THEBANK OF NEW YORK,
6.750% Notes due2031
Dated asof February 8, 2002
FIRSTSUPPLEMENTAL INDENTURE, dated as of February 8, 2002 (herein called theFirstSupplemental Indenture”),between MIDAMERICAN ENERGY COMPANY, a corporation duly organized and existingunder the laws of the State of Iowa (herein called the “Company”), andTHE BANK OF NEW YORK, a national banking association duly organized and existingunder the laws of the United States of America, as Trustee (herein called the“Trustee”), underthe Original Indenture referred to below.
WHEREAS,the Company has heretofore executed and delivered to the Trustee an indenturedated as of February 8, 2002 (herein called the “OriginalIndenture”), toprovide for the issuance from time to time of its unsubordinated debentures,notes or other evidences of indebtedness, the form and terms of which are to beestablished as set forth in Sections 2.01 and 3.01 of the OriginalIndenture;
WHEREAS,Section 9.01 of the Original Indenture provides, among other things, that theCompany and the Trustee may enter into indentures supplemental to the OriginalIndenture for, among other things, (i) the purpose of establishing the form andterms of the Securities (as defined in the Original Indenture) of any series aspermitted by Sections 2.01 and 3.01 of the Original Indenture, and (ii) to addto the covenants of the Company for the benefit of the Holders of all or anyseries of Securities (as defined in the Original Indenture);
WHEREAS, the Company desires to create one series of securities in an aggregateprincipal amount of four hundred million dollars ($400,000,000) to be designatedthe “6.750% Notes due2031” (the “Securities”), andall action on the part of the Company necessary to authorize the issuance of theSecurities under the Original Indenture and this First Supplemental Indenturehas been duly taken;
WHEREAS, the Company and the Trustee desire to make certain amendments to theOriginal Indenture in conformance with the requirements described above;and
WHEREAS, all acts and things necessary to make the Securities, when executed bythe Company and authenticated and delivered by the Trustee as provided in theOriginal Indenture, the valid and binding obligations of the Company and toconstitute these presents a valid and binding supplemental indenture andagreement
accordingto its terms, have been done and performed.
NOW,THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE
That inconsideration of the premises and of the acceptance and purchase of theSecurities by the holders thereof and of the acceptance of this trust by theTrustee, the Company covenants and agrees with the Trustee, for the equalbenefit of holders of the Securities, as follows:
The useof the terms and expressions herein is in accordance with the definitions, usesand constructions contained in the Original Indenture and the form of Securityattached hereto as ExhibitA.
TERMS ANDISSUANCE OF THE SECURITIES
Section2.01. Issueof Securities. Oneseries of notes, which shall be designated the “6.750% Notes due2031”, shall be executed, authenticated and delivered in accordance with theprovisions of, and shall in all respects be subject to, the terms, conditionsand covenants of the Original Indenture and this First Supplemental Indenture(including the form of Security set forth in ExhibitA). Theaggregate principal amount of the 6.750% Notes due 2031 which may beauthenticated and delivered under this First Supplemental Indenture shall notexceed $400,000,000.
Section2.02. OptionalRedemption. TheSecurities may be redeemed, in whole or in part, at the option of the Companypursuant to the terms set forth in Annex1 to theSecurities to be redeemed. The provisions of Article XI of the OriginalIndenture shall also apply to any optional redemption of Securities by theCompany.
Section2.03.Defeasance and Discharge. Theprovisions of Section 14.02 of the Original Indenture shall be applicable to theSecurities.
Section2.04. CovenantDefeasance. Theprovisions of Section 14.03 of theOriginal Indenture shall be applicable to the Securities.
Section2.05.Place of Payment. The Placeof Payment in respect of the Securities will be in The City of New York,initially at the Corporate Trust Office of The Bank of New York (which as of thedate hereof is located at 101 Barclay Street, 21 West, New York, New York 10286,Attention: Corporate Trust Administration).
Section2.06. Formof Securities; Incorporation of Terms. The formof the Securities shall be substantially in the form of ExhibitA, theterms of which are herein incorporated by reference and which are part of thisFirst Supplemental Indenture. The Securities shall be issued as one or moreGlobal Securities in filly registered form, as determined in accordance withSection 2.01 of the Original Indenture. The Global Securities shall be deliveredby the Trustee to the Depositary, as the Holder thereof, or a nominee orcustodian therefore, to be held by the Depositary in accordance with the
Section2.07. Exchangeof the Global Securities. Each ofthe Global Securities shall be exchangeable for definitive Securities only asprovided in Section 3.05 of the Original Indenture.
