BERKSHIRE HATHAWAY INC. SUBSCRIPTION AGREEMENT
MidAmerican Energy Holdings Company
000 Xxxxx 00xx Xxxxxx
Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx
Ladies and Gentlemen:
The undersigned is executing this Agreement in connection with
its subscription for Shares (as defined below) of MidAmerican Energy Holdings
Company (the "Company"), an Iowa corporation. The undersigned understands that
the Company is relying upon the accuracy and completeness of the information
contained herein in complying with its obligations under federal and state
securities and other applicable laws.
Certain affiliates of the Company propose to enter into that
certain Purchase Agreement (the "Xxxxxxxx Purchase Agreement") with The Xxxxxxxx
Companies, Inc., a Delaware corporation ("Xxxxxxxx"), and certain entities
affiliated with Xxxxxxxx providing for the purchase of 100% of the partnership
interests in Kern River Gas Transmission Company, a Texas general partnership.
In addition, the Company proposes to enter into that certain Stock Purchase
Agreement (the "Xxxxxxxx Stock Purchase Agreement" and, together with the
Xxxxxxxx Purchase Agreement, the "Transaction Agreements") with Xxxxxxxx for the
purchase by the Company of shares of convertible preferred stock of Xxxxxxxx.
The purchase and sale of the partnership interests contemplated under the
Xxxxxxxx Purchase Agreement, together with the issuance and sale of the shares
of convertible preferred stock of Xxxxxxxx contemplated under the Xxxxxxxx Stock
Purchase Agreement (the "Xxxxxxxx Preferred Stock Purchase"), are referred to
herein together as the "Transactions."
The undersigned hereby irrevocably agrees with, and represents
and warrants to and for the benefit of, the Company and the shareholders of the
Company, as follows:
1. Subscription.
On the terms and subject to the conditions of this Agreement,
the undersigned hereby irrevocably subscribes for and the Company hereby
irrevocably agrees to sell an aggregate of 6,700,000 shares of Zero Coupon
Convertible Preferred Stock (the "Shares") of the Company (the terms of which
are described in the form of the Amended and Restated Articles of Incorporation
of the Company, attached as Schedule I hereto) for a purchase price of $60.00
per share.
The purchase price for the Shares to be purchased pursuant to
this Agreement is payable in cash. The undersigned may assign its subscription
rights hereunder to one or more of its consolidated subsidiaries; provided,
however, that the undersigned shall remain fully liable for all of its
obligations hereunder, including, without limitation, the payment of the
purchase price for all of the Shares. As a condition to such subscription, each
consolidated subsidiary of the undersigned purchasing Shares shall execute and
deliver to the Company a counterpart of this Agreement, and shall be bound by
the terms and conditions of this Agreement (but with its obligations limited to
the Shares being purchased by it) as if such person was the original signatory
hereto.
2. [Intentionally omitted.]
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the undersigned that:
(a) Organization and Qualification. The Company is duly formed, validly
existing and in good standing under the laws of the State of Iowa.
(b) Authority. Subject to the filing of the Amendment (as defined below), the
Company has the requisite power and authority to enter into this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly approved by all necessary action,
and no other proceedings on the part of the Company are necessary to authorize
the execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery of this Agreement by the
undersigned, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) Issuance of Shares. The Shares to be issued and sold by the Company pursuant
to this Agreement, when issued in accordance with the provisions hereof, will be
validly issued, fully paid and nonassessable stock of the Company, and no holder
of stock of the Company will have any preemptive rights to subscribe for any
such Shares. Other than shares of the Company's common stock, no par value
("Common Stock"), and shares of the Company's Zero Coupon Convertible Preferred
Stock, in each case, currently outstanding or reserved for issuance, and options
to purchase shares of Common Stock, the only securities authorized for issuance
by the Company are the Shares to be issued and sold by the Company pursuant to
this Agreement.
