferred Securities or under this Guarantee Agreement. -14- ARTICLE VIII MISCELLANEOUS SECTION 8.01 Successors and Assigns. All guarantees and agreements contained in this Guarantee Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Preferred Securities then outstanding. Except in connection with a consolidation, merger or sale involving the Guarantor that is permitted under Article Eleven of the Indenture, the Guarantor shall not assign its obligations hereunder. SECTION 8.02 Amendments. This Guarantee Agreement may be amended only by an instrument in writing entered into by the Guarantor and the Guarantee Trustee. Except with respect to any changes which do not materially adversely affect the rights of Holders (in which case no consent of Holders will be required), this Guarantee Agreement may only be amended with the prior approval of the Holders of not less than 66 2/3% in aggregate liquidation amount of all the outstanding Preferred Securities. The provisions of Article VI of the Trust Agreement concerning meetings of Holders shall apply to the giving of such approval. Nothing herein contained shall be deemed to require that the Guarantee Trustee enter into any amendment of this Guarantee Agreement. SECTION 8.03 Notices. Any notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving such notice, and delivered, telecopied or mailed by first class mail as follows: (a) if given to the Guarantor, to the address set forth below or such other address as the Guarantor may give notice of to the Holders of the Preferred Securities: MidAmerican Energy Company 666 Grand Avenue P.O. Box 657 Des Moines, Iowa 50303-0657 Attention: Treasurer with a copy to the General Counsel of the Guarantor. (b) if given to the Issuer, in care of the Administrative Trustees, at the Issuer's (and the Administrative Trustee's) address set forth below or such other address as the Administrative Trustees on behalf of the Issuer may give notice of to the Holders: -15- MidAmerican Energy Financing [ ] c/o MidAmerican Energy Company 666 Grand Avenue P.O. Box 657 Des Moines, Iowa 50303-0657 (c) if given to the Guarantee Trustee, to the address set forth below or such other address as the Guarantee Trustee may give notice of to the Holders of the Preferred Securities: The First National Bank of Chicago One First National Plaza, Suite 0126 Chicago, IL 60670-0126 Attention: Corporate Trust Administration Telephone: (815) 356-3090 Telecopy: (312) 407-1708 (d) if given to any Holder, at the address set forth on the books and records of the Issuer. All notices hereunder shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. SECTION 8.04 Benefit. This Guarantee Agreement is solely for the benefit of the Holders and, subject to Section 3.01(a), is not separately transferable from the Preferred Securities. SECTION 8.05 Interpretation. In this Guarantee Agreement, unless the context otherwise requires: (a) Capitalized terms used in this Guarantee Agreement but not defined in the preamble hereto have the respective meanings assigned to them in Section 1.01; (b) a term defined anywhere in this Guarantee Agreement has the same meaning throughout; -16- (c) all references to "the Guarantee Agreement" or "this Guarantee Agreement" are to this Guarantee Agreement as modified, supplemented or amended from time to time; (d) all references in this Guarantee Agreement to Articles and Sections are to Articles and Sections of this Guarantee Agreement unless otherwise specified; (e) a term defined in the Trust Indenture Act has the same meaning when used in this Guarantee Agreement unless otherwise defined in this Guarantee Agreement or unless the context otherwise requires; (f) a reference to the singular includes the plural and vice versa; and (g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders. SECTION 8.06 Governing Law. This Guarantee Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. -17- THIS GUARANTEE AGREEMENT is executed as of the day and year first above written. MidAmerican Energy Company By: ______________________________ Name: Title: The First National Bank of Chicago, as Guarantee Trustee By: ______________________________ Name: Title: -18- EX-4.L 10 EXHIBIT 4(L) INDENTURE BETWEEN COMPANY & THE BANK - -------------------------------------------------------------------------------- MIDAMERICAN ENERGY COMPANY AND THE FIRST NATIONAL BANK OF CHICAGO, Trustee -------------------- INDENTURE Dated as of _________, 1996 -------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS ARTICLE ONE DEFINITIONS PAGE Section 1.01. General....................................................2 Section 1.02. TIA........................................................2 Section 1.03. Other Definitions..........................................3 Accrued Interest.....................................................3 Accrued Interest Factor..............................................3 Amortized Face Amount................................................4 Amortizing Note......................................................4 Authenticating Agent.................................................4 Authorized Agent.....................................................4 Authorized Newspaper.................................................4 Basis Point..........................................................5 Board of Directors...................................................5 Board Resolution.....................................................5 Bond Indenture.......................................................5 Business Day.........................................................5 Calculation Agent....................................................5 Calculation Date.....................................................5 Commercial Paper Rate................................................5 Commercial Paper Rate Interest Determination Date....................6 Commercial Paper Rate Notes..........................................6 Common Shareholders Equity...........................................7 Company Order........................................................7 Composite Quotations.................................................9 Corporate Trust Office of the Trustee................................9 CUSIP................................................................9 Depositary...........................................................9 Designated LIBOR Page................................................9 Discharged..........................................................10 Event of Default....................................................10 Extension Notice....................................................10 Extension Period....................................................10 Final Maturity Date.................................................11 First Mortgage Bonds................................................11 Fixed Rate Amortizing Note..........................................11 Fixed Rate Note.....................................................11 Floating Rate Note..................................................11 Global Note.........................................................11 H.15(519):..........................................................11 Indebtedness........................................................12 Indenture...........................................................12 Index Maturity......................................................12 Initial Interest Rate...............................................12 Initial Redemption Date.............................................12 Interest Accrual Period.............................................12 Interest Determination Date.........................................13 Interest Factor.....................................................13 Interest Payment Date...............................................13 Interest Rate.......................................................14 Interest Rate Basis; Base Rate......................................14 Interest Reset Date.................................................15 Interest Reset Period...............................................15 Iowa-Illinois Indenture.............................................16 Issue Price.........................................................16 LIBOR...............................................................16 LIBOR Interest Determination Date...................................18 LIBOR Notes.........................................................18 London Business Day.................................................18 Maturity............................................................18 Maximum Interest Rate...............................................18 Midwest Power Indenture.............................................18 Minimum Interest Rate...............................................19 Money Market Yield..................................................19 Note or Notes; Outstanding..........................................19 Noteholder; Holder..................................................20 Officers' Certificate...............................................20 Opinion of Counsel..................................................20 Optional Interest Reset Date:.......................................20 Original Issue Date.................................................20 Original Issue Discount Note........................................21 Permitted Encumbrances..............................................21 Person..............................................................23 Pre-Exercise Stated Maturity Date...................................23 Prime Rate..........................................................24 Prime Rate Interest Determination Date..............................24 Prime Rate Notes....................................................25 Principal Amount....................................................25 Principal Executive Offices of the Company..........................25 Principal Facility..................................................25 Redemption Date.....................................................26 Reset Note..........................................................26 Reset Notice........................................................26 Responsible Officer.................................................26 Reuters Screen USPRIME1.............................................27 Spread..............................................................27 Spread Multiplier...................................................27 Stated Maturity.....................................................27 Subsequent Interest Period..........................................27 Subsidiary..........................................................27 Treasury............................................................28 Treasury Bills......................................................28 Treasury Rate.......................................................28 Treasury Rate Interest Determination Date...........................29 Treasury Rate Notes.................................................29 Trustee.............................................................29 U.S. Government Obligations.........................................29 Wholly-Owned Subsidiary.............................................30 Yield to Maturity...................................................30 Zero Coupon Note....................................................30 ARTICLE TWO FORM, ISSUE, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES Section 2.01. Form Generally............................................30 Section 2.02. Form of Trustee's Certificate of Authentication..........................................31 Section 2.03. Amount Unlimited..........................................31 Section 2.04. Denominations, Dates, Interest Payment and Record Dates............................................31 Section 2.05. Execution, Authentication, Delivery and Dating..................................................33 Section 2.06. Exchange and Registration of Transfer of Notes...................................................36 Section 2.07. Mutilated, Destroyed, Lost or Stolen Notes...................................................37 Section 2.08. Temporary Notes...........................................38 Section 2.09. Cancellation of Notes Paid, etc...........................39 Section 2.10. Interest Rights Preserved.................................39 Section 2.11. Payment of Notes..........................................39 Section 2.12. Notes Issuable in the Form of a Global Note....................................................40 Section 2.13. CUSIP Numbers.............................................43 ARTICLE THREE REDEMPTION OF NOTES; REPAYMENT PRIOR TO STATED MATURITY Section 3.01. Applicability of Redemption Provisions....................43 Section 3.02. Notice of Redemption; Selection of Notes..................43 Section 3.03. Payment of Notes on Redemption; Deposit of Redemption Price.....................................44 Section 3.04. Repayment at the Option of the Holder.....................45 Section 3.05. Extension.................................................47 Section 3.06. Reset Notes...............................................48 ARTICLE FOUR FIRST MORTGAGE BONDS Section 4.01. Issuance Restrictions.....................................49 Section 4.02. First Mortgage Bonds held by the Trustee..................50 Section 4.03. Trustee to Exercise Rights of First Mortgage Bondholder.....................................50 Section 4.04. No Transfer of First Mortgage Bonds; Exception...............................................50 Section 4.05. Release of First Mortgage Bonds...........................50 Section 4.06. Voting of First Mortgage Bonds............................51 Section 4.07. Discharge of Bond Indenture...............................51 ARTICLE FIVE SATISFACTION AND DISCHARGE; UNCLAIMED MONEYS Section 5.01. Satisfaction and Discharge................................52 Section 5.02. Deposited Moneys to Be Held in Trust by Trustee.................................................53 Section 5.03. Return of Unclaimed Moneys................................54 Section 5.04. Reinstatement.............................................54 ARTICLE SIX PARTICULAR COVENANTS OF THE COMPANY Section 6.01. Payment of Principal, Premium and Interest................................................54 Section 6.02. Office for Notices and Payments, etc......................55 Section 6.03. Appointments to Fill Vacancies in Trustee's Office........................................55 Section 6.04. Annual Statement and Notice...............................55 Section 6.05. Corporate Existence.......................................56 Section 6.06. Limitation Upon Mortgages and Liens.......................56 Section 6.07. Waiver of Certain Covenants...............................56 ARTICLE SEVEN NOTEHOLDER LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE Section 7.01. Noteholder Lists..........................................57 Section 7.02. Securities and Exchange Commission Reports.................................................57 Section 7.03. Reports by the Trustee....................................57 ARTICLE EIGHT REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON EVENT OF DEFAULT Section 8.01. Events of Default.........................................57 Section 8.02. Acceleration of Maturity; Rescission and Annulment...........................................59 Section 8.03. Collection and Suits for Enforcement by Trustee..............................................60 Section 8.04. Trustee May File Proofs of Claim..........................61 Section 8.05. Trustee May Enforce Claims Without Possession of Notes.....................................62 Section 8.06. Application of Moneys Collected by Trustee.................................................63 Section 8.07. Proceedings by Noteholders................................64 Section 8.08. Proceedings by Trustee....................................64 Section 8.09. Remedies Cumulative and Continuing........................65 Section 8.10. Restoration of Rights and Remedies........................65 Section 8.11. Direction of Proceedings and Waiver of Defaults by Majority Noteholders.....................65 Section 8.12. Notice of Default.........................................66 Section 8.13. Undertaking to Pay Costs..................................66 ARTICLE NINE CONCERNING THE TRUSTEE Section 9.01. Certain Duties and Responsibilities.......................67 Section 9.02. Notice of Defaults........................................68 Section 9.03. Certain Rights of Trustee.................................68 Section 9.04. Not Responsible for Recitals or Issuance of Notes.......................................70 Section 9.05. May Hold Notes............................................70 Section 9.06. Money Held in Trust.......................................70 Section 9.07. Compensation and Reimbursement............................70 Section 9.08. Disqualification; Conflicting Interests...................71 Section 9.09. Corporate Trustee Required; Eligibility...................77 Section 9.10. Resignation and Removal; Appointment of Successor............................................77 Section 9.11. Acceptance of Appointment by Successor....................79 Section 9.12. Merger, Conversion, Consolidation or Succession to Business..................................79 Section 9.13. Preferential Collection of Claims Against Company.........................................79 Section 9.14. Appointment of Authenticating Agent.......................84 ARTICLE TEN CONCERNING THE NOTEHOLDERS Section 10.01. Action by Noteholders....................................86 Section 10.02. Proof of Execution by Noteholders........................87 Section 10.03. Who Deemed Absolute Owners...............................87 Section 10.04. Company-Owned Notes Disregarded..........................87 Section 10.05. Revocation of Consents; Future Holders Bound...........................................88 Section 10.06. Record Date for Noteholder Acts..........................88 ARTICLE ELEVEN NOTEHOLDERS' MEETING Section 11.01. Purposes of Meetings.....................................88 Section 11.02. Call of Meetings by Trustee..............................89 Section 11.03. Call of Meetings by Company or Noteholders.........................................89 Section 11.04. Qualifications for Voting................................89 Section 11.05. Regulations..............................................90 Section 11.06. Voting...................................................90 Section 11.07. Right of Trustee or Noteholders not Delayed............................................91 ARTICLE TWELVE CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE Section 12.01. Company May Consolidate, etc., only on Certain Terms..................................91 Section 12.02. Successor Corporation Substituted........................92 ARTICLE THIRTEEN SUPPLEMENTAL INDENTURES Section 13.01. Supplemental Indentures without Consent of Noteholders.................................93 Section 13.02. Supplemental Indentures with Consent of Noteholders.................................94 Section 13.03. Compliance with Trust Indenture Act; Effect of Supplemental Indentures......................96 Section 13.04. Notation on Notes........................................96 Section 13.05. Evidence of Compliance of Supplemental Indenture to Be Furnished Trustee......................96 ARTICLE FOURTEEN IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS Section 14.01. Indenture and Notes Solely Corporate Obligations...........................................96 ARTICLE FIFTEEN MISCELLANEOUS PROVISIONS Section 15.01. Provisions Binding on Company's Successors.............................................97 Section 15.02. Official Acts by Successor Corporation...................97 Section 15.03. Addresses for Notices, etc...............................97 Section 15.04. Governing Law............................................97 Section 15.05. Evidence of Compliance with Conditions Precedent..............................................98 Section 15.06. Business Days............................................99 Section 15.07. Trust Indenture Act to Control...........................99 Section 15.08. Table of Contents, Headings, etc.........................99 Section 15.09. Execution in Counterparts................................99 Section 15.10. Manner of Mailing Notice to Noteholders...........................................100 EXHIBITS Exhibit A Form of Global Fixed Rate Note Exhibit B Form of Fixed Rate Note Exhibit C Form of Global Floating Rate Note Exhibit D Form of Floating Rate Note TIE-SHEET of provisions of Trust Indenture Act of 1939 with Indenture dated as of _________, 1996, between MidAmerican Energy Company and The First National Bank of Chicago, as trustee. SECTION OF ACT SECTION OF INDENTURE -------------- -------------------- 310(a)(1) and (2) ................... 9.09 310(a)(3) and (4) ................... Not applicable 310(a)(5) ........................... 9.08 310(b) .............................. 9.08 and 9.10 310(c) .............................. Not applicable 311(a) and (b) ...................... 9.13 311(c) .............................. Not applicable 312(a) .............................. 7.01 312(b) and (c) ...................... 7.01 313(a) .............................. 7.03 313(b)(1) ........................... Not applicable 313(b)(2) ........................... 7.03 313(c) .............................. 7.03 313(d) .............................. 7.03 314(a) .............................. 6.04, 7.02 314(b) .............................. Not applicable 314(c)(1) and (2) ................... 15.05 314(c)(3) ........................... Not applicable 314(d) .............................. Not applicable 314(e) .............................. 15.05 314(f) .............................. Not applicable 315(a), (c) and (d) ................. 9.01 315(b) .............................. 8.12; 9.02 315(e) .............................. 8.13 316(a)(1) ........................... 8.01 and 8.11 316(a)(2) ........................... Omitted 316(a) last sentence ................ 10.04 316(b) .............................. 8.07 316(c) .............................. 10.06 317(a)(1)............................ 8.03 317(a)(2)............................ 8.04 317(b) .............................. Omitted 318(a) .............................. 15.07 - ------------------------- This tie-sheet does not constitute a part of the Indenture. THIS INDENTURE, dated as of __________, 1996, between MidAmerican Energy Company, a corporation duly organized and existing under the laws of the State of Iowa (hereinafter sometimes called the "Company"), and The First National Bank of Chicago, a national banking association organized and existing under the laws of the United States of America (hereinafter called the "Trustee"). W I T N E S S E T H: WHEREAS, for its lawful corporate purposes, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its Medium-Term Notes (hereinafter sometimes called "Notes"), to be issued as in this Indenture provided; AND WHEREAS, all acts and things necessary to make this Indenture a valid agreement according to its terms have been done and performed, and the execution of this Indenture and the issue hereunder of the Notes have in all respects been duly authorized; NOW THEREFORE, THIS INDENTURE WITNESSETH: That in order to declare the terms and conditions upon which the Notes are, and are to be authenticated, issued and delivered, and in consideration of the premises, of the purchase and acceptance of the Notes by the Holders thereof and of the sum of one dollar duly paid to it by the Trustee at the execution of these presents, the receipt whereof is hereby acknowledged, the Company covenants and agrees with the Trustee for the equal and proportionate benefit of the respective Holders from time to time of the Notes, as follows: ARTICLE ONE DEFINITIONS SECTION 1.01. GENERAL. The terms defined in this Article One (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Article One. SECTION 1.02. TIA. (a) Whenever this Indenture refers to a provision of the Trust Indenture Act of 1939, as amended ("TIA"), such provision is incorporated by reference in -2- and made a part of this Indenture. The following TIA terms incorporated in this Indenture have the following meanings: "indenture securities" means the Notes. "indenture note holder" means a Noteholder or a Holder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company. (b) All terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by a rule of the Securities and Exchange Commission have the meanings assigned to them in the TIA or such statute or rule as in force on the date of execution of this Indenture. SECTION 1.03. OTHER DEFINITIONS. For purposes of this Indenture, the following terms have the following meanings. ACCRUED INTEREST: The term "Accrued Interest" at any Interest Payment Date (a) for a Floating Rate Note shall mean the amount obtained by multiplying the principal amount of such Floating Rate Note by its Accrued Interest Factor, and (b) for a Fixed Rate Note, shall mean the amount obtained by multiplying the principal amount of such Fixed Rate Note by its Interest Rate, and multiplying the product thus obtained by a fraction, the numerator of which is the number of days in the Interest Reset Period for such Note ending on such Interest Payment Date based on a 360-day year of twelve 30-day months, and the denominator of which is 360. ACCRUED INTEREST FACTOR: The term "Accrued Interest Factor" at any Interest Payment Date for a Floating Rate Note shall mean the sum of the Interest Factors for such Floating Rate Note calculated for each day in the Interest Reset Period for such Note ending on such Interest Payment Date or the prior Record Date, as the case may be. -3- AMORTIZED FACE AMOUNT: The term "Amortized Face Amount" of an Original Issue Discount Note as of the date that (i) the principal amount of such Note is to be repaid prior to its Stated Maturity, whether upon declaration of acceleration, call for redemption, repayment at the option of the Holder or otherwise, or (ii) any consent, notice, request, direction, waiver or suit by the Noteholders shall be deemed to be given, made or commenced under this Indenture, shall mean the principal amount of such Note multiplied by its Issue Price plus the portion of the difference between the dollar amount thus obtained and the principal amount of such Note that has accreted at the Yield to Maturity of such Note (computed in accordance with generally accepted United States bond yield computation principles) to such date, but in no event shall the Amortized Face Amount of an Original Issue Discount Note exceed its principal amount stated in the applicable Company Order. AMORTIZING NOTE: The term "Amortizing Note" shall mean a Note for which payments of principal of and interest on such Note are made in installments over the life of such Note, and unless otherwise specified in the applicable Company Order, payments with respect to an Amortizing Note shall be applied first to interest due and payable thereon and then to the reduction of the unpaid principal amount thereof. AUTHENTICATING AGENT: The term "Authenticating Agent" shall mean the agent of the Trustee which shall be appointed and acting pursuant to Section 9.14. AUTHORIZED AGENT: The term "Authorized Agent" shall mean an agent of the Company designated by an Officers' Certificate to give to the Trustee the information specified in clause (a) of "Company Order" for the issuance of a Note. AUTHORIZED NEWSPAPER: The term "Authorized Newspaper" shall mean a newspaper of general circulation in the relevant area, printed in the English language and customarily published on each Business Day; whenever successive publications in an Authorized Newspaper are required by this Indenture, such publications may be made on the same or different days and in the same or in different Authorized Newspapers. BASIS POINT: The term "Basis Point" shall mean one-one hundredth of a percentage point. BOARD OF DIRECTORS: The term "Board of Directors" shall mean the Board of Directors of the Company or the Executive Committee of such Board or any other duly authorized Committee of such Board. BOARD RESOLUTION: The term "Board Resolution" shall mean a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. BOND INDENTURE: The term "Bond Indenture" shall mean the Iowa-Illinois Indenture or the Midwest Power Indenture. BUSINESS DAY: The term "Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday that in The City of New York, is not a day on which banking institutions are authorized or obligated by law, regulation or executive order to close and, with respect to LIBOR Notes, is also a London Business Day, unless otherwise specified in the applicable Company Order. CALCULATION AGENT: The term "Calculation Agent" for a particular Floating Rate Note shall mean the Trustee, unless otherwise specified in the applicable Company Order. CALCULATION DATE: The term "Calculation Date" shall mean with regard to any particular Interest Determination Date, the earlier of (i) the tenth calendar day after such Interest Determination Date, or, if any such day is not a Business Day, the next day that is a Business Day, or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. COMMERCIAL PAPER RATE: -5- The term "Commercial Paper Rate" for a particular Floating Rate Note, unless otherwise indicated in the applicable Company Order, shall mean, with respect to any Commercial Paper Rate Interest Determination Date, the Money Market Yield on such date of the rate for commercial paper having the Index Maturity specified in such Company Order, as such rate shall be published in H.15(519) under the heading "Commercial Paper". In the event that such rate is not published prior to 9:00 A.M., New York City time, on the Calculation Date pertaining to such Commercial Paper Rate Interest Determination Date, then the Commercial Paper Rate shall be the Money Market Yield on such Commercial Paper Rate Interest Determination Date of the rate for commercial paper of the specified Index Maturity as published in Composite Quotations under the heading "Commercial Paper". If by 3:00 P.M., New York City time, on such Calculation Date such rate is not published in either H.15(519) or Composite Quotations, then the Commercial Paper Rate for such Commercial Paper Rate Interest Determination Date shall be calculated by the Calculation Agent and shall be the Money Market Yield of the arithmetic mean of the offered rates (quoted on a bank discount basis) as of 11:00 A.M., New York City time, on such Commercial Paper Rate Interest Determination Date of three leading dealers of commercial paper in The City of New York selected by the Calculation Agent for commercial paper of the specified Index Maturity placed for an industrial issuer whose bond rating is "AA", or the equivalent, from a nationally recognized rating agency; PROVIDED, HOWEVER, that if the dealers selected as aforesaid by the Calculation Agent are not quoting as set forth above, the Commercial Paper Rate will be the Commercial Paper Rate immediately prior to such Commercial Paper Rate Interest Determination Date. COMMERCIAL PAPER RATE INTEREST DETERMINATION DATE: The term "Commercial Paper Rate Interest Determination Date" pertaining to an Interest Reset Date for a Commercial Paper Rate Note shall mean the second Business Day immediately preceding such Interest Reset Date, unless otherwise specified in the applicable Company Order. COMMERCIAL PAPER RATE NOTES: The term "Commercial Paper Rate Notes" shall mean Floating Rate Notes which are specified in the applicable Company Order as bearing interest at an interest rate calculated with reference to the Commercial Paper Rate. -6- COMMON SHAREHOLDERS EQUITY: The term "Common Shareholders Equity" shall mean, at any time, the total shareholders' equity of the Company and its consolidated subsidiaries, determined on a consolidated basis in accordance with generally accepted accounting principles, as of the end of the most recently completed fiscal quarter of the Company for which financial information is then available. COMPANY: The term "Company" shall mean the corporation named as the "Company" in the first paragraph of this Indenture, and its successors and assigns. COMPANY ORDER: The term "Company Order" shall mean: (a) a written order signed in the name of the Company by the Chairman of the Board, the President or any Vice President and by the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee, to authenticate a Note and to make it available for delivery, and specifying for such Note the following information: (1) the name of the Person in which a Note to be issued and authenticated shall be registered; (2) the address of such Person; (3) the taxpayer identification number of such Person; (4) the principal amount of such Note and, if multiple Notes are to be issued to such Person, the denominations of such Notes; (5) the Issue Price of such Note; (6) the Original Issue Date of such Note; (7) the date upon which such Note is scheduled to mature, any Extension Period or Extension Periods, the Final Maturity Date and any procedures pursuant to which the Holder of such Note may renew such Note; (8) if the Note is to be redeemable at the option of the Company, the Initial Redemption Date and the date or dates on which, and the price or prices at which, such Note is redeemable at the option of the Company; -7- (9) if the Note is a Fixed Rate Note, the rate of interest on such Note and the Interest Payment Dates, if other than January 15 and July 15, and the Record Dates, if other than January 1 and July 1; (10) if the Note is an Original Issue Discount Note, its Yield to Maturity; (11) if such Note is an Amortizing Note, a table setting forth the schedule of dates and amounts of payments of principal of and interest on such Note or the formula for the amortization of principal and/or interest; (12) if the Note is a Reset Note, the Optional Interest Reset Date and the formula, if any, for resetting the interest rate of a Fixed Rate Note or the Spread and/or Spread Multiplier of a Floating Rate Note; (13) if the Note is a Floating Rate Note, its: (A) Initial Interest Rate (F) Interest Reset Dates (G) Spread (B) Interest Rate Basis or (H) Spread Multiplier Base Rate (including any (I) Maximum Interest Rate Designated LIBOR Page) (J) Minimum Interest Rate (C) Index Maturity (K) Interest Payment Dates (D) Interest Determination (L) Record Dates Dates (E) Interest Reset Period (14) whether or not such Note is to be issued in the form of a Global Note to the Depositary; (15) the name and address of the Calculation Agent, if other than the Trustee; (16) if other than denominations of $1,000 and integral multiples thereof, the authorized denominations in which Notes shall be issued; and (17) all other information necessary for the issuance of such Note not inconsistent with the provisions of this Indenture; or (b) confirmation given to the Trustee by an officer of the Company designated by an Officers' Certificate, by telephone, confirmed by telex or facsimile or similar writing, of the information given to the Trustee by an Authorized Agent for the issuance of a Note, and the written order of the Company to authenticate such Note and to make it available for delivery. -8- COMPOSITE QUOTATIONS: The term "Composite Quotations" shall mean the daily statistical release "Composite 3:30 P.M. Quotations for U.S. Government Securities" or any successor publication published by the Federal Reserve Bank of New York. CORPORATE TRUST OFFICE OF THE TRUSTEE: The term "Corporate Trust Office of the Trustee" (or other similar term) shall mean the principal office of the Trustee at which at any particular time its corporate business shall be administered, which office at the date of original execution of this Indenture is located at One First National Plaza, Suite 0126, Chicago, Illinois 60670, Attention: Corporate Trust Administration, except that, with respect to presentation of the Notes for payment or registration of transfers or exchanges and the location of the register, such term means the office or agency of the Trustee at which at any particular time its corporate agency business shall be conducted, which at the date of original execution of this Indenture is located at c/o First Chicago Trust Company of New York, 14 Wall Street-8th Floor-Window 2, New York, New York 10005. CUSIP: The term "CUSIP" shall mean the registered trademark "Committee on Uniform Securities Identification Procedures" or "CUSIP" and a unique system of identification of each public issue of a security owned by the American Bankers Association and administered by Standard and Poor's Corporation, as agent of the American Bankers Association. DEPOSITARY: The term "Depositary" shall mean, unless otherwise specified by the Company pursuant to Section 2.05 hereof, The Depository Trust Company, New York, New York, or any successor thereto registered as a Clearing Agency under the Securities and Exchange Act of 1934, as amended, or any successor statute or regulation. DESIGNATED LIBOR PAGE: The term "Designated LIBOR Page" shall mean either (a) the display on the Reuters Monitor Money Rates Service for the purpose of displaying the London interbank rates of major banks for United States Dollars (if "LIBOR Reuters" is specified in the applicable Company Order), or (b) the display on the Dow Jones Telerate Service for the purpose of displaying the London -9- interbank rates of major banks for United States dollars (if "LIBOR Telerate" is specified in the applicable Company Order). If neither LIBOR Reuters nor LIBOR Telerate is specified in the applicable Company Order, LIBOR for United States dollars will be determined as if LIBOR Telerate [(and page 3750)] had been chosen. DISCHARGED: The term "Discharged" means, with respect to all Notes at the time outstanding, that the Company shall be deemed to have paid and discharged the entire indebtedness represented by, and obligations under, all Notes and to have satisfied all the obligations under the Indenture relating to such Notes except (i) the rights of Holders of such Notes to receive, from the trust fund provided for under Sections 5.01 and 5.02, payment of the principal of (and premium, if any) and interest on such Notes when such payments are due, (ii) the Company's obligations with respect to such Notes under Sections 2.06, 2.07 and 6.02 and (iii) the rights, powers, trusts, duties and immunities of the Trustee under the Indenture. EVENT OF DEFAULT: The term "Event of Default" shall mean any event specified in Section 8.01, continued for the period of time, if any, and after the giving of the notice, if any, therein designated. EXTENSION NOTICE: The term "Extension Notice" shall mean a notice sent by the Trustee by telegram, telex, facsimile transmission, hand delivery or letter (first class, postage prepaid) to the Holder of a Note with respect to which the Company has exercised its option to extend the Stated Maturity, indicating (i) that the Company has elected to extend the Stated Maturity of such Note, (ii) the new Stated Maturity, (iii) in the case of a Fixed Rate Note, the interest rate applicable to the Extension Period or, in the case of a Floating Rate Note, the Spread and/or Spread Multiplier applicable to the Extension Period, and (iv) any provisions for redemption of such Note during the Extension Period, including the date or dates on which or the period or periods during which and the price or prices at which such redemption may occur during the Extension Period. -10- EXTENSION PERIOD: The term "Extension Period" shall mean a period of from one to five whole years for which the Company may, at its option, extend the Stated Maturity of a particular Note. FINAL MATURITY DATE: The term "Final Maturity Date" shall mean the date beyond which the Stated Maturity of a particular Note may not be extended at the option of the Company. FIRST MORTGAGE BONDS: The term "First Mortgage Bonds" shall mean the first mortgage bonds issued under the Iowa-Illinois Indenture or the Midwest Power Indenture. FIXED RATE AMORTIZING NOTE: The term "Fixed Rate Amortizing Note" shall mean a Fixed Rate Note which is an Amortizing Note. FIXED RATE NOTE: The term "Fixed Rate Note" shall mean a Note which bears interest at a fixed rate (which may be zero in the case of a Zero Coupon Note) specified in the applicable Company Order. FLOATING RATE NOTE: The term "Floating Rate Note" shall mean a Note which bears interest at a variable rate determined by reference to interest rate formula, and includes a Commercial Paper Rate Note, a LIBOR Note, a Prime Rate Note or a Treasury Rate Note. GLOBAL NOTE: The term "Global Note" shall mean a single Note that pursuant to Section 2.05 is issued to evidence Notes having identical terms and provisions, which is delivered to the Depositary or pursuant to instructions of the Depositary and which shall be registered in the name of the Depositary or its nominee. H.15(519): The term "H.15(519)" shall mean the publication "Statistical Release H.15(519), Selected Interest Rates" or any successor publication published by the Board of Governors of the Federal Reserve System. -11- INDEBTEDNESS: The term "Indebtedness" shall mean with respect to any Person (i) any liability of such Person (a) for borrowed money, or (b) evidenced by a bond, note, debenture or similar instrument (including purchase money obligations but excluding trade payables), or (c) for the payment of money relating to a lease that is required to be classified as a capitalized lease obligation in accordance with generally accepted accounting principles; (ii) any liability of others described in the preceding clause (i) that such Person has guaranteed, that is recourse to such Person or that is otherwise its legal liability; and (iii) any amendment, supplement, modification, deferral, renewal, extension or refunding of any liability of the types referred to in clauses (i) and (ii) above. INDENTURE: The term "Indenture" shall mean this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented. INDEX MATURITY: The term "Index Maturity" of a particular Floating Rate Note shall mean the period to Stated Maturity of the instrument or obligation from which the Base Rate of such Floating Rate Note is calculated, as specified in the applicable Company Order. INITIAL INTEREST RATE: The term "Initial Interest Rate" for a particular Floating Rate Note shall mean the interest rate specified in the applicable Company Order as in effect from the Original Issue Date of such Floating Rate Note to its first Interest Reset Date. INITIAL REDEMPTION DATE: The term "Initial Redemption Date" shall mean the earliest date, if any, on which a particular Note shall be redeemable at the option of the Company prior to the Stated Maturity of such Note, as specified in the applicable Company Order. INTEREST ACCRUAL PERIOD: The term "Interest Accrual Period" for a particular Floating Rate Note shall mean the period from the date of issue -12- of such Floating Rate Note, or from an Interest Reset Date, if any, to its next subsequent Interest Reset Date. INTEREST DETERMINATION DATE: The term "Interest Determination Date" shall mean each Commercial Paper Rate Interest Determination Date, LIBOR Interest Determination Date, Prime Rate Interest Determination Date and Treasury Rate Interest Determination Date. INTEREST FACTOR: The term "Interest Factor" for a Floating Rate Note for each day in an Interest Accrual Period for such Floating Rate Note shall be computed by dividing the Interest Rate applicable to such day by 360, in the case of Commercial Paper Rate Notes, LIBOR Notes and Prime Rate Notes, or by the actual number of days in the year, in the case of Treasury Rate Notes. INTEREST PAYMENT DATE: (a) The term "Interest Payment Date" shall mean with respect to a Floating Rate Note, including a Floating Rate Amortizing Note, which has an Interest Reset Date which is (1) daily, weekly or monthly: the third Wednesday of each month or the third Wednesday of March, June, September and December of each year, as specified in the applicable Company Order, (2) quarterly: the third Wednesday of March, June, September and December of each year, as specified in the applicable Company Order, (3) semiannually: the third Wednesday of the two months of each year, as specified in the applicable Company Order; (4) annually: the third Wednesday of one month of each year, as specified in the applicable Company Order, and, in each case, the date of Maturity of such Floating Rate Note and, with respect to defaulted interest on such Floating Rate Note, the date established by the Company for the payment of such defaulted interest. If any Interest Payment Date (other than at Maturity) for any Floating Rate Note would fall on a day that is not a Business Day with respect to such Floating Rate Note, such Interest Payment Date will be the following day that is a Business Day with respect to such Floating Rate Note, except that, in the case of a LIBOR Note, if such Business Day with respect to such Floating Rate Note is in the next succeeding calendar month, such Interest Payment Date shall be the immediately preceding London Business Day. (b) the term "Interest Payment Date" shall mean with respect to a Fixed Rate Note, including a Fixed Rate Amortizing Note, each January 15 and July 15, or such other dates which are specified in the applicable Company Order during the period such -13- Fixed Rate Note is outstanding, the date of Maturity of such Fixed Rate Note, and with respect to defaulted interest on such Fixed Rate Note, the date established by the Company for the payment of such defaulted interest. (C) Notwithstanding the foregoing, the first Interest Payment Date for any Note originally issued between a Record Date and the next Interest Payment Date shall be the Interest Payment Date following the next succeeding Record Date. INTEREST RATE: (a) The term "Interest Rate" for a particular Floating Rate Note shall mean (1) from the date of issue of such Floating Rate Note to the first Interest Reset Date for such Floating Rate Note, the Initial Interest Rate, and (2) each Interest Accrual Period commencing on or after such First Interest Reset Date, the Base Rate with reference to the Index Maturity for such Floating Rate Note as specified in the applicable Company Order plus or minus the Spread, if any, multiplied by the Spread Multiplier, if any; PROVIDED, in the event no Spread or Spread Multiplier is provided in such Company Order, the Spread and Spread Multiplier shall be zero and one, respectively; PROVIDED, FURTHER, in no event shall the Interest Rate be greater than the Maximum Interest Rate, if any, or less than the Minimum Interest Rate, if any; PROVIDED, FURTHER, the Interest Rate in effect for the ten days immediately prior to Maturity will be the Interest Rate in effect on the tenth day preceding such Maturity; and PROVIDED, FURTHER, the Interest Rate will in no event be higher than the maximum rate permitted by New York or other applicable law, as the same may be modified by United States federal laws of general application. (b) The term "Interest Rate" for a particular fixed Rate Note shall mean the interest rate specified in the applicable Company Order. INTEREST RATE BASIS; BASE RATE: The term "Interest Rate Basis" or "Base Rate" shall mean with respect to (a) Commercial Paper Rate Notes, the Commercial Paper Rate, (b) LIBOR Notes, LIBOR, (c) Prime Rate Notes, the Prime Rate, (d) Treasury Rate Notes, the Treasury Rate, and (e) any other Floating Rate Note, the interest rate formula which determines the variable rate at which such Note bears interest. -14- INTEREST RESET DATE: The term "Interest Reset Date" shall mean, in the case of a Floating Rate Note specified in the applicable Company Order as being reset (a) daily: each Business Day; (b) weekly: the Wednesday of each week (with the exception of weekly reset Treasury Rate Notes which reset the Tuesday of each week, except as specified below); (c) monthly: the third Wednesday of each month; (d) quarterly: the third Wednesday of March, June, September and December; (e) semiannually: the third Wednesday of the two months specified in the applicable Company Order; and (f) annually: the third Wednesday of the month specified in the applicable Company Order. If any Interest Reset Date for a Floating Rate Note would otherwise be a day which is not a Business Day, such Interest Reset Date shall be postponed to the next succeeding day that is a Business Day, except that in the case of a LIBOR Note, if such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the immediately preceding Business Day. If, in the case of a Treasury Rate Note, an Interest Reset Date shall fall on a day on which the Treasury auctions Treasury Bills, then such Interest Reset Date shall instead be the first Business Day immediately following such auction. INTEREST RESET PERIOD: The term "Interest Reset Period" shall mean for: (a) each Floating Rate Note on which interest is reset monthly, quarterly, semiannually or annually, and each Fixed Rate Note, the period: (1) beginning on and including the Original Issue Date of such Note or the most recent Interest Payment Date on which interest was paid on such Note, and (2) ending on but not including the next Interest Payment Date or, for the last Interest Reset Period, the Maturity, of such Note; (b) each Floating Rate Note on which interest is reset daily or weekly, the period: (1) beginning on and including the Original Issue Date of such Floating Rate Note, or beginning on but excluding the most recent Record Date through which interest was paid on such Note, and -15- (2) ending on and including the next Record Date or, for the last Interest Reset Period, ending on but excluding Maturity, of such Note; PROVIDED, HOWEVER, that the first Interest Reset Period for any Note which has its Original Issue date after a Record Date and prior to its next Interest Payment Date, shall begin on and include such Original Issue Date and (i) end on and include the next Record Date for Floating Rate Notes on which interest is reset daily or weekly, and (ii) end on but not include the second Interest Payment Date after the Original Issue Date for all other Notes. IOWA-ILLINOIS INDENTURE: The term "Iowa-Illinois Indenture" shall mean the