Section2.08. Regular Record Date for the Securities. The Regular Record Date for theSecurities shall be the June 15 or December 15 immediately prior to eachInterest Payment Date.
Section2.09. AuthorizedDenominations. Beneficialinterests in Global Securities, as well as definitive Securities, may be heldonly in denominations of $1,000 and integral multiples of $1,000 in excessthereof.
Section3.01. Depositary.TheDepositary Trust Company, its nominees and their respective successors arehereby appointed Depositary with respect to the Global Securities.
AMENDMENTSTO ORIGINAL INDENTURE
Section4.01. Amendments.TheOriginal Indenture is hereby amended as follows:
(a) Section1.01 of the Original Indenture is hereby amended to add or modify the followingdefinitions, as the case may be:
“CommonShareholders Equity” means,at any time, the total shareholders’ equity of the Company and its consolidatedsubsidiaries, determined on a consolidated basis in accordance with generallyaccepted accounting principles, as of the end of the most recently completedfiscal quarter of the Company for which financial information is thenavailable.”
“Iowa-IllinoisIndenture” meansthe Indenture of Mortgage and Deed of Trust, dated as of March 1, 1947, fromIowa-Illinois Gas and Electric Company to Harris Trust and Savings Bank and LynnLloyd (C. Potter, successor individual trustee), as trustees, and indenturessupplemental thereto.”
“MidwestPower Indenture” meansthe General Mortgage Indenture and Deed of Trust, dated as of January 1, 1993,between Midwest Power Systems Inc. and Morgan Guaranty Trust Company of NewYork, trustee (Harris Trust and Savings Bank, successor trustee), and indenturessupplemental thereto.”
(a) (i) anymortgage, pledge or other lien or encumbrance on any property hereafter acquiredor constructed by the Company or a Subsidiary, or on which property soconstructed is located, and created prior to, contemporaneously with or within360 days after, such acquisition or construction or the commencement ofcommercial operation of such property to secure or provide for the payment ofany part of the purchase or construction price of such property, or (ii) anyproperty subject to any mortgage, pledge, or other lien or encumbrance upon suchproperty existing at the time of acquisition thereof by the Company or anySubsidiary, 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, membership interests or indebtedness of a corporation orlimited liability company at the time such corporation or limited liabilitycompany shall become a Subsidiary or any pledge of the shares of stock ormembership interests of such corporation or limited liability company prior to,contemporaneously with or within 360 days after such corporation or limitedliability company shall become a Subsidiary to secure or provide for the paymentof any part of the purchase price of such stock or membership interests, or (iv)any conditional sales agreement or other title retention agreement with respectto any property hereafter acquired or constructed; providedthat, inthe case of clauses (i) through (iv), the lien of any such mortgage, pledge orother lien does not spread to property owned prior to such acquisition orconstruction or to other property thereafter acquired or constructed other thanadditions to such acquired or constructed property and other than property onwhich property so constructed is located; and provided,further, that if afirm commitment from a bank, insurance company or other lender or investor (notincluding the Company, a Subsidiary or an Affiliate of the Company) for thefinancing of the acquisition or construction of property is made prior tocontemporaneously with or within the 360-day period hereinabove referred to, theapplicable mortgage, pledge, lien or encumbrance shall be deemed to be permittedby this clause (a) whether or not created or assumed within suchperiod;
(b) anymortgage, pledge or other lien or encumbrance created for the sole purpose ofextending, renewing or refunding any mortgage, pledge, lien or encumbrancepermitted by clause (a) of this definition; provided,however, that theprincipal amount of indebtedness secured thereby shall not exceed the principalamount of indebtedness so secured at the time of such extension, renewal orrefunding and that such extension, renewal or refunding mortgage, pledge, lienor encumbrance shall be limited to all or any part of the same property thatsecured the mortgage, pledge or other lien or encumbrance extended, renewed orrefunded;