(d) Approvals and Consents; Non-Contravention. The creation, authorization,
issuance, offer and sale of the Shares do not require any consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority on the part of the Company (other than as will be
described in the Transaction Agreements and the filing of the Amendment (as
defined below) with the Iowa Secretary of State) or the vote, consent or
approval in any manner of the holders of any capital stock or other security of
the Company as a condition to the execution and delivery of this Agreement or
the creation, authorization, issuance, offer and sale of the Shares. The
execution and delivery by the Company of this Agreement and the performance by
the Company of its obligations hereunder will not violate (i) the terms and
conditions of the Articles of Incorporation (as amended by the Amendment) or the
Bylaws of the Company, or any agreement to which the Company is a party or by
which it is bound or (ii) subject to the accuracy of the representations and
warranties of the undersigned contained in Section 4 hereof, any federal or
state law.
(e) Use of Proceeds. If the Xxxxxxxx Preferred Stock Purchase is consummated by
June 15, 2002, the Company will fund such purchase solely with the proceeds from
the sale of the Shares hereby.
4. Representations and Warranties of the Undersigned. The undersigned
hereby represents and warrants to the Company that:
(a) Organization and Qualification. The undersigned is duly organized or
formed, validly existing and in good standing under the laws of the state of its
organization or formation.
(b) Authority. The undersigned has the requisite power and authority to enter
into this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by the undersigned and the consummation by the undersigned of the
transactions contemplated hereby have been duly and validly approved by all
necessary action, and no other proceedings on the part of the undersigned are
necessary to authorize the execution, delivery and performance of this Agreement
by the undersigned and the consummation by the undersigned of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the undersigned and, assuming the due authorization, execution and
delivery of this Agreement by the Company, constitutes a legal, valid and
binding obligation of the undersigned enforceable against the undersigned in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(c) Approvals and Consents; Non-Contravention. Except for consents, approvals
and/or authorizations which have been obtained, and filings that have been made,
the execution, delivery and performance of this Agreement by the undersigned and
the consummation by the undersigned of the transactions contemplated hereby do
not require any consent, approval or authorization of, or filing, registration
or qualification with, any governmental authority on the part of the
undersigned, or the vote, consent or approval in any manner of the holders of
any capital stock or other security of the undersigned as a condition to the
execution and delivery of this Agreement or the consummation by the undersigned
of the transactions contemplated hereby. The execution and delivery by the
undersigned of this Agreement and the performance by the undersigned of its
obligations hereunder will not violate (i) the terms and conditions of the
certificate of incorporation, or other applicable formation document, or the
bylaws of the undersigned, or any agreement to which the undersigned is a party
or by which it is bound or (ii) any federal or state law. Notwithstanding any
other provision of this Section 4(c), no representation or warranty is made as
to whether the undersigned or any of its affiliates, as a result of the
transactions contemplated by this Agreement or the Transaction Agreements would
be subject to regulation as a registered holding company under the Public
Utility Holding Company Act of 1935, as amended. The undersigned would not
intend to register as such a holding company if that were a required condition
of the transaction.
(d) Residence. The principal place of business address set forth on the
signature page hereof is the undersigned's true and correct principal place of
business and is the only jurisdiction in which an offer to sell the Shares was
made to the undersigned and the undersigned has no present intention of moving
its principal place of business to any other state or jurisdiction.
(e) No Registration. The undersigned understands that the Shares have not been
registered under the Securities Act of 1933, as amended (the "Act"), or under
the laws of any other jurisdiction, and that the Company does not contemplate
and is under no obligation to so register the Shares. The undersigned
understands and agrees that the Shares must be held indefinitely unless they are
subsequently transferred (i) pursuant to an effective registration statement
under the Act and, where required, under the laws of other jurisdictions or (ii)
pursuant to an exemption from applicable registration requirements. The
undersigned recognizes that there is no established trading market for the
Shares and that it is unlikely that any public market for the Shares will
develop for at least five years. The undersigned will not offer, sell, transfer
or assign its Shares or any interest therein in contravention of this Agreement,
the Act or any state or federal law.