Indenture of Mortgage and Deed of Trust, dated as of March 1, 1947, from Iowa-Illinois Gas and Electric Company to Harris Trust and Savings Bank and Lynn Lloyd (C. Potter, successor individual trustee), as trustees, and indentures supplemental thereto. ISSUE PRICE: The term "Issue Price" shall mean the price expressed as a percentage of the aggregate principal amount of a Note at which such Note is issued. LIBOR: The term "LIBOR" for a particular Floating Rate Note, unless otherwise indicated in the applicable Company Order, shall mean, with respect to any LIBOR Interest Determination Date, the rate determined: (i) with respect to any LIBOR Interest Determination Date, LIBOR shall be either: (a) if "LIBOR Reuters" is specified in the applicable Company Order, the arithmetic mean of the offered rates (unless the specified Designated LIBOR Page by its terms provides only for a single rate, in which case such single rate will be used) for deposits in United States dollars having the Index Maturity specified in the applicable Company Order, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, which appear on the Designated LIBOR Page specified in the applicable Company Order as of 11:00 A.M., London time, on that LIBOR Interest Determination Date, if at least two such offered rates appear (unless, as aforesaid, only a single rate is required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate" is specified in the applicable Company Order, the rate for deposits in United States dollars having the Index Maturity specified in the -16- applicable Company Order, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, which appears on the Designated LIBOR Page specified in the applicable Company Order as of 11:00 A.M., London time, on that LIBOR Interest Determination Date. Notwithstanding the foregoing, if fewer than two offered rates appear on the Designated LIBOR Page with respect to LIBOR Reuters (unless the specified Designated LIBOR Page by its terms provides only for a single rate, in which case such single rate will be used), or if no rate appears on the Designated LIBOR Page with respect to LIBOR Telerate, whichever may be applicable, LIBOR with respect to such LIBOR Interest Determination Date shall be determined as provided in clause (ii) below. (ii) With respect to any LIBOR Interest Determination Date on which fewer than two offered rates appear on the Designated LIBOR Page with respect to LIBOR Reuters (unless the specified Designated LIBOR Page by its terms provides only for a single rate, in which case such single rate will be used), or if no rate appears on the Designated LIBOR Page with respect to LIBOR Telerate, as the case may be, the Calculation Agent shall request the principal London office of each of four major banks in the London interbank market selected by the Calculation Agent to provide the Calculation Agent with its offered rate quotation for deposits in United States dollars for the period of the applicable Index Maturity specified in the applicable Company Order, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, to prime banks in the London interbank market as of 11:00 A.M., London time, on such LIBOR Interest Determination Date and in a principal amount that is representative for a single transaction in United States dollars in such market at such time. If at least two such quotations are provided, LIBOR with respect to such LIBOR Interest Determination Date shall be calculated by the Calculation Agent and shall be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR with respect to such LIBOR Interest Determination Date shall be the arithmetic mean of the rates quoted as of 11:00 A.M., New York City Time, on such LIBOR Interest Determination Date by three major banks in The City of New York selected by the Calculation Agent for loans in United States Dollars to leading European banks, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date having the Index Maturity specified in the applicable Company Order in a principal amount that is representative for a single transaction in such United States dollars in such market at such time; PROVIDED, HOWEVER, that if the banks so selected by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR with respect to such LIBOR Interest Determination Date shall be LIBOR in -17- effect immediately prior to such LIBOR Interest Determination Date. LIBOR INTEREST DETERMINATION DATE: The term "LIBOR Interest Determination Date" pertaining to an Interest Reset Date for a LIBOR Note shall mean the second London Business Day immediately preceding such Interest Reset Date, unless otherwise specified in the applicable Company Order. LIBOR NOTES: The term "LIBOR Notes" shall mean Floating Rate Notes which are specified in the applicable Company Order as bearing interest at an interest rate calculated with reference to LIBOR. LONDON BUSINESS DAY: The term "London Business Day" shall mean any day on which dealings in deposits in United States dollars are transacted in the London interbank market. MATURITY: The term "Maturity", when used with respect to any Note, shall mean the date on which the principal of such Note or an installment of principal becomes due and payable in accordance with its terms and the terms of this Indenture as therein or herein provided, whether at Stated Maturity, upon declaration of acceleration, call for redemption, repayment at the option of the Holder or otherwise. MAXIMUM INTEREST RATE: The term "Maximum Interest Rate" shall mean the maximum rate of interest, if any, which may be applicable to any Floating Rate Note during any Interest Accrual Period as specified in the applicable Company Order. MIDWEST POWER INDENTURE: The term "Midwest Power Indenture" shall mean the General Mortgage Indenture and Deed of Trust, dated as of January 1, 1993, between Midwest Power Systems Inc. and Morgan Guaranty Trust Company of New York, trustee (Harris Trust and Savings Bank, successor trustee), and indentures supplemental thereto. -18- MINIMUM INTEREST RATE: The term "Minimum Interest Rate" shall mean the minimum rate of interest, if any, which may be applicable to any Floating Rate Note during any Interest Accrual Period as specified in the applicable Company Order. MONEY MARKET YIELD: The term "Money Market Yield" shall be the yield (expressed as a percentage) calculated in accordance with the following formula: D x 360 Money Market Yield = _______________ x 100 360 - (D x M) where "D" refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal, and "M" refers to the actual number of days in the Interest Accrual Period for which interest is being calculated. NOTE OR NOTES; OUTSTANDING: The terms "Note" or "Notes" shall mean any Fixed Rate or Floating Rate Note or Notes, as the case may be, authenticated and delivered under this Indenture, including any Global Note. The term "outstanding," when used with reference to Notes, shall, subject to Section 10.04, mean, as of any particular time, all Notes authenticated and delivered by the Trustee under this Indenture, except (a) Notes theretofore cancelled by the Company or delivered to the Company for cancellation; (b) Notes, or portions thereof, for the payment or redemption of which moneys in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own paying agent), PROVIDED that if such Notes are to be redeemed prior to the Maturity thereof, notice of such redemption shall have been given as provided in Article Three, or provisions satisfactory to the Trustee shall have been made for giving such notice; (c) Notes which shall have been Discharged; and -19- (d) Notes in lieu of or in substitution for which other Notes shall have been authenticated and delivered, or which have been paid, pursuant to Section 2.07; NOTEHOLDER; HOLDER: The terms "Noteholder" or "Holder" shall mean any Person in whose name at the time a particular Note is registered in the register of the Company kept for that purpose in accordance with the terms hereof. OFFICERS' CERTIFICATE: The term "Officers' Certificate" when used with respect to the Company, shall mean a certificate signed by the Chairman of the Board, the President or any Vice President and by the Secretary or an Assistant Secretary of the Company. Each such certificate shall include the statements provided for in Section 15.05 if and to the extent required by such Section. OPINION OF COUNSEL: The term "Opinion of Counsel" shall mean an opinion in writing signed by legal counsel, who may be an employee of the Company, or such other counsel who is satisfactory to the Trustee. Each such opinion shall include the statements provided for in Section 15.05 if and to the extent required by such Section. In the event that the Indenture requires the delivery of an Opinion of Counsel to the Trustee, the text and substance of which has been previously delivered to the Trustee, the Company may satisfy such requirement by the delivery by the legal counsel that delivered such previous Opinion of Counsel of a letter to the Trustee to the effect that the Trustee may rely on such previous Opinion of Counsel as if such Opinion of Counsel was dated and delivered the date delivery of such Opinion of Counsel is required. OPTIONAL INTEREST RESET DATE: The term "Optional Interest Reset Date" shall mean each date on which the interest rate on a Fixed Rate Reset Note or the Spread and/or Spread Multiplier of a Floating Rate Reset Note may be reset at the option of the Company. ORIGINAL ISSUE DATE: The term "Original Issue Date" shall mean for a particular Note, or portions thereof, the date upon which it, or such portion, was issued by the Company pursuant to this -20- Indenture and authenticated by the Trustee (other than in connection with a transfer, exchange or substitution). ORIGINAL ISSUE DISCOUNT NOTE: The term "Original Issue Discount Note" shall mean (i) a Note that has a "stated redemption price at maturity" that exceeds its "issue price", each as defined for United States federal income tax purposes, by at least 0.25% of its stated redemption price at maturity multiplied by the number of complete years from the Original Issue Date to the Stated Maturity for such Note (or in the case of a Note that provides for payment of any amount other than the "qualified stated interest", as defined for United States federal income tax purposes, prior to maturity, the weighted average maturity of the Note) and (ii) any other Note designated by the Company in the applicable Company Order as issued with original issue discount for United States federal income tax purposes. PERMITTED ENCUMBRANCES: The term "Permitted Encumbrances" shall mean: (a) (i) any mortgage, pledge or other lien or encumbrance on any property hereafter acquired or constructed by the Company or a Subsidiary, or on which property so constructed is located, and created prior to, contemporaneously with or within 360 days after, such acquisition or construction or the commencement of commercial operation of such property to secure or provide for the payment of any part of the purchase or construction price of such property, or (ii) the acquisition by the Company or a Subsidiary of any property subject to any mortgage, pledge, or other lien or encumbrance upon such property existing at the time of acquisition thereof, whether or not assumed by the Company or such Subsidiary, or (iii) any mortgage, pledge, or other lien or encumbrance existing on the property, shares of stock or indebtedness of a corporation at the time such corporation shall become a Subsidiary, or (iv) any conditional sales agreement or other title retention agreement with respect to any property hereafter acquired or constructed; PROVIDED that, in the case of clauses (i) through (iv), the lien of any such mortgage, pledge or other lien does not spread to property owned prior to such acquisition or construction or to other property thereafter acquired or constructed other than additions to such acquired or constructed property and other than property on which property so constructed is located; and PROVIDED, FURTHER, that if a firm commitment from a -21- bank, insurance company or other lender or investor (not including the Company, a Subsidiary or an Affiliate of the Company) for the financing of the acquisition or construction of property is made prior to, contemporaneously with or within the 360-day period hereinabove referred to, the applicable mortgage, pledge, lien or encumbrance shall be deemed to be permitted by this subsection (a) whether or not created or assumed within such period; (b) any mortgage, pledge or other lien or encumbrance created for the sole purpose of extending, renewing or refunding any mortgage, pledge, lien or encumbrance permitted by subsection (a) of this Section; PROVIDED, HOWEVER, that the principal amount of indebtedness secured thereby shall not exceed the principal amount of indebtedness so secured at the time of such extension, renewal or refunding and that such extension, renewal or refunding mortgage, pledge, lien or encumbrance shall be limited to all or any part of the same property that secured the mortgage, pledge or other lien or encumbrance extended, renewed or refunded; (c) liens for taxes or assessments or governmental charges or levies not then due and delinquent or the validity of which is being contested in good faith, and against which an adequate reserve has been established; liens on any property created in connection with pledges or deposits to secure public or statutory obligations or to secure performance in connection with bids or contracts; materialmen's, mechanics', carrier's, workmen's, repairmen's or other like liens; or liens on any property created in connection with deposits to obtain the release of such liens; liens on any property created in connection with deposits to secure surety, stay, appeal or customs bonds; liens created by or resulting from any litigation or legal proceeding which is currently being contested in good faith by appropriate proceedings; leases and liens, rights of reverter and other possessory rights of the lessor thereunder; zoning restrictions, easements, rights-of-way or other restrictions on the use of real property or minor irregularities in the title thereto; and any other liens and encumbrances similar to those described in this subsection (c), the existence of which does not, in the opinion of the Company, materially impair the use by the Company or a Subsidiary of the affected property in the operation of the business of the Company or a Subsidiary, or the value of such property for the purposes of such business; (d) any mortgage, pledge or other lien or encumbrance created after the date of this Indenture on any property -22- leased to or purchased by the Company or a Subsidiary after that date and securing, directly or indirectly, obligations issued by a State, a territory or a possession of the United States, or any political subdivision of any of the foregoing, or the District of Columbia, to finance the cost of acquisition or cost of construction of such property; PROVIDED that the interest paid on such obligations is entitled to be excluded from gross income of the recipient pursuant to Section 103(a)(1) of the Internal Revenue Code of 1986, as amended (or any successor to such provision), as in effect at the time of the issuance of such obligations; (e) any mortgage, pledge or other lien or encumbrance on any property now owned or hereafter acquired or constructed by the Company or a Subsidiary, or on which property so owned, acquired or constructed is located, to secure or provide for the payment of any part of the construction price or cost of improvements of such property, and created prior to, contemporaneously with or within 360 days after, such construction or improvement; PROVIDED that if a firm commitment from a bank, insurance company or other lender or investor (not including the Company, a Subsidiary or an Affiliate of the Company) for the financing of the acquisition or construction of property is made prior to, contemporaneously with or within the 360-day period hereinabove referred to, the applicable mortgage, pledge, lien or encumbrance shall be deemed to be permitted by this subsection (e) whether or not created or assumed within such period; and (f) any mortgage, pledge or other lien or encumbrance not otherwise permitted under this Section; PROVIDED that the aggregate amount of indebtedness secured by all such mortgages, pledges, liens or encumbrances does not exceed the greater of $100,000,000 or 10% of Common Shareholders' Equity. PERSON: The term "Person" shall mean any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. PRE-EXERCISE STATED MATURITY DATE: The term "Pre-Exercise Stated Maturity Date" shall mean the Stated Maturity of a Note (including, if such Stated Maturity has previously been extended, the Stated Maturity as previously extended) in effect immediately prior to the Company's exercise -23- of an option to extend such Stated Maturity for an Extension Period or the Holder's exercise of an option to renew such Note pursuant to provisions included in the applicable Company Order. PRIME RATE: The term "Prime Rate" for a particular Floating Rate Note, unless otherwise indicated in the applicable Company Order, shall mean, with respect to any Prime Rate Interest Determination Date, the rate on such date as published in H.15(519) under the heading "Bank Prime Loan." In the event that such rate is not published prior to 9:00 A.M., New York City time, on the Calculation Date pertaining to such Prime Rate Interest Determination Date, then the Prime Rate with respect to such Prime Rate Interest Determination Date shall be calculated by the Calculation Agent and shall be the arithmetic mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen USPRIME1 as such bank's prime rate or base lending rate as in effect with respect to such Prime Rate Interest Determination Date. If fewer than four such rates appear on the Reuters Screen USPRIME1 with respect to such Prime Rate Interest Determination Date, the Prime Rate with respect to such Prime Rate Interest Determination Date shall be calculated by the Calculation Agent and shall be the arithmetic mean of the prime rates quoted on the basis of the actual number of days in the year divided by 360 as of the close of business on such Prime Rate Interest Determination Date by at least two of the three major money center banks in The City of New York selected by the Calculation Agent. If fewer than two quotations are provided, the Prime Rate with respect to such Prime Rate Interest Determination Date shall be determined on the basis of the rates furnished in The City of New York by the appropriate number of substitute banks or trust companies organized and doing business under the laws of the United States, or any state thereof, having total equity capital of at least $500,000,000 and being subject to supervision or examination by federal or state authority, selected by the Calculation Agent to provide such rate or rates; PROVIDED, HOWEVER, that if the appropriate number of substitute banks or trust companies selected as aforesaid are not quoting as mentioned in this sentence, the Prime Rate with respect to such Prime Rate Interest Determination Date shall be the Prime Rate in effect immediately prior to such Prime Rate Interest Determination Date. PRIME RATE INTEREST DETERMINATION DATE: The term "Prime Rate Interest Determination Date" pertaining to an Interest Reset Date for a particular Prime Rate Note shall mean the second Business Day immediately preceding such Interest -24- Reset Date, unless otherwise specified in the applicable Company Order. PRIME RATE NOTES: The term "Prime Rate Notes" shall mean Floating Rate Notes which are specified in the applicable Company Order as bearing interest at an interest rate calculated with reference to the Prime Rate. PRINCIPAL AMOUNT: The term "principal amount" with respect to any Note shall mean the principal amount thereof set forth in the applicable Company Order; PROVIDED that in the case of any Original Issue Discount Note, its principal amount as of (i) any date that the principal amount of such Note is to be repaid prior to its Stated Maturity, whether upon declaration of acceleration, call for redemption, repayment at the option of the Holder or otherwise, or (ii) any date that any consent, notice, request, direction, waiver or suit by the Noteholders shall be deemed to be given, made or commenced under this Indenture, such term shall mean the Amortized Face Amount of such Note as of such date. PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY: The term "principal executive offices of the Company" shall mean the place where the main corporate offices of the Company are located, currently 666 Grand Avenue, Des Moines, Iowa 50303, or such other place where the main corporate offices of the Company are located as designated in an Officer's Certificate delivered to the Trustee. PRINCIPAL FACILITY: The term "Principal Facility" shall mean the real property, fixtures, machinery and equipment relating to any facility owned by the Company or any Subsidiary, except any facility that, in the opinion of the Board of Directors, is not of material importance to the business conducted by the Company and its Subsidiaries, taken as a whole. RECORD DATE: The term "Record Date" shall mean for the Interest Payment Date for the payment of interest for an Interest Reset Period for a particular Note, unless otherwise specified in the applicable Company Order, (a) the day which is fifteen calendar days prior to such Interest Payment Date, whether or not such day -25- is a Business Day, (b) the date of Maturity of such Note, unless such date of Maturity for a Fixed Rate Note is a January 1 or a July 1, in which event the Record Date will be as provided in clause (a), and (c) a date which is not less than five Business Days preceding the Interest Payment Date of defaulted interest on such Note established by notice given by first-class mail by or on behalf of the Company to the Holder of such Note not less than fifteen days prior to such Interest Payment Date. REDEMPTION DATE: The term "Redemption Date" for a Note shall mean the date fixed for the redemption of such Note in accordance with the provisions of this Indenture. RESET NOTE: The term "Reset Note" shall mean a Fixed Rate Note, with respect to which the Company has the option to reset the interest rate, and a Floating Rate Note, with respect to which the Company has the option to reset the Spread and/or Spread Multiplier. RESET NOTICE: The term "Reset Notice" shall mean a notice sent by the Trustee by telegram, telex, facsimile transmission, hand delivery or letter (first class, postage prepaid) to the Holder of a Reset Note with respect to which the Company has exercised its option to reset the interest rate or the Spread and/or the Spread Multiplier, indicating (i) that the Company has elected to exercise such option, (ii) such new interest rate or Spread and/or Spread Multiplier and (iii) any provisions for redemption of such Note during the Subsequent Interest Period commencing on the applicable Optional Interest Reset Date. RESPONSIBLE OFFICER: The term "responsible officer" or "responsible officers" when used with respect to the Trustee shall mean one or more of the following: the chairman of the board of directors, the vice chairman of the board of directors, the chairman of the executive committee, the vice chairman of the executive committee, the chairman of the trust committee, the president, any vice president, the cashier, the secretary, the treasurer, any trust officer, any second or assistant vice president, any assistant cashier, any assistant secretary, any assistant treasurer, any assistant trust officer or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall -26- be such officers, respectively, or to whom any corporate trust matter is referred because of his or her knowledge of and familiarity with the particular subject. REUTERS SCREEN USPRIME1: The term "Reuters Screen USPRIME1" shall mean the display designated as page "USPRIME1" on the Reuters Monitor Money Rate Service (or such other page which may replace the USPRIME1 page on such service for the purpose of displaying the prime rate or base lending rate of major banks). SPREAD: The term "Spread" applicable to a particular Floating Rate Note shall mean the number of Basis Points above or below the Base Rate for such Floating Rate Note as specified in the applicable Company Order, used in the calculation of the Interest Rate for such Floating Rate Note. SPREAD MULTIPLIER: The term "Spread Multiplier" applicable to a particular Floating Rate Note shall mean the percentage of the Base Rate (plus or minus any applicable Spread) for such Floating Rate Note as specified in the applicable Company Order, used in the calculation of the Interest Rate for such Floating Rate Note. STATED MATURITY: The term "Stated Maturity", when used with respect to any Note shall mean the date specified in such Note as the date on which the principal of such Note is due and payable, or the date specified as the Stated Maturity (i) in an Extension Notice or (ii) in accordance with procedures included in the applicable Company Order pursuant to which the Holder may renew such Note. SUBSEQUENT INTEREST PERIOD: The term "Subsequent Interest Period" shall mean a period from an Optional Interest Reset Date of a Note to the next Optional Interest Reset Date of such Note or, if there is no such next Optional Interest Reset Date, to the Stated Maturity of such Note. SUBSIDIARY: The term "Subsidiary" shall mean any corporation of which at least a majority of the outstanding stock having by the terms thereof ordinary voting power to elect a majority of the -27- directors of such corporation, irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency, is at the time, directly or indirectly, owned or controlled by the Company or by one or more Subsidiaries thereof, or by the Company and one or more Subsidiaries. TREASURY: The term "Treasury" shall mean the United States Department of Treasury. TREASURY BILLS: The term "Treasury Bills" shall mean direct obligations of the United States. TREASURY RATE: The term "Treasury Rate" for a particular Floating Rate Note, unless otherwise indicated in the applicable Company Order, shall mean, with respect to any Treasury Rate Interest Determination Date, the rate resulting from the most recent auction of Treasury Bills having the Index Maturity specified in the applicable Company Order, as such rate is published in H.15(519) under the heading "Treasury bills-auction average (investment)" or, if not so published by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Treasury Rate Interest Determination Date, the average auction rate on such Treasury Rate Determination Date (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) as otherwise announced by the Treasury. In the event that the results of the auction of Treasury Bills having the specified Index Maturity are not reported as provided above by 3:00 P.M., New York City time, on such Calculation Date pertaining to such Treasury Rate Determination Date, or if no such auction is held in a particular week, then the Treasury Rate with respect to such Treasury Rate Interest Determination Date shall be calculated by the Calculation Agent and shall be a yield to maturity (expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 P.M., New York City time, on such Treasury Rate Interest Determination Date, of three leading primary United States government securities dealers selected by the Calculation Agent, for the issue of Treasury Bills with a remaining maturity closest to the Index Maturity specified in the applicable Company Order; PROVIDED, however, that if the dealers selected as aforesaid by the Calculation Agent are not quoting as set forth above, the Treasury Rate with respect to -28- such Treasury Rate Interest Determination Date shall be the Treasury Rate in effect immediately prior to such Treasury Rate Interest Determination Date. TREASURY RATE INTEREST DETERMINATION DATE: The term "Treasury Rate Interest Determination Date" pertaining to an Interest Reset Date for a Treasury Rate Note shall mean the day of the week in which its Interest Reset Date falls on which Treasury Bills normally would be auctioned, PROVIDED, HOWEVER, that if as a result of a legal holiday an auction is held on the Friday of the week preceding such Interest Reset Date, the related Treasury Rate Interest Determination Date shall be such Friday, unless otherwise specified in the applicable Company Order. TREASURY RATE NOTES: The term "Treasury Rate Notes" shall mean Floating Rate Notes which are specified in the applicable Company Order as bearing interest at an interest rate calculated with reference to the Treasury Rate. TRUSTEE: The term "Trustee" shall mean The First National Bank of Chicago and, subject to Article Nine, shall also include any successor Trustee. U.S. GOVERNMENT OBLIGATIONS: The term "U.S. Government Obligations" shall mean securities that are (i) direct obligations of the United States for the payment of which its full faith and credit is pledged, or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States, which, in either case under clauses (i) or (ii), are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt; PROVIDED that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or -29- principal of the U.S. Government Obligation evidenced by such depository receipt. WHOLLY-OWNED SUBSIDIARY: The term "Wholly-Owned Subsidiary" shall mean a Subsidiary of which all of the outstanding voting stock (other than directors' qualifying shares) is at the time, directly or indirectly, owned by the Company, or by one or more Wholly-Owned Subsidiaries of the Company or by the Company and one or more Wholly-Owned Subsidiaries. YIELD TO MATURITY: The term "Yield to Maturity" shall mean for a particular Note the yield to maturity of such Note, computed in accordance with generally accepted United States bond yield computation principles and expressed as a percentage, specified in the applicable Company Order. ZERO COUPON NOTE: The term "Zero Coupon Note" means a Note issued at a price representing a discount from the principal amount payable at Maturity and bearing a zero fixed rate of interest. ARTICLE TWO FORM, ISSUE, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES SECTION 2.01. FORM GENERALLY. (a) The Notes shall be titled "Medium-Term Notes", and, if such Notes shall be in the form of (a) a Fixed Rate Note which is a Global Note, shall be in substantially the form set forth in EXHIBIT A, (b) a Fixed Rate Note which is not a Global Note, shall be in substantially the form set forth in EXHIBIT B, (c) a Floating Rate Note which is a Global Note, shall be in substantially the form set forth in EXHIBIT C, and (d) a Floating Rate Note which is not a Global Note, shall be in substantially the form set forth in EXHIBIT D, to this Indenture, or in any such case such other form as shall be established by a Board Resolution, or an Officers' Certificate pursuant to a Board Resolution, or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as -30- may be required to comply with the rules of any securities exchange or with applicable law or as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution of such Notes. If the form of Notes is established by a Board Resolution, or an Officers' Certificate pursuant to a Board Resolution, a copy of such Board Resolution or Officer's Certificate shall be delivered to the Trustee at or prior to the delivery to the Trustee of the Company Order contemplated by Section 2.05 for the authentication and delivery of such Notes. (b) The definitive Notes shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Notes, as evidenced by their execution of such Notes. SECTION 2.02. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The Trustee's certificate of authentication on all Notes shall be in substantially the following form: Trustee's Certificate of Authentication This is one of the Notes referred to in the within-mentioned Indenture. The First National Bank of Chicago, as Trustee By ________________________ Authorized Signatory SECTION 2.03. AMOUNT UNLIMITED. The aggregate principal amount of Notes which may be authenticated and delivered under this Indenture is unlimited. SECTION 2.04. DENOMINATIONS, DATES, INTEREST PAYMENT AND RECORD DATES. (a) The Notes shall be issuable in registered form without coupons in denominations of $1,000 and integral multiples thereof, unless otherwise specified in the applicable Company Order. (b) Each Note shall be dated and issued as of the date of its authentication by the Trustee, and shall bear an Original Issue Date or, as provided in Section 2.12(e), two or more Original Issue Dates; each Note issued upon transfer, exchange or -31- substitution of a Note shall bear the Original Issue Date or Dates of such transferred, exchanged or substituted Note, subject to Section 2.12(e). (c) Each Note shall bear interest, if any, at its Interest Rate during each Interest Reset Period for such Note, from the later of (1) its Original Issue Date (or, if pursuant to Section 2.12, a Global Note has two or more Original Issue Dates, interest shall, beginning on each such Original Issue Date, begin to accrue for that part of the principal amount of such Global Note to which that Original Issue Date is applicable), or (2) the most recent date to which any interest has been paid or duly provided for until the principal of such Note is paid or funds are made available for such payment, and Accrued Interest on each Note shall be payable for each Interest Reset Period on the Interest Payment Date immediately subsequent to the Record Date for the payment of interest for such Interest Reset Period. (d) All percentages resulting from any calculation of the Interest Rate for a Floating Rate Note shall be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)), and all dollar amounts used in or resulting from such calculation shall be rounded to the nearest cent (with one-half cent being rounded upward). (e) Each Note shall mature on a date specified in such Note not less than nine months nor more than 30 years after its Original Issue Date, and the principal amount of each outstanding Note shall be payable on the Maturity date specified therein. (f) The Person in whose name any Note is registered at the close of business on any Record Date with respect to an Interest Payment Date for such Note shall be entitled to receive the Accrued Interest payable on such Note on such Interest Payment Date notwithstanding the cancellation of such Note upon any registration of transfer, exchange or substitution of such Note subsequent to such Record Date and prior to such Interest Payment Date. (g) The Company shall cause the Calculation Agent to calculate each Interest Rate applicable to each Floating Rate Note in accordance with this Indenture, and the Company shall, or shall cause the Calculation Agent to, notify the Trustee of each determination of such Interest Rate promptly after such determination. The Calculation Agent's determination of any Interest Rate shall be final and binding in the absence of manifest error. -32- (h) On the fifth Business Day immediately preceding each Interest Payment Date, the Trustee shall furnish to the Company a notice setting forth the total amount of the Accrued Interest payments to be made on such Interest Payment Date, and to the Depositary a notice setting forth the total amount of Accrued Interest payments to be made on Global Notes on such Interest Payment Date. The Trustee will provide monthly to the Company a list of the principal of and any premium and Accrued Interest to be paid on Notes in the next succeeding month and to the Depositary a list of the principal of and any premium and Accrued Interest to be paid on Global Notes in the such succeeding month. Promptly after the first Business Day of each month, the Trustee shall furnish to the Company a written notice setting forth the aggregate principal amount of the Global Notes. The Company will provide to the Trustee not later than the payment date sufficient moneys to pay in full all principal of and any premium and Accrued Interest payments due on such payment date. The Trustee shall be responsible for withholding taxes on interest paid as required by law. (i) Upon the request of any Noteholder of a Floating Rate Note, the Trustee shall provide to such Noteholder the Interest Rate then in effect and, if then determined, the Interest Rate that will become effective on the next Interest Reset Date, with respect to such Floating Rate Note. SECTION 2.05. EXECUTION, AUTHENTICATION, DELIVERY AND DATING. (a) The Notes shall be executed on behalf of the Company by the Chairman of the Board, the President or any Vice President and by the Secretary or an Assistant Secretary. The signature of any of such officers on any Notes may be manual or facsimile. (b) Notes bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes. (c) At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication, together with one or more Company Orders for the authentication and delivery of such Notes, and the Trustee in accordance with any such Company Order shall authenticate such Notes and make them available for delivery. Prior to authenticating such Notes, and in accepting the additional responsibilities under this -33- Indenture in relation to such Notes, the Trustee shall be entitled to receive the following only at or before the first issuance of Notes, and (subject to Section 9.01) shall be fully protected in relying upon: (1) a Board Resolution authorizing this Indenture and the Notes, and if applicable, an appropriate record of any action taken pursuant to such Board Resolution, certified by the Secretary or an Assistant Secretary of the Company; (2) an Officers' Certificate designating one or more officers of the Company who are authorized to give Company Orders for the issuance of, and specifying terms of, Notes and, if appropriate, setting forth the form of Notes in accordance with Section 2.01; (3) an Opinion of Counsel stating, (A) if the form of Notes has been established by or pursuant to a Board Resolution, an Officers' Certificate pursuant to a Board Resolution, or a supplemental indenture as permitted by Section 2.01, that such form has been established in conformity with this Indenture; (B) that the Indenture has been duly authorized, executed and delivered by the Company and constitutes a valid and legally binding agreement of the Company, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting the enforcement of creditors' rights and to general equity principles; (C) that the Indenture, the Iowa-Illinois Indenture and the Midwest Power Indenture are qualified under the TIA; (D) that any supplemental indenture referred to in (A) above has been duly authorized, executed and delivered by the Company and constitutes a legal, valid and binding agreement of the Company, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization and other laws of general applicability relating -34- to or affecting the enforcement of creditors' rights and to general equity principles; (E) that the Notes, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel consistent with the terms of this Indenture, will constitute legal, valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting the enforcement of creditors' rights and to general equity principles; (F) that all laws and requirements in respect of the execution, delivery and sale by the Company of the Notes have been complied with; (G) that the Company is not in default in any of its obligations under this Indenture, the Iowa-Illinois Indenture or the Midwest Power Indenture, and that the issuance of the Notes will not result in any such default; and (H) such other matters as the Trustee may reasonably request. (d) The Trustee shall have the right to decline to authenticate and deliver any Note: (1) if the issuance of such Note pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Notes and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee; (2) if the Trustee, being advised by counsel, determines that such action may not lawfully be taken; or (3) if the Trustee in good faith by its Board of Directors, executive committee or a trust committee of directors and/or responsible officers in good faith determines that such action would expose the Trustee to personal liability to Holders of any outstanding Notes. -35- (e) No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture; PROVIDED, HOWEVER, that if any Note shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Note to the Trustee for cancellation as provided in Section 2.09, for all purposes of this Indenture such Note shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture. SECTION 2.06. EXCHANGE AND REGISTRATION OF TRANSFER OF NOTES. (a) Subject to Section 2.12, Notes may be exchanged for one or more new Notes of any authorized denominations and of a like aggregate principal amount and Stated Maturity and having the same terms and Original Issue Date or Dates. Notes to be exchanged shall be surrendered at any of the offices or agencies to be maintained by the Company for such purpose as provided in Section 6.02, and the Company shall execute and register and the Trustee shall authenticate and deliver in exchange therefor the Note or Notes which the Noteholder making the exchange shall be entitled to receive. (b) The Trustee on behalf of the Company shall keep, at one of said offices or agencies, a register in which, subject to such reasonable regulations as it or the Company may prescribe, the Trustee shall register or cause to be registered Notes and shall register or cause to be registered the transfer of Notes as in this Article Two provided. Such register shall be in written form or in any other form capable of being converted into written form within a reasonable time. At all reasonable times such register shall be open for inspection by the Trustee. Upon due presentment for registration of transfer of any Note at any such office or agency, the Company shall execute and register or cause to be registered and the Trustee shall authenticate and make available for delivery, in the name of the transferee or transferees, one or more new Notes of any authorized denominations and of a like aggregate principal amount and Stated Maturity and having the same terms and Original Issue Date or Dates. (c) All Notes presented for registration of transfer or for exchange, redemption or payment shall (if so required by the Company) be duly endorsed by, or be accompanied by a written -36- instrument or instruments of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder or the attorney of such Holder duly authorized in writing. (d) No service charge shall be made for any exchange or registration of transfer of Notes, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. (e) The Company shall not be required to exchange or register a transfer of any Notes selected, called or being called for redemption except, in the case of any Note to be redeemed in part, the portion thereof not to be so redeemed. (f) If the principal amount and any applicable premium of part but not all of a Global Note is paid, then upon surrender to the Trustee of such Global Note, the Company shall execute, and the Trustee shall authenticate, and make available for delivery, a Global Note in an authorized denomination in aggregate principal amount equal to, and having the same terms and Original Issue Date or Dates as, the unpaid portion of such Global Note. SECTION 2.07. MUTILATED, DESTROYED, LOST OR STOLEN NOTES. (a) In case any temporary or definitive Note shall become mutilated or be destroyed, lost or stolen, the Company in its discretion may execute, and upon its request the Trustee shall authenticate and deliver, a new Note of like form and principal amount and having the same terms and Original Issue Date or Dates and bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated Note, or in lieu of and in substitution for the Note so destroyed, lost or stolen. In every case the applicant for a substituted Note shall furnish to the Company, the Trustee, any Authenticating Agent or Note registrar such security or indemnity as may be required by them to save each of them harmless, and, in every case of destruction, loss or theft of a Note, the applicant shall also furnish to the Company and to the Trustee evidence to their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof. (b) The Trustee may authenticate any such substituted Note and deliver the same upon the written request or authorization of any officer of the Company. Upon the issuance of any substituted Note, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith. In case any Note which has matured or is -37- about to mature shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substituted Note, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Note) if the applicant for such payment shall furnish to the Company, the Trustee, any Authenticating Agent or Note registrar such security or indemnity as may be required by them to save each of them harmless and, in case of destruction, loss or theft, evidence satisfactory to the Company and the Trustee of the destruction, loss or theft of such Note and of the ownership thereof. (c) Every substituted Note issued pursuant to this Section 2.07 by virtue of the fact that any Note is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not such destroyed, lost or stolen Note shall be found at any time, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder. All Notes shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. SECTION 2.08. TEMPORARY NOTES. Pending the preparation of definitive Notes, the Company may execute and the Trustee shall authenticate and make available for delivery, temporary Notes (printed, lithographed or otherwise reproduced). Temporary Notes shall be issuable in any authorized denomination and substantially in the form of the definitive Notes but with such omissions, insertions and variations as may be appropriate for temporary Notes, all as may be determined by the Company. Every such temporary Note shall be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with the same effect, as the definitive Notes. Without unreasonable delay the Company will execute and register and will deliver to the Trustee definitive Notes and thereupon any or all temporary Notes may be surrendered in exchange therefor, at the Corporate Trust Office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary Notes an equal aggregate principal amount of definitive Notes. Such exchange shall be made by the Company at its own expense and without any charge therefor to the Noteholders. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as definitive Notes authenticated and made available for delivery hereunder. -38- SECTION 2.09. CANCELLATION OF NOTES PAID, ETC. All Notes surrendered for the purpose of payment, redemption, exchange or registration of transfer shall be surrendered to the Trustee for cancellation and promptly cancelled by it and no Notes shall be issued in lieu thereof except as expressly permitted by this Indenture. All Notes so cancelled shall be retained by the Trustee. If the Company shall acquire any of the Notes, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Notes unless and until the same are cancelled by the Trustee. SECTION 2.10. INTEREST RIGHTS PRESERVED. Each Note delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Note shall carry all the rights to unpaid Accrued Interest, and interest to accrue, which were carried by such other Note, and each such Note shall be so dated that neither gain nor loss of interest shall result from such transfer, exchange or substitution. SECTION 2.11. PAYMENT OF NOTES. Unless otherwise specified in the applicable Company Order, the principal of and any premium and Accrued Interest on all Notes shall be payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts as follows: (a) On or before 10:00 a.m., New York City time, of the day on which any payment of principal, Accrued Interest or premium is due on any Global Note pursuant to the terms thereof, the Company shall deliver to the Trustee immediately available funds sufficient to make such payment. On or before 10:30 a.m., New York City time or such other time as shall be agreed upon between the Trustee and the Depositary, of the day on which such payment is due, the Trustee shall deposit with the Depositary such funds by wire transfer into the account specified by the Depositary. As a condition to the payment at the Maturity of any part of the principal and any applicable premium of any Global Note, the Depositary shall surrender, or cause to be surrendered, such Global Note to the Trustee, whereupon a new Global Note shall be issued to the Depositary pursuant to Section 3.03(d). (b) With respect to any Note that is not a Global Note, principal, any premium and Accrued Interest due at the Maturity of such Note shall be payable in immediately available funds when due upon presentation and surrender of such Note at the Corporate Trust Office of the Trustee; PROVIDED that this Note is presented to the Trustee in time for the Trustee to make such payment in such funds in accordance with its normal procedures. Accrued Interest on (and, in the case of Amortizing -39- Notes, installments of principal of) any Note that is not a Global Note (other than Accrued Interest or such installments payable at Maturity) shall be paid by a clearinghouse funds check mailed on the Interest Payment Date; PROVIDED, HOWEVER, that if any Holder of Notes, the aggregate principal amount of which equals or exceeds $10,000,000, provides a written request to the Trustee on or before the applicable Record Date for such Interest Payment Date, Accrued Interest (and such installments of principal) shall be paid by wire transfer of immediately available funds to a bank within the continental United States or by direct deposit into the account of such Holder if such account is maintained with the Trustee. SECTION 2.12. NOTES ISSUABLE IN THE FORM OF A GLOBAL NOTE. (a) If the Company shall establish pursuant to Section 2.05 that particular Notes are to be issued in whole or in part in the form of one or more Global Notes, then the Company shall execute and the Trustee shall, in accordance with Section 2.05 and the Company Order delivered to the Trustee thereunder, authenticate and make available for delivery, such Global Note or Notes, which (1) shall represent, shall be denominated in an amount equal to the aggregate principal amount of, and shall have the same terms as, the outstanding Notes to be represented by such Global Note or Notes, (2) shall be registered in the name of the Depositary or its nominee, (3) shall be delivered by the Trustee to the Depositary or pursuant to the Depositary's instruction and (4) shall bear a legend substantially to the following effect: "Unless and until it is exchanged in whole or in part for the individual Notes represented hereby, this Global Note may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary." (b) Notwithstanding any other provision of Section 2.06 or of this Section 2.12, unless the terms of a Global Note expressly permit such Global Note to be exchanged in whole or in part for individual Notes, a Global Note may be transferred, in whole but not in part, only to a nominee of the Depositary, or by a nominee of the Depositary to the Depositary, or to a successor Depositary for such Global Note selected or approved by the Company or to a nominee of such successor Depositary. (c) (1) If at any time the Depositary for a Global Note notifies the Company that such Depositary is unwilling or unable to continue as Depositary for such Global Note or if at any time the Depositary for a Global Note shall no longer be -40- registered as a clearing agency under the Securities Exchange Act of 1934, as amended, or any successor statute or regulation, the Company may appoint a successor Depositary with respect to such Global Note. If (A) a successor Depositary for such Global Note is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, or (B) any Notes are represented by a Global Note at a time when an Event of Default with respect to the Notes shall have occurred and be continuing, then in each case the Company's election pursuant to the applicable Company Order shall no longer be effective with respect to such Global Note and the Company shall execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of individual Notes of like tenor and terms in exchange for such Global Note, shall authenticate and make available for delivery, individual Notes of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of such Global Note in exchange for such Global Note. The Trustee shall not be charged with knowledge of notice of the ineligibility of a Depositary unless a responsible officer assigned to and working in its corporate trust administration department shall have actual knowledge thereof. (2) The Company may at any time and in its sole discretion determine that one or more Notes issued or issuable in the form of one or more Global Notes shall no longer be represented by such Global Note or Notes. In such event the Company shall execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of individual Notes of like tenor and terms in exchange for such Global Note or Notes, shall authenticate and make available for delivery, individual Notes of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of such Global Note or Notes in exchange for such Global Note or Notes. (3) If agreed upon by the Company and the Depositary with respect to Notes issued in the form of a Global Note, the Depositary for such Global Note shall surrender such Global Note in exchange in whole or in part for individual Notes of like tenor and terms in definitive form on such terms as are acceptable to the Company and such Depositary. Thereupon the Company shall execute, and the Trustee shall authenticate and make available for delivery, without a service charge, (A) to each Person specified by the Depositary, a new Note or Notes of like tenor and terms, and of any authorized denomination as requested by such Person, in aggregate principal amount equal to and in exchange for the beneficial interest of such Person in such Global Note; and (B) to such Depositary a new Global Note of like tenor and terms and in a denomination equal to the difference, if any, between the principal amount of the -41- surrendered Global Note and the aggregate principal amount of Notes delivered to Holders thereof. (4) In any exchange provided for in Section 2.12(c)(1),(2) or (3), the Company will execute and the Trustee will authenticate and make available for delivery, individual Notes in definitive registered form in authorized denominations. Upon the exchange of a Global Note for individual Notes, such Global Note shall be cancelled by the Trustee. Notes issued in exchange for a Global Note pursuant to this Section 2.12 shall be registered in such names and in such authorized denominations as the Depositary for such Global Note, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Notes to the Depositary for delivery to the Persons in whose names such Notes are so registered, or if the Depositary shall refuse or be unable to deliver such Notes, the Trustee shall deliver such Notes to the Persons in whose names such Notes are registered, unless otherwise agreed upon by the Trustee and the Company. (d) Neither the Company, the Trustee or any Authenticating Agent will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in a Global Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. (e) Pursuant to the provisions of this subsection, at the option of the Trustee and upon thirty days' written notice to the Depositary, the Depositary shall be required to surrender any two or more Global Notes which have identical terms, including, without limitation, identical maturities, interest rates and redemption provisions (but which may have differing Original Issue Dates) to the Trustee, and the Company shall execute and the Trustee shall authenticate and deliver to, or at the direction of, the Depositary a Global Note in principal amount equal to the aggregate principal amount of, and with all terms identical to, the Global Notes so surrendered to the Trustee, and such new Global Note shall indicate each applicable Original Issue Date and the principal amount applicable to each such Original Issue Date. The exchange contemplated in this subsection shall be consummated at least 30 days prior to any Interest Payment Date applicable to any of the Global Notes so surrendered to the Trustee. Upon any exchange of any Global Note with two or more Original Issue Dates, whether pursuant to this Section or pursuant to Section 2.06 or Section 3.03, the aggregate principal amount of the Notes with a particular Original Issue Date shall be the same before and after such exchange, giving effect to any retirement of Notes and the -42- Original Issue Dates applicable to such Notes occurring in connection with such exchange. SECTION 2.13. CUSIP NUMBERS. The Company in issuing Notes may use CUSIP numbers (if then generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of redemption as a convenience to Noteholders; PROVIDED that any such notice may state that no representation is made as to the correctness of such CUSIP numbers either as printed on the Notes or as contained in any notice of redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. ARTICLE THREE REDEMPTION OF NOTES; REPAYMENT PRIOR TO STATED MATURITY SECTION 3.01. APPLICABILITY OF REDEMPTION PROVISIONS. Unless otherwise specified in the applicable Company Order, the Notes will not be subject to any sinking fund. If a Company Order specifies an Initial Redemption Date for a Note, the Company shall have an option to redeem such Note prior to its Stated Maturity on the date or dates and at the prices specified in such Company Order, all as provided for in Sections 3.02 and 3.03, except as otherwise specified in the applicable Company Order. SECTION 3.02. NOTICE OF REDEMPTION; SELECTION OF NOTES. (a) The election of the Company to redeem any Notes shall be evidenced by a Board Resolution which shall be given with notice of such redemption to the Trustee at least ten Business Days prior to the giving of the notice of redemption to Holders of such Notes. The selection of Notes or portions thereof to be redeemed prior to their Stated Maturity shall be in the sole discretion of the Company; PROVIDED that the Company shall give notice thereof to the Trustee in accordance with Section 3.02(b). Each Note which by its terms is redeemable prior to its Stated Maturity may be redeemed by the Company in whole or in part without also redeeming any other Note which is redeemable prior to its Stated Maturity. (b) Notice of redemption to each Holder of Notes to be redeemed as a whole or in part shall be given by the Company (or, at the Company's request, by the Trustee in the name and at the expense of the Company) in the manner provided in Section 15.10 at least 30 but not more than 60 calendar days prior to the -43- Redemption Date. Any notice which is given in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Noteholder receives the notice. In any case, failure duly to give such notice, or any defect in such notice, to the Holder of any Note designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. (c) Each such notice shall specify the Redemption Date, the places of redemption and the redemption price at which such Notes are to be redeemed, and shall state that payment of the redemption price of such Notes or portion thereof to be redeemed will be made on surrender of such Notes at such places of redemption, that Accrued Interest to the Redemption Date will be paid as specified in such notice and that from and after such date interest thereon will cease to accrue. If less than all the Notes having the same terms are to be redeemed, the notice shall specify the particular Notes or portions thereof to be redeemed. In case any Note is to be redeemed in part only, the notice which relates to such Note shall state the portion of the principal amount thereof to be redeemed, and shall state that, upon surrender of such Note, a new Note or Notes having the same terms in aggregate principal amount equal to the unredeemed portion thereof will be issued. (d) If at the time of the mailing of any notice of redemption the Company shall not have irrevocably directed the Trustee to apply funds deposited with the Trustee or held by it and available to be used for the redemption of Notes to redeem all the Notes called for redemption, such notice may state that it is subject to the receipt of the redemption moneys by the Trustee before the Redemption Date and that such notice shall be of no effect unless such moneys are so received before such date. SECTION 3.03. PAYMENT OF NOTES ON REDEMPTION; DEPOSIT OF REDEMPTION PRICE. (a) If notice of redemption shall have been given as provided in Section 3.02, such Notes or portions of Notes called for redemption shall become due and payable on the date and at the places stated in such notice at the applicable redemption price, together with Accrued Interest to the Redemption Date of such Notes, and on and after the Redemption Date; PROVIDED that the Company shall have deposited with the Trustee on or prior to the Redemption Date funds in an amount sufficient to pay the redemption price together with Accrued Interest to the Redemption Date of such Notes. Interest on the Notes or portions thereof so called for redemption shall cease to accrue and such Notes or portions thereof shall be deemed not to be entitled to any benefit under this Indenture except to receive payment of the -44- redemption price together with Accrued Interest to the Redemption Date of such Notes; PROVIDED, HOWEVER, that any payments due with respect to such Note prior to the Redemption Date shall be payable to the Holders of record of such Notes at the close of business on the relevant Record Date specified in the applicable Company Order. On presentation and surrender of such Notes at such a place of payment in such notice specified, such Notes or the specified portions thereof shall be paid and redeemed at the applicable Redemption Price. (b) The Company shall not mail any notice of redemption of Notes during the continuance of any Event of Default, except that (1) where notice of redemption of any Notes has theretofore been mailed, the Company shall redeem such Notes; PROVIDED that funds have theretofore been deposited for such purpose, and (2) notices of redemption of all outstanding Notes may be given during the continuance of an Event of Default. (c) If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and any premium on such Note, shall until paid bear interest from the date fixed for redemption at the rate borne by such Note. (d) Upon surrender of any Note redeemed in part only, the Company shall execute and register, and the Trustee shall authenticate and make available for delivery, a new Note or Notes of authorized denominations in aggregate principal amount equal to, and having the same terms and Original Issue Date or Dates as, the unredeemed portion of the Note so surrendered. SECTION 3.04. REPAYMENT AT THE OPTION OF THE HOLDER. (a) Unless otherwise specified in the applicable Company Order, Notes shall not be repayable prior to Stated Maturity at the option of the Holder. If so specified, a Note shall be repayable at the option of the Holder, in whole or in part, on a date or dates prior to Stated Maturity and at a price or prices specified in the applicable Company Order, plus accrued and unpaid interest to but excluding the date of repayment. (b) In order for a Note that is repayable at the option of the Holder to be repaid prior to Stated Maturity, such Holder shall deliver or cause to be delivered to the Trustee at least 30 but not more than 45 calendar days prior to the repayment date: (i) the Note with the form entitled "Option to Elect Repayment" on the reverse of the Note duly completed, or (ii) a telegram, telex, facsimile transmission, hand delivery or letter (first class, postage prepaid) from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United -45- States setting forth the name of the Holder of the Note, the principal amount of the Note, the principal amount of the Note to be repaid, the certificate number or a description of the tenor and terms of the Note, a statement that the option to elect repayment is being exercised thereby and a guarantee that the Note to be repaid with the form entitled "Option to Elect Repayment" on the reverse of the Note duly completed shall be received by the Trustee not later than five Business Days after the date of such telegram, telex, facsimile transmission, hand delivery or letter, if such Note and form duly completed are received by the Trustee by such fifth Business Day. (c) Exercise of the repayment option by the Holder of a Note shall be irrevocable, except that a Holder who has tendered a Note for repayment may revoke such tender for repayment by written notice to the Trustee received prior to 5:00 P.M., New York City time, on the tenth calendar day prior to the repayment date. (d) Unless otherwise specified in the applicable Company Order, the repayment option may be exercised by the Holder of a Note for less than the entire principal amount of the Note; PROVIDED that the principal amount of the Note remaining outstanding after such repayment is an authorized denomination. Upon such partial repayment such Note will be cancelled and a new Note or Notes for the remaining principal amount thereof shall be issued in the name of the Holder thereof. (e) While any Note is represented by one or more Global Notes, any such option for repayment may be exercised by the applicable participant in the Depositary that has an account for Notes with the Depositary, on behalf of the beneficial owners of the Note represented by such Global Note or Notes, by delivering a written notice substantially similar to the above-mentioned form duly completed to the Trustee at its Corporate Trust Office (or such other address of which the Company shall from time to time notify the Holders), at least 30 but not more than 60 calendar days prior to the date of repayment. Notices of election from such participants on behalf of beneficial owners of the Global Note or Notes representing such Notes to exercise their option to have such Notes repaid shall be received by the Trustee by 5:00 P.M., New York City time, on the last day for giving such notice. All notices shall be executed by a duly authorized officer of such participant (with signatures guaranteed) and shall be irrevocable. In addition, beneficial owners of the Global Note or Notes representing Notes shall effect delivery to the Depositary at the time such notices of election are given by causing the applicable participant to transfer such beneficial owner's interest in the Global Note or -46- Notes representing such Notes, on the Depositary's records, to the Trustee. SECTION 3.05. EXTENSION. (a) If a Company Order specifies an Extension Period or Periods for a Note, the Company shall have an option to extend the Stated Maturity of such Note for one or more Extension Periods specified in such Company Order, but not beyond the Final Maturity Date specified therein. The Company may exercise such option by notifying the Trustee of such exercise at least 45 but not more than 60 calendar days prior to the Pre-Exercise Stated Maturity Date of such Note, and after receipt of such notification, the Trustee shall send not later than 40 calendar days prior to such Pre-Exercise Stated Maturity Date an Extension Notice to the Holder of such Note. (b) Upon the sending by the Trustee of an Extension Notice to the Holder of a Note, the Stated Maturity of such Note will be extended automatically, and, except as modified by the Extension Notice and, subject to Section 3.05(c) and (d), such Note will have the same terms as prior to the sending of such Extension Notice. (c) Notwithstanding Sections 3.05(a) and (b), not later than 20 calendar days prior to the Pre-Exercise Stated Maturity Date, the Company may, at its option, revoke the interest rate, in the case of a Fixed Rate Note, or the Spread and/or Spread Multiplier, in the case of a Floating Rate Note, provided for in the Extension Notice and establish a higher interest rate, in the case of a Fixed Rate Note, or a Spread and/or Spread Multiplier resulting in a higher interest rate, in the case of a Floating Rate Note, for the Extension Period by causing the Trustee to send by telegram, telex, facsimile transmission, hand delivery or letter (first class, postage prepaid) notice of such higher interest rate or Spread and/or Spread Multiplier resulting in a higher interest rate, as the case may be, to the Holder of such Note, and such notice will be irrevocable. All Notes with respect to which the Stated Maturity is extended will bear such higher interest rate, in the case of a Fixed Rate Note, or Spread and/or Spread Multiplier resulting in a higher interest rate, in the case of a Floating Rate Note, for the Extension Period, whether or not tendered for repayment as provided in Section 3.05(d). (d) If the Company extends the Stated Maturity of a Note (including, if such Stated Maturity has previously been extended, the Stated Maturity as previously extended), the Holder of such Note shall have the option to elect repayment of such Note, in whole but not in part, by the Company on the Pre- -47- Exercise Stated Maturity Date (including, if such Stated Maturity has previously been extended, the last day of the then current Extension Period), at a price equal to the principal amount thereof plus accrued and unpaid interest to but excluding such date. In order for a Note to be so repaid on the Pre-Exercise Stated Maturity Date, the Holder thereof must follow the procedures set forth in Section 3.04 for optional repayment, except that the period for delivery of such Note or notification to the Trustee will be at least 25 but not more than 35 calendar days prior to the Pre-Exercise Stated Maturity Date. A Holder who has tendered a Note for repayment following receipt of an Extension Notice may revoke such tender for repayment by written notice to the Trustee received prior to 5:00 P.M., New York City time, on the tenth calendar day prior to the Pre-Exercise Stated Maturity Date. SECTION 3.06. RESET NOTES. (a) If a Company Order specifies Optional Interest Reset Dates for a Note, the Company shall have an option to reset the interest rate of a Fixed Rate Note or the Spread and/or Spread Multiplier of a Floating Rate Note, subject to any formula for such resetting specified in such Company Order. The Company may exercise such option by notifying the Trustee of such exercise at least 45 but not more than 60 calendar days prior to an Optional Interest Reset Date for such Note. If the Company so notifies the Trustee of such exercise, the Trustee shall send not later than 40 calendar days prior to such Optional Interest Reset Date, by telegram, telex, facsimile transmission, hand delivery or letter (first class, postage prepaid) to the Holder of such Note, a Reset Notice, including the date or dates on which or the period or periods during which and the price or prices at which redemption of such Note may occur during the Subsequent Interest Period commencing on such Optional Interest Reset Date. (b) Notwithstanding Section 3.06(a), not later than 20 calendar days prior to an Optional Interest Reset Date for a Note, the Company may, at its option, revoke the interest rate, in the case of a Fixed Rate Note, or the Spread and/or Spread Multiplier, in the case of a Floating Rate Note, provided for in a Reset Notice and establish a higher interest rate, in the case of a Fixed Rate Note, or a Spread and/or Spread Multiplier resulting in a higher interest rate, in the case of a Floating Rate Note, for the Subsequent Interest Period commencing on such Optional Interest Reset Date by causing the Trustee to send by telegram, telex, facsimile transmission, hand delivery or letter (first class, postage prepaid) notice of such higher interest rate or Spread and/or Spread Multiplier resulting in a higher interest rate, as the case may be, to the Holder of such Note, and such notice will be irrevocable. All Notes with respect to -48- which the interest rate or Spread and/or Spread Multiplier is reset on an Optional Interest Reset Date to a higher interest rate or Spread and/or Spread Multiplier resulting in a higher interest rate will bear such higher interest rate, in the case of a Fixed Rate Note, or Spread and/or Spread Multiplier resulting in a higher interest rate, in the case of a Floating Rate Note, whether or not tendered for repayment as provided in Section 3.06(c). (c) If the Company elects prior to an Optional Interest Reset Date to reset the interest rate or the Spread and/or Spread Multiplier of a Note, the Holder of such Note shall have the option to elect repayment of such Note, in whole but not in part, by the Company on such Optional Interest Reset Date at a price equal to the principal amount thereof plus accrued and unpaid interest to but excluding such Optional Interest Reset Date. In order for a Note to be so repaid on an Optional Interest Reset Date, the Holder thereof must follow the procedures set forth in Section 3.04, except that the period for delivery of such Note or notification to the Trustee will be at least 25 but not more than 35 calendar days prior to such Optional Interest Reset Date. A Holder who has tendered a Note for repayment following receipt of a Reset Notice may revoke such tender for repayment by written notice to the Trustee received prior to 5:00 P.M., New York City time, on the tenth calendar day prior to such Optional Interest Reset Date. ARTICLE FOUR FIRST MORTGAGE BONDS SECTION 4.01. ISSUANCE RESTRICTIONS. So long as any Notes are outstanding, the Company will not (a) issue additional First Mortgage Bonds except to replace any mutilated, lost, destroyed or stolen First Mortgage Bonds or to effect exchanges and transfers of First Mortgage Bonds or (b) subject to the lien of the Iowa-Illinois Indenture or the Midwest Power Indenture any property which is (i) excepted and excluded from the Iowa-Illinois Indenture and the lien and operation thereof by the terms of the Iowa-Illinois Indenture, or (ii) is "Excepted Property" under the Midwest Power Indenture, unless (A) concurrently with the issuance of such First Mortgage Bonds or subjection of any such property to either such lien, the Company issues, and the trustee under the Bond Indenture under which such First Mortgage Bonds are issued or under the lien of which such property becomes subject, authenticates and delivers to the Trustee, a First Mortgage Bond or Bonds in an aggregate principal amount equal to the aggregate principal amount of the Notes then outstanding, and (B) concurrently with and as a condition -49- precedent to the issuance of any Notes thereafter, the Company issues, and the trustee under the applicable Bond Indenture authenticates and delivers to the Trustee, a First Mortgage Bond or Bonds in an aggregate principal amount equal to the aggregate principal amount of the Notes to be issued, and in each such case such First Mortgage Bonds shall have the same Stated Maturity, bear interest at the same rates, have redemption and other terms and provisions which are the same as, the Notes then outstanding or to be issued, as the case may be. SECTION 4.02. FIRST MORTGAGE BONDS HELD BY THE TRUSTEE. First Mortgage Bonds delivered to the Trustee pursuant to Section 4.01 shall be fully registered in the name of the Trustee, which shall hold such First Mortgage Bonds in trust for the benefit of the Holders from time to time of the Notes, to provide the security of the First Mortgage Bonds for (a) the full and prompt payment of the principal of each Note when and as the same shall become due in accordance with the terms and provisions of this Indenture, either at the Stated Maturity thereof, upon acceleration of the maturity thereof or upon call for redemption, and (b) the full and prompt payment of any premium and interest on each Note when and as the same shall become due in accordance with the terms and provisions of this Indenture. SECTION 4.03. TRUSTEE TO EXERCISE RIGHTS OF FIRST MORTGAGE BONDHOLDER. As a holder of First Mortgage Bonds, the Trustee shall have and exercise all of the rights of a holder of First Mortgage Bonds possessed under the Bond Indenture under which such First Mortgage Bonds were issued. SECTION 4.04. NO TRANSFER OF FIRST MORTGAGE BONDS; EXCEPTION. Except as required to effect an assignment to a successor trustee under this Indenture, the Trustee shall not sell, assign or transfer any First Mortgage Bonds held by it pursuant to this Indenture and the Company shall issue stop transfer instructions to the trustees and any transfer agents under the Bond Indentures to effect compliance with this Section 4.04. SECTION 4.05. RELEASE OF FIRST MORTGAGE BONDS. When (a) all of the principal of and any premium and interest on all Notes shall have been paid or provision therefor duly made in accordance with this Indenture, or (b) all Notes shall have been delivered to the Trustee for cancellation by or on behalf of the Company, or (c) no Note is any longer outstanding under this Indenture and all conditions in Article Five have been satisfied, the Trustee shall upon request of the Company, within five Business Days thereafter, deliver to the Company without charge all First Mortgage Bonds held by the Trustee under this Indenture, together with such appropriate instruments of release -50- as may be required; the First Mortgage Bonds so acquired by the Company shall be delivered for cancellation to the trustee under the Bond Indenture under which they were issued. SECTION 4.06. VOTING OF FIRST MORTGAGE BONDS. (a) The Trustee, as a holder of First Mortgage Bonds, shall attend meetings of Bondholders under the Bond Indenture under which they were issued, and either at such meeting, or otherwise when the consent of such Bondholders is sought without a meeting, the Trustee shall vote the outstanding principal amount of such First Mortgage Bonds, or shall consent with respect thereto, proportionally with respect to the holders all other First Mortgage Bonds then outstanding under such Bond Indenture and eligible to vote or consent. (b) Notwithstanding Section 4.06(a), the Trustee shall not vote any portion of the outstanding principal amount of the First Mortgage Bonds held by it hereunder in favor of, or give its consent to, any action which, in the opinion of the Trustee, would materially adversely affect the interests of the Noteholders, except with the appropriate consent of the Noteholders. SECTION 4.07. DISCHARGE OF BOND INDENTURE. The Trustee shall surrender for cancellation to the trustee under a Bond Indenture all First Mortgage Bonds then held by the Trustee and issued under such Bond Indenture upon receipt by the Trustee of: (a) an Officer's Certificate requesting such surrender for cancellation of such First Mortgage Bonds, and to the effect that no First Mortgage Bonds are outstanding under such Bond Indenture other than First Mortgage Bonds held by the Trustee hereunder and that promptly upon such surrender such Bond Indenture will be satisfied and discharged pursuant to the terms thereof; and (b) an Opinion of Counsel to the effect that upon satisfaction and discharge of such Bond Indenture the property formerly subject to the lien of such Bond Indenture will be subject to no lien except Permitted Encumbrances. -51- ARTICLE FIVE SATISFACTION AND DISCHARGE; UNCLAIMED MONEYS SECTION 5.01. SATISFACTION AND DISCHARGE. This Indenture shall, upon the request of the Company set forth in an Officers Certificate, cease to be of further effect and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Notes theretofore authenticated and delivered (other than (i) Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.07, (ii) Notes for which payment money has theretofore been deposited with or paid to the Trustee and thereafter repaid to the Company or discharged from such trust, as provided in Section 5.03) have been delivered to the Trustee for cancellation; or (B) all such Notes not theretofore delivered to the Trustee for cancellation, (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), (ii) or (iii) of this subclause (B), has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose an amount in United States dollars, U.S. Government Obligations maturing as to principal and interest in such amounts and at such times as will ensure the availability of United States dollars, or a combination of United States dollars and U.S. Government Obligations, sufficient to pay and discharge the entire indebtedness on such Notes for principal (and premium, if any) and interest to the date of such deposit (in the case of Notes which have become due and payable) or to the Stated Maturity or Redemption Date, as -52- the case may be; PROVIDED, HOWEVER, in the event a petition for relief under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, is filed with respect to the Company within 91 days after the deposit and the Trustee is required to return the deposited money to the Company, the obligations of the Company under this Indenture with respect to such Notes shall not be deemed terminated or discharged; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture with respect to such Notes have been complied with; and (4) the Company has delivered to the Trustee an Opinion of Counsel or a ruling by the Internal Revenue Service to the effect that Holders of the Notes will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and discharge. Notwithstanding the satisfaction and discharge of this Indenture, this Indenture shall continue in effect as to (i) rights of registration of transfer and exchange of Notes, (ii) substitution of apparently mutilated, defaced, destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments of principal thereof and any premium and interest thereon, upon the original stated due dates therefor (but not upon acceleration of maturity), (iv) the rights, obligations and immunities of the Trustee hereunder and (v) the rights of the Holders of Notes as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them), and the Trustee, on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel and at the cost and expense of the Company, shall execute proper instruments acknowledging such satisfaction of and discharging this Indenture. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 9.07 shall survive. SECTION 5.02. DEPOSITED MONEYS TO BE HELD IN TRUST BY TRUSTEE. Subject to Section 5.03, all moneys and U.S. Government Obligations deposited with the Trustee pursuant to Section 5.01 shall be held in trust and applied by it to the payment, either directly or through any paying agent (including the Company if acting as its own paying agent), to the Holders of the particular Notes for the payment or redemption of which such moneys and U.S. -53- Government Obligations have been deposited with the Trustee, of all sums due and to become due thereon for principal and premium, if any, and interest. SECTION 5.03. RETURN OF UNCLAIMED MONEYS. Any moneys deposited with or paid to the Trustee for payment of the principal of or any premium or interest on any Notes and not applied but remaining unclaimed by the Holders of such Notes for two years after the date upon which the principal of or any premium or interest on such Notes, as the case may be, shall have become due and payable, shall be repaid to the Company by the Trustee on written demand and all liability of the Trustee shall thereupon cease; and any Holder of any of such Notes shall thereafter look only to the Company for any payment which such Holder may be entitled to collect; PROVIDED, HOWEVER, that the Trustee before being required to make any such repayment, may at the expense of the Company cause to be mailed to such Holder notice that such money remains unclaimed and that, after a date specified therein which shall not be less than 30 days from the date of such mailing, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 5.04. REINSTATEMENT. If the Trustee is unable to apply any money or U.S. Government Obligations in accordance with Section 5.01 by reason of any legal proceeding or any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture with respect to the Notes to which such money or U.S. Government Obligations were to have been applied shall be revived and reinstated as though no deposit had occurred pursuant to Section 5.01 until such time as the Trustee is permitted to apply such money or U.S. Government Obligations in accordance with Section 5.01; PROVIDED, HOWEVER, that if the Company has made any payment of principal of or any premium or interest on any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee. ARTICLE SIX PARTICULAR COVENANTS OF THE COMPANY SECTION 6.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The Company covenants and agrees for the benefit of the Holders of the Notes that it will duly and punctually pay or cause to be paid the principal of and any premium and interest on each of the Notes at the places, at the respective times and in the manner provided in such Notes. -54- SECTION 6.02. OFFICE FOR NOTICES AND PAYMENTS, ETC. So long as any of the Notes remain outstanding, the Company will maintain in the Borough of Manhattan, The City of New York, an office or agency where the Notes may be presented for registration of transfer and for exchange as in this Indenture provided, and where, at any time when the Company is obligated to make a payment upon Notes (other than a payment as to which it is permitted to make such payment by check), the Notes may be presented for payment, and shall maintain at any such office or agency and at its principal office an office or agency where notices and demands to or upon the Company in respect of the Notes or of this Indenture may be served; PROVIDED that the Company may maintain at its principal executive offices, one or more other offices or agencies for any or all of the foregoing purposes; the Company hereby appoints the Trustee as agent of the Company for the foregoing purposes. The Company will give to the Trustee written notice of the location of each such office or agency and of any change of location thereof. In case the Company shall fail to maintain any such office or agency or shall fail to give such notice of the location or of any change in the location thereof, presentations may be made and notices and demands may be served at the Corporate Trust Office of the Trustee. SECTION 6.03. APPOINTMENTS TO FILL VACANCIES IN TRUSTEE'S OFFICE. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 9.11, a Trustee, so that there shall at all times be a Trustee hereunder. SECTION 6.04. ANNUAL STATEMENT AND NOTICE. (a) The Company will deliver to the Trustee within 120 days after the end of each fiscal year of the Company, beginning with the fiscal year ending December 31, 1996, an Officers' Certificate which complies with TIA Section 314(a)(4) stating that in the course of the performance by the signers of their duties as officers of the Company they would obtain knowledge of any default by the Company in the performance of any covenant contained in this Indenture or an Event of Default (as defined in the Mortgage) stating whether they have obtained knowledge of any such default or such Event of Default, and, if so, specifying each such default or such Event of Default of which the signers have knowledge, and the nature and status thereof. -55- (b) The Company shall give to the Trustee written notice of the occurrence of an Event of Default within five days after the Company becomes aware of such occurrence. SECTION 6.05. CORPORATE EXISTENCE. Subject to Article Twelve, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchises; PROVIDED HOWEVER, that the Company shall not be required to preserve any such right or franchise if the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company. SECTION 6.06. LIMITATION UPON MORTGAGES AND LIENS. The Company will not at any time directly or indirectly create or assume and will not cause or permit a Subsidiary directly or indirectly to create or assume, except in favor of the Company or a Wholly-Owned Subsidiary, any mortgage, pledge or other lien or encumbrance upon any Principal Facility or any interest it may have therein or upon any stock of any Subsidiary or any indebtedness of any Subsidiary to the Company or any other Subsidiary, whether now owned or hereafter acquired, without making effective provision (and the Company covenants that in such case it will make or cause to be made, effective provision) whereby the outstanding Notes and any other indebtedness of the Company then entitled thereto shall be secured by such mortgage, pledge, lien or encumbrance equally and ratably with any and all other obligations and indebtedness thereby secured, so long as any such other obligations and indebtedness shall be so secured (provided, that for the purpose of providing such equal and ratable security, the principal amount of outstanding Original Issue Discount Notes shall be their Amortized Face Amount); PROVIDED, HOWEVER, that the foregoing covenant shall not be applicable to the lien of the Iowa-Illinois Indenture, the lien of the Midwest Power Indenture or Permitted Encumbrances. SECTION 6.07. WAIVER OF CERTAIN COVENANTS. The Company may omit in any particular instance to comply with any term, provision or condition set forth in Article Four or Section 6.06 (and if so specified, any other covenant not set forth herein and specified pursuant to Section 2.05 to be applicable to any Notes, except as otherwise provided pursuant to Section 2.05), if before the time for such compliance the Holders of at least a majority in aggregate principal amount of the Notes then outstanding shall either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no waiver shall extend to or affect such term, provision or condition except to the extent expressly so waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such -56- term, provision or condition shall remain in full force and effect. ARTICLE SEVEN NOTEHOLDER LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE SECTION 7.01. NOTEHOLDER LISTS. The Company will, so long as any Notes are outstanding under this Indenture, furnish or cause to be furnished to the Trustee within 15 days prior to each Interest Payment Date on Notes then outstanding, and at such other times as the Trustee, may request in writing, the information required by TIA Section 312(a), which the Trustee shall preserve as required by TIA Section 312(a). The Trustee shall also comply with TIA Section 312(b), but the Trustee, the Company and each Person acting on behalf of the Trustee or the Company shall have the protection of TIA Section 312(c). SECTION 7.02. SECURITIES AND EXCHANGE COMMISSION REPORTS. The Company shall (a) file with the Trustee, within 15 days after the Company is required to file the same with the Securities and Exchange Commission, copies of the reports, information and documents (or portions thereof) required to be so filed pursuant to TIA Section 314(a), and (b) comply with the other provisions of TIA Section 314(a). SECTION 7.03. REPORTS BY THE TRUSTEE. The Trustee shall (a) transmit within 60 days after May 15 in each year, beginning with the year 1997, to the Noteholders specified in TIA Section 3.13(c) and to the Securities and Exchange Commission, a brief report dated as of such May 15 and complying with the requirements of TIA Section 313(a), but no report shall be required if no event described in TIA Section 313(a) shall have occurred within the previous twelve months ending on such date. The Trustee shall also comply with the other provisions of TIA Section 313(b)(2). ARTICLE EIGHT REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON EVENT OF DEFAULT SECTION 8.01. EVENTS OF DEFAULT. "Event of Default" wherever used herein with respect to any Notes means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law, pursuant to any judgment, decree or -57- order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest upon any Note when it becomes due and payable, and continuance of such default for a period of 30 days; or (2) default in the payment of the principal of (and premium, if any, on) any Note at its Maturity; or (3) default in the performance or breach of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section 8.01 specifically dealt with), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Notes then outstanding, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or (4) default (i) in the payment of any principal of or interest on any Indebtedness of the Company or any Subsidiary of the Company (other than Notes), aggregating more than $10,000,000 in principal amount, when due after giving effect to any applicable grace period or (ii) in the performance of any other term or provision of any Indebtedness of the Company or any Subsidiary of the Company (other than Notes) in excess of $10,000,000 principal amount that results in such Indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable, and such acceleration shall not have been rescinded or annulled, or such Indebtedness shall not have been discharged, within a period of 15 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Notes then outstanding, a written notice specifying such default or defaults and stating that such notice is a "Notice of Default" hereunder; or (5) the entry against the Company or any Subsidiary of the Company of one or more judgments, decrees or orders by a court having jurisdiction in the premises from which no appeal may be or is taken for the payment of money, either individually or in the aggregate, in excess of $10,000,000, and the continuance of such judgment, decree or other unsatisfied and in effect for any period of 45 consecutive -58- days after the amount thereof is due without a stay of execution and there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Notes then outstanding, a written notice specifying such entry and continuance of such judgment, decree or order and stating that such notice is a "Notice of Default" hereunder; or (6) the entry of a decree or order for relief in respect of the Company by a court having jurisdiction in the premises in an involuntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, or a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable federal or state law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or (7) the commencement by the Company of a voluntary case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, or the consent by it to the entry of an order for relief in an involuntary case under any such law or to the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of its creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action; or (8) any other Event of Default provided with respect to the particular Note specified in the applicable Company Order. SECTION 8.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event of Default with respect to the Notes then outstanding occurs and is continuing, then in every such case the Trustee or the Holders of not less than 25% in principal amount of the Notes then outstanding may declare the principal amount of all the Notes to be due and payable immediately, by a notice in -59- writing in the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount shall become immediately due and payable. Upon payment of such amount in United States dollars, all obligations of the Company in respect of the payment of principal of the Notes shall terminate. At the time after such a declaration of acceleration with respect to the Notes has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in aggregate principal amount of the Notes then outstanding, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if (1) the Company has paid or deposited with the Trustee a sum in United States dollars sufficient to pay (A) all overdue installments of interest on all Notes, (B) the principal of (and premium, if any, on) any Notes which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Notes, (C) to the extent that payment of such interest is lawful, interest upon overdue installments of interest on each Note at the rate borne by such Note, and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) All Events of Default with respect to the Notes, other than the nonpayment of the principal of Notes which has become due solely by such declaration of acceleration, have been cured or waived as provided in Section 8.11. No such rescission and waiver shall affect any subsequent default or impair any right consequent thereon. SECTION 8.03. COLLECTION AND SUITS FOR ENFORCEMENT BY TRUSTEE. The Company covenants that if (1) default is made in the payment of any installment of interest on any Note when such interest becomes due and -60- payable and such default continues for a period of 30 days, or (2) default is made in the payment of principal of (or premium, if any, on) any Notes as and when the name shall have become due and payable, the Company shall, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Notes, the amount then due and payable on such Notes, for the principal (and premium, if any) and interest, if any, and, to the extent that payment of such interest shall be legally enforceable, interest upon the overdue principal (and premium, if any) and upon overdue installments of interest, at the rate borne by the Notes; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amount forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor under such Notes, and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon such Notes wherever situated. If an Event of Default with respect to any Notes occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of the Notes by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 8.04. TRUSTEE MAY FILE PROOFS OF CLAIM. In the case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceedings, or any voluntary or involuntary case under the federal bankruptcy laws, as now or hereafter constituted, relative to the Company or any other obligor upon the Notes or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of such Notes shall then be due and payable as therein expressed or by declaration of acceleration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or -61- interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount of principal (or, if any Notes are Original Issue Discount Securities, the Amortized Face Amount thereof or such other portion of the principal amount as may be due and payable with respect to such Original Issue Discount Notes pursuant to a declaration in accordance with Section 8.02) (and premium, if any) and interest owning and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders of such Notes allowed in such judicial proceeding, and (ii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any receiver, assignee, trustee, custodian, liquidator, sequestrator (or other similar official) in any such proceeding is hereby authorized by each such Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to such Holders, to pay to the Trustee and amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 9.06. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 8.