(c) liens fortaxes or assessments or governmental charges or levies not then due anddelinquent or the validity of which is being contested in good faith, andagainst which an adequate reserve has been established; liens on any propertycreated in connection with pledges or deposits to secure public or statutoryobligations or to secure performance in connection with bids or contracts;materialmen’s, mechanics’, carrier’s, workmen’s, repairmen’s or other likeliens; or liens on any property created in connection with deposits to obtainthe release of such liens; liens on any property created in connection withdeposits to secure surety, stay, appeal or customs bonds; liens created by orresulting from any litigation or legal proceeding which is currently beingcontested in good faith by appropriate proceedings; leases and liens, rights ofreverter and other possessory rights of the lessor thereunder; zoningrestrictions, easements, rights-of-way or other restrictions on the use of realproperty or minor irregularities in the title thereto; and any other liens andencumbrances similar to those described in this clause (c), the existence ofwhich, in the opinion of the board of directors of the Company, does notmaterially impair the use by the Company or a Subsidiary of the affectedproperty in the operation of the business of the Company or a Subsidiary, or thevalue of such property for the purposes of such business;
(d) anymortgage, pledge or other lien or encumbrance created after February 8, 2002 onany property leased to or purchased by the Company or a Subsidiary after thatdate and securing, directly or indirectly, obligations issued by a State, aterritory or a possession of the United States, or any political subdivision ofany of the foregoing, or the District of Columbia, to finance the cost ofacquisition or cost of construction of such property; providedthat theinterest paid on such obligations is entitled to be excluded from gross incomeof the recipient pursuant to Section 103(a)(l) of the Internal Revenue Code of1986, as amended (or any successor to such provision), as in effect at the timeof the issuance of such obligations;
(e) anymortgage, pledge or other lien or encumbrance on any property now owned orhereafter acquired or constructed by the Company or a Subsidiary, or on whichproperty so owned, acquired or constructed is located, to secure or provide forthe payment of any part of the construction price or cost of improvements ofsuch property, and created prior to, contemporaneously with or within 360 daysafter, such construction or improvement; providedthat if afirm commitment from a bank, insurance company or other lender or investor (notincluding the Company, a Subsidiary or an Affiliate of the Company) for thefinancing of the acquisition or construction of property is made prior to,contemporaneously with or within the 360-day period hereinabove referred to, theapplicable mortgage, pledge, lien or encumbrance shall be deemed to be permittedby this clause (e) whether or not created or assumed within such period;and
(f) anymortgage, pledge or other lien or encumbrance not otherwise described in clauses(a) through (e); providedthat theaggregate amount of indebtedness secured by all such mortgages, pledges, liensor encumbrances does not exceed the greater of $100,000,000 or 10% of CommonShareholders’ Equity.”
“PrincipalFacility” meansthe real property, fixtures, machinery and equipment relating to any facilityowned by the Company or any Subsidiary, except any facility that is not ofmaterial importance to the business conducted by the Company and itsSubsidiaries, taken as a whole.”
“RegulatedSubsidiary” meansany Subsidiary which owns or operates facilities used for the generation,transmission or distribution of electric energy and is subject to thejurisdiction of any governmental authority of the United States or any state orpolitical subdivision thereof, as to any of its: rates; services; accounts;issuances of securities; affiliate transactions; or construction, acquisition orsale of any such facilities, except that any “exempt wholesale generator”, asdefined in 15 USC 79z-5a(a)(l), “qualifying facility”, as defined in 18 CFR29z,l0l(b)(l), “foreign utility company”, as defined in 15 USC 79z-5b(a)(3), and“power marketer”, as defined in NORTHWEST POWER MARKETING COMPANY, LL.C.,75FERC PARA61,281, shall not be a Regulated Subsidiary.”
“Subsidiary” means acorporation or limited liability company more than 50% of the outstanding votingstock or voting membership interests of which is or are owned, directly orindirectly, by the Company or by one or more other Subsidiaries, or by theCompany and one or more other Subsidiaries. For the purposes of this definition,(1) “voting stock” means stock which ordinarily has voting power for theelection of directors, whether at all times or only so long as no senior classof stock has such voting power by reason of any contingency and (2) “votingmembership interests” means membership interests which ordinarily have votingpower for the election of directors (or the equivalent thereof), whether at alltimes or only so long as no senior class of membership interests have suchvoting power by reason of any contingency.
“Wholly-OwnedSubsidiary” means aSubsidiary of which all of the outstanding voting stock or voting membershipinterests (other than directors’ qualifying shares) is or are at the time,directly or indirectly, owned by the Company, or by one or more Wholly-OwnedSubsidiaries of the Company or by the Company and one or more Wholly-OwnedSubsidiaries.”