(f) Purchase for Investment. The Shares for which the undersigned hereby
subscribes are being acquired solely for the undersigned's own account for
investment and are not being purchased with a view to or for resale,
distribution or other disposition, and the undersigned has no present plans to
enter into any contract, undertaking, agreement or arrangement for any such
resale, distribution or other disposition.
(g) Information. The undersigned has been granted the opportunity to ask
questions of, and receive answers from, the Company and the officers of the
Company concerning the terms and conditions of the sale of the Shares, the
Transaction Agreements and the transactions contemplated thereby, and to obtain
any additional information which the undersigned deems necessary to make an
informed investment decision. The undersigned has received or has had access to
other documents requested from the Company relating to the Shares and the
purchase thereof, and the Company has afforded the undersigned the opportunity
to discuss the undersigned's investment in the Company and to ask and receive
answers to any questions relating to the investment in the Shares, the
Transaction Agreements and the transactions contemplated thereby. The
undersigned understands and has evaluated the risks of a purchase of the Shares.
(h) Accredited Investor. The undersigned has read the text of Rule 501(a)(1)-(8)
of Regulation D under the Act and confirms that it is an "accredited investor"
as described thereby.
(i) Plan Assets.
(i) By checking below, the undersigned has indicated whether or
not it is, or is acting on behalf of, a "benefit plan
investor", as defined in 29 C.F.R. ss. 2510.3-101. The
undersigned acknowledges that (A) a benefit plan investor
includes (x) an "employee benefit plan" within the meaning of
Section 3(3) of the U.S. Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), whether or not such plan is
subject to ERISA, or (y) a plan or arrangement subject to
Section 4975 of the Internal Revenue Code of 1986, as amended
(the "Code") or (iii) an entity which is deemed to hold the
assets of any such employee benefit plan, plan or arrangement
described in (x) or (y) above pursuant to 29 C.F.R. ss.
2510.3-101 or otherwise, (B) a plan which is maintained by a
foreign corporation, governmental entity or church, a Xxxxx
plan covering no common-law employees and an individual
retirement account would each be a benefit plan investor for
this purpose, even though they are generally not subject to
ERISA and (C) a foreign or U.S. entity which is not an
operating company and which is not publicly traded or
registered as an investment company under the Investment
Company Act of 1940, as amended, and in which 25% or more of
the value of any class of equity interests is held by benefit
plan investors, would be deemed to hold the assets of one or
more employee benefit plans pursuant to 29 C.F.R. 2510.3-101.
The undersigned further understands that for purposes of
determining whether this 25% threshold has been met or
exceeded, the value of any equity interests held by a person
(other than a benefit plan investor) who has discretionary
authority or control with respect to the assets of the entity,
or any person who provides investment advice for a fee (direct
or indirect) with respect to such assets, or any affiliate of
such a person, is disregarded.
___ Yes X No
(ii) By checking below, the undersigned has indicated whether it
is, or is acting on behalf of, such an employee benefit plan,
plan or arrangement described in the preceding question, or is
an entity deemed to hold the assets of any such employee
benefit plan, plan or arrangement that is subject to ERISA
and/or Section 4975 of the Code.
___ Yes X No
(iii) By checking below, the undersigned has indicated whether it is
an insurance company using assets of its general account.
___ Yes X No
If the answer to the above question is yes, please indicate
the percentage of the general account that is attributable to
benefit plan investors subject to ERISA and/or Section 4975 of
the Code: _______%.
(j) Holding Company. The undersigned is not a "public utility company," a
"holding company," a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company," as such terms
are defined in the Public Utility Holding Company Act of 1935, as amended, or a
"public utility" as such term is defined in the Federal Power Act.
(k) Assignment. The undersigned will only assign its subscription rights
hereunder to one or more of its consolidated subsidiaries who are capable of
making the representations and warranties contained in this Section 4 and of
performing the obligations they undertake hereunder.