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES. All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of such Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name, as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered. -62- SECTION 8.06. APPLICATION OF MONEYS COLLECTED BY TRUSTEE. Any moneys collected by the Trustee with respect to any of the Notes shall be applied in the order following, at the date or dates fixed by the Trustee for the distribution of such moneys, upon presentation of the several Notes, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due to the Trustee pursuant to Section 9.07; SECOND: In case the principal of the Notes then outstanding in respect of which such moneys have been collected shall not have become due and be unpaid, to the payment of interest on the Notes, in the order of the maturity of the installments of such interest, with interest (to the extent allowed by law and to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest at the rate borne by the Notes, such payments to be made ratably to the persons entitled thereto; THIRD: In case the principal of the Notes then outstanding in respect of which such moneys have been collected shall have become due, by declaration or otherwise, to the payment of the whole amount then owing and unpaid upon the Notes for principal and any premium and interest thereon, with interest on the overdue principal and any premium and (to the extent allowed by law and to the extent that such interest has been collected by the Trustee) upon overdue installments of interest at the rate borne by the Notes; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Notes, then to the payment of such principal and any premium and interest without preference or priority of principal and any premium over interest, or of interest over principal and any premium or of any installment of interest over any other installment of interest, or of any Note over any other Note, ratably to the aggregate of such principal and any premium and accrued and unpaid interest; and FOURTH: To the payment of the remainder, if any, to the Company its successors or assigns, or to whomsoever may lawfully be entitled to the same, or as a court of competent jurisdiction may determine. -63- SECTION 8.07. PROCEEDINGS BY NOTEHOLDERS. (a) No Holder of any Note shall have any right by virtue of or by availing of any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless such Holder previously shall have given to the Trustee written notice of default with respect to such Note and of the continuance thereof, as hereinabove provided, and unless also the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding, it being understood and intended, and being expressly covenanted by the taker and the Holder of every Note with every other taker and Holder and the Trustee that no one or more Holders of Notes shall have any right in any manner whatever by virtue of or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other Holder of Notes, or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Notes. (b) Notwithstanding any other provision in this Indenture, however, the rights of any Holder of any Note to receive payment of the principal of and any premium and interest on such Note, on or after the respective due dates expressed in such Note (or, in the case of redemption, on the Redemption Date), or to institute suit for the enforcement of any such payment on or after such respective dates shall not be impaired or affected without the consent of such Holder. SECTION 8.08. PROCEEDINGS BY TRUSTEE. In case of an Event of Default hereunder the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. -64- SECTION 8.09. REMEDIES CUMULATIVE AND CONTINUING. All powers and remedies given by this Article Eight to the Trustee or to the Noteholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any powers and remedies hereof or of any other powers and remedies available to the Trustee or the Holders of the Notes, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture, and no delay or omission of the Trustee or of any Holder of any of the Notes in exercising any right or power accruing upon any default occurring and continuing as aforesaid shall impair any such right or power, or shall be construed to be a waiver of any such default or an acquiescence therein; and, subject to Section 8.07, every power and remedy given by this Article Eight or by law to the Trustee or to the Noteholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Noteholders. SECTION 8.10. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Noteholder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Noteholder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Noteholders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Company, the Trustee and the Noteholders shall continue as though no such proceeding had been instituted. SECTION 8.11. DIRECTION OF PROCEEDINGS AND WAIVER OF DEFAULTS BY MAJORITY NOTEHOLDERS. The Holders of a majority in aggregate principal amount of the Notes then outstanding shall have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee; PROVIDED, HOWEVER, that (subject to Section 9.01) the Trustee shall have the right to decline to follow any such direction if the Trustee being advised by counsel determines that the action or proceeding so directed may not lawfully be taken or if the Trustee in good faith by its board of directors or trustees, executive committee, or a trust committee of directors or trustees or responsible officers shall determine that the action or proceeding so directed would involve the Trustee in personal liability or would be unduly prejudicial to the rights of Noteholders not joining in such directions. Prior to any declaration accelerating the Maturity of the Notes, the Holders of a majority in aggregate principal amount of the Notes then outstanding may on behalf of all of the Holders of all of the Notes waive any past default or Event of Default hereunder and -65- its consequences, except a default (i) in the payment of principal of or any premium or interest on any Note or (ii) in respect of a covenant or provision hereof which pursuant to Section 13.02 cannot be modified or amended without the consent of the Holder of each Note then outstanding that would be affected thereby. Upon any such waiver, such default will cease to exist, and any Event of Default arising therefrom will be deemed to have been cured, for every purpose of the Indenture and the Notes, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. SECTION 8.12. NOTICE OF DEFAULT. The Trustee shall, within 90 days after the occurrence of a default with respect to the Notes, give to all Holders of the Notes specified in TIA Section 3.13(c), in the manner provided in Section 15.10, notice of such default, unless such default shall have been cured before the giving of such notice, the term "default" for the purpose of this Section 8.12 being hereby defined to be any event which is or after notice or lapse of time or both would become an Event of Default; PROVIDED that, except in the case of default in the payment of the principal of or any premium or interest on any of the Notes, the Trustee shall be protected in withholding such notice if and so long as its board of directors or trustees, executive committee, or a trust committee of directors or trustees or responsible officers in good faith determines that the withholding of such notice is in the interests of the Holders of the Notes. The Trustee shall not be charged with knowledge of any Event of Default unless a responsible officer of the Trustee assigned to the corporate trust division of the Trustee shall have actual knowledge of such Event of Default. SECTION 8.13. UNDERTAKING TO PAY COSTS. All parties to this Indenture agree, and each Holder of any Note by acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but this Section 8.13 shall not apply to any suit instituted by the Trustee, or to any suit instituted by any Noteholder, or group of Noteholders, holding in the aggregate more than 10% in principal amount of the Notes then outstanding, or to any suit instituted by any Noteholder for the enforcement of the payment of the principal of or any premium or interest on any Note on or after the due date expressed in such Note. -66- ARTICLE NINE CONCERNING THE TRUSTEE SECTION 9.01. CERTAIN DUTIES AND RESPONSIBILITIES. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section 9.01. (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in principal amount of the Notes at the time outstanding, determined as provided in Section 10.04, relating to the time, method and place of conducting any -67- proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Notes; and (4) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 9.01. SECTION 9.02. NOTICE OF DEFAULTS. Within 90 days after the occurrence of any default hereunder the Trustee shall transmit by mail to all Holders as their names and addresses appear in the Note register, notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; PROVIDED, HOWEVER, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest on any Note or in the payment of any sinking fund installment with respect to any Notes, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interest of the Holders of such Notes; and PROVIDED, FURTHER, that in the case of any default of the character specified in Section 8.01(3), no such notice to Holders shall be given until at least 30 days after occurrence thereof. For the purpose of this Section 9.02, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default. SECTION 9.03. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of Section 9.01: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; -68- (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by an Officers' Certificate and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; (d) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) prior to the occurrence of an Event of Default and after the curing or waiving of all such Events of Default which may have occurred, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, approval or other paper or document, or the books and records of the Company, unless requested in writing to do so by the Holders of a majority in aggregate principal amount of the Notes then outstanding; PROVIDED, HOWEVER, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is not, in the opinion of the Trustee, reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such costs, expenses or liabilities as a condition to so proceeding; the reasonable expense of every such investigation shall be paid by the Company or, if paid by the Trustee, shall be repaid by the Company upon demand; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be -69- responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. SECTION 9.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES. The recitals contained herein and in the Notes, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee or any Authenticating Agent assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Notes. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of Notes or the proceeds thereof. SECTION 9.05. MAY HOLD NOTES. The Trustee, any Authenticating Agent, any Paying Agent, any Note registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Sections 9.08 and 9.13, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Note registrar or such other agent. SECTION 9.06. MONEY HELD IN TRUST. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed with the Company. SECTION 9.07. COMPENSATION AND REIMBURSEMENT. The Company agrees: (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnity the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of -70- or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any its powers or duties hereunder. The provisions of this Section 9.07 shall survive this Indenture. SECTION 9.08. DISQUALIFICATION; CONFLICTING INTERESTS. (a) If the Trustee has or shall acquire any conflicting interest, as defined in this Section 9.08, with respect to the Notes, it shall, within 90 days after ascertaining that it has such conflicting interest, either eliminate such conflicting interest or resign in the manner and with the effect hereinafter specified in this Article Nine. (b) In the event that the Trustee shall fail to comply with the provisions of Subsection (a) of this Section 9.08, the Trustee shall, within 10 days after the expiration of such 90-day period, transmit by mail to all Holders as their names and addresses appear in the Note registrar, notice of such failure. (c) For the purposes of this Section 9.08, the Trustee shall be deemed to have a conflicting interest with respect to the Notes if (1) the Trustee is trustee under another indenture under which any securities, or certificates of interest or participation in any other securities, of the Company are outstanding, unless such other indenture is a collateral trust indenture under which the only collateral consists of Notes, PROVIDED that there shall be excluded from the operation of this paragraph this Indenture with respect to any other indenture or indenture under which securities, or certificates of interest or participation in other securities, of the Company are outstanding, if (i) this Indenture and such other indenture or indentures are wholly unsecured and such other indenture or indentures are hereafter qualified under the TIA, unless the Securities and Exchange Commission shall have found and declared by order pursuant to Section 305(b) or Section 307(c) of the TIA that differences exist between the provisions of this Indenture and the provisions of such other indenture or indentures which are so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to -71- disqualify the Trustee from acting as such under this Indenture with respect to such other indenture or indentures, or (ii) the Company shall have sustained the burden of proving, on application to the Securities and Exchange Commission and after opportunity for hearing thereon, that trusteeship under this Indenture with respect to such other indenture or indentures is not so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under this Indenture with respect to such other indenture or indentures; (2) the Trustee or any of its directors or executive officers is an obligor upon the Notes or an underwriter for the Company; (3) the Trustee directly or indirectly controls or is directly or indirectly controlled by or is under direct or indirect common control with the Company or an underwriter for the Company; (4) the Trustee or any of its directors or executive officers is a director, officer, partner, employee, appointee or representative of the Company, or of an underwriter (other than the Trustee itself) for the Company who is currently engaged in the business of underwriting, except that (i) one individual may be a director or an executive officer, or both, of the Trustee and a director or an executive officer, or both, of the Company but may not be at the same time an executive officer of both the Trustee and the Company; (ii) if and so long as the number of directors of the Trustee in office is more than nine, one additional individual may be a director or an executive officer, or both, of the Trustee and a director of the Company; and (iii) the Trustee may be designated by the Company or by any underwriter for the Company to act in the capacity of transfer agent, registrar, custodian, paying agent, fiscal agent, escrow agent or depositary, or in any other similar capacity, or, subject to the provisions of paragraph (1) of this Subsection, to act as trustee, whether under an indenture or otherwise; (5) 10% or more of the voting securities of the Trustee is beneficially owned either by the Company or by any director, partner or executive officer thereof, or 20% or more of such voting securities is beneficially owned, collectively, by any two or more of such persons; or 10% or -72- more of the voting securities of the Trustee is beneficially owned either by an underwriter for the Company or by any director, partner or executive officer thereof, or is beneficially owned, collectively, by any two or more such persons; (6) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), (i) 5% or more of the voting securities, or 10% or more of any other class of security, of the Company not including the Notes and securities issued under any other indenture under which the Trustee is also trustee, or (ii) 10% or more of any class of security of an underwriter for the Company; (7) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), 5% or more of the voting securities of any person who, to the knowledge of the Trustee, owns 10% or more of the voting securities of, or controls directly or indirectly or is under direct or indirect common control with, the Company; (8) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), 10% or more of any class of security of any person who, to the knowledge of the Trustee, owns 50% or more of the voting securities of the Company; or (9) the Trustee owns, on May 15 in any calendar year, in the capacity of executor, administrator, testamentary or inter vivos trustee, guardian, committee or conservator, or in any other similar capacity, an aggregate of 25% or more of the voting securities, or of any class of security, of any person, the beneficial ownership of a specified percentage of which would have constituted a conflicting interest under paragraph (6), (7) or (8) of this Subsection. As to any such securities of which the Trustee acquired ownership through becoming executor, administrator or testamentary trustee of an estate which included them, the provisions of the preceding sentence shall not apply, for a period of two years from the date of such acquisition, to the extent that such securities included in such estate do not exceed 25% of such voting securities or 25% of any such class of security. Promptly after May 15 in each calendar year, the Trustee shall make a check of its holdings of such securities in any of the above-mentioned capacities as of such May 15. If the Company fails to make payment in full of the principal of (or premium, if any) or interest on any -73- of the Notes when and as the same becomes due and payable, and such failure continues for 30 days thereafter, the Trustee shall make a prompt check of its holdings of such securities in any of the above-mentioned capacities as of the date of the expiration of such 30-day period, and after such date, notwithstanding the foregoing provisions of this paragraph, all such securities so held by the Trustee, with sole or joint control over such securities vested in it, shall, but only so long as such failure shall continue, be considered as though beneficially owned by the Trustee for the purposes of paragraphs (6), (7) and (8) of this Subsection. The specification of percentages in paragraphs (5) to (9), inclusive, of this Subsection shall not be construed as indicating that the ownership of such percentages of the securities of a person is or is not necessary or sufficient to constitute direct or indirect control for the purposes of paragraph (3) or (7) of this Subsection. For the purposes of paragraphs (6), (7), (8) and (9) of this Subsection only, (i) the terms "security" and "securities" shall include only such securities as are generally known as corporate securities, but shall not include any note or other evidence of indebtedness issued to evidence an obligation to repay moneys lent to a person by one or more banks, trust companies or banking firms, or any certificate of interest or participation in any such note or evidence of indebtedness; (ii) an obligation shall be deemed to be "in default" when a default in payment of principal shall have continued for 30 days or more and shall not have been cured; and (iii) the Trustee shall not be deemed to be the owner or holder of (A) any security which it holds as collateral security, as trustee or otherwise, for an obligation which is not in default as defined in clause (ii) above, or (B) any security which it holds as collateral security under this Indenture, irrespective of any default hereunder, or (C) any security which it holds as agent for collection, or as custodian, escrow agent or depositary, or in any similar representative capacity. (d) For the purposes of this Section 9.08: (1) The term "underwriter", when used with reference to the Company, means every person who, within three years prior to the time as of which the determination is made, has purchased from the Company with a view to, or has offered or sold for the Company in connection with, the distribution of any security of the Company outstanding at such time, or has participated or has had a direct or indirect participation in any such undertaking, or has participated or has had a -74- participation in the direct or indirect underwriting of any such undertaking, but such term shall not include a person whose interest was limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission. (2) The term "director" means any director of a corporation or any individual performing similar functions with respect to any organization, whether incorporated or unincorporated. (3) The term "person" means an individual, a corporation, a partnership, an association, a joint-stock company, a trust, an unincorporated organization or a government or political subdivision thereof. As used in this paragraph, the term "trust" shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security. (4) The term "voting security" means any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a person, or any security issued under or pursuant to any trust, agreement or arrangement whereby a trustee or trustees or agent or agents for the owner or holder of such security are presently entitled to vote in the direction or management of the affairs of a person. (5) The term "Company" means any obligor upon the Notes. (6) The term "executive officer" means the president, every vice president, every trust officer, the cashier, the secretary and the treasurer of a corporation, and any individual customarily performing similar functions with respect to any organization whether incorporated or unincorporated, but shall not include the chairman of the board of directors. (e) The percentages of voting securities and other securities specified in this Section 9.08 shall be calculated in accordance with the following provisions: (1) A specified percentage of the voting securities of the Trustee, the Company or any other person referred to in this Section 9.08 (each of whom is referred to as a "person" in this paragraph) means such amount of the outstanding voting securities of such person as entitles the holder or holders thereof to cast such specified percentage of the aggregate votes which the holders of all the outstanding -75- voting securities of such person are entitled to cast in the direction or management of the affairs of such person. (2) A specified percentage of a class of securities of a person means such percentage of the aggregate amount of securities of the class outstanding. (3) The term "amount", when used in regard to securities, means the principal amount if relating to evidences of indebtedness, the number of shares if relating to capital shares and the number of units if relating to any other kind of security. (4) The term "outstanding" means issued and not held by or for the account of the issuer. The following securities shall not be deemed outstanding within the meaning of this definition: (i) securities of an issuer held in a sinking fund relating to securities of the issuer of the same class; (ii) securities of an issuer held in a sinking fund relating to another class of securities of the issuer, if the obligation evidenced by such other class of securities is not in default as to principal or interest or otherwise; (iii) securities pledged by the issuer thereof as security for an obligation of the issuer not in default as to principal or interest or otherwise; and (iv) securities held in escrow if placed in escrow by the issuer thereof; PROVIDED, HOWEVER, that any voting securities of an issuer shall be deemed outstanding if any person other than the issuer is entitled to exercise the voting rights thereof. (5) A security shall be deemed to be of the same class as another security if both securities confer upon the holder or holders thereof substantially the same rights and privileges; PROVIDED, HOWEVER, that, in the case of secured evidences of indebtedness, all of which are issued under a single indenture, differences in the interest rates or maturity dates of various series thereof shall not be deemed sufficient to constitute such series different classes and PROVIDED, FURTHER, that, in the case of unsecured evidences of indebtedness, differences in the interest rates or maturity dates thereof shall not be deemed sufficient to -76- constitute them securities of different classes, whether or not they are issued under a single indenture. SECTION 9.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 subject to supervision or examination by Federal or State authority and having its Corporate Trust Office in Chicago, Illinois or New York, New York, to the extent there is such an institution eligible and willing to serve. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section 9.09, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 9.09, it shall resign immediately in the manner and with the effect hereinafter specified in this Article Nine. SECTION 9.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article Nine shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 9.11. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 9.11 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by the Holders of a majority in aggregate principal amount of the Notes then outstanding, delivered to the Trustee and to the Company. (d) If at any time: (1) the Trustee shall fail to comply with Section 9.08(a) after written request therefor by the Company or by -77- any Holder who has been a bona fide Holder of a Note for at least six months, or (2) the Trustee shall cease to be eligible under Section 9.09 and shall fail to resign after written request therefor by the Company or by any such Holder, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the Company by a Board Resolution may remove the Trustee, or (ii) subject to Section 8.13, any Holder who has been a bona fide Holder of a Note for at least six months may, on behalf of such Holder and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee or Trustees. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees and shall comply with the applicable requirements of Section 9.11. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by the Holders of a majority in aggregate principal amount of the Notes then outstanding delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 9.11, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 9.11, any Holder who has been a bona fide Holder of a Note for at least six months may, on behalf of such Holder and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to all Holders as their names and addresses appear in the Note register. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. -78- SECTION 9.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. (a) Every successor Trustee shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. (b) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) of this Section 9.11. (c) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article Nine. SECTION 9.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. SECTION 9.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. (a) Subject to Subsection (b) of this Section 9.13, if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of the Company within four months prior to a default, as defined in Subsection (c) of this -79- Section 9.13, or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the Holders of the Notes and the holders of other indenture securities, as defined in Subsection (c) of this Section 9.13: (1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such four months' period and valid as against the Company and its other creditors, except any such reduction resulting from the receipt or disposition of any property described in paragraph (2) of this Subsection, or from the exercise of any right of set-off which the Trustee could have exercised if a petition in bankruptcy had been filed by or against the Company upon the date of such default; and (2) all property received by the Trustee in respect of any claims as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such four months' period, or an amount equal to the proceeds of any such property, if disposed of, subject, however, to the rights, if any, of the Company and its other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee: (A) to retain for its own account (i) payments made on account of any such claim by any Person (other than the Company) who is liable thereon, and (ii) the proceeds of the bona fide sale of any such claim by the Trustee to a third Person, and (iii) distributions made in cash, securities or other property in respect of claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law; (B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such four months' period; (C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such four months' period and such property was received as security therefor -80- simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a default, as defined in Subsection (c) of this Section 9.13, would occur within four months; or (D) to receive payment on any claim referred to in paragraph (B) or (C), against the release of any property held as security for such claim as provided in paragraph (B) or (C), as the case may be, to the extent of the fair value of such property. For the purposes of paragraphs (B), (C) and (D), property substituted after the beginning of such four months' period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any pre-existing claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim. If the Trustee shall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned among the Trustee, the Holders and the holders of other indenture securities in such manner that the Trustee, the Holders and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from the Company of the funds and property in such special account and before crediting to the respective claims of the Trustee and the Holders and the holders of other indenture securities dividends on claims filed against the Company in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, in bankruptcy or receivership or proceedings for reorganization pursuant to the Federal Bankruptcy Act or applicable State law, whether such distribution is made in cash, securities or other property, but shall not include any such -81- distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or proceedings for reorganization is pending shall have jurisdiction (i) to apportion among the Trustee, the Holders and the holders of other indenture securities, in accordance with the provisions of this paragraph, the funds and property held in such special account and proceeds thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee and the Holders and the holders of other indenture securities with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any Trustee which has resigned or been removed after the beginning of such four months' period shall be subject to the provisions of this Subsection as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such four months' period, it shall be subject to the provisions of this Subsection if and only if the following conditions exist: (i) the receipt of property or reduction of claim, which would have given rise to the obligation to account, if such Trustee had continued as Trustee, occurred after the beginning of such four months' period; and (ii) such receipt of property or reduction of claim occurred within four months after such resignation or removal. (b) There shall be excluded from the operation of Subsection (a) of this Section 9.13 a creditor relationship arising from: (1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee; (2) advances authorized by a receivership or bankruptcy court of competent jurisdiction or by this Indenture, for the purposes of preserving any property which shall at any time be subject to the lien of this Indenture or of discharging tax liens or other prior liens or -82- encumbrances thereon, if notice of such advances and of the circumstances surrounding the making thereof is given to the Holders at the time and in the manner provided in this Indenture; (3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity; (4) an indebtedness created as a result of services rendered or premises rented; or an indebtedness created as a result of goods or securities sold in a cash transaction, as defined in Subsection (c) of this Section 9.13; (5) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of the Company; and (6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fall within the classification of self-liquidating paper, as defined in Subsection (c) of this Section 9.13. (c) For the purposes of this Section 9.13 only: (1) the term "default" means any failure to make payment in full of the principal of or interest on any of the Notes or upon the other indenture securities when and as such principal or interest becomes due and payable; (2) the term "other indenture securities" means securities upon which the Company is an obligor outstanding under any other indenture (i) under which the Trustee is also trustee, (ii) which contains provisions substantially similar to the provisions of this Section 9.13, and (iii) under which a default exists at the time of the apportionment of the funds and property held in such special account; (3) the term "cash transaction" means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; (4) the term "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, -83- drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation; (5) the term "Company" means any obligor upon the Notes; and (6) the term "Federal Bankruptcy Act" means the Bankruptcy Act or Title 11 of the United States Code. SECTION 9.14. APPOINTMENT OF AUTHENTICATING AGENT. At any time when any of the Notes remain outstanding the Trustee may appoint an Authenticating Agent or Agents with respect to the Notes which shall be authorized to act on behalf of the Trustee to authenticate Notes issued upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 2.06, and Notes so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Notes by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section 9.14, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 9.14, such Authenticating -84- Agent shall resign immediately in the manner and with the effect specified in this Section 9.14. Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section 9.14, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 9.14, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall mail written notice of such appointment by first-class mail, postage prepaid, to all Holders as their names and addresses appear in the Note register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section 9.14. The Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 9.14, and the Trustee shall be entitled to be reimbursed for such payments, subject to the provisions of Section 9.07. If an appointment is made pursuant to this Section 9.07, the Notes may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternate certificate of authentication in the following form: -85- Trustee's Certificate of Authentication This is one of the Notes referred to in the within-mentioned Indenture. The First National Bank of Chicago, as Trustee By -------------------------- As Authenticating Agent By -------------------------- Authorized Officer ARTICLE TEN CONCERNING THE NOTEHOLDERS SECTION 10.01. ACTION BY NOTEHOLDERS. (a) Whenever in this Indenture it is provided that the holders of a specified percentage in aggregate principal amount of the Notes may take any action (the making of any demand or request, or the giving of any notice, consents or waivers in lieu of a Noteholders' meeting or the taking of any other action) the fact that at the time of taking any such action the Holders of such specified percentage have joined therein may be evidenced (a) by any instrument or any number of instruments of similar tenor executed by such Noteholders in person or by agent or proxy appointed in writing, or (b) by the record of such Noteholders voting in favor thereof at any meeting of Noteholders duly called and held in accordance with Article Eleven, or (c) by a combination of such instrument or instruments and any such record of such a meeting of Noteholders. (b) Whenever in this Indenture it is provided that the Holders of a specified percentage in aggregate principal amount of the Notes may take any action, any party designated in writing by the Depositary, or by any party so designated by the Depositary, as the owner of a beneficial interest of a specified principal amount of any Global Note held by such Depositary shall be deemed to be a Holder of Notes in such principal amount for such purpose. -86- SECTION 10.02. PROOF OF EXECUTION BY NOTEHOLDERS. (a) Subject to Sections 9.01 and 11.05, proof of the execution of any instruments by a Noteholder or the agent or proxy for such Noteholder shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The ownership of Notes shall be proved by the Note register of the Company or by a certificate of the Note registrar. (b) The record of any Noteholders' meeting shall be proven in the manner provided for in Section 11.06. SECTION 10.03. WHO DEEMED ABSOLUTE OWNERS. Subject to Sections 2.04(f) and 10.01, the Company, the Trustee, any Authenticating Agent and Note registrar may deem the person in whose name any Note shall be registered upon the Note register of the Company to be, and may treat such person as, the absolute owner of such Note (whether or not such Note shall be overdue) for the purpose of receiving payment of or on account of the principal of and any premium and interest on such Note, and for all other purposes; and neither the Company nor the Trustee nor any Authenticating Agent nor any Note registrar shall be affected by any notice to the contrary. All such payments shall be valid and effectual to satisfy and discharge the liability upon any such Note to the extent of the sum or sums so paid. SECTION 10.04. COMPANY-OWNED NOTES DISREGARDED. In determining whether the Holders of the requisite aggregate principal amount of Notes then outstanding have concurred in any direction, consent or waiver under this Indenture, Notes which are owned by the Company or any other obligor on the Notes or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Notes shall be disregarded and deemed not to be outstanding for the purpose of any such determination; PROVIDED that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver only Notes which the Trustee knows are so owned shall be so disregarded. Notes so owned which have been pledged in good faith may be regarded as outstanding for the purposes of this Section 10.04 if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such Notes and that the pledgee is not a person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any such other obligor. In the case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. -87- SECTION 10.05. REVOCATION OF CONSENTS; FUTURE HOLDERS BOUND. At any time prior to the taking of any action by the holders of the percentage in aggregate principal amount of the Notes specified in this Indenture in connection with such action, any Holder of a Note, which is shown by the evidence to be included in the Notes the Holders of which have consented to such action may, by filing written notice with the Trustee at the Corporate Trust Office of the Trustee and upon proof of ownership as provided in Section 10.02(a), revoke such action so far as it concerns such Note. Except as aforesaid any such action taken by the Holder of any Note shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Note and of any Notes issued in exchange or substitution therefor, irrespective of whether or not any notation thereof is made upon such Note or such other Notes. SECTION 10.06. RECORD DATE FOR NOTEHOLDER ACTS. If the Company shall solicit from the Noteholders any request, demand, authorization, direction, notice, consent, waiver or other act, the Company may, at its option, by Board Resolution, fix in advance a record date in compliance with TIA Section 3.16(c) for the determination of Noteholders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other act, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other act may be given before or after the record date, but only the Noteholders of record at the close of business on the record date shall be deemed to be Noteholders for the purpose of determining whether Holders of the requisite aggregate principal amount of Notes then outstanding have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other act, and for that purpose the outstanding Notes shall be computed as of the record date; PROVIDED, HOWEVER, that no such authorization, agreement or consent by the Noteholders on the record date shall be deemed effective unless it shall become effective pursuant to this Indenture not later than six months after the record date. ARTICLE ELEVEN NOTEHOLDERS' MEETING SECTION 11.01. PURPOSES OF MEETINGS. A meeting of Noteholders may be called at any time and from time to time pursuant to this Article Eleven for any of the following purposes: -88- (a) to give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to consent to the waiving of any default hereunder and its consequences, or to take any other action authorized to be taken by Noteholders pursuant to Article Eight; (b) to remove the Trustee and nominate a successor Trustee pursuant to Article Nine; (c) to consent to the execution of an indenture or indentures supplemental hereto pursuant to Section 13.02; or (d) to take any other action authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of the Notes, as the case may be, under any other provision of this Indenture or under applicable law. SECTION 11.02. CALL OF MEETINGS BY TRUSTEE. The Trustee may at any time call a meeting of Holders of Notes to take any action specified in Section 11.01, to be held at such time and at such place as the Trustee shall determine. Notice of every such meeting of Noteholders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given to Holders of the Notes that may be affected by the action proposed to be taken at such meeting in the manner provided in Section 15.10. Such notice shall be given not less than 20 nor more than 90 days prior to the date fixed for such meeting. SECTION 11.03. CALL OF MEETINGS BY COMPANY OR NOTEHOLDERS. In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 10% in aggregate principal amount of the Notes then outstanding, shall have requested the Trustee to call a meeting of Noteholders, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Company or such Noteholders may determine the time and the place for such meeting and may call such meeting to take any action authorized in Section 11.01, by giving notice thereof as provided in Section 11.02. SECTION 11.04. QUALIFICATIONS FOR VOTING. To be entitled to vote at any meetings of Noteholders a Person shall (a) be a Holder of one or more Notes affected by the action proposed to be taken or (b) be a Person appointed by an instrument in writing as proxy by a Holder of one or more such Notes. The -89- only Persons who shall be entitled to be present or to speak at any meeting of Noteholders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. SECTION 11.05. REGULATIONS. (a) Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Noteholders, in regard to proof of the holding of Notes and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit. (b) The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by the Noteholders as provided in Section 11.03, in which case the Company or Noteholders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by the Holders of a majority in aggregate principal amount of the Notes present in person or by proxy at the meeting. (c) Subject to Section 10.04, at any meeting each Noteholder or proxy shall be entitled to one vote for each $1,000 principal amount of Notes held or represented by such Noteholder; PROVIDED, HOWEVER, that no vote shall be cast or counted at any meeting in respect of any Note challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Notes held by such chairman or instruments in writing as aforesaid duly designating such chairman as the person to vote on behalf of other Noteholders. At any meeting of Noteholders duly called pursuant to Section 11.02 or 11.03, the presence of persons holding or representing Notes in an aggregate principal amount sufficient to take action on any business for the transaction for which such meeting was called shall constitute a quorum. Any meeting of Noteholders duly called pursuant to Section 11.02 or 11.03 may be adjourned from time to time by the Holders of a majority in aggregate principal amount of the Notes present in person or by proxy at the meeting, whether or not constituting a quorum, and the meeting may be held as so adjourned without further notice. SECTION 11.06. VOTING. The vote upon any resolution submitted to any meeting of Noteholders shall be by written -90- ballots on which shall be subscribed the signatures of the Holders of Notes or of their representatives by proxy and the principal amount of Notes held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Noteholders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 11.02. The record shall show the principal amount of the Notes voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee. Any record so signed and verified shall be conclusive evidence of the matters therein stated. SECTION 11.07. RIGHT OF TRUSTEE OR NOTEHOLDERS NOT DELAYED. Nothing in this Article Eleven contained shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Noteholders or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Holders of Notes under any of the provisions of this Indenture or of the Notes. ARTICLE TWELVE CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 12.01. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. The Company shall not consolidate with or merge into any other corporation or convey, transfer or lease its properties and assets substantially as an entirety to any Person unless: (1) the corporation formed by such consolidation or into which the Company is merged (the "successor corporation") or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America or any State or -91- the District of Columbia, and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest on all Notes and the performance of every covenant of this Indenture on the part of the Company to be performed or observed; (2) immediately after giving effect to such consolidation, merger, conveyance, transfer or lease, no Event of Default, and no event which, after notice or lapse of time, or both, would become an Event of Default, shall have occurred and be continuing; (3) if, as a result of such consolidation, merger, conveyance, transfer or lease, properties or assets of the Company would become subject to a mortgage, pledge, lien, security interest or other encumbrance which would not otherwise be permitted by this Indenture without making effective provision whereby the Notes then outstanding and any other indebtedness of the Company then entitled thereto will be equally and ratably secured with any and all indebtedness and obligations secured thereby, the Company or the successor corporation or Person, as the case may be, will take such action as will be necessary effectively to secure all Notes equally and ratably with (or prior to) all indebtedness secured thereby; and (4) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that such consolidation, merger, conveyance, transfer or lease and such supplemental indenture comply with this Article Twelve and that all conditions precedent herein provided for relating to such consolidation, merger, conveyance or transfer have been complied with. SECTION 12.02. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation or merger, or any conveyance, transfer or lease as an entirety in accordance with Section 12.01, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named as the Company herein; PROVIDED, HOWEVER, that no such conveyance or transfer shall have the effect of releasing the Person named as the "Company" in the first paragraph of this Indenture or any successor corporation which shall theretofore -92- have become such in the manner prescribed in this Article Twelve from its liability as obligor and maker on any of the Notes. ARTICLE THIRTEEN SUPPLEMENTAL INDENTURES SECTION 13.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS. (a) The Company, when authorized by Board Resolution, and the Trustee may at any time and from time to time enter into an indenture or indentures supplemental hereto for one or more of the following purposes: (1) to make such provision in regard to matters or questions arising under this Indenture as may be necessary or desirable and not inconsistent with this Indenture or for the purpose of supplying any omission, curing any ambiguity, or curing, correcting or supplementing any defective or inconsistent provision; PROVIDED that such provision shall not adversely affect the interests of Holders of outstanding Notes created prior to the execution of such supplemental indenture in any material respect; (2) to change or eliminate any of the provisions of this Indenture; PROVIDED that any such change or elimination shall become effective only when there is no Note outstanding created prior to the execution of such supplemental indenture which is entitled to the benefit of such provision; (3) to secure the Notes; (4) to establish the form of Notes as permitted by Section 2.01 or to establish or reflect any terms of any Note determined pursuant to Section 2.05; (5) to evidence the succession of another corporation to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Notes; (6) to grant to or confer upon the Trustee for the benefit of the Holders any additional rights, remedies, powers or authority; (7) to permit the Trustee to comply with any duties imposed upon it by law; -93- (8) to specify further the duties and responsibilities of, and to define further the relationships among, the Trustee, any Authenticating Agent and any paying agent; (9) to add to the covenants of the Company for the benefit of the Holders of all or any Notes (and if such covenants are to be for the benefit of less than all Notes, stating that such covenants are expressly being included solely for the benefit of such Notes) or to surrender a right or power conferred on the Company herein; and (10) to add any additional Events of Default (and if such Events of Default are to be applicable to less than all Notes, stating that such Events of Default are expressly being included for the benefit of such Notes). (b) The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer and assignment of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. (c) Any supplemental indenture authorized by this Section 13.01 may be executed by the Company and the Trustee without the consent of the Holders of any of the Notes then outstanding, notwithstanding any of the provisions of Section 13.02. SECTION 13.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. (a) With the consent (evidenced as provided in Section 10.01) of the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding that would be affected by the particular supplemental indenture, the Company, when authorized by Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Noteholders; PROVIDED, HOWEVER, that no such supplemental indenture shall: (1) change the Stated Maturity of any Note; or reduce the rate of interest on any Note; or change the method of calculating interest, or any term used in the calculation of interest, or the period for which -94- interest is payable, on any Floating Rate Note; or reduce the principal amount of any Note or any premium thereon; reduce the amount of the principal of an Original Issue Discount Note that would be due and payable upon a declaration of acceleration of the Maturity thereof, or adversely affect the right of repayment or renewal, if any, at the option of the Holder; or change the coin or currency in which the principal of any Note or any premium or interest thereon is payable; or change the date on which any Note may be redeemed; or adversely affect the rights of any Noteholder to institute suit for the enforcement of any payment of principal of or any premium or interest on any Note; in each case without the consent of the Holder of each Note then outstanding that would be affected thereby (for purposes of this Section 13.02 (a)(1) only, the term "Note" shall include Notes for which an offer to purchase has been accepted by the Company); or (2) reduce the aforesaid percentage of Notes, the Holders of which are required to consent to any such supplemental indenture, or the percentage in principal amount of the Notes at the time outstanding the consent of the Holders of which is required for any waiver of certain past defaults or Events of Default hereunder or the consequences thereof, in each case without the consent of the Holders of all of the Notes then outstanding. (b) Upon the request of the Company, accompanied by a copy of the Board Resolution authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Noteholders as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. (c) It shall not be necessary for the consent of the Holders of Notes under this Section 13.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. (d) Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to this Section 13.02, the Company shall give notice in the manner provided in Section 15.10, setting forth in general terms the -95- substance of such supplemental indenture, to all Noteholders. Any failure of the Company to give such notice, or any defect therein shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 13.03. COMPLIANCE WITH TRUST INDENTURE ACT; EFFECT OF SUPPLEMENTAL INDENTURES. Any supplemental indenture executed pursuant to this Article Thirteen shall comply with the TIA. Upon the execution of any supplemental indenture pursuant to this Article Thirteen, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the Noteholders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 13.04. NOTATION ON NOTES. Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article Thirteen may bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company or the Trustee shall so determine, new Notes so modified as to conform in the opinion of the Trustee and the Board of Directors to any modification of this Indenture contained in any such supplemental indenture may be prepared and executed by the Company, authenticated by the Trustee and delivered in exchange for the Notes then outstanding. SECTION 13.05. EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL INDENTURE TO BE FURNISHED TRUSTEE. The Trustee, subject to Section 9.01, may receive an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant hereto complies with the requirements of this Article Thirteen. ARTICLE FOURTEEN IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS SECTION 14.01. INDENTURE AND NOTES SOLELY CORPORATE OBLIGATIONS. No recourse for the payment of the principal of or any premium or interest on any Note, or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company, contained in this Indenture or in any supplemental indenture, or in any Note, or because of the creation of any indebtedness -96- represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Notes. ARTICLE FIFTEEN MISCELLANEOUS PROVISIONS SECTION 15.01. PROVISIONS BINDING ON COMPANY'S SUCCESSORS. All the covenants, stipulations, promises and agreements made by the Company in this Indenture shall bind its successors and assigns whether so expressed or not. SECTION 15.02. OFFICIAL ACTS BY SUCCESSOR CORPORATION. Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or officer of the Company shall and may be done and performed with like force and effect by the like board, committee or officer of any corporation that shall at the time be the lawful successor of the Company. SECTION 15.03. ADDRESSES FOR NOTICES, ETC. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Noteholders on the Company may be given or served by being deposited postage prepaid in a post office letter box addressed (until another address is filed by the Company with the Trustee) to MidAmerican Energy Company, 666 Grand Avenue, Des Moines, Iowa 50303, to the attention of the Corporate Secretary. Any notice, direction, request or demand by any Noteholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the Corporate Trust Office of the Trustee. SECTION 15.04. GOVERNING LAW. This Indenture and each Note shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be construed in accordance with the laws of said State. -97- SECTION 15.05. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. (a) Upon any application or demand by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with. (b) Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (1) a statement that each Person making such certificate or opinion has read such covenant or condition and the definitions relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinion contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such Person, such Person has made such examination or investigation as is necessary to enable such Person to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of each such Person, such condition or covenant has been complied with. (c) In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. (d) Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which such certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such person knows, or in the exercise of reasonable care should know, that the certificate or -98- opinion or representations with respect to such matters are erroneous. (e) Any certificate, statement or opinion of any officer of the Company, or of counsel, may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which the certificate, statement or opinion of such officer or counsel may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate or opinion of any firm of independent public accountants filed with the Trustee shall contain a statement that such firm is independent. (f) Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 15.06. BUSINESS DAYS. Unless otherwise provided herein, in any case where the date of Maturity of the principal of or any premium or interest on any Note or the Redemption Date of any Note is not a Business Day, then payment of such principal or any premium or interest need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on the date of Maturity or the Redemption Date, and, in the case of payment, no interest shall accrue for the period from and after such date. SECTION 15.07. TRUST INDENTURE ACT TO CONTROL. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with another provision included in this Indenture which is required to be included in this Indenture by any of Sections 310 to 317, inclusive, of the TIA, such required provision shall control. SECTION 15.08. TABLE OF CONTENTS, HEADINGS, ETC. The table of contents and the titles and headings of the articles and sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 15.09. EXECUTION IN COUNTERPARTS. This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. -99- SECTION 15.10. MANNER OF MAILING NOTICE TO NOTEHOLDERS. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served by the Trustee or the Company to or on the Holders of Notes, as the case may be, shall be given or served by first-class mail, postage prepaid, addressed to the Holders of such Notes at their last addresses as the same appear on the Note register referred to in Section 2.06, and any such notice shall be deemed to be given or served by being deposited in a post office letter box in the form and manner provided in this Section 15.10. -100- IN WITNESS WHEREOF, MidAmerican Energy Company has caused this Indenture to be signed and acknowledged by its _______________ and its Secretary or an Assistant Secretary, and The First National Bank of Chicago has caused this Indenture to be signed and acknowledged by one of its __________ and its corporate seal to be affixed hereunto, and the same to be attested by one of its _____________, as of the day and year first written above. MIDAMERICAN ENERGY COMPANY By ------------------------------- Name: Title: By ------------------------------- Name: Title: THE FIRST NATIONAL BANK OF CHICAGO, as Trustee [Seal] By ------------------------------- Name: Title: Attest: - -------------------------- Name: Title: -101- STATE OF IOWA ) ) ss: COUNTY OF POLK ) I, ________________________, a Notary Public in and for said County and State aforesaid, do hereby certify that _________________________ of MidAmerican Energy Company, an Iowa corporation, and ________________ of said corporation, who are personally known to me to be the same persons whose names are subscribed to the foregoing instrument and who are both personally known to me to be ___________________________ and Secretary of said corporation, respectively, appeared before me this day in person and severally acknowledged that they this day signed and delivered the said instrument as their free and voluntary act as such ___________________________ and Secretary, respectively, of said corporation and as the free and voluntary act of said corporation, for the uses and purposes therein set forth, and that the said instrument was signed and delivered on behalf of said corporation by authority of its Board of Directors, and acknowledged said instrument to be the free and voluntary act of said corporation. GIVEN under my hand and notarial seal this __________ day of ________, 1996. ----------------------------------- Notary Public My commission expires: -102- STATE OF ILLINOIS ) ) ss: COUNTY OF COOK ) I, _____________________________, a Notary Public in and for said County and State aforesaid, do hereby certify that ____________________________ of The First National Bank of Chicago, a national banking association organized and existing under the laws of the United States of America, and _______________ of said corporation, who are personally known to me to be the same persons whose names are subscribed to the foregoing instrument and who are both personally known to me to be an ________________________ and ___________________ of said corporation, appeared before me this day in person and severally acknowledged that they this day signed, sealed and delivered the said instrument as their free and voluntary act as such an ________________________ and ___________________, respectively, of said corporation, and as the free and voluntary act of said corporation, for the uses and purposes therein set forth, and that the seal affixed to said instrument is the corporate seal of said corporation and that the said instrument was signed, sealed and delivered on behalf of said corporation by authority of its By-laws, and acknowledged said instrument to be the free and voluntary act of said corporation. GIVEN under my hand and notarial seal this _____ day of ________, 1996. ----------------------------- Notary Public My commission expires: -103- EXHIBIT A Global Fixed Rate Note REGISTERED REGISTERED NO. MIDAMERICAN ENERGY COMPANY Fixed Rate Medium-Term Note Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Company or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co., or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. The following summary of terms is subject to the provisions set forth below: CUSIP: ORIGINAL ISSUE DATE(S): PRINCIPAL AMOUNT: MATURITY DATE: INTEREST RATE: INTEREST PAYMENT DATES: RECORD DATES: OPTIONAL REDEMPTION: / / Yes / / No INITIAL REDEMPTION DATE: AMORTIZING NOTE: / / Yes / / No OPTION TO ELECT REPAYMENT: / / Yes / / No OPTIONAL REPAYMENT DATE(S): OPTIONAL REPAYMENT PRICE(S): OPTIONAL EXTENSION OF ORIGINAL MATURITY DATE: / / Yes / / No EXTENSION PERIOD: NUMBER OF EXTENSION PERIODS: FINAL MATURITY DATE: OPTIONAL INTEREST RESET: / / Yes / / No OPTIONAL INTEREST RESET DATES: ORIGINAL ISSUE DISCOUNT NOTE / / Yes / / No ISSUE PRICE (percentage of principal) YIELD TO MATURITY RENEWABLE AT OPTION OF HOLDER: / / Yes / / No ANNEX ATTACHED (and incorporated by reference herein): / / Yes / / No MidAmerican Energy Company, an Iowa corporation (herein called the"Company", which term includes any successor Person under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to or registered assigns the principal sum specified above, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, on the Maturity date specified above and to pay interest thereon, in such coin or currency, from and including the Original Issue Date (or if this Global Note has two or more Original Issue Dates, interest shall, beginning on each such Original Issue Date, begin to accrue for that part of the principal amount to which such Original Issue Date is applicable) specified above, or from and including the most recent Interest Payment Date specified above to which interest has been paid or duly provided for, as the case may be. Interest shall be paid in arrears semiannually on each Interest Payment Date in each year commencing on (a) the first such Interest Payment Date next succeeding the earliest Original Issue Date or Dates, or (b) if such Original Issue Date is after a Record Date and prior to the first Interest Payment Date, on the second Interest Payment Date, at the per annum Interest Rate set forth above until Maturity and the principal hereof is paid or made available for payment. The interest so payable and punctually paid or duly provided for on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note is registered at the close of business on the Record Date specified above next preceding such Interest Payment Date; PROVIDED, HOWEVER, that if an Original Issue Date falls between a Record Date and the next Interest Payment Date, the first payment of interest with respect to such Original Issue Date will be paid on the second Interest Payment Date subsequent to such Original Issue Date to the Person in whose name this Note is registered at the close of business on the Record Date for such second Interest Payment Date; and PROVIDED, FURTHER, that interest payable on the Maturity date or, if applicable, upon redemption, shall be payable to the Person to whom principal shall be payable. Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Record Date and shall be paid to the Person in whose name this Note is registered at the close of business on a Record Date for the payment of such defaulted interest to be fixed by the Company, notice whereof shall be given to Noteholders not less than fifteen days prior to such Record Date. Payment of the principal of and any premium and interest on this Note shall be made on or before 10:30 A.M., New York City time or such other time as shall be agreed upon between the Trustee and the A-2 Depositary, of the day on which such payment is due, by wire transfer into the account specified by the Depositary; PROVIDED, HOWEVER, that as a condition to the payment at the Maturity date of any part of the principal and any applicable premium of this Global Note, the Depositary shall surrender, or cause to be surrendered, this Global Note to the Trustee. The Company will pay any administrative costs imposed by banks in connection with making payments by wire transfer, but not any tax, assessment or governmental charge imposed on the Holder of this Note. Under certain circumstances, this Global Note is exchangeable in whole or from time to time in part for a definitive individual Note or Notes, with the same Original Issue Date or Dates, Maturity date, Interest Rate and redemption and other provisions as provided herein or in the Indenture. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS GLOBAL NOTE SET FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an Authenticating Agent, by manual signature of an authorized signatory, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. Dated: MIDAMERICAN ENERGY COMPANY By President TRUSTEE'S CERTIFICATE OF AUTHENTICATION By This is one of the Notes referred Secretary to in the within-mentioned Indenture. THE FIRST NATIONAL BANK OF CHICAGO, as Trustee By Authorized Signatory A-3 MIDAMERICAN ENERGY COMPANY MEDIUM-TERM NOTE This Global Note is one of, and a global security which represents Notes which are part of, the duly authorized Notes of the Company (herein called the "Notes"), issued and to be issued under an Indenture dated as of __________, 1996 (herein called the "Indenture") between the Company and The First National Bank of Chicago, as Trustee (herein called the "Trustee", which term includes any successor Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Noteholders, and of the terms upon which the Notes are, and are to be, authenticated and delivered. Each Note shall be dated the date of its authentication by the Trustee. Each Note shall also bear an Original Issue Date or Dates which with respect to this Global Note (or any portion thereof) shall mean the date or dates of the original issue of the Notes represented hereby as specified on the face hereof, and such Original Issue Date or Dates shall remain the same for all Notes subsequently issued upon transfer, exchange or substitution of such original Note (or such subsequently issued Notes) regardless of their dates of authentication. The Notes may bear different dates, mature at different times, bear interest at different dates, be subject to different redemption provisions, if any, and may otherwise vary, all as provided in the Indenture. Interest on this Note will be payable on the Interest Payment Date or Interest Payment Dates as specified on the face hereof and, in either case, at Maturity. Unless otherwise specified on the face hereof, payments on this Note with respect to any particular Interest Payment Date or the Maturity date will include interest accrued from and including the applicable Original Issue Date, or from and including the most recent Interest Payment Date to which interest has been paid or duly provided for, to but excluding the particular Interest Payment Date or the Maturity date. Interest on this Note will be computed and paid on the basis of a 360-day year of twelve 30-day months. Unless otherwise specified on the face hereof, if this Note is an Amortizing Note, payments with respect to this Note will be applied first to interest due and payable hereon and then to the reduction of the unpaid principal amount hereof. If this Note is an Amortizing Note, a table setting forth the schedule of A-4 dates and amounts of payments of principal of and interest on this Note or the formula for the amortization of principal and/or interest is set forth in an annex attached to this Note. All percentages resulting from any calculation with respect to this Note will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with five one-millionths of a percentage point rounded upward) and all dollar amounts used in or resulting from any such calculation with respect to this Note will be rounded to the nearest cent (with one-half cent being rounded upward). "Business Day" means, unless otherwise specified on the face hereof, any Monday, Tuesday, Wednesday, Thursday or Friday that in The City of New York is not a day on which banking institutions are authorized or obligated by law, regulation or executive order to close. If an Interest Payment Date or Maturity for this Note falls on a day that is not a Business Day, payment of principal, premium, if any, and interest to be made on such day with respect to this Note will be made on the next day that is a Business Day with the same force and effect as if made on the due date, and no additional interest will be payable on the date of payment for the period from and after the due date as a result of such delayed payment. This Note will be redeemable at the option of the Company prior to its Stated Maturity only if an Initial Redemption Date is specified on the face hereof. If so specified, this Note will be subject to redemption at the option of the Company on any date on and after such Initial Redemption Date in whole or from time to time in part in increments of $1,000 or integral multiples thereof, at the redemption prices specified in an annex attached to this Note, plus accrued and unpaid interest to but excluding the date of redemption, but payments due with respect to this Note prior to the date of redemption will be payable to the Holder of this Note of record at the close of business on the relevant Record Date specified on the face hereof, all as provided in the Indenture. The Company may exercise such option by causing the Trustee to mail a notice of such redemption, at least 30 but not more than 60 calendar days prior to the date of redemption, in accordance with the provisions of the Indenture. In the event of redemption of this Note in part only, this Note will be cancelled and a new Note or Notes representing the unredeemed portion hereof will be issued in the name of the Holder hereof. This Note is not subject to a sinking fund unless otherwise specified in an annex attached hereto. A-5 If so specified on the face of this Note, (i) this Note shall be subject to repayment, in whole or in part, prior to Stated Maturity at the option of the Holder on a certain date or dates and at a certain price or prices, plus accrued and unpaid interest to but excluding the date of payment; (ii) the Stated Maturity of this Note may be extended at the option of the Company for one or more Extension Periods of from one to five years, as specified on the face hereof, up to but not beyond the Final Maturity Date specified on the face hereof; (iii) the interest rate specified on the face hereof may be reset by the Company in accordance with a formula or otherwise on the Optional Interest Reset Date or Dates specified on the face hereof; and/or (iv) this Note shall be renewable at the option of the Holder, in each case in accordance with the provisions of the Indenture applicable thereto and/or as specified in an annex attached to this Note. Notwithstanding anything herein to the contrary, if this Note is an Original Issue Discount Note as specified on the face hereof, the amount payable in the event the principal amount hereof is declared to be due and payable immediately by reason of an Event of Default or in the event of redemption or repayment hereof prior to the Stated Maturity hereof, in lieu of the principal amount due at the Stated Maturity hereof, shall be the Amortized Face Amount of this Note as of the date of declaration, redemption or repayment, as the case may be. The "Amortized Face Amount" of this Note shall be the amount equal to the principal amount of this Note multiplied by the Issue Price specified on the face hereof plus (b) the portion of the difference between the dollar amount thus obtained and the principal amount hereof that has accreted at the Yield to Maturity specified on the face hereof (computed in accordance with generally accepted United States bond yield computation principles) to such date of declaration, redemption or repayment but in no event shall the Amortized Face Amount of this Note exceed the principal amount stated on the face hereof. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Noteholders to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding that would be affected thereby. The Indenture also contains provisions permitting the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding, on behalf of the Holders of all Notes, to waive A-6 compliance by the Company with certain covenants in the Indenture. The Indenture also provides that the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding may waive certain past defaults and their consequences on behalf of the Holders of all Notes. Any such consent or waiver by the Holder of this Global Note (if not timely revoked in accordance with the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders of this Global Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Global Note or such Note. As set forth in, and subject to, the provisions of the Indenture, no Holder of any Notes will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing default with respect to the Notes, the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as Trustee, and the Trustee shall have failed to institute such proceeding within 60 days; PROVIDED, HOWEVER, that such limitations do not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of and any premium or interest on this Global Note on or after the respective due dates expressed herein. THIS NOTE IS A GLOBAL NOTE REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE THEREOF AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL NOTES REPRESENTED HEREBY, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. If at any time the Depositary for this Global Note notifies the Company that it is unwilling or unable to continue as Depositary for this Global Note or if at any time the Depositary for this Global Note shall no longer be registered as a clearing agency under the Securities Exchange Act of 1934, as amended, or any successor statute or regulation, the Company may appoint a successor Depositary with respect to this Global Note. If (A) a successor Depositary for this Global Note is not appointed by the Company within 90 days after the Company A-7 receives such notice or becomes aware of such ineligibility, or (B) any Notes are represented by this Global Note at a time when an Event of Default with respect to the Notes shall have occurred and be continuing, then in each case the Company's election to issue this Note in global form shall no longer be effective with respect to this Global Note and the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of individual Notes in exchange for this Global Note, shall authenticate and make available for delivery, individual Notes of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of this Global Note in exchange for this Global Note. If agreed by the Company and the Depositary with respect to Notes issued in the form of this Global Note, the Depositary for such Global Note shall surrender this Global Note in exchange in whole or in part for individual Notes of like tenor and terms in definitive form on such terms as are acceptable to the Company and such Depositary. Thereupon the Company shall execute, and the Trustee shall authenticate and make available for delivery, without a service charge, (1) to each Person specified by such Depositary, a new Note or Notes of like tenor and terms, and of any authorized denomination as requested by such Person in aggregate principal amount equal to and in exchange for the beneficial interest of such Person in this Global Note, and (2) to such Depositary a new Global Note of like tenor and terms and in a denomination equal to the difference, if any, between the principal amount of this Global Note and the aggregate principal amount of Notes delivered to Holders thereof. Under certain circumstances specified in the Indenture, the Depositary may be required to surrender any two or more Global Notes which have identical terms (but which may have differing Original Issue Dates) to the Trustee, and the Company shall execute and the Trustee shall authenticate and deliver to, or at the direction of, the Depositary a Global Note in principal amount equal to the aggregate principal amount of, and with all terms identical to, the Global Notes surrendered to the Trustee, and such new Global Note shall indicate each applicable Original Issue Date and the principal amount applicable to each such Original Issue Date. No reference herein to the Indenture and no provision of this Global Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this A-8 Global Note at the times, places and rates, and in the coin or currency, herein prescribed. The Indenture contains provisions for the satisfaction and discharge of the Indenture upon compliance by the Company with certain conditions specified therein, which provisions apply to this Note. Prior to due presentment of this Global Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Global Note is registered as the owner hereof for all purposes, whether or not this Global Note is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York. All terms used in the Note which are defined in the Indenture but are not defined in this Note shall have the meanings assigned to them in the Indenture. A-9 OPTION TO ELECT REPAYMENT [To be completed only if this Note is repayable at the option of the Holder and the Holder elects to exercise such rights] The undersigned owner of this Note hereby irrevocably elects to have the Company repay (i) the principal amount of this Note or portion hereof below designated at the applicable optional repayment price indicated on an annex attached hereto plus accrued and unpaid interest to but excluding the date of repayment, if this election is being made pursuant to the option referred to under "Option to Elect Repayment" on the face hereof, or (ii) 100% of the principal amount of this Note plus accrued and unpaid interest to but excluding the Optional Interest Reset Date, if this election is being made following an exercise by the Company of the option referred to under "Optional Interest Reset" on the face hereof, or to but excluding the Pre-Exercise Stated Maturity Date (as defined in the Indenture), if this election is being made following an exercise by the Company of the option referred to under "Optional Extension of Original Maturity Date" on the face hereof. If a portion of this Note is not being repaid pursuant to clause (i) above, specify the principal amount to be repaid and the denomination or denominations (which will be $1,000 or an integral multiple thereof) of the Note or Notes to be issued to the Holder for the portion of this Note not being repaid (in the absence of any specification, one such Note will be issued for the portion not being repaid): Dated: ----------------------- ----------------------------------- Signature Sign exactly as name appears on the front of this Note Principal amount to be repaid if Indicate address where check is amount to be repaid is pursuant to be sent: to clause (i) above and is less than the entire principal amount of this Note (principal amount remaining ----------------------------------- must be an authorized denomination) ----------------------------------- $ ---------------------------------- (Which must be an integral multiple of $1,000) Denomination or denominations of the SOCIAL SECURITY OR OTHER TAXPAYER Note or Notes to be issued for the ID NUMBER: portion of this Note not being repaid pursuant to clause (i) above: ----------------------------------- - ----------------------------------- - ----------------------------------- A-10 ABBREVIATIONS The following abbreviations, when used in the inscription of the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIT GIFT MIN ACT - _____Custodian_____ TEN ENT - as tenants by the (Cust) (Minor) entireties Under Uniform Gifts to Minors Act JT TEN - as joint tenants with right of survivorship and not as tenants in common ___________________ State Additional abbreviations may also be used though not in the above list. ______________________ FOR VALUE RECEIVED the undersigned hereby sell(s) assign(s) and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ____________________________________________ ____________________________________________ ________________________________________________________________________________ Please print or typewrite name and address including postal zip code of assignee ________________________________________________________________________________ the within note and all rights thereunder, hereby irrevocably constituting and appointing _____________________________________ attorney to transfer said note on the books of the Company, with full power of substitution in the premises. Dated:____________________ _____________________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever. The signature must be guaranteed by a commercial bank, a trust company or a member of the New York Stock Exchange. A-11 EXHIBIT B Fixed Rate Note REGISTERED REGISTERED NO. MIDAMERICAN ENERGY COMPANY Fixed Rate Medium-Term Note The following summary of terms is subject to the provisions set forth below: CUSIP: ORIGINAL ISSUE DATE: PRINCIPAL AMOUNT: MATURITY DATE: INTEREST RATE: INTEREST PAYMENT DATES: RECORD DATES: OPTIONAL REDEMPTION: / / Yes / / No INITIAL REDEMPTION DATE: AMORTIZING NOTE: / / Yes / / No OPTION TO ELECT REPAYMENT: / / Yes / / No OPTIONAL REPAYMENT DATE(S): OPTIONAL REPAYMENT PRICE(S): OPTIONAL EXTENSION OF ORIGINAL MATURITY DATE: / / Yes / / No EXTENSION PERIOD: NUMBER OF EXTENSION PERIODS: FINAL MATURITY DATE: OPTIONAL INTEREST RESET: / / Yes / / No OPTIONAL INTEREST RESET DATES: ORIGINAL ISSUE DISCOUNT NOTE: / / Yes / / No ISSUE PRICE (percentage of principal): YIELD TO MATURITY: RENEWABLE AT OPTION OF HOLDER: / / Yes / / No ANNEX ATTACHED (and incorporated by reference herein): / / Yes / / No MidAmerican Energy Company, an Iowa corporation (herein called the "Company", which term includes any successor Person under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to or registered assigns the principal sum specified above, in such coin to currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, on the Maturity date specified above, and to pay interest thereon, in such coin or currency, from and including the Original Issue Date specified above, or from the most recent Interest Payment Date specified above to which interest has been paid or duly provided for, as the case may be. Interest shall be paid in arrears semiannually on each Interest Payment Date in each year commencing on (a) the first such Interest Payment Date next succeeding the Original Issue Date specified above, or (b) if such Original Issue Date is after a Record Date and prior to the first Interest Payment Date, on the second Interest Payment Date, at the per annum Interest Rate set forth above until Maturity and the principal hereof is paid or made available for payment. The interest so payable and punctually paid or duly provided for on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note is registered at the close of business on the Record Date specified above next preceding such Interest Payment Date; PROVIDED, HOWEVER that if the Original issue Date falls between a Record Date and the next Interest Payment Date, the first payment of interest will be paid on the second Interest Payment Date subsequent to such Original Issue Date to the Person in whose name this Note is registered at the close of business on the Record Date for such second Interest Payment Date; and PROVIDED, FURTHER, that interest payable on the Maturity date, or, if applicable, upon redemption, shall be payable to the Person to whom principal shall be payable. Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Record Date and shall be paid to the Person in whose name this Note is registered at the close of business on a Record Date for the payment of such defaulted interest to be fixed by the Company, notice whereof shall be given to Noteholders not less than fifteen days prior to such Record Date. Payment of the principal of and any premium and interest on this Note due at the Maturity of this Note shall be payable in immediately available funds when due upon presentation and surrender of such Note at the Corporate Trust Office of the Trustee in the Borough of Manhattan, The City of New York; PROVIDED that this Note is presented to the Trustee in time for the Trustee to make such payment in such funds in accordance with its normal procedures. Accrued Interest on (and, if this Note is an Amortizing Note, installments of principal of) this Note (other than Accrued B-2 Interest or such installments payable at Maturity) shall be paid by a clearinghouse funds check mailed on the Interest Payment Date; PROVIDED, HOWEVER, that if any Holder of Notes, the aggregate principal amount of which equals or exceeds $10,000,000, provides a written request to the Trustee on or before the applicable Record Date for such Interest Payment Date, Accrued Interest (and such installments of principal) shall be paid by wire transfer of immediately available funds to a bank within the continental United States or by direct deposit into the account of such Holder if such account is maintained with the Trustee. The Company will pay any administration costs imposed by banks in connection with making payments by wire transfer, but not any tax, assessment or governmental charge imposed upon the Holder of this Note. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an Authenticating Agent, by manual signature of an authorized signatory, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. Dated: MIDAMERICAN ENERGY COMPANY By President TRUSTEE'S CERTIFICATE OF AUTHENTICATION By Secretary This is one of the Notes referred to in the within-mentioned Indenture. THE FIRST NATIONAL BANK OF CHICAGO, as Trustee By Authorized Signatory B-3 MIDAMERICAN ENERGY COMPANY MEDIUM-TERM NOTE This Note is one of the duly authorized Notes of the Company (herein called the "Notes"), issued and to be issued under an Indenture dated as of __________, 1996 (herein called the "Indenture") between the Company and The First National Bank of Chicago, as Trustee (herein called the "Trustee", which term includes any successor Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Noteholders, and of the terms upon which the Notes are, and are to be, authenticated and delivered. Each Note shall be dated the date of its authentication by the Trustee. Each Note shall also bear an Original Issue Date which with respect to this Note (or any portion thereof) shall mean the date of its original issue as specified on the face hereof, and such Original Issue Date shall remain the same for all Notes subsequently issued upon transfer, exchange or substitution of such original Note (or such subsequently issued Notes) regardless of their dates of authentication. The Notes may bear different dates, mature at different times, bear interest at different dates, be subject to different redemption provisions, if any, and may otherwise vary, all as provided in the Indenture. Interest on this Note will be payable on the Interest Payment Date or Interest Payment Dates as specified on the face hereof and, in either case, at Maturity. Unless otherwise specified on the face hereof, payments on this Note with respect to any particular Interest Payment Date or the Maturity date will include interest accrued from and including the Original Issue Date, or from and including the most recent Interest Payment Date to which interest has been paid or duly provided for, to but excluding the particular Interest Payment Date or the Maturity date. Interest on this Note will be computed and paid on the basis of a 360-day year of twelve 30-day months. Unless otherwise specified on the face hereof, if this Note is an Amortizing Note, payments with respect to this Note will be applied first to interest due and payable hereon and then to the reduction of the unpaid principal amount hereof. If this Note is an Amortizing Note, a table setting forth the schedule of dates and amounts of payments of principal of and interest on this Note or the formula for the amortization of principal and/or interest is set forth in an annex attached to this Note. B-4 All percentages resulting from any calculation with respect to this Note will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with five one-millionths of a percentage point rounded upward) and all dollar amounts used in or resulting from any such calculation with respect to this Note will be rounded to the nearest cent (with one-half cent being rounded upward). "Business Day" means, unless otherwise specified on the face hereof, any Monday, Tuesday, Wednesday, Thursday or Friday that in The City of New York is not a day on which banking institutions are authorized or obligated by law, regulation or executive order to close. If an Interest Payment Date or Maturity for this Note falls on a day that is not a Business Day, payment of principal, premium, if any, and interest to be made on such day with respect to this Note will be made on the next day that is a Business Day with the same force and effect as if made on the due date, and no additional interest will be payable on the date of payment for the period from and after the due date as a result of such delayed payment. This Note will be redeemable at the option of the Company prior to its Stated Maturity only if an Initial Redemption Date is specified on the face hereof. If so specified, this Note will be subject to redemption at the option of the Company on any date on and after such Initial Redemption Date in whole or from time to time in part in increments of $1,000 or integral multiples thereof, at the redemption prices specified in an annex attached to this Note, plus accrued and unpaid interest to but excluding the date of redemption, but payments due with respect to this Note prior to the date of redemption will be payable to the Holder of this Note of record at the close of business on the relevant Record Date specified on the face hereof, all as provided in the Indenture. The Company may exercise such option by causing the Trustee to mail a notice of such redemption, at least 30 but not more than 60 calendar days prior to the date of redemption, in accordance with the provisions of the Indenture. In the event of redemption of this Note in part only, this Note will be cancelled and a new Note or Notes representing the unredeemed portion hereof will be issued in the name of the Holder hereof. This Note is not subject to a sinking fund unless otherwise specified in an annex attached hereto. If so specified on the face of this Note, (i) this Note shall be subject to repayment, in whole or in part, prior to Stated Maturity at the option of the Holder on the Optional B-5 Repayment Date or Dates specified on the face hereof at the Optional Repayment Price or Prices specified on the face hereof, plus accrued and unpaid interest to but excluding the date of payment; (ii) the Stated Maturity of this Note may be extended at the option of the Company for one or more Extension Periods of from one to five years, as specified on the face hereof, up to but not beyond the Final Maturity Date specified on the face hereof; (iii) the interest rate specified on the face hereof may be reset by the Company in accordance with a formula or otherwise on the Optional Interest Reset Date or Dates specified on the face hereof; and/or (iv) this Note shall be renewable at the option of the Holder, in each case in accordance with the provisions of the Indenture applicable thereto and/or the provisions of an annex attached to this Note. Notwithstanding anything herein to the contrary, if this Note is an Original Issue Discount Note as specified on the face hereof, the amount payable in the event the principal amount hereof is declared to be due and payable immediately by reason of an Event of Default or in the event of redemption or repayment hereof prior to the Stated Maturity hereof, in lieu of the principal amount due at the Stated Maturity hereof, shall be the Amortized Face Amount of this Note as of the date of declaration, redemption or repayment, as the case may be. The "Amortized Face Amount" of this Note shall be the amount equal to the principal amount of this Note multiplied by the Issue Price specified on the face hereof plus (b) the portion of the difference between the dollar amount thus obtained and the principal amount hereof that has accreted at the Yield to Maturity specified on the face hereof (computed in accordance with generally accepted United States bond yield computation principles) to such date of declaration, redemption or repayment but in no event shall the Amortized Face Amount of this Note exceed the principal amount stated on the face hereof. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Noteholders to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding that could be affected thereby. The Indenture also contains provisions permitting the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding, on behalf of the Holders of all Notes, to waive compliance by the Company with certain covenants in the Indenture. The Indenture also provides that the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding may waive certain past defaults and their consequences on behalf of the Holders of all Notes. Any such B-6 consent or waiver by the Holder of this Global Note (if not timely revoked in accordance with the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note or such Note. As set forth in, and subject to, the provisions of the Indenture, no Holder of any Notes will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing default with respect to the Notes, the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as Trustee, and the Trustee shall have failed to institute such proceeding within 60 days; PROVIDED, HOWEVER, that such limitations do not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of and any premium or interest on this Note on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Note at the times, places and rates, and in the coin or currency, herein prescribed. The Indenture contains provisions for the satisfaction and discharge of the Indenture upon compliance by the Company with certain conditions specified therein, which provisions apply to this Note. Unless otherwise specified in an annex attached hereto, the Notes are issuable only in registered form, without coupons, in denominations of $1,000 and integral multiples thereof. As provided in the Indenture and subject to certain limitations specified therein, this Note may be exchanged for one or more new Notes, of any authorized denominations and of a like aggregate principal amount and Stated Maturity and having the same terms and Original Issue Date, as requested by the Holder surrendering this Note. As provided in the Indenture and subject to the limitations specified therein, upon due presentment of this Note for registration of transfer at an office or agency of the Trustee in the Borough of Manhattan, The City of New York, maintained for such purpose, duly endorsed by, or accompanied by B-7 a written instrument of transfer in form satisfactory to the Company and the note registrar duly executed by, the Holder hereof or the attorney of such Holder duly authorized in writing, the Company shall execute and register or cause to be registered and the Trustee shall authenticate and make available for delivery, in the name of the transferee or transferees one or more new Notes of any authorized denominations and of a like aggregate principal amount and Stated Maturity and having the same terms and Original Issue Date. No service charge will be made for any such exchange or registration of transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York. All terms used in the Note which are defined in the Indenture but are not defined in this Note shall have the meanings assigned to them in the Indenture. B-8 OPTION TO ELECT REPAYMENT [To be completed only if this Note is repayable at the option of the Holder and the Holder elects to exercise such rights] The undersigned owner of this Note hereby irrevocably elects to have the Company repay (i) the principal amount of this Note or portion hereof below designated at the applicable Optional Repayment Price indicated on the face hereof plus accrued and unpaid interest to but excluding the date of repayment, if this election is being made pursuant to the option referred to under "Option to Elect Repayment" on the face hereof, or (ii) 100% of the principal amount of this Note plus accrued and unpaid interest to but excluding the Optional Interest Reset Date, if this election is being made following an exercise by the Company of the option referred to under "Optional Interest Reset" on the face hereof, or to but excluding the Pre-Exercise Stated Maturity Date (as defined in the Indenture), if this election is being made following an exercise by the Company of an option referred to under "Optional Extension of Original Maturity Date" on the face hereof. If a portion of this Note is not being repaid pursuant to clause (i) above, specify the principal amount to be repaid and the denomination or denominations (which will be $1,000 or an integral multiple thereof) of the Note or Notes to be issued to the Holder for the portion of this Note not being repaid (in the absence of any specification, one such Note will be issued for the portion not being repaid): Dated: ----------------------- ---------------------------------------- Signature Sign exactly as name appears on the front of this Note Principal amount to be repaid if Indicate address where check is amount to be repaid is pursuant to be sent: to clause (i) above and is less than the entire principal amount of this Note (principal amount remaining ---------------------------------------- must be an authorized denomination) ---------------------------------------- $ ---------------------------------- (Which must be an integral multiple of $1,000) Denomination or denominations of the SOCIAL SECURITY OR OTHER TAXPAYER Note or Notes to be issued for the ID NUMBER: portion of this Note not being repaid pursuant to clause (i) above: ---------------------------------------- - ----------------------------------- - ----------------------------------- B-9 ABBREVIATIONS The following abbreviations, when used in the inscription of the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIT GIFT MIN ACT - _____Custodian_____ TEN ENT - as tenants by the (Cust) (Minor) entireties Under Uniform Gifts to Minors Act JT TEN - as joint tenants with right of survivorship and not as tenants in common ___________________ State Additional abbreviations may also be used though not in the above list. ______________________ FOR VALUE RECEIVED the undersigned hereby sell(s) assign(s) and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ____________________________________________ ____________________________________________ ________________________________________________________________________________ Please print or typewrite name and address including postal zip code of assignee ________________________________________________________________________________ the within note and all rights thereunder, hereby irrevocably constituting and appointing _____________________________________ attorney to transfer said note on the books of the Company, with full power of substitution in the premises. Dated:____________________ _____________________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever. The signature must be guaranteed by a commercial bank, a trust company or a member of the New York Stock Exchange. B-10 EXHIBIT C Global Floating Rate Note REGISTERED REGISTERED NO. MIDAMERICAN ENERGY COMPANY Floating Rate Medium-Term Note Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Company or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co., or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. The following summary of terms is subject to the provisions set forth below: CUSIP: ORIGINAL ISSUE DATE(S): PRINCIPAL AMOUNT: MATURITY DATE: INITIAL INTEREST RATE: INTEREST RATE BASIS (BASE RATE): INDEX MATURITY: INTEREST DETERMINATION DATES: INTEREST RESET PERIOD: INTEREST RESET DATES: SPREAD: SPREAD MULTIPLIER: MAXIMUM INTEREST RATE: MINIMUM INTEREST RATE: INTEREST PAYMENT DATES: RECORD DATES: OPTIONAL REDEMPTION: / / Yes / / No INITIAL REDEMPTION DATE: AMORTIZING NOTE: / / Yes / / No OPTION TO ELECT REPAYMENT: / / Yes / / No OPTIONAL REPAYMENT DATE(S): OPTIONAL REPAYMENT PRICE(S): OPTIONAL EXTENSION OF ORIGINAL MATURITY DATE: / / Yes / / No EXTENSION PERIOD: NUMBER OF EXTENSION PERIODS: FINAL MATURITY DATE: OPTIONAL INTEREST RESET: / / Yes / / No OPTIONAL INTEREST RESET DATES: ORIGINAL ISSUE DISCOUNT NOTE: / / Yes / / No ISSUE PRICE (percentage of principal): YIELD TO MATURITY: RENEWABLE AT OPTION OF HOLDER: / / Yes / / No ANNEX ATTACHED (and incorporated by reference herein): / / Yes / / No MidAmerican Energy Company, an Iowa corporation (herein called the "Company", which term includes any successor Person under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to or registered assigns the principal sum specified above, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, on the Maturity date specified above and to pay interest thereon, in such coin or currency, from and including the Original Issue Date (or if this Global Note has two or more Original Issue Dates, interest shall, beginning on each such Original Issue Date, begin to accrue for that part of the principal amount to which such Original Issue Date is applicable) specified above, or from and including the most recent Interest Payment Date specified above to which interest has been paid or duly provided for, as the case may be. Interest shall be paid in arrears monthly, quarterly, semiannually or annually as specified above under Interest Payment Dates, on each Interest Payment Date in each year and at Maturity, commencing on (a) the first such Interest Payment Date next succeeding the earliest Original Issue Date or Dates, or (b) if such Original Issue Date is after a Record Date and prior to the first Interest Payment Date, on the second Interest Payment Date, at a rate per annum equal to the Initial Interest Rate specified above until the initial Interest Reset Date specified above, and thereafter at a rate per annum determined in accordance with the provisions in the Indenture for calculating the Interest Rate for Notes having the Interest Rate Basis specified above, until Maturity and the principal hereof is paid or made available for payment. The interest so payable and punctually paid or duly provided for on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note is registered at the close of business on the Record Date specified above next preceding such Interest Payment Date; PROVIDED, HOWEVER, that if an Original Issue Date falls between a Record Date and the next Interest Payment Date, the first payment of interest with respect to such Original Issue Date will be paid on the second Interest Payment Date subsequent to such Original Issue Date to the Person in whose name this Note is registered at the close of business on the Record Date for such second Interest Payment Date; and PROVIDED, FURTHER, that interest payable on the Maturity date or, if applicable, upon redemption, shall be payable to the Person to whom principal shall be payable. Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Record Date and shall be paid to the Person in whose name this Note is registered at the close of business on a Record Date for the C-2 payment of such defaulted interest to be fixed by the Company, notice whereof shall be given to Noteholders not less than fifteen days prior to such Record Date. Payment of the principal of and any premium and interest on this Note shall be made on or before 10:30 A.M., New York City time or such other time as shall be agreed upon between the Trustee and the Depositary, of the day on which such payment is due, by wire transfer into the account specified by the Depositary; PROVIDED, HOWEVER, that as a condition to the payment at the Maturity date of any part of the principal and any applicable premium of this Global Note, the Depositary shall surrender, or cause to be surrendered, this Global Note to the Trustee. The Company will pay any administrative costs imposed by banks in connection with making payments by wire transfer, but not any tax, assessment or governmental charge imposed on the Holder of this Note. Under certain circumstances, this Global Note is exchangeable in whole or from time to time in part for a definitive individual Note or Notes, with the same Original Issue Date or Dates, Maturity date, Interest Rate and redemption and other provisions as provided herein or in the Indenture. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS GLOBAL NOTE SET FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an Authenticating Agent, by manual signature of an authorized signatory, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. Dated: MIDAMERICAN ENERGY COMPANY By President TRUSTEE'S CERTIFICATE OF AUTHENTICATION By This is one of the Notes referred Secretary to in the within-mentioned Indenture. THE FIRST NATIONAL BANK OF CHICAGO, as Trustee By Authorized Signatory C-3 MIDAMERICAN ENERGY COMPANY MEDIUM-TERM NOTE This Global Note is one of, and a global security which represents Notes which are part of, the duly authorized Notes of the Company (herein called the "Notes"), issued and to be issued under an Indenture dated as of __________, 1996 (herein called the "Indenture") between the Company and The First National Bank of Chicago, as Trustee (herein called the "Trustee", which term includes any successor Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Noteholders, and of the terms upon which the Notes are, and are to be, authenticated and delivered. Each Note shall be dated the date of its authentication by the Trustee. Each Note shall also bear an Original Issue Date or Dates which with respect to this Global Note (or any portion thereof) shall mean the date or dates of the original issue of the Notes represented hereby as specified on the face hereof, and such Original Issue Date or Dates shall remain the same for all Notes subsequently issued upon transfer, exchange or substitution of such original Note (or such subsequently issued Notes) regardless of their dates of authentication. The Notes may bear different dates, mature at different times, bear interest at different dates, be subject to different redemption provisions, if any, and may otherwise vary, all as provided in the Indenture. Interest on this Note will be payable on the Interest Payment Date or Interest Payment Dates as specified on the face hereof and, in either case, at Maturity. Unless otherwise specified on the face hereof, payments on this Note with respect to any particular Interest Payment Date or the Maturity date will include interest accrued from and including the applicable Original Issue Date, or from and including the most recent Interest Payment Date to which interest has been paid or duly provided for, to but excluding the particular Interest Payment Date or the Maturity date. Interest on this Note shall be calculated for each day during such period by dividing the interest rate applicable to such day by 360, if the Interest Rate Basis specified on the face hereof is the Commercial Paper Rate, LIBOR or Prime Rate, or by the actual number of days in the year, if the Interest Rate Basis specified on the face hereof is the Treasury Rate. Unless otherwise provided in an annex attached hereto, the Trustee, acting in the capacity of Calculation Agent, C-4 will calculate the Interest Rate on this Note. Upon the request of any Holder of this Note, the Trustee shall provide to such Holder the Interest Rate then in effect and, if then determined, the interest rate that will become effective on the next Interest Reset Date with respect to this Note. Each such determination of an Interest Rate will be final and binding in the absence of manifest error. Unless otherwise specified in an annex attached hereto, if this Note is an Amortizing Note, payments with respect to this Note will be applied first to interest due and payable hereon and then to the reduction of the unpaid principal amount hereof. If this Note is an Amortizing Note, a table setting forth the schedule of dates and amounts of payments of principal of and interest on this Note or the formula for the amortization of principal and/or interest is set forth in an annex attached to this Note. All percentages resulting from any calculation with respect to this Note will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with five one-millionths of a percentage point rounded upward) and all dollar amounts used in or resulting from any such calculation with respect to this Note will be rounded to the nearest cent (with one-half cent being rounded upward). "Business Day" means, unless otherwise specified on the face hereof, any Monday, Tuesday, Wednesday, Thursday or Friday that in The City of New York is not a day on which banking institutions are authorized or obligated by law, regulation or executive order to close. If an Interest Payment Date or Maturity for this Note falls on a day that is not a Business Day, payment of principal, premium, if any, and interest to be made on such day with respect to this Note will be made on the next day that is a Business Day with the same force and effect as if made on the due date, and no additional interest will be payable on the date of payment for the period from and after the due date as a result of such delayed payment. This Note will be redeemable at the option of the Company prior to its Stated Maturity only if an Initial Redemption Date is specified on the face hereof. If so specified, this Note will be subject to redemption at the option of the Company on any date on and after such Initial Redemption Date in whole or from time to time in part in increments of $1,000 or integral multiples thereof, at the redemption prices specified in an annex attached to this Note, plus accrued and unpaid interest to but excluding the date of redemption, but C-5 payments due with respect to this Note prior to the date of redemption will be payable to the Holder of this Note of record at the close of business on the relevant Record Date specified on the face hereof, all as provided in the Indenture. The Company may exercise such option by causing the Trustee to mail a notice of such redemption, at least 30 but not more than 60 calendar days prior to the date of redemption, in accordance with the provisions of the Indenture. In the event of redemption of this Note in part only, this Note will be cancelled and a new Note or Notes representing the unredeemed portion hereof will be issued in the name of the Holder hereof. This Note is not subject to a sinking fund unless otherwise specified in an annex attached hereto. If so specified on the face of this Note, (i) this Note shall be subject to repayment, in whole or in part, prior to Stated Maturity at the option of the Holder on the Optional Repayment Date or Dates specified on the face hereof at the Optional Repayment Price or Prices specified on the face hereof, plus accrued and unpaid interest to but excluding the date of payment; (ii) the Stated Maturity of this Note may be extended at the option of the Company for one or more Extension Periods of from one to five years, as specified on the face hereof, up to but not beyond the Final Maturity Date specified on the face hereof; (iii) the interest rate specified on the face hereof may be reset by the Company in accordance with a formula or otherwise on the Optional Interest Reset Date or Dates specified on the face hereof; and/or (iv) this Note shall be renewable at the option of the Holder, in each case in accordance with the provisions of the Indenture applicable thereto and/or the provisions of an annex attached to this Note. Notwithstanding anything herein to the contrary, if this Note is an Original Issue Discount Note as specified on the face hereof, the amount payable in the event the principal amount hereof is declared to be due and payable immediately by reason of an Event of Default or in the event of redemption or repayment hereof prior to the Stated Maturity hereof, in lieu of the principal amount due at the Stated Maturity hereof, shall be the Amortized Face Amount of this Note as of the date of declaration, redemption or repayment, as the case may be. The "Amortized Face Amount" of this Note shall be the amount equal to the principal amount of this Note multiplied by the Issue Price specified on the face hereof plus (b) the portion of the difference between the dollar amount thus obtained and the principal amount hereof that has accreted at the Yield to Maturity specified on the face hereof (computed in accordance with generally accepted United States bond yield computation principles) to such date of C-6 declaration, redemption or repayment but in no event shall the Amortized Face Amount of this Note exceed the principal amount stated on the face hereof. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Noteholders to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding that could be affected thereby. The Indenture also contains provisions permitting the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding, on behalf of the Holders of all Notes, to waive compliance by the Company with certain covenants in the Indenture. The Indenture also provides that the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding may waive certain past defaults and their consequences on behalf of the Holders of all Notes. Any such consent or waiver by the Holder of this Global Note (if not timely revoked in accordance with the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders of this Global Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Global Note or such Note. As set forth in, and subject to, the provisions of the Indenture, no Holder of any Notes will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing default with respect to the Notes, the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as Trustee, and the Trustee shall have failed to institute such proceeding within 60 days; PROVIDED, HOWEVER, that such limitations do not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of and any premium or interest on this Global Note on or after the respective due dates expressed herein. THIS NOTE IS A GLOBAL NOTE REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE THEREOF AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL NOTES REPRESENTED HEREBY, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE C-7 DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. If at any time the Depositary for this Global Note notifies the Company that it is unwilling or unable to continue as Depositary for this Global Note or if at any time the Depositary for this Global Note shall no longer be registered as a clearing agency under the Securities Exchange Act of 1934, as amended, or any successor statute or regulation, the Company may appoint a successor Depositary with respect to this Global Note. If (A) a successor Depositary for this Global Note is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, or (B) any Notes are represented by this Global Note at a time when an Event of Default with respect to the Notes shall have occurred and be continuing, then in each case the Company's election to issue this Note in global form shall no longer be effective with respect to this Global Note and the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of individual Notes in exchange for this Global Note, shall authenticate and make available for delivery, individual Notes of like tenor and terms in definitive form in an aggregate principal amount equal to the principal amount of this Global Note in exchange for this Global Note. If agreed by the Company and the Depositary with respect to Notes issued in the form of this Global Note, the Depositary for such Global Note shall surrender this Global Note in exchange in whole or in part for individual Notes of like tenor and terms in definitive form on such terms as are acceptable to the Company and such Depositary. Thereupon the Company shall execute, and the Trustee shall authenticate and make available for delivery, without a service charge, (1) to each Person specified by such Depositary, a new Note or Notes of like tenor and terms, and of any authorized denomination as requested by such Person in aggregate principal amount equal to and in exchange for the beneficial interest of such Person in this Global Note, and (2) to such Depositary a new Global Note of like tenor and terms and in a denomination equal to the difference, if any, between the principal amount of this Global Note and the aggregate principal amount of Notes delivered to Holders thereof. Under certain circumstances specified in the Indenture, the Depositary may be required to surrender any two or more Global Notes which have identical terms (but which may have C-8 differing Original Issue Dates) to the Trustee, and the Company shall execute and the Trustee shall authenticate and deliver to, or at the direction of, the Depositary a Global Note in principal amount equal to the aggregate principal amount of, and with all terms identical to, the Global Notes surrendered to the Trustee, and such new Global Note shall indicate each applicable Original Issue Date and the principal amount applicable to each such Original Issue Date. No reference herein to the Indenture and no provision of this Global Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Global Note at the times, places and rates, and in the coin or currency, herein prescribed. The Indenture contains provisions for the satisfaction and discharge of the Indenture upon compliance by the Company with certain conditions specified therein, which provisions apply to this Note. Prior to due presentment of this Global Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Global Note is registered as the owner hereof for all purposes, whether or not this Global Note is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York. All terms used in the Note which are defined in the Indenture but are not defined in this Note shall have the meanings assigned to them in the Indenture. C-9 OPTION TO ELECT REPAYMENT [To be completed only if this Note is repayable at the option of the Holder and the Holder elects to exercise such rights] The undersigned owner of this Note hereby irrevocably elects to have the Company repay (i) the principal amount of this Note or portion hereof below designated at the applicable Optional Repayment Price indicated on the face hereof plus accrued and unpaid interest to but excluding the date of repayment, if this election is being made pursuant to the option referred to under "Option to Elect Repayment" on the face hereof, or (ii) 100% of the principal amount of this Note plus accrued and unpaid interest to but excluding the Optional Interest Reset Date, if this election is being made following an exercise by the Company of the option referred to under "Optional Interest Reset" on the face hereof, or to but excluding the Pre-Exercise Stated Maturity Date (as defined in the Indenture), if this election is being made following an exercise by the Company of the option referred to under "Optional Extension of Original Maturity Date" on the face hereof. If a portion of this Note is not being repaid pursuant to clause (i) above, specify the principal amount to be repaid and the denomination or denominations (which will be $1,000 or an integral multiple thereof) of the Note or Notes to be issued to the Holder for the portion of this Note not being repaid (in the absence of any specification, one such Note will be issued for the portion not being repaid): Dated: ----------------------- ---------------------------------------- Signature Sign exactly as name appears on the front of this Note Principal amount to be repaid if Indicate address where check is amount to be repaid is pursuant to be sent: to clause (i) above and is less than the entire principal amount of this Note (principal amount remaining ---------------------------------------- must be an authorized denomination) ---------------------------------------- $ - ----------------------------------- (Which must be an integral multiple of $1,000) Denomination or denominations of the SOCIAL SECURITY OR OTHER TAXPAYER Note or Notes to be issued for the ID NUMBER: portion of this Note not being repaid pursuant to clause (i) above: ---------------------------------------- - ----------------------------------- - ----------------------------------- C-10 ABBREVIATIONS The following abbreviations, when used in the inscription of the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIT GIFT MIN ACT - _____Custodian_____ TEN ENT - as tenants by the (Cust) (Minor) entireties Under Uniform Gifts to Minors Act JT TEN - as joint tenants with right of survivorship and not as tenants in common ___________________ State Additional abbreviations may also be used though not in the above list. ______________________ FOR VALUE RECEIVED the undersigned hereby sell(s) assign(s) and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ____________________________________________ ____________________________________________ ________________________________________________________________________________ Please print or typewrite name and address including postal zip code of assignee ________________________________________________________________________________ the within note and all rights thereunder, hereby irrevocably constituting and appointing _____________________________________ attorney to transfer said note on the books of the Company, with full power of substitution in the premises. Dated:____________________ _____________________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever. The signature must be guaranteed by a commercial bank, a trust company or a member of the New York Stock Exchange. C-11 EXHIBIT D Floating Rate Note REGISTERED REGISTERED NO. MIDAMERICAN ENERGY COMPANY Floating Rate Medium-Term Note The following summary of terms is subject to the provisions set forth below: CUSIP: ORIGINAL ISSUE DATE: PRINCIPAL AMOUNT: MATURITY DATE: INITIAL INTEREST RATE: INTEREST RATE BASIS (BASE RATE): INDEX MATURITY: INTEREST DETERMINATION DATES: INTEREST RESET PERIOD: INTEREST RESET DATES: SPREAD: SPREAD MULTIPLIER: MAXIMUM INTEREST RATE: MINIMUM INTEREST RATE: INTEREST PAYMENT DATES: RECORD DATES: OPTIONAL REDEMPTION: / / Yes / / No INITIAL REDEMPTION DATE: AMORTIZING NOTE: / / Yes / / No OPTION TO ELECT REPAYMENT: / / Yes / / No OPTIONAL REPAYMENT DATE(S): OPTIONAL REPAYMENT PRICE(S): OPTIONAL EXTENSION OF ORIGINAL MATURITY DATE: / / Yes / / No EXTENSION PERIOD: NUMBER OF EXTENSION PERIODS: FINAL MATURITY DATE: OPTIONAL INTEREST RESET: / / Yes / / No OPTIONAL INTEREST RESET DATES: ORIGINAL ISSUE DISCOUNT NOTE: / / Yes / / No ISSUE PRICE (percentage of principal): YIELD TO MATURITY: RENEWABLE AT OPTION OF HOLDER: / / Yes / / No ANNEX ATTACHED (and incorporated by reference herein): / / Yes / / No MidAmerican Energy Company, an Iowa corporation (herein called the "Company", which term includes any successor Person under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to or registered assigns the principal sum specified above, in such coin to currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, on the Maturity date specified above, and to pay interest thereon, in such coin or currency, from and including the Original Issue Date specified above, or from the most recent Interest Payment Date specified above to which interest has been paid or duly provided for, as the case may be. Interest shall be paid in arrears monthly, quarterly, semiannually or annually as specified above under Interest Payment Dates, on each Interest Payment Date in each year and at Maturity, commencing on (a) the first such Interest Payment Date next succeeding the Original Issue Date specified above, or (b) if such Original Issue Date is after a Record Date and prior to the first Interest Payment Date, on the second Interest Payment Date, at a rate per annum equal to the Initial Interest Rate specified above until the initial Interest Reset Date specified above, and thereafter at a rate per annum determined in accordance with the provisions in the Indenture for calculating the Interest Rate for Notes having the Interest Rate Basis specified above, until Maturity and the principal hereof is paid or made available for payment. The interest so payable and punctually paid or duly provided for on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note is registered at the close of business on the Record Date specified above next preceding such Interest Payment Date; PROVIDED, HOWEVER that if the Original issue Date falls between a Record Date and the next Interest Payment Date, the first payment of interest will be paid on the second Interest Payment Date subsequent to such Original Issue Date to the Person in whose name this Note is registered at the close of business on the Record Date for such second Interest Payment Date; and PROVIDED, FURTHER, that interest payable on the Maturity date, or, if applicable, upon redemption, shall be payable to the Person to whom principal shall be payable. Except as otherwise provided in the Indenture, any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Record Date and shall be paid to the Person in whose name this Note is registered at the close of business on a Record Date for the payment of such defaulted interest to be fixed by the Company, notice whereof shall be given to Noteholders not less than fifteen days prior to such Record Date. Payment of the principal of and any premium and interest on this Note due at the Maturity of this Note shall be payable in immediately available funds when due upon presentation and surrender of such Note at the Corporate Trust Office of the D-2 Trustee in the Borough of Manhattan, The City of New York; PROVIDED that this Note is presented to the Trustee in time for the Trustee to make such payment in such funds in accordance with its normal procedures. Accrued Interest on (and, if this Note is an Amortizing Note, installments of principal of) this Note (other than Accrued Interest or such installments payable at Maturity) shall be paid by a clearinghouse funds check mailed on the Interest Payment Date; PROVIDED, HOWEVER, that if any Holder of Notes, the aggregate principal amount of which equals or exceeds $10,000,000, provides a written request to the Trustee on or before the applicable Record Date for such Interest Payment Date, Accrued Interest (and such installments of principal) shall be paid by wire transfer of immediately available funds to a bank within the continental United States or by direct deposit into the account of such Holder if such account is maintained with the Trustee. The Company will pay any administration costs imposed by banks in connection with making payments by wire transfer, but not any tax, assessment or governmental charge imposed upon the Holder of this Note. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH IN FULL ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN FULL AT THIS PLACE. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, directly or through an Authenticating Agent, by manual signature of an authorized signatory, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. Dated: MIDAMERICAN ENERGY COMPANY By President TRUSTEE'S CERTIFICATE OF AUTHENTICATION By Secretary This is one of the Notes referred to in the within-mentioned Indenture. THE FIRST NATIONAL BANK OF CHICAGO, as Trustee By Authorized Signatory D-3 MIDAMERICAN ENERGY COMPANY MEDIUM-TERM NOTE This Note is one of the duly authorized Notes of the Company (herein called the "Notes"), issued and to be issued under an Indenture dated as of __________, 1996 (herein called the "Indenture") between the Company and The First National Bank of Chicago, as Trustee (herein called the "Trustee", which term includes any successor Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Noteholders, and of the terms upon which the Notes are, and are to be, authenticated and delivered. Each Note shall be dated the date of its authentication by the Trustee. Each Note shall also bear an Original Issue Date which with respect to this Note (or any portion thereof) shall mean the date of its original issue as specified on the face hereof, and such Original Issue Date shall remain the same for all Notes subsequently issued upon transfer, exchange or substitution of such original Note (or such subsequently issued Notes) regardless of their dates of authentication. The Notes may bear different dates, mature at different times, bear interest at different dates, be subject to different redemption provisions, if any, and may otherwise vary, all as provided in the Indenture. Interest on this Note will be payable on the Interest Payment Date or Interest Payment Dates as specified on the face hereof and, in either case, at Maturity. Unless otherwise specified on the face hereof, payments on this Note with respect to any particular Interest Payment Date or the Maturity date will include interest accrued from and including the Original Issue Date, or from and including the most recent Interest Payment Date to which interest has been paid or duly provided for, to but excluding such Interest Payment Date or the Maturity date. Interest on this Note shall be calculated for each day during such period by dividing the interest rate applicable to such day by 360, if the Interest Rate Basis specified on the face hereof is the Commercial Paper Rate, LIBOR or Prime Rate, or by the actual number of days in the year, if the Interest Rate Basis specified on the face hereof is the Treasury Rate. Unless otherwise provided in an annex attached hereto, the Trustee, acting in the capacity of Calculation Agent, will calculate the Interest Rate on this Note. Upon the request of any Holder of D-4 this Note, the Trustee shall provide to such Holder the Interest Rate then in effect and, if then determined, the interest rate that will become effective on the next Interest Reset Date with respect to this Note. Each such determination of an Interest Rate will be final and binding in the absence of manifest error. Unless otherwise specified in an annex attached hereto, if this Note is an Amortizing Note, payments with respect to this Note will be applied first to interest due and payable hereon and then to the reduction of the unpaid principal amount hereof. If this Note is an Amortizing Note, a table setting forth the schedule of dates and amounts of payments of principal of and interest on this Note or the formula for the amortization of principal and/or interest is set forth in an annex attached to this Note. All percentages resulting from any calculation with respect to this Note will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with five one-millionths of a percentage point rounded upward) and all dollar amounts used in or resulting from any such calculation with respect to this Note will be rounded to the nearest cent (with one-half cent being rounded upward). "Business Day" means, unless otherwise specified on the face hereof, any Monday, Tuesday, Wednesday, Thursday or Friday that in The City of New York is not a day on which banking institutions are authorized or obligated by law, regulation or executive order to close. If an Interest Payment Date or Maturity for this Note falls on a day that is not a Business Day, payment of principal, premium, if any, and interest to be made on such day with respect to this Note will be made on the next day that is a Business Day with the same force and effect as if made on the due date, and no additional interest will be payable on the date of payment for the period from and after the due date as a result of such delayed payment. This Note will be redeemable at the option of the Company prior to its Stated Maturity only if an Initial Redemption Date is specified on the face hereof. If so specified, this Note will be subject to redemption at the option of the Company on any date on and after such Initial Redemption Date in whole or from time to time in part in increments of $1,000 or integral multiples thereof, at the redemption prices specified in an annex attached to this Note, plus accrued and unpaid interest to but excluding the date of redemption, but payments due with respect to this Note prior to the date of redemption will be payable to the Holder of this Note of record at the close of business on the relevant Record Date specified on D-5 the face hereof, all as provided in the Indenture. The Company may exercise such option by causing the Trustee to mail a notice of such redemption, at least 30 but not more than 60 calendar days prior to the date of redemption, in accordance with the provisions of the Indenture. In the event of redemption of this Note in part only, this Note will be cancelled and a new Note or Notes representing the unredeemed portion hereof will be issued in the name of the Holder hereof. This Note is not subject to a sinking fund unless otherwise specified in an annex attached hereto. If so specified on the face of this Note, (i) this Note shall be subject to repayment, in whole or in part, prior to Stated Maturity at the option of the Holder on a certain date or dates and at a certain price or prices, plus accrued and unpaid interest to but excluding the date of payment; (ii) the Stated Maturity of this Note may be extended at the option of the Company for one or more Extension Periods of from one to five years, as specified on the face hereof, up to but not beyond the Final Maturity Date specified on the face hereof; (iii) the interest rate specified on the face hereof may be reset by the Company in accordance with a formula or otherwise on the Optional Interest Reset Date or Dates specified on the face hereof; and/or (iv) this Note shall be renewable at the option of the Holder, in each case in accordance with the provisions of the Indenture applicable thereto and/or as specified in an annex attached to this Note. Notwithstanding anything herein to the contrary, if this Note is an Original Issue Discount Note as specified on the face hereof, the amount payable in the event the principal amount hereof is declared to be due and payable immediately by reason of an Event of Default or in the event of redemption or repayment hereof prior to the Stated Maturity hereof, in lieu of the principal amount due at the Stated Maturity hereof, shall be the Amortized Face Amount of this Note as of the date of declaration, redemption or repayment, as the case may be. The "Amortized Face Amount" of this Note shall be the amount equal to the principal amount of this Note multiplied by the Issue Price specified on the face hereof plus (b) the portion of the difference between the dollar amount thus obtained and the principal amount hereof that has accreted at the Yield to Maturity specified on the face hereof (computed in accordance with generally accepted United States bond yield computation principles) to such date of declaration, redemption or repayment but in no event shall the Amortized Face Amount of this Note exceed the principal amount stated on the face hereof. D-6 The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Noteholders to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding that would be affected thereby. The Indenture also contains provisions permitting the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding, on behalf of the Holders of all Notes, to waive compliance by the Company with certain covenants in the Indenture. The Indenture also provides that the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding may waive certain past defaults and their consequences on behalf of the Holders of all Notes. Any such consent or waiver by the Holder of this Global Note (if not timely revoked in accordance with the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note or such Note. As set forth in, and subject to, the provisions of the Indenture, no Holder of any Notes will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such Holder shall have previously given to the Trustee written notice of a continuing default with respect to the Notes, the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding shall have made written request, and offered reasonable indemnity, to the Trustee to institute such proceeding as Trustee, and the Trustee shall have failed to institute such proceeding within 60 days; PROVIDED, HOWEVER, that such limitations do not apply to a suit instituted by the Holder hereof for the enforcement of payment of the principal of and any premium or interest on this Note on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Note at the times, places and rates, and in the coin or currency, herein prescribed. The Indenture contains provisions for the satisfaction and discharge of the Indenture upon compliance by the Company with certain conditions specified therein, which provisions apply to this Note. D-7 Unless otherwise specified in an annex attached hereto, the Notes are issuable only in registered form, without coupons, in denominations of $1,000 and integral multiples thereof. As provided in the Indenture and subject to certain limitations specified therein, this Note may be exchanged for one or more new Notes, of any authorized denominations and of a like aggregate principal amount and Stated Maturity and having the same terms and Original Issue Date, as requested by the Holder surrendering this Note. As provided in the Indenture and subject to the limitations specified therein, upon due presentment of this Note for registration of transfer at an office or agency of the Trustee in the Borough of Manhattan, The City of New York, maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the note registrar duly executed by, the Holder hereof or the attorney of such Holder duly authorized in writing, the Company shall execute and register or cause to be registered and the Trustee shall authenticate and make available for delivery, in the name of the transferee or transferees one or more new Notes of any authorized denominations and of a like aggregate principal amount and Stated Maturity and having the same terms and Original Issue Date. No service charge will be made for any such exchange or registration of transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. The Indenture and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York. All terms used in the Note which are defined in the Indenture but are not defined in this Note shall have the meanings assigned to them in the Indenture. D-8 OPTION TO ELECT REPAYMENT [To be completed only if this Note is repayable at the option of the Holder and the Holder elects to exercise such rights] The undersigned owner of this Note hereby irrevocably elects to have the Company repay (i) the principal amount of this Note or portion hereof below designated at the applicable optional repayment price indicated on an annex attached hereto plus accrued and unpaid interest to but excluding the date of repayment, if this election is being made pursuant to the option referred to under "Option to Elect Repayment" on the face hereof, or (ii) 100% of the principal amount of this Note plus accrued and unpaid interest to but excluding the Optional Interest Reset Date, if this election is being made following an exercise by the Company of the option referred to under "Optional Interest Reset" on the face hereof, or to but excluding the Pre-Exercise Stated Maturity Date (as defined in the Indenture), if this election is being made following an exercise by the Company of an option referred to under "Optional Extension of Original Maturity Date" on the face hereof. If a portion of this Note is not being repaid pursuant to clause (i) above, specify the principal amount to be repaid and the denomination or denominations (which will be $1,000 or an integral multiple thereof) of the Note or Notes to be issued to the Holder for the portion of this Note not being repaid (in the absence of any specification, one such Note will be issued for the portion not being repaid): Dated: ----------------------- ---------------------------------------- Signature Sign exactly as name appears on the front of this Note Principal amount to be repaid if Indicate address where check is amount to be repaid is pursuant to be sent: to clause (i) above and is less than the entire principal amount of this Note (principal amount remaining ---------------------------------------- must be an authorized denomination) ---------------------------------------- $ ---------------------------------- (Which must be an integral multiple of $1,000) Denomination or denominations of the SOCIAL SECURITY OR OTHER TAXPAYER Note or Notes to be issued for the ID NUMBER: portion of this Note not being repaid pursuant to clause (i) above: ---------------------------------------- - ----------------------------------- - ----------------------------------- D-9 ABBREVIATIONS The following abbreviations, when used in the inscription of the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIT GIFT MIN ACT - _____Custodian_____ TEN ENT - as tenants by the (Cust) (Minor) entireties Under Uniform Gifts to Minors Act JT TEN - as joint tenants with right of survivorship and not as tenants in common ___________________ State Additional abbreviations may also be used though not in the above list. ______________________ FOR VALUE RECEIVED the undersigned hereby sell(s) assign(s) and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ____________________________________________ ____________________________________________ ________________________________________________________________________________ Please print or typewrite name and address including postal zip code of assignee ________________________________________________________________________________ the within note and all rights thereunder, hereby irrevocably constituting and appointing _____________________________________ attorney to transfer said note on the books of the Company, with full power of substitution in the premises. Dated:____________________ _____________________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever. The signature must be guaranteed by a commercial bank, a trust company or a member of the New York Stock Exchange. D-10 D-11 EX-5.A 11 EXHIBIT 5A OPINION OF RASMUSSEN Page 1 Exhibit 5(a) 666 Grand Avenue P. O. Box 657 Des Moines, Iowa 50303-0657 November 1, 1996 MidAmerican Energy Company 666 Grand Avenue Des Moines, Iowa 50322 Ladies and Gentlemen: I refer to the proposed issuance and sale by you ("Company") of a presently indeterminate number of medium-term notes ("Notes") pursuant to the terms of an indenture from the Company to The First National Bank of Chicago, as trustee ("Note Indenture"), and the registration of a presently indeterminate number of preferred securities ("Preferred Securities") of MidAmerican Energy Financing I and II ("Trusts") (and related Guarantees and Junior Subordinated Debentures ("Debentures") pursuant to the terms of indentures from the Company to The First National Bank of Chicago, as trustee ("Debenture Indenture" and "Guarantee Indenture")), such Preferred Securities to be offered in underwritten public offerings, as contemplated in the Registration Statement on Form S-3 to be filed by the Company on or about the date hereof ("Registration Statement") with the Securities and Exchange Commission ("Commission") under the Securities Act of 1933, as amended ("Act"). I have examined such documents and satisfied myself as to such matters of procedure, law and fact as I deem relevant for the purposes of this opinion, and based upon the foregoing, I advise you that, in my opinion, (a) the Company is a duly incorporated and validly existing corporation under the laws of the State of Iowa, and (b) when the following additional steps have been taken: 1. The issuance, execution, delivery and sale of the Notes, Debentures and Guarantees, and the execution and delivery of the Note Indenture, the Debenture Indenture and the Guarantee Indenture shall have been authorized by your Board of Directors; 2. The Note Indenture, Debenture Indenture, Guarantee Indenture, and any applicable Supplemental Indentures thereto shall have been qualified under the Trust Indenture Act of 1939, as amended ("39 Act"); 3. Your proposed Registration Statement being filed with the Commission under the Act, and any required amendments and post-effective amendments thereto shall have become effective under the Act; Page 2 4. The Federal Energy Regulatory Commission ("FERC") and the Illinois Commerce Commission ("ICC") each shall have issued their appropriate orders upon an application with respect to the Notes, Debentures and Guarantees filed with FERC and ICC, respectively; 5. The Notes, Debentures and Guarantees shall have been issued and sold in accordance with the authorizations of the Board of Directors of the Company, and the appropriate orders of the FERC and ICC in response to the above mentioned applications, and; 6. All statutory fees imposed upon or by reason of the issuance of the Notes, Debentures and Guarantees shall have been paid, (i) the Notes, Debentures and Guarantees will be legally issued and will constitute legal, valid and binding obligations of the Company enforceable in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting enforcement of creditors' rights, or by general principles of equity, and (ii) the Notes, Debentures and Guarantees will be entitled to the benefits provided by their respective indentures, as supplemented and as to be supplemented by supplemental indentures creating each series of such Notes and Debentures. I am further of the opinion that no approval of any state or federal regulatory authority, other than the FERC, ICC and the Commission under the Act and the 39 Act is required with respect to the proposed offering, issuance and sale of the Notes, Debentures and Guarantees. I do not find it necessary for the purposes of this opinion, and accordingly I do not purport herein, to cover the application of state securities or "blue sky" laws relating to sales of Notes, Debentures and Guarantees. I consent that copies of this opinion may be filed with the Commission as an exhibit to the Registration Statement on Form S-3 with respect to the Notes, Debentures and Guarantees, and to the references to my name under the captions "Legal Matters" in such Registration Statement. Sincerely, /s/John A. Rasmussen, Jr. John A. Rasmussen, Jr. EX-5.B 12 EXHIBIT 5B OPINION OF RICHARDS, LAYTON [LETTERHEAD] November 1, 1996 MidAmerican Energy Financing I c/o MidAmerican Energy Company 666 Grand Avenue P.O. Box 657 Des Moines, Iowa 50303-0657 Re: MIDAMERICAN ENERGY FINANCING I Ladies and Gentlemen: We have acted as special Delaware counsel for MidAmerican Energy Financing I, a Delaware business trust (the "Trust"), in connection with the matters set forth herein. At your request, this opinion is being furnished to you. For purposes of giving the opinions hereinafter set forth, our examination of documents has been limited to the examination of originals or copies of the following: (a) The Certificate of Trust of the Trust, dated October 24, 1996 (the "Certificate"), as filed in the office of the Secretary of State of the State of Delaware (the "Secretary of State") on October 31, 1996; (b) The Trust Agreement of the Trust, dated as of October 31, 1996, among MidAmerican Energy Company, an Iowa corporation ("MidAmerican"), and the trustees of the Trust named therein; (c) The Registration Statement (the"Registration Statement") on Form S-3, including a preliminary prospectus and a prospectus supplement (the "Prospectus"), relating to the __% Preferred Securities of the Trust, Series A, representing preferred MidAmerican Energy Financing I November 1, 1996 Page 2 undivided beneficial interests in the Trust (each, a "Preferred Security" and collectively, the "Preferred Securities"), as filed by MidAmerican, the Trust and others as set forth therein with the Securities and Exchange Commission on November 1, 1996; (d) A form of Amended and Restated Trust Agreement of the Trust, to be entered into among MidAmerican, the trustees of the Trust named therein, and the holders, from time to time, of undivided beneficial interests in the Trust (the "Trust Agreement"), attached as an exhibit to the Registration Statement; and (e) A Certificate of Good Standing for the Trust, dated the date hereof, obtained from the Secretary of State. Initially capitalized terms used herein and not otherwise defined are used as defined in the Trust Agreement. For purposes of this opinion, we have not reviewed any documents other than the documents listed above, and we have assumed that there exists no provision in any document that we have not reviewed that bears upon or is inconsistent with the opinions stated herein. We have conducted no independent factual investigation of our own but rather have relied solely upon the foregoing documents, the statements and information set forth therein and the additional matters recited or assumed herein, all of which we have assumed to be true, complete and accurate in all material respects. With respect to all documents examined by us, we have assumed (i) the authenticity of all documents submitted to us as authentic originals, (ii) the conformity with the originals of all documents submitted to us as copies or forms, and (iii) the genuineness of all signatures. For purposes of this opinion, we have assumed (i) that the Trust Agreement constitutes the entire agreement among the parties thereto with respect to the subject matter thereof, including with respect to the creation, operation and termination of the Trust, and that the Trust Agreement and the Certificate are in full force and effect and have not been amended, (ii) except to the extent provided in paragraph 1 below, the due creation or due organization or due formation, as the case may be, and valid existence in good standing of each party to the documents examined by us under the laws of the jurisdiction governing its creation, organization or formation, (iii) the legal capacity of natural persons who are parties to the documents examined by us, (iv) that each of the parties to the documents examined by us has the power and authority to execute and deliver, and to perform its obligations under, such documents, (v) the due authorization, execution and delivery by all parties thereto of all documents examined by us, (vi) the receipt by each Person to whom a Preferred Security is to be issued by the Trust (collectively, the "Preferred Security Holders") of a Preferred Security Certificate for such Preferred MidAmerican Energy Financing I November 1, 1996 Page 3 Security and the payment for the Preferred Security acquired by it, in accordance with the Trust Agreement and the Registration Statement, and (vii) that the Preferred Securities are issued and sold to the Preferred Security Holders in accordance with the Trust Agreement and the Registration Statement. We have not participated in the preparation of the Registration Statement and assume no responsibility for its contents. This opinion is limited to the laws of the State of Delaware (excluding the securities laws of the State of Delaware), and we have not considered and express no opinion on the laws of any other jurisdiction, including federal laws and rules and regulations relating thereto. Our opinions are rendered only with respect to Delaware laws and rules, regulations and orders thereunder which are currently in effect. Based upon the foregoing, and upon our examination of such question s of law and statutes of the State of Delaware as we have considered necessary or appropriate, and subject to the assumptions, qualification, limitations and exceptions set forth herein, we are of the opinion that: 1. The Trust has been duly created and is validly existing in good standing as a business trust under the Delaware Business Trust Act, 12 DEL. C. Section 3801, ET SEQ. 2. The Preferred Securities will represent valid and, subject to the qualifications set forth in paragraph 3 below, fully paid and nonassessable undivided beneficial interests in the assets of the Trust. 3. The Preferred Security Holders, as beneficial owners of the Trust, will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. We note that the Preferred Security Holders may be obligated to make payments as set forth in the Trust Agreement. We consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement. In addition, we hereby consent to the use of our name under the heading "Legal Matters" in the Prospectus. In giving the foregoing consents, we do not thereby admit that we come within the category of Persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. Except as stated above, without our prior written consent, this opinion may not be furnished or quoted to, or relied upon by, any other Person for any purpose. Very truly yours, /s/ Richards, Layton & Finger EX-8.A 13 EXHIBIT 8A OPINION (MEDIUM TERM NOTES) Exhibit 8(a) [MEDIUM-TERM NOTE OPINION] November 1, 1996 To The Agents for the Offering of Medium Term Notes by MidAmerican Engery Company Ladies and Gentlemen: We have acted as counsel to you in connection with the proposed offering by MidAmerican Energy Company, an Iowa corporation (the "Company"), of its Medium-Term Notes (the "Notes") as described in the Registration Statement on Form S-3 (the "Registration Statement"), which is being filed by the Company with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended. The Registration Statement includes the Prospectus and the Prospectus Supplement (collectively, the "Prospectuses") relating to such offering. In rendering the opinion expressed below, we have examined the Prospectuses and such other documents as we have deemed relevant and necessary, including, without limitation, the Form of Indenture and the Form of Supplemental Indenture attached as Exhibits to the Registration Statement. Such opinion is conditioned, among other things, upon the accuracy and completeness of the facts, information and representations contained in the Prospectuses as of the date hereof and the continuing accuracy and completeness thereof as of the date of the issuance of the Notes. We have assumed that the transactions contemplated by the Prospectuses and such other documents will occur as provided therein and that there will be no material change to the Prospectuses or any of such other documents between the date hereof and the date of the issuance of the Notes. Based upon and subject to the foregoing, we are of the opinion that the discussion set forth in the Prospectus under the caption "UNITED STATES FEDERAL INCOME TAX CONSEQUENCES" is a To The Agents for the Offering of Medium Term Notes by MidAmerican Engery Company November 1, 1996 Page 2 fair and accurate summary of the matters addressed therein, based upon current law and the assumptions stated or referred to therein. We assume no obligation to update or supplement this letter to reflect any facts or circumstances which may hereafter come to our attention with respect to the opinion expressed above, including any changes in applicable law which may hereafter occur. We hereby consent to the filing of this letter as an Exhibit to the Registration Statement and to all references to our Firm included in or made a part of the Registration Statement. Very truly yours, EX-8.B 14 EXHIBIT 8B OPINION (QUIPS) Exhibit 8(b) [QUIPS OPINION] November 1, 1996 To The Underwriters of the Preferred Securities of MidAmerican Energy Financing I and MidAmerican Energy Financing II Ladies and Gentlemen: We have acted as counsel to you in connection with the proposed offering by MidAmerican Energy Financing I, a Delaware statutory business trust ("Trust"), of its Cumulative Quarterly Income Preferred Securities, Series A (the "Series A Preferred Securities"), as described in the Registration Statement on Form S-3 (the "Registration Statement"), which is being filed by MidAmerican Energy Company, an Iowa corporation (the "Company"), the Trust and MidAmerican Energy Financing II, a Delaware statutory business trust, with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended. The Registration Statement includes the Prospectus and the Prospectus Supplement (collectively, the "Prospectuses") relating to such offering. In rendering the opinion expressed below, we have examined the Prospectuses and such other documents as we have deemed relevant and necessary, including, without limitation, the Form of Amended and Restated Trust Agreement, the Form of Indenture and the Form of Guarantee attached as Exhibits to the Registration Statement. Such opinion is conditioned, among other things, upon the accuracy and completeness of the facts, information and representations contained in the Prospectuses as of the date hereof and the continuing accuracy and completeness thereof as of the date of the issuance of the Series A Preferred Securities. We have assumed that the transactions contemplated by the Prospectuses and such other documents will occur as provided therein and that there will be no material change to the Prospectuses or any of such other documents between the date hereof and the date of the issuance of the Series A Preferred Securities. To The Underwriters of the Preferred Securities of MidAmerican Energy Financing I and MidAmerican Energy Financing II November 1, 1996 Page 2 Based upon and subject to the foregoing, we are of the opinion that the discussion set forth in the Prospectus Supplement under the caption "UNITED STATES FEDERAL INCOME TAXATION" is a fair and accurate summary of the matters addressed therein, based upon current law and the assumptions stated or referred to therein. We assume no obligation to update or supplement this letter to reflect any facts or circumstances which may hereafter come to our attention with respect to the opinion expressed above, including any changes in applicable law which may hereafter occur. We hereby consent to the filing of this letter as an Exhibit to the Registration Statement and to all references to our Firm included in or made a part of the Registration Statement. Very truly yours, EX-23.A 15 EXHIBIT 23(A) CONSENT OF ARTHUR ANDERSEN Exhibit 23(a) [LETTERHEAD] CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated January 26, 1996 included in MidAmerican Energy Company's Form 10-K for the year ended December 31, 1995 and to all references to our Firm included in this Registration Statement. ARTHUR ANDERSEN LLP Chicago, Illinois October 31, 1996 EX-23.B 16 EXHIBIT 23(B) CONSENT OF DELOITTE & TOUCHE Exhibit 23(b) [LETTERHEAD] CONSENT OF INDEPENDENT AUDITORS MidAmerican Energy Company: We consent to the incorporation by reference in this Registration Statement on Form S-3 of our reports dated January 25, 1995, covering the consolidated balance sheet and statement of capitalization of Iowa-Illinois Gas and Electric Company and subsidiary as of December 31, 1994, and the related consolidated statements of income, retained earnings and cash flows for the years ended December 31, 1994 and 1993, and the schedule listed in Item 14(a)(2) as of December 31, 1994 and 1993 and for each of the two years in the period ended December 31, 1994, appearing in MidAmerican Energy Company's Form 10-K for the year ended December 31, 1995. It should be noted that we have not audited any financial statements of Iowa-Illinois Gas and Electric Company and subsidiary subsequent to December 31, 1994, or performed any audit procedures subsequent to the date of our reports. DELOITTE & TOUCHE LLP October 31, 1996 EX-24 17 EXHIBIT 24 POWER OF ATTY POWER OF ATTORNEY Each of the undersigned does hereby appoint Paul J. Leighton, John A. Rasmussen, Jr. and J. Sue Rozema, and each of them severally, his true or her true and lawful attorneys, with full power of substitution in his or her name, place and stead, to execute on his or her behalf a Registration Statement on Form S-3 of MidAmerican Energy Company relating to the issuance and sale of up to $500,000,000 principal amount of bonds, notes, debentures or other evidences of indebtedness and other aspects of the financing transactions related to such issuance and sale, to be filed pursuant to the Securities Act of 1933, as amended, and any and all amendments thereto (including post-effective amendments), and other documents relating thereto, including exhibits, and to file the same with the Securities and Exchange Commission. Each of such attorneys shall have full power and authority to do and perform each and every act with or without the others. IN WITNESS WHEREOF, the undersigned have duly executed this instrument as of October 31, 1996. MIDAMERICAN ENERGY COMPANY /s/Russell E.Christiansen - ----------------------------------- ---------------------------------------- (Russell E. Christiansen) Chairman (Stanley J. Bright) President, and Director Chief Executive Officer and Director - ----------------------------------- ---------------------------------------- (John W. Aalfs) Director (Robert A. Burnett) Director - ----------------------------------- ---------------------------------------- (Ross D. Christensen) Director (John W. Colloton) Director - ----------------------------------- ---------------------------------------- (Frank S. Cottrell) Director (Jack W. Eugster) Director - ----------------------------------- ---------------------------------------- (Mel Foster, Jr.) Director (Nolden Gentry) Director - ----------------------------------- ---------------------------------------- (James M. Hoak, Jr.) Director (Richard L. Lawson) Director - ----------------------------------- ---------------------------------------- (Robert L. Peterson) Director (Nancy L. Seifert) Director - ----------------------------------- ---------------------------------------- (W. Scott Tinsman) Director (Leonard L. Woodruff) Director POWER OF ATTORNEY Each of the undersigned does hereby appoint Paul J. Leighton, John A. Rasmussen, Jr. and J. Sue Rozema, and each of them severally, his true or her true and lawful attorneys, with full power of substitution in his or her name, place and stead, to execute on his or her behalf a Registration Statement on Form S-3 of MidAmerican Energy Company relating to the issuance and sale of up to $500,000,000 principal amount of bonds, notes, debentures or other evidences of indebtedness and other aspects of the financing transactions related to such issuance and sale, to be filed pursuant to the Securities Act of 1933, as amended, and any and all amendments thereto (including post-effective amendments), and other documents relating thereto, including exhibits, and to file the same with the Securities and Exchange Commission. Each of such attorneys shall have full power and authority to do and perform each and every act with or without the others. IN WITNESS WHEREOF, the undersigned have duly executed this instrument as of October 31, 1996. MIDAMERICAN ENERGY COMPANY /s/Stanley J. Bright - ----------------------------------- ---------------------------------------- (Russell E. Christiansen) Chairman (Stanley J. Bright) President, and Director Chief Executive Officer and Director - ----------------------------------- ---------------------------------------- (John W. Aalfs) Director (Robert A. Burnett) Director - ----------------------------------- ---------------------------------------- (Ross D. Christensen) Director (John W. Colloton) Director - ----------------------------------- ---------------------------------------- (Frank S. Cottrell) Director (Jack W. Eugster) Director - ----------------------------------- ---------------------------------------- (Mel Foster, Jr.) Director (Nolden Gentry) Director - ----------------------------------- ---------------------------------------- (James M. Hoak, Jr.) Director (Richard L. Lawson) Director - ----------------------------------- ---------------------------------------- (Robert L. Peterson) Director (Nancy L. Seifert) Director - ----------------------------------- ---------------------------------------- (W. Scott Tinsman) Director (Leonard L. Woodruff) Director POWER OF ATTORNEY Each of the undersigned does hereby appoint Paul J. Leighton, John A. Rasmussen, Jr. and J. Sue Rozema, and each of them severally, his true or her true and lawful attorneys, with full power of substitution in his or her name, place and stead, to execute on his or her behalf a Registration Statement on Form S-3 of MidAmerican Energy Company relating to the issuance and sale of up to $500,000,000 principal amount of bonds, notes, debentures or other evidences of indebtedness and other aspects of the financing transactions related to such issuance and sale, to be filed pursuant to the Securities Act of 1933, as amended, and any and all amendments thereto (including post-effective amendments), and other documents relating thereto, including exhibits, and to file the same with the Securities and Exchange Commission. Each of such attorneys shall have full power and authority to do and perform each and every act with or without the others. IN WITNESS WHEREOF, the undersigned have duly executed this instrument as of October 31, 1996. MIDAMERICAN ENERGY COMPANY - ----------------------------------- ---------------------------------------- (Russell E. Christiansen) Chairman (Stanley J. Bright) President, and Director Chief Executive Officer and Director /s/John W. Aalfs - ----------------------------------- ---------------------------------------- (John W. Aalfs) Director (Robert A. Burnett) Director - ----------------------------------- ---------------------------------------- (Ross D. Christensen) Director (John W. Colloton) Director - ----------------------------------- ---------------------------------------- (Frank S. Cottrell) Director (Jack W. Eugster) Director - ----------------------------------- ---------------------------------------- (Mel Foster, Jr.) Director (Nolden Gentry) Director - ----------------------------------- ---------------------------------------- (James M. Hoak, Jr.) Director (Richard L. Lawson) Director - ----------------------------------- ---------------------------------------- (Robert L. Peterson) Director (Nancy L. Seifert) Director - ----------------------------------- ---------------------------------------- (W. Scott Tinsman) Director (Leonard L. Woodruff) Director POWER OF ATTORNEY Each of the undersigned does hereby appoint Paul J. Leighton, John A. Rasmussen, Jr. and J. Sue Rozema, and each of them severally, his true or her true and lawful attorneys, with full power of substitution in his or her name, place and stead, to execute on his or her behalf a Registration Statement on Form S-3 of MidAmerican Energy Company relating to the issuance and sale of up to $500,000,000 principal amount of bonds, notes, debentures or other evidences of indebtedness and other aspects of the financing transactions related to such issuance and sale, to be filed pursuant to the Securities Act of 1933, as amended, and any and all amendments thereto (including post-effective amendments), and other documents relating thereto, including exhibits, and to file the same with the Securities and Exchange Commission. Each of such attorneys shall have full power and authority to do and perform each and every act with or without the others. IN WITNESS WHEREOF, the undersigned have duly executed this instrument as of October 31, 1996. MIDAMERICAN ENERGY COMPANY - ----------------------------------- ---------------------------------------- (Russell E. Christiansen) Chairman (Stanley J. Bright) President, and Director Chief Executive Officer and Director /s/Robert A. Burnett - ----------------------------------- ---------------------------------------- (John W. Aalfs) Director (Robert A. Burnett) Director - ----------------------------------- ---------------------------------------- (Ross D. Christensen) Director (John W. Colloton) Director - ----------------------------------- ---------------------------------------- (Frank S. Cottrell) Director (Jack W. Eugster) Director - ----------------------------------- ---------------------------------------- (Mel Foster, Jr.) Director (Nolden Gentry) Director - ----------------------------------- ---------------------------------------- (James M. Hoak, Jr.) Director (Richard L. Lawson) Director - ----------------------------------- ---------------------------------------- (Robert L. Peterson) Director (Nancy L. Seifert) Director - ----------------------------------- ---------------------------------------- (W. Scott Tinsman) Director (Leonard L. Woodruff) Director POWER OF ATTORNEY Each of the undersigned does hereby appoint Paul J. Leighton, John A. Rasmussen, Jr. and J. Sue Rozema, and each of them severally, his true or her true and lawful attorneys, with full power of substitution in his or her name, place and stead, to execute on his or her behalf a Registration Statement on Form S-3 of MidAmerican Energy Company relating to the issuance and sale of up to $500,000,000 principal amount of bonds, notes, debentures or other evidences of indebtedness and other aspects of the financing transactions related to such issuance and sale, to be filed pursuant to the Securities Act of 1933, as amended, and any and all amendments thereto (including post-effective amendments), and other documents relating thereto, including exhibits, and to file the same with the Securities and Exchange Commission. Each of such attorneys shall have full power and authority to do and perform each and every act with or without the others. IN WITNESS WHEREOF, the undersigned have duly executed this instrument as of October 31, 1996. MIDAMERICAN ENERGY COMPANY - ----------------------------------- ---------------------------------------- (Russell E. Christiansen) Chairman (Stanley J. Bright) President, and Director Chief Executive Officer and Director - ----------------------------------- ---------------------------------------- (John W. Aalfs) Director (Robert A. Burnett) Director /s/Ross D. Christensen - ----------------------------------- ---------------------------------------- (Ross D. Christensen) Director (John W. Colloton) Director - ----------------------------------- ---------------------------------------- (Frank S. Cottrell) Director (Jack W. Eugster) Director - ----------------------------------- ---------------------------------------- (Mel Foster, Jr.) Director (Nolden Gentry) Director - ----------------------------------- ---------------------------------------- (James M. Hoak, Jr.) Director (Richard L. Lawson) Director - ----------------------------------- ---------------------------------------- (Robert L. Peterson) Director (Nancy L. Seifert) Director - ----------------------------------- ---------------------------------------- (W. Scott Tinsman) Director (Leonard L. Woodruff) Director POWER OF ATTORNEY Each of the undersigned does hereby appoint Paul J. Leighton, John A. Rasmussen, Jr. and J. Sue Rozema, and each of them severally, his true or her true and lawful attorneys, with full power of substitution in his or her name, place and stead, to execute on his or her behalf a Registration Statement on Form S-3 of MidAmerican Energy Company relating to the issuance and sale of up to $500,000,000 principal amount of bonds, notes, debentures or other evidences of indebtedness and other aspects of the financing transactions related to such issuance and sale, to be filed pursuant to the Securities Act of 1933, as amended, and any and all amendments thereto (including post-effective amendments), and other documents relating thereto, including exhibits, and to file the same with the Securities and Exchange Commission. Each of such attorneys shall have full power and authority to do and perform each and every act with or without the others. IN WITNESS WHEREOF, the undersigned have duly executed this instrument as of October 31, 1996. MIDAMERICAN ENERGY COMPANY - ----------------------------------- ---------------------------------------- (Russell E. Christiansen) Chairman (Stanley J. Bright) President, and Director Chief Executive Officer and Director - ----------------------------------- ---------------------------------------- (John W. Aalfs) Director (Robert A. Burnett) Director /s/John W. Colloton - ----------------------------------- ---------------------------------------- (Ross D. Christensen) Director (John W. Colloton) Director - ----------------------------------- ---------------------------------------- (Frank S. Cottrell) Director (Jack W. Eugster) Director - ----------------------------------- ---------------------------------------- (Mel Foster, Jr.) Director (Nolden Gentry) Director - ----------------------------------- ---------------------------------------- (James M. Hoak, Jr.) Director (Richard L. Lawson) Director - ----------------------------------- ---------------------------------------- (Robert L. Peterson) Director (Nancy L. Seifert) Director - ----------------------------------- ---------------------------------------- (W. Scott Tinsman) Director (Leonard L. Woodruff) Director POWER OF ATTORNEY Each of the undersigned does hereby appoint Paul J. Leighton, John A. Rasmussen, Jr. and J. Sue Rozema, and each of them severally, his true or her true and lawful attorneys, with full power of substitution in his or her name, place and stead, to execute on his or her behalf a Registration Statement on Form S-3 of MidAmerican Energy Company relating to the issuance and sale of up to $500,000,000 principal amount of bonds, notes, debentures or other evidences of indebtedness and other aspects of the financing transactions related to such issuance and sale, to be filed pursuant to the Securities Act of 1933, as amended, and any and all amendments thereto (including post-effective amendments), and other documents relating thereto, including exhibits, and to file the same with the Securities and Exchange Commission. Each of such attorneys shall have full power and authority to do and perform each and every act with or without the others. IN WITNESS WHEREOF, the undersigned have duly executed this instrument as of October 31, 1996. MIDAMERICAN ENERGY COMPANY - ----------------------------------- ---------------------------------------- (Russell E. Christiansen) Chairman (Stanley J. Bright) President, and Director Chief Executive Officer and Director - ----------------------------------- ---------------------------------------- (John W. Aalfs) Director (Robert A. Burnett) Director - ----------------------------------- ---------------------------------------- (Ross D. Christensen) Director (John W. Colloton) Director /s/Frank S. Cottrell - ----------------------------------- ---------------------------------------- (Frank S. Cottrell) Director (Jack W. Eugster) Director - ----------------------------------- ---------------------------------------- (Mel Foster, Jr.) Director (Nolden Gentry) Director - ----------------------------------- ---------------------------------------- (James M. Hoak, Jr.) Director (Richard L. Lawson) Director - ----------------------------------- ---------------------------------------- (Robert L. Peterson) Director (Nancy L. Seifert) Director - ----------------------------------- ---------------------------------------- (W. Scott Tinsman) Director (Leonard L. Woodruff) Director POWER OF ATTORNEY Each of the undersigned does hereby appoint Paul J. Leighton, John A. Rasmussen, Jr. and J. Sue Rozema, and each of them severally, his true or her true and lawful attorneys, with full power of substitution in his or her name, place and stead, to execute on his or her behalf a Registration Statement on Form S-3 of MidAmerican Energy Company relating to the issuance and sale of up to $500,000,000 principal amount of bonds, notes, debentures or other evidences of indebtedness and other aspects of the financing transactions related to such issuance and sale, to be filed pursuant to the Securities Act of 1933, as amended, and any and all amendments thereto (including post-effective amendments), and other documents relating thereto, including exhibits, and to file the same with the Securities and Exchange Commission. Each of such attorneys shall have full power and authority to do and perform each and every act with or without the others. IN WITNESS WHEREOF, the undersigned have duly executed this instrument as of October 31, 1996. MIDAMERICAN ENERGY COMPANY - ----------------------------------- ---------------------------------------- (Russell E. Christiansen) Chairman (Stanley J. Bright) President, and Director Chief Executive Officer and Director - ----------------------------------- ---------------------------------------- (John W. Aalfs) Director (Robert A. Burnett) Director - ----------------------------------- ---------------------------------------- (Ross D. Christensen) Director (John W. Colloton) Director /s/Jack W. Eugster - ----------------------------------- ---------------------------------------- (Frank S. Cottrell) Director (Jack W. Eugster) Director - ----------------------------------- ---------------------------------------- (Mel Foster, Jr.) Director (Nolden Gentry) Director - ----------------------------------- ---------------------------------------- (James M. Hoak, Jr.) Director (Richard L. Lawson) Director - ----------------------------------- ---------------------------------------- (Robert L. Peterson) Director (Nancy L. Seifert) Director - ----------------------------------- ---------------------------------------- (W. Scott Tinsman) Director (Leonard L. Woodruff) Director POWER OF ATTORNEY Each of the undersigned does hereby appoint Paul J. Leighton, John A. Rasmussen, Jr. and J. Sue Rozema, and each of them severally, his true or her true and lawful attorneys, with full power of substitution in his or her name, place and stead, to execute on his or her behalf a Registration Statement on Form S-3 of MidAmerican Energy Company relating to the issuance and sale of up to $500,000,000 principal amount of bonds, notes, debentures or other evidences of indebtedness and other aspects of the financing transactions related to such issuance and sale, to be filed pursuant to the Securities Act of 1933, as amended, and any and all amendments thereto (including post-effective amendments), and other documents relating thereto, including exhibits, and to file the same with the Securities and Exchange Commission. Each of such attorneys shall have full power and authority to do and perform each and every act with or without the others. IN WITNESS WHEREOF, the undersigned have duly executed this instrument as of October 31, 1996. MIDAMERICAN ENERGY COMPANY - ----------------------------------- ---------------------------------------- (Russell E. Christiansen) Chairman (Stanley J. Bright) President, and Director Chief Executive Officer and Director - ----------------------------------- ---------------------------------------- (John W. Aalfs) Director (Robert A. Burnett) Director - ----------------------------------- ---------------------------------------- (Ross D. Christensen) Director (John W. Colloton) Director - ----------------------------------- ---------------------------------------- (Frank S. Cottrell) Director (Jack W. Eugster) Director /s/Mel Foster, Jr. - ----------------------------------- ---------------------------------------- (Mel Foster, Jr.) Director (Nolden Gentry) Director - ----------------------------------- ---------------------------------------- (James M. Hoak, Jr.) Director (Richard L. Lawson) Director - ----------------------------------- ---------------------------------------- (Robert L. Peterson) Director (Nancy L. Seifert) Director - ----------------------------------- ---------------------------------------- (W. Scott Tinsman) Director (Leonard L. Woodruff) Director POWER OF ATTORNEY Each of the undersigned does hereby appoint Paul J. Leighton, John A. Rasmussen, Jr. and J. Sue Rozema, and each of them severally, his true or her true and lawful attorneys, with full power of substitution in his or her name, place and stead, to execute on his or her behalf a Registration Statement on Form S-3 of MidAmerican Energy Company relating to the issuance and sale of up to $500,000,000 principal amount of bonds, notes, debentures or other evidences of indebtedness and other aspects of the financing transactions related to such issuance and sale, to be filed pursuant to the Securities Act of 1933, as amended, and any and all amendments thereto (including post-effective amendments), and other documents relating thereto, including exhibits, and to file the same with the Securities and Exchange Commission. Each of such attorneys shall have full power and authority to do and perform each and every act with or without the others. IN WITNESS WHEREOF, the undersigned have duly executed this instrument as of October 31, 1996. MIDAMERICAN ENERGY COMPANY - ----------------------------------- ---------------------------------------- (Russell E. Christiansen) Chairman (Stanley J. Bright) President, and Director Chief Executive Officer and Director - ----------------------------------- ---------------------------------------- (John W. Aalfs) Director (Robert A. Burnett) Director - ----------------------------------- ---------------------------------------- (Ross D. Christensen) Director (John W. Colloton) Director - ----------------------------------- ---------------------------------------- (Frank S. Cottrell) Director (Jack W. Eugster) Director /s/Nolden Gentry - ----------------------------------- ---------------------------------------- (Mel Foster, Jr.) Director (Nolden Gentry) Director - ----------------------------------- ---------------------------------------- (James M. Hoak, Jr.) Director (Richard L. Lawson) Director - ----------------------------------- ---------------------------------------- (Robert L. Peterson) Director (Nancy L. Seifert) Director - ----------------------------------- ---------------------------------------- (W. Scott Tinsman) Director (Leonard L. Woodruff) Director POWER OF ATTORNEY Each of the undersigned does hereby appoint Paul J. Leighton, John A. Rasmussen, Jr. and J. Sue Rozema, and each of them severally, his true or her true and lawful attorneys, with full power of substitution in his or her name, place and stead, to execute on his or her behalf a Registration Statement on Form S-3 of MidAmerican Energy Company relating to the issuance and sale of up to $500,000,000 principal amount of bonds, notes, debentures or other evidences of indebtedness and other aspects of the financing transactions related to such issuance and sale, to be filed pursuant to the Securities Act of 1933, as amended, and any and all amendments thereto (including post-effective amendments), and other documents relating thereto, including exhibits, and to file the same with the Securities and Exchange Commission. Each of such attorneys shall have full power and authority to do and perform each and every act with or without the others. IN WITNESS WHEREOF, the undersigned have duly executed this instrument as of October 31, 1996. MIDAMERICAN ENERGY COMPANY - ----------------------------------- ---------------------------------------- (Russell E. Christiansen) Chairman (Stanley J. Bright) President, and Director Chief Executive Officer and Director - ----------------------------------- ---------------------------------------- (John W. Aalfs) Director (Robert A. Burnett) Director - ----------------------------------- ---------------------------------------- (Ross D. Christensen) Director (John W. Colloton) Director - ----------------------------------- ---------------------------------------- (Frank S. Cottrell) Director (Jack W. Eugster) Director - ----------------------------------- ---------------------------------------- (Mel Foster, Jr.) Director (Nolden Gentry) Director /s/James M. Hoak, Jr. - ----------------------------------- ---------------------------------------- (James M. Hoak, Jr.) Director (Richard L. Lawson) Director - ----------------------------------- ---------------------------------------- (Robert L. Peterson) Director (Nancy L. Seifert) Director - ----------------------------------- ---------------------------------------- (W. Scott Tinsman) Director (Leonard L. Woodruff) Director POWER OF ATTORNEY Each of the undersigned does hereby appoint Paul J. Leighton, John A. Rasmussen, Jr. and J. Sue Rozema, and each of them severally, his true or her true and lawful attorneys, with full power of substitution in his or her name, place and stead, to execute on his or her behalf a Registration Statement on Form S-3 of MidAmerican Energy Company relating to the issuance and sale of up to $500,000,000 principal amount of bonds, notes, debentures or other evidences of indebtedness and other aspects of the financing transactions related to such issuance and sale, to be filed pursuant to the Securities Act of 1933, as amended, and any and all amendments thereto (including post-effective amendments), and other documents relating thereto, including exhibits, and to file the same with the Securities and Exchange Commission. Each of such attorneys shall have full power and authority to do and perform each and every act with or without the others. IN WITNESS WHEREOF, the undersigned have duly executed this instrument as of October 31, 1996. MIDAMERICAN ENERGY COMPANY - ----------------------------------- ---------------------------------------- (Russell E. Christiansen) Chairman (Stanley J. Bright) President, and Director Chief Executive Officer and Director - ----------------------------------- ---------------------------------------- (John W. Aalfs) Director (Robert A. Burnett) Director - ----------------------------------- ---------------------------------------- (Ross D. Christensen) Director (John W. Colloton) Director - ----------------------------------- ---------------------------------------- (Frank S. Cottrell) Director (Jack W. Eugster) Director - ----------------------------------- ---------------------------------------- (Mel Foster, Jr.) Director (Nolden Gentry) Director /s/Richard L. Lawson - ----------------------------------- ---------------------------------------- (James M. Hoak, Jr.) Director (Richard L. Lawson) Director - ----------------------------------- ---------------------------------------- (Robert L. Peterson) Director (Nancy L. Seifert) Director - ----------------------------------- ---------------------------------------- (W. Scott Tinsman) Director (Leonard L. Woodruff) Director POWER OF ATTORNEY Each of the undersigned does hereby appoint Paul J. Leighton, John A. Rasmussen, Jr. and J. Sue Rozema, and each of them severally, his true or her true and lawful attorneys, with full power of substitution in his or her name, place and stead, to execute on his or her behalf a Registration Statement on Form S-3 of MidAmerican Energy Company relating to the issuance and sale of up to $500,000,000 principal amount of bonds, notes, debentures or other evidences of indebtedness and other aspects of the financing transactions related to such issuance and sale, to be filed pursuant to the Securities Act of 1933, as amended, and any and all amendments thereto (including post-effective amendments), and other documents relating thereto, including exhibits, and to file the same with the Securities and Exchange Commission. Each of such attorneys shall have full power and authority to do and perform each and every act with or without the others. IN WITNESS WHEREOF, the undersigned have duly executed this instrument as of October 31, 1996. MIDAMERICAN ENERGY COMPANY - ----------------------------------- ---------------------------------------- (Russell E. Christiansen) Chairman (Stanley J. Bright) President, and Director Chief Executive Officer and Director - ----------------------------------- ---------------------------------------- (John W. Aalfs) Director (Robert A. Burnett) Director - ----------------------------------- ---------------------------------------- (Ross D. Christensen) Director (John W. Colloton) Director - ----------------------------------- ---------------------------------------- (Frank S. Cottrell) Director (Jack W. Eugster) Director - ----------------------------------- ---------------------------------------- (Mel Foster, Jr.) Director (Nolden Gentry) Director - ----------------------------------- ---------------------------------------- (James M. Hoak, Jr.) Director (Richard L. Lawson) Director /s/Robert L. Peterson - ----------------------------------- ---------------------------------------- (Robert L. Peterson) Director (Nancy L. Seifert) Director - ----------------------------------- ---------------------------------------- (W. Scott Tinsman) Director (Leonard L. Woodruff) Director POWER OF ATTORNEY Each of the undersigned does hereby appoint Paul J. Leighton, John A. Rasmussen, Jr. and J. Sue Rozema, and each of them severally, his true or her true and lawful attorneys, with full power of substitution in his or her name, place and stead, to execute on his or her behalf a Registration Statement on Form S-3 of MidAmerican Energy Company relating to the issuance and sale of up to $500,000,000 principal amount of bonds, notes, debentures or other evidences of indebtedness and other aspects of the financing transactions related to such issuance and sale, to be filed pursuant to the Securities Act of 1933, as amended, and any and all amendments thereto (including post-effective amendments), and other documents relating thereto, including exhibits, and to file the same with the Securities and Exchange Commission. Each of such attorneys shall have full power and authority to do and perform each and every act with or without the others. IN WITNESS WHEREOF, the undersigned have duly executed this instrument as of October 31, 1996. MIDAMERICAN ENERGY COMPANY - ----------------------------------- ---------------------------------------- (Russell E. Christiansen) Chairman (Stanley J. Bright) President, and Director Chief Executive Officer and Director - ----------------------------------- ---------------------------------------- (John W. Aalfs) Director (Robert A. Burnett) Director - ----------------------------------- ---------------------------------------- (Ross D. Christensen) Director (John W. Colloton) Director - ----------------------------------- ---------------------------------------- (Frank S. Cottrell) Director (Jack W. Eugster) Director - ----------------------------------- ---------------------------------------- (Mel Foster, Jr.) Director (Nolden Gentry) Director - ----------------------------------- ---------------------------------------- (James M. Hoak, Jr.) Director (Richard L. Lawson) Director /s/Nancy L. Seifert - ----------------------------------- ---------------------------------------- (Robert L. Peterson) Director (Nancy L. Seifert) Director - ----------------------------------- ---------------------------------------- (W. Scott Tinsman) Director (Leonard L. Woodruff) Director POWER OF ATTORNEY Each of the undersigned does hereby appoint Paul J. Leighton, John A. Rasmussen, Jr. and J. Sue Rozema, and each of them severally, his true or her true and lawful attorneys, with full power of substitution in his or her name, place and stead, to execute on his or her behalf a Registration Statement on Form S-3 of MidAmerican Energy Company relating to the issuance and sale of up to $500,000,000 principal amount of bonds, notes, debentures or other evidences of indebtedness and other aspects of the financing transactions related to such issuance and sale, to be filed pursuant to the Securities Act of 1933, as amended, and any and all amendments thereto (including post-effective amendments), and other documents relating thereto, including exhibits, and to file the same with the Securities and Exchange Commission. Each of such attorneys shall have full power and authority to do and perform each and every act with or without the others. IN WITNESS WHEREOF, the undersigned have duly executed this instrument as of October 31, 1996. MIDAMERICAN ENERGY COMPANY - ----------------------------------- ---------------------------------------- (Russell E. Christiansen) Chairman (Stanley J. Bright) President, and Director Chief Executive Officer and Director - ----------------------------------- ---------------------------------------- (John W. Aalfs) Director (Robert A. Burnett) Director - ----------------------------------- ---------------------------------------- (Ross D. Christensen) Director (John W. Colloton) Director - ----------------------------------- ---------------------------------------- (Frank S. Cottrell) Director (Jack W. Eugster) Director - ----------------------------------- ---------------------------------------- (Mel Foster, Jr.) Director (Nolden Gentry) Director - ----------------------------------- ---------------------------------------- (James M. Hoak, Jr.) Director (Richard L. Lawson) Director - ----------------------------------- ---------------------------------------- (Robert L. Peterson) Director (Nancy L. Seifert) Director /s/W. Scott Tinsman - ----------------------------------- ---------------------------------------- (W. Scott Tinsman) Director (Leonard L. Woodruff) Director POWER OF ATTORNEY Each of the undersigned does hereby appoint Paul J. Leighton, John A. Rasmussen, Jr. and J. Sue Rozema, and each of them severally, his true or her true and lawful attorneys, with full power of substitution in his or her name, place and stead, to execute on his or her behalf a Registration Statement on Form S-3 of MidAmerican Energy Company relating to the issuance and sale of up to $500,000,000 principal amount of bonds, notes, debentures or other evidences of indebtedness and other aspects of the financing transactions related to such issuance and sale, to be filed pursuant to the Securities Act of 1933, as amended, and any and all amendments thereto (including post-effective amendments), and other documents relating thereto, including exhibits, and to file the same with the Securities and Exchange Commission. Each of such attorneys shall have full power and authority to do and perform each and every act with or without the others. IN WITNESS WHEREOF, the undersigned have duly executed this instrument as of October 31, 1996. MIDAMERICAN ENERGY COMPANY - ----------------------------------- ---------------------------------------- (Russell E. Christiansen) Chairman (Stanley J. Bright) President, and Director Chief Executive Officer and Director - ----------------------------------- ---------------------------------------- (John W. Aalfs) Director (Robert A. Burnett) Director - ----------------------------------- ---------------------------------------- (Ross D. Christensen) Director (John W. Colloton) Director - ----------------------------------- ---------------------------------------- (Frank S. Cottrell) Director (Jack W. Eugster) Director - ----------------------------------- ---------------------------------------- (Mel Foster, Jr.) Director (Nolden Gentry) Director - ----------------------------------- ---------------------------------------- (James M. Hoak, Jr.) Director (Richard L. Lawson) Director - ----------------------------------- ---------------------------------------- (Robert L. Peterson) Director (Nancy L. Seifert) Director /s/Leonard L. Woodruff - ----------------------------------- ---------------------------------------- (W. Scott Tinsman) Director (Leonard L. Woodruff) Director EX-25.A 18 EXHIBIT 25(A) STATEMENT OF QUALIFICATIONS SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 -------- STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ___ ------------------------- THE FIRST NATIONAL BANK OF CHICAGO (EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER) A NATIONAL BANKING ASSOCIATION 36-0899825 (I.R.S. EMPLOYER IDENTIFICATION NUMBER) ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) THE FIRST NATIONAL BANK OF CHICAGO ONE FIRST NATIONAL PLAZA, SUITE 0286 CHICAGO, ILLINOIS 60670-0286 ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE) ---------------------------- MIDAMERICAN ENERGY COMPANY (EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER) IOWA 42-1425214 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 666 GRAND AVENUE DES MOINES, IOWA 50303-0657 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) DEBT SECURITIES (TITLE OF INDENTURE SECURITIES) ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. Comptroller of Currency, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C., The Board of Governors of the Federal Reserve System, Washington D.C. (B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR ----------------------------- IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. No such affiliation exists with the trustee. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF ELIGIBILITY. 1. A copy of the articles of association of the trustee now in effect.* 2. A copy of the certificates of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee.* 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 2 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, The First National Bank of Chicago, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and State of Illinois, on the 31st day of October, 1996. THE FIRST NATIONAL BANK OF CHICAGO, TRUSTEE BY /S/ R. D. MANELLA RICHARD D. MANELLA VICE PRESIDENT * EXHIBITS 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF SUNAMERICA INC. FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25, 1996 (REGISTRATION NO. 333-14201). 3 EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT October 31, 1996 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In connection with the qualification of an indenture between MidAmerican Energy Company and The First National Bank of Chicago, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, THE FIRST NATIONAL BANK OF CHICAGO BY: /S/ R. D. MANELLA RICHARD D. MANELLA VICE PRESIDENT 4 EXHIBIT 7 Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0460 Page RC-1 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 ---------
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1996 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last business day of the quarter. SCHEDULE RC--BALANCE SHEET
C400 DOLLAR AMOUNTS IN ------------ ---- THOUSANDS RCFD BIL MIL THOU -------------------- ---- ------------ ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): a. Noninterest-bearing balances and currency and coin(1). . . . . . 0081 3,572,641 1.a. b. Interest-bearing balances(2) . . . . . . . . . . . . . . . . . . 0071 6,958,367 1.b. 2. Securities a. Held-to-maturity securities(from Schedule RC-B, column A). . . . 1754 0 2.a. b. Available-for-sale securities (from Schedule RC-B, column D) . . 1773 1,448,974 2.b. 3. Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and its Edge and Agreement subsidiaries, and in IBFs: a. Federal Funds sold . . . . . . . . . . . . . . . . . . . . . . . 0276 5,020,878 3.a. b. Securities purchased under agreements to resell. . . . . . . . . 0277 918,688 3.b. 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income (from Schedule RC-C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2122 19,125,160 4.a. b. LESS: Allowance for loan and lease losses. . . . . . . . . . . . RCFD 3123 379,232 4.b. c. LESS: Allocated transfer risk reserve . . . . . . . . . . . RCFD 3128 0 4.c. d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c) . . . . . . . . . . . . . . 2125 18,745,928 4.d. 5. Assets held in trading accounts . . . . . . . . . . . . . . . . . . 3545 9,599,172 5. 6. Premises and fixed assets (including capitalized leases). . . . . . 2145 623,289 6. 7. Other real estate owned (from Schedule RC-M). . . . . . . . . . . . 2150 8,927 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M). . . . . . . . . . . . . . . . . . . 2130 57,280 8. 9. Customers' liability to this bank on acceptances outstanding. . . . 2155 632,259 9. 10. Intangible assets (from Schedule RC-M). . . . . . . . . . . . . . . 2143 156,715 10. 11. Other assets (from Schedule RC-F) . . . . . . . . . . . . . . . . . 2160 1,592,088 11. 12. Total assets (sum of items 1 through 11). . . . . . . . . . . . . . 2170 49,335,206 12.
- ---------------- (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. 5 Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0460 Page RC-2 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 ---------
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN THOUSANDS BIL MIL THOU -------------------- ------------ LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part 1) . . . . . . . . . . . . . . . . RCON 2200 16,878,870 13.a. (1) Noninterest-bearing(1). . . . . . . . . . . . . . . . . RCON 6631 7,855,880 13.a.(1) (2) Interest-bearing. . . . . . . . . . . . . . . . . . . . RCON 6636 9,022,990 13.a.(2) b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II). . . . . . . . . . . . . RCFN 2200 12,677,057 13.b. (1) Noninterest bearing . . . . . . . . . . . . . . . . . . RCFN 6631 766,936 13.b.(1) (2) Interest-bearing. . . . . . . . . . . . . . . . . . . . RCFN 6636 11,910,121 13.b.(2) 14. Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: a. Federal funds purchased . . . . . . . . . . . . . . . . . . RCFD 0278 1,318,968 14.a. b. Securities sold under agreements to repurchase. . . . . . . RCFD 0279 1,197,589 14.b. 15. a. Demand notes issued to the U.S. Treasury. . . . . . . . . . RCON 2840 104,546 15.a. b. Trading Liabilities . . . . . . . . . . . . . . . . . . . . RCFD 3548 6,431,784 15.b. 16. Other borrowed money: a. With original maturity of one year or less. . . . . . . . . RCFD 2332 4,437,636 16.a. b. With original maturity of more than one year . . . . . . . RCFD 2333 75,308 16.b. 17. Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2910 283,041 17. 18. Bank's liability on acceptance executed and outstanding. . . . RCFD 2920 632,259 18. 19. Subordinated notes and debentures. . . . . . . . . . . . . . . RCFD 3200 1,275,000 19. 20. Other liabilities (from Schedule RC-G) . . . . . . . . . . . . RCFD 2930 892,947 20. 21. Total liabilities (sum of items 13 through 20) . . . . . . . . RCFD 2948 46,205,005 21. 22. Limited-Life preferred stock and related surplus . . . . . . . RCFD 3282 0 22. EQUITY CAPITAL 23. Perpetual preferred stock and related surplus. . . . . . . . . RCFD 3838 0 23. 24. Common stock . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3230 200,858 24. 25. Surplus (exclude all surplus related to preferred stock) . . . RCFD 3839 2,349,164 25. 26. a. Undivided profits and capital reserves. . . . . . . . . . . RCFD 3632 584,878 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities. . . . . . . . . . . . . . . . . . . . . . . . . RCFD 8434 (3,951) 26.b. 27. Cumulative foreign currency translation adjustments. . . . . . RCFD 3284 (748) 27. 28. Total equity capital (sum of items 23 through 27) RCFD 3210 3,130,201 28. 29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, and 28). . . . . . . . . . . . . RCFD 3300 49,335,206 29.
Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external Number -------- auditors as of any date during 1995 . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 6724 N/A M.1. --------
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public ccounting firm which submits a report on the bank 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4. = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8 = No external audit work - ----------- (1) Includes total demand deposits and noninterest-bearing time and savings deposits. 6 EX-25.B 19 EXHIBIT 25(B) STATEMENT OF QUALIFICATIONS II SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ------------------------------- THE FIRST NATIONAL BANK OF CHICAGO (EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER) A NATIONAL BANKING ASSOCIATION 36-0899825 (I.R.S. EMPLOYER IDENTIFICATION NUMBER) ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) THE FIRST NATIONAL BANK OF CHICAGO ONE FIRST NATIONAL PLAZA, SUITE 0286 CHICAGO, ILLINOIS 60670-0286 ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE) ------------------------------------ MIDAMERICAN ENERGY FINANCING I (EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER) IOWA (TO BE APPLIED FOR) (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 666 GRAND AVENUE DES MOINES, IOWA 50303-0657 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) PREFERRED SECURITIES (TITLE OF INDENTURE SECURITIES) ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. Comptroller of Currency, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C., The Board of Governors of the Federal Reserve System, Washington D.C. (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. No such affiliation exists with the trustee. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF ELIGIBILITY. 1. A copy of the articles of association of the trustee now in effect.* 2. A copy of the certificates of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee.* 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 2 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, The First National Bank of Chicago, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and State of Illinois, on the 31st day of October, 1996. THE FIRST NATIONAL BANK OF CHICAGO, TRUSTEE BY /s/ R. D. Manella RICHARD D. MANELLA VICE PRESIDENT * EXHIBITS 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF SUNAMERICA INC. FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25, 1996 (REGISTRATION NO. 333-14201). 3 EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT October 31, 1996 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In connection with the qualification of an Amended and Restated Trust Agreement of MidAmerican Energy Financing I, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, THE FIRST NATIONAL BANK OF CHICAGO BY: /S/ R. D. MANELLA RICHARD D. MANELLA VICE PRESIDENT 4 EXHIBIT 7 Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0460 Page RC-1 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1996 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last business day of the quarter. SCHEDULE RC--BALANCE SHEET
DOLLAR AMOUNTS IN C400 - THOUSANDS RCFD BIL MIL THOU ---------------- ---- ------------ ---- ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): a. Noninterest-bearing balances and currency and coin(1) . . . . 0081 3,572,641 1.a. b. Interest-bearing balances(2). . . . . . . . . . . . . . . . . 0071 6,958,367 1.b. 2. Securities a. Held-to-maturity securities(from Schedule RC-B, column A). . . . . . . . . . . . . . . . . . . . . . . . . . . . 1754 0 2.a. b. Available-for-sale securities (from Schedule RC-B, column D). . . . . . . . . . . . . . . . . . . . . . . . . . . . 1773 1,448,974 2.b. 3. Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and its Edge and Agreement subsidiaries, and in IBFs: a. Federal Funds sold. . . . . . . . . . . . . . . . . . . . . . 0276 5,020,878 3.a. b. Securities purchased under agreements to resell . . . . . . . 0277 918,688 3.b. 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income (from Schedule RC-C). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2122 19,125,160 4.a. b. LESS: Allowance for loan and lease losses . . . . . . . . . . RCFD 3123 379,232 4.b. c. LESS: Allocated transfer risk reserve . . . . . . . . . . . . RCFD 3128 0 4.c. d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c) . . . . . . . . . . . . 2125 18,745,928 4.d. 5. Assets held in trading accounts. . . . . . . . . . . . . . . . . 3545 9,599,172 5. 6. Premises and fixed assets (including capitalized leases) . . . . 2145 623,289 6. 7. Other real estate owned (from Schedule RC-M) . . . . . . . . . . 2150 8,927 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) . . . . . . . . . . . . . . . . . 2130 57,280 8. 9. Customers' liability to this bank on acceptances outstanding . . 2155 632,259 9. 10. Intangible assets (from Schedule RC-M) . . . . . . . . . . . . . 2143 156,715 10. 11. Other assets (from Schedule RC-F). . . . . . . . . . . . . . . . 2160 1,592,088 11. 12. Total assets (sum of items 1 through 11) . . . . . . . . . . . . 2170 49,335,206 12. - --------------------------------
(1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading 5 Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0460 Page RC-2 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 SCHEDULE RC-CONTINUED
Dollar Amounts In Thousands Bil Mil Thou --------------- ------------- LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part 1) . . . . . . . . . . . . . RCON 2200 16,878,870 13.a. (1) Noninterest-bearing(1). . . . . . . . . . . . . . . . . . RCON 6631 7,855,880 13.a.(1) (2) Interest-bearing. . . . . . . . . . . . . . . . . . . . . RCON 6636 9,022,990 13.a.(2) b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II). . . . . . . . . . . . . . RCFN 2200 12,677,057 13.b. (1) Noninterest bearing . . . . . . . . . . . . . . . . . . . RCFN 6631 766,936 13.b.(1) (2) Interest-bearing. . . . . . . . . . . . . . . . . . . . . RCFN 6636 11,910,121 13.b.(2) 14. Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: a. Federal funds purchased . . . . . . . . . . . . . . . . . . . RCFD 0278 1,318,968 14.a. b. Securities sold under agreements to repurchase. . . . . . . . RCFD 0279 1,197,589 14.b. 15. a. Demand notes issued to the U.S. Treasury. . . . . . . . . . . RCON 2840 104,546 15.a. b. Trading Liabilities . . . . . . . . . . . . . . . . . . . . . RCFD 3548 6,431,784 15.b. 16. Other borrowed money: a. With original maturity of one year or less. . . . . . . . . . RCFD 2332 4,437,636 16.a. b. With original maturity of more than one year . . . . . . . . RCFD 2333 75,308 16.b. 17. Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2910 283,041 17. 18. Bank's liability on acceptance executed and outstanding. . . . . RCFD 2920 632,259 18. 19. Subordinated notes and debentures. . . . . . . . . . . . . . . . RCFD 3200 1,275,000 19. 20. Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . RCFD 2930 892,947 20. 21. Total liabilities (sum of items 13 through 20) . . . . . . . . . RCFD 2948 46,205,005 21. 22. Limited-Life preferred stock and related surplus . . . . . . . . RCFD 3282 0 22. EQUITY CAPITAL 23. Perpetual preferred stock and related surplus. . . . . . . . . . RCFD 3838 0 23. 24. Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3230 200,858 24. 25. Surplus (exclude all surplus related to preferred stock) . . . . RCFD 3839 2,349,164 25. 26. a. Undivided profits and capital reserves. . . . . . . . . . . . RCFD 3632 584,878 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities. . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 8434 (3,951) 26.b. 27. Cumulative foreign currency translation adjustments. . . . . . . RCFD 3284 (748) 27. 28. Total equity capital (sum of items 23 through 27). . . . . . . . RCFD 3210 3,130,201 28. 29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, and 28). . . . . . . . . . . . . . RCFD 3300 49,335,206 29.
Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external Number ---------- auditors as of any date during 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 6724 ...... N/A M.1. ----------
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4.= Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8 = No external audit work - ---------------------- (1) Includes total demand deposits and noninterest-bearing time and savings deposits. 6 EX-25.C 20 EXHIBIT 25(C) STATEMENT OF QUALIFICATIONS III SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ____ ----------------------------- THE FIRST NATIONAL BANK OF CHICAGO (EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER) A NATIONAL BANKING ASSOCIATION 36-0899825 (I.R.S. EMPLOYER IDENTIFICATION NUMBER) ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) THE FIRST NATIONAL BANK OF CHICAGO ONE FIRST NATIONAL PLAZA, SUITE 0286 CHICAGO, ILLINOIS 60670-0286 ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE) ----------------------------- MIDAMERICAN ENERGY FINANCING II (EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER) IOWA (TO BE APPLIED FOR) (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 666 GRAND AVENUE DES MOINES, IOWA 50303-0657 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) PREFERRED SECURITIES (TITLE OF INDENTURE SECURITIES) ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. Comptroller of Currency, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C., The Board of Governors of the Federal Reserve System, Washington D.C. (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. No such affiliation exists with the trustee. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF ELIGIBILITY. 1. A copy of the articles of association of the trustee now in effect.* 2. A copy of the certificates of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee.* 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 2 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, The First National Bank of Chicago, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and State of Illinois, on the 31st day of October, 1996. THE FIRST NATIONAL BANK OF CHICAGO, TRUSTEE BY /S/ R. D. MANELLA RICHARD D. MANELLA VICE PRESIDENT * EXHIBITS 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF SUNAMERICA INC. FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25, 1996 (REGISTRATION NO. 333-14201). 3 EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT October 31, 1996 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In connection with the qualification of an Amended and Restated Trust Agreement of MidAmerican Energy Financing II, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, THE FIRST NATIONAL BANK OF CHICAGO BY: /S/ R. D. MANELLA RICHARD D. MANELLA VICE PRESIDENT 4 EXHIBIT 7
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0460 Page RC-1 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 ---------
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1996 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last business day of the quarter. SCHEDULE RC--BALANCE SHEET
C400 < - DOLLAR AMOUNTS IN ------------ ------ THOUSANDS RCFD BIL MIL THOU ----------------- ---- ------------ ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): a. Noninterest-bearing balances and currency and coin(1) . . . . . . . 0081 3,572,641 1.a. b. Interest-bearing balances(2). . . . . . . . . . . . . . . . . . . . 0071 6,958,367 1.b. 2. Securities a. Held-to-maturity securities(from Schedule RC-B, column A) . . . . . 1754 0 2.a. b. Available-for-sale securities (from Schedule RC-B, column D). . . . 1773 1,448,974 2.b. 3. Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and its Edge and Agreement subsidiaries, and in IBFs: a. Federal Funds sold. . . . . . . . . . . . . . . . . . . . . . . . . 0276 5,020,878 3.a. b. Securities purchased under agreements to resell . . . . . . . . . . 0277 918,688 3.b. 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income (from Schedule RC-C). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2122 19,125,160 4.a. b. LESS: Allowance for loan and lease losses . . . . . . . . . . . . . RCFD 3123 379,232 4.b. c. LESS: Allocated transfer risk reserve . . . . . . . . . . . . . . . RCFD 3128 0 4.c. d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c). . . . . . . . . . . . . . . . 2125 18,745,928 4.d. 5. Assets held in trading accounts. . . . . . . . . . . . . . . . . . . . 3545 9,599,172 5. 6. Premises and fixed assets (including capitalized leases) . . . . . . . 2145 623,289 6. 7. Other real estate owned (from Schedule RC-M) . . . . . . . . . . . . . 2150 8,927 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) . . . . . . . . . . . . . . . . . . . . 2130 57,280 8. 9. Customers' liability to this bank on acceptances outstanding . . . . . 2155 632,259 9. 10. Intangible assets (from Schedule RC-M) . . . . . . . . . . . . . . . . 2143 156,715 10. 11. Other assets (from Schedule RC-F). . . . . . . . . . . . . . . . . . . 2160 1,592,088 11. 12. Total assets (sum of items 1 through 11) . . . . . . . . . . . . . . . 2170 49,335,206 12. - -------------------
(1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. 5
Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0460 Page RC-2 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 ---------
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN THOUSANDS BIL MIL THOU ----------------- ------------ LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part 1) . . . . . . . . . . . . . . . RCON 2200 16,878,870 13.a. (1) Noninterest-bearing(1). . . . . . . . . . . . . . . . RCON 6631 7,855,880 13.a.(1) (2) Interest-bearing. . . . . . . . . . . . . . . . . . . RCON 6636 9,022,990 13.a.(2) b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II). . . . . . . . . . RCFN 2200 12,677,057 13.b. (1) Noninterest bearing . . . . . . . . . . . . . . . . . RCFN 6631 766,936 13.b.(1) (2) Interest-bearing. . . . . . . . . . . . . . . . . . . RCFN 6636 11,910,121 13.b.(2) 14. Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: a. Federal funds purchased . . . . . . . . . . . . . . . . . RCFD 0278 1,318,968 14.a. b. Securities sold under agreements to repurchase. . . . . . RCFD 0279 1,197,589 14.b. 15. a. Demand notes issued to the U.S. Treasury. . . . . . . . . RCON 2840 104,546 15.a. b. Trading Liabilities . . . . . . . . . . . . . . . . . . . RCFD 3548 6,431,784 15.b. 16. Other borrowed money: a. With original maturity of one year or less. . . . . . . . RCFD 2332 4,437,636 16.a. b. With original maturity of more than one year . . . . . . RCFD 2333 75,308 16.b. 17.Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . . . . . . . . . . RCFD 2910 283,041 17. 18. Bank's liability on acceptance executed and outstanding. . . RCFD 2920 632,259 18. 19. Subordinated notes and debentures. . . . . . . . . . . . . . RCFD 3200 1,275,000 19. 20. Other liabilities (from Schedule RC-G. . . . . . . . . . . . RCFD 2930 892,947 20. 21. Total liabilities (sum of items 13 through 20. . . . . . . . RCFD 2948 46,205,005 21. 22. Limited-Life preferred stock and related surplus . . . . . . RCFD 3282 0 22. EQUITY CAPITAL 23. Perpetual preferred stock and related surplu . . . . . . . . RCFD 3838 0 23. 24. Common stock . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3230 200,858 24. 25. Surplus (exclude all surplus related to preferred stock) . . RCFD 3839 2,349,164 25. 26. a. Undivided profits and capital reserves. . . . . . . . . . RCFD 3632 584,878 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities. . . . . . . . . . . . . . . . RCFD 8434 (3,951) 26.b. 27. Cumulative foreign currency translation adjustments. . . . . RCFD 3284 (748) 27. 28. Total equity capital (sum of items 23 through 27). . . . . . RCFD 3210 3,130,201 28. 29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, and 28) . . . . . . . . RCFD 3300 49,335,206 29.
Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external Number ----------- auditors as of any date during 1995 . . . RCFD 6724 ...N/A M.1. ----------- 1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm whichsubmits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4. = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8 = No external audit work - -------------------- (1) Includes total demand deposits and noninterest-bearing time and savings deposits. 6 EX-25.D 21 EXHIBIT 25(D) STATEMENT OF QUALIFICATIONS IV SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) THE FIRST NATIONAL BANK OF CHICAGO (EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER) A NATIONAL BANKING ASSOCIATION 36-0899825 (I.R.S. EMPLOYER IDENTIFICATION NUMBER) ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) THE FIRST NATIONAL BANK OF CHICAGO ONE FIRST NATIONAL PLAZA, SUITE 0286 CHICAGO, ILLINOIS 60670-0286 ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE) MIDAMERICAN ENERGY COMPANY (EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER) IOWA 42-1425214 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 666 GRAND AVENUE DES MOINES, IOWA 50303-0657 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) JUNIOR SUBORDINATED DEBENTURES (TITLE OF INDENTURE SECURITIES) ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. Comptroller of Currency, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C., The Board of Governors of the Federal Reserve System, Washington D.C. (B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. No such affiliation exists with the trustee. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF ELIGIBILITY. 1. A copy of the articles of association of the trustee now in effect.* 2. A copy of the certificates of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee.* 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, The First National Bank of Chicago, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and State of Illinois, on the 31st day of October, 1996. THE FIRST NATIONAL BANK OF CHICAGO, TRUSTEE BY /S/ R.D. MANELLA R.D. MANELLA VICE PRESIDENT * EXHIBITS 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF SUNAMERICA INC. FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25, 1996 (REGISTRATION NO. 333-14201). EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT October 31, 1996 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In connection with the qualification of an indenture between MidAmerican Energy Company and The First National Bank of Chicago, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, THE FIRST NATIONAL BANK OF CHICAGO BY: /S/ R. D. MANELLA RICHARD D. MANELLA VICE PRESIDENT EXHIBIT 7 Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0460 Page RC-1 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1996 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last business day of the quarter. SCHEDULE RC--BALANCE SHEET DOLLAR AMOUNTS IN C400 ------- ---- THOUSANDS RCFD BIL MIL THOU ----------------- ---- ------------ ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): a. Noninterest-bearing balances and currency and coin(1) . . . . . . . . . . 0081 3,572,641 1.a. b. Interest-bearing balances(2). . . . . . . . . . . . . . . . . . . . . . . 0071 6,958,367 1.b. 2. Securities a. Held-to-maturity securities(from Schedule RC-B, column A) . . . . . . . . 1754 0 2.a. b. Available-for-sale securities (from Schedule RC-B, column D). . . . . . . 1773 1,448,974 2.b. 3. Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and its Edge and Agreement subsidiaries, and in IBFs: a. Federal Funds sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . 0276 5,020,878 3.a. b. Securities purchased under agreements to resell . . . . . . . . . . . . . 0277 918,688 3.b. 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income (from Schedule RC-C) . . . . . . RCFD 2122 19,125,160 4.a. b. LESS: Allowance for loan and lease losses . . . . . . . . . . . . . . . . RCFD 3123 379,232 4.b. c. LESS: Allocated transfer risk reserve . . . . . . . . . . . . . . . . . . RCFD 3128 0 4.c. d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c). . . . . . . . . . . . . . . . . . . 2125 18,745,928 4.d. 5. Assets held in trading accounts. . . . . . . . . . . . . . . . . . . . . . . 3545 9,599,172 5. 6. Premises and fixed assets (including capitalized leases) . . . . . . . . . . 2145 623,289 6. 7. Other real estate owned (from Schedule RC-M) . . . . . . . . . . . . . . . . 2150 8,927 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) . . . . . . . . . . . . . . . . . . . . . . . 2130 57,280 8. 9. Customers' liability to this bank on acceptances outstanding . . . . . . . . 2155 632,259 9. 10. Intangible assets (from Schedule RC-M) . . . . . . . . . . . . . . . . . . . 2143 156,715 10. 11. Other assets (from Schedule RC-F). . . . . . . . . . . . . . . . . . . . . . 2160 1,592,088 11. 12. Total assets (sum of items 1 through 11) . . . . . . . . . . . . . . . . . . 2170 49,335,206 12.
- ---------- (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0460 Page RC-2 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 SCHEDULE RC-CONTINUED DOLLAR AMOUNTS IN THOUSANDS BIL MIL THOU ----------------- ------------ LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part 1) . . . . . . . . . . . . . . . . . RCON 2200 16,878,870 13.a. (1) Noninterest-bearing(1). . . . . . . . . . . . . . . . . . RCON 6631 7,855,880 13.a.(1) (2) Interest-bearing. . . . . . . . . . . . . . . . . . . . . RCON 6636 9,022,990 13.a.(2) b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II). . . . . . . . . . . . . . RCFN 2200 12,677,057 13.b. (1) Noninterest bearing . . . . . . . . . . . . . . . . . . . RCFN 6631 766,936 13.b.(1) (2) Interest-bearing. . . . . . . . . . . . . . . . . . . . . RCFN 6636 11,910,121 13.b.(2) 14. Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: a. Federal funds purchased. . . . . . . . . . . . . . . . . . RCFD 0278 1,318,968 14.a. b. Securities sold under agreements to repurchase . . . . . . RCFD 0279 1,197,589 14.b. 15. a. Demand notes issued to the U.S. Treasury . . . . . . . . . RCON 2840 104,546 15.a. b. Trading Liabilities....................................... RCFD 3548 6,431,784 15.b. 16. Other borrowed money: a. With original maturity of one year or less . . . . . . . . RCFD 2332 4,437,636 16.a. b. With original maturity of more than one year. . . . . . . RCFD 2333 75,308 16.b. 17. Mortgage indebtedness and obligations under capitalized leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2910 283,041 17. 18. Bank's liability on acceptance executed and outstanding . . . RCFD 2920 632,259 18. 19. Subordinated notes and debentures . . . . . . . . . . . . . . RCFD 3200 1,275,000 19. 20. Other liabilities (from Schedule RC-G). . . . . . . . . . . . RCFD 2930 892,947 20. 21. Total liabilities (sum of items 13 through 20). . . . . . . . RCFD 2948 46,205,005 21. 22. Limited-Life preferred stock and related surplus. . . . . . . RCFD 3282 0 22. EQUITY CAPITAL 23. Perpetual preferred stock and related surplus . . . . . . . . RCFD 3838 0 23. 24. Common stock. . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3230 200,858 24. 25. Surplus (exclude all surplus related to preferred stock). . . RCFD 3839 2,349,164 25. 26. a. Undivided profits and capital reserves . . . . . . . . . . RCFD 3632 584,878 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities. . . . . . . . . . . . . . . RCFD 8434 (3,951) 26.b. 27. Cumulative foreign currency translation adjustments . . . . . RCFD 3284 (748) 27. 28. Total equity capital (sum of items 23 through 27) RCFD 3210 3,130,201 28. 29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, and 28) . . . . . . . . . . . . RCFD 3300 49,335,206 29.
Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external Number ----------- auditors as of any date during 1995 . . . . . . . . . . . . . . . . . . . . . . RCFD 6724 ... N/A M.1. -----------
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4.= Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8 = No external audit work - ---------- (1) Includes total demand deposits and noninterest-bearing time and savings deposits. EX-25.E 22 EXHIBIT 25(E) STATEMENT OF QUALIFICATIONS V SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ---------------------------------- THE FIRST NATIONAL BANK OF CHICAGO (EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER) A NATIONAL BANKING ASSOCIATION 36-0899825 (I.R.S. EMPLOYER IDENTIFICATION NUMBER) ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) THE FIRST NATIONAL BANK OF CHICAGO ONE FIRST NATIONAL PLAZA, SUITE 0286 CHICAGO, ILLINOIS 60670-0286 ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE) ---------------------------------- MIDAMERICAN ENERGY COMPANY (EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER) IOWA (TO BE APPLIED FOR) (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 666 GRAND AVENUE DES MOINES, IOWA 50303-0657 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) GUARANTEE OF PREFERRED SECURITIES OF MIDAMERICAN ENERGY FINANCING I (TITLE OF INDENTURE SECURITIES) ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. Comptroller of Currency, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C., The Board of Governors of the Federal Reserve System, Washington D.C. (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. No such affiliation exists with the trustee. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF ELIGIBILITY. 1. A copy of the articles of association of the trustee now in effect.* 2. A copy of the certificates of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee.* 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 2 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, The First National Bank of Chicago, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and State of Illinois, on the 31st day of October, 1996. THE FIRST NATIONAL BANK OF CHICAGO, TRUSTEE BY /S/ R. D. MANELLA RICHARD D. MANELLA VICE PRESIDENT * EXHIBITS 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF SUNAMERICA INC. FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25, 1996 (REGISTRATION NO. 333-14201). 3 EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT October 31, 1996 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In connection with the qualification of a Guarantee Agreement of MidAmerican Energy Company, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, THE FIRST NATIONAL BANK OF CHICAGO BY: /S/ R. D. MANELLA RICHARD D. MANELLA VICE PRESIDENT 4 EXHIBIT 7 Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0460 Page RC-1 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1996 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last business day of the quarter. SCHEDULE RC--BALANCE SHEET
C400 - DOLLAR AMOUNTS IN ------ ------ THOUSANDS RCFD BIL MIL THOU ----------------- ----- ------------- ----- ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): a. Noninterest-bearing balances and currency and coin(1).................. 0081 3,572,641 1.a. b. Interest-bearing balances(2)........................................... 0071 6,958,367 1.b. 2. Securities a. Held-to-maturity securities(from Schedule RC-B, column A) .............. 1754 0 2.a. b. Available-for-sale securities (from Schedule RC-B, column D)............ 1773 1,448,974 2.b. 3. Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and its Edge and Agreement subsidiaries, and in IBFs: a. Federal Funds sold..................................................... 0276 5,020,878 3.a. b. Securities purchased under agreements to resell........................ 0277 918,688 3.b. 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income (from Schedule RC-C)........... RCFD 2122 19,125,160 4.a. b. LESS: Allowance for loan and lease losses............................... RCFD 3123 379,232 4.b. c. LESS: Allocated transfer risk reserve................................... RCFD 3128 0 4.c. d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c).................................... 2125 18,745,928 4.d. 5. Assets held in trading accounts......................................... 3545 9,599,172 5. 6. Premises and fixed assets (including capitalized leases)................ 2145 623,289 6. 7. Other real estate owned (from Schedule RC-M)............................ 2150 8,927 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M).......................................... 2130 57,280 8. 9. Customers' liability to this bank on acceptances outstanding............ 2155 632,259 9. 10. Intangible assets (from Schedule RC-M).................................. 2143 156,715 10. 11. Other assets (from Schedule RC-F)....................................... 2160 1,592,088 11. 12. Total assets (sum of items 1 through 11)................................ 2170 49,335,206 12.
- ----------- (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. 5 Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0460 Page RC-2 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN THOUSANDS BIL MIL THOU ----------------- ------------ LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part 1)............................... RCON 2200 16,878,870 13.a. (1) Noninterest-bearing(1)................................ RCON 6631 7,855,880 13.a.(1) (2) Interest-bearing...................................... RCON 6636 9,022,990 13.a.(2) b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II)........................ RCFN 2200 12,677,057 13.b. (1) Noninterest bearing................................... RCFN 6631 766,936 13.b.(1) (2) Interest-bearing...................................... RCFN 6636 11,910,121 13.b.(2) 14. Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: a. Federal funds purchased................................... RCFD 0278 1,318,968 14.a. b. Securities sold under agreements to repurchase............ RCFD 0279 1,197,589 14.b. 15. a. Demand notes issued to the U.S. Treasury............... RCON 2840 104,546 15.a. b. Trading Liabilities....................................... RCFD 3548 6,431,784 15.b. 16. Other borrowed money: a. With original maturity of one year or less................ RCFD 2332 4,437,636 16.a. b. With original maturity of more than one year............. RCFD 2333 75,308 16.b. 17. Mortgage indebtedness and obligations under capitalized leases................................................... RCFD 2910 283,041 17. 18. Bank's liability on acceptance executed and outstanding... RCFD 2920 632,259 18. 19. Subordinated notes and debentures......................... RCFD 3200 1,275,000 19. 20. Other liabilities (from Schedule RC-G).................... RCFD 2930 892,947 20. 21. Total liabilities (sum of items 13 through 20)............ RCFD 2948 46,205,005 21. 22. Limited-Life preferred stock and related surplus.......... RCFD 3282 0 22. EQUITY CAPITAL 23. Perpetual preferred stock and related surplus............. RCFD 3838 0 23. 24. Common stock.............................................. RCFD 3230 200,858 24. 25. Surplus (exclude all surplus related to preferred stock).. RCFD 3839 2,349,164 25. 26. a. Undivided profits and capital reserves.................. RCFD 3632 584,878 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities........................... RCFD 8434 (3,951) 26.b. 27. Cumulative foreign currency translation adjustments....... RCFD 3284 (748) 27. 28. Total equity capital (sum of items 23 through 27)......... RCFD 3210 3,130,201 28. 29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, and 28)..................... RCFD 3300 49,335,206 29.
Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed Number for the bank by independent external auditors as of any date during 1995 RCFD 6724 N/A M.1.
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8 = No external audit work - ------------- (1) Includes total demand deposits and noninterest-bearing time and savings deposits. 6 EX-25.F 23 EXHIBIT 25(F) STATEMENT OF QUALIFICATIONS VI SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ----- --------------------------------- THE FIRST NATIONAL BANK OF CHICAGO (EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER) A NATIONAL BANKING ASSOCIATION 36-0899825 (I.R.S. EMPLOYER IDENTIFICATION NUMBER) ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) THE FIRST NATIONAL BANK OF CHICAGO ONE FIRST NATIONAL PLAZA, SUITE 0286 CHICAGO, ILLINOIS 60670-0286 ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919 (NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE) ----------------------------------- MIDAMERICAN ENERGY COMPANY (EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER) IOWA (TO BE APPLIED FOR) (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 666 GRAND AVENUE DES MOINES, IOWA 50303-0657 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) GUARANTEE OF PREFERRED SECURITIES OF MIDAMERICAN ENERGY FINANCING II (TITLE OF INDENTURE SECURITIES) ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. Comptroller of Currency, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C., The Board of Governors of the Federal Reserve System, Washington D.C. (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. No such affiliation exists with the trustee. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF ELIGIBILITY. 1. A copy of the articles of association of the trustee now in effect.* 2. A copy of the certificates of authority of the trustee to commence business.* 3. A copy of the authorization of the trustee to exercise corporate trust powers.* 4. A copy of the existing by-laws of the trustee.* 5. Not Applicable. 6. The consent of the trustee required by Section 321(b) of the Act. 2 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. 8. Not Applicable. 9. Not Applicable. Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, The First National Bank of Chicago, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Chicago and State of Illinois, on the 31st day of October, 1996. THE FIRST NATIONAL BANK OF CHICAGO, TRUSTEE BY /S/ R. D. MANELLA RICHARD D. MANELLA VICE PRESIDENT * EXHIBITS 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF SUNAMERICA INC. FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 25, 1996 (REGISTRATION NO. 333-14201). 3 EXHIBIT 6 THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT October 31, 1996 Securities and Exchange Commission Washington, D.C. 20549 Gentlemen: In connection with the qualification of a Guarantee Agreement of MidAmerican Energy Company, the undersigned, in accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the reports of examinations of the undersigned, made by Federal or State authorities authorized to make such examinations, may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Very truly yours, THE FIRST NATIONAL BANK OF CHICAGO BY: /s/ R. D. MANELLA RICHARD D. MANELLA VICE PRESIDENT 4 EXHIBIT 7 Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0460 Page RC-1 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR JUNE 30, 1996 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding of the last business day of the quarter. SCHEDULE RC--BALANCE SHEET
C400 - DOLLAR AMOUNTS IN -------- ----- THOUSANDS RCFD BIL MIL THOU ----------------- ---- ------------ ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): a. Noninterest-bearing balances and currency and coin(1) . . . . . . . 0081 3,572,641 1.a. b. Interest-bearing balances(2). . . . . . . . . . . . . . . . . . . . 0071 6,958,367 1.b. 2. Securities a. Held-to-maturity securities(from Schedule RC-B, column A) . . . . . 1754 0 2.a. b. Available-for-sale securities (from Schedule RC-B, column D)..... . 1773 1,448,974 2.b. 3. Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and its Edge and Agreement subsidiaries, and in IBFs: a. Federal Funds sold. . . . . . . . . . . . . . . . . . . . . . . . . 0276 5,020,878 3.a. b. Securities purchased under agreements to resell . . . . . . . . . . 0277 918,688 3.b. 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income (from Schedule RC-C). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2122 19,125,160 4.a. b. LESS: Allowance for loan and lease losses . . . . . . . . . . . . . RCFD 3123 379,232 4.b. c. LESS: Allocated transfer risk reserve . . . . . . . . . . . . . RCFD 3128 0 4.c. d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c) . . . . . . . . . . . . . . . . . 2125 18,745,928 4.d. 5. Assets held in trading accounts. . . . . . . . . . . . . . . . . . . . 3545 9,599,172 5. 6. Premises and fixed assets (including capitalized leases) . . . . . . . 2145 623,289 6. 7. Other real estate owned (from Schedule RC-M) . . . . . . . . . . . . . 2150 8,927 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) . . . . . . . . . . . . . . . . . . . . 2130 57,280 8. 9. Customers' liability to this bank on acceptances outstanding . . . . . 2155 632,259 9. 10. Intangible assets (from Schedule RC-M) . . . . . . . . . . . . . . . . 2143 156,715 1 0. 11. Other assets (from Schedule RC-F). . . . . . . . . . . . . . . . . . . 2160 1,592,088 11. 12. Total assets (sum of items 1 through 11) . . . . . . . . . . . . . . . 2170 49,335,206 12.
- --------------- (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. 5 Legal Title of Bank: The First National Bank of Chicago Call Date: 06/30/96 ST-BK: 17-1630 FFIEC 031 Address: One First National Plaza, Ste 0460 Page RC-2 City, State Zip: Chicago, IL 60670 FDIC Certificate No.: 0/3/6/1/8 SCHEDULE RC-CONTINUED
Dollar Amounts In Thousands Bil Mil Thou ----------------- ------------ LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part 1) . . . . . . . . . . . . . . . . . . . . RCON 2200 16,878,870 13.a. (1) Noninterest-bearing(1). . . . . . . . . . . . . . . . . . . . . RCON 6631 7,855,880 13.a.(1) (2) Interest-bearing. . . . . . . . . . . . . . . . . . . . . . . . RCON 6636 9,022,990 13.a.(2) b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II). . . . . . . . . . . . . . . . . RCFN 2200 12,677,057 13.b. (1) Noninterest bearing . . . . . . . . . . . . . . . . . . . . . . RCFN 6631 766,936 13.b.(1) (2) Interest-bearing. . . . . . . . . . . . . . . . . . . . . . . . RCFN 6636 11,910,121 13.b.(2) 14. Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: a. Federal funds purchased . . . . . . . . . . . . . . . . . . . . . . RCFD 0278 1,318,968 14.a. b. Securities sold under agreements to repurchase. . . . . . . . . . . RCFD 0279 1,197,589 14.b. 15. a. Demand notes issued to the U.S. Treasury. . . . . . . . . . . . . . RCON 2840 104,546 15.a. b. Trading Liabilities................................................... RCFD 3548 6,431,784 15.b. 16. Other borrowed money: a. With original maturity of one year or less. . . . . . . . . . . . . RCFD 2332 4,437,636 16.a. b. With original maturity of more than one year. . . . . . . . . . . . RCFD 2333 75,308 16.b. 17. Mortgage indebtedness and obligations under capitalized leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2910 283,041 17. 18. Bank's liability on acceptance executed and outstanding. . . . . . . . RCFD 2920 632,259 18. 19. Subordinated notes and debentures. . . . . . . . . . . . . . . . . . . RCFD 3200 1,275,000 19. 20. Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . RCFD 2930 892,947 20. 21. Total liabilities (sum of items 13 through 20) . . . . . . . . . . . . RCFD 2948 46,205,005 21. 22. Limited-Life preferred stock and related surplus . . . . . . . . . . . RCFD 3282 0 22. EQUITY CAPITAL 23. Perpetual preferred stock and related surplus. . . . . . . . . . . . . RCFD 3838 0 23. 24. Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3230 200,858 24. 25. Surplus (exclude all surplus related to preferred stock) . . . . . . . RCFD 3839 2,349,164 25. 26. a. Undivided profits and capital reserves. . . . . . . . . . . . . . . RCFD 3632 584,878 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 8434 (3,951) 26.b. 27. Cumulative foreign currency translation adjustments. . . . . . . . . . RCFD 3284 (748) 27. 28. Total equity capital (sum of items 23 through 27). . . . . . . . . . . RCFD 3210 3,130,201 28. 29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, and 28). . . . . . . . . . . . . . . . . RCFD 3300 49,335,206 29.
Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external Number ------------ auditors as of any date during 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 6724.... N/A M.1. ------------
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4. = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8 = No external audit work - ------------------ (1) Includes total demand deposits and noninterest-bearing time and savings deposits. 6 -----END PRIVACY-ENHANCED MESSAGE-----