(b) Section1.12 of the Indenture is amended by replacing the words “without regard toconflicts of laws and rules of said state” with the words “without regard toconflicts of laws rules of said state”.
(c) Section10.06 of the Original Indenture is hereby amended by replacing the reference toSection 10.04 therein with a reference to Section 10.08.
(d) Article Xof the Original Indenture is amended by adding a new Section 10.08 theretoimmediately following Section 10.07 thereof, such Section 10.08 to read asfollows:
“Section10.08. Limitationupon Mortgages and Liens.
TheCompany will not at any time directly or indirectly create or assume and willnot 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 interestit may have therein or upon any stock of any Regulated Subsidiary or anyindebtedness of any Subsidiary to the Company or any other Subsidiary, whethernow owned or hereafter acquired, without making effective provision (and theCompany covenants that in such case it will make or cause to be made, effectiveprovision) whereby the outstanding Securities and any other indebtedness of theCompany then entitled thereto shall be secured by such mortgage, pledge, lien orencumbrance equally and ratably with any and all other obligations andindebtedness thereby secured, so long as any such other obligations andindebtedness shall be so secured (provided,
that forthe purpose of providing such equal and ratable security, the principal amountof outstanding Original Issue Discount Securities shall be the amount of theprincipal thereof that would be due and payable as of the date of suchdetermination upon a declaration of acceleration of the Maturity thereofpursuant to Section 5.02);provided, however, that theforegoing covenant shall not be applicable to (I) the lien of the Iowa-IllinoisIndenture, (2) the lien of the Midwest Power Indenture, (3) PermittedEncumbrances or (4) any transfer, lease, use or other encumbrance of or on theCompany’s or any Subsidiary’s transmission assets (a) substantially inaccordance with the filings made with the Federal Energy Regulatory Commissionon September 28. 2001 and given docket numbers ECO I – 156-000 and ERO1-3154-000 and/or (b) as otherwise required by applicable state or federalorder, regulation, rule or statute.”
(e) The firstsentence of Section 14.03 of the Original Indenture is hereby amended byreplacing the references to Section 10.04 therein with references to Section10.08 in each place where such references appear in such sentence.
Section4.02. Applicationof Amendments. Theamendments to the Original Indenture set forth in Section 4.01 hereof shall beapplicable only to the Securities, and shall not be applicable to any otherseries of securities issued under the Indenture.
Section5.01. Executionas Supplemental Indenture. ThisFirst Supplemental Indenture is executed and shall be construed as an indenturesupplemental to the Original Indenture and, as provided in the OriginalIndenture, this First Supplemental Indenture forms a part thereof.
Section5.02. Effectof Headings. TheArticle and Section headings herein are for convenience only and shall notaffect the construction hereof.
Section5.03.Successors and Assigns. Allcovenants and agreements contained in this First Supplemental Indenture made bythe Company shall bind its successors and assigns, whether so expressed ornot.
Section5.04. SeparabilityClause. In caseany provision in this First Supplemental Indenture or in the Securities shall beinvalid, illegal or unenforceable, the validity, legality and enforceability ofthe remaining provisions shall not in any way be affected or impairedthereby.
Section5.05.Benefits of First Supplemental Indenture. Nothingin this First Supplemental Indenture or in the Securities, express or implied,shall give to any person, other than the parties hereto and their successorshereunder and the Holders of the Securities, any benefit or any legal orequitable right, remedy or claim under this First SupplementalIndenture.
Section5.06. Executionand Counterparts. ThisFirst Supplemental Indenture may be executed in any number of counterparts, eachof which shall be deemed to be an original, but all such counterparts shalltogether constitute but one and the same instrument.
Section5.07.Trustee Not Responsible/or Recitals. Therecitals herein contained are made by the Company and not by the Trustee, andthe Trustee assumes no responsibility for the correctness thereof. The Trusteemakes no representation as to the validity or sufficiency of this FirstSupplemental Indenture or of the Securities. The Trustee shall not beaccountable for the use or application by the Company of the Securities or theproceeds thereof.
INWITNESS WHEREOF, the parties hereof have caused this First SupplementalIndenture to be duly executed by their respective officers or directors dulyauthorized thereto, all as of the day and year first above written.
MIDAMERICAN ENERGY COMPANY
By: /s/ Brian K. Hankel
Name: Brian K. Hankel
THE BANK OF NEW YORK,
By: /s/ Robert A. Massimillo
Name: Robert A. Massimillo
Title: Vice President