5. Closing. The closing (the "First Closing") of the purchase and sale of an
aggregate of 4,583,334 Shares pursuant to this Agreement shall be held on March
7, 2002 (such date, the "First Closing Date"). The closing (the "Second Closing"
and, together with the First Closing, the "Closings") of the purchase and sale
of the remaining 2,116,666 Shares pursuant to this Agreement shall be held on
March 12, 2002 (such date, the "Second Closing Date" and, together with the
First Closing Date, the "Closing Dates").
6. Conditions to Closing. (a) The undersigned's obligation to purchase
the applicable Shares under this Agreement at each Closing is subject to the
fulfillment on or prior to such Closing of the following conditions:
(i) Representations and Warranties. Each representation and
warranty made by the Company in this Agreement shall be true
and correct in all material respects on and as of such Closing
Date as though such representation or warranty was made on
such Closing Date, and any representation or warranty made as
of a specified date earlier than such Closing Date shall have
been true and correct in all material respects on and as of
such earlier date.
(ii) Performance. The Company shall have performed and complied
with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or
complied with by the Company at or before such Closing Date.
(b) The Company's obligation to sell the applicable Shares under this Agreement
at each Closing is subject to the fulfillment on or prior to such Closing of the
following conditions:
(i) Representations and Warranties. Each representation and
warranty made by the undersigned in this Agreement shall be
true and correct in all material respects on and as of such
Closing Date as though such representation or warranty was
made on such Closing Date, and any representation or warranty
made as of a specified date earlier than such Closing Date
shall have been true and correct in all material respects on
and as of such earlier date.
(ii) Performance. The undersigned shall have performed and complied
with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or
complied with by the undersigned at or before such Closing
Date.
7. Covenants. Each of the Company and the undersigned covenants and agrees with
the other that, at all times from and after the date hereof until the Second
Closing Date, it will comply with all covenants and provisions of this Section
7, except to the extent the other party may otherwise consent in writing.
(a) Amendment of Articles of Incorporation. The Company shall take all actions
necessary to amend its Articles of Incorporation to authorize the issuance of
the Shares under this Agreement (the "Amendment").
(b) Regulatory and Other Approvals. Subject to the terms and conditions of this
Agreement, each of the Company and the undersigned will proceed diligently and
in good faith to, as promptly as practicable (x) obtain all consents, approvals
or actions of, make all filings with and give all notices to governmental or
regulatory authorities or any public or private third parties required of the
Company and the undersigned to consummate the transactions contemplated hereby
and by the Transaction Agreements, and (y) provide such other information and
communications to such governmental or regulatory authorities or other public or
private third parties as the other party or such governmental or regulatory
authorities or other public or private third parties may reasonably request in
connection therewith.
(c) Notice and Cure. Each of the Company and the undersigned will promptly
notify the other in writing of, and contemporaneously will provide the other
with true and complete copies of any and all information or documents relating
to, and will use all commercially reasonable efforts to cure before each Closing
Date, any event, transaction or circumstance, occurring after the date of this
Agreement that causes or will cause any covenant or agreement of either such
party under this Agreement to be breached or that renders or will render untrue
any representation or warranty of either such party contained in this Agreement
as if the same were made on or as of the date of such event, transaction or
circumstance.
(d) Fulfillment of Conditions. Each of the Company and the undersigned will take
all commercially reasonable steps necessary or desirable and proceed diligently
and in good faith to satisfy each condition to the obligations of such party
contained in this Agreement and will not take any action that could reasonably
be expected to result in the nonfulfillment of any such condition or fail to
take any commercially reasonable action that could reasonably be expected to
prevent the nonfulfillment of any such condition.
8. Indemnification. The undersigned agrees to indemnify and hold harmless the
Company or any officer, director or control person (within the meaning of
Section 15 of the Act) of the Company from and against any and all loss, damage
or liability due to or arising out of a breach of any representation or warranty
of the undersigned contained in any document furnished by the undersigned in
connection with the offering and sale of the Shares, including, without
limitation, this Agreement, or failure by the undersigned to comply with any
covenant or agreement made by the undersigned herein or in any other document
furnished by the undersigned to any of the foregoing in connection with this
transaction.
9. Survival; Binding Effect. All covenants, agreements, representations and
warranties made herein shall survive the execution and delivery of this
Agreement and delivery of the Shares and payment therefor and, notwithstanding
any investigation heretofore or hereafter made by the undersigned or on the
undersigned's behalf, shall continue in full force and effect. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party and all covenants,
promises and agreements in this Agreement by or on behalf of the Company, or by
or on behalf of the undersigned, shall bind and inure to the benefit of the
successors and assigns of such parties hereto.
10. Termination.
(a) This Agreement may be terminated, and the transactions contemplated hereby
may be abandoned (i) at any time before either Closing, by mutual written
agreement of the Company and the undersigned or (ii) at any time before either
Closing, by the Company or the undersigned, in the event that any order or law
becomes effective restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement, upon notification of the non-terminating party by the terminating
party.
(b) This Agreement shall terminate, with no further action being required on the
part of either party hereto, automatically, upon any termination of either
Transaction Agreement in accordance with its terms by the Company.
(c) If this Agreement is validly terminated pursuant to this Section 10, this
Agreement will forthwith become null and void, and there will be no liability or
obligation on the part of the undersigned or the Company (or any of their
respective shareholders, officers, directors, employees, agents or other
representatives or affiliates) except to the extent of the transactions
previously consummated hereunder. Notwithstanding the foregoing, no such
termination shall affect the obligations of the undersigned pursuant to Section
8, which shall survive any such termination.
11. Notices. All notices, statements, instructions or other documents required
to be given hereunder shall be in writing and shall be given either personally,
by overnight courier or by facsimile, addressed to the Company at its principal
offices and to the other party at its address or facsimile number reflected on
the signature page hereto. The undersigned, by written notice given to the
Company in accordance with this Section 11 may change the address to which
notices, statements, instructions or other documents are to be sent to the
undersigned. All notices, statements, instructions and other documents hereunder
that are mailed shall be deemed to have been given on the date of delivery.
12. Complete Agreement; Counterparts. This Agreement constitutes the entire
agreement and supersedes all other agreements and understandings, both written
and oral, between the parties hereto, with respect to the subject matter hereof.
This Agreement may be executed by any one or more of the parties hereto in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same instrument.
13. Assignment. Without the prior written consent of each of the parties hereto,
neither this Agreement nor any right, interest or obligation hereunder may be
assigned by any party hereto and any attempt to do so will be void; provided,
however, that, notwithstanding any other provisions of this Agreement, this
Agreement and all rights, interests and obligations of the undersigned hereunder
(or, at the option of the undersigned, the right and obligation to purchase
some, but not all, of the Shares) may be assigned by the undersigned to one or
more subsidiaries of the undersigned which are consolidated with the undersigned
for financial accounting purposes, without obtaining the consent of any other
party hereto. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and shall be enforceable by the parties hereto and
their respective successors and assigns.
14. Amendment and Waiver. This Agreement may be amended or modified only by an
instrument signed by the parties hereto. A waiver of any provision of this
Agreement must be in writing, designated as such, and signed by the party
against whom enforcement of that waiver is sought. The waiver by a party of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent or other breach thereof.
15. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement on this 7th day of March, 2002.
BERKSHIRE HATHAWAY INC. 0000 Xxxxxx Xxxxx
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Mailing Address
By: /s/ Xxxx X. Hamburg Xxxxx XX 00000
--------------------------------- ----------------------------------
Name: Xxxx X. Hamburg City State Zip Code
Title: Vice President
00-0000000
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Tax Identification Number
(000) 000-0000
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Facsimile Number
SUBSCRIPTION ACCEPTED AS OF THE ABOVE DATE
MIDAMERICAN ENERGY HOLDINGS COMPANY
By: /s/ Xxxxx X. Xxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chairman and Chief Executive